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336 U.S. 271 69 S.Ct. 535 93 L.Ed. 672 GRAVER TANK & MFG. CO., Inc., et al.v.LINDE AIR PRODUCTS CO. (two cases). Nos. 184 and 185. Argued Jan. 5, 6, 1949. Decided Feb. 28, 1949. Rehearing Granted May 16, 1949. See 337 U.S. 910, 69 S.Ct. 1046. Mr. Thomas V. Koykka, of Cleveland, Ohio, for petitioners. Messrs. John T. Cahill, of New York City, and Richard R. Wolfe, of Chicago, Ill., for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 Writs of certiorari have been granted, 335 U.S. 810, 69 S.Ct. 50, to review two judgments of the Court of Appeals for the Seventh Circuit, 167 F.2d 531, involving the same patent. What we shall call the Jones patent was No. 2,043,960, issued to Lloyd Theodore Jones and others for an electric welding process and for fluxes, or compositions, to be used therewith. The patent is now owned by The Linde Air Products Company, which brought an action for infringement against the Lincoln and two Graver companies. 2 The District Court held four of the flux claims valid and infringed and concluded that the patent owner had not misused the patent so as to forfeit its claims to relief therefor. It held certain other flux claims and all of the process claims invalid. 86 F.Supp. 191. 3 The Court of Appeals affirmed the findings that four flux claims were valid and infringed and that the patent had not been abused, but reversed the trial court and held valid the process claims and the remaining contested flux claims. 7 Cir., 167 F.2d 531. 4 The petitioners contend not only that the Court of Appeals' judgment should be reversed, but that we should also reverse the District Co rt's finding of partial validity and should declare the patent entirely invalid and not infringed. 5 At the trial the electric welding prior art and the nature of the Jones invention were explored at length, and opinions of the two courts below, already in the books, adequately discuss the technology of that art and the scientific features of the claims involved. We shall confine this opinion to a statement of the legal principles which lead to our decision. I. Flux Claims 18, 20, 22 and 23, Held Valid, and Infringed, by Two Courts Below. 6 Electric welding was an established art before this invention but one with serious limitations which the industry sought to overcome. The known method was slow and laborious and permitted welding of only relatively thin plates. It was of different types, but each had such deficiencies as a dazzling open arc, smoke and splatter, which made operation unpleasant and somewhat hazardous. 7 Three scientifically trained individuals, Jones, Kennedy and Rotermund, set out purposely to discover a cure for the deficiencies and inadequacies in the method of flux welding, then the most successful method known. They collaborated for some six months in conducting a series of about 500 experiments in the course of which they compounded 75 different flux compositions. They finally produced the invention for which a patent was sought. 8 The trial court noted that the results produced by their invention contrasted with those possible under all prior methods in that 'there is no glare, no open arc, no splatter, and very little, if any, smoke in the Jones, et al. method.' 9 'The truly remarkable difference, however, between what Jones, Kennedy and Rotermund invented and what had gone on before is perhaps best manifested by the performance achievement of their invention. For instance, only through its use can plates as thick as two and one-half inches be welded in a single pass. Furthermore, the welding speeds made possible by it dwarf those of any other method, and the welds produced by it are of the highest quality in contrast to the great amount of porosity contained in the welds produced by the so-called clay flux process.' 10 The trial court continued: 'Since the patentees did invent something patentable over the prior art of electric welding, the collateral questions of what constitutes their invention and what are its boundaries become pertinent.' He concluded that what was really invented was that which was claimed and bounded by the composition claims Nos. 18, 20, 22 and 23. His findings and conclusion were affirmed by the Court of Appeals. We are now asked to hold that there has been no such invention. 11 Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A., provides in part: 'Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.' To no type of case is this last clause more appropriately applicable than to the one before us, where the evidence is largely the testimony of experts as to which a trial court may be enlightened by scientific demonstrations. This trial occupied some three weeks, during which, as the record shows, the trial judge visited laboratories with counsel and experts to observe actual demonstrations of welding as taught by the patent and of the welding accused of infringing it, and of various stages of the prior art. He viewed motion pictures of various welding operations and tests and heard many experts and other witnesses. He wrote a careful and succinct opinion and made findings covering all the factual issues. 12 The rule requires that an appellate court make allowance for the advantages possessed by the trial court in appraising the significance of conflicting testimony and reverse only 'clearly erroneous' findings. These are manifestly supported by substantial evidence and the Court of Appeals found them supported by the weight of the evidence—indeed found the evidence to warrant support of the patent even in matters not found by the trial court. A court of law, such as this Court is, rather than a court for correction of errors in fact finding, cannot undertake to review concurrent findings of fact by two courts below in the absence of a very obvious and exceptional showing of error. Goodyear Tire & Rubber Co. v. Ray-O-Vac Co., 321 U.S. 275, 64 S.Ct. 593, 88 L.Ed. 721; District of Columbia v. Pace, 320 U.S. 698, 64 S.Ct. 406, 88 L.Ed. 408; Williams Mfg. Co. v. United Shoe Machinery Corp., 316 U.S. 364, 62 S.Ct. 1179, 86 L.Ed. 1537; Baker v. Schofield, 243 U.S. 114, 118, 37 S.Ct. 333, 334, 61 L.Ed. 626. 13 No such showing is made. While the ultimate question of patentability is one of meeting the requirements of the statute, R.S. § 4886, as amended, 35 U.S.C. § 31, 35 U.S.C.A. § 31, the facts as found with respect to these four flux claims warrant a conclusion here that as matter of law those statutory requirements have been met. Accordingly, we affirm the judgment insofar as it holds claims numbered 18, 20, 22 and 23 define an invention for which patent has validly issued. 14 Turning to the question of infringement, the District Court found that the Lincoln Electric Co. made, and the other petitioners used and sold, a flux substantially identical with that set forth in the valid composition claims of the patent in suit and which could be made by a person skilled in the art merely by following its teachings. The petitioners introduced no evidence to show that their accused flux was derived either from the prior art, by independent experiment or from any source other than the teachings of the patent in suit. The court found infringement of each of the four claims and concluded that the respondent was entitled to a permanent injunction against future infringement and to an accounting for profits and damages. These findings and conclusions were affirmed by the Court of Appeals and we find no cause for reversal. II. Flux Claims Held Invalid by the District Court and Valid by the Court of Appeals. 15 The District Court held invalid claims to a flux for use in the process, numbered 24, 26 and 27. The Court of Appeals reversed as to these and held them valid. Remaining flux claims, numbered 19, 21, 25, 28 and 29, were not in issue, and claim 27 we consider along with the process claims. 16 The difference between the District Court and the Court of Appeals as to these findings comes to this: The trial court looked at claims 24 and 26 alone and declined to interpret the terms 'silicates' and 'metallic silicates' therein as being limited or qualified by specifications to mean only the nine metallic silicates which had been proved operative. The District Court considered that the claims therefore were too broad and comprehended more than the invention. The Court of Appeals considered that because there was nothing in the record to show that the applicants for the patent intended by these claims to assert a monopoly broader than nine metallic silicates named in the specifications, the court should have construed the claims as thus narrowed and limited by the specifications. 17 The statute makes provision for specification separately from the claims and requires that the latter 'shall particularly point out and distinctly claim the part, improvement, or conbination which he claims as his invention or discovery.' R.S. § 4888, as amended, 35 U.S.C. § 33, 35 U.S.C.A. § 33. It would accomplish little to require that claims be separately written if they are not to be separately read. While vain repetition is no more to be encouraged in patents than in other documents, and claims like other statements may incorporate other matter by reference, their text must be sufficient to 'particularly point out and distinctly claim' an identifiable invention or discovery. We have frequently held that it is the claim which measures the grant to the patentee. See, for example, Milcor Steel Co. v. George A. Fuller Co., 316 U.S. 143, 1 5, 62 S.Ct. 969, 970, 86 L.Ed. 1332; General Electric Co. v. Wabash Appliance Corp., 304 U.S. 364, 369, 58 S.Ct. 899, 901, 82 L.Ed. 1402; Altoona Publix Theatres v. American Tri-Ergon Corp., 294 U.S. 477, 487, 55 S.Ct. 455, 459, 79 L.Ed. 1005. While the cases more often have dealt with efforts to resort to specifications to expand claims, it is clear that the latter fail equally to perform their function as a measure of the grant when they overclaim the invention. When they do so to the point of invalidity and are free from ambiguity which might justify resort to the specifications, we agree with the District Court that they are not to be saved because the latter are less inclusive. Cf. General Electric Co. v. Wabash Appliance Corp., 304 U.S. 364, 373, 374, 58 S.Ct. 899, 903, 904, 82 L.Ed. 1402; see McClain v. Ortmayer, 141 U.S. 419, 424, 425, 12 S.Ct. 76, 77, 78, 35 L.Ed. 800; Cimiotti Unhairing Co. v. American Fur Refining Co., 198 U.S. 399, 410, 25 S.Ct. 697, 702, 49 L.Ed. 1100. 18 We think the District Court correctly applied this principle to claims 24 and 26. 19 III. Process Claims. 20 All process claims were held invalid by the District Court; those numbered 1, 3, 4, 7, 8 and 9, because they make no specific reference to the essential chemical constituents of the welding composition to be used in the claimed welding process, a conclusion with which we agree. Process claim 2 was held invalid for the reason applicable to flux claims 24 and 26, with which we also agree. Others, namely 5, 6, 11, 12, 13, 14, 15, 16 and 17, and composition claim 27 were held invalid because they erroneously imported that the sole conductive medium through which electric current passes from the electrode to the base metal is the welding composition, which is in a molten state, and that no electric arc phenomenon is present. 21 The court found that the procedural steps in the process taught by the patent are identical in all respects with those followed in prior automatic electric welding processes and that the only invention or discovery resides in the use of a different welding composition. It sustained the patent for the composition, as we have shown, but denied its validity insofar as it claimed the old procedure. 22 The trial court gave extensive consideration to the process claims. It agreed that a radically new process would have been discovered if it could be said that the electric current passed between the electrode and the base metal through a welding composition in a liquid state and that no electric arc is present. All of the previous art had used the electric arc. But with full appreciation of the critical nature of the inquiry and after long litigation of the technology of the art, the court concluded that no such finding of departure from the prior art could be made and said that the evidence is persuasive that no such basic difference in phenomena is present in the Jones method. 23 The District Court reinforced its conclusion by pointing out that the inventors themselves initially did not conceive their invention to embody any such radical departure from known phenomena and that their first application for a patent was replete with references to the presence and use of an electric arc in the new method. It was only after they had assigned their rights to the respondent that the suggestion of a basically new phenomenon, other than an arc, was made. Just what happens in the Jones method admits of controversy, for there is no visual evidence of an electric arc after the welding operation commences because what actually occurs between the electrode and the metal base is hidden from view by the flux. The court concluded that it is impossible to say with complete certainty that there is not an arc and one of the plaintiff's expert witnesses gave substantial support to the idea that the arc is still present, although it is shielded by the flux in the Jones patent. 24 The same deference is due to the findings of the trial court which overturn claims as to those which sustain them. Technicians may and probably will continue to debate with plausible arguments on each side as to what this obscure process really is. But the record in this case, while not establishing to a certainty that the findings are right, fall far short of convincing us that they are clearly erroneous. We think that the rules that govern review entitle the trial court's conclusions to prevail and that the process claims are invalid under the statute. 25 IV. Abuse of Patent. 26 Contentions are made that the patent has been abused through efforts to broaden the patent monopoly by requiring the purchase of unpatentable material for use in connection with it. The trial court found, however, that the plaintiff does not impose on licensees, either as a condition of a license or otherwise, any requirement, condition, agreement or understanding as to the purchase or use of unpatentable commodities and that its licensees are free to buy and use any materials and equipment from any source. The court recognized that an appearance of such freedom is not conclusive if it conceals a subterfuge and that there is a real, although informal, restraint. But examining the conduct of the plaintiff, it found no such obstacle to the maintenance of an action for infringement on that part of the patent which was valid. The Court of Appeals affirmed, and we accept the conclusion of the two courts below on this branch of the case. 27 Our conclusion is that the judgment of the Court of Appeals, insofar as it reverses that of the District Court, should be reversed and that the judgment of the District Court be in all things reinstated. To that extent the judgment below is reversed. 28 Reversed in part. 29 It is so ordered. 30 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS joins, concurring. 31 I concur in the Court's judgment in this case and in parts II, III and IV of the Court's opinion. But my concurrence in the holding that Claims 18, 20, 22 and 23 are valid does not rest merely on findings of the District Court and the Court of Appeals that those claims were valid. While accepting the findings of those two courts on what I consider to be questions of fact, it is my view that determination of the ultimate question of patentability cannot properly be classified as a finding of fact. I would adhere to this Court's earlier pronouncement that 'whether the thing patented amounts to a patentable invention' is a question of law to be decided by the courts as such. Mahn v. Harwood, 112 U.S. 354, 358, 5 S.Ct. 174, 176, 6 S.Ct. 451, 28 L.Ed. 665; and see dissenting opinions in Goodyear Tire & Rubber Co. v. Ray-O-Vac Co., 321 U.S. 275, 280, 64 S.Ct. 593, 595, 88 L.Ed. 721, note 1, and Williams Manufacturing Co. v. United Shoe Machinery Corp., 316 U.S. 364, 383, 62 S.Ct. 1179, 1189, 86 L.Ed. 1537. 32 I agree, however, that the facts found here justify the holding that Claims 18, 20, 22, and 23 do show patentable discovery when measured by the standards announced by this Court in Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84, 62 S.Ct. 37, 86 L.Ed. 58. For this reason I concur in affirming the judgment to the extent that it held these claims valid.

78

336 U.S. 328 69 S.Ct. 554 93 L.Ed. 710 CITY OF NEW YORKv.SAPER. STATE OF NEW YORK v. CARTER. UNITED STATES v. CARTER. Nos. 168, 200, and 201. Argued Jan. 4, 1949. Decided March 7, 1949. Mr. Seymour B. Quel, of New York City, for City of New York. Mr. David Haar, of New York City, for Saper. Mr. Francis R. Curran, of Poughkeepsie, N.Y., for State of New York. Mr. J. Henry Kutz, of New York City, for the United States. Mr. Sydney W. Cable, of New York City, for Carter. Mr. Justice JACKSON delivered the opinion of the Court. 1 The ultimate issue in these three cases is whether tax claims against a bankrupt bear interest until the date of bankruptcy1 as held by the court below,2 or until payment, as previously held by another Court of Appeals.3 We granted certiorari4 to resolve the conflict, the matter being of considerable practical importance5 in the administration of the Bankruptcy Act.6 2 If the question were one of first impression to be decided in the light of the present statute alone, we should have no difficulty in affirming the court below. More than forty years ago Mr. Justice Holmes wrote for this Court that the rule stopping interest at bankruptcy had then been followed for more than a century and a half. He said the rule was not a matter of legislative command or statutory construction but, rather, a fundamental principle of the English bankruptcy7 system which we copied. Sexton v. Dreyfus, 219 U.S. 339, 344, 31 S.Ct. 256, 257, 55 L.Ed. 244. Our present statute contains no provision expressly repudiating that principle or allowing an exception in favor of tax claims. Every logical implication from relevant provisions is to the contrary. Section 63, sub. a (1), 11 U.S.C. § 103 sub. a (1), 11 U.S.C.A. § 103, sub. a (1), allows interest on judgments and written instruments8 only to date of bankruptcy. Section 63, sub. a(5), 11 U.S.C. § 103, sub. a(5), 11 U.S.C.A. § 103, sub. a (5), allows interest only to that date on debts reduced to judgment9 after bankruptcy.10 No provision permits post-bankruptcy interest on other claims in general or tax claims in particular. Section 57, sub. j, 11 U.S.C. § 93, sub. j, 11 U.S.C.A. § 93, sub. j, forbidding allowance of governmental penalties or forfeitures permits11 allowance of losses sustained by the acts penalized, with actual costs and 'such interest as may have accrued thereon according to law.' However, on its face this appears to delimit even such allowable debts as of the date of bankruptcy and to allow no more interest than does § 63 with respect to the claims there specified. Moreover, there is no interest except that which accrues according to law—it is exactly such interest that the 'fundamental principle' cuts off as of bankruptcy. Section 57, sub. n, 11 U.S.C. § 93, sub. n, 11 U.S.C.A. § 93, sub. n, requires governmental claims to be proved in the same manner and within the same time as other debts and only for cause shown may a reasonable extension be granted. Tax claims are treated the same as other debts except for the fourth priority of payment, § 64, sub. a, 11 U.S.C. § 104, sub. a, 11 U.S.C.A. § 104, sub a, and the provision making taxes nondischargeable, § 17, 11 U.S.C. § 35, 11 U.S.C.A. § 35. But each of these sections is silent as to interest. 3 The long-standing rule against post-bankruptcy interest thus appears implicit in our current Bankruptcy Act. To read into such a statute an exception to that rule would be unwarranted and, as an original proposition, we should decline to do so. However, the issue comes here after forty years of bankruptcy administration under the Act of 1898 followed by ten years under the 1938 Chandler Amendments. Petitioners contend that judicial decisions during those periods have now been incorporated into a legislative policy allowing interest on tax claims to payment, thereby producing a rule of law beyond further judicial scrutiny. 4 It is contended that decisions under the Act of 1898 definitely established such a rule. And petitioners challenge the lower court's holding, despite those decisions, that the Congress through the Chandler Act completed the assimilation of taxes to debts and manifested an intention that such claims be treated, interest-wise, the same as other debts. They assert that the pre-Chandler Act allowance of interest to date of payment was grounded in judicial construction of § 57, sub. j, approved at least sub silentio by this Court in United States v. Childs, 266 U.S. 304, 45 S.Ct. 110, 69 L.Ed. 299, and adopted by Congressional reenactment of that section in the Chandler Act. They also contend that even after the Chandler Act the lower courts, and this Court in Meilink v. Unemployment Reserves Commission, 314 U.S. 564, 62 S.Ct. 389, 86 L.Ed. 458, affirmed the alleged prior interpretation of § 57, sub. j. In such a situation, it is said, the courts cannot modify what has now become legislative poli y even though originally it may have been a judicially developed rule and one which now, as a matter of statutory construction, we should reject. 5 At the outset it may be admitted that in practice under the Act of 1898 the lower courts generally did allow interest on tax claims until paid. The parties and the lower courts trace that practice to In re Kallak, D.C., 147 F. 276, and cases following that decision. But we do not believe those cases support petitioners' contention that the pre-Chandler allowance of post-bankruptcy interest reflects a construction of § 57, sub. j. The Kallak opinion itself refutes that contention insofar as it may be based on that line of cases. The court there first decided that since § 64, sub. a, of the Act of 189812 gave taxes absolute priority over claims of every kind, 'public taxes do not constitute a 'claim' in bankruptcy.' 147 F. 276, 277. The statute did not require that taxes be proved but that the trustee should seek them out and pay them in full. In view of that requirement and since taxes were not claims, the court saw no reason why the rule stopping interest on ordinary claims should apply. The court found that rule was based on considerations of expediency and practical convenience not present in the case of taxes. First, it said that allowance of such interest at the varying rates applicable to the different claims sharing the estate would prevent definite determination of each claimant's proportionate share. Secondly, such recurring readjustments would complicate administration of the estate. Since neither difficulty would result from allowing post-bankruptcy interest on taxes not sharing the fund with other obligations, the rule against such interest was held to be inapplicable. This conclusion was grounded entirely in reasons of practical convenience. If the case involved construction of any part of the Act of 1898, it clearly was § 64 sub. a, with its requirements of absolute priority in payment of 'all taxes legally due and owing,' which, together with the dispensation from proof, the court considered as indicating that taxes enjoyed a status entirely different from that accorded ordinary claims. Those provisions were considered controlling, while § 57, sub. j, was not mentioned in the opinion. Consequently the latter section's reenactment could not be considered a legislative adoption of any 'judicial gloss' on that section resulting from the Kallak line of cases. The only section relied upon in Kallak, § 64, sub. a, has been significantly amended to deprive taxes of their preferred status, first by the amendment of 1926, and later by the Chandler Act. The former13 expressly provided that taxes yield priority to administration expenses and certain wages, neither of which bear interest. The latter amendments finalized the subordination of taxes to other priority items. They also wrote into § 57, sub. n, the requirement of proof, formerly dispensed with under § 64, sub. a. Consequently the argument based on alleged Chandler Act recognition of lower court interpretations of § 57, sub. j, seems entirely without force. And, on the contrary, that enactment did significantly change the provisions of § 64, sub. a, which were decisive in Kallak and similar cases.14 6 Petitioners rely most heavily, however, upon this Court's decision in United States v. Childs, 266 U.S. 304, 45 S.Ct. 110, 69 L.Ed. 299, reversing In re J. Menist & Co., 2 Cir., 290 F. 947. It is urged that this decision reflected a construction by this Court of § 57, sub. j, which the Congress adopted in enacting the Chandler Amendments. We do not believe this contention survives scrutiny of that case or that it is supported by the legislative history of the Chandler Act. The Court of Appeals stated that the only issue before it was 'whether an exaction of 1 per cent a month as the price of delay amounts to a penalty.' 290 F. 947, 949. It decided that anything in excess of 6% per annum would be a penalty barred by § 57, sub. j. It is true that court also stated the allowable interest could run until payment. However, that statement was also based on the 'highly preferred' status of taxes and the requirement of § 64, sub. a, that absolute priority be given to 'all taxes legally due and owing.' Section 57, sub. j, was considered as establishing that 12%, as a penalty, could not be allowed but that 6% was a 'pecuniary loss' within the meaning of that section, and allowable as such, in full. But the Government challenged in this Court only the holding that the 12% interest was a penalty barred by § 57, sub. j. This Court reversed as to that point and the opinion makes it clear that it was the only issue considered and decided here. The question whether interest could run to payment, although discussed in respondent's brief on the merits, was not the issue which induced the Court to bring the case here, and it is not discussed in the opinion. We cannot agree that the case represents even a sub-silentio approval of allowance of post-bankruptcy interest. Even assuming, arguendo, such approval to be implicit in the decision, it would not help petitioners, relying solely on reenactment of § 57, sub. j, since we have shown the lower court's holding was based largely on provisions of § 64, sub. a, which have since been changed by the Act of 1926 and the Chandler Act. 7 Other decisions of this Court cited by petitioners on this point do not help their cause and require little discussion. Dayton v. Stanard, 241 U.S. 588, 36 S.Ct. 595, 60 L.Ed. 1190, approved payment of interest to individuals who, during the course of a bankruptcy, paid off tax liens binding property of the bankrupt. The Court's decision was only that such parties, whose tax deeds were invalidated because at the time they were issued the property was in custodia legis, could be reimbursed out of the estate's general fund for both their advances and interest at the legal rate. This was simple equity since the claimants had paid taxes which the then § 64, sub. a, required the trustee to seek out and pay in full. People of State of New York v. Jersawit, 263 U.S. 493, 44 S.Ct. 167, 68 L.Ed. 405, is clearly a holding limited to the determination that the claim there assert d was a penalty not allowable under § 57, sub. j. The case was so described in the Childs opinion, 266 U.S. 304, 309, 45 S.Ct. 110, 111, 69 L.Ed. 299, and the discussion there confirms our conclusion that the latter decision was similarly limited to that point. Coder v. Arts, 213 U.S. 223, 29 S.Ct. 436, 53 L.Ed. 772, 16 Ann.Cas. 1008, states as a subsidiary point only that, where the estate was adequate, interest could properly be allowed on a mortgage which the Court had held not to be a voidable preference. 8 It is thus clear that when the Chandler amendments were under consideration in Congress the reported cases established only that lower courts were allowing interest on tax claims until payment, either as a matter of practical convenience or because § 64, sub. a gave those claims absolute priority and dispensed with proof. There was no basis for belief that the lower courts, much less this Court, had applied any judicial gloss to § 57, sub. j, requiring similar preferred treatment, interest-wise, for tax claims. If any conclusion could have been drawn from the cases it was that § 64, sub. a, might have justified a judicial belief that taxes need not be considered, for any purpose, the same as other debts. And, as we have seen, both significant provisions of that section were amended with adverse effects on the status of tax claims. Consequently, reenactment of § 57, sub. j, does not support petitioners' position on this issue. This conclusion is confirmed by the complete lack of any indication in the legislative history that Congress considered § 57, sub. j, in this connection. Petitioners are in fact asserting that adding to an alleged sub-silentio ruling here on § 57, sub. j, Congressional silence in reenacting that section precipitated a legislative command that post-bankruptcy interest be allowed on tax claims which, at the same time, were deliberately being reduced to the level of other debts. Mere statement of the proposition indicates its rejection. 9 The Court of Appeals concluded that by the 1926 amendment and the Chandler Act, Congress assimilated taxes to other debts for all purposes, including denial of post-bankruptcy interest. We think this is a sound and logical interpretation of the Act after those amendments to §§ 64, sub. a, and 57, sub. n. Considered in conjunction with the general rule against post-bankruptcy interest15 as well as § 63's limitations of interest on other claims to date of bankruptcy, they compel our conclusion, already stated, that the statute as amended did not contemplate any exception in favor of tax claims. 10 Petitioners' final contention is that even after the Chandler Act the lower courts continued to allow post-bankruptcy interest, that this Court in Meilink v. Unemployment Reserves Commission, 314 U.S. 564, 62 S.Ct. 389, 86 L.Ed. 458, approved the practice, and that Congressional recognition of that interpretation is reflected in an unsuccessful attempt to modify § 57, sub. j. It may be admitted that lower courts, other than the one whose judgment is now being reviewed, did continue to allow such interest after the 1938 amendment.16 But this Court has not, in the Meilink case or otherwise, passed on the question. That case involved the same issue that had been presented in Childs: whether or not the interest there challenged was in fact a penalty proscribed by § 57, sub. j, which had been left substantially unchanged by the Chandler Act. We decided only that question. 11 But, irrespective of that decision, petitioners contend that Congress has considered the lower courts' post-Chandler Act decisions as a statutory interpretation which can be overruled only by legislation. The argument is based on a Committee Report accompanying a bill approved by the House during the 80th Congress but not acted upon in the Senate. Among Bankruptcy Act amendments proposed in this bill was one designed 'both to clarify and modify' § 57, sub. j. The change, it was said in the House Report, was to make it clear that the section referred to interest on the 'pecuniary loss' and that such interest stops at bankruptcy. The clarifying clause was 'intended to overrule an obsolete rule' as to interest on delinquent taxes. It was stated that although §§ 64, sub. a, and 57, sub. n, as amended by the Chandler Act rendered the reasoning of the Kallak case obsolete, nevertheless its rule had not been changed and legislation was necessary, citing Davie v. Green, 1 Cir., 133 F.2d 451, the case which conflicts with the decision now being reviewed. The text of the section of the report devoted to this proposed amendment is printed in the margin.17 We believe a fair reading of it leads to the conclusion that the Committee believed, not that the Chandler Act either allowed post-bankruptcy interest or left the matter open, but that the courts in allowing such interest were ignoring the necessary and intended implications from the Chandler amendments to §§ 57, sub. n, and 64, sub. a. The court below did not have this report before it, but in a well-considered opinion reached the same conclusion. We believe that conclusion is confirmed by the report and that petitioners' contentions find no support in either the Chandler Act or this abortive attempt at clarification.18 12 The case thus presents only the conflict between two Courts of Appeals as to the proper interpretation of the current statute. We agree with the court below and resolve the conflict by affirming its judgments.19 13 Affirmed. 14 Mr. Justice REED dissents for the reasons given in Davie v. Green, 1 Cir., 133 F.2d 451. 1 The terms 'date of bankruptcy' and 'bankruptcy,' with reference to time, mean the date when the petition was filed, 30 Stat. 544, as amended 52 Stat. 840, 841, and are used accordingly in this opinion. 2 In No. 168 the istrict Judge allowed New York City interest to the date of payment, 75 F.Supp. 458, and the Court of Appeals reversed, 168 F.2d 268. In Nos. 200—201, the District Judge allowed the United States and the State of New York interest only to the date of bankruptcy, 73 F.Supp. 685, and the Court of Appeals affirmed, 168 F.2d 272. 3 Davie v. Green, 1 Cir., 133 F.2d 451. 4 335 U.S. 811—812, 69 S.Ct. 47, 52, 53. 5 Those most immediately concerned with administration of the Act have frequently expressed dissatisfaction over the inroads taxes and interest thereon make in the fund available for creditors. For discussions of that and similar practical problems see 14 J.N.A.Ref.Bankr. 3; 17 id. 129; 18 id. 17; 19 id. 31; 21 id. 106; 22 id. 41; 44 Com.L.J. 411; and 45 id. 370. See also Judge Bright's opinion below, 73 F.Supp. 685, and referees' comments in Matter of Dorsey, 46 A.B.R., N.S., 146, and Matter of D. O. Summers Co., 45 A.B.R., N.S., 123. The whole subject of tax claims and interest is discussed at length in 3 Collier, Bankruptcy (14th ed., 1941 & 1948 Cum.Supp.) §§ 57.22, 57.30, 63.16, 63.26, 64.404, 64.407, 64.408. Comments appear in 61 Harv.L.Rev. 354; 21 Temp.L.Q. 428; 29 Va.L.Rev. 206; 34 id. 835; 23 N.Y.U.L.Q.Rev. 516. 6 Bankruptcy Act of 1898, c. 541, 30 Stat. 544, as amended by the Chandler Act of June 22, 1938, c. 575, 52 Stat. 840, 11 U.S.C. § 1 et seq., 11 U.S.C.A. § 1 et seq. 7 In England the practice was well established, 2 Blackstone, Commentaries *488; Bromley v. Goodere, 1 Atk. 75; Ex parte Bennet, 2 Atk. 527; and applied to mortgages as well as unsecured debts, Ex parte Badger, 4 Ves. Jr. 165; Ex arte Ramsbottom, 2 Mont. & Ayrt. 79; Ex parte Penfold, 4 DeG. & Sm. 282; Ex parte Lubbock, 9 Jur.N.S. 854; In re Savin, L.R. 7 Ch. 760, 764; Ex parte Bath, 22 Ch.Div. 450, 454; Quartermaine's Case, (1892) 1 Ch. 639; In re Bonacino, 1 Manson 59. Two exceptions were recognized: if the alleged 'bankrupt' proved solvent, creditors received post-bankruptcy interest before any surplus reverted to the debtor, Bromley v. Goodere, 1 Atk. 75; Ex parte Mills, 2 Ves.Jr. 295; Ex parte Clarke, 4 Ves.Jr. 676; and if securities held by a creditor as collateral produced interest or dividends during bankruptcy such amounts were applied to post-bankruptcy interest, Ex parte Ramsbottom, 2 Mont. & Ayrt. 79; Ex parte Penfold, 4 DeG. & Sm. 228; Quartermaine's Case (1892) 1 Ch. 639. These exceptions have been carried over into our system. See American Iron & Steel Mfg. Co. v. Seaboard Air Line Ry., 233 U.S. 261, 267, 34 S.Ct. 502, 505, 58 L.Ed. 949; Sexton v. Dreyfus, 219 U.S. 339, 346, 31 S.Ct. 256, 258, 55 L.Ed. 244. 8 'Debts of the bankrupt may be proved and allowed against his estate which are founded upon (1) a fixed liability, as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition by or against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest * * *.' 9 '* * * (5) provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge, less costs incurred and interest accrued after the filing of the petition and up to the time of the entry of such judgments * * *.' 10 Although the provisions of § 63 sub. a (1) requiring a rebate of unearned interest, and of § 63 sub. a (5) eliminating certain post-bankruptcy interest, may in practice be operative but infrequently, they reflect a principle of long standing. See 2 Blackstone, Commentaries, *488. 11 'Debts owing to the United States or any State or subdivision thereof as a penalty or forfeiture shall not be allowed, except for the amount of the pecuniary loss sustained by the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby and such interest as may have accrued thereon according to law.' 12 'Sec. 64. Debts Which Have Priority.—a The court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States, State, county, district, or municipality in advance of the payment of dividends to creditors * * *. b The debts to have priority * * * and to be paid in full out of bankrupt estates, and the order of payment shall be ((1) costs of preserving the estate (2) certain filing fees (3) administration expenses including attorneys' fees (4) wages as specified (5) debts entitled to priority under state or federal laws. * * *)' 13 § 15 of the Act of May 27, 1926, c. 406, 44 Stat. 662, 666. 14 In re Ashland Emery & Corundum Co., D.C., 229 F. 829, relies entirely on § 64, sub. a and the Kallak case. In re Clark Realty Co , 7 Cir., 253 F. 938, discusses § 64, sub. a, but not § 57, sub. j, and relies, erroneously, on Dayton v. Stanard, 241 U.S. 588, 36 S.Ct. 695, 60 L.Ed. 1190, as to which see text. In re J. Menist & Co., 2 Cir., 290 F. 947, relying on § 64, sub. a, is discussed in the text. In re A. E. Fountain, Inc., D.C., 295 F. 873, does not discuss the issue, deciding only that taxes bear simple interest. Horn v. Boone County, 8 Cir., 44 F.2d 920, discusses only whether the levy there was penalty or interest. In re Martin, 7 Cir., 75 F.2d 618, does not discuss the issue. In re Semon, D.C., 11 F.Supp. 18, modified 2 Cir., 80 F.2d 81, was based on the Revenue Act of 1928 and the Court of Appeals decided only that the levy there was not a penalty. In re Beardsley & Wolcott Mfg. Co., 2 Cir., 82 F.2d 239, 104 A.L.R. 881, also involved only the penalty issue. Compare In re William F. Fisher & Co., D.C., 148 F. 907, denying the claimed interest because § 64, sub. a, contained no provision allowing it; and dictum as to interest in McCormick v. Puritan Coal Min. Co., 3 Cir., 41 F.2d 213, 214. 15 See note 7 and text; and see Thomas v. Western Car Co., 149 U.S. 95, 13 S.Ct. 824, 37 L.Ed. 663; Sexton v. Dreyfus, 219 U.S. 339, 31 S.Ct. 256, 55 L.Ed. 244; American Iron & Steel Mfg. Co. v. Seaboard Air Line Ry., 233 U.S. 261, 34 S.Ct. 502, 58 L.Ed. 949. 16 See, for example, In re L. Gandolfi & Co., Inc., D.C., 42 F.Supp. 706; In re Flayton, D.C., 42 F.Supp. 1002; Davie v. Green, 1 Cir., 133 F.2d 451. But see Referee's decision, In Matter of Union Beverage Co., Inc., 50 A.B.R., N.S., 825, 829. And see discussion by the court below in Hammer v. Tuffy, 2 Cir., 145 F.2d 447, 449, and in United States v. Roth, 2 Cir., 164 F.2d 575, 577, 578. 17 '11. Section 11(a) of the bill is intended both to clarify and modify section 57j of the act. The change in 57j(c) is to make clear that the limitation on interest 'up to the date of bankruptcy' relates only to interest on the 'pecuniary loss,' and further that such interest stops at the date of bankruptcy. The addition of clause (2) in the bill is intended to overrule an obsolete rule as to interest on delinquent tax debts. Interest on general unsecured debts, on unsecured Government debts other than taxes, and on debts entitled to priority under section 64a, is suspended at the date of bankruptcy so that, except in the rare case of a solvent estate, interest is allowable only to such date. Sec. 63a; Adams v. Napa Cantina Wineries, 9 Cir., 94 F.2d 694, 36 A.B.R., N.S., 8; In re L. Gandolfi & Co., Inc., D.C., S.D.N.Y., 42 F.Supp. 706, 51 A.B.R., N.S., 521 (governmental debts and other debts entitled to priority); 3 Collier on Bankruptcy, 14th Ed., 1835 et seq.; 2 Remington on Bankruptcy, 4th Ed., Secs. 771, 795. However, interest on delinquent tax debts is allowable to the date of payment. In re Kallak, D.C.N.D., 1906, 147 F. 276, 17 A.B.R. 414; In re Ashland Emery and Corundum Co., D.C.Mass. 1916, 229 F. 829, 36 A.B.R. 194; In re Clark Realty Co., 7 Cir., 1918, 253 F. 938, 42 A.B.R. 403; sub silentio, United States v. Childs, 1924, 266 U.S. 304, 307, 45 S.Ct. 110, 111, 69 L.Ed. 299, 5 A.B.R., N.S., 5. Although under the Chandler Act, a tax debt is required to be proved (sec. 57n) and its order of priority ranks below all administration costs and expenses, wages and costs and expenses of creditors successfully opposing a settlement or discharge, or procuring a conviction for an offense (sec. 64a(1), (2), (3)), thereby rendering obsolete the reasoning in the Kallak case, nevertheless its rule has not been changed, and therefore requires this statutory modification. For further discussion see In re D. O. Summers Co. (Ref., N.D. Ohio, 1939), 46 (45) A.B.R., N.S., 123; In re Dorsey, (Ref., W.D.Wash., 1940) 46 A.B.R., N.S., 146; Davis(e) v. Green, 1 Cir., 1943, 133 F.2d 451, 52 A.B.R., N.S., 603. And on overruling the Kallak case see In re Union Fabries, Inc., D.C., S.D.N.Y. 1947, 73 F.Supp. 685, appeal pending. 'The Judicial Conference has more than once expressly approved this amendment to § 57j. Its most recent reaffirmation of its position was in October 1946. (See Report of the Judicial Confererce, October 1946, p. 15.) The Administrative Office of the United States Courts has stated that the language of section 11 of the bill is satisfactory on this score.' H.R. Rep. No. 2083, 80th Cong., 2d Sess., p. 5. 18 The United States cites, as confirming the construction it has placed on § 57, sub. j, federal taxing statutes beginning with the Revenue Act of 1924 which direct that upon nonpayment of the tax there shall be added, as part of the tax, interest at the specified rate from due date to date of payment. It has been held that federal taxes ordinarily bear interest even in the absence of statute. See Billings v. United States, 232 U.S. 261, 284—288, 34 S.Ct. 421, 425—427, 58 L.Ed. 596. But we do not think either such a rule or statutory provision could be permitted to negative the Bankruptcy Act's requirement in that respect if the latter be to the contrary, as we think it is. That Act was early held to take into consideration 'the whole range of indebtedness of the bankrupt—national, state and individual,' Guarantee Title & Trust Co. v. Title Guaranty & Suprety Co., 224 U.S. 152, 160, 32 S.Ct. 457, 460, 56 L.Ed. 706, and to have been passed 'with the United States in the mind of Congress,' Davis v. Pringle, 268 U.S. 315, 317, 45 S.Ct. 549, 550, 69 L.Ed. 974. We do not believe the Revenue Act of 1924 and similar enactments were intended to amend the comprehensive scheme of the Bankruptcy Act, with an effect clearly contrary to specific amendments such as the Act of 1926 and the Chandler Act. This would indeed be a strange way to require, as it would, that federal tax claims be preferred over state and municipal claims when the Bankruptcy Act itself treats all tax claims equally. This contention, standing by itself, or in support of the argument based on § 57, sub. j, cannot be accepted. 19 Since we have concluded that neither the alleged legislative treatment of this issue nor prior rulings of this Court support the contrary result, this decision involves no consideration of the principle of stare decisis. If it did, the responsible exercise of the judicial process, Helvering v. Hallock, 309 U.S. 106, 119, 60 S.Ct. 444, 451, 84 L.Ed. 604, 125 A.L.R. 1368, would dictate that the express principles and logical implications of the Chandler Act prevail over earlier inconclusive lower court holdings and Congressional failure to correct them.

78

336 U.S. 301 69 S.Ct. 584 93 L.Ed. 691 ALGOMA PLYWOOD & VENEER CO.v.WISCONSIN EMPLOYMENT RELATIONS BOARD. No. 216. Argued Nov. 18, 1948. Decided March 7, 1949. Mr. Roger C. Minahan, of Milwaukee, Wis., for petitioner. Beatrice Lampert, of Madison, Wis., for respondent. [Argument of Counsel from page 302 intentionally omitted] Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 The Algoma Plywood & Veneer Co. manufactures in Kewaunee County, Wisconsin, the products for which it is named. Ninety-five per cent of its output is sold in interstate commerce. In 1942 the National Labor Relations Board held an election at the plant, the outcome of which was the certification of Local 1521 of the Carpenters and Joiners Union as bargaining representative for all production employees, about 650 in number. In 1943, under pressure from the Department of Labor and the War Labor Board, Algoma agreed to a maintenance-of-membership clause in its contract with Local 1521. That clause was carried over from year to year and was part of the contract effective for the year following April 29, 1946. One Victor Moreau refused to pay dues, and on Jan. 7, 1947, the Union notified him that unless he paid up by Jan. 13, he would be discharged. On Jan. 14, 1947 in the presence of representatives of the Company and the Union, he said that he would rather quit than pay dues to the Union. And so the Vice-President of the Company told him to collect his pay and go home. 2 On Jan. 27, 1947, Moreau filed with the Wisconsin Employment Relations Board a complaint charging the Company with an unfair labor practice under Wis.Stat. § 111.06(1)(c) 1, which provides: 3 'It shall be an unfair labor practice for an employer * * * to encourage * * * membership in any labor organization * * * by discrimination in regard to hiring, tenure or other terms or conditions of employment; pr vided, that an employer shall not be prohibited from entering into an all-union agreement with the representatives of his employees in a collective bargaining unit, where at least two thirds of such employes voting * * * shall have voted affirmatively by secret ballot in favor of such all-union agreement in a referendum conducted by the board. * * *' 4 No referendum had been conducted at the Algoma plant. The Board, accordingly, on April 30, 1947, ordered the Company to cease and desist from giving effect to the maintenance-of-membership clause, to offer Moreau reinstatement, and to make him whole for any loss of pay. The Company and the Union petitioned the Wisconsin Circuit Court of Kewaunee County for review of the order, and the Board petitioned for its enforcement. In its judgment of Nov. 21, 1947, the Circuit Court modified the order by striking the award of back pay, but otherwise affirmed it. On May 11, 1948, the Wisconsin Supreme Court affirmed the judgment of the Circuit Court insofar as it sustained the jurisdiction of the Board to issue its cease and desist order and to require an offer of reinstatement but directed enforcement of the back-pay award. 252 Wis. 549, 32 N.W.2d 417. 5 At every stage of the proceedings the Company and the Union contested the jurisdiction of the Employment Relations Board on the ground of the exclusive authority of the National Labor Relations Board under § 10(a) of the National Labor Relations Act, 49 Stat. 453, 29 U.S.C. § 160(a), 29 U.S.C.A. § 160(a), and asserted the repugnancy of Wis.Stat. § 111.06(1)(c) 1 to § 8(3) of the National Labor Relations Act, 49 Stat. 452, 29 U.S.C. § 158(3), 29 U.S.C.A. § 158(3). We granted certiorari under 28 U.S.C. § 1257(3), 28 U.S.C.A. § 1257(3), because of the important bearing of these issues upon the distribution of power in our federal system. 335 U.S. 812, 69 S.Ct. 55. 6 The discharge of Moreau and the orders of the Wisconsin Board preceded the Labor Management Relations Act, 1947, colloquially known as the Taft-Hartley Act, 61 Stat. 136, 29 U.S.C. § 141 et seq., 29 U.S.C.A. § 141 et seq. The judgments of the Circuit Court for Kewaunee County and the Supreme Court of Wisconsin were rendered after it came into force. If the National Labor Relations Act gave affirmative protection to the employer in discharging an employee under a union-security agreement for failure to maintain union membership, it would be necessary to decide whether adoption of the Taft-Hartley Act retroactively removed that protection and whether it equally gave effect to a reinstatement order, an award of back pay, and a cease and desist order which would previously have been invalid. Since, however, we do not find conflict between the Wisconsin law under which the orders were issued and either the National Labor Relations Act or the Taft-Hartley Act, we are relieved from defining the respective applicability of the federal Acts. 7 In seeking to show that the Wisconsin Board had no power to make the contested orders, petitioner points first to § 10(a) of the National Labor Relations Act, which is set forth in the margin.1 It argues that the grant to the National Labor Relations Board of 'exclusive' power to prevent 'any unfair labor practice' thereby displaced State power to deal with such practices, provided of course that the practice was one affecting commerce. But this argument implies two equally untenable assumptions. One requires disregard of the parenthetical phrase '(listed in section 8)'; the other depends upon attaching to the section as it stands, the clause 'and no other agency shall have power to prevent unfair labor practices not listed in section 8.' 8 The term 'unfair labor practice' is not a term of art having an independent significance which transcends its statutory definition. The State are free (apart from pre-emption by Congress) to characterize any wrong of any kind by an employer to an employee, whether statutorily created or known to the common law, as an 'unfair labor practice.' At the time when the National Labor Relations Act was adopted, the courts of many States, at least under some circumstances, denied validity to union-security agreements. See 1 Teller, Labor Disputes and Collective Bargaining § 170 (1940). Here Wisconsin has attached conditions to their enforcement and has called the voluntary observance of such a contract when those conditions have not been met an 'unfair labor practice.' Had the sponsors of the National Labor Relations Act meant to deny effect to State policies inconsistent with the unrestricted enforcement of union-shop contracts, surely they would have made their purpose manifest. So far as appears from the Committee Reports, however, § 10(a) was designed, as its language declares, merely to preclude conflict in the administration of remedies for the practices proscribed by § 8. The House Report, after summarizing the provisions of the section, adds, 'The Board is thus made the paramount agency for dealing with the unfair labor practices described in the bill.' H.R. Rep. No. 969, 74th Cong., 1st Sess. 21. See also the identical language of H.R. Rep. No. 972, 74th Cong., 1st Sess. 21 and H.R. Rep. No. 1147, 74th Cong. 1st Sess. 23. And the Senate Report describes the purpose of the section as 'intended to dispel the confusion resulting from dispersion of authority and to establish a single paramount administrative or quasi-judicial authority in connection with the development of the Federal American law regarding collective bargaining.' S. Rep. No. 573, 74th Cong., 1st Sess. 15. 9 The contention that § 10(a) of the Wagner Act swept aside State law respecting the union shop must therefore be rejected. If any provision of the Act had that effect, it could only have been § 8(3), which explicitly deals with membership in a union as a condition of employment. We now turn to consideration of that section. 10 Section 8(3) provides that it shall be an unfair labor practice for an employer 11 'By discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this Act * * * or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization * * * to require as a condition of employment membership therein, if such labor organization is the representative of the employees as provided in section 9(a), in the appropriate collective bargaining unit covered by such agreement when made.' 12 It is argued, therefore, that a State cannot forbid what § 8(3) affirmatively permits. The short answer is that § 8(3) merely disclaims a national policy hostile to the closed shop or other forms of union-security agreement. This is the obvious inference to be drawn from the choice of the words 'nothing in this Act * * * or in any other statute of the United States,' and it is confirmed by the legislative history. 13 The Senate Report on the bill which was to become the National Labor Relations Act has this to say about § 8(3): 14 'The proviso attached to the third unfair-labor practice deals with the question of the closed shop. Propaganda has been wide-spread that this proviso attaches special legal sanctions to the closed shop or seeks to impose it upon all industry. This propaganda is absolutely false. The reason for the insertion of the proviso is as follows: According to some interpretations, the provision of section 7(a) of the National Industrial Recovery Act, 48 Stat. 198, assuring the freedom of employees 'to organize and bargain collectively through r presentatives of their own choosing,' was deemed to illegalize the closed shop. The Committee feels that this was not the intent of Congress when it wrote section 7(a); that it is not the intent of Congress today; and that it is not desirable to interfere in this drastic way with the laws of the several States on this subject. 15 'But to prevent similar misconceptions of this bill, the proviso in question states that nothing in this bill, or in any other law of the United States, or in any code or agreement approved or prescribed thereunder, shall be held to prevent the making of closed-shop agreements between employers and employees. In other words, the bill does nothing to facilitate closed-shop agreements or to make them legal in any State where they may be illegal; it does not interfere with the status quo on this debatable subject but leaves the way open to such agreements as might now be legally consummated * * *.' S. Rep. No. 573, 74th Cong., 1st Sess. 11-12. 16 The House Report contains similar language: 17 'The proviso to the third unfair labor practice, dealing with the making of closed-shop agreements, has been widely misrepresented. The proviso does not impose a closed shop on all industry; it does not give new legal sanctions to the closed shop. All that it does is to eliminate the doubts and misconstructions in regard to the effect of section 7(a) upon closed-shop agreements, and the possible repetition of such doubts and misconstructions under this bill, by providing that nothing in the bill or in section 7(a) or in any other statute of the United States shall illegalize a closed-shop agreement between an employer and a labor organization, provided such organization has not been established, maintained, or assisted by any action defined in the bill as an unfair labor practice and is the choice of a majority of the employees, as provided in section 9(a), in the appropriate collective bargaining unit covered by the agreement when made. The bill does nothing to legalize the closed-shop agreement in the States where it may be illegal; but the committee is confident that it would not be the desire of Congress to enact a general ban upon closed-shop agreements in the States where they are legal. And it should be emphasized the no closed shop may be effected unless it is assented to by the employer.' H.R.Rep.No. 969, 74th Cong., 1st Sess. 17. See also the identical language in H.R.Rep. No. 972, 74th Cong., 1st Sess. 17, and H.R.Rep. No. 1147, 74th Cong., 1st Sess. 19, 20. 18 In his major speech to the Senate in support of the bill, Senator Wagner said: 19 'While outlawing the organization that is interfered with by the employer, this bill does not establish the closed shop or even encourage it. The much-discussed closedshop proviso merely states that nothing in any Federal law shall be held to illegalize the confirmation of voluntary closed-shop agreements between employers and workers.' 79 Cong.Rec. 7570. 20 The Senator went on to explain the purpose of the section as dispelling misunderstanding of § 7(a) of the National Industrial Recovery Act, 48 Stat. 198, denied either advocacy or disapproval of the closed shop, then added: 21 'The virulent propaganda to the effect that this bill encourages the closed shop is outrageous in view of the fact that in two respects it actually narrows the now-existing law in regard to the closed-shop agreement.' Ibid. 22 Later, during discussion of proposed amendments, Senator Wagner answered a question from the floor about the effect of the proviso in the following words: 23 'The provision will not change the status quo. That is the law today; and wherever it is the law today that a closedshop agreement can be made, it will continue to be the law. By this bill we do not change that situation.' Id. at 7673. 24 Equally conclusive is the answer by Representative Connery, manager of the bill in the House, to a statement by Representative Taber in support of an amendment which would have entirely stricken the prov so. Representative Taber charged that the proviso would make it possible for 51% of the employees of any organization to bring about the discharge of the other 49%. Representative Connery said: 25 'Mr. Chairman, I merely rise to say this in opposition: The closed-shop proposition in this bill does not refer to any State which has any law forbidding the closed shop. It does not interfere with that in any way.' Id. at 9726. 26 No ruling by the courts or the National Labor Relations Board, the agency entrusted with administration of the Wagner Act, has adopted a construction of § 8(3) in disregard of this legislative history. It is suggested, however, that the interpretation given the section of the War Labor Board supports petitioner's position. The Board, it is true, in view of the practical desirability of the maintenance-of-membership clause in settling wartime disputes over union security found authority to order contracts containing such clauses despite inconsistent State law. It found such authority, however, not in § 8(3) but in the conclusion that 'its power to direct the parties to abide by the maintenance-of-membership provision in such a case as this one stems directly from the war powers of the United States Government.' Greenebaum Tanning Co., 10 War Lab. Rep. 527, 534.2 The Supreme Court of Wisconsin itself acknowledged the supremacy of the war power in a decision suspending an order directing the reinstatement of an employee discharged under a maintenance-of-membership clause ordered by the War Labor Board. International Brotherhood of Paper-Makers Local No. 66 (A.F.L.) v. Wisconsin Employment Relations Board, 245 Wis. 541, 15 N.W.2d 806. When the orders of the Wisconsin Board in the present case were entered, the War Labor Board had ceased to exist, Exec. Order No. 9672, 50 U.S.C.A.Appendix, § 964 note, 11 Fed.Reg. 221, and, with the occasion that had called it into being, the necessity for suppression of State law had also come to an end.3 27 Since we would be wholly unjustified, therefore, in rejecting the legislative interpretation of § 8(3) placed upon it at the time of its enactment, it is not even necessary to invoke the principle that in cases of concurrent power over commerce State law remains effective so long as Congress has not manifested an unambiguous purpose that it should be supplanted. See, e.g., Sinnot v. Davenport, 22 How. 227, 16 L.Ed. 243; Missouri, K. & T.R. Co. v. Haber, 169 U.S. 613, 18 S.Ct. 488, 42 L.Ed. 878. Nor need we, if Congress in enacting § 8(3) did not mean to enlarge the right to bargain for union security, consider contentions based on Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782, to the effect that in guaranteeing the right to collective bargaining the National Labor Relations Act also guaranteed the right to contract upon any terms which are commonly the subject of collective bargaining. 28 We come now to the question whether the Taft-Hartley Act expresses a policy inconsistent with § 111.06(1)(c) 1 of the Wisconsin Employment Peace Act. 29 Section 10(a) of the Taft-Hartley Act, which is set forth in the margin,4 contains important changes, but none requiring modification of the conclusions we have reached as to the corresponding section of the National Labor Relations Act. One phrase, however, reinforces those conclusions; that is the phrase 'inconsistent with the corresponding provision of this Act.' These words must mean that cession of jurisdiction is to take place only where State and federal laws have parallel provisions. Where the State and federal laws do not overlap, no cession is necessary because the State's jurisdiction is unimpaired. This reading is confirmed by the purpose of the proviso in which the phrase is contained: to meet situations made possible by Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 92 L.Ed. 1234. where no State agency would be free to take jurisdiction of cases over which the National Board had declined jurisdiction. See H.R.Rep. No. 245, 80th Cong., 1st Sess. 40; S.Minority Rep.No. 105, P. 2, 80th Cong., 1st Sess. 38. 30 Other provisions of the Taft-Hartley Act make it even clearer than the National Labor Relations Act that the States are left free to pursue their own more restrictive policies in the matter of union-security agreements. Because § 8(3) of the new Act forbids the closed shop and strictly regulates the conditions under which a union-shop agreement may be entered, § 14(b) was included to forestall the inference that federal policy was to be exclusive. It reads: 31 'Nothing in this Act shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.' 32 It is argued, however, that the effect of this section is to displace State law which 'regulates' but does not wholly 'prohibit' agreements requiring membership in a labor organization as a condition of employment. But if there could be any doubt that the language of the section means that the Act shall not be construed to authorize any 'application' of a union-security contract, such as discharging an employee, which under the circumstances 'is prohibited' by the State, the legislative history of the section would dispel it. See S.Rep. No. 105, 80th Cong., 1st Sess. 5—7; H.R.Rep. No. 245, 80th Cong., 1st Sess. 9, 34, 40, 44; H.R.Conf.Rep. No. 510, 80th Cong., 1st Sess. 60; 93 Cong.Rec. 3554, 3559, 4904, 6383—84, 6446; N.R. 3020, as reported, § 13. 33 It remains to consider whether certification of the Union by the National Labor Relations Board in 1942 thereby forever ousted jurisdiction of the Wisconsin Board to enjoin practices forbidden by Wisconsin law. Since the enumeration by the Wagner Act and the Taft-Hartley Act of unfair labor practices over which the National Board has exclusive jurisdiction does not prevent the States from enforcing their own policies in matters not governed by the federal law, such freedom of action by a State cannot be lost because the National Board has once held an election under the Wagner Act. The character of activities left to State regulation is not changed by the fact of certification. Certification, it is true, makes clear that the employer and the union are subject to federal law, but that is not disputed. So far as the relationship of State and national power is concerned, certification amounts to no more than an assertion that as to this employer the State shall not impose a policy inconsistent with national policy, Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782, or the National Board's interpretation of that policy, Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234; La Crosse Telephone Corporation v. Wisconsin Employment Relations Board, 336 U.S. 18, 69 S.Ct. 379. Indeed, the express disclaimer in § 8(3) of the National Labor Relations Act of intention to interfere with State law and the permission granted the States by § 14(b) of the Taft-Hartley Act to carry out policies inconsistent with the Taft-Hartley Act itself, would be practically meaningless if so easily avoided. For these provisions can have application, obviously, only where State and federal power are concurrent; it would have been futile to disclaim the assertion of federal policy over areas which the commerce power does not reach. 34 Since, therefore, the effect given the Wisconsin Meployment Peace Act by the judgment below does not conflict with the enacted policies of Congress, that judgment is affirmed. 35 Affirmed. 36 Mr. Justice RUTLEDGE and Mr. Justice MURPHY, concur in the result. 37 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS joins, dissenting. 38 The decision just rendered holds that the State of Wisconsin can compel the petitioner to pay unearned back wages to an employee found to have been discharged by petitioner under the terms of a collective bargaining agreement which required such discharge. The petitioner had originally entered into the agreement in response to irresistible pressure by the United States Government. 252 Wis. 549, 559, 32 N.W.2d 417. The circumstances under which the contract was made were these: 39 From 1938 to 1943 the company and the union were in an almost constant wrangle. The chief bone of controversy throughout this five-year period was the union's demand for a 'closed shop.' Petitioner resolutely fought for an ' pen shop.' In 1938 the union took its cause to the National Labor Relations Board. After a long hearing of which the closed shop issue was a prominent phase, that Board in 1940 ordered petitioner to bargain with the union on the pending issues. Algoma Plywood Co., 26 N.L.R.B. 975, 980, 1002 (1940). The Court of Appeals, referring to the closed shop question as the 'main stumbling block' between petitioner and the union, refused to enforce the order on the ground that it was not clear that the union represented a majority of petitioner's employees. National Labor Relations Board v. Algoma Plywood & Veneer Co., 7 Cir., 121 F.2d 602, 606, 611. Thereafter, early in 1942, petitioner appealed to the Wisconsin Employment Relations Board to conduct an election. The union went to the National Board; petitioner withdrew its state board application; the National Board conducted an election; the union won, and the old closed shop controversy was renewed with increased intensity. 40 The union appealed to the National War Labor Board to settle the closed shop dispute. That Board, in collaboration with the United States Department of Labor, put pressure on petitioner to yield to the union's demands. Petitioner was informed that unless it agreed to a maintenance of membership clause, which was at the time forbidden by Wisconsin law, the clause 'would be put in by the War Labor Board anyhow' since inclusion of such provisions was a part of that Board's national policy. Thus fired at from one side by the state and from the other side by powerful federal agencies, petitioner had to flee to one side or the other. Neither side offered a safe sanctuary. In weighing the conflicting considerations, petitioner not unreasonably found the scales tipped on the United States' side. Had petitioner refused the demands of the federal agency, the Government could and might have seized and operated its plants.1 Furthermore, petitioner's employees might have stopped work. In response to its best judgment, though contrary to its own strong desires, petitioner finally yielded to the Federal Government's demands and agreed to the union's terms. January 23, 1943, a collective bargaining agreement was executed which contained the controversial maintenance of union membership clause and an automatic extension clause. This contract was approved by the War Labor Board. The controversial clause was extended automatically from year to year and was in effect when the alleged discharge took place. The Court apparently concedes that this clause of the collective bargaining contract was valid when petitioner entered into it under federal compulsion. In my judgment it was equally valid when the employee was discharged under it. It seems at least a questionable interpretation of federal statutory policy for this Court—a federal tribunal—to hold that a state is free to impose a money penalty on this company for acting in obedience to a contract which a federal agency validly compelled it to make.2 I. 41 The Court's concession that the contract was valid when made rests on the premise that the statute creating the War Labor Board stemmed from the war power of Congress and that under this power the War Labor Board could, as it did, force petitioner to make the contract. Greenebaum Tanning Co., 10 War Lab.Rep. 527. But, says the Court, when Wisconsin entered the back-pay order, the War Labor Board had ceased to exist and on its dissolution on January 4, 1946, Wisconsin became possessed of the power to order petitioner to break his contract. In other words, the holding seems to be that the discontinuance of the War Labor Board automatically and instantly empowered the states to impair and nullify all collective bargaining contracts entered into under authority of the supreme federal policy embodied in the National War Labor Board Act. For several reasons, I cannot agree. 42 1. The termination of the War Labor Board was accomplished by Executive Order of the President, No. 9672. 11 Fed.Reg. 221. But there is nothing in that Executive Order that indicates a purpose to authorize invalidation of contracts made under the Board's directions. A contrary purpose is indicated. The Executive Order established the National Wage Stabilization Board. As the name of that Board indicates, it was established to exercise functions in connection with wage disputes which might adversely affect the national economy. For the limited purposes enumerated in the Order the new Board was vested with all the 'powers, functions and responsibilities of the National War Labor Board * * *.' While scope for operation of these powers was within more narrow limits than had been the scope of the War Labor Board's powers, the creation of this new Board negatives any possible contention that dissolution of the War Labor Board showed an intention to permit states to invalidate previously executed legal contracts approved by the War Labor Board in the interests of industrial peace. And far from indicating a presidential belief that wage stabilization and industrial peace were no longer essential in the war emergency period, the new Executive Order, as had the old, rested on the war power and the statutes that had stemmed from it. The War Labor Board was created to implement a congressional war policy expressed in part in the War Labor Disputes Act. 57 Stat. 163, 50 U.S.C.A.Appendix, § 1501 et seq. The Board's dissolution could not detract from the force of the statute or from the congressional war power. See Kelly v. Washington, 302 U.S. 1, 14, 58 S.Ct. 87, 94, 82 L.Ed. 3. This Executive Order recognized the continued existence of conditions that called for the further exercise of war powers. It was promulgated January 4, 1946. The last automatic extension of the compelled contract was April 4, 1946. This automatically extended contract was the basis for the discharge. Under the foregoing circumstances I cannot agree that dissolution of the War Labor Board authorized Wisconsin to punish petitioner for its continued observance of the contract. 43 2. That the President correctly assumed the continued existence of war powers after the cessation of hostilities seems beyond question in the light of this Court's holding in Ludecke v. Watkins, 335 U.S. 160, 166—170, 68 S.Ct. 1429, 1432-1434. The holding in the Ludecke case was that the war had not at that time officially ended and that the congressional war power still existed in May, 1947 This was long after the dissolution of the War Labor Board and the employee's discharge. In light of the 1947 Ludecke holding it seems odd that dissolution of the War Labor Board should now be held an adequate reason for permitting a state in 1946 to invalidate contracts previously entered into in obedience to federal commands made under a valid federal law rooted in the war power. It seems to me that the Court's holding today can be justified if at all only by adopting the holding of the Wisconsin Supreme Court in this case. That court supported the state penalty imposed on petitioner by concluding that the National War Lanor Board's action was ultra vires. Its reasoning was that national war powers had 'ended' in 1946. 252 Wis. 549, at page 560, 32 N.W.2d 417. But in the Ludecke case this Court held those powers still existed in 1947. The result here is all the more inexplicable when it is considered that wholesale invalidation of those federally authorized contracts could result in serious industrial conflicts at a time when industrial relationships were extremely strained due to the transition from a war to a peace economy. Woods v. Cloyd W. Miller Co., 333 U.S. 138, 144, 68 S.Ct. 421, 424. 44 3. I suppose it cannot be denied that congressional authority to force contracts under the war power carries with it authority to provide that (at least during the existence of the war power) the obligations assumed under those contracts should be faithfully observed and that the contracts should be invulnerable to state attack. In this view after the War Labor Board ceased to exist and before peace had been officially declared, Congress under the war power doubtless could have made it possible under enumerated contingencies for states to invalidate contracts such as this one. But no suggestion has been made that any statutory language of Congress can be stretched far enough to find such congressional intent. Since no such intent has been manifested, it seems fair to assume that Congress intended that such contracts should remain immune from state attack and continue in force unless terminated under their valid provisions. I would therefore hold that petitioner was obligated to continue to observe the terms of the contract until terminated according to its provisions. 45 The contract had not terminated when the War Labor Board ceased to exist. It had been given continued vitality under its own original terms, terms which must be interpreted under controlling federal law authorizing the contract's creation. I may assume at this point that the contract was invulnerable to state impairment or nullification only because of congressional authority stemming from the war power. Even so and despite the dissolution of the War Labor Board, I think the state was without power to penalize petitioner for observance of the contract, at least during the period in which the war had not officially ended. II. 46 It is apparent that the Wisconsin statute as here applied deprives petitioner and his employees of a substantial federal right if § 8(3) of the National Labor Relations Act3 authorized union membership maintenance agreements without regard to contrary state policies. For given that interpretation of § 8(3), the Wisconsin Act would not only impair collective bargaining rights protected by § 8(3);4 it would also stand 'as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.' Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 542, 65 S.Ct. 1373, 1375, 89 L.Ed. 1782; Bethlehem Steel Co. v. New York Labor Board, 330 U.S. 767, 775-776, 67 S.Ct. 1026, 1031, 91 L.Ed. 1234. 47 The Wisconsin Employment Relations Board began proceedings against the petitioner eleven years after passage of the National L bor Relations Act. During that entire eleven-year period it seems to have been generally assumed that § 8(3) was an unequivocal federal authorization for collective bargaining provisions of the type here made. This Court had noticed that such provisions were 'frequent subjects of negotiation between employers and employees,' and had strongly indicated that it was an unfair labor practice for an employer to refuse to bargain concerning them. National Licorice Co. v. National Labor Relations Board, 309 U.S. 350, 360, 60 S.Ct. 569, 575, 576, 84 L.Ed. 799. Both the courts and the National Labor Relations Board have held that efforts of employers to frustrate the right of unions to bargain for exclusive union employment constituted a violation of the federal Act for which employers could be held accountable.5 48 The action of the United States Department of Labor and the National War Labor Board in forcing this petitioner to accept a maintenance of membership provision in its collective bargaining agreement was not the result of an isolated or haphazard interpretation of § 8(3) of the National Labor Relations Act. The action forced upon petitioner was pursuant to a thoroughly considered and well-established policy of the National War Labor Board.6 Both the National War Labor Board and the conciliation division of the United States Department of Labor were charged with special duties in regard to labor disputes by the War Labor Disputes Act of June 25, 1943, 57 Stat. 163, 50 U.S.C.Appendix, §§ 1501—1511, 50 U.S.C.A.Appendix, §§ 1501—1511. And the War Labor Disputes Act required both these federal agencies to conform to the provisions of the National Labor Relations Act. In order that these government agencies might be better able to carry out their statutory duty of conforming to the National Labor Relations Act, an interdepartmental committee was established. It consisted of representatives of the National Labor Relations Board, the Department of Labor, and the National War Labor Board. This committee was vested with power to discuss and consider policy questions and other problems relating to administration of the duties of the National Labor Relations Board and the National War Labor Board. This power was exercised. Rep.N.L.R.B. 74 (1943). 49 As early as April, 1942, the National War Labor Board in the Little Steel Companies' controversy, 1 War Lab.Rep. 325, asserted its power to require that contracts for maintenance of union membership be inserted in collective bargaining agreements. It reached the conclusion, see pp. 354—356, that such collective bargaining provisions were valid because they fell within the proviso of § 8(3) of the National Labor Relations Act. From then on until 1945, when its last decisions were made, the National War Labor Board continued to require maintenance of membership contracts.7 50 The most extensive discussion of the question directly involved in this case occurred in the National War Labor Board's opinion in Greenebaum Tanning Co., 10 War Lab.Rep. 527. Greenebaum Tanning Co., a Wisconsin business, was engaged in interstate commerce and therefore was covered by the National Labor Relations Act. In the Greenebaum case, the National War Labor Board had to decide whether it could enforce a maintenance of union membership contract in Wisconsin contrary to the provisions of the very Wisconsin statute relied on by the Wisconsin Board in this case. It was decided over the strenuous objection of the company that the National War Labor Board had power to enforce contracts such as petitioner made here, despite the conflicting Wisconsin statute.8 The Board found its power to override the state law in the war powers of the President, the War Labor Disputes Act, and the National Labor Relations Act. The National War Labor Board pointed out in the Greenebaum decision that, at the request of the President of the United States, it had first considered with the National Labor Relations Board the questions of the power of these Boards in cases such as the Greenebaum case. In holding that § 8(3) of the National Labor Relations Act granted the employers and employees the right to make maintenance of union membership agreements, the Board at p. 543 stated: 'The Board is satisfied that, were it not for the existence of the war emergency, the employees involved in this case would have had the right to demand maintenance of membership in favor of the designated representative of a majority of employees. This right is granted to the employees under the National Labor Relations Act, and is a right which could be enforced in peacetime by strike. If the Wisconsin Employment Peace Act requires more than a majority of employees to vote for maintenance of membership under those circumstances, it must be subordinated to the provisions of the National Labor Relations Act.' 51 The foregoing is evidence that up to the time the Taft-Hartley Act was passed by Congress in 1947, § 8(3) of the National Labor Relations Act had been accepted by government agencies as an unequivocal authorization for maintenance of union membership contracts. The Taft-Hartley Act expressly granted the states more leeway in regard to enforcement of their own policies as to contracts of the type here involved. 61 Stat. 136, 151, 29 U.S.C. § 164, 29 U.S.C.A. § 164. And the National Labor Relations Board has now construed the new federal Act as precluding such contracts to the same extent that they are precluded by state law.9 But it is significant that this interpretation rested entirely on the language and legislative history of the Taft-Hartley Act. The Board did not indicate any belief that this phase of the new Taft-Hartley Act was a mere clarification of the old Act. 52 Thus, up to 1943, when petitioner originally made this contract, and up to 1946 when it was automatically renewed, all indications were that § 8(3) authorized the type of contract which federal authorities practically commanded petitioner to accept. There seemed to be no reason then why petitioner or any other employer should anticipate that § 8(3) would be construed to permit states to nullify collective bargaining rights which that section was generally supposed to have recognized. It is apparent from this record that petitioner entered into the contract and permitted its automatic renewal in the belief that § 8(3) deprived the state of power to enforce its policy and that petitioner's reluctant action was due to pressure incident to the then accepted interpretation of § 8(3). 53 Nevertheless, the Court now, after § 8(3) is no longer the law, gives it an entirely new and apparently wholly unanticipated interpretation. hether such new interpretation will affect the past conduct of any persons other than the parties to this action we do not know. We do know that a new interpretation will impose penalties on this employer for conduct pressed upon it by federal labor authorities under authority of the federal Act. 54 The new interpretation given § 8(3) by the Court rests on the conclusion that the legislative history of the Act shows that Congress intended to leave states free to bar the type of contract here involved. The committee reports and legislative comments on the national Act set out in the Court's opinion do lend strong support to this contention. In the light of this legislative history, I would join in the Court's interpretation of § 8(3) if we were interpreting that section on a clean slate. But we are not. The section has a history of administrative interpretation counter to the one that the Court gives it today. The language of § 8(3)10 is reasonably susceptible of the interpretation the section was given by the Conciliation Division of the United States Department of Labor and by the National War Labor Board, an interpretation to which the National Labor Relations Board appears to have assented. And, as previously pointed out, the National Labor Relations Board held this very petitioner guilty of an unfair labor practice for its refusal to bargain with its Wisconsin employees on their demand for a closed shop. Algoma Plywood Co., supra at 994, 998. This N.L.R.B. finding was in 1940, a year after the passage of the Wisconsin Act here held controlling. I think a change in the interpretation of § 8(3) should not be made at this late date, when the section is no longer the law, merely to invalidate a contract made under federal compulsion and founded on a justifiable belief that § 8(3) authorized the contract. I would not make a trap of this settled administrative interpretation by subjecting this employer to penal damages for his good faith reliance on it. See National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 123, 64 S.Ct. 851, 856, 857, 88 L.Ed. 1170. 55 I would reverse this judgment. 1 'Sec. 10. (a) The Board is empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice (listed in section 8) affecting commerce. This power shall be exclusive, and shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, code law, or otherwise.' 2 Although some language in the Greenebaum opinion seems to point to an interpretation of § 8(3) inconsistent with its legislative history, see 10 War Lab.Rep. at 542—43, the Board adopted as its own the conclusion of its General Counsel, Mr. Lloyd K. Garrison, reached in a full-dress opinion which reviewed that history. 10 War Lab.Rep. at 541. The General Counsel had said: 'The National Labor Relations Act does not preclude a government agency from ordering maintenance of membership in suitable cases for the purpose of settling disputes and stabilizing industrial relations in time of war.' 12 War Lab.Rep. ix, xxii. The next two cases ordering a maintenance-of-membership contract which would not have been permitted by State law did not mention the National Labor Relations Act. Fairbanks, Morse & Co., 11 War Lab.Rep. 217; Vilter Mfg. Co., 11 War Lab.Rep. 332. In later cases, the Board adhered to its reliance upon the war power. U.S. Vanadium Corp., 13 War Lab.Rep. 527; Ingalls Iron Works Co., 17 War Lab.Rep. 190; Cudahy Bros. Co., 19 War Lab.Rep. 124. 3 The significance of the War Labor Board's determination of the impact of federal power on State law must be viewed in the light of the fact that it was an agency of the War Administration organized not to interpret the Constitution but to prevent interruption of production. See Exec. Order No. 9017, 50 U.S.C.A.Appendix, § 1507 note, 7 Fed.Reg. 237. That the two roles are quite distinct is illustrated by the policy of the War Labor Board of the First World War which outlawed 'yellow-dog' contracts for the duration of that war, thereby in effect nullifying this Court's then recent decision in Hitchman Coal & Coke Co. v. Mitchell, 245 U.S. 229, 38 S.Ct. 65, 62 L.Ed. 260, L.R.A. 1918C, 497, Ann.Cas. 1918B, 461. See Smith & Wesson Co., War Lab.Bd. Docket No. 273; Gregg, The National War Labor Board, 33 Harv.L.Rev. 39, 54. The difference in roles is again emphasized by the ruling of the War Labor Policies Board of 1918 that all Government cont acts should contain a clause prohibiting the use of child labor, although Hammer v. Dagenhart, 247 U.S. 251, 38 S.Ct. 529, 62 L.Ed. 1101, 3 A.L.R. 649, Ann.Cas. 1918E, 724, invalidating such a child-labor provision, was decided within a few weeks after that Board was established. See 6th Ann.Rep. of the Secretary of Labor 114 (1918); 7th Ann.Rep. of the Secretary of Labor 126 (1919); Report on International Labor Standards 43 (prepared in 1918 by the War Labor Policies Board, undated). 4 'Sec. 10. (a) The Board is empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice (listed in section 8) affecting commerce. This power shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, law, or otherwise: Provided, That 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.' 1 The dire consequences of a violation of a Board order is illustrated by United States v. Montgomery Ward & Co., 7 Cir., 150 F.2d 369. This Court granted certiorari and ordered the judgment vacated on the ground that the cause had become moot. Montgomery Ward & Co. v. United States, 326 U.S. 690, 66 S.Ct. 140, 90 L.Ed. 406. In this case Montgomery Ward refused to carry out an order of the War Labor Board. One of the subjects of the order was a maintenance of membership clause similar to the one involved in this case. The action in this Montgomery Ward case was brought by the United States to test the legality of an order of the President of the United States directing seizure of the properties of Montgomery Ward because of the refusal of that company to obey the Board' order. The Court of Appeals upheld the legality of the seizure order. See also National War Labor Board v. Montgomery Ward & Co., 79 U.S.App.D.C. 200, 144 F.2d 528; and United States v. Montgomery Ward & Co., D.C., 58 F.Supp. 408. 2 The Wisconsin trial court refused to impose this 'penalty' on petitioner. It found the 'equities' on petitioner's side. The State Supreme Court held that the compulsion under which petitioner had acted could not relieve him from the state penalty which was imposed to 'retard the employer's inclination to yield to this compulsion in the future.' 252 Wis. 549, 561, 32 N.W.2d 417, 423. In other words the penalty was imposed as a warning to petitioner and others that continued complaince with the federal policy would subject them to penalties in Wisconsin. 3 See note 10, 69 S.Ct. 597. 4 See Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employ ment Relations Board, 315 U.S. 740, 751, 62 S.Ct. 820, 826, 86 L.Ed. 1154. 5 National Labor Relations Board v. Reed & Prince Mfg. Co., 1 Cir., 118 F.2d 874, 883; Peninsular & Occidental S.S. Co. v. National Labor Relations Board, 5 Cir., 98 F.2d 411, 414. In 1944 the National Labor Relations Board held that an employer was guilty of an unfair labor practice where it refused to negotiate with the union's collective bargaining representative on the subject of a contract providing that none but union members should be employed. The Board held that such a refusal was an unfair labor practice. In the Matter of Tempa Electric Co., 56 N.L.R.B. 1270, 1273. And see Algoma Plywood Co., 26 N.L.R.B. 975, 994. 6 See for example, Little Steel Companies, 1 War Lab.Rep. 325; and Industrial Cotton Mills Co., Inc., 25 War Lab.Rep. 136. 7 Douglas Aircraft Co., 28 War Lab.Rep. 51 (1945). 8 In all of the cases below, the War Labor Board required insertion of the maintenance of membership clause despite local state statutes which prohibited such agreements. Vilter Mfg. Co., 11 War Lab.Rep. 332; U.S. Vanadium Corp., 13 War Lab.Rep. 527; Ingalls Iron Works Co., 21 War Lab.Rep. 27; St. Joe Paper Co., 25 War Lab.Rep. 421. 9 Giant Food Shopping Center, Inc. (1948), 77 N.L.R.B. (No. 133). The Taft-Hartley Act cannot justify this order of the Wisconsin Board because the Act was passed after the order was issued. 10 'Sec. 8. It shall be an unfair labor practice for an employer— '(3) By discrimination in regard to hire to tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this Act, * * * or in any code or agreement approved or prescribed thereunder, or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization * * * to require as a condition of employment membership therein, if such labor organization is the representative of the employees as provided in section 9(a), in the appropriate collective bargaining unti covered by such agreement when made.' 49 Stat. 449, 452, 29 U.S.C. § 158(3), 29 U.S.C.A. § 158(3).

910

336 U.S. 281 69 S.Ct. 575 93 L.Ed. 680 FOLEY BROS., Inc., et al.v.ILARDO. No. 91. Argued Dec. 15, 1948. Decided March 7, 1949. Mr. Robert L. Stern, of Washington, D.C., for petitioners. Mr. Chester A. Lessler, of New York City, for respondent. Mr. Justice REED delivered the opinion of the Court. 1 This case presents the question whether the Eight Hour Law1 applies to a contract between the United States and a private contractor for construction work in a foreign country. 2 This Act provides that 'Every contract made to which the United States * * * is a party * * * shall contain a provision that no laborer or mechanic doing any part of the work contemplated by the contract, in the employ of the contractor or any subcontractor * * * shall be required or permitted to work more than eight hours in any one calendar day upon such work; * * *.' 37 Stat. 137, 40 U.S.C. § 324, 40 U.S.C.A. § 324. 3 Penalties are specified for violations. In 1940 the prohibition against workdays of longer than eight hours was modified as follows: 'Notwithstanding any other provision of law, the wages of every laborer and mechanic employed by any contractor or subcontractor engaged in the performance of any contract of the character specified in sections 324 and 325 of this title, shall be computed on a basic day rate of eight hours per day and work in excess of eight hours per day shall be permitted upon compensation for all hours worked in excess of eight hours per day at not less than one and one-half times the basic rate of pay.' 54 Stat. 884, 40 U.S.C. § 325a, 40 U.S.C.A. § 325a. 4 In 1941 petitioners contracted on a cost-plus basis to build certain public works on behalf of the United States in the East and Near East, particularly in Iraq and Iran. Petitioners agreed in the contract to 'obey and abide by all applicable laws, regulations, ordinances, and other rules of the United States of America.' The provisions of the Eight Hour Law were not specifically included in the contract. In 1942 petitioners hired respondent, an American citizen, to work on the construction projects as a cook at $60 a week. This contract of employment contained no provision concerning hours of work or overtime. Pursuant to the contract, respondent went to Iraq and Iran where he frequently worked more than eight hours a day during the years 1942 and 1943. 5 Upon the refusal of his request for overtime pay for work in excess of eight hours per day, he brought suit against petitioners in the Supreme Court of New York, claiming that the Act entitled him to one and one-half times the basic rate of pay for such work. The court denied petitioners' motions to dismiss the case and for a directed verdict thereby overruling the contention that the Act did not apply to contracts which were to be performed in foreign countries. Judgment was entered on a jury verdict for respondent. The Appellate Division reversed on the ground that the Eight Hour Law as amended did not confer a right of action on an employee for overtime pay. 272 App.Div. 446, 71 N.Y.S.2d 592. Consequently it did not consider the question now before us. The New York Court of Appeals reversed, holding that the Act applied to this contract. 297 N.Y. 217, 78 N.E.2d 480, 484. Referring to the language of the statute quoted above, it concluded, 'Words of such inclusive reach cannot properly be read to exclude contracts for government jobs abroad.' We granted certiorari to settle this important question concerning the scope of the Eight Hour Law. 335 U.S. 808, 69 S.Ct. 35. 6 Since the question is one of statutory interpretation, the Act as it now exists, 40 U.S.C. §§ 321—326, 40 U.S.C.A. §§ 321 326, is our starting point. In pertinent part it provides for the limitation to eight hours per day of the working time of laborers and mechanics employed by the government or any contractor thereof on a public work of the United States. § 321. The same section makes it unla ful to require or permit work in excess of eight hours per day except in extraordinary emergencies. An intentional violation of this mandate is made a misdemeanor punishable by fine or imprisonment or both. § 322. The insertion in 'every contract' made by or on behalf of the United States of this restriction on hours of work is required by § 324. The contracts must stipulate a monetary penalty for violation, which penalty takes the form of a withholding by the government of moneys otherwise due the contractor under the terms of the contract. § 324. Finally the restriction is lifted as to employees of private contractors by § 325a, supra, 336 U.S. 282, 69 S.Ct. 576, on condition that hours worked in excess of eight be paid for at the overtime rate. 7 The question before us is not the power of Congress to extend the Eight Hour Law to work performed in foreign countries. Petitioner concedes that such power exists. Cf. Blackmer v. United States, 284 U.S. 421, 52 S.Ct. 252, 76 L.Ed. 375; United States v. Bowman, 260 U.S. 94, 43 S.Ct. 39, 67 L.Ed. 149. The question is rather whether Congress intended to make the law applicable to such work. We conclude, for the reasons expressed below, that such was not the intention of the legislators. 8 First. The canon of construction which teaches that legislation of Congress, unless a countrary intent appears, is meant to apply only within the territorial jurisdiction of the United States, Blackmer v. United States, supra, 284 U.S. at 437, 52 S.Ct. at page 254, 76 L.Ed. 375, is a valid approach whereby unexpressed congressional intent may be ascertained It is based on the assumption that Congress is primarily concerned with domestic conditions. We find nothing in the Act itself, as amended, nor in the legislative history, which would lead to the belief that Congress entertained any intention other than the normal one in this case. The situation here is different from that in Vermilya-Brown Co. v. Connell, 335 U.S. 377, 69 S.Ct. 140, where we held that by specifically declaring that the Act covered 'possessions' of the United States, Congress directed that the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., applied beyond those areas over which the United States has sovereignty and was in effect in all 'possessions.' This Court concluded that the leasehold there involved was a 'possession' within the meaning of the Fair Labor Standards Act. 9 There is no language in the Eight Hour Law, here in question, that gives any indication of a congressional purpose to extend its coverage beyond places over which the United States has sovereignty or has some measure of legislative control. There is nothing brought to our attention indicating that the United States had been granted by the respective sovereignties any authority, legislative or otherwise, over the labor laws or customs of Iran or Iraq. We were on their territory by their leave, but without the transfer of any property rights to us. 10 The scheme of the Act itself buttresses our conclusion. No distinction is drawn therein between laborers who are aliens and those who are citizens of the United States. Unless we were to read such a distinction into the statute we should be forced to conclude, under respondent's reasoning, that Congress intended to regulate the working hours of a citizen of Iran who chanced to be employed on a public work of the United States in that foreign land. Such a conclusion would be logically inescapable although labor conditions in Iran were known to be wholly dissimilar to those in the United States and wholly beyond the control of this nation. An intention so to regulate labor conditions which are the primary concern of a foreign country should not be attributed to Congress in the absence of a clearly expressed purpose. See Attorney General Stone's conclusion to this effect in 34 Op.Atty.Gen. 257, where he stated that the law did not apply to alien laborers engaged in altering the American Embassy in London. The absence of any dis inction between citizen and alien labor indicates to us that the statute was intended to apply only to those places where the labor conditions of both citizen and alien employees are a probable concern of Congress. Such places do not include foreign countries such as Iraq and Iran.2 11 Second. The legislative history of the Eight Hour Law reveals that concern with domestic labor conditions led Congress to limit hours of work. The genesis of the present statute was the Act of June 25, 1868, 15 Stat. 77, which was apparently aimed at unemployment resulting from decreased construction in government navy yards. Congressional Globe, 40th Cong., 2d Sess., Part I, p. 335. In 1892, when the coverage of this Act was extended to employees of government contractors and when criminal penalties were added, 27 Stat. 340, the considerations before Congress were domestic unemployment, the influx of cheap foreign labor, and the need for improved labor conditions in this country. H.R.Rep. 1267, 52d Cong., 1st Sess. The purpose of the new legislation was to remedy the defects in the Act of 1868. 23 Cong.Rec. 5723. 12 The Act was amended in 1912, 37 Stat. 137, to include 'every contract.' (Italics supplied.) The insertion of the word 'every' was designed to remedy a misinterpretation according to which the Act did not apply to work performed on private property by government contractors. 48 Cong.Rec. 381, 385, 394—95. Nothing in the legislative history supports the conclusion of respondent and the court below that 'every contract' must of necessity, by virtue of the broadness of the language, include contracts for work to be performed in foreign countries.3 A contrary inference must be drawn, we think, from a 1913 amendment which extended the law to cover persons employed 'to perform services similar to those of laborers and mechanics in connection with dredging or rock excavation in any river or harbor of the United States or of the District of Columbia.' 37 Stat. 726, 40 U.S.C. § 321, 40 U.S.C.A. § 321. This Court had held that such dredgers were not covered by the phrase 'laborers and mechanics' in the previously existing law. Ellis v. United States, 206 U.S. 246, 27 S.Ct. 600, 51 L.Ed. 1047, 11 Ann.Cas. 589. In its attempt to secure equality of treatment for dredgers on the one hand and laborers and mechanics on the other, Congress would hardly have intended for coverage over the latter class to extend to the far corners of the globe while coverage over the former was limited to work performed in rivers or harbors 'of the United States or of the District of Columbia.' 13 The 1940 amendment which permitted work in excess of eight hours per day upon payment of overtime, 54 Stat. 884, passed without any discussion indicative of geographical scope. 86 Cong.Rec. 11216—11217. 14 Third. The administrative interpretations of the Eight Hour Law in its various phases of development afford no touchstone by which its geographic scope can be determined. Executive Order No. 8623 of December 31, 1940, 40 U.S.C.A. § 321 note, 3 CFR Cum.Supp. 850, issued pursuant to § 326 of the Act, suspended the law as to laborers and mechanics employed directly by the government at Atlantic bases leased from Great Britain. Such a suspension indicated, to be sure, a conclusion on the part of the President that the statute applied, or might apply, to these bases. Such action, however, may well have been predicated on the premise that the leases with the provisio § discussed in our Vermilya-Brown decision were sufficiently subject to our control so that the Eight Hour Law would apply to them. Though numerous Executive Orders have been issued which suspend the operation of the Act in the United States, Alaska, Hawaii, Midway Island, Wake Island, etc., we have not been able to find, nor has our attention been directed, to any orders purporting to suspend its operation in countries not subject to our legislative control.4 The order deserves no weight as an administrative determination of the Act's applicability to localities unquestionably and completely beyond the direct legislative competence of the United States. 15 It is true that in 1905 Attorney General Moody, in a letter to the Secretary of War, expressed the opinion that the Eight Hour Law applied to public works to be constructed in the Canal Zone. 25 Op.Atty.Gen. 441. For the purpose of his opinion he treated the Canal Zone as foreign territory. 25 Op.Atty.Gen. at page 444. No distinction was drawn between citizen and alien laborers. If we accept the Attorney General's assumption as to the status of the Canal Zone,5 his opinion is in line with respondent's contention that the law is applicable to work performed in foreign Convention, proclaimed on February 26, too much. Although Attorney General States had been granted all the rights, would flow from his interpretation, it the Zone. for an act of Congress to regulate the et seq. government project there. Attorney General the inclusion in every government public-works advised the State Department that the the Secretary of the Treasury has approved workers engaged in altering the American Embassy in London. 34 Op.Atty.Gen. 257. Since the statute contains no distinction between laborers based on citizenship, Attorney General Stone's reasoning that aliens are not covered points to the conclusion that the statute does not apply to contracts which are to be performed in foreign countries. The Comptroller General has expressed agreement with this conclusion by stating that 'the Eight Hour Law of June 19, 1912, was not intended to and does not apply to contracts necessarily entered into on behalf of the United States in foreign countries which may require or involve the employment of foreign laborers or mechanics in their performance.' 19 Comp.Gen. 516, 518.6 16 Although the statute expressly requires the inclusion in every government public-works contract of the eight-hour provision, the Secretary of the Treasury has approved a standard form for construction contracts which contains eight-hour provisions but which provides that the use of the form will not be required in foreign countries. U.S. Standard Form No. 23, 41 U.S.C.App. § 12.23, pp. 4520, 4522, 41 U.S.C.A.Appendix, § 12.23. The inclusion of such provisions is also required by War Department Procurement Regulation No. 3, par. 346, in 'all contracts subject to the provisions of the Eight Hour Law.' Yet neither the instant contract nor others covering off-continent operations contain the Eight Hour Law clause.7 Similarly the Department of State 'does not consider it legally necessary to include provisions of the Eight Hour Law in contracts to be performed in foreign countries.' Letter of November 8, 1948, signed by the Acting Legal Adviser 'For the Acting Secretary of State,' to the Attorney General. 17 We conclude that administrative interpretations of the Act, although not specifically directed at the precise problem before us, tend to support petitioners' contention as to its restricted geographical scope. 18 Since we decide that the Eight Hour Law is inapplicable to a contract for the construction of public works in a foreign country over which the United States has no direct legislative control, it is unnecessary to decide whether the law, either directly or via the third party beneficiary contract route, gives an employee who is covered by it a cause of action against his employer for overtime wages. 19 Reversed. 20 Mr. Justice FRANKFURTER, with whom Mr. Justice JACKSON joins, concurring: 21 Because the decision in Vermilya-Brown Co. v. Connell, 335 U.S. 377, 69 S.Ct. 140, was one of statutory interpretation, I would feel bound by it were it not still open because rendered at this Term. If I felt bound by it, I would be obliged to dissent in this case. 22 We are here confronted by a statute which in terms covers 'Every contract made to which the United States * * is a party'. 37 Stat. 137, 40 U.S.C. § 324, 40 U.S.C.A. § 324. Yet the Court construes it as inapplicable even to the work of a citizen of the United States under a contract between the United States and a corporation domiciled in the United States because 'An intention so to regulate labor conditions which are the primary concern of a foreign country should not be attributed to Congress in the absence of a clearly expressed purpose.' For this conclusion reliance is put upon an opinion of Attorney General Stone which refused to interpret the statute as applying to work done upon the American Embassy at London on the ground that 'the enforcement of the statutory provision would disturb the agreements entered into between contractors and laborers and mechanics in a foreign country.' 34 Op.Atty.Gen. 257, 260. Support is also found in an opinion of the Comptroller General which reaches a similar conclusion on the basis that 'such an application of the statute might easily lead to serious difficulties in effecting contracts for necessary services in countries where social and business conditions and customs differ widely from our own.' 19 Comp.Gen. 516, 518. 23 Such considerations, I agree, ought properly to take precedence over the literal language of the Eight Hour Law as guides to its interpretation. See American Security & Trust Co. v. Commissioners of District of Columbia, 224 U.S. 491, 32 S.Ct. 553, 56 L.Ed. 856. We should not, in the absence of an explicit declaration of policy, assume that Congress meant to impose our domestic standards of employment upon peoples who are not generally subject to the regulatory power of Congress. See 29 Op.Atty.Gen. 488, 492, 493. But I could not regard these considerations as controlling if I felt bound by the decision of the Court in the Vermilya-Brown case. That case extended to foreign conditions of labor provisions of the Fair Labor Standards Act indistinguishable in effect from those of the Eight Hour Law, and it was an extension more difficult than that which the Court avoids here both because not apparently compelled by the literal terms of the Fair Labor Standards Act and because that Act is not confined in its application to contracts to which the United States is a party. Uniformity in the terms of Government contracts, indeed, is a matter so much more nearly within the usual scope of Congressional concern that Attorney General Moody required no explicit showing of Congressional purpose to conclude that the Eight Hour Law applied to contractors for the construction of the Panama Canal, even upon the assumption that the Canal Zone was to be regarded as foreign territory. 25 Op.Atty.Gen. 441. 24 But there are other re pects in which the Vermilya-Brown case presented more compelling reasons than we have here for refusing to attribute to Congress an intention to regulate the conditions of work of foreign employees. Here we are required only to construe a phrase, 'Every contract made to which the United States * * * is a party,' which is peculiar to its own context. In the Vermilya-Brown case, however, the Court held that our leased bases fell within the term 'possessions,' and that is a term which Congress has used at least sixty-eight times. See Vermilya-Brown Co. v. Connell, dissenting opinion, 335 U.S. at page 398, 69 S.Ct. at page 151, note 11. And as illustrating the readiness with which the Vermilya-Brown case can be regarded as controlling the interpretation of all the statutes in which the term occurs, see Spelar v. United States, 2 Cir., 171 F.2d 208, applying the Federal Tort Claims Act to a leased base in Newfoundland. The Vermilya-Brown case, moreover, brushes aside official apprehensions about the interference of the United States in foreign conditions of labor far more serious than those which have influenced judgment here. All we have to guide us in the present case are general statements in opinions of two Attorneys General and a Comptroller General which required no specialized information about working conditions abroad, the knowledge that the standard contracts approved by the Secretary of the Treasury and the War Department are consistent with those opinions, and a letter from the State Department which says merely that the Department 'does not consider it legally necessary to include provisions of the Eight Hour Law in contracts to be performed in foreign countries.' 25 In the Vermilya-Brown case, however, the Court had before it a letter on behalf of the Secretary of State which said: '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 future be sought.' 26 The State Department speaks authoritatively on the international responsibility of our Government in observing agreements with other nations, and thus it spoke in this letter. It also has knowledge, to which courts cannot pretend, of the bearing of such observance on propitious negotiations of future agreements. The letter reflects that knowledge. Even cloistered judges, however, need not be ignorant of the fact that this country has not exhausted its interest in securing bases on territory not ours. 27 Our decision in the Vermilya-Brown case in disregard of this weighty concern of the Secretary of State was followed by a petition for rehearing impressively supported by all the actively responsible executive officers of the Government. The State Department reiterated its view that the inclusion of the leased bases among the 'possessions' of the United States was 'unfortunate' and added that the Department 'does not share the assurance of the Court that the house of assembly of Bermuda or other colonial legislatures might not undertake legislation similar to the Fair Labor Standards Act to control labor relations on the bases. It is at least worthy of note in this connection that administrative difficulties have arisen in the bases by reason of the application to contractors' employees of workmen's compensation laws of both the United States and the colonies concerned.' 28 The petition for rehearing also brought to the attention of the Court a letter from the Secretary of the Army which read in part as follows: 'During the past nine years of employment experience in foreign countries, Army contracting officers have discovered (whether the employment was handled directly or through a CPFF contractor) that in hiring native workmen the local overnment in many countries will impose maximum wage standards which dare not be violated. These standards are sometimes fixed by statute or regulation with the force of statute, and other times by policy which has the practical effect of law. Such governments explain that to pay native workmen according to American wage standards would seriously disrupt the local economy. Also, in many industrially undeveloped countries, local officials advise that 'excessive' wages to common laborers would jeopardize the availability of such laborers and impose serious police problems upon the state. (It should be noted that the social and economic structure of many areas, organized along tribal lines, precludes a direct dealing with individual laborers.) It appears doubtful that the Court has been sufficiently apprised of this special problem. The payment of statutory overtime to American personnel at contractors' overseas construction sites will be a minor problem in comparison with paying of statutory minimum wages and overtime to native workmen in the face of militant opposition by foreign governments. (It should be noted that among American personnel all laborers and mechanics, skilled and semi-skilled artisans and craftsmen, have always been paid on hourly rates with overtime benefits far exceeding statutory requirements * * *.)' 29 The Acting Secretary of the Navy expressed similar views: 'It has been and is the policy of this Department to employ local labor at the leased bases to the maximum extent practicable and to make its wage and labor practices with respect thereto conform as nearly as possible to the usual wage and labor practices of the particulr locality. Application of the Fair Labor Standards Act to the particular areas involved may well create conditions which would adversely affect the cooperation heretofore given Navy contractors by local authorities. The continued cooperation of such authorities is, of course, highly desirable.' The Wage and Hour Administrator, who is ultimately responsible for enforcing the Vermilya-Brown decision, wrote that 'even if I should be able to reach sound conclusions as to the application of the Act in these areas, I cannot help but foresee fundamental administrative difficulties in attempting to apply the Act in 'possessions' over which the United States does not exercise full sovereign rights, especially where foreign employers and alien labor are involved.' In view both of the Administrator's very special relation to this matter and of the persuasiveness of his views, his letter is printed as an Appendix to this opinion. 30 If, in the face of these statements by executive officers charged with, and experienced in, the administration of our leased bases, the Court could reach a contrary interpretation of the broad term 'possessions,' it must be manifest why I could not, were I bound by precedent, join in reading the narrow phrase 'Every contract made to which the United States * * * is a party' in a way which departed from its literal terms when the only reason for such a departure is reluctance to attribute to Congress an intention to interfere in 'labor conditions which are the primary concern of a foreign country'. Appendix 31 U.S. Department of Labor Wage and Hour and Public Contracts Divisions 32 Washington 25, D.C., December 23, 1948. 33 The Honorable Phillip B. Perlman, Solicitor General of the United States, Department of Justice, Washington 25, D.C. 34 Dear Mr. Perlman: By letter dated December 22, 1948, you advise that you intend to support a petition for rehearing to be filed in connection with the recent decision of the Supreme Court in Vermilya-Brown Company v. Connell, 335 U.S. 377, 69 S.Ct. 140. You state that you will present to the Court the views of the Departments of State, Army, and Navy. On behalf of these Departments, and the Department of Justice, you will urge the Court to reconsider its holding that the word 'possession,' as used in the phrase 'State * * * Territory or possession' in Section 3(c) of the Fair Labor Standards Act, 29 U.S.C.A. § 203(c), is not a term of art, and that the Bermuda defense area leased to us in 1940 by Great Britain is within the coverage of the statute as a 'possession.' You request that I forward to you my views concerning the effect which this holding may have on administration and enforcement of the Act. 35 I think it my fairly be said that my predecessors and I, in considering the territorial aspects of wage-hour coverage in the past, have proceeded on the assumption that traditional concepts of sovereign control were implicit in the meaning of the phrase, 'any Territory or possession of the United States', as that phrase is used in the Fair Labor Standards Act. In the absence of controlling court decisions, it was necessary for us to interpret the phrase for our guidance in the administration of the Act. In doing so, we not only studied the provisions of other statutes in which these terms were used and authoritative decisions of the courts construing such language in situations which were thought to be comparable, but gave particular weight to authoritative expressions of the State Department and other proper governmental agencies on the question of what areas are viewed as Territories or possessions over which the United States exercises full sovereign rights. On this basis we expressed the opinion in Interpretative Bulletin No. 2, first issued in November, 1938, and in Chapter V, Part 776, Title 29 of the Code of Federal Regulations (section 776.1(c)) which replaced this bulletin in July, 1947, that Alaska, Hawaii, Puerto Rico, the Canal Zone, Guam, Guano Islands, Samoa, and the Virgin Islands were Territories and possessions within the meaning of the Act. 36 When the question of the status of the leased bases of the type involved in the Vermilya-Brown case was first brought to our attention in 1942 and 1943, we expressed the view, in the opinions quoted in the Government's brief before the Supreme Court, that these bases were not Territories or possessions of the United States within the meaning of the Act. This view was subsequently modified after it appeared that the matter was being litigated in the courts and consultation with State Department officials indicated that that Department had made no ruling (the letter from that Department which is Appendix A to your brief not having been written at that time). This modification of our position is reflected by the following language which was used to advise inquiries: 'Until the question has been settled by court decisions, congressional or executive action, or interpretations issued by the State Department or other proper governmental agencies, the Divisions are not in a position to assert whether the Fair Labor Standards Act applies to employees working at bases leased from the British.' 37 As a result of the Supreme Court's decision in the Vermilya-Brown case, it appears that the status of a given area as a 'Territory or possession of the United States' for purposes of the Act is subject to determination on the basis of considerations other than those used by the political departments of the Government, on which we have placed particular reliance in the past. I anticipate that at least two major problems will confront me as a result of the Court's ruling. 38 First, in order to perform my statutory duties under the Act, it will be necessary for me to decide initially, pending authoritative guidance from the courts, whether other defense base areas come within the statutory language covering Territories and possessions of the United States. If, as would seem to follow from the Court's decision, I would not be aided in this by the views of the State Department as to whether such areas are Territories or possessions in the political sense, or under traditional concepts of sovereignty, I shall be called upon to enter a field of interpretation in which our previous experience with the Act offers no reliable guides, and whic may involve the meaning of international agreements on which this agency would ordinarily seek the advice of the State Department. Adequate standards for guidance in deciding such questions for purposes of administration of the Act are, in my opinion, not available to me either in the language of the statute, its legislative history, or in the Vermilya-Brown decision itself. The difficulty, in such circumstances, of reaching sound conclusions concerning coverage in bases such as Okinawa, Greece, Iceland, Canada, Newfoundland, the Philippine Islands, Tunisia, and Arabia is apparent. My position will be even more difficult in connection with classified military base areas. 39 Second, even if I should be able to reach sound conclusions as to the application of the Act in these areas, I cannot help but foresee fundamental administrative difficulties in attempting to apply the Act in 'possessions' over which the United States does not exercise full sovereign rights, especially where foreign employers and alien labor are involved. Even if such difficulties may not be insuperable, vexing problems of courts with proper jurisdiction and venue to apply the criminal and civil sanctions in such cases are, it seems to me, bound to arise if we are to undertake active enforcement in these bases. And, as you will appreciate, neither the appropriation for, nor the organization of the Wage and Hour Division were devised in contemplation of enforcement efforts in outposts such as these. 40 It has, of course, not been possible for us to explore fully these and other possible problems which might confront us as a result of the Vermilya-Brown decision, in the limited time available to us by reason of the period for filing petitions for rehearing. If the Court should grant a rehearing in the case, I shall be glad to make available to you the results of our further exploration of these questions in order that you may fully apprise the Court of my views concerning the probable effects of the present decision in terms of the over-all administration of the Fair Labor Standards Act. 41 Very truly yours, 42 Wm. R. McComb, 43 Administrator. 1 27 Stat. 340, as amended, 40 U.S.C. §§ 321—326, 40 U.S.C.A. §§ 321—326. 2 Since it is unnecessary for this decision, we do not reach a conclusion as to the precise geographic coverage of the Eight Hour Law. 3 '* * * Words having universal scope, such as 'every contract in restraint of trade,' 'every person who shall monopolize,' etc., will be taken, as a matter of course, to mean only every one subject to such legislation, not all that the legislator subsequently may be able to catch.' American Banana Co. v. United Fruit Co., 213 U.S. 347, 357, 29 S.Ct. 511, 513, 53 L.Ed. 826, 16 Ann.Cas. 1047. 4 See, however, Executive Orders 9251, 40 U.S.C.A. § 321 note, 3 C.F.R.Cum.Supp. 1216, and 9898, 40 U.S.C.A. § 321 note, 3 C.F.R.1947 Supp. 172, in which the geographic coverage of the suspensions is not specified. 5 See, however, the Isthmian Canal Convention, proclaimed on February 26, 1904, 33 Stat. 2234, whereby the United States had been granted all the rights, power and authority of a sovereign in the Zone. 6 See also 29 Op.Atty.Gen. 488, 492 et seq. 7 Illustrative contracts from which the clause is omitted are: W 1098 eng—1525, June 8, 1942 (Labrador and Baffin Island); W 1098 eng—1375, June 3, 1942 (Cuba); W 1098 eng—135 , April 24, 1942 (Bahamas); W 1098 eng—108, November 10, 1941 (North Africa and Palestine); W 1098 eng—2, August 2, 1941 (Greenland); W 258 eng—54, February 8, 1941 (Newfoundland); W 958 eng—50, February 4, 1941 (Bermuda).

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336 U.S. 342 69 S.Ct. 561 93 L.Ed. 721 OKLAHOMA TAX COMMISSIONv.TEXAS CO. OKLAHOMA TAX COMMISSION v. MAGNOLIA PETROLEUM CO. Nos. 40 and 41. Argued Nov. 19, 1948. Decided March 7, 1949. Rehearing Denied April 25, 1949. See 336 U.S. 958, 69 S.Ct. 887. Mr. R. F. Barry, of Oklahoma City, Okl., for petitioner. Mr. B. W. Griffith, of Tulsa, Okl., for The Texas Co. Mr. Robert W. Richards, of Oklahoma City, Okl., for Magnolia Petroleum Co. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 The principal question is whether a lessee of mineral rights in allotted and restricted Indian lands is immunized by the Constitution against payment of non-discriminatory state gross production taxes and state excise taxes on petroleum produced from such lands. In effect the issue is whether this Court's previous decisions in Howard v. Gipsy Oil Co., 247 U.S. 503, 38 S.Ct. 426, 62 L.Ed. 1239; Large Oil Co. v. Howard, 248 U.S. 549, 39 S.Ct. 183, 63 L.Ed. 416, and State of Oklahoma v. Barnsdall Refineries, 296 U.S. 521, 56 S.Ct. 340, 80 L.Ed. 366, invalidating such taxes as applied to like lessees, have been so undermined by later decisions, in particular Helvering v. Mountain Producers Corp., 303 U.S. 376, 58 S.Ct. 623, 83 L.Ed. 907, that they should now be overruled. 2 With certain exceptions,1 the lands from which was extracted the petroleum sought to be taxed are held in trust by the United States, pursuant to allotments made under the General Allotment Act,2 for various members of the Pottawatomie, Apache, Comanche, and Otoe and Missouria Tribes.3 All the lands are located within the State of Oklahoma and at all material times they were restricted4 against alienation by the Indian cestui owners without the consent of the Secretary of the Interior.5 He approved each of the leases now in question. The respondents Texas Company (No. 40) and Magnolia Petroleum Company (No. 41) acquired their leases before Oklahoma levied the assessments now in issue, either as original lessees or by assignment from non-Indians who were such lessees. The companies thus became owners of all right, title and interest in their respective leases, subject only to the one-eighth royalty interest reserved to the Indian lessors, and were such owners at the times of the respective assessments. It may be taken that they have operated the leases in conformity with the applicable regulations of the Department of the Interior6 and of the State of Oklahoma,7 except for the payment of the state taxes iin question.8 3 The Oklahoma gross production tax requires payment of five per cent of the gross value of production, including royalty interests. It is imposed on every person engaged in the production in Oklahoma of petroleum, crude oil or other mineral oil, and natural gas and casinghead gas. The tax is exacted in lieu of all taxes by the state and its political subdivisions on property rights in minerals and mineral rights, producing leases, machinery used in connection with any oil or gas well, the oil and gas during the tax year in which it is produced, and any investment in any leases, minerals, or other property. The statute authorizes the state board of equalization to raise or lower the rate of tax to equate the amount payable with the amount which would be payable if the general ad valorem property tax were assessed against the property of the producers subject to taxation. The board's rate changes are subject to review by the state supreme court.9 In consequence of these provisions, the tax has been construed consistently by the state courts to be a tax on the lessee's property, not an occupation or excise tax.10 4 The petroleum excise tax requires payment of one mill, formerly one-eighth of one cent,11 per barrel on every barrel of petroleum produced in Oklahoma. The statute was enacted first in 1933 to defray the expenses of administering the state's newly adopted proration law12 and has been reenacted at each subsequent session of the legislature.13 The tax, unlike the gross production tax, is construed by the Oklahoma Suprem Court as an excise tax on the production of oil. Barnsdall Refineries v. Oklahoma Tax Commission, 171 Okl. 145, 41 P.2d 918, affirmed, 296 U.S. 521, 56 S.Ct. 340, 80 L.Ed. 366. 5 In No. 40 the Oklahoma Tax Commission, petitioner here, assessed both gross production and petroleum excise taxes against the Texas Company for production, less royalties to the Indian lessors,14 during September, October and November, 1942. In No. 41 the commission likewise assessed both taxes, less royalties, on the Magnolia Company's production for various periods between June 1, 1942, and March 1, 1946. The orders were entered after the cases were consolidated for hearing before the commission and were thus heard by it. 6 In No. 40 the Texas Company paid the taxes under protest and brought suit to recover them in an Oklahoma trial court. After hearing, that court sustained the commission's demurrer to the company's amended petition and ordered it dismissed. Appeal was duly taken to the state supreme court. In No. 41, following a different statutory procedure, the Magnolia Company appealed from the assessments against it directly to that court. 7 In both cases the Supreme Court of Oklahoma, with one judge dissenting, held the assessments invalid. The decisions rested flatly on the ground that the lessee was an instrumentality of the Federal Government and as such, under prior and controlling decisions of this Court, particularly in the Large Oil, Gipsy Oil, and Barnsdall Refineries cases, supra, not subject to the taxes in question.15 In the Texas Company case the court expressly distinguished Helvering v. Mountain Producers Corp., supra, on the ground that the decision in that case related to income taxes assessed against the lessee there situated as were the lessees here. The opinion, indicating the writer's personal view that reconsideration of the earlier decisions well might be sought, nevertheless stated: 8 'But it is thought beyond the power of this court to now engage in such reconsideration, in view of the cited decisions of the higher authority which thus far wholly sustain the claim of (the Texas Company) to immunity from the tax here involved. 9 'Upon questions of federal law, citizens and their attorneys have the right to rely upon decisions of the Supreme Court of the United States, and upon such questions it is our fixed duty to follow such decisions, leaving to the United States Congress or or Supreme Court the making of the necessary changes in such legal rules.' 10 From the state supreme court's decisions16 the Oklahoma Tax Commission filed appeals in this Court. We dismissed the appeals for want of jurisdiction. But treating them as applications for certiorari,17 we granted the writs and consolidated the cases for argument. 333 U.S. 870, 68 S.Ct. 906, 907. The Solicitor General was requested to file a brief as amicus curiae. I. 11 But for the course of decision here from Choctaw, O. & G.R. Co. v. Harrison, 235 U.S. 292, 35 S.Ct. 27, 59 L.Ed. 234, decided in 1914, to State of Oklahoma v. Barnsdall Refineries, 296 U.S. 521, 56 S.Ct. 340, 80 L.Ed. 366, decided in 1936, the problems of taxation and intergovernmental immunity these cases present would seem subject to solution on well-settled or fairly obvious legal principles. 12 It has long been established that property owned by a private person and used by him in performing services for the Federal Government is subject to state and local ad valorem taxes.18 And the oil and gas produced is, of course, subject to such taxation. Indian Territory Illuminating Oil Co. v. Board of Equalization of Tulsa County, Okl., 288 U.S. 325, 53 S.Ct. 388, 77 L.Ed. 812. Both by the substance of the statute's explicit provisions and by the consistent construction of the Oklahoma Supreme Court,19 that state's so-called gross production tax in its presently applicable form is a tax on the lessee's property used in carrying out its contractual obligations with the Federal Government and on the oil and gas during the tax year in which it was produced. The tax is levied expressly in lieu of all property taxes which the state might constitutionally impose in ad valorem form, the gross production levy being a tentative measure for the value of that property. To guard against that measure's being utilized to lay in effect a tax not actually of that character, the state board of equalization is authorized, indeed is required upon complaint, to equate the amount payable with what would be payable if the general ad valorem tax were assessed against the property of the producing lessees subject to taxation, with provision for judicial review of the board's action. 13 Unembarrassed by some of this Court's prior decisions, therefore, Oklahoma's so-called gross production tax would seem to be sustained by the well-established line of decisions cited above.20 14 Moreover, even if the status of respondents as federal instrumentalities, in the sense in which they use the term, were fully conceded, it seems difficult to imagine how any substantial interference with performing their functions as such in developing the leaseholds could be thought to flow from requiring them to pay the small tax Oklahoma exacts to satisfy their shares of the state's expense in maintaining and administering its proration program. That system works for respondents' benefit in performing their producing function, as it does for the benefit of all other producers, by stabilizing production, eliminating waste, and preventing runaway competition in an industry notorious for those evils in the absence of some such control. Cf. Railroad Commission of Texas v. Rowan & Nichols Oil Co., 310 U.S. 573, 60 S.Ct. 1021, 84 L.Ed. 1368; Republic Natural Gas Co. v. Oklahoma, 334 U.S. 62, dissenting opinion Part III, 89, 68 S.Ct. 972, 987. Indeed respondents do not claim they are exempt from the plan's regulatory features. They claim only that they are constitutionally immune from contributing to the plan's support. As a matter entirely fresh, the contention would not seem weighty. II. 15 But neither issue is fresh. Each is complicated by this Court's prior decisions squarely ruling that the taxes are invalid as unconstitutional intrusions by the state upon the performance of federal functions. Those decisions have not been explicitly overruled. But it is strongly urged that our later decisions, especially in Helvering v. Mountain Producers Corp., supra, have stricken the foundation from beneath the Gipsy Oil, Large Oil and Barnsdall Refineries decisions, supra, so that the latter no longer can stand in reason and consistency with the former. 16 It is true that this Court's more recent pronouncements have beaten a fairly large retreat from its formerly prevailing ideas concerning the breadth of so-called intergovernmental immunities from taxation, a retreat which has run in both directions—to restrict the scope of immunity of private persons seeking to clothe themselves with governmental character from both federal and state taxation. The history of the immunity, by and large in both aspects, represents a rising or expanding curve, tapering off into a falling or contracting one. 17 Our present problem lies on the constitutional level. It requires reconsideration of former decisions specifically in point, together with later ones deviating in rationale. It is of substantial importance both for the states' powers of taxation and for the subjects on which they may impinge. Moreover, even though the immediate questions are closely related to federal policies concerning ndian lands, they are equally tangent to considerations affecting other types of situation raising questions of immunity. For these reasons it will not be amiss to consider the questions in the context of two conflicting courses of decision. 18 Before we turn to the survey, however, two delimitations of the specific issues should be made. 19 These cases present no question concerning the immunity of the Indian lands themselves from state taxation. There is no possibility that ultimate liability for the taxes may fall upon the owner of the land. Cf. Wilson v. Cook, 327 U.S. 474, dissenting opinion, 489, 66 S.Ct. 663, 670, 90 L.Ed. 793. Nor, as has been noted, do the cases involve challenges to the immunity from state taxation of royalty oil, the Indian's share of production.21 III. 20 Despite the possibility that the prospect of taxation by the state may reduce the amount the United States might receive from the sale of its property, it is well established that property purchased by a private person from the Federal Government becomes a part of the general mass of property in the state and must bear its fair share of the expenses of local government. The theoretical burden which state ad valorem property taxation thus imposes upon the Federal Government is regarded as too remote and indirect to justify tax immunity for property purchased from that Government. City of New Brunswick v. United States, 276 U.S. 547, 48 S.Ct. 371, 72 L.Ed. 693; Forbes v. Gracey, 94 U.S. 762, 24 L.Ed. 313; Tucker v. Ferguson, 22 Wall. 527, 22 L.Ed. 805; see Weston v. Charleston, 2 Pet. 449, 468, 7 L.Ed. 481. Also subject to local ad valorem taxation, as has been noted above,22 is property owned by a private party and used by him in performing services for the Federal Government. Where oil produced by a private lessee from restricted Indian lands was owned solely by the lessee and had been removed from the leased lands and stored in the lessee's tanks, it was held subject to state ad valorem taxation. Indian Territory Illuminating Oil Co. v. Board of Equalization, 288 U.S. 325, 53 S.Ct. 388, 77 L.Ed. 812.23 And equipment used by a lessee of restricted Indian lands has been held subject to the same sort of exaction. Taber v. Indian Territory Illuminating Oil Co., 300 U.S. 1, 57 S.Ct. 334, 81 L.Ed. 463. Cf. Thomas v. Gay, 169 U.S. 264, 18 S.Ct. 340, 42 L.Ed. 740, sustaining a state tax on cattle grazing on tribal lands leased from Indians by the non-Indian owner of the cattle. 21 Anomalous in the light of these rulings was the evolution of a line of decisions of this Court condemning forms of taxation which would have imposed no more direct or substantial burden upon the United States than would an ad valorem property tax applied to property purchased from the United States. Private lessees of restricted or tribal Indian lands came to be held 'federal instrumentalities' like the lands themselves, and so immune from various forms of state taxation ranging from a gross production tax on production from the leased lands to a tax upon the lessee's net income. The theory of the Court was the one which was rejected in directly analogous cases: A state tax on the lessee, he lease, or the profits from the lease would be 'a direct hamper upon the effort of the United States to make the best terms that it can for its wards.' Gillespic v. Oklahoma, 257 U.S. 501, 506, 42 S.Ct. 171, 173, 66 L.Ed. 338. Alternatively, 'A tax upon the leases is a tax upon the power to make them, and could be used to destroy the power to make them.' Indian Territory Illuminating Oil Co. v. Oklahoma, 240 U.S. 522, 530, 36 S.Ct. 453, 456, 60 L.Ed. 779. 22 The history of this development is a progression 'from exemption of the gross income of the lessee of Indian lands * * * through exemption of new receipts to serious impairment of the taxing powers of Oklahoma.' Cohen, Handbook of Federal Indian Law 257, n. 29(1942). The development is an outgrowth and a progressive extension of early rulings that tribal lands themselves are immune from state taxation.24 More immediately it stems from the later ruling that allotted Indian lands held in trust by the United States were 'an instrumentality employed by the United States for the benefit and control of this dependent race,' and so were immune from state taxation. UnitedStates v. Rickert, 188 U.S. 432, 437—439, 23 S.Ct. 478, 480, 47 L.Ed. 532. 23 In 1908 Oklahoma imposed, in addition to ad valorem property taxes, a gross production tax, the progenitor of the present tax bearing that label, on oil, gas and other minerals produced within the state. Okla.Laws 1908, c. 71, Art. II, § 6. The Oklahoma court held that the 1910 reenactment of the statute25 imposed a property tax. McAlester-Edwards Coal Co. v. Trapp, 43 Okl. 510, 141 P. 794. But the statute, as applied to a lessee of restricted Indian coal lands, was held by this Court to be an occupational tax and so an unconstitutional burden on the lessee, who was held to be an instrumentality of the Federal Government. Choctaw, O. & G.R. Co. v. Harrison, supra. Next the Court held the lease itself federal instrumentality immune from state taxation. Indian Territory Illuminating Oil Co. v. Oklahoma, supra. 24 The Oklahoma legislature revised the gross production tax statute in 1915 and again in 1916, a principal change being the provision that the tax was in lieu of all other ad valorem taxes.26 The revised tax was held by the Oklahoma Supreme Court to be a property tax.27 But this Court rejected that construction sub silentio and invalidated the tax in memorandum opinions citing only the Choctaw, O. & G.R. Co. case, 235 U.S. 292, 35 S.Ct. 27, 59 L.Ed. 234, and the Indian Territory Illuminating Oil Co. case, 240 U.S. 522, 36 S.Ct. 453, 60 L.Ed. 779. Howard v. Gipsy Oil Co., 247 U.S. 503, 38 S.Ct. 426, 62 L.Ed. 1239; Large Oil Co. v. Howard, 248 U.S. 549, 39 S.Ct. 183, 63 L.Ed. 416. 25 Suspicions that this Court had overlooked the fact that under the revised statute the gross production tax was in lieu of rather than in addition to all other ad valorem property taxes,28 were dispelled by Mr. Justice Holmes' remark in Gillespie v. Oklahoma, supra, 257 U.S. at pages 504—505, 42 S.Ct. at page 172, 66 L.Ed. 338, that the statutory change had been noticed and regarded as immaterial.29 If a gross receipts tax was a burden on the Federal Government 'so as to interfere with the performance of its functions, it could not be saved because it was in lieu of a tax upon property, or was so characterized.' See James v. Dravo Contracting Co., 302 U.S. 134, 158, 58 S.Ct. 208, 220, 82 L.Ed. 155, 114 A.L.R. 318. 26 The high-water mark of immunity for non-Indian lessees of restricted and allotted Indian lands came in 1922 when the Gillespie decision, supra, invalidated an Oklahoma net income tax upon income derived by a lessee from sales of his share of oil produced from restricted lands. 27 The non-Indian lessee's immunity was last sustained here by State of Oklahoma v. Barnsdall Refineries, supra. That decision held, on application of a rule of strict construction of congressional waivers, that Congress' express waiver of immunity from gross production taxes on oil produced from the specified Indian lands did not extend to petroleum excise taxes. The state did not challenge the implied constitutional immunity but pitched its argument on the ground of statutory exemption.30 28 The instrumentality doctrine has been applied to confer a correlative immunity upon private lessees of state-owned lands. The Texas rule that oil and gas leases are present sales to the lessees of the oil and gas in place caused this Court to sustain the imposition of the federal income tax upon income of the lessee derived from the sale of oil and gas produced from lands leased from that state. It was observed that '* * * the remote and indirect effects upon the one government of such nondiscriminatory tax by the other have never been considered adequate grounds for thus aiding the one at the expense of the taxing power of the other.' Group No. 1 Oil Corp. v. Bass, 283 U.S. 279, 282, 51 S.Ct. 432, 433, 75 L.Ed. 1032. 29 Although this decision may be taken to mark a turning point in expansion of the lessee's immunity, it was not immediately permitted to impair the Gillespie rationale. A tax on income would be no greater burden where, under applicable state law, 'title' to the oil did not 'p ss' until the oil was removed from the ground. And although Justices Brandeis, Stone, Roberts and Cardozo contended that the Gillespie decision could not stand consistently with the principles which had been reaffirmed in the Group No. 1 Oil case, a majority of one in Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 52 S.Ct. 443, 76 L.Ed. 815, provided a corollary to the rule of the Gillespie case. This was done by holding that the Federal Government was barred from taxing the income of a lessee of state lands as the state was barred from taxing the income of the lessee of federal lands. 30 A parallel immunity from state occupational or privilege taxes was once accorded private contractors with, or agencies of, the Government, Williams v. Talladega, 226 U.S. 404, 33 S.Ct. 116, 57 L.Ed. 275, notwithstanding the venerable rule that the property of such a contractor or agency is liable to state property taxation. See the cases cited supra in note 18. Decisions curtailing this immunity were presaged by Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 70 L.Ed. 384. It held subject to federal income taxation income received by a consulting engineer from a state for services in connection with temporary work. Equally significant was Alward v. Johnson, 282 U.S. 509, 514, 51 S.Ct. 273, 274, 75 L.Ed. 496, 75 A.L.R. 9, which sustained a state tax measured by gross receipts on the property of a stage line engaged in carrying the mails.31 31 Later this Court sustained a state tax on the gross receipts of a contractor with the Federal Government, James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155, 114 A.L.R. 318; Silas Mason Co. v. Tax Commission, 302 U.S. 186, 58 S.Ct. 233, 82 L.Ed. 187; a state tax on the net income of such a contractor, Atkinson v. State Tax Commission, 303 U.S. 20, 58 S.Ct. 419, 82 L.Ed. 621; state sales and use taxes on purchases of materials used by a contractor in performing a cost-plus contract with the United States, State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3; Curry v. United States, 314 U.S. 14, 62 S.Ct. 48, 86 L.Ed. 9; and a state severance tax imposed on a contractor who severed and purchased timber from lands owned by the United States, Wilson v. Cook, 327 U.S. 474, 66 S.Ct. 663, 90 L.Ed. 793. It was pointed out that 32 '* * * the Constitution, unaided by Congressional legislation, (does not prohibit) a tax exacted from the contractors merely because it is passed on economically, by the terms of the contract or otherwise, as a part of the construction cost to the Government. So far as such a nondiscriminatory state tax upon the contractor enters into the cost of the materials to the Government, that is but a normal incident of the organization within the same territory of two independent taxing sovereignties. The asserted right of the one to be free of taxation by the other does not spell immunity from paying the added costs, attributable to the taxation of those who furnish supplies to the Government and who have been granted no tax immunity.' State of Alabama v. King & Boozer, 314 U.S. 1, 8—9, 62 S.Ct. 43, 45, 86 L.Ed. 3. 33 The opportunity to reexamine the Gillespie and Coronado cases arose in 1938 in Helvering v. Mountain Producers Corp., 303 U.S. 376, 58 S.Ct. 623, 82 L.Ed. 907, the decision upon which the Oklahoma commission relies most strongly to secure reversal of the judgments in the present cases. The Mountain Producers case involved the application of the federal income tax law to a cestui of an express trust which received the proceeds of the sale of oil taken from school lands owned by the State of Wyoming. The Court declined to distinguish the Gillespie and Coronado decisions on the narrow ground available, the fact that the taxpayer was a cestui of a trust which received the proceeds of the sale of the oil rather than the lessee itself. 303 U.S. at page 383, 58 S.Ct. at page 626.32 34 Rather the Court sought broader grounding, which lay in reconsideration of the foundations of the Gillespie and Coronado decisions. The opinion stated: 35 'The ground of the decision in the Gillespie case, as stated by Mr. Justice Holmes in speaking for the Court, was that 'a tax upon the leases' was "a tax upon the power to make them, and could be used to destroy the power to make them,' 240 U.S. 522, at page 530, 36 S.Ct. 453 (at page 456), 60 L.Ed. 779,' and that a tax 'upon the profits of the leases' was 'a direct hamper upon the effort of the United States to make the best terms that it can for its wards.' (257 U.S. at page 506, 42 S.Ct. at page 172, 66 L.Ed. 338.) In the light of the expanding needs of state and nation, the inquiry has been pressed whether this conclusion has adequate basis * * *.' 303 U.S. at page 384, 58 S.Ct. at page 626. 36 Noting that it had held that the Gillespie ruling should be limited strictly to cases closely analogous,33 and asserting that 'the distinctions thus maintained have attenuated its teaching and raised grave doubt as to whether it should longer be supported,' 303 U.S. at pages 384—385, 58 S.Ct. at page 627, the Court went on to say: 37 'In numerous decisions we have had occasion to declare the competing principle, buttressed by the most cogent considerations, that the power to tax should not be crippled 'by extending the constitutional exemption from taxation to those subjects which fall within the general application of nondiscriminatory laws, and where no direct burden is laid upon the governmental instrumentality, and there is only remote, if any, influence upon the exercise of the functions of government.' Willcuts v. Bunn, 282 U.S. 216, 225, 51 S.Ct. 125 (126), 127, 75 L.Ed. 304, 71 A.L.R. 1260, and illustrations there cited.' 303 U.S. at page 385, 58 S.Ct. at page 627. 38 That competing principle the Court found applicable to the case before it and to require that the decisions in the Gillespie and Coronado cases be overruled. Rejecting as insubstantial the distinction based on the passage of title to the oil at the time of making the lease, compare Group No. 1 Oil Corp. v. Bass, supra, with Burnet v. Coronado Oil & Gas Co., supra, and after reviewing various other decisions denying the immunity when claimed by private persons, 303 U.S. at pages 385—386, 58 S.Ct. at page 627, the Court said: 39 'These decisions in a variety of applications enforce what we deem to be the controlling view—that immunity from non-discriminatory taxation sought by a private person for his property or gains because he is engaged in operations under a government contract or lease cannot be supported by merely theoretical conceptions of interference with the functions of government. Regard must be had to substance and direct effects.' 303 U.S. at page 386, 58 S.Ct. at page 627. IV. 40 Respondents strongly urge that the Mountain Producers decision is not controlling or effective to require reversal in these cases, since it involved a tax on ent income rather than gross production and excise taxes. And they insist that a sharp line should be drawn between what they call l ssees performing a governmental function and independent contractors doing work for the Government.34 The latter distinction is largely, if not altogether verbal, in the context of the fact situations in these cases. As for the former difference, although the Court explicitly overruled only the Gillespie and Coronado cases, the groundings of the Mountain Producers decision do not permit limiting its effects to so narrow an application.35 41 The language last quoted above is as applicable to the present cases as it was to the Gillespie and Coronado decisions. The taxes here are nondiscriminatory. The respondents are 'private persons' who seek immunity 'for their property or gains because they are engaged in operations under a government contract or lease.' The functions they perform in operating the leases are hardly more governmental in character than those performed by lessees of school lands or, indeed, by many contractors with the Government. The lessees in the Mountain Producers case stood identically with the respondents in all these respects. 42 Moreover the burdens of the taxes here, if any of a character likely to interfere with respondents in carrying out the terms of their leases, are as appropriately to be judged by 'regard * * * to substance and direct effects,' and as inappropriately to be determined 'by merely theoretical conceptions of interference with the functions of government,' as were those in the Mountain Producers case.36 True, as respondents say, a net income tax may be a step farther removed from interfering effect than a gross production tax or excise tax on production. But this all depends upon the rate at which each tax is levied. 43 To the adaptation of Marshall's oft-quoted aphorism made by Mr. Justice McKenna in Indian Territory Illuminating Oil Co. v. Oklahoma, 240 U.S. at page 530, 36 S.Ct. at page 456, 60 L.Ed. 779, and followed by Mr. Justice Holmes in Gillespie v. Oklahoma, 257 U.S. at page 505, 42 S.Ct. at page 172, 66 L.Ed. 338, namely, that 'A tax upon the leases is a tax upon the power to make them, and could be used to destroy the power to make them,' Chief Justice Hughes in the Mountain Producers case did not explicitly make the rejoinder given by Holmes in another connection, 'The power to tax is not the power to destroy while this Court sits.' Panhandle Oil Co. v. Knox, 277 U.S. 218, 223, 48 S.Ct. 451, 453, 72 L.Ed. 857, 56 A.L.R. 583. But this was the effect of the Mountain Producers decision, when in a single paragraph it challenged both the aphorism and the assumption that 'a tax upon the profits of the leases' was 'a direct hamper upon the effort of the United States to make the best terms that it can for its wards.' 44 The Mountain Producers case was not decided on narrow, merely technical or presumptive grounds. Its very foundation was a repudiation of those insubstantial bases for securing broad private tax exemptions, unjustified by actual interfering or destructive effects upon the performance of obligations to or work for the government, state or national. The decision came as the result of experience and of observation of the constant widening of the exempting process from tax to tax to tax. 45 Since that decision, as we have noted, the process has been reversed in direction. True intergovernmental immunity remains for the most part. But, so far as concerns private persons claiming immunity for their ordinary business operations (even though in connection with governmental activities), no implied constitutional immunity can rest on the merely hypothetical interferences with governmental functions here asserted to sustain exemption. In the light of the broad groundings of the Mountain Producers decision and of later decisions, we cannot say that the Gipsy Oil, Large Oil and Barnsdall Refineries decisions remain immune to the effects of the Mountain Producers decision and others which have followed it. They 'are out of harmony with correct principle,' as were the Gillespie and Coronado decisions and, accordingly, they should be, and they now are, overruled. This accords with the result reached in Santa Rita Oil & Gas Co. v. State Board of Equalization, 112 Mont. 359, 116 P.2d 1012, 136 A.L.R. 757. Moreover, since the decisions in Choctaw, O. & G.R. Co. v. Harrison, supra, and Indian Territory Illuminating Oil Co. v. Oklahoma, supra, rest upon the same foundations as those underlying the Gipsy Oil, Large Oil and Barnsdall Refineries decisions, indeed supplied those foundations, we think they too should be, and they now are, overruled. 46 We do not imply, by this decision, that Congress does not have power to immunize these lessees from the taxes we think the Constitution permits Oklahoma to impose in the absence of such action.37 The question whether immunity shall be extended in situations like these is essentially legislative in character. But Congress has not created an immunity here by affirmative action,38 and 'The immunity formerly said to rest on constitutional implication cannot now be resurrected in the form of statutory implication.' Oklahoma Tax Commission v. United States, 319 U.S. 598, 604, 63 S.Ct. 1284, 1286, 87 L.Ed. 1612. And see Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 480, 59 S.Ct. 595, 598, 83 L.Ed. 927, 120 A.L.R. 1466: '* * * if it appears that there is no ground for implying a constituional immunity, there is equally a want of any ground for assuming any purpose on the part of Congress to create an immunity.' 47 The Oklahoma Supreme Court appears to suggest, though the opinions do not flatly so state, as a possible alternative support for its conclusion in these cases that 'Congress has acted on the theory that such immunity exists in the case of leases of this character unless waived,' that is, several congressional enactments permit Oklahoma to impose a gross production tax on minerals produced from the lands of the Osages,39 the Kaws,40 the Quapaws,41 and the Five Civilized Tribes,42 and authorize payment of taxes due on account of the Indians' royalty interest. But Congress' purpose in enacting these statutes was the removal of the immunities of the Indians themselves, immunities which are not challenged in these cases; the action was occasioned by the favorable economic position of the particular Indians.43 The resulting removal of the immunity of private lessees of those Indian lands was an incidental effect of this legislation. 48 Finally, we refuse to infer from mere congressional silence approval of the doctrine of immunity enunciated in the Choctaw, O. & G.R. Co., Indian Territory Illuminating Oil, 240 U.S. 522, 36 S.Ct. 453, 60 L.Ed. 779, Gipsy Oil, Large Oil and Barnsdall Refineries decisions, supra. Congress' silence prior to the Mountain Producers decision did not preclude this Court from curtailing the lessee's immunity in that case; and Congress seems to have accepted that decision with equanimity. Cf. Girouard v. United States, 328 U.S. 61, 69—70, 66 S.Ct. 826, 829—830, 90 L.Ed. 1084; Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 479—480, 59 S.Ct. 595, 597—598, 83 L.Ed. 927, 120 A.L.R. 1466.44 49 Reversed and remanded. 50 Mr. Justice JACKSON concurs in the result. 1 Interests in the lands to which the United States does not hold title are of two kinds: (1) Undivided interests acquired by non-Indians; (2) an interest (which is still restricted) conveyed to the son of an allottee by approved noncompetent Indian deeds, pursuant to the Act of March 1, 1907, 34 Stat. 1018, 25 U.S.C. § 405, 25 U.S.C.A. § 405. 2 February 8, 1887, 24 Stat. 388, as amended, 25 U.S.C. § 331 et seq., 25 U.S.C.A. § 331 et seq. 3 The allotments were made to members of the Apache and Comanche tribes pursuant to the agreement approved by Congress on June 6, 1900, 31 Stat. 676. Members of the Citizen Band of the Pottawatomie Tribe were allotted land pursuant to the agreement of March 3, 1891, 26 Stat. 1016. Allotments were made to the Otoe and Missouria Indians under the General Allotment Act without special agreement. Mills, Oklahoma Indian Land Laws § 438 (1924). The nature of the Indians' interest has been described as follows: '* * * the United States retained the legal title, giving the Indian allottee a paper or writing, improperly called a patent, showing that at a particular time in the future, unless it was extended by the President, he would be entitled to a regular patent conveying the fee.' United States v. Rickert, 188 U.S. 432, 436, 23 S.Ct. 478, 480, 47 L.Ed. 532. 4 With these exceptions: (1) In a single immaterial instance in No. 40, an undivided 7/16th interest in one of the leases was alienable and was owned by non-Indians. The Texas Company paid without protest the taxes levied against it which were attributable to this 7/16th interest (2) In No. 41, an undivided 1/4th interest in the lands subject to one of the leases and an undivided 1/3d interest in the land subject to another lease were owned by non-Indians. The effect of the decision of the Oklahoma Supreme Court was to deny the portion of the assessments applicable to these interests. However, it was conceded at the argument here that the assessments were valid insofar as they applied to interests in lands owned, when the assessments were made, by non-Indian owners or by Indian owners not under restriction. 5 24 Stat. 389, 390, as amended, 25 U.S.C. §§ 348, 349, 25 U.S.C.A. §§ 348, 349. See Cohen, Handbook of Federal Indian Law 108—109 (1942). Leases of allotted land for mining purposes may be made with the approval of the Secretary of the Interior under 35 Stat. 783, 25 U.S.C. § 396, 25 U.S.C.A. § 396. 6 52 Stat. 348, 25 U.S.C. § 396d, 25 U.S.C.A. § 396d; 30 C.F.R. §§ 221.1—221.67. 7 52 Okla.Stat. §§ 81—286.17 (Conservation of Oil and Gas), §§ 291—303 (Regulation and Inspection of Wells) (Cum.Supp.1947); Order No. 1299—Cause No. 2935, Thirty-seventh Annual Report of Corporation Comm'n of Okla., 1944, p. 84. The assumption stated in the text is made, although in No. 41 the commission excluded, as irrelevant, evidence tendered to show compliance with the federal and state regulations, and in No. 40 no evidence of compliance was introduced. 8 The three oil and gas leases involved in No. 40 were made by members of the Apache Tribe to non-Indian lessees who assigned their interests to the Texas Company. In No. 41, in which eight leases are involved, the Indian lessors are members of the Apache, Comanche, Citizen Pottawatomie, and Otoe and Missouria Tribes. Undivided interests in the lands subject to certain leases were held by non-Indians at the time of assessment. See notes 1 and 4. 9 68 Okla.Stat. § 821 (1941). The (general) scheme of the tax is as follows: The tax falls due on the first day of each calendar month as to production during the preceding month. The purchaser pays the tax on oil or gas sold at the time of production and is authorized to deduct the amount of tax paid when settling with the producer (and with the royalty owner in cases in which the tax applies to him, see note 14). If the tax becomes due before the oil is sold, the producer is required to pay the tax for himself (and, in cases where the tax applies to royalties, see note 14, for the royalty owner and is permitted to deduct the amount of tax paid on royalty oil when settling with the royalty owner). 68 id. § 833. The tax is a first and paramount lien against the property of the person liable for the tax. 68 id. § 836. Of the proceeds received from the tax, 78 per cent is paid into the state treasury to be used for the general expenses of state government. Ten per cent is paid to the county treasurer of the county in which the oil or gas was produced, and is used for the constitution and maintenance of county highways. Ten per cent is paid to the county treasurer for distribution among the county's school districts. The remaining two per cent is placed to the credit of the Oklahoma Tax Commission and is used for collection and enforcement activities. 68 id. § 827 (Cum.Supp.1947). 10 But see note 27 and text infra. 11 The amount of the tax was one-eighth of one cent per barrel for the period prior to July 1, 1943, Okla.Laws, 1941, tit. 68, c. 26, and one mill per barrel after that date, Okla.Laws, 1943, tit. 68, c. 26. The Texas Company was assessed under the former act. Magnolia was assessed under both acts. 12 Okla.Laws, 1933, c. 131, as amended, 52 Okla.Stat. 81 et seq. (Cum.Supp.1947). 13 Okla.Laws, 1933, c. 132; Okla.Laws, 1935, c. 59, Art. 2; Okla.Laws, 1937, c. 59, Art. 2; Okla.Laws, 1939, c. 66, Art. 7; Okla.Laws, 1941, tit. 68, c. 26; Okla.Laws, 1943, tit. 68, c. 26; Okla.Laws, 1945, tit. 68, c. 26; Okla.Laws, 1947, tit. 68, c. 26. The present statute appears at 68 Okla.Stat. § 1220.1 et seq. (Cum.Supp.1947). The tax receipts, collected in the same manner as in the case of the gross production tax, present 68 Okla.Stat. § 1220.1 (Cum.Supp.1947), are deposited to the credit of the 'Conservation Fund' and the 'Interstate Oil Compact Fund of Oklahoma.' 68 Id. 1220.3. 14 Although the Oklahoma statutes in their general application lay the taxes on gross production, including royalties, cf. notes 9 and 13, they provide, with respect to the gross production tax, that the producer, in his required monthly statement to the Oklahoma Tax Commission, state, 'where such royalty is claimed to be exempt from taxation by law, the facts on which such claim of exemption is based.' 68 Okla.Stat. § 821 (1941). This provision is made applicable to the petroleum excise tax by the first section of each of the several enactments establishing and continuing that exaction. See note 13 supra. Only the interests of the lessees were assessed in these cases. 15 The Oklahoma Supreme Court rendered separate, unreported opinions. The principal opinion, filed in the Texas Company case, - P.2d —-,* was followed in the later one filed iin the Magnolia Petroleum case, —- P.2d —-.* Rehearing was denied in both cases. * Motion to stay mandate pending at date of publication. The original judgment in the Texas Company case provided for reversal of the trial court' judgment, with directions to overrule the commission's demurrer 'and proceed consistent with the views here expressed.' On motion of counsel for the commission this was modified to provide that 'The trial court judgment * * * is reversed' and that 'final judgment is hereby rendered for plaintiff and against the defendant for the sum sued for,' thus eliminating all question concerning the finality of the judgment. 16 See note 15 supra. 17 Pursuant to former § 237(c) of the Judicial Code, as amended, 28 U.S.C. § 344(c), 28 U.S.C.A. § 344(c), present 28 U.S.C. § 2103, 28 U.S.C.A. § 2103. 18 Thomson v. Pacific R. Co., 9 Wall. 579, 19 L.Ed. 792; Union Pac. Railroad Co. v. Peniston, 18 Wall. 5, 21 L.Ed. 787; Central Pacific R. Co. v. People of State of California, 162 U.S. 91, 16 S.Ct. 766, 40 L.Ed. 903; Gromer v. Standard Dredging Co., 224 U.S. 362, 371, 32 S.Ct. 499, 502, 56 L.Ed. 801; Choctaw, O. & G.R. Co. v. Mackey, 256 U.S. 531, 535—537, 41 S.Ct. 582, 583, 65 L.Ed. 1076. 19 See note 27 and text. 20 But see text infra, Part III. nless the measure of a tax is fairly to be considered as designed to conceal or distort unduly its true nature, the tax is not to be invalidated because the measure is not one customarily employed if as applied it achieves fairly the purpose for which it is avowedly laid, that purpose of course being one within the legislative power to accomplish. American Mfg. Co. v. City of St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084; Hope Natural Gas Co. v. Hall, 274 U.S. 284, 47 S.Ct. 639, 71 L.Ed. 1049; Utah Power & Light Co. v. Pfost, 286 U.S. 165, 52 S.Ct. 548, 76 L.Ed. 1038. Moreover, ordinarily the construction given to a state statute by the state's highest court capable of deciding the question is taken as binding on this Court. See e.g., Supreme Lodge, Knights of Pythias v. Meyer, 265 U.S. 30, 32—33, 44 S.Ct. 432, 433, 68 L.Ed. 885; Guaanty Trust Co. v. Blodgett, 287 U.S. 509, 513, 53 S.Ct. 244, 245, 77 L.Ed. 463; Hartford Accident & Indemnity Co. v. N. O. Nelson Mfg. Co., 291 U.S. 352, 358, 54 S.Ct. 392, 394, 78 L.Ed. 840. Cf. Galveston, H. & S.A.R. Co. v. Texas, 210 U.S. 217, 227, 28 S.Ct. 638, 640, 52 L.Ed. 1031; Hanover Fire Insurance Co. v. Harding, 272 U.S. 494, 509, 510, 47 S.Ct. 179, 183, 71 L.Ed. 372, 49 A.L.R. 713; Carpenter v. Shaw, 280 U.S. 363, 367—368, 50 S.Ct. 121, 122—123, 74 L.Ed. 478. 21 See note 14 supra. Cf. Carpenter v. Shaw, 280 U.S. 363, 50 S.Ct. 121, 74 L.Ed. 478, holding that oil royalties received by Indian lessors from nontaxable allotted lands were not subject to a state gross production tax, the tax being regarded as on the lessor's interest rather than on the severed oil. But royalty income is subject to state and federal net income taxes. Choteau v. Burnet, 283 U.S. 691, 51 S.Ct. 598, 75 L.Ed. 1353; Superintendent of Five Civilized Tribes v. Commissioner, 295 U.S. 418, 55 S.Ct. 820, 79 L.Ed. 1517; Leahy v. State Treasurer, 297 U.S. 420, 56 S.Ct. 507, 80 L.Ed. 771. 22 At note 18. 23 Distinguishing Jaybird Mining Co. v. Weir, 271 U.S. 609, 46 S.Ct. 592, 70 L.Ed. 1112, on the ground that there the interest of the Indian lessor had not been prepaid or segregated. 24 See The Kansas Indians, 5 Wall. 737, 18 L.Ed. 667; The New York Indians, 5 Wall. 761, 18 L.Ed. 708. Those early decisions seem to rest on the basis that the Indian tribes possessed many attributes of sovereignty. As to the immunity from state taxation of lands acquired by individual Indians by treaty or under the general homestead laws rather than under the General Allotment Act, see Cohen, op. cit. supra note 5, at 257—258, 259—260. Lands outside a reservation purchased with restricted Indian funds from a person who did not hold the land tax exempt were held subject to state taxes in Shaw v. Gibson-Zahniser Oil Corp., 276 U.S. 575, 48 S.Ct. 333, 72 L.Ed. 709. But Congress specifically exempted such lands from taxation. Act of June 20, 1936, 49 Stat. 1542, as amended, 50 Stat. 188, to limit the exemption to homesteads, 25 U.S.C. § 412a, 25 U.S.C.A. § 412a. See Cohen, op. cit. supra, at 260—261. This legislation was sustained and applied in Board of Commissioners v. Seber, 318 U.S. 705, 63 S.Ct. 920, 87 L.Ed. 1094. 25 Okla.Laws 1910, c. 44, § 6, adding a provision permitting the producer to deduct the amount of royalties paid for the benefit of an Indian tribe. 26 Okla.Laws 1915, c. 107, Art. 2, subd. A; Okla.Laws 1916, c. 39 Further amendments were made by Okla.Laws 1933, c. 103, and by Okla.Laws 1935, c. 66, Art. 4, 68 O.S.1941, § 821. See note 9 and text supra. 27 Large Oil Co. v. Howard, 63 Okl. 143, 163 P. 537, reversed per curiam, 248 U.S. 549, 39 S.Ct. 183, 63 L.Ed. 416; In re Gross Production Tax of Wolverine Oil Co., 53 Okl. 24, 154 P. 362, L.R.A.1916F, 141, which had held that the 1915 Act was an occupational rather than a property tax, was distinguished because of changes made by the 1916 Act. The Wolverine case was specifically overruled in In re Skelton Lead & Zinc Co.'s Gross Production Tax for 1919, 81 Okl. 134, 197 P. 495, accord, Bergin Oil & Gas Co. v. Howard, 82 Okl. 176, 199 P. 209. The Oklahoma Supreme Court has since consistently held that the tax is a property tax in lieu of all other ad valorem taxes. E.g., In re Protest of Bendelari, Agent, 82 Okl. 97, 198 P. 606. And see Meriwether v. Lovett, 166 Okl. 73, 26 P.2d 200; State v. Indian Royalty Co., 177 Okl. 238, 58 P.2d 601; Peteet v. Carmichael, 191 Okl. 593, 131 P.2d 767. 28 The Oklahoma Supreme Court assumed for a time that the statutory difference was overlooked by this Court and that an opposite result would have been reached had the difference been noticed. In re Skelton Lead & Zinc Co.'s Gross Production Tax for 1919, 81 Okl. 134, 197 P. 495; In re Protest of Bendelari, Agent, 82 Okl. 97, 198 P. 606. 29 The Oklahoma Supreme Court capitulated in Atchison, T. & S.F.R. Co. v. McCurdy, 86 Okl. 148, 207 P. 321. 30 See note 39 infra. 31 Cf. the contemporary case of Willcuts v. Bunn, 282 U.S. 216, 51 S.Ct. 125, 75 L.Ed. 304, 71 A.L.R. 1260, holding capital gain resulting from resale of municipal bonds taxable under the federal income tax law. 32 Cf. Burnet v. A. T. Jergins Trust, 288 U.S. 508, 516, 53 S.Ct. 439, 441, 71 L.Ed. 925, in which a city leased oil and gas land to a private trust, which was held liable for a federal income tax on its share of the receipts, the Court stating that 'the doctrine of Gillespie v. Oklahoma is to be applied strictly and only in circumstances closely analogous to those which it disclosed.' 33 Citing Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 52 S.Ct. 443, 76 L.Ed. 815, which the opinion characterized as 'a corollary' to the Gillespie case. 303 U.S. at page 383, 58 S.Ct. at page 626, 82 L.Ed. 907. The federal income tax in the Coronado case was levied upon the lessee of state school lands. Cf. note 32 supra. 34 Among the cases which one or the other of respondents attempts to distinguish on the ground that the tax was imposed on an independent contractor rather than a 'true Federal instrumentality' are: James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155, 114 A.L.R. 318; Buckstaff Bath House Co. v. McKinley, 308 U.S. 358, 60 S.Ct. 279, 84 L.Ed. 322; State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3; and Wilson v. Cook, 327 U.S. 474, 66 S.Ct. 663, 90 L.Ed. 793. It is also contended that cases sustaining taxes on the property of a federal instrumentality, e.g., Union Pac. Railroad Co. v. Peniston, 18 Wall. 5, 21 L.Ed. 787; Alward v. Johnson, 282 U.S. 509, 51 S.Ct. 273, 75 L.Ed. 496, 75 A.L.R. 9; Indian Territory Illuminating Oil Co. v. Board of Equalization, 288 U.S. 325, 53 S.Ct. 388, 77 L.Ed. 812, are not inconsistent with the view they ask us to take. Cf. Part I supra. 35 The incongruity of the doctrine respondents ask us to perpetuate is underscored by decisions subsequent to the Mountain Producers case withdrawing income tax immunity for state and federal official salaries. Helvering v. Gerhardt, 304 U.S. 405, 58 S.Ct. 969, 82 L.Ed. 1427; Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927, 120 A.L.R. 1466. See generally, Powell, The Waning of Intergovernmental Tax Immunities, 58 Harv.L.Rev. 633; Powell, The Remnant of Intergovernmental Tax Immunities, 58 Harv.L.Rev. 757. 36 Respondents merely assert hypothetically that imposition of the taxes might in some instances make the margin between successful and unsuccessful operation. Leases approved by the Secretary of the Interior provided for the same rental and royalty payments both before and after the Mountain Producers decision. 25 C.F.R. § 189.16. And rental and royalty payments provided for by the Department of the Interior are the same for lands allotted under the General Allotment Act as they are for lands of members of the Five Civilized Tribes, 25 C.F.R. §§ 183.24, 189.16. Production from the latter lands has been subject to Oklahoma's gross production tax since 1928. See note 42 infra. The Government, in its brief amicus curiae, states that, because differences in the value of different tracts of land would be reflected in the bonuses which lessees are willing to pay, an exact comparison of bonuses is impossible. 37 See James v. Dravo Contracting Co., 302 U.S. 134, 160—161, 58 S.Ct. 208, 221, 82 L.Ed. 155, 114 A.L.R. 318; Pittman v. Home Owners Co p., 308 U.S. 21, 32—33, 60 S.Ct. 15, 17—18, 84 L.Ed. 11, 124 A.L.R. 1263; Maricopa County v. Valley Nat. Bank, 318 U.S. 357, 361, 63 S.Ct. 587, 588, 57 L.Ed. 834; Board of Commissioners v. Seber, 318 U.S. 705, 715—719, 63 S.Ct. 920, 925—927, 87 L.Ed. 1094; Oklahoma Tax Commission v. United States, 319 U.S. 598, 606 607, 63 S.Ct. 1284, 1287—1288, 87 L.Ed. 1612; Mayo v. United States, 319 U.S. 441, 446, 63 S.Ct. 1137, 1140, 87 L.Ed. 1504, 147 A.L.R. 761; Smith v. Davis, 323 U.S. 111, 116—119, 65 S.Ct. 157, 160—161, 89 L.Ed. 107. 38 See Cohen, op. cit. supra, note 5, at 255—256. 39 41 Stat. 1250. As has been stated, State of Oklahoma v. Barnsdall Refineries, 296 U.S. 521, 56 S.Ct. 340, 80 L.Ed. 366, held that this statute did not authorize the imposition of the state's petroleum excise tax. See text at note 30 supra. 40 43 Stat. 176. 41 41 Stat. 1248, as amended, 50 Stat. 68. 42 45 Stat. 496. 43 H.R. Rep. No. 1377, 66th Cong., 3d Sess. 4; H.R. Rep No. 1278, 66th Cong., 3d Sess. 2—3; S. Rep. No. 704, 66th Cong., 3d Sess. 3 (all relating to the Osage Act, note 39 supra); H.R. Rep. No. 269, 68th Cong., 1st Sess. 3; S. Rep. No. 433, 68th Cong., 1st Sess. 3 (both relating to the Kaw Act, note 40 supra); H.R. Rep. No. 431, 75th Cong., 1st Sess.; S. Rep. No. 234, 75th Cong., 1st Sess. 2 (both relating to the Quapaw Act, note 41 supra); H.R. Rep. No. 1193, 70th Cong., 1st Sess. 5; S. Rep. No. 982, 70th Cong., 1st Sess., 4—5 (both relating to the Five Civilized Tribes Act, note 42 supra). 44 Respondents also urge that the Oklahoma legislature has recognized the immunity they assert here by authorizing the refund of 'payment made in error on account of the production being derived from restricted Indian lands and therefore exempt from taxation.' 68 Okl. Stat. 1941, § 832. Although respondents tell us that this argument was urged upon the Oklahoma Supreme Court, that court did not mention this possible state ground but rested its decision exclusively on the federal ground. We do not purport to decide whether Oklahoma law affords the exemption which federal law denies. See note 4 as to the assessments attributable to the undivided interests in lands held by non-Indians in No. 41.

910

336 U.S. 410 69 S.Ct. 616 93 L.Ed. 771 COMMISSIONER OF INTERNAL REVENUEv.PHIPPS. No. 83. Argued Dec. 9, 1948. Decided March 14, 1949. Mr. Stanley M. Silverberg, of Washington, D.C., for petitioner. Messrs. Montgomery Dorsey and W. Clayton Carpenter, both of Denver, Colo., for respondent. Mr. Justice MURPHY delivered the opinion of the Court. 1 This case involves a tax-free liquidation by a parent corporation of some of its subsidiaries. At the time of the liquidation the parent had earnings and profits available for distribution, and the subsidiaries had an aggregate net deficit. The issue now before us is whether the rule of Commissioner v. Sansome, 2 Cir., 60 F.2d 931, requires the subtraction of the subsidiaries' deficit from the parent's earnings and profits, in determining whether a subsequent distribution by the parent constituted dividends or a return of capital to its stockholders. 2 The Sansome case, supra, arose from a tax-free reorganization in which the transferor corporation had a surplus in earnings and profits available for distribution. It was there held that those earnings and profits, for purposes of a subsequent distribution by the transferee corporation to its stockholders, retain their status as earnings or profits and are taxable to the recipients as dividends. The rule has been held to include liquidations of a subsidiary by its parent. Robinette v. Commissioner, 9 Cir., 148 F.2d 513; U.S.Treas.Reg. 101, Art. 115—11, promulgated under the Revenue Act of 1938, 26 U.S.C.A.Int.Rev.Acts, page 1001 et seq., and made retroactive. 3 The facts were stipulated, and so found by the Tax Court. So far as relevant, they are as follows: In December, 1936, Nevada-California Electric Corporation liquidated five of its wholly owned subsidiaries by distributing to itself all of their assets, subject to their liabilities, and by redeeming and canceling all of their outstanding stock. No gain or loss on the liquidation was recognized for income tax purposes under § 112(b)(6) of the Revenue Act of 1936, 26 U.S.C.A.Int.Rev.Acts, pages 855, 856.1 On the date of liquidation, one of the subsidiaries had earnings and profits accumulated after February 28, 1913, in the amount of $90,362.77. The four others had deficits which aggregated $3,147,803.62. On December 31, 1936, the parent had earnings and profits accumulated after February 28, 1913, in the amount of $2,129,957.81, which amount does not reflect the earnings or deficits of the subsidiaries. In 1937, Nevada-California had earnings of $390,387.02. In the years 1918 to 1933 inclusive the parent and its subsidiaries filed consolidated income tax returns.2 4 Respondent was the owner of 2,640 shares o the preferred stock of Nevada-California. During 1937 that corporation made a prorata cash distribution to its preferred stockholders in the amount of $802,284, of which respondent received $18,480. The Commissioner determined that the distribution was a dividend under § 115 of the Revenue Act of 1936, 26 U.S.C.A.Int.Rev.Acts, page 868,3 and constituted ordinary income in its entirety. 5 Of the 1937 distribution, approximately 49% was chargeable to earnings and profits of the taxable year. Consequently, respondent conceded in the Tax Court that that percentage of her share, or about $9,000, was taxable as a dividend under § 115(a)(2). The Tax Court held in her favor that the balance was not a taxable dividend out of earnings and profits, on the theory that all of Nevada-California's accumulated earnings and profits, plus the accumulated earnings and profits of the subsidiary that had a surplus, were erased by the aggregate deficits of the other four subsidiaries.4 8 T.C. 190. The Court of Appeals, 10 Cir., affirmed by a divided court, 167 F.2d 117. We brought the case here on a writ of certiorari, 335 U.S. 807, 69 S.Ct. 33, because of its importance in the administration of the revenue laws, and because of an alleged conflict of the decision below with that of the Court of Appeals for the Ninth Circuit in Cranson v. United States, 146 F.2d 871. 6 Commissioner v. Sansome, 2 Cir., 60 F.2d 931, arose thus: A Corporation sold out all its assets to B Corporation, both organized under the laws of New Jersey. B Corporation assumed all liabilities and issued its stock to the stockholders of A Corporation, without change in the proportions of their holdings. The only change was that the charter of B Corporation gave it slightly broader powers. At the time of the reorganization, A Corporation had on its books a large surplus and undivided profits. The new corporation made no profit and the company soon dissolved. The liquidating distributions in 1923, the year when the dissolution was begun, did not exhaust the amount of accumulated profits of the predecessor corporation, and the Commissioner contended that those distributions were taxable to the stockholders as dividends and not, as claimed by them, as a return of capital. The Court of Appeals for the Second Circuit agreed with the Commissioner, and held that since the reorganization was nontaxable under § 202(c)(2) of the Revenue Act of 1921, 42 Stat. 230, the accumulated earnings and profits of the transferor retained their character as such for tax purposes in the h nds of the transferee and were consequently taxable on distribution as ordinary income under § 201 of the same Act, 42 Stat. 228.5 The view of the court was thus expressed by Judge Learned Hand: 'Hence we hold that a corporate reorganization which results in no 'gain or loss' under section 202(c)(2) (42 Stat. 230) does not toll the company's life as continued venture under section 201, and that what were 'earnings or profits' of the original, or subsidiary, company remain, for purposes of distribution, 'earnings or profits' of the successor, or parent, in liquidation.' 60 F.2d 931, 933. The rule has been consistently followed judicially6 and has received explicit Congressional approval.7 7 The rationale of the Sansome decision as a 'continued venture' doctrine has been often repeated in the cases, and in some of them the fact that the successor corporation has differed from the predecessor merely in identity or form8 has lent it plausibility. Other cases, however, demonstrate that the 'continued venture' analysis does not accurately indicate the basis of the decisions. The rule that earnings and profits of a corporation do not lose their character as such by virtue of a tax-free reorganization or liquidation has been applied where more than one corporation has been absorbed or liquidated,9 where there has been a 'split-off' reorganization,10 and where the reorganization has resulted in substantial changes in the proprietary interests.11 8 In Commissioner v. Munter, 331 U.S. 210, 67 S.Ct. 1175, 91 L.Ed. 1441, this Court reversed a decision of the Court of Appeals for the Third Circuit, 157 F.2d 132, which had held in favor of the taxpayer on the ground that the ownership of the successor corporation was so different from that of the two predecessors that there was not sufficient continuity of the corporate entity to apply the Sansome doctrine. The opinion of the Court stated our unanimous view of the basis of the rule: 'A basic principle of the income tax laws has long been that corporate earnings and profits should be taxed when they are distributed to the stockholders who own the distributing corporation. * * * Thus unless those earnings and profits accumulated by the predecessor corporations and undistributed in this reorganization are deemed to have been acquired by the successor corporation and taxable upon distribution by it, they would escape the taxation which Congress intended. * * * The congressional purpose to tax all stockholders who receive distributions of corporate earnings and profits cannot be frustrated by any reorganization which leaves earnings and profits undistributed in whole or in part.' 331 U.S. at pages 214, 215, 67 S.Ct. at page 1177, 91 L.Ed. 1441. See Murchison's Estate v. Commissioner, 5 Cir., 76 F.2d 641, 642; Putnam v. United States, 2 Cir., 149 F.2d 721, 726; Samuel L. Slover, 6 T.C. 884, 886. We concluded from the cases that the Sansome rule is grounded not on a theory of continuity of the corporate enterprise but on the necessity to prevent escape of earnings and profits from taxation. 9 The decision of the Court of Appeals for the Second Circuit in Harter v. Helvering, 79 F.2d 12, is not inconsistent with this view. In that case the situation was as follows: A Corporation and B Corporation, each of which had accumulated earnings and profits merged to form C Corporation. By the operation of the Sansome rule, the earnings and profits retained their character as such in the hands of C. Some time later, D Corporation acquired all the stock of C, and thereafter liquidated it in a transaction in which no gain or loss was recognized. At the time of the liquidation of C Corporation, D Corporation, the parent, had a deficit in earnings and profits. The court held, in determining the amount of earnings and profits available to D Corporation after the liquidation for distribution as dividends, that its deficit should be deducted from the accumulated earnings and profits acquired from its subsidiary. It is vigorously contended that the logic of the Harter case compels the allowance of a deduction of the deficits of the subsidiaries from the accumulated earnings and profits of the parent. We believe this view to be the product of inadequate analysis.12 The difference between the Harter situation and the problem before us may perhaps be clarified by comparing them taxwise if neither liquidation had occurred. Briefly stated, in the case of a distribution to a corporation with a deficit from either current or prior losses, the corporation receiving the distribution has no taxable income or earnings or profits available for current distribution until current income excees current losses, and no accumulated earnings or profits until its actual deficit from prior losses is erased. See 1 Mertens, Law of Federal Income Taxation § 9.30, and cases cited therein n. 44 et seq. In the instant situation, however, the parent did have accumulated earnings and profits available for distribution as dividends, absent the liquidation. Congressional intent to tax such earnings and profits on their distribution cannot be prevented by the fact of an intervening reorganization or liquidation.13 10 The operation of the Sansome rule on the taxation of corporate distributions is brought into high relief by consideration of the economic relation between a parent corporation and its subsidiary. Congress requires that earnings and profits, current or accumulated, be taxed to the recipients thereof as dividends on their distribution.14 If a subsidiary has a surplus in earnings and profits, the parent has a choice of two methods by which it may 'realize' this surplus. It may cause the subsidiary to declare a dividend, or it may liquidate its interest or part of its interest in the subsidiary. In the former case, the distribution would of course be taxable as ordinary income to the parent insofar as that distribution, plus the parent's other income, represented net income to it. If the parent uses the second method, two alternatives again are available: the liquidation may take the form of a sale outright, or may be performed within the framework of the reorganization sections of the Internal Revenue Code or its predecessor acts. If the former, gain is of course realized, and is also recognized for tax purposes. We note in passing, in this connection, that such gain will correspond, if at all, only by coincidence with the amount of earnings and profits of the subsidiary. If the latter, Congress has determined that the gain shall not be recognized at that time, but that such recognition shall be deferred. If the subsidiary has a deficit in earnings and profits, the deficit may be 'realized' by the parent only by liquidation, and the same two alternatives are present as when the subsidiary has a surplus: sale, and reorganization within § 112. Again, in the former case, loss is realized and also recognized. And in the case of a reorganization or liquidation in the framework of the Code, the recognition of loss is deferred by Congressional mandate to a later time. 11 If the assets of the parent and subsidiary are combined via a tax-free reorganization or liquidation, the effect of the Sansome rule is simply this: a distribution of assets that would have been taxable as dividends absent the reorganization or liquidation does not lose that character by virtue of the tax-free transaction. Respondent's contention that the logic of the Sansome rule requires subtracting the deficit of the subsidiary from the earnings and profits of the parent as a corollary of carrying over the earnings and profits of the subsidiary has a superficial plausibility; but the plausibility disappears when it is noted that the taxpayer would thus obtain an advantage taxwise that would not be available absent the liquidation since there is no way to 'declare' a deficit, and thus no method of loss realization open to the parent parallel to a declaration of dividends dends as a mode of realizing the profits of a subsidiary. 12 It is urged upon us that the deficits of the subsidiaries should be subtracted from the earnings and profits of the parent in order to make the tax consequences of the liquidation correspond with corporate accounting practice. The answer is brief. The Sansome rule itself, as applied to earnings and profits, has never been thought to be controlled by ordinary corporate accounting concepts; its uniform effect is to treat for tax purposes as earnings or profits assets which are properly considered capital for many if not most corporate purposes, and it has long been a commonplace of tax law that similar divergences often occur. See Commissioner v. Wheeler, 324 U.S. 542, 546, 65 S.Ct. 799, 801, 89 L.Ed. 1166; Putnam v. United States, 2 Cir., 149 F.2d 721, 726; 1 Mertens, op. cit. § 9.33; Rudick, op, cit. 878—906.15 13 Congress has expressed its purpose to tax all stockholders who receive distributions of earnings and profits. In order to facilitate simplification of corporate financial structures, it has further provided that certain intercorporate transactions shall be free of immediate tax consequences to the corporations. There has been judicially superimposed by the Sansome rule, with the subsequent explicit ratification of Congress, the doctrine that tax-free reorganizations shall not disturb the status of earnings and profits otherwise available for distribution. Nevada-California at the time of the 1937 distribution to respondent had such earnings and profits. Since we believe that to allow deduction from these earnings of the deficits of its subsidiaries would be in effect to recognize losses the tax effects of which Congress has explicitly provided should be deferred, the judgment of the Court of Appeals is reversed. 14 Reversed. 15 Mr. Justice DOUGLAS concurs in the result. 1 'Sec. 112. Recognition of Gain or Loss '(a) General rule.—Upon the sale or exchange of property the entire amount of the gain or loss, determined under section 111, shall be recognized, except as hereinafter provided in this section. '(b) Exchanges solely in kind.— '(6) Property received by corporation on complete liquidation of another.—No gain or loss shall be recognized upon the receipt by a corporation of property distributed in complete liquidation of another corporation. * * *' 2 It does not appear in what years occurred the subsidiaries' losses which resulted in their deficits, or to what extent they were set off against the net income of the parent in consolidated return years. To the extent that such set-offs did exist, the basis of the subsidiaries' stock to Nevada-California had been reduced and the losses realized by the parent and availed of for tax purposes prior to the liquidation. U.S.Treas.Reg.94, art. 113(b)—1, promulgated under the Revenue Act of 1936. 3 'Sec. 115. Distributions by Corporations '(a) Definition of dividend.—The term 'dividend' when used in this title (except in section 203(a)(3) and section 207(c)(1), relating to insurance companies) means any distribution made by a corporation to its shareholders, whether in money or in other property, (1) out of its earnings or profits accumulated after February 28, 1913, or (2) our of the earnings or profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made. '(b) Source of distributions.—For the purposes of this Act every distribution is made out of earnings or profits to the extent thereof, and from the most recently accumulated earnings or profits. Any earnings or profits accumulated, or increase in value of property accrued, before March 1, 1913, may be distributed exempt from tax, after the earnings and profits accumulated after February 28, 1913, have been distributed, but any such tax-free distribution shall be applied against and reduce the adjusted basis of the stock provided in section 113.' 4 Respondent agrees that the earnings and profits of the subsidiary with a surplus become, by virtue of the Sansome rule, earnings and profits of the parent, whatever the ultimate treatment of the deficits of the other subsidiaries. 5 Section 201 of the 1921 Act specifies what corporate distributions are taxable as dividends; § 202(c)(2) provides for the nonrecognition of gain or loss from certain corporate reorganizations. 6 Commissioner v. Munter, 331 U.S. 210, 67 S.Ct. 1175, 91 L.Ed. 1441; United States v. Kauffmann, 9 Cir., 62 F.2d 1045; Murchison's Estate v. Commissioner, 5 Cir., 76 F.2d 641; Harter v. Helvering, 2 Cir., 79 F.2d 12; Georday Enterprises, Ltd. v. Commissioner, 4 Cir., 126 F.2d 384; Reed Drug Co. v. Commissioner, 6 Cir., 130 F.2d 288; Robinette v. Commissioner, 9 Cir., 148 F.2d 513; Putnam v. United States, 2 Cir., 149 F.2d 721. See also Coudon v. Tait, 4 Cir., 61 F.2d 904, which was decided a few months after Sansome and reached the same result independently. 7 The Senate Finance Committee Report on § 115(h) of the Revenue Act of 1936, S.Rep.No.2156, 74th Cong., 2d Sess., p. 19 (1939—1 Cum.Bull. (part 2) 678, 690), recognized the rule of the Sansome case, and said that the amendment made by that Act intended no change in existing law, but was added only in the interest of clarity. U.S.Treas.Reg. 94, art. 115—11, promulgated under the 1936 Act, incorporates the substance of the report. The Revenue Act of 1938 amended § 115(h) only by extending its application to distributions of 'property or money' as well as of 'stock or securities'; the effect was to make § 115(h) harmonize with § 112(b)(6) and (7); and Regulations 101, promulgated under the 1938 Act, was amended to conform. The Internal Revenue Code contains the section substantially unchanged. Section 501 of the Second Revenue Act of 1940, 26 U.S.C.A. Int.Rev.Acts, page 56, added § 115(1) to the Internal Revenue Code, to elaborate the law with regard to the effect of tax-free distributions on earnings and profits. The reports accompanying the bill in Congress, H.R.Rep.No.2894, 76th Cong., 3d Sess., p. 41 (1940—2 Cum. Bull. 496, 526), and S.Rep.No.2114, 76th Cong., 3d Sess., p. 25 (1940—2 Cum. Bull. 528, 546—547), both recognize the application of 'the principle under which the earnings and profits of the transferor become the earnings and profits of the transferee.' Ibid., p. 25. The reports do not mention deficits. 8 See, e.g., Murchison's Estate v. Commissioner; Reed Drug Co. v. Commissioner; United States v. Kauffmann, all supra, n. 6. 9 Harter v. Helvering; Baker v. Commissioner, supra, n. 6. 10 Barnes v. United States, D.C., 22 F.Supp. 282; Estate of McClintic, 47 B.T.A. 188; Stella K. Mandel, 5 T.C. 684. 11 Commissioner v. Munter, supra, n 6. 12 See Note, The Effect of Tax-Free Reorganizations on Subsequent Corporate Distributions, 48 Col.L.Rev. 281; Atlas, The Case of the Disappearing Earnings and Profits, in Seventh Annual Institute of Federal Taxation, 1155; cf. 1 Mertens, Law of Federal Income Taxation § 9.58 ( 942); 1 Montgomery, Federal Taxes Corporations and Partnerships 1948—49, 154 (1948); Green, Recent Trends Under the Sansome Rule, in Sixth Annual Institute on Federal Taxation, 338; cf. Rudick, 'Dividends' and 'Earnings or Profits' Under the Income Tax Law: Corporate Non-Liquidating Distributions, 89 U.Pa.L.Rev. 865, 896. 13 Senior Investment Co., 2 T.C. 124, did not involve the question before us, but was concerned with the applicability, for purposes of computing surtax on undistributed profits, of §§ 26(c)(1) and 26(c)(3) of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev.Acts, page 836, the latter as amended by § 501(a)(2) of the Revenue Act of 1942, 26 U.S.C.A. Int.Rev.Acts, page 344, to the transferor corporation in a tax-free reorganization. The question of 'inheritance' of a deficit was not in issue. See Green, supra, note 12, at 341. 14 The operation of the Sansome rule is restricted, of course, to earnings and profits which are not considered to be distributed to its own stockholders by the transferor corporation in a tax-free reorganization. Commissioner v. Munter, 331 U.S. 210, 215—216, 67 S.Ct. at page 1177, 91 L.Ed. 1441; Samuel L. Slover, 6 T.C. 884. Cf. U.S.Treas.Reg.111, art. 29.112(b)(6)—4 as to the effect of the tax-free reorganization on minority stockholders of the transferor corporation. 15 On its merits, respondent's argument is not convincing. It fails to take into account the difference between the concept of surplus or deficit, which is a summary of the operations of the corporation reporting, it, and the concept of gain or loss, which reports the effect of the taxfree transaction itself. So various are the possible permutations and combinations of the economic factors that equivalence of surplus or deficit in the accounts of the subsidiary with the gain or loss to the parent would be mere coincidence. Consider for example the case where a corporation acquires all the stock of another which at the time has a large deficit. If the subsidiary is soon liquidated, the deficit will still be large, and the parent may realize little or no loss on the liquidation. See the first two texts cited note 12, supra.

1112

336 U.S. 386 69 S.Ct. 622 93 L.Ed. 754 BLACK DIAMOND S. S. CORPORATIONv.ROBERT STEWART & SONS, Limited, et al. UNITED STATES v. ROBERT STEWART & SONS, Limited, et al. Nos. 121 and 130. Argued Jan. 3, 4, 1949. Decided March 14, 1949. Judgment Amended June 13, 1949. See 69 S.Ct. 1490. Mr. John W. Crandall, of New York City, for Black Diamond S. S. corp. Mr. Philip Elman, of Washington, D.C., for the United States. [Argument of Counsel from page 387 intentionally omitted] Mr. W. G. Symmers, of New York City, for respondents. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 We brought these cases here because they call for determination of important issues in the administration of admiralty law. 335 U.S. 809, 69 S.Ct. 40. They bring for review a decree of the Court of Appeals for the Second Circuit affirming the dismissal of a petition for limited liability brought in the United States District Court for the Eastern District of New York by the United States, as owner and the Black Diamond Steamship Corporation as bareboat charterer of the S. S. Norwalk Victory. 167 F.2d 308. 2 The facts controlling our decision are riefly these. On April 28, 1947, the Norwalk Victory, while proceeding down the Schelde River in the territorial waters of Belgium, collided with the British steamer Merganser. The Merganser sank with all her cargo; her chief steward was killed; in backing away from the Merganser the Norwalk Victory struck and damaged the bank of the Schelde. Soon after the collision the owners of the Merganser brought suit against Black Diamond in the High Court of Justice of England claiming damages in the amount of $1,000,000. That is the only proceeding which has been brought abroad. On October 14, 1947, the owners of the cargo lost in the sinking of the Merganser brought suit in the Eastern District of New York; aggregate claims thus far filed total nearly $1,000,000. 3 In their petition for limitation of liability, brought under R.S. § 4285, as amended, 49 Stat. 1480, 46 U.S.C. s 185, 46 U.S.C.A. § 185,1 the United States and Black Diamond allege the possibility that in addition to the suit in the High Court of Justice and the suits by the cargo owners in New York, there may be suits in the courts of the United States by other cargo owners, by the personal representative of the Merganser's chief steward, and by the Belgian Government for damages to the bank of the Schelde and for the cost of removing the wreck of the Merganser from the river. These claims, they say, would exceed the value of the Norwalk Victory, which is about $1,000,000. But the petitioners, despite the provisions of R.S. § 4283, as amended, 49 Stat. 1479, 46 U.S.C. § 183, 46 U.S.C.A. § 183,2 do not recognize the value of their ship as the limit of their liability. They insist, rather, that their liability is limited by the International Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Vessels, signed at Brussels on August 25, 1924.3 The Convention was ratified by Belgium on June 2, 1930, and took effect on June 2, 1931; it is alleged, therefore, to have been part of the territorial law of Belgium at the time of this collision in Belgian waters. On the basis of this Convention, the petitioners assert their maximum liability to be $325,028.79. 4 Accordingly, Black Diamond accompanied its petition for limitation of liability with a bond in the amount of $325,028.79. The United States, standing upon 28 U.S.C. § 2408, 28 U.S.C.A. § 2408,4 and § 3 of the Suits in Admiralty Act, 41 Stat. 526, as amended, 46 U.S.C. § 743, 46 U.S.C.A. § 743,5 filed no bond. The District Court, holding that the privilege of limiting liability relates 'not to the substantive rights giving rise to the liability, but to the remedy, and that is governed by the law of the forum,' dismissed the petition of the ground that Black Diamond had not complied with R.S. s 4285 by filing a bond in the amount of the value of the ship $1,000,000. The standing of the United States (which was not separately represented at that stage of the proceeding) was not considered. 5 Upon appeal, the petitioners were found to be in 'a dilemma from which they cannot escape.' 2 Cir., 167 F.2d at page 309. Reading the petition as alleging that the Belgian limitation attached to the claimants' substantive right to recover, and treating that allegation as proved for purposes of determining the sufficiency of the petition, the Court accepted arguendo the sum of $325,000 as 'the limit of all their (petitioners') liabilities.' Id. But though the Court of Appeals looked to the lex loci delicti for the substantive limit of liability, its next step was taken on the assumption that the conditions under which a petition praying for the injunction of other proceedings and a forum concursus may be filed are matte § of procedure governed by the lex fori. It is a condition imposed by the lex fori, the court's reasoning continued, that a petition for limitation of liability is not available to a shipowner unless the aggregate of known and probable claims against him is greater than the value of his ship. As establishing this proposition, the court cited The Aquitania, 2 Cir., 20 F.2d 457; Curtis Bay Towing Co. v. Tug Kevin Moran, Inc., 2 Cir., 159 F.2d 273; and The George W. Fields, D.C.S.D.N.Y., 237 F. 403. And it held these cases applicable on the ground that the maximum liability imposed by Belgian law was less than the value of the Norwalk Victory. 6 But the lower court found it unnecessary to pass finally on the question whether the Belgian limitation was in fact controlling because, if it were not, petitioners would be impaled on the other horn of the dilemma: if the substantive law of the forum rather than that of Belgium applied, the limit of liability, by R.S. § 4283, would be the value of the vessel. Since the procedural law of the forum, moreover, requires the posting of a bond in the amount of potential liability, and since the bond proposed by petitioners was for less than a third of that amount, upon this hypothesis also they were disentitled to proceed. The Court of Appeals accordingly affirmed the dismissal of the petition. 7 If the Court of Appeals' reliance upon The Aquitania, Curtis Bay Towing Co. v. Tug Kevin Moran, and The George W. Fields, supra, was, as we are convinced, under the circumstances misplaced, we escape its dilemma without wanting in respect for the wisdom of that most experienced of admiralty courts. Those cases, it is true, hold that where the aggregate claims against a shipowner can by no possibility exceed the value of his ship, a proceeding under R.S. § 4285 will not lie. But the value of the ship was relevant in those cases only because under the law of the United States, which was assumed to be applicable, that was the limit of the owner's liability. Since the total amount of all potential claims in each case was only a fraction of that limit, the fund available for their satisfaction was more than ample. There was no reason, therefore, for permitting the petitioners to invoke a forum concursus. But where, as here, the total amount of potential claims exceeds the fund available for their satisfaction, whether that fund be measured by the law of Belgium or of the United States, there exists just such a situation as R.S. § 4285 was designed to meet. 8 'Unless some proceeding of this kind were adopted which should bring all the parties interested into one litigation, and all the claimants into concourse for a pro rata distribution of the common fund, it is manifest that in most cases the benefits of the act could never be realized. Cases might occur, it is true, in which the shipowners could avail themselves of those benefits, by way of defense alone, as where both ship and freight are totally lost, so that the owners are relieved from all liability whatever. But even in that case, in the absence of a remedy by which they could obtain a decree of exemption as to all claimants, they would be liable to a diversity of suits, brought, perhaps, in different states, after long periods of time, when the witnesses have been dispersed, and issuing in contrary results before different tribunals; while in the ordinary cases, where a limited liability to some extent exists, but to an amount less than the aggregate claims for damages, so as to require a concourse of claimants and a pro rata distribution, the prosecution of separate suits, if allowed to proceed, would result in a subversion of the whole object and scheme of the statute.' Providence & N.Y.S.S. Co. v. Hill Mfg. Co., 109 U.S. 578, 594—595, 3 S.Ct. 379, 389, 390, 27 L.Ed. 1038. 9 Indeed, if the total amount recoverable is fixed by Belgian law, the need for the issuance of a motion under Admiralty Rule 51, 28 U.S.C.A., the injunction of other suits, and a forum concursus is obviously greater than it is under the higher substantive limitation of our own law. Thus one of the horns of petitioners' dilemma disappears; we must, accordingly, reverse the judgment below and remand the cases for further proceedings. 10 Since the cases are going back, it is necessary to confront the other horn of the dilemma. In that branch of its reasoning, the Court of Appeals assumed that the posting of too small a bond would require the dismissal of the petition. The court's attention apparently was not directed to the status of the Government, which, by the plain import of 28 U.S.C. § 2408, 28 U.S.C.A. § 2408,6 and 41 Stat. 526, as amended, 46 U.S.C. § 743, 46 U.S.C.A. § 743,7 relieves it of the duty to post a bond in order to be entitled to proceed under R.S. § 4285. And perhaps it is well to add, in passing, that, in view of the six-month limitation8 on proceeding under that statute, remand to the District Court in order to give Black Diamond an opportunity to file a larger bond would have been a better course, since the defect was not jurisdictional, than affirmance of dismissal of the petition. See Langnes v. Green, 282 U.S. 531, 541—542, 51 S.Ct. 243, 247, 75 L.Ed. 520; Curtis Bay Towing Co. v. Tug Kevin Moran, Inc. 2 Cir., 159 F.2d 273, 276; cf. Bigler v. Waller, 12 Wall. 142, 149, 20 L.Ed. 260; Davis v. Wakelee, 156 U.S. 680, 15 S.Ct. 555, 39 L.Ed. 578. We add this observation because, under the circumstances, affirmance could only have had the effect of depriving the petitioners altogether of the privilege of a limitation proceeding, no matter what the amount of the bond they were willing to post. It threw them back upon the dubious advantage of limitation of liability as a partial defense to successive suits in admiralty in which the recoveries, though separately less than the applicable limit, might in the aggregate far exceed it. And such would be the effect were we also to affirm the judgment. 11 Having decided that the case must be remanded because the petition was improperly dismissed, we turn to the question whether there are any circumstances under which the Belgian limitation would be enforceable by our courts. On this point we agree with the Court of Appeals—and disagree with the District Court—that if, indeed, the Belgian limitation attaches to the right, then nothing in The Titanic, 233 U.S. 718, 34 S.Ct. 754, 58 L.Ed. 1171, stands in the way of observing that limitation. The Court in that case was dealing with 'a liability assumed already to exist on other grounds.' Id., 233 U.S. at page 733, 34 S.Ct. at page 756. But if it is the law of Belgium that the wrong creates no greater liability than that recognized by the Convention of 1924, we cannot, without more, regard our own statutes as expanding the right to recover. Any other conclusion would disregard the settled principle that, in the absence of some overriding domestic policy translated into law, the right to recover for a tort depends upon and is measured by the law of the place where the tort occurred. Smith v. Condry, 1 How. 28, 33, 11 L.Ed. 35; Slater v. Mexican National R. Co., 194 U.S. 120, 24 S.Ct. 581, 48 L.Ed. 900; Cuba R. Co. v. Crosby, 222 U.S. 473, 32 S.Ct. 132, 56 L.Ed. 274, 38 L.R.A., N.S., 40; Western Union Telegraph Co. v. Brown, 234 U.S. 542, 34 S.Ct. 955, 58 L.Ed. 1457. 12 If, on the other hand, the Convention merely provides procedural machinery by which claim otherwise created are brought into concourse and scaled down to their proportionate share of a limited fund, we would respect the equally well settled principle that the forum is not governed by foreign rules of procedure. See Pritchard v. Norton, 106 U.S. 124, 1 S.Ct. 102, 27 L.Ed. 104; Davis v. Mills, 194 U.S. 451, 24 S.Ct. 692, 48 L.Ed. 1067. We leave open the choice between these opposing hypotheses. Nor do we mean to imply that these apparently clear-cut alternatives are exhaustive. A limi which attaches not do an individual's right of recovery but to the aggregate claims arising from a given tort can be said to be 'attached to the right' only in a special sense of that phrase, and a rule which operates to cut down the amount recoverable by a claimant cannot be fitted within any but a very broad definition of the term 'procedure.' Whether there are in fact considerations of domestic policy which deserve to be measured against application of the lex loci delicti and whether such considerations are as significant where the foreign limitation is lower than our own as where it is higher—these too are questions not now before us in view of the fact that the case is here merely on exceptions to the petition for limitation of liability. 13 Since Belgian law may be enforceable by our courts, that law, having been pleaded, must be established. It is true that this Court has on several occasions held international rules which had passed into the 'general maritime law' to be subject to judicial notice. The Scotia, 14 Wall. 170, 20 L.Ed. 822; The Belgenland, 114 U.S. 355, 370, 5 S.Ct. 860, 867, 29 L.Ed. 152; Richelieu & Ontario Nav. Co. v. Boston Marine Ins. Co., 136 U.S. 408, 422, 10 S.Ct. 934, 937, 34 L.Ed. 398; The New York, 175 U.S. 187, 20 S.Ct. 67, 44 L.Ed. 126. But where less widely recognized rules of foreign maritime law have been involved, the Court has adhered to the general principle that foreign law is to be proved as a fact. Liverpool & G. W. Steam Co. v. Phenix Ins. Co., 129 U.S. 397, 9 S.Ct. 469, 32 L.Ed. 788; see Talbot v. Seeman, 1 Cranch 1, 38, 2 L.Ed. 15; The Scotia, 14 Wall. 170, 188, 20 L.Ed. 822. See also the decisions of the lower federal courts cited in 3 Benedict on Admiralty 11, n. 36 (6th ed., Knauth, 1940). Although we would no doubt be free to notice the terms of the Limitation Convention itself even though they were not set forth among the allegations of the petition, their legal significance does not appear on the surface. 'Many doubts are left unresolved by the documents before us.' Slater v. Mexican National R. Co., supra, 194 U.S. at page 130, 24 S.Ct. at page 584, 48 L.Ed. 900. Respondents, indeed, in their effort to show that the Convention lays down purely 'procedural' requirements, rely upon 'personal consultations with three active maritime lawyers of Antwerp' which are no part of the record before us. 'Substance' and 'procedure,' moreover, are not legal concepts of invariant content, see Guaranty Trust Co. of New York v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1469, 89 L.Ed. 2079, 160 A.L.R. 1231, and on the basis of what is before us we are precluded from choosing one of these categories rather than the other. 14 It is important to add, moreover, that the question of what law governs the substantive limit of liability should be determined upon remand in advance of the proof of individual claims. A proceeding to limit liability is ipso facto a proceeding to limit recovery, and the amount of the applicable limit, like the value of the vessel and freight, is a question affecting the magnitude of the res from which recovery is sought. It is a question, therefore, which lies at the threshold of all claims, is equally relevant to all, and should accordingly be disposed of before any. 15 One last point remains to be considered—the amount of the bond to be required of Black Diamond upon remand of No. 121. A literal reading of the procedural requirements of R.S. § 4285 would compel the posting of a bond in 'a sum equal to the amount or value of the interest of such owner in the vessel and freight,' in this instance about $1,000,000. But we think that this provision, as part of a total legislative scheme, should be read in the light of the substantive limitation imposed by R.S. § 4283, for it is obvious that the words 'amount or value of the interest of such owner' in § 4285 were carried over from and are relevant solely to the identical language of § 4283 laying down the limit which recovery against the owner shall not * * * exceed.' The whole tenor of R.S. § 4285—the option of depositing cash or 'approved security,' the discretion granted the court to require additional deposits if 'necessary to carry out the provisions of section 4283,' and the alternative of transferring the vessel and freight to a trustee—is one of concern with protecting the assets from which the claimants' satisfaction must ultimately come. 16 If, therefore Belgian law rather than R.S. § 4283 should be found to govern the substantive limit of liability, no purpose would be served, so far as proceedings in the District Court are concerned, by demanding security in excess of that limit. But the choice of law presents a knotty problem, and we cannot overlook the contingencies of appellate review. If the District Court should find Belgian law controlling, it might, under our interpretation of § 4285, exact a bond of only $325,000. If, however, a contrary view should ultimately prevail, the requisite amount of the bond would have been $1,000,000. The District Court, therefore, should provide for that contingency by requiring Black Diamond to post a bond for the value of the ship and freight, not because § 4285 demands it, but as an exercise of its power to preserve the status quo pending appeal. See Scripps-Howard Radio, Inc., v. Federal Communications Comm., 316 U.S. 4, 9—10, 62 S.Ct. 875, 879 880, 86 L.Ed. 1229. 17 So, for proceedings not inconsistent with this opinion, the case is 18 Reversed and remanded. 19 Mr. Justice JACKSON, dissenting. 20 I suspect this decision will cause confusion in practical application of the Act of Congress governing limitation proceedings in admiralty. 21 The Act is designed to encourage American capital to risk itself in shipping ventures where 'ships are but boards, sailors but men; * * * and then there is the peril of waters, winds and rocks.' In order that disaster at sea might not jeopardize the shipowner's other assets, Congress limited his liability to the 'value of the interest of such owner in such vessel, and her freight then pending.' R.S. 4283, as amended, 49 Stat. 1479, 46 U.S.C. § 183, 46 U.S.C.A. § 183.1 This limitation serves much the same purpose for maritime ventures that the corporate fiction serves for the landsman's enterprises. 22 The statute also provides a skeleton proceeding, filled in by our rules, for affirmatively effecting this limitation of liability when catastrophe threatens claims that exceed the value of ship and freight. To a landlocked mind it has some analogy to voluntary bankruptcy. It is, in effect, a turn-over of the assets at risk to satisfy creditors. The owner may, after petitioning the District Court for limitation of liability, either transfer to a trustee his interest in the vessel and freight, together with enough to make up the limitation, and be quit of further responsibility, or he may keep his ship and sail on, provided he shall deposit with the court 'a sum equal to the amount or value of the interest of such owner in the vessel and freight, or approved security therefor.' R.S. § 4285, as amended, 49 Stat. 1480, 46 U.S.C. § 185, 46 U.S.C.A. § 185. 23 Our statute is clear: § 4283 fixes the maximum liability at ship plus freight and § 4285 sets the minimum security at the same figure. To provide any other limit of liability or security is to rewrite both sections. As written, the two sections provide and are designed to provide a provisional remedy to let the ship go her way whil the creditors are secured as well as if she were held in custody to pay their claims. 24 Our own rules in admiralty, as amended June 21, 1948, 28 U.S.C.A., prescribe the practice for applying this limitation when the shipowner takes the initiative under R.S. § 4285. The proceeding is conducted in two stages. In the first or preliminary stage the owner petitions for relief from personal liability, is required either to surrender his interest in the ship and her freight or to stipulate, with adequate bond, to pay into court its value. The statute says, 'Upon compliance with the requirements of this section all claims and proceedings against the owner with respect to the matter in question shall cease.' At this point an important change in the nature of the proceeding occurs. 25 The proceeding continues as a proceeding in rem against either the ship or the fund as the res. Our rules provide that when petitioner complies with the court's order as to surrender or bond, the court shall issue a monition requiring all persons asserting claims to file the same and may also issue injunction against the further prosecution of suits against either the owner or the vessel. Rule 51. The court then adjudicates the claims and apportions the available fund among them. Rule 52. The owner is at liberty to contest his liability or the liability of the vessel 'provided he shall have complied' with the requirements of surrender or deposit as above set forth. Rule 53. 26 We think such compliance is a condition precedent to obtaining a forum concursus to adjudicate liability. As the petitioner in this case did not post the security nor surrender the ship as required, the court below properly dismissed the petition and refused to enter the second or adjudicating stage of the proceeding. 27 This Court apparently holds that compliance is not a condition precedent and that instead of the vessel's value some other measure of liability might be adequate. While it requires the prescribed bond in this particular case, it does so, as we read its opinion, only as a matter of discretion and because of uncertainty as to the final decision on the foreign law issue on appeal. It seems to authorize a foreign law limitation on liability to be applied before a forum concursus takes place, while we think any issue as foreign law liability is to be applied only in the latter stage of the proceedings when the general issues as to liability are to be determined. 28 Congress could not have been unaware that maritime usages the world over have imposed some limitation upon ship-owners' liability and that several bases for its ascertainment have existed. Some systems have admitted no personal liability of the owner, confining liability to the ship itself; others have limited the owner's personal responsibility on his abandonment of the ship and freight. Still others have limited personal responsibility to payment of a sum computed on the ship's tonnage. Congress, however, has deliberately imposed and adhered to our own measure of liability based on the actual value of the interest in the ship and her freight. We think there is no authority for releasing the owner from liability, or releasing the ship, which are the steps now under consideration, until the owner has complied with provisions which fully protect this American measure of liability. 29 In this case, the reason the owners did not comply with the American limitation provision is that they aver that on the Schelde, where the collision occurred, Belgian law granted a much more drastic limitation, under which their liability is only about one-third of that imposed by our law. The court below held that release of the owner and ship, and invocation of a forum concursus, could not be granted on this basis. But it held that if they had complied with provisions of American law necessary to reach the question of the amount of aggregate liability, they were at liberty to interpose the Belgian law as a defense. The Court now holds that this question of fact—what is the foreign law? should be determined as a part of the preliminary step in the case and that the bond may be limited thereby. We think this is not the scheme of the statute and the rules and that, except for issues subsidiary to the court's fixing of the security required under Rule 51, all matters of fact, going to the substance of liability, are to be heard only at the later stages of the proceedings. 30 The limitation figure is established preliminarily, not because it represents the res, but because the statute and rules prescribe that formula and procedure for fixing both the maximum liability and minimum security required of the owner. And it has no bearing on the amount of claims that may be proved-until the latter are determined and a proportion established there is no need to know, for that purpose, what limit of liability applies. Indeed, unless it is intended to also change the rule where the statutory limitation under R.S. § 4283 is set up as a defense, it may be asserted after trial on the merits and after judgment. The Benefactor, 103 U.S. 239, 26 L.Ed. 351. And by the terms of Rule 55, the provisions of Rules 51—54 regulating limitation of liability proceedings are made applicable even to the Courts of Appeals. 31 Admiralty practice is a unique system of substantive law and procedure with which members of this Court are singularly deficient in experience. The court below is perhaps the most experienced in this country. The issue on which we reverse it is not one of ultimate rights of parties but one of practice, the consequences of which cannot be foreseen. I should leave the problem, at least at this stage, where the Court of Appeals left it, with a minor exception. 32 Of course, it should be noted that the Government is exempt from giving any security, but that is an oversight that it hardly needed to come here to correct. It should have the limitation which Congress has prescribed. 33 Except for that detail, I would affirm. 34 It may be that petitioner should now be allowed to amend and file the required bond equal to the ship's value and proceed. It has not so far asked to do so, insisting instead upon what it thought to be its legal right to proceed without compliance. This question, too, may be left to the courts below. 35 Mr. Justice REED and Mr. Justice DOUGLAS join in this opinion. 36 Mr. Justice RUTLEDGE, dissenting. 37 I agree with Mr. Justice JACKSON that, when Congress gave shipowners the privilege of limiting their liability and conditioned that privilege, in the alternative, upon turning over the vessel and freight for the benefit of claimants or depositing with the court cash or approved security of equivalent value, it meant exactly what it wrote into the statute concerning the amount of the security to be given. 38 Nothing in the statute's wording, purpose, or legislative history is cited or exists to justify rewriting 'a sum equal to the amount or value of the interest of such owner in the vessel and freight,'1 so as to make that wording read 'a sum equal to one-third the value of the interest of such owner when that amount possibly but by no means certainly will be the limit of his substantive liability after the claims against him are finally determined.' 39 The most appealing argument put forward to support this statutory distortion is petitioners' wholly specious plea of resulting 'injustice' if the judicial revision is not made. The plea is founded altogether upon petitioners' assumption that their view of the extent of their aggregate possible liability will prevail, when the time comes for deciding that question. 40 Petitioners' view is that the lex loci delicti governs both the existence and the extent of their liability in this case. That law is the law of Belgium, because the collision here involved took place in Belgian waters. Mo eover, since Belgium ratified the Brussels Convention of August 25, 1924,2 that Convention is claimed to be controlling of the resulting substantive liability. This, because the aggregate limit the Convention prescribes comes to only some $325,000 in this case and that limit, so it is argued, attaches to the right of recovery as part of the right, not merely as a matter of remedy. See Slater v. Mexican National R. Co., 194 U.S. 120, 24 S.Ct. 581, 48 L.Ed. 900; Cf. Smith v. Condry, 1 How. 28, 33, 11 L.Ed. 35; Cuba R. Co. v. Crosby, 222 U.S. 473, 32 S.Ct. 132, 56 L.Ed. 274, 38 L.R.A.,N.S., 40; American Banana Co. v. United Fruit Co., 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed. 826, 16 Ann.Cas. 1047. 41 Hence, it is urged petitioner Black Diamond satisfied the requirements of Rev.Stat. § 4285, as amended, for limitation of liability, when it deposited an approved bond for $325,000, rather than one in the amount of $1,000,000, the value of the owner's interest in the vessel and freight, as § 4285 in terms requires. The conclusion is grounded on the 'injustice' which petitioners say would result if one substantively liable for only $325,000 were required to post bond in three times that amount in order to have the advantage of limitation. This, it is said, would mean forcing such an owner to pay bond premiums three times larger than necessary to discharge all his liabilities, an 'injustice' it is argued Congress cannot have contemplated notwithstanding its clear and unambiguous language. 42 Even if petitioners' assumption concerning their ultimate liability should turn out to be true, the statutory command is clear and unequivocal: Turn over the ship and the freight or their value as the price of limitation. In this command Congress was concerned not at all with the extent of aggregate claims or liabilities. It was concerned only with affording the owner a chance to limit his liabilities, but at the same time allowing this privilege only on precise and fixed conditions for giving security to his creditors in the amount specified. This was unrelated to the amount of the liabilities in the aggregate, whether above or below the maximum fixed by the statute.3 43 That Congress intended the same maximum and the same security for claimants, regardless of the alternative mode chosen for giving the security, is shown by the very alternatives themselves. They are equivalents. There was no intent to permit less security to be given when the owner elects to give the statutory substitutes than when he turns over the ship. Correlatively there was no intention to give him the limitation for less cost or on more advantageous terms in the one case than in the other. The provision for substituting money or security for the ship had no purpose or function to correlate the bond required with the amount of the ultimate aggregate substantive liabilities which seldom can be known in advance of their final determination. The alternative mode's purpose was only to permit the owner to release the ship and continue it in active business use, provided he substituted its equivalent in value, not some lesser sum, for it. 44 It is quite true that the statute was enacted for shipowners' benefit and for encouragement of the industry, by enabling owners to limit their liability. But in doing this and thereby cutting down the rights of claimants to recovery, Congress was not unmindful of the latter. For satisfying their unrestricted claims it substituted a fund instead of the owner's general and unlimited liability. That fund was the vessel's value or its equivalent. Nor was this a subordinate feature of the scheme of limitation. It was the very heart of that scheme, and, in my opinion, was intended to create a general and uniform policy for application in American courts. In cutting down claimants' rights of recovery to the fund prescribed, Congress was not giving the owner the additional right to cut further the security provided for their payment, by either assuming or pleading that his ultimate aggregate liabilities would be below that fund. 45 This brings us to the final consideration, which is that there is no injustice whatever here, there is only an imagined one, in requiring Black Diamond to deposit in court cash or security in the full amount of $1,000,000 required by the statute's terms. The aggregate of petitioners' liabilities has not been determined, nor can it be until the further and probably extended proceedings for that purpose have been concluded. Meanwhile, it must remain uncertain, as it has during all the litigation to this date, whether petitioners' or respondent's view on that matter ultimately will prevail. In other words, it is now as likely that petitioners' liabilities eventually will be found to be $1,000,000 as it is that they will be fixed according to petitioners' view of the Belgian law and ours. Indeed, the Court's opinion sets forth considerations casting grave doubt on whether petitioners' theory of the substantive limitation can prevail. 46 In this state of affairs petitioners actually are asking us to gamble with them, and against respondent and other claimants, on the ultimate computation of petitioners' aggregate liabilities. And in this petitioners are asking us to put upon the claimants the risk that petitioners will turn out to be right. That risk, under the statute's policy, should be the other way. Likewise, under the policy, the cost of that risk is put upon petitioner Black Diamond. In reducing claimants' rights of recovery to the value of the ship or its equivalent, Congress did not mean that the claimants should take the risk of not having that value available to satisfy their claims if the aggregate should eventually be held to be the amount of the specified fund. Nor did it mean that they should have that value for security if the ship were turned over for their benefit, but should bear either the loss or the risk if the shipowner elected to substitute cash or other security, with the court's approval, in a smaller amount in order to keep his vessel running. 47 In the event petitioners turn out to be wrong and, as seems likely in that event, valid claims should amount to $1,000,000 or more, under the view petitioners would have us take, the claimants would have certain security to apply on what is due them for only $325,000. Petitioner Black Diamond then either will have limited its liability to that amount, to the claimants' loss and contrary to the statute's provision; or, if the District Court should then see fit to apply the authority given it to require further security tocarry out the purposes of § 4283, as amended,4 it will have cast the burden of Black Diamond's solvency on the claimants for the probably extended period of litigation necessary to complete the final determination of petitioners' substantive liabilities. 48 I do not think the statute meant the claimants to bear either such a loss or such a risk. Its policy is to exchange limitation for security. The security specified is not contingent or to be supplied in the future. It is a present exchange, immediately effective, to give the shipowner immunity to liability beyond the fund exacted and, at the same time, to relieve claimants of any risk that the fund will not be available if their valid claims eventually equal or exceed it. To allow security in less than the statutory amount to be given, o the change that valid claims may turn out to be less than the fund, vitiates that clear statutory object and command. The only purpose of requiring the approved substituted security to be deposited in court is to assure that claimants will not bear the risk of loss of the fund pending the final determination of their claims. 49 Petitioners' claim of 'injustice' is therefore without substance. Black Diamond seeks to shift to its creditors the risk which the language and policy of the statute place on it. The statute does not permit security contingent upon the outcome of the adjudication of claims or to be given in the future. The security is to be given concurrently with the privilege of limitation and is to stand in the court's control and at the statutory amount until the claims are finally adjudicated. Black Diamond seeks to have the statutory limitation without paying the statutory price. If that were allowed, the injustice would fall upon the claimants, not upon Black Diamond. 50 No case has been cited which holds that the statutory limitation can be obtained by giving security in less than the statutory amount. Nor need we now express opinion upon the problem considered in cases like The Aquitania, 2 Cir., 20 F.2d 457, and Curtis Bay Towing Co. v. Tug Kevin Moran, Inc., 2 Cir., 159 F.2d 273.5 51 In my view petitioner Black Diamond has not complied with the statute. Strictly therefore it is not entitled to the statutory limitation. But because the question is novel, the time for instituting another limitation proceeding has passed, and filing of security now in accordance with the statute's command would better serve its objects than dismissing the cause, I would reverse the judgment and remand the cause to the District Court to permit the filing of the statutory security, if Black Diamond can and promptly will comply with that requirement. This is for the reason that the statute, § 4285, requires security to be given by turning over the ship or its value in order to secure the limitation of liability, not merely as a matter of judicial discretion to preserve the status quo pending appeal from determination of the issues concerning whether the Belgian substantive limitation applies. The statutory security, if given, should remain in force until all claims have been filed and finally adjudicated. 1 'Sec. 4285. The vessel owner, within six months after a claimant shall have given to or filed with such owner written notice of claim, may petition a district court of the United States of competent jurisdiction for limitation of liability within the provisions of this chapter, as amended, and the owner (a) shall deposit with the court, for the benefit of claimants, a sum equal to the amount or value of the interest of such owner in the vessel and freight, or approved security therefor, and in addition such sums, or approved security therefor, as the court may from time to time tax as necessary to carry out the provisions of section 4283, as amended, or (b) at his option shall transfer, for the benefit of claimants, to a trustee to be appointed by the court his interest in the vessel and freight, together with such sums, or approved security therefor, as the court may from time to time fix as necessary to carry out the provisions of section 4283, as amended. Upon compliance with the requirements of this section all claims and proceedings against the owner with respect to the matter in question shall cease.' 2 'Sec. 4283. (a) The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, shall not, except in the cases provided for in subsection (b) of this section, exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.' 3 The pertinent parts of the Convention, p blished in U.S. Dept. of State Treaty Information Bull, No. 20, p. 13 (1931), are: 'Article 1 'The liability of the owner of a seagoing vessel is limited to an amount equal to the value of the vessel, the freight and the accessories of the vessel, in respect of— '1. Compensation due to third parties by reason of damage caused, whether on land or on water, by the acts or faults of the master, crew, pilot, or any other person in the service of the vessel; '5. Any obligation to remove the wreck of a sunken vessel, and any obligations connected therewith; 'Provided that, as regards the cases mentioned in Nos. 1, 2, 3, 4 and 5, the liability referred to in the preceding provisions shall not exceed an aggregate sum equal to 8 pounds sterling per ton of the vessel's tonnage. 'Article 4 'The freight referred to in article 1, including passage money, is deemed, as respects vessels of every description, to be a lump sum fixed at all events at 10 per cent of the value of the vessel at the commencement of the voyage. * * * 'Article 7 'Where death or bodily injury is caused by the acts or faults of the captain, crew, pilot or any other person in the service of the vessel, the owner of the vessel is liable to the victims or their representatives in an amount exceeding the limit of liability provided for in the preceding articles up to 8 pounds sterling per ton of the vessel's tonnage. * * * 'Article 10 'Where a person who operates the vessel without owning it or the principal charterer is liable under one of the heads enumerated in article 1, the provisions of thie convention are applicable to him. 'Article 11 'For the purposes of the provisions of the present convention, 'tonnage' is calculated as follows: 'In the case of steamers and other mechanically propelled vessels, net tonnage, with the addition of the amount deducted from the gross tonnage on account of engine-room space for the purpose of ascertaining the net tonnage. * * *' 4 '§ 2408. Security not required of United States. 'Security for damages or costs shall not be required of the United States, any department or agency thereof or any party acting under the direction of any such department or agency on the issuance of process or the institution or prosecution of any proceeding. * * *' 5 '§ 743. Procedure in cases of libel in personam '* * * Neither the United States nor such corporation shall be required to give any bond or admiralty stipulation on any proceeding brought hereunder.' 6 See footnote 4 ante. 7 See footnote 5 ante. 8 See footnote 1 ante. 1 'The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, shall not * * * exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.' 1 Rev.Stat. § 4285, as amended, 49 Stat. 1480, 46 U.S.C. § 185, 46 U.S.C.A. § 185. The full text of the section is quoted in note 1 of the majority opinion. 2 International Convention for the Unification of Certain Rules Relating to the Limitation of the Liability of Owners of Seagoing Vessels, signed at Brussels on August 25, 1924. See note 2 of the majority opinion. 3 But cf. the cases cited in the text infra at note 5. 4 Whether the ship is turned over for the creditor's benefit or other acceptable security is substituted, § 4285, as amended, authorizes the court to require 'in addition such sums, or approved security therefor, as the court may from time to time fix as necessary to carry out the provisions of' § 4283, as amended. 46 U.S.C. § 185, 46 U.S.C.A. § 185. 5 Holding, as the Court of Appeals said in this case, that the limitation proceeding is not available where the aggregate of known and probable claims is less than the value of the ship.

78

336 U.S. 368 69 S.Ct. 606 93 L.Ed. 741 STAINBACK, Governor of Territory of Hawaii, et al.v.MO HOCK KE LOK PO et al. (two cases). Nos. 52, 474. No. 474. Distributed Dec. 30, 1948. No. 52. Argued Jan. 11 and 12, 1949. Decided March 14, 1949. Appeal from the District Court of the United States for the District of Hawaii. No. 52: Mr. Thomas W. Flynn, Jr., of Honolulu. T.H., for appellants. [Argument of Counsel from page 369 intentionally omitted] Messrs. N. Wai Yuen Char, of Honolulu, T.H., and A. L. Wirin, of Los Angeles, Cal., for appellees. No. 474: Mr. C. Nils Tavares, of Honolulu, T.H., for petitioners. Messrs. A. L. Wirin and Fred Okrano, both of Los Angeles, Cal., for respondents. Mr. Justice REED delivered the opinion of the Court. 1 The appeal in No. 52, Stainback, Governor of the Territory of Hawaii, et al. v. Mo Hock Ke Lok Po, An Eleemosynary Corporation, et al., and the writ of certiorari in No. 474, a case with the same short title, seek review of a judgment of the District Court of the United States for the District of Hawaii. This judgment was passed by a special three-judge court that was called pursuant to Judicial Code § 266 and by that section's provision was brought directly here on May 7, 1948, in case No. 52. To guard against a frustration of review by this Court's refusal to accept jurisdiction, a timely appeal by the petitioners here in No. 52 has been taken by them in No. 474 to the Court of Appeals for the Ninth Circuit. No judgment on that appeal has been entered by the Court of Appeals and appellants there, the Governor of Hawaii et al., petitioned here on December 21, 1948, for the allowance of a writ of certiorari under 28 U.S.C. § 1254(1), 28 U.S.C.A. § 1254(1).1 2 A jurisdictional question as to whether Judicial Code § 266 was applicable in the Territory of Hawaii arises in No. 52. It was postponed by order of this Court on June 1, 1948, to the hearing of that case on the merits. This Court postponed action on the petition for certiorari in No. 474 until the hearing of No. 52 on the merits. As the record, arguments and briefs here and the opinions below fully present the case decided by the District Court, to avoid further futile proceedings we now grant the petition for the writ of certiorari to the Court of Appeals before its decree and proceed in No. 474 to a review of the judgment of the District Court of Hawaii. The opinions appeal in 74 F.Supp. 852, Mo Hock Ke Lok Po v. Stainback. 3 Respondents here were plaintiffs in the trial court. They are Chinese School Associations, a Chinese school, all giving instruction in Chinese, and a teacher of Chinese in Chinese language schools. After December 7, 1941, these schools closed and have not reopened. Prior to that date they had more than 2,000 pupils, several hundred of whom were in the first and second grade, and numerous teachers. Under J.C. § 266 they sought an injunction against officers of the Territory of Hawaii charged by law with the administration of an Act of the Territory 'Regulating the Teaching of Foreign Languages to Children,'2 from enforcing it in any particular against the teaching of foreign languages to the respondents' pupils. 4 The Act was grounded on a legislative finding 'that the study and persistent use of foreign languages by children of average intelligence in their earl and formative years definitely detract from their ability properly to understand and assimilate their normal studies in the English language.' Revised Laws of Hawaii 1945, § 1871. 'School' was defined as any teaching regularly of two or more persons in a group.3 Requirements for pupils and teachers in foreign language schools were set out.4 Visitation of the foreign language schools by appropriate officials for enforcement purposes was authorized. § 1875. The only sanction for enforcement is by injunction.5 This lack of coercion by fine or imprisonment and the limitation of enforcement to injunction are important factors in our conclusion upon No. 474. 5 The complaint alleged that in violation of the Fifth Amendment the Act deprived plaintiff schools of the right to manage their property by contracting with instructors and parents for the teaching of Chinese, and the plaintiff teacher of Chinese of his right to follow his occupation.6 See Farrington v. T. Tokushige, 273 U.S. 284, 299, 47 S.Ct. 40 , 409, 71 L.Ed. 646. The judgment of the special district court granted a sweeping permanent injunction against enforcement of the Hawaiian Act. As our conclusions are based solely upon procedural issues, any further discussion of the facts or of the law applicable to the merits is not appropriate. 6 The complaint asked for and obtained a three-judge court under the provisions of the Judicial Code § 266.7 The minute entries of proceedings and trial and the opinion re applicability of § 266, Judicial Code, 74 F.Supp. at page 858, show suggestions that a special district court under Judicial Code § 266 cannot be called for Hawaii. The statement of jurisdiction laid bare the problem with commendable frankness. It lies at the threshold of any consideration of this appeal.8 7 Within the present decade, this Court summarized in Phillips v. United States, 312 U.S. 246, 61 S.Ct. 480, 85 L.Ed. 800, the purpose and effect of § 266 and extracted from its history and the precedents for the section's application a congressional requirement of strict construction to protect our appellate docket while assuring the states that exceptionally careful judicial consideration would guard them against all assaults, through federal courts against their legislative statutes or administrative board orders by applications for injunction when those assaults were based on the Federal Constitution. 312 U.S. at pages 250—251, 61 S.Ct. at page 483, 85 L.Ed. 800. While we take judicial notice that since the Phillips case air carriage has brought Hawaii closer to the continent,9 the interference with the normal adjudicatory and appellate processes of the federal judicial system and our docket persists. The power to call a panel of judges under § 266 in Hawaii is to be examined in the light of the Phillips case. 8 Hawaii is still a territory but a territory in which the Constitution and laws of the United States generally are applicable. 31 Stat. 141, § 5, as amended, 48 U.S.C. § 495, 48 U.S.C.A. § 495; Duncan v. Kahanamoku, 327 U.S. 304, 317, 66 S.Ct. 606, 612, 90 L.Ed. 688. Not only its federal courts but also its territorial courts are of course subject to congressional legislation. 48 U.S.C. § 631, et seq., 48 U.S.C.A. § 631 et seq. The Organic Act for Hawaii, § 86,10 provided in 1900: 9 'The there shall be established in said Territory a district court to consist of one judge, * * *. Said court shall have, in addition to the ordinary jurisdiction of district courts of the United States, jurisdiction of all cases cognizable in a circuit court of the United States, and shall proceed therein in the same manner as a circuit court; * * *.' 31 Stat. 158. 10 When incorporated into the Code, this Court was given 'the jurisdiction of district courts of the United States, and shall proceed therein in the same manner as a district court.' 48 U.S.C. § 642, 48 U.S.C.A. § 642. It now has that jurisdiction.11 The only change that could be considered significant is the more definite integration of the district court for Hawaii into the federal judicial system by definition.12 As jurisdiction of this Court on appeal depends upon whether or not a special three-judge court was properly called13 and not upon the power of this Court to review under Judicial Code § 266, we need not analyze the method of review of the judgments of the District Court of Hawaii.14 11 Our issue is narrowed to the inquiry of whether Congress intended that Judicial Code § 266 should apply in the Territory of Hawaii under circumstances that would require its application in a similar suit in a state. Congress in discussing an amendment to the Mann-Elkins Act, which amendment evolved into this section, considered the geographical difficulties inherent in the requirement of a three-judge court and the burden thus place on the functioning of the federal judicial system, but decided that such considerations were outweighed by the desirability of having the constitutionality of a state statute passed on by a court comparable to the court of last resort of the state. 45 Cong.Rec. 7253—57. It is to be noted that nowhere in § 266 is mention made of territories nor as far as has been called to our attention in the congressional debates and reports relating to this section and its amendments. 12 While, of course, great respect is to be paid to the enactments of a territorial legislature by all courts as it is to the adjudications of territorial courts,15 the predominant reason for the enactment of Judicial Code § 266 does not exist as respects territories. This reason was a congressional purpose to avoid unnecessary interference with the laws of a sovereign state.16 In our dual system of government, the position of the state as sovereign over matters not ruled by the Constitution requires a deference to state legislative action beyond that required for the laws of a territory.17 A territory is subject to congressional regulation.18 13 When the long-established rule of strict construction of Judicial Code § 266 and that of protection of the docket of this Court is also considered in conjunction with the necessary interference with the normal operations of the federal judicial system by the establishment of the three-judge requirement in Hawaii, we are not persuaded that Congress intended § 266 to cover Hawaii. See 45 Cong.Rec. 7253-57. Despite its generality the words of § 266 have been strictly construed so that 'statute of a State' does not include ordinances; 'officer of such State' means one with authority to execute or administer a state-wide policy.19 14 It is not merely the absence of the word 'territory' from § 266 that leads us to this conclusion. We recognize that in some situations the word 'state' includes territory. Andres v. United States, 333 U.S. 740, 68 S.Ct. 880. In that case we thought the purpose of Congress would be frustrated by a holding that the word 'state' in a federal statute providing for execution of a criminal in 'the manner prescribed by the laws of the State within which the sentence is imposed' did not include 'Territory.' There we held state included territory.20 Here the purpose of the statute to protect state sovereignty is not furthered by an interpretation of state to include territory. 15 A former opinion of this Court lends strength of this interpretation. In Farrington v. T. Tokushige, 273 U.S. 284, 47 S.Ct. 406, 71 L.Ed. 646, decided in the United States District Court of Hawaii on July 21, 1925, a temporary injunction forbidding territorial officers from enforcing a territorial statute somewhat similar to the one here involved was granted by a single district judge on the ground of the invalidity of the territorial statute under the Federal Constitution. 11 F.2d 710. The Circuit Court of Appeals for the Ninth Circuit affirmed on the same ground and so did this Court on certiorari. No question was raised in any court as to the applicability of the requirement of § 266 that no such injunction should be granted against a state without three judges. If § 266 applied to Hawaii, the interlocutory order of injunction was entered without jurisdiction. The Court of Appeals and this Court were without jurisdiction over the appeal. While it is sometimes said that action, where the power to act is unquestioned, can hardly be said to be a precedent for a future case,21 where as here the responsibility was on the courts to see that the threejudge judge rule was followed, we think it significant that no one sought to apply § 266 to Hawaii.22 16 We hold that Judicial Code § 266 is not applicable to Hawaii, that we are without jurisdiction in case No. 52 and that the appeal therein must be dismissed. 17 We turn now to No. 474, here on writ of certiorari to the Cou t of Appeals of the Ninth Circuit before the entry of a decree in that court. 28 U.S.C. § 2101(d), 28 U.S.C.A. § 2101(d). What we have said concerning the final judgment in the District Court of Hawaii establishes that the judgment was entered by a court improperly constituted under Judicial Code § 266. Nevertheless this order is subject to review in the Court of Appeals.23 It is the final order of a district court although erroneously heard by three judges instead of one and not appealable directly here because not covered by § 266. But as a final order of the District Court, it is reviewable in the Court of Appeals,24 and can be considered here. 18 Another procedural matter leads us to refuse consideration of case No. 474 on the merits. Respondents in the United States District Court sought and obtained injunctive relief from the enforcement of a territorial law by a proceeding under 28 U.S.C. § 41(1) on the plea that the law violates the due process clause of the Fifth Amendment because respondents by the law were deprived of liberty and of property.25 The allegations of irreparable injury consist of an assertion that it will be necessary to incur a comparatively large liability for building repairs and employment of teachers on the part of the respondent schools before the Act will be violated, sums that will be lost if the Act can be enforced constitutionally. The teacher claims to suffer irreparable injury because he cannot follow his occupation. As the District Court found irreparable injury to all respondents in the jurisdictional amount, we assume there is both federal and equitable jurisdiction.26 Furthermore, there is no problem as to whether or not there is an adequate legal remedy in the federal courts.27 There is none. The sole sanction, see note 5 supra, is by the institution of proceedings in equity in territorial courts whereby the extraordinary remedies of prohibitory and mandatory injunctions are utilized to stop violations of the Act. The respondents here, if such proceedings were brought, would have such defenses as the laws of the territory allow, including of course, defenses based upon the present issues of unconstitutionality under the Federal Constitution. 19 We are of the view, however, that the United States District Court for Hawaii, as a matter of its discretion, should have refused to grant this injunction. The complaint called for broad consideration of the application of the Act to foreign language schools and teachers. It had not been construed by the Hawaiian courts. Judge McLaughlin pointed out in his conclusions of law on a motion for preliminary injunction before the request for a three-judge court that this law 20 '* * * carries no criminal penalties for infractions. Enforcement is in equity in the circuit courts of the Territory. Plaintiffs have no reason to fear a court of equity, and there is every reason to believe that their constitutional rights would be fully protected in the equity courts of the Territory and that an appeal, if need be, eventually could be had to the United States Supreme Court.' 21 The statement applies as well to the final injunction. Entirely aside from the question of the propriety of an injunction in any court,28 territorial like state courts are the natural sources for the interpretation and application of the acts of their legislatures and equally of the propriety of interference by injunction.29 We think that where equitable interference with state and territorial acts is sought in federal courts, judicial consideration of acts of importance primarily to the people of a state or territory should, as a matter of discretion, be left by the federal courts to the courts of the legislating authority unless exceptional circumstances command a different course. We find no such circumstances in this case. 22 The appeal in No. 52 is dismissed. 23 The judgment in No. 474 is reversed and the cause remanded to the District Court with directions to dismiss the complaint. 24 Appeal dismissed in No. 52. Judgment reversed and cause remanded in No. 474. 25 Mr. Justice FRANKFURTER, with whom Mr. Justice RUTLEDGE joins, concurring in part and dissenting in part. 26 As to No. 52, I join the Court's opinion. 27 As to No. 474, I would leave the appeal now pending in the Court of Appeals for the Ninth Circuit to its adjudication there and not grant the petition for certiorari. The power which Congress has given to this Court to short-circuit the Courts of Appeals should not be exercised except for some compelling reason of wise judicial administration. No reason is here present that would not be equally available in almost every case which, even though a constitutional issue may be involved, cannot come here directly, but must first go to a Court of Appeals. Congress decided not to provide for such direct appeals here and we should not exercise our discretionary power to grant what Congress has withheld. This discretionary power should come into play only for those exceptional circumstances for which Congress designed it. 28 After finding that we are without jurisdiction to review directly the decree of the District Court of Hawaii, the Court in effect allows such direct review by not requiring the appeal now pending in the Court of Appeals to run its normal course of adjudication in that court. This is justified on the ground that the case has been fully presented in the District Court and here. But if we would not have brought here an appeal undecided in the Court of Appeals merely because it had been adjudicated on its merits in the District Court, there is no more reason for doing so when a direct appeal from the District Court has been improvidently sought here. Moreover, the Court is not disposing of the case on its merits. By lifting the case out of the Court of Appeals the Court is assuming the burden of canvassing issues not dealt with below. This entails the study of new questions and the task of opinion writing. These are precisely the burdens from which the Court asked to be saved and from which Congress saved the Court by the Judiciary Act of 1925. If the regular course of proceeding were followed and the matter were to be disposed of by the Court of Appeals, as it is now being disposed of here, the necessity for future consideration here might never arise beyond that involved in finding no reason for granting a petition for certiorari were one to be applied for. Drains on the Court's time through jurisdictional misconceptions should be strongly discouraged. We should follow the honored practice of this Court in dismissing a proceeding that should not be here ab initio, even though the Court's time and effort had been expended after full argument in concluding that a case should never have been brought here.1 29 If the attempt had been made to bring No. 474 here prematurely it would surely have failed. It should not succeed because No. 52 was improperly brought here. Accordingly I agree with the Court in dismissing No. 52 for want of jurisdiction, and in No. 474 I would deny the petition for certiorari. 1 '§ 1254. Courts of appeals; certiorari; appeal; certified questions. 'Cases in the courts of appeals may be reviewed by the Supreme Court by the following methods: '(1) By writ of certiorari granted upon the petition of any party to any civil or criminal case, before or after rendition of judgment or decree; * * *.' 2 Session Laws of Hawaii 1943, Act 104, Revised Laws of Hawaii 1945, c. 31. 3 'Sec. 1872. Definitions. As used in this chapter: "School' means any person, firm, group of persons, unincorporated association, corporation, establishment, or institution, which teaches, with or without fees, compensation or other charges therefor, any language other than the English language, as a course of study, to two or more persons as a group, as a regular and customary practice.' 4 'No child shall be taught a foreign language in any school unless he shall comply with one of the following requirements: (a) That he shall have passed the fourth grade in public shool or its equivalent, and shall pass from time to time in each succeeding grade a standard test in English composition and reading conducted by or under the direction of the department of public instruction attaining a score not lower than normal for his grade; or (b) that he shall have passed the eighth grade in public school or its equivalent; or (c) that he shall have attained the age of fifteen years.' R.L.Haw.1945, § 1873. 'No school shall permit the teaching of any foreign language to any child under the age of fifteen unless the teacher shall have been examined and certified by a board of examiners of three persons appointed by the commissioners of public instruction to be reasonably well versed in the usage and idiom of both the English language and the foreign language to be taught by such teacher. * * *' R.L.Haw.1945, § 1874. 5 'Sec. 1876. Injunctive enforcement. In the event any school or any person shall be found to be violating, or failing to comply with any of the requirements of, this chapter, or there shall be reasonable cause to believe that such school or person is violating, or failing to comply with the requirements of, this chapter, the attorney general, at his own instance or at the request of the department of public instruction, shall institute appropriate proceedings in equity in the circuit in which the violation occurs to enjoin the performance of any acts or practices forbidden by this chapter, or to require such school or person to comply with the requirements of this chapter. Jurisdiction to hear and dispose of all actions under this section is hereby conferred upon each circuit judge, and each such judge shall have power to issue such orders and decrees, by way of injunction, mandatory injunction or otherwise, as may be appropriate to enforce the provisions of this chapter. In the event any respondent or respondents shall fail or refuse to comply with any such order or decree, the court, in addition to any other powers hereby granted, shall have power to enjoin the operation and conduct of such school until and unless this chapter is complied with or satisfactory assurance is given that this chapter will be complied with. The county attorney of each county shall, at the request of the attorney general, conduct such proceeding in behalf of the Territory. All such suits shall be brought in the name of the Territory by the attorney general.' R.L.Haw.1945. 6 There was a further allegation of a denial to plaintiffs of rights under 8 U.S.C. §§ 41, 42, 43, 8 U.S.C.A. §§ 41, 42, 43. This was not considered by the District Court or relied upon is brief or argument here. We do not consider it. 7 28 U.S.C. § 380 (see redistribution without change of importance in this case, Act of June 25, 1948, Pub.Law No. 773, §§ 1253, 2101, 2281, 2284, 28 U.S.C.A.): 'No interlocutory injunction suspending or restraining the enforcement, operation, or execution of any statute of a State by restraining the action of any officer of such State in the enforcement or execution of such statute, * * * shall be issued or granted * * * unless the application for the same shall be presented to a justice of the Supreme Court of the United States, or to a circuit or district judge, and shall be heard and determined by three judges, * * *. Whenever such application as aforesaid is presented to a justice of the Supreme Court, or to a judge, he shall immediately call to his assistance to hear and determine the application two other judges: * * *. An appeal may be taken direct to the Supreme Court of the United States from the order granting or denying, after notice and hearing, an interlocutory injunction in such case. * * * The requirement respecting the presence of three judges shall also apply to the final hearing in such suit in the district court; and a direct appeal to the Supreme Court may be taken from a final decree granting or denying a permanent injunction in such suit.' An interlocutory injunction was sought in the complaint, filed June 26, 1947, but the record presented to us does not show that one was issued although the final injunction was not issued until February 11, 1948. An opinion on the applicability of Judicial Code § 266, filed October 22, 1947, says that 'All pertinent adjective prerequisites specified by the Supreme Court in Ayrshire Collieries Corporation v. United States, 331 U.S. 132, 67 S.Ct. 1168 (91 L.Ed. 1391), and in Farrington v. T. Tokushige, supra, necessary to make operative three judge participation in the instant suit have occurred. An interlocutory injunction has been sought and passed to a hearing in the District Court at Honolulu and a substantial federal question of transcending limitations of the 5th Amendment to the Constitution has been sufficiently alleged in the Amended Complaint.' 74 F.Supp. 858, 859. Despite appellants' suggestion that the application for an interlocutory injunction was not pressed, we think that in view of this language it would be hypercritical for us to dismiss this appeal for failure of the record to show more definitely that the prayer for an interlocutory judgment was pressed. But see Healy v. Ratta, 289 U.S. 701, 53 S.Ct. 522, 77 L.Ed. 1459, where the correspondence file in this Court shows receipt of a supplemental record containing a formal waiver of prayer for temporary relief. Ayrshire Collieries Corp. v. United States, supra, 331 U.S. at page 140, 67 S.Ct. at page 1172, 91 L.Ed. 1391; Stratton v. St. Louis S.W.R. Co., 282 U.S. 10, 51 S.Ct. 8, 75 L.Ed. 135. Compare 28 U.S.C. § 1253, 28 U.S.C.A. § 1253, and 28 U.S.C. (1946 ed., Supp. II) pp. 1444, 1453, 28 U.S.C.A., showing epeal and redistribution of Judicial Code § 266. We therefore assume that the quoted statement from the District Court opinion establishes that the request for an interlocutory injunction was pressed on that court. 8 Stratton v. St. Louis S.W.R. Co., 282 U.S. 10, 13, 51 S.Ct. 8, 9, 75 L.Ed. 135; Phillips v. United States, 312 U.S. 246, 248, 61 S.Ct. 480, 481, 85 L.Ed. 800. 9 Air travel to Hawaii is recognized by the Administrative Office of the United States Courts as a necessary travel expense for judges under 28 U.S.C. § 604(7), 28 U.S.C.A. § 604(7). 10 31 Stat. 158. 11 28 U.S.C. §§ 451, 91, 1331—1359, 28 U.S.C.A. §§ 91, 451, 1331—1359; see 28 U.S.C. § 41, 28 U.S.C.A. § 41; sec. 8, Act of June 25, 1948, 62 Stat. 986, 48 U.S.C.A. § 645. Note arrangement for Alaska id., sec. 9, 48 U.S.C.A. § 101. 12 See Revisers Notes to §§ 1291, 1292. Cf. Mookini v. United States, 303 U.S. 201, 58 S.Ct. 543, 82 L.Ed. 748. 13 Rorick v. Board of Commissioners of Everglades Drainage District, 307 U.S. 208, 212, 59 S.Ct. 808, 810, 83 L.Ed. 1242. 14 Review of the judgments of the district court for Hawaii was allowed in the Organic Act by § 86 to the ninth judicial circuit in the same manner as from the then circuit courts to the circuit courts of appeals. This was adjusted to conform to the elimination of the circuit courts by Judicial Code § 128 as amended. See 48 U.S.C. § 64 , 48 U.S.C.A. § 645. Since this appeal was taken the United States Code, Title 28, §§ 1291, 1294, 28 U.S.C.A. §§ 1291, 1294, has become effective. Under Judicial Code § 266 this Court had direct review, Judicial Code §§ 128, 238, at the time of appeal and still has. 28 U.S.C. § 1253, 28 U.S.C.A. §§ 1253. 15 Waialua Agr. Co. v. Christian, 305 U.S. 91, 108, 59 S.Ct. 21, 30, 83 L.Ed. 60; De Castro v. Board of Com'rs, 322 U.S 451, 455, 64 S.Ct. 1121, 1123, 88 L.Ed. 1384. 16 Ex parte Collins, 277 U.S. 565, 567—569, 48 S.Ct. 585—586, 72 L.Ed. 990. 17 Although Judicial Code § 266 originated in 1910, 36 Stat. 539, 557, it was not until 1937 that the requirement of a three-judge district court to hear applications for injunctions against the enforcement of Acts of Congress was enacted. 50 Stat. 752. 18 Const., Art. IV, § 3, cl. 2. 19 To the cases on strict construction of § 266 cited in Phillips v. United States, supra, add City of Cleveland v. United States, 323 U.S. 329, 65 S.Ct. 280, 89 L.Ed. 274; Spielman Motor Sales Co. v. Dodge, 295 U.S. 89, 55 S.Ct. 678, 79 L.Ed. 1322; Public Nat. Bank of New York v. Keating, D.C., 29 F.2d 621; City of Des Moines v. Des Moines Gas Co., 8 Cir., 264 F. 506; Calhoun v. City of Seattle, D.C., 215 F. 226; Cumberland Telephone & Telegraph Co. v. City of Memphis, D.C., 198 F. 955. 20 See also Talbott v. Board of Com'rs of Silver Bow County, 139 U.S. 438, 11 S.Ct. 594, 35 L.Ed. 210; Wynne v. United States, 217 U.S. 234, 242, 30 S.Ct. 447, 448, 54 L.Ed. 748; Yeung v. Territory of Hawaii, 9 Cir., 132 F.2d 374, 377. 21 United States v. More, 3 Cranch 159, 172, 2 L.Ed. 397; Snow v. United States, 118 U.S. 346, 354, 6 S.Ct. 1059, 1063, 30 L.Ed. 207; Cross v. Burke, 146 U.S. 82, 87, 13 S.Ct. 22, 23, 36 L.Ed. 896; Louisville Trust Co. v. Knott, 191 U.S. 225, 236, 24 S.Ct. 119, 123, 48 L.Ed. 159; Arant v. Lane, 245 U.S. 166, 170, 38 S.Ct. 94, 96, 62 L.Ed. 223. 22 Stratton v. St. Louis S.W.R. Co., 282 U.S. 10, 13, 51 S.Ct. 8, 9, 75 L.Ed. 135. See also Benedicto v. West India & Panama Telegraph Co., 1 Cir., 256 F. 417. Compare Porto Rico Ry., Light & Power Co. v. Colom, 1 Cir., 106 F.2d 345, 354—355. The District Court thought that any question by reason of the Tokushige case as to differences between that court and the United States District Courts of the States so far as their powers under § 266 is concerned, had been 'expressly and clearly removed by subsequent specific Congressional legislation. Title 48, Section 646, U.S.C.A., Federal Rules of Civil Procedure, rules 1, 65(e), 28 U.S.C.A.' 74 F.Supp. at page 860. We do not think that either the section or the rules have any effect upon the applicability of § 266 to the United States District Court in Hawaii. 48 U.S.C. § 646 (now covered by 28 U.S.C. § 2072, 28 U.S.C.A. § 2072, see note 26 infra) made the rules applicable to Hawaii, but the rules do not affect the question of the applicability of § 266 to Hawaii. Rule 1 states the scope of the rules. Rule 65(e), insofar as it has any possible bearing, says merely that 'These rules do not modify * * * the act of August 24, 1937, c. 754, § 3, relating to actions to enjoin the enforcement of acts of Congress.' Section 3 of c. 754, 50 Stat. 751, is the section that provides for a special district court where an injunction is sought restraining the enforcement, operation or execution of the setting aside of any act of Congress on the ground that it is repugnant to the Constitution of the United States. In this present proceeding we are not dealing with any act of Congress but with an act of the territorial legislature of the Hawaiian Islands. 23 Healy v. Ratta, 289 U.S. 701, 53 S.Ct. 522, 77 L.Ed. 1459; Id., 292 U.S. 263, 264, 54 S.Ct. 700, 701, 78 L.Ed. 1248; Id., 1 Cir., 67 F.2d 554, 556; Wilentz v. Sovereign Camp, 306 U.S. 573, 582, 59 S.Ct. 709, 714, 83 L.Ed. 994, Public Service Commission v. Brashear Freight Lines, 312 U.S. 621, 626, 61 S.Ct. 784, 787, 85 L.Ed. 1083. 24 28 U.S.C. § 225(a), now 28 U.S.C. § 1291, 28 U.S.C.A. § 1291. See Gully v. Interstate Nat. Gas Co., 292 U.S. 16, 19, 54 S.Ct. 565, 567, 78 L.Ed. 1088; Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., 292 U.S. 386, 392, 54 S.Ct. 732, 734, 78 L.Ed. 1318; Rorick v. Board of Commissioners, 307, U.S. 208, 213, 59 S.Ct. 808, 811, 83 L.Ed. 1242. Cf. Jameson & Co. v. Morgenthau, 307 U.S. 171, 174, 59 S.Ct. 804, 805, 83 L.Ed. 1189; International Ladies' Garment Workers' Union v. Donnelly Garment Co., 304 U.S. 243, 251—252, 58 S.Ct. 875, 880, 82 L.Ed. 1316. 25 As indicated above, note 6, respondents also relied upon a denial of equal rights under 8 U.S.C. §§ 41, 42 and 43, 8 U.S.C.A. §§ 41, 42, 43. No more definite allegation appears. The hearing developed nothing to indicate any purpose or action of discrimination against any race or group in the law or its administration. The Act covered all foreign languages. We, therefore, confine ourselves to the due process issue. See Snowden v. Hughes, 321 U.S. 1, 64 S.Ct. 397, 88 L.Ed. 497. 26 Notwithstanding the fusion of law and equity by the Rules of Civil Procedure, the substantive principles of Courts of Chancery remain unaffected. Rules 1 and 2; 48 Stat. 1064, §§ 1 and 2 (now 28 U.S.C.A. § 2072); (note 48 U.S.C., 1946 ed., § 646; repealed by Act of June 25, 1948, 62 Stat. 992; cf. 28 U.S.C. § 451) Abbe v. New York, N.H. & H.R. Co., 2 Cir., 171 .2d 387, 388; Bereslavsky v. Caffey, 2 Cir., 161 F.2d 499; Bereslavsky v. Kloeb, 6 Cir., 162 F.2d 862; Byram v. Vaughn, D.C., 68 F.Supp. 981, 984 Compare Sibbach v. Wilson & Co., 312 U.S. 1, 9—10, 655, 61 S.Ct. 422, 424, 80 L.Ed. 479. See Hillsborough Tp. Cromwell, 326 U.S. 620, 622, 66 S.Ct. 445, 447, 90 L.Ed. 358. Atlas Life Ins. Co. v. W. I. Southern, Inc., 306 U.S. 563, 568, 59 S.Ct. 657, 659, 83 L.Ed. 987: 'Section 11 of the Judiciary Act of 1789, 1 Stat. 78, provided that the circuit courts should have 'cognizance * * * of all suits of a civil nature at common law or in equity' in cases appropriately brought in those courts. This provision is perpetuated in § 24(1) of the Judicial Code, 28 U.S.C. § 41(1), 28 U.S.C.A. § 41(1) (now § 1331 et seq.) which declares that the district courts shall have jurisdiction of such suits. The 'jurisdiction' thus conferred on the federal courts to entertain suits in equity is an authority to administer in equity suits the principles of the system of judicial remedies which had been devised and was being administered by the English Court of Chancery at the time of the separation of the two countries. * * * This clause of the statute does not define the jurisdiction of the district courts as federal courts, in the sense of their power or authority to hear and decide, but prescribes the body of doctrine which is to guide their decisions and enable them to determine whether in any given instance a suit of which a district court has jurisdiction as a federal court is an appropriate one for the exercise of the extraordinary powers of a court of equity. * * *' 27 Cf. Matthews v. Rodgers, 284 U.S. 521, 525, 52 S.Ct. 217, 219, 76 L.Ed. 447; Moore's Federal Practice, vol. 1, pp. 108, 208; Grauman v. City Company of New York, D.C., 31 F.Supp. 172; H.R. Rep. No. 308, 80th Cong., 1st Sess., p. A 236 on 28 U.S.C. § 384, 28 U.S.C.A. § 384. 28 See Spielman Motor Sales Co. v. Dodge, 295 U.S. 89, 95, 55 S.Ct. 678, 680, 79 L.Ed. 1322. 29 Waialua Agr. Co. v. Christian, 305 U.S. 91, 108, 59 S.Ct. 21, 30, 83 L.Ed. 60; Beal v. Missouri Pacific R. Corp., 312 U.S. 45, 61 S.Ct. 418, 85 L.Ed. 577; Watson v. Buck, 313 U.S. 387, 61 S.Ct. 962, 85 L.Ed. 1416; Douglas v. Jeannette, 319 U.S. 157, 63 S.Ct. 877, 87 L.Ed. 1324; Burford v. Sun Oil Co., 319 U.S. 315, 333, 63 S.Ct. 1098, 1107, note 29, 87 L.Ed. 1424; Meredith v. Winter Haven, 320 U.S. 228, 235, 4 S.Ct. 7, 11, 88 L.Ed. 9. Compare Spector Motor Service v. McLaughlin, 323 U.S. 101, 65 S.Ct. 152, 89 L.Ed. 101. 1 Writs of certiorari granted because of an apparent conflict between courts of appeals have been dismissed because the existence of such conflict did not survive argument. And for these reasons: '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.' Layne & Bowler Corp. v. Western Well Works, Inc., 261 U.S. 387, 393, 43 S.Ct. 422, 423, 67 L.Ed. 712.

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336 U.S. 460 69 S.Ct. 714 93 L.Ed. 805 UNITED STATESv.WOMEN'S SPORTSWEAR MFG. ASS'N et al. No. 37. Argued Feb. 28 and March 1, 1949. Decided March 28, 1949. Appeal from the United States District Court for the District of Massachusetts. Mr. Robert L. Stern, of Washington, D.C., for the United States. Mr. Harry Bergson, of Boston, Mass., for appellees. Mr. Justice JACKSON delivered the opinion of the Court. 1 The District Court, after trial, has denied the Government's plea for an injunction, and other relief, against appellees under the Sherman Act.1 75 F.Supp. 112. The cause is brought here by direct appeal, as Congress has authorized.2 Defendants below and appellees here are an unincorporated trade association, its officers and members. There is no serious controversy as to facts. Our review must determine whether or not they establish the Government's right to the relief which has been denied. 2 We first should be satisfied that the activities on which restraints are alleged to have been exerted constitute commerce among states. The industry involved is women's sportswear. It is carried on by jobbers who maintain sales offices in New York and engage in nationwide competition for orders, chiefly by means of traveling salesmen who solicit throughout the country. Upon receiving an order, the jobber buys the fabrics and cuts them to the customer's fancy. In most cases he then sends the cut material to a contractor who does the stitching, puts on such accessories as the buttons and the bows, and returns the completed garments to the jobber who promptly ships them to the customer. 3 That the jobbers maintain a c rrent of commerce, substantial in volume and interstate in character, seems clear. The Boston area ranks fifth in this country's production of women's sportswear. Its jobbers obtain about 80% of the cloth used from sources outside of Massachusetts. At least 80% of the finished sportswear is sold and shipped to customers outside of that State. Thus the industry in Massachusetts subsists on a constant influx of cloth and outgo of garments which pass through the hands of the stitching contractors for an essential operation. 4 Our next inquiry is whether the accused combination, which is made up of stitching contractors, has imposed upon this interstate trade restraints of a character and magnitude to violate the Sherman Act. The Association is made up of members who handle at least 50% of all sportswear produced in Boston. The cost of this contractor's operation is about 25% of the jobber's sale price, and its variations are reflected in wholesale and retail prices. The Association's executive director took steps to induce jobbers to enter into a written agreement, among other things, to employ only members of the Association, refrain from dealing with nonmembers, and accept no secret price rebates. When the jobbers hesitated, stoppage of production was threatened and when they refused because they were advised that it would violate antitrust laws, the Association ordered contractors to stop work for three jobbers, which was done, and work for them was not resumed until the jobbers obtained a state court injunction. The proposed agreement was then revised and ultimately was signed by twenty-one jobbers who handle a gross annual volume of about $8,800,000, that being a substantial portion of the Boston output. 5 The agreement in final form, together with the circumstances of its making, is alleged to constitute an illegal restraint of trade. Terms relevant to the issue require jobbers to give all of their work to available Association members who are in good standing with the International Ladies' Garment Workers Union, provided such contractors are 'comparable' as to price and quality of work with nonmember contractors having contracts with the same Union. The jobber is to furnish a written order specifying price and is forbidden to receive secret rebates. A jobber can give work to a nonmember only in continuance of an existing relationship. The jobber will give no new contract to any stitcher who ceases to be a member of the Association. The Association agrees to assist the jobber in getting sufficient contractors as the amount of his work 'may equitably require,' and the jobber agrees that he will divide his work 'as equally and equitably as possible among the Association contractors engaged by him.' The District Court found that one of the purposes of the Association was to maintain the standard of prices. The Government also recites evidence suggesting that the Association policed the membership to prevent price competition and excluded from membership 'newcomers in the trade.' 6 In the light of its origin and the circumstances of the industry, it seems clear that the intent and effect of the agreement is substantially to restrict competition and to control prices and markets. It prohibits the jobbers from awarding work to others (with minor exceptions) unless their prices are not 'comparable' to those of association members. It effects for Association members a virtual monopoly of work at 'comparable' prices. Work given to members must be allocated 'equitably,' not by reference to price or quality of work. And it apparently contemplates boycott by the Association of jobbers who do not subscribe to these terms. That such a contract restrains trade in violation of the Sherman Act is obvious, even if the restraints in actual practice under it do not go beyond its express terms, which the evidence indicates to be likely. 7 It is argued that inclusion of the labor provisions makes the agreement immune from attack under the antitrust laws. The stitc ing contractor, although he furnishes chiefly labor, also utilizes the labor through machines and has his rentals, capital costs, overhead and profits. He is an entrepreneur, not a laborer. Cf Columbia River Packers Association v. Hinton, 315 U.S. 143, 62 S.Ct. 520, 86 L.Ed. 750. The labor provisions were incorporated into the second proposal after the first was rejected as violating the antitrust laws and seem to give nothing to labor that it was not already getting for itself from other as well as from these manufacturers. The restraints here went beyond limiting work to Union shops; it limited it to those Union shops also members of the Association. The trial court found no evidence that the Union participated in making the agreement. And if it did, benefits to organized labor cannot be utilized as a cat's-paw to pull employers' chestnuts out of the antitrust fires. Allen-Bradley Co. v. Local Union No. 3, International Brotherhood of Electrical Workers, 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939. 8 The trial court appears to have dismissed the case chiefly on the ground that the accused Association and its members were not themselves engaged in interstate commerce. This may or may not be the nature of their operation considered alone, but it does not matter. Restraints, to be effective, do not have to be applied all along the line of movement of interstate commerce. The source of the restraint may be intrastate, as the making of a contract or combination usually is; the application of the restraint may be intrastate, as it often is; but neither matters if the necessary effect is to stifle or restrain commerce among the states. If it is interstate commerce that feels the pinch, it does not matter how local the operation which applies the squeeze. 9 The manifest purpose and intent of the contract in question was to restrain the jobbers from free choice among stitching contractors on equal terms. The business affected by the restraint is interstate commerce. The volume affected is substantial. While the restraint of the final contract is more moderate than the one first attempted and its dollar-and-cents effect on the commerce might be difficult to appraise, it is sufficient to warrant judgment canceling the contract and enjoining carrying out of the plan it embodies. 10 The judgment is reversed. 11 Reversed. 1 Section 1 of the Act of July 2, 1890, c. 647, 26 Stat. 209, as amended, 15 U.S.C. § 1, 15 U.S.C.A. § 1. 2 15 U.S.C. § 29, 15 U.S.C.A. § 29; 28 U.S.C. § 2101, 28 U.S.C.A. § 2101.

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336 U.S. 422 69 S.Ct. 726 93 L.Ed. 779 NATIONAL CARBIDE CORPORATIONv.COMMISSIONER OF INTERNAL REVENUE. AIR REDUCTION SALES CO. v. COMMISSIONER OF INTERNAL REVENUE. PURE CARBONIC, Inc. v. COMMISSIONER OF INTERNAL REVENUE. Nos. 151, 152, and 153. Argued Jan. 6, 1949. Decided March 28, 1949. Mr. Erwin N. Griswold, of Cambridge, Mass., for petitioners. Mr. Hilbert P. Zarky, of Washington, D.C., for respondent. [Argument of Counsel from page 423 intentionally omitted] Mr. Chief Justice VINSON delivered the opinion of the Court. 1 Petitioners are three wholly owned subsidiaries of Air Reduction Corporation (Airco). They seek a determination of the question whether deficiencies in income and declared value excess profits taxes for the year 1938 found by the Commissioner of Internal Revenue are properly chargeable to them. Their contention is that they are corporate agents of Airco, that the income from their operations is income of Airco, and that income and excess profits taxes must be determined on that basis. 2 By a series of combinations and dissolutions of previously acquired subsidiary companies, Airco had, prior to 1938, reduced the number of its subsidiaries to four. All operated strictly in accordance with contracts with Airco.1 The subsidiaries were utilized by Airco as operating companies in the four major fields of operation in which it was engaged. Air Reduction Sales Company carried on the manufacture and sale of the gaseous constituents of air; National Carbide Corporation, the manufacture and sale of calcium carbide; Pure Carbonic, Inc., the manufacture and sale of carbon dioxide; and Wilson Welder & Metals Co., the manufacture and sale of welding machines, equipment and supplies.2 3 The contracts between Airco and its subsidiaries provided, in substance, that the latter were employed as agents to manage and operate plants designed for the production of the products assigned to each, and as agents to sell the output of the plants. Airco was to furnish working capital, executive management and office facilities for its subsidiaries. They in turn agreed to pay Airco all profits in excess of six percent on their outstanding capital stock, which in each case was nominal in amount.3 Title to the assets utilized by the subsidiaries was held by them, and amounts advanced by Airco for the purchase of assets and working capital were shown on the books of the subsidiaries as accounts payable to Airco. The value of the assets of each company thus approximated the amount owed to Airco. No interest ran on these accounts. 4 Airco and its subsidiaries were organized horizontally into six overriding divisions: corporate, operations, sales, financial, distribution, and research. Officers heading each division were, in turn, officers of the subsidiaries. Top officials of Airco held similar positions in the subsidiary companies. Directors of the subsidiaries met only to ratify the actions of the directors and officers of Airco. 5 Airco considered the profits turned over to it by the subsidiaries pursuant to the contracts as its own income and reported it as such. Petitioners reported as income only the six per cent return on capital that each was entitled to retain. Similarly, in declaring the value of their capital stock for declared value excess profits tax purposes, the subsidiaries reported only the nominal amounts at which the stock was carried on the books of each. The Commissioner notified petitioners of substantial income and excess profits tax deficiencies in their 1938 returns, having taken the position that they are taxable on the income turned over to Airco as well as the nominal amounts retained. The Tax Court held, however, that the income from petitioners' operations in excess of six per cent of their capital stock was income and property of Airco. 8 T.C. 594. Three judges dissented. The Court of Appeals for the Second Circuit reversed. 167 F.2d 304. We granted the petition for a writ of certiorari, 335 U.S. 810, 69 S.Ct. 44, because of this conflict of opinion and the disagreement between courts as to the continuing vitality of Southern Pacific Co. v. Lowe, 1918, 247 U.S. 330, 38 S.Ct. 540, 62 L.Ed. 1142. 6 Petitioners' contention is, in substance, that our decision in Moline Properties, Inc., v. Commissioner of Internal Revenue, 1943, 319 U.S. 436, 63 S.Ct. 1132, 1135, 87 L.Ed. 1499, which held that the tax laws require taxation of the corporate entity if it engages in 'business activity,' expressly excepted the situation in which the corporation is the agent of its owner; that Southern Pacific Co. v. Lowe, supra, defines the content of 'agency' for tax purposes; and that, as the Tax Court found, this Court's characterization of the relationship between the corporations in the Southern Pacific case is 'aptly descriptive' of the relationship between Airco and petitioners. It must follow, according to petitioners, that income received by them and transmitted to Airco is taxable only to Airco. 7 Respondent does not quarrel with the first and third propositions. The collision occurs at the second. The issue as presented by petitioners is, therefore, whether the principal-agent relationship described in the Southern Pacific case—and the similar arrangement between Airco and petitioners contains the 'usual incidents of an agency relationship,' as that phrase was used in Moline roperties, Inc., v. Commissioner, supra. 8 Petitioners' contention that the Southern Pacific case established a concept of agency that has survived our later decisions may be dealt with rather summarily. That case treated income earned by a wholly owned subsidiary before March 1, 1913, the effective date of the Income Tax Act of 1913, as having accrued to its parent prior to that date despite the fact that the actual transfer of funds by declaration of dividends occurred subsequent thereto. The theory of the case was that the two corporations could be treated as identical, for the purposes of the 1913 Act, because of the complete domination and control exercised by the parent over its subsidiary. 9 By this decision, this Court is said to have 'looked beyond the corporate form,'4 and 'ignored the separate entity of a corporation.'5 Whatever the dialectics employed, courts and commentators have agreed that parent and subsidiary were treated as one corporation for the purposes of the taxes there in question; transfer of earnings to the parent was merely 'a paper transaction.' (247 U.S. 330, 38 S.Ct. 543) The Southern Pacific case did not, and did not purport to rest on any principle of agency. The only reference to the subsidiary (Central Pacific) as an agent is made in this context: 10 '* * * the Central Pacific and the Southern Pacific were in substance identical because of the complete ownership and control which the latter possessed over the former, as stockholder and in other capacities. While the two companies were separate legal entities, yet in fact, and for all practical purposes they were merged, the former being but a part of the latter, acting merely as its agent and subject in all things to its proper direction and control.' 247 U.S. at page 337, 38 S.Ct. at page 542, 62 L.Ed. 1142. It is thus clear beyond doubt that the subsidiary was not referred to as an agent of the parent in the usual or technical sense. 'Agency' and 'practical identity,' as those words are used in the Southern Pacific case, are unquestionably opposite sides of the same coin.6 The close relationship between corporations because of complete ownership and control of one by the other was the basis for the result reached, whatever its articulation. 11 That basis has been repudiated by subsequent decisions of this Court. Whatever the vitality of Southern Pacific Co. v. Lowe on its special facts, we have held that a corporation formed or operated for business purposes must share the tax burden despite substantial identity, in practical operation, with its owner. Complete ownership of the corporation, and the control primarily dependent upon such ownership—the important ingredients of the Southern Pacific case—are no longer of significance in determining taxability. Moline Properties, Inc., v. Commissioner, supra; Burnet v. Commonwealth Improvement Co., 1932, 287 U.S. 415, 53 S.Ct. 198, 77 L.Ed. 399.7 12 In both of the cases last cited, the agency argument now urged upon us was made and rejected. In both cases, Southern Pacific Co. v. Lowe, supra, was relied upon by the taxpayers. In both, we found that the contention that the corporation was the agent of its owner was simply the argument that the subsidiary had no corporate identity distinct from its stockholders in a different form. It is true that petitioners here do not ask that they be ignored completely for tax purposes. They are willing to pay taxes on the nominal amounts they retain as Airco's 'agents.' But this fact serves to emphasize the inapplicability of the Southern Pacific case, upon which they rely. There, as in Commonwealth Improvement Co. and Moline Properties cases, the decision turned upon the question whether the corporate entity was or was not to be completely ignored for tax purposes. If the Central Pacific had been accorded any tax status in the Southern Pacific case, it unquestionably would have been taxed on the entire income it received. In fact, it was so taxed upon all income received after March 1, 1913; only income received prior thereto was considered income of the parent directly.8 13 We think, therefore, that petitioners' argument is without merit because based on an erroneous interpretation of Southern Pacific Co. v. Lowe, supra. The agency argument, to quote the opinion in Moline Properties, 'is basically the same argument of identity in a different form * * * the question of agency or not depends upon the same legal issues as does the question of identity previously discussed.'9 Ownership of a corporation and the control incident thereto can have no different tax consequences when clothed in the garb of agency than when worn as a removable corporate veil. 14 But it is necessary to go farther. The Tax Court did not, as petitioners seem to think, consider the argument that they were agents of Airco as different from or having any greater validity than the argument of identity of Airco and its subsidiaries. The court, in characterizing petitioners as Airco's agents, used that term exactly as it had been used in the Southern Pacific, Commonwealth Improvement Co., and Moline Properties cases. According to the Tax Court's opinion: 15 'The issue which (was decided) in this proceeding is: Whether, as the respondent has determined, the income from the operations of the three petitioners belonged not to Airco, the parent but to the petitioners and was taxable to them; or whether, as the three petitioners contend, the income from the operations of the petitioners in 1938, exclusive of the small amounts paid to petitioners under the contracts, belonged and was taxable to Airco, the parent company, both because the petitioners were in fact incorporated departments, divisions or branches of Airco's business and because the petitioners operated pursuant to express contract with Airco.'10 16 The theory upon which the Tax Court expunged the deficiencies apparently was that since the Southern Pacific Co. case was not expressly overruled by Moline Properties, the 'business purpose' rule laid down in the latter is not absolute, but that the corporate entity may be disregarded (or the corporation treated as an agent of its owner) for tax purposes when the facts of ownership and control of the corporation approximate those presented by the Southern Pacific case. The Court of Appeals disagreed. It held that under our decisions, when a corporation carries on business activity the fact that the owner retains direction of its affairs down to the minutest detail, provides all of its assets and takes all of its profits can make no difference tax-wise. The court concluded that 'Even though Southern Pacific Co. v. Lowe, supra, set up a different test, we regard it as pro tanto no longer controlling.'11 17 The result reached by the Court of Appeals is clearly required by our later decisions. Our reluctance to erase Southern Pacific from the books has been due not to any belief that it lays down a correct rule for tax purposes generally, but to the fact that it concerns 'very peculiar facts' which make it clearly distinguishable from later cases involving the tax status of a subsidiary or other wholly owned corporation.12 For that reason, we have, instead, held that it lays down no rule for tax purposes. Burnet v. Commonwealth Improvement Co., supra, 287 U.S. at page 419, 53 S.Ct. at page 199, 77 L.Ed. 399; Moline Properties, Inc., v. Commissioner of Internal Revenue, supra, 319 U.S. at page 439, 63 S.Ct. at page 1134, 87 L.Ed. 1499. That the concept of identity of the corporation with its owner set out in the Southern Pacific case is incompatible with later decisions of this Court may be demonstrated by a consideration of the facts enumerated and relied upon by the Tax Court, which based such reliance on the emphasis placed upon similar facts in the Southern Pacific case. These facts relate to the ownership, control, and right to income reserved by the parent. 18 So far as control is concerned, we can see no difference in principle between Airco's control of petitioners and that exercised over Moline Properties, Inc., by its sole stockholder. Undoubtedly the great majority of corporations owned by sole stockholders are 'dummies' in the sense that their policies and day-to-day activities are determined not as decisions of the corporation but by their owners acting individually. We can see no significance, therefore, in findings of fact such as, 'The Airco Board held regular meetings and exercised complete control over Airco and each of the petitioners,' and 'The chairman, vice chairman and president of Airco were in charge of the administration and management of the activities of each petitioner and carried out the policies and directives with respect to each petitioner as promulgated by the Airco board.'13 We reversed the Board of Tax Appeals in Moline Properties in the face of its finding that 'Full beneficial ownership was in Thompson (the sole stockholder), who continued to manage and regard the property as his own individually.'14 19 Some stress was placed by the Tax Court, and by petitioners in argument here, upon the form of ownership of assets adopted by Airco and its subsidiaries. Petitioners' capital stock was, as has been stated, nominal in amount. Assets of considerable value, to which title was held by the subsidiaries, were balanced by accounts payable to Airco on the books of each. The Tax Court thought it material that 'All assets held by petitioner were furnished to it by Airco, which paid for them with its own cash or stock. Airco supplied all the working capital of each petitioner.' 20 If Airco had supplied assets to its subsidiaries in return for stock valued at amounts equal to the value of the assets, no question could be raised as to the reality of ownership of the assets by the subsidiaries. Airco would then have been in a position comparable, so far as ownership of the assets of petitioners is concerned, to that of the sole stockholder in Moline Properties. We think that it can make no difference that financing of the subsidiaries was carried out by means of book indebtednesses in lieu of increased book value of the subsidiaries' stock. A corporation must derive its funds from three sources: capital contributions, loans, and profits from operations. The fact that Airco, the sole stockholder, preferred to supply funds to its subsidiaries primarily by the second method, rather than either of the other two,15 does not make the income earned by their utilization income to Airco. We need not decide whether the funds supplied to petitioners by Airco were capital contributions rather than loans. It is sufficient to say that the very factors which, as petitioners contend, show that Airco 'supplied' and 'furnished' their assets also indicate that petitioners were the recipients of capital contributions rat er than loans.16 21 Not do the contracts between Airco and petitioners by which the latter agreed to pay all profits above a nominal return to the former, on that account, become 'agency' contracts within the meaning of our decisions. The Tax Court felt that the fact that Airco was entitled to the profits by contract shows that the income 'belonged to Airco' and should not, for that reason, be taxed to petitioners. Our decisions requiring that income be taxed to those who earn it, despite anticipatory agreements designed to prevent vesting of the income in the earners, foreclose this result. Lucas v. Earl, 1930, 281 U.S. 111, 50 S.Ct. 241, 74 L.Ed. 731; Helvering v. Clifford, 1940, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788; United States v. Joliet & Chicago R. Co., 1942, 315 U.S. 44, 62 S.Ct. 442, 86 L.Ed. 658; Commissioner v. Sunnen, 1948, 333 U.S. 591, 68 S.Ct. 715. Of course one of the duties of a collection agent is to transmit the money he receives to his principal according to their agreement.17 But the fact that petitioners were required by contract to turn over the money received by them to Airco, after deducting expenses and nominal profits, is no sure indication that they were mere collection agents. Such an agreement is entirely consistent with the corporation-sole stockholder relationship whether or not any agency exists, and with other relationships as well.18 22 What we have said does not foreclose a true corporate agent or trustee from handling the property and income of its owner-principal without being taxable therefor. Whether the corporation operates in the name and for the account of the principal, binds the principal, by its actions, transmits money received to the principal, and whether receipt of income is attributable to the services of employees of the principal and to assets belonging to the principal19 are some of the relevant considerations in determining whether a true agency exists. If the corporation is a true agent, its relations with its principal must not be dependent upon the fact that it is owned by the principal, if such is the case. Its business purpose must be the carrying on of the normal duties of an agent.20 Absence of the factors mentioned above, and the essentiality of ownership of the corporation to the existence of any 'agency' relationship in the Moline Properties, Commonwealth Improvement Co., and Southern Pacific cases indicates the fallacy of the agency argument made in those case. 23 The same fallacy is apparent in the contention that petitioners are agents of Airco. They claim that they should be taxable on net income aggregating only $1,350, despite the fact that during the tax year (1938) they owned assets worth nearly 20 million dollars, had net sales of approximately 22 million dollars, and earned nearly four and one-half million dollars net. Their employees number in the thousands. We have passed the question whether Airco's interest in these assets is that of owner of the subsidiaries or lender, but whatever the answer, they do not belong to Airco as principal. The entire earnings of petitioners, except for trifling amounts, are turned over to Airco not because the latter could command this income if petitioners were owned by third persons, but because it owns, and thus completely dominates the subsidiaries. Airco, for sufficient reasons of its own, wished to avoid the burdens of principalship.21 See Moline Properties, Inc., v. Commissioner of Internal Revenue, supra; Sheldon Building Corporation v. Commissioner of Internal Revenue, 7 Cir., 1941, 118 F.2d 855. Compare Forshay v. Commissioner of Internal Revenue, 1930, 20 B.T.A. 537. It cannot now escape the tax consequences of that choice, no matter how bona fide its motives or longstanding its arrangements. When we referred to the 'usual incidents of an agency relationship' in the Moline Properties case, we meant just that—not the identity of ownership and control disclo ed by the facts of this case. 24 We have considered the other arguments made by petitioners and find them to be without merit. The judgment of the Court of Appeals is affirmed. 25 Affirmed. 1 The substance of a typical subsidiaryparent contract is as follows: 'Airco hereby employs Sales as its agent to manage and operate, during the term of this contract, all plants for the production of oxygen, acetylene and other gases and for the manufacture of apparatus and containers for the utilization and transportation of such gases * * *; and likewise employs Sales as its agent to market and sell, during the term of this contract, the output of all such plants. * * * Airco agrees (1) to give Sales the use of all cylinders, containers, motor trucks, equipment, and shipping facilities, which it now owns or may hereafter acquire; (2) to supply such working capital as Sales may need; (3) to provide such executive management (but not accounting, bookkeeping and clerical service), and office accommodation and facilities as may be necessary for the proper conduct of Sales business. * * * Sales agrees (1) to manage and operate * * * all of said plants; (2) to maintain the same in first class condition, charging necessary repairs and replacements to operating expense and setting aside and charging to operating expense proper reserves for depreciation * * * (3) to distribute, market and sell, the product manufactured in said plants as efficiently as possible * * * (4) to pay all expenses of such operation, maintenance and selling, and to discharge all expenses and liabilities incurred therein or thereby and to collect all accounts receivable or other proceeds resulting therefrom; (5) to credit monthly on its books to Airco all profits accruing to it from the operation of its entire business over and above an amount equal to six per cent. (6%) per annum on its outstanding capital stock, which said amount it is hereby authorized to deduct and retain, and it hereby agrees to accept as full compensation for its services hereunder; and (6) to pay over to Airco upon emand any profits becoming due and credited to Airco as aforesaid.' 2 Wilson Welder had a net deficit during the year here involved and is not a petitioner in this action. 3 Sales had outstanding 125 shares of stock of $100 par value; Carbide's outstanding capital stock was 50 shares of $100 par value; Carbonic also had 50 shares of $100 par value. 4 Mertens, Law of Federal Income Taxation (1948 ed.), Vol. 10A, p. 237. 5 Finkelstein, The Corporate Entity and the Income Tax, 44 Yale L.J. 436, 448. 6 In Ballantine, Separate Entity of Parent and Subsidiary Corporations, 14 Cal.L.Rev. 12, 18, the writer discusses this use of the agency concept as follows: 'What is meant by such terms as 'adjunct,' 'agency,' 'instrumentality,' 'creature' or 'mouthpiece'? What conditions must exist to warrant a court in treating the A corporation as the mere adjunct of the B corporation? The word 'agency' is often used as a synonym of 'adjunct,' whatever that may mean, and as descriptive of a relation variously defined in the cases as 'alter ego,' 'alias,' 'device,' 'dummy,' 'branch,' 'tool,' 'corporate double,' 'business conduit,' 'instrumentality,' etc., but all in the sense of 'means' through which a corporation's own business is actively prosecuted.' 7 The case other than Southern Pacific relied upon by the Tax Court was Munson Steamship Line v. Commissioner of Internal Revenue, 2 Cir., 77 F.2d 849. That case w § explained in Moline Properties, Inc., v. Commissioner of Internal Revenue, supra, as depending upon a particular legislative purpose which justified disregarding the separate entity. 8 Plaintiff's Exhibit P, No. 452, October Term 1917, is an income tax statement of the subsidiary, central pacific Co., showing payment of income taxes on $3,333,846.18, its total net income for 1913 less one-sixth (i.e., making an allowance for the two months before the income tax law went into effect March 1). 9 319 U.S. at pages 440-441, 63 S.Ct. at page 1135, 87 L.Ed. 1499. 10 8 T.C. 594, 611. After enumerating the facts considered pertinent, the court concluded: 'It is true, of course, that taken separately some of the foregoing facts would not be sufficient in themselves to make inoperative the general rule that corporations are separate juristic persons and are to be so treated for tax purposes. We think, however, that when all these facts are viewed together they bring petitioners within the rule announced by the Supreme Court in Southern Pacific Co. v. Lowe, supra.' 8 T.C. at page 614. It should be added that the Court of Appeals, whose opinion was written by its Chief Judge, did not so much as mention the agency argument now made by petitioners. Its only references to agency were isolated quotations from the Tax Court's opinion and the contracts quoted in footnote 1. The court's opinion phrases the question as 'when a wholly owned subsidiary of a parent corporation shall be treated for purposes of income taxation as a separate taxable person, and when as merely a part of the corporate activities of the parent'. 167 F.2d 304, 305. 11 167 F.2d at page 307. 12 Two basic distinctions between the Southern Pacific case and subsequent cases, except Gulf Oil Corporation v. Lewellyn, 1918, 248 U.S. 71, 39 S.Ct. 35, 63 L.Ed. 133, which followed Southern Pacific, are immediately apparent. First, the Southern Pacific case involved taxation of the parent-owner rather than the subsidiary corporation; second, the question was when the income had been earned, rather than who had earned it. The importance of these distinctions is indicated by the fact that the subsidiary paid income taxes upon income received subsequent to March 1, 1913, see footnote 8, supra, and that the parent did not dispute its tax liability for dividends from post-1913 earnings of the subsidiary. The decision is based on an interpretation of the Income Tax Act of 1913. The Court felt that it was not the intent of the Act to tax earnings prior to the effective date of the Act, and that the Central Pacific's pre-1913 income had actually accrued to the parent before the effective date of the Act. The opinion states that 'The case turns upon its very peculiar facts, and is distinguishable from others in which the question of the identity of a controlling stockholder with his corporation has been raised.' 247 U.S. at pages 338-339, 38 S.Ct. at page 543, 62 L.Ed. 1142. By its very terms, the decision is limited to its precise facts. 13 Much of the testimony introduced by petitioners had to do with the intercorporate relationship between Airco and its subsidiaries, the use of certain facilities by two or more of the subsidiaries, the duties of various officers who held positions with Airco and its subsidiaries, and the services performed for all of the subsidiaries by certain departments of Airco. So far as this testimony shows the integration of the corporate system and its direction by Airco, it is, as we have indicated, immaterial. So far as it indicates that the subsidiaries received the use of equipment and services for which they were not charged, it is relevant as showing that their income was distorted to that extent, but it does not indicate that the income received 'belonged' to Airco at the time of its receipt. The Commissioner made allowance for this distortion by allocating over $400,000 of the expenses reported by Airco to petitioners under the authority given him by § 45 of the Revenue Act of 1938, 26 U.S.C. § 45, 26 U.S.C.A. § 45. 14 45 B.T.A. 647, 650. 15 As a practical matter, a considerable part of the assets of petitioners was supplied out of profits from their operations. Even though assets were purchased directly out of the earnings of a subsidiary, however, the amount withdrawn was entered in the accounts payable by the subsidiary and in the accounts receivable of Airco, since substantially all profits of the subsidiaries were, by contract, payable only to the parent. 16 Since petitioners were required to pay all profits except very small amounts to Airco each year, it was obviously impossible for them to pay the accounts payable to Airco. See note 15. Mr. C. E. Adams, Chairman of Air Reduction Corporation, testified that the assets of the subsidiaries represented by the accounts payable could be realized by Airco only upon dissolution of the subsidiaries. In other words, there was never any expectation that the accounts would be paid prior to dissolution. Since no interest ran on these accounts, the 'loans' were identical, except in name, with contributions of capital. See American Cigar Co. v. Commissioner of Internal Revenue, 2 Cir., 33 F.2d 425; Hoyt v. Commissioner of Internal Revenue, 2 Cir., 145 F.2d 634; Van Clief v. Helvering, 77 U.S.App.D.C. 337, 135 F.2d 254; Reading Co. v. Commissioner of Internal Revenue, 3 Cir., 132 F.2d 306. Levy and Simonds, Stockholder Advances to Corporations . . . Are They Loans or Capital Contributions? 25 Taxes 127, 128, state that 'intention to lend and expectation of repayment are necessary to the existence of a valid debt.' The fact that no interest ran on these 'loans' is, of course, further indication that they are capital contributions. Berry Motor Car Co., 43 B.T.A. Memo. Op. 1209, Jan. 25, 1941. Title to gas cylinders used by petitioners, amounting in value to about $13,000,000, was retained by Airco, but the cylinders were used by the subsidiaries without charge. Whether these, too, were capital contributions we find it unnecessary to decide in this case. Free use of the cylinders by petitioners, if they were merely on loan, may have distorted the subsidiaries' income beyond the allocations made by the Commissioner, but that problem is not before us. 17 Restatement o Agency, § 427. 18 In United States v. Joliet & Chicago R. Co., 1942, 315 U.S. 44, 62 S.Ct. 442, 86 L.Ed. 658, a lessee railroad agreed to pay rental payments to the lessor's stockholders directly. The lessor thereafter carried on no active business. It was nevertheless held taxable on the income received by its stockholders, since they received the payments only because they held its stock. 19 Art. 22(a)-1 of Treasury Regulations 101, promulgated under the Revenue Act of 1938, provides: 'Art. 22(a)-1. What included in gross income.—Gross income includes in general compensation for personal and professional services, business income, profits from sales of and dealings in property, interest, rent, dividends, and gains, profits, and income derived from any source whatever, unless exempt from tax by law. (See sections 22(b) and 116.) In general, income is the gain derived from capital, from labor, or from both combined, provided it be understood to include profit gained through a sale or conversion of capital assets. * * *' See Eisner v. Macomber, 1920, 252 U.S. 189, 207, 40 S.Ct. 189, 64 L.Ed. 521, 9 A.L.R. 1570; Merchants Loan & Trust Co. v. Smietanka, 1921, 255 U.S. 509, 519, 41 S.Ct. 386, 65 L.Ed. 751, 15 A.L.R. 1305. In the case of a subsidiary who supplies the labor and the capital with which the income is earned, as is true of petitioners here, it can hardly be contended that it did not earn the income. 20 Of course even a corporation which satisfies the usual tests of agency may be disregarded by the Commissioner if it is a sham or unreal. Higgins v. Smith, 1940, 308 U.S. 473, 60 S.Ct. 355, 84 L.Ed. 406; Gregory v. Helvering, 1935, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596, 97 A.L.R. 1355. Escaping taxation is not a 'business' activity. See National Investors Corporation v. Hoey, 2 Cir., 144 F.2d 466. 21 The two main purposes for the adoption by Airco of the corporate subsidiary method of operation, as related by Mr. C. E. Adams, Chairman of Air Reduction Corp., were these: 'Frankly, in 1918 and still, Air Reduction, Inc., was and is a New York corporation. Even at that early date it became evident, as I already said, we were going to have plants scattered all over the United States. We didn't want to domicile the parent company in 48 states of the Union and have us subject to service in all those states, that is, have the parent company subject to service in all those states, and that was distinctly a reason for using this corporate setup in connection with operations to be run as divisions, just as the contract sets forth. 'Now, in addition to that, as a practical matter, out in the field and on the firing line, to have a representative, an officer, we will say, of Pure Carbonic, when trouble arises with a customer, a vice president of Pure Carbonic, who is not an officer of Air Reduction, Inc., at all, who goes in and straightens that out with that customer, increases his cudos (sic), helps him with all his negotiating efforts, with their competitors on the outside.' It is thus apparent that Airco was attempting to avoid the status of principal vis-a-vis its subsidiaries. As principal it would have been subject to service of process through its agents; as owner of the subsidiary it was not. See Peterson v. Chicago, R.I. & P.R. Co., 1907, 205 U.S. 364, 391, 27 S.Ct. 513, 51 L.Ed. 841; Cannon Mfg. Co. v. Cudahy Packing Co., 1925, 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634. The purpose of having officers of subsidiaries who could deal directly with customers does not indicate an agency relationship. On the contrary, the very purpose of the organization adopted was to lead customers to believe that they were dealing with top men in the company actually manufacturing and selling the products they purchased.

1112

336 U.S. 440 69 S.Ct. 716 93 L.Ed. 790 KRULEWITCHv.UNITED STATES. No. 143. Argued Jan. 10, 1949. Decided March 28, 1949. Mr. Jocob W. Friedman, of New York City, for petitioner. Mr. Robert W. Ginnane, of Washington, D.C., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 A federal district court indictment charged in three counts that petitioner and a woman defendant had (1) induced and persuaded another woman to go on October 20, 1941, from New York City to Miami, Florida, for the purpose of prostitution, in violation of 18 U.S.C. § 399 (now § 2422); (2) transported or caused her to be transported from New York to Miami for that purpose, in violation of 18 U.S.C. § 398 (now § 2421); and (3) conspired to commit those offenses in violation of 18 U.S.C. § 88 (now § 371.) Tried alone, the petitioner was convicted on all three counts of the indictment. The Court of Appeals affirmed. 2 Cir., 167 F.2d 943. And see disposition of prior appeal, 2 Cir., 145 F.2d 76, 156 A.L.R. 337. We granted certiorari limiting our review to consideration of alleged error in admission of certain hearsay testimony against petitioner over his timely and repeated objections. 2 The challenged testimony was elicited by the Government from its complaining witness, the person whom petitioner and the woman defendant allegedly induced to go from New York to Florida for the purpose of prostitution. The testimony narrated the following purported conversation between the complaining witness and petitioner's alleged co-conspirator, the woman defendant. 'She asked me, she says, 'You di n't talk yet?' And I says, 'No.' And she says, 'Well, don't,' she says, 'until we get you a lawyer.' And then she says, 'Be very careful what you say.' And I can't put it in exact words. But she said, 'It would be better for us two girls to take the blame than Kay (the defendant) because he couldn't stand it, he couldn't stand to take it." The time of the alleged conversation was more than a month and a half after October 20, 1941, the date the complaining witness had gone to Miami. Whatever original conspiracy may have existed between petitioner and his alleged co-conspirator to cause the complaining witness to go to Florida in October, 1941, no longer existed when the reported conversation took place in December, 1941. For on this latter date the trip to Florida had not only been made—the complaining witness had left Florida, had returned to New York, and had resumed her residence there. Furthermore, at the time the conversation took place, the complaining witness, the alleged co-conspirator, and the petitioner had been arrested. They apparently were charged in a United States District Court of Florida with the offense of which petitioner was here convicted.1 3 It is beyond doubt that the central aim of the alleged conspiracy—transportation of the complaining witness to Florida for prostitution—had either never existed or had long since ended in success or failure when and if the alleged co-conspirator made the statement attributed to her. Cf. Lew Moy v. United States, 8 Cir., 237 F. 50. The statement plainly implied that petitioner was guilty of the crime for which he was on trial. It was made in petitioner's absence and the Government made no effort whatever to show that it was made with his authority. The testimony thus stands as an unsworn, out-of-court declaration of petitioner's guilt. This hearsay declaration, attributed to a co-conspirator, was not made pursuant to and in furtherance of objectives of the conspiracy charged in the indictment, because if made, it was after those objectives either had failed or had been achieved. Under these circumstances, the hearsay declaration attributed to the alleged co-conspirator was not admissible on the theory that it was made in furtherance of the alleged criminal transportation undertaking. Fiswick v. United States, 329 U.S. 211, 216—217, 67 S.Ct. 224, 227, 91 L.Ed. 196; Brown v. United States, 150 U.S. 93, 98—99, 14 S.Ct. 37, 39, 37 L.Ed. 1010; Graham v. United States, 8 Cir., 15 F.2d 740, 743. 4 Although the Government recognizes that the chief objective of the conspiracy—transportation for prostitution purposes—had ended in success or failure before the reported conversation took place, it nevertheless argues for admissibility of the hearsay declaration at one in furtherance of a continuing subsidiary objective of the conspiracy. Its argument runs this way. Conspirators about to commit crimes always expressly or implicitly agree to collaborate with each other to conceal facts in order to prevent detection, conviction and punishment. Thus the argument is that even after the central criminal objectives of a conspiracy have succeeded or failed, an implicit subsidiary phase of the conspiracy always survives, the phase which has concealment as its sole objective. The Court of Appeals adopted this view. It viewed the alleged hearsay declaration as one in furtherance of this continuing subsidiary phase of the conspiracy, as part of 'the implied agreement to conceal.' 167 F.2d 943, 948. It consequently held the declaration properly admitted. 5 We cannot accept the Government's contention. There are many logical and practical reasons that could be advanced against a special evidentiary rule that permits out-of-court statements of one conspirator to be used against another. But howver cogent these reasons, it is fir ly established that where made in furtherance of the objectives of a going conspiracy, such statements are admissible as exceptions to the hearsay rule. This prerequisite to admissibility, that hearsay statements by some conspirators to be admissible against others must be made in furtherance of the conspiracy charged, has been scrupulously observed by federal courts. The Government now asks us to expand this narrow exception to the hearsay rule and hold admissible a declaration, not made in furtherance of the alleged criminal transportation conspiracy charged, but made in furtherance of an alleged implied but uncharged conspiracy aimed at preventing detection and punishment. No federal court case cited by the Government suggests so hospitable a reception to the use of hearsay evidence to convict in conspiracy cases. The Government contention does find support in some but not all of the state court opinions cited in the Government brief.2 But in none of them does there appear to be recognition of any such broad exception to the hearsay rule as that here urged. The rule contended for by the Government could have far-reaching results. For under this rule plausible arguments could generally be made in conspiracy cases that most out-of-court statements offered in evidence tended to shield co-conspirators. We are not persuaded to adopt the Government's implicit conspiracy theory which in all criminal conspiracy cases would create automatically a further breach of the general rule against the admission of hearsay evidence. 6 It is contended that the statement attributed to the alleged co-conspirator was merely cumulative evidence, that without the statement the case against petitioner was so strong that we should hold the error harmless under 28 U.S.C. § 391.3 In Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557, we said that error should not be held harmless under the harmless error statute if upon consideration of the record the court is left in grave doubt as to whether the error had substantial influence in bringing about a verdict. We have such doubt here. The Florida District Court grand jury failed to indict. After indictment in New York petitioner was tried four times with the following results: mistrial; conviction; mistrial; conviction with recommendation for leniency. The revolting type of charges made against this petitioner by the complaining witness makes it difficult to believe that a jury convinced of a strong case against him would have recommended leniency. There was corroborative evidence of the complaining witness on certain phases of the case. But as to all vital phases, those involving the sordid criminal features, the jury was compelled to choose between believing the petitioner or the complaining witness. The record persuades us that the jury's task was difficult at best. We cannot say that the erroneous admission of the hearsay declaration may not have been the weight that tipped the scales against petitioner. 7 Reversed. 8 Mr. Justice JACKSON, concurring in the judgment and opinion of the Court. 9 This case illustrates a present drift in the federal law of conspiracy which warrants some further comment because it is characteristic of the long evolution of that elastic, sprawling and pervasive offense. Its history exemplifies the 'tendency of a principle to expand itself to the limit of its logic.'1 The unavailing protest of courts against the growing habit to indict for conspiracy in lieu of prosecuting for the substantive offense itself, or in addition thereto,2 suggests that loose practice as to this offense constitutes a serious threat to fairness in our administration of justice. 10 The modern crime of conspiracy is so vague that it almost defies definition.3 Despite certain elementary and essential elements,4 it also, chameleon-like, takes on a special coloration from each of the many independent offenses on which it may be overlaid.5 It is always 'predominantly mental in composition' because it consists primarily of a meeting of minds and an intent.6 11 The crime comes down to us wrapped in vague but unpleasant connotations. It sounds historical undertones of treachery, secret plotting and violence on a scale that menaces social stability and the security of the state itself. 'Privy conspiracy' ranks with sedition and rebellion in the Litany's prayer for deliverance. Conspiratorial movements do indeed lie back of the political assassination, the coup d'etat, the putsch, the revolution, and seizures of power in modern times, as they have in all history.7 12 But the conspiracy concept also is superimposed upon many concerted crimes having no political motivation. It is not intended to question that the basic conspiracy principle has some place in modern criminal law, because to unite, back of a criminal purpose, the strength, opportunities and resources of many is obviously more dangerous and more difficult to police than the efforts of a lone wrongdoer.8 It also may be trivialized, as here, where the conspiracy consists of the concert of a loathsome panderer and a prostitute to go from New York to Florida to ply their trade, see 2 Cir., 145 F.2d 76, 156 A.L.R. 337, for details, and it would appear that a simple Mann Act prosecution would vindicate the majesty of federal law. However, even when appropriately invoked, the looseness and pliability of the doctrine present inherent dangers which should be in the background of judicial thought wherever it is sought to extend the doctrine to meet the exigencies of a particular case. 13 Conspiracy in federal law aggravates the degree of crime over that of unconcerted offending. The act of confederating to commit a misdemeanor, followed by even an innocent overt act in its execution, is a felony and is such even if the misdemeanor is never consummated.9 The more radical proposition also is well-established that at common law and under some statutes a combination may be a criminal conspiracy even if it contemplates only acts which are not crimes at all when perpetrated by an individual or by many acting severally.10 14 Thus the conspiracy doctrine will incriminate persons on the fringe of offending who would not be guilty of aiding and abetting or of becoming an accessory, for those charges only lie when an act which is a crime has actually been committed.11 15 Attribution of criminality to a confederation which contemplates no act that would be criminal if carried out by any one of the conspirators is a practice peculiar to Anglo-American law. 'There can be little doubt that this wide definition of the crime of conspiracy originates in the criminal equity administered in the Star Chamber.'12 In fact, we are advised that 'The modern law of conspiracy is almost entirely the result of the manner in which conspiracy was treated by the Court of the Star Chamber.13 The doctrine does not commend itself to jurists of civil-law countries,14 despite universal recognition that an organized society must have legal weapons for combatting organized criminality. Most other countries have devised what they consider more discriminating principles upon which to prosecute criminal gangs, secret associations and subversive syndicates.15 16 A recent tendency has appeared in this Court expand this elastic offense and to facilitate its proof. In Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489, it sustained a conviction of a substantive crime where there was no proof of participation in or knowledge of it, upon the novel and dubious theory that conspiracy is equivalent in law to aiding and abetting. 17 Doctrines of conspiracy are not only invoked for criminal prosecution, but also in civil proceedings for damages or for injunction, and in administrative proceedings to apply regulatory statutes. They have been resorted to by military commissions and on at least one notable occasion when civil courts were open at the time and place to punish the offense.16 This conspiracy concept was employed to prosecute laborers for combining to raise their wages and formed the basis for abuse of the labor injunction.17 The National Labor Relations Act, 29 U.S.C.A. § 151 et seq., found it necessary to provide that concerted labor activities otherwise lawful were not rendered unlawful by mere concert.18 But in other fields concert may still be a crime though it contemplates only acts which each could do lawfully on his own. 18 The interchangeable use of conspiracy doctrine in civil as well as penal proceedings opens it to the danger, absent in the case of many crimes, that a court having in mind only the civil sanctions will approve lax practices which later are imported into criminal proceedings. In civil proceedings this Court frankly has made the end a test of the means, saying, 'To require a greater showing would cripple the Act,' United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, in dispensing with the necessity for specific intent to produce a result violative of the statute. Further, the Court has dispensed with even the necessity to infer any definite agreement, although that is the gist of the offense. 'It is elementary that an unlawful conspiracy may be and often is formed without simultaneous action or agreement on the part of the conspirators. * * *' United States v. Masonite Corp., 316 U.S. 265, 275, 62 S.Ct. 1070, 1076, 86 L.Ed. 1461. One might go on from the reports of this and lower courts and put together their decisions condoning absence of proof to demonstrate that the minimum of proof required to establish conspiracy is extremely low, and we may expect our pronouncements in civil cases to be followed in criminal ones also. 19 Of course, it is for prosecutors rather than courts to determine when to use a scatter gun to bring down the defendant, but there are procedural advantages from using it which add to the danger of unguarded extension of the concept. 20 An accused, under the Sixth Amendment, has the right to trial 'by an impartial jury of the State and district wherein the crime shall have been committed.' The leverage of a conspiracy charge lifts this limitation from the prosecution and reduces its protection to a phantom, for the crime is considered so vagrant as to have been committed in any district where any one of the conspirators did any one of the acts, however innocent, intended to accomplish its object.19 The Government may, and often does, compel one to defend at a great distance from any place he ever did any act because some accused confederate did some trivial and by itself innocent act in the chosen district. Circumstances may even enable the prosecution to fix the place of trial in Washington, D.C., where a defendant may lawfully be put to trial before a jury partly or even wholly made up of employees of the Government that accuses him. Cf. Frazier v. United States, 335 U.S. 497, 69 S.Ct. 201. 21 When the trial starts, the accused feels the full impact of the conspiracy strategy. Strictly, the prosecution should first establish prima facie the conspiracy and identify the co spirators, after which evidence of acts and declarations of each in the course of its execution are admissible against all. But the order of proof of so sprawling a charge is difficult for a judge to control. As a practical matter, the accused often is confronted with a hodgepodge of acts and statements by others which he may never have authorized or intended or even known about, but which help to persuade the jury of existence of the conspiracy itself. In other words, a conspiracy often is proved by evidence that is admissible only upon assumption that conspiracy existed. The naive assumption that prejudicial effects can be overcome by instructions to the jury, cf. Blumenthal v. United States, 332 U.S. 539, 559, 68 S.Ct. 248, 257, all practicing lawyers know to be unmitigated fiction. See Skidmore v. Baltimore & Ohio R. Co., 2 Cir., 167 F.2d 54. 22 The trial of a conspiracy charge doubtless imposes a heavy burden on the prosecution, but it is an especially difficult situation for the defendant. The hazard from loose application of rules of evidence is aggravated where the Government institutes mass trials.20 Moreover, in federal practice there is no rule preventing conviction on uncorroborated testimony of accomplices, as there are in many jurisdictions, and the most comfort a defendant can expect is that the court can be induced to follow the 'better practice' and caution the jury against 'too much reliance upon the testimony of accomplices.' Caminetti v. United States, 242 U.S. 470, 495, 37 S.Ct. 192, 198, 61 L.Ed. 442, L.R.A.1917A, 502, Ann.Cas.1917B, 1168. 23 A co-defendant in a conspiracy trial occupies an uneasy seat. There generally will be evidence of wrongdoing by somebody. It is difficult for the individual to make his own case stand on its own merits in the minds of jurors who are ready to believe that birds of a feather are flocked together. If he is silent, he is taken to admit it and if, as often happens, co-defendants can be prodded into accusing or contradicting each other, they convict each other. There are many practical diffidulties in defending against a charge of conspiracy which I will not enumerate.21 24 Against this inadequately sketched background, I think the decision of this case in the court below introduced an ominous expansion of the accepted law of conspiracy. The prosecution was allowed to incriminate the defendant by means of the prostitute's recital of a conversation with defendant's alleged co-conspirator, who was not on trial. The conversation was said to have taken place after the substantive offense was accomplished, after the defendant, the co-conspirator and the witness had all been arrested, and after the witness and the other two had a falling out. The Court of Appeals sustained its admission upon grounds stated as follows: '* * * We think that implicit in a conspiracy to violate the law is an agreement among the conspirators to conceal the violation after as well as before the illegal plan is consummated. Thus the conspiracy continue , at least for purposes of concealment, even after its primary aims have been accomplished. The statements of the co-conspirator here were made in an effort to protect the appellant by concealing his role in the conspiracy. Consequently, they fell within the implied agreement to conceal and were admissible as evidence against the appellant. Cf. United States v. Goldstein, 2 Cir., 135 F.2d 359; Murray v. United States, 7 Cir., 10 F.2d 409, certiorari denied, 271 U.S. 673, 46 S.Ct. 486, 70 L.Ed. 1144. While Bryan v. United States, 5 Cir., 17 F.2d 741, is by implication directly to the contrary, we decline to follow it.' 25 I suppose no person planning a crime would accept as a collaborator one on whom he thought he could not rely for help if he were caught, but I doubt that this fact warrants an inference of conspiracy for that purpose. Of course, if an understanding for continuous aid had been proven, it would be embraced in the conspiracy by evidence and there would be no need to imply such an agreement. Only where there is no convincing evidence of such an understanding is there need for one to be implied. 26 It is difficult to see any logical limit to the 'implied conspiracy,' either as to duration or means, nor does it appear that one could overcome the implication by express and credible evidence that no such understanding existed, nor any way in which an accused against whom the presumption is once raised can terminate the imputed agency of his associates to incriminate him. Conspirators, long after the contemplated offense is complete, after perhaps they have fallen out and become enemies, may still incriminate each other by deliberately harmful, but unsworn declarations, or unintentionally by casual conversations out of court. On the theory that the law will impute to the confederates a continuing conspiracy to defeat justice, one conceivably could be bound by another's unauthorized and unknown commission of perjury, bribery of a juror or witness, or even putting an incorrigible witness with damaging information out of the way. 27 Moreover, the assumption of an indefinitely continuing offense would result in an indeterminate extension of the statute of limitations. If the law implies an agreement to cooperate in defeating prosecution, it must imply that it continues as long as prosecution is a possibility, and prosecution is a possibility as long as the conspiracy to defeat it is implied to continue. 28 I do not see the slightest warrant for judicially introducing a doctrine of implied crimes or constructive conspiracies. It either adds a new crime or extends an old one. True, the modern law of conspiracy was largely evolved by the judges. But it is well and wisely settled that there can be no judge-made offenses against the United States and that every federal prosecution must be sustained by statutory authority.22 No statute authorizes federal judges to imply, presume or construct a conspiracy except as one may be found from evidence. To do so seems to approximate creation of a new offense and one that I would think of doubtful constitutionality even if it were created by Congress.23 And, at all events, it is one fundamentally and irreconcilably at war with our presumption of innocence. 29 There is, of course, strong temptation to relax rigid standards when it seems the only way to sustain convictions of evildoers. But statutes authorize prosecution for substantive crimes for most evildoing without the dangers to the liberty of the indivudal and the integrity of the j dicial process that are inherent in conspiracy charges. We should disapprove the doctrine of emplied or constructive crime in its entirety and in every manifestation. And I think there should be no straining to uphold any conspiracy conviction where prosecution for the substantive offense is adequate and the purpose served by adding the conspiracy charge seems chiefly to get prodecural advantages to ease the way to conviction. 30 Although a reversal after trials is, of course, regrettable, I cannot overlook the error as a harmless one. But I should concur in reversal even if less sure that prejudice resulted, for it is better that the crime go unwhipped of justice than that this theory of implied continuance of conspiracy find lodgment in our law, either by affirmance or by tolerance. Few instruments of injustice can equal that of implied or presumed or constructive crimes. The most odious of all oppressions are those which mask as justice. 31 Mr. Justice FRANKFURTER and Mr. Justice MURPHY join in this opinion. 32 Mr. Justice BURTON, dissenting. 33 While I agree with the opinion of the Court that the hearsay testimony in question was not properly admissible, I regard its admission, under the circumstances of this case, as an absolutely harmless error. 34 In speaking of harmless errors that may result from the admission of evidence, this Court has said: 'Errors of this sort in criminal causes conceivably may be altogether harmless in the face of other clear evidence, although the same error might turn scales otherwise level, as constantly appears in the application of the policy of § 2691 to questions of the admission of cumulative evidence.' Kotteakos v. United States, 328 U.S. 750, 763, 66 S.Ct. 1239, 1247, 90 L.Ed. 1557. 35 Again, in determining whether error in the admission of evidence should result in a reversal of a judgment, we said that the question is— 36 'what effect the error had or reasonably may be taken to have had upon the jury's decision. * * * 37 'If, when all is said and done, the conviction is sure that the error did not influence the jury, or had but very slight effect, the verdict and the judgment should stand, except perhaps where the departure is from a constitutional norm or a specific command of Congress.' Id., 328 U.S. at pages 764—765, 66 S.Ct. at page 1247. 38 The issue before us involves no constitutional question or specific command of Congress. The trial was a long one concerning personal conduct involving simple issues of fact. The record of it covers more than 800 pages. The jury must have been thoroughly familiar with the issues and with the degree of dependability, if any, to be placed upon the oral testimony of the petitioner and of the two witnesses involved in the conversation that is before us as reported by one of them. The evidence supporting the jury's verdict was cumulative, repetitive and corroborated to such a point that I cannot believe that the verdict or the rights of the parties could have been appreciably affected by such weight as the jury may have attached to this reported snatch of conversation b tween two people of such negligible dependability as was demonstrated here. After this extended fourth trial, to set aside this jury's verdict merely because of this particular bit of hearsay testimony seems to me to be an unrealistic procedure that tends to make a travesty of the jury system which is neither necessary nor deserved. I would affirm the judgment below. 1 The Florida grand jury failed to indict and the cases there were closed without prosecution in February, 1942. The New York indictments were not returned until January, 1943. 2 Commonwealth v. Smith, 151 Mass. 491, 24 N.E. 677; People v. Mol, 137 Mich. 692, 707, 100 N.W. 913, 68 L.R.A. 871, 4 Ann.Cas. 960; Hooper v. State, 187 Ark. 88, 92, 58 S.W.2d 434; State v. Gauthier, 113 Or. 297, 307, 231 P. 141; State v. Emory, 116 Kan. 381, 384, 226 P. 754; Carter v. State, 106 Ga. 372, 376, 32 S.E. 345, 71 Am.St.Rep. 262; Watson v. State, 166 Miss. 194, 213, 146 So. 122; Baldwin v. State, 46 Fla. 115, 120—121, 35 So. 220; State v. Strait, Mo.Sup., 279 S.W. 109. 3 Repealed by Act June 25, 1948, c. 646, § 39, 62 Stat. 992. See Federal Rules of Civil Procedure, Rule 61, 28 U.S.C.A.; Federal Rules of Criminal Procedure, Rule 52, 18 U.S.C.A. 1 The phrase is Judge Cardozo's—The Nature of the Judicial Process, p. 51. 2 The Conference of Senior Circuit Judges, presided over by Chief Justice Taft, in 1925 reported: 'We note the prevalent use of conspiracy indictments for converting a joint misdemeanor into a felony; and we express our conviction that both for this purpose and for the purpose—or at least with the effect—of bringing in much improper evidence, the conspiracy statute is being much abused. 'Although in a particular case there may be no preconcert of plan, excepting that necessarily inherent in mere joint action, it is difficult to exclude that situation from the established definitions of conspiracy; yet the theory which permits us to call the aborted plan a greater offense than the completed crime supposes a serious and substantially continued group scheme for cooperative law breaking. We observe so many conspiracy prosecutions which do not have this substantial base that we fear the creation of a general impression, very harmful to law enforcement, that this method of prosecution is used arbitrarily and harshly. Further the rules of evidence in conspiracy cases make them most difficult to try without prejudice to an innocent defendant.' Annual Report of the Attorney General for 1925, pp. 5 6. Fifteen years later Judge Learned Hand observed: '* * * so many prosecutors seek to sweep within the drag-net of conspiracy all those who have been associated in any degree whatever with the main offenders. That there are opportunities of great oppression in such a doctrine is very plain, and it is only by circumscribing the scope of such all comprehensive indictments that they can be avoided.' United States v. Falcone, 2 Cir., 109 F.2d 579, 581. 3 Harno, Intent in Criminal Conspiracy, 89 U. of Pa.L.Rev. 624: 'In the long category of crimes there is none, not excepting criminal attempt, more difficult to confine within the boundaries of definitive statement than conspiracy.' An English author—Wright, The Law of Criminal Conspiracies, p. 11—gives up with the remark: 'But no intelligible definition of 'conspiracy' has yet been established.' 4 Justice Holmes supplied an oversimplified working definition in United States v. Kissel, 218 U.S. 601, 608, 31 S.Ct. 124, 126, 54 L.Ed. 1168: 'A conspiracy is a partnership in criminal purposes.' This was recently restated 'A conspiracy is a partnership in crime.' Pinkerton v. United States, 328 U.S. 640, 644, 66 S.Ct. 1180, 1182, 90 L.Ed. 1489. The latter is inaccurate, since concert in criminal purposes, rather than concert in crime establishes the conspiracy. Carson offers the following re sume of American cases: 'It would appear that a conspiracy must be a combination of two or more persons by some concerted action to accomplish some criminal object; or some object not criminal by criminal means: or, some object not criminal by means which are not criminal, but where mischief to the public is involved; or, where neither the object nor the means are criminal, or even unlawful, but where injury or oppression to individuals are the result.' The Law of Criminal Conspiracies, as found in American Cases, p. 123. 5 See, for example: 8 U.S.C. § 47, 8 U.S.C.A. § 47 Conspiracy to interfere with civil rights: (1) Preventing officer from performing duties; (2) Obstructing justice, intimidating party, witness, or juror; (3) Depriving persons of rights or privileges. 10 U.S.C. § 1566, 10 U.S.C.A. § 1566, Conspiracy by persons in military service to defraud the U.S. 12 U.S.C. § 1138d(f), 12 U.S.C.A. § 1138d(f), Conspiracy involving Farm Credit Banks, Administration, etc. 15 U.S.C. §§ 1—3, 15 U.S.C.A. §§ 1—3, Conspiracy in restraint of trade; § 8, 15 U.S.C.A. § 8, Conspiracy in restraint of import trade. 18 U.S.C. § 6, 18 U.S.C.A. § 6, Seditious conspiracy; § 11, Conspiracy to impair loyalty of armed forces or advocate overthrow of U.S. Government by force; § 51, Conspiracy to injure person in exercise of civil rights; § 54, Conspiracy to prevent officer from performing duties; § 83, Conspiracy to defraud the government by obtaining payment of a false claim; § 88, Conspiracy to defraud the U.S.; § 242, Conspiracy to obstruct justice; § 252, Conspiracy to cause riots at Federal penal institutions; § 408c, Conspiracy to transport kidnapped person in interstate commerce; § 418a, Conspiracy to transport stolen property and counterfeiting instruments in interstate commerce; § 420a(d), Conspiracy to violate Anti-Racketeering Act; § 483, Conspiracy to incite mutiny on shipboard; § 487, Conspiracy to cast away vessel. 22 U.S.C. § 234, 22 U.S.C.A. § 234, Conspiracy to injure property of foreign government. 31 U.S.C. § 231, 31 U.S.C.A. § 231, Conspiracy to obtain payment of false claims. 34 U.S.C. § 749a, 34 U.S.C.A. § 749a, Conspiracy to bid collusively on construction of naval aircraft. 38 U.S.C. § 715, 38 U.S.C.A. § 715, Conspiracy to falsify pension claims. 50 U.S.C. § 34, 50 U.S.C.A. § 34, Conspiracy to disclose national defense information or commit espionage. 50 App.U.S.C. § 311, 50 U.S.C.A.Appendix, § 311, Conspiracy to violate Selective Service Act. 6 Harno, Intent in Criminal Conspiracy, 89 U. of Pa.L.Rev. 624, 632. 7 See Senturia, Conspiracy-Political, IV Encyc. Soc. Sci. 238 (1937). On conspiracy principles German courts, on May 30, 1924, adjudged the Nazi Party to be a criminal organization. It also held in 1928 that the Leadership Corps of the Communist Party was a criminal organization and in 1930 entered judgment of criminality against the Union of Red Front Fighters of the Communist Party. See note 15. 8 8 Holdsworth, History of English Law, 383. Miller, Criminal Law, p. 110. 9 18 U.S.C.A. § 371. Until recently, the punishment for such a felony could have been far in excess of that provided for the substantive offense. However, the Act of June 25, 1948, c. 645, 62 Stat. 683, 701, provides that in such a case the punishment for the conspiracy shall not exceed the maximum provided for such misdemeanor. 10 This is the federal law applicable to antitrust prosecutions. For the history of this conception and its perversion, particularly in labor cases, see Sayre; Criminal Conspiracy, 35 Harv.L.Rev. 393. On the abuse of conspiracy see O'Brian, Loyalty Tests and Guilt by Association, 61 Harv.L.Rev. 592, and Note, The Conspiracy Dilemma; Prosecution of Group Crime or Protection of Individual Defendants, 62 Harv.L.Rev. 276. 11 This statement, of course, leaves out of account the subject of attempts with which conspiracy is said to be allied. 8 Holdsworth, History of English Law, 382. 12 Id., 382. 13 Id., 379. 14 'It is utterly unknown to the Roman law: it is not found in modern Continental codes; few Continental lawyers ever heard of it. It is a fortunate circumstance that it is not encrusted so deep in our jurisprudence by past decisions of our courts that we are unable to slough it off altogether. It is a doctrine which has proved it is the evil genius of our law wherever it has touched it.' Sayre, Criminal Conspiracy, 35 Harv.L.Rev. 393, 427. 15 Counsel representing the United States, the United Kingdom, the French Republic, and the Soviet Union, and German defendants, indulged in some comparisons of the relevant laws of several nations before the International Military Tribunal at Nu rnberg in connection with organizations there accused as criminal. 8 Trial of Major War Criminals (GPO 1947), pp. 353, et seq.; 2 Nazi Conspiracy and Aggression (GPO 1946), p. 1; Jackson, The Nu rnberg Case, p. 95. 16 The Assassination of President Lincoln and the Trial of the Conspirators, New York, 1865. See, however, Ex parte Milligan, 4 Wall. 2, 18 L.Ed. 281. 17 See Sayre, Criminal Conspiracy, 35 Harv.L.Rev. 393, 403. 18 International Union, U.A.W. v. Wisconsin Employment Relations Board, 336 U.S. 245, 69 S.Ct. 516. 19 Hyde v. United States, 225 U.S. 347, 32 S.Ct. 793, 56 L.Ed. 1114, Ann.Cas. 1914A, 614. Mr. Justice Holmes, on behalf of himself and Justices Hughes, Lurton and Lamar, wrote a vigorous protest which did not hesitate to brand the doctrine as oppressive and as 'one of the wrongs that our forefathers meant to prevent.' 225 U.S. 347, 387, 32 S.Ct. 793, 809. 20 An example is afforded by Allen v. United States, 7 Cir., 4 F.2d 688. At the height of the prohibition frenzy, seventy-five defendants were tried on charges of conspiracy. A newspaper reporter testified to going to a drinking place where he talked with a woman, behind the bar, whose name he could not give. There was not the slightest identification of her nor showing that she knew or was known by any defendant. But it was held that being back of the bar showed her to be a co-conspirator and, hence, her statements were admissible against all. He was allowed to relate incriminating statements made by her. 21 For courtroom technique employed in the trial of conspiracy cases by both prosecution and defense, see O'Dougherty, Prosecution and Defense under Conspiracy Indictments, 9 Brooklyn L.Rev. 263. His survey, which accords with our observation, will hardly convince one that a trial of this kind is the highest exemplification of the working of the judicial process. 22 United States v. Hudson, 7 Cranch 32, 3 L.Ed. 259; United States v. Worrall, 2 Dall. 384, 1 L.Ed. 426; United States v. Coolidge, 1 Wheat. 415, 4 L.Ed. 124; United States v. Eaton, 144 U.S. 677, 687, 12 S.Ct. 764, 767, 36 L.Ed. 591; United States v. Bathgate, 246 U.S. 220, 225, 38 S.Ct. 269, 270, 62 L.Ed. 676. See, however, Warren, History of Federal Judiciary Act, 1937, Harv.L.Rev. 49, 73. 23 Cf. Tot v. United States, 319 U.S. 463, 63 S.Ct. 1241, 87 L.Ed. 1519. 1 Section 269 of the Judicial Code, as then in effect, and as in effect at the time of the trial of the instant case and of the entry of the judgment below, provided: 'Sec. 269. * * * On the hearing of any appeal, certiorari, writ of error, or motion for a new trial, in any case, civil or criminal, the court shall give judgment after an examination of the entire record before the court, without regard to technical errors, defects, or exceptions which do not affect the substantial rights of the parties.' 40 Stat. 1181, 28 U.S.C. § 391. Rule 52(a) of the Federal Rules of Criminal Procedure, 18 U.S.C.A., as continuously in effect during and since the time of the trial of the instant case and as still in effect, provides: 'Rule 52. Harmless Error and Plain Error. '(a) Harmless Error. Any error, defect, irregularity or variance which does not affect substantial rights shall be disregarded. * * *'

01

336 U.S. 490 69 S.Ct. 684 93 L.Ed. 834 GIBONEY et al.v.EMPIRE STORAGE & ICE CO. No. 182. Argued for Appellants and Submitted for Appellee Jan. 4, 5, 1949. Decided April 4, 1949. Appeal from the Supreme Court of the State of Missouri. Clif Langsdale, of Kansas City, Mo., for appellants. Richard K. Phelps, of Kansas City, Mo., for appellee. Mr. Justice BLACK delivered the opinion of the Court. 1 This case here on appeal under 28 U.S.C. § 1257, 28 U.S.C.A. § 1257, raises questions concerning the constitutional power of a state to apply its antitrade restraint law1 to labor union activities, and to enjoin union members from peaceful picketing carried on as an essential and inseparable part of a course of conduct which is in violation of the state law. The picketing occurred in Kansas City, Missouri. The injunction was issued by a Missouri state court. 2 The appellants are members and officers of the Ice and Coal Drivers and Handlers Local Union No. 953, affiliated with the American Federation of Labor. Its membership includes about 160 of 200 retail ice peddlers who drive their own trucks in selling ice from door to door in Kansas City. The union began efforts to induce all the nonunion peddlers to join. One objective of the organizational drive was to better wage and working conditions of peddlers and their helpers. Most of the nonunion peddlers refused to join the union. To break down their resistance the union adopted a plan which was designed to make it impossible for nonunion peddlers to buy ice to supply their retail customers in Kansas City. , pursuant to the plan the union set about to obtain from all Kansas City wholesale ice distributors agreements that they would not sell ice to nonunion peddlers. Agreements were obtained from all distributors except the appellee, Empire Storage and Ice Company. Empire refused to agree. The union thereupon informed Empire that it would use other means at its disposal to force Empire to come around to the union view. Empire still refused to agree. Its place of business was promptly picketed by union members although the only complaint registered against Empire, as indicated by placards carried by the pickets, was its continued sale of ice to nonunion peddlers. 3 Thus the avowed immediate purpose of the picketing was to compel Empire to agree to stop selling ice to nonunion peddlers. Missouri statutes, set out in note 1, make such an agreement a crime punishab e by a fine of not more than $5,000 and by imprisonment in the penitentiary for not more than five years. Furthermore, had Empire made the agreement, the ice peddlers could have brought actions for triple damages for any injuries they sustained as a result of the agreement under § 8308 of the Missouri Revised Statutes 1939, Mo.R.S.A. 4 About 85% of the truck drivers working for Empire's customers were members of labor unions. These union truck drivers refused to deliver goods to or from Empire's place of business. Had any one of them crossed the picket line he would have been subject to fine or suspension by the union of which he was a member. 5 Because of the foregoing facts shown either by admissions, by undisputed evidence, or by unchallenged findings, the picketing had an instantaneous adverse effect on Empire's business. It was reduced 85%. In this dilemma, Empire was faced with three alternatives: It could continue to sell ice to nonunion peddlers, in which event it would be compelled to wage a fight for survival against overwhelming odds; it could stop selling ice to nonunion peddlers thereby relieving itself from further conflict with the union, in which event it would be subject to prosecution for crime and suits for triple damages; it could invoke the protection of the law. The last alternative was adopted. 6 Empire's complaint charged that the concerted efforts of union members to restrain Empire from selling to nonunion members was a violation of the antitrade restraint statute and that an agreement by Empire to refuse to make such sales would violate the same statute. It prayed for an injunction against the picketing. In answering, appellants asserted a constitutional right to picket Empire's premises in order to force it to discontinue sale of ice to nonunion peddlers. They contended that their right to do so was 'guaranteed by the First and Fourteenth Amendments' because there was 'a labor dispute existing' between appellants and appellee, and because the picketers publicized only the truthful information that appellee was 'selling ice to peddlers who are not members of the said defendant union.' 7 The trial court heard evidence, made findings and issued an injunction restraining the appellants from 'placing pickets or picketing around or about the buildings' of Empire. 8 The State Supreme Court affirmed. Mo.Sup., 210 S.W.2d 55. It agreed with the findings of the trial court that the conduct of appellants was pursuant to a local transportation combination used to compel Empire to stop selling ice to nonunion peddlers and that the purpose of the picketing was to force Empire to become a party to such combination. It held that such activities were unlawful because in violation of § 8301 of the Missouri statutes and further held that the injunction to prevent picketing for such unlawful purpose did not contravene the appellants' right of free speech. 9 In this Court appellants do not raise problems similar to those discussed in Near v. Minnesota, 283 U.S. 697, 51 S.Ct. 625, 75 L.Ed. 1357, relating to censorship prior to publication as distinguished from sanctions to be imposed after publication, nor are their objections to the form, language, or scope of the injunction. See Milk Wagon Drivers Union of Chicago, Local 753 v. Meadowmoor Dairies, 312 U.S. 287, 297—298, also dissenting opinion, 299—303, 61 S.Ct. 552, 556—557, 558—559, 85 L.Ed. 836, 132 A.L.R. 1200. Attacking the Missouri statute as construed and applied, appellants broadly challenge the power of the state to issue any injunction against their conduct since, they assert, the primary objective of their combination and picketing was to improve wage and working conditions. On this premise they argue that their right to combine, to picket, and to publish must be determined by focusing attention exclusively upon their lawful purpose to improve labor conditions, and that their violation of the state antitrade restraint laws must be dismissed as merely incidental to this lawful p rpose. 10 First. That states have constitutional power to prohibit competing dealers and their aiders and abettors from combining to restrain freedom of trade is beyond question. Watson v. Buck, 313 U.S. 387, 403—404, 61 S.Ct. 962, 967—968, 85 L.Ed. 1416. In speaking of the Missouri statutory antecedent of the statute here challenged, this Court said: 'The purpose of such statutes is to secure competition and preclude combinations which tend to defeat it. * * * There is nothing in the Constitution of the United States which precludes a state from adopting and enforcing such policy. To so decide would be stepping backwards.' International Harvester Co. v. Missouri, 234 U.S. 199, 209, 34 S.Ct. 859, 862, 58 L.Ed. 1276, 52 L.R.A,N.S., 525. Agreements and combinations not to sell to or buy goods from particular persons, or to dictate the terms under which transportation will be supplied, are well recognized trade restraint practices which both state and national legislation can and do prohibit. Grenada Lumber Co. v. Mississippi, 217 U.S. 433, 440—441, 30 S.Ct. 535, 538, 54 L.Ed. 826; Eastern States Retail Lumber Dealers' Ass'n v. United States, 234 U.S. 600, 612—614, 34 S.Ct. 951, 954—955, 58 L.Ed. 1490, L.R.A.1915A, 788; Fashion Originators' Guild v. Trade Comm., 312 U.S. 457, 465, 61 S.Ct. 703, 706, 85 L.Ed. 949; United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 324—325, 17 S.Ct. 540, 552, 41 L.Ed. 1007. 11 Second. It is contended that though the Missouri statute can be applied validly to combinations of businessmen who agree not to sell to certain persons, it cannot be applied constitutionally to combinations of union workers who agree in their self-interest to use their joint power to prevent sales to nonunion workers. This contention appears to be grounded on the guaranties of freedom of speech and press stemming from the Fourteenth and First Amendments. Aside from the element of disseminating information through peaceful picketers, later dicussed, it is difficult to perceive how it could be thought that these constitutional guaranties afford labor union members a peculiar immunity from laws against trade restraint combinations, unless, as appellants contend, labor unions are given special constitutional protection denied all other people.2 12 The objective of unions to improve wages and working conditions has sometimes commended itself to Congress and to state legislatures. To the extent that the states or Congress, for this or other reasons, have seen fit to exempt unions from antitrust laws, this Court has sustained legislative power to grant the exemptions. International Harvester Co. v. Missouri, 234 U.S. 199, 34 S.Ct. 859, 58 L.Ed. 1276, 52 L.R.A.,N.S., 525; Allen-Bradley Co. v. Union, 325 U.S. 797, 810—811, 65 S.Ct. 1533, 1540, 89 L.Ed. 1939; United States v. Hutcheson, 312 U.S. 219, 232—234, 61 S.Ct. 463, 466—467, 85 L.Ed. 788, and see Tigner v. Texas, 310 U.S. 141, 60 S.Ct. 879, 84 L.Ed. 1124, 130 A.L.R. 1321. On the other hand where statutes have not granted exemptions, we have declared that violations of antitrust laws could not be defended on the ground that a particular accused combination would not injure but would actually help manufacturers, laborers, retailers, consumers, or the public in general. Fashion Originators' Guild v. Trade Comm., 312 U.S. 457, 467—468, 61 S.Ct. 703, 707—708, 85 L.Ed. 949. More than thirty years ago thi Court said, International Harvester Co. v. Missouri, supra, 234 U.S. at page 209, 34 S.Ct. at page 862, 58 L.Ed. 1276, 52 L.R.A.,N.S., 525: 'It is too late in the day to assert against statutes which forbid combinations of competing companies that a particular combination was induced by good intentions. * * *' See also United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 220—221, 60 S.Ct. 811, 842—843, 84 L.Ed. 1129; Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 242—243, 68 S.Ct. 996, 1009. 13 The foregoing holdings rest on the premise that legislative power to regulate trade and commerce includes the power to determine what groups, if any, shall be regulated, and whether certain regulations will help or injure businessmen, workers, and the public in general.3 In making this determinination Missouri has decided to apply its law without exception to all persons who combine to restrain freedom of trade. We are without constitutional authority to modify or upset Missouri's determination that it is in the public interest to make combinations of workers subject to laws designed to keep the channels of trade wholly free and open. To exalt all labor union conduct in restraint of trade above all state control would greatly reduce the traditional powers of states over their domestic economy and might conceivably make it impossible for them to enforce their antitrade restraint laws. See Allen-Bradley Co. v. Union, 325 U.S. 797, 810, 65 S.Ct. 1533, 1540, 89 L.Ed. 1939. More than that, if for the reasons here contended states cannot subject union members to such antitrade restraint laws as Missouri's, neither can Congress. The Constitution has not so greatly impaired the states' or nation's power to govern. 14 Third. It is contended that the injunction against picketing adjacent to Empire's place of business is an unconstitutional abridgment of free speech because the picketers were attempting peacefully to publicize truthful facts about a labor dispute. See Thornhill v. Alabama, 310 U.S. 88, 102, 60 S.Ct. 736, 744, 84 L.Ed. 1093, and Allen-Bradley Co. v. Union, 325 U.S. 797, 807, note 12, 65 S.Ct. 1533, 1539, 89 L.Ed. 1939. But the record here does not permit this publicizing to be treated in isolation. For according to the pleadings, the evidence, the findings, and the argument of the appellants, the sole immediate object of the publicizing adjacent to the premises of Empire, as well as the other activities of the appellants and their allies, was to compel Empire to agree to stop selling ice to nonunion peddlers. Thus all of appellants' activities—their powerful transportation combination, their patrolling, their formation of a picket line warning union men not to cross at peril of their union membership, their publicizing—constituted a single and integrated course of conduct, which was in violation of Missouri's valid law. In this situation, the injunction did not more than enjoin an offense against Missouri law, a felony. 15 It rarely has been suggested that the constitutional freedom for speech and press extends its immunity to speech or writing used as an integral part of conduct in violation of a valid criminal statute. We reject the contention now. Nothing that was said or decided in any of the cases relied on by appellants calls for a d fferent holding. 16 Neither Thornhill v. Alabama, supra, nor Carlson v. California, 310 U.S. 106, 60 S.Ct. 746, 84 L.Ed. 1104, both decided the same day, supports the contention that conduct otherwise unlawful is always immune from state regulation because an integral part of that conduct is carried on by display of placards by peaceful picketers. In both these cases this Court struck down statutes which banned all dissemination of information by people adjacent to certain premises, pointing out that the statutes were so broad that they could not only be utilized to punish conduct plainly illegal but could also be applied to ban all truthful publications of the facts of a labor controversy. But in the Thornhill opinion, 310 U.S. at pages 103—104, 60 S.Ct. at page 745, 84 L.Ed. 1093, the Court was careful to point out that it was within the province of states 'to set the limits of permissible contest open to industrial combatants.' See Lincoln Labor Union v. Northwestern Iron and Metal Co., 335 U.S. 525, 536, 69 S.Ct. 251, 257; Allen-Bradley Local v. Wisconsin Employment Relations Board, 315 U.S. 740, 748—751, 62 S.Ct. 820, 825—826, 86 L.Ed. 1154. Further emphasizing the power of a state 'to set the limits of permissible contest open to industrial combatants' the Court cited with approval the opinion of Mr. Justice Brandeis in Duplex Printing Co. v. Deering, 254 U.S. 443, at page 488, 41 S.Ct. 172, at page 184, 65 L.Ed. 349, 16 A.L.R. 196. On that page the opinion stated: 17 '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 demands. 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.' 18 After emphasizing state power over industrial conflicts, the Court in the Thornhill opinion, 310 U.S. at page 104, 60 S.Ct. at page 745, 84 L.Ed. 1093, went on to say, that states may not 'in dealing with the evils arising from industrial disputes * * * impair the effective exercise of the right to discuss freely industrial relations * * *.' This statement must be considered in its context. It was directed toward a sweeping state prohibition which this Court found to embrace 'nearly every practicable, effective means whereby those interested—including the employees directly affected—may enlighten the public on the nature and causes of a labor dispute.' That the general statement of the limitation of a state's power to impair free speech was not intended to apply to the fact situation presented here is further indicated by the cases cited with approval in note 21 of the Thornhill opinion.4 19 Appellants also rely on Carpenters Union v. Ritter's Cafe, 315 U.S. 722, 62 S.Ct. 807, 86 L.Ed. 1143, and Bakery Drivers Local v. Wohl, 315 U.S. 769, 62 S.Ct. 816, 86 L.Ed. 1178, decided the same day. Neither lends support to the contention that peaceful picketing is beyond legislative control. The Court's opinion in the Ritter case approvingly quoted a part of the Thornhill opinion which recognized broad state powers over industrial conflicts. In the Wohl case, 315 U.S. at page 775, 62 S.Ct. at page 819, 86 L.Ed. 1178, the Court's opinion found no 'violence, force or coercion, or conduct otherwise unlawful or oppressive' and said that 'A state is not required to tolerate in all places * * * even peaceful picketing by an individual.' A concurring opinion in the Wohl case, 315 U.S. at pages 776-777, 62 S.Ct. at pages 819-820, 86 L.Ed. 1178, pointed out that picketing may include conduct other than speech, conduct which can be made the subject of restrictive legislation. No opinions relied on by petitioners assert a constitutional right in picketers to take advantage of speech or press to violate valid laws designed to protect important interests of society.5 20 We think the circumstances here and the reasons advanced by the Missouri courts justify restraint of the picketing which was done in violation of Missouri's valid law for the sole immediate purpose of continuing a violation of law. In holding this, we are mindful of the essential importance to our society of a vigilant protection of freedom of speech and press. Bridges v. California, 314 U.S. 252, 263, 62 S.Ct. 190, 194, 86 L.Ed. 192, 159 A.L.R. 1346. States cannot consistently with our Constitution abridge those freedoms to obviate slight inconveniences or annoyances. Schneider v. State, 308 U.S. 147, 162, 60 S.Ct. 146, 151, 84 L.Ed. 155. But placards used as an essential and inseparable part of a grave offense gainst an important public law cannot immunize that unlawful conduct from state control. Virginia Electric & Power Co. v. National Labor Relations Board, 319 U.S. 533, 539, 63 S.Ct. 1214, 1218, 87 L.Ed. 1568; Thomas v. Collins, 323 U.S. 516, 536, 537, 538, 539—540, 65 S.Ct. 315, 325, 326, 327, 89 L.Ed. 430. Nor can we say that the publication here should not have been restrained because of the possibility of separating the picketing conduct into illegal and legal parts. Thomas v. Collins, supra, 323 U.S. at page 547, 65 S.Ct. at page 330. For the placards were to effectuate the purposes of an unlawful combination, and their sole, unlawful immediate objective was to induce Empire to violate the Missouri law by acquiescing in unlawful demands to agree not to sell ice to nonunion peddlers. It is true that the agreements and course of conduct here were as in most instances brought about through speaking or writing. But it has never been deemed an abridgement of freedom of speech or press to make a course of conduct illegal merely because the conduct was in part initiated, evidenced, or carried out by means of language, either spoken, written, or printed. See e.g., Fox v. Washington, 236 U.S. 273, 277, 35 S.Ct. 383, 384, 59 L.Ed. 573; Chaplinsky v. New Hampshire, 315 U.S. 568, 62 S.Ct. 766, 86 L.Ed. 1031. Such an expansive interpretation of the constitutional guaranties of speech and press would make it practically impossible ever to enforce laws against agreements in restraint of trade as well as many other agreements and conspiracies deemed injurious to society. 21 The interest of Missouri in enforcement of its antitrust laws cannot be classified as an effort to outlaw only a slight public inconvenience or annoyance. The Missouri policy against restraints of trade is of long standing and is in most respects the same as that which the Federal Government has followed for more than half a century. It is clearly drawn in an attempt to afford all persons an equal opportunity to buy goods. There was clear danger, imminent and immediate, that unless restrained, appellants would succeed in making that policy a dead letter insofar as purchases by nonunion men were concerned. Appellants' power with that of their allies was irresistible. And it is clear that appellants were doing more than exercising a right of free speech or press. Bakery Drivers Local v. Wohl, 315 U.S. 769, 776—777, 62 S.Ct. 816, 819, 820, 86 L.Ed. 1178. They were exercising their economic power together with that of their allies to compel Empire to abide by union rather than by state regulation of trade.6 22 What we have said emphasizes that this is not a case in which it can be assumed that injury from appellants' conduct would be limited to this single appellee. Thornhill v. Alabama, 310 U.S. 88, 104—105, 60 S.Ct. 736, 745, 84 L.Ed. 1093. Missouri, acting within its power, has decided that such restraints of trade as petitioners sought are against the interests of the whole public. This decision is in accord with the general ideas underlying all antitrade restraint laws. It is not for us to overrule this clearly adopted state policy. 23 While the State of Missouri is not a party in this case it is plain that the basic issue is whether Missouri or a labor union has paramount constitutional power to regulate and govern the manner in which certain trade practices shall be carried on in Kansas City, Missouri. Missouri has by statute regulated trade one way. The appellant union members have adopted a program to regulate it another way. The state has provided for enforcement of its statutory rule by imposing civil and criminal sanctions. The union has provided for enforcement of its rule by sanctions against union members who cross picket lines. See Associated Press v. United States, 326 U.S. 1, 19, 65 S.Ct. 1416, 1424, 89 L.Ed. 2013; Fashion Originators' Guild v. Trade Comm., supra, 312 U.S. at page 465, 61 S.Ct. at page 706, 85 L.Ed. 949; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 242, 20 S.Ct. 96, 107, 44 L.Ed. 136. We hold that the state's power to govern in this field is paramount, and that nothing in the constitutional guaranties of speech or press compels a state to apply or not to apply its antitrade restraint law to groups of workers, businessmen or others. Of course this Court does not pass on the wisdom of the Missouri statute. We hold only that as here construed and applied it does not violate the Federal Constitution. 24 Affirmed. 1 'Combinations in restraint of trade declared a conspiracy. Any person who shall create, enter into, become a member of or participate in any pool, trust, agreement, combination, confederation or understanding with any person or persons in restraint of trade or competition in the importation, transportation, manufacture, purchase or sale of any product or commodity in this state, or any article or thing bought or sold whatsoever, shall be deemed and adjudged guilty of a conspiracy in restraint of trade, and shall be punished as provided in this article.' Mo.Rev.Stat.Ann. § 8301 (1939). And § 8305 provides that anyone violating § 8301 '* * * shall be adjudged guilty of a felony, and upon conviction thereof shall be punished by imprisonment in the penitentiary not exceeding five years, or by imprisonment in the county jail not exceedng one year, or by a fine of not less than five hundred dollars nor more than five thousand dollars, or by both such fine and imprisonment.' Mo.Rev.Stat.Ann. § 8305 (1939). 2 Appellants say, after quoting from a concurring opinion in United States v. Hutcheson, 312 U.S. 219, 243, 61 S.Ct. 463, 471, 85 L.Ed. 788, 'We believe, therefore, that it is perfectly clear that a state may not apply either statutory or common law policies concerning restraint of trade to illegalize combinations among workingmen for the purpose of eliminating wage competition throughout a trade or industry.' And petitioners further argue that a state may not 'make it unlawful for an employer to acquiesce in union demands that he refrain from supplying goods to nonunion peddlers. * * *' 3 In the International Harvester Co. case, 234 U.S. 199, 34 S.Ct. 859, 58 L.Ed. 1276, 52 L.R.A.,N.S., 525, the then Missouri statute was construed as inapplicable to combinations of purchasers and laborers. For this reason the statute was challenged as denying equal protection of the laws. Replying to the challenge, this Court said, 234 U.S. at page 210, 34 S.Ct. at page 863: 'Whether it would have been better policy to have made such comprehensive classification it is not our province to decide. In other words, whether a combination of wage earners or purchasers of commodities called for repression by law under the conditions in the state was for the legislature of the state to determine.' 4 Eastern States Lumber Dealers' Ass'n v. United States, 234 U.S. 600, 34 S.Ct. 951, 58 L.Ed. 1490, L.R.A.1915A, 788, was cited in note 21. In that case the lumber association was a combination of retail lumber dealers found by the court to have conspired to prevent wholesale dealers from selling directly to consumers of lumber. The sole basis for the injunction was the distribution and dissemination of truthful information by the association to its members in an official report. This Court sustained the decree which broadly enjoined the distribution of this truthful information. The cases cited in note 21 of the Thornhill opinion include the following, strongly emphasizing states' powers to regulate their internal industrial and economic affairs and rejecting contentions that challenged regulations violated the Federal Constitution. Senn v. Tile Layers Union, 301 U.S. 468, 57 S.Ct. 857, 81 L.Ed. 1229; West Coast Hotel Co. v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 81 L.Ed. 703, 108 A.L.R. 1330; Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469; Dorchy v. K nsas, 272 U.S. 306, 47 S.Ct. 86, 71 L.Ed. 248; Aikens v. Wisconsin, 195 U.S. 194, 25 S.Ct. 3, 49 L.Ed. 154; Holden v. Hardy, 169 U.S. 366, 18 S.Ct. 383, 42 L.Ed. 780. Another case cited in note 21 of the Thornhill opinion was Ethyl Gasoline Corp. v. United States, 309 U.S. 436, 60 S.Ct. 618, 84 L.Ed. 852. It also involved a violation of the federal antitrust laws, and once again this Court sustained the power of the Government to enjoin trade practices deemed in violation of those laws. The only other case cited in note 21, National Labor Relations Board v. Newport News, 308 U.S. 241, 60 S.Ct. 203, 84 L.Ed. 219, sustained an order against an employer which restrained it from using its influence over employees to interfere with their activities. 5 Both parties here rely on the Ritter case. Empire contends that this Court affirmed the action of the Texas courts on the basis of the state's antitrust law. Appellants argue that this Court upheld the Texas injunction on the ground that the business picketed did not bear a sufficiently close relation to the labor dispute to justify picketing at that place. Since the Court relied on this ground, appellants contend that the Court impliedly rejected the contention that the injunction was justified because of an alleged violation of the antitrust laws. This Court's opinion in the Ritter case, as well as the dissents, did emphasize questions other than the antitrust act contentions. The Court of Civil Appeals of Texas had not mentioned the Texas antitrust laws in its first or second opinion in the Ritter case. 138 S.W.2d 223, 149 S.W.2d 694. A third opinion, denying rehearing, did make reference for the first time to the state's antitrust laws, but did not definitely point out in what way the picketers' conduct violated any specific provision of these laws. 149 S.W.2d 694, 699. Under these circumstances nothing that was said in the Ritter opinion stands for the principle that speech and writings, utilized as a part of conduct engaged in only to break a valid antitrade restraint law, render that course of conduct immune from state control. 6 'Picketing by an organized group is more than free speech, since it involves patrol of a particular locality and since the very presence of a picket line may induce action of one kind or another, quite irrespective of the nature of the ideas which are being disseminated. Hence those aspects of picketing make it the subject of restrictive regulation.' Bakery Drivers Local v. Wohl, supra, 315 U.S. at pages 776—777, 62 S.Ct. at page 819. The opinion in Thomas v. Collins, 323 U.S. 516, 537—538, 65 S.Ct. 315, 326, 89 L.Ed. 430, stated: '* * * When to this persuasion other things are added which bring about coercion, or give it that character, the limit of the right has been passed. * * * But short of that limit the employer's freedom cannot be impaired. The Constitution protects no less the employees' converse right. Of course espousal of the cause of labor is entitled to no higher constitutional protection than the espousal of any other lawful cause. It is entitled to the same protection.' A concurring opinion in Thomas v. Collins, 315 U.S. at pages 543—544, 65 S.Ct. at page 329, stated this: 'But once he uses the economic power which he has over other men and their jobs to influence their action, he is doing more than exercising the freedom of speech protected by the First Amendment. That is true whether he be an employer or an employee. But as long as he does no more than speak he has the same unfettered right, no matter what side of an issue he espouses.'

23

336 U.S. 505 69 S.Ct. 704 93 L.Ed. 845 UNITED STATESv.KNIGHT. No. 406. Argued March 4, 1949. Decided April 4, 1949. Mr. Philip R. Monahan, of Washington, D.C., for the United states. Mr. Robert T. McCracken, of Philadelphia, Pa., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Robert Michael was trustee in bankruptcy of the Central Forging Co. and Donald Reifsnyder was his counsel. Maxi Manufacturing Co. was a competitor of Central and one of its creditors. George Fenner and respondent Harry S. Knight were attorneys for Maxi. After negotiations which it is unnecessary to relate here, a plan of reorganization under ch. X of the Bankruptcy Act 52 Stat. 883, 11 U.S.C. § 501 et seq., 11 U.S.C.A. § 501 et seq., was approved by the court and accepted by more than two-thirds of the creditors. Under this plan Maxi was to acquire all the assets of Central; the stockholders of Central were to receive nothing; the secured creditors of Central were to receive 20 per cent and its unsecured creditors 5 per cent of their claims in bonds of Maxi; and all taxes, costs, and expenses of the reorganization were to be paid in full in cash by the trustee. The cash requirements of the plan were to be furnished by Maxi. 2 The amount of those requirements and the nature of Maxi's commitment are sources of the present controversy. Michael and Reifsnyder concededly obtained funds in connection with the reorganization for which they did not account. It is the theory of the prosecution that those funds were part of the bankruptcy estate. It is the theory of the defense that they were gifts by Maxi of its own property. 3 There was evidence (including Michael's testimony in this case and one construction of respondent's testimony concerning the same transactions in an earlier contempt case against Michael) that Maxi agreed to pay $26,404.33 in cash for Central's net current assets in addition to the $17,000 in bonds. If this version of the transaction were believed, there was a scheme to value the assets of Central at $3,000 less than $26,404.33 and to divert the $3,000 to Michael's and Reifsnyder's own ends. 4 There was another version of this phase of the plan which is also supported by evidence, viz. that Maxi was to pay in cash all expenses of the reorganization provided they did not exceed $26,404.33. In this view the difference between $26,404.33 and the expenses allowed by the Court, $23,404.33, was Maxi's to do with as it pleased. 5 The court confirmed the plan and ordered the transfer of all of Central's assets to Maxi on receipt of the bonds and on payment of the costs and expenses as allowed by the court, 'within the imits of the funds as set forth in the Trustee's report filed April 15, 1942.' That report listed the net current assets of Central at $23,404.33. There was some evidence that the value of those assets had been falsified in the report by deducting $3,000 from the accounts receivable. 6 The expenses approved by the court and paid by Maxi included allowances for the fees and expenses of Michael and Reifsnyder. Knight arranged for Maxi also to draw a check for $3,000 to Fenner which Fenner cashed and, after deducting $500 for income tax, paid over to Michael and Reifsnyder who never accounted to the court for it. 7 Knight and Fenner were indicted for aiding and abetting Michael to appropriate property of the bankruptcy estate in violation of the Bankruptcy Act, 30 Stat. 554, as amended, 11 U.S.C. § 52(a),1 and for conspiring with Michael and others to do the same. Knight and Fenner were found guilty by a jury on all counts. Knight was fined $1,000. The Court of Appeals reversed his conviction and directed entry of a judgment of acquittal, one judge dissenting. 169 F.2d 1001. The case is here on a petition for certiorari which we granted because of the importance of the ruling in the administration of the Bankruptcy Act. 8 There was substantial evidence that Maxi agreed to pay $26,404.33 for the net current assets of Central and that Knight was party to a scheme to divert $3,000 of that consideration to the personal ends of Michael and Reifsnyder. It was therefore an improper interference with the jury's function for the lower court to reject that theory of the case and to accept one which to it seemed more credible. See Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 470, 86 L.Ed. 680; Kotteakos v. United States, 328 U.S. 750, 763-764, 66 S.Ct. 1239, 1247, 1248, 90 L.Ed. 1557. 9 But even if, as the defense urges, Maxi only agreed to pay expenses up to $26,404.33, the result is the same. Maxi in fact paid that amount. It was paid in connection with the reorganization. It was paid for services allegedly rendered by Michael and Reifsnyder in the proceedings. It was paid secretly and in a devious way. The assets of the estate which were transferred to Maxi were worth $26,404.33. This is a substantial showing that $26,404.33 was in fact paid for the assets and that the form of the arrangement served only to syphon a part of the consideration to Michael and Reifsnyder without court approval. 10 All the consideration which is paid for a bankrupt's assets becomes part of the estate. No device or arrangement, however subtle, can subtract or divert any of it. It is the substance of the transaction not its form which controls. If that requirement were not rigidly enforced, control of the plan of reorganization2 and control of allowances,3 would pass from the court to the parties. That would subvert the statutory scheme. 11 This consequence is sought to be avoided here by the argument that when the $3,000 was diverted to Michael and Reifsnyder, the rights of creditors and stockholders in the estate had been fixed and all the allowances had been determined. It is therefore said that there would have been no rightful claimants to the money had it been paid into court. By that procedure parties woul arrogate to themselves the control over the estate which Congress has entrusted to the bankruptcy judge.4 12 Reversed. 13 Mr. Justice MURPHY, Mr. Justice JACKSON, and Mr. Justice RUTLEDGE took no part in the consideration or decision of this case. 14 Mr. Justice FRANKFURTER, dissenting. 15 The Court of Appeals, speaking through one of the most conscientious and experienced of judges, thus summarized the problem of the case: 16 'The whole transaction was highly reprehensible and it may well have involved the commission of a criminal offense. Indeed under another indictment defendant Michael pleaded guilty to another charge growing out of these occurrences. The question before us, however, is not whether the defendant Knight committed any crime but only whether he aided and abetted Michael to violate Section 29, sub. a, in the manner described in the indictment.' 169 F.2d 1001, 1005. 17 The court concluded that the evidence did not support the charges made in the indictment and that the motion for a directed verdict should have been granted. At the bar of this Court the Government disavowed the presence of any question of law in the case except the question whether the record warranted submission of the case to the jury as the District Court thought, and as the Court of Appeals thought not. The Government conceded unreservedly that the correctness of this decision turns entirely on the facts of this particular case. We ought not to be called upon to canvass a record of 870 pages to determine whether the District Court properly viewed the facts in relation to the charge, or whether the appraisal made by the Court of Appeals was right. I do not propose to do so. One appellate review of the facts should suffice, even when the review goes against the Government. 18 It having appeared, after the writ of certiorari was granted, that the case merely involves weighing evidence, I think the writ should be dismissed as having been improvidently granted. 1 'A person shall be punished by imprisonment for a period of not to exceed five years or by a fine of not more than $5,000, or both, upon conviction of the offense of having knowingly and fraudulently appropriated to his own use, embezzled, spent, or unlawfully transferred any property or secreted or destroyed any document belonging to the estate of a bankrupt which came into his charge as trustee, receiver, custodian, marshal, or other officer of the court.' (See Revised Criminal Code, 18 U.S.C.A. § 153). 2 Even after confirmation of the plan of reorganization under § 221 of ch. X, it may be altered or modified pursuant to the procedure prescribed in § 222. 3 See §§ 241—244 of ch. X; Leiman v. Guttman, 336 U.S. 1, 69 S.Ct. 371. 4 See note 2, supra.

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336 U.S. 511 69 S.Ct. 707 93 L.Ed. 850 FARRELLv.UNITED STATES et al. No. 267. Argued Jan. 14, 1949. Decided April 4, 1949. Messrs. Myron Scott and Silas Blake Axtell, both of New York City, for petitioner . Mr. Newell A. Clapp, of Washington, D.C., for respondents. Mr. Justice JACKSON delivered the opinion of the Court. 1 Petitioner, a seaman, brought suit in admiralty to recover damages under the Jones Act, 46 U.S.C.A. § 688, and maintenance, cure and wages under maritime law. The issue of negligence was decided against him by both courts below and the claim is abandoned here. Petition for certiorari to review other issues was granted. 335 U.S. 869, 69 S.Ct. 165. 2 I. Maintenance and Cure. 3 The facts which occasion maintenance and cure for this seaman are not in dispute. The claimant, 22 years of age and in good health, was a member of the Merchant Marine. He was in the service of the S.S. James E. Haviland, a merchant vessel owned and operated by the United States as a cargo and troopship. On February 5, 1944, she was docked at Palermo, Sicily, and Farrell was granted shore leave which required his return to the ship by 6 p.m. of the same day. He overstayed his leave and about eight o'clock began, in rain and darkness, to make his way to the ship. He became lost and was misdirected to the wrong gate, by which he entered the shore-front area about a mile from where the ship lay moored. The area generally was blacked out but petitioner's companion, forty or fifty feet away, saw him fall over a guard chain into a drydock which was lighted sufficiently for night work then in progress. Farrell was grievously injured. 4 He was treated without expense to himself in various government hospitals until June 30, 1944, when he was discharged at Norfolk, Virginia, as completely disabled. He is totally and permanently blind and suffers post-traumatic convulsions which probably will become more freq ent and are without possibility of further cure. From time to time he will require some medical care to ease attacks of headaches and epilepic convulsions. The court below concluded that the duty of a shipowner to furnish maintenance and cure does not extend beyond the time when the maximum cure possible has been effected. Petitioner contends that he is entitled to maintenance as long as he is disabled, which in this case is for life. 5 Admittedly there is no authority in any statute or American admiralty decisions for the proposition that he is entitled to maintenance for life. But an argument is based upon the ancient authority of Cleirac, Jugmens d'Oleron, Arts. 6 and 7 and notes by Cleirac; Consolato del Mare, cc. 182, 137; 2 Pard Coll.Mar. 152; to which American authorities have paid considerable respect. See Story, Circuit Justice, in Reed v. Canfield, 20 Fed.Cas. pages 426, 429, No. 11,641. A translation of the note relied upon reads: 6 'If in defending himself or fighting against an enemy or corsairs, a mariner is maimed, or disabled to serve on board a ship for the rest of his life, besides the charge of his cure, he shall be maintained as long as he lives at the cost of the ship and cargo. Vide the Hanseatic Law, Art. 35.' 7 Article 35 of the Laws of the Hanse Towns referred to reads: 8 'Art. XXXV. The seamen are obliged to defend their ship against rovers, on pain of losing their wages; and if they are wounded, they shall be healed and cured at the general charge of the concerned in a common average. If anyone of them is maimed and disabled he shall be maintained as long as he lives by a like average.' 9 We need not elaborate upon the meanings or weight to be given to these medieval pronouncements of maritime law. As they show, they were written when pirates were not operatic characters but were real-life perils of the sea. When they bore down on a ship, all was lost unless the seaman would hazard life and limb in desperate defense. If they saved the ship and cargo, it was something in the nature of salvage and for their sacrifice in the effort a contribution on principles of average may have been justly due. Perhaps more than humanitarian considerations, inducement to stand by the ship generated the doctrine that saving the ship and her cargo from pirates entitles the seaman to lifelong maintenance if he is disabled in the struggle. 10 But construe the old-time law with what liberality we will, it cannot be made to cover the facts of this case. This ship was not beset but was snug at berth in a harbor that had capitulated to the United States and her allied forces six months before. No sea rovers, pirates or corsairs appeared to have menaced her. It is true that the ship was engaged in warlike operations and was a legitimate target for enemy aircraft or naval vessels, which made her service a war risk, but at that time and place no enemy attack was in progress or imminent. Even if we pass all this and assume the ship always to have been in potential danger and in need of defense, this seaman at the time of his injury had taken leave of her and he is in no position to claim that he was a sacrifice to her salvation. Far from helping to man the ship at the moment, he was unable to find her; he was lost ashore and not able adequately to take care of himself. However patriotic his motive in enlisting in the service and however ready he may have been to risk himself for his country, we can find no rational basis for awarding lifetime maintenance against the ship on the theory that he was wounded or maimed while defending her against enemies. 11 It is claimed, however, even if the basis for a lifetime award does not exist, that he is entitled to maintenance and cure beyond the period allowed by the courts below. This is based largely upon statements in the opinion of the Court in Calmar Steamship Corp. v. Taylor, 303 U.S. 525, 58 S.Ct. 651, 654, 82 L.Ed. 993. There the question as stated by the Court was whether the duty of a shipowner to rovide maintenance and cure for a seaman falling ill of an incurable disease while in its employ, extends to the payment of a lump-sum award sufficient to defray the cost of maintenance and cure for the remainder of his life. The Court laid aside cases where incapacity is caused by the employment and said, 'We can find no basis for saying that, if the disease proves to be incurable, the duty extends beyond a fair time after the voyage in which to effect such improvement in the seaman's condition as reasonably may be expected to result from nursing, care, and medical treatment. This would satisfy such demands of policy as underlie the imposition of the obligation. Beyond this we think there is no duty, at least where the illness is not caused by the seaman's service.' 12 It is claimed that when the Court reserved or disclaimed any judgment as to cases where the incapacity is caused 'by the employment' or 'by the seaman's service' it recognized or created such cases as a separate class for a different measure of maintenance and cure. We think no such distinction exists or was premised in the Calmar case. In Aguilar v. Standard Oil Co. of New Jersey, 318 U.S. 724, 63 S.Ct. 930, 932, 87 L.Ed. 1107, the Court pointed out that logically and historically the duty of maintenance and cure derives from a seaman's dependence on his ship, not from his individual deserts, and arises from his disability, not from anyone's fault. We there refused to look to the personal nature of the seaman's activity at the moment of injury to determine his right to award. Aside from gross misconduct or insubordination, what the seaman is doing and why the how he sustains injury does not affect his right to maintenance and cure, however decisive it may be as to claims for indemnity or for damages for negligence. He must, of course, at the time be 'in the service of the ship,' by which is meant that he must be generally answerable to its call to duty rather than actually in performance of routine tasks or specific orders. 13 It has been the merit of the seaman's right to maintenance and cure that it is go inclusive as to be relatively simple, and can be understood and administered without technical considerations. It has few exceptions or conditions to stir contentions, cause delays, and invite litigation. The seaman could forfeit the right only be conduct, whose wrongful quality even simple men of the calling would recognize—insubordination, disobedience to orders, and gross misconduct. On the other hand, the Master knew he must maintain and care for even the erring and careless seaman, much as a parent would a child. For any purpose to introduce a graduation of rights and duties based on some relative proximity of the activity at time of injury to the 'employment' or the 'service of the ship,' would alter the basis and be out of harmony with the spirit and function of the doctrine and would open the door to the litigiousness which has made the landman's remedy so often a promise to the ear to be broken to the hope. 14 Nor is it at all clear to us what this particular litigant could gain from introduction of the distinction for which contention is made. It we should concede that larger measure of maintenance is due those whose injury is caused by the nature of their employment, it would seem farfetched to hold it applicable here. Claimant was disobedient to his orders and for his personal purposes overstayed his shore leave. His fall into a drydock that was sufficiently lighted for workmen to be carrying on repairs to a ship therein was due to no negligence but his own. These matters have not been invoked to forfeit or reduce his usual seaman's right, but it is difficult to see how such circumstances would warrant enlargement of it. We hold that he is entitled to the usual measure of maintenance and cure at the ship's expense, no less and no more, and turn to ascertainment of its bounds. 15 The law of the sea is in a peculiar sense an international law, but application of its § ecific rules depends upon acceptance by the United States. The problem of the sick or injured seaman has concerned every maritime country and, in 1936, the General Conference of the International Labor Organization at Genevasubmitted a draft convention to the United States and other states. It was ratified by the Senate and was proclaimed by the President as effective for the United States on October 29, 1939. 54 Stat. 1693. Article 4, paragraph 1 thereof provides: 'The shipowner shall be liable to defray the expense of medical care and maintenance until the sick or injured person has been cured, or until the sickness or incapacity has been declared of a permanent character.' 16 While enactment of this general rule by Congress would seem controlling, it is not amiss to point out that the limitation thus imposed was in accordance with the understanding of those familiar with the laws of the sea and sympathetic with the seaman's problems. 17 The Department of Labor issued a summary of the Convention containing the following on this subject: 'The shipowner is required to furnish medical care and maintenance, including board and lodging, until the disabled person has been cured or the disability has been declared permanent.' Robinson, Admiralty, p. 300. 18 Representatives of the organized seamen have recognized and advised Congress of this traditional limitation on maintenance and cure. When Congress has had under consideration substitution of a system of workmen's compensation on the principles of the Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, as amended, 33 U.S.C. §§ 901—950, 33 U.S.C.A. §§ 901—950, organized seamen, as we have heretofore noted, have steadfastly opposed the change. Hust v. Moore-McCormack Lines, 328 U.S. 707, 715, 66 S.Ct. 1218, 1222, 90 L.Ed. 1534. In doing so the legal representative of one maritime union advised the Committee on Merchant Marine of the House of Representatives that maintenance extended during '(a) the period that a seaman receives treatment at a hospital, either as an inpatient or an out-patient; and (b) during a period of convalescence, and until the maximum cure is obtained.'1 Another representative, after defining it to include hospitalization, said, 'In addition, a seaman is entitled to recover maintenance while outside of the hospital until his physical condition becomes fixed.'2 19 That the duty of the ship to maintain and care for the seaman after the end of the voyage only until he was so far cured as possible, seems to have seen the doctrine of the American admiralty courts prior to the adoption of the Convention by Congress,3 despite occasional ambiguity of language or reservation as to possible situations not before the court. It has been the rule of admiralty courts since the Convention.4 20 Maintenance and cure is not the only recourse of the injured seaman. In an appropriate case he may obtain indemnity or compensation for injury due to negligence or unseaworthiness and may recover, by trial before court and jury, damages for partial or total disability. But maintenance and cure is more certain if more limited in its benefits. It does not hold a ship to permanent liability for a pension, neither does it give a lump-sum payment to offset disability based on some conception of expectancy of life. Indeed the custom of providing maintenance and cure in kind and concurrently with its need has had the advantage of removing its benefits from danger of being wasted by the proverbial improvidence of its beneficiaries. The Government does not contend that if Farrell receives future treatment of a curative nature he may not recover in a new proceeding the amount expended for such treatment and for maintenance while receiving it. 21 The need of this seaman for permanent help is great and his plight most unfortunate. But as the evidence has afforded no basis for supplying that need by finding negligence, neither does the case afford a basis for distortion of the doctrine of maintenance and cure. This seaman was in the service of the United States and extraordinary measures of relief while not impossible are not properly addressed to the courts. 22 II. Wages. 23 The two courts below have held the petitioner entitled to wages until the completion of the voyage at the port of New York on March 28, 1944. The petitioner contends that he has a right to wages for twelve months from December 16, 1943, the date he joined the vessel. The articles of the Haviland, signed by petitioner, were on a printed form which left a vacant space subject to the following footnote: 'Here the nature of the voyage is to be described and the places named at which the ship is to touch; or if that cannot be done, the general nature and probable length of the voyage is to be stated, and the port or country at which the voyage is to terminate.' The Haviland's articles, for security reasons during the war, did not describe the voyage in such terms but provided, 'from the port of Philadelphia, to a point in the Atlantic Ocean to the eastward of Philadelphia and thence to such ports and places in any part of the world as the Master may direct or as may be ordered or directed by the United States Government or any department, commission or agency thereof * * * and back to a final port of discharge in the United States, for a term of time not exceeding 12 (twelve) calendar months.' It is not questioned that the general custom in ships, other than the coastwise trade, is to sign on for a voyage rather than for a fixed period. But it is contended that the last clause of this contract obligated the petitioner to serve for twelve calendar months, irrespective of the termination of the voyage, and therefore gave him the right to wages for a similar period. The contract is not an uncommon form and complied with war-time requirements as to voyage contracts.5 We think, in the light of the custom of the industry and the condition of the times, there is nothing ambiguous about it and that it obligated the petitioner only for the voyage on which the ship was engaged when he signed on and that, when it terminated at a port of discharge in the United States, he could not have been required to reimbark for a second voyage. The twelve-month period appears as a limitation upon the duration of the voyage and not as a stated period of employment. We think the court below made no error in determining the wages. 24 For the reasons set forth, the judgment is affirmed. 25 Affirmed. 26 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK, Mr. Justice MURPHY and Mr. Justice RUTLEDGE concur, dissenting. 27 I. Wages.—The articles bound Farrell to a voyage on the vessel which was en route to 'a point in the Atlantic Ocean to the Eastward of Philadelphia and thence to such ports and places in any part of the world as the Master may direct or as may be ordered or directed by the United States Government or any department, commission or agency thereof * * * and back to a final port of discharge in the United States, for a term of time not exceeding 12 (twelve) calendar months.' If this were a coastwise voyage, there would be little question that Farrell could recover his wages for the entire twelve-month period. See Enochasson v. Freeport Sulphur Co., D.C., 7 F.2d 674, 675; Jones v. Waterman S.S. Corp., 3 Cir., 155 F.2d 992, 996. I agree with Judge Kirkpatrick that the principle of those cases is likewise applicable to foreign voyages. Shields v. United States, D.C., 73 F.Supp. 862 866. Any difference is not apparent. In each the seaman binds himself for the period. The obligation to pay wages should be cotermious with that responsibility. Enochasson v. Freeport Sulphur Co., supra. The number of voyages made is therefore immaterial. It is the extent of the voyage that could be demanded that is controlling. 28 II. Maintenance and Cure.—Calmar S.S. Corp. v. Taylor, 303 U.S. 525, 58 S.Ct. 651, 82 L.Ed. 993, involved maintenance and cure1 for an incurable disease which manifested itself during the seaman's employment but was not caused by it. The Court held that the shipowner's liability ended when the seaman was cured as far as possible, reserving the question whether a different rule would apply if the incapacity arose from the employment. 303 U.S. at page 530, 58 S.Ct. at page 654, 82 L.Ed. 993. The question reserved is now presented, for an injury received on returning to a ship from shore leave is plainly incurred in the service. Aguilar v. Standard Oil Co. of New Jersey, 318 U.S. 724, 63 S.Ct. 930, 87 L.Ed. 1107; Reed v. Canfield, Fed.Cas.No. 11,641. Justice Story was of the view that the ship remained liable until the cure was completed. Reed v. Canfield, supra. That was in 1832. Intervening decisions in the lower courts qualified that view. It was held that the right to maintenance and cure extended to a reasonable time beyond the end of the voyage.2 The problem of what was a reasonable time remained. The test adopted by the Court is that it extends through the period when the maximum cure within the reach of medical science has been achieved. 29 But that test is not sufficiently discriminating. 30 Even though a maximum cure has been effected, two entirely different states of being may result when the injured man is left totally disabled. 31 (1) He may be totally disabled but no longer in need of medical aid to care for the condition created by the injury nor without means of providing maintenance. That is not the present case, at least so far as medical care is concerned. And we need not determine what rights to maintenance and cure one so situated has. 32 (2) One injured in the service of a ship may not only be permanently disabled after reaching the point of maximum cure. He may also be in need of future medical aid to sustain that condition and be without means of maintenance. These needs may extend to end of life. That is the present case, at least so far as medical care is concerned.3 In this situation payments to give continuing needed care of wounds have been allowed, even though a maximum cure has been effected. The Josephine & Mary, 1 Cir., 120 F.2d 459, 462, 464. Cf. Saunders v. Luckenbach Co., D.C., 262 F. 845, 847. 33 In the present case an award for maintenance and cure to cover a six-month period after discharge from the hospital was allowed. Nevertheless even though Farrell's expenses of care may be continuing, the district court judge refused any further award. I do not believe that these future expenses should be any less a charge on the ship than past ex enses. To conclude as the Court now does that they are not is to ignore in part the salutary policy supporting the doctrine of maintenance and cure. 34 Maintenance and cure is an ancient doctrine. It reflects in part the concern which the state has had from an early date in a poor and improvident class of workers. See Mr. Justice Story in Harden v. Gordon, Fed.Cas.No.6,047. It also recognizes the imperative necessity of the nation to maintain in peace and war a merchant marine. If men are to go down to the sea in ships and face the perils of the ocean, those who employ them must be solicitous of their welfare. Maintenance and cure is an inducement on the part of masters and owners to be solicitous of the health, safety, and welfare of seamen while they are in the service. It gives a decree of security, though injury or sickness be incurred. It gives service in the merchant marine a dignity equal to the important function it performs. It reflects 'the great public policy of preserving this important class of citizens for the commercial service and maritime time defence of the nation.' Id., Fed.Cas.No.6,047. 35 Accordingly, the injuries of seamen arising out of the service were made a charge against the enterprise to the extent at least of maintenance and cure. Their maintenance and cure were indeed part of the cost of the business. It is nonetheless a legitimate cost though the expense continues beyond the time when a maximum cure has been effected.4 1 Hearings before the House Committee on Merchant Marine and Fisheries, 76th Cong., 1st Sess., on H.R.6726 and H.R.6881, p. 83. 2 Id., p. 131. 3 See, for example, The Wensleydale, D.C., 41 F. 829; The Bouker No. 2, 2 Cir., 241 F. 831; Skolar v. Lehigh Valley R. Co., 2 Cir., 60 F.2d 893; The Point Fermin, 5 Cir., 70 F.2d 602. 4 See, for example, Lindgren v. Shephard S.S. Co., 2 Cir., 108 F.2d 806; The Josephine & Mary, 1 Cir., 120 F.2d 459; Luksich v. Misetich, 9 Cir., 140 F.2d 812. 5 7 F.R. 2477. 1 Maintenance includes food and lodging; and cure means care. The Bouker No. 2, 2 Cir., 241 F. 831, 835. 2 The Bouker No. 2, supra; The Mars, 3 Cir., 149 F. 729; The Eastern Dawn, D.C., 25 F.2d 322; The Troy, D.C., 121 F. 901; Geistlinger v. International Mercantile Marine Co., D.C., 295 F. 176. 3 The District Court said: 'He will continue to have these spells and to have pain in the area of the fracture. He will need treatment and medical care from time to time and probably some care for the rest of his life. He was always a healthy individual before his accident and never showed any signs of epilepsy before then. The medical testimony also shows that his condition of blindness is permanent, that in all likelihood his convulsive attacks will continue, and possibly become more frequent, and without any possibility of a further cure. The attacks and headaches mentioned will require some care from time to time whenever they persist.' 4 The Shipowners' Liability Convention of 1936, 54 Stat. 1693, does not require a contrary result. Article 4, cl. 1, provides: 'The shipowner shall be liable to defray the expense of medical care and maintenance until the sick or injured person has been cured, or until the sickness or incapacity has been declared of a permanent character.' But Art. 12 contains a power to depart from that standard in this type of case. It provides: 'Nothing in this Convention shall affect any law, award, custom or agreement between shipowners and seamen which ensures more favourable conditions than those provided by this Convention.'

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336 U.S. 465 69 S.Ct. 692 93 L.Ed. 817 CHICAGO, MILWAUKEE, ST. PAUL & PAC. R. CO. et al.v.ACME FAST FREIGHT, Inc. No. 65. Argued Dec. 8, 1948. Decided April 4, 1949. Messrs. Joseph Walker and Rowland L. Davis, Jr., both of New York City (Messrs. Willam Zearfaus, of Philadelphia, Pa., Bleakley, Platt, Gilchrist & Walker, Arthur C. Patterson, Dennis P. Donovan, Thomas L. Ennis, and Joseph Rosch, all of New York City, John H. English, of Albany, N.Y., and Pierce & Greer and H. Brua Campbell, both of New York City, of counsel), for petitioners. Mr. Paul A. Crouch, of New York City, for respondent. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 In 1942, Congress enacted what is popularly known as the Freight Forwarder Act. This legislation, which appears as Part IV1 of the Interstate Commerce Act, was designed to define freight forwarders, to prescribe certain regulations governing forwarder operations, and to bring this essential transportation business within the control of the Interstate Commerce Commission. The legislative and judicial history culminating in the Act need not now be detailed. See United States v. Chicago Heights Trucking Co., 1940, 310 U.S. 344, 60 S.Ct. 931, 84 L.Ed. 1243; Acme Fast Freight, Inc., v. United States, D.C., 30 F.Supp. 968, affirmed 1939, 309 U.S. 638, 60 S.Ct. 810, 84 L.Ed. 993. 2 Freight forwarders consolidate less than carload freight into carloads for shipment by rail, truck, or water. Their charges approximate rail less than carload rates; their expenses and profits are derived from the spread between the carload and 1. c. 1. rates. Forwarders are utilized by 1. c. 1. shippers because of the speed and efficiency with which they handle shipments, the unity of responsibility obtained, and certain services which forwarders make available.2 3 Forwarders are required by § 1013 of the Act to issue bills of lading to their customers, covering the individual package shipment from time of receipt until delivery to the ultimate consignee. When the freight is consolidated into carloads, the railroad gives the forwarder its bill of lading in which the forwarder is designated as both consignor and consignee. The contents are noted as 'one carload of mixed merchandise' and usually move under an 'all-commodity' carload rate. The destination set out in the railroad bill of lading is the forwarder's break-bulk point. At that point the carload is broken up; some shipments may be distributed locally, some sent by truck to off-line destinations, and some consolidated into carloads for reshipment to further break-bulk points. The railroad has no knowledge of the contents of the car, the identity of the individual shippers, or the ultimate destinations of the consignments. The forwarder has an unqualified right to select the carrier and route for the transportation of the freight. 4 The forwarder thus has some of the characteristics of both carrier and shipper. In its relations with its customers, a forwarder is subjected by the Act to many of the requirements and regulations applicable to common carriers under Parts I, II, and III of the Act, 49 U.S.C.A. § 1 et seq., 301 et seq., 901 et seq. In its relations with these carriers, however, the status of the forwarder is still that of shipper. It is this duality of character that raises the question in this case. 5 Section 1013 of the Act3 provides that the Carmack Amendment, 34 Stat. 593, as amended, 49 U.S.C. § 20 (11)4 and (12),5 49 U.S.C.A. § 20(11, 12), shall apply to freight forwarders 'in the case of service subject to this chapter' (Part IV), and that the freight forwarder shall be deemed both the receiving and delivering transportation company for the purposes of such § 20(11) and (12). Incorporation of the Carmack Amendment requires, as has been noted, that the forwarder issue bills of lading to its shippers, covering transportation of the individual shipments to their ultimate destinations. There can be no question but that under § 20(11), the forwarder is liable to its shipper for loss or damage to the freight exactly as if it were an initial carrier subject to Parts I, II, and III. We are now asked to decide whether the right-over given by § 20(12) to an initial carrier against its connecting carriers applies in the case of forwarders who have paid loss and damage claims to their shippers and seek recompense from the carrier responsible for the loss. 6 In this action, respondent freight forwarder sought a declaratory judgment that it is not bound by the nine-month limitation period provided in the railroad bill of lading for the filing of loss or damage claims. If § 1013 of the Act, by its incorporation of § 20(11) and (12), makes the forwarder an initial carrier with a right-over against the carrier responsible for the loss or damage, the nine-month period is not applicable. If, however, the forwarder is still a shipper vis-a-vis the railroads, it must file its claims within the period specified in the railroad bill of lading.6 The District Court held, on an agreed statement of facts, that the forwarder must file its claims within the nine-month period. The Court of Appeals for the Second Circuit reversed, holding that for the purposes of § 1013 alone, forwarders are to be considered carriers and as such are entitled to the right-over given by § 20(12). We granted the petition for a writ of certiorari, 335 U.S. 807, 69 S.Ct. 30, to resolve this important question under Part IV of the Interstate Commerce Act. 7 First. The railroads contend that Part IV of the Act was not intended to change the shipper-carrier relationship that had for many years existed between forwarder and railroad. Their position is that while the previously prevailing duties and responsibilities owed by the forwarder to the public were changed by the Act, the language of the Act and its legislative history negative the forwarder's claim to carrier status. They read the language of § 1013, that 'The provisions of section 20(11) and (12) of this title * * * shall apply with respect to freight forwarders, in the case of service subject to this chapter * * *' to mean that, while the forwarder is liable to its shippers under § 20(11) for loss or damage no matter whose the ultimate responsibility, its right-over under § 20(12) is limited to losses or damage occurring in 'service subject to this chapter'—i.e., in the business of forwarding freight. Thus limited, the right-over would apply as against other freight forwarders with whom joint loading agreements authorized by § 1004(d) were in effect, and against motor carriers who are permitted by § 1013 to issue bills of lading on behalf of the forwarders. The right-over would not, however, apply against railroads, water carriers, and line-haul motor carriers. 8 'Service subject to this chapter' is defined in § 1002 as 'any or all of the service in connection with the transportation in interstate commerce which any person undertakes to perform or provide as a freight forwarder * * *.' While use of the word, 'provide,' lends some support to respondent's thesis that the definition should be read broadly to include the service performed by common carriers for the forwarders, the House Committee report indicates the contrary. It defines 'service subject to this chapter' as: 'the term used throughout Part IV when referring to the business or operations of freight forwarders which it is proposed to regulate. The definition is intended to be broad enough to cover everything the freight forwarder does, in connection with the forwarding by surface facilities, in the course of carrying out his undertaking to the shipper whom he serves. On the other hand it is not broad enough, of course, to bring under regulation, under Part IV, the services performed by the carriers whose services the freight forwarder utilizes in performing his undertaking.'7 (Italics added.) 9 The emphasis supplied by the phrase is emphasis on the freight forwarder's activities, not upon the service performed by underlying carriers. Since the forwarder contracts with its shipper to deliver the shipment safely to its ultimate destination, its undertaking is obviously part of the 'service subject to this chapter'. But inclusion of that phrase in § 1013 indicates a limitation of applicability of the right-over under § 20(12) to the forwarder's business, which, we are told by the House Report, does not include 'the services performed by the carriers whose services the freight forwarder utilizes in performing his undertaking.' 10 The importance of the phrase, 'service subject to this chapter,' in the Forwarder Act is accentuated by a contemporaneous amendment to Part II of the Interstate Commerce Act, which pertains to motor carriers. The MotorCarrier Act had made, § 20(11) applicable to motor carriers but had omitted § 20(12). As a part of the Freight Forwarder legislation, Congress amended § 219 of the Interstate Commerce Act to make § 20(12) applicable to motor carriers. It did so without including the qualifying phrase. The amendment reads simply: 11 'Sec. 219. The provisions of section 20(11) and (12) of this Act, together with such other provisions of such part (including penalties) as may be necessary for the enforcement of such provisions, shall apply with respect to common carriers by motor vehicle with like force and effect as in the case of those persons to which such provisions are specifically applicable.' 12 Unless we are to assume that Congress, in enacting § 1013, included the phrase, 'in the case of service subject to this chapter,' for no purpose whatsoever, while at the same time approving a similar section which did not include the qualifying phrase, we must give it the effect contended for by petitioners. Respondent suggests no other. 13 That meaning is supported by the explanation of § 1013 given by Representative Wolverton, a member of the committee which drafted the section. However, doubt is cast upon the correctness of this interpretation by a contrary statement in the House Committee report. This report states flatly that 'in case the loss or damage to the property transported occurs on the line of a carrier whose service the freight forwarder utilizes, the freight forwarder will have the right of subrogation against the carrie under section 20(12).'8 14 We are warned, however, that the report is to be discounted in some particulars. Representative Wolverton prefaced his section-by-section analysis of the bill with this significant statement: 15 'In some respects the report which accompanies this bill is not as complete as it might be. Due to limitations of time, the report was not submitted to the members of the committee or subcommittee, and therefore it may not be out of place to include in these remarks some further explanations which may be helpful to the Members in their consideration of the measure. In a few instances, which will be mentioned later, the report may not be so phrased as to convey fully the sense of what was intended.'9 16 That he had § 1013 specifically in mind is clearly shown by his remarks explaining that section: 17 'In its explanation of section 413 (§ 1013), the report which accompanied the bill is not strictly accurate in interpreting the intended legal effect of making section 20(11) and (12) of part I applicable to freight forwarders. It should be understood that, in so far as a given service to its shipper is covered by the published rate of a freight forwarder, the latter is the only person to which such shipper is entitled to look for recovery of damages, and it is in this sense that the forwarder is to 'be deemed both the receiving and delivering transportation company.' If damage to a shipment occurs on the line of a common carrier whose services are being utilized by the forwarder, the forwarder has no right of subrogation under section 20(12), since its own shipper never had any right of action against such carrier. The forwarder's recovery against the carrier would be upon the bill of lading issued to it by such carrier and under the provisions of law applicable thereto. The reference to paragraph (12) of section 20 was included in section 413 (§ 1013) to cover a combination of services performed directly for the owner of the goods, such as would occur when two or more forwarders were involved.'10 18 In weighing the relative importance of this statement and the committee report, a number of additional facts assume importance. The bill under consideration was reported unanimously by the House Committee on Interstate and Foreign Commerce.11 Congressman Wolverton, who was the ranking minority member of the committee, spoke in behalf of the bill and presented the only extended exposition of its provisions. His explanation of its meaning was not challenged or contradicted by any member of the committee. On the contrary, his part in its drafting was recognized by the chairman of the committee,12 and his remarks have been quoted as authority by the Interstate Commerce Commission.13 19 In this posture of events, the committee report can be given little weight. A report not previously submitted to members of the committee and expressly contradicted without challenge on the floor of the House by a ranking member of the committee can hardly be considered authoritative. The Committee of Conference, of which Representative Wolverton was a member, adopted § 1013 exactly as it appeared in the House amendment. It bore, at that time, the gloss placed upon it on the floor of the House.14 Under those circumstances, we cannot construe the statute to give forwarders the right-over against underlying carriers under § 20(12). 20 Second. Such a construction would, moreover, be out of harmony with the previously existing relationship between forwarders and carriers regulated by Parts I, II, and III of the Interstate Commerce Act, a relationship which Part IV unquestionably accepted and continued. Prior to the enactment of the Forwarder Act, this Court held in a number of cases that forwarders are shippers insofar as carriers are concerned, and that the latter cannot discriminate in favor of or against forwarders, nor enter into joint or proportional rates with them absent legislative authority. Interstate Commerce Commission v. Delaware, L. & W.R. Co., 1911, 220 U.S. 235, 31 S.Ct. 392, 55 L.Ed. 448; Great Northern R. Co. v. O'Connor, 1914, 232 U.S. 508, 34 S.Ct. 380, 58 L.Ed. 703; Lehigh Valley R. Co. v. United States, 1917, 243 U.S. 444, 37 S.Ct. 434, 61 L.Ed. 839; United States v. Chicago Heights Trucking Co., supra; Acme Fast Freight, Inc., v. United States, supra. 21 It is clear that this relationship was not altered by the enactment of Part IV. Nowhere in the Act are freight forwarders referred to as carriers. Congress defined the term, 'freight forwarder' in § 1002(a)(5) to mean any person which 'otherwise than as a carrier subject to part I, II, or III of this title' consolidates goods for shipment, etc. In one section where, by inadvertence, forwarders were referred to as carriers, an amendment was passed less than two months later striking out 'carrier' and substituting 'freight forwarder.'15 The statements by committee members on the floor of the House16 leave no doubt that it was not the intent of Congress to alter the forwarders' status as shippers vis-a-vis carriers by rail, highway, and water. 22 The fact that Congress studiously avoided characterizing forwarders as carriers, while at the same time subjecting them to many of the duties and responsibilities of such carriers, serves to emphasize the distinction drawn by the Act. The reason for this distinction has already been suggested. In their relations with shippers, forwarders unquestionably perform functions and have duties similar to the functions and duties of common carriers. Their activities are not essentially different from those of express companies, which are common carriers by definition, under § 1(3) of the Interstate Commerce Act, 49 U.S.C. § 1(3), 49 U.S.C.A. § 1(3). Nevertheless, Congress recognized that forwarders occupy a different position in their dealings with the carriers whose services they utilize.17 For that reason, they refused to sanction the joint rates that forwarders had established with certain motor carriers. See Acme Fast Freight, Inc. v. United States, supra. According to Representative Wolverton's statement on the floor of the House, 'it would be illogical and anomalous to permit the making of so-called joint rates in such a situation. The maintenance of a joint rate by a carrier and a shipper would be an absurdity. If nevertheless permitted, it would enable such shipper to receive rebates through the medium of divisions of the joint rate.'18 Carriers subject to Parts I, II, and III were permitted by § 1008 of the Act to establish so-called 'assembling and distribution' rates, which were designed to give the forwarder the benefit of rates lower than those available to other shippers, because of savings to the carriers effected by some services performed by the forwarder. This was thought to be consistent with the position of the forwarder as shipper, however, and such rates could not be lowered beyond an amount which would reflect the savings. It is significant, too, that these rates were not applicable to line-haul or carload freight, but only to the services performed by carriers in bringing less than carload shipments from off-line points to the forwarder's concentration point and from break-bulk point to final destination.19 It is therefore clear beyond argument that Congress intended to preserve the existing shipper-carrier relationship between forwarders and those carriers regulated by Parts, I, II, and III of the Act. 23 Third. The Court of Appeals, while conceding that forwarders are still shippers vis-a-vis carriers under the Act, held that for the purposes of § 1013 alone, they are to be regarded as initial carriers, while the railroads, motor vehicles, and boats whose services are utilized by forwarders are to be considered connecting carriers. Respondent goes farther. It contends not only that the liability provisions of the uniform rail bill of lading issued to the forwarder for his carload shipment may be disregarded, but that the railroad need not issue its bill of lading at all. In its view, Missouri, Kansas & Texas R. Co. of Texas v. Ward, 1917, 244 U.S. 383, 37 S.Ct. 617, 61 L.Ed. 1213, which struck down conditions in the bill of lading issued without consideration by a connecting carrier, is decisive of the invalidity of the conditions imposed by the rail bill of lading here in controversy. 24 We do not agree, nor can we believe that the contention is seriously made. The underlying carrier's haul involves a different shipment, a different consideration, a different origin, a different destination, and a different consignor and consignee than are involved in the forwarder's undertaking. Furthermore, respondent's contention leads to the conclusion that railroads, whose bills of lading have long been prescribed by the I.C.C. and filed with rail tariffs, must transport freight on bills of lading subject to change at will by the forwarder and possibly different in many respects from the uniform rail bill. See e.g., Chain Deliveries Express, Inc., 260 I.C.C., 149, 151 (1943). That certainly has not been the position taken by the I.C.C. since enactment of Part IV,20 nor was the contention accepted by either of the courts below in this case. 25 The real issue is whether, granting that both forwarder and underlying carrier must issue bills of lading, the liability provisions of bills issued by the latter are to be considered null and void when forwarder freight is being hauled. We think that the whole scheme of the Act, its language and history, negative that proposition. As has been noted, the forwarder remains a shipper in its relations with underlying carriers under the Act. It is a shipper to whom carriers are forbidden to give any undue or unreasonable preference in any respect whatsoever, under the specific provisions of the Act. § 1004(c). On the other hand, forwarders, like other shippers, may discriminate as they choo e between carriers. § 1004(b). 26 If the liability provisions of the carrier bill of lading are inapplicable, other difficulties are presented. Since they are not bound to use the uniform bill of lading, forwarders may adopt a limitation period for the submission of claims longer than nine months, the minimum period permitted by § 20(11). Since the rail bill of lading, which prescribes a nine-month period, would apply to all shippers other than shippers by freight forwarder, the former would thus be discriminated against contrary to § 1004(c). 27 Similarly, a shipper by freight forwarder might wish to contract for common-law liability by paying the higher tariff to the forwarder, as he must be permitted to do under § 20(11). Cincinnati, N.O. & T.P.R. Co. v. Rankin, 1916, 241 U.S. 319, 36 S.Ct. 555, 60 L.Ed. 1022, L.R.A.1917A, 265. The forwarder, on the other hand, pays the lower declared value rate to the railroad for the carload shipment. If the shipment were lost or damaged, the shipper could undoubtedly recover its actual value from the forwarder, but under ordinary circumstances the latter would be confined to recovery from the railroad of a proportional part of the declared value of the carload shipment. Section 20(12) provides, however, that the right-over is in the amount of the loss, damage, or injury as may be evidenced by any receipt, judgment, or transcript thereof. Under respondent's theory, its bill of lading would be controlling, and the forwarder would be entitled to full recovery despite the fact that it had contracted with the carrier at the reduced rate. This result is clearly contrary to Great Northern R. Co. v. O'Connor, supra, which was relied on by the Court of Appeals in the present case. 28 In addition, the factors which Congress felt made the original Carmack Amendment workable are totally absent in the case of freight forwarders. Congressman Richardson, in explaining its purpose to the House, said: 29 'The reasons for inducing us to (make the initial carrier liable for loss or damage) were the initial carrier has a through route connection with the secondary carrier on whose route the loss occurred, and the settlement between them will be an easy matter, while the shippper would be at a heavy expense in the institution of a suit. If a judgment is obtained against the initial carrier, no doubt exists but that the secondary carrier will pay it at once. Why? Because the arrangement, the concert, the cooperation, the through route courtesies between them would be broken up if prompt payment were not made. We have done that in Conference.'21 See Atlantic Coast Line R. Co. v. Riverside Mills, 1911, 219 U.S. 186, 201, 31 S.Ct. 164, 168, 55 L.Ed. 167, 31 L.R.A.,N.S., 7. 30 The railroads have done exactly as was suggested. Elaborate freight-claim rules have been established covering the investigation, settlement, and defense of claims and the allocation of liability between carriers when, as is frequently the case, responsibility for loss or damage cannot be precisely ascertained. Arbitration boards settle disputes arising between carriers under the rules. As a practical matter, the right-over given by § 20(12) is very little used by carriers, and indeed it is of no value when responsibility cannot definitely be placed upon any one carrier. 31 The considerations that made § 20(12) workable as applied to railroads are not, however, applicable to freight forwarders. They enter into no 'arrangements,' 'concerts,' 'cooperation,' or 'through route courtesies' with railroads. As shippers they are forbidden by law to do so. Furthermore, the forwarder will always be in the position of a receiving or delivering carrier seeking the right-over against 'connecting' carriers, never in the position of a carrier against whom the right-over is asserted. A railroad against which a claim has been filed as receiving or delivering carrier will ordinarily represent the connecting carrier as if no right-over existed, since it must depend in other cases upon similar representation by other roads. Details of such representation are, in fact, prescribed by the Freight Claim Rules, which are subscribed to by nearly all railroads. But the forwarder is always its own representative, and as between its customer, the shipper, and an underlying carrier allegedly responsible for loss or damage, the forwarder's tendency would naturally be to placate the former at the expense of the latter if the right-over existed and was applicable. These facts are, we feel, persuasive that Congress meant the right-over given in § 1013 to extend no farther than to actions against those with whom forwarders are permitted to enter into cooperative arrangements—i.e., against those to whom the forwarder does not bear the relation of shipper. 32 Fourth. Two arguments are made as to the inequity that will result from requiring forwarders to comply with the requirements of § 20(11) without giving them the rights of initial carriers under § 20(12). It is said that Congress could not have intended to make the forwarder an insurer of freight while requiring at the same time that it file and prove claims against carriers as if it were an ordinary shipper. Secondly, it is argued that the forwarder must, under § 20(11), allow at least nine months for the filing of claims by shippers, and if the forwarder is subject to a similar limitation period, there will necessarily be some claims filed by shippers at the end of the period which the forwarder will not be able to refile against the carrier in time. 33 The first contention is the result of a serious misconception as to the liability of freight forwarders prior to enactment of Part IV. This misconception is based on a failure to distinguish between two very different kinds of 'forwarders.'22 The term was originally applied to persons who arrange for the transportation by common carrier of the shipper's goods. The forwarder did not necessarily consolidate the individual consignments into carload lots, and its duties, as agent of the shipper, went no farther than procuring transportation by carrier and handling the details of shipment. Forwarders of this type charged fees for their services, which the shipper paid in addition to the freight charges of the carrier utilized for the actual transportation. 34 Later, a different type of forwarding service was offered. This forwarder picked up the less than carload shipment at the shipper's place of business and engaged to deliver it safely at its ultimate destination. The freight forwarder charged a rate covering the entire transportation and made its profit by consolidating the shipment with others in carload quantities to take advantage of the spread between carload and 1. c. 1. rates. It held itself out not merely to arrange with common carriers for the transportation of the goods, but rather to deliver them safely to the consignee. The shipper seldom if ever knew which carrier would be utilized in the carriage of his shipment. 35 This difference in function was recognized very early by the courts, and differing standards of liability were imposed. When goods handled by an agent-forwarder were lost or damaged, it was liable to the shipper only for its own negligence, including negligence in selecting a carrier.23 If, on the other hand, the shipment had been entrusted to a forwarder of the second type—i.e., one who contracted to deliver the goods to the consignee at rates set by itself—the forwarder was subjected to common carrier liability for loss or damage whether it or an underlying carrier had been at fault.24 The fact that the forwarder did not own the carriers whose services it utilized was held to be immaterial. Its undertaking was to deliver the shipment safely at the destination. Common carrier liability was the penalty for failure of fulfilment of that undertaking. 36 The Freight Forwarder Act encompasses only the second type of forwarder described above. Section 1002(a)(5) defines 'freight forwarder' as 37 'Any person which * * * holds itself out to the general public to transport or provide transportation of property * * * and which, in the ordinary and usual course of its undertaking, (A) assembles and consolidates or provides for assembling and consolidating shipments of such property, and performs or provides for the performance of break-bulk and distributing operations with respect to such consolidated shipments, and (B) assumes responsibility for the transportation of such property from point of receipt to point of destination, and (C) utilizes, for the whole or any part of the transportation of such shipments, the services of a carrier or carriers subject to chapter 1, 8 or 12 of this title.'25 (Italics added.) 38 As to this group, as has been pointed out, the liability of common carrier to its shippers has always been the rule. By making § 20(11) applicable to these forwarders, Congress did two things: (1) required forwarders to issue bills of lading;26 and (2) made a matter of federal law what had been uniformly adopted by the states as the rule of liability for loss or damage. As applied to railroads, the Carmack Amendment made a significant change, since it prevented the initial carrier from exercising the right given by decision is a majority of states to limit its liability to loss or damage occurring on its own lines. But that right had never been granted to forwarders of the type regulated by Part IV. Their liability has, from the beginning, been extended to loss or damage to the consignment occurring at any time between pick-up at the point of origin and delivery at destination. As shippers, they have, of course, always had a right of action against the underlying carrier at fault. The defense that the goods are not those of the forwarder is not open to the carrier, since, as we have held, the carrier is not concerned with questions of ownership, but must treat the forwarder as shipper. Interstate Commerce Commission v. Delaware, L. & W.R. Co., supra. 39 The Act thus leaves the freight forwarder in substantially the same position it had previously held with respect to its liability to shippers and its rights against underlying carriers. The hearings, committee reports and debates are bare of any suggestion that forwarders needed relief from the requirement that they file their claims against carriers like other shippers. They have done so for over a century. They have continued to do so since enactment of the Freight Forwarder Act. See, e.g., Merchant Shippers Ass'n v. Kellogg Express & Draying Co., 1946, 28 Cal.2d 594, 170 P.2d 923; J. R. Kelly Freight Forwarder Application, 260 I.C.C. 315, 318 (1944); Hugh F. Gannon, Inc. Freight Forwarder Application, 260 I.C.C. 219, 220 (1944). We would require a much clearer showing than has been made to find that Congress intended, without increasing the liabilities of forwarders regulated by the Act, to give them a right-over against railroads, ship lines, and line-haul motor carriers as initial carriers under motor carriers as initial carriers under § 20(12).27 40 It is true that under the provisions of § 20(11), forwarders are now forbidden to limit the period within which claims must be filed by shippers to less than nine months. If forwarders must, in turn, file claims with carriers within nine months, respondent contends that in the case of claims filed against a forwarder during the last day or two of the period, it will not have enough time to refile the claim with the proper carrier and will thus have no recourse after having paid the claim. This objection obviously applies to an insignificant proportion of the total claims. Furthermore, if the Interstate Commerce Commission considers the matter to be of sufficient importance, it has the experience and authority to prescribe the proper corrective. In any event, this single inconsistency is hardly sufficient to justify the contention that Congress intended that § 1013 be interpreted to make the forwarder an initial carrier with right-over against common carriers who must treat the forwarder as a shipper for all purposes. 41 The decision of the Court of Appeals is reversed. 42 Reversed. 43 Mr. Justice BLACK, Mr. Justice DOUGLAS, and Mr. Justice RUTLEDGE would affirm the judgment for reasons stated by Judge Frank, writing for the Court of Appeals. See 166 F.2d 778. 1 56 Stat. 284, 49 U.S.C. § 1001 et seq., 49 U.S.C.A. § 1001 et seq. 2 For a full description of freight forwarder practices, see United States v. Chicago Heights Truc ing Co., 1939, 310 U.S. 344, 60 S.Ct. 931, 84 L.Ed. 1243; Freight Forwarding Investigation, 229 I.C.C. 201; Bills of Lading of Freight Forwarders, 259 I.C.C. 277. 3 '§ 1013. Bills of lading and delivery of property. The provisions of section 20(11) and (12) of this title, together with such other provisions of chapter 1 of this title, including penalties, as may be necessary for the enforcement of such provisions, shall apply with respect to freight forwarders, in the case of service subject to this chapter, with like force and effect as in the case of those persons to which such provisions are specifically applicable, and the freight forwarder shall be deemed both the receiving and delivering transportation company for the purposes of such section 20(11) and (12). * * * When the services of a common carrier by motor vehicle subject to chapter 8 of this title are utilized by a freight forwarder for the delivery of property to the consignee named in the freight forwarder's bill of lading, shipping receipt, or freight bill, the property may, with the consent of the freight forwarder, be delivered on the freight bill, and receipted for on the delivery receipt, of the freight forwarder.' 4 So far as pertinent here, § 20(11) provides: 'Liability of initial carrier for loss; limitation of liability; notice and filing of claim. Any common carrier, railroad, or transportation company § bject to the provisions of this chapter receiving property for transportation * * * shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it or by any common carrier, railroad, or transportation company to which such property may be delivered or over whose line or lines such property may pass within the United States or within an adjacent foreign country when transported on a through bill of lading, * * * and any such common carrier, railroad, or transportation company so receiving property for transportation * * * shall be liable to the lawful holder of said receipt or bill of lading or to any party entitled to recover thereon, whether such receipt or bill of lading has been issued or not. * * * Provided further, That nothing in this section shall deprive any holder of such receipt or bill of lading of any remedy or right of action which he has under the existing law * * *.' 5 Section 20(12) provides: 'Recovery by initial carrier from connecting carrier. The common carrier, railroad, or transportation company issuing such receipt or bill of lading, or delivering such property so received and transported, shall be entitled to recover from the common carrier, railroad, or transportation company on whose line the loss, damage, or injury shall have been sustained, the amount of such loss, damage, or injury as it may be required to pay to the owners of such property, as may be evidenced by any receipt, judgment, or transcript thereof'. 6 Petitioners also make the contention that even assuming the forwarder is an initial carrier with right-over under § 20(12), the limitation period provided in § 2(b) of the railroad bill of lading is effective to modify that right. They point to numerous modifications of the right-over in the Freight Claims Rules applicable to railroads inter se. And see Article I(a) of Principles and Practices for the Investigation and Disposition of Freight Claims. Under the view we take of the case, it is unnecessary to reach that question. 7 H.R. Rep. No. 1172, 77th Cong., 1st Sess., p. 6. 8 Id. at p. 10. 9 87 Cong.Rec. 8216. 10 87 Cong.Rec. 8220. 11 It should be noted that although the debate technically concerned a bill already passed by the Senate (S. 210), the House Committee on Interstate and Foreign Commerce had struck everything following the enacting clause, so the measure actually under consideration was a House amendment. This amendment was made the basis of the bill reported by the conference, and § 1013 was carried over intact from the House amendment. The conference report was adopted by both houses with little debate. 12 Mr. Lea. 'The gentleman from New Jersey (Mr. Wolverton), as the ranking minority member gave unstinted work to these problems and with an ability of which every member of the committee is well aware. I appreciate his good support of this measure today as well as the fine contributions he has made to other important measures we have brought to the House in recent years.' 87 Cong.Rec. 8227. Later, during debate on the bill reported by the conference, Chairman Lea said: 'I particularly commend the services of the gentleman from New Jersey (Mr. Wolverton) who has given much of his time, experience, and ability to this measure. It is fortunate for this country that this body has Members so well qualified by experience and ability to give such service to the nation.' 88 Cong.Rec. 4064. 13 Pacific Coast Wholesalers' Association, Investigation of Status, 269 IC.C. 504, 513. 14 In debate on the bill reported out of conference, Representative Wolverton gave a detailed explanation of the changes made by the Committee of Conference in the House amendment to S. 210. He did not comment specifically on the sections which had not been changed in conference, but said: 'In general, the balance of the bill now presented is substantially identical with that which was passed by the House on October 23, 1941. At that time I explained and commented on its principal provisions, and, to the extent that they are retained in the present measure, what I there said of them still remains applicable.' 88 Cong.Rec. 4068. 15 In explanation of this amendment (S. 2642) to § 1017(b), Senator Reed said: 'When we passed the so-called freight forwarders' legislation there was some question as to whether or not a freight forwarder was a common carrier. The Senate bill offered no difficulty with that subject. We did not treat a freight forwarder as a common carrier. We passed Senate bill 210, which went to the House and was referred to the Committee on Interstate and Foreign Commerce. In the House there were a number of bills dealing with the subject. The House struck everything after the enacting clause and substituted one of its own bills. 'When the conference committee finished its work we thought we had a perfect bill. Later it was found that the drafting service had made a mistake as to one word, so Senate bill 2642 was introduc d for the purpose of correcting that error. At one place in the bill which was passed reference was made to a freight forwarder as a carrier. We desire to correct that reference.' 88 Cong.Rec. 6115. 16 Mr. Youngdahl: 'Close analysis developed that in many respects freight forwarders, as regards their relations with the actual carriers, are properly to be considered not as carriers but as shippers, and because of this essential difference in character it became necessary to recommend a form of legislation in keeping with that character. Only so, could gross discriminations against other shippers be avoided.' 87 Cong.Rec. 8223. Mr. Wolverton: 'Even though they may assume or incur the obligations of a common carrier toward their own shippers, forwarders nevertheless stand in the role of shippers with respect to the actual carriers whose service they utilize.' 88 Cong.Rec. 4065. See also, to the same effect, J. R. Kelly Freight Forwarder Application, 260 I.C.C. 315, 321. And see Freight Forwarding Investigation, 229 I.C.C. 201, 297—304. 17 That the relation between express companies and underlying carriers is much different than the relations between forwarders and such carriers is clearly indicated in a letter from the Interstate Commerce Commission to Chairman Lea of the House Committee on Interstate and Foreign Commerce, which appears at p. 42 of the Hearings before that committee on H.R. 2764, 79th Cong., 1st Sess. The Commission there said: 'There is a vast distinction between the relations of forwarders and the Express Agency to the underlying carriers. The Express Agency has an identical contract with each rail oad, which would not be true of the forwarder. The profits, if any, accrue to the railroads, whereas under the forwarder arrangement the profits would accrue, as they do now under the joint rates, to the forwarders. The routing of express shipments, although in the control of the Express Agency, must of necessity depend primarily upon available train service rather than upon solicitation by, or concessions from, the transporting carrier, whereas concessions in the amount of compensation to the carrier would be the most important factor in the case of the forwarder. Thus, the considerations which led to the adoption of laws prohibiting unjust discrimination and undue prejudice and preference as between large and influential shippers on the one hand, and smaller shippers on the other, are practically absent in express service, but are highly prominent in forwarder service.' 18 87 Cong.Rec. 8218. 19 Under § 1009, forwarders were permitted to continue operation under joint rates previously established with motor carriers for eighteen months from the date of enactment of Part IV. This provision was thought necessary 'in order to provide a reasonable period of adjustment within which rates and charges may be established pursuant to the provisions of section (1008).' Section 1009 was amended by the Act of February 20, 1946, 60 Stat. 21, to permit the filing of joint rates between forwarders and motor carriers under certain circumstances. 20 See e.g., Twin City Shippers Association Freight Forwarder Application, 260 I.C.C. 307, 309. 21 40 Cong.Rec. 9580. 22 See 1 Hutchinson on Carriers (3d ed.) §§ 71, 80—84; Bunge, Law of Draymen, Freight Forwarders and Warehousemen, p, 111. 23 Krender v. Woolcott, 1856, 1 Hilt., N.Y., 223; Heath v. Judson Freight Forwarding Co., 1920, 47 Cal.App. 426, 190 P. 839; Mansfield v. Chicago Title & Trust Co., 7 Cir., 1912, 199 F. 95. 24 The distinction is made in a number of cases, of which the following is typical: 'The defendants were not forwarders but carriers. A simple engagement to forward goods at New York, marked for a particular destination, is discharged by shipping the goods by the usual or most direct conveyance to the place designated; but an agreement to forward them from New York to the place of destination, the charge for freight for the whole distance being specified in the agreement, is very different. It is an agreement to carry them for that distance, or to be responsible for their safe carriage and delivery at the place designated in the agreement.' Krender v. Woolcott, 1856, 1 Hilt., N.Y., 223. See also, Christenson v. American Express Co., 1870, 15 Minn. 270, 2 Am.Rep. 122; Bare v. American Forwarding Co., 1909, 146 Ill.App. 388; Kettenhofen v. Globe Transfer & Storage Co., 1912, 70 Wash. 645, 127 P. 295, 42 L.R.A.,N.S., 902, Ann.Cas.1914B, 776; Highway Freight Forwarding Co. v. Public Service Commission, 1933, 108 Pa.Super. 178, 164 A. 835. 25 For discussion of the problem of assumption of responsibility for the through transportation of property by freight forwarders, see Judson-Sheldon Corp. Application, 260 I.C.C. 473; Universal Transcontinental Corp. Application, 260 I.C.C. 521; J. Nelson Kagarise Application, 260 I.C.C. 745. Cf. United States v. American Union Transport, 1945, 327 U.S. 437, 66 S.Ct. 644. 90 L.Ed. 772. 26 Section 20(11), of course, also includes the Cummins Amendments, 38 Stat. 1196 and 39 Stat. 441, which relate to limitation of liability to the declared value of the shipment. The section adds no new liability, however, to that previously borne by the orwarder. 27 The Court of Appeals rejected Representative Wolverton's analysis of § 1013 as based on the erroneous premise that the shipper by freight forwarder never had any right of action against the carrier, and therefore the forwarder can have no right of subrogation under § 20(12). The court felt that this rationale indicates a withdrawal of the shipper's common-law right of recovery against the responsible carrier, and consequently the placing of the forwarder in the position of an insurer with no right against the carrier responsible for loss or damage. We do not so read that analysis. Of course shippers by freight forwarder have for many years been permitted to sue underlying carriers for loss or damage occasioned by the latter. New Jersey Steam Navigation Co. v. Merchants' Bank of Boston, 1848, 6 How. 344, 12 L.Ed. 465; Great Northern R. Co. v. O'Connor, 1914, 232 U.S. 508, 509, 34 S.Ct. 380, 58 L.Ed. 703. The theory of these actions was that the shipper is the undisclosed principal of its agent, the forwarder, in the latter's contract with the carrier. The forwarder, as agent of an undisclosed principal, could, of course, sue on the contract. Merchant Shippers Ass'n v. Kellogg Express & Drayage Co., 28 Cal.2d 594, 170 P.2d 923. See Bunge, Law of Draymen, Freight Forwarders and Warehousemen, p. 117. See also Restatement of Agency, §§ 322, 364. On the other hand, when a shipper sued a connecting for loss of goods delivered to an initial carrier by railroad, it did so as a disclosed principal. The initial carrier, like the forwarder, acted as agent to contract with the connecting carrier for carriage of goods on the latter's lines, but since it acted for a disclosed principal, it was not a party to the contract. See Bichlmeir v. Minneapolis, St. P. & S.S.M.R. Co., 1915, 159 Wis. 404, 150 N.W. 508; 1 Roberts, Federal Liabilities of Carriers § 386. See also Restatement of Agency § 320. When the Carmack Amendment was passed, the theory of the liability imposed upon the initial carrier was that it became a principal and all its connecting carriers agents for the transportation of the goods. Northern Pacific R. Co. v. Wall, 1916, 241 U.S. 87, 36 S.Ct. 493, 60 L.Ed. 905; Atlantic Coast Line R. Co. v. Riverside Mills, 1911, 219 U.S. 186, 31 S.Ct. 164, 55 L.Ed. 167, 31 L.R.A.,N.S., 7. Since the initial carrier, unlike the forwarder, did not have a contract right of action against its connecting carriers (i.e. was not a shipper), § 20(12) was passed to insure that the burden would fall on the carrier responsible for the loss. The forwarder, however, is a party to the contract with the carrier. It has no need for subrogation to the shipper's rights, as Representative Wolverton indicated. Its recovery against the carrier has always been upon 'the bill of lading issued to it by such carrier and under the provisions of law applicable thereto.' That right remains.

78

336 U.S. 525 69 S.Ct. 657 93 L.Ed. 865 H. P. HOOD & SONS, Inc.,v.DU MOND, Commissioner of Agriculture and Markets of New York. No. 92. Argued Dec. 13, 14, 1948. Decided April 4, 1949. Mr. Warren F. Farr, of Boston, Mass., for petitioner. Messrs. Nathaniel L. Goldstein, Wendell P. Brown and Robert G. Blabey, all of Albany, N.Y., for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 This case concerns the power of the State of New York to deny additional facilities to acquire and ship milk in interstate commerce where the grounds of denial are that such limitation upon interstate business will protect and advance local economic interests. 2 H. P. Hood & Sons, Inc., a Massachusetts corporation, has long distributed milk and its products to inhabitants of Boston. That city obtains about 90% of its fluid milk from states other than Massachusetts. Dairies located in New York State since about 1900 have been among the sources of Boston's supply, their contribution having varied but during the last ten years approximately 8%. The area in which Hood has been denied an additional license to make interstate purchases has been developed as a part of the Boston milkshed from which both the Hood Company and a competitor have shipped to Boston. 3 The state courts have held and i is conceded here that Hood's entire business in New York, present and proposed, is interstate commerce. This Hood has conducted for some time by means of three receiving depots, where it takes raw milk from farmers. The milk is not processed in New York but is weighed, tested and, if necessary, cooled and on the same day shipped as fluid milk to Boston. These existing plants have been operated under license from the State and are not in question here as the State has licensed Hood to continue them. The controversy concerns a proposed additional plant for the same kind of operation at Greenwich, New York.1 4 Article 21 of the Agriculture and Markets Law of New York, Consol.Laws, c. 69,2 forbids a dealer to buy milk from producers unless licensed to do so by the Commissioner of Agriculture and Markets. For the license he must pay a substantial fee and furnish a bond to assure prompt payment to producers for milk. Under § 258, the Commissioner may not grant a license unless satisfied 'that the applicant is qualified by character, experience, financial responsibility and equipment to properly conduct the proposed business.'3 The Hood Company concededly has met all the foregoing tests and license for an additional plant was not denied for any failure to comply with these requirements. 5 The Commissioner's denial was based on further provisions of this section which require him to be satisfied 'that the issuance of the license will not tend to a destructive competition in a market already adequately served, and that the issuance of the license will be in the public interest.' 6 Upon the hearing pursuant to the statute, milk dealers competing with Hood as buyers in the area opposed licensing the proposed Greenwich plant. They complained that Hood, by reason of conditions under which it sold in Boston, had competitive advantages under applicable federal milk orders, Boston health regulations, and OPA ceiling prices. There was also evidence of a temporary shortage of supply in the Troy, New York market during the fall and winter of 1945—46. The Commissioner was urged not to allow Hood to compete for additional supplies to milk or to take on producers then delivering to ther dealers. 7 The Commissioner found that Hood, if licensed at Greenwich, would permit its present suppliers, at their option, to deliver at the new plant rather than the old ones and for a substantial number this would mean shorter hauls and savings in delivery costs. The new plant also would attract twenty to thirty producers, some of whose milk Hood anticipates will or may be diverted from other buyers. Other large milk distributors have plants within the general area and dealers serving Troy obtain milk in the locality. He found that Troy was inadequately supplied during the preceding short season. 8 In denying the application for expanded facilities, the Commissioner states his grounds as follows: 9 'If applicant is permitted to equip and operate another milk plant in this territory, and to take on producers now delivering to plants other than those which it operates, it will tend to reduce the volume of milk received at the plants which lose those producers, and will tend to increase the cost of handling milk in those plants. 10 'If applicant takes producers now delivering milk to local markets such as Troy, it will have a tendency to deprive such markets of a supply needed during the short season. 11 'There is no evidence that any producer is without a market for his milk. There is no evidence that any producers not now delivering milk to applicant would receive any higher price, were they to deliver their milk to applicant's proposed plant. 12 'The issuance of a license to applicant which would permit it to operate an additional plant, would tend to a destructive competition in a market already adequately served, and would not be in the public interest.'4 13 Denial of the license was sustained by the Court of Appeals5 over constitutional objections duly urged under the Commerce Clause6 and, because of the importance of the questions involved, we brought the case here by certiorari.7 14 Production and distribution of milk are so intimately related to public health and welfare that the need for regulation to protect those interests has long been recognized and is, from a constitutional standpoint, hardly controversial. Also, the economy of the industry is so eccentric that economic controls have been found at once necessary and difficult. These have evolved detailed, intricate and comprehensive regulations, including price-fixing. They have been much litigated but were generally sustained by this Court as within the powers of the State over its internal commerce as against the claim that they violated the Fourteenth Amendment.8 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; Hegeman Farms Corporation v. Baldwin, 293 U.S. 163, 55 S.Ct. 7, 79 L.Ed. 259; Borden's Farm Products Co. v. Ten Eyck, 297 U.S. 251, 56 S.Ct. 453, 80 L.Ed. 669. But see Mayflower Farms v. Ten Eyck, 297 U.S. 266, 56 S.Ct. 457, 80 L.Ed. 675. As the states extended their efforts to control various phases of export and import also, questions were raised as to limitations on state power under the Commerce Clause of the Constitution. 15 Pennsylvania enacted a law including provisions to protect producers which were very similar to those of this New York Act. A concern which operated a receiving plant in Pennsylvania from which it shipped milk to the New York City market challenged the Act upon grounds thus defined by this Court: 'The respondent contends that the act, if construed to require it to obtain a license, to file a bond for the protection of producers, and to pay the farmers the prices prescribed by the Board, unconstitutionally regulates and burdens interstate commerce.' Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 350, 59 S.Ct. 528, 530, 83 L.Ed. 752. This Court, specifically limiting its judgment to the Act's provisions with respect to license, bond and regulation of prices to be paid to producers, 306 U.S. at page 352, 59 S.Ct. at page 530, considered their effect on interstate commerce 'incidental and not forbidden by the Constitution, in the absence of regulation by Congress.' 306 U.S. at page 353, 59 S.Ct. at page 531. 16 The present controversy begins where the Eisenberg decision left off. New York's regulations, designed to assure producers a fair price and a responsible purchaser, and consumers a sanitary and modernly equipped handler, are not challenged here but have been complied with. It is only additional restrictions, imposed for the avowed purpose and with the practical effect of curtailing the volume of interstate commerce to aid local economic interests, that are in question here, and no such measures were attempted or such ends sought to be served in the Act before the Court in the Eisenberg case.9 17 Our decision in a milk litigation most relevant to the present controversy deals with the converse of the present situation. Baldwin v. G. A. F. Seelig, Inc., 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032, 101 L.R.A. 55. In that case, New York placed conditions and limitations on the local sale of milk imported from Vermont designed in practical effect to exclude it, while here its order proposes to limit the local facilities for purchase of additional milk so as to withhold milk from export. The State agreed then, as now, that the Commerce Clause prohibits it from directly curtailing movement of milk into or out of the State. But in the earlier case, it contended that the same result could be accomplished by controlling delivery, bottling and sale after arrival, while here it says it can do so by curtailing facilities for its purchase and receipt before it is shipped out. In neither case is the measure supported by health or safety considerations but solely by protection of local economic interests, such as supply for local consumption and limitation of competition. This Court unanimously rejected the State's contention in the Seelig case and held that the Commerce Clause, even in the absence or congressional action, prohibits such regulations for such ends. 18 The opinion was by Mr. Justice Cardozo, experienced in the milk problems of New York and favorably disposed toward the efforts of the State to control the industry. Hegeman Farms Corporation v. Baldwin, 293 U.S. 163, 55 S.Ct. 7, 79 L.Ed. 259; Borden's Farm Products Co. v. Baldwin, 293 U.S. 194, concurrence at page 213, 55 S.Ct. 187, at page 193, 79 L.Ed. 281; Mayflower Farms v. Ten Eyck, 297 U.S. 266, dissent at page 274, 56 S.Ct. 457, at page 459, 80 L.Ed. 675. It recognized, as do we, broad power in the State to protect its inhabitants against perils to health or safety, fraudulent traders and highway hazards even by use of measures which bear adversely upon interstate commerce. But it laid repeated emphasis upon the principle that the State may not promote its own economic advantages by curtailment or burdening of interstate commerce. 19 The Constitution, said Mr. Justice Cardozo for the unanimous Court, 'was framed upon the theory that the peoples of the several states must sink or swim together, and that in the long run prosperity and salvation are in union and not division.'10 He reiterated that the economic objective, as distinguished from any health, safety and fair-dealing purpose of the regulation, was the root of its invalidity. The action of the State would 'neutralize the economic consequences of fr e trade among the states.'11 'Such a power, if exerted, will set a barrier to traffic between one state and another as effective as if customs duties, equal to the price differential, and been laid upon the thing transported.'12 'If New York, in order to promote the economic welfare of her farmers, may guard them against competition, with the cheaper prices of Vermont, the door has been opened to rivalries and reprisals that were meant to be averted by subjecting commerce between the states to the power of the nation.'13 And again, 'Neither the power to tax nor the police power may be used by the state of destination with the aim and effect of establishing an economic barrier against competition with the products of another state or the labor of its residents. Restrictions so contrived are an unreasonable clog upon the mobility of commerce. They set up what is equivalent to a rampart of customs duties designed to neutralize advantages belonging to the place of origin. They are thus hostile in conception as well as burdensome in result.'14 20 This distinction between the power of the State to shelter its people from menaces to their health or safety and from fraud, even when those dangers emanate from interstate commerce, and its lack of power to retard, burden or constrict the flow of such commerce for their economic advantage, is one deeply rooted in both our history and our law. 21 When victory relieved the Colonies from the pressure for solidarity that war had exerted, a drift toward anarchy and commercial warfare between states began. '* * * each state would legislate according to its estimate of its own interests, the importance of its own products, and the local advantages or disadvantages of its position in a political or commercial view.' This came 'to threaten at once the peace and safety of the Union.' Story, The Constitution, §§ 259, 260. See Fiske, The Critical Period of American History, 144; Warren, The Making of the Constitution, 567. The sole purpose for which Virginia initiated the movement which ultimately produced the Constitution was 'to take into consideration the trade of the United States; to examine the relative situations and trade of the said states; to consider how far a uniform system in their commercial regulation may be necessary to their common interest and their permanent harmony' and for that purpose the General Assembly of Virginia in January of 1786 named commissioners and proposed their meeting with those from other states. Documents, Formation of the Union, 12 H.Docs., 69th Cong., 1st Sess., p. 38. 22 The desire of the Forefathers to federalize regulation of foreign and interstate commerce stands in sharp contrast to their jealous preservation of power over their internal affairs. No other federal power was so universally assumed to be necessary, no other state power was so readily relinguished. There was no desire to authorize federal interference with social conditions or legal institutions of the states. Even the Bill of Rights amendments were framed only as a limitation upon the powers of Congress. The states were quite content with their several and diverse controls over most matters but, as Madison has indicated, 'want of a general power over Commerce led to an exercise of this power separately, by the States, which not only proved abortive, but engendered rival, conflicting and angry regulations.' 3 Farrand, Records of the Federal Convention, 547. 23 The necessity of centralized regulation of commerce among the states was so obvious and so fully recognized that the few words of the Commerce Clause were little illuminated by debate. But the significance of the clause was not lost and its effect was immediate and salutary. We are told by so responsible an authority as Mr. Jefferson's first appointee to this Court that 'there was not a State in the Union in which there did not, at that time exist a variety of commercial regulations; concerning which it is too much to suppose, that the whole ground covered by these regulations was immediately assumed by actual legislation, under the authority of the Union. But where was the existing statute on this subject, that a State attempted to execute? Or by what State was it ever thought necessary to repeal those statutes? By common consent, these laws dropped lifeless from their statute books, for want of the sustaining power, that had been relinguished to Congress.' Gibbons v. Ogden, 9 Wheat. 1, concurring opinion at page 226, 6 L.Ed. 23. 24 The Commerce Clause is one of the most prolific sources of national power and an equally prolific source of conflict with legislation of the state. While the Constitution vests in Congress the power to regulate commerce among the states, it does not say what the states may or may not do in the absence of congressional action, nor how to draw the line between what is and what is not commerce among the states. Perhaps even more than by interpretation of its written word, this Court has advanced the solidarity and prosperity of this Nation by the meaning it has given to these great silences of the Constitution. 25 Baldwin v. G. A. F. Seelig, Inc., 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032, 101 A.L.R. 55, is an explicit, impressive, recent and unanimous condemnation by this Court of economic restraints on interstate commerce for local economic advantage, but it does not stand along. This Court consistently has rebuffed attempts of states to advance their own commercial interests by curtailing the movement of articles of commerce, either into or out of the state, while generally supporting their right to impose even burdensome regulations in the interest of local health and safety. As most states serve their own interests best by sending their produce to market, the cases in which this Court has been obliged to deal with prohibitions or limitations by states upon exports of articles of commerce are not numerous. However, in a leading case, State of Oklahoma v. Kansas Natural Gas Co., 221 U.S. 229, 31 S.Ct. 564, 55 L.Ed. 716, 35 L.R.A., N.S., 1193, the Court denied constitutional validity to a statute by which Oklahoma, by regulation of gas companies and pipe lines, sought to restrict the export of natural gas. The Court held that when a state recognizes an article to be a subject of commerce, it cannot prohibit it from being a subject of interstate commerce; that the right to engage in interstate commerce is not the gift of a state, and that a state cannot regulate or restrain it. 26 Later West Virginia, by act of the Legislature, undertook regulation of pipeline companies intended to keep within West Virginia all natural gas there produced that might be required for local needs. This Court held that the State could not accord to its own consumers a preferred right of purchase over consumers in other states and in language applicable to the case before us now said, 'Much of the business is interstate and has grown up through a course of years. West Virginia encouraged and sanctioned the development of that part of the business and has profited greatly by it. Her present effort, rightly understood, is to subordinate that part to the local business within her borders. In other words, it is in effect an attempt to regulate the interstate business to the advantage of the local consumers. But this she may not do.' Commonwealth of Pennsylvania v. State of West Virginia, 262 U.S. 553, at pages 597, 598, 43 S.Ct. 658, at page 665, 67 L.Ed. 1117, 32 A.L.R. 300. 27 In Foster Fountain Packing Co. v. Haydel, 278 U.S. 1, 49 S.Ct. 1, 73 L.Ed. 147, the Court cited these two cases as authority for the proposition that 'A state is without power to prevent privately owned articles of trade from being shipped and sold in interstate commerce on the ground that they are requ red to satify local demands or because they are needed by the people of the state.' 278 U.S. 1, 10, 49 S.Ct. 1, 4. The Court also pointed out that 'the purpose (of the statute there involved) in not to retain the shrimp for the use of the people of Louisiana; it is to favor the canning of the meat and the manufacture of bran in Louisiana * * *.' 278 U.S. at page 13, 49 S.Ct. at page 4. Thus in the Foster case, and in the companion case Johnson v. Haydel, 278 U.S. 16, 49 S.Ct. 6, 73 L.Ed. 155, although the articles sought to be regulated were shrimp and oysters, which under ordinary conditions might not be considered subjects of commerce, the Court invalidated state enactments attempting to promote local interest at the expense of interstate commerce. 28 In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315, California's restrictions on sales of raisins within the State to those who were there processing and packing them were attacked as invalid because approximately 95% of the crop would find its way into interstate commerce after processing and packing. However, the Court said: '* * * no case has gone so far as to hold that a state could not license or otherwise regulate the sale of articles within the state because the buyer, after processing and packing them, will, in the normal course of business, sell and ship them in interstate commerce. * * * The regulation is thus applied to transactions wholly intrastate before the raisins are ready for shipment in interstate commerce.' 317 U.S. 341, at page 361, 63 S.Ct. 307, at page 318. This regulation of sale to local processors was distinguished from those which were held invalid in Lemke v. Farmers' Grain Co., of Embden, N.D., 258 U.S. 50, 42 S.Ct. 244, 66 L.Ed. 458, and Shafer v. Farmers' Grain Co. of Embden, N.D., 268 U.S. 189, 45 S.Ct. 481, 69 L.Ed. 909, because the regulation in the earlier cases was 'of the business of those who purchased grain within the state for immediate shipment out of it.' Id. In those cases, the regulation was of interstate commerce itself. Another element in the Parker case which led the Court to sustain the California regulation was that it was one which the policy of Congress was to aid and encourage, and the Secretary of Agriculture had approved the State program by loans. 29 The most recent case of this kind, Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156, involved, among other things, a South Carolina requirement that the owners of shrimp boats fishing off its shores 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. It was considered that the effect of this section of the statute was to divert to South Carolina employment and business which might otherwise go to other states, and the Court pointed out that 'the necessary tendency of the statute is to impose an artificial rigidity on the economic pattern of the industry.' 334 U.S. 385, 403—404, 68 S.Ct. 1156, 1166. It was held that the Commerce Clause was violated by such a provision. 30 This principle that our economic unit is the Nation, which alone has the gamut of powers necessary to control of the economy, including the vital power of erecting customs barriers against foreign competition, has as its corollary that the states are not separable economic units. As the Court said in Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 527, 55 S.Ct. 497, 502, 79 L.Ed. 1032, 101 A.L.R. 55, 'What is ultimate is the principle that one state in its dealings with another may not place itself in a position of economic isolation.' In so speaking it but followed the principle that the state may not use its admitted powers to protect the health and safety of its people as a basis for suppressing competition. In Buck v. Kuykendall, 267 U.S. 307, 45 S.Ct. 324, 326, 69 L.Ed. 623, 38 A.L.R. 286, the Court struck down a state act because, in the language of Mr. Justice Brandeis, 'Its primary purpose is not regulation with a view to safety or to conservation of the highways, but the prohibition of competition.' The same argument here advanced, that limitation of competition would itself contribute to safety and conservation, and therefore indirectly serve and end permissible to the state, was there declared 'not sound.' 267 U.S. 307, 315, 45 S.Ct. 324, 325. It is no better here. This Court has not only recognized this disability of the state to isolate its own economy as a basis for striking down parochial legislative policies designed to do so, but it has recognized the incapacity of the state to protect its own inhabitants from competition as a reason for sustaining particular exercises of the commerce power of Congress to reach matters in which states were so disabled. Cf. Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279, 109 A.L.R. 1293; Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 57 S.Ct. 868, 81 L.Ed. 1245, 109 A.L.R. 1327; Helvering v. Davis, 301 U.S. 619, 672, 57 S.Ct. 904, 81 L.Ed. 1307, 109 A.L.R. 1319. 31 The material success that has come to inhabitants of the states which make up this federal free trade unit has been the most impressive in the history of commerce, but the established interdependence of the states only emphasizes the necessity of protecting interstate movement of goods against local burdens and repressions. We need only consider the consequences if each of the few states that produce copper, lead, high-grade iron ore, timber, cotton, oil or gas should decree that industries located in that state shall have priority. What fantastic rivalries and dislocations and reprisals would ensue if such practices were begun! Or suppose that the field of discrimination and retaliation be industry. May Michigan provide that automobiles cannot be taken out of that State until local dealers' demands are fully met? Would she not have every argument in the favor of such a statute that can be offered in support of New York's limiting sales of milk for out-of-state shipment to protect the economic interests of her competing dealers and local consumers? Could Ohio then pounce upon the rubber-tire industry, on which she has a substantial grip, to retaliate for Michigan's auto monopoly? 32 Our system, fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the certainty that he will have free access to every market in the Nation, that no home embargoes will withhold his export, and no foreign state will by customs duties or regulations exclude them. Likewise, every consumer may look to the free competition from every producing area in the Nation to protect him from exploitation by any. Such was the vision of the Founders; such has been the doctrine of this Court which has given it reality. 33 The State, however, insists that denial of the license for a new plant does not restrict or obstruct interstate commerce, because petitioner has been licensed at its other plants without condition or limitation as to the quantities it may purchase. Hence, it is said, all that has been denied petitioner is a local convenience—that of being able to buy and receive at Greenwich, quantities of milk it is free to buy at Eagle Bridge and Salem. It suggests that, by increased efficiency or enlarged capacity at its other plants, petitioner might sufficiently increase its supply through those facilities. 34 The weakness of this contention is that a buyer has to buy where there is a willing seller, and the peculiarities of the milk business necessitate location of a receiving and cooling station for nearby producers. The Commissioner has not made and there is nothing to persuade us that he could have made findings that petitioner can obtain such additional supplies through its existing facilities; indeed he found that 'applicant has experienced some difficulty during the flush season because of the inability of the plant facilities to handle the milk by 9 a.m.,' the time its receipt is required by Boston health authoritie unless it is cooled by the farmer before delivery, and a substantial part of it is not. 35 But the argument also asks us to assume that the Commissioner's order will not operate in the way he found that it would as a reason for making it. He found that petitioner, at its new plant, would divert milk from the plants of some other large handlers in the vicinity, which plants 'can handle more milk.' This competition he did not approve. He also found it would tend to deprive local markets of needed supplies during the short season. In the face of affirmative findings that the proposed plant would increase petitioner's supply, we can hardly be asked to assume that denial of the license will not deny petitioner access to such added supplies. While the state power is applied in this case to limit expansion by a handler of milk who already has been allowed some purchasing facilities, the argument for doing so, if sustained, would be equally effective to exclude an entirely new foreign handler from coming into the state to purchase. 36 The State, however, contends that such restraint or obstruction as its order imposes on interstate commerce does not violate the Commerce Clause because the State regulation coincides with, supplements and is part of the federal regulatory scheme. This contention that Congress has taken possession of 'the field' but shared it with the State, it is to be noted, reverses the contention usually made in comparable cases, which is that Congress has not fully occupied the field and hence the State may fill the void. 37 Congress, as a part of its Agricultural Marketing Agreement Act,15 authorizes the Secretary of Agriculture to issue orders regulating the handling of several agricultural products, including milk, when they are within the reach of its commerce power. As to milk, it sets up, § 8c(5), 7 U.S.C. § 608c(5), 7 U.S.C.A. § 608c(5), a rather complicated system of fixing prices to be paid to producers through equalization pools which distribute the total value of all milk sold in a specified market among the producers supplying that market. This federal regulation was sustained and explained in United States v. Rock Royal Co-operative, Inc., 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446; H. P. Hood & Sons v. United States, 307 U.S. 588, 59 S.Ct. 1019, 83 L.Ed. 1478; see also Stark v. Wickard, 321 U.S. 288, 64 S.Ct. 559, 88 L.Ed. 733. Section 10 of the Federal Act16 also authorizes federal officials to engage in conferences, joint hearings and cooperation with the state authorities. 38 New York State, in its present and antecedent statutes, has authorized its state authorities to confer with federal officials on milk control problems17 and a series of conferences and joint hearings have been held. The two authorities formalized their collaboration in 1938 by signing a 'memorandum of the principles of cooperation to be observed in the formulation and administration of complementary orders for milk for marketing areas located within the State of New York, to be issued concurrently by the Secretary of Agriculture and the Commissioner of Agriculture and Markets.' But no federal approval or responsibility for the challenged features of this order appears in any of these provisions or arrangements. The 'memorandum of the principles of cooperation' relates only to marketing areas in New York, while the marketing area served by Hood is entirely outside of New York and is controlled by Federal Order No. 4, applicable to the greater Boston market.18 Federal Order No. 27 is applicable to the New York metropolitan market19 and it is as to this order that the State of New York is recognized by the memorandum as entitled to consultation. There is no such financial support as was given in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307 87 L.Ed. 315. 39 The Congressional regulation contemplates and permits a wide latitude in which the State may exercise its police power over the local facilities for handling milk. We assume, though it is not necessary to decide, that the Federal Act does not preclude a state from placing restrictions and obstructions in the way of interstate commerce for the ends and purposes always held permissible under the Commerce Clause. But here the challenge is only to a denial of facilities for interstate commerce upon the sole and specific grounds that it will subject others to competition and take supplies needed locally, an end, as we have shown, always held to be precluded by the Commerce Clause. We have no doubt that Congress in the national interest could prohibit or curtail shipments of milk in interstate commerce, unless and until local demands are met. Nor do we know of any reason why Congress may not, if it deems it in the national interest, authorize the states to place similar restraints on movement of articles of commerce. And the provisions looking to state cooperation may be sufficient to warrant the state in imposing regulations approved by the federal authorities, even if they otherwise might run counter to the decisions that coincidence is as fatal as conflict when Congress acts. See Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234. It is, of course, a quite different thing if Congress through its agents find such restrictions upon interstate commerce advance the national welfare, than if a locality is held free to impose them because it, judging its own cause, finds them in the interest of local prosperity. 40 When it is considered that the Federal Act was passed expressly to overcome 'disruption of the orderly exchange of commodities in interstate commerce' and conditions found to 'burden and obstruct the normal channels of interstate commerce,' 7 U.S.C. § 601, 7 U.S.C.A. § 601, it seems clear that we can not sustain the State's argument that its restrictions here involved supplement and further the federal scheme. 41 Moreover, we can hardly assume that the challenged provisions of this order advance the federal scheme of regulation because Congress forbids inclusion of such a policy in a federal milk order. Section 8c(5)(G) of the Act provides: 42 'No marketing agreement or order applicable to milk and its products in any marketing area shall prohibit or in any manner limit, in the case of the products of milk, the marketing in that area of any milk or product thereof produced in any production area in the United States.'20 43 While there may be difference of opinion as to whether this authorizes the Federal Order to limit, so long as it does not prohibit, interstate shipment of milk, see Bailey Farms Dairy Co. v. Anderson, 8 Cir., 157 F.2d 87, 96; Bailey Farms Dairy Co. v. Jones, D.C., 61 F.Supp. 209, 221; a question upon which we express no opinion, it is clear that the policy of the provision is inconsistent with the State's contention that it may, in its own interest, impose such a limitation as a coincident or supplement to federal regulation. 44 The only federal restriction of handlers' purchases from new producers, found in § 8c(5)(B), authorizes inclusion, in orders concerning milk or milk products, of a clause providing that for deliveries made during the first sixty days a new producer shall be paid only the minimum price applicable for milk of the particular use classification, subject to adjustments not relevant here.21 This provision was included in the 1935 amendment22 'to prevent assaults upon the price structure by the sporadic importation of milk from new producing areas, while permitting the orderly and natural expansion of the area supplying any market. * * *' S.Rep. No. 1011, 74th Cong., 1st Sess., p. 1. And, it was added, 'this is the only limitation upon the entry of new producers—wherever located—into a market, and it can remain effective only for the specified * * * period.' Ibid. The bill originally provided for a ninety-day minimum price period but in conference the less restrictive sixty-day period was adopted. H.R.Rep.No.1757, 74th Cong., 1st Sess., p. 21.23 45 These sections and reports indicate that it is the deliberate policy of the Congress to prevent federal officers from placing barriers in the way of the interstate flow of milk. While a statutory prohibition against federal interference with certain phases of it may not always imply that the state too is precluded, it is obvious that a state limitation on export for the benefit of its own consumers is not authorized by this Federal Act. The purpose as expressed in § 1, 7 U.S.C. § 601, 7 U.S.C.A. § 601, is to avoid conditions which burden and obstruct the normal channels of interstate commerce. The object of the federal program to raise and stabilize the price of products was to stimulate interstate commerce. The order of the Commissioner avows itself to have the opposite effect. It can claim neither federal sponsorship nor congressional sanction. 46 Since the statute as applied violates the Commerce Clause and is not authorized by federal legislation pursuant to that Clause, it cannot stand. The judgment is reversed and the cause remanded for proceedings not inconsistent with this opinion. It is so ordered. 47 Reversed and remanded. 48 Mr. Justice BLACK, dissenting. 49 In this case the Court sets up a new constitutional formula for invalidation of state laws regulating local phases of interstate commerce. I believe the New York law is invulnerable to constitutional attack under constitutional rules which the majority of this Court have long accepted. The new formula subjects state regulations of local business activities to greater constitutional hazards than they have ever had to meet before. The consequences of the new formula, as I understand it, will not merely leave a large area of local business activities free from state regulation. All local activities that fall within the scope of this new formula will be free from any regulatory control whatever. For it is inconceivable that Congress could pass uniform national legislation capable of adjustment and application to all the local phases of interstate activities that take place in the 48 states. See Robertson v. People of State of California, 328 U.S. 440, 449, 459—460, 66 S.Ct. 1160, 1165, 1170—1171, 90 L.Ed. 1366. It is equally inconceivable that Congress would attempt to control such diverse local activities through a 'swarm of statutes only locally applicable, and utterly inconsistent.' Kidd v. Pearson, 128 U.S. 1, 21, 9 S.Ct. 6, 10, 32 L.Ed. 346. 50 First. New York has a comprehensive set of regulations to control the production, distribution and sale of milk. Their over-all purposes are two: (1) To promote health by maintaining an adequate supply and an orderly distribution of uncontaminated milk; (2) to promote the general welfare by saving farmer milk-producers from impoverishment and insolvency. The state legislature concluded that achievement of these goals demanded elimination of destructive competition among milk dealers. The legislature believed that while cutthroat competition among purchaser dealers temporarily raises the price of farmers' milk, the end result of the practice in New York had been economic distress for the farmers. After destructive dealer competition had driven financially weak dealers from the contest, the more opulent survivors had pushed producers' prices far below production costs. Nebbia v. People of State of New York, 291 U.S. 502, 515—516, 54 S.Ct. 505, 506—507, 78 L.Ed. 940, 89 A.L.R. 1469, gives a graphic description of the plight of these farmers prior to the enactment of these regulations and makes clear that the chief incentive for the regulations was the promotion of health and the general welfare by financial rehabilitation of the farmers. And despite due-process objections, the Nebbia case sustained the state's constitutional power to apply its law to New York dealers in order to promote the health, economic stability and general welfare of the state's people. 51 That part of the regulatory plan challenged here bars issuance of licenses for additional milk-handling plants if new plants would 'tend to destructive competition in a market already adequately served' or would be contrary to 'the public interest.' In determining whether a milk market is 'adequately served,' the state follows a plan similar to the federal law in that both divide the country into 'marketing areas.' Under this plan, the state legislature did not attempt to prescribe one rule applicable throughout the whole state limiting the number of milk dealers or the number of their plants. A single rule of this kind would have lacked the necessary flexibility to accommodate the varying needs of markets in different parts of the state. So a state commissioner was authorized to hold hearings and make findings of fact to determine whether existing plants could adequately supply a given local producer's market or whether new plants would bring about the destructive competition among dealers that the law was designed to prevent. The commissioner's findings and orders were subject to judicial review. There is no challenge to the constitutional validity of the New York law as applied to New York milk dealers who sell milk in New York. 52 Second. Petitioner, a milk dealer, has two plants in New York. It buys milk, cools it, and ships it to Boston. It applied to the commissioner for a license to operate a third plant in the same local market area. After evidence the commissioner found that petitioner's two plants plus the others in the vicinity were adequate outlets for all the milk produced in that vicinity; some of the dealers in the area had plant capacities already in excess of the available supply. Petitioner was one of these. From this the commissioner found that more plants would bring about the kind of destructive competition against which the law was aimed. That finding is not challenged. Nor is it charged that the order was prompted by desire to prevent New York milk from going to Boston. 53 There was a finding that the destructive competition incident to the operation of a new plant probably would reduce the volume of milk purchased by some existing dealers who supplied milk to certain New York cities. One of these cities had recently suffered a milk shortage. But this finding neither proves nor implies that petitioner's application was denied to keep milk from going to Boston or to aid local economic interests. In gauging the effect of an order denying an application for additional milk plants in a purchasing area, it seems essential to intelligent administration that the commissioner consider the available supply in that area in relation to the consumer demand on dealers as sellers. For if existing area plants already are unable to buy enough milk to supply their consumer demands, new plants, striving to buy a portion of the short supply, will inevitably intensify competition among purchasing dealers, thus bringing one kind of destructive competition the New York law was designed to prevent. Consequently, in determining whether new plants would tend to destructive competition, the commissioner cannot ignore a fundamental economic truth—the interrelation of supply and demand. Whether the new plants would service Troy, Boston, or elsewhere, the effect new plants would have on the available supply to existing consumers is a relevant consideration. And the New York law requires that consideration without regard to the geographical location o the consumers. 54 Had a dealer supplying New York customers applied for a license to operate a new plant, the commissioner would have been compelled under the Act to protect petitioner's plants supplying Boston consumers in the same manner that this order would have protected New York consumers. In protecting inter- or intrastate dealers from destructive competition which would endanger the milk farmers' price structure or the continued supply of healthful milk to the customers of existing dealers, the commissioner would be faithful to the Act's avowed purposes. The commerce clause should not be stretched to forbid New York's fair attempt to protect the healthful milk supply of consumers, even though some of the consumers in this case happen to live in Troy, New York. And unless this Court is willing to charge an unfairness to the commissioner that has not been charged by petitioner or shown by the evidence, the Court cannot attribute to the commissioner an invidious purpose to discriminate against petitioner's interstate business in order to benefit local intrastate competitors and their local consumers. Of course if this were a case involving such discrimination, relief could be obtained under the principles announced in Best & Co. v. Maxwell, 311 U.S. 454, 61 S.Ct. 334, 85 L.Ed. 275. 55 The language of this state Act is not discriminatory, the legislative history shows it was not so intended, and the commissioner has not administered it with a hostile eye. The Act must stand or fall on this basis notwithstanding the overtones of the Court's opinion. If petitioner and other interstate milk dealers are to be placed above and beyond this law, it must be done solely on this Court's new constitutional formula which bars a state from protecting itself against local destructive competitive practices so far as they are indulged in by dealers who ship their milk into other states. 56 Third. The number of plants petitioner can have in the New York market is of concern to petitioner, to New York, and to the nation. Petitioner's business interest, however, under the Nebbia rule must be subordinated to the public interest. New York's concern derives from its interest in the health and well-being of its people deemed by the legislature of New York to be threatened by competitive trade practices of dealers who buy and sell milk produced in the state. That its concern is great is manifested by the state law, its background, its purposes, and its administration. The national concern, reflected in the commerce clause, flows from federal solicitude for freedom of trade among the states. That solicitude is great. 57 Reconciliation of state and federal interests in regulation of commerce always has been a perplexing problem. The claims of neither can be ignored if due regard be accorded the welfare of state and nation. For in the long run the welfare of each is dependent upon the welfare of both. Injury to commercial activities in the states is bound to produce an injurious reaction on interstate commerce, and vice versa. The many local activities which are parts of interstate transactions have given rise to much confusion. The basic problem has always been whether the state or federal government has power to regulate such local activities, whether the power of either is exclusive or concurrent, whether the state has power to regulate until Congress exercises its supreme power, and the extent to which and the circumstances under which this Court should invalidate state regulations in the absence of an exercise of congressional power. This last question is the one here involved. 58 Fourth. Gibbons v. Ogden, 9 Wheat. 1, 6 L.Ed. 23, decided in 1824, held invalid a New York stattue regulating commerce which conflicted with an Act of Congress. The Court there left undecided the question strongly urged that the commerce clause of itself forbade New York to regulate commerce. In 1847 this undecided question was discussed by Chief Justice Taney.1 His view was that the com erce clause of itself did no more than grant power to Congress to regulate commerce among the states; that until Congress acted states could regulate the commerce; and that this Court was without power to strike down state regulations unless they conflicted with a valid federal law. This the Chief Justice thought was the intention of the Constitution's framers, drawing his inference of thier intent from his belief that they knew 'a multitude of minor regulations must be necessary, which Congress amid its great concerns could never find time to consider and provide * * *.'2 59 In 1852 this Court rejected in part the Taney interpretation of the Commerce Clause. Cooley v. Board of Wardens, 12 How. 299, 13 L.Ed. 996. The opinion there stated that the commerce clause per se forbade states to regulate commerce under some circumstances but left them free to do so under other circumstances. The dividing line was not precisely drawn, but the Court outlined broad principles to guide future determinations of the side of the line on which commercial transactions would be held to fall. In doing so, it apparently took into consideration Mr. Chief Justice Taney's 1847 belief that absolute prohibition of all state regulation of commerce would create an area immune from any regulation at all. For in the Cooley case the Court held, 12 How. at page 319, that the commerce clause per se only prohibited state regulation of local interstate commerce activities which 'are in their nature national, or admit only of one uniform system.' It was also held, 12 How. at page 320, that the commerce clause left states free to regulate interstate commerce activities where diverse conditions incident to different customs, habits and trade practices, could best be treated and regulated by different regulations 'drawn from local knowledge and experience, and conformed to local wants.' Thus cautiously did the Court enter this new field of judicial power. It decided no more than that this Court in passing upon state regulations of commerce would always weigh the conflicting interests of state and nation. Moreover, implicit in the rule, as shown by what the Court said, was a determined purpose not to leave areas in which interstate activities could be insulated from any regulation at all. 60 Fifth. The basic principles of the Cooley rule have been entangled and sometimes obscured with much language. In the main, however, those principles have been the asserted grounds for determination of all commerce cases decided by this Court from 1852 until today. Pertinent quotations from some of these cases appear in Mr. Justice FRANKFURTER'S dissenting opinion and he refers to others. Many of the cases have used the words 'restraints,' 'obstructions,' 'in commerce,' 'on commerce,' 'burdens,' 'direct burdens,' 'undue burdens,' 'unreasonable burdens,' 'unfair burdens,' 'incidental burdens,' etc., but such words have almost always been used, as the opinions reveal, to aid in application of the Cooley balance-of-interests rule.3 61 There have been some sporadic deviations from the Cooley principle as illustrated by Di Santo v. Commonwealth of Pennsylvania, 273 U.S. 34, 47 S.Ct. 267, 71 L.Ed. 524. The powerful dissents of Mr. Justice Brandeis and Mr. Justice Stone, concurred in by Mr. Justice Holmes, pointed out the Di Santo deviation. The necessity for delicate adjustment of the conflicting state and federal claims was pointed out. It was emphasized that decision on such an issue required a consideration of facts such as the nature of the regulation, the character of the business, the regulation's actual effect on interstate commerce. Mr. Justice Brandeis pointed out the dangers in deviating from these principles, and, perhaps with prohetic insight as to the future fate of the Di Santo case, cited a long list of cases in which such deviations had required this Court later to overrule or explain away the prior deviations. 273 U.S. page 43, note 4, 47 S.Ct. page 270. In People of State of California v. Thompson, 313 U.S. 109, 115—116, 61 S.Ct. 930, 933, 85 L.Ed. 1219, this Court explained away the Di Santo case. It could not stand, so said the Court, because it was a departure from the principle that had been recognized ever since Cooley v. Board of Wardens, supra. 62 In this Court, challenges to the Cooley rule on the ground that the rule was an ineffective protector of interstate commerce from state regulations have been confined to dissents and concurring opinions.4 Duckworth v. State of Arkansas, 314 U.S. 390, 400—401, 62 S.Ct. 311, 316, 86 L.Ed. 294, 138 A.L.R. 1144; Bob-Lo Excursion Co. v. People of State of Michigan, 333 U.S. 28, 37, 38, 41, 42, 45, 68 S.Ct. 358, 362—363, 364, 365, 366; Independent Warehouses v. Scheele, 331 U.S. 70, 85, 95, 67 S.Ct. 1062, 1070, 1075, 91 L.Ed. 1346. In the Duckworth case by application of the Cooley rule the majority of this Court sustained a state regulation of interstate transportation. A concurring opinion expressed the view that the Court's opinion written by Chief Justice Stone, rooted as it was in the Cooley principle, 'let commerce struggle for Congressional action to make it free,' and expressed the writer's unwillingness to follow the Court's 'trend'5 beyond the 'plain requirements' of existing cases, 314 U.S. at page 401, 62 S.Ct. at page 316, 86 L.Ed. 294, 138 A.L.R. 1144. 63 The philosophy of this Duckworth concurring opinion which the Court rejected, can alone support the holding and opinion today. That philosophy commends itself to many thoughtful people. Some people believe in this philosophy because of fea that judicial toleration of any state regulations of local phases of commerce will bring about what they call 'Balkanization' of trade in the United States—trade barriers so high between the states that the stream of interstate commerce cannot flow over them.6 Other people believe in this philosophy because of an instinctive hostility to any governmental regulation of 'free enterprise'; this group prefers a laissez faire economy.7 To them the spectre of 'Bureaucracy' is more frightening than 'Balkanization.' 64 The Cooley balancing-of-interests principle which the Court accepted and applied in the Duckworth case is today supplanted by the philosophy of the Duckworth concurring opinion which though presented in the Duckworth case gained no adherents.8 For the New York statute is killed by a mere automatic application of a new mechanistic formula. The Court appraises nothing, unless its stretching of the old Commerce Clause interpretation results from a reappraisal of the power and duty of this Court under the Commerce Clause. Numerous cases, for examples Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315, and Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 59 S.Ct. 528, 83 L.Ed. 752, which made judicial appraisals under the Cooley rule, are gently laid to rest. Their interment is tactfully accomplished, without ceremony, eulogy, or report of their demise. The ground beneath them has been deftly excavated by a soothing process which limits them to their facts, their precise facts, their 'plain requirements.' The vacancy left by the Cooley principle will be more than filled, however, by the new formula which without balancing interests, automatically will relieve many businesses from state regulations. This Court will thereby be relieved of much trouble in attempting to reconcile state and federal interests. State regulatory agencies too will be relieved of a large share of their traditional duties when they discover that bad local business practices are now judicially immunized from state regulation. But it is doubtful if the relief accorded will promote the welfare of the state or nation since Congress cannot possibly undertake the monumental task of suppressing all pernicious local business practices. 65 Sixth. The Court strongly relies on Baldwin v. G. A. F. Seelig, Inc., 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032, 101 A.L.R. 55. The crucial facts of that case were these. New York law fixed a minimum price for milk bought by New York dealers from New York farmers. Vermont's legislative policy left Vermont farmers and milk dealers free to fix milk prices by bargaining. Seelig, a New York dealer, sold milk in New York which had been bought from Vermont farmers at prices below that fixed for New York farmers by New York law. New York law forbade sale of Seelig's milk in New York because the Vermont farmers had not received the New York fixed price for their milk. New York's object was to save its farmers from competition with Vermont milk. And the Court saw the New York law as a discriminatory 'barrier to traffic between one state and another as effective as if customs duties, equal to the price differential, had been laid upon the thing transported.' Baldwin v. G. A. F. Seelig, Inc., supra, 294 U.S. at page 521, 55 S.Ct. at page 499, 500. The effect of the law, therefore, was precisely the same as though in order to protect its farmers from competition with Vermont milk, New York had imposed substantially higher taxes on sellers of Vermont produced artic es than it imposed on sellers of New York produced articles. Under many previous decisions of this Court such discriminations against interstate commerce were not permitted. See Best & Co. v. Maxwell, 311 U.S. 454, 61 S.Ct. 334, 85 L.Ed. 275. 66 Even though the Court regarded the Baldwin v. G. A. F. Seelig, Inc., law as discriminatory, other considerations were added to weight the scales on the side of invalidation. Its impact on Vermont economy and Vermont legislative power was weighed. To whatever extent it is desirable to reform the economic standards of Vermont, 'the legislature of Vermont and not that of New York must supply the fitting remedy.' Baldwin v. G. A. F. Seelig, Inc., supra, 294 U.S. at page 524, 55 S.Ct. at page 500. This is a due process concept.9 In emphasizing the due process objectionable phase of New York's law, the Court was well within the Cooley philosophy.10 Furthermore under the Cooley rule, aside from due process, a state's regulation that immediately bears upon nothing but activities wholly within its boundaries is far less vulnerable than one which casts burdens on activities within the boundaries of another state.11 67 It was because New York attempted to project its law into Vermont that even its admitted health purpose was insufficient to outweigh Vermont's interest in controlling its own local affairs. Baldwin v. G. A. F. Seelig, Inc., supra, 294 U.S. page 524, 55 S.Ct. at page 500. Added to this was the Court's appraisal of the law as a plain discrimination against interstate commerce that would inescapably erect a barrier to suppress competitive sales of Vermont milk in New York, thus leading to retaliatory 'rivalries and reprisals,' 294 U.S. at page 522, 55 S.Ct. at page 500. Quite differently here New York has not attempted to regulate the price of milk in Massachusetts or the manner in which it will be distributed there; it has not attempted to put pressure on Massachusetts to reform its economic standards; its law is not hostile to interstate commerce in conception or operation; its purpose to conserve health and promote economic stability among New York producers is not stretched to the breaking point by an argument that New York cannot safely aid its own people's health unless permitted to trespass upon the power of Massachusetts to regulate local affairs in Massachusetts. Nor is this New York law, fairly administered as it has been, the kind that breeds 'rivalries and reprisals.' The circumstances and conditions that brought about invalidation of the law considered in the Baldwin case are too different from those here considered to rest today's holding on the Baldwin decision. 68 Seventh. Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 59 S.Ct. 528, 83 L.Ed. 752, would control this case but for the Court's limiting that case to its precise facts. That law required a state license of all persons who handled or purchased milk within the commonwealth for sale within or without the commonwealth. It required all dealers, interstate and intrastate, to keep records and to make bonds. Dealers who sold their products within or without the state were requir d to pay state-fixed prices. The state granted or denied licenses on the Act's enumerated terms and suspended or revoked them for cause. Avowed purposes of the Pennsylvania law were identical with the stated purposes of the New York law. Like New York the method chosen to achieve these purposes was protection of milk farmers from what were deemed to be the evil consequences of cutthroat competition. The law was applied against interstate dealers in Pennsylvania, who like petitioner in New York, bought, weighed, tested, and cooled milk in Pennsylvania preparatory to shipment outside the state. 69 The Eisenberg case thus sustained the power of a state to require licenses from interstate dealers and to impose conditions on their interstate commerce transactions in order to effectuate legitimate state policies. And the conditions Pennsylvania imposed were burdensome, as this Court recognized. They erected obstacles which were bound to limit the number of interstate dealers. The limited number of interstate dealers who could get and hold state licenses were compelled to incur expenses that added to the costs of state-fixed milk prices they were required to pay as a condition precedent to the state's allowing them to buy and ship out any milk at all. Pennsylvania imposed these burdens on interstate commerce to promote health and to protect its farmers from the consequences of destructive competition among dealers. This New York law was designed to promote health and to protect New York farmers from destructive competition in New York. 70 It requires more than invocation of the spectre of 'Balkanization' and eulogy of the Constitution's framers to prove that there is a gnat's heel difference in the burdens imposed on commerce by the two laws. It cannot even be said that one regulation was 'on commerce' and one was not (whatever 'on commerce' means), for both affected the capacity of dealers to buy milk for interstate sales. There is this difference. The handicap of state-fixed high-priced milk, big bonds and large bookkeeping expenses would probably reduce the volume of interstate shipments far more than the New York limitation of new plants in particular localities. True, this New York regulation might reduce the volume of milk this particular dealer might get and ship. But the commerce clause was not written to let one particular dealer's interests destroy a state's orderly marketing system. 71 There has certainly been no proof here that New York is wrong in believing that its law will rehabiltate farmers, induce more of them to get and stay in the milk business, and thus provide a greater New York production of better milk available for sale both in and out of New York. Should this result follow, interstate commerce will not be burdened, it will be helped. And it seems to me that here as in the Eisenberg case, this Court should not pit its legal judgment against a legislative judgment that is in harmony with the views of persons who have devoted their lives to a practical study of the milk problem. 72 Eighth. I think that Congress and its authrized federal agency have knowingly acquiesced in, if they have no actually encouraged and approved, enactment and enforcement of the New York law here held invalid. The New York law authorizes its administrator to act in cooperation with federal milk-control authorities and after consultation to make such supplementary orders as might be helpful in accomplishing the joint state-federal program. So also, 7 U.S.C. § 610(i), 7 U.S.C.A. § 610(i), authorizes and directs the Secretary of Agriculture to confer and hold joint hearings with the authorities of any state in order to 'obtain uniformity in the formulation, administration, and enforcement of Federal and State programs relating to the regulation of the handling of agricultural commodities * * *.' The section further authorizes the Secretary to 'issue orders * * * complementary to orders or other regulations issued by such (State) authorities and to make available to such State authorities the records and facilities of the Department of Agriculture * * *.' 73 In the foregoing provisions Congress manifested its purpose to subject the milk industry to two cooperating authorities: (1) State legislatures and their selected administrative authorities, and (2) the Secretary of Agriculture. Congress did far more than direct a formal, polite cooperation between New York and the Secretary of Agriculture. Recognizing the compelling necessity for a state-federal integrated regulatory system for the milk industry, Congress was careful to leave the door open for the Secretary of Agriculture and state authorities working together to formulate mutually complementary orders in the field. These complementary state-federal laws and orders were to be aimed at precisely the same evils believed to have been generated by chaotic competitive conditions in the milk industry. The objective of both laws was to help impoverished farmers. 48 Stat. 31, 7 U.S.C. § 601, 7 U.S.C.A. § 601. 74 This record does not reveal the extent to which there was state-federal cooperation in connection with enactment and enforcement of the New York law here involved. Absence of a full showing of such cooperation is doubtless due to the failure of the petitioner to raise any commerce questions in the hearing before the New York Commissioner. This in itself should be enough to cause this Court, at the very least, to follow Mr. Justice Frankfurter's suggestion and remand the case. This would afford the state opportunity to develop the facts concerning federal and state cooperation. New York's law should not be condemned on the basis of abstract rhetoric about the 'fathers' and the commerce clause. Surely a state is still entitled to present its side of a constitutional controversy, though perhaps today's new rule makes it an exercise in futility. 75 New York has presented some evidence in its brief of such state-federal cooperation. Without such showing we should assume that the Secretary has followed congressional directions. If such an assumption be not made we cannot ignore the action of Congress in selecting the Secretary of Agriculture to protect interstate commerce in milk. Congress has even given him power to limit milk shipments as between different federal marketing areas.12 This is hardly consistent with a congressional purpose to deny the Secretary power to approve this state regulation and order complementary to his own basic program. And here there is no evidence whatever to show that fair enforcement of the New York law would limit the total volume of New York milk available for shipment into other states. The basic purpose of the New York law like that of the federal law was to protect producers from low prices on the theory that this protection would insure an adequate milk supply for inter as well as intrastate shipments. 76 From the foregoing, it seems to me that the Court now steps in where Congress wanted it to stay out. The Court puts itself in the position of guardian of interstate trade in the milk industry. Congress, with full constitutional power to do so, selected the Secretary of Agriculture to do this job. Maybe this Court would be a better guardian, but it may be doubted that authority for the Court to undertake the task can be found in the Constitution—even in its 'great silences.' At any rate, I had supposed that this Court would not find conflict where Congress explicitly has commanded cooperation.13 77 The sole immediate result of today's holding is that petitioner will be allowed to operate a new milk plant in New York. This consequence standing alone is of no great importance. But there are other consequences of importance. It is always a serious thing for this Court to strike down a statewide law. It is more serious when the state law falls under a new rule which will inescapably narrow the area in which states can regulate and control local business practices found inimical to the public welfare. The gravity of striking down state regulations is immeasurably increased when it results as here in leaving a no-man's land immune from any effective regulation whatever. It is dangerous to assume that the aggressive cupidity of some need never be checked by government in the interest of all. 78 The judicially directed march of the due process philosophy as an emancipator of business from regulation appeared arrested a few years ago. That appearance was illusory. That philosophy continues its march. The due process clause and commerce clause have been used like Siamese twins in a never ending stream of challenges to government regulation. See for example, Pacific Telephone and Telegraph Co. v. Tax Com., 297 U.S. 403, 420, 56 S.Ct. 522, 528, 80 L.Ed. 760, 105 A.L.R. 1. The reach of one twin may appear to be longer than that of the other, but either can easily be turned to remedy this apparent handicap. 79 Both the commerce and due process clauses serve high purposes when confined within their proper scope. But a stretching of either outside its sphere can paralyze the legislative process, rendering the people's legislative representatives impotent to perform their duty of providing appropriate rules to govern this dynamic civilization. Both clauses easily lend themselves to inordinate expansions of this Court's power at the expense of legislative power.14 For under the prevailing due process rule, appeals can be made to the 'fundamental principles of liberty and justice' which our 'fathers' wished to preserve. In commerce clause cases reference can appropriately be made to the far-seeing wisdom of the 'fathers' in guarding against commercial and even shooting wars among the states. Such arguments have strong emotional appeals and when skillfully utilized they sometimes obscure the vision. 80 The basic question here is not the greatness of the commerce clause concept, but whether all local phases of interstate business are to be judically immunized from state laws against destructive competitive business practices such as those prohibited by New York's law. Of course, there remains the bare possibility Congress might attempt to federalize all such local business activities in the forty-eight states. While I have doubt about the wisdom of this New York law, I do not conceive it to be the function of this Court to revise that state's economic judgments. Any doubt I may have concerning the wisdom of New York's law is far less, however, than is my skepticism concerning the ability of the Federal Government to reach out and effectively regulate all the local business activities in the forty-eight states. 81 I would leave New York's law alone. 82 Mr. Justice MURPHY joins in this opinion. 83 Mr. Justice FRANKFURTER, with whom Mr. Justice RUTLEDGE joins, dissenting. 84 If the Court's opinion has meaning beyond deciding this case in isolation, its effect is to hold that no matter how important to the internal economy of a State may be the prevention of destructive competition, and no matter how unimportant the interstate commerce affected, a State cannot as a means of preventing such competition deny an applicant access to a market within the State if that applicant happens to intend the out-of-state shipment of the product that he buys. I feel constrained to dissent because I cannot agree in treating what is essentially a problem of striking a balance between competing interests as an exercise in absolutes. Nor does it seem to me that such a problem should be disposed of on a record from which we cannot tell what weights to put in which side of the scales. 85 In the interest of clarity, the controlling facts in this case may thus be fairly summarized. 86 Hood, the petitioner, is a Massachusetts corporation engaged in supplying the Boston market with fluid milk. In New York State, on the border of Vermont and Massachusetts, it operates two milk-receiving plants to which milk is delivered by local producers and whence it is shipped to Boston without processing. These two plants—at Eagle Bridge and Salem—are quite close together. On January 30, 1946, Hood applied to the Commissioner of Agriculture and Markets of New York for an extension of its New York license to purchase milk which would permit it to operate an additional receiving plant at Greenwich, New York. Greenwich is ten miles from Salem and twelve miles from Eagle Bridge. Hood proposed to divert to the plant at Greenwich milk deliveries of producers living in that vicinity who were then delivering to its more distant plants at Eagle Bridge and Salem and to take on at Greenwich twenty or thirty additional producers then delivering to competing dealers in the vicinity of Greenwich. 87 The Commissioner of Agriculture and Markets denied Hood's appl cation for extension of its license. In so doing, it rested its decision upon the following 'conclusions': 88 'If applicant is permitted to equip and operate another milk plant in this territory, and to take on producers now delivering to plants other than those which it operates, it will tend to reduce the volume of milk received at the plants which lose those producers, and will tend to increase the cost of handling milk in those plants. 89 'If applicant takes producers now delivering milk to local markets such as Troy, it will have a tendency to deprive such markets of a supply needed during the short season. * * * 90 'The issuance of a license to applicant which would permit it to operate an additional plant, would tend to a destructive competition in a market already adequately served, and would not be in the public interest.' 91 Hood instituted proceedings in the Supreme Court of New York to review the order which were transferred without hearing to the Appellate Division. The Appellate Division sustained the Commissioner's action in a per curiam opinion, and leave to appeal to the Court of Appeals was granted. That court considered Hood's claim that the order violated the commerce clause and denied it on the ground that 'any interference with the free flow of interstate commerce was incidental only.' 297 N.Y. 209, 215, 78 N.E.2d 476, 478—479. 92 Some of the principles relevant to decision of this case are settled beyond dispute. One of these is that the prevention of destructive competition is a permissible exercise of the police power. 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; United States v. Rock Royal Cooperative, 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446; Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 395, 60 S.Ct. 907, 913, 84 L.Ed. 1263. Another is that a State is not barred from licensing an activity merely because it is interstate commerce.1 Even more basic is the principle that as to matters which do not demand that regulation be uniformly present or uniformly absent, see Cooley v. Board of Wardens, 12 How. 299, 13 L.Ed. 996, the State may impose its own requirements 'even though they materially interfere with interstate commerce.' South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 188, 625, 58 S.Ct. 510, 515, 82 L.Ed. 734. And only recently, be it noted, this Court has characterized the buying of milk for out-of-state shipment as an 'essentially local' business. Milk Control Board of Pennsylvania v. Eisenberg Farm Products, 306 U.S. 346, 352, 59 S.Ct. 528, 530, 83 L.Ed. 752. 93 Behind the distinction between 'substantial' and 'incidental' burdens upon interstate commerce is a recognition that, in the absence of federal regulation, it is sometimes—of course not alway —of greater importance that local interests be protected than that interstate commerce be not touched. 94 'When Congress has not exerted its power under the Commerce Clause, and state regulation of matters of local concern is so related to interstate commerce that it also operates as a regulation of that commerce, the reconciliation of the power thus granted with that reserved to the state is to be attained by the accommodation of the competing demands of the state and national interests involved.' Parker v. Brown, 317 U.S. 341, 362, 63 S.Ct. 307, 319, 87 L.Ed. 315. 95 'But the Commerce Clause does not cut the States off from all legislative relation to foreign and interstate commerce. South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 625, 58 S.Ct. 510, 82 L.Ed. 734; Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823, 115 A.L.R. 944. Such commerce interprenetrates the States and no undisputed generality about the freedom of commerce from state encroachment can delimit in advance the interacting areas of state and national power when Congress has not by legislation foreclosed state action. The incidence of the particular state enactment must determine whether it has transgressed the power left to the States to protect their special state interests although it is related to a phase of a more extensive commercial process.' Union Brokerage Co. v. Jensen, 322 U.S. 202, 209—210, 64 S.Ct. 967, 972, 88 L.Ed. 1227, 152 A.L.R. 1072. 96 '* * * in the necessary accommodation between local needs and the overriding requirement of freedom for the national commerce, the incidence of a particular type of State action may throw the balance in support of the local need because interference with the national interest is remote or unsubstantial. A police regulation of local aspects of interstate commerce is a power often essential to a State in safeguarding vital local interests. At least until Congress chooses to enact a nationwide rule, the power will not be denied to the State.' Freeman v. Hewit, 329 U.S. 249, 253, 67 S.Ct. 274, 277, 91 L.Ed. 265. 97 See also Southern R. Co. v. King, 217 U.S. 524, 533, 30 S.Ct. 594, 596, 54 L.Ed. 868; Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U.S. 498, 506, 62 S.Ct. 384, 387, 86 L.Ed. 371.2 98 The Court's opinion deems the decision in Baldwin v. G. A. F. Seelig, Inc., 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032, 101 A.L.R. 55, as most relevant to the present controversy. But it is the essential teaching of that case that 'considerations of degree' determine the line of decision between what a State may and what a State may not regulate, when what is sought to be regulated is part of the shuttle-work of interstate commerce. 294 U.S. at page 525, 55 S.Ct. at page 501. What was there held and all that was held was accurately defined in Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 353, 59 S.Ct. 528, 531, 83 L.Ed. 752: 'In Baldwin v. (G. A. F.) Seelig, (Inc.), 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032, 101 A.L.R. 55, this court condemned an enactment aimed solely at interstate commerce attempting to affect and regulate the price to be paid for milk in a sister state, and we indicated that the attempt amounted in effect to a tariff barrier set up against milk imported into the enacting state.' The nakedness of New York's purpose to reach into Vermont was ill-concealed by the tenuous justification that if Vermont farmers got cheap prices for their milk they would be tempted to save the expense of sanitary precautions and thereby affect the health of New York consumers. 'If New York, in order to promote the economic welfare of her farmers, may guard them against competition with the cheaper prices of Vermont, the door has been opened to rivalries and reprisals that were meant to be averted by subjecting commerce between the states to the power of the nation.' 294 U.S. at page 522, 55 S.Ct. at page 500. But guarding against out-of-state competition is a very different thing from curbing competition from whatever source. A tariff barrier between States, moreover, presupposes a purpose to prefer those who are within the barrier; where no such preference appears there can be no justification for reprisals and there is consequently little probability of them. In the determination that an extension of petitioner's license would tend to destructive competition, the fact that petitioner intended the out-of-state shipment of what it bought was, so far as the record tells us, wholly irrelevant; under the circumstances, any other applicant, no matter where he meant to send his milk, would presumably also have been refused a license. 99 As I see the central issue, therefore, it is whether the difference in degree between denying access to a market for failure to comply with sanitary or book-keeping regulations and denying it for the sake of preventing destructive competition from disrupting the market is great enough to justify a difference in result. But for that difference in degree, the judgment below would fully rest on the Eisenberg case. If, on the other hand, petitioner's competitors were like itself engaged in interstate commerce, Buck v. Kuykendall, 267 U.S. 307, 45 S.Ct. 324, 69 L.Ed. 623, 38 A.L.R. 286; and Bush & Sons Co. v. Maloy, 267 U.S. 317, 45 S.Ct. 326, 69 L.Ed. 627, would be powerful precedents in favor of reversal. See also Lemke v. Farmers' Grain Co. of Embden, N.D., 258 U.S. 50, 42 S.Ct. 244, 66 L.Ed. 458; Shafer v. Farmers' Grain Co. of Embden, N.D., 268 U.S. 189, 45 S.Ct. 481, 69 L.Ed. 909. 100 This case falls somewhere between these most nearly decisive authorities. It is closer to the Buck and Bush cases than to the Eisenberg case in that the denial of a license to enter a market because the market is 'adequately served' imposes a disqualification beyond the power of the applicant to remove. In that respect the effect upon the free flow of commerce is more enduring than is the case where all that is required is compliance with a local regulation. The State's interest in restricting competition, moreover, is less obvious than its interest in preserving health or insuring probity in business dealings. Yet the commerce involved in the Buck and Bush cases—the operation of busses between Seattle, Washington, and Portland, Oregon—was exclusively interstate. Here, however, it does not appear that any of Hood's competitors sent milk out of the State, and, in fact, only about 8% of New York's entire production of milk is sent out.3 In this respect the case resembles the Eisenberg case, in which it appeared that only slightly more than 10% of the milk produced in Pennsylvania was exported. 306 U.S. at page 350, 59 S.Ct. at page 530, 83 L.Ed. 752. In upholding the State's licensing power in that case, the Court remarked that this percentage was 'only a small fraction of the milk produced by farmers in Pennsylvania' and concluded that as a consequence 'the effect of the law on interstate commerce is incidental.' 306 U.S. at page 353, 59 S.Ct. at page 531. But comparison could be carried further and still the similarities and dissimilarities of the facts in the record before us to the Eisenberg case and the Buck and Bush cases would be inconclusive. In an area where differences of degree depend on slight differences of fact, precedent alone is an inadequate guide. 101 It is argued, however, that New York can have no interest in the restriction of competition great enou h to warrant shutting its doors to one who would buy its products for shipment to another State. This must mean that the protection of health and the promotion of fair dealing are of a different order, somehow, than the prevention of destructive competition. But the fixing of prices was a main object of the regulation upheld in the Eisenberg case, and it is obvious that one of the most effective ways of maintaining a price structure is to control competition.4 The milk industry is peculiarly subject to internecine warfare, as this Court recognized in sustaining against due-process attack the precursor of New York's present milk-control law. 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. A picture of ruthless and wasteful competition was painted in that case as in each of the other cases in which the Court has upheld the regulation of the milk industry. United States v. Rock Royal Co-operative, 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446; H. P. Hood & Sons v. United States, 307 U.S. 588, 59 S.Ct. 1019, 83 L.Ed. 1478; United States v. Wrightwood Dairy Co., 315 U.S. 110, 62 S.Ct. 523, 86 L.Ed. 726. And so far as appears, State action to maintain the price structure in conjunction with complementary regulation by the Secretary of Agriculture is no less necessary for the dairy industry than for the raisin industry. Compare Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315; see United States v. Rock Royal Co-operative, Inc., 307 U.S. 533, 548—549, 59 S.Ct. 993, 1001, 83 L.Ed. 1446. In view of the importance that we have hitherto found in regulation of the economy of agriculture, I cannot understand the justification for assigning, as a matter of law, so much higher a place to milk dealers' standards of bookkeeping than to the economic wellbeing of their industry. 102 As matters now stand, however, it is impossible to say whether or not the restriction of competition among dealers in milk does in fact contribute to their economic well-being and, through them, to that of the entire industry. And if we assume that some contribution is made, we cannot guess how much. Why, when the State has fixed a minimum price for producers, does it take steps to keep competing dealers from increasing the price by bidding against each other for the existing supply? Is it concerned with protecting consumers from excessive prices? Or is it concerned with seeing that marginal dealers, forced by competition to pay more and charge less, are not driven either to cut corners in the maintenance of their plants or to close them down entirely? Might these consequences follow from operation at less than capacity? What proportion of capacity is necessary to enable the marginal dealer to stay in business? Could Hood's potential competitors in the Greenwich area maintain efficient and sanitary standards of operation on a lower margin of profit? How would their closing down affect producers? Would the competition of Hood affect dealers other than those in that area? How many of those dealers are also engaged in interstate ommerce? How much of a strain would be put on the price structure maintained by the State by a holding that it cannot regulate the competition of dealers buying for an out-of-state market? Is this a situation in which State regulation, by supplementing federal regulation, is of benefit to interstate as well as to intrastate commerce? 103 We should, I submit, have answers at least to some of these questions before we can say either how seriously interstate commerce is burdened by New York's licensing power or how necessary to New York is that power. The testimony of the dealers with whom Hood seeks to compete is too inexplicit to supply the answers. Since the needed information is neither accessible to judicial notice nor within its proper scope, I believe we should seek further light by remanding the case to the courts of the State. It is a course we have frequently taken upon records no more unsatisfactory than this one. Compare Chastleton Corporation v. Sinclair, 264 U.S. 543, 44 S.Ct. 405, 68 L.Ed. 841; City of Hammond v. Schappi Bus Line, 275 U.S. 164, 48 S.Ct. 66, 72 L.Ed. 218; Borden's Farm Products Co. v. Baldwin, 293 U.S. 194, 55 S.Ct. 187, 79 L.Ed. 281; Polk Co. v. Glover, 305 U.S. 5, 59 S.Ct. 15, 83 L.Ed. 6; Gibbs v. Buck, 307 U.S. 66, 59 S.Ct. 725, 83 L.Ed. 1111; Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310, 60 S.Ct. 217, 84 L.Ed. 774—all cases remanded to avoid constitutional adjudication without adequate knowledge of the relevant facts. 104 Nor should we now dispose of the case upon the claim that New York cannot discriminate against interstate commerce by keeping its milk for absorption 'by local markets such as Troy.' In support of this claim reliance is placed on State of Oklahoma v. Kansas Natural Gas Co., 221 U.S. 229, 31 S.Ct. 564, 55 L.Ed. 716, 35 L.R.A.,N.S., 1193, and Commonwealth of Pennsylvania v. State of West Virginia, 262 U.S. 553, 43 S.Ct. 658, 67 L.Ed. 1117, 32 A.L.R. 300, and there is much force in the argument that if a State cannot keep for its own use a natural resource like gas, as it can keep its wild game, Geer v. State of Connecticut, 161 U.S. 519, 16 S.Ct. 600, 40 L.Ed. 793; see People of State of New York ex rel. Silz v. Hesterberg, 211 U.S. 31, 41, 29 S.Ct. 10, 12, 53 L.Ed. 75, then a fortiori it cannot prefer its own inhabitants in the consumption of a product that would not have come into existence but for its commercial value. But compare Heisler v. Thomas Colliery Co., 260 U.S. 245, 43 S.Ct. 83, 67 L.Ed. 237; Oliver Iron Mining Co. v. Lord, 262 U.S. 172, 43 S.Ct. 526, 67 L.Ed. 929. It is only as to this aspect of the case, at any rate, that I can see the relevance of Baldwin v. G. A. F. Seelig Inc., 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032, 101 A.L.R. 55, as dealing with what is characterized as 'the converse of the present situation.' Support is also sought in Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1, 49 S.Ct. 1, 73 L.Ed. 147, and Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156, but in these cases what the State had done was to halt for the benefit of local processors a product already moving in interstate commerce without entirely withholding the product from interstate commerce. 105 Broadly stated, the question is whether a State can withhold from interstate commerce a product derived from local raw materials upon a determination by an administrative agency that there is a local need for it. For me it has not been put to rest by Commonwealth of Pennsylvania v. State of West Virginia, supra. More narrowly, the question is whether the State can prefer the consumers of one community to consumers in other States as well as to consumers in other parts of its own territory. It is arguable, moreover, that the Commissioner was actuated not by preference for New York consumers, but by the aim of stabilizing the supply of all the local markets, including Boston as well as Troy, served by the New York milkshed. It may also be that he had in mind the potentially harmful competitive effect of efforts by ealers supplying the Troy market to repair by attracting new producers, the aggravation of Troy's shortage which would result from the diversion to Boston of part of Troy's supply. These too are matters as to which more light would be needed if it were now necessary to decide the question. 106 In the view I take of the issue of destructive competition, however, this question need not now be decided. It is impossible to say from a reading of the opinions below that the Commissioner's finding that extension of Hood's license would tend to destructive competition would not by itself have been a sufficient basis for his order; and it is a basis which evidence adduced upon remand might put upon solid constitutional ground. A decision at this stage of the question of preferment of local needs, assuming that the record presents it, would prove to be purely advisory, therefore, if when the case came back to the State court, it found the order adequately supported by the justification of preventing destructive competition. It may be answered, to be sure, that the State would have no reason to decide whether or not the latter justification was adequate in the absence of an indication by this Court that the former—the retention of locally needed milk—is constitutionally invalid. And such an indication would amount to decision of the very constitutional issue professedly left open. To which my reply would be that it is a very different thing to recognize the difficulty of a constitutional issue and to point out circumstances in which it would not arise than it is to decide the issue. 107 My conclusion, accordingly, is that the case should be remanded to the Supreme Court of Albany County for action consistent with the views I have stated. 1 The New York Court of Appeals described the geographical situation with respect to petitioner's present and proposed plants as follows: 'The extension would have permitted petitioner to operate a milk receiving plant at Greenwich, New York, in addition to petitioner's other similar plants already licensed and operating at Eagle Bridge, Salem and Norfolk, in this State. Eagle Bridge is in Rensselaer County and Salem and Greenwich are in Washington County, Rensselaer County being adjacent to Washington County on the south, and both these counties being on the easterly edge of New York State, bordering on Massachusetts and Vermont. Petitioner's Norfolk establishment is in St. Lawrence County in another part of New York State, and serves a different area and a different group of milk producers. The present Eagle Bridge and Salem depots, however, are quite close together and the proposed Greenwich plant, for which a license has been refused, is ten miles from Salem and twelve miles from Eagle Bridge.' 297 N.Y. 209, 212, 78 N.E.2d 476, 477. 2 Laws of 1934, c. 126. 3 Section 258-c provides in pertinent part as follows: 'No license shall be granted to a person not now engaged in business as a milk dealer except for the continuation of a now existing business, and no license shall be granted to authorize the extension of an existing business by the operation of an additional plant or other new or additional facility, unless the commissioner is satisfied that the applicant is qualified by character, experience, financial responsibility and equipment to properly conduct the proposed business, that the issuance of the license will not tend to a destructive competition in a market already adequately served, and that the issuance of the license is in the public interest. * * *' 4 This finding follows the statutory language. See Note 3. 5 297 N.Y. 209, 78 N.E.2d 476. 6 U.S.Const., Art. I, § 8, cl. 3, granting Congress power 'To regulate Commerce * * * among the several States * * *.' 7 335 U.S. 808, 69 S.Ct. 35. 8 '* * * 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.' 9 The Court said: 'The Commonwealth (of Pennsylvania) does not essay to regulate or to restrain the shipment of the respondent's milk into New York * * *.' 306 U.S. 346, 352, 59 S.Ct. 528, 531, 83 L.Ed. 752. 10 294 U.S. 511, 523, 55 S.Ct. 497, 500, 79 L.Ed. 1032, 101 A.L.R. 55. 11 294 U.S. 526, 55 S.Ct. 501. 12 294 U.S. 521, 55 S.Ct. 499, 500. 13 294 U.S. 522, 55 S.Ct. 500. 14 294 U.S. 527, 55 S.Ct. 502. 15 Act of June 3, 1937, c. 296, 50 Stat. 246, as amended, 7 U.S.C. § 601 et seq. 7 U.S.C.A. § 601 et seq. 16 7 U.S.C. § 610(i), 7 U.S.C.A. § 610(i). 17 See Laws N.Y.1937, c. 383, § 258-n. 18 7 C.F.R. §§ 904.1—904.202 (1947 Supp.). 19 7 C.F.R. §§ 927.1—927.202 (1947 Supp.). 20 7 U.S.C. § 608c(5)(G), 7 U.S.C.A. § 608c(5)(G). 21 See 7 U.S.C. § 608c(5)(B), 7 U.S.C.A. § 608c(5)(G). 22 The Act of August 24, 1935, 49 Stat. 750, amended the Agricultural Adjustment Act of 1933, 48 Stat. 31. Section 8c first appeared in the 1935 Act, which was amended and reenacted by the 1937 Act, 50 Stat. 246, cited in Note 15. 23 See also H.R.Rep. No. 1241, 74th Cong., 1st Sess., pp. 7 11. And see debates at 79 Cong.Rec. 9461—63; 9572—73; 9602—04; 11134—41; and 13022. 1 The License Cases, 5 How. 504, 578, 579, 12 L.Ed. 256. And see Frankfurter, The Commerce Clause, 50—58 (1937). 2 State legislation which patently discriminates against interstate commerce has long been held to conflict with the commerce clause itself. The writer has acquiesced in this interpretation, Adams Mfg. Co. v. Storen, 304 U.S. 307, 331—332, 58 S.Ct. 913, 925, 82 L.Ed. 1365, 117 A.L.R. 429, although agreeing with the views of Chief Justice Taney that the commerce clause was not intended to grant courts power to regulate commerce even to this extent. The equal protection clause would seem to me a more appropriate source of judicial power in respect to such discriminatory laws. 3 Dowling, Interstate Commerce and State Power, 27 Va.L.Rev. 1 (1940); and see for illustration Southern Pacific Co. v. State of Arizona, 325 U.S. 761, 768—769, 65 S.Ct. 1515, 1519—1520, 89 L.Ed. 1915; United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 547—549, 64 S.Ct 1162, 1170—1171, 88 L.Ed. 1440; Cloverleaf Butter Co. v. Patterson, 315 U.S. 148, 154—155, 786, 62 S.Ct. 491, 494—495, 86 L.Ed. 754; People of State of California v. Thompson, 313 U.S. 109, 113, 61 S.Ct. 930, 932, 85 L.Ed. 1219; Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 59 S.Ct. 528, 83 L.Ed. 752; South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 184—191, 625, 58 S.Ct. 510, 513—517, 82 L.Ed. 734; Hartford Accident & Indemnity Co. v. People of State of Illinois, 298 U.S. 155, 56 S.Ct. 685, 80 L.Ed. 1099; Kidd v. Pearson, 128 U.S. 1, 9 S.Ct. 6, 32 L.Ed. 346. And see cases collected by Mr. Justice Brandeis, in his dissenting opinion in Di Santo v. Commonwealth of Pennsylvania, 273 U.S. 34, 39—40, 47 S.Ct. 267, 269, 71 L.Ed. 524. 4 The writer's view has been that the Cooley rule resulted in this Court's invalidating state statutes that should be left operative unless Congress should strike them down. See dissenting opinion in Southern Pac. Co. v. State of Arizona, 325 U.S. 761, 784—796, 65 S.Ct. 1515, 1527—1532, 89 L.Ed. 1915. But since my views were rejected, I joined in disposition of Morgan v. Commonwealth of Virginia, 328 U.S. 373, 386—388, 66 S.Ct. 1050, 1058—1059, 90 L.Ed. 1317, 165 A.L.R. 574, by application of the Cooley rule. 5 Dowling, Interstate Commerce and State Power, 27 Va.L.Rev. 1 (1940); Braden, Umpire to the Federal System, 10 U. of Chi. L.Rev. 27 (1942). 6 Bane, Interstate Trade Barriers, 16 Ind.L.J. 121 (1940); and see the collection of articles on the subject of Trade Barriers in 9 Geo. Wash.L.Rev. 755 (1941). 7 Melder, The Economics of Trade Barriers, 16 Ind.L.J. 127, 131 (1940); Reynolds, The Distribution of Power to Regulate Interstate Carriers Between the Nation and the States, 379 (1928). 8 Barnett, Interstate Commerce—State Control, 21 Ore.L.Rev. 385, 391—392 (1942); Note, 26 Minn.L.Rev. 654, 655 (1942). 9 Allgeyer v. State of Louisiana, 165 U.S. 578, 17 S.Ct. 427, 41 L.Ed. 832; cf. Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 318—319, 63 S.Ct. 602, 605—606, 87 L.Ed. 777, 145 A.L.R. 1113; Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U.S. 143, 149—150, 54 S.Ct. 634, 636, 78 L.Ed. 1178, 92 A.L.R. 928. 10 Morgan v. Commonwealth of Virginia, 328 U.S. 373, 386, 66 S.Ct. 1050, 1058, 90 L.Ed. 1317, 165 A.L.R. 574; and compare dissenting opinion 328 U.S. at pages 391, 394, 66 S.Ct. at pages 1060—1062; Bob-Lo Excursion Co. v. People of State of Michigan, 333 U.S. 28, 37, note 16, 40, 41—42, 68 S.Ct. 358, 362, 364, 365. 11 Southern Pac. Co. v. State of Arizona, 325 U.S. 761, 767 768, note 2, 65 S.Ct. 1515, 1519, 89 L.Ed. 1915; South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 184—186, 625, 58 S.Ct. 510, 513—514, 82 L.Ed. 734. 12 7 U.S.C. § 608c(5)(G), 7 U.S.C.A. § 608c(5)(G). This section restricts the Secretary of Agriculture's power in two respects: (1) It forbids him to 'prohibit' shipment of 'milk' from one federal marketing area to another. (2) It forbids him to 'limit' market-to-market shipment of 'milk products.' The Chairman of the Committee in charge of the Act in which this provision appeared explained to the House that a failure to grant the Secretary power to 'limit' milk shipments 'would absolutely wreck the whole milk program.' 79 Cong.Rec. 9572—9573. See also 79 Cong.Rec. 13022, 13023; Bailey Farm Dairy v. Anderson, 8 Cir., 157 F.2d 87—96; Bailey Farm Dairy v. Jones, D.C., 61 F.Supp. 209, 221 224. 13 Union Brokerage Co. v. Jensen, 322 U.S. 202, 209, 64 S.Ct. 967, 972, 88 L.Ed. 1227, 152 A.L.R. 1072; Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315; Townsend v. Yeomans, 301 U.S. 441, 454, 57 S.Ct. 842, 848, 81 L.Ed. 1210; Rice v. Board of Trade, 331 U.S. 247, 255, 67 S.Ct. 1160, 1164, 91 L.Ed. 1468; Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 433—436, 66 S.Ct. 1142, 1156—1158, 90 L.Ed. 1342, 164 A.L.R. 476. 14 Other constitutional provisions with vague contours are available as instruments for the judiciary to protect business from legislative regulation. Appealing phases of these vague contour provisions can be judicially integrated to provide a variety of techniques to accomplish a single purpose, the protection of business against legislative regulations obnoxious to courts. Under such a constitutional philosophy courts can invalidate business regulations on substantive grounds or they can put obstacles in the path of enforcement making it impossible to suppress business practices outlawed by valid legislation. 1 Among considerations of State concern which have been found sufficient to allow State licensing are the maintenance of sanitary conditions, Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 59 S.Ct. 528, 83 L.Ed. 752; and adequate prices, see Brief of Petitioner in Milk Control Board v. Eisenberg Farm Products, supra, at pages 20—21; control of the transportation of liquor, Ziffrin, Inc., v. Reeves, 308 U.S. 132, 60 S.Ct. 163, 84 L.Ed. 128; Duckworth v. State of Arkansas, 314 U.S. 390, 62 S.Ct. 311, 86 L.Ed. 294, 138 A.L.R. 1144; the prevention of 'fraud and overreaching' by transportation agents, People of State of California v. Thompson, 313 U.S. 109, 113, 61 S.Ct. 930, 932, 85 L.Ed. 1219; 'safeguarding the interests of its (the State's) own people in business dealings with corporations not of its own chartering but who do business within its borders,' Union Brokerage Co. v. Jensen, 322 U.S. 202, 208, 64 S.Ct. 967, 972, 88 L.Ed. 1227, 152 A.L.R. 1072; and protection of the public from 'fraud, misrepresentation, incompetence and sharp practice' on the part of insurance agents, Robertson v. People of State of California, 328 U.S. 440, 447, 66 S.Ct. 1160, 1164, 90 L.Ed. 1366. 2 Every case determining whether or not a local regulation amounts to a prohibited 'burden' on interstate commerce belongs at some point along a graduated scale. Considering only those decided since Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 59 S.Ct. 528, 83 L.Ed. 752, at one end are the tax cases; since a State has other sources of revenue, the need for a tax 'on' interstate commerce is hard to justify. It is to be expected, therefore, that State revenue laws should constitute the largest group of laws invalidated as 'burdening' commerce. And so they do. McCarroll v. Dixie Greyhound Lines, 309 U.S. 176, 60 S.Ct. 504, 84 L.Ed. 683; McGoldrick v. Gulf Oil Corporation, 309 U.S. 414, 60 S.Ct. 664, 84 L.Ed. 840; McLeod v. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304; Nippert v. City of Richmond, 327 U.S. 416, 66 S.Ct. 586, 90 L.Ed. 760, 162 A.L.R. 844; Freeman v. Hewit, 329 U.S. 249, 67 S.Ct. 274, 91 L.Ed. 265; Joseph v. Carter & Weekes Stevedoring Co., 330 U.S. 422, 67 S.Ct. 815, 91 L.Ed. 993; Central Greyhound Lines of New York v. Mealey, 334 U.S. 653, 662, 68 S.Ct. 1260, 1265. Yet there has been an increasing recognition of the States' interest in seeing that interstate commerce 'pays its way,' and a consequent disposition to classify the object of the tax as intrastate. McGoldrick v. Berwind-White Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876; McGoldrick v. Felt & Tarrant Mfg. Co., 309 U.S. 70, 60 S.Ct. 404, 84 L.Ed. 584; McGoldrick v. Compagnie Generale Transatlantique, 309 U.S. 430, 60 S.Ct. 670, 84 L.Ed. 849; Nelson v. Sears Roebuck & Co., 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. 888, 132 A.L.R. 475; Nelson v. Montgomery Ward & Co., 312 U.S. 373, 61 S.Ct. 593, 85 L.Ed. 97; Northwest Airlines v. State of Minnesota, 322 U.S. 292, 64 S.Ct. 950, 88 L.Ed. 1283, 153 A.L.R. 245; General Trading Co. v. State Tax Comm., 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309; International Harvester Co. v. Department of Treasury of State of Indiana, 322 U.S. 340, 64 S.Ct. 1019, 88 L.Ed. 1313; Independent Warehouses v. Scheele, 331 U.S. 70, 67 S.Ct. 1062, 91 L.Ed. 1346; cf. Aero Mayflower Transit Co. v. Board of R.R. Com'rs, 332 U.S. 495, 68 S.Ct. 167. By the same principle, a regulation which makes a good deal of trouble for an interstate railroad must be struck down in the absence of any very convincing showing that the regulation is a reasonable response to a serious local need. Southern Pacific Co. v. State of Arizona, 325 U.S. 761, 65 S.Ct. 1515, 89 L.Ed. 1915; Morgan v. Commonwealth of Virginia, 328 U.S. 373, 66 S.Ct. 1050, 90 L.Ed. 1317, 165 A.L.R. 574. But a more impressive showing of such a contribution on the one hand and a less persuasive demonstration of inconvenience on the other has brought about the opposite result. Terminal Railroad Ass'n of St. Louis v. Brotherhood of Railroad Trainmen, 318 U.S. 1, 63 S.Ct. 420, 87 L.Ed. 571; Bob-Lo Excursion Co. v. People of State of Michigan, 333 U.S. 28, 68 S.Ct. 358. Where motor carriers are concerned, a State is regarded as having a proprietary interest in its highways which justifies a generally more aggressive assertion of its self-interest. Welch Co. v. State of New Hampshire, 306 U.S. 79, 59 S.Ct. 438, 83 L.Ed. 500; Clark v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83 L.Ed. 1001; Maurer v. Hamilton, 309 U.S. 598, 60 S.Ct. 726, 84 L.Ed. 969, 135 A.L.R. 1347. And the protection of its own citizens through maintenance of high standards of business dealing by such regulations as those involved in People of State of California v. Thompson, 313 U.S. 109, 61 S.Ct. 930, 85 L.Ed. 1219; Union Brokerage Co. v. Jensen, 322 U.S. 202, 64 S.Ct. 967, 88 L.Ed. 1227, 152 A.L.R. 1072; and Robertson v. People of State of California, 328 U.S. 440, 66 S.Ct. 1160, 90 L.Ed. 1366, is a matter of local concern that has been given almost as much latitude as the protection of health, Clason v. State of Indiana, 306 U.S. 439, 59 S.Ct. 609, 83 L.Ed. 858. But at the opposite extreme from revenue measures, perhaps, is control of the transportation of intoxicating liquor, in the name of which quite confining hobbles have been put upon interstate commerce and sustained under the Commerce Clause, without resorting to the Twenty-first Amendment. Ziffrin, Inc., v. Reeves, 308 U.S. 132, 60 S.Ct. 163, 84 L.Ed. 128; Duckworth v. State of Arkansas, 314 U.S. 390, 62 S.Ct. 311, 86 L.Ed. 294, 138 A.L.R. 1144; Carter v. Commonwealth of Virginia, 321 U.S. 131, 64 S.Ct. 464, 88 L.Ed. 605. 3 For this information I am indebted to the Department of Agriculture of the United States. 4 Thus, in the Interstate Commerce Act of 1920, Congress gave the Interstate Commerce Commission power to limit competition both by withholding certificates of public convenience and necessity and by permitting consolidations beyond the reach of the antitrust laws and at the same time gave it power to prescribe minimum rates; the two forms of control supplement each other. See 41 Stat. 477, as amended, 49 U.S.C. § 1(18), (19), (20), 49 U.S.C.A. § 1(18—20); 41 Stat. 480, as amended, 49 U.S.C. § 5(11), 49 U.S.C.A. § 5(11); 41 Stat. 484—485, as amended, 49 U.S.C. § 15(1), 49 U.S.C.A. § 15(1); Bikle , Power of the Interstate Commerce Commission to Prescribe Minimum Rates, 36 Harv.L.Rev. 5, 26; see also Mr. Justice Brandeis, dissenting in New State Ice Co. v. Liebmann, 285 U.S. 262, 280, 308—310, 52 S.Ct. 371, 385, 386, 76 L.Ed. 747, and authorities there cited. Compare the Miller-Tydings Act, 50 Stat. 693, 15 U.S.C. § 1, 15 U.S.C.A. § 1.

78

336 U.S. 674 69 S.Ct. 751 93 L.Ed. 957 RICEv.RICE. No. 117. Argued Dec. 14, 1948. Decided April 18, 1949. Mr. Daniel D. Morgan, of New Haven, Conn., for petitioner. Messrs. Samuel A. Persky and Ralph H. Clark, both of New Haven, Conn., for respondent. PER CURIAM. 1 The question for decision here is whether the courts of Connecticut gave to a Nevada divorce decree the full faith and credit required by Art. IV, § 1 of the Constitution. Respondent brought the action in a Connecticut Superior Court, seeking a declaratory judgment that a decree of divorce entered against her and in favor of her husband, the late Herbert N. Rice, by a Nevada court is not entitled to full faith and credit because he was not domiciled in that state at the time the decree was entered. Petitioner, who had married Herbert N. Rice following his divorce, and the administrator of his estate were joined as defendants. The purpose of the action was to determine the widowhood status of the parties and to decide questions concerning the inheritance of the property of the decedent, who dies intestate. 2 After a full trial, judgment was entered in favor of respondent, and the court's finding that Herbert N. Rice had never established a bona fide domicile in Nevada was affirmed on appeal by the Supreme Court of Errors of Connecticut. We granted the petition for certiorari, 335 U.S. 842, 69 S.Ct. 65, to consider petitioner's contention that the Connecticut courts did not fairly discharge the duty of respect owed the Nevada decree under this Court's decisions in Williams v. North Carolina, 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577, 157 A.L.R. 1366, and Esenwein v. Commonwealth, 325 U.S. 279, 65 S.Ct. 1118, 89 L.Ed. 1608, 157 A.L.R. 1396. 3 Upon full consideration of the record, the opinion of the Supreme Court of Errors, and the argument of counsel, we have concluded that the Connecticut courts gave proper weight to the claims of power by the Nevada court, that the burden of proving that the decedent had not acquired a domicile in Nevada was placed upon respondent, that this issue of fact was fairly tried according to appropriate procedure, and that the findings of the Connecticut courts are amply supported in evidence. Our statement in the Esenwein opinion, 325 U.S. at page 281, 65 S.Ct. at page 1119, that 'It is not for us to retry the facts, and we cannot say that in reaching their conclusion the (Connecticut) courts did not have warrant in evidence and did not fairly weight the facts,' is appropriate here. 4 Sherrer v. Sherrer, 334 U.S. 343, 68 S.Ct. 1087, 1097, and Coe v. Coe, 334 U.S. 378, 68 S.Ct. 1094, 1097, decided by this Court last term, are not in point. No personal service was made upon respondent, nor did she in any way participate in the Nevada proceedings. She was not, therefore, precluded in the present action from challenging the finding of the Nevada court that Herbert N. Rice was, at the time of the divorce, domiciled in that state. 5 Affirmed. 6 Mr. Justice BLACK, Mr. Justice DOUGLAS, and Mr. Justice RUTLEDGE dissent. 7 Mr. Justice JACKSON, dissenting. 8 Since this case involves only reappraisal of evidence, and we decline to do that, it is hard to see a reason for granting certiorari unless it was to record in our reports an example of the manner in which, in the law of domestic relations, 'confusion now hath made his materpiece.' The question is whether property owned in Connecticut by one who has obtained a Nevada divorce and remarried in that State can be taken from his acting widow and bestowed upon the woman she superseded. The facts are these: 9 After twenty years of married life in Connecticut with Lillian, Rice arrived at Reno, Nevada, on March 23, 1944, and began a divorce action on May 5. The complaint and process were handed to Lillian at her home in Connecticut. She was not served with process in Nevada. She was teaching school in Connecticut, never had lived in Nevada, and did not appear personally or by attorney in the action, which she claims was a surprise maneuver on the part of Rice. 10 Rice had rented a furnished room in Reno and testified that he intended to remain there 'indefinitely.' He was awarded a divorce from Lillian on June 13 and wired Hermoine, who arrived there on July 3. They were immediately married and never returned to Connecticut. They retained the room in Reno, which they occupied from time to time, and both obtained war employment in California where six months later Rice died. 11 Lillian brought an action in Connecticut to have herself declared his widow insofar as Connecticut real estate was concerned. The court reviewed the evidence as to whether Rice established a good faith domicile in Nevada and held that he had not and was not entitled to maintain an action there for devorce. The question comes here as to whether this holding by Connecticut courts gave full faith and credit to the Nevada decree of divorce as required by the Constitution. 12 In Williams v. North Carolina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279, 143 A.L.R. 1273, this Court rode roughshod over the precedents and held that a state court, without personal service of process on the defendant, can on short residence grant a divorce which is valid and entitled to faith and credit in all states. If Rice could have relied on that pronouncement, his divorce from Lillian and his marriage to Hermoine would be without legal flaw, and the latter's widowhood clear. 13 But in the second case of Williams v. North Carolina, 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577, 157 A.L.R. 1366, the Court held that jurisdictional findings by the Nevada court in such a case do not preclude re-examination and a different conclusion on the part of another state. And in Estin v. Estin, 334 U.S. 541, 68 S.Ct. 1213, the Court held that the second state is free to arrive at its own determination as to plaintiff's domicile in determining property rights, even though required, under the Williams cases or either of them, to recognize the divorce judgment as terminating the marriage. Now comes Rice v. Rice to demonstrate the consequences of these doctrines. 14 Congress, as it is empowered to do by the Full Faith and Credit Clause of the Constitution, has enacted that judgments '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 whence (they) are taken.' 1 Stat. 122. There is no doubt that under the law and usage of Nevada, Hermoine was wife and widow of Rice, and on its face the statute would seem to require that she be recognized as such elsewhere. But things sometimes are not what they seem. 15 In order to have anything which courts of the Western World recognize as a judgment, except in an action in rem, it is necessary that the rendering court have within its power both the party who seeks relief and the one against whom relief is sought. 16 This Court, while acknowledging that personal service of process on the defendant ordinarily is necessary to a valid judgment in a personal action, held in the first Williams case that a state could bring a nonresident defendant within its power merely by publication or out-of-state service of its summons. It overruled former decisions to introduce what it has aptly characterized in Sherrer v. Sherrer, 334 U.S. 343, 349, and 356, 68 S.Ct. 1087, 1090 note 11, and 1097, as the 'ex parte divorce.' To me ex parte divorce is a concept as perverse and unrealistic as an ex parte marriage. The vice of the system sanctioned in Williams v. North Carolina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279, 143 A.L.R. 1273, is that one of the parties may leave the state where both for years have made their home, seek a forum of his choice, and pretty much on his own terms alter the pattern of two lives without affording the other even a decent chance to be heard—as this case illustrates. Lillian either had to leave her teaching and means of support o follow her husband two thousand miles from any place where she ever had lived, or let her marriage go by default. If she chose to follow and contest under Nevada law, she had little real chance to succeed. But this Court had called this due process of law for Lillian. 17 Hermoine relied on the Nevada court, which did only what this Court authorized it to do—grant an ex parte divorce. She married a man whom this Court says Nevada had a right to make free by such process. She had every right to believe her marriage complete and valid in all places and for all purposes. Certainly under the law of Nevada where she continued to reside it was valid, and this Court had held the out-of-state service sufficient to empower Nevada to take jurisdiction of Lillian for the purpose of dissolving her marriage. But now we say that Connecticut may find that Rice was not sufficiently domiciled in Nevada to give that State power to act on his complaint. This presents a study in contrasts. 18 We have said that Nevada does have power to dissolve the marriage of a woman who never was there in her life, never invoked its law or its courts, did not submit herself to its jurisdiction, refused to answer its summons, and took no benefits from its judgments. 19 On the other hand, we say that courts of any state may find that Nevada does not get power to dissolve the marriage of a man who went to that State and never came back, who invoked its law, went into its court and submitted himself to its jurisdiction, testified he was domiciled there, and during the rest of his life held quarters within that State. 20 But even under the two Williams cases, a quick Nevada divorce was either conclusive (first Williams case) or vulnerable (second Williams case) in its entirety. However, in addition to the rights grouped under the term consortium, which are terminated by divorce, there are subsidiary rights of a property nature such as support, alimony, distributive interests in personalty, dower and inheritance. These presented difficulties in case of the divorce on constructive service of process on a nonresident dependent in which there was no real chance to defend. So the Court improvised the concept of 'divisible' divorce, Estin v. Estin, 334 U.S. 541, 549, 68 S.Ct. 1213, a divorce good to end a marriage but invalid to affect dependent property rights. 21 I think that the judgment of the Connecticut court, but for the first Williams case and its progeny, might properly have held that the Rice divorce decree was void for every purpose because it was rendered by a state court which never obtained jurisdiction of the nonresident defendant and which had no power to reach into another state and summon her before it. 22 But if we adhere to the holdings that the Nevada court had power over her for the purpose of blasting her marriage and opening the way to a successor, I do not see the justice of inventing a compensating confusion in the device of a divisible divorce by which the parties are half-bound and half-free and which permits Rice to have a wife who cannot become his widow and to leave a widow who was no longer his wife. Lillian's standing as the relict of Rice is invulnerable, while her standing as his wife could be blasted by a Nevada decree in an action to which she did not need to even become a party. 23 This Court is not responsible for all the contradictions and conflicts resulting from our federal system or from our crazy quilt of divorce laws, but we are certainly compounding those difficulties by repudiating the usual requirements of procedural due process in divorce cases and compensating for it by repudiating the Full Faith and Credit Clause. My dissenting views in the Williams and Estin cases would lead me to affirm the judgment below, because I believe this divorce was always and in all places invalid on due process grounds for want of jurisdiction of the defendant. However, if it was valid on that ground and nothing but a review of the evidence of domicile by the second tate court is involved, we should not grant writs in this class of cases; but if I am to review the evidence here, I think the Nevada court's finding of jurisdiction was based on substantial evidence of domicile, not overcome by any new evidence before the Connecticut court, and the Nevada judgment should be given full faith and credit as the Congress has commanded.

1011

336 U.S. 631 69 S.Ct. 762 93 L.Ed. 931 DEFENSE SUPPLIES CORPORATION et al.v.LAWRENCE WAREHOUSE Co. et al. No. 298. Argued Feb. 3, 1949. Decided April 18, 1949. Rehearing Denied May 31, 1949. See 337 U.S. 921, 69 S.Ct. 1151. Mr. Morton Liftin, of Washington, D.C., for petitioners. Messrs. Morris Lavine, of Los Angeles, Cal., and W. R. Wallace, Jr., of San Francisco, Cal., for respondents. Mr. Justice MURPHY delivered the opinion of the Court. 1 We are asked to assess the effect of the Defense Supplies Corporation's dissolution on an action to which it was a party at the time of dissolution. Petitioners are the Defense Supplies Corporation and the Reconstruction Finance Corporation. Both are arms of the United States Government.1 2 Defense Supplies Corporation brought action against respondents in the District Court for the Northern District of California, in February, 1944, alleging respondents' neglig nt destruction of automobile tires owned by Defense Supplies and stored by respondents. Respondents denied their negligence. The District Judge tried the cause without a jury in February, 1945. He ordered the case submitted on July 16, 1945, and in January, 1946, found negligence and ordered judgment for Defense Supplies Corporation in the amount of $41,975.15 and costs, D.C., 67 F.Supp. 16; engrossed findings and final judgment were entered in April, 1946. Respondents filed notice of appeal on June 14, 1946; the appeal was argued in the Court of Appeals for the Ninth Circuit in October, 1947, and in December the court affirmed the judgment below. 164 F.2d 773. In January, 1948, rehearing was denied. 3 Then respondents discovered that Defense Supplies Corporation 'did not exist.' Congress had dissolved the theretofore successful litigant as of July 1, 1945, in the Joint Resolution of June 30, 1945, 59 Stat. 310, 15 U.S.C.A. § 611 note, and transferred all its assets to the Reconstruction Finance Corporation—after trial, but before judgment, in the District Court. The Court of Appeals, one judge dissenting, granted respondents' second petition for reconsideration; denied a motion to substitute the Reconstruction Finance Corporation as out of time; and vacated the judgment entered in favor of the Defense Supplies Corporation, ordering the action dismissed. 9 Cir., 168 F.2d 199. We brought the case here on certiorari, 335 U.S. 857, 69 S.Ct. 132, because of alleged conflict with Gaynor v. Metals Reserve Co., 166 F.2d 1011, in the Court of Appeals for the Eighth Circuit. 4 Our decision rests upon interpretation of the statute dissolving Defense Supplies Corporation. For although our conception of a corporation centers upon legislative grant rather than spontaneous existence, see Petrogradsky M. K. Bank v. National City Bank, 253 N.Y. 23, 30—31, 170 N.E. 479, the courts have generally treated a corporation's demise much as they have that of a natural litigant. Mumma v. Potomac Co., 8 Pet. 281, 287, 8 L.Ed. 945; National Bank v. Colby, 21 Wall. 609, 22 L.Ed. 687; Pendleton v. Russell, 144 U.S. 640, 12 S.Ct. 743, 36 L.Ed. 574; Oklahoma Natural Gas Co. v. Oklahoma, 273 U.S. 257, 47 S.Ct. 391, 71 L.Ed. 634. The parallel has not been the subject of universal admiration, see Marcus, Suability of Dissolved Corporations, 58 Harv.L.Rev. 675; and is by no means exact, Shayne v. Evening Post Publishing Co., 168 N.Y. 70, 78, 61 N.E. 115, 55 L.R.A. 777, 85 Am.St.Rep. 654; Bruun v. Katz Drug Co., 351 Mo. 731, 173 S.W.2d 906. But at least one facet of the analogy has seemed too clear to permit change without an 'independent lift of power'2 from the Congress. Whether phrased in terms of adherence to precedent, congressional acceptance of that precedent,3 or the 'impossibility' of proceeding 'without a defendant,'4 most courts have held that the dissolution of a corporation works an abatement of pending actions.5 5 But a time-honored feature of the corporate device is that a corporate entity may be utterly dead for most purposes, yet have enough life remaining to litigate its actions. All that is necessary is a statute so providing. Oklahoma Gas Co. v. Oklahoma, supra; Pease v. Rathbun-Jones Engineering Co., 243 U.S. 273, 277, 37 S.Ct. 283, 285, 61 L.Ed. 715, Ann.Cas. 1918C, 1147. Unless the statutory terms are observed, however, the consequences of total dissolution attach, and, if we follow Oklahoma Natural Gas Co. v. Oklahoma, supra, and cases cited, the actions abate. 6 The controlling statute is set out in full in the margin.6 The first section di solves several Government corporations, including Defense Supplies, and transfers all their assets and authority to the Reconstruction Finance Corporation. Section 2 provides that 'no suit, action, or other proceeding lawfully commenced by or against any of such corporations shall abate * * * but the court, on motion or supplemental petition filed at any time within twelve months after' July 1, 1945, showing necessity for survival, 'may allow the same to be maintained by or against' Reconstruction Finance. The question presented now is whether the failure to substitute by July 1, 1946, deprives petitioner Defense Supplies Corporation of its $42,000 judgment. 7 First. We agree with the Court of Appeals that the motion to substitute Reconstruction Finance was out of time. The statute provides for substitution during the year after July 1, 1945, and Reconstruction Finance's motion was presented to the court below on March 2, 1948. We do not think Congress intended a gesture of futility when it stated a twelve-month period for substitution. 8 Second. But the court read the substitution provision as conditioning the action's continuance: unless Reconstruction Finance became the litigant, the action abated. It therefore held that the District Court was without jurisdiction to enter judgment for Defense Supplies after July 1, 1945, and vacated the judgment so entered. 9 We disagree. The statute states categorically that 'no action shall abate.' Following that command, provision is made for substituting Reconstruction Finance. If Reconstruction Finance is not substituted within one year, the action by or against Defense Supplies is of course, at an end and the parties are left in statu quo; but there is nothing to show that during the year in which Reconstruction Finance may be substituted, action by or against Defense Supplies cannot continue in Defense Supplies name. If Congress states that no action shall abate, we fail to see why we should make additional language a proviso. And since the District Court entered its judgment during the year allowed for substitution of the Reconstruction Finance Corporation, we conclude that it was valid when entered. 10 The Court of Appeals though that LeCrone v. McAdoo, 253 U.S. 217, 40 S.Ct. 510, 64 L.Ed. 869; Payne v. Industrial Board, 258 U.S. 613, 42 S.Ct. 462, 66 L.Ed. 790; and United States ex rel. Claussen v. Curran, 276 U.S. 590, 48 S.Ct. 206, 72 L.Ed. 720, dictated a contrary result. They do not. They rather demonstrate the validity of our interpretation. The statutory language construed in the LeCrone and Payne cases was substantially the same as that under scrutiny now,7 and the court held only that the actions were 'at an end' in this court after the year given for substitution had expired—that after that year, we had no jurisdiction to review the merits. The court did not suggest that the courts below had entered their judgments improperly. It simply dismissed the writs of error.8 But in 1925 the statute was amended. The command, 'no action shall abate,' was omitted; the new provision made it unmistakably clear that the validity of the judgment was conditional upon substitution.9 And when called upon to interpret the new statute, we went further than we had in Payne and LeCrone. We vacated the judgments below, and remanded to the District Court with a direction to dismiss the cause as abated. United States ex rel. Claussen v. Curran, supra. 11 Three conclusions follow from our interpretation of the statute, plus the Payne and LeCrone interpretations of a statute with nearly identical language. The first is that the Court of Appeals was without jurisdiction to review the merits of the cause, since respondents called for review after the period given for substitution had expired. In addition, the District Court judgment was valid when entered, since it was entered during the one-year period. And finally the judgment was not robbed of its vitality by the abatement of appellate proceedings. The latter conclusion adheres to the familiar rule that a judgment against or in favor of a corporation is not erased by subsequent dissolution Pendleton v. Russell, supra, 144 U.S. at page 646, 12 S.Ct. 745, 36 L.Ed. 574. See 47 A.L.R. 1385, n. 1. There is no good sense in departing from that principle because a notice of appeal was filed in this case before the corporation ended for all purposes. For even if the judgment had been stayed—a fact that does not appear in the record before us—the stay would have been conditional upon perfecting the appeal. And we do not think respondents are in a position to object that they could not perfect an appeal because the Court of Appeals had no jurisdiction, when respondents could have remedied the defect by a motion to substitute the Reconstruction Finance Corporation. 12 We have held, above, that the Court of Appeals had no jurisdiction to review the merits. LeCrone and Payne show that we likewise have no jurisdiction so far as the merits are concerned. But that, of course, does not affect our power to set aside the erroneous action of the Court of Appeals. Our supervisory appellate jurisdiction would be of little value if the injustice caused by the decision below were to stand uncorrected. We are not so constricted. The Claussen case, supra, indicates that. And Walling v. Reuter Co., 321 U.S. 671, 676, 64 S.Ct. 826, 828, 88 L.Ed. 1001, and cases cited, is conclusive against respondents' argument. 13 We conclude that the Court of Appeals erred in depriving petitioner Defense Supplies of its valid judgment in the District Court, and we vacate the judgment of the Court of Appeals and remand to that court with directions to dismiss the appeal from the judgment of the District Court. Reconstruction Finance, as the real party in interest, Rule 17(a), Federal Rules of Civil Procedure, 28 U.S.C.A.; see Heisen v. Smith, 138 Cal. 216, 219, 71 P. 180, 94 Am.St.Rep. 39, may then bring action on the judgment. Rule 81(b); Mitchell v. St. Maxent's Lessee, 4 Wall. 237, 242—243, 18 L.Ed. 326; Freeman, Judgments (5th, ed.), § 1091, p. 2268; Town of Fletcher v. Hickman, 10 Cir., 165 F. 403; Thomas v. Thomas, 14 Cal.2d 355, 358, 94 P.2d 810. Scire facias revival, while often considered merely a continuation of the original suit, United States v. Payne, 147 U.S. 687, 690, 13 S.Ct. 442, 443, 37 L.Ed. 332, is a separate action for this purpose, and in the setting of this statute. See Browne, Manzaneres & Co. v. Chavez, 181 U.S. 68, 21 S.Ct. 514, 45 L.Ed. 752.10 14 Vacated and remanded. 1 Reconstruction Finance Corporation, 15 U.S.C. § 601 et seq., 15 U.S.C.A. § 601 et seq.; Defense Supplies Corporation, see footnote 6, infra. 2 L. Hand, J., in another context, Helvering v. Proctor, 2 Cir., 140 F.2d 87 at 89, 155 A.L.R. 845. 3 The statute dissolving Defense Supplies Corporation, footnote 6, infra, is an example. 4 Mumma v. Potomac Co., supra; Peora Coal Co. v. Ashcraft, 123 W.Va. 586, 595, 17 S.E.2d 444. 5 The problem is distinct from that of survival of causes of action. Fix v. Philadelphia Barge Co., 290 U.S. 530, 54 S.Ct. 270, 78 L.Ed. 481. 6 'Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That, notwithstanding any other provision of law, all functions, powers, duties, and authority of the corporations hereinafter designated, are hereby transferred, together with all their documents, books of account, records, assets, and liabilities of every kind and nature, to Reconstruction Finance Corporation and shall be performed, exercised, and administered by that Corporation in the same manner and to the same extent and effect as if originally vested in Reconstruction Finance Corporation, and the designated corporations are hereby dissolved: Defense Plant Corporation, Metals Reserve Company, Rubber Reserve Company, and Defense Supplies Corporation, created by Reconstruction Finance Corporation pursuant to the Act of June 25, 1940 (54 Stat. 572), and Disaster Loan Corporation, created by the Act of February 11, 1937 (50 Stat. 19), are hereby designated as the corporations to which this joint resolution applies. 'Sec. 2. The Reconstruction Finance Corporation shall assume and be subject to all liabilities, whether arising out of contract or otherwise, of the corporations dissolved by this joint resolution. No suit, action, or other proceeding lawfully commenced by or against any of such corporations shall abate by reason of the enactment of this joint resolution, but the court, on motion or supplemental petition filled at any time within twelve months after the date of such enactment, showing a necessity for the survival of such suit, action, or other proceeding to obtain a determination of the questions involved, may allow the same to be maintained by or against the Reconstruction Finance Corporation. 'Sec. 3. This joint resolution shall take effect on July 1, 1945.' 59 Stat. 310. 7 'Be it enacted * * * That no suit, action, or other proceeding lawfully commenced by or against the head of any Department or Bureau or other officer of the United States in his official capacity, or in relation to the discharge of his official duties, shall abate by reason of his death, or the expiration of his term of office, or his retirement, or resignation, or removal from office, but, in such event, the Court, on motion or supplemental petion filed, at any time within twelve months thereafter, showing a necessity for the survival thereof to obtain a settlement of the questions involved, may allow the same to be maintained by or against his successor in office * * *.' 30 Stat. 822. 8 Mr. McAdoo resigned as Secretary of the Treasury on November 22, 1918. The resignation was to be effective when his successor took office. New York Times, Nov. 23, 1918, p. 1, col. 8. Carter Glass took office as Secretary of the Treasury on December 16, 1918. New York Times, Dec. 17, 1918, p. 17, col. 2. The writ in LeCrone v. McAdoo was dismissed on June 1, 1920. John Barton Payne resigned as Director General of Railroads in April, 1921. Who Was Who in America (Chicago, 1943), p. 946. The writ in Payne v. Industrial Board was dismissed on May 1, 1922. 9 'Be it enacted * * * That where, during the pendency of an action, suit, or other proceeding brought by or against an officer of the United States, or of the District of Columbia, or the Canal Zone, or of a Territory or an insular possession of the United States, * * * such officer dies, resigns, or otherwise ceases to hold such office, it shall be competent for the court wherein the action, suit, or proceeding is pending, whether the court be one of first instance or an appellate tribunal, to permit the cause to be continued and maintained by or against the successor in office of such officer, if within six months after his death or separation from the office it be satisfactorily shown to the court that there is a substantial need for so continuing and maintaining the cause and obtaining an adjudication of the questions involved.' 43 Stat. 936, 941. 10 The view we take of this case makes it unnecessary to decide whether principles of estoppel might not foreclose respondents' attack upon the failure to substitute. Compare Habich v. Folger, 20 Wall. 1, 22 L.Ed. 307; Pease v. Rathbun-Jones Engineering Co., supra, 243 U.S. at page 277, 37 S.Ct. 285, 61 L.Ed. 715, Ann.Cas.1918C, 1147; with United States ex rel. Claussen v. Curran, supra; and Mumma v. Potomac Co., supra. Nor need we determine whether the entry of a nunc pro tunc order by the Court of Appeals would have properly avoided the problem of statutory construction. Compare Jackson v. Smietanka, 7 Cir., 272 F. 970, with Mitchell v. Overman, 103 U.S. 62, 26 L.Ed. 369; Quon Quon Poy v. Johnson, 273 U.S. 352, 359, 47 S.Ct. 346, 348, 71 L.Ed. 680; Shakman v. United States Credit System, 92 Wis. 366, 377—378, 66 N.W. 528, 32 L.R.A. 383, 53 Am.St.Rep. 920; State v. Waldo Bank, 20 Me. 470.

89

336 U.S. 681 69 S.Ct. 754 93 L.Ed. 971 FOUNTAINv.FILSON et al. No. 542. Decided April 18, 1949. Rehearing Denied May 31, 1949. See 337 U.S. 921, 69 S.Ct. 1153. Mr. Charles A. Horsky, of Washington, D.C., for petitioner. Mr. Camden R. McAtee, of Washington, D.C., for respondents. PER CURIAM. 1 Mr. and Mrs. Filson brought this suit in the District Court for the District of Columbia, claiming a $6,000 interest in certain New Jersey realty. The complaint alleged that Mr. and Mrs. Fountain, the defendants, acquired title to this realty subject to a resulting trust in favor of the Filsons in that amount. The Fountains answered. They denied the existence of a resulting trust and also denied the existence of any obligation to the Filsons. The documents covering the transfer of the realty and certain depositions of the parties were filed. Mrs. Fountain, her husband having died, them moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A. The sole basis of the motion was the claim that New Jersey law would not permit the imposition of a resulting trust under the circumstances disclosed in the complaint and the accompanying documents. The motion was granted and judgment for Mrs. Fountain was entered. 2 On appeal the Court of Appeals for the District of Columbia came to three conclusions. First, it agreed that under New Jersey law no resulting trust could arise. Second, it concluded that the summary judgment in Mrs. Fountain's favor was nevertheless erroneous, because the complaint contained a general prayer for 'other relief' and alleged facts on the basis of which a personal judgment for $6,000 could have been recovered even in the absence of a resulting trust in the realty. Finally, the Court of Appeals proceeded to examine the depositions which had been taken in advance of trial. The court concluded that they showed the existence of a personal obligation and the case was, therefore, remanded to the District Court with instructions to enter a personal judgment in favor of the Filsons for $6,000. Mrs. Fountain's timely motion for a modification of this order in order to permit a trial as to the existence of the personal obligation was denied. 3 Mrs. Fountain's petition for certiorari, which attacks only the third portion of the Court of Appeals' ruling above stated, is granted and the judgment of the Court of Appeals is reversed. 171 F.2d 999. We need not pass on the propriety of an order for summary judgment by a district court in favor of one party after the opposite party has moved for summary judgment in its favor, where it appears that there is no dispute as to any fact material to the issue being litigated. For here the order was made on appeal on a new issue as to which the opposite party had no opportunity to present a defense before the trial court. In Globe Liquor Co. v. San Roman, 1948, 332 U.S 571, 68 S.Ct. 246, and Cone v. West Virginia Pulp & Paper Co., 1947, 330 U.S. 212, 67 S.Ct. 752, 91 L.Ed. 849, we held that judgment notwithstanding the verdict could not be given in the Court of Appeals in favor of a party who had lost in the trial court and who had not there moved for such relief. One of the reasons for so holding was that otherwise the party who had won in the trial court would be deprived of any opportunity to remedy the defect which the appellate court discovered in his case. He would have had such an opportunity if a proper motion had been made by his opponent in the trial court. The same principle interdicts, a fortiori, the appellate court order or summary judgment here. Summary judgment may be given, under Rule 56, only if there is no dispute as to any material fact. There was no occasion in the trial court for Mrs. Fountain to dispute the facts material to a claim that a personal obligation existed, since the only claim considered by that court on her motion for summary judgment was the claim that there was a resulting trust. When the Court of Appeals concluded that the trial court should have considered a claim for personal judgment it was error for it to deprive Mrs. Fountain of an opportunity to dispute the facts material to that claim by ordering summary judgment against her. The judgment of the Court of Appeals is, therefore, reversed and the cause remanded to the District Court for further proceedings in accordance with the opinion of the Court of Appeals as here modified. 4 Reversed.

01

336 U.S. 613 69 S.Ct. 766 93 L.Ed. 919 NYE & NISSEN et al.v.UNITED STATES. No. 228. Argued March 3, 1949. Decided April 18, 1949. Mr. Joseph B. Keenan, of Washington, D.C., for petitioners. Mr. Philip Elman, of Washington, D.C., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Nye & Nissen is a corporation which during the years covered by the indictment was engaged in the business of purchasing and selling eggs, butter, and cheese in San Francisco. Throughout this period Moncharsh was president of the corporation, one of its directors, and the owner of one-third of the stock of the holding company which had sole owners ip of Nye & Nissen. Moncharsh's mother owned a one-third interest in the holding company, while the other third was owned by one Baum who lived in New York. Berman and Goddard were brothers-in-law of Moncharsh—the former being city sales manager of Nye & Nissen in charge of the company's retail salesmen, the latter being shipping and receiving clerk. Menges was another employee. 2 During the period from 1938 to 1944, Nye & Nissen made large sales of its products to the Army and Navy and, after December, 1943, to operators of various vessels having general agency contracts with the War Shipping Administration. 3 An indictment in seven counts was returned on June 20, 1945, against Nye & Nissen, Moncharsh, Berman, Goddard and Menges. The first count charged the defendants with having conspired to defraud the United States from 1938 to 1945, in violation of § 37 of the Criminal Code, 18 U.S.C. § 88, 18 U.S.C.A. § 88,1 now § 371 by designated fraudulent practices to which we will refer. The other six counts charged the defendants with violations of § 35 of the Criminal Code, 18 U.S.C. § 80, 18 U.S.C.A. § 80,2 now § 1001 by misrepresenting in invoices presented to the War Shipping Administration in April and May, 1944, the weights, grades, and prices of specified sales of eggs and cheese. 4 Menges was acquitted. Berman and Goddard were found guilty on all counts, sentenced to a year and a day on each count, the terms to run concurrently, and fined $700. They did not appeal. Nye & Nissen was found guilty on all counts and fined $5,000 on each. Moncharsh was convicted on all counts and sentenced to two years' imprisonment on the first and to five years on each of the other six, all seven terms to run concurrently. He was also fined $5,000 on each count. On appeal the judgments of conviction of Nye & Nissen and Moncharsh were affirmed. 168 F.2d 846. The case is here on a petition for certiorari which we granted because of doubts whether the conviction of Moncharsh on the substantive counts could be sustained under the theory of Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489, on which the Court of Appeals seemed to rely. 5 Two preliminary questions are presented. It is argued in the first place that there was a variance prejudicial to Moncharsh between the conspiracy charged and the proof, in that the evidence tended to show the existence of two separate conspiracies of differen characters and involving different persons. The contention is that the conspiracy charged was a continuing one from 1938 to 1945, and involved the circumvention of the Government's inspection system with relation to the sale of eggs. It is said that the proof showed two separate and distinct conspiracies—the first embracing Berman, Goddard, Moncharsh and Menges in an undertaking to defraud the United States by impeding and impairing the Government's inspection system with relation to the sales of eggs to the Army and Navy from 1938 to 1942; the second embracing Berman and Goddard alone in an agreement in 1943 and 1944, to file false vouchers with the War Shipping Administration. We need not take the space to relate why under that theory Moncharsh is said to have been prejudiced, because the argument that there was a variance seems to us to lack merit. The case was submitted to the jury on the basis of a single conspiracy throughout the period alleged in the indictment. That was proper, for as we read the indictment it charged a single conspiracy to defraud the United States in various ways: by grading and selling to agencies of the Government inferior products through frauds practiced upon its inspectors and representatives; by impeding and defeating the functions of government agencies in the inspection, grading, weighing, and purchase of eggs, butter, and cheese; by utilizing various schemes to circumvent and avoid the standards, grades, weights, and specifications to which the orders were subject; and by misrepresenting the grade, weight, and price of eggs, butter, and cheese. The fact that certain types of fraudulent practices occurred during one period and other types at different periods is without significance. The circumvention of the inspection system and the presentation of false invoices were part and parcel of the same conspiracy as charged and proved. There was an abundance of evidence, as the Court of Appeals held, from which the jury could conclude that there was one continuous and persistent conspiracy to defraud. It is conceivable that the jury might conclude that beginning in 1943 or thereabouts Moncharsh severed himself from the conspiracy and that his subordinates carried it forward on their own. But we could not reverse them if that theory taxed their credulity. 6 It is argued in the second place that the trial court erred in admitting against Moncharsh evidence of crimes similar to those charged in the substantive counts to prove the guilty intent with which the substantive acts were committed. Each of the six substantive counts charged the presentation of a separate false invoice. The evidence showed the presentation of eleven other false invoices. This was part of the evidence received in support of the conspiracy count. The trial court also admitted it at the conclusion of the case 'for the sole purpose of proving guilty intent, motive, or guilty knowledge' of the defendants. Evidence that similar and related offenses were committed in this period tended to show a consistent pattern of conduct highly relevant to the issue of intent.3 7 The principal question in the case pertains to the charge concerning the substantive offenses and the sufficiency of the evidence to support them. 8 In Pinkerton v. United States, supra, a conspiracy and substantive offenses were charged. We held that a conspirator could be held guilty of the substantive offense even though he did no more than join the conspiracy, rovided that the substantive offense was committed in furtherance of the conspiracy and as a part of it. A verdict on that theory requires submission of those fact issues to the jury. That was not done here. Hence Moncharsh argues that he is entitled to a new trial. 9 The difficulty with that argument is that the case was submitted to the jury on an equally valid theory. The trial court charged that one 'who aids, abets, counsels, commands, induces, or procures the commission of an act is as responsible for that act as if he committed it directly.' That theory is well engrained in the law. See s 332 of the Criminal Code, 18 U.S.C. § 550 (now 18 U.S.C.A. § 2);4 United States v. Johnson, 319 U.S. 503, 518, 63 S.Ct. 1233, 1240, 87 L.Ed. 1546; United States v. Dotterweich, 320 U.S. 277, 281, 64 S.Ct. 134, 136, 88 L.Ed. 48. In order to aid and abet another to commit a crime it is necessary that a defendant 'in some sort associate himself with the venture, that he participate in it as in something that he wishes to bring about, that he seek by his action to make it succeed.' L.Hand, J., in United States v. Peoni, 2 Cir., 100 F.2d 401, 402. 10 There is no direct evidence tying Moncharsh to the six false invoices involved in the substantive counts. Yet there is circumstantial evidence wholly adequate to support the finding of the jury that Moncharsh aided and abetted in the commission of those offenses. Thus there is evidence that he was the promoter of a long and persistent scheme to defraud, that the making of false invoices was a part of that project, that the makers of the false invoices were Moncharsh's subordinates, that his family was the chief owner of the business, that he was the manager of it, that his chief subordinates were his brothers-in-law, that he had charge of the office where the invoices were made out. 11 Those activities extended throughout the period when the substantive crimes were committed. They constitute ample evidence in a record reeking with fraud that Moncharsh was associated with the presentation of the six false invoices. The fact that some of that evidence may have served double duty by also supporting the charge of conspiracy is of course immaterial. 12 We see therefore no reason to exculpate him as an aider and abettor. There was no inadequacy in the charge to the jury on that theory. Nor was the submission in conflict with Pinkerton v. United States, supra. The rule of that case does service where the conspiracy was one to commit offenses of the character described in the substantive counts. Aiding and abetting has a broader application. It makes a defendant a principal when he consciously shares in any criminal act whether or not there is a conspiracy. And if a conspiracy is also charged, it makes no difference so far as aiding and abetting is concerned whether the substantive offense is done pursuant to the conspiracy. Pinkerton v. United States is narrow in its scope. Aiding and abetting rests on a broader base; it states a rule of criminal responsibility for acts which one assists another in performing. The fact that a particular case might conceivably be submitted to the jury on either theory is irrelevant. It is sufficient if the proof adduced and the basis on which it was submitted were sufficient to support the verdict. 13 Affirmed. 14 Mr. Justice FRANKFURTER, dissenting. 15 Scarcely more than a recital of the history of these proceedings will expose the reasons why I cannot agree with the Court. 16 Moncharsh, with the other defendants, was indicted on seven counts. The first count charged conspiracy to defraud the United States. The other six counts charged the presentation of false invoices to the War Shipping Administration. The trial court correctly instructed the jury as to the findings necessary to support a conviction of guilty on the conspiracy count; it also correctly defined what is necessary to conclude that the defendant had aided and abetted commission of the substantive crimes charged in the remaining counts. On April 6, 1946, the jury found Moncharsh guilty as charged on all counts. He appealed, challenging, inter alia, the sufficiency of the evidence as to each. 17 To sustain on appeal he conviction for the substantive crimes, the Government chose not to insist upon the sufficiency of the evidence to sustain a finding by the jury that Moncharsh had aided and abetted the commission of the substantive offenses. It urged instead the applicability of the decision of this Court in Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489, decided June 10, 1946. The Court of Appeals, regarding that case as controlling, was eloquently silent as to the sufficiency of the evidence to sustain a finding of aiding and abetting. 18 This Court now finds that the theory of the Pinkerton case cannot support the conviction. I agree that it cannot. The charge to the jury in that case made explicit that in order to supply the lack of direct evidence of participation in the substantive offenses, the jury could regard their finding, if they made one, that a conspiracy existed as sufficient to support a conviction on those counts, but it could do so only 'provided the acts referred to in the substantive counts were acts in furtherance of the unlawful conspiracy * * *.' 328 U.S. 640, 645—646, 66 S.Ct. 1180, 1183, Note 6. Here also direct evidence was lacking, but there was no such charge, and so I join the Court in rejecting the applicability of the Pinkerton theory. 19 The Court thus recognizes that the Pinkerton doctrine is available only if (1) there is a connection between the conduct of the conspiracy and the commission of the substantive offenses, and (2) the jury has been instructed that evidence establishing guilt of conspiracy cannot be used as a basis for conviction upon the substantive counts unless it has found the necessary connection to exist. The importance of these requirements lies in this: only when a jury has been properly instructed as to the relevant standards to be applied to the evidence does a basis exist for determining whether evidence sufficient to support the verdict was presented to it. See Bollenbach v. United States, 326 U.S. 607, 613—615, 66 S.Ct. 402, 405—406, 90 L.Ed. 350. The relevant question is not was the evidence sufficient, but was it sufficient to fulfill the required standards. 20 If this were all, we should reverse even though the record contained evidence which would have supported a finding that the acts referred to in the substantive counts were acts in furtherance of the unlawful conspiracy. But there remains the possibility of affirming on the ground that the record nevertheless contains evidence sufficient to support conviction for the substantive counts upon the theory of aiding and abetting, since the trial court did submit the substantive counts to the jury on a legally proper exposition of that theory and the jury apparently found that the evidence fulfilled the standards established. But the defendant challenges the jury's right so to find; he insists that the evidence is insufficient to establish his responsibility as an aider and abettor. As the case came before the Court of Appeals it did not feel called upon to meet this challenge. This was evidently due to the fact that the Government had shifted its position—a shift doubtless reduced by the fact that the Pinkerton decision, rendered after the case went to the jury, offered a tempting short-cut by which to sustain the verdict. 21 It may well be that the record supports the jury's finding of guilt on the substantive counts. But that question can be answered only by facing petitioner's challenge to the insufficiency of the evidence. This challenge is hardly met by examining bits and pieces of the record or by reliance on atmospheric emanations of guilt. The whole record must be canvassed, and the state of this Court's business precludes such an undertaking. It is a task especially to be avoided in view of the provision of the Evarts Act of 1891, underlined by the Judiciary Act of 1925, making criminal appeals final in the Courts of Appeals, reserving to this Court to grant further review in those rare instances where a serious issue of law or a conflict between the Courts of Appeals presents an issue of true public importance. The question of evidentiary sufficiency here at issue exemplifies precisely those burdensome features which led Congress to free this Court from such a wasteful responsibility. The record comprises twelve volumes, including 4,630 pages. It is not conceivable that the case would have been brought here for the purpose of canvassing such a record. We should not now undertake the task merely because the need to do so is unexpectedly presented, nor do we contribute to sound judicial administration by adopting a conclusion, on a necessarily partial examination of the record, which the Court of Appeals itself, though it must have examined the record, refrained from adopting.1 Our duty is not to sustain merely on the basis of a general sense that crime has been committed; our duty is to sustain only if the applicable procedural requirements have been satisfied. Now that the theory has been rejected which made it unnecessary for the Court of Appeals to pass on the sufficiency of the evidence to support the charge of aiding and abetting, we should remand the case so that it may do so. Bates v. United States, 323 U.S. 15, 65 S.Ct. 15, 89 L.Ed. 13. 22 Plainly the Court cannot undertake the task from which Congress has happily relieved it. By failing to do so, however, it leaves room for doubt whether it has regarded the conviction for conspiracy as the demning fact that establishes guilt of the substantive offenses. Granted that evidence tending to establish guilt of the conspiracy may also be relevant to establish association with the substantive crimes, it is wholly immaterial, in the absence of such an instruction as that given in the Pinkerton case, that the defendant has been found guilty of conspiracy. Yet the Court points to the 'evidence that he was the promoter of a long and persistent scheme to defraud,' and adds that 'those activities extended throughout the period when the substantive crimes were committed.' The former statement on its face is no more than a way of saying that he was convicted of a conspiracy to defraud, and surely the fact that this scheme was contemporaneous with the commission of unrelated crimes does not supply the lack of an instrument which would make guilt of participation in it available as proof of aiding and abetting those crimes. 23 The instruction given in the Pinkerton case was needed to inform the jury of the conditions under which they might use a finding that the defendants were guilty of conspiracy as circumstantial evid nce of guilt of the substantive offenses. An instruction as to aiding and abetting serves no such function, for it leaves wholly at large the bearing of the crime of conspiracy upon the substantive offenses. For the same reasons, therefore, that it cannot be assumed, in the absence of such an instruction as that given in the Pinkerton case, that the acts referred to in the substantive counts were acts in furtherance of the unlawful conspiracy, so it cannot be assumed that the acts constituting the conspiracy were found by the jury to be acts aiding and abetting the substantive offenses. Without more, the aiding and abetting instruction was sufficient only to entitle the jury to draw inferences supplying the lack of evidence of the defendant's direct participation in the substantive offenses from the circumstantial evidence offered to establish commission of those offenses. Lacking a Pinkerton instruction, the finding that a conspiracy existed cannot be used to fill out that circumstantial evidence. 24 I am left in doubt, therefore, whether in lieu of a charge to the jury the Court is fabricating a rule of law. The Court itself seems to draw the inference that the defendant, because of his position and connection with the conspiracy, must inevitably have been associated as an aider and abettor in the commission of the substantive crimes. For an appellate court to draw such an inference is to make it a rule of law that the same inference must be drawn in every similar case. It is to create, in other words, a presumption that whenever A has been found guilty of conspiring with B an C to bring X, Y and Z to pass, and A and B commit the substantive offenses L, M and N, during the life of this conspiracy, C is an aider and abettor with A and B in the commission of L, M and N. 25 Clarity as to the ground on which a criminal conviction is sustained is indispensable to Anglo-American notions of criminal justice; it is no less indispensable for the guidance of district courts in future prosecutions for conspiracy. Such prosecutions are appropriate to reach a combination united to accomplish defined criminal purposes; the concept of conspiracy is not an invitation to circumvent the safeguards in the prosecution of crime which are the special boast of our democratic society by making it a device to establish guilt, not on the basis of personal responsibility, but by association, and we should be at pains to forestall the implication that we have so extended it. My brother JACKSON has impressively shown the grave dangers of abuse to which conspiracy charges so readily lend themselves. Krulewitch v. United States, 336 U.S. 440, 69 S.Ct. 716. They are dangers which the Conference of Senior Circuit Judges has strikingly pointed out, and along before that judges who had observed these abuses in practice had warned against them. 26 'There seems to be an increasing tendency in recent years for public prosecutors to indict for conspiracies when crimes have been committed. A conspiracy to commit a crime may be a sufficiently serious offiense to be properly punished; but, when a crime has been actually committed by two or more persons, there is usually no proper reason why they should be indicted for the agreement to commit the crime, instead of for the crime itself. * * * Prosecutors seem to think that by this practice all statutes of limitations and many of the rules of evidence established for the protection of persons charged with crime can be disregarded. But there is no mysterious potency in the word 'conspiracy.' If a conspiracy to commit a crime has been carried out, and the crime committed, the crime, in my opinion, cannot be made something else by being called a conspiracy.' United States v. Kissel, C.C.S.D.N.Y., 173 F. 823, 828. 27 Neither can a conspiracy to commit on crime be made to establish another crime by resort to the doctrine of aiding and abetting. 28 As to other issues canvassed by the Court of Appeals, among them the admission f proof of similar crimes to show intent, I do not mean to imply agreement with its views. For the reasons I have stated, I believe that the judgment should be reversed and the case remanded to the Court of Appeals. 29 Mr. Justice JACKSON and Mr. Justice RUTLEDGE join in this opinion. 30 Mr. Justice MURPHY, dissenting. 31 The petitioners were indicted for seven offenses. The first was a conspiracy to defraud the Government between 1938 and 1945. The remaining counts charged six specific instances of that fraud. Serious attack has been made in this Court on the petitioners' convictions under the six substantive counts. The Court upholds those convictions. I finds sufficient evidence to establish the fact that petitioners aided or abetted the perpetration of the substantive offenses; and since 18 U.S.C. § 2, 18 U.S.C.A. § 2, makes an aider or abettor a principal, the petitioners are guilty of the substantive offenses. 32 The trial lasted nearly three months. The judge's charge to the jury began with an analysis of the conspiracy count, and offered several definitions of the term 'conspiracy.' Some were traditional. But one was this: 'If a person, understanding the unlawful character of a transaction, encourages, advises, or in any manner, with a purpose to forward the enterprise or scheme, assists in the prosecution, he becomes a conspirator.' Later in the analysis of the conspiracy count, a definition of 'abetting' was given. It was immediately followed by this statement: 'In this connection' the acts and declarations of a conspirator are admissible against other conspirators. 33 The judge then passed to the substantive offenses. And he charged: 'One who aids, abets, counsels, commands, induces aids, abets, counsels, commands, induces as responsible for that act as if he committed it directly.'1 The jurors were not told what the terms 'counsel' or 'induce' signified. Abetting, in the context of the substantive crimes, was not defined. Most important, the jurors were not told how to use a belief that conspiracy existed as evidence in itself of the substantive crimes. There was no attempt to sketch differences between abetting, counseling, inducing, and conspiring. 34 Yet the convictions are upheld in this Court on the theory that the jury found aiding or abetting. In this Court, then, aiding or abetting fraud becomes the substantive offense. Finding sufficient evidence to support the verdict on this theory of the substantive counts, the Court holds that failure to instruct of the relationship between conspiracy and aiding or abetting is unimportant. 35 I cannot agree. Conviction of the guiltless bystander is, of course, the great danger when conspiracy counts and substantive counts are tried together. A letter is written, a call is made, and the foundation is laid. The jury is subject to the temptation of generalizing; its confusion makes that temptation harder to resist. Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489, as interpreted today, attempted to place limitations on this process. A conspiracy's mere joiner is not guilty of the substantive offense unless the substance was part of the conspiracy and in furtherance of it. The trial judge must so warn the jury. 36 The policy which required cautions in the Pinkerton case requires the same cautions here. This voluminous record, and the judge's instructions in particular, are replete with possibilities of confusion for the juror. The Court states that the crime of aiding or abetting the commission of a substantive offense is 'well engrained in the law.' And so it is. 18 U.S.C. § 2, 18 U.S.C.A. § 2; United States v. Peoni, 2 Cir., 100 F.2d 401. 37 Attorneys may have an accurate idea what action constitutes aiding, abetting, counseling, inducing, or procuring. Counseling, in this context, means advising, or recommending. Although 'conspiracy' means a variety of things, see Krulewitch v. United States, 336 U.S. 440, 69 S.Ct. 716, concurring opinion, we real ze that the concept of at least implicit agreement may mark it somewhat apart from counseling, for example, or inducing. See Thomas v. United States, 10 Cir., 57 F.2d 1039, 1042; United States v. Mack, 2 Cir., 112 F.2d 290, 292. 38 Precise use of words is part of the lawyer's craft. But we expect too much of a juror when we ask him to make intelligent distinctions after a three-month trial and after instructions such as those I have quoted above—in an area of law which is difficult enough for the seasoned attorney. See United States v. Sall, 3 Cir., 116 F.2d 745, overruled in Pinkerton v. United States, supra. 39 In this case an intelligent verdict on the substantive counts seems scarcely possible. The jury may have used the proof of conspiracy as proof in itself of the other offenses—the substantive crimes of aiding or abetting fraud on the Government. As the Court interprets Pinkerton, it is beyond question that such use would be improper, without a warning that the substantive crime must be committed in furtherance of the conspiracy and as a part of it. We do not know, we cannot know, what evidence was determinative of guilt in the jury room. 40 An appellate court has no business deciding for itself that there is sufficient evidence to convict, when the triers of fact may have considered improper evidence their basis for the finding of guilt. The presence of proper evidence has no relevance whatever. At the very least, the judge should instruct the jury that there is a difference between the real participation contemplated in aiding or abetting, and the more remote plotting embraced by simple 'conspiracy,' United States v. Peoni, supra, 100 F.2d at page 402, although one may be both conspirator and abettor. 41 Guilt by association is a danger in any conspiracy prosecution. Its consequences are more serious when a substantive crime is also charged. But when the magic words 'counseling' or 'inducing' are injected to 'define' the substantive crimes, the danger and its consequences reach a new high. It is hard to assess the effect of a trial judge's charge upon a jury's unsophisticated belief in defendants' bad conduct. But it is our duty to do what we can by way of warning. Clarity is indispensable. 42 The guilt or innocence of Moncharsh and Nye & Nissen is relatively unimportant. The effect of today's decision on future trials, however, will be serious indeed. The Court gives further comfort to the dragnet theory of criminal justice. The judgment should be reversed. 1 'If two or more persons conspire either to commit any offense against the United States, or to defraud the United States in any manner or for any purpose, and one or more of such parties do any act to effect the object of the conspiracy, each of the parties to such conspiracy shall be fined not more than $10,000, or imprisoned not more than two years, or both.' 2 'Whoever shall make or cause to be made or present or cause to be presented, for payment or approval, to or by any person or officer in the civil, military, or naval service of the United States, or any department thereof, or any corporation in which the United States of America is a stockholder, any claim upon or against the Government of the United States, or any department or officer thereof, or any corporation in which the United States of America is a stockholder, knowing such claim to be false, fictitious, or fraudulent; or whoever shall knowingly and willfully falsify or conceal or cover up by any trick, scheme, or device a material fact, or make or cause to be made any false or fraudulent statements or representations, or make or use or cause to be made or used any false bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to contain any fraudulent or fictitious statement or entry in any matter within the jurisdiction of any department or agency of the United States or of any corporation in which the United States of America is a stockholder, shall be fined not more than $10,000 or imprisoned not more than ten years, or both.' 3 See 2 Wigmore, Evidence (3d Ed., 1940) §§ 302—304; 1 Wharton, Criminal Evidence (11th Ed., 1935) §§ 349—352. 4 'Whoever directly commits any act constituting an offense defined in any law of the United States, or aids, abets, counsels, commands, induces, or procures its commission, is a principal.' 1 The following excerpts from the opinion of the Court of Appeals make clear how firmly it placed its decision upon the Pinkerton doctrine rather than upon a determination of the sufficiency of the evidence. '* * * Here the case was submitted to the jury with an instruction under 18 U.S.C.A. § 550 that 'one who aids, abets, counsels, commands, induces, or procures the commission of an act is as responsible for that act as if he committed it directly.' It is the gist of appellant's (sic) contention in this respect that unless there is substantial evidence to support the verdict under the instruction which were given, the verdict cannot be sustained on the ground that the evidence was sufficient under a theory as to which the jury was uninstructed. 'No authority is cited in support of the point so raised and our search fails to reveal any federal case in which it has been expressly considered. * * * 'Whatever the answer to this problem may be, we are of the opinion that the verdict of the jury on the substantive counts did not disregard or go beyond the scope of the instructions given. Appellants' contention to the contrary is answered by the Pinkerton case itself. 'So long as the conspiracy existed, the members acted for each other in carrying it forward. The criminal intent to commit substantive offenses in furtherance of the unlawful project was established by the formation of the conspiracy.' 168 F.2d at page 854. 1 Emphasis added.

01

336 U.S. 577 69 S.Ct. 775 93 L.Ed. 895 FEDERAL POWER COMMISSION et al.v.INTERSTATE NATURAL GAS CO., Inc., et al. PUBLIC SERVICE COMMISSION OF STATE OF MISSOURI v. INTERSTATE NATURAL GAS CO., Inc., et al. MEMPHIS LIGHT, GAS & WATER DIVISION v. INTERSTATE NATURAL GAS CO. et al. ILLINOIS COMMERCE COMMISSION et al. v. INTERSTATE NATURAL GAS CO., Inc., et al. Nos. 109, 188, 209, and 212. Argued and Submitted Jan. 11, 1949. Decided April 18, 1949. [Syllabus from pages 577-579 intentionally omitted] Mr. Bradford Ross, of Washington, D.C., for Federal Power commission. Mr. John P. Randolph, of St. Joseph, Mo., for Public Service Commission of Missouri. Mr. William C. Wines, of Chicago, Ill., for Illinois Commerce Commission. Mr. John T. Cahill, of New York City, for Memphis Natural Gas Company. Mr. Forney Johnston, of Birmingham, Ala., for Southern Natural Gas Company. Mr. William A. Dougherty, of New York City, for Interstate Natural Gas Company and Mississippi River Fuel Corporation. Mr. Charles C. Crabtree, of Memphis, Tenn., for Memphis Light, Gas & Water Division. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This case, here on certiorari, involves the proper disposition of a fund accumulated under a stay order issued by the Court of Appeals pending review of a rate order issued by petitioner. That order reduced the rates for natural gas on sales by Interstate Natural Gas Co. to Mississippi River Fuel Corp , Southern Natural Gas Co., and United Gas Pipe Line Co. for resale to Memphis Natural Gas Co., and on sales by Interstate to Memphis. The Court of Appeals sustained the order, 5 Cir., 156 F.2d 949, and we affirmed its judgment, 331 U.S. 682, 67 S.Ct. 1482, 91 L.Ed. 1742. 2 Interstate deposited in the registry of the court pending review the monthly difference between payments under existing rates and those required under the order of the Commission. Interstate has now moved in the Court of Appeals for a distribution of the fund. The pipe-line companies—Mississippi, Southern, United,1 and Memphis—claimed the fund and asked that it be distributed to them. Petitioner and certain state and municipal agencies also intervened, opposing distribution to the pipe-line companies and claiming that it should be made to the ultimate consumers of the gas or to such others as may be equitably entitled to it. The Court of Appeals, relying on Central States Electric Co. v. Muscatine, 324 U.S. 138, 65 S.Ct. 565, 89 L.Ed. 801, ordered the fund to be paid to those from whom Interstate wrongfully exacted the payments, viz., the pipe-line companies, without prejudice to such rights as others may have to hold those companies accountable for the amounts involved. 5 Cir., 166 F.2d 796. 3 First. Here, unlike Central States Electric Co. v. Muscatine, supra, the distributing companies that seek return of the fund created from their payments of the excessive rates are subject to the jurisdiction of the Federal Power Commission, since they are natural gas companies engaged in the transportation or sale at wholesale of natural gas in interstate commerce. See Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U.S. 498, 62 S.Ct. 384, 86 L.Ed. 371. The claims of these pipeline companies to the fund are therefore determinable solely with reference to federal law, since the Natural Gas Act, 52 Stat. 821, 15 U.S.C. § 717, 15 U.S.C.A. § 717, is designed to regulate the segment of the industry occupied by such distributors. See Interstate Natural Gas Co. v. Federal Power Commission, 331 U.S. 682, 689—690, 67 S.Ct. 1482, 1486, 1487, 91 L.Ed. 1742; Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 610, 64 S.Ct. 281, 291, 88 L.Ed. 333. We may not therefore sustain the action of the Court of Appeals unless it is clear as a matter of federal law that the pipe-line companies are entitled to the fund. 4 The basis of the claim stated in their petitions for intervention is that they are entitled to the fund as of right, since it was created by their payments. But we would be unmindful of the purpose of the Act and the responsibility of the federal courts under it, if we so ruled. The aim of the Act was to protect ultimate consumers of natural gas from excessive charges. See Federal Power Commission v. Hope Natural Gas Co., supra, 320 U.S. at pages 610, 612, 64 S.Ct. at pages 291, 292. They were the intended beneficiaries of rate reductions ordered by the federal commission, though state machinery might have to be invoked to obtain lower rates at the consumer level. The rates charged a wholesaler are part of its costs, reflected in its rate base. Reduction of those costs normally will lead in due course to reduction in its resale rates, unless we are to assume that the passage of the Natural Gas Act was an exercise in futility. It is of course conceivable that a wholesaler might be warranted in keeping all or a part of the rate reduction under the standards of reasonableness prescribed by the Act. But a court would not be warranted in assuming that the rates which have been charged are so low as to be unreasonable. No such presumption attends rates which have been fixed pursuant to rate orders of the Commission. Nor can we make any such presumption as respects rates fixed by the utilities themselves without the compulsion of a rate order. For experience does not indicate that utilities are wont to charge themselves out of business. 5 The pipe-line companies in their petitions for intervention make no claim that their rates have been so low that they are entitled to these refunds as a matter of law. Were that issue tendered the court would need to resolve it and could call upon the Federal Power Commission for information relevant to it. Moreover, if the pipe-line companies passed on to their customers the rate reductions from the date of the Commission's order (as Mississippi alleges it did), they would be entitled to a return of the payments they made into the fund. They would then have done all that was in their power to effectuate the policy of the Act in this regard. But apart from those exceptions, it is the duty of the court to look beyond those companies for the rightful claimants of the funds. It is the responsibility of the court which distributes the fund accumulated under its stay order 'to correct that which has been wrongfully done by virtue of its process.' United States v. Morgan, 307 U.S. 183, 197, 59 S.Ct. 795, 802, 83 L.Ed. 1211. That responsibility plainly cannot be discharged by payment of the fund to those who show no loss by reason of the court's action. 6 It is said that the federal court could not bypass the pipe-line companies without undertaking to pass on the reasonableness of the rates which they have charged—a matter beyond its competence except on review or orders of the Commission. But it is not remaking to determine the equity of the claim of the pipe-line companies to the fund. The federal court, through exercise of its power under § 19 of the Act, issued the stay order under which the fund was accumulated. When a federal court of equity grants relief by way of injunction it has a responsibility to protect all the interests whom its injunction may affect. Inland Steel Co. v. United States, 306 U.S. 153, 59 S.Ct. 415, 83 L.Ed. 557. It assumes the duty to make disposition of the fund in accord with equitable principles. United States v. Morgan, supra, 307 U.S. at page 191, 59 S.Ct. at page 799. If in a particular case the court reaches the question of reasonableness of rates, it does so only for purposes of distributing the fund for whose creation it alone was responsible. It does not fix or prescribe rates for the past or the future. The reasonableness of rates charged by the companies who claim the fund is wholly ancillary to the problem of determining what claimants are equitably entitled to share in it. See Atlantic Coast Line R. Co. v. Florida, 295 U.S. 301, 55 S.Ct. 713, 79 L.Ed. 1451; United States v. Morgan, supra. 7 Second. The problem is somewhat more complicated if distribution of the fund is to be made to claimants other than the pipe-line companies. The latter sell gas to at least two types of customers—industrial users over whose rates the Federal Power Commission has no jurisdiction2 and over which state regulatory bodies may or may not, depending on local law; and numerous distributing companies selling to customers in eight states. If the pipe-line companies had passed the rate reductions on to the distributing companies those reductions may or may not have reached the ultimate consumers. We likewise do not know whether the reductions would have reached the industrial users either by terms of the contracts or by virtue of the assertion of regulatory authority. 8 If in this situation local law rpovides a standard for determining which of two or more claimants would have been entitled to the benefits of the rate reduction, the federal court should apply it. If clear and speedy state remedies are available, the federal court might hold the fund until those having the final say on the state law questions have spoken. Cf. Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 483, 60 S.Ct. 628, 630, 84 L.Ed 876; Spector Motor Service v. McLaughlin, 323 U.S. 101, 65 S.Ct. 152, 89 L.Ed. 101. But in absence of uch a showing the federal court in the interest of dispatch should proceed to determine the questions, relying on such sources of local law as may be available, including information from state regulatory agencies. The federal court may in its discretion disburse the funds directly to either the local distributing companies or the ultimate consumers or work out an administrative scheme whereby the distribution is made pursuant to directives of state agencies. 9 In conclusion, the task of the federal court in distributing the fund accumulated by virtue of its stay order is to undo the wrong which its process caused. The basic problem, therefore, is not to fix rates but to determine who suffered a loss as a result of the court's action in granting the stay. What in fact would have happened as a consequence of federal or state law if the stay had not been issued, no one can know for a certainty. But the federal court must make its prognostication, whether an excursion into federal or state law questions is entailed. Distribution of the fund should not involve prolonged litigation. It is an administrative matter involving the exercise of an informed judgment by the federal court and should have the flexibility and dispatch which characterize the administrative process. 10 Reversed. 11 FRANKFURTER, Justice, concurring. 12 While agreeing in substance with Mr. Justice DOUGLAS's opinion, because of the conflict of views to which the case has given rise I deem it desirable to spell out with particularity what I regard as the controlling considerations. 13 1. The controversy concerns the proper disposition of a fund impounded in the Court of Appeals by virtue of the Court's suspension of a rate reduction order of the Federal Power Commission. Interstate paid into the registry of the court the sums collected by it in excess of the rates fixed by the Commission. After the order was finally sustained Interstate moved the court for distribution of the fund to the three companies which, as customers of Interstate, paid the unlawfully exacted amounts. The motion was supported by the three purchasers from Interstate; it was resisted by the Federal Power Commission which asked that distribution be made to the ultimate consumers; it was also resisted by the City of Jackson and by the regulatory commissions of Illinois and Missouri, which likewise urged that distribution be made to the ultimate consumers within their respective territories. One of Interstate's purchasers, United Gas Pipe Line Company, although intervening as a claimant, advised the court that it would pass on its share of the refund to the Memphis Natural Gas Company, to which United had resold the gas purchased from Interstate. 14 2. The court below thus had before it claims upon the fund by two immediate purchasers from Interstate, which asserted their right to the amounts paid into the fund by them, by a third purchaser from Interstate which made claim upon the fund but merely as a conduct for its passage to a subpurchaser, and by public agencies—national, state and municipal—which urged that the entire fund be distributed to the ultimate consumers. 15 The respondents—Interstate and the three immediate purchasers from it—basically rely on Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531, 38 S.Ct. 186, 62 L.Ed. 451, in urging that the fund should go to the immediate depositors from whom it was found to have been wrongfully exacted. They deem that case to be the foundation of our decision in Central States Electric Co. v. City of Muscatine, 324 U.S. 138, 65 S.Ct. 565, 89 L.Ed. 801. The Government on the other hand asks that the Muscatine case be overruled and that the fund should go to the ultimate consumers. 16 In the Muscatine case this Court rejected the notion that as between a utility like Interstate and its immediae purchasers a rate reduction makes the distributors mere conduits of the reduction for the exclusive benefit of the ultimate consumers. In short, the rationale of the M scatine case is that that which is in fact not true in the process of rate-fixing ought not to be erected into a principle of law merely because the effect of a rate-reduction is postponed through an exercise of the right to judicial review afforded by the Congress. 17 3. It would, therefore, appear to be clear that the judicial duty is to deal fairly with a trust fund held to await the with a trust fund held to await the it may be distributed on the basis of what would have taken place had the Power Commission's order gone into effect at once. 18 The task, then, for the Court of Appeals is to reconstruct, as far as it can possibly be done, what would have happened had no fund accrued. Reasons of equity produced the fund; equitable considerations must determine its distribution. The governing principle is that of unjust enrichment. Since the task of the court is to place the parties in the position in which they would have been had there not been a postponement of the effective date of the rate-reduction, it is now the duty of the court to make that retrospective determination not by unfounded assumptions erected into rigid legal rules, but by an ascertainment of what actually would have happened contemporaneously had purchasers from Interstate obtained their gas at the lower rate. 19 4. A utility is entitled to charge a reasonable rate. It would be dealing with a fiction and not a fact to hold as a matter of law either that the immediate purchasers from Interstate should keep the benefit of the reduced rate or that it should all go to the ultimate consumers. Whether the three purchasers or the intervening distributors are entitled to any part of the reduction depends on the ascertainable condition of the three purchasers from Interstate and the intermediate purchasers from them. A merely compensatory rate below which no rate may be fixed by a regulatory commission may not be a reasonable rate. See Brandeis, J., in Southwestern Bell Telephone Co. v. Public Service Commission, 262 U.S. 276, 296, 43 S.Ct. 544, 549, 67 L.Ed. 981, 31 A.L.R. 807. For various reasons a utility may charge, as is well known, less than what as a matter of law it could be compelled to charge. On the other hand, it may charge the maximum of what is reasonable. 20 To distribute the entire fund among the immediate purchasers from Interstate may give them a complete windfall, since they might have been compelled, under their duty to charge only a reasonable rate, to reduce their rates so as to keep none of the Interstate reductions. Since all these purchasers are subject to regulation by the Power Commission, the Power Commission could have ordered such rate reductions in whole or in part. On the other hand to take it all away from them now might work an injustice because they might have been allowed to keep at least part of the reduction. As to the intermediate purchasers that were not subject to the Federal Power Commission, the allowable retention of any part of a reduced rate from a distributor would have turned contemporaneously on state law. To deny both these classes of the intermediate purchasers the right to establish just claim against the fund and to distribute it all among the consumers, moreover, would inevitably leave a sizeable unclaimed amount, and this, of course, would have to go to the depositors as the residuary claimant—it would have to go, that is, to Interstate, the one party least entitled to any of the fund. 21 These arbitrary alternatives—to distribute the whole fund to the immediate purchasers from Interstate or to distribute it all to the ultimate consumers—have at least the support of logic though not of justice. A suggested compromise to go beyond the immediate purchasers and at the same time stop short with those purchasers over whom the Federal Power Commission has authority—is said to be justified by the fact that a federal court cannot engage in rate regulation. This suggestion has the support neither of logic nor of justice. If a federal court is arred from inquiring, because such an inquiry amounts in effect to rate regulation, what would have been the consequences to all those affected had the reduction of Interstate's rate gone into immediate effect, rates administered by the Federal Power Commission should be no more open to such an inquiry than are those beyond the power of the Commission. And if it would be unjust to let an immediate distributee which had passed on the higher rate to its purchasers retain the benefit of the reduction, it would be equally unjust to let any succeeding distributee which had done the same thing enjoy the benefit merely because it was the last distributee subject to the Commission's jurisdiction. 22 At all events, in preventing unjust enrichment a court of equity is not exercising the functions of rate-making; it is neither awarding reparations for the past nor fixing a future schedule as does a rate-regulating body. Granting that a federal court does not have the power to regulate rates, it does not follow that in discharging the duty to distribute a fund of its own creation it is barred from an inquiry which has some aspects though I believe very minor ones—that would also appear in a rate proceeding. In short, issues that may be pertinent to a rate investigation before a regulatory commission are not therefore beyond the power of judicial inquiry when they arise in a totally different relation. 23 5. Accordingly, the task for the court below is to determine in 1949 how the Interstate rate reduction would have affected all the intermediate distributors in '43 and '44 had it not been suspended by the court's injunction. The Court of Appeals has inherent powers to bring to its aid all effective means to discharge this task. This Court, in Ex parte Peterson, 253 U.S. 300, 40 S.Ct. 543, 64 L.Ed. 919, showed the resources available to our District Courts even in an action at law when due regard must be had for the requirements of the Seventh Amendment. The more clearly available are procedures for doing justice where a court of equity is called upon to distribute a trust fund of its own creation. 24 In the light of the foregoing, the Court of Appeals should ask the Federal Power Commission for an advisory report as to what the Commission might have determined had it in the original proceeding for the reduction of the rates of Interstate exercised its power to bring in all the parties. There is nothing novel in this. District Courts may call upon the Federal Trade Commission to help shape decrees in Sherman Law cases. To be sure, the Clayton Act explicitly so provides. But a court of equity has inherent powers to invite such help from a great agency of the Government. While the Federal Power Commission could, if it chose, decline to render that help, it is inconceivable that it would do so. As to the intermediate purchasers, subject not to the Power Commission but to State or city regulation, the local agencies could be similarly resorted to for aid in the ultimate problem before the lower court of distributing a commingled fund as to which none of the interested parties can fairly be said, as a matter of law, to have an obvious, demonstrated claim. 25 Various obstacles are conceived to stand in the way of the lower court's fulfillment of this task. But it is, to say the least, premature to conjure up abstract difficulties which, as a practical matter, may evaporate in the light of the informed advice which these various regulatory agencies may be able to furnish readily on the basis of their available records of the financial condition of the utilities subject to them. It will be time enough to distribute the fund by some makeshift rule of thumb if what is concededly a rule of intrinsic fairness should be found judicially unenforceable. Accordingly, I would remand the case to the Court of Appeals to take steps consistent with the foregoing views. 26 By Mr. Justice JACKSON. 27 Mr. Justice BURTON and I view this case in a different light than do any of our brethre but we have joined in the judgment and the opinion of Mr. Justice DOUGLAS because we deem it important that instructions to the court below carry the concurrence of a majority of this Court. We agree with much but not all of that opinion and where our views differ we are closer to that opinion than to other views expressed here. We repeat our concurrence so that there may be no misunderstanding but with also be express for the record our individual views. The way this case appears to us is this: 28 1. The three pipe-line companies whose excessive payments made up this fund may not, under the terms of the impounding order, have an absolute right to recover it. However, since this Court found that the money was illegally exacted from them, it would seem to make at least a prima facie case for returning it to their possession. The minimum to which they are entitled is a chance to be heard as to whatever claim they may have to it. As these companies are subject to the Federal Natural Gas Act, a federal court might properly weigh their claims under federal law. 29 2. Assuming, however, what is not improbable, that none of the pipe-line companies establishes a claim to the fund, the next in right to receive it would be their customers, the local distributing companies. The latter are under protection of federal law as to the rates which may be exacted from them by the pipe-line companies but are in no respect under federal law as to the rates they may charge customers. If all of the federal power exerted in the Natural Gas Act had been exercised by the Federal Power Commission, it could not reach or control their customer relations. We do not see, therefore, how a federal court in this litigation can derive from the Act any greater power to enter the local field with refunds than the Power Commission had to enter it for rate-making. There are many legal and practical reasons why the court's function should not be expanded beyond the point where Congress ended the functions of the PowerCommission. 30 3. The manner and amount by which any repayments to distributing companies would be reflected in reduced rates to consumers, and therefore in rebates, is exclusively for state law. Twenty-one of these distributing companies are involved and they operate in eight states, each with its own principles to govern local rate-making and separate authorities to apply them. We solve no problem by saying that computation of this refund is not rate-making. Of course it is not, but it is so like unto it that no one suggests that any body of law except that of rate-making is applicable. Disguise it with what sophistry we will, the disposition of refunds as between operating companies and customers must be generally based on the local law of rate-making or on no law at all. Some of these companies and their customers are located within the territorial jurisdiction of the Court of Appeals for the Fifth Circuit; others are in the Sixth, Seventh and Eighth Circuits. I know of no legal or practical justification for requiring the Fifth Circuit Court of Appeals to undertake interpretation and application as an original matter of the laws of eight states, several of them beyond its jurisdiction. 31 4. The application of these funds, if they are held to go to the local distributing companies, present difficult questions of policy which it is the responsibility of the states to resolve in their own ways. The federal court should not undertake to resolve them, even if they were less complex. These problems are not solved or evaded by saying that refunds shall go to consumers rather than to the companies. It oversimplifies these problems to treat consumers in the abstract as a class all alike. And it does not dispose of the problems to declare that refunds should be on 'equitable principles' as if there were a defined and accepted body of principles of equity on this subject. Equity in the historical sense—equity jurisprudence—has no guidance to give beyond maxims, such, for exampl , as 'equality is equity.' But here, what is equality? Of course, what no doubt is meant is that the court should apply a sort of natural justice based on popular notions of right dealing. But this does not answer some of the concrete questions which someone must face in final disposition of these funds. I shall mention but few. 32 At the very outset one is faced with the question as to what is an 'equitable' basis of refund as between industrial and domestic consumers. Direct sales to industrial consumers by the three pipe-line companies amounted to 63% of the total for Mississippi River Fuel Company, 18% in the case of Southern Natural Gas Company, and 11% for United Gas Pipe Line Company. In addition to this, other industrial consumers may be served by local distributing companies. The Federal Power Commission proposal, which this Court seems to think should prevail, is that refunds both to industrial and domestic consumers be calculated by dividing the money in proportion to feet of gas sold to each one. On this basis, the Power Commission's exhibit proposes a refund to direct industrial consumers alone of over a million dollars from this fund. The Commission does not tell us the prices paid by various classes of consumers. But it is common knowledge that, for a variety of reasons, industries get a much lower price per m.c.f. than domestic users. If we assume it is 50%, then the refund would repay industrials twice as large a proportion of what they have paid for gas per m.c.f. as it would household users. Is this 'equity'? In my dissent in Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333, I pointed out the uneconomic use of gas in industry and the waste and exhaustion of irreplaceable natural resources that it causes, and the great differential that exists between their low contract price and the price paid by domestic users. I have great doubt whether the industrial users have any just basis for participating in this refund; but if they could, and they certainly are entitled to try, their share should not be greater than their proportion of the revenues contributed, rather than of their proportion of the consumption. The latter measures only the benefits they already have derived from exhausting the Nation's supplies, not at all what they have contributed to the fund. This Court refused to consider these equities, as did also the Power Commission, in the Hope case. Why not then leave the states free to solve the issue? Some of the states may have an intelligent policy with reference to the rapid depletion of our gas reserves, vis a vis domestic and industrial consumption, and the relation of price to uneconomic uses. The Federal Government has none. 33 The Power Commission has furnished a tabulation showing the share of each local distributing company under its theory. But it has not provided any of the data which would disclose the magnitude and complexity of the task it is asking us to visit upon the Court of Appeals by directing it to go beyond this and distribute each company's share among its consumers. By reference to Moody's Manual, however, we can learn the approximate number of customers served by each company. Then by applying the Power Commission's tabulation of the share of refunds, it would appear that refunds for some companies would be so trivial that a state supervising authority might conclude that to cover this refund into the current revenues of the operating company for whatever effect it might have on its present or future rates would be a more sensible procedure than to spend it in expense of special proceedings to refund to consumers. For instance, Arkansas-Louisiana Gas Co. serves 142,481 customers in 109 communities. The Power Commission allocates it $20,911, or an average 15¢ per consumer. The Illinois Power serves 116,000 customers in 56 communities and is allocated $50,065, or about 43 per consumer. Birmingham Gas serves 61,000 consumers in 9 communities and is allocated $30, 33, making an average refund of about 49¢. 34 The foregoing estimate of consumer refunds assumes an equal amount to each consumer. Another permissible basis, and I should think, a fairer one where substantial amounts were involved, would be a refund in ratio to the bills paid for gas. The Power Commission, however, if consistent, would use another method and refund in proportion to the feet of gas purchased by the consumer. Different local conditions precipitate some nice questions in applying any fair method as between consumers. From Moody's Manual, for example, we learn that one of the largest of the distributing companies, the Atlanta Gaslight Co., with serves approximately 133,000 consumers in 28 communities, has a graduated scale of rates, so that consumers pay different rates for gas consumed in different quantity brackets. I should think the practical effect of its schedule would be that a very large consumer would make an average payment much less per thousand feet than would a moderate household consumer. Equality of refund may not be equality of treatment. It will take more than equalitarian generalities to get this cash into consumers' hands. Is not the manner of refund under such local conditions one to be worked out by local authorities rather than the federal court of a distant circuit? 35 The problems do not end here. Consumers during what period are entitled to refund? Certainly the rate reduction which caused this fund to accumulate could not in normal course have reached local retail consumers until sometime after reduction in wholesale rates, and the period would differ according to local conditions. The individuals who are entitled to refund, for whatever period may be adopted, must be identified and questions settled as who is entitled to the refund of a deceased consumer, what becomes of the share of one who has removed or is unknown. Disputes between landlord and tenant, husband and wife, and many other questions will arise; all of which are for local authorities. 36 For these reasons it seems to us that the functions of the federal court end when it has granted these refunds to the last purchaser whose purchase price the federal authority can lawfully reduce. This would be the distributing companies. From there on it is a local problem with which neither the Power Commission nor the court has any legitimate concern. The machinery of some of the states may be somewhat inadequate for dealing with the problem, but that does not, in our view, warrant usurpation of their functions. 37 However, for reasons stated at the beginning of this opinion, Mr. Justice BURTON and I have joined the judgment and opinion of the Court. 38 Mr. Justice BLACK, concurring in part and dissenting in part. 39 I concur in reversal of the judgment of the Court of Appeals, but dissent from the directions given that court for disposition of the impounded funds. In the first place I think those directions rest on erroneous legal principles. Secondly, without precise definition of issues or standards, the directions impose an almost impossible task on the Court of Appeals, a task which is bound to dissipate a large part of the funds in diverse, protracted, involved and confused litigation. Furthermore, I see little assurance that the fund's remnant at the end of this litigation could ever reach the consumers who are in my judgment the equitable and legal beneficiaries of the funds. 40 Acting pursuant to the Natural Gas Act,1 the Federal Power Commission ordered the Interstate Natural Gas Company to reduce its rates to certain wholesale pipe-line companies. Challenging this order as illegal, the wholesale companies sought and obtained from a District Court an injunction against enforcement of the rate reduction order. By reason of the injunction the pipe-line companies were compelled to continue to pay the higher gas rates. But the court required the Natural Gas Company to make monthly payment into court of amounts equal to the rate reduction. For more than four years these funds have been collected and paid into court. When this case was submitted, the total amount collected was in excess of two and a half million dollars. The rate reduction order was sustained by this Court2 and consequently Interstate is not entitled to and asserts no claim to the fund. The wholesale pipe-line companies claim it on the ground that but for the injunction they would have obtained the gas at the lower rate.3 The Federal Power Commission and certain state agencies here contend that since the purpose of the Natural Gas Act was to provide benefits to the ultimate consumers the total impounded funds should be distributed to the consumers. 41 First. I agree with the Court that the aim of the Federal Act was to protect ultimate consumers of gas from excessive charges. To protect the ultimate consumer, however, the Act went no further than to fix the interstate rates of producers and wholesalers. Congress intended that these federal rate reductions would lower the costs of gas to local retailers, thus enabling state and local agencies to fix lower consumer rates on the federally fixed lower wholesale rates. Consequently, where courts leave the Act's scheme free to function, ultimate consumers of gas get no benefits from the federally reduced producer rates until and unless state or local authorities fix reduced rates for companies whose sales fall within their respective jurisdictions. Under such circumstances rate relationships and cost consequences as between consumers and dealers under state jurisdiction would raise questions of state law only. But here, the normal consequences of the valid federal rate reduction were not allowed to take place. The injunction placed an insuperable obstacle to state reduction of wholesale or retail rates on the basis of the federal rate reduction order. Thus the court's stay blocked the congressional mechanism intended to produce lower consumer rates. Central States Electric Co. v. Muscatine, 324 U.S. 138, 149, 65 S.Ct. 565, 570, 89 L.Ed. 801 (dissenting opinion). Furthermore, no practical remedy is available in the state courts or state or federal regulatory agencies to determine retroactively what is a proper distribution of the impounded funds. The judicial stay therefore effectually frustrated the congressional purpose to provide a timely opportunity for state or national regulatory agencies to accord consumers the Act's benefits. Consequently, rights in the fund as between ultimate consumers and the pipe-line companies must be determined under the new situation created by the federal court. 42 Second. Different from the Court, I think that distribution of the fund in this new situation is wholly a matter of federal law and that the fund should be distributed without a futile effort to determine the extent consumer rates might have been reduced by state or national regulatory agencies had they been left free to act on the reduced rate cost of gas. It was a federal court acting under authority of federal law that created the fund. And having deprived consumers of an opportunity to get the reduced rates Congress intended them to have as the result of an integrated federal-state course of conduct, it became the duty of the federal court to administer this fund under federal rules that would as nearly as possible afford these congressionally intended benefits to consumers. Nothing short of this will accord with the congressional purpose or with equitable principles by which the court must be governed in administering the fund. Inland Steel Co. v. United States, 306 U.S. 153, 59 S.Ct. 415, 83 L.Ed. 557; United States v. Morgan, 307 U.S. 183, 59 S.Ct. 795, 83 L.Ed. 1211. 43 All ga the wholesale price of which was affected by the Commission's order had its ultimate price to the consumer fixed by law or by agreement of parties.4 In neither event can it be assumed that the price paid failed to give the seller a reasonable value. Under such circumstances, where rates were fixed by law or contract on the basis of the high wholesale rate, neither statutes nor equitable principles require the Court of Appeals to seek standards of reasonableness different from those under which gas merchants voluntarily had already sold their product to retailers and consumers. All regulatory statutes permit utilities to complain of unreasonable rates, and the failure of these utilities to prosecute claims for excess rates until this windfall was in sight should bar them from making retroactive claims now. And of course, where the price was fixed by voluntary contracts, the court should not be required to re-examine those contracts on the naive assumption that consumers took an unconscionable advantage of the pipe-line companies. 44 My belief is that under the circumstances here the only way even partially to carry out the purpose of Congress to afford consumer relief is by distributing this fund to the consumers. This itself will impose a tedious, onerous, and perhaps expensive burden on the court and the consumers. Such a burden, however, is one of the prices to be paid for the practice of judicial suspension of rate orders. But the burden in distribution to consumers would be small in comparison to that imposed by requiring the court in 1949 and 1950 to make expensive and extensive explorations to speculate on what rates state administrative agencies would have found reasonable in separate years from 1943 to 1947.5 Neither the procedure I suggest nor that adopted by the Court can achieve with scientific accuracy the result that would have followed had the court not suspended the rate reduction order. But under the Court's plan to require the Court of Appeals to reconstruct hypothetical rate situations in several states a major part of the funds might be dissipated in a costly but vain search for an unattainable goal.6 Consumers at least can get a substantial part of the funds under the procedure I suggest.7 Nor can I see any possible intrusion into state functions by following such a course. 45 Neither state laws nor state courts are responsible for the tangled situation here. I cannot see where it could p ssibly offend the states or encroach on their power for the federal court to distribute these funds to the very state people the federal law was passed to protect. And the state representatives here arguing for the distribution of this fund to the ultimate consumers, citizens of their states, are apparently unable to detect in distribution to these consumers any invasion of state rights by the federal courts. 46 This seems an appropriate time to reverse Central States Electric Co. v. Muscatine, 324 U.S. 138, 65 S.Ct. 565, 89 L.Ed. 801. I regret to see that holding survive even in part. 47 Mr. Justice MURPHY and Mr. Justice RUTLEDGE join in this opinion. 1 United claimed an allocable share on behalf of Memphis to which it had resold the gas which it had purchased from Interstate. 2 § 1(b). 1 52 Stat. 821, 15 U.S.C. § 717, 15 U.S.C.A. § 717. 2 Interstate Natural Gas Co. v. Federal Power Commission, 331 U.S. 682, 67 S.Ct. 1482, 91 L.Ed. 1742. 3 One pipe-line company claims to have passed on the rate reduction to its customers which if proved would put it in an entirely different category. 4 As the Court points out, industrial purchasers' rates may not have been fixed by law but by contracts. 5 How is this reasonableness to be determined, on the fair value theory, the reproduction cost theory, or some other theory? And how many more years would it take the Court to complete the several extensive inquiries required to reach its conclusions as to reasonableness of the prices charged by the several companies in the several states where they sold gas? See McCart v. Indianapolis Water Co., 302 U.S. 419, 428—439, 58 S.Ct. 324, 328 333, 82 L.Ed. 336 (dissenting opinion). 6 It is interesting to note the unchallenged assertion in the Government brief that although in Central States Electric Co. v. Muscatine, 324 U.S. 138, 65 S.Ct. 565, 89 L.Ed. 801, 'this Court required that the way be left open for the ultimate consumers to utilize the remedies, if any, provided by local law, no such proceeding has been brought.' The illusion that state relief is somehow available to the consumers here seems to persist despite the realities that consumers in the Central States case, similarly situated to the consumers here, have not received a dime from the 'available' state remedies. 7 Apprehension is expressed in this Court that the procedure I suggest would result in making the producing company the residuary beneficiary of funds not claimed by consumers. Such an apprehension is not justified since the Court of Appeals can direct any unclaimed consumer funds to be distributed to whatever company might show a superior equity.

78

336 U.S. 641 69 S.Ct. 787 93 L.Ed. 938 UNITED STATESv.JONES. JONES v. UNITED STATES. Nos. 135, 198. Argued Feb. 2—3, 1949. Decided April 18, 1949. Rehearing Denied May 31, 1949. See 337 U.S. 920, 69 S.Ct. 1150. Mr. Moultrie Hitt, of Washington, D.C., for Jones. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for United States. [Argument of Counsel from page 642 intentionally omitted] Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 This controversy began in 1931, when respondent's predecessors as receivers of the Georgia & Florida Railroad filed an application with the Interstate Commerce Commission for a reexamination of rates then applicable to it for transporting the mails. Since then, in one form or another, the dispute has found its way back and forth through the Commission and the courts, finally to come here now for the second time. See United States v. Griffin, 303 U.S. 226, 58 S.Ct. 601, 82 L.Ed. 764. 2 Through all these years the carrier and the Commission have been at odds over whether the railroad is entitled to an increase in the rates prescribed for its service for the period beginning April 1, 1931, and ending, as covered by the present suit, February 28, 1938.1 The case is now here on certiorari to the Court of Claims, 335 U.S. 883, 69 S.Ct. 231, which had rendered a judgment awarding respondent $186,707.06 as increased compensation due for the years 1931 to 1938, Griffin v. United States, 77 F.Supp. 197, 110 Ct.Cl. 330, contrary to the findings and orders of the Commission denying any increase beyond the amounts already paid for that service under the rates fixed by it. Railway Mail Pay, Georgia & Florida R. Co., 192 I.C.C. 779; id., 214 I.C.C. 66. I. 3 A statement of the background and course of the litigation will aid in understanding the rather complicated problems presented, both on the merits and affecting jurisdiction. 4 In 1916 Congress enacted the Railway Mail Pay Act. 39 U.S.C. §§ 523—568, 39 U.S.C.A. §§ 523—568. This embodied a comprehensive scheme for regulating transportation of the mails by railroad common carriers. Such carriers were required to transport the mails pursuant to the Act's provisions. These included that the carriers should be compensated at 'fair and reasonable rates' to be fixed and determined by the Interstate Commerce Commission. The rates were to be established only after notice and hearing. But after six months from the entry of a rate order the Postmaster General or a carrier was authorized to apply for a reexamination of the order. 39 U.S.C. §§ 541, 542, 544—554, 553, 39 U.S.C.A. §§ 541, 542, 544—554, 553. 5 The Commission was authorized to prescribe 'the method or methods by weight, or space, or both, or otherwise, for ascertaining such rate,' 39 U.S.C. § 542, 39 U.S.C.A. § 542, and for the same purpose 'to make such classification of carriers as may be just and reasonable and, where just and equitable, fix general rates applicable to all carriers in the same classification.' 39 U.S.C. § 549, 39 U.S.C.A. § 549. Other sections specify and define four classes of service, namely, full railway post-office car service, apartment service, § orage-car service and closed-pouch service. 39 U.S.C. §§ 525—530, 39 U.S.C.A. §§ 525—530.2 Only apartment service and closed-pouch service are involved in this case. 6 On December 23, 1919, after extended investigation and hearings, the Commission entered its first general mail rate order. Railway-Mail Pay, 56 I.C.C. 1. This adopted the space basis for determining 'fair and reasonable rates.' On July 10, 1928, in proceedings for reexamination the Commission granted a general increase of 15% over the preexisting rates. Railway Mail Pay, 144 I.C.C. 675. The Georgia & Florida Railroad accepted these general rates until April 1, 1931. 7 At that time it applied to the Commission for a reexamination of the rates as applied to itself. The application was heard and determined by Division 5. On May 10, 1933, the Commission denied any increase, holding the general rates established by the order of July 10, 1928, fair and reasonable as applied to this carrier. Railway Mail Pay, Georgia & Florida R. Co., 192 I.C.C. 779. This order is in substance, though not technically, the one now involved. 8 After the Commission had denied reconsideration, the railroad sued in the United States District Court for the Southern District of Georgia to set aside the Commission's order. A special three-judge court was convened, cf. the Urgent Deficiencies Act, former 28 U.S.C. §§ 41(28), 47 (1948 Revision, 28 U.S.C.A. §§ 1336, 2284, 2325); held the order unlawful; and remanded the case to the Commission for further proceedings. This decree was filed on January 23, 1935. 9 Thereupon the full Commission conducted further hearings and in a report filed February 4, 1936, again found the rates previously fixed to be fair and reasonable in their application to the Georgia & Florida Railroad. The order therefore denied any increase. Railway Mail Pay, Georgia & Florida R. Co., 214 I.C.C. 66. 10 Again the carrier resorted to the District Court, filing a supplemental bill. And again that court, composed of the same three judges, held the Commission's order unlawful in a decree filed on February 23, 1937. The Government appealed directly to this Court, which, in United States v. Griffin, supra, held that the order was not of a type reviewable under the Urgent Deficiencies Act.3 Accordingly, on February 28, 1938, the District Court's judgment was reversed with directions to dismiss the bill and without determination of the cause on the merits. 11 After nearly four years the receivers renewed the litigation by filing this suit in the Court of Claims. The amended petition sets forth in some detail the history of the previous stages of controversy before the Commission and the courts. The carrier's basic claims on the merits are substantially the same as in those proceedings. They are, in effect, (1) that the Commission's orders denying any increase are confiscatory, in that the rates prescribed by the general rate order on July 10, 1928, and continued in effect specifically as to this carrier by the orders of May 10, 1933, and February 4, 1936, do not afford just compensation under the Fifth Amendment on the ground that they do not provide for payment of the cost of the service rendered plus a reasonable return upon invested capital allocated to that service; and (2) that the Commission's orders do not afford the 'fair and reasonable' compensation required by the Railway Mail Pay Act.4 Both claims rest upon attacks made on the Commission's findings as b ing unsupported by the evidence before it and on its conclusions as being contrary to that evidence. 12 To sustain jurisdiction in the Court of Claims, respondent rests upon § 145 of the Judicial Code, 28 U.S.C. s 250, now 28 U.S.C. § 1491, 28 U.S.C.A. § 1491, and upon statements made in part Fourth of the opinion in United States v. Griffin, 303 U.S. at page 238, 58 S.Ct. at page 607, 82 L.Ed. 764.5 II. 13 Although the Railway Mail Pay Act contains no explicit provision for judicial review of orders of the Interstate Commerce Commission fixing rates of pay for transporting the mails pursuant to authorizations of the Postmaster General for such service, it had been thought, until the decision in United States v. Griffin, supra, that such orders were of the kind reviewable under the Urgent Deficiencies Act. The affect of that decision, however, was to rule out such orders as those now in question from the jurisdiction conferred by the latter Act. 14 While the 'negative order' basis for the Court's ruling is no longer effective, Rochester Telephone Corporation v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147, the alternative grounding remains in full force. 303 U.S. at page 234, 58 S.Ct. at page 605, 82 L.Ed. 764.6 Since the very orders now in issue were involved in the Griffin case, it is settled that the railroad or its receivers had no recourse to a district court, under the Urgent Deficiencies Act, for securing review of the Commission's order or relief of the type now sought. 15 The Court in the Griffin case, however, was not content to rest merely with this negative jurisdictional ruling. In part Fourth of the opinion the Court went on to say that its ruling did not 'preclude every character of judicial review.' 303 U.S. at page 238, 58 S.Ct. at page 607, 82 L.Ed. 764. The opinion then suggested three possible other methods, two in the Court of Claims and one in the district courts. 16 Without doubt it was due to these suggestions that respondent's predecessors chose to bring this suit in the Court of Claims. The language in which the suggestions were made has assumed such importance, in view of the problems raised by the receivers' choice in following them, that it seems wise here to quote in full what the Court said: 17 'If the Commission makes the appropriate finding of reasonable compensation but fails, because of an alleged error of law, to order payment of th full amount which the railroad believes is payable under the finding, the Court of Claims has jurisdiction of an action for the balance, as the claim asserted is one founced upon a law of Congress. Missouri Pacific R. Co. v. United States, 271 U.S. 603, 46 S.Ct. 598, 70 L.Ed. 1109. Compare United States v. New York Central R. Co., 279 U.S. 73, 49 S.Ct. 260, 73 L.Ed. 619, affirming (New York Central R. Co. v. United States), 65 Ct.Cl. 115, 121. And since railway mail service is compulsory, the Court of Claims would, under the general provisions of the Tucker Act, 24 Stat. 505, have jurisdiction also of an action for additional compensation if an order is confiscatory. United States v. Great Falls Mfg. Co., 112 U.S. 645, 5 S.Ct. 306, 28 L.Ed. 846; North American Transportation & Trading Co. v. United States, 253 U.S. 330, 333, 40 S.Ct. 518, 64 L.Ed. 935; Jacobs v. United States, 290 U.S. 13, 16, 54 S.Ct. 26, 78 L.Ed. 142, 96 A.L.R. 1. Moreover, as district courts have jurisdiction of every suit at law or in equity 'arising under the postal laws,' 28 U.S.C., § 41(6) (1948 Revision, 28 U.S.C.A. § 1339), suit would lie under their general jurisdiction if the Commission is alleged to have acted in excess of its authority, or otherwise illegally. Compare Powell v. United States, 300 U.S. 276, 288, 289, 57 S.Ct. 470, 81 L.Ed. 643.' 303 U.S. at page 238, 58 S.Ct. at page 607, 82 L.Ed. 764. 18 Respondent and the Court of Claims are at odds over whether the carrier's claims now asserted fall under the first or the second class of cases of which this Court said the Court of Claims would have jurisdiction. Respondent insists, both in the complaint and in the brief filed here, that his claim is grounded on the basis that the Commission's orders are confiscatory and have the effect of depriving the carrier of its property and services without just compensation due under the Fifth Amendment. 19 On the other hand, the Court of Claims expressly disclaims that it was exercising any jurisdiction over constitutional matters. This was done in denying the carrier's claim to interest on the award.7 In the court's view therefore the jurisdiction which it was exerting fell within the first class of cases stated in the Griffin opinion to be within the Court of Claims' jurisdiction, mamely, where the Commission makes the appropriate finding of reasonable compensation but fails, because of an alleged error of law, to order payment of the full amount the carrier believes payable under the finding. 20 The Government, however, insists that the Court of Claims did not exercise jurisdiction under this category. It disputes that the court 'gave effect,' as the court stated,8 to the Commission's order or ordered payment of any balance due under the Commission's finding. Rather, the Government urges, the court flouted that order, substituted its own judgment for the Commission's concerning the appropriate order to be entered, and in effect entered a wholly new and different order from that made by the Commission, together with a money judgment giving its own view effect. 21 Ordinarily it would be sufficient for us to take the Court of Claims at its word and accept its stated view of the nature of the jurisdiction it was exerting. But the three differing views of its action taken by itself, b the Government, and by the respondent, together with the difficulties each raises on the record for disposing of the cause, compel us to examine those claims. 22 If, as the court asserts, it was 'giving effect' to the Commission's order and doing so without substituting its own judgment for the Commission's as to what was a 'fair and reasonable rate,' there should be little difficulty in sustaining the jurisdiction;9 that is, unless respondent is right in his contention the the Court was caled upon to and, notwithstanding its disclaimer, in fact did adjudicate his claim for just compensation under the Fifth Amendment. In that event and on the assumption that the award was proper on the merits, reversal would be required in order that the court might make appropriate allowance for interest.10 23 On the other hand, if the Government is correct in the view that the court did not give effect to the Commission's order, but instead disregarded that order and substituted its own judgment for the Commission's concerning what constituted a 'fair and reasonable rate,' the question arises whether the Griffin statements were intended to give that power to the Court of Claims under either category of jurisdiction the opinion said that court might have. III. 24 The Railway Mail Pay Act gives the Interstate Commerce Commission exclusive jurisdiction to determine 'fair and reasonable rates.' The Urgent Deficiencies Act provided for judicial review of the Commission's rate orders in 'cases brought to enjoin, set aside, annul, or suspend' such orders. No power was given the reviewing court to revise them when found invalid, or to render judgment for any amount thought to be due under such a revision. 25 It would be strange, indeed anomalous in the extreme, if this Court by its Griffin pronouncements intended to confer on the Court of Claims, by implication in the cases there held not reviewable under the Urgent Deficiencies Act, a broader, more conclusive and final power of judicial review than that Act expressly provided for like orders within its purview. The assumption is hardly tenable that Congress intended such a result when it enacted the Railway Mail Pay Act or the Urgent Deficiencies Act or both. Congress in no instance has expressly empowered the Court of Claims to review rate orders of the Commission,11 either to set them aside or to render a money judgement for additional amounts found due upon a determination of an order's invalidity. To infer such an intention would be contrary not only in spirit to the limitations Congress has placed upon review of such orders wherever expressly provided, but also to the whole history and practice of Congress in conferring jurisdiction on the Court of Claims. 26 Thus, when these very orders were twice before the district court, under the assumption that it had jurisdiction, that court found the orders invalid. But in each instance it remanded the cause to the Commission for further proceedings; there was no attempt to render a money judgment for the carrier. 27 Necessarily this restraint reflected the jurisdictional limitations placed upon the court by the Urgent Deficiencies Act. But those limitations themselves reflected another policy, quite apart from and in addition to that giving effect to the constitutional limitations of Article III.12 The limitations exemplify settled congressional policy concerning the relations of ratemaking bodies and reviewing courts. Not only is rate making essentially legislative in the first instance. The policy of judicial restraint is one having regard for the expertise of special agencies charged with performing the rate-making function and for the inherent actual, as well as legal, disability of courts to execute that function. Such doctrines or policies as those of primary jurisdiction'13 and exhaustion of administrative remedies14 lie at the very root of the problem. And this is as true of the jurisdiction of the Court of Claims, which is not restricted by Article III, as it is of courts so limited.15 28 Hardly can it be conceived therefore that Congress would have provided expressly for review of the Commission's rate-making orders by the Court of Claims; or that, if it had done so, it would have authorized a money judgment for such amount as that court in its own judgment considered the rate should have produced. 29 It is equally significant, we think, that when the three-judge district court twice set aside the Commission's order it did so on grounds substantially similar to those used by the Court of Claims in this case for holding the order invalid. In other words, what the district court did by way of examining the orders on their merits, factual as well as legal, the Court of Claims has done in this case. Indeed, it has gone much further, since it has rendered a money judgment for the carrier covering the period 1931—1938, having the effect in the particular circumstances of a new and final order. IV 30 A full understanding of the Commission's orders and of the effects of the action taken regarding them, both by the three-judge district court and by the Court of Claims, can be had only by readling and comparing the reports and opinions.16 The limitations of space prevent summarizing their content here in substantial detail. But the gist of the controversy between the Commission and the courts may be indicated. 31 We note, to begin with, that the court awarded to the respondent $186,707.06, or some 87 per cent more than the amount allowable under the Commission's orders. This in itself shows the wide discrepancy between the Commission's vew and the court's concerning the amount of a 'fair and reasonable rate.' 32 Moreover, the Commission's task in fixing that rate was both gigantic and complex. It was authorized to make classification of carriers where 'just and reasonable' and, 'where just and equitable,' to 'fix general rates applicable to all carriers in the same classification.' 39 U.S.C. § 549, 39 U.S.C.A. § 549. That authority of course was not to be ignored in applying the requirement for compensation of carriers at 'fair and reasonable rates.' 39 U.S.C. § 542, 39 U.S.C.A. § 542. The two were not entirely separate, but were merely different prongs of the same fork. 33 In its first general rate proceeding the Commission classified the nation's carriers, for mail-pay compensation purposes, placing the Georgia & Florida Railroad in Class I.17 It also decided generally upon the space basis as an appropriate method of determining fair and reasonable compensation. 56 I.C.C. 1. 34 Railroad accounting, however, does not, and concededly cannot, accurately reflect actual operating costs of each type of service rendered, or the proportionate amounts of capital employed in rendering each service. The Commission therefore sought a method or methods for making such allocations tentatively as the initial stage of performing its rate-making function. This required, first, segregating freight service from passenger train service; then dividing the latter into three categories: passenger service proper (including baggage service), express service, and mail service. 35 The problem arose both in the proceedings culminating in the first general rate order, 56 I.C.C. 1, and in those resulting in the general rate increase of 1928. 144 I.C.C. 675. In the latter the initial separation of total operating expenses between freight and passenger services was made on the basis of the Commission's rules governing such separation on large steam railways. Id. at 685—688. But, for determining the cost of service in respect to the further allocation and apportionment of passenger-train service among its three components, the Commission, having determined upon the space basis for this initial stage in fixing 'fair and reasonable rates,' was faced with the problem of what should be done with unused space. 36 That problem presents the crux of this case, as it did of the Commission's action. In the proceedings leading to the 1928 order, three general plans were given primary consideration for distributing space. They are described in the report last cited. See id. at 681, 689. In general they were alike in allocating full-car18 space to the service it performed. But they differed widely in allocating unused space in so-called combination cars and mixed cars.19 Without going into further detail here, suffice it to say that Plan 3 allocated the largest amounts of unused space to passenger and express service and correspondingly the smallest amount to mail service; Plan 2, more nearly approximating the carrier's proposals, worked out in inverse proportions; and Plan 1 lay between the two. See 144 I.C.C. at 681, 689. 37 The differences in results following from use of the various plans were highly significant, making the difference between net return and net deficit, or deficits of different sizes, depending upon which plan was used.20 In each plan after the ultimate space ratios were determined by complicated statistical studies, they were applied to total passenger-train service expense to determine expense ratios for the three constituent services. And those expense ratios were also used to apportion investment in road and equipment assigned to passengertrain service. 38 The Commission rejected Plan 3 because, it said, that plan had departed from the car-operating unit which it had adopted for making space allocations. 144 I.C.C. 689—691. While not specifically eliminating Plan 1 from consideration for purposes of comparison, the Commission primarily rested its allocations of space for purposes of tentative or preliminary apportionment of costs and capital on Plan 2. Id. at 691. 39 In utilizing the ratios derived from using Plan 2, however, the Commission expressly stated: 40 'In connection with the cost studies under any of the plans for dividing the train space, it should be borne in mind that in computations of this character where the direct allocations are relatively small and the great bulk of expenses and investment are necessarily divided, subdivided, apportioned, and reapportioned upon various theories and assumptions, the results can not be accepted as an accurate ascertainment of the costs of service. At best, they are approximations to be given such weight as seems proper in view of all the circumstances under which they have been obtained and the theories underlying the assumptions and the various steps in the computations.' 144 I.C.C. at 691—692. (Emphasis added.) 41 The Commission proceeded to consider the results obtained by the use of the Plan 2 formula in the light of other circumstances and considerations deemed relevant, including comparison with results obtained upon the basis of the total equated 60-foot-car miles (see 144 I.C.C. at 692), the fact that there was no such incentive to limit the amount of space utilized for passenger, baggage and express services as existed in the case of mail service, id. at 693, and other factors. The Commission then concluded: 42 'Giving consideration to all the figures based upon the respective cost studies; to the fact that none of these figures except those in the carriers' exhibits, includes any charge against the passenger-train service for its proportion of the cost of handling nonrevenue freight; giving special weight to the figures based on the plan for the division of train space followed in the original proceeding and subsequent reexaminations; and making allowance for weaknesses of theories and methods, an increase of 15 per cent in mail revenues for the carriers as a whole in this group is justified.' 144 I.C.C. at 695. (Emphasis added.) 43 This increase, very much smaller than a use of the results obtained by unqualified application of Plan 2 would have produced, resulted in general rates of 14.5 cents per mile of service in a '15-foot apartment car' and 4.5 cents per mile of service in a '3-foot closed-pouch service space.' Those rates became applicable to the Georgia & Florida Railroad, were accepted by it from 1928 to 1931, and are the rates now in question. 44 In this suit and in the prior proceedings since 1931, no attack has been made on the validity of these rates as general rates applicable to Class I carriers. But the 1931 proceedings challenged their validity as applied to this particular carrier. This has been the bone of contention throughout the subsequent phases of controversy. 45 When in 1931 the carrier's application for reexamination was filed, the Commission by its Division 5 first proceeded to make a cost study of the railroad's individual operations, conducted along the same lines as the cost studies in its general rate hearings. A test period of 28 days from September 28 to October 25, 1931, was selected for obtaining space and other data. Space ratios were determined on the data secured, applied to expenses, and the resulting expense ratios used to apportion investment, all under Plan 2. After adjustments made to reflect the year's operations for 1931, the Plan 2 formula worked out to show a net operating deficit for mail service of $4,945, which, together with a return of 5.75 per cent on the capital allocated by the formula to mail service, brought the carrier's claim for increased compensation for that year to $31,227. 192 I.C.C. 779, 781. To meet this, an increase of 87.40 per cent would have been necessary. 46 As in the general rate investigations and for the same reasons, the Division was unwilling to rest exclusively upon the results obtained by the computations under Plan 2, and went on to consider other factors which it deemed relevant in determining the fairness and reasonableness of the rates. It found that of the three component services in passenger-train service, 'the mail service makes the best showing with respect to revenue.'21 The Division further pointed out that in the period 1929 to 1931, mail revenues had been more stable than revenues from other passenger-train services, passenger service proper having decreased 67 per cent, express service 64 per cent, and mail service 12 per cent. Consideration also was given to the special facts shown relating to use of unused space. 47 Pointing out that the carrier's claim was based on the special cost study and the fact that 'because of its low traffic density and low earnings per mile of road, it is not comparable with many class I roads which receive the same rates of pay,' the Division reiterated that 'The cost study is not considered to be an accurate ascertainment of the actual cost of service. It is an approximation to be given such weight as seems proper in view of all the circumstances. See Railway Mail Pay, supra.' 192 I.C.C. at 783. It then concluded: 48 'The comparison of mail revenue with other revenue received for services in passenger-train operations shows that mail with relation to the other services is bearing its fair share of the expenses of operation and is contributing relatively more than the other services for the space furnished. Applicant receives the same rates as those received by other roads for the same kind of service. Many of these other roads are, as applicant points out, roads which are very much larger and which have greater traffic and lower unit operating costs. On the other hand many are in much the same situation as the applicant in respect of passenger-train operations. The data submitted fail to justify giving the applicant rates higher than those now paid other railway common carriers for like service. 49 'We find that the rates of pay now received by applicant for the transportation of mail, established in Railway Mail Pay, 144 I.C.C. 675, for railroads over 100 miles in length, are fair and reasonable. The application for increased compensation is denied.' Ibid. 50 When the cause was returned to the Commission by the Georgia District Court in 1935, the full Commission reopened the proceeding and held a further hearing at which further evidence was received. In remanding the cause the district court had stressed the computed finding under Plan 2 that 'The distribution of expense upon the space ratios shows that the operating ratio for mail service was 102.79'22 or, as the court added, 'that for every dollar applicants received for transporting mails they expended one dollar and 2.79 cents.' The court then asserted that other considerations taken into account by Division 5 'do not refute or impair the fact that the compensation allowed this railroad for the transportation of mail does not equal the cost of so doing.' 51 Counsel for the carrier stressed this before the Commission as 'an adjudication' that the previous rates of pay were 'totally inadequate.' But the Commission rejected the apparent district court in erence that abandonment of mail service would save the carrier money: 'Considering the character of the expenses included in the study it is clear that no such saving could be made. The importance of the operating-ratio figure has been overemphasized. Relative costs derived from a series of studies of expenditures for operations common to a number of services cannot be converted into obsolute costs by using a single-figure relation derived from such studies.' 214 I.C.C. at 69. 52 The Commission then again repeated its insistence that cost computed under such a formula as Plan 2 'is a hypothetical cost and not an actual cost,' ibid.; that in other mail-pay proceedings consideration had been given to other factors;23 and, again taking such factors into account, concluded upon the augmented record that the rates then applicable to the carrier were fair and reasonable. 214 I.C.C. at 70-76. 53 On return of the cause, the district court disclaimed entertaining the view 'that the hypothetical cost is 'necessarily conclusive." Rather, the court said, 'It is merely the fairest method that has been devised.' It held inapplicable to the carrier the considerations utilized by the Commission to qualify the results computed by the cost formula, such as 'comparisons with compensation received from other service in passenger train cars'; and 'comparisons per car-mile and per car-foot mile of the computed cost of mail service and the revenue from authorized mail service with the computed cost of corresponding units in passenger-train service as a whole.' The court accordingly again found the Commission's order unlawful and remanded the cause to it a second time for further proceedings. 54 It is obvious, from the foregoing account, that the basic difference between the Commission and the district court lay in whether the Commission's statistical and mathematical computations under Plan 2 alone should be taken as determinative of costs and thus of fair and reasonable rates24 or whether those computations were rightly taken by the Commission as merely tentative estimates or approximations, applicable in the initial stage of rate determination, but subject to qualification by comparison with results obtained under other plans and, in the final stage, by consideration of other factors found pertinent in the Commission's judgment. 55 This is exactly the question which was crucial in the judgment rendered by the Court of Claims In its opinion, much more extended than either of those rendered by the district court, it said: 56 'Under finding 16 herein, it is shown that the Interstate Commerce Commission found and determined that plaintiff would require an increase in its mail revenue of 87.4% in order to secure for itself, under Plan 2 adopted by the Commission, a return of 5.75% theretofore fixed by the Commission, on its investments in road and equipment engaged in mail traffic. * * * The Commission has, by its use of Plan No. 2, adjudged it to be a fair and reasonable basis. And out of that basis there has been ascertained, by formulae prescribed by the Commission, what is the fair and reasonable compensation for plaintiffs' carriage of the mails beginning the first of April 1931, and ending at the close of February 1938. Fair and reasonable compensation cannot be both a deficit and the amount of $186,707.06 so found. It is, we conclude, the latter.' 77 F.Supp. at page 203, 110 Ct.Cl. at pages 366—367, 369. (Emphasis added.) 57 The court then quoted the Commission's concluding language in 192 I.C.C. 779, 783, set out above in the text, and said: 58 'We are of the opinion that the 'approximation' (Plan 2) should be given greater weight than the Commission affords it, because, as we have said, and the Commission in effect admits, there is no such thing as certainty in actual cost. Approximate, or as it is called, 'computed' cost must be relied upon, and as a matter of law must be decisive. There is no alternative, at least no satisfying alternative. Of course there were other methods of computing cost, but the Commission, put to the choice, selected Plan No. 2.' 77 F.Supp. at page 205, 110 Ct.Cl. at page 370. 59 Then followed rejection of the factors considered by the Commission in qualifying the computations obtained under Plan 2 as 'not convincing or even persuasive.' 77 F.Supp. at page 206, 110 Ct.Cl. at page 372. According to the court: 'It was for the Commission to demonstrate that the general rates prescribed gave the plaintiffs a fair and reasonable return. This the Commission failed to do. More than that, the Commission has by its findings, using its adopted plan and its own methods as applied to plaintiffs' circumstances, proved that plaintiffs have been underpaid $186,707.06 in fair and reasonable compensation for the period in question.' Ibid. 60 In view of these groundings, the court's decision tied the Commission exclusively and finally to the results which it had obtained by using Plan 2 in the initial stage of the rate-making process. It rejected the Commission's repeated assertion, in both the general rate hearings and the special hearings given this carrier, that the cost studies under Plan 2 (or any other such plan) could not be taken as an accurate ascertainment of actual costs of service and should be given only such weight as seemed proper in view of all the circumstances. The court likewise rejected as 'not convincing or even persuasive' the numerous factors the Commission considered not only proper, but highly important to be taken into account in qualifying the computed results under Plan 2. 61 In doing all this the court substituted its own judgment for the Commission's concerning the relevance of facts to be taken into account in fixing a fair and reasonable rate; the weight to be given to those facts, including the computations under Plan 2 as well as the other facts utilized to check and qualify them; and the burden of proof on the whole case. 62 In the latter respect the court disregarded not only the general rule which gives administrative determinations in such matters presumptive weight,25 but also the effect of the statute itself. As has been noted the Railway Mail Pay Act expressly authorized the Commission to classify carriers and 'where just and equitable, fix general rates applicable to all carriers in the same classification.' 39 U.S.C. § 549, 39 U.S.C.A. § 549. While this general authority did not preclude examination of the gene al rate's application to a particular carrier, it gave that rate prima facie validity as to all within the classification. Indeed, contrary to the court's holding that the Commission could not consider rates paid to other carriers or their effects, the statute required the Commission to take those rates into account. Ibid. The burden of proof was therefore clearly upon the carrier to show that the general rate was unfair and unreasonable as applied to it and not, as the court held, upon the Commission to show that that rate as applied was fair and reasonable. 63 We cannot say that the Commission acted arbitrarily or unreasonably in respect to its use of Plan 2 or of the factors used in checking the plan's results and qualifying them. Contrary to the court's conclusion, Plan 2 was never intended or accepted by the Commission as furnishing a final and exclusive basis for fixing rates. Certainly it was not arbitrary or unreasonable to use such a plan, which proceeded step by step upon 'various theories and assumptions,' as merely a preliminary and wholly tentative step in the process of rate-making; or to check its results against those produced by other such plans differing in detail of theories and assumptions employed; or to qualify the computations by the factors which the Commission took into account in the final stages of judgment. 64 In holding the initial formula conclusive, the court has disregarded the Commission's informed contrary judgment in matters committed to its special competence. This the court did in the guise of 'giving effect' to the Commission's 'finding,' namely, its preliminary computations under Plan 2, and by disregarding all else the Commission took into account as 'error of law.' The 'finding' was in fact no finding at all, but only a preliminary figure. And the matters thrown out as 'error of law' were matters of fact and expert judgment, not legal questions. 65 We think the carrier has not sustained its burden of showing that the Commission acted arbitrarily or unreasonably and we conclude that the general rates fixed by its 1928 order are, upon the record made, fair and reasonable as applied to the Georgia & Florida Railroad. But for the matter of jurisdiction, this determination would end the case. But the question of jurisdiction remains and is important. Moreover, the determination on the merits is relevant to its disposition. V. 66 In sustaining its jurisdiction, the Court of Claims stated: 'As the Supreme Court has said, this Court has jurisdiction to render judgment of recovery for an amount sufficient to constitute fair and reasonable compensation under the facts as found by the Commission, unpaid through failure of the Commission, because of an error of law, to order payment thereof.' 77 F.Supp. at page 203, 110 Ct.Cl. at page 366. (Emphasis added.) That language on its face seems fully in accord with the Griffin pronouncement. As will be recalled, it was: 'If the Commission makes the appropriate finding of reasonable compensation but fails, because of an alleged error of law, to order payment of the full amount which the railroad believes is payable under the finding, the Court of Claims has jurisdiction of an action for the balance, as the claim asserted is one founded upon a law of Congress.' (Emphasis added.) 67 On its face this language does not authorize revision of the Commission's findings or of the rate it prescribes by the Court of Claims. The claim of which it is said to have jurisdiction is one for 'the full amount which the railroad believes is payable under the finding,' some part of which the Commission has failed to order paid by reason of an error of law. There was no intimation of authority for the court to reexamine the facts or to substitute its own judgment concerning the facts to be consider d or the weight to be given them in determining the rate. True, the wording reads 'appropriate' finding. But we cannot construe that single word to mean that this Court intended the Court of Claims to reopen the entire question of the order's appropriateness and substitute its own judgment, either on the record made before the Commission or on independent evidence, for the Commission's findings and conclusions on that question. 68 Such a construction is sustained by none of the cases cited in the Griffin opinion to support the statement26 and is directly contrary to previous decisions by the Court of Claims with reference to its power to review such orders of the Commission.27 Moreover, to conceive the Griffin statement as sanctioning the broad authority assumed by the court would be, for reasons already stated, to give it by implication a jurisdiction which Congress has never expressly conferred. 69 We think the Griffin language contemplated a much narrower jurisdiction. The purpose was, in our judgment, to indicate that review might be had of the carrier's claim whenever it does not run in the teeth of the Commission's findings or order or seek revision of that order. In other words, the claim must be one consistent with the Commission's order fixing the rate, but asserting underpayment by reason of some error of law in its application which would not require the Commission's further consideration for fixing a new rate. This view is consistent with all of the authorities cited in Griffin, supra, to sustain the first category of jurisdiction said to reside in the Court of Claims. It is the view we think this Court meant to be taken. 70 As we have pointed out, however, here the Court of Claims, though asserting the contrary, has not 'given effect' to the rate order, but in the guise of finding 'error of law' has set it aside, together with the Commission's findings; has substituted 'findings' of its own; and has made, in effect, a new order by its judgment. It follows, in our view of what was intended by the Griffin statement, that the Court of Claims had no jurisdiction in this case, since it involves no such 'error of law' as that statement contemplated, but relates only to questions essentially of fact going to the order's appropriateness on the merits. The case is wholly unlike Missouri Pacific R. Co. v. United States, 271 U.S. 603, 46 S.Ct. 598, 70 L.Ed. 1109; United States v. New York Central R. Co., 279 U.S. 73, 49 S.Ct. 260, 73 L.Ed. 619, and other cases cited in the Griffin opinion. 71 The same result would follow if, contrary to the Court of Claims' disclaimer, the suit could be regarded as one for just compensation under the Fifth Amendment, as respondent insists it was. For the reasons already stated, respondent has not shown that the Commission's order was confiscatory in its effects. Moreover, jurisdictionally speaking, none of th cases cited by the Griffin opinion to sustain the second category28 of jurisdiction in the Court of Claims involved any problem of reviewing rate orders of the Interstate Commerce Commission. All related to questions of compensation resulting from takings of private property for public use, in which the only questions determined were the value of the property taken or that value coupled with the right to interest on the award.29 While respondent contends that the effect of the Commission's order here has been to deprive it of its property without just compensation and justifies the Court of Claims' award on that basis, the court did not so ground its decision and, as we have said, respondent has not made out any such case. 72 Moreover, in view of the fact that the Court of Claims has jurisdiction only to render a money judgment against the United States and none to remand to the Commission for further consideration a rate order which it might find confiscatory, we do not think the Griffin ruling can be taken to have contemplated that upon such a finding, made after reviewing the Commission's order on the merits, the Court of Claims could foreclose the Commission from further consideration of the order and render final judgment for the amount by which it had found the order confiscatory. This not only would short-circuit the Commission in the rate-making process, but would involve substituting the court's judgment for the Commission's as to the amount of any new rate which might be fixed. Consequently, we do not think this case falls within either category of jurisdiction indicated by the Griffin statement as possibly available in the Court of Claims. 73 There remains the third remedy suggested in the Griffin opinion, namely, by suit in the district court as one at law or in equity 'arising under the postal laws,' former 28 U.S.C. § 41(6), cf. present 28 U.S.C. § 1339, 28 U.S.C.A. § 1339, where the Commission is alleged to have acted in excess of its authority, or otherwise illegally. Strictly speaking, it is not necessary to consider whether this remedy would have been available to respondent, since it has not been followed. 74 However, notwithstanding some obvious difficulties in making district court jurisdiction available for review in such a proceeding as this,30 that jurisdiction posesses one outstanding advantage over review in the Court of Claims. It is that the district courts are not confined, as is the Court of Claims, to rendering a money judgment by way of relief against the United States. Under their general equity jurisdiction they would have power, on finding a rate order invalid, whether as confiscatory or as not complying with the statute, to remand the cause to the Commission for further proceedings. In this respect the review afforded and the relief given would more nearly approximate that given by the Urgent Deficiencies Act in similar cases reviewable under its terms. 75 Since the Griffin case was decided, Congress has adopted the so-called Administrative Procedure Act,31 which by § 10, entitled 'Judicial review of agency action,' provides: 76 'Except so far as (1) statutes preclude judicial review of (2) agency action is by law committed to agency discretion— 77 '(a) Any person suffering legal wrong because of any agency action, or adversely affected or aggrieved by such action within the meaning of any relevant statute, shall be entitled to judicial review thereof. 78 '(b) The form of proceeding for judicial review shall be any special statutory review proceeding relevant to the subject matter in any court specified by statute or, in the absence or inadequacy thereof, any applicable form of legal action (including actions for declaratory judgments or writs of prohibitory or mandatory injunction or habeas corpus) in any court of competent jurisdiction. * * *.' 5 U.S.C. § 1009, 5 U.S.C.A. § 1009. 79 This provision, we think, adds force to the suggestion made in the Griffin case concerning the jurisdiction of the district courts in relation to review of rate orders like those now in question. Such review under the equity or declaratory jurisdiction of those courts would seem to afford a remedy consonant with § 10 of the Administrative Procedure Act and also more nearly like that afforded by the Urgent Deficiencies Act, though without its expediting features. The relief afforded, unlike that required in the Court of Claims, could thus be limited to setting aside or enjoining the Commission's order and remanding the cause to it for further consideration, as is done in like cases reviewable by three-judge courts. Consistently with that jurisdiction also the review could be confined to the record made before the Commission32 rather than one compiled by independent evidence not presented to the Commission or considered by it. 80 These suggestions, as we have said, are not strictly necessary for disposition of this case. But we think them appropriate in order to prevent a recurrence in the future and in other cases of long and chiefly jurisdictional litigation such as this cause has involved with profit to no one. 81 The judgment is reversed, and the cause is remanded to the Court of Claims with instructions to dismiss it. 82 Reversed and remanded. 83 Mr. Justice REED and Mr. Justice JACKSON took no part in the consideration or decision of this case. 1 The present receiver, Alfred W. Jones, was substituted as respondent in No. 135 by order of this Court dated December 6, 1948. 335 U.S. 883, 69 S.Ct. 231. 2 Full railway post-office-car service involves service in which an entire car of specified length and equipment is authorized. Apartment-car service involves authorized use of thirty- or fifteen-foot apartments partitioned off from the remaining portion of the car. Closedpouch service involves handling by railroad employees where full or apartment railway post-office cars are not authorized and where space authorizations are for units of seven feet and three feet in space, unenclosed, on both sides of the car. 3 See note 6. 4 The amended petition and the brief assign both grounds. Nevertheless, respondent insists that his case is in fact grounded upon the constitutional basis. Indeed, so strongly does respondent insist upon this point of view that, without challenging the award or its amount, except for the disallowance of interest, he has sought and we granted certiorari in No. 198, in effect to have the judgment of the Court of Claims grounded solely on the Fifth Amendment footing as the basis for establishing his claim of accrued interest. See note 7 infra. 5 As has been stated, the Court of Claims, accepting jurisdiction, rendered judgment for the respondent for $186,707.06. Its determination was based upon the various reports of the Commission above cited, although evidence was received by the court's commissioner which was not before the Interstate Commerce Commission. He made extensive special findings of fact based in part upon this evidence which were adopted by the court and filed, together with its opinion. 77 F.Supp. 197, 110 Ct.Cl. 330. Both the Government and the respondent applied for certiorari and both petitions were granted. See note 4. 6 This was in brief that Congress could not be assumed to have made the extraordinary remedy of the Urgent Deficiencies Act applicable to such orders as the one here involved, since 'There is no wide public interest in its speedy determination'; 'no danger of temporarily interrupting the mail service through the improvident issue of an injunction by a single judge'; and 'only the method or amount of payments currently to be made would be affected.' 7 The opinion, quoting the Court of Claims' language in an earlier railway mail pay case, New York Central R. Co. v. United States, 65 Ct.Cl. 115, 128—129, affirmed United States v. New York Central R. Co., 279 U.S. 73, 49 S.Ct. 260, 73 L.Ed. 619, stated): "We do not think the plaintiff can have judgment for interest on the deferred payments. We are not determining just compensation but are giving effect to an authorized order of the Interstate Commerce Commission. In such case the statute forbids the allowance of interest. Sec. 177, Judicial Code, as amended (1948 Revision, 28 U.S.C.A. § 2516)." 77 F.Supp. at page 206, 110 Ct.Cl. at page 373. Cf. notes 10 and 29 infra. 8 See note 7. 9 See the cases cited at note 26 infra. 10 Cf. Jacobs v. United States, 290 U.S. 13, 54 S.Ct. 26, 78 L.Ed. 142, 96 A.L.R. 1. 11 See the cases cited at note 27 infra. 12 Which, among other things, forbid non-District of Columbia courts created pursuant to that Article to exercise legislative functions such as rate making. Cf. Keller v. Potomac Electric Power Co., 261 U.S. 428, 43 S.Ct. 445, 67 L.Ed. 731; Postum Cereal Co. v. California Fig Nut Co., 272 U.S. 693, 47 S.Ct. 284, 71 L.Ed. 478; Prentis v. Atlantic Coast Line Co., 211 U.S. 210, 226, 29 S.Ct. 67, 69, 53 L.Ed. 150. 13 Texas & Pacific R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, 9 Ann.Cas. 1075; cf. Rochester Telephone Corporation v. United States, 307 U.S. 125, 139, 59 S.Ct. 754, 761, 762, 83 L.Ed. 1147; Myers v. Bethlehem Shipbuilding Corporation, 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638. See 51 Harv.L.Rev. 1251. 14 United States v. Illinois Central R. Co., 291 U.S. 457, 463—464, 54 S.Ct. 471, 473—474, 78 L.Ed. 909; (and cf. concurring opinion, 291 U.S. at page 465, 54 S.Ct. at page 474, 78 L.Ed. 909); Myers v. Bethlehem Shipbuilding Corporation, 303 U.S. 41, 50 52, 58 S.Ct. 459, 463—465, 82 L.Ed. 638. See Berger, Exhaustion of Administrative Remedies, 48 Yale L.J. 981; 44 Mich.L.Rev. 1035. 15 See the authorities cited at note 27 infra. 16 The opinions of the three-judge court rendered when this controversy was twice before its are not reported. 17 Class I included all railroads of more than 100 miles in length. At the general rate hearings the Georgia & Florida Railroad was represented by representatives of another class and seems to have contended that it should be classified with or treated as though it were a member of that class. But no question concerning its classification has been made in the proceedings begun in 1931 or afterward. 18 See note 2. 19 Combination cars include space separated by partitions into 'apartments,' cf. note 2, with each apartment devoted exclusively to a different use. Mixed cars contain no partitions or 'apartments,' but are used for several different services, e.g., baggage, express and mailpouch services. See note 2; 144 I.C.C. at 679. 20 See Railway Mail Pay, 144 I.C.C. at 688—689. Plan 3, the Commission said in that general rate proceeding, would result in a 'net railway operating income from mail of $18,759,056 instead of a deficit of $1,104,744 under plan 2, and a net income of $12,844,643 under plan 1,' id. at 689, giving a net return under Plan 3 of 5.94 per cent but requiring an increased rate of 26.48 per cent under Plan 2 and of 7.43 per cent under Plan 1 to meet the computed deficits and give a net return of 5.7 per cent on the invested capital allocated to mail. 21 The report continued: 'The total mail revenue of $35,728 for the year 1931 on a space ratio of 12.96 was only $594 less than the total revenue from passenger service proper, including baggage, and miscellaneous service, with a space ratio of 80.35 * * *. The distribution of expense upon the space ratios shows that the operating ratio for mail service was 102.79 as compared with 630.41 for passenger proper, including baggage, etc., and 249.67 for express.' 192 I.C.C. at 781—782. 22 See note 21. 23 'In other mail-pay proceedings, in which space authorized and paid for was found to be the space that should be charged to mail in cost studies similar to that here, consideration was given to other factors as well, such as the amount and character of the unused space reported as operated, Railway Mail Pay, 85 I.C.C. 157, 170, 123 I.C.C. 33, 39; the actual space occupied by mail, as distinguished from authorized space, determined by the mail load, carried, based upon a count of bags and of packages outside of bags, and, in some instances, by the weight, Railway Mail Pay, 95 I.C.C. 493, 500, 511, 120 I.C.C. 439, 446; comparisons with compensation received from other services in passenger-train cars, Railway Mail Pay, 144 I.C.C. 675, 706; comparisons with freight rates, Railway Mail Pay, 144 I.C.C. 675, 705, 151 I.C.C. 734, 742; comparisons per car-mile and per car-foot mile of the computed cost of mail service and the revenue from authorized mail service with the computed cost of corresponding units in passenger-train service as a whole, Railway Mail Pay, 144 I.C.C. 675, 699; and the character of the service performed in connection with transporting the mail, Railway Mail Pay, 56 I.C.C. 1, 8, Electric Railway Mail Pay, 58 I.C.C. 455, 464, 98 I.C.C. 737, 755.' 214 I.C.C. at 69—70. 24 It is to be recalled that the expense ratios based upon the space ratios accepted under Plan 2 were applied also to capital allocated to passenger-train service to apportion that capital among the three component services making up passenger-train service. 25 See, e.g., Shields v. Utah Idaho Cent. R. Co., 305 U.S. 177, 184—185, 59 S.Ct. 160, 164—165, 83 L.Ed. 111. Cf. Norton v. Warner Co., 321 U.S. 565, 568—569, 64 S.Ct. 747, 749—750, 88 L.Ed. 430. 26 Cited in the text, 303 U.S. at page 238, 58 S.Ct. at page 607, 82 L.Ed. 764, were Missouri Pacific R. Co. v. United States, 271 U.S. 603, 46 S.Ct. 598, 70 L.Ed. 1109, upholding the Court of Claims' view on demurrer that Congress, in enacting 39 U.S.C. § 536, 39 U.S.C.A. § 536, not only intended to but had power to provide that land-grant railroads were to receive only 80% of whatever mail pay rate the Commission should set not only for mere transportation of mail (e.g., closed-pouch space) but for space in which postal employees sorted mail (e.g., apartment mail-cars), and United States v. New York Central R. Co., 279 U.S. 73, 49 S.Ct. 260, 73 L.Ed. 619, affirming the Court of Claims' conclusion that the Commission had power to make mail rate revisions applicable as of the date of the carrier's request for reexamination of rates rather than as of the date of the Commission order raising the rate. Court of Claims mail pay decisions cited in a footnote, 303 U.S. at page 238, n. 10, included 58 S.Ct. at page 607, 82 L.Ed. 764: Chicago & E.I.R. Co. v. United States, 63 Ct.Cl. 585; Nevada County Narrow Gauge R. Co. v. United States, 65 Ct.Cl. 327; Chicago & E.I.R. Co. v. United States, 72 Ct.Cl. 407; Macon, D. & S.R. Co. v. United States, 78 Ct.Cl. 251, Id., 79 Ct.Cl. 298. In each of these cases the claimant carrier recovered compensation in excess of that allowed it by the Postmaster General, but in each case the dispute centered around the meaning of a Commission rate order or the Commission's power to enter the order made; in none was there any challenge to the rate itself: Thus, in the first Chicago & E.I.R. Co. case, supra, the question was whether the Commission had, in accordance with 39 U.S.C. § 535, 39 U.S.C.A. § 535, ordered compensation for the return to their departure points of mail storage cars. In the second Chicago & E.I.R. Co. case, supra, the question was whether 'closed-pouch space' was a 'lesser unit' within the meaning of a rate order setting compensation for a 'storage car or lesser unit.' The Nevada County Narrow Gauge R. Co. case, supra, was a companion to New York Central R. Co. v. United States, 65 Ct.Cl. 115, affirmed, United States v. New York Central R. Co., 279 U.S. 73, 49 S.Ct. 260, 73 L.Ed. 619, holding that the Commission had power to order a rate increase effective as of the date of the application for such increase. Similarly, the two opinions in Macon, D. & S.R. Co., supra, held that the Commission had power retroactively to reclassify the claimant carrier in a higher compensation bracket as of a date prior to the carrier's application for reclassification so as to impose on the United States liability for additional compensation from that retroactively determined date of reclassification. With the prefatory admonition, 'Compare,' the Griffin footnote, 303 U.S. at page 238 n. 10, 58 S.Ct. at page 607, 82 L.Ed. 764, cited two other Court of Claims railway mail pay decisions, Pere Marquette R. Co. v. United States, 59 Ct.Cl. 538, and New Jersey & N.Y.R. Co. v. Unit d States, 80 Ct.Cl. 243: these decisions held the court powerless to fix mail pay rates or classifications, both functions being found to be within the exclusive purview of the Commission. See note 27 infra. 27 In Pere Marquette R. Co. v. United States, 59 Ct.Cl. 538, the carrier sought compensation for mail car space furnished by the carrier where that space was neither authorized by the Post Office Department nor in fact used for mail transportation, and where the Commission had not ordered compensation; the Court of Claims said, Id., 59 Ct.Cl. at page 545, in dismissing the petition: 'The act of July 28, 1916, clearly intended that all questions of the compensation to be paid railroad companies for carrying the mails should be determined by the Interstate Commerce Commission. The commission having acted within the scope of its authority, having fixed the reasonable compensation to which the plaintiff is entitled, this Court can not review the action of the commission and undertake to fix a different compensation from that arrived at by the commission. If the plaintiff has performed any service which the commission has failed to provide for in its order fixing compensation, then the plaintiff's remedy is before the Interstate Commerce Commission and not in this court.' In New Jersey & N.Y.R. Co. v. United States, 80 Ct.Cl. 243, the Court of Claims dismissed a claim for compensation based on a classification which had been denied the carrier by the Commission; the dismissal was grounded on the proposition that 'This court has no jurisdiction to classify railroads or to fix the compensation for the carrying of the mails.' 80 Ct.Cl. at page 248. Of the cases allowing money judgments for compensation, discussed in note 26 supra, the court observed that there 'the recovery in this court merely carried into effect the Commission's determination, that is to say, this court did not undertake to make a classification or to fix a rate of compensation.' 80 Ct.Cl. at page 248. Cf. Denver & Rio Grande R. Co. v. United States, 50 Ct.Cl. 382, 391. 28 'And since railway mail service is compulsory, the Court of Claims would, under the general provisions of the Tucker Act, 24 Stat. 505, have jurisdiction also of an action for additional compensation if an order is confiscatory. United States v. Great Falls Mfg. Co., 112 U.S. 645, 5 S.Ct. 306, 28 L.Ed. 846; North American Transportation & Trading Co. v. United States, 253 U.S. 330, 333, 40 S.Ct. 518, 64 L.Ed. 935; Jacobs v. United States, 290 U.S. 13, 16, 54 S.Ct. 26, 78 L.Ed. 142, 96 A.L.R. 1.' 303 U.S. at page 238, 58 S.Ct. at page 607, 82 L.Ed. 764. 29 As to interest compare the Great Falls case with the Jacobs case, both cited in note 28. 30 Our attention has not been called to attacks on railway mail rate orders based on this grant of jurisdiction; but it may be noted that district court suits to enjoin the Postmaster General's fraud orders are commonplace. See, e.g., Williams v. Fanning, 332 U.S. 490, 492, n. 2, 68 S.Ct. 188, 189. 31 5 U.S.C. §§ 1001—1011, 5 U.S.C.A. §§ 1001—1011. 32 See Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 444, n. 50 S.Ct. 220, 226, 74 L.Ed. 524. Cf. National Broadcasting Co. v. United States, 319 U.S. 190, 227, 63 S.Ct. 997, 1014, 87 L.Ed. 1344; Shields v. Utah, Idaho Cent. R. Co., 305 U.S. 177, 185, 59 S.Ct. 160, 164, 165, 83 L.Ed. 111.

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336 U.S. 601 69 S.Ct. 756 93 L.Ed. 911 TRANSCONTINENTAL & WESTERN AIR, Inc.v.CIVIL AERONAUTICS BOARD. No. 387. Argued Feb. 8, 9, 1949. Decided April 18, 1949. Mr. Gerald B. Brophy, of New York City, for petitioner. Mr. Emory T. Nunneley, Jr., of Washington, D.C., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 The question in this case is whether the Civil Aeronautics Board has authority to fix a new mail rate for air carriers and to make it retroactive for a period in which a final rate previously fixed by the Board was in effect and unchallenged by the initiation of a mail rate proceeding. The answer turns primarily on the meaning of § 406(a) of the Civil Aeronautics Act of 1938 as amended, 52 Stat. 998, 49 U.S.C. § 486(a), 49 U.S.C.A. § 486(a), which empowers the Board to fix and determine the fair and reasonable rates of compensation for the transportation of mail by aircraft and 'to make such rates effective from such date make such rates effective from such date as it shall determine to be proper * * *.'1 2 The Board in an order dated October 26, 1945, fixed a mail rate of 45 cents per mail ton-mile for petitioner.2 From that date until March 14, 1947, petitioner was paid at that rate for its air carrier services. During that time no action was taken by petitioner or by the government to initiate a change in that rate. On March 14, 1947, petitioner filed a petition with the Board alleging that its mail rate had not been fair and reasonable since January 1, 1946, and requesting the Board to fix a fair and reasonable rate 'from and after January 1, 1946.' After hearing the Board by a divided vote ruled that it had no authority to fix a mail rate for a period prior to March 14, 1947, and dismissed the petition insofar as it sought that relief. 8 C.A.B. 685. The Court of Appeals affirmed the order of the Board. 169 F.2d 893. The case is here on a petition for a writ of certiorari which we granted because of the importance of the question to the carriers and public alike. 3 The language of § 406(a) which empowers the Board to 'fix and determine' after notice and hearing 'the fair and reasonable rates of compensation' for the transportation of mail by aircraft3 reads like a typical public utility rate-making authority. Both subdivisions (a) and (b) of § 406, to be sure, reflect some characteristics of ratemaking which are peculiar to air carriers. That is true of the methods specified in § 406(a) for ascertaining the rates of compensation—'aircraft-mile, pound-mile, weight, space, or any combination thereof, or otherwise * * *.' Special standards for rate-making are also prescribed. The Board is authorized to consider 'the conditions peculiar to transportation by aircraft and to the particular air carrier or class of air carriers' in fixing different rates for different air carriers or classes of air carriers and different classes of service. § 406(b). And the Board in determining the rate is authorized and directed to consider 'the need of each such air carrier for compensation for the transportation of mail sufficient to insure the performance of such service, and, together with all other revenue of the air carrier, to enable such air carrier under honest, economical, and efficient management, to maintain and continue the development of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service, and the national defense.' § 406(b). 4 Considerable reliance is placed on this last provision for the view that the Board has authority under the 'make effective' clause to order such retroactive adjustments of rates as the 'need' of the air carrier makes appropriate. But such a standard has its counterparts in other legislation dealing with rate-making4 and does not necessarily mark a departure from the customary pattern of fixing rates prospectively. Yet, unless we found a congressional purpose to make a radical break with tradition, we would be most reluctant to give the 'make effective' clause the broad meaning which petitioner urges. For the rates of carriers and other utilities fixed by public authorities, while usually prospective, are sometimes made retroactive to the date of the commencement of the ratemaking proceeding. See United States v. New York Central R. Co., 279 U.S. 73, 49 S.Ct. 260, 73 L.Ed. 619. But, so far as we are aware, they have never been retroactive to an earlier date. 5 The language of the Act does not suggest that Congress intended to break with these traditions of rate-making.5 Moreover, the legislative history indicates that the 'make effective' clause was inserted only to make clear that the rates could be made retroactive to the date of the application.6 Finally the scheme of the Act and its underlying policy seem to us to preclude the more expansive reading of the clause urged on us by petitioner. 6 Petitioner's reading of the Act would in practical effect have the tendency to transform it into a cost-plus system of regulation, a construction which would not harmonize with the apparent design of the Act. Thus § 406(b) authorizes the Board to fix rates for 'classes of air carriers.'7 It is plain that the uniform rate for the class is an important regulatory device. For § 2(d) of the Act looks to the sound development of an air transportation system through competition.8 A uniform rate forces carriers within a given class to compete in securing revenue and in reducing or controlling costs. If the Board had authority on the basis of the carrier's needs to make rates retroactive to any point of time, there would be a powerful incentive to seek relief from the uniform rate, not to live within it. 7 In sum a construction which would make it possible to revise rates retroactively to any point of time would be a real innovation which should have a more solid basis than our own predilections. We cannot but feel that if the rate-making power were to be put to such a novel use, the purpose would have been made clear. It is too unprecedented a departure from the conventions of rate-making to rest on mere inference. 8 It is pointed out that the Board apparently considers past operating losses in fixing rates9 and that therefore it is a matter of no great consequence if the rates are made retroactive to one date rather than another. But the power to fix rates to recoup past losses is a distinct question not before us. 9 Affirmed. 10 Mr. Justice REED took no part in the consideration or decision of this case. 11 Mr. Justice JACKSON, dissenting. 12 The Civil Aeronautics Board asks us to hold that it is denied by its organic Act any power retroactively to fix rates for carrying air mail. It has not convinced me that it has no power, whatever it should wisely do with it as matter of policy. 13 The fundamental premise of the Court's opinion is that the function of the Board in fixing the air-mail rate is analogous to rate-making for a railroad or a public utility. The two types of rates are not comparable. 'Rate' as applied to the Government's air-mail payments is an euphemism to embrace a subsidy as well as compensation. The statute requires the Board, in fixing the 'rate' for transportation of mail, to take into consideration the 'need of each such air carrier for compensation * * * to insure the performance of such service, * * * and to enable such air carrier * * * to maintain and continue the development of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service, and the national defense.' § 406(b). These considerations are inappropriate in applying ordinary utility rate-making principles. Moreover, utility rates apply to a multitude of customers; the air-mail rate is paid by only one—the Government. Utility services must be paid for currently; air-mail payments can be and are being paid in lump sums on account of items long past. 14 Congress, in the Act before us, set up a scheme for dealing with each according to its separate nature. The rate for public carriage of passengers and goods by air lines, of course, cannot be fixed retroactively on the basis of experience, for the public must know at the time they take service hat they are to pay for it and the carrier must collect then or never. The Act recognizes this necessity with respect to passengers and cargo. Rates for transporting them are required by § 403, 49 U.S.C.A. § 483, to be embodied in filed and published tariffs, which may be altered only after hearing and notice and only prospectively. Section 1002 provides that the Board may institute proceedings to modify these rates and may, after prescribed procedures, set the rates thereafter to be charged. Thus, when Congress was dealing with utility rates for passengers and shippers, it permitted only prospective changes, and said so. 15 But Congress believed that, in the interest of the national defense and commercial aviation, it had to subsidize pioneering air lines and underwrite revenues above those to be realized from passenger and cargo carriage. A feasible way to do it was through air-mail payments. Its plan to that effect was detailed in § 406. But as to this subsidy rate, it enacted no prohibition against retroactivity and, if it had, it is difficult to see how the Board would have authority to go back even to the date of the petition. On the contrary, however, § 406(a) empowers and directs the Board to determine the air-mail rate and 'to make such rates effective from such date as it shall determine to be proper.' I see no justification for holding that this language means anything less than just what it says, or for holding that two such opposite kinds of payments must be governed by identical rules. 16 The Civil Aeronautics Board, however, asks us to hold that the same rules as to retrospective rates are 'applicable equally to mail, passenger and property rates under the Act.' It urges that its provisions do not 'convert the Board's primary function of fixing rates of compensation for the future into a duty to award amounts of compensation for the past' and that, if it sets too low a rate, 'the carrier has no redress save a new hearing and the fixing of a more adequate rate for the future.' It contends for application of decisions by which this Court 'has refused to require the capitalization of past losses in the rate base for the purpose of fixing future rates' or to allow 'current reimbursement out of new rates of deficiencies arising from a failure to earn a reasonable return in past years, or the capitalization of costs of maintaining excess capacity during early periods of operation.' And the Board argued that it has adhered to such rules and advances policy reasons why we should hold that it is without power to do otherwise. 17 I have not been able to reconcile the position which the Board took before this Court at its argument on February 8 and 9 with what appears to be its almost contemporaneous action. On February 21. 1949, the Board handed down an order in which it allowed to this very petitioner, in a lump sum, $2,748,000 for the period July 14, 1947, to December 31, 1948, and $33,333 in a lump sum each month thereafter. It said, 'The above payments for each of these carriers are in addition to, and not exclusive of, the mail rates provided for in previous temporary or final mail rate orders, for the respective periods stated.' (Emphasis supplied.) The TWA lump sum of $2,748,000 was to make them whole for the year 1948 and also to pay their 'grounding losses' for 1946, a year prior to the filing of its petition, which the Board asks us to hold as the limit of backward operation of rates. The Board said: 18 'In 1946, TWA incurred substantial costs because of the grounding of the Constellation aircraft. Similar costs were incurred by United and American in 1947 and 1948 when the DC—6 was grounded. These costs are merely another form of developmental costs attributable to the introduction of a new air craft type. It is clear that they are, in these cases, of such severity as to obstruct their current development. Under our statutory mandate to develop air transportation we should underwrite such costs in some appropriate manner.' 19 At the same time the Board issued a state ent of policy. As to the grounding costs which the Board had argued to this Court it had no power to reimburse retroactively, it said that it had originally felt they would not be high enough to require special mail-pay allowance for their 'reimbursement.' But it continued: 'Experience has not supported this view' and it is 'desirable to make special mail rate provision for established losses of this character.' It announced that this petitioner, among others, is being paid for grounding losses. 'In addition, in view of its obligation under § 406(b) of the Act, discussed above, the Board has concluded that the temporary mail rates for the United and TWA should be increased to an extent sufficient to meet the remainder of their approximate break-even needs for the year 1948. With respect to the entire retroactive period and the future, the Board will determine final rates after formal proceedings, which will give consideration to the full reasonable requirements of these two carriers.' (Emphasis supplied.) 20 What I get from the Board's orders and statements is that it is acting in a spirit completely contrary to its argument to this Court and to this Court's opinion, even if there may be a technical consistency, which I doubt. It appears to have authorized capitalization of losses for periods before any rate petition was filed and the amortization of those losses from subsidy payments afterward. I find far less statutory authorization for such a device for carrying losses forward into current rates than for forthright fixing of effective rates from such prior date as shall be proper. If the need for retroactivity is so imperative that it must be met by evasion, the policy arguments of the Board against construing the statute to permit retroactivity fail. I do not know that these matters of policy should influence the Court in any event, but if they do, my own predilections, unlike the Court's, favor fixing the subsidy on experience rather than on prophecy. In the light of what appears to be the practice, I see no reason why the statute should not be applied so as to carry out what its language conveys and why the subsidy rates should not be regarded as always tentative and subject to revision either to meet unforeseen contingencies or to recapture excessive payments. The Commission would no more be bound to reimburse extravagant management or improvident outlay after it has occurred than to allow for it in advance. In fact, excessive expense would probably be easier to detect in actual statements of operations than in estimates. 21 But if I were to consider accepting the Board's argument, I would at least set this case for reargument and require a candid explanation of what appears to be a material discrepancy between what the Board has led this Court to hold and the premises on which it seems actually to be proceeding. 22 Mr. Justice FRANKFURTER joins in this opinion. 1 Section 406 provides: '(a) The Authority is empowered and directed, upon its own initiative or upon petition of the Postmaster General or an air carrier, (1) to fix and determine from time to time, after notice and hearing, the fair and reasonable rates of compensation for the transportation of mail by aircraft, the facilities used and useful therefor, and the services connected therewith (including the transportation of mail by an air carrier by other means than aircraft whenever such transportation is incidental to the transportation of mail by aircraft or is made necessary by conditions of emergency arising from aircraft operation), by each holder of a certificate authorizing the transportation of mail by aircraft, and to make such rates effective from such date as it shall determine to be proper; (2) to prescribe the method or methods, by aircraft-mile, pound-mile, weight, space, or any combination thereof, or otherwise, for ascertaining such rates of compensation for each air carrier or class of air carriers; and (3) to publish the same; and the rates so fixed and determined shall be paid by the Postmaster General from appropriations for the transportation of mail by aircraft. '(b) In fixing and determining fair and reasonable rates of compensation under this section, the Authority, considering the conditions peculiar to transportation by aircraft and to the particular air carrier or class of air carriers, may fix different rates for different air carriers or classes of air carriers, and different classes of service. In determining the rate in each case, the Authority shall take into consideration, among other factors, the condition that such air carriers may hold and operate under certificates authorizing the carriage of mail only by providing necessary and adequate facilities and service for the transportation of mail; such standards respecting the character and quality of service to be rendered by air carriers as may be prescribed by or pursuant to law; and the need of each such air carrier for compensation for the transportatio of mail sufficient to insure the performance of such service, and, together with all other revenue of the air carrier, to enable such air carrier under honest, economical, and efficient management, to maintain and continue the development of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service, and the national defense.' The Civil Aeronautics Board took the place of the Authority on June 30, 1940. See 54 Stat. 1235. 2 See 6 C.A.B. 595. 3 See note 1, supra. 4 See § 1 of Title I of the Transportation Act of 1940, 54 tat. 899, 49 U.S.C., note prior to § 1, 49 U.S.C.A. note preceding § 1: '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 * * * to * * * foster sound economic conditions in transportation and among the several carriers; * * * 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.' 5 The other rate-making provisions of the Act likewise follow the conventional pattern. See § 1002(d) and (e), 49 U.S.C.A. § 642(d, e). 6 The Interstate Commerce Commission in its administration of the Air Mail Act of 1934 as amended, 48 Stat. 933, 935, 49 Stat. 614, 616, 39 U.S.C.A. § 469 et seq., had asserted the power to make its orders effective as of the date of initiation of the proceeding. But there was a sharp divergence of views within the Commission over its authority to do so. See Air Mail Compensation, 216 I.C.C. 166, 222 I.C.C. 602. The congressional committees seemed primarily concerned with that problem in their consideration of the 'make effective' clause in the bills which preceded the ones resulting in the Act. See S. Hearings, Committee on Interstate Commerce, S. 2 and S. 1760, 75th Cong., 1st Sess. 179, 180, 239, 291, 343, 483—485, 523. And see H.R. Hearings, Committee on Interstate and Foreign Commerce, H.R. 5234 and H.R. 4652, 75th Cong., 1st Sess. 325—327. The policy of adhering to conventional rate-making is suggested by H.R. Rep. No. 911, 75th Cong., 1st Sess. 18, and by the statements of Senator Truman who was in charge of the bill in the Senate. 81 Cong.Rec. 9202, 9204. This history is relevant to our problem, for though it relates to the 1937 bill which was not passed, the 'make effective' clause crystallized at that time and appeared in the 1938 bill which was enacted. The Conference Report on the latter bill is silent on the 'make effective' clause, though the following passage from it, H.R. Rep. No. 2635, 75th Cong., 3d Sess. 71—72, by its brief exposition of the power conferred suggests that Congress did not depart from the conventional pattern of rate-making when it enacted the measure: 'This section (§ 406) empowers the Authority to fix mail rates and sets forth the congressional policy to guide the Authority in fixing such rates and enables the Authority to adjust rates so that the policy of Congress may be properly carried out in the case of each carrier or class of carriers according to the needs of the particular case.' 7 § 406(b) supra note 1. 8 Section 2(d) provides: 'In the exercise and performance of its powers and duties under this Act, the (Board) shall consider the following, among other things, as being in the public interest, and in accordance with the public convenience and necessity— '(d) Competition to the extent necessary to assure the sound development of an air-transportation system properly adapted to the needs of the foreign and domestic commerce of the United States, of the Postal Service, and of the national defense * * *.' 49 U.S.C.A. § 402(d). 9 After the present case was argued in this Court, the Civil Aeronautics Board, on February 21, 1949, awarded a temporary mail rate, increase to TWA effective March 14, 1947, to compensate it for losses sustained prior thereto as the result of grounding the Constellation aircraft. American Airlines, Inc., et al., Mail Rate Increases, C.A.B. Docket No. 2849, Serial No. 3-2484 (Feb. 21, 1949). That action does not render the present case moot, for the new temporary mail rate covers only a part of the losses on the basis of which a rate increase was sought here. Nor do we have in this case any question concerning the power of the Board over temporary, as distinguished from final, mail rates. See Essair, Inc., Temporary Mail Rate, 6 C.A.B. 687, 690—691; In the Matter of National Airlines Inc., Docket No. 3037, Serial No. E1271, March 5, 1948.

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336 U.S. 704 69 S.Ct. 814 93 L.Ed. 993 GRIFFINv.UNITED STATES. No. 417. Argued Dec. 15, 16, 1948. Decided April 25, 1949. Rehearing Denied May 31, 1949. See 337 U.S. 921, 69 S.Ct. 1152. Mr. Francis J. Kelly, of Washington, D.C., for petitioner. Mr. Charles B. Murray, of Washington, D.C., for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 This case was brought here under § 1254(1) of Title 28 of the United States Code, 28 U.S.C.A. § 1254(1) to review the dismissal by the Court of Appeals for the District of Columbia of an appeal from the denial of a motion for a new trial on the ground of evidence discovered after the petitioner had been convicted of murder in the first degree. 335 U.S. 866, 69 S.Ct. 139. The decisive issue is the admissibility of that evidence. The question arises not through its exclusion at trial but on a motion for a new trial in order to be able to introduce it as newly discovered. 2 The petitioner, Baxter Griffin, was convicted of the murder of Lee Hunter. The killing was the outcome of a quarrel. Admitting that he shot Hunter, Griffin claimed that he did so in self-defense. His story was that the deceased and he were playing a card game called blackjack, that Hunter demanded a larger share of the pot than was his right, and that upon his refusal to pay, Hunter 'jumped up and started around the table, with his hand in his pocket, and told me he would kick my teeth out of my head.' On cross-examination Griffin added that Hunter threatened to kill him. Accordingly, so his story continued, Griffin shot Hunter as Hunter advanced toward him with his hand in his pocket. This version of the occurrence was contradicted by five Government witnesses. Each testified that petitioner started the argument, and that it had nothing to do with the card game which, according to their account, was over before the fracas began. According to them, this is what happened: Griffin made some remark to Hunter about taking Hunter's wife and baby around to Griffin's house; Hunter replied that he would kick petitioner's teeth down his throat; Griffin thereupon left the house and returned within ten minutes with a gun, and on his return shot Hunter who had made no move from the spot where he was standing. Griffin admitted that he saw nothing in Hunter's hand at the time he shot Hunter. On the evidence, as summarized, the jury on March 28, 1947, found Griffin guilty of murder in the first degree; on April 18, 1947, he was sentenced to death; on December 8, 1947, the conviction was affirmed, 83 U.S.App.D.C. 20, 164 F.2d 903; on March 15, 1948, this Court denied certiorari, 333 U.S. 857, 68 S.Ct. 727, 92 L.Ed. 1137. 3 On May 7, 1948, a little more than a month before the day set for execution, Griffin began the present proceedings for a new trial. It was based on affidavits of his then counsel who averred that it had recently come to his knowledge that the attendant at the morgue had found an opened penknife in the trousers' pocket of the deceased and that the prosecutor knew of this at the time of the trial but failed to introduce this circumstance in evidence or make it available to the defense. The affidavits further alleged that there was evidence that playing cards were on the floor immediately after the shooting, a fact which would, had it been known to the defense, have tended to corroborate Griffin's statement that the card game was in progress at the time of the shooting. An extended hearing was had on the motion for a new trial. The allegation regarding scattered playing cards on the floor at the time of the fatal shooting was adequately met, and this ground for a new trial need not detain us. 4 As to Griffin's discovery, after his conviction was affirmed, of the undisclosed knife in the pocket of the deceased, the Government conceded that it knew of this circumstance at the time of the trial and despite that knowledge neither introduced the fact in evidence nor felt any duty to make it known to the defense. The Government justified this on the ground that in its view the circumstance of the knife was inadmissible, since knowledge of its presence in the pocket of the deceased had not been communicated to Griffin either by sight or otherwise. The District Judge took this view of the law and denied the motion for a new trial. In an unreported opinion, he stated, 'The question whether a person is justified in attacking an assailant in self-defense must be determined by the facts which were presented to the person who pleads self-defense. He (Griffin) did not know, it appears, that the deceased had an open knife in his pocket, and therefore its existence is irrelevant.' An appeal having been taken, the Government moved to dismiss the appeal on the ground that 'the issues raised by appellant's motion for a new trial were fully explored in the court below and that the disposition made of them by the trial court was manifestly correct.' The appeal was dismissed by a unanimous Court of Appeals, presided over by a judge than whom no one is more alert in protecting the rights of the accused. 5 Unfortunately, the Court of Appeals evidently thought that the ground for dismissing the appeal was too clear to require explication. It dismissed the appeal without an expression of views regarding the admissibility of the evidence on which the claim for a new trial rests. It may well have done so on the ground that in the District evidence of this nature is inadmissible. That this was the reason for the dismissal is the view of some members of this Court. The opinion of the Court of Appeals on a later appeal from the denial of a petition for habeas corpus by Griffin lends support to such an interpretation of the summary dismissal of the appeal now under review. See Griffin v. Clemmer, 83 U.S.App.D.C. 351, 169 F.2d 961.1 But solicitude for life bars reliance on such an inference, especially since the issue on habeas corpus is quite different from that on appeal from a denial of a motion for a new trial. It seems to us more appropriate for the Court of Appeals to address itself directly to the issue of admissibility. This is so in order to rule out the inference that the Court of Appeals may, in apply ng United States v. Johnson, 327 U.S. 106, 66 S.Ct. 464, 90 L.Ed. 562, have deemed the denial of a motion for a new trial on the basis of newly discovered evidence solely a matter for the trial court's discretion. 6 Were the Court of Appeals to declare that the controverted evidence was admissible according to the law prevailing in the District, it would have to consider further whether it would not be too dogmatic, on the basis of mere speculation, for any court to conclude that the jury would not have attached significance to the evidence favorable to the defendant had the evidence been before it. If the Court of Appeals had decided that the disputed evidence was not admissible in the District of Columbia on a claim of self-defense and on that ground had sustained the denial of the motion for a new trial, there would have been an end of the matter. It is not to be assumed that this Court would have granted a petition for certiorari to review the ruling since the determination would have been a matter of local law as are the rules of evidence prevailing in the State Courts. 7 We are told, however, that a ruling which did not permit the introduction of 'uncommunicated threats' would constitute 'egregious error' to be corrected by this Court. Fisher v. United States, 328 U.S. 463, 476, 66 S.Ct. 1318, 1324, 90 L.Ed. 1382, 166 A.L.R. 1176. Wigmore is vouched as authority that uncommunicated threats are admissible in 'virtually all Courts.' But Wigmore immediately follows the words quoted with a series of qualifications and limitations which prove that there are few questions of admissibility in trials for murder that have occasioned a greater contrariety of views. See 1 Wigmore, Evidence § 111 (3d Ed., 1940).2 By way of example, most jurisdictions hold that evidence of uncommunicated threats is inadmissible where there is clear proof that the defendant took the initiative, or where there is no evidence that the deceased was the aggressor other than the proffered uncommunicated threats. Were this the rule in the District, the dismissal of the appeal may well have been rested on it, since there was weighty proof that the petitioner was the aggressor. Indeed, for all we know the Court of Appeals might have had in mind a rule concerning uncommunicated threats that would admit them and yet guard against the danger of fabrication by placing upon the trial judge the responsibility of excluding such alleged threats against the defendant in the absence of proof satisfactory to him of some hostile manifestation by the deceased relevant to the killing. At least one State has some such rule. State v. Carter, 197 La. 155, 158, 1 So.2d 62. This is not to reject as unreasonable a rule, followed by some courts, that would let the evidence in, even where all other witnesses oppose a defendant's version of the killing. 8 One thing is clear. There is no 'federal rule' on this subject. The decision in Wiggins v. People, etc., in Utah, 93 U.S. 465, 23 L.Ed. 941, does not purport to lay down a general rule, nor does it even formulate the evidentiary problem now in controversy. In that case, in light of the fact that there was no other identification of the aggressor, proof was offered that the deceased had exhibited a pistol a few minutes before the shooting and had said, though out of the hearing of the accused, that 'he would kill defendant before he went to bed that night.' and this Court naturally held that this evidence should have been admitted. It did so because 'it would have tended strongly to show where that first shot came from, and how that pistol, with one chamber emptied, came to be found on the ground.' Wiggins v. People, etc., in Utah, supra, 93 U.S. at page 470. 9 But even assuming that the 'federal rule' is that the evidence described in the motion for a new trial would be admissible, it does not follow that it must also be the rule for the District of Columbia. This Court, in its decisions, and Congress, in its enactment of statutes, have often recognized the appropriateness of one rule for the District and another for other jurisdictions so far as they are subject to federal law. Thus, the 'federal rule' in first-degree murder cases is that, unless the jury by unanimous vote agrees that the penalty should be death, the court must fix the sentence at imprisonment for life. 35 Stat. 1151, 1152, 18 U.S.C. § 567, now 18 U.S.C. § 1111, 18 U.S.C.A. § 1111; (1948), Andres v. United States, 333 U.S. 740, 68 S.Ct. 880, 92 L.Ed. 1055. But a defendant convicted of first-degree murder in the District cannot look to the jury to soften the penalty; he must be given the death sentence. 31 Stat. 1321, 43 Stat. 799, D.C.Code § 22—2404, Johnson v. United States, 225 U.S. 405, 32 S.Ct. 748, 56 L.Ed. 1142. Furthermore, the Court's decision in Fisher v. United States, 328 U.S. 463, 66 S.Ct. 1318, 90 L.Ed. 1382, 166 A.L.R. 1176, makes clear that when we refused to reverse the Court of Appeals for the District we were not establishing any 'federal rule' in interpreting the murder statutes which apply in places other than the District of Columbia over which Congress has jurisdiction. In fact, this Court has been at pains to point out that 'Congress * * * recognized the expediency of separate provisions' pertaining to criminal justice applicable exclusively to the District of Columbia in contradistinction to the Criminal Code governing offenses amendable to federal jurisdiction elsewhere. Johnson v. United States, 225 U.S. 405, 418, 32 S.Ct. 748, 752, 56 L.Ed. 1142. 10 Many statutes reflect this distinctive position of the District in matters of criminal law. Compare 35 Stat. 1149, 18 U.S.C. § 516, 18 U.S.C.A. § 516 ('federal' adultery statute), now repealed, 18 U.S.C. p. 2415 (1948), with 31 Stat. 1332, D.C.Code § 22—301 (District adultery statute); compare 35 Stat. 1143, 18 U.S.C. §§ 2031, 2032, 18 U.S.C.A. §§ 2031, 2032, (1948) ('federal' rape statute) with 31 Stat. 1322, 41 Stat. 567, 43 Stat. 798, D.C.Code § 22—2801 (District rape statute); compare 35 Stat. 1144, 18 U.S.C. § 2111, 18 U.S.C.A. § 2111 (1948) ('federal' robbery statute) with 31 Stat. 1322, D.C.Code § 22—2901 (District robbery statute); compare 35 Stat. 1144, 18 U.S.C. § 466, 18 U.S.C.A. § 466 ('federal' larceny statute), now repealed, 18 U.S.C. p. 2415 (1948),3 with 31 Stat. 1324, 50 Stat. 628, D.C.Code § 22—2201 (District larceny statute). In fact, it requires two volumes to contain 'all the general and permanent laws relating to or in force in the District of Columbia, on January 3, 1941, except such laws as are of application in the District of Columbia by reason of being laws of the United States general and permanent in their nature.' See reface to District of Columbia Code (1940 Ed.). If Congress can enact substantive rules of criminal law exclusively for the District of Columbia,4 the Court of Appeals for the District of Columbia ought not to be denied opportunity to formulate rules of evidence appropriate for the District, so long as the rules chosen do not offend statutory or constitutional limitations. 11 The position of spouses as witnesses strikingly illustrates that the District stands apart from the rule of evidence prevailing generally in the federal courts. The federal courts have held that one spouse cannot testify against the other unless the defendant spouse waives the privilege. Miles v. United States, 103 U.S. 304, 26 L.Ed. 481; Bassett v. United States, 137 U.S. 496, 11 S.Ct. 165, 34 L.Ed. 762; cf. United States v. Mitchell, 2 Cir., 137 F.2d 1006, 1008. Since this Court in the Funk case left open the question whether this rule should be changed, Funk v. United States, 290 U.S. 371, 373, 54 S.Ct. 212, 78 L.Ed. 369, 93 A.L.R. 1136, it presumably is still the 'federal rule' for the lower courts. In the District, however, the rule has long been otherwise. Halback v. Hill, 49 App.D.C. 127, 261 F. 1007; Buford v. Buford, 81 U.S.App.D.C. 169, 156 F.2d 567, 568; cf. Dobbins v. United States, 81 U.S.App.D.C. 218, 157 F.2d 257; 31 Stat. 1358, D.C.Code § 14 306. Another example is afforded by the fact that the statute just cited also provided that one spouse could testify in favor of the other in cases in the District when the 'federal rule' was still to the contrary. Compare Jin Fuey Moy v. United States, 254 U.S. 189, 41 S.Ct. 98, 65 L.Ed. 214; Hendrix v. United States, 219 U.S. 79, 31 S.Ct. 193, 55 L.Ed. 102, both overruled in Funk v. United States, supra. 12 The problem of the admissibility of the evidence set forth in the motion for a new trial is serious and its wise solution full of difficulty. The problem was apparently not explored below, and at the bar of this Court counsel did not give it the consideration appropriate for determination of a federal issue of general importance. It was not even argued in their briefs. Under such circumstances it is not for us to announce a rule for the District of Columbia. Nothing that has been said concerning the various possible choices is intended as an expression of preference among the competing rules about the admissibility of uncommunicated threats, nor as the slightest restriction upon the freedom of the Court of Appeals to make its own choice. We purposely withhold any expression of opinion on the merits of any of the permissible views on admissibility of this evidence. Certainly nothing in our decisions forecloses the Court of Appeals from selecting an one in the range of choices open to it, each one having some rational basis. That court has heretofore been recognized as the appellate tribunal for determining the local rules of evidence; it also is a court that has active experience with the just and practical considerations governing trials for murder, plainly outside the preoccupation of this Court. 13 It is precisely for such reasons that for a decade the Court has declined to review all convictions for first-degree murder in the District of Columbia, with a single exception, and in every one of these cases some local rule of evidence was at least in part involved. The Appendix gives a summary of the legal issues involved in the fourteen cases in which we denied a petition for certiorari. This course of disposition manifests uniformity of respect by this Court for District rulings on evidence.5 Reference to this course of disposition of attempts to secure review here for convictions of murder in the District in no wise disregards our repeated admonition that denial of a petition for certiorari imports nothing as to the merits of a lower court decision. These denials do not remotely imply approval of the various rulings on evidence made in these cases by the Court of Appeals for the District. What they do establish is that it has become settled practice for this Court to recognize that the formulation of rules of evidence for the District of Columbia is a matter purely of local law to be determined—in the absence of specific Congressional legislation—by the highest appellate court for the District. 14 Previous to this case, there was, as has been noted, a single exception to this Court's consistent refusal, for the past decade, to bring here for review a conviction for murder in the District.6 The disposition of the exception powerfully underlines the significance of the necessity for the Court of Appeals to pass initially on this issue. The conviction in that case was affirmed essentially on the principle that the law of evidence and procedure governing criminal trials in the District of Columbia is in the keeping of the Court of Appeals for the District and is not to be exercised by this Court. 'The administration of criminal law in matters not affected by constitutional limitations or a general federal law is a matter peculiarly of local concern. * * * Matters relating to law enforcement in the District are entrusted to the courts of the District. Our policy is not to interfere with the local rules of law which they fashion, save in exceptional situations where egregious error has been committed.' Such were the views which determined decision in Fisher v. United States, 328 U.S. 463, 476, 66 S.Ct. 1318, 1324, 90 L.Ed. 1382, 166 A.L.R. 176. While the Fisher case evoked dissent, it was a decision rendered after the Court of Appeals had fully declared its views of the law, and none of the considerations that moved the dissenters in that case is even remotely present in the case now before us. 15 We must therefore remand the case to the Court of Appeals with instructions to decide, in the first instance, what rule should prevail in the District of Columbia. To do otherwise would constitute an unwarranted departure from a wise rule of practice in our consideration of cases coming here from the Court of Appeals of the District. 'There are cogent reasons why this Court should not undertake to decide questions of local law without the aid of some expression of the views of judges of the local courts who are familiar with the intricacies and trends of local law and practice. We do not ordinarily decide such questions without that aid where they may conveniently be decided in the first instance by the court whose special function it is to resolve questions of the local law of the jurisdiction over which it presides. Huddleston v. Dwyer, 322 U.S. 232, 237, 64 S.Ct. 1015, 1018 (88 L.Ed. 1246), and cases cited. Only in exceptional cases will this Court review a determination of such a question by the Court of Appeals for the District.' Busby v. Electric Utilities Employees Union, 323 U.S. 72, 74—75, 65 S.Ct. 142, 143, 144, 89 L.Ed. 78. APPENDIX 16 Summary of Disposition of Petitions for Certiorari to the Court of Appeals for the District of Columbia to Review Death Sentences on Conviction for First-degree Murder since 1938. 17 Reported at-- 18 Case Questions raised Disposition U. S. F. 2d 19 1. No. 926, O. T. 1939... 1. Insufficiency of evidence Denied 310/643 111/199 20 McAffee v. U. S. 2. Use of confession. 3. Interpretation of murder 21 staute. 22 2. No. 260, O. T. 1942... 1. Abandonment of felony Denied 317/656 130/411 23 Mumforde v. U. S. 2. Admission of statements made 24 in absence of counsel. 25 3. Charge to jury. 26 3. No. 341, O. T. 1944... 1. Use of confession Denied 323/754 144/519 27 Neely v. U. S. 2. Admission of statements made 28 in absence of counsel. 29 4. No. 1057, O. T. 1944... 1. Use of confession Denied 325/850 147/572 30 Mergner v. U. S. 2. Instructions as to premeditation. 31 No. 270, O.T. 1945 3. Was there prima facie evidence 32 (denial of lunacy haaring). in support of lunacy petition? 33 5. No. 122, O. T. 1945... 1. Insufficiency of evidence to Granted 326/768 150/977 Fisher v. U. S. show premeditation 34 2. Refusal of instructions. 3. Interpretation of murder statute 35 (see opinion 328 U.S. 463, 36 66 S.Ct. 1318). 37 6. No. 363, O. T. 1945... 1. Admission into evidence of Denied 326/788 150/593 38 McFarland v. U. S. victim's blood-stained clothes. 2. Instructions on circumstantial 39 evidence. 40 3. Newly discovered evidence. 41 4. Blood-detection test. 42 7. No. 1242, O. T. 1945... 1. Admission of expert testimony. Denied 328/873 155/857 43 Medley v. U. S. 2. Instructions to jury. 44 3. Time to file plea in abatement. 45 8. No. 1097, O. T. 1946... 1. Evidence of unrelated crimes Denied 331/830 158/652 46 Hawkins v. U. S. 2. Use of confession. 47 3. Charge to jury. 48 9. No. 276 Misc. O. T. 1. Cross-examination by trial Denied 333/857 164/903 1947. judge 49 Griffin v. U. S. 50 Reported at-- 51 Case Questions raised Disposition U. S. F. 2d 52 10. No 300 Misc. O. T. 1947 1. Jury improperly constituted Denied 333/829 165/225 53 Wheeler v. U.S. 2. Restrictive cross-examination. 54 3. Misconduct of judge. 55 11. No. 327 Misc. O. T. 1. Sufficiency of evidence Denied 333/830 165/225 56 Patton v. U.S. 2. Separation of jury. 57 12. No. 519 O. T. 1947... 1. Judge's comment on evidence Denied 333/838 164/716 58 Fook v. U. S. 2. Instructions to the jury. 3. Prejudicial remarks 59 13. No. 553 Misc. O. T. 1. Evidence of other crimes Denied 334/853 168/161 60 1947. 2. Insufficiency of proof. 61 Hall v. U. S. 3. Use of confession. 4. Improper use of peremptory 62 challenges. 63 14. No. 554 Misc.* O. T. 1. Evidence of other crimes Denied 334/853 168/161 64 1947. 2. Insufficiency of proof. 65 Gray v. U. S. 3. Use of confession. 4. Improper use of peremptory 66 challenges. 67 15. No. 41 Misc. O. T. 1. Admissibility of uncommunicated Granted 225/866 --------- 68 1948 (instant case). threats to self-defense 69 Groffin v. U.S. (now No. 417). 70 Mr. Justice MURPHY, dissenting. 71 Baxter Griffin has been sentenced to die for the murder of Lee Hunter. His justification for the killing was self defense. He has found that Hunter had an open knife in his pocket when he was shot. He seeks a new trial on the basis of that newly-discovered evidence. The first question is whether that evidence would be admissible at a new trial. 72 It is clear to me that it is admissible. Uncommunicated threats and designs on the defendant cannot show his motive in killing, but they may demonstrate that a design on the defendant did in fact exist. This is the rule in 'virtually all Courts.' 1 Wigmore, Evidence (3d Ed., 1940), § 111, p. 547. It is certainly the federal rule. Wiggins v. People in Territory of Utah, 93 U.S. 465, 23 L.Ed. 941; Trapp v. Territory of New Mexico, 8 Cir., 225 F. 968. And it is a thoroughly desirable rule. A defendant should be entitled to present the jury with evidence lending credence to his theory of the case. Griffin's case is a good example of the policy behind the rule: for the open knife is the only supporting evidence of his self-defense testimony. 73 There can be little question that the open knife is an element in the proof of a design on the defendant, and is admissible under the rule stated above. But some Courts have made exceptions to this rule, three of which might be considered relevant in this case. Wigmore, supra, § 111, (3). The exceptions have a central foundation: distrust of the jury's ability to evaluate this kind of evidence. Many rules of exclusion are bottomed on this distrust, of course. But it is clearly misplaced when directed at the jury's capability in weighing the value of uncommunicated threats in a murder trial. The evidence is simple; it is not calculated to inflame; it is far more difficult to fabricate than are communicated threats; the prosecution can easily question its importance; and it provides solid support for a defendant's self-defense theory. While in Griffin's case the evidence is stronger for the prosecution than it was in Wiggins,' supra, that difference is not a distinction. The very plea of self-defense raises doubt on that question. Defendant's testimony, supporting his plea, raises further doubt. 74 It is clear that this evidence might change the jury's verdict. To make admissibility depend upon mechanical and often illogical variations in the size of the doubt in a judge's mind is an invasion of the jury's function. 'It is pertinent here to remark, that both the effect of (the witnesses') testimony and (their) credibility was to be weighed by the jury.' Wiggins v. People in Territory of Utah, supra, 93 U.S. at page 469. 75 The Court makes little attempt to justify the exclusion of this evidence. Instead, it cites Fisher v. United States, 328 U.S. 463, 66 S.Ct. 1318, 90 L.Ed. 1382, 166 A.L.R. 1176. The Fisher case declined to upset an evidence rule that had 'long been the law of the District of Columbia': that 'mental deficiency which does not show legal irresponsibility' is not 'a relevant factor in determining whether an accused is guilty of murder in the first or second degree.' The Court stated the general rule that 'matters relating to law enforcement in the District are entrusted to the courts of the District' in a case in which a reversal would have been a 'radical departure from common law concepts' and thus 'more properly a subject for the exercise of legislative power or at least for the discretion of the courts of the District.' 328 U.S. at pages 471, 473, 476, 66 S.Ct. at page 1322. 76 In Fisher, the Court considered the judiciary's case by case method ill suited for the sweeping changes which were and are necessary in the law of insanity. It recognized that an indirect attack on the problem, by admitting evidence of one's past life as relevant in premeditation, might lead to the trial of one's whole life rather than of the specific offense charged. 77 Despite the radical nature of the change, three members of this Court thought that the judiciary should make an attempt to correct the injustice of the common-law rules. Those arguments were rejected. But they were rejected only upon the limited basis to which I have referred. 78 Today the Court extends the Fisher rule. It calls Fisher a holding that no District of Columbia rules of evidence are reviewable in this Court. The Fisher case is no authority for such a proposition. There is no warrant for it in statute. And our denial of thirteen petitions for certiorari in death cases in the District in the last ten years cannot establish such a proposition. In the last ten complete Terms of Court, only 5.1% of all petitions for certiorari in forma pauperis have been granted. And the percentage of petitions for certiorari, other than in forma pauperis, granted in the same period has fluctuated between 14.9 and 22.7.1 When we deny nineteen out of twenty petitions in forma pauperis, and four out of five of the other petitions, the denial of petitions in thirteen capital cases in ten years reflects no greater policy in those cases than it does in any other class of cases. This is particularly true when the sample fifteen cases—is so small compared to the number of cases we are asked to review, and when the sample considers only murder cases. 'Nothing § so fallacious as facts, except figures.' For figures which do not reveal the peculiar facts of each case cannot reflect a policy of any kind. 79 Self-limitation of our appellate powers may be a worthy thing, but it is not attractive to me when the behest of Congress is otherwise. Congress has given this Court the ultimate power to review District of Columbia trials. No matter how the decision is phrased, the Court's power in the premises is such that it is responsible for the evidence rule it asks the Court of Appeals to expound. There is no 'radical departure from common law rules' in Griffin's case, as there was in Fisher's. We should declare the evidence admissible. 80 If the evidence is admissible, a motion for a new trial should be granted. A contrary determination would be an abuse of discretion,2 for there is manifestly a reasonable possibility3 that the jury would lessen the verdict of first degree murder. 81 The CHIEF JUSTICE, Mr. Justice DOUGLAS, and Mr. Justice RUTLEDGE join in this opinion. 1 In Griffin v. Clemmer, 83 U.S.App.D.C. 351, 169 F.2d 961, the Court of Appeals had before it an appeal from the denial of a petition for a writ of habeas corpus alleging that Griffin's detention was illegal because the conviction was procured by unfair conduct on the part of the prosecutor. This was filed by Griffin after the Court of Appeals had dismissed the appeal from the denial of the motion for a new trial but before this Court granted this petition for certiorari. The claim of unfairness was based on the failure to disclose the finding of the penknife on Hunter. In effect this was a claim of lack of jurisdiction in the court, according to the doctrine of Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461, 146 A.L.R. 357. The Court of Appeals deemed the evidence to be irrelevant to that proceeding. It is too precarious to treat this as a holding on the admissibility of the evidence. 2 It is pertinent to quote at length Wigmore's statements on this subject: 'This evidence (uncommunicated threats) is now conceded to be admissible, by virtually all Courts. But the following discrim nations must be noted: '(3) There is much opportunity for abuse of this sort of evidence. Not only may it be manufactured; but, even when genuine, it may be employed improperly to help the defendant by way of justification,—in certain communities at least, where the Courts have been compelled repeatedly to make clear the law that a threat to shoot another is no justification for the latter to kill on sight. For these reasons various limitations have been attempted: '(a) The evidence of threat is inadmissible where there is clear evidence that the defendant was the aggressor. Most jurisdictions adopt this rule, and none seem to negative it. '(b) Furthermore, the threat is only admissible (as most Courts provide) where there is some other evidence of an aggression by the deceased. This is unually expressed by saying that there must have been some 'demonstration of hostility,' or, more shortly, some 'overt act,' by the deceased. It is difficult to say whether this limitation originated in the 'res gestae' notion (infra) or in a rule of criminal law that an overt act is a necessary element of the justification of self-defence, or merely in a general policy of preventing the abuse of this evidence. At any rate, it seems a satisfactory limitation, provided the multiplication of quibbles as to 'overt acts' is avoided by leaving the whole matter in the hands of the trial judge; for it prevents the defendant from trying to use the threats as a mere pretext for justifying the killing of one who was making no actual attempt to injure him. '(c) Another condition, sometimes suggested, but inconsistent with and more stringent than the preceding one, is that the threat should be received only when there is no other direct evidence as to who was the aggressor, i.e. when there were no eye-witnesses. Perhaps in practice a combination of (b) and (c) would be the best; i.e. to admit the evidence when by eye-witnesses there was some other evidence of the deceased's aggression, or when there were no eye-witnesses to the affair. '(4) Another and additional use, independent of the preceding, receives the uncommunicated threat in 'confirmation' or 'corroboration' of communicated threats. This is usually coupled with one of the preceding limitations as an alternative condition of admission. '(5) The doctrine of 'res gestae' is sometimes invoked as the ground of receiving the evidence; and the same notion underlies the occa- sional suggestion that the threats 'characterize' the deceased's conduct. This employment of 'res gestae' as a veil for obscurity of thought is elsewhere examined (post, § 1795); and it is enough here to say that it has no possible application to this kind of evidence, and cannot be made to fit its rules; the sooner such phrases are abandoned, the better for clearness of legal thought. '(6) In some jurisdictions it is impossible to ascertain the exact rule. Previous precedents are ignored, inconsistent tests laid down in succeeding rulings, decisions in other jurisdictions are cited to the exclusion of local precedents; and the oftener the matter comes up for a ruling, the more it is obscured. '(7) The prosecution may of course rebut the evidence of threats by countertestimony of the deceased's peaceful plans. It would seem also that, whenever the deceased's aggression is in issue, the prosecution could begin with its evidence of peaceful plans. The prosecution may also, on the principle of § 63, ante, rebut by evidence of the deceased's peaceful character. '(8) There may be sundry other cases in which the threats of a deceased person would be relevant apart from the present doctrines. '(9) The threats of a third person may also be admitted, where it is desired to show that he, and not the accused, was the aggressor. '(10) In other issues in which the aggression of the plaintiff or prosecuting witness is material, his threats are admissible on the foregoing principles. '(11) Other conduct of the deceased, not amounting to threats, but indicating a motive to attack (on the principle of § 390, post) may be admitted, by the logic of the present rule, without showing prior communication to the defendant.' 1 Wigmore, Evidence, § 111 (3d Ed., 1940). 3 The repeal of the specific provisions on adultery and larceny does not detract from their illustrative significance. 4 '* * * There is certainly nothing anomalous in punishing the crime of murder differently in different jurisdictions. It is but the application of legislation to conditions. But if it be annomalous, very little argument can be drawn from it to solve the questions in controversy. The difference existed for a number of years between the District and other places under national jurisdiction, for, as we have seen, the qualified verdict has not existed in the District since the enactment of the District Code, and did not exist when the Criminal Code was enacted. * * * 'Congress certainly, in enacting the District Code, recognized the expediency of separate provisions for the District of Columbia. It was said at the bar, and not denied, that the District Code was not only the work of the lawyers of the District, having in mind the needs of the District, but of its citizens as well, expressed through various organizations and bodies of them. In yielding to the recommendations Congress made no new precedent. It had given local control to the territories, and it enacted a separate Code for Alaska.' Johnson v. United States, 225 U.S. 405, 417—418, 32 S.Ct. 748, 752, 56 L.Ed. 1142. 5 To compare this impressive course of disposition with the fact that we have granted little over 5% of petitions in forma pauperis on behalf of convicts is to treat statistics as though they were merely figures without meaning. The mass of these in forma pauperis petitions, usually drawn by laymen, are pathetically trivial and frivolous endeavors by those incarcerated to procure their freedom after all other hope has faded. To draw inferences from this 5% figure is to treat as fungible denials of certiorari because no federal question is raised, denials because the state remedies were not exhausted, and denials for other unrelated jurisdictional reasons. The fourteen petitions for certiorari for the District of Columbia were of a wholly different nature. They were all cases in which the petitioner was represented by counsel and in which the Court of Appeals for the District of Columbia had considered seriously errors claimed to have occurred in the course of the trial—they were all adjudications on the merits. Our consistent denials under these circumstances are mute evidence, not of approval or disapproval, but of deference to the Court of Appeals for the District of Columbia on rules of evidence prevailing in the District. 6 The situation in England regarding appeals in criminal cases is not without illumination on the importance of abstention by this Court in criminal cases already decided by two courts. Between the establishment of the Court of Criminal Appeal by the Criminal Appeal Act of 1907 and the end of 1947, there have been 585 appeals in murder cases to that Court. In the same period there have been only four appeals from that Court to the House of Lords. Such appeals can only be taken if 'the Director of Public Prosecutions or the prosecutor or defendant obtains the certificate of the Attorney General that the decision of the Court of Criminal Appeal involves a point of law of exceptional public importance, and that it is desirable in the public interest that a further appeal should be brought.' The Criminal Appeal Act, 1907, 7 Edw. VII, c. 23. We are indebted for the above figures to the kindness of the Attorney General of England, the Rt. Hon. Sir Hartley Shawcross. * Certiorari denied because application therefor was not made within the time provided by law, 334 U.S. 853, 68 S.Ct. 1509. NOTE —The Court also denied certiorari in the only other first-degree murder case filed during the last decade. No evidentiary point was raised in the petition for certiorari. See Copeland v. United States, 80 U.S.App.D.C. 308, 152 F.2d 769, certiorari denied at 328 U.S. 841, 66 S.Ct. 1010. 1 Annual Report of the Director of the Administrative Office of the United States Courts 1948, Table A1. 2 See United States v. Johnson, 327 U.S. 106, 66 S.Ct. 464, 90 L.Ed. 562. 3 The Government concedes that the 'reasonable possibility' standard is proper, at least in a capital case. Compare Wagner v. United States, 9 Cir., 118 F.2d 801; Evans v. United States, 10 Cir., 122 F.2d 461; Weiss v. United States, 5 Cir., 122 F.2d 675; Berry v. State of Georgia, 10 Ga. 511.

89

336 U.S. 684 69 S.Ct. 834 93 L.Ed. 974 WADEv.HUNTER, Warden. No. 427. Argued March 7, 1949. Decided April 25, 1949. Rehearing Denied May 31, 1949. See 337 U.S. 921, 69 S.Ct. 1152. Messrs. R. T. Brewster, of Kansas City, Mo., and N. E. Snyder, of Kansas City, Kan., for petitioner. Mr. Oscar Davis, of Washington, D.C., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 The Fifth Amendment to the Constitution provides that a person shall not 'be twice put in jeopardy of life or limb' for the same offense. The petitioner, now in prison under a court-martial conviction for a serious offense, contends he is entitled to his freedom because another court-martial had previously put him in jeopardy for the same offense. The first court-martial was dissolved by the convening authority before the court reached a decision. The Government contends that the Fifth Amendment's double-jeopardy provision, if applicable to military courts, did not bar the second court-martial conviction here because, as the Government views the record, dissolution of the first court-martial was dictated by a pressing military tactical situation. The circumstances from which these contentions arise are as follows. 2 March 13, 1945, American troops of the 76th Infantry Division entered Krov, Germany. The next afternoon two German women were raped by two men in American uniforms. Several days later petitioner and another American soldier were arrested upon charges that they committed these offenses. Two weeks later, March 27, the troops had advanced about 22 miles farther into Germany to a place called Pfalzfeld. On that date at Pfalzfeld petitioner and the other soldier were put on trial before a general court-martial convened by order of the Commanding General of the 76th Infantry Division to which Division the two soldiers were attached.1 After hearing evidence and arguments of counsel, the court-martial closed to consider the case. Later that day the court-martial reopened and announced that the court would be continued until a later date to be fixed by the judge advocate. The reason for the continuance was the desire of the court-martial to hear other witnesses not then available before deciding the guilt or innocence of the accused.2 3 A week later the Commanding General of the 76th Division withdrew the charges from the court-martial directing it to take no further proceedings. The General then transmitted the charges to the Commanding General of the Third Army with recommendations for trial by a new court-martial. The reason for transferring the charges as explained in a communication to the Commanding General of the Third Army was: 4 'The case was previously referred for trial by general court-martial and trial was commenced. Two witnesses, the mother and father of the victim of the alleged rape, were unable to be present due to sickness, and the Court continued the case so that their testimony could be obtained. Due to the tactical situation the distance to the residence of such witnesses has become so great that the case cannot be compl ted within a reasonable time.' 5 The Commanding General of the Third Army concluded that the 'tactical situation' of his command and its 'considerable distance' from Krov made it impracticable for the Third Army to conduct the court-martial. Accordingly, he in turn transmitted the charges to the Fifteenth Army stating that this action was necessary to carry out the policy of the American Army in Europe to accelerate prompt trials 'in the immediate vicinity of the alleged offenses.' Pursuant to this transmittal, the Fifteenth Army Commanding General convened a court-martial at a point about forty miles from Krov. Petitioner, represented by counsel, filed a plea in bar alleging that he had been put in jeopardy by the first court-martial proceedings and could not be tried again. His plea was overruled, the case was tried, and a conviction followed. He was sentenced to a dishonorable discharge, forfeiture of all pay and allowances, and life imprisonment, which imprisonment was later reduced to twenty years.3 6 After exhausting his right to military review, petitioner brought this habeas corpus proceeding in a federal district court. That court ordered his release, holding that his plea of former jeopardy should have been sustained. 72 F.Supp. 755. The Court of Appeals reversed, one judge dissenting. 10 Cir., 169 F.2d 973. We hold that under the circumstances shown, the Fifth Amendment's double-jeopardy provision did not bar petitioner's trial before the second court-martial.4 7 The interpretation and application of the Fifth Amendment's double-jeopardy provision have bene considered chiefly in civil rather than military court proceedings. Past cases have decided that a defendant, put to trial before a jury, may be subjected to the kind of 'jeopardy' that bars a second trial for the same offense even though his trial is discontinued without a verdict. See Kepner v. United States, 195 U.S. 100, 128, 24 S.Ct. 797, 804, 49 L.Ed. 114, 1 Ann.Cas. 655; cf. Palko v. Connecticut, 302 U.S. 319, 322—323, 58 S.Ct. 149, 150, 82 L.Ed. 288. The same may be true where a judge trying a case without a jury fails for some reason to enter a judgment. McCarthy v. Zerbst, 10 Cir., 85 F.2d 640, 642. The double-jeopardy provision of the Fifth Amendment, however, does not mean that every time a defendant is put to trial before a competent tribunal he is entitled to go free if the trial fails to end in a final judgment. Such a rule would create an insuperable obstacle to the administration of justice in many cases in which there is no semblance of the type of oppressive practices a which the double-jeopardy prohibition is aimed. There may be unforeseeable circumstances that arise during a trial making its completion impossible, such as the failure of a jury to agree on a verdict. In such event the purpose of law to protect society from those guilty of crimes frequently would be frustrated by denying courts power to put the defendant to trial again. And there have been instances where a trial judge has discovered facts during a trial which indicated that one or more members of a jury might be biased against the Government of the defendant. It is settled that the duty of the judge in this event is to discharge the jury and direct a retrial.5 What has been said is enough to show that a defendant's valued right to have his trial completed by a particular tribunal must in some instances be subordinated to the public's interest in fair trials designed to end in just judgments. 8 When justice requires that a particular trial be discontinued is a question that should be decided by persons conversant with factors relevant to the determination. The guiding rule of federal courts for determining when trials should be discontinued was outlined by this Court in United States v. Perez, 9 Wheat. 579, 6 L.Ed. 165. In that case the trial judge without consent of the defendant or the Government discharged the jury because its members were unable to agree. The defendant claimed that he could not be tried again and prayed for his discharge as a matter of right. In answering the claim this Court said, 9 Wheat. at page 580: 9 '* * * We think, that in all cases of this nature, the law has invested Courts of justice with the authority to discharge a jury from giving any verdict whenever, in their opinion, taking all the circumstances into consideration, there is a manifest necessity for the act, or the ends of public justice would otherwise be defeated. They are to exercise a sound discretion on the subject; and it is impossible to define all the circumstances, which would render it proper to interfere. To be sure, the power ought to be used with the greatest caution, under urgent circumstances, and for very plain and obvious causes; and, in capital cases especially, Courts should be extremely careful how they interfere with any of the chances of life, in favour of the prisoner. But, after all, they have the right to order the discharge; and the security which the public have for the faithful, sound, and conscientious exercise of this discretion, rests, in this, as in other cases, upon the responsibility of the Judges, under their oaths of office. * * *' 10 The rule announced in the Perez case has been the basis for all later decisions of this Court on double jeopardy.6 It attempts to lay down no rigid formula. Under the rule a trial can be discontinued when particular circumstances manifest a necessity for so doing, and when failure to discontinue would defeat the ends of justice. We see no reason why the same broad test should not be applied in deciding whether court-martial action runs counter to the Fifth Amendment's provision against double jeopardy. Measured by the Perez rule to which we adhere, petitioner's second court-martial trial was not the kind of double jeopardy within the intent of the Fifth Amendment. 11 There is no claim here that the court-martial went beyond its powers in temporarily continuing the trial to obtain the benefit of other witnesses.7 But the District Court viewed the record as showing that the only purpose of dissolving the court-martial was t get more witnesses. This purpose, the District Court held, was not the kind of 'imperious' or 'urgent necessity' that came within the recognized exception to the double-jeopardy provision. See Cornero v. United States, 9 Cir., 48 F.2d 69, 74 A.L.R. 797. We are urged to apply the Cornero interpretation of the 'urgent necessity' rule here. We are asked to adopt the Cornero rule under which petitioner contends the absence of witnesses can never justify discontinuance of a trial. Such a rigid formula is inconsistent with the guiding principles of the Perez decision to which we adhere. Those principles command courts in considering whether a trial should be terminated without judgment to take 'all circumstances into account' and thereby forbid the mechanical application of an abstract formula. The value of the Perez principles thus lies in their capacity for informed application under widely different circumstances, without injury to defendants or to the public interest. 12 Furthermore, this record is sufficient to show that the tactical situation brought about by a rapidly advancing army was responsible for withdrawal of the charges from the first court-martial. This appears in the first order of transmittal of the charges. That order was made by the Commanding General of the 76th Division who was responsible for convening the court-martial and who was also responsible for the most effective military employment of that Division in carrying out the plan for the invasion of Germany. There is no intimation in the record that the tactical situation did not require the transfer order. The court-martial was composed of officers of the invading Army Division. Momentous issues hung on the invasion and we cannot assume that these court-martial officers were not needed to perform their military functions. In the Perez case we said that the sound discretion of a presiding judge should be accepted as to the necessity of discontinuing a trial. This case presents extraordinary reasons why the judgment of the Commanding General should be accepted by the courts. At least, in the absence of charges of bad faith on the part of the Commanding General, courts should not attempt to review his on-the-spot decision that the tactical situation required transfer of the charges. 13 Affirmed. 14 Mr. Justice MURPHY, with whom Mr. Justice DOUGLAS and Mr. Justice RUTLEDGE agree, dissenting. 15 I agree with the court below that in the military courts, as in the civil, jeopardy within the meaning of the Fifth Amendment attaches when the court begins the hearing of evidence. I agree also that a valid charge was pending before the first court-martial with which we are now concerned, and that the court had jurisdiction of the subject-matter and of the person of the petitioner. 16 In the first court-martial evidence was introduced; in fact, both sides had completed the presentation of their cases and had submitted oral argument, and the court had closed to consider its decision. The court was later opened on its own motion, for the purpose of hearing the testimony of three named witnesses, who were expected to shed light on the question of identification. 17 The Commanding General of the unit comprising petitioner and the court-martial that was trying him withdrew the charges and dissolved the court-martial, and transmitted the papers to the Commanding General of the Third Army, 'with a recommendation of trial by eneral court-martial.' They were subsequently transferred to the Commanding General of the Fifteenth Army, who referred the case for trial by general court-martial. Petitioner was tried and convicted, after the court-martial had overruled a plea of former jeopardy based on the prior proceeding. The Commanding General, Fifteenth Army, on the recommendation of his Staff Judge Advocate, approved the finding of guilty and reduced the period of confinement from life to twenty years. The case was assigned for review to Board of Review No. 4, consisting of three Judge Advocates in the Branch Office of the Judge Advocate General with the European Theater. This Board, sitting in Paris, close to the scene of military operations, filed a unanimous opinion to the effect that the plea in bar should have been sustained1 and that consequently the record of trial was legally insufficient to support the findings and sentence. The Assistant Judge Advocate General filed a dissenting opinion, and the sentence was confirmed by the Commanding General, European Theater. In the habeas corpus proceedings in the United States, the District Court agreed with the Board of Review that the plea of double jeopardy should have been sustained. The Court of Appeals reversed, one judge dissenting. 18 There is no doubt that Wade was placed in jeopardy by his first trial. This Court now holds that the decision of his Commanding Officer, assessing the tactical military situation, is sufficient to deprive him of his right under the Constitution to be free from being twice subjected to trial for the same offense. With this reading of the Constitution I cannot agree. The harassment to the defendant from being repeatedly tried is not less because the army is advancing. The guarantee of the Constitution against double jeopardy is not to be eroded away by a tide of plausible-appearing exceptions. The command of the Fifth Amendment does not allow temporizing with the basic rights it declares. Adaptations of military justice to the exigencies of tactical situations is the prerogative of the commander in the field, but the price of such expediency is compliance with the Constitution. I would reverse the judgment below. 1 The charges were under the 92d Article of War, 10 U.S.C. § 1564, 10 U.S.C.A. § 1564. 2 'Law Member: The Court desires that further witnesses be called into the case, and to allow time to secure these witnesses, this case will be continued. We would like to have as witnesses brought before the Court, the parents of this person making the accusation, Rosa Glowsky, and also the sister-in-law that was in the room who could further assist in the identification or identity of the accused. The Court will be continued until a later date set by the T.(rial) J.(udge) A.(dvocate)' 3 The other soldier was acquitted by the court-martial. The acting Army judge advocate in reviewing petitioner's conviction said: 'Four witnesses, all German, positively identified the accused Wade. The same witnesses failed to identify' the other soldier. 4 Our holding that under the circumstances here the Fifth Amendment did not bar trial by the second court-martial makes it unnecessary to consider the following questions discussed in the Government's brief: (1) To what extent a court-martial's overruling of a plea of former jeopardy is subject to collateral attack in habeas corpus proceedings. See Carter v. McClaughry, 183 U.S. 365, 390, 22 S.Ct. 181, 191, 46 L.Ed. 236, and cf. Grafton v. United States, 206 U.S. 333, 352—353, 27 S.Ct. 749, 754, 51 L.Ed. 1084, 11 Ann.Cas. 640; Sunal v. Large, 332 U.S. 174, and cases collected in n. 8, page 179, 67 S.Ct. 1588, 1591, 91 L.Ed. 1982. (2) The validity of the Fortieth Article of War, 41 Stat. 795, 10 U.S.C. § 1511, 10 U.S.C.A. § 1511. That article provides in part as follows: 'No person shall, without his consent, be tried a second time for the same offense; but no proeeding in which an accused has been found guilty by a court-martial upon any charge or specification shall be held to be a trial in the sense of this article until the reviewing and, if there be one, the confirming authority shall have taken final action upon the case.' 5 Simmons v. United States, 142 U.S. 148, 154, 12 S.Ct. 171, 172, 35 L.Ed. 968; Thompson v. United States, 155 U.S. 271, 273 274, 15 S.Ct. 73, 74, 39 L.Ed. 146. 6 See, e.g., Simmons v. United States, 142 U.S. 148, 12 S.Ct. 171, 35 L.Ed. 968; Logan v. United States, 144 U.S. 263, 297—298, 12 S.Ct. 617, 627—628, 36 L.Ed. 429; Keerl v. Montana, 213 U.S. 135, 137, 29 S.Ct. 469, 470, 53 L.Ed. 734; Lovato v. New Mexico, 242 U.S. 199, 37 S.Ct. 107, 61 L.Ed. 244. 7 The Manual for Courts-Martial, par. 75a (1928), recommends that where the ' * * * evidence appears to be insufficient for a proper determination of any issue or matter before it, the court may and ordinarily should, take appropriate action with a view to obtaining such available additional evidence as is necessary or advisable for such determination. The court may, for instance, require the trial judge advocate to recall a witness, to summon new witnesses, or to make investigation or inquiry along certain lines with a view to discovering and producing additional evidence.' 1 The opinion of the Board of Review reads in part as follows: 'We see nothing which renders the absence of witnesses, as shown by the record of trial in this case, an emergent situation in exception to the rule in the Federal courts. Their witnesses may lie beyond the reach of process, if process issues witnesses may not respond, oral promises to appear may not be kept, and they may become ill during trial; but such difficulties in proof are not grounds for a termination of trial and a second prosecution. Imperious necessity means a sudden and overwhelming emergency, uncontrollable and unforeseeable, infecting the judicial process and rendering a fair and impartial trial impossible. It does not mean expediency.' Transcript of Record, p. 75.

01

336 U.S. 695 69 S.Ct. 830 93 L.Ed. 986 HUMPHREYv.SMITH. No. 457. Argued March 30, 1949. Decided April 25, 1949. Mr. Robert W. Ginnane, of Washington, D.C., for petitioner. Mr. Daniel F. Mathews, of Syracuse, N.Y., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 The respondent, Bernard W. Smith, an American soldier, was convicted by an Army court-martial for rape of one woman and assault with intent to rape another in violation of the 92d and 93d Articles of War. 10 U.S.C. §§ 1564 and 1565, 10 U.S.C.A. §§ 1564, 1565. His punishment was dishonorable discharge, forfeiture of all pay and allowances, and imprisonment for life. Army reviewing authorities approved the conviction and sentence, but the President reduced the punishment to sixteen years' imprisonment. This habeas corpus proceeding was brought in a District Court challenging the validity of the conviction. The District Court denied relief. 72 F.Supp. 935. The Court of Appeals reversed, ordering respondent's discharge. 170 F.2d 61. We granted certiorari because the petition raises questions concerning important phases of court-martial statutory powers and the scope of judicial review of court-martial convictions. 2 We may at once dispose of the concention that the respondent should not have been convicted on the evidence offered. That evidence was in sharp dispute. But our authority in habeas corpus proceedings to review court-martial judgments does not permit us to pass on the guilt or innocence of persons convicted by courts-martial.1 3 It is contended that the court-martial was without jurisdiction to try respondent. If so the court-martial exceeded its lawful authority and can be invalidated despite the limited powers of a court in habeas corpus proceedings.2 The soundness of this contention depends upon an interpretation of the 70th Article of War, the pertinent part of which is set out below.3 It provides the manner in which pre-trial investigations shall be made preliminary to trials of soldiers before general courts-martial. A part of the language is that 'No charge will be referred to a general court martial for trial until after a thorough and impartial investigation thereof shall have been made.' The contention is that this requirement is jurisdictional in nature; that the kind of pre-trial investigation prescribed is an indispensable prerequisite to exercise of general court-martial jurisdiction; and that absent such prior investigation a judgment of conviction is wholly void. 4 Here there was an investigatio. The claim is that it was neither 'thorough' nor 'impartial' as the 70th Article requires. The Court of Appeals, one judge dissenting, so held, and its reversal was rested on that finding. There was no finding that there was unfairness in the court-martial trial itself. 5 We do not think that the pre-trial investigation procedure required by Article 70 can properly be construed as an indispensable prerequisite to exercise of Army general court-martial jurisdiction. The Article does serve important functions in the administration of court-martial procedures and does provide safeguards to an accused. Its language is clearly such that a defendant could object to trial in the absence of the required investigation. In that event the court-martial could itself postpone trial pending the investigation. And the military reviewing authorities could consider the same contention, reversing a court-martial conviction where failure to comply with Article 70 has substantially injured an accused.4 But we are not persuaded that Congress intended to make otherwise valid court-martial judgments wholly void because pre-trial investigations fall short of the standards prescribed by Article 70. That Congress has not required analogous pre-trial procedure for Navy courts-martial is an indication that the investigatory plan was not intended to be exalted to the jurisdictional level. 6 Nothing in the legislative history of the Article supports the contention that Congress intended that a conviction after a fair trial should be nullified because of the manner in which an investigation was conducted prior to the filing of charges. Its original purposes were to insure adequate preparation of cases, to guard against hasty, ill-considered charges, to save innocent persons from the stigma of unfounded charg s, and to prevent trivial cases from going before general courts-martial. War Department, Military Justice During the War, 63 (1919). All of these purposes relate solely to actions required in advance of formal charges or trial. All the purposes can be fully accomplished without subjecting court-martial convictions to judicial invalidation where pre-trial investigations have not been made. 7 Shortly after enactment of Article 70 in 1920 the Judge Advocate General of the Army did hold that where there had been no pre-trial investigation, court-martial proceedings were void ab initio.5 But this holding has been expressly repudiated in later holdings of the Judge Advocate.6 This later interpretation has been that the pre-trial requirements of Article 70 are directory, not mandatory, and in no way affect the jurisdiction of a court-martial. The War Department's interpretation was pointedly called to the attention of Congress in 1947 after which Congress amended Article 70 but left unchanged the language here under consideration.7 8 We hold that a failure to conduct pre-trial investigations as required by Article 70 does not deprive a general court-martial of jurisdiction so as to empower courts in habeas corpus proceedings to invalidate court-martial judgments. It is contended that this interpretation of Article 70 renders it meaningless, practically making it a dead letter. This contention must rest on the premise that the Army will comply with the 70th Article of War only if courts in habeas corpus proceedings can invalidate any court-martial conviction which does not follow an Article 70 pre-trial procedure. We cannot assume that judicial coercion is essential to compel the Army to obey this Article of War. It was the Army itself that initiated the pre-trial investigation procedure and recommended congressional enactment of Article 70.8 A reasonable assumption is that the Army will require compliance with the Article 70 investigatory procedure to the end that Army work shall not be unnecessarily impeded and that Army personnel shall not be wronged as the result of unfounded and frivolous court-martial charges and trials.9 9 This court-martial conviction resulting from a trial fairly conducted cannot be invalidated by a judicial finding that the pre-trial investigation was not carried on in the manner prescribed by the 70th Article of War.10 10 Reversed. 11 Mr. Justice MURPHY, with whom Mr. Justice DOUGLAS and Mr. Justice RUTTLEDGE concur, dissenting. 12 Pretrial investigation under the seventieth Article of War performs a dual function. It saves the Army's time by eliminating frivolous cases; it protects an accused from the ignominy of a general court martial when the charges against him are groundless. These policies, of course, mean more than the protection of the respondent in this case. Their primary service appears when the defendant is clearly innocent. If the Article is ignored, and the court martial finds the defendant innocent, the error can never be corrected—the officers' time has been wasted and the defendant's record is forever besmirched by the words 'general court martial.' Yet if the prisoner is found guilty, there is still no sanction. For military authorities will not set aside a conviction unless the very accused asking reversal has been prejudiced. And if the trial has been fair, and resulted in conviction, who will say that the defendant has been prejudiced because preliminary investigation was wanting? 13 Unless a civilian court is able to enforce the requirement, then, it is not a requirement at all, but only a suggestion which should be observed. Today the Court adopts the latter alternative. It holds that the error of noncompliance with A.W. 70 is not jurisdictional. It makes A.W. 70 a virtual dead letter. 14 I cannot impute so bland a rule to the Congress. And no evidence of such sterility has been brought to our attention. What the Eightieth Congress thought about the problem is irrelevant, of course, for A.W. 70 was the product of the Sixty-Sixth Congress, in 1920, and respondent was tried in 1944, long before the Eightieth Congress convened. Had respondent's trial taken place in 1948, the result might be entirely different. The available evidence indicates clearly that the Sixty-Sixth Congress considered preliminary investigation vital before trial. The language of the Article is that of command—'no charge will be referred' without investigation. The report accompanying the 1920 statute, after referring to an investigation of unfairness in administering military justice, and concluding that 'the personal element entered too largely into these cases,' listed twenty-three changes in the law. The second change mentioned was this: 'Speedy but thorough and impartial preliminary investigation will be had in all cases.' H.R. Rep. No. 940, 66th Cong., 2d Sess. (1920), p. 2. 15 In 1924, just four years after A.W. 70 became the law, the Board of Review construed the language directly opposite to the Court's present interpretation. It held that the error was jurisdictional. Cm 161728, Clark. Two later holdings, both in 1928, confirmed this view. CM 182225, Keller; Cm 183183, Claybaugh. In Keller, the investigation took place, but was not 'thorough.' The Board held that a thorough investigation was 'an absolute right given to the accused by statute.' And in 1937 Congress reenacted the same language we are construing now, the same language the Board of Review expounded in 1924 and 1928. 50 Stat. 724. It seems extraordinary to say that reversals of the prior rulings in 1943, CM 229477, Floyd, 17 B.R. 149, should govern when Congress has apparently acquiesced in the first, and contemporary, interpretations. 16 Congressional belief in the importance of preliminary investigation should not now be frustrated by a holding that noncompliance cannot be attacked by habeas corpus. I agree with the court below that the preliminary investigation in this case did not meet the proper standard, and would affirm the judgment. 1 Carter v. McClaughry, 183 U.S. 365, 381, 22 S.Ct. 181, 46 L.Ed. 236; and see In re Yamashita, 327 U.S. 1, 8—9, 66 S.Ct. 340, 90 L.Ed. 499, and cases cited. 2 United States v. Cooke, 336 U.S. 210, 69 S.Ct. 530; Collins v. McDonald, 258 U.S. 416, 418, 42 S.Ct. 326, 66 L.Ed. 692; see In re Yamashita, 327 U.S. 1, 8—9, 66 S.Ct. 340, 90 L.Ed. 499. 3 'No charge will be referred to a general court martial for trial until after a thorough and impartial investigation thereof shall have been made. This investigation will include inquiries as to the truth of the matter set forth in said charges, form of charges, and what disposition of the case should be made in the interest of justice and discipline. At such investigation full opportunity shall be given to the accused to cross-examine witnesses against him if they are available and to present anything he may desire in his own behalf either in defense or mitigation, and the investigating officer shall examine available witnesses requested by the accused. If the charges are forwarded after such investigation, they shall be accompanied by a statement of the substance of the testimony taken on both sides.' 41 Stat. 759, 802, as amended 50 Stat. 724, 10 U.S.C. § 1542, 10 U.S.C.A. § 1542. See also Pub. L. No. 759, 80th Cong., 2d Sess. §§ 222, 231, 244, June 24, 1948, 10 U.S.C.A. §§ 1472, 1517, 1542. 4 Military reviewing authorities do not revise court-martial convictions for failure to follow pre-trial procedure unless it appears to them that such failure has injuriously affected the substantial rights of the accused. CM 229477, Floyd, 17 B.R. 149, 153—156 (1943). The Assistant Judge Advocate General testifying before the Committee on Armed Services stated: 'If it appeared in the Office of the Judge Advocate General that the man had been deprived of any substantial right, such as the presentation of testimony in his own behalf, or something of that kind, it would be possible for us to say that the error injuriously affected the rights of the accused and that the sentence should therefore be vacated. The case of real injury would be rare. Ordinarily guilt or innocence is and should be determined at the trial and not by what occurred prior to the trial.' Hearings before subcommittee No. 11, Legal, of House Committee on Armed Services on H.R. 2575, 80th Cong., 1st Sess. 2059—2060 (1947). 5 CM 161728, Clark. See also to the same effect CM 182225, Keller; CM 183183, Claybaugh. 6 See Floyd, supra, n. 4; CMETO 4570, Hawkins, 13 B.R. (ETO) 57, 71—75 (1945); CM 323486, Ruckman, 72 B.R. 267, 272—274 (1947). 7 Pub.L. No. 759, 80th Cong., 2d Sess., §§ 222, 231, 244, June 24, 1948. In congressional committee hearings War Department representatives were subjected to considerable questioning as to whether pre-trial requirements should be made jurisdictional prerequisites. One of many statements supporting the War Department's view was that of Undersecretary of War Royall, who testified: 'However, our bill does not make it a jurisdictional factor, but it does contemplate a thorough investigation. In the states in which I have practiced law preliminary investigations are never a jurisdictional requirement. I know they are not in the Federal courts. * * * We would be departing radically from accepted judicial practice, generally throughout the United States, if we made that a jurisdictional requirement. That is really the difference between the Durham bill and this, as I understand.' This statement and others in opposition to raising pre-trial investigations to a jurisdictional level appear at the following pages of the Hearings before subcommittee No. 11, Legal, of House Committee on Armed Services on H.R. 2575, 80th Cong., 1st Sess. 1924—1925, 2058—2061, 2064—2065, 2146, 2152—2153 (1947). 8 War Department, Military Justice During the War, 63 (1919); H.R.Rep. No. 940, 66th Cong., 2d Sess. 2 (1920). 9 Secretary Royall in referring to the procedure told the House Committee: 'We believe very strongly in it and we will provide for it as strongly as we can, without making it grounds for a technical appeal.' Hearings before subcommittee No. 11, Legal, of House Committee on Armed Services on H R. 2575, 80th Cong., 1st Sess. 2152 (1947). 10 District Courts and Courts of Appeal have not been in agreement on the question. Henry v. Hodges, D.C., 76 F.Supp. 968, 970—974; Anthony v. Hunter, D.C., 71 F.Supp. 823, 830—831; Hicks v. Hiatt, D.C., 64 F.Supp. 238, 242; Waite v. Overlade, 7 Cir., 164 F.2d 722, 723—724; De War v. Hunter, 10 Cir., 170 F.2d 993, 995—997.

01

336 U.S. 725 69 S.Ct. 841 93 L.Ed. 1005 See 337 U.S. 921, 69 S.Ct. 1152. PEOPLE OF STATE OF CALIFORNIA v.ZOOK et al. No. 355. Argued Feb. 8, 1949. Decided April 25, 1949. Rehearing Denied May 31, 1949. Mr. John L. Bland, of Los Angeles, Cal., for petitioner. Mr. D. M. Manning, of Los Angeles, Cal., for respondents. Mr. Justice MURPHY delivered the opinion of the Court. 1 A California statute prohibits the sale or arrangement of any transportation over the public highways of the State if the transporting carrier has no permit from the Interstate Commerce Commission.1 The federal Motor Carrier Act has substantially the same provision.2 The question is whether the State act as applied in this case is invalid in view of the federal act. 2 Respondents operate a travel bureau in Los Angeles, and receive commissions for arranging 'share-expense' passenger transportation in automobiles. Owners of private cars desiring passengers for a trip register with respondents' agency, as do prospective passengers. State lines are crossed in many of the trips. Until 1942 the federal act specifically exempted such 'casual, occasional, or reciprocal' transportation.3 But in that year the Interstate Commerce Commission removed the exemption,4 as the Motor Carrier Act empowered it to do.5 Both the California and federal statutes now require respondents to sell transportation only in carriers having permits from the I.C.C. 3 Respondents were prosecuted under the State act. They admitted their unlawful activity, but demurred to the criminal complaint on the sole ground that the State statute entered an exclusive congressional domain. The trial court disagreed, and entered a judgment of conviction, but the appellate court6 upheld respondents' contention, and ordered the complaint dismissed. 87 Cal.App.2d Supp. 921, 197 P.2d 851. The case is here on certiorari, 335 U.S. 883, 69 S.Ct. 238. 4 Certain first principles are no longer in doubt. Whether as inference from congressional silence, or as a negative implication from the grant of power itself, when Congress has not specifically acted we have accepted the Cooley case's broad delineation of the areas of state and national power over interstate commerce. Cooley v. Board of Wardens of Port of Philadelphia, to use of Soc. for Relief of Distressed Pilots, Their Widows and Children, 12 How. 299, 13 L.Ed. 996; Southern Pacific Co. v. State of Arizona ex rel. Sullivan, 325 U.S. 761, 768, 65 S.Ct. 1515, 1519, 1520, 89 L.Ed. 1915. See Ribble, State and National Power Over Commerce, ch. 10. Absent congressional action, the familiar test is that of uniformity versus locality: if a case falls within an area in commerce thought to demand a uniform national rule, State action is struck down. If the activity is one of predominantly local interest, State action is sustained. More accurately, the question is whether the State interest is outweighed by a national interest in the unhampered operation of interstate commerce. 5 There is no longer any question that Congress can redefine the areas of local and national predominance, Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 66 S.Ct. 1142, 90 L.Ed. 1342, 164 A.L.R. 476; Southern Pacific Co. v. State of Arizona ex rel. Sullivan, supra, 325 U.S. at page 769, 65 S.Ct. at page 1520, 89 L.Ed. 1915, despite theoretical inconsistency with the rationale of the Commerce Clause, art. 1, § 8, cl. 3, as a limitation in its own right. The words of the Clause—a grant of power—admit of no other result. When Congress enters the field by legislation, we try to discover to what extent it intended to exercise its power of redefinition; here we are closer to an intent that can be demonstrated with assurance, although we may employ presumptions grounded in experience in doubtful cases. 6 But whether Congress has or has not expressed itself, the fundamental inquiry, broadly stated, is the same: does the State action conflict with national policy? The Cooley rule and its later application, Southern Pacific Co. v. State of Arizona ex rel. Sullivan, supra, the question of congressional 'occupation of the field,' and the search for conflict in the very terms of state and federal statutes are but three separate particularizations of this initial principle. 7 We restate the familiar because respondents would have us pronounce an additional rule: that when Congress has made specified activity unlawful, 'coincidence is as ineffective as opposition,' and State laws 'aiding' enforcement are invalid. Respondents seem to argue that this is as fundamental as the rule of conflict with national authority, and that it rests upon wholly independent premis s. 8 But respondents seize upon only one part of the familiar phrase in Charleston & Western C.R. Co. v. Varnville Furniture Co., 237 U.S. 597, 604, 35 S.Ct. 715, 716, 717, 59 L.Ed. 1137, Ann.Cas.1916D, 333. We said that when 'Congress has taken the particular subject-matter in hand, coincidence is as ineffective as opposition * * *' See also, Pennsylvania R. Co. v. Public Service Commission of Commonwealth of Pennsylvania, 250 U.S. 566, 569, 40 S.Ct. 36, 37, 64 L.Ed. 1142; Missouri Pac. R. Co. v. Porter, 273 U.S. 341, 346, 47 S.Ct. 383, 385, 71 L.Ed. 672. Respondents' argument assumes the stated premise—that Congress has 'taken the particular subject-matter in hand,' to the exclusion of state laws. The Court could not have intended to enunciate a mechanical rule, to be applied whatever the other circumstances indicating congressional intent. Neither the language nor the facts of the cases cited support an approach in such marked contrast with this Court's consistent decisional bases. The Varnville case struck down a South Carolina statute which had the effect of holding a connecting carrier liable for goods damaged in interstate commerce, when Congress had determined that the initial carrier should bear primary responsibility; the Pennsylvania Railway case held invalid a state measure requiring a specified type of rear platform different from the detailed specifications of the Interstate Commerce Commission; and in the Porter case, the Court thought Congress intended to leave the terms of a uniform bill of lading to the I.C.C., and that state laws on the subject were meant to be ineffective. See Cloverleaf Butter Co. v. Patterson, 315 U.S. 148, 157-159, 62 S.Ct. 491, 496-498, 786, 86 L.Ed. 754. 9 The 'coincidence' rationale is only an application of the first principle of conflict with national policy. The phrase itself simply states that familiar rule. If State laws on commerce are identical with those of Congress, the Court may find congressional motive to exclude the States: Congress has provided certain limited penalties, 'and a state law is not to be declared a help because it attempts to go farther than Congress has seen fit to go,' Varnville, supra, 237 U.S. at page 604, 35 S.Ct. at page 717, 59 L.Ed. 1137, Ann.Cas.1916D, 333—that is, if Congress has 'occupied the field.' But the fact of identity does not mean the automatic invalidity of State measures. Coincidence is only one factor in a complicated pattern of facts guiding us to congressional intent.7 As the Court stated in the Pennsylvania Railway case, 250 U.S. at page 569, 40 S.Ct. at page 37, 64 L.Ed. 1142, the 'question whether Congress and its commissions acting under it have so far exercised the exclusive jurisdiction that belongs to it as to exclude the State, must be answered by a judgment upon the particular case.' Statements concerning the 'exclusive jurisdiction' of Congress beg the only controversial question: whether Congress intended to make its jurisdiction exclusive. 10 This has long been settled. Fox v. State of Ohio, 5 How. 410, 12 L.Ed. 213, announced uncertainly what United States v. Marigold, 9 How. 560, 13 L.Ed. 257, later made clear: that 'the same act might, as to its character and tendencies, and the consequences it involved, constitute an offence against both the State and Federal governments, and might draw to its commission the penalties denounced by either, as appropriate to its character in reference to each.' 9 How. at page 569, 13 L.Ed. 257.8 See Ex parte Siebold, 100 U.S. 371, 390, 25 L.Ed. 717; United States v. Lanza, 260 U.S. 377, 384, 43 S.Ct. 141, 143, 67 L.Ed. 314. And see Union Brokerage Co. v. Jensen, 322 U.S. 202, 208, 64 S.Ct. 967, 971, 972, 88 L.Ed. 1227, 152 A.L.R. 1072. 11 Asbell v. State of Kansas, 209 U.S. 251, 28 S.Ct. 485, 52 L.Ed. 778, 14 Ann.Cas. 1101, is a further illustration. A Kansas statute provided criminal penalties for the importation of cattle from any point south of the State, except for immediate slaughter, without approval of the proper State officials or the Bureau of Animal Industry of the United States. The congressional Act, 32 Stat. 791, 792, 21 U.S.C.A. §§ 111—113, 120—122, allowed cattle to be transported into a state if inspected and passed by an inspector of the United States Bureau of Animal Industry. Violation of the federal act brought criminal sanctions. Yet we affirmed a conviction under the State law. We said that 'if the state law conflicts with (federal law) the state law must yield. But the law of Kansas now before us recognizes the supremacy of the national law and conforms to it.' 209 U.S. at page 258, 28 S.Ct. at page 487, 52 L.Ed. 778, 14 Ann.Cas. 1101. And see the similar problem and similar answer by Brandeis, J., for the Court in Dickson v. Uhlmann Grain Co., 288 U.S. 188, 53 S.Ct. 362, 77 L.Ed. 691, 83 A.L.R. 492. 12 To limit our inquiry to respondents' single standard would restrict us to unreality. For Congress is often explicit when it wishes state laws to conclude federal prosecution, to avoid the double punishment possible in a federal system. See, for example, 18 U.S.C. § 659, 18 U.S.C.A. § 659, defining the crime of stealing from an interstate carrier; 18 U.S.C. § 660, 18 U.S.C.A. § 660, misapplication of funds by an officer or employee of a carrier engaged in commerce. And when state enforcement mechanisms so helpful to federal officials are to be excluded, Congress may say so, as in the Taft-Hartley Act, 29 U.S.C.(Supp.), § 160(a), 29 U.S.C.A. § 160(a). That Congress has specifically saved state laws in some instances, see, e.g., the Securities Act, 15 U.S.C. § 77r, 15 U.S.C.A. § 77r, indicates no general policy save clarity. 13 Respondents' automatic 'coincidence means invalidity' theory, applied in an area as imbued with the state's interest as is this one, see infra, would lead us to the conclusion that a state may not make a dealer in perishable agricultural commodities respect its laws on the fraudulent nonpayment of an obligation, if that fraud occurred after an interstate shipment, 7 U.S.C. § 499b(4), 7 U.S.C.A. § 499b(4), for Congress has not expressly saved such prosecutions. We would hold, too, that extortion or robbery from interstate commerce under 18 U.S.C. § 1951, 18 U.S.C.A. § 1951, or 18 U.S.C. § 2117, 18 U.S.C.A. § 2117, is immune from state action; that the wrecking of a bridge over an interstate railroad is an 'exclusively federal' offense, 18 U.S.C. § 1992, 18 U.S.C.A. § 1992; that the transmittal of a ransom note in interstate commerce cannot be punished by local authorities, 18 U.S.C. § 875, 18 U.S.C.A. § 875. And see 18 U.S.C. §§ 331, 472, 479, 18 U.S.C.A. §§ 331, 472 479. In short, we would be setting aside great numbers of state statutes to satisfy a congressional purpose which would be only the product of this Court's imagination. We cannot agree that each of the problems under the statutes cited may not be resolved by examination of the whole case. 14 The question is whether Congress intended to override State laws identical with its own when it, through the Interstate Commerce Commission, regulated share-expense passenger automobile transportation, or whether it intended to let State laws stand. While the statute says nothing expressly on this point and we are aided by no legislative history directly in point,9 we know that normally congressional purpose to displace local laws must be clearly manifested. H. P. Welch Co. v. State of New Hampshire, 306 U.S. 79, 59 S.Ct. 438, 83 L.Ed. 500, and cases cited; Maurer v. Hamilton, 309 U.S. 598, 614, 60 S.Ct. 726, 734, 84 L.Ed. 969, 135 A.L.R. 1347; Kelly v. State of Washington ex rel. Foss Co., 302 U.S. 1, 11, 14, 58 S.Ct. 87, 92, 93, 94, 82 L.Ed. 3; Mintz v. Baldwin, 289 U.S. 346, 53 S.Ct. 611, 77 L.Ed. 1245. Or if the claim is conflict in terms, it 'must be clear that the federal provisions are inconsistent with those of the state to justify the thwarting of state regulation.' Cloverleaf Butter Co. v. Patterson, supra, 315 U.S. at page 156, 62 S.Ct. at page 496, 786, 86 L.Ed. 754. See also Hines v. Davidowitz, 312 U.S. 52, at page 67, 61 S.Ct. 399, at page 404, 85 L.Ed. 581. 15 General propositions derived from the whole sweep of the Commerce Clause are often helpful, and we think those just stated are persuasive indications of congressional intent in the case now before us. But the quite separate Commerce Clause degree questions can be resolved only by careful scrutiny of the particular activity regulated. The Interstate Commerce Commission found these dangers present in the business of share-expense passenger transportation: abandonment of passengers before reaching the promised destination; personal injuries sustained by passengers because of irresponsible drivers, with attendant delay and expense; delays caused by arrest and detention of drivers for violations of traffic laws; crowded conditions in automobiles by reason of an excessive number of passengers and their baggage; and 'annoyance, anxiety, or fright caused by reckless and improper driving by the automobile operators, by the bad mechanical condition of the vehicles used, by the fatigue of drivers operating the automobiles for long periods without adequate rest, or by the improper conduct of the driver or other passengers.' Evidence of these evils led the I.C.C. to remove the exemption which had covered these respondents. Ex parte No. MC—35, 33 M.C.C. 69, 73, 74. See also Report of Federal Coordinator of Transportation on the Regulation of Transportation Agencies other than Railroads and on Proposed Changes in Railroad Regulation, Washington, 1934, Sen. Doc. 152, 73d Cong., 2d Sess., p. 226, mentioning the financial irresponsibility of these carriers. And see State of California v. Thompson, 313 U.S. 109, 61 S.Ct. 930, 85 L.Ed. 1219. 16 Of course we no longer limit the states to the r 'traditional' police powers in considering a statute's validity under the Fourteenth Amendment. See Lincoln Federal Labor Union No. 19129, A.F. of L. v. Northwestern Iron & Metal Co., 335 U.S. 525, 69 S.Ct. 251. But the tradition of 'usual police powers' is still of aid in determining congressional intent to exclude State action on interstate commerce, at least when Congress has legislated. Many of the evils discussed by the I.C.C., above, are of the oldest within the ambit of the police power: protection against fraud and physical harm to a State's residents. And consistent with the many cases giving the State's interest in its own highways more weight than the national interest against 'burdening' commerce,10 we have held that the highway regulation involved in this case is allowable State action before Congress acted. State of California v. Thompson, supra. Removal of the Motor Carrier Act's exemption since the Thompson case does not change our conclusion. 17 The case would be different if there were conflict in the provisions of the federal and California statutes. But there is no conflict in terms, and no possibility of such conflict, for the state statute makes federal law its own in this particular. The case might also be different were there variegated state laws on this subject in 1941, when the I.C.C. removed the federal exemption. We might then infer congressional purpose to displace local laws and establish a uniform rule beyond which states may not go. See Southern R. Co. v. Railroad Commission of Indiana, 236 U.S. 439, 35 S.Ct. 304, 59 L.Ed. 661. Whatever the result in that class of cases, it would be startling to discover congressional intention to 'displace' state laws when there were no state laws to displace when Congress acted. And that is nearly the situation in the present case. When the I.C.C. removed the federal exemption, it mentioned twelve cities, other than Los Angeles and San Francisco, in which the problem was particularly acute.11 Of these twelve cities, only two were located in states which attempted regulation of the kind of transportation we are now considering.12 Such striking absence of state law in states where the problem was recognized as serious by the I.C.C. clearly demonstrates a purpose to provide rather than displace local rules—to fill a void rather than nationalize a single rule. And we see nothing to show that a more serious problem in the State of California might not properly beget a more serious penalty, if the California legislature deemed it wise. I.C.C. recognition that the problem is more acute in some states than in others may well indicate acceptance of that proposition. 18 It is said that I.C.C. recognition of the difficulties facing state regulation of interstate commerce, 33 M.C.C. at 76, because of cases such as Buck v. Kuykendall, supra, is of importance here. But this case concerns only the state's mechanisms for enforcing a statute identical with that of the federal government, though rooted in different policy considerations. We cannot predicate exclusion upon the simple recognition of Constitutional difficulties not present in the cause before us. Since the I.C.C. order was issued after State of California v. Thompson, supra, one would expect the federal agency to be specific if it intended to supersede state laws. And we do not see how a previous California statute conflicting with I.C.C. policy, cf. 1933 Cal.Stat., c. 390, § 1, p. 1012, and Frank Broker Application, 8 M.C.C. 15, can have anything to do with the only California statute we are considering—a measure which does not conflict with I.C.C. policy. It is difficult to believe that the I.C.C. intended to deprive itself of effective aid from local officers experienced in the kind of enforcement necessary to combat this evil—aid of particular importance in view of the I.C.C.'s small staff. See 61st Annual Report of the I.C.C. (1947), p. 122; 62d Annual Report of the I.C.C. (1948), p. 109.13 19 This is not a hypothetical case on 'normal Congressional intent.' It is California's attempt to deal with a real danger to its residents. We know that coincidence, with its consequent possibility of double punishment, is an important factor to be considered. In many cases it may be a persuasive indication of congressional intent. But we must look at the whole case. In this case the factors indicating exclusion of state laws are of no consequence in the light of the small number of local regulations and the state's normal power to enforce safety and good-faith requirements for the use of its own highways. 'The state and federal regulations here applicable have their separate spheres of operation.' Union Brokerage Co. v. Jensen, supra, 322 U.S. at page 208, 64 S.Ct. at page 971, 88 L.Ed. 1227, 152 A.L.R. 1072.14 So far as casual, occasional, or reciprocal transportation of passengers for hire is concerned, the State may punish as it has in the present case for the safety and welfare of its inhabitants; the nation may punish for the safety and welfare of interstate commerce. There is no conflict. 20 Reversed. 21 Mr. Justice FRANKFURTER, dissenting. 22 My brother BURTON has set forth in convincing detail how the regulation of 'travel bureaus' for arranging transportation of passengers by motor carriers engaged in interstate commerce was taken over by federal authority, after experience had disclosed the inadequacy of state regulation. What I have to say only serves to emphasize my agreement with his conclusion. 23 In State of California v. Thompson, 313 U.S. 109, 61 S.Ct. 930, 85 L.Ed. 1219, this Court recognized that positive intervention of Congress was required to displace the reserve power of the State to promote safety and honesty in the business of arranging for motor carrier transportation even beyond state lines. As to such business the power of Congress to regulate commerce 'among the several States' was an excluding, not an exclusive, power—State action was not barred by the Commerce Clause but only by appropriate congressional action. State action is displaced only to the extent that Congress chooses to displace it. One would suppose that, when Congress has proscribed defined conduct and attached specific consequences to violations of such outlawry, the States were no longer free to impose additional or different consequences by making the same misconduct also a state offense. And that is this case. 24 For the first time in the hundred and twenty-five years since the problem of determining when State regulation has been displaced by federal enactment came before this Court, Gibbons v. Ogden, 9 Wheat. 1, 6 L.Ed. 23, the Court today decides that the States can impose an additional punishment for a federal offense unless Congress in so many words forbids the States to do it. When Congress deals with a specific evil in a specific way, subject to specified sanctions, it is not reasonable to require Congress to add, 'and hereafter the States may not also punish for this very offense,' to preclude the States from outlawing the same specific evil under different sanctions.1 To do so would impute to Congress the purpose of imposing upon a nationwide rule the crazy-quilt of diversity—actual or potential—in State legislation, when the federal policy was adopted by Congress precisely because it concluded that the manner in which the States, under their permissive power, dealt with the evil was unsatisfactory. Such an inference is a strained and strange way of interpreting the mind of Congress. It also disregards an important aspect of civil liberties, namely, avoidance of double punishment for the same act even though such double punishment may be constitutionally permissible. See Jerome v. United States, 318 U.S. 101, 105, 63 S.Ct. 483, 486, 87 L.Ed. 640. 25 Of course the same physical act may offend a State policy and another policy of the United States. Assaulting a United States marshal would offend a State's policy against street brawls, but it may also be an obstruction to the administration of federal law. Scores of such instances, inevitable in a federal government, will readily suggest themselves. That was the kind of a situation presented by United States v. Marigold, 9 How. 560, 13 L.Ed. 257. Passing counterfeit currency may, in one aspect, be 'a private cheat practiced by one citizen of Ohio upon another,' and therefore invoke a State's concern in 'protecting her citizens against frauds,' 9 How. at pages 568, 569, 13 L.Ed. 257, but the same passing becomes of vital concern to the Federal Government because it tends to debase the currency. Such a situation is quite different from this case. It merits repetition to say that we are now reversing a State court for holding that the very same conduct for the disobedience of which federal regulation imposes a maximum fine of one hundred dollars for the first offense cannot be prosecuted in a State court under a State law imposing a larger fine and, perchance, a prison sentence. 26 The talk about 'conflict' as a basis for displacing State by Federal enactment is relevant only in situations where Congress has chosen to 'circumscribe its regulation and occupy only a limited field,' while State regulation is 'outside that limited field,' and yet an inference of negation of State action is sought to be drawn. See Kelly v. State of Washington ex rel. Foss Co., 302 U.S. 1, 10, 58 S.Ct. 87, 92, 82 L.Ed. 3. Even in each circumstances this Court has drawn inferences of implied exclusion of State action although in no sense of the word would there have been physical clash between State and Federal regulation so as to preclude concurrence of vitality for both regulations. See, e.g., Cloverleaf Butter Co. v. Patterson, 315 U.S. 148, 62 S.Ct. 491, 786, 86 L.Ed. 754; Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782. In this case we have the very conduct theretofore left to State regulation taken over by Federal regulation, and yet the Court superimposes upon the displacing Federal regulation the State regulation which was consciously displaced. That a Court which only on April 4, 1949, decided H. P. Hood & Sons v. Du Mond, 336 U.S. 525, 69 S.Ct. 657, as it did, should now decide this case as it does, presents indeed a problem for reconciliation. 27 Mr. Justice BURTON, with whom Mr. Justice DOUGLAS and Mr. Justice JACKSON join, dissenting. 28 The question presented is whether § 654.1 of the Penal Code of California1 is invalid as applied in this case to interstate commerce by the Municipal Court of Los Angeles. The respondents, Zook and Craig, were convicted of making a sale, in 1948, in California, of interstate motor transportation to Texas, on an individual fare basis, over the public highways of California, under conditions whereby the transportation was to be supplied by a carrier having no certificate of convenience and necessity or other permit from the Public Utilities Commission of California, or from the Interstate Commerce Commission of the United States. Such a sale was adjudged contrary to the terms of § 654.1 but the Appellate Department of the Superior Court of California held that that Section was invalid as thus applied to interstate commerce in the face of the Interstate Commerce Act of the United States and of orders issued under the authority of that Act making precisely such a sale a federal offense. We agree with the court below that California could not, without the consent of Congress, lawfully thus share the exclusive jurisdiction being exercised by Congress to regulate commerce among the states and we find here no such consent. On the other hand, we do find here, under all the circumstances, that Congress has exercised its power of regulation of this precise form of interstate commerce to the exclusion of the states and in conflict with the regulation attempted here by the State of California. 29 From 1933 until 1947 the California legislation on this subject expressly distinguished between intrastate and interstate transportation. It provided that the state legislation was to be applicable to interstate motor carriers only 'until such time as Congress of the United States shall act, * * *'2 or in 'the absence of action on the part of Congress or the Interstate Commerce Commission * * *.'3 California thus recognized not only the possibility but the propriety of federal regulation of this form of commerce to the extent of its interstate operations. In 19354 and in 19405 Congress, on its part, expressly recognized a federal responsibility for such regulation. It assumed jurisdiction over the qualifications and maximum hours of service of employees and over safety of operations and standards of equipment. As to other regulations, Congress temporarily and conditionally exempted this kind of transportation from the Interstate Commerce Act. In doing so, however, it authorized the Interstate Commerce Commission to determine from time to time to what extent, if any, the exemption should be removed. In 1942, after a thorough study, that Commission largely removed the exemption.6 Thus, by express authority of Congress, the regulation of the interstate operations of this type of transportation was vested in the Interstate Commerce Commission after a determination by that Commission that such an application of federal law was necessary to carry out the policy of Congress. 30 Section 654.1, which was added to the Penal Code of California in 1947, contained no provision distinguishing between intrastate and interstate commerce in this field. It mentioned only 'transportation * * * over the public highways of the State of California * * *.' The state court below nevertheless interpreted the Section as seeking to include interstate as well as ntrastate transportation and then held that it was invalid insofar as it applied to interstate transportation.7 We accept the state court's interpretation and the question before us is only the validity of the statute as applied to interstate transportation.8 If it were not for the interpretation given to the California statute by the court below, the issue might be disposed of by limiting that statute, like its predecessor, to intrastate transportation. 31 The complaint is printed in the margin.9 Its sufficiency is the precise issue presented to us on the demurrer which the court below has ordered sustained. In that court, the respondents successfully asserted the invalidity of the state statute in the face of the Interstate Commerce Act applicable to the same offense. The petitioner concedes that the two laws sought to forbid and punish the same acts, but contends that this was a permissible duplication. 32 Agreeing that the two statutes forbid the same acts, our first duty is to see how far this identity of legislative effect extends. Our remaining duty then is to determine whether the state law is valid in the face of the federal law on the same subject. 33 The substantial identity between the statutes ends with their definitions of the offense. Only the Federal Act requires a broker's license and the general exemptions from the respective Acts are in great conflict.10 The penalties are substantially different.11 For example, in the instant case each respondent was fined $150 more under the state law than would have been possible under the federal law for what apparently was a first offense under each Act. Under the state law the court also had an option to impose a jail sentence, whereas no such option would have been available to it under the federal law. The federal law also provided for a fine up to $500 for each offense after the first. Under the state law, convictions after the first were punishable solely by imprisonment. Accordingly, while the offense here charged was one which violated both the state and federal statutes, there was a substantial conflict between the sanctions available for the enforcement of those statutes. This conflict is by no means conclusive of this case but it is entitled to consideration as indicating the absence, rather than the presence, of an implied consent by the United States to the intrusion of the state law into the exclusive jurisdiction made available to the United States by the Federal Constitution. Prosecution and punishment under both the state and federal statutes would, in this instance, often result in greater punishment than the maximum permitted by the federal law. We cannot readily assume congressional consent to state legislation that makes an expressly stated congressional 'maximum' penalty no longer a maximum penalty. 34 The issue requires answers to two questions: I. Did the California Code invade the exclusive jurisdiction which Congress was exercising through its Interstate Commerce Act? II. If so, was the conviction under the California Code invalid on the ground that Congress had taken exclusive jurisdiction over that offense and had not consented to share its jurisdiction with California as here proposed? For the reasons to be stated, we believe the answer to each of those questions should be yes. I. 35 The California Code invaded the exclusive jurisdiction which Congress was exercising through its Interstate Commerce Act. 36 The petitioner's concession that the respondents' acts simultaneously violated the terms of both statutes sharply distinguishes the issue here from those often presented in this general field of controversy. (1) We do not have here the much litigated issue as to the validity of state statutes prohibiting or otherwise regulating acts committed in the course of interstate commerce but in a field of that commerce where Congress has taken no action. In the instant case, Congress has taken jurisdiction by statute not only in this general field but over the precise type of interstate motor carrier transportation of passengers that is the subject of the state legislation and of the complaint in this case. (2) Similarly, we do not have here a case where a state has applied its prohibitory or otherwise regulatory measures to some intrastate transaction taking place before or after, and separable from, the transactions in interstate commerce over which the Federal Government has taken jurisdiction. (3) We do not have here an attempt by a state to supplement federal control over some activity related to but not specifically covered by the federal legislation. (4) Also, we do not have here a case where Congress has expressly consented to share with the states the plenary and supreme authority of Congress to take jurisdiction over the regulation of the interstate commerce in question. (5) On the other hand, we do have here the significant situation of a state attempting, by a new state law, to reach and punish, additionally, a transaction in interstate commerce in the face of the active exercise of substantially conflicting federal jurisdiction over the same transaction and in the absence of express congressional consent to such attempted duplication of jurisdiction. This is in contrast to an attempt by a state to help enforce, as such, an already existing federal statute covering the offense. 37 We start not merely with the inherent right of a state to exercise its police power over acts within its jurisdiction. We start also with the constitutional provisions by which the supreme legislative power of the respective states has been delegated to Congress to regulate interstate commerce.12 38 Once Congress has lawfully exercised its legislative supremacy in one of its allotted fields and has not accompanied that exercise with an indication of its consent to share it with the states, the burden of overcoming the supremacy of the federal law in that field is upon any state seeking to do so. 39 An early statement of the general principle involved was made by Mr. Justice Story in Prigg v. Commonwealth of Pennsylvania, 16 Pet. 539, 617-618, 10 L.Ed. 1060.13 That statement was approved and enlarged upon by Mr. Justice J. R. Lamar in Southern R. Co. v. Railroad Commission of Indiana, 236 U.S. 439, 35 S.Ct. 304, 59 L.Ed. 661, in a case arising under the Interstate Commerce Act in which, on reasoning applicable in the instant case, an Indiana statute was held invalid because it required handholds on the sides or ends of railroad cars operating in interstate commerce in Indiana in substantial duplication of the Federal Safety Appliance Act, 45 U.S.C.A. § 1 et seq., requiring handlods on both the sides and ends of such cars. There Mr. Justice Lamar said: 40 'But the principle that the offender may, for one act, be prosecuted in two jurisdictions, has no application where one of the g vernments has exclusive jurisdiction of the subject-matter, and therefore the exclusive power to punish. Such is the case here where Congress, in the exercise of its power to regulate interstate commerce, has legislated as to the appliances with which certain instrumentalities of that commerce must be furnished in order to secure the safety of employees. Until Congress entered that field, the states could legislate as to equipment in such manner as to incidentally affect, without burdening, interstate commerce. But Congress could pass the safety appliance act only because of the fact that the equipment of cars moving on interstate roads was a regulation of interstate commerce. Under the Constitution the nature of that power is such that, when exercised, it is exclusive, and ipso facto supersedes existing state legislation on the same subject. Congress, of course, could have 'circumscribed its regulations' so as to occupy a limited field. Savage v. Jones, 225 U.S. 501, 533, 32 S.Ct. 715 (725, 726), 56 L.Ed. 1182, 1194; Atlantic Coast Line R. Co. v. (State of) Georgia, 234 U.S. 280, 293, 34 S.Ct. 829 (832), 58 L.Ed. 1312, 1318. But so far as it did legislate, the exclusive effect of the safety appliance act did not relate merely to details of the statute and the penalties it imposed, but extended to the whole subject of equipping cars with appliances intended for the protection of employees. The states thereafter could not legislate so as to require greater or less or different equipment; nor could they punish by imposing greater or less or different penalties. 41 'The test, however, is not whether the state legislation is in conflict with the details of the Federal law or supplements it, but whether the state had any jurisdiction of a subject over which Congress had exerted its exclusive control.' (Emphasis added.) Id., 236 U.S. at pages 446, 448, 35 S.Ct. at pages 305, 59 L.Ed. 661. 42 Mr. Justice Holmes said in Charleston & Western C.R. Co. v. Varnville Furniture Co., 237 U.S. 597, 604, 35 S.Ct. 715, 717, 59 L.Ed. 1137, Ann.Cas.1916D, 333: 43 'When Congress has taken the particular subject-matter in hand, coincidence is as ineffective as opposition, and a state law is not to be declared a help because it attempts to go farther than Congress has seen fit to go.' 44 Mr. Justice Butler reemphasized this in sweeping terms in Missouri Pac. R. Co. v. Porter, 273 U.S. 341, 346, 47 S.Ct. 383, 385, 71 L.Ed. 672, by concluding the opinion of the Court as follows: 45 'Its (Congress') power to regulate such (interstate) commerce and all its instrumentalities is supreme; and, as that power has been exerted, state laws have no application. They cannot be applied in coincidence with, as complementary to or as in opposition to, federal enactments which disclose the intention of Congress to enter a field of regulation that is within its jurisdiction.' (Emphasis added.) 46 See also, Erie R. Co. v. People of State of New York, 233 U.S. 671, 683, 34 S.Ct. 756, 760, 58 L.Ed. 1149, 52 L.R.A.,N.S., 266; Second Employers' Liability Cases, (Mondou v. New York, N.H. & H.R. Co.), 223 U.S. 1, 55, 32 S.Ct. 169, 177, 56 L.Ed. 327, 38 L.R.A.,N.S., 44. 47 Related to this exclusive jurisdiction of Congress, established by Article VI of the Constitution, is the general policy against subjecting anyone to punishment more than once for the commission of a single act. Unless care is taken to prevent this, such double punishment may result from the overlapping of the federal and state jurisdictions. However, its unfairness to the individual, as well as its cumbersomeness for enforcement purposes, suggests that it should not be read into legislation in the absence of clear language demonstrating a purpose to permit it. In a case which related to the interpretation of a federal statute that might duplicate or build upon a state law, this Court said: 48 '* * * it should be noted that the double jeopardy provision of the Fifth Amendment does not stand as a bar to federal prosecution though a state conviction based on the same acts has already been obtained. * * * That consideration gives additional weight to the view that where Congress is creating offenses which duplicate or build upon state law, courts should be reluctant to expand the defined offenses beyond the clear requirements of the terms of the statute.' Jerome v. United States, 318 U.S. 101, 105, 63 S.Ct. 483, 486, 87 L.Ed. 640. 49 So here we should be reluctant to read into a federal statute congressional consent to state legislation which authorized prosecution and punishment by the State in addition to federal prosecution and punishment. 50 Where there is legislative intent to share the exclusiveness of the congressional jurisdiction, appropriate language can make that intent clear. An outstanding example of such authorization is in the Eighteenth Amendment, now repealed. It was there provided that 'The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.' (U.S.Const.) More recently, clear language was used by Congress to insure the validity of state cooperation in the 'Migratory Bird Conservation Act,' approved February 18, 1929: 51 'Sec. 17. That when any State shall, by suitable legislation, make provision adequately to enforce the provisions of this Act and all regulations promulgated thereunder, the Secretary of Agriculture may so certify, and then and thereafter said State may cooperate with the Secretary of Agriculture in the enforcement of this Act and the regulations thereunder.' 45 Stat. 1225, 16 U.S.C. § 715p, 16 U.S.C.A. § 715p. 52 Still closer to the present situation is the language used by the Congress that passed the Motor Carrier Act, 1935. In 'The Whaling Treaty Act' it said: 53 'Sec. 12. That nothing in this Act shall be construed to prevent the several States and Territories from making or enforcing laws or regulations not inconsistent with the provisions of said Convention (for the regulation of whaling) or of this Act, or from making or enforcing laws or regulations which shall give further protection to whales * * *.' 49 Stat. 1248, 16 U.S.C. § 912, 16 U.S.C.A. § 912.14 54 The Motor Carrier Act, 1935, did not overlook the subject of exclusive state and federal jurisdiction over the respective fields of intrastate and interstate commerce touched by the Act. It did not, however, approve joint and conflicting control by both at the same time. It expressly vested in the Interstate Commerce Commission the regulation of the transportation of passengers by motor carriers engaged in interstate commerce. With equal clarity it expressly provided that Part II of the Interstate Commerce Act should not affect the powers of taxation of the several states. It thus dealt with and preserved to the states their full powers to tax without added restriction because of the Motor Carrier Act's relation to interstate commerce. The state powers of taxation were thus distinguished from those of regulation because the power of regulation of interstate commerce was vested expressly in the Interstate Commerce Commission. Also, in relation to the regulation of intrastate commerce, Congress provided that nothing in Part II of the Interstate Commerce Act 'shall be construed * * * to authorize a motor carrier to do an intrastate business on the highways of any State, or to interfere with the exclusive exercise by each State of the power of regulation of intrastate commerce by motor carriers on the highways thereof.' (Emphasis added.) § 202(c), 49 Stat. 543, later designated § 202(b), 54 Stat. 920, 49 U.S.C. § 302(b), 49 U.S.C.A. § 302(b). For full text of original § 202(b) and (c), later designated § 202(a) and (b), see Appendix B(2), infra. 55 Congress thus dealt directly with the problem of state and federal regulation of motor carrier transportation either interstate or intrastate in character. Congress indicated no consent to share with others its exclusive jurisdiction over the regulation of interstate commerce. If it had intended to do so, that would have been the place to express such an intent. The language used reflected not merely an absence of congressional consent to the sharing of its jurisdiction over any form of interstate commerce. On the contrary, especially when read with § 203(b)(9), it evidenced a conscious congressional dissent from any such sharing of its jurisdiction over this form of interstate commerce described in this legislation. Section 203(b)(9) stated a positive insistence upon federal jurisdiction in the precise field which concerns us here. It provided that the federal jurisdiction become effective whenever and to the extent that the Interstate Commerce Commission found the necessity for it. In this narrow field, Congress thus expressly left temporarily on trial the substantially exclusive state regulation of interstate commerce which was already in effect. This express temporary conditional exemption created a special situation in which the consent of Congress to state regulation was to be continued or cut off by the Interstate Commerce Commission. It did not suggest any sharing or duplication of control by the Commission and the state. This temporary survival of state control was expressly and unequivocally terminated by the order of the Interstate Commerce Commission in 1942. That order called for a positive discontinuance of state control, coupled with a positive vesting of jurisdiction in the Interstate Commerce Commission over this particular type of interstate commerce. The procedure thus taken to substitute federal for state regulation of interstate commerce was the very opposite of a procedure permissive of joint or duplicating federal and state control. It is difficult to conceive of a more deliberate and obvious substitution of one for the other. The area available for such substitution of federal for state control was clearly defined and set aside in § 203(b)(9) and then put into effect by order of the Interstate Commerce Commission. Ex parte No. 35, 33 M.C.C. 69, 49 C.F.R. Cum. Supp. § 210.1. For an example of a substitution of exclusive federal regulation for exclusive state regulation of certain interstate commerce activities in the warehousing field, see Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 67 S.Ct. 1146, 91 L.Ed. 1447. 56 This brings us to the final question of statutory interpretation. Did Congress impliedly consent to this attempted sharing of its established jurisdiction within the narrow limits of § 203(b)(9)? II. 57 The conviction under the California Code was invalid because Congress had taken exclusive jurisdiction over that offense and had not consented to share its jurisdiction with California. 58 It is a contradiction in terms to say that a state, without the consent of Congress, may duplicate or share in the exclusive jurisdiction of Congress. If the jurisdiction of Congress has become exclusive, the state's jurisdiction must, by hypothesis, be derived thereafter from Congress or cease to exist. In this case there was no express consent by Congress to share with the states the federally protected exclusive jurisdiction over this type of transaction in interstate commerce. The question remains, however, whether, under all the circumstances, Congress shall be held to have impliedly consented to share its exclusive jurisdiction with California. The text of the legislation and the course of events, which led the Federal Government to take jurisdiction, not only disclose an absence of any basis for a claim that Congress impliedly consented to the California legislation but present overwhelming evidence of a deliberate, careful and unconditional assumption by Congress of federal jurisdiction, consciously exclusive of the inadequate state regulation theretofore found to exist. See the reference, supra, to original § 202(b) and (c) of the Act dealing with the jurisdiction of the Interstate Commerce Commission and of the states. For full text, see § 202(a) and (b) in Appendix B(2), infra. In addition, we shall now consider in detail the action taken under the informed guidance of the Interstate Commerce Commission in accordance with the express terms of § 203(b). 59 The precise fundamental issue is not the identity, similarity, diversity, or even repugnance, of the two statutes. The fundamental issue is that of the presence or absence of congressional consent to the sharing of its exclusive jurisdiction. The degree of immediate or potential conflict between the statutes has a material relation to the issue of congressional consent. Clear conflict between the statutes would be practically conclusive against the state. The less the conflict, the less obvious is the basis for the objection of Congress to sharing its jurisdiction with the state. However, even a complete absence of conflict, resulting in a mere duplication of offenses, would not remove all basis for objection and would not necessarily establish the required congressional consent. For example, the inherent objectionability of the double punishment of an offender for a single act always argues against its implied authorization. Similarly, the difficulties inherent in diverse legislative and enforcement policies always argue against the introduction of new state offenses, as distinguished from state cooperation in prosecuting existing federal offenses. Here there was substantial potential conflict between the prescribed state penalties and the federal penalties, although the prohibited acts were the same. Likewise, there was a substantial difference between the two statutes in the exceptions to their application and in such related provisions as those for the licensing of the travel bureaus as distingui hed from the carriers. Furthermore, § 203(b) expressly left it to the Interstate Commerce Commission to determine the extent, if any, to which the federal jurisdiction should be applied. 60 In the instant case the most impressive material, emphasizing the unwillingness of Congress to share its exclusive control with a control through state legislation, is found in the legislative, administrative and judicial proceedings which led to the taking of complete jurisdiction by Congress. When federal jurisdiction was thus taken, in 1942, it was clear to Congress that there existed highly unsatisfactory state regulation of the interstate transactions in question. There is no evidence of a subsequent change in the attitude of Congress. The course of events tells the story. It suggests no consent by Congress to a duplication of federal and state control. On the other hand, it demonstrates the existence of ample reasons for taking and retaining exclusive federal jurisdiction over this kind of interstate transportation. It is an example of the effective integration of our federal and state jurisdictions when each is given exclusive control over designated activities, rather than simultaneous, dual and conflicting control over the same activities. 61 1. June 5, 1931.—A California statute was approved defining motor carrier transportation agents (comparable to travel bureaus arranging share-the-expense trips), and providing for the State's regulation, supervision and licensing of such agents. This Act referred expressly to transportation between points within California and to transportation to the border of that State when one of the points to be reached was outside the State. It expressly permitted these state-licensed transportation agencies to arrange for motor transportation by a motor carrier not holding a valid certificate of public convenience and necessity issued by the Railroad Commission of California. In substance, the Act thus recognized and licensed travel bureaus arranging for share-the-expense interstate, as well as intrastate, motor trips by unlicensed carriers. 1931 Cal.Stat., c. 638, § 1, p. 1362 et seq. 62 2. May 15, 1933.—Another California statute repealed the Act of June 5, 1931. The new statute declared it to be the policy of California to regulate and control motor carrier transportation agents acting as 'intermediaries between the public and those motor carriers of passengers operating, as common carriers or otherwise, over the public highways of the State, for compensation, that are not required by law to obtain, or that have not obtained, a certificate from the Railroad Commission of the State of California * * *.' 1933 Cal.Stat., c. 390, § 1, p. 1012. This statute, like that of 1931, recognized and prescribed licenses for the travel bureaus dealing in share-the-expense interstate, as well as intrastate, motor trips by unlicensed carriers. This statute and this declaration remained in effect until 1947. It was during this same time that the Interstate Commerce Commission, after investigation, declared that it found that such operations, at least as applied to interstate commerce, were contrary to public policy. The Commission's extended investigation resulted, in 1942, in the deliberate application of the Interstate Commerce Act to these interstate operations under express authority of Congress. The federal law thereupon expressly prohibited such transportation by unlicensed carriers, in interstate commerce, and also prohibited travel bureaus or brokers from selling or arranging such unlicensed trips in interstate commerce. The conflict in policy thus became clear, at least by 1942. 63 The relation of the 1933 California Act to interstate commerce and its conflict with the federal policy stated by the Interstate Commerce Commission is emphasized by the foregoing declaration of state policy which remained in the State Act from 1933 until 1941: 'until such time as Congress of the United States shall act, the public welfare requires such re ulation and control of such intermediaries between the public and interstate motor carriers as well as between the public and intrastate motor carriers.' (Emphasis added.) Id., at p. 1012. 64 The California Act also included, until 1941, the following: 'The provision of this act shall apply regardless of whether such transportation so sold, or offered to be sold, is interstate or intrastate.' Id., at p. 1013. In general, the Act amplified the plan of the 1931 Act. It required the bonding and licensing of motor carrier transportation agents (or travel bureaus) arranging for unlicensed interstate, as well as intrastate, motor carrier transportation. Both State Acts contained a section providing explicitly for the separability of any section, subsection, sentence, clause or phrase which might be held unconstitutional. 65 3. August 9, 1935.—Following an extended survey of the rapidly increasing volume of interstate motor transportation, the Motor Carrier Act, 1935, was enacted by Congress as Part II of the Interstate Commerce Act. For the purposes of this case, the most important feature of this Act was its provision for the partial and conditional exemption from its operation of the kind of motor carrier transportation here involved. Section 203(b)(9) excluded from its operation, except for safety purposes, 'the casual, occasional, or reciprocal transportation of passengers or property in interstate or foreign commerce for compensation by any person not engaged in transportation by motor vehicle as a regular occupation or business.' 49 Stat. 546. This exclusion of casual and occasional motor carriers was only a conditional exemption, expressive of federal concern over the apparent inadequacy of the state control over casual and occasional transportation involving interstate trips. The condition applied to the exclusion was— 66 '(b) Nothing in this part (Part II of the Interstate Commerce Act), * * * shall be construed to include * * * (clauses (1) to (7) incl.); nor, unless and to the extent that the (Interstate Commerce) Commission shall from time to time find that such application is necessary to carry out the policy of Congress enunciated in section 202,15 shall the provisions of this part, except the provisions of section 204 relative to qualifications and maximum hours of service of employeed and safety of operation or standards of equipment apply to: (8) * * * or (9) * * * (casual, occasional or reciprocal transportation as quoted above).' (Emphasis added.) 49 Stat. 545—546. 67 The close relation between the Commission, the policy of Congress enunciated in the Act and the federal control over the casual and occasional motor carrier transportation of passengers has been emphasized thus from the inception of the Motor Carrier Act, 1935, to the present. 68 This provision conditionally exempted from federal control not only the casual and occasional transportation service itself but, by rendering such transportation not 'subject to' Part II of the Interstate Commerce Act, it also conditionally exempted, from the federal brokerage license requirements, the travel bureaus which sold or arranged for such casual and occasional unlicensed and unregulated interstate transportation.16 69 4. June 14, 1938.—Frank Broker Application, 8 M.C.C. 15. Division 5 of the Interstate Commerce Commission made an important ruling on this application. February 11, 1936, the applicant, doing business as Frank's Travel Bureau, of Dallas, Texas, filed an application under § 211 of the Motor Carrier Act, 1935, for a broker's license for the purpose of arranging motor transportation of persons in interstate commerce. For five years the applicant had operated a 'travel bureau' in Dallas, Texas. The nature of his business was to bring together persons desiring to travel from Dallas to any point as far west as Los Angeles, California, o as far east as New York, New York. The applicant also sold tickets, on a commission for certain competing licensed motor carriers. The Commission held that it was necessary for the applicant to obtain a broker's license under the Federal Act in order to continue to sell tickets for the licensed carriers. The rest of the applicant's interstate business, however, was that of a typical travel bureau, arranging for transportation by unlicensed carriers. The Commission's opinion discussed this activity at length and reached a conclusion that throws light on the future policy of the Commission and on the future course of the federal and state legislation. It demonstrates that the Commission, when taking its stand against this type of interstate transportation, did so, at least in California, in the face of a contrary state policy which then favored the continuance, rather than the prohibition, of such operations. The Commission finally issued the broker's license but only upon the express condition that the applicant would discontinue his travel bureau operations in arranging for the above-described unlicensed interstate transportation which the Commission found to be not in the public interest. It said (pp. 19—20): 70 'The record convinces us that applicant's method of doing that portion of his business, namely the bringing together of prospective passengers and private individuals, not motor carriers, in order that they may enter into an arrangement whereby the passenger for compensation is transported in interstate or foreign commerce by the private individual, is not in the public interest. Applicant's limited knowledge of the passenger and owner-driver, and his inability to secure authoritative information with respect to each, of necessity makes it impossible for him to safeguard the rights of either. As a result of this practice an unscrupulous passenger or owner-driver is given an opportunity to defraud honest citizens. Under section 204(a)(4) of the act, 49 U.S.C.A. § 304(a)(4), we are authorized, among other things, to establish reasonable requirements with respect to the practices of a broker. We are of the opinion that it is reasonable to require applicant to discontinue his practice of securing private individuals not engaged in business as carriers, to transport passengers for compensation in interstate or foreign commerce, and the license granted herein will be subject to this condition and limitation. 71 'We find that applicant is fit, willing, and able to perform the brokerage service proposed and to conform to the provisions of the act and our requirements, rules, and regulations thereunder; that the proposed service, subject to the condition and limitation stated in the next preceding paragraph, is consistent with the public interest and the policy declared in section 202(a)17 of the act; and that a brokerage license should be issued to him.' (Emphasis added.) 72 5. February 6, 1939.—Michaux Broker Application, 11 M.C.C. 317. Division 5 of the Interstate Commerce Commission denied this application, filed in June, 1936, for a broker's license under the Federal Act. The applicant sought to carry on an interstate travel bureau operation in Chicago. The Commission found that, if the operation were strictly limited to arrangements for interstate transportation by casual or occasional carriers, 'the transportation would not be subject to the act.' Id. at p. 318. The applicant, accordingly, would not require a broker's license for that activity. The Commission, however, said (p. 318): 'The extent of applicant's past operations gives rise to doubt that such a volume of business could be achieved without the employment of some persons regularly engaged in transportation of passengers by motor vehicle as an occupation.' He disclaimed intention to engage in such operations in the future. The Commission thereupon denied his request for a broker's license for those operations because no such license was required fo them. The Commission warned him of the penalties for unlawful operations and denied his application on the ground that he had 'not shown that his operation as broker will be consistent with the public interest or with the policy declared in section 202(a)18 of the act, * * *.' (P. 318.) His operations as thus described and condemned were of a type comparable to those previously condemned by the Commission in its decision on the Frank Broker Application, supra, but approved in California's statutory declaration of a contrary policy then in effect. 73 6. May 1, 1940, and May 17, 1940.19—The Interstate Commerce Commission entered upon its important investigations known, respectively, as Ex parte No. MC—35, 33 M.C.C. 69, and Ex parte No. 36, 32 M.C.C. 267. The first was made— 74 'into the practices with respect to the casual, occasional, or reciprocal transportation of passengers in interstate or foreign commerce for compensation, for the purpose of determining whether the exemption of such transportation as provided in section 203(b)(9) of the Interstate Commerce Act should be removed to the extent of making applicable all provisions of part II of the act to such transportation * * * (when sold under travel bureau practices).' Ex parte No. MC—35, 33 M.C.C. 69, 70. 75 The second was an investigation into the subject of rules and regulations to govern brokers of passenger transportation subject to Part II of the Interstate Commerce Act. The first investigation later disclosed, among other things, that the— 76 'Board of Public Utilities and Transportation of the city of Los Angeles during the latter part of 1939 and the early part of 1940 received an average of 8 complaints daily involving travel bureaus. At other cities, abandoned passengers, who were usually found to be without funds, were assisted by private or public charity. In general, the testimony of the witnesses for such organizations as better-business bureaus, and travelers' aid societies, based upon a knowledge acquired in the performance of their duties, corroborates that of passengers who testified with regara to the difficulties they encountered while traveling by means of transportation arranged through travel bureaus. 77 'The law-enforcement officials and representatives of eleemosynary and quasipublic organizations who testified favor the removal of the exemption in section 203(b)(9) of the casual, occasional, and reciprocal transportation of passengers for compensation, when such transportation is arranged through travel bureaus, and believe that regulation by this Commission of such transportation is necessary. Their opinions are based principally on the grounds that this type of transportation as now conducted is the cause of inconvenience and hardship to the traveling public using such transportation, for which adequate redress cannot be obtained, that numerous violations of State and local laws and regulations occur in connection therewith, that State and local officials are unable properly to requlate such operations because of the fact that a large proportion of the transportation is interstate, and that, because of the present practices in connection with such transportation, an unreasonable burden is placed upon private and public charities in caring for passengers abandoned or injured while traveling by this means of transportation.' (Emphasis added.) Id. at pp. 75—76. 78 7. September 18, 1940.—Amendments were enacted to Part II, Interstate Commerce Act. Although the final report in Ex parte No. MC—35 was not made until 1942, some of the conditions referred to above were reflected in an amendment made to § 203(b)(9) in 1940.20 Congress still left the casual transportation operations generally unlicensed and unregulated by the Commission. Yet, through this 1940 Amendment, Congress did expressly provide that, at least when the sales or arrangements for the casual or occasiona interstate transportation were made by a licensed broker, then those sales and arrangements were to be considered 'subject to' the Act. The effect of this was to prohibit brokers licensed under the Interstate Commerce Commission from also conducting an unlicensed travel bureau business. This was, therefore, an express congressional recognition of the policy announced by the Commission in the Frank Broker Application, supra. 79 In substance this amounted to a congressional assumption of jurisdiction, in 1940, in conflict with a part of the existing California policy which approved and attempted to regulate these transactions not only in intrastate but also in interstate transactions. This action of Congress, conforming to the Commission's declaration of policy in the Broker Application cases, substituted this federal prohibition in place of state regulation of these interstate activities. This attitude was strongly reenforced in 1942 and there has been no contrary federal action at any time. See also, Copes Broker Application, 27 M.C.C. 153, 155—156, 169—172, decided by the full Commission, December 20, 1940. 80 8. April 28, 1941.—State of California v. Thompson, 313 U.S. 109, 61 S.Ct. 930, 85 L.Ed. 1219. This case overruled Di Santo v. Commonwealth of Pennsylvania, 273 U.S. 34, 47 S.Ct. 267, 71 L.Ed. 524. It held that the 1933 California Act, at least prior to 1940, was valid, but the Court made it clear that it did so because Congress had not then taken jurisdiction over travel bureau or brokerage operations in selling or arranging for casual or occasional interstate motor carrier transportation of passengers. The opinion of the Court is full of reservations as to what might be the contrary effect of the taking of federal jurisdiction over these transactions. For example, the Court said: 81 'Congress has not undertaken to regulate the acts for which respondent was convicted or the interstate transportation to which they related. * * * Hence we are concerned here only with the constitutional authority of the state to regulate those who, within the state, aid or participate in a form of interstate commerce over which Congress has not undertaken to exercise its regulatory power.' Id., 313 U.S. at page 112, and see pages 114 and 115, 61 S.Ct. at pages 931, 932, 933, 85 L.Ed. 1219. 82 9. June 2, 1941.—The 1933 California Act, which had been slightly revised in 1935, was substantially amended. The Amendment struck out the express application of the Act to interstate as well as intrastate transportation. While the Act evidently still applied, through its general language, to both types of transportation, the omission reflected the State's anticipation of the coming federal control over the interstate transactions. This anticipation was expressly stated in an amendment to § 2 limiting the State's regulation of these interstate transactions to a period in 'the absence of action on the part of Congress or the Interstate Commerce Commission regulating or requiring licenses of motor carrier transportation agents acting as such for motor carriers carrying passengers in interstate commerce * * *.'21 his demonstrated California's recognition of the lack of the necessity for, or even the lack of propriety in its attempting to exercise state control in the face of federal control. This provision was later held by the Superior Court of California to cut off completely and voluntarily the state control after the anticipated federal action was taken in 1942. People v. Van Horn, 76 Cal.App.2d 753, 174 P.2d 12. 83 10. March, 21, 1942.—This is the most significant date in these proceedings. It marked the issuance of the order of the Interstate Commerce Commission, effective May 15, 1942, in Ex parte No. MC—35, 33 M.C.C. 69, 49 C.F.R.Cum.Supp. § 210.1.22 That order expressly removed the abovementioned exemption which theretofore had excluded from regulation, under Part II of the Interstate Commerce Act, the casual, occasional and reciprocal transportation of passengers by motor vehicle in interstate commerce for compensation as provided in § 203(b)(9). This order removed that exemption 'to the extent necessary to make applicable all provisions of Part II of the Act to such transportation when sold * * * or arranged for, by any person who sells, * * * or arranges for such transportation for compensation or as a regular occupation or business.'23 It thus expressly brought under federal control the interstate passenger transportation arranged for through travel bureaus and it also brought those travel bureaus themselves under federal control. It required a license or permit to be secured for the trip and a broker's license to be secured by the bureau. §§ 203(b)(9) and 211(a), 49 Stat. 546, 554, 54 Stat. 921, 49 U.S.C. §§ 303(b)(9) and 311(a), 49 U.S.C.A. §§ 303(b)(9), 311(a). The federal control was coextensive with the problem and carefully adjusted to it. There was no need, desire or willingness expressed to accept duplicate parallel state control of these interstate operations. On the other hand, it was expressly stated that it was the inability of the state and local officials properly to regulate such interstate operations that convinced the Commission of the necessity of federal control. Ex parte No. MC—35, supra, p. 76. 84 The intent of Congress and of its specially qualified Interstate Commerce Commission to take complete control of these interstate operations and to supersede the existing state regulation had been indicated in the amendment to § 203(b)(9), made September 18, 1940. It was demonstrated beyond question in the Commission's report in Ex parte No. MC—35, supra. That report summarized two years of nationwide investigations. It dealt with the travel bureau problem especially upon an interstate basis. It made specific reference to interstate operations between California and Texas. Typical excerpts from the report have been quoted supra, 336 U.S. 765, 69 S.Ct. 859. Bearing further upon the unsuitability of state and local control over the interstate features of this kind of transportation and upon the need for a more uniform and complete federal control, the report said: 85 'There can be little doubt that the removal of the exemption may in some instances work a hardship upon casual, occasional, or reciprocal transporters of passengers and upon persons traveling as passengers by that means of transportation, as well as upon travel bureaus. On the other hand, substantial benefits to the general public would result from the proper regulation of such transportation. If it were properly regulated, passengers using such transportatio would not encounter many of the difficulties arising at present. In their testimony, briefs, and exceptions, several travel bureaus admit that reasonable rules and regulations governing the operations of travel bureaus in their appropriate and legitimate field are desirable and necessary. Casual, occasional, and reciprocal transportation of passengers cannot be regulated unless the exemption in section 203(b)(9) is at least partially removed. The act does not give us power, without the removal of the exemption referred to, to prescribe reasonable rules and regulations governing, or to regulate in any other manner the operations of, travel bureaus. Proper regulation of travel bureaus engaged in legitimate operations can be accomplished only by amendment of the act.' Id. at p. 80. See also, pp. 76—81. 86 The validity and binding effect of this order was upheld by the United States District Court for the Northern District of Illinois, November 18, 1942. See Findings of Fact and Conclusions of Law, in Levin v. United States, sub nom., T. A. Drake et al. v. United States et al.,3 Fed.Car.Cas. (CCH) 80,100, judgment affirmed, per curiam, 319 U.S. 728, 63 S.Ct. 1163, 87 L.Ed. 1692. 87 11. November 8, 1946.—People v. Van Horn, 76 Cal.App.2d 753, 174 P.2d 12. There could be no doubt that the Federal Government had thus taken jurisdiction over the regulation of travel bureaus engaged in selling or arranging motor transportation in interstate commerce or that the federal statute prohibited such transportation without a federal license or permit. The effect of this action as relating to California was tested in 1945. The operator of a travel bureau arranging for casual interstate motor transportation between San Diego and points outside of California was charged with violation of the 1933 California Act, as amended by the Act of 1941. The Appellate Department of the Superior Court of that State, in People v. Van Horn, supra, thereupon held that the California statute no longer applied to such interstate commerce because, under its 1941 Amendment, that Act was made to apply only in 'the absence of action on the part of Congress or the Interstate Commerce Commission regulating or requiring licenses of motor carrier transportation agents acting as such for motor carriers carrying passengers in interstate commerce * * *.' 1941 Cal.Stat., c. 539, § 2, p. 1863. The court recognized that, since 1942, that condition had been met. Accordingly, although California formerly had regulated these transactions, it was held that it had voluntarily abandoned such regulation in favor of the Federal Government.24 88 12. July 8, 1947.—The present California statute was approved. It repealed the Act of 1933, as amended in 1935 and 1941. While the application of the new Act to interstate transactions is not express, it was interpreted by the court below as being thus applicable.25 It may indicate, therefore, a change in the legislative policy of California toward intrastate operations and an attempted change toward interstate operations but there is no evidence of a change in the policy of Congress. 89 Jurisdiction over these interstate transactions was assumed by Congress after thorough investigation of the need for such action. That legislation enacted was supreme and therefore exclusive. This does not mean that it might not have been shared with the states if Congress had so provided. We believe, however, that it does mean that, in order for the federal jurisdiction to have been so shared, there must have been some express or implied consent by Congress to do so. The position of Congress was perfectly clear in 1942. There has been no evidenc of a change in it. 90 In Appendix C, infra, there are placed in convenient juxtaposition the principal circumstances in this case which demonstrate conflicts between the California and federal legislation and policies, classified as follows: 91 (1) Conflicts inherent in the statutory texts. 92 (2) Emphasis expressly placed upon the mutual exclusiveness of the state and federal regulations. 93 (3) Conflicts between state and federal policies which led to the taking of federal jurisdiction over travel bureaus and share-the-expense motor transportation engaged in casual interstate operations. 94 In the absence of controverting evidence, the above list of circumstances presents a convincing argument against the conclusion that Congress, in this instance, either expressly or impliedly consented to share with California the regulation of casual, occasional or reciprocal transportation of passengers by motor vehicle in interstate commerce. 95 While it may be uncertain where the line of exclusive federal jurisdiction impinges upon that of the states in the absence of the exercise of federal jurisdiction by Congress, there is no doubt that, when Congress has asserted its exclusive jurisdiction, it is for Congress to indicate the extent, if any, to which a state may then share it. To whatever extent that this is not so, federal law will have lost its constitutional supremacy over state law. 96 For these reasons we believe that the judgment should be affirmed. 97 Appendix A. 98 The California Act of 1947. 99 'An act to repeal 'An act to define motor carrier transportation agent; to provide for the regulation, supervision and licensing thereof, and to provide for the enforcement of said act and penalties for the violation thereof; and repealing an act entitled 'An act to define motor carrier transportation agent; to provide for the regulation, supervision and licensing thereof, and to provide for the enforcement of said act and penalties for the violation thereof,' approved June 5, 1931, and all acts or parts of acts inconsistent with the provisions of this act,' approved May 15, 1933, and to add Sections 654.1, 654.2, and 654.3 to the Penal Code, relating to transportation of persons. 100 '(Approved by Governor July 8, 1947. Filed with Secretary of State July 8, 1947.) 101 'The people of the State of California do enact as follows: 102 'Section 1. The act cited in the title hereof is repealed. 103 'Sec. 2. Section 654.1 is added to the Penal Code, to read: 104 '654.1. It shall be unlawful for any person, acting individually or as an officer or employe of a corporation, or as a member of a copartnership or as a commission agent or employee of another person, firm or corporation, to sell or offer for sale or, to engotiate, provide or arrange for, or to advertise or hold himself out as one who sells or offers for sale or negotiates, provides or arranges for transportation of a person or persons on an individual fare agent; to provide for the regulation, of California unless such transportation is to be furnished or provided solely by, and such sale is authorized by, a carrier having a valid and existing certificate of convenience and necessity, or other valid and existing permit from the Public Utilities Commission of the State of California, or from the Interstate Commerce Commission of the United States, authorizing the holder of such certificate or permit to provide such transportation. 105 'Sec. 3. Section 654.2 is added to the Penal Code, to read: 106 '654.2. The provisions of Section 654.1 of the Penal Code shall not apply to the selling, furnishing or providing of transportation of any person or persons 107 '(1) When no compensation is paid or to be paid, either directly or indirectly, for such transportation; 108 '(2) To the furnishing or providing of transportation to or from work, of employees engaged in farm work on any farm of the State of California; 109 '(3) To the furnishing or providing of transportation to and from work of employees of any nonprofit coopera ive association, organized pursuant to any law of the State of California; 110 '(4) To the transportation of persons wholly or substantially within the limits of a single municipality or of contiguous municipalities; 111 '(5) To transportation of persons over a route wholly or partly within a national park or state park where such transportation is sold in conjunction with or as part of a rail trip or trip over a regularly operated motor bus transportation system or line; '(6) To the transportation of passengers by a person who is driving his own vehicle and the transportation of persons other than himself and members of his family when transporting such persons to or from their place of employment and when the owner of such vehicle is driving to or from his place of employment; provided that arrangements for any such transportation provided under the provisions of this subsection shall be made directly between the owner of such vehicle and the person who uses or intends to use such transportation. 112 'Sec. 4. Section 654.3 is added to the Penal Code, to read: 113 '654.3. Violation of Section 654.1 shall be a misdemeanor, and upon first conviction the punishment shall be a fine of not over two hundred fifty dollars ($250), or imprisonment in jail for not over 90 days, or both such fine and imprisonment shall be second conviction the punishment shall be imprisonment in jail for not less than 30 days and not more than 180 days. Upon a third or subsequent conviction the punishment shall be confinement in jail for not less than 90 days and not more than one year, and a person suffering three or more convictions shall not be eligible to probation, the provisions of any law to the contrary notwithstanding.' 1947 Cal.Stat., c. 1215, pp. 2723—2725. 114 Appendix B. 115 (1) National Transportation Policy. 116 '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.' Inserted before Part I of the Interstate Commerce Act 54 Stat. 899, 49 U.S.C., note preceding § 1, 49 U.S.C.A. note preceding § 1. 117 The foregoing 'National Transportation Policy' has, for many purposes, superseded the declaration of the policy of Congress enunciated in the original § 202 of the Motor Carrier Act, 1935, to which a cross reference was made expressly in § 203(b), 49 Stat. 545. This cross reference prescribed that, in order to make Part II of the Interstate Commerce Act applicable to the kind of interstate transportation described in 203(b)(9), the Commission must 'find that such application is necessary to carry out the policy of Congress enunciated in Section 202, * * *.' The policy of Congress thus referred to as being enunciated in § 202 was contained in the original form of § 202(a), 49 Stat. 543. It read as follows: 118 'Sec. 202. (a) It is hereby declared to be the policy of Congress to regulate transportation by motor carriers in such manner as to recognize and preserve the inherent advantages of, and foster sound economic conditions in, such transportation and among such carriers in the public interest; promote adequate, economical, and efficient service by motor carriers, and reasonable charges therefor, without unjust discriminations, undue preferences or advantages, and unfair or destructive competitive practices; improve the relations between, and coordinate transportation by and regulation of, motor carriers and other carriers; develop and preserve a highway transportation system properly adapted to the needs of the commerce of the United States and of the national defense; and cooperate with the several States and the duly authorized officials thereof and with any organization of motor carriers in the administration and enforcement of this part.' 119 The foregoing original § 202(a) was repealed, September 18, 1940, 54 Stat. 920. At the same time the designation of the original § 202(b) and (c) were changed respectively to § 202(a) and (b). (Both of these subsections are material and they are printed in Appendix B(2), infra.) 120 Accordingly, § 202 of Part II of the Interstate Commerce Act ceased to contain any statement of the general 'policy of Congress' corresponding to that contained in the original form of § 202(a). On the other hand, the very same Act which this removed this declaration of policy from Part II of the Interstate Commerce Act inserted 'before Part I' of that Act a new paragraph entitled 'National Transportation Policy.' This is the paragraph quoted above from 54 Stat. 899. In the codification of Title 49, a reference to this new paragraph was substituted for the original reference to § 202. The codified clause thus required the Commission to 'find that such application is necessary to carry out the national transportation policy declared in the Interstate Commerce Act, * * *.' 49 U.S.C. § 303(b), 49 U.S.C.A. § 303(b), instead of 'the policy of Congress enunciated in section 202, * * *.' We have adopted that interpretation in this opinion. (2) Material Provisions of Part II of the Interstate Commerce Act. 121 'Sec. 202. (a) The provisions of this part apply to the transportation of passengers or property by motor carriers engaged in interstate or foreign commerce and to the procurement of and the provision of facilities for such transportation, and the regulation of such transportation, and of the procurement thereof, and the provision of facilities therefor, is hereby vested in the Interstate Commerce Commission. 122 '(b) Nothing in this part shall be construed to affect the powers of taxation of the several States or to authorize a motor carrier to do an intrastate business on the highways of any State, or to interfere with the exclusive exercise by each State of the power of regulation of intrastate commerce by motor carriers on the highways thereof.' 49 Stat. 543, as amended, 54 Stat. 920, 49 U.S.C. § 302(a) and (b), 49 U.S.C.A. § 302(a, b). 123 'Sec. 203. * * * 124 '(b) Nothing in this part, except the provisions of section 204 relative to qualifications and maximum hours of service of employees and safety of operation or standards of equipment shall be construed to include (1) motor vehicles employed solely in transporting school children and teachers to or from school; or (2) taxicabs, or other motor vehicles performing a bona fide taxicab service, having a capacity of not more than six passengers and not operated on a regular route or between fixed termini; or (3) motor vehicles owned or operated by or on behalf of hotels and used exclusively for the transportation of hotel patrons between hotels and local railroad or other common carrier stations; or (4) motor vehicles operated, under authorization, regulation, and control of the Secretary of the Interior, principally for the purpose of transporting persons in and about the national parks and national monuments; or (4a) motor vehicles controlled and operated by any farmer when used in the transportation of his agricultural commodities an products thereof, or in the transportation of supplies to his farm; or (5) motor vehicles controlled and operated by a cooperative association as defined in the Agricultural Marketing Act, approved June 15, 1929, as amended, or by a federation of such cooperative associations, if such federation possesses no greater powers or purposes than cooperative associations so defined; or (6) motor vehicles used in carrying property consisting of ordinary livestock, fish (including shell fish), or agricultural commodities (not including manufactured products thereof), if such motor vehicles are not used in carrying any other property, or passengers, for compensation; (7) motor vehicles used exclusively in the distribution of newspapers; or (7a) the transportation of persons or property by motor vehicle when incidental to transportation by aircraft; nor, unless and to the extent that the Commission shall from time to time find that such application is necessary to carry out the policy of Congress enunciated in section 202,26 shall the provisions of this part, except the provisions of section 204 relative to qualifications and maximum hours of service of employees and safety of operation or standards of equipment apply to: (8) The transportation of passengers or property in interstate or foreign commerce wholly within a municipality or between contiguous municipalities or within a zone adjacent to and commercially a part of any such municipality or municipalities, except when such transportation is under a common control, management, or arrangement for a continuous carriage or shipment to or from a point without such municipality, municipalities, or zone, and provided that the motor carrier engaged in such transportation of passengers over regular or irregular route or routes in interstate commerce is also lawfully engaged in the intrastate transportation of passengers over the entire length of such interstate route or routes in accordance with the laws of each State having jurisdiction; or (9) the casual, occasional, or reciprocal transportation of passengers or property by motor vehicle in interstate or foreign commerce for compensation by any person not engaged in transportation by motor vehicle as a regular occupation or business, unless, in the case of transportation of passengers, such transportation is sold or offered for sale, or provided or procured or furnished or arranged for, by a broker, or by any other person who sells or offers for sale transportation furnished by a person lawfully engaged in the transportation of passengers by motor vehicle under a certificate or permit issued under this part or under a pending application for such a certificate or permit.' 49 Stat. 545—546, as amended by 52 Stat. 1029, 1237, 54 Stat. 921, 49 U.S.C. § 303(b), 49 U.S.C.A. § 303(b). 125 'Sec. 211. (a) No person shall for compensation sell or offer for sale transportation subject to this part or shall make any contract, agreement, or arrangement to provide, procure, furnish, or arrange for such transportation or shall hold himself or itself out by advertisement, solicitation, or otherwise as one who sells, provides, procures, contracts, or arranges for such transportation, unless such person holds a broker's license issued by the Commission to engage in such transactions: Provided, however, That no such person shall engage in transportation subject to this part unless he holds a certificate or permit as provided in this part. In the execution of any contract, agreement, or arrangement to sell, provide, procure, furnish, or arrange for such transportation, it shall be unlawful for such person to employ any carrier by motor vehicle who or which is not the lawful holder of an effective certificate or permit issued as provided in this part: And provided further, That the provisions of this paragraph shall not apply to any carrier holding a certificate or a permit under the provisions of this part or to any bona fide employee or agent o such motor carrier, so far as concerns transportation to be furnished wholly by such carrier or jointly with other motor carriers holding like certificates or permits, or with a common carrier by railroad, express, or water.' 49 Stat. 554, 49 U.S.C. § 311(a), 49 U.S.C.A. § 311(a). 126 'Sec. 222. (a) Any person knowingly and willfully violating any provision of this part, or any rule, regulation, requirement, or order thereunder, or any term or condition of any certificate, permit, or license, for which a penalty is not otherwise herein provided, shall, upon conviction thereof, be fined not more than $100 for the first offense and not more than $500 for any subsequent offense. Each day of such violation shall constitute a separate offense.' 49 Stat. 564, 49 U.S.C. § 322(a), 49 U.S.C.A. § 322(a). 127 APPENDIX C. 128 Summary of conflicts between California and federal legislation and policies. 129 (1) Conflicts inherent in the statutory texts. 130 CALIFORNIA STATUTE. (See Appendix A, supra) 131 Persona Affected and Activities Prohibited. 132 654.1 It shall be unlawful for any person, acting individually or as an officer or employee of a corporation, or as a member of a copartnership or as a commission agent or employee of another person, firm or corporation, to sell or offer for sale or, to negotiate, provide or arrange for, or to advertise or hold himself out as one who sells or offers for sale or negotiates, provides or arranges for transportation of a person or persons on an individual fare basis over the public highways of the State of California unless such transportation is to be furnished or provided solely by, and such sale is authorized by, a carrier having a valid and existing certificate of convenience and necessity, or other valid and existing permit from the Public Utilities Commission of the State of California, or from the Interstate Commerce Commission of the United States, authorizing the holder of such certificate or permit to provide such transportation. 133 (In addition to the textual variations between the state and federal prohibitions, this measure differs from the federal measure because this merely prohibits travel bureau operations as such unless the carrier has a state or federal license or permit and it does not require that the broker selling or arranging for the transportation must be a licensed broker.) (b) Exemptions. 134 654.2. The provisions of Section 654.1 of the Penal Code shall not apply to the selling, furnishing or providing of transportation of any person or persons 135 (1) When no compensation is paid or to be paid, either directly or indirectly, for such transportation; 136 (2) To the furnishing or providing of transportation to or from work, of employees engaged in farm work on any farm of the State of California; 137 (3) To the furnishing or providing of transportation to and from work of employees of any nonprofit cooperative association, organized pursuant to any law of the State of California; 138 (4) To the transportation of persons wholly or substantially within the limits of a single municipality or of contiguous municipalities; 139 (5) To transportation of persons over a route wholly or partly within a national park or state park where such transportation is sold in conjunction with or as part of a rail trip or trip over a regularly operated motor bus transportation system or line; 140 (6) To the transportation of passengers by a person who is driving his own vehicle and the transportation of persons other than himself and members of his family when transporting such persons to or from their place of employment and when the owner of such vehicle is driving to or from his place of employment; provided that arrangements for any such transportation provided under the provisions of this subsection shall be made directly between the owner of such vehicle and the person who uses or intends to use such transportation. (c) Penalties. 141 654.3. Violation of Section 654.1 shall be a misdemeanor, and upon first conviction the punishment shall be a fine of not over two hundred fifty dollars ($250), or imprisonment in jail for not over 90 days, or both such fine and imprisonment. Upon second conviction the punishment shall be imprisonment in jail for not less than 30 days and not more than 180 days. Upon a third or subsequent conviction the punishment shall be confinement in jail for not less than 90 days and not more than one year, and a person suffering three or more convictions shall not be eligible to probation, the provisions of any law to the contrary notwithstanding. 142 (2) Emphasis expressly placed upon the mutual exclusiveness of the state and federal regulations assigning intrastate regulation to the states,and interstate regulation to the Interstate Commerce Commission upon its finding it necessary. 143 1933 California Act. 144 The state policy of regulation of motor carrier transportation agents and unlicensed share-the-expense motor carriers was to apply to interstate, as well as intrastate, transportation "until such time as Congress of the United States shall act, * * *." P.761, 69 S.Ct.857, supra. 145 1941 California Amendments. 146 The state regulation of the interstate transportation was limited to a period in "the absence of action on the part of Congress or the Interstate Commerce Commission regulating or requiring licenses of motor carrier transportation agents acting as such for motor carriers carrying passengers in interstate commerce* * *" 336 U.S. 769, 69 S.Ct. 861, supra. 147 1947 California Act. 148 This repealed the 1933 Act, as amended in 1941, and mentioned only "transportation * * * over the public highways of the State of California * * *." Appendix A, supra. This could be interpreted as limited to intrastate transportation but it was interpreted, by the court below, as an invalid attempt to invade the federal jurisdiction over interstate commerce. Note 7, supra. 149 (3) Conflicts between state and federal policies which led to the taking federal jurisdiction over travel bureaus and share-the-expensemotor transportation engaged in casual interstate operations. 150 The 1931 California Act recognized and licensed travel bureaus arranging share-the-expense interstate, as well as intrastate, motor trips by unlicensed carriers. 336 U.S. 759, 69 S.Ct. 856, supra. The 1933 California Act continued this policy as to interstate transportation. It stated, however, that such application to interstate transportation would continue only until such time as the Congress of the United States took action. 336 U. S. 761, 69 S.Ct. 857, supra. 151 The 1941 California Amendments emphasized the limitation upon state regulation of interstate transportation. 336 U.S. 768, 69 S.Ct. 860, supra. 152 In 1942, the anticipated federal action automatically cut off the California regulation of these interstate operations. 336 U.S. 770-773, 69 S.Ct. 861-863, supra. FEDERAL STATUTE. 153 (See Appendix A, supra.) 154 Persona Affected and Activities Prohibited. 155 SEC. 203. (a) As used in this part-- 156 (1) The term "person" means any individual, firm, copartnership, corporation, company, association, or joint-stock association; and includes any trustee, receiver, assignee, or personal representative thereof. 49 Stat. 544, 49 U.S.C. § 303(a) (1), 49 U.S.C.A. § 303(a) (1). 157 SEC. 211. (a) No person shall for compensation sell or offer for sale transportation subject to this part or shall make any contract, agreement, or arrangement to provide, procure, furnish, or arrange for such transportation or shall hold himself or itself out by advertisement, solicitation, or otherwise as one who sells, provides, procures, contracts, or arranges for such transportation, unless such person holds a broker's license issued by the Commission to engage in such transactions: Provided, however, That no such person shall engage in transportation subject to this part unless he holds a certificate or permit as provided in this part. In the execution of any contract, agreement, or arrangement to sell, provide, procure, furnish, or arrange for such transportation, it shall be unlawful for such person to employ any carrier by motor vehicle who or which is not the lawful holder of an effective certificate or permit issued as provided in this part: * * *. 158 (In addition to the textual variations between the state and federal prohibitions, this differs form the state measure because this measure not only prohibits interstate travel ureau operations as such unless the carrier holds a federal license or permit, but it also requires that the broker selling or arranging for the transportation must hold a federal broker's license.) (b) Exemptions. 159 SEC. 211 (a) * * * And provided further, That the provisions of this paragraph shall not apply to any carrier holding a certificate or a permit under the provisions of this part or to any bona fide employee or agent of such motor carrier, so far as concerns transportation to be furnished wholly by such carrier or jointly with other motor carriers holding like certificates or permits, or with a common carriers by railroad, express, or water. 160 SEC. 203. * * * 161 (b) Nothing in this part, except the provisions of section 204 relative to qualifications and maximum hours of service of employees and safety of operation or standards or equipment shall be construed to include 162 (1) motor vehicles employed solely in transporting school children and teachers to or from school; or 163 (2) taxicabs, or other motor vehicles performing a bona fide taxicab service, having a capacity of not more than six passengers and not operated on a regular route or between fixed termini; or 164 (3) motor vehicles owned or operated by or on behalf of hotels and used exclusively for the transportation of hotel patrons between hotels and local railroad or other common carrier stations; or 165 (4) motor vehicles operated, under authorization, regulation, and control of the Secretary of the Interior, principally for the purpose of transporting persons in and about the national parks and national monuments; or (4a) motor vehicles controlled and operated by any farmer when used in the transportation of his agricultural commodities and products thereof, or in the transportation of supplies to his farm; or (5) motor vehicles controlled and operated by a cooperative association as defined in the Agricultural Marketing Act, approved June 15, 1929, as amended, or by a federation of such cooperative associations, if such federation possesses no greater powers or purposes than cooperative associations so defined; or 166 (6) motor vehicles used in carrying property consisting of ordinary livestock, fish (including shell fish) or agricultural commodities (not including manufactured products thereof), if such motor vehicles are not used in carrying any other property, or passengers, for compensation; 167 (7) motor vehicles used exclusively in the distribution of newspapers; or 168 (7a) the transportation of persons or property by motor vehicle when incidental to transportation by aircraft; nor, unless and to the extent that the Commission shall from tine to time find that such application is necessary to carry out the policy of Congress enunciated in section 202, shall the provisions of this part, except the provisions of section 204 relative to qualifications and maximum hours of service of employees and safety of operation or standards of equipment apply to: 169 (8) The transportation of passengers or property in interstate or foreign commerce wholly within a municipality or between contiguous municipalities or within a zone adjacent to and commercially a part of any such municipality or municipalities, except when such transportation is under a common control, management, or arrangement for a continuous carriage or shipment to or from a point without such municipality, municipalities, or zone, and provided that the motor carrier engaged in such transportation of passengers over regular or irregular route or routes in interstate commerce is also lawfully engaged in the intrastate transportation of passengers over the entire length of such interstate route of routes in accordance with the laws of each State having jurisdiction; or 170 (9) the casual, occasional, or reciprocal transportation of passengers or property by motor vehicle in interstate or foreign commerce for compensation by any person not engaged in transportation by motor vehicle as a regular occupation or business, unless, in the case of transportation of passengers, such transportation is sold or offered for sale, or provided or procured or furnished or arranged for, by a broker, or by any other person who sells or offers for sale transportation furnished by a person lawfully engaged in the transportation of passengers by motor vehicle under a certificate or permit issued under this part or under a pending application for such a certificate or permit. (c) Penalties. 171 SEC. 222. (a) Any person knowingly and willfully violating any provision of this part, or any rule, regulation, requirement, or order thereunder, or any term or condition of any certificate, permit, or license, for which a penalty is not otherwise herein provided, shall, upon conviction thereof, be fined not more than $100 for the first offense and not more that $500 for any subsequent offense. Each day of such violation shall constitute a separate offense. 172 (2) Emphasis expressly placed upon the mutual exclusiveness of the state and federal regulations assigning intrastate regulation to the states,and interstate regulation to the Interstate Commerce Commission upon its finding it necessary. 173 Federal Act--Motor Carrier Act, 1935, Part II. Interstate Commerce Act. 174 "The provisions of this part apply to the transportation of passengers or property by motor carriers 336 U.S. engaged in interstate or foreign commerce * * * and the regulation of such transportation, * * * is hereby vested in the Interstate Commerce Commission." § 202(a). Appendix B (2), supra. "Nothing in this part shall be construed * * * to interfere with the exclusive exercise by each State of the power of regulation of intrastate commerce by motor carriers on the highways thereof." § 202(b), Appendix B (2), supra. 175 Nothing in this part was to include the casual, occasional, or reciprocal transportation of passengers by motor vehicle in interstate commerce for compensation by any person not engaged in such transportation as a regular occupation or business "unless and to the extent that the Commission shall from time to time find that such application is necessary to carry out the policy of Congress enunciated in section 202, * * *." § 203(b), Appendix B (2), supra. 176 Federal Act--1940 Amendment to Part II of the Interstate Commerce Act. 177 This partly removed the exemption of the Federal Act from the casual, occasional, or reciprocal transporters of persons or property in interstate commerce. The removal applied to cases, for example, where the transportation was sold or arranged for by a broker. Note 20, supra. 178 Federal Order--1942 Order of the Interstate Commerce Commission. 179 This further removed the exemption from the casual, occasional, or reciprocal transporters of persons or property in interstate commerce. This federal order brought these interstate operations under the Federal Act and under the regulations of the Commission. By virtue of the self-terminating provisions of the California Act, this order cut off the state regulation of these interstate operations. Note 23, supra. 180 (3) Conflicts between state and federal policies which led to the taking federal jurisdiction over travel bureaus and share-the-expensemotor transportation engaged in casual interstate operations. 181 In 1935 and 1940, Part II of the Interstate Commerce Act gave warning that federal control would be taken when the Interstate Commerce Commission found it necessary in order to carry out the policy of Congress. 336 U.S. 762, 767, 69 S.Ct. 857, 858, 860, supra. 182 In 1940, the Interstate Commerce Commission began its expressly authorized investigations into the operations of travel bureaus and share-the-expense interstate motor transportation. 69 S.Ct. 859, supra. In 1942, these resulted in the Commission's conclusion t at such operations, as applied to interstate commerce, were contrary to public policy. It declined to issue a license even to a regular transportation broker unless he agreed to refrain from such operations. It expressly found that state and local officials were unable to regulate such operations because a large proportion of the transportation was interstate. 183 In 1942, the Interstate Commerce Commission order largely removed the statutory exemption of these travel bureaus and operations from the Interstate Commerce Act and federal control has been continuously exercised over them since that date. 336 U.S. 770-773, 69 S.Ct. 861-863, supra. 1 Calif.Stats.1947, c. 1215, §§ 2, 4, pp. 2724, 2725, Deering's Calif. Penal Code (1947 Supp.), §§ 654.1, 654.3. The statute makes it criminal to sell transportation in a carrier which has failed to secure a permit from either the California Public Utilities Commission or the Interstate Commerce Commission of the United States. Our only concern is with the correspondence of State and federal legislation. 2 49 U.S.C. §§ 301, 303(b), 49 U.S.C.A. §§ 301, 303(b) (see note 5, infra), 49 Stat. 543 et seq., 54 Stat. 919, 921. The act is limited to carriers operating in interstate commerce. 49 U.S.C. § 302(b), 49 U.S.C.A. § 302(b). 3 49 U.S.C. § 303(b)(9), 49 U.S.C.A. § 303(b)(9). 4 When the transportation is arranged 'by a third-party intermediary who engages in making such transactions for compensation or as a regular occupation or business.' Ex parte No. MC—35, 33 M.C.C. 69, 81. 5 The I.C.C. order was upheld by the District Court for the Northern District of Illinois in Drake v. United States, November 18, 1942 (3 Federal Carriers Cases 2297). We affirmed. Levin v. United States, 319 U.S. 728, 63 S.Ct. 1163, 87 L.Ed. 1692. 6 The Appellate Department of the Superior Court of Los Angeles County, State of California. There is no further review in the State courts. Art. VI, §§ 4, 4b, Calif.Const.; People v. Reed, 13 Cal.App.2d 39, 56 P.2d 240. 7 Compare Missouri, K. & T.R. Co. of Texas v. Harris, 234 U.S. 412, 34 S.Ct. 790, 58 L.Ed. 1377, L.R.A.1915E, 942, with Northern Pac. R. Co. v. State of Washington ex rel. Atkinson, 222 U.S. 370, 32 S.Ct. 160, 56 L.Ed. 237; People of State of New York v. Compagnie Generale Transatlantique, 107 U.S. 59, 63, 2 S.Ct. 87, 90, 27 L.Ed. 383; Oregon-Washington R. & Nav. Co. v. State of Washington, 270 U.S. 87, 46 S.Ct. 279, 70 L.Ed. 482; and Cloverleaf Butter Co. v. Patterson, 315 U.S. 148, 62 S.Ct. 491, 786, 86 L.Ed. 754. In these cases we made our decision concerning congressional intent by considering all the factors we considered relevant. We did not resort to a mechanical rule. The text also seems to supply the underlying rationale for the two cases cited in Varnville, supra, 237 U.S. at page 604, 35 S.Ct. at pages 716, 717, 59 L.Ed. 1137, Ann.Cas.1916D, 333, to support the familiar quotation on 'coincidence.' Southern R. Co. v. Railroad Commission of Indiana, 236 U.S. 439, 35 S.Ct. 304, 59 L.Ed. 6 1, and Chicago, R.I. & P.R. Co. v. Hardwick Farmers' Elevator Co., 226 U.S. 426, 33 S.Ct. 174, 57 L.Ed. 284, 46 L.R.A., N.S., 203. And see Jerome v. United States, 318 U.S. 101, 105, 63 S.Ct. 483, 486, 87 L.Ed. 640. 8 The Fox and Marigold cases were concerned with congressional power over forgeries, but for the purposes of this case the principle is the same. 9 As might be expected: there was an exemption of casual operations when the statute was passed. See note 5, supra, and text. Discussion in debate and hearings is largely descriptive. See, e.g., Hearings before Subcommittee of House Committee on Interstate and Foreign Commerce on H.R. 5262 and H.R. 6016, 74th Cong., 1st Sess., pp. 47, 97, 183, 188—191, 208, 262; Hearings before Senate Committee on Interstate Commerce on S. 1629, S. 1632, and S. 1635, 74th Cong., 1st Sess., pp. 69, 70, 87, 97, 119, 186—188, 215, 390. The Committee reports are not helpful. There is, however, an expression of deference to State action on intrastate commerce, 49 U.S.C. § 302(b), 49 U.S.C.A. § 302(b), as strengthened on the floor of the Senate, 79 Cong.Rec. 5735 5737. See 79 Cong.Rec. 12197; 49 U.S.C. § 305(a), 49 U.S.C.A. § 305(a). 10 E.g., South Carolina State Highway Department v. Barnwell Bros., 303 U.S. 177, 625, 58 S.Ct. 510, 82 L.Ed. 734; Clark v. Poor, 274 U.S. 554, 557, 47 S.Ct. 702, 703, 71 L.Ed. 1199; Maurer v. Hamilton, 309 U.S. 598, 614, 60 S.Ct. 726, 734, 84 L.Ed. 969, 135 A.L.R. 1347; Hendrick v. State of Maryland, 235 U.S. 610, 35 S.Ct. 140, 59 L.Ed. 385; H. P. Welch Co. v. State of New Hampshire, 306 U.S. 79, 59 S.Ct. 438, 83 L.Ed. 500; Kelly v. State of Washington ex rel. Foss Co., 302 U.S. 1, 10, 58 S.Ct. 87, 92, 82 L.Ed. 3. See the distinction of Buck v. Kuykendall, 267 U.S. 307, 45 S.Ct. 324, 69 L.Ed. 623, 38 A.L.R. 286, and Bush & Sons Co. v. Maloy, 267 U.S. 317, 45 S.Ct. 326, 69 L.Ed. 627, in Bradley v. Public Utilities Commission of Ohio, 289 U.S. 92, at page 95, 53 S.Ct. 577, at page 578, 77 L.Ed. 1053, 85 A.L.R. 1131. See Kauper, State Regulation of Interstate Motor Carriers, 31 Mich.L.Rev. 920, 1097. 11 'The travel-bureau business is quite extensive in many cities, particularly those in the western and southwestern States, notably at Kansas City, Mo., Wichita, Kans., Oklahoma City and Tulsa, Okla., Dallas, Fort Worth, San Antonio, Houston and El Paso, Tex., Los Angeles and San Francisco, Calif., Portland, Oreg., Seattle, Wash., and Denver, Colo. The record establishes that such operations exist at other cities, including Chicago, Ill., and New York, N.Y. At one time, there were approximately 50 bureaus in operation in Los Angeles alone. * * *' 33 M.C.C. at 71 72. 12 Letters from motor carrier commissions in western and southwestern States show that in 1941 there was no regulation, or attempt at regulation, covering Kansas City, Oklahoma City, Tulsa, Dallas, Fort Worth, San Antonio, Houston, El Paso, Portland, or Seattle. Only in Wichita and Denver was regulation attempted, and its extent in Wichita is not at all clear. In 1941 there was likewise no regulation or attempt at regulation of any kind in Arizona, Montana, New Mexico, or Utah, although Wyoming attempted some measure of control Idaho's only requirement was a registration fee. 13 Respondents ignore practical differences when they rely upon the Southern R. Co. case, supra, which invalidated state regulation of grab-irons on railroad cars moving in interstate commerce. The individual state's interest in the manner its residents use its own highways can hardly be compared with the time-honored I.C.C. control over the nation's traditional avenues of interstate transportation, the railroads. A case closer to the one before us is Asbell v. State of Kansas, supra. To recognize that the question is one of degree does not resolve the sharp differences in extreme revealed by the Southern R. Co. case and the one now before us. 14 'The Federal Government has dealt with the manner in which customhouse brokerage is carried on. Minnesota, however, is legitimately concerned with safeguarding the interests of its own peo le * * *.' Id. 1 The variety of sanctions now enforceable is reflected in the following statutes: United States: fine of not more than $100 for the first offense and not more than $500 for any subsequent offense. 49 Stat. 564, 49 U.S.C. § 322(a), 49 U.S.C.A. § 322(a). California: fine of not over $250 or imprisonment for not over 90 days or both, and on the second conviction, imprisonment for not less than 30 days or more than 180 days. For subsequent convictions, imprisonment for no less than 90 days and not more than one year. Cal.Pen.Code § 654.3 (1947 Supp.). Washington: fine of not over $250 or not over 90 days in jail; apparently additional offenses do not increase the punishment. Wash.Rev.Stat.Ann. § 2266 (1940), §§ 6397—19, 6397—20, (1941 Supp.). Wyoming: fine of not less than $25, nor more than $100, or imprisonment for not more than six months or both. Wyoming Comp.Stat. §§ 60—1309, 60—1362 (1945). The applicability of these sections to a situation of the present type is not free from doubt. 1 See Appendix A, infra. 2 1933 Cal.Stats., c. 390, § 1, p. 1012. 3 1941 Cal.Stats., c. 539, § 2, p. 1863. 4 § 203(b), 49 Stat. 545—546, of the Motor Carrier Act, 1935, which became Part II, Interstate Commerce Act, 49 Stat. 543, 54 Stat. 919, 49 U.S.C.A. § 303(b). 5 § 203(b)(9) of Part II, Interstate Commerce Act, 54 Stat. 921, 49 U.S.C. § 303(b)(9), 49 U.S.C.A. § 303(b)(9). For text, see Appendix B(2), infra. 6 Ex parte No. MC—35, 33 M.C.C. 69, 49 C.F.R., Cum.Supp. § 210.1. 7 'The point made on appeal is that the acts charged and proved against defendants were done in interstate commerce and that for that reason and because of certain Federal legislation, the state law cannot be applied to those acts. We find this contention well founded. 'Respondent (The People of the State of California) concedes and even demonstrates that under the circumstances of this case the Federal law and section 654.1, Penal Code, forbid and punish the same acts, but contends that this is permissible and does not invalidate the state law, even as applicable to acts in interstate commerce. If we look to the rule in California for determining whether a city ordinance is in conflict with a state law and for that reason void, the city being limited by our Constitution to such police regulations 'as do not conflict with general laws,' we find it established that 'there is a conflict where the ordinance and the general law punish precisely the same acts.' * * * Respondent contends that this is not the rule applicable as between State and Federal legislation, but on review of the authorities we conclude that the rule in interstate commerce matters has substantially the same effect as that above stated. Of such a case, the United States Supreme Court said long ago: 'This legislation (enacted by Congress) covers the same ground as the New York Statute, and they cannot coexist.' (People of State of New York v. Compagnie Generale Transatlantique, 1883, 107 U.S. 59, 63, 2 S.Ct. 87, (90), 27 L.Ed. 383, 385.) 'We conclude, therefore, that section 654.1, Penal Code, cannot be validly applied to transportation in interstate commerce, and since the complaint herein expressly limits itself to such transportation, it states no offense punishable under the section and the demurrer should have been sustained.' (Emphasis added.) People v. Zook, 87 Cal.App.2d Supp. 921, 197 P.2d 851, 852, 854. 8 People v. Zook, supra. The material statutory provisions include: The Penal Code of California, §§ 654.1—654.3, added by 1947 Cal.Stat. c. 1215, pp. 2723—2725. For text, see Appendix A, infra. National Transportation Policy, inserted before Part I of the Interstate Commerce Act, 54 Stat. 899, 49 U.S.C., note preceding § 1, 49 U.S.C.A. note preceding § 1. For text, see Appendix B(1), infra. Part II, Interstate Commerce Act, §§ 202(a), jurisdiction in Interstate Commerce Commission; 202(b), powers of states; 203(b)(9), partial and conditional exemption of casual and occasional transportation; 211(a), licenses, certificates, permits; 222(a), penalties; 49 Stat. 543, et seq., as amended by 52 Stat. 1029, 1237, 54 Stat. 920, et seq.; 49 U.S.C. §§ 302(a) and (b), 303(b)(9), 311(a), 322(a), 49 U.S.C.A. §§ 302(a, b), 303(b)(9), 311(a), 322(a). For text, see Appendix B(2), infra. 49 C.F.R.Cum.Supp. § 210.1, as to removal of exemption as provided in § 203(b)(9) of Part II, Interstate Commerce Act. For text, see note 23, infra. 9 'COMPLAINT—Filed January 8, 1948 'Personally appeared before me, this 8th day of January, 1948, E. W. Hively of Los Angeles City, who, first being duly sworn, complains and says: That on or about the 7th day of January, 1948, at and in Los Angeles City, in the County of Los Angeles, State of California, a misdemeanor, to-wit: Violation of Section 654.1 of the Penal Code of the State of California was committed by Berl B. Zook and Wilmer K. Craig (whose true name to affiant is unknown), who at the time and place last aforesaid, did wilfully and unlawfully, at 925 West 7th Street, in the City of Los Angeles, sell, and offer to sell, negotiated, provided and arranged for, and advertised and held themselves out as persons who sell and offer to sell and negotiate, provide and arrange for the transportation of persons on an individual fare basis over the public highways of the State of California by a carrier other than a carrier having a valid and existing certificate of convenience and necessity or other valid and existing permit from the Public Utilities Commission of the State of California or from the Interstate Commerce Commission of the United States authorizing such holder of a certificate or other permit to provide such transportation of passengers in that the said Berl B. Zook and Wilmer K. Craig, held themselves out as persons willing to sell and negotiate for the above described transportation and sold to James A. Moss and Dorothy Mae Elbag, transportation from Los Angeles to Fort Worth, Texas, over a carrier which was not licensed in any manner by the State of California or the Interstate Commerce Commission to carry passengers for compensation or hire and Legotiated for the sale of such transportation and arranged for such transportation. 'All of which is contrary to the form of the Statute in such cases made and provided, and against the peace and dignity provided, and against the peace and dignity Said Complainant therefore prays that a warrant may be issued for the arrest of said Defendant ........ (whose true name ........ to affiant is unknown) and that ........ he ........ may be dealt with according to law. 'Subscribed and sworn to before me this 8th day of January, 1948, E. W. Hively. 'Urban F. Emma, Clerk of the Municipal Court of Los Angeles City, in said County and State. By G. Lander (Seal.) Deputy Clerk. '(File endorsement omitted) 'Issued by Ray L. Chesebro, City Attorney 'By Boyd A. Taylor, Deputy City Attorney.' The respondents demurred to this complaint. The demurrer was overruled by the Municipal Court of the City of Los Angeles, California. The respondents, upon a stipulated statement of facts, were convicted and sentenced by that court. Their motion in arrest of judgment was denied. The Appellate Department of the Superior Court of the State of California, in and for the County of Los Angeles, reversed the judgment and remanded the cause to the Municipal Court with directions to sustain the demurrer. The appeal from the order in arrest of judgment was dismissed. 10 Cf. § 654.2 of the Penal Code of California with § 203(b) of the Interstate Commerce Act; see § 211(a) as to broker's license and, generally, Appendices A and B, infra. For a detailed juxtaposition of the conflict, see Appendix C, infra. 11 Under § 654.3 of the Penal Code of California, assuming this to be the respondents' first offense, each respondent was subject to a maximum fine of $250 or imprisonment for not over 30 days, or both. In the instant case the court fined each respondent $250 and required that, in default of the payment of the respective fines before 5 p.m. on the date of judgment, they were to be imprisoned in the city jail in the proportion of one day's imprisonment for each $2 of the fines until paid, not exceeding 125 days. For a second conviction the punishment prescribed is limited to imprisonment for not less than 30 days and not more than 180 days. Upon a third or subsequent conviction the punishment is limited to imprisonment for not less than 90 days and not more than one year, without eligibility for probation. Violations of the corresponding § 211(a) of the Interstate Commerce Act are punishable, under § 222(a), by a fine of not more than $100 for the first offense and not more than $500 for any subsequent offense. Each day of violation constitutes a separate offense. 12 'The Congress shall have Power * * * To regulate Commerce * * * among the several States, * * *.' (U.S.Const. Art. I, § 8.) 'This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; * * * shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.' (Id. Art. VI.) 13 '* * * it would seem, upon just principles of construction, that the legislation of Congress, if constitutional, must supersede all state legislation upon the same subject; and by necessary implication prohibit it. For if Congress have a constitutional power to regulate a particular subject, and they do actually regulate it in a given manner, and in a certain form, it cannot be that the state legislatures have a right to interfere; and, as it were, by way of compliment to the legislation of Congress, to prescribe additional regulations, and what they may deem auxiliary provisions for the same purpose. In such a case, the legislation of Congress, in what it does prescribe, manifestly indicates that it does not intend that there shall be any farther legislation to act upon the subject-matter. Its silence as to what it does not do, is as expressive of what its intention is as the direct provisions made by it. This doctrine was fully recognised by this Court, in the case of Houston v. Moore, 5 Wheat. 1, 21, 22 (5 L.Ed. 19); where it was expressly held, that where Congress have exercised a power over a particular subject given them by the Constitution, it is not competent for state legislation to add to the provisions of Congress upon that subject; for that the will of Congress upon the whole subject is as clearly established by what it had not declared, as by what it has expressed.' Id. 16 Pet. at pages 617—618, 10 L.Ed. 1060. 14 The constitutional principle of the supremacy of federal jurisdiction here discussed puts a limitation upon the legislative jurisdiction of the states in the absence of congressional consent. It does not restrict cooperation of the states in the enforcement of federal statutes. Such cooperation, for example, is an appropriate accompaniment of the National Transportation Policy under the Interstate Commerce Act. This cooperation does not, however, require the creation of separate state offenses paralleling or nearly paralleling the federal offenses. It calls, rather, for cooperation in enforcing the existing federal offenses. The petitioner, in aid of its argument, has pointed to the declaration of policy as originally stated in the Motor Carrier Act, 1935. There is no aid for the petitioner there. That declaration contained the general phrase, 'It is hereby declared to be the policy of Congress to * * * cooperate with the several States and the duly authorized officials thereof and with any organization of motor carriers in the administration and enforcement of this part.' 49 Stat. 543. For full text, see Appendix B(1), infra. When this declaration was repealed in 1940 and largely incorporated in a statement of the 'National Transportation Policy,' preceding Part I of the Interstate Commerce Act, Congress added language emphasizing the federal rather than the state features of the policy. The material clauses then read: 'It is hereby declared to be the national transportation policy of the Congress * * * to cooperate with the several States and the duly authorized officials thereof; * * * 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 Servi e, and of the national defense. * * *' 54 Stat. 899. For full text and comment, see Appendix B(1), infra. It was because the Commission, in 1942, found it necessary in order to carry out this National Transportation Policy that it withdraw the exemption in § 203(b)(9) which is now before us and which theretofore, to a large extent, had kept interstate travel bureaus and interstate share-the-expense operators exempt from the Interstate Commerce Act. 15 See Appendix B(1), infra. 16 § 211(a), 49 Stat. 547, 49 U.S.C. § 311(a), 49 U.S.C.A. § 311(a). For text, see Appendix B(2), infra. 17 See Appendix B(1), infra. 18 See Appendix B(1), infra. 19 Orders directing investigations, 5 Fed.Reg. 1830, 1845. 20 Clause (9) of § 203(b) was amended to read as follows, the new language being italicized: '(9) the casual, occasional, or reciprocal transportation of passengers or property by motor vehicle in interstate or foreign commerce for compensation by any person not engaged in transportation by motor vehicle as a regular occupation or business, unless, in the case of transportation of passengers, such transportation is sold or offered for sale, or provided or procured or furnished or arranged for, by a broker, or by any other person who sells or offers for sale transportation furnished by a person lawfully engaged in the transportation of passengers by motor vehicle under a certificate or permit issued under this part or under a pending application for such a certificate or permit.' (Emphasis added.) 54 Stat. 921, 49 U.S.C. § 303(b)(9), 49 U.S.C.A. § 303(b)(9). 21 'Sec. 2. Section 2 of the act cited in the title hereof is hereby amended to read as follows: 'In the absence of action on the part of Congress or the Interstate Commerce Commission regulating or requiring licenses of motor carrier transportation agents acting as such for motor carriers carrying passengers in interstate commerce (in this paragraph referred to as 'interstate motor carrier transportation agents') this act shall apply to and regulate such interstate motor carrier transportation agents to the same extent and in the same manner that it regulates or requires the licensing of motor carrier transportation agents acting as such for motor carriers carrying passengers in intrastate commerce (in this paragraph referred to as 'intrastate motor carrier transportation agents').' 1941 Cal.Stat., c. 539, pp. 1862, 1863, amending 1933 Cal.Stat., c. 390, which was the Act cited in the title of this 1941 Act. 22 It was preceded, on February 3, 1942, by the report and order in EX parte No. MC—36, 32 M.C.C. 267, effective April 1, 1942, 49 C.F.R.Cum.Supp. § 200.300. That order prescribed the kind of information that must be recorded, under federal control, by every passenger broker licensed under § 211 of Part II of the Interstate Commerce Act. 23 'Order 'At a Session of the Interstate Commerce Commission, Division 5, held at its office in Washington, D.C., on the 21st day of March, A.D. 1942. 'Ex Parte No. Mc,—35 'Exemption of Casual, Occasional, or Reciprocal Transportation of Passengers by Motor Vehicle 'It appearing, That by order of May 1, 1940, the Commission division 5, entered into an investigation into practices with respect to the casual, occasional, or reciprocal transportation of passengers in interstate or foreign commerce for compensation for the purpose of determining w ether the exemption of such transportation as provided in section 203(b)(9) of the act should be removed to the extent necessary to make applicable all provisions of the act to such transportation when it is sold, or offered for sale, or provided, or procured, or furnished, or arranged for by any person who holds himself or itself out as one who sells, or offers for sale transportation wholly or partially subject to the act, or who negotiates for, or holds himself out by solicitation, advertisement, or otherwise, as one who sells, provides, furnishes, contracts, or arranges for, such transportation; 'And it further appearing, That a full investigation of the matters and things involved has been made and that the division, on the date hereof, has made and filed a report containing its findings of fact and conclusions thereon, which report is hereby referred to and made a part hereof: 'It is ordered, That the Code of Federal Regulations be, and it is hereby, amended by adding the following: 'Title 49—Transportation and Railroads 'Chapter 1—Interstate Commerce Commission 'Subchapter B—Carriers by Motor Vehicle 'Part 210—Exemptions 'Sec. 210. 1 Casual, occasional, or reciprocal transportation of passengers for compensation when such transportation is sold or arranged by anyone for compensation. The partial exemption from regulation under the provisions of Part II of the Interstate Commerce Act of the casual, occasional, and reciprocal transportation of passengers by motor vehicle in interstate or foreign commerce for compensation as provided in section 203(b)(9) of the act be, and it is hereby, removed to the extent necessary to make applicable all provisions of Part II of the act to such transportation when sold or offered for sale, or provided or procured or furnished or arranged for, by any person who sells, offers for sale, provides, furnishes, contracts, or arranges for such transportation for compensation or as a regular occupation or business. Sec. 203(b)(9), 49 Stat. 546, 54 Stat. 919, 921, 49 U.S.C. 303(b)(9), 49 U.S.C.A. § 303(b)(9). 'It is further ordered, That this order shall become effective May 15, 1942. 'And it is further ordered, That notice of this order be given to the general public affected thereby by publishing it in the Federal Register and by depositing copies thereof in the office of the Secretary of the Commission in Washington, D.C. 'By the Commission, division 5. '(Signed) W. P. Bartel 'Secretary.' We are indebted to the Interstate Commerce Commission for the full text of the above order. The amendment to the Code of Federal Regulations made by this order appears in 49 C.F.R.Cum.Supp. § 210.1. 24 See also, People v. Edmondson, decided March 15, 1946, by the Appellate Department of the Superior Court, County of Los Angeles, California. The opinion of that court is not officially reported but appears in 1946 L.A.Crim.App. 2160. Cert. denied, October 14, 1946, 329 U.S. 716, 67 S.Ct. 47, 91 L.Ed. 621. 25 See note 7, supra. 26 See Appendix B(1), supra.

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336 U.S. 793 69 S.Ct. 824 93 L.Ed. 1042 UNITED STATESv.WALLACE & TIERNAN CO., Inc., et al. No. 416. Argued March 29, 1949. Decided May 2, 1949. Appeal from the United States District Court for Rhode Island. Mr. Arnold Raum, of Washington, D.C., for appellant. Mr. Charles H. Tuttle, of New York City, for appellees. Mr. Justice BLACK delivered the opinion of the Court. 1 The basic question here is whether the Fourth Amendment's prohibition of unreasonable searches and seizures bars the United States from utilizing certain documentary evidence in this civil anti-trust proceeding instituted in the United States District Court of Rhode Island. Subsidiary procedural questions involve the doctrine of res judicata.1 We proceed at once to consideration of the important basic question since for reasons later given we reject the subsidiary res judicata contentions. 2 First. Whether the Government has a right to utilize the documentary evidence in this civil proceeding can be best understood by an immediate reference to this Court's holding in Silverthorne Lumber Co. v. United States, 51 U.S. 385, 40 S.Ct. 182, 183, 64 L.Ed. 319, 24 A.L.R. 1426. Appellees here contend that the Silverthorne holding is a complete and permanent bar to the Government's introduction of the documents as evidence, to the use of the documents to obtain other evidence, or for any other purpose. 3 The facts in the Silverthorne case as found by this Court were these: The Silverthornes having been indicted were arrested at their homes early in the morning and detained in custody for some hours. While so detained Government officers 'without a shadow of authority' went to the office of their company and made a clean sweep of all the books, papers and documents found there. 'All the employees were taken or directed to go to the office of the District Attorney of the United States to which also the books, &c., were taken at once.' The District Court ordered all books, etc., returned on a finding that the search and seizure violated the constitutional rights of the parties. Photographs and copies of the papers having been made, a new indictment was returned based upon the knowledge thus obtained. Subpoenas were then issued calling for production of the original papers. Upon refusal to produce, one of the Silverthornes was imprisoned for contempt. 4 This Court viewed the whole performance of the unlawful search and seizure of the Silverthorne books and papers as an 'outrage,' planned or at least retified by the Government. Under these circumstances it was held that the Government was neither entitled to use the original documents nor any knowledge obtained from the originals, the photostats, or the copies. The rule announced was that evidence or knowledge 'gained by the Government's own wrong' is not merely forbidden to be 'used before the court but that it shall not be used at all.' Other cases in this Court have applied the same rule.2 It is an extraordinary sanction, judicially imposed, to limit searches and seizures to those conducted in strict compliance with the commands of the Fourth Amendment. 5 In the case before us, however, United States officers did not go to the appellees' offices and seize their documents. Officers served a court subpoena on appellees calling on them to produce certain designated documents for use in a grand jury investigation. Appellees challenged the subpoena on the ground that it was so broad and sweeping as to constitute an unreasonable search and seizure under the Fourth Amendment. The District Court at all times has rejected this contention, and appellees do not urge it here. Thus it cannot be thought that the form of the subpoena or the method of its enforcement constitutes even a 'constructive' search or seizure barred as 'unreasonable' by the Fourth Amendment. Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 202—208, 66 S.Ct. 494, 502—505, 90 L.Ed. 614, 166 A.L.R. 531. And up to this point nothing that happened in this case is even remotely analogous to the situation that evoked this Court's condemnation in the Silverthorne case. But the District Court found and appellees here urge that subsequent developments in this case call for application of the Silverthorne rule. Those developments were as follows: 6 The grand jury before which the documents were produced returned a indictment against appellees and others charging violations of §§ 1 and 2 of the Sherman Act.3 Shortly after we decided Ballard v. United States, 329 U.S. 187, 67 S.Ct. 261, 91 L.Ed. 181, the District Court on motion of appellees dismissed the indictment on the ground that the court practice of intentionally and systematically excluding women from the grand jury panel rendered the grand jury an illegally constituted body. On the same day the court granted appellees' motion for return of the previously impounded documents. Later the court ordered the Government to return a number of photostats that had been made of the original documents. In an opinion discussing return of the photostats the District Court reaffirmed its belief that the (76 F.Supp. 215, 217) 'subpoenas did not violate the Fourth Amendment and the Government was entitled to have the documents produced for presentation to a legal grand jury.' The court held, however, that 'when the grand jury turned out to be illegally constituted and the indictment was dismissed * * * the subpoenas amounted to unreasonable searches and seizures in violation of the Fourth Amendment * * *.' 7 In order to implement a congressional policy to have the grand jury a 'truly representative' cross section of the community, we held in the Ballard case, supra, that exclusion of women from the grand jury required dismissal of an indictment. The effect of the District Court's holding here was to add to the Ballard requirement for dismissal of the indictment a further extraordinary sanction devised by this Court to prevent violations of the Fourth Amendment. For here there was no official culpability in issuance or service of the subpoena duces tecum. The sole ultimate reason for the District Court's application of the Silverthorne rule was that no women were on the grand jury, a circumstance that bears only a remote if not wholly theoretical relationship to search and seizure. We cannot agred that the Silverthorne rule requires such a result. 8 Aside from the limited extent to which the Fourth Amendment applies to the subpoena process, see Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614, 166 A.L.R. 531, there are other reasons why the Silverthorne exclusionary rule should not be extended to the situation in this case. That rule stems from the Fourth Amendment. This Court has said that the Fourth Amendment command 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.' Trupiano v. United States, 334 U.S. 699, 705, 68 S.Ct. 1229, 1232, 92 L.Ed. 1663; see also McDonald v. United States, 335 U.S. 451, 455—456, 69 S.Ct. 191, 193. The Silverthorne search and seizure was made without any authority from a magistrate. And the seizure was so sweeping in nature that it probably could not have been authorized by a search warrant. Weeks v. United States, 232 U.S. 383, 393—394, 34 S.Ct. 341, 344 345, 58 L.Ed. 652, L.R.A.1915B, 834, Ann.Cas.1915C, 1177. The Silverthorne exclusionary rule as explained in that case and others is designed to safeguard the privacy of people, and to prevent seizure of their papers and property except in compliance with valid judicial process. As tersely stated in the Silverthorne case the rule's purpose is to prevent the Fourth Amendment from being reduced to 'a form of words.' 9 Only by engaging in the most exaggerated apprehensions can the action of the prosecuting officers in this case be considered a threat to the Fourth Amendment. They went to the court for their subpoena. The court approved it. There is no claim that the subpoena was obtained or served in an improper manner or that any Government officer committed a wrong in the way the documents were handled or returned. At least many of the documents were highly relevant to the serious mo opoly offenses charged against appellees. That there were no women on the grand jury did not contribute to any invasion of appellees' privacy. Dismissal of the indictment could not transform what had been proper official conduct into the type of conduct condemned in the Silverthorne and other cases. 10 It is true that a metaphysical argument can be made to support a strained analogy between the situation here and that in the Silverthorne and other cases. That argument is that the 'illegal' grand jury was only a 'so-called' grand jury, and that the considered judicial command for production of papers before it must be treated as though the court had ordered production of papers before a group of appellees' competitors. This argument has a superficial plausibility on the word level, but if out attention is directed to substance rather than symbols the speciousness of the argument is exposed. 11 Whatever injury appellees may have suffered resulted from the absence of women on the ground jury and that injury has been remedied by freeing appellees from prosecution under the indictment. Furthermore the search and seizure here, if such it can be called in any true sense, was not the kind that has prompted this Court to hold that the Government has by wrongful conduct of its officers forfeited all opportunity to make use of evidence unlawfully seized. We decline to extend the Silverthorne rule to such an extent. The Fourth Amendment, important as it is in our society, does not call for imposition of justicial sanctions where enforcing officers have followed the law with such punctilious regard as they have here. We hold that dismissal of the grand jury because no women were on it is no sufficient reason for holding that the Government is barred from making use of the summoned documents. 12 Second. At the same time the District Court ordered the indictment dismissed, it also ordered that the document be returned to the defendants. The Government did not appeal from the order dismissing the indictment. See United States v. Hark, 320 U.S. 531, 535—536, 64 S.Ct. 359, 361, 88 L.Ed. 290. It is contended that by its failure to appeal, the Government is barred by the doctrine of res judicata from challenging the dismissal and return orders. 13 Assuming that the Government by failure to appeal is barred from challenging the court's holding that the grand jury was illegally constituted and that the documents were properly ordered returned, it by no means follows that these orders permanently barred the Government from any future use of the documents as evidence. For the Government forfeited no rights to use the documents in a future valid proceeding by failing to appeal from the dismissal of the indictment—a dismissal it believed to be supported by our holding in the Ballard case. And dismissal of the pending indictment after holding the grand jury illegal created a situation where appellees were entitled to return of their papers as a matter of course. Consequently, an appeal from the return order alone, even if such an appeal could have been taken, would have availed the Government nothing. For the foregoing reasons we hold that orders dismissing the indictment and requiring return of the documents did not affect the Government's right to have the documents produced in these civil proceedings. 14 For the same reasons we hold that the Government's right to demand production in this civil case was not affected by the District Court's later order requiring return of photostatic copies of the documents. Return of the photostats, like return of the originals, necessarily followed from the dismissal of the indictment. This was recognized by the District Court when in directing return of the photostats the court said, 'Since these motions stem from Indictment No. 6055, the Clerk is ordered to make the motions, the hearings thereon, and this opinion part of the record of said indictment.' 15 Third. For their claim of res judicata appellees also rely on a third order of the District Court 'precluding and restraining the United States from using in any way or for any purpose any knowledge, information or evidence obtained from or contained in any of the aforesaid illegally seized papers and documents.' This order was entered prior to the Court's action in this civil proceeding in which it quashed the subpoena duces tecum and refused to order production of the documents. Appellees contend that this order was a 'decree of judicial outlawry' against any future Government use of the papers or knowledge acquired from them; that the Government could have but did not appeal from the order; that for this reason the 'decree of judicial outlawry' had become final and binding upon the Government at the time it asked for production in this proceeding. The Government denies that the order had or was intended to have the broad proscriptive effect urged by respondents. In addition, the Government contends that the order was interlocutory and therefore not appealable. On this latter premise the Government relies on 'familiar law that only a final judgment is res judicata as between the parties.' Merriam Co. v. Saalfield, 241 U.S. 22, 28, 36 S.Ct. 477, 480, 60 L.Ed. 868. 16 To some extent both phases of the contention—scope of the order and its appealability—depend upon whether the proceeding was handled by the court as an independent plenary proceeding or one to suppress evidence at a forthcoming trial. For a judgment in an independent plenary proceeding for return of property and its suppression as evidence is final and appealable and the scope of relief in such a case may extend far beyond its effect on a pending trial; but a decision on a motion to return or suppress evidence in a pending trial may be no more than a procedural step in a particular case and in such event the effect of the decision would not extend beyond that case. Whether a motion is to be treated as independent and plenary or as merely a procedural step in a pending trial must be determined by particular circumstances. See Cogen v. United States, 278 U.S. 221, 49 S.Ct. 118, 73 L.Ed. 275. The circumstances here we think show that the order now considered was not one of permanent general 'outlawry' against all use of the documents involved, but an order to prevent their use in a particular criminal proceeding then pending. 17 After the court had dismissed the indictment because no women were on the jury, the Government filed in the same District Court an information charging the same offense. The defendants filed a motion in the information proceeding (1) to dismiss the information; (2) in the alternative to dismiss and expunge those facts of the information based on knowledge obtained from the papers and documents; (3) to preclude and restrain the United States from using in any way or for any purpose knowledge or evidence obtained from or contained in the documents. The court denied (1) and (2) but granted (3). The motion, court opinion, and court order bore the title and number (6070) of the criminal information proceeding. During the argument colloquies took place between court and counsel which emphasized that the motion related to 'Criminal 6070.' The motion was argued at length before the district judge. Government counsel took the position that the court's order on the motion would not be appealable. See Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed. 783; United States v. Rosenwasser, 9 Cir., 145 F.2d 1015, 156 A.L.R. 1200. He therefore asked the court to be careful about the form of the order, expressing apprehensions that counsel for appellees would later argue that the order entered in the criminal proceeding was broad enough to bar use of the documents in the civil proceedings. Government counsel indicated his plans subsequently to present the issue of the Government's right to use the documents in this civil proceeding, taking the position that an appeal would then lie. He therefore asked the court to await entry of any order until is plans could be carried out. Appellees' counsel told the court that 'The plans which Mr. Kelleher has concern Civil 6055. This is Criminal 6070.' And the court told Government counsel that the preclusion order would preclude use of the documents 'only in this criminal) action.' The court further said to Government counsel that if the court made a wrong order 'Then you can go ahead as you contend or plan to go ahead in your civil action.' Finally, just before conclusion of the hearing on the order, the court told Government counsel, 'I don't see how this is going to prejudice you in some other case, and this Court is only concerned with 6070 (criminal information charge) at this time, as I understand it.' 18 We hold that the proceedings leading up to the preclusion order must be deemed a part of the criminal proceedings, see Cogen v. United States, 278 U.S. 221, 227, 49 S.Ct. 118, 120, 73 L.Ed. 275; that the order did not preclude use of the documents except in these proceedings; and that this order does not stand as a bar to consideration of the availability of the documents for use as evidence in this civil case. 19 Other contentions of appellees have been considered and found to be without merit. 20 Reversed. 1 Appellees have moved to dismiss this appeal taken by the United States under § 2 of the Expediting Act of February 11, 1903, 32 Stat. 823, 15 U.S.C. § 29, as amended, Pub. L. No. 773, 80th Cong., 2d Sess., § 17, June 25, 1948, 15 U.S.C.A. § 29. The judgment appealed from was as follows: 'The Government's request' for judgment and relief prayed for in the complaint is denied and judgment may be entered dismissing the action without prejudice. It is so ordered.' This judgment followed the court's action in denying the Government's motions for production of doucments essential to prove the Government's case. The record fails to sustain appellees' contention that the Government invited the court to enter this order denying relief and dismissing the action. That the dismissal was without prejudice to filing another suit does not make the cause unappealable, for denial of relief and dismissal of the case ended this suit so far as the District Court was concerned. Wecker v. National Enameling & Stamping Co., 204 U.S. 176, 181—182, 27 S.Ct. 184, 186, 51 L.Ed. 430, 9 Ann.Cas. 757. See also United States v. National City Lines, 334 U.S. 573, 577, 68 S.Ct. 1169, 1171, 92 L.Ed. 1584, and Bowles v. Beatrice Creamery Co., 10 Cir., 146 F.2d 774. The motion to dismiss the appeal is overruled. 2 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; Johnson v. United States, 333 U.S. 10, 68 S.Ct. 367, 92 L.Ed. 436; Go-Bart Importing Co. v. United States, 282 U.S. 344, 51 S.Ct. 153, 75 L.Ed. 374; Byars v. United States, 273 U.S. 28, 47 S.Ct. 248, 71 L.Ed. 520; Gouled v. United States, 255 U.S. 298, 41 S.Ct. 261, 65 L.Ed. 647; United States v. Lefkowitz, 285 U.S. 452, 52 S.Ct. 420, 76 L.Ed. 877, 82 A.L.R. 775; Trupiano v. United States, 334 U.S. 699, 68 S.Ct. 1229, 92 L.Ed. 1663; and cf. Harris v. United States, 331 U.S. 145, 67 S.Ct. 1098, 91 L.Ed. 1399; Zap v. United States, 328 U.S. 624, 66 S.Ct. 1277, 90 L.Ed. 1477; Davis v. United States, 328 U.S. 582, 66 S.Ct. 1256, 90 L.Ed. 1453. 3 26 Stat. 209, as amended 50 Stat. 693, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2.

01

336 U.S. 804 69 S.Ct. 840 93 L.Ed. 1052 UNITED STATESv.URBUTEIT. No. 640. On Petition for Certiorari Distributed April 15, 1949. Decided May 2, 1949. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for petitioner. Mr. H. O. Pemberton, of Tallahassee, Fla., for respondent. PER CURIAM. 1 The question presented by this petition is whether the Court of Appeals followed our mandate on remand of the cause in 335 U.S. 355, 69 S.Ct. 112. 2 The case when it was here earlier this Term appeared in the following posture: 3 A condemnation proceeding was instituted by the United States under the Federal Food, Drug, and Cosmetic Act, 52 Stat. 1044, 21 U.S.C. § 334, 21 U.S.C.A. § 334. Sixteen machines with alleged diagnostic and curative capabilities had been shipped in interstate commerce. Leaflets describing the uses of the machine had been shipped at a separate time. The Court of Appeals, 164 F.2d 245, had held that the separate shipments of the machines a d leaflets precluded a conclusion that the leaflets had accompanied the device in interstate commerce, and therefore the transaction was outside the reach of the Act. We reversed the Court of Appeals and held that the separate shipment of the machines and leaflets constituted a single interrelated activity. 4 On remand the Court of Appeals, 172 F.2d 386, concluded that because there were several shipments of machines and a single shipment of advertising matter, it was not clear which shipments might be considered a single interrelated activity. Therefore, it remanded the case to the District Court for a determination of this fact. 5 When the case was here before, we decided that the fact of separate shipments of machines and leaflets was immaterial. The controlling factors were whether the leaflets were designed for use with the machine and whether they were so used. Since the function of the leaflets and the purpose of their shipment were established, nothing more was needed to show that the movements of the machines and leaflets constituted a single interrelated activity. Moreover, the case is not complicated by shipments of machines and leaflets to different persons. One Kelsch was the recipient of both. 6 On remand the Court of Appeals adhered to its former ruling that the District Court erroneously excluded evidence as to the therapeutic or curative value of the machines. When the case was here before we did not disturb that ruling. But we did leave to the Court of Appeals for consideration a further question—whether the evidence as respects the falsity of the diagnostic capabilities of the machine was adequate to sustain the condemnation even though error in exclusion of the other evidence were conceded. The United States is entitled to a hearing on that question. 7 The petition for certiorari is granted and the judgment is reversed. 8 Reversed.

89

336 U.S. 806 69 S.Ct. 921 93 L.Ed. 1054 UNITED STATES ex rel. JOHNSONv.SHAUGHNESSY. No. 506. Argued April 19, 20, 1949. Decided May 9, 1949. Mr. Gunther Jacobson, of New York City, for petitioner. Patricia H. Collins, for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 The American Foreign Service at Stockholm issued to petitioner an immigration visa to come to the United States as a Swedish quota immigrant. On the ground that she was a mental defective, authorities of the Immigration and Naturalization Service declined to admit her into this country and ordered her detention at Ellis Island pending deportation to Sweden. She filed this habeas corpus proceeding contending that she was not a mental defective and challenging in several respects the legality of the exclusion order. The District Court discharged the writ and ordered petitioner remanded to the immigration authorities. 82 F.Supp. 36. The Court of Appeals affirmed, one judge dissenting. 170 F.2d 1009. Certiorari was granted because important questions were raised concerning administration of the immigration laws. 2 Section 3 of the Immigration Act of 1917 excludes from admission into this country certain classes of aliens deemed undesirable. Among those excluded are persons 'who are found to be and are certified by the examining surgeon as being mentally * * * defective * * *.' 39 Stat. 874, 875, 8 U.S.C. § 136(d), 8 U.S.C.A. § 136(d). Section 16 of the Act1 provides that mental examinations of arriving aliens shall be made by not less than two United States Public Health Service medical officers especially trained in the diagnosis of insanity and mental defects. The same section authorizes an appeal to a special board of medical officers of the Public Health Service for any alien who is certified by the two medical officers as a mental defective. Finally § 17 of the Act as amended, 8 U.S.C. § 153, 8 U.S.C.A. § 153, provides that boards of special inquiry shall be appointed by the Immigration and Naturalization Service, subject to approval of the Attorney General. These boards of specia inquiry are granted 'authority to determine whether an alien who has been duly held shall be allowed to land or shall be deported.' It was a board of special inquiry of this kind that ordered petitioner excluded from the United States. 3 First. Two medical officers of the Public Health Service signed a certificate that petitioner was a mental defective. On appeal a board of three Public Health medical officers affirmed the finding of this certificate. Later when her case was under consideration by a board of special inquiry of the Immigration and Naturalization Service, petitioner asked for time to produce additional evidence to show that she was not a mental defective. The board refused to hear such evidence holding that it was bound by § 17 of the Immigration Act to accept as final the medical certification that she was a mental defective. Petitioner contends that this holding was error which invalidates the exclusion order. We hold that the Court of Appeals correctly rejected this contention. 4 Section 17 provides, with an exception not here relevant, that 'The decision of a board of special inquiry shall be based upon the certificate of the examining medical officer and * * * shall be final as to the rejection of aliens affected with * * * any mental * * * disability which would bring such aliens within any of the classes excluded from admission to the United States under section three of this Act.' We agree with the following statement of the Court of Appeals. 'A certificate by the medical board if its action conformed to the statute and regulations and its decision was made after a fair hearing was plainly intended to be conclusive.' 170 F.2d 1009, 1012. This conclusion is particularly compelling in the light of the legislative history referred to in that court's opinion. We therefore turn to the medical certificates to consider the contention that they were not issued as the result of the kind of examinations required by the statute and regulations, and that the certificates themselves failed to conform to those requirements. 5 Second. Petitioner attacks the validity of both the initial medical certificate and that of the appellate medical board, contending that they provide an inadequate basis for excluding her from the United States. The importance of these medical certificates is underscored by our holding that Congress has made the findings and conclusions in the certificates final on the question of whether an alien is so mentally defective that admission into the country must be denied. Congress has taken note of the crucial importance of this medical determination by prescribing certain minimum procedural requirements that the Public Health Service must follow, such as special qualifications of examining doctors, the minimum number of doctors that must examine the applying alien, and the right of an alien to have an initial adverse certificate reviewed by a special board of doctors. In order that further safeguards might be provided, Congress authorized the Surgeon General of the Public Health Service to prescribe additional regulations governing the procedure to be observed in the exercise of that Service's exclusive authority over medical questions. 6 Pursuant to this statutory authority the Surgeon General issued regulations which detail the manner in which medical examinations shall be held and the type of certificates by which examining doctors and boards shall report their findings and conclusions. As shown by the dissenting opinion below, serious challenges have been made to the sufficiency of the certificate of the medical appeal board as well as to the initial medical certificate in which two doctors certified petitioner to be a mental defective.2 The shortcomings of the initial certificate, however, probably could have been rendered harmless by a proper examination and certificate by the medical board of appellate review. Since our conclusion is that the appellate review failed to meet the requisite standards prescribed by statute and regulations, we need not consider the challenges directed against the original certificate standing alone. 7 Regulations of the Public Health Service provide the way in which medical appeal boards shall be convened and detail a procedure for the boards to follow. The regulations impose a duty on such boards 'to re-examine an alien'; they further provide that 're-examination shall include * * * a medical examination by the board'; that the 'findings and conclusions of the board shall be based on its medical examination of the alien'; and that 'The board shall report its findings and conclusions to the Immigration Service * * *.'3 The report of the medical appeal board here shows only that it 'considered the appeal * * * and after taking into consideration the certificate of March 11, 1948, and the testimony given by Dr. Carlton Simon, reports that it concurs with the above dated certificate.' The report of this medical board therefore wholly failed to show any compliance with the requirement of § 34.13(g) that the board base its 'findings and conclusions * * * upon its medical examination of the alien * * *.' We think the record makes clear that the appeal board made no such medical examination as was required by the regulations. 8 The report itself shows that the appellate board based its conclusion on two considerations: (1) the initial certificate of the two public health doctors; (2) testimony given by Dr. Carlton Simon. But the appellate board could not rest its finding that petitioner was a mental defective on the original certificate without denying petitioner the independent review and re-examination which Congress and the Surgeon General had prescribed. Nor could the appellate board relieve itself of its duty to make an independent re-examination by relying on the testimony of Dr. Simon. Moreover, Dr. Simon testified that petitioner was not a mental defective. His testimony was that she was 'normal.' It hardly seems necessary to add that the statement of the appellate board that it had 'considered the appeal,' cannot be treated as a certification that petitioner had been given an independent medical examination. We therefore hold that the appellate board's certificate is an inadequate basis on which to rest the exclusion order of the board of special inquiry. 9 The Government contends, however, that additional data in the record shows that the board did re-examine the petitioner. We may assume without deciding that the defects in the appellate board's report could be cured by additional record data, but we find no such data in the record sufficient to cure the defect. The data on which the Government relies is contained in a stenographic report of evidence given by petitioner and Dr. Simon, petitioner's witness. Petitioner's evidence, like that of Dr. Simon, was an emphatic denial of any condition which could justify her classification as a mental defective. The stenographic report thus falls far short of showing that the medical appeal board made an independent medical examination of petitioner's mental qualities. That report tends to confirm the fact that the board's conclusions were rested only on the report of the initial examination by the two Public Health Service doctors and on a report of the physician of the ship on which petitioner came to this country. This makes necessary a short statement concerning this report by the ship's doctor and the circumstances under which the record discloses that report was made. 10 Apparently the second day after petitioner had commenced her voyage to America the ship's doctor visited her. He found her weak and dizzy. She stated that 'she could not stand the sea' and would not go to the dining room. The doctor's impression after his first visit was that she was seasick. The next day, according to the doctor's report, she admitted hallucinations, stating that at night she heard cries and saw faces, said she had given the consul 'wrong information,' and thought this sinful. At this time the ship's doctor wrote down his 'impression of incipient psychosis' and transferred her to the isolation ward of the ship's hospital. The next day according to the doctor, petitioner stated that she had been treated for insanity at her home in Sweden for a six-month period two years before. On the last day of the sea trip, the ship's doctor reported that she had cleared up 'remarkably,' that she had no recollection of 'a lot of strange things she had said before,' was sleeping well, denied having any hallucinations, and looked 'considerably better.' In her evidence before the medical board petitioner stated that she spoke 'terribly bad English'; that prior to boarding the ship she had been to a number of parties and was very tired when she came aboard; that after coming aboard and during the voyage she had taken bromides and sleeping tablets; and that in her condition she just slept and said 'yes' to every question the doctor asked. 11 From the foregoing it appears that the data relied on by the Government was totally inadequate to show that the appellate medical board 're-examined' petitioner. The sum total of that data is testimony given by petitioner and her medical specialist to the effect that petitioner was mentally normal, plus petitioner's admissions that while seasick and under the influence of drugs she had said things that prompted the ship's doctor at one time to suspect 'incipient psychosis.' 12 So far as the medical findings and evidence here show, the daily reports made by the ship's doctor while petitioner was a passenger constitute the only affirmative evidence that petitioner is or was a mental defective. The Public Health regulations plainly prohibit the issuance of exclusion orders resting on nothing but a single episode reported by a non-Public-Health doctor. For Congress has provided that before aliens supected of mental defects are excluded, findings and conclusions shall be made by Public Health doctors based on their own examinations made in compliance with procedural safeguards defined or authorized by Congress. Medical certificates barring aliens are even then to be issued 'only if the presence of such * * * defect is clearly established.' 42 Code Fed.Regs. § 34.4 (Supp.1947). And such c rtificates 'shall in no case be issued with respect to an alien having only mental shortcomings due to ignorance, or suffering only from a mental condition attributable to remedial physical causes, or from a psychosis of a temporary nature caused by a toxin, drug, or disease.' 42 Code Fed.Regs. § 34.7. So far as appears from the appellate certificate here, the board made no examination to determine whether the ship episode, as reported by the physician, was the result of petitioner's ignorance of English plus temporary debility or was the result of a mental defect justifying exclusion. Even the report of the ship physician contained no finding on this point, and it is not amiss to add that the verified petition for habeas corpus contains an undenied allegation that the ship's doctor has now stated that 'in his opinion the alien is not mentally defective.' 13 Our holding that the appellate board's medical certificate and additional data are inadequate to support the exclusion order makes it unnecessary to decide other questions relating to applicability of the Administrative Procedure Act to hearings before the board of special inquiry. 60 Stat. 237, 239, 5 U.S.C. §§ 1001, 1004, 5 U.S.C.A. §§ 1001, 1004. 14 The judgment is reversed and the cause is remanded to the District Court for entry of an order affording petitioner a proper hearing and medical examination before the appropriate Public Health authorities. 15 Reversed and remanded. 16 Mr. Justice REED, with whom THE CHIEF JUSTICE and Mr. Mr. Justice BURTON join, dissenting. 17 This Court affirms the decision that a proper medical finding of a physical defect which excludes an alien from entrance into the United States is final and not subject to further inquiry. With the Court's ruling on this point, I agree. 18 (1) The reversal of the dismissal of the writ of habeas corpus is founded on the Court's premise that the report of the reviewing board of medical officers 'shows that the appellate board based its conclusion on two considerations: (1) the initial certificate of the two public health doctors; (2) testimony given by Dr. Carlton Simon (a psychiatrist chosen by the alien).' The Court then concludes that 'the appellate board could not rest its finding that petitioner was a mental defective on the original certificate without denying petitioner the independent review and re-examination which Congress and the Surgeon General had prescribed.' That is to say, the report, as the Court phrases it, 'makes clear that the appeal board made no such medical examination as was required by the regulations.'1 My reading of the opinion is that the Court thinks the record affirmatively shows a failure to comply with the statute and regulation § 34.13(g) and (h) as to findings and examination.2 19 There is a suggestion that a medical appeal board must certify that the alien had been examined.3 I assume, however, that if the Court intended to require specific certification by the medical board of the steps leading to its findings and conclusions it would have made such a holding definitive. 20 I disagree with the Court's interpretation of the report. A strong presumption exists that public officials perform their duty. If the report had added the phrase, 'in accordance with the regulations,' after the word 'considered,' there could be no doubt as to the sufficiency of the report. The presumption of regularity until rebutted requires courts to adopt such an interpretation.4 The statement of the board of medical officers that it 'has considered the appeal' means to me that the board has proceeded conformably to the statute and regulations. 21 (2) There is a graver error in the Court's holding, however, which may interfere with sound administrative procedure. Although petitioner was represented by counsel, no objection to the form of the report was made during the administrative process. This case heretofore has centered around the issue of finality disposed of by the Court. Even in the several hearings of her effort to get relief by habeas corpus, petitioner has never asserted, in this or any other court, that she was not examined by the physicians of the medical review board. This is made plain by the Court's statement of the generalized objections on other grounds to the report of the medical review board, see opinion at note 2, and from the affidavits and objections appearing in the record. The dissenting judge, 170 F.2d 1009, did not refer to the failure to examine petitioner. He spoke only of the failure of the Board of Special Inquiry and the medical board to req ire adequate and revealing certificates and reports. Even the petition for certiorari does not present the question. The brief does not discuss it. 22 The administrative remedy must be exhausted by fair effort to correct administrative errors before resort to habeas corpus or other judicial remedies.5 To permit occasional reversal of administrative orders on points not brought to the attention of the agency hampers administrative routine and, if adopted as a rule of law, would disorganize administrative procedure. Afterthought cannot take the place of required objection. This is not a case where rules of practice and procedure defeat the ends of justice.6 There is nothing in this record to indicate that disabilities of petitioner, or difficulties of procedure or practice, the emergence of a new rule of law or any other change of circumstance has affected the course of petitioner's pleas. She has had advantage of every method of relief known to the law but has not seen fit to bring forward the ground upon which this Court reverses. 23 It is obvious that had objection been made to the form of the report of the Board of Medical Officers at the hearing before the Board of Special Inquiry, April 6, 1948, a prompt elaboration of the report could have been obtained or, if no examination such as is required by the regulations had already been made, it could have been done promptly. Proper administrative procedure requires that objection to certificates be made at the earliest opportunity which in this case was during the administrative hearing before the Board of Special Inquiry. A litigant's unexplained failure to raise an issue does not justify capricious judicial intervention on behalf of an individual. 24 I would affirm the judgment below. 1 39 Stat. 885, as amended, 8 U.S.C. § 152, 8 U.S.C.A. § 152. 2 During the hearings before the Board of Special Inquiry counsel for petitioner stated to this board 'that from an examination of the record it appears that the only positive finding of mental defectiveness appears in the record of the ship's surgeon * * *.' Counsel insisted that petitioner was suffering from no 'mental disturbance whatsoever.' In her behalf he asked for an opportunity to produce further medical testimony. In response to this request the board's chairman asked counsel whether petitioner would be able to bear the expenses of her continued detention should the board grant her request for an opportunity to produce further medical testimony. Counsel replied that he believed she could. The board immediately thereafter closed the hearing, made its findings and ordered her excluded. The dissenting opinion stated: 'I would reverse the order and direct that the writ be sustained because of inadequacy of the original certificate of the examining surgeons and total failure of the reviewing Board of Medical Officers to comply with the regulations.' 170 F.2d 1009, 1014. 3 (c) 'Re-examination shall include: '(1) A medical examination by the board; '(2) A review of all records submitted; '(3) Use of any laboratory or diagnostic methods or tests deemed advisable; and '(4) Consideration of statements regarding the alien's physical or mental condition made by a reputable physician after his examination of the alien. '(e) An alien being re-examined may introduce as witnesses before the board such physicians or medical experts as the board may in its discretion permit, at his own cost and expense, * * *.' 42 Code Fed.Reg. § 34.13 (Supp. 1947). 1 The report reads as follows: 'Pursuant to the request of the District Director of Immigration and the order of the Medical Officer in Charge, the following Board of Medical Officers of the U.S. Public Health Service, has considered the appeal regarding subject-named alien May Gunborg Johnson and after taking into consideration the certificate of Mar. 11, 1948 and the testimony given by Dr. Carlton Simon, reports that it concurs with the above dated certificate.' 2 39 Stat. 885, as amended, 8 U.S.C. § 152, 8 U.S.C.A. § 152. 'Sec. 16. The physical and mental examination of all arriving aliens shall be made by medical officers of the United States Public Health Service who shall conduct all medical examinations and shall certify, for the information of the immigration officers and the boards of special inquiry hereinafter provided for, any and all physical and mental defects or diseases observed by said medical officers in any such alien; * * * Any alien certified for insanity or mental defect may appeal to the board of medical officers of the United States Public Health Service, which shall be convened by the Surgeon General of the United States Public Health Service, and said alien may introduce before such board one expert medical witness at his own cost and expense. * * *' 42 C.F.R., 1947 Supp., § 34.13. 'Re-examination; convening of boards; expert witnesses; reports. (a) The Surgeon General, or when authorized, a medical officer in charge, shall convene a board of medical officers to re-examine an alien '(2) Upon an appeal by the alien from a certificate of insanity or mental defect, issued at a port of entry. '(c) Re-examination shall include: '(1) A medical examination by the board; '(2) A review of all records submitted; '(3) Use of any laboratory or diagnostic methods or tests deemed advisable; and '(4) Consideration of statements regarding the alien's physical or mental condition made by a reputable physician after his examination of the alien. '(g) The findings and conclusions of the board shall be based on its medical examination of the alien and on the evidence presented to it and made a part of the record of its proceedings. '(h) The board shall report its findings and conclusions to the Immigration Service, and shall also give prompt notice thereof to the alien if the re-examination has been held upon his appeal. The board's report to the Immigration Service shall specifically affirm, modify, or reject the findings and conclusions of prior examining medical officers.' It will be noted that the evidence presented to the board was made a part of the report to the Board of Special Inquiry as required by the regulation. 3 'It hardly seems necessary to add that the statement of the appellate board that it had 'considered the appeal,' cannot be treated as a certification that petitioner had been given an independent medical examination.' 4 Lewis v. United States, 279 U.S. 63, 73, 49 S.Ct. 257, 260, 73 L.Ed. 615: 'It is the settled general rule that all necessary prerequisites to the validity of official action are presumed to have been complied with, and that where the contrary is asserted it must be affirmatively shown.' R. H. Stearns Co. of Boston, Mass., v. United States, 291 U.S. 54, 63, 54 S.Ct. 325, 328, 329, 78 L.Ed. 647, and authorities cited; United States v. Chemical Foundation, 272 U.S. 1, 14; 47 S.Ct. 1, 6, 71 L.Ed. 131. 5 We refused to review an issue not raised before an administrative body in Unemployment Compensation Commission of Territory of Alaska v. Aragan, 329 U.S. 143, 155, 67 S.Ct. 245, 251, 91 L.Ed. 136: 'A reviewing court usurps the agency's function when it sets aside the administrative determination upon a ground not theretofore presented and deprives the Commission of an opportunity to consider the matter, make its ruling, and state the reasons for its action.' Tri-State Broadcasting Co. v. Federal Communications Commission, 71 App.D.C. 157, 107 F.2d 956, 958. Cf. Myers v. Bethlehem Shipbuilding Corporation, 303 U.S. 41, 51, note 9, 58 S.Ct. 459, 463, 464, 82 L.Ed. 638; Blair v. Oesterlein Mach. Co., 275 U.S. 220, 48 S.Ct. 87, 72 L.Ed. 249. The Administrative Procedure Act contemplates presentation before the administrative agency of every issue that may be made the subject of judicial review by habeas corpus or appellate process. 60 Stat. 237, § 7(c), 8(b)(2), 10(b), (c) and (e), 5 U.S.C.A. §§ 1006(c), 1007(b)(2), 1009(b, c, e). The rule against raising questions on judicial review that were not raised in administrative proceedings has general application, see Caldarone v. Zoning Board of Review of City of Warwick, R.I., 60 A.2d 158, 159; Reisberg v. Board of Standards and Appeals of New York City, Sup., 81 N.Y.S.2d 511, 513; General Transp. Co. v. United States, D.C., 65 F.Supp. 981, 984. 6 Cf. Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 721, 722, 85 L.Ed. 1037.

12

337 U.S. 38 69 S.Ct. 911 93 L.Ed. 1190 UNION NAT. BANK OF WICHITA, KANSAS,v.LAMB. No. 500. Argued and Submitted March 31, 1949. Decided May 16, 1949. Petition for Rehearing and Modification Denied June 13, 1949. See 337 U.S. 928, 69 S.Ct. 1492. Appeal from Missouri Supreme Court. Argued by Maurice J. O'Sullivan, Kansas City, Mo. for appellant. Submitted by Daniel L. Brenner, Kansas City, Mo., for appellee. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Missouri has a statute which limits the life of a judgment to ten years after its original rendition or ten years after its revival.1 Missouri also provides that no judgment can be revived after ten years from its rendition.2 These provisions are applicable to all judgments whether rendered by a Missouri court or by any other court. 2 Petitioner has a Colorado judgment against respondent. It was obtained in 1927 and revived in Colorado3 in 1945 in personal service upon respondent in Missouri. Suit was then brought in Missouri on the revived Colorado judgment. The Supreme Court of Missouri, though assuming that the judgment was valid in Colorado, refused to enforce it because the original judgment under Missouri's law could not have been revived in 1945. It held that the lex fori governs the limitations of actions and that the Full Faith and Credit Clause of the Constitution, Art. IV, § I, did not require Missouri to recognize olorado's more lenient policy as respects revival of judgments. Mo.Sup., 213 S.W.2d 416. 3 1. Petitioner sought to bring the case here by appeal. But we postponed the question of jurisdiction to the merits. Certiorari, not appeal, is the route by which the question whether or not full faith and credit has been given a foreign judgment is brought here. Roche v. McDonald, 275 U.S. 449, 48 S.Ct. 142, 72 L.Ed. 365, 53 A.L.R. 1141; Morris v. Jones, 329 U.S. 545, 67 S.Ct. 451, 91 L.Ed. 488, 168 A.L.R. 656. Hence we treat the papers as a petition for certiorari, 28 U.S.C. § 2103, 28 U.S.C.A. § 2103, and grant it. 4 2. The opinion of the Supreme Court of Missouri was handed down July 12, 1948, and the motion for rehearing or for transfer to the court en banc4 was denied September 13, 1948. The appeal was allowed by the Missouri court on December 13, 1948. That was within three months and therefore timely prior to the revision of the Judical Code. But 28 U.S.C. § 2101(c), 28 U.S.C.A. § 2101(c), effective September 1, 1948, reduced that period to ninety days. The ninetieth day was December 12, 1948, which was a Sunday. There is a contrariety of views whether an act which by statute is required to be done within a stated period may be done a day later when the last day of the period falls on Sunday.5 Thus Street v. United States, 133 U.S. 299, 10 S.Ct. 309, 33 L.Ed. 631, treating Sunday as a dies non under a statute which authorized the President to transfer army officers from active duty and to fill vacancies in the active list on or before January 1, 1871, allowed the action to be taken on the following day. We think the policy of that decision is applicable to 28 U.S.C. § 2101(c), 28 U.S.C.A. § 2101(c). Rule 6(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A., provides that where the last day for performance of an act falls on a Sunday or a legal holiday, performance on the next day which is not a Sunday or legal holiday is timely.6 That rule provides the method for computation of time prescribed or allowed not only by the rules or by order of court but by 'any applicable statute.' Since the rule had the concurrence of Congress,7 and since no contrary policy is expressed in the statute governing this review, we think that the considerations of liberality and leniency which find expression in Rule 6(a) are equally applicable to 28 U.S.C. § 2101(c), 28 U.S.C.A. § 2101(c). The appeal therefore did not fail for lack of timeliness. 5 3. Roche v. McDonald is dispositive f the merits. Roche had a Washington judgment against McDonald. He brought suit on that judgment in Oregon. He obtained a judgment in Oregon at a time when the original judgment had by Washington law expired and could not be revived. Roche then sued in Washington on the Oregon judgment. The Court reversed the Supreme Court of Washington, 136 Wash. 322, 239 P. 1015, 44 A.L.R. 444, which had held that full faith and credit need not be given the Oregon judgment since it would have been void and of no effect if rendered in Washington. The Court held that once the court of the sister State had jurisdiction over the parties and of the subject matter its judgment was valid and could not be impeached in the state of the forum, even though it could not have been obtained there. That decision was in line with Fauntleroy v. Lum, 210 U.S. 230, 28 S.Ct. 641, 52 L.Ed. 1039 and Christmas v. Russell, 5 Wall. 290, 18 L.Ed. 475. For in those cases the Court had held that the State of the forum could not defeat the foreign judgment because it was obtained by a procedure hostile to or inconsistent with that of the forum or because it was based on a cause of action which the forum itself would not have recognized. 6 Any other result would defeat the aim of the Full Faith and Credit Clause and the statute enacted pursuant to it.8 It is when a clash of policies between two states emerges that the need of the Clause is the greatest. It and the statute which implements it are indeed designed to resolve such controversies. Morris v. Jones, supra. There is no room for an exception, as Roche v. McDonald makes plain, where the clash of policies relates to revived judgments rather than to the nature of the underlying claim as in Fauntleroy v. Lum, supra. It is the judgment that must be given full faith and credit. In neither case can its integrity be impaired, save for attacks on the jurisdiction of the court that rendered it. 7 Cases of statute of limitations against a cause of action on a judgment, McElmoyle for use of Bailey v. Cohen, 13 Pet. 312, 10 L.Ed. 177, involve different considerations as Christmas v. Russell, supra, 5 Wall. 290, at page 300, 18 L.Ed. 475, long ago pointed out. They do not undermine the integrity of the judgment on which suit is brought. In this case it is the 1945 Colorado judgment that claims full faith and credit in Missouri. No Missouri statute of limitations is tendered to cut off a cause of action based on judgment of that vintage. 8 It is argued, however, that under Colorado law the 1945 Colorado judgment is not a new judgment and that the revivor did no more than to extend the statutory period in which to enforce the old judgment.9 It is said that those were the assumptions on which the Missouri court proceeded. But we would have to add to and subtract from its opinion to give it that meaning. For when i placed revived judgments on the same basis as original judgments, it did so because of Missouri not Colorado law.10 9 This is not a situation where Colorado law also makes that conclusion plain. The Colorado authorities which have been cited to us indeed seem to hold just the opposite. Thus La Fitte v. Salisbury, 43 Colo. 248, 95 P. 1065, holds that a revived judgment has the effect of a new one.11 We are referred to no Colorado authorities to the contrary. 10 But since the status of the 1945 judgment under Colorado law was not passed upon by the Missouri court, we do not determine the question. For the same reason we do not consider whether the service on which the Colorado judgment was revived satisfied due process. See Owens v. Henry, 161 U.S. 642, 16 S.Ct. 693, 40 L.Ed. 837. Both of those questions will be open on remand of the cause. 11 The suggestion that we follow the course taken in State of Minnesota v. National Tea Co., 309 U.S. 551, 60 S.Ct. 676, 84 L.Ed. 920, and vacate the judgment and remand the cause to the Missouri court so that it may first pass on these questions would be appropriate only if it were uncertain whether that court adjudicated a federal question. That course is singularly inappropriate here since it is plain that the Missouri court held that, whatever the effect of revivor under Colorado law, the Colorado judgment was not entitled to full faith and credit in Missouri. That holding is a ruling on a federal question and it cannot stand if, as assumed, the Colorado judgment had the force and effect of a new one. 12 Reversed. 13 Mr. Justice BLACK and Mr. Justice RUTLEDGE dissent. 14 Mr. Justice FRANKFURTER, dissenting. 15 The Court finds that Roche v. McDonald, 275 U.S. 449, 48 S.Ct. 142, 72 L.Ed. 365, 53 A.L.R. 1141, is 'dispositive of the merits' of this case. I agree that that case demands the remand of this one; more than that can be found only by misconceiving what this case is about or what Roche v. McDonald decided 16 1. Artilce IV, § 1 of the Constitution commands the courts of each State to give 'Full Faith and Credit * * * to the * * * Judicial Proceedings of every other State,' and we have interpreted this command so straitly as to mean that the State of the forum cannot go behind the judgment of a sister State to establish such an allegation as that the judgment was procured by fraud, Christmas v. Russell, 5 Wall. 290, 18 L.Ed. 475, or that the judgment creditor was not the real party in interest, Titus v. Wallick, 306 U.S. 282, 59 S.Ct. 557, 83 L.Ed. 653. We have even required a State which prohibited the enforcement of gambling contracts to give full faith and credit to another State's judgment upon such a contract when the contract itself was entered in the State which regarded it as illegal. Fauntleroy v. Lum, 210 U.S. 230, 28 S.Ct. 641, 52 L.Ed. 1039. See also Kenney v. Supreme Lodge of the World, Loyal Order of Moose, 252 U.S. 411, 40 S.Ct. 371, 64 L.Ed. 638, 10 A.L.R. 716; Morris v. Jones, 329 U.S. 545, 67 S.Ct. 451, 91 L.Ed. 488, 168 A.L.R. 656. 17 2. Considerations of policy lying behind the Full Faith and Credit Clause, how ever, are by no means so forcibly presented where the issue is simply whether the forum must respect the limitation period attached to a foreign judgment or whether it may apply its own. This Court has accordingly held that a State may refuse to enforce the judgment of another State brought later than its own statute of limitations permits even though the judgment would still have been enforceable in the State which rendered it. McElmoyle for Use of Bailey v. Cohen, 13 Pet. 312, 10 L.Ed. 177; Bacon v. Howard, 20 How. 22, 15 L.Ed. 811. 18 3. Conversely, where the enforcement of a judgment by State A is sought in State B, which has a longer limitation period than State A, State B is plainly free to enter its own judgment upon the basis of State A's original judgment, even though that judgment would no longer be enforceable in State A. If enforcement of State B's new judgment is then sought in State A, State A cannot refuse to enforce it without violating the principle that the State where enforcement of a judgment is sought cannot look behind the judgment. That was the situation in Roche v. McDonald, 275 U.S. 449, 48 S.Ct. 142, 72 L.Ed. 365, 53 A.L.R. 1141, and so we there held. 19 4. The present situation is this: Colorado entered a judgment in 1927 which in 1945 was there revived in accordance with Colorado's procedure. In 1945 the 1927 judgment could not have been enforced in Missouri because barred by that State's statute of limitations. The question whether the 1945 proceedings gave rise to a judgment enforceable in Missouri thus depends, obviously, on whether those proceedings created a new Colorado judgment, or whether they merely had the effect of extending the Colorado statute of limitations on the old judgment. Only in the former the colorado statute of limitations of the merits'; in the latter, it is equally clear that McElmoyle for Use of Bailey v. Cohen, supra, 13 Pet. 312, 10 L.Ed. 177, and Bacon v. Howard, supra, 20 How. 22, 15 L.Ed. 811, would be controlling. Fundamental, therefore, to the issue of full faith and credit is an initial determination as to the effect in Colorado of its reviver proceedings. 20 5. The opinion of the Supreme Court of Missouri is not unequivocal. It could hardly, however, have assumed the law of Colorado to be that reviver proceedings create a new judgment, for it chiefly relied upon a decision of its own according full recognition to Roche v. McDonald and other cases invoking the principle that the forum cannot look behind a judgment brought there for enforcement. See Northwestern Brewers Supply Co. v. Vorhees, 356 Mo. 699, 703, 203 S.W.2d 422, 424. Surely we ought not to attribute to a State court a flagrant disregard of the decisions of this Court, particularly when it shows awareness of these decisions.1 The more obvious interpretation of the Missouri court's opinion is that it as umed the effect of the Colorado proceedings to be what the face of the Colorado statute implies, namely, to extend the statute of limitations on the original judgment.2 We should affirm, therefore, but for language which suggests a third view: that because the original judgment would have been unenforceable in Missouri at the time of the reviver proceedings, those proceedings were not entitled to full faith and credit no matter what their effect under Colorado law. If in fact the Colorado proceedings had resulted in a new judgment, this view would have disregarded Roche v. McDonald. But a State court may reach the right result despite an awkward formulation of the issue before it. Petitioner, to be entitled to redress, must establish that Colorado gave it a judgment which Missouri flouted, and it fails to do so unless it shows that under Colorado law a judgment of reviver is a new judgment. 21 6. The Court does not find that petitioner has sustained this burden, and we should neither initiate an independent examination of Colorado law nor rest upon phrases in a single decision that does not explicitly adjudicate the question. Yet the Court concludes, 'In this case it is the 1945 Colorado judgment that claims full faith and credit in Missouri. No Missouri statute of limitations is tendered to cut off a cause of action based on judgments of that vintage.' But the very question of Colorado law in issue is whether the 1945 proceedings did in fact create a new judgment entitled to claim full faith and credit. Since in the view most favorable to petitioner it is not clear whether the courts of Missouri have resolved this issue against petitioner or left it undecided, we should not by affirming foreclose all opportunity for petitioner to establish that the true effect of the reviver proceedings was to grant it a new judgment. But neither should we foreclose the issue in petitioner's favor. 22 In view of the unresolved elements of the situation, the procedure outlined in State of Minnesota v. National Tea Co., 309 U.S. 551, 557, 60 S.Ct. 676, 679, 680, 84 L.Ed. 920, should be followed in disposing of this case. Accordingly, I would vacate the judgment of the Supreme Court of Missouri and remand the case for further proceedings. 1 Mo.Rev.Stat.1939, § 1038, Mo.R.S.A. 2 Mo.Rev.Stat.1939, § 1271, Mo.R.S.A. 3 1 Colo.Ann.Stat.1935, c. 6, Rule 54(h); 3 id., c. 93, § 2. 4 See Gorman v. Washington University, 316 U.S. 98, 62 S.Ct. 962, 86 L.Ed. 1300. 5 Pro: Street v. United States, 133 U.S. 299, 10 S.Ct. 309, 33 L.Ed. 631; Sherwood Bros. v. District of Columbia, 72 App.D.C. 155, 113 F.2d 162; Wilson v. Southern R. Co., 5 Cir., 147 F.2d 165. Contra: Johnson v. Meyers, 8 Cir., 54 F. 417; Meyer v. Hot Springs Imp. Co., 9 Cir., 169 F. 628; Siegelschiffer v. Penn Mut. Life Ins. Co., 2 Cir., 248 F. 226; Larkin Packer Co. v. Hinderliter Tool Co., 10 Cir., 60 F.2d 491; Walters v. Baltimore & O.R. Co., 3 Cir., 76 F.2d 599. 6 Rule 6(a) provides: 'In computing any period of time prescribed or allowed by these rules, by order of court, or by any applicable statute, the day of the act, event, or default after which the designated period of time begins to run is not to be included. The last day of the period so computed is to be included, unless it is a Sunday or a legal holiday, in which event the period runs until the end of the next day which is neither a Sunday nor a holiday. When the period of time prescribed or allowed is less than 7 days, intermediate Sundays and holidays shall be excluded in the computation. A half holiday shall be considered as other days and not as a holiday.' 7 See Act of June 19, 1934, 48 Stat. 1064, 28 U.S.C. § 723c, 28 U.S.C.A. § 723c, now § 2072; Rule 86, Rules of Civil Procedure; Sibbach v. Wilson & Co., 312 U.S. 1, 61 S.Ct. 422, 85 L.Ed. 479. 8 Article IV, § I of the Constitution 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 Congress enacted pursuant to the Clause, 28 U.S.C. § 1738, 28 U.S.C.A. § 1738, in part reads as follows: 'The records and judicial proceedings of any court of any such State, Territory or Possession, or copies thereof, shall be proved or admitted in other courts within the United States and its Territories and Possessions by the attestation of the clerk and seal of the court annexed, if a seal exists, together with a certificate of a judge of the court that the said attestation is in proper form. 'Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken.' 9 There is no concession that under Colorado law revival does not make a new judgment. Petitioner merely argues that the requirements of due process are less exacting in case of a revived, as distinguished from an original, judgment. 10 The Missouri court stated, Mo.Sup., 213 S.W.2d at page 419: 'Definitely, it is the law of this state that a foreign judgment, absent revival, or a payment thereon as provided in Sec. 1038, is barred in 10 years from the date of its original rendition regardless of what the limitation period may be under the law of the state where the judgment was rendered. Northwestern Brewers Supply Co. v. Vorhees, supra (356 Mo. 699, 203 S.W.2d 422). And the only reasonable conclusion to draw is that a revived judgment, domestic or foreign, absent a payment as provided in Sec. 1038, is barred under said section unless the revival was within 10 years from the date of original rendition or, if such is the case, within 10 years from the last revival. In other words, a foreign judgment, original or revived, has the same standing in Missouri, no better, no worse, than a domestic judgment. This does not run counter to the full faith and credit provision of the federal Constitution, because, as we have seen, the enforcement of a foreign judgment goes to the remedy only and that is a matter for the law of the forum.' Northwestern Brewers Supply Co. v. Vorhees, which the court cites did not involve a revived judgment. It merely held that a Wisconsin judgment sued on in Missouri was subject to Missouri's statute of limitations. The fact that the Missouri court in the present case held that the revived Colorado judgment was governed by that rule throws no light on the status of the revived judgment under Colorado law. 11 1 Colo.Ann.Stat.1935, c. 6, Rule 54(h) provides in part: 'A revived judgment must be entered within 20 years after the entry of the judgment which it revives, and may be enforced and made a lien in the same manner and for a like period as an original judgment.' 1 The improbability that this was the view of the Missouri courts is emphasized by the fact that such a view would inevitably inject into the case an issue which in fact they put aside as irrelevant: the effectiveness of personal service upon defendant in Missouri to obtain jurisdiction in Colorado to supplant the old judgment by a new one. See Owens v. Henry, 161 U.S. 642, 16 S.Ct. 693, 40 L.Ed. 837. 2 '* * * from and after twenty years from the entry of final judgment in any court of this state, the same shall be considered as satisfied in full, unless revived as provided by law.' 3 Colo.Stat.Ann.1935, c. 93, § 2.

1011

337 U.S. 1 69 S.Ct. 894 93 L.Ed. 1131 TERMINIELLOv.CITY OF CHICAGO. No. 272. Argued Feb. 1, 1949. Decided May 16, 1949. Rehearing Denied June 13, 1949. See 337 U.S. 934, 69 S.Ct. 1490. Mr. Albert W. Dilling, of Chicago, Ill., for petitioner. Mr. L. Louis Karton, of Chicago, Ill., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Petitioner after jury trial was found guilty of disorderly conduct in violation of a city ordinance of Chicago1 and fined. The case grew out of an address he delivered in an auditorium in Chicago under the auspices of the Christian Veterans of America. The meeting commanded considerable public attention. The auditorium was filled to capacity with over eight hundred persons present. Others were turned away. Outside of the auditorium a crowd o about one thousand persons gathered to protest against the meeting. A cordon of policemen was assigned to the meeting to maintain order; but they were not able to prevent several disturbances. The crowd outside was angry and turbulent. 2 Petitioner in his speech condemned the conduct of the crowd outside and vigorously, if not viciously, criticized various political and racial groups whose activities he denounced as inimical to the nation's welfare. 3 The trial court charged that 'breach of the peace' consists of any 'misbehavior which violates the public peace and decorum'; and that the 'misbehavior may constitute a breach of the peace if it stirs the public to anger, invites dispute, brings about a condition of unrest, or creates a disturbance, or if it molests the inhabitants in the enjoyment of peace and quiet by arousing alarm.' Petitioner did not take exception to that instruction. But he maintained at all times that the ordinance as applied to his conduct violated his right of free speech under the Federal Constitution, U.S.Const. Amend. 1. The judgment of conviction was affirmed by the Illinois Appellate Court, 332 Ill.App. 17, 74 N.E.2d 45, and by the Illinois Supreme Court. 396 Ill. 41, 71 N.E.2d 2, 400 Ill. 23, 79 N.E.2d 39. The case is here on a petition for certiorari which we granted because of the importance of the question presented. 4 The argument here has been focused on the issue of whether the content of petitioner's speech was composed of derisive, fighting words, which carried it outside the scope of the constitutional guarantees. See Chaplinsky v. New Hampshire, 315 U.S. 568, 62 S.Ct. 766, 86 L.Ed. 1031; Cantwell v. Connecticut, 310 U.S. 296, 310, 60 S.Ct. 900, 906, 84 L.Ed. 1213, 128 A.L.R. 1352. We do not reach that question, for there is a preliminary question that is dispositive of the case. 5 As we have noted, the statutory words 'breach of the peace' were defined in instructions to the jury to include speech which 'stirs the public to anger, invites dispute, brings about a condition or unrest, or creates a disturbance. * * *' That construction of the ordinance is a ruling on a question of state law that is as binding on us as though the precise words had been written into the ordinance. See Hebert v. Louisiana, 272 U.S. 312, 317, 47 S.Ct. 103, 104, 71 L.Ed. 270, 48 A.L.R. 1102; Winters v. New York, 333 U.S. 507, 514, 68 S.Ct. 665, 669, 92 L.Ed. 840. 6 The vitality of civil and political institutions in our society depends on free discussion. As Chief Justice Hughes wrote in De Jonge v. Oregon, 299 U.S. 353, 365, 57 S.Ct. 255, 260, 81 L.Ed. 278, it is only through free debate and free exchange of ideas that government remains responsive to the will of the people and peaceful change is effected. The right to speak freely and to promote diversity of ideas and programs is therefore one of the chief distinctions that sets us apart from totalitarian regimes. 7 Accordingly a function of free speech under our system of government is to invite dispute. It may indeed best serve its high purpose when it induces a condition of unrest, creates dissatisfaction with conditions as they are, or even stirs people to anger. Speech is often provocative and challenging. It may strike at prejudices and preconceptions and have profound unsettling effects as it presses for acceptance of an idea. That is why freedom of speech, though not absolute, Chaplinsky v. New Hampshire, supra, 315 U.S. at pages 571—572, 62 S.Ct. at page 769, 86 L.Ed. 1031, is nevertheless protected against censorship or punishment, unless shown likely to roduce a clear and present danger of a serious substantive evil that rises far above public inconvenience, annoyance, or unrest. See Bridges v. California, 314 U.S. 252, 262, 62 S.Ct. 190, 193, 86 L.Ed. 192, 159 A.L.R. 1346; Craig v. Harney, 331 U.S. 367, 373, 67 S.Ct. 1249, 1253, 91 L.Ed. 1546. There is no room under our Constitution for a more restrictive view. For the alternative would lead to standardization of ideas either by legislatures, courts, or dominant political or community groups. 8 The ordinance as construed by the trial court seriously invaded this province. It permitted conviction of petitioner if his speech stirred people to anger, invited public dispute, or brought about a condition of unrest. A conviction resting on any of those grounds may not stand. 9 The fact that petitioner took no exception to the instruction is immaterial. No exception to the instructions was taken in Stromberg v. California, 283 U.S. 359, 51 S.Ct. 532, 75 L.Ed. 1117, 73 A.L.R. 1484. But a judgment of conviction based on a general verdict under a state statute was set aside in that case, because one part of the statute was unconstitutional. The statute had been challenged as unconstitutional and the instruction was framed in its language. The Court held that the attack on the statute as a whole was equally an attack on each of its individual parts. Since the verdict was a general one and did not specify the ground upon which it rested, it could not be sustained. For one part of the statute was unconstitutional and it could not be determined that the defendant was not convicted under that part. 10 The principle of that case controls this one. As we have said, the gloss which Illinois placed on the ordinance gives it a meaning and application which are conclusive on us. We need not consider whether as construed it is defective in its entirety. As construed and applied it at least contains parts that are unconstitutional. The verdict was a general one; and we do not know on this record but what it may rest on the invalid clauses. 11 The statute as construed in the charge to the jury was passed on by the Illinois courts and sustained by them over the objection that as so read it violated the Fourteenth Amendment. The fact that the parties did not dispute its construction makes the adjudication no less ripe for our review, as the Stromberg decision indicates. We can only take the statute as the state courts read it. From our point of view it is immaterial whether the state law question as to its meaning was controverted or accepted. The pinch of the statute is in its application. It is that question which the petitioner has brought here. To say therefore that the question on this phase of the case is whether the trial judge gave a wrong charge is wholly to misconceive the issue. 12 But it is said that throughout the appellate proceedings the Illinois courts assumed that the only conduct punishable and punished under the ordinance was conduct constituting 'fighting words.' That emphasizes, however, the importance of the rule of the Stromberg case. Petitioner was not convicted under a statute so narrowly construed. For all anyone knows he was convicted under the parts of the ordinance (as construed) which, for example, make it an offense merely to invite dispute or to bring about a condition of unrest. We cannot avoid that issue by saying that all Illinois did was to measure petitioner's conduct, not the ordinance, against the Constitution. Petitioner raised both points that his speech was protected by the consTitution; that the inclusion of his speech within the ordinance was a violation of the Constitution. We would, therefore, strain at technicalities to conclude that the constitutionality of the ordinance as construed and applied to petitioner was not before the Illinois courts. The record makes clear that petitioner at all times challenged the constitutionality of the ordinance as construed and applied to him. 13 Reversed. 14 Mr. Chief Justice VINSON, dissen ing. 15 I dissent. The Court today reverses the Supreme Court of Illinois because it discovers in the record one sentence in the trial court's instructions which permitted the jury to convict on an unconstitutional basis. The offending sentence had heretofore gone completely undetected. It apparently was not even noticed, much less excepted to, by the petitioner's counsel at the trial. No objection was made to it in the two Illinois appellate tribunals which reviewed the case. Nor was it mentioned in the petition for certiorari or the briefs in this Court. In short, the offending sentence in the charge to the jury was no part of the case until this Court's independent research ferreted it out of a lengthy and somewhat confused record. I think it too plain for argument that a reversal on such a basis does not accord with any principle governing review of state court decisions heretofore announced by this Court. Certainly, Stromberg v. California, 1931, 283 U.S. 359, 51 S.Ct. 532, 75 L.Ed. 1117, 73 A.L.R. 1484, as Mr. Justice FRANKFURTER demonstrates, offers no precedent for today's action. 16 It will not do to say that, because the Illinois appellate courts affirmed the petitioner's conviction in the face of a constitutional attack, they necessarily must have approved the interpretation of the Chicago ordinance contained in the unnoticed instruction. The fact is that the Illinois courts construed the ordinance as punishing only the use of 'fighting words.' Their opinions plainly show that they affirmed because they thought that the petitioner's speech had been found by the jury to come within that category.1 Their action was not, and cannot here be taken to be, an approval of the ordinance 'as construed' by the instruction because the record clearly shows that the case was treated on appeal, both by counsel and by the courts, as if no such instruction existed. This Court can reverse the conviction because of the instruction only if we are to say that every time a state court affirms a conviction it necessarily must approve of every unnoticed and unobjected to error which we may discover in the record. If such is the doctrine of this case, I feel compelled to register my emphatic dissent. 17 The instruction informed the jury that they could return a verdict of guilty if they found that the petitioner's speech was one which 'stirs the public to anger, invites public dispute, brings about a condition of unrest, or creates a disturbance.' If the petitioner's counsel, who carefully made other constitutional objections throughout the proceedings below, had brought any issue here as to the constitutional validity of that instruction I would agree with the Court's decision. But the record gives me no basis on which to believe that the Illinois courts would not also have so decided if that issue had been presented to them. 18 The Court, as I understand it, does not reach the issue which the parties argued here—whether a properly instructed jury could constitutionally have found from the conflicting evidence in the record that, under the circumstances, the words in the petitioner's speech were 'fighting words' to those inside the hall who heard them. Certainly, the Court does not decide whether the violent opposition of those outside the hall, who did not hear the speech, could constitutionally warrant the conviction of the petitioner in order to keep the streets from becoming ideological battlegrounds. Since neither of these constitutional issues is decided by the Court, I think that it is not within my province to indicate any opinion concerning them. See Rescue Army v. Municipal Court, 1947, 331 U.S. 549, 568, 67 S.Ct. 1409, 1419, 91 L.Ed. 1666. 19 Mr. Justice FRANKFURTER, dissenting. 20 For the first time in the course of the 130 years i which State prosecutions have come here for review, this Court is today reversing a sentence imposed by a State court on a ground that was urged neither here nor below and that was explicitly disclaimed on behalf of the petitioner at the bar of this Court. 21 The impropriety of that part of the charge which is now made the basis of reversal was not raised at the trial nor before the Appellate Court of Illinois. The fact that counsel for Terminiello wholly ignored it is emphasized by the objections that he did make in relation to other instructions given and not given. On appeal to the Supreme Court of Illinois, counsel still failed to claim as error that which this Court on its own motion now finds violative of the Constitution. It was not mentioned by the Illinois Supreme Court in its careful opinion disposing of other claims and it was not included in the elaborate petition for rehearing in that court. Thus an objection, not raised by counsel in the Illinois courts, not made the basis of the petition for certiorari here—not included in the 'questions presented,' nor in the 'reasons relied on for the allowance of the writ'—and explicitly disavowed at the bar of this Court, is used to upset a conviction which has been sustained by three courts of Illinois. 22 Reliance on Stromberg v. California, 283 U.S. 359, 51 S.Ct. 532, 75 L.Ed. 1117, 73 A.L.R. 1484, for what is done today is wholly misplaced. Neither expressly nor by implication has that decision any bearing upon the issue which the Court's opinion in this case raises, namely, whether it is open for this Court to reverse the highest court of a State on a point which was not brought before that court, did not enter into the judgment rendered by that court, and at no stage of the proceedings in this Court was invoked as error by the State court whose reversal is here sought. The Stromberg case presented precisely the opposite situation. In that case the claim which here prevailed was a ground of unconstitutionality urged before the California court; upon its rejection by that court it was made the basis of appeal to this Court; it was here urged as the decisive ground for the reversal of the California judgment. 23 The Stromberg case dealt with a statute which proscribed conduct in a threefold way. The information upon which a verdict of guilty was secured was couched in the threefold terms of the statute, and in that form submitted to the jury. A general verdict followed. It was urged throughout the proceedings, and finally at the bar of this Court, that one of the proscriptions of the statute was invalid under the Fourteenth Amendment. That view was sustained. All that the case holds is that where the validity of a statute is successfully assailed as to one of three clauses of a statute and all three clauses were submitted to the jury, the general verdict has an infirmity because it cannot be assumed that the jury convicted on the valid portions of the statute and not on the invalid. There was no question in that case of searching the record for an alleged error that at no time was urged against the State judgment brought here for review. 24 In the Stromberg case an error that was properly urged was sustained. In this case a claim that was not urged but was disavowed is transmuted into a claim denied. 25 Only the uninformed will deride as a merely technical point objection to what the Court is doing in this case. The matter touches the very basis of this Court's authority in reviewing the judgments of State courts. We have no authority to meddle with such a judgment unless some claim under the Constitution or the laws of the United States has been made before the State court whose judgment we are reviewing and unless the claim has been denied by that court.1 How could there have been a denial of a federal claim by the Illinois courts, i.e., that the trial judge offended the Constitution of the United States in what he told the jury, when no such claim was made? The relation of the United States and the courts of the United States to the States and the courts of the States is a very delicate matter. It is too delicate to permit silence when a judgment of a State court is reversed in disregard of the duty of this Court to leave untouched an adjudication of a State unless that adjudication is based upon a claim of a federal right which the State has had an opportunity to meet and to recognize. If such a federal claim was neither before the State court nor presented to this Court, this Court unwarrantably strays from its province in looking through the record to find some federal claim that might have been brought to the attention of the State court and, if so, brought, fronted, and that might have been, but was not, urged here. This is a court of review, not a tribunal unbounded by rules. We do not sit like a kadi under a tree dispensing justice according to considerations of individual expediency. 26 Freedom of speech undoubtedly means freedom to express views that challenge deep-seated, sacred beliefs and to utter sentiments that may provoke resentment. But those indulging in such stuff as that to which this proceeding gave rise are hardly so deserving as to lead this Court to single them out as beneficiaries of the first departure from the restrictions that bind this Court in reviewing judgments of State courts. Especially odd is it to bestow such favor not for the sake of life or liberty, but to save a small amount of property—$100, the amount of the fine imposed upon the petitioner in a proceeding which is civil, not criminal, under the laws of Illinois, and thus subject only to limited review. City of Chicago v. Terminiello, 400 Ill. 23, 29, 79 N.E.2d 39, 43. This Court has recognized that fines of this nature are not within provisions of the Constitution governing federal criminal prosecutions. See Hepner v. United States, 213 U.S. 103, 29 S.Ct. 474, 53 L.Ed. 720, 27 L.R.A.,N.S., 739, 16 Ann.Cas. 960. 27 The importance of freedom of speech of course cannot be measured by dollars and cents. A great principle may be at stake, as in the Case of the Ship Money, though the issue arise over the payment of a few shillings' tax. Were the Court to sustain the claim urged throughout these proceedings, in Illinois and here, namely, that a law is unconstitutional when it forbids Terminiello's harangue in the circumstances of its utterance, it would be immaterial that only $100 is involved. But to inject an error into the record in order to avoid the issue on which the case was brought here—for certainly relief from the payment of a fine of $100 could not alone have induced this Court to excogitate a defect in the judgment which counsel thoughtfully rejected and which three State courts did not consider—hardly raises the objection to the dignity of such a principle. If the Court refrained from taking phrases out of their environment and finding in them a self-generated objection, it could not be deemed to have approved of them even § abstract propositions. 28 On the merits of the issue reached by the Court I share Mr. Justice JACKSON'S views. For I assume that the Court does not mean to reject, except merely for purposes of this case, the basic principle that guides scrutiny of a charge on appeal. I assume, that is, that a charge is not to be deemed a bit of abstraction in a non-existing world; the function which a charge serves is to give practical guidance to a jury in passing on the case that was unfolded before it—the particular circumstances in their particular setting. 29 Mr. Justice JACKSON and Mr. Justice BURTON join this dissent. 30 Mr. Justice JACKSON, dissenting. 31 The Court reverses this conviction by reiterating generalized approbations of freedom of speech with which, in the abstract, no one will disagree. Doubts as to their applicability are lulled by avoidance of more than passing reference to the circumstances of Terminiello's speech and judging it as if he had spoken to persons as dispassionate as empty benches, or like a modern Demosthenes practicing his Philippics on a lonely seashore. 32 But the local court that tried Terminiello was not indulging in theory. It was dealing with a riot and with a speech that provoked a hostile mob and incited a friendly one, and threatened violence between the two. When the trial judge instructed the jury that it might find Terminiello guilty of inducing a breach of the peace if his behavior stirred the public to anger, invited dispute, brought about unrest, created a disturbance or molested peace and quiet by arousing alarm, he was not speaking of these as harmless or abstract conditions. He was addressing his words to the concrete behavior and specific consequences disclosed by the evidence. He was saying to the jury, in effect, that if this particular speech added fuel to the situation already so inflamed as to threaten to get beyond police control, it could be punished as inducing a breach of peace. When the light of the evidence not recited by the Court is thrown upon the Court's opinion, it discloses that underneath a little issue of Terminiello and his hundred-dollar fine lurk some of the most far-reaching constitutional questions that can confront a people who value both liberty and order. This Court seems to regard these as enemies of each other and to be of the view that we must forego order to achieve liberty. So it fixes its eyes on a conception of freedom of speech so rigid as to tolerate no concession to society's need for public order. 33 An old proverb warns us to take heed lest we 'walk into a well from looking at the stars.' To show why I think the Court is in some danger of doing just that, I must bring these deliberations down to earth by a long recital of facts. 34 Terminiello, advertised as a Catholic Priest, but revealed at the trial to be under suspension by his Bishop, was brought to Chicago from Birmingham, Alabama, to address a gathering that assembled in response to a call signed by Gerald L. K. Smith, which, among other things, said: 35 '* * * The same people who hate Father Coughlin hate Father Terminiello. They have persecuted him, hounded him, threatened him, but he has remained unaffected by their anti-Christian campaign against him. You will hear all sorts of reports concerning Father Terminiello. But remember that he is a Priest in good standing and a fearless lover of Christ and America.' 36 The jury may have considered that this call attempted to capitalize the hatreds this man had stirred and foreshadowed, if it did not intend to invite, the kind of demonstration that followed. 37 Terminiello's own testimony shows the conditions under which he spoke. So far as material it follows: 38 '* * * We got there (the meeting place) approximately fifteen or twenty minutes past eight. The car stopped at the front entrance. There was a crowd of three or four hundred congregated there shouting and cursing and picketing. * * * 39 'When we got there the pickets were not marching; th y were body to body and covered the sidewalk completely, some on the steps so that we had to form a flying wedge to get through. Police escorted us to the building, and I noticed four or five others there. 40 'They called us 'God damned Fascists, Nazis, ought to hang the so and sos.' When I entered the building I heard the howls of the people outside. * * * There were four or five plain clothes officers standing at the entrance to the stage and three or four at the entrance to the back door. 41 'The officers threatened that if they broke the door again they would arrest them and every time they opened the door a little to look out something was thrown at the officers, including ice-picks and rocks. 42 'A number of times the door was broken, was partly broken through. There were doors open this way and they partly opened and the officers looked out two or three times and each time ice-picks, stones and bottles were thrown at the police at the door. I took my place on the stage, before this I was about ten or fifteen minutes in the body of the hall. 43 'I saw a number of windows broken by stones or missiles. I saw the back door being forced open, pushed open. 44 'The front door was broken partly open after the doors were closed. There were about seven people seated on the stage. Smith opened the meeting with prayer, the Pledge of Allegiance to the Flag and singing of America. There were other speakers who spoke before me and before I spoke I heard things happening in the hall and coming from the outside. 45 'I saw rocks being thrown through windows and that continued throughout at least the first half of the meeting, probably longer, and again attempts were made to force the front door, rather the front door was forced partly. The howling continued on the outside, cursing could be heard audibly in the hall at times. Police were rushing in and out of the front door protecting the front door, and there was a general commotion, all kinds of noises and violence—all from the outside. 46 'Between the time the first speaker spoke and I spoke, stones and bricks were thrown in all the time. I started to speak about 35 or 40 minutes after the meeting started, a little later than nine o'clock. * * *' 47 The court below, in addition to this recital, heard other evidence, that the crowd reached an estimated number of 1,500. Picket lines obstructed and interfered with access to the building. The crowd constituted 'a surging, howling mob hurling epithets at those who would enter and tried to tear their clothes off.' One young woman's coat was torn off and she had to be assisted into the meeting by policemen. Those inside the hall could hear the loud noises and hear those on the outside yell, 'Fascists, Hitlers!' and curse words like 'damn Fascists.' Bricks were thrown through the windowpanes before and during the speaking. About 28 windows were broken. The street was black with people on both sides for at least a block either way; bottles, stink bombs and brickbats were thrown. Police were unable to control the mob, which kept breaking the windows at the meeting hall, drowning out the speaker's voice at times and breaking in through the back door of the auditorium. About 17 of the group outside were arrested by the police. 48 Knowing of this environment, Terminiello made a long speech, from the stenographic record of which I omit relatively innocuous passages and add emphasis of what seems especially provocative: 49 'Father Terminiello: Now, I am going to whisper my greetings to you, Fellow Christians. I will interpret it. I said, 'Fellow Christians,' and I suppose there are some of the scum got in by mistake, so I want to tell a story about the scum: 50 '* * * And nothing I could say tonight could begin to express the contempt I have for the slimy scum that got in by mistake. 51 '* * * The subject I want to talk to you tonight about is the attempt that is going on right outside this hall tonight, the attempt that is going on to destroy America by revolution. * * * 52 ' y friends, it is no longer true that it can't happen here. It is happening here, and it only depends upon you, good people, who are here tonight, depends upon all of us together, as Mr. Smith said. The tide is changing, and if you and I turn and run from that tide, we will all be drowned in this tidal wave of Communism which is going over the world. 53 '* * * I am not going to talk to you about the menace of Communism, which is already accomplished, in Russia, where from eight to fifteen million people were murdered in cold blood by their own countrymen, and millions more through Eastern Europe at the close of the war are being murdered by these murderous Russians, hurt, being raped and sent into slavery. That is what they want for you, that howling mob outside. 54 'I know I was told one time that my winter quarters were ready for me in Siberia. I was told that. Now, I am talking about the fifty-seven varieties that we have in America, and we have fifty-seven varieties of pinks and reds and pastel shades in this country; and all of it can be traced back to the twelve years we spent under the New Deal, because that was the build-up for what is going on in the world today. 55 'Now, Russia promised us we would ga (sic) back to the official newspaper of Russia. Primarily it was back about 1929. They quoted the words of George E. Dimitroff, who at that time was the Executive Secretary of the Communist International. I only quote you this one passage. I could quote thousands of paragraphs for you. Let me quote you: 'You worldwide nature of our program is not mere talk, but an all embracing blood-soaked reality.' That is what they want for us, a blood-soaked reality but it was promised to us by the crystal gazers in Washington; and you know what I mean by the 'crystal gazers,' I presume. 56 'First of all, we had Queen Eleanor. Mr. Smith said, 'Queen Eleanor is now one of the world's communists. She is one who said this—imagine, coming from the spouse of the former President of the United States for twelve long years—this is what she said: 'The war is but a step in the revolution. The war is but one step in the revolution, and we know who started the war.' 57 'Then we have Henry Adolph Wallace, the sixty million job magician. You know we only need fifty-four million jobs in America and everybody would be working. He wants sixty million jobs, because some of the bureaucrats want two jobs apiece. Here he is, what he says about revolution: 'We are in for a profound revolution. Those of us who realize the inevitableness of the revolution, and are anxious that it be gradual and bloodless instead of somewhat bloody. Of course, if necessary, we will have it more bloody.' 'And then Chief Justice Stone had this to say: 'A way has been found for the effective suppression of speeches and press and religion, despite constitutional guarantee,'—from the Chief Justice, from the Chief Justice of the United States. 58 'Now, my friends, they are planning another ruse; and if it ever happens to this cou-try (sic), God help America. They are going to try to put into Mr. Edgar Hoover's position a man by the name of George Swarzwald. I think even those who were uneducated on so-called sedition charges, that the majority of the individuals in this department, that Christ-like men and women who realize today what is going on in this country, men who are in this audience today, who want to know the names of those people, before they are outside, they want to know the names if any. Did you hear any tonight that you recognize? Most of them probably are imported. They are imported from Russia, certainly. If you know the names, please send them to me immediately. * * * 59 '* * * Didn't you ever read the Morgenthau plan for the starvation of little babies and pregnant women in Germany? Whatever could a child that is born have to do with Hitler or anyone else at the beginning of the war? Why should every child in Germany today not live to be more than two or three months of age? Because M rgenthau wants it that way, and so did F.D.R. * * * You will know who is behind it when I tell you the story of a doctor in Akron, Ohio. He boasted to a friend of mine within the last few days, while he was in the service of this country as a doctor, he and others of his kind made it a practice—now, this was not only one man—made it a practice to amputate the limbs of every German they came in contact with whenever they could get away with it; so, that they could never carry a gun. Imagine men of that caliber, sworn to serve this beautiful country of ours, why should we tolerate them? 60 'My friends, this moment someone reminded me of the plan to sterilize them. The nurses, they tell me are going to inject diseases in them, syphilis and other diseases in every one that came there all of one race, all non-Christians. 61 'Now, we are going to get the threats of the people of Argentine, the people of Spain. We have now declared, according to our officials, to have declared Franco to have taken the place of Hitler. Franco was the savior of what was left of Europe. 62 'Now, let me say, I am going to talk about—I almost said, about the Jews. Of course, I would not want to say that. However, I am going to talk about some Jews. I hope that—I am a Christian minister. We must take a Christian attitude. I don't want you to go from this hall with hatred in your heart for any person, for no person. * * * 63 'Now, this danger which we face—let us call them Zionist Jews if you will, let's call them atheistic, communistic Jewish or Zionist Jews, then let us not fear to condemn them. You remember the Apostles when they went into the upper room after the death of the Master, they went in there, after locking the doors; they closed the windows. (At this time there was a very loud noise as if something was being thrown into the building.) 64 'Don't be disturbed. That happened by the way, while Mr. Gerald Smith was saying 'Our Father who art in heaven;' (just then a rock went through the window.) Do you wonder they were persecuted in other countries in the world? 'You know I have always made a study of the psychology, sociology of mob reaction. It is exemplified out there. Remember there has to be a leader to that mob. He is not out there. He is probably across the street, looking out the window. There must be certain things, money, other things, in order to have successful mob action; there must be rhythm. There must be some to beat a cadence. Those mobs are chanting; that is the caveman's chant. They were trained to do it. They were trained this afternoon. They are being led; there will be violence. 65 'That is why I say to you, men, don't you do it. Walk out of here dignified. The police will protect you. Put the women on the inside, where there will be no hurt to them. Just walk; don't stop and argue. * * * They want to picket our meetings. They don't want us to picket their meetings. It is the same kind of tolerance, if we said there was a bedbug in bed, 'We don't care for you,' or if we looked under the bed and found a snake and said, 'I am going to be tolerant and leave the snake there.' We will not be tolerant of that mob out there. We are not going to be tolerant any longer. 66 'We are strong enough. We are not going to be tolerant of their smears any longer. We are going to stand up and dare them to smear us. 67 'So, my friends, since we spent much time tonight trying to quiet the howling mob, I am going to bring my thoughts to a conclusion, and the conclusion is this. We must all be like the Apostles before the coming of the Holy Ghost. We must not lock ourselves in an upper room for fear of the Jews. I speak of the Communistic Zionistic Jew, and those are not American Jews. We don't want them here; we want them to go back where they came from. 68 'Mr. Smith: I would like to ask that Miss Purcell would please go back to the front of the building and contact the police officer in charge of the detail. We are going to adjourn this meeting i and when Miss Purcell comes back and reports to me that the one in charge of the detail believes it is safe for us to go out on the street. I am sure it is. Sit still. We are not going to have anybody move. If there are any chiselers that want to go, we are going to take up an offering for Father Terminiello. 69 'There was further discussion to stimulate this offering which was not reported.)' 70 Such was the speech. Evidence showed that it stirred the audience not only to cheer and applaud but to expressions of immediate anger, unrest and alarm. One called the speaker a 'God damned liar' and was taken out by the police. Another said that 'Jews, niggers and Catholics would have to be gotten rid of.' One response was, 'Yes, the Jews are all killers, murderers. If we don't kill them first, they will kill us.' The anti-Jewish stories elicited exclamations of 'Oh!' and 'Isn't that terrible!' and shouts of 'Yes, send the Jews back to Russia,' 'Kill the Jews,' 'Dirty kikes,' and much more of ugly tenor. This is the specific and concrete kind of anger, unrest and alarm, coupled with that of the mob outside, that the trial court charged the jury might find to be a breach of peace induced by Terminiello. It is difficult to believe that this Court is speaking of the same occasion, but it is the only one involved in this litigation. 71 Terminiello, of course, disclaims being a fascist. Doubtless many of the indoor audience were not consciously such. His speech, however, followed, with fidelity that is more than coincidental, the pattern of European fascist leaders. 72 The street mob, on the other hand, included some who deny being communists, but Terminiello testified and offered to prove that the demonstration was communist-organized and communist-led. He offered literature of left-wing organizations calling members to meet and 'mobilize' for instruction as pickets and exhorting followers: 'All out to fight Fascist Smith.' 73 As this case declares a nation-wide rule that disables local and state authorities from punishing conduct which produces conflicts of this kind, it is unrealistic not to take account of the nature, methods and objectives of the forces involved. This was not an isolated, spontaneous and unintended collision of political, racial or ideological adversaries. It was a local manifestation of a world-wide and standing conflict between two organized groups of revolutionary fanatics, each of which has imported to this country the strong-arm technique developed in the struggle by which their kind has devastated Europe. Increasingly, American cities have to cope with it. One faction organizes a mass meeting, the other organizes pickets to harass it; each organizes squads to counteract the other's pickets; parade is met with counterparade. Each of these mass demonstrations has the potentiality, and more than a few the purpose, of disorder and violence. This technique appeals not to reason but to fears and mob spirit; each is a show of force designed to bully adversaries and to overawe the indifferent. We need not resort to speculation as to the purposes for which these tactics are calculated nor as to their consequences. Recent European history demonstrates both. 74 Hitler summed up the strategy of the mass demonstration as used by both fascism and communism: 'We should not work in secret conventicles but in mighty mass demonstrations, and it is not by dagger and poison or pistol that the road can be cleared for the movement but by the conquest of the streets. We must teach the Marxists that the future master of the streets is National Socialism, just as it will some day be the master of the state.' (Emphasis supplied.) 1 Nazi Conspiracy & Aggression (GPO, 1946) 204, 2 id. 140, Docs. 2760—PS, 404—PS, from 'Mein Kampf.' First laughed at as an extravagant figure of speech, the battle for the streets became a tragic reality when an organized Sturmabterlung began to give practical effect to its slogan that 'possession of the streets is the key to power in he state.' Ibid., also Doc. 2168—PS. 75 The present obstacle to mastery of the streets by either radical or reactionary mob movements is not the opposing minority. It is the authority of local governments which represent the free choice of democratic and law-abiding elements, of all shades of opinion but who, whatever their differences, submit them to free elections which register the results of their free discussion. The fascist and communist groups, on the contrary, resort to these terror tactics to confuse, bully and discredit those freely chosen governments. Violent and noisy shows of strength discourage participation of moderates in discussions so fraught with violence and real discussion dries up and disappears. And people lose faith in the democratic process when they see public authority flouted and impotent and begin to think the time has come when they must choose sides in a false and terrible dilemma such as was posed as being at hand by the call for the Terminiello meeting: 'Christian Nationalism or World Communism—Which?' 76 This drive by totalitarian groups to undermine the prestige and effectiveness of local democratic governments is advanced whenever either of them can win from this Court a ruling which paralyzes the power of these officials. This is such a case. The group of which Terminiello is a part claims that his behavior, because it involved a speech, is above the reach of local authorities. If the mild action those authorities have taken is forbidden, it is plain that hereafter there is nothing effective left that they can do. If they can do nothing as to him, they are equally powerless as to rival totalitarian groups. Terminiello's victory today certainly fulfills the most extravagant hopes of both right and left totalitarian groups, who want nothing so much as to paralyze and discredit the only democratic authority and can curb them in their battle for the streets. 77 I am unable to see the the local authorities have transgressed the Federal Constitution. Illinois imposed no prior censorship or suppression upon Terminiello. On the contrary, its sufferance and protection was all that enabled him to speak. It does not appear that the motive in punishing him is to silence the ideology he expressed as offensive to the State's policy or as untrue, or has any purpose of controlling his thought or its peaceful communication to others. There is no claim that the proceedings against Terminiello are designed to discriminate against him or the faction he represents or the ideas that he bespeaks. There is no indication that the charge against him is a mere pretext to give the semblance of legality to a covert effort to silence him or to prevent his followers or the public from hearing any truth that is in him. 78 A trial court and jury has found only that in the context of violence and disorder in which it was made, this speech was a provocation to immediate breach of the peace and therefore cannot claim constitutional immunity from punishment. Under the Constitution as it has been understood and applied, at least until most recently, the State was within its powers in taking this action. 79 Rioting is a substantive evil, which I take it no one will deny that the State and the City have the right and the duty to prevent and punish. Where an offense is induced by speech, the Court has laid down and often reiterated a test of the power of the authorities to deal with the speaking as also an offense. 'The question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about the substantive evils that Congress (or the State or City) has a right to prevent.' (Emphasis supplied.) Mr. Justice Holmes in Schenck v. United States, 249 U.S. 47, 52, 39 S.Ct. 247, 249, 63 L.Ed. 470. No one ventures to contend that the State on the basis of this test, for whatever it may be worth, was not justified in punishing Terminiello. In this case the evidence pro es beyond dispute that danger of rioting and violence in response to the speech was clear, present and immediate. If this Court has not silently abandoned this long standing test and substituted for the purposes of this case an unexpressed but more stringent test, the action of the State would have to be sustained. 80 Only recently this Court held that a state could punish as a breach of the peace use of epithets such as 'damned racketeer' and 'damned fascists,' addressed to only one person, an official, because likely to provoke the average person to retaliation. But these are mild in comparison to the epithets 'slimy scum,' 'snakes,' 'bedbugs,' and the like, which Terminiello hurled at an already inflamed mob of his adversaries. Mr. Justice Murphy, writing for a unanimous Court in Chaplinsky v. New Hampshire, 315 U.S. 568, 571—572, 62 S.Ct. 766, 769, 86 L.Ed. 1031, said: 81 'There are certain well-defined and narrowly limited classes of speech, the prevention and punishment of which have never been thought to raise any Constitutional problem. These include the lewd and obscene, the profane, the libelous, and the insulting or 'fighting' words—those which by their very utterance inflict injury or tend to incite an immediate breach of the peace. It has been well observed that such utterances are no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality. 'Resort to epithets or personal abuse is not in any proper sense communication of information or opinion safeguarded by the Constitution, and its punishment as a criminal act would raise no question under that instrument.' Cantwell v. Connecticut, 310 U.S. 296, 309, 310, 60 S.Ct. 900, 906, 84 L.Ed. 1213, 128 A.L.R. 1352.' 82 In the latter case Mr. Justice Roberts for a unanimous Court also said: 83 'The offense known as breach of the peace embraces a great variety of conduct destroying or menacing public order and tranquility. It includes not only violent acts but acts and words likely to produce violence in others. No one would have the hardihood to suggest that the principle of freedom of speech sanctions incitement to riot or that religious liberty connotes the privilege to exhort others to physical attack upon those belonging to another sect. When clear and present danger of riot, disorder, interference with traffic upon the public streets, or other immediate threat to public safety, peace, or other, appears, the power of the State to prevent or punish is obvious.' 310 U.S. 296, 308, 60 S.Ct. 900, 905, 84 L.Ed. 1213, 128 A.L.R. 1352. 84 How this present decision, denying state power to punish civilly one who precipitated a public riot involving hundreds of fanatic fighters in a most violent melee, can be squared with those unanimous statements of law, is incomprehensible to me. And the Court recently cited these two statements as indicating that 'The essential rights of the First Amendment in some instances are subject to the elemental need for order without which the guarantees of civil rights to others would be a mockery.' United Public Workers v. Mitchell, 330 U.S. 75, 95, 67 S.Ct. 556, 567, 91 L.Ed. 754. 85 However, these wholesome principles are abandoned today and in their place is substituted a dogma of absolute freedom for irresponsible and provocative utterance which almost completely sterilizes the power of local authorities to keep the peace as against this kind of tactics. 86 Before giving the First and Fourteenth Amendments to the Constitution this effect, we should recall that our application of the First Amendment to Illinois rests entirely on authority which this Court has voted to itself. The relevant parts of the First Amendment, with emphasis supplied, reads: 'Congress shall make no law * * * abridging the freedom of speech.' This restrains no authority except Congress. Read as literally as some would do, it restrains Congress i terms so absolute that no legislation would be valid if it touched free speech, no matter how obscene, treasonable, defamatory, inciting or provoking. If it seems strange that no express qualifications were inserted in the Amendment, the answer may be that limitations were thought to be implicit in the definition of 'freedom of speech' as then understood. Or it may have been thought unnecessary to delegate to Congress any power over abuses of free speech. The Federal Government was then a new and experimental authority, remote from the people, and it was supposed to deal with a limited class of national problems. Inasmuch as any breaches of peace from abuse of free speech traditionally were punishable by state governments, it was needless to reserve that power in a provision drafted to exclude only Congress from such a field of law-making. 87 The Fourteenth Amendment forbade states to deny the citizen 'due process of law.' But its terms gave no notice to the people that its adoption would strip their local governments of power to deal with such problems of local peace and order as we have here. Nor was it hinted by this Court for over half a century that the Amendment might have any such effect. In 1922, with concurrence of the most liberty-alert Justices of all times—Holmes and Brandeis—this Court declared flatly that the Constitution does not limit the power of the state over free speech. Prudential Insurance Co. v. Cheek, 259 U.S. 530, 543, 42 S.Ct. 516, 522, 66 L.Ed. 1044, 27 A.L.R. 27. In later years the Court shifted this dogma and decreed that the Constitution does this very thing and that state power is bound by the same limitation as Congress. Gitlow v. New York, 268 U.S. 652, 45 S.Ct. 625, 69 L.Ed. 1138. I have no quarrel with this history. See 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. I recite the method by which the right to limit the state has been derived only from this Court's own assumption of the power, with never a submission of legislation or amendment into which the people could write any qualification to prevent abuse of this liberty, as bearing upon the restraint I consider as becoming in exercise of self-given and unappealable power. 88 It is significant that provisions adopted by the people with awareness that they applied to their own states have universally contained qualifying terms. The Constitution of Illinois is representative of the provisions put in nearly all state constitutions and reads (Art. II, § 4): 'Every person may freely speak, write and publish on all subjects, being responsible for the abuse of that liberty.' (Emphasis added.) That is what I think is meant by the cryptic phrase 'freedom of speech,' as used in the Federal Compact, and that is the rule I think we should apply to the states. 89 This absence from the Constitution of any expressed power to deal with abuse of freedom of speech has enabled the Court to soar aloof from any consideration of the abuses which create problems for the states and to indulge in denials of local authority, some of which seem to me improvident in the light of functions which local governments must be relied on to perform for our free society. Quite apart from any other merits or defects, recent decisions have almost completely immunized this battle for the streets from any form of control. 90 Streets and parks maintained by the public cannot legally be denied to groups 'for the communication of ideas.' Hague v. C.I.O., 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423; Jamison v. Texas, 318 U.S. 413, 63 S.Ct. 669, 671, 87 L.Ed. 869. Cities may not protect their streets from activities which the law has always regarded subject to control, as nuisances. Lovell v. Griffin, 303 U.S. 444, 58 S.Ct. 666, 82 L.Ed. 949; Schneider v. State, 308 U.S. 147, 60 S.Ct. 146, 84 L.Ed. 155. Cities may not protect the streets or even homes of their inhabitants from the aggressions of organized bands operating in large numbers. Douglas . Jeannette, 319 U.S. 157, 63 S.Ct. 877, 87 L.Ed. 1324. As in this case, the facts are set forth fully only in the dissent, 319 U.S. at page 166, 63 S.Ct. at page 882. See also Martin v. Struthers, 319 U.S. 141, 63 S.Ct. 862, 87 L.Ed. 1313. Neither a private party nor a public authority can invoke otherwise valid state laws against trespass to exclude from their property groups bent on disseminating propaganda. Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265; Tucker v. Texas, 326 U.S. 517, 66 S.Ct. 274, 90 L.Ed. 274. Picketing is largely immunized from control on the ground that it is free speech, Thornhill v. Alabama, 310 U.S. 88, 60 S.Ct. 736, 84 L.Ed. 1093, and police may not regulate sound trucks and loud-speakers, Saia v. New York, 334 U.S. 558, 68 S.Ct. 1148, 92 L.Ed. 1574, though the Court finds them an evil that may be prohibited altogether. Kovacs v. Cooper, 336 U.S. 77, 69 S.Ct. 448. And one-third of the Court has gone further and declared that a position 'that the state may prevent any conduct which induces people to violate the law, or any advocacy of unlawful activity, cannot be squared with the First Amendment. * * *' and it is only we who can decide when the limit is passed. Musser v. Utah, 333 U.S. 95, 102, 68 S.Ct. 397, 400, 92 L.Ed. 562. Whatever the merits of any one of these decisions in isolation, and there were sound reasons for some of them, it cannot be denied that their cumulative effect has been a sharp handicap on municipal control of the streets and a dramatic encouragement of those who would use them in a battle of ideologies. 91 I do not think we should carry this handicap further, as we do today, but should adhere to the principles heretofore announced to safeguard our liberties against abuse as well as against invasion. It should not be necessary to recall these elementary principles, but it has been a long time since some of them were even mentioned in this Court's writing on the subject and results indicate they may have been overlooked. 92 I begin with the oft-forgotten principle which this case demonstrates, that freedom of speech exists only under law and not independently of it. What would Terminiello's theoretical freedom of speech have amounted to had he not been given active aid by the officers of the law? He could reach the hall only with this help, could talk only because they restrained the mob, and could make his getaway only under their protection. We would do well to recall the words of Chief Justice Hughes in Cox v. New Hampshire, 312 U.S. 569, 574, 61 S.Ct. 762, 765, 85 L.Ed. 1049, 133 A.L.R. 1396: '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. * * *' 93 This case demonstrates also that this Court's service to free speech is essentially negative and can consist only of reviewing actions by local magistrates. But if free speech is to be a practical reality, affirmative and immediate protection is required; and it can come only from nonjudicial sources. It depends on local police, maintained by law-abiding taxpayers, and who, regardless of their own feelings, risk themselves to maintain supremacy of law. Terminiello's theoretical right to speak free from interference would have no reality if Chicago should withdraw its officers to some other section of the city, or if the men assigned to the task should look the other way when the crowd threatens Terminiello. Can society by expected to keep these men at Terminiello's service if it has nothing to say of his behavior which may force them into dangerous action? 94 No one will disagree that the fundamental, permanent and overriding policy of police and courts should be to permit and encourage utmost freedom of utterance. It is the legal right of any American citizen to advocate peaceful adoption of fascism or communism, socialism or capitalism. He may go far in expressing sentiments whether pro- emitic or anti-semitic, pro-negro or anti-negro, pro-Catholic or anti-Catholic. He is legally free to argue for some anti-American system of government to supersede by constitutional methods the one we have. It is our philosophy that the course of government should be controlled by a consensus of the governed. This process of reaching intelligent popular decisions requires free discussion. Hence we should tolerate no law or custom of censorship or suppression. 95 But we must bear in mind also that no serious outbreak of mob violence, race rioting, lynching or public disorder is likely to get going without help of some speech-making to some mass of people. A street may be filled with men and women and the crowd still not be a mob. Unity of purpose, passion and hatred, which merges the many minds of a crowd into the mindlessness of a mob, almost invariably is supplied by speeches. It is naive, or worse, to teach that oratory with this object or effect is a service to liberty. No mob has ever protected any liberty, even its own, but if not put down it always winds up in an orgy of lawlessness which respects no liberties. 96 In considering abuse of freedom by provocative utterances it is necessary to observe that the law is more tolerant of discussion than are most individuals or communities. Law is so indifferent to subjects of talk that I think of none that it should close to discussion. Religious, social and political topics that in other times or countries have not been open to lawful debate may be freely discussed here. 97 Because a subject is legally arguable, however, does not mean that public sentiment will be patient of its advocacy at all times and in all manners. So it happens that, while peaceful advocacy of communism or fascism is tolerated by the law, both of these doctrines arouse passionate reactions. A great number of people do not agree that introduction to America of communism or fascism is even debatable. Hence many speeches, such as that of Terminiello, may be legally permissible but may nevertheless in some surrounding, be a menace to peace and order. When conditions show the speaker that this is the case, as it did here, there certainly comes a point beyond which he cannot indulge in provocations to violence without being answerable to society. 98 Determination of such an issue involves a heavy responsibility. Courts must beware lest they become mere organs of popular intolerance. Not every show of opposition can justify treating a speech as a breach of peace. Neither speakers nor courts are obliged always and in all circumstances to yield to prevailing opinion and feeling. As a people grow in capacity for civilization and liberty their tolerance will grow, and they will endure, if not welcome, discussion even on topics as to which they are committed. They regard convictions as tentative and know that time and events will make their own terms with theories, by whomever and by whatever majorities they are held, and many will be proved wrong. But on our way to this idealistic state of tolerance the police have to deal with men as they are. The crowd mind is never tolerant of any idea which does not conform to its herd opinion. It does not want a tolerant effort at meeting of minds. It does not know the futility of trying to mob an idea. Released from the sense of personal responsibility that would restrain even the worst individuals in it if alone and brave with the courage of numbers, both radical and reactionary mobs endanger liberty as well as order. The authorities must control them and they are entitled to place some checks upon those whose behavior or speech calls such mobs into being. When the right of society to freedom from probable violence should prevail over the right of an individual to defy opposing opinion, presents a problem that always tests wisdom and often calls for immediate and vigorous action to preserve public order and safety. 99 I do not think that the Constitution of the United States denies to the states and t e municipalities power to solve that problem in the light of local conditions, at least so long as danger to public order is not invoked in bad faith, as a cover for censorship or suppression. The preamble declares domestic tranquility as well as liberty to be an object in founding a Federal Government and I do not think the Forefathers were naive in believing both can be fostered by the law. 100 Certain practical reasons reinforce the legal view that cities and states sould be sustained in the power to keep their streets from becoming the battleground for these hostile ideologies to the destruction and detriment of public order. There is no other power that can do it. Theirs are the only police that are on the spot. The Federal Government has no police force. The Federal Bureau of Investigation is, and should remain, not a police but an investigative service. To date the only federal agency for preserving and restoring order when local authority fails has been the Army. And when the military steps in, the court takes a less liberal view of the rights of the individual and sustains most arbitrary exercises of military power. See Korematsu v. United States, 323 U.S. 214, 65 S.Ct. 193, 89 L.Ed. 194. Every failure of local authority to deal with riot problems results in a demand for the establishment of a federal police or intervention by federal authority. In my opinion, locally established and controlled police can never develop into the menace to general civil liberties that is inherent in a federal police. 101 The ways in which mob violence may be worked up are subtle and various. Rarely will a speaker directly urge a crowd to lay hands on a victim or class of victims. An effective and safer way is to incite mob action while pretending to deplore it, after the classic example of Antony, and this was not lost on Terminiello. And whether one may be the cause of mob violence by his own personification or advocacy of ideas which a crowd already fears and hates, is not solved merely by going through a transcript of the speech to pick out 'fighting words.' The most insulting words can be neutralized if the speaker will smile when he says them, but a belligerent personality and an aggressive manner may kindle a fight without use of words that in cold type shock us. True judgment will be aided by observation of the individual defendant, as was possible for this jury and trial court but impossible for us. 102 There are many appeals these days to liberty, often by those who are working for an opportunity to taunt democracy with its stupidity in furnishing them the weapons to destroy it as did Goebbels when he said: 'When democracy granted democratic methods for us in times of opposition, this (Nazi seizure of power) was bound to happen in a democratic system. However, we National Socialists never asserted that we represented a democratic point of view, but we have declared openly that we used democratic methods only in order to gain the power and that, after assuming the power, we would deny to our adversaries without any consideration the means which were granted to us in times of (our) opposition.' 1 Nazi Conspiracy & Aggression (GPO 1946) 202, Docs. 2500—PS, 2412—PS. 103 Invocation of constitutional liberties as part of the strategy for overthrowing them presents a dilemma to a free people which may not be soluble by constitutional logic alone. 104 But I would not be understood as suggesting that the United States can or should meet this dilemma by suppression of free, open and public speaking on the part of any group or ideology. Suppression has never been a successful permanent policy; any surface serenity that it creates is a false security, while conspiratorial forces go underground. My confidence in American institutions and in the sound sense of the American people is such that if with a stroke of the pen I could silence every fascist and communist speaker, I would not do it. For I agree with Woodrow Wilson, who said: 105 'I have always been among those who b lieved that the greatest freedom of speech was the greatest safety, because if a man is a fool, the best thing to do is to encourage him to advertise the fact by speaking. It cannot be so easily discovered if you allow him to remain silent and look wise, but if you let him speak, the secret is out and the world knows that he is a fool. So it is by the exposure of folly that it is defeated; not by the seclusion of folly, and in this free air of free speech men get into that sort of communication with one another which constitutes the basis of all common achievement.' Address at the Institute of France, Paris, May 10, 1919. 2 Selected Literary and Political Papers and Addresses of Woodrow Wilson (1926) 333. 106 But if we maintain a general policy of free speaking, we must recognize that its inevitable consequence will be sporadic local outbreaks of violence, for it is the nature of men to be intolerant of attacks upon institutions, personalities and ideas for which they really care. In the long run, maintenance of free speech will be more endangered if the population can have no protection from the abuses which lead to violence. No liberty is made more secure by holding that its abuses are inseparable from its enjoyment. We must not forget that it is the free democratic communities that ask us to trust them to maintain peace with liberty and that the factions engaged in this battle are not interested permanently in either. What would it matter to Terminiello if the police batter up some communists or, on the other hand, if the communists batter up some policemen? Either result makes grist for his mill; either would help promote hysteria and the demand for strong-arm methods in dealing with his adversaries. And what, on the other hand, have the communist agitators to lose from a battle with the police? 107 This Court has gone far toward accepting the doctrine that civil liberty means the removal of all restraints from these crowds and that all local attempts to maintain order are impairments of the liberty of the citizen. The choice is not between order and liberty. It is between liberty with order and anarchy without either. There is danger that, if the Court does not temper its doctrinaire logic with a little practical wisdom, it will convert the constitutional Bill of Rights into a suicide pact. 108 I would affirm the conviction. 109 Mr. Justice BURTON joins in this opinion. 1 'All persons who shall make, aid, countenance, or assist in making any improper noise, riot, disturbance, breach of the peace, or diversion tending to a breach of the peace, within the limits of the city * * * shall be deemed guilty of disorderly conduct, and upon conviction thereof, shall be severally fined not less than one dollar nor more than two hundred dollars for each offense.' § 1(1), ch. 193, Rev.Code 1939, City of Chicago. 1 The opinions are reported at 332 Ill.App. 17, 74 N.E.2d 45, and at 400 Ill. 23, 79 N.E.2d 39. See, particularly, 332 Ill.App. at pages 23 and 38, 74 N.E.2d at pages 48 and 54; 400 Ill. at page 33, 79 N.E.2d at page 45. 1 'Our power of review in this case is limited not only to the question whether a right guaranteed by the Federal Constitution was denied (Murdock v. City of Memphis, 20 Wall. 590, 22 L.Ed. 429; Haire v. Rice, 204 U.S. 291, 301, 27 S.Ct. 281, 51 L.Ed. 490), but to the particular claims duly made below, and denied (Seaboard Air Line Ry. v. Duvall, 225 U.S. 477, 485, 488, 32 S.Ct. 790, 56 L.Ed. 1171). We lack here the power occasionally exercised on review of judgments of lower federal courts to correct in criminal cases vital errors, although the objection was not taken in the trial court. Wiborg v. United States, 163 U.S. 632, 658, 660, 16 S.Ct. 1127, 1197, 41 L.Ed. 289; Clyatt v. United States, 197 U.S. 207, 221, 222, 25 S.Ct. 429, 49 L.Ed. 726. This is a writ of error to a state court. Because we may not inquire into the errors now alleged I concur in affirming the judgment of the state court.' Concurring opinion of Mr. Justice Brandeis joined by Mr. Justice Holmes in Whitney v. California, 274 U.S. 357, 380, 47 S.Ct. 641, 650, 71 L.Ed. 1095.

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337 U.S. 49 69 S.Ct. 918 93 L.Ed. 1200 BROOKSv.UNITED STATES (two cases). Nos. 388 and 389. Argued March 2, 1949. Decided May 16, 1949. Mr. W. S. Blakeney, of Charlotte, N.C., for petitioners. Mr. Paul A. Sweeney, of Washington, D.C., for respondent. Mr. Justice MURPHY delivered the opinion of the Court. 1 This is a suit against the United States under the Federal Tort Claims Act, 28 U.S.C. § 921, 60 Stat. 842, now 28 U.S.C. § 26 1, 28 U.S.C.A. § 2671. The question is whether members of the United States armed forces can recover under that Act for injuries not incident to their service. The District Court for the Western District of North Carolina entered judgment against the Government, rendering an unreported opinion, but the Court of Appeals for the Fourth Circuit reversed, in a divided decision. 169 F.2d 840. We brought the case here on certiorari because of its importance as an interpretation of the Act. 2 The facts are these. Welker Brooks, Arthur Brooks, and their father, James Brooks, were riding in their automobile along a public highway in North Carolina on a dark, rainy night in February, 1945. Arthur was driving. He came to a full stop before entering an intersection, and proceeded across the nearer lane of the intersecting road. Seconds later the car was struck from the left by a United States Army truck, driven by a civilian employee of the Army. Arthur Brooks was killed; Welker and his father were badly injured. 3 Welker and the administrator of Arthur's estate brought actions against the United States in the District Court. The District Judge tried the causes without a jury and found negligence on the part of the truck driver. The Government moved to dismiss on the ground that Welker and his deceased brother were in the armed forces of the United States at the time of the accident, and were therefore barred from recovery. The Court denied the motion, entered a $25,425 judgment for the decedent's estate, and a $4,000 judgment for Welker.1 On appeal, however, the Government's argument persuaded the Court of Appeals to reverse the judgment, Judge Parker dissenting. 4 We agree with Judge Parker. The statute's terms are clear. They provide for District Court jurisdiction over any claim founded on negligence brought against the United States. We are not persuaded that 'any claim' means 'any claim but that of servicemen.' The statute doen contain twelve exceptions. § 421 (now 28 U.S.C.A. § 2680). None exclude petitioners' claims. One is for claims arising in a foreign country. A second excludes claims arising out of combatant activities of the military or naval forces, or the Coast Guard, during time of war. These and other exceptions are too lengthy, specific, and close to the present problem to take away petitioners' judgments. Without resorting to an automatic maxim of construction, such exceptions make it clear to us that Congress knew what it was about when it used the term 'any claim.' It would be absurd to believe that Congress did not have the servicemen in mind in 1946, when this statute was passed. The overseas and combatant activities exceptions make this plain. 5 More than the language and framework of the act support this view. There were eighteen tort claims bills introduced in Congress between 1925 and 1935.2 All but two3 contained exceptions denying recovery to members of the armed forces. When the present Tort Claims Act was first introduced, the exception concerning servicemen had been dropped.4 What remained from previous bills was an exclusion of all claims for which compensation was provided by the World War Veterans' Act of 1924, 43 Stat. 607, 38 U.S.C.A. § 421, et seq., 38 U.S.C.A. § 421 et seq. compensation for injury or death occurring in the first World War. H.R. 181, 79th Cong., 1st Sess. When H.R. 181 was incorporated into the Legislative Reorganization Act, the last vestige of the exclusion for members of the armed forces disappeared. See also Note, 1 Syracuse L.Rev. 87, 93-94. 6 The Government envisages dire consequences should we reverse the judgment.5 A battle commander's poor judgment, an army surgeon's slip of hand, a defective jeep which causes injury, all would ground tort actions against the United States. But we are dealing with an accident which had nothing to do with the Brooks' army careers, injuries not caused by their service except in the sense that all human events depend upon what has already transpired. Were the accident incident to the Brooks' service, a wholly different case would be presented. We express no opinion as to it, but we may note that only in its context to Dobson v. United States, 2 Cir., 27 F.2d 807; Bradey v. United States, 2 Cir., 151 F.2d 742, and Jefferson v. United States, D.C., 77 F.Supp. 706, have any relevance. See the similar distinction in 31 U.S.C. § 223b, 31 U.S.C.A. § 223b. Interpretation of the same words may vary, of course, with the consequences, for those consequences may provide insight for determination of congressional purpose. Lawson v. Suwanee Fruit & Steamship Co., 336 U.S. 198, 69 S.Ct. 503. The Government's fears may have point in reflecting congressional purpose to leave injuries incident to service where they were, despite literal language and other considerations to the contrary. The result may be so outlandish that even the factors we have mentioned would not permit recovery. But that is not the case before us. 7 Provisions in other statutes for disability payments to servicemen, and gratuity payments to their survivors, 38 U.S.C. § 701, 38 U.S.C.A. § 701, indicate no purpose to forbid tort actions under the Tort Claims Acts. Unlike the usual workman's compensation statute, e.g., 33 U.S.C. § 905, 33 U.S.C.A. § 905, there is nothing in the Tort Claims Act or the veterans' laws which provides for exclusiveness of remedy. United States v. Standard Oil Co., 332 U.S. 301, 67 S.Ct. 1604, 91 L.Ed. 2067, indicates that, so far as third party liability is concerned. Nor did Congress provide for an election of remedies, as in the Federal Employees' Compensation Act, 5 U.S.C. § 757, 5 U.S.C.A. § 757. Thus, Dahn v. Davis, 258 U.S. 421, 42 S.Ct. 320, 66 L.Ed. 696, and cases following that decision, are not in point. Compare Parr v. United States, 10 Cir., 172 F.2d 462. We will not call either remedy in the present case exclusive, nor pronounce a doctrine of election of remedies, when Congress has not done so. Compare 31 U.S.C. § 224b, 31 U.S.C.A. § 224b, specifically repealed by the Tort Claims Act, § 424(a). In the very Act we are construing, Congress provided for exclusiveness of the remedy in three instances, §§ 403(d), 410(b), and 423 (now 28 U.S.C.A. §§ 1346, 2672, 2679), and omitted any provision which would govern this case. 8 But this does not mean that the amount payable under servicemen's benefit laws should not be deducted, or taken into consideration, when the serviceman obtains judgment under the Tort Claims Act. Without the benefit of argument in this Court, or discussion of the matter in the Court of Appeals, we now see no indication that Congress meant the United States to pay twice for the same injury. Certain elements of tort damages may be t e equivalent of elements taken into account in providing disability payments. It would seem incongruous, at first glance, if the United States should have to pay in tort for hospital expenses it had already paid, for example. And whatever the legal theory behind a wrongful death action, the same considerations might apply to the Government's gratuity death payment to Arthur Brooks' survivors, although national service life insurance might be considered a separate transaction, unrelated to an action in tort or other benefits. 9 But the statutory scheme and the Veterans' Administration regulations may dictate a contrary result. The point was not argued in the case as it came to us from the Court of Appeals. The court below does not appear to have passed upon it; it was unnecessary, in the view they took of the case. We do not know from this record whether the Government objected to this portion of the District Court judgment—nor can we tell from this record whether the Court of Appeals should consider a general objection to the judgment sufficient to allow it to consider this problem. Finally, we are not sure how much deducting the District Judge did. It is obvious that we are in no position to pass upon the question of deducting other benefits in the case's present posture. 10 We conclude that the language, framework and legislative history of the Tort Claims Act require a holding that petitioners' actions were well founded. But we remand to the Court of Appeals for its consideration of the problem of reducing damages pro tanto, should it decide that such consideration is proper in view of the District Court judgment and the parties' allegations of error. 11 Reversed and remanded. 12 Mr. Justice FRANKFURTER and Mr. Justice DOUGLAS dissent, substantially for the reasons set forth by Judge Dobie, below, 4 Cir., 169 F.2d 840. 1 James Brooks, the father, also recovered judgment in his own right. The Government does not contest his recovery. 2 H.R. 12178, 68th Cong., 2d Sess.; H.R. 12179, 68th Cong., 2d Sess.; S. 1912, 69th Cong., 1st Sess.; H.R. 6716, 69th Cong., 1st Sess.; H.R. 8914, 69th Cong., 1st Sess.; H.R. 9285, 70th Cong., 1st Sess.; S. 4377, 71st Cong., 2d Sess.; H.R. 15428, 71st Cong., 3d Sess.; H.R. 16429, 71st Cong., 3d Sess.; H.R. 17168, 71st Cong., d Sess.; H.R. 5065, 72d Cong., 1st Sess.; S. 211, 72d Cong., 1st Sess.; S. 4567, 72d Cong., 1st Sess.; S. 1833, 73d Cong., 1st Sess.; H.R. 129, 73d Cong., 1st Sess.; H.R. 8561, 73d Cong., 2d Sess.; H.R. 2028, 74th Cong., 1st Sess.; S. 1043, 74th Cong., 1st Sess. 3 H.R. 8561, 73d Cong., 2d Sess.; H.R. 12178, 68th Cong., 2d Sess. 4 Other bills after those mentioned in note 2, above, also omitted this exception. See, e.g., H.R. 5373, 77th Cong., 1st Sess.; H.R. 1356, 78th Cong., 1st Sess. This has nothing to do with 'congressional awareness' of the Dobson and Bradey decisions, infra. The present Tort Claims Act contains exceptions which would have been specifically covered by those cases. § 421(d) (now 28 U.S.C.A. § 2680). 5 The Government's other arguments on this phase of the case are sleeveless. They will not be discussed.

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337 U.S. 137 69 S.Ct. 1000 93 L.Ed. 1264 SMITHv.UNITED STATES. No. 292. Argued March 4—7, 1949. Decided May 31, 1949. Mr. Walter R. Hart, Brooklyn, N.Y., for petitioner. Mr. Harold D. Cohen, Washington, D.C., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 Petitioner, George Smith, together with Daisart Sportswear, Inc., and another person was charged by the United States in two informations of forty-one counts each with violations of § 301 of the Second War Powers Act1 and Priorities Regulations Nos. 1 and 3.2 The first information charged petitioner and his co-defendants with the intentional misuse of priority ratings in forty-one instances in order to purchase certain cotton and rayon materials and the second information charged them with the unlawful utilization of the textiles so obtained. The same defendants were also indicted in the same court for conspiring to violate the Emergency Price Control Act of 19423 and the regulations thereunder by selling finished piece goods above the established maximum price and by keeping false records of their transactions. The two informations and the indictment were consolidated for trial in the District Court of the United States for the Southern District of New York; after trial before a jury petitioner was found guilty on the indictment and on thirty-five counts of each of the informations. On appeal the Court of Appeals for the Second Circuit affirmed the conviction as to the indictment and twentythree counts of each of the informations, but reversed as to twelve counts of each of the two informations. United States v. Daisart Sportswear, 2 Cir., 169 F.2d 856. 2 During 1944 and 1945 the petitioner, Smith, was the sole owner and officer of Daisart Sportswear, Inc. (hereinafter called Daisart), a corporation engaged in the fabrication, purchase, and sale of textile goods. Its actual operation was as a contractor working on the goods of others. As part of its business Daisart was to furnish Metals Disintegrating Corporation with cloth bags for filtering and packing the metal powders manufactured by Metals Disintegrating under contracts with the Army and Navy. The War Production Board had granted Metals Disintegrating high pr ference ratings to secure the materials necessary to fulfill its government contracts. Because of its inability to provide the particular cloth used to make powder bags, which was of a greyish white duck color, very similar to the canvas used in tents, Metals Disintegrating gave Daisart high blanket preference ratings which Daisart was to apply or extend4 to purchase all the piece goods needed to manufacture the bags. 3 There is evidence which would justify a jury in finding the following facts. Through the use of these top priorities petitioner obtained piece goods for his company, and in the orders he certified that the goods were to be manufactured into powder bags. Over two and a half million square yards of material were thus invoiced to and paid for by Daisart. Metals Disintegrating, however, purchased from Daisart only 11,987 powder bags consisting of 48,920 square yards of material. Moreover these piece goods which petitioner obtained by means of preference ratings consisted of fabrics of a wide variety of colors and finishes. They were resold by Daisart, often still in their original packing, to manufacturers of civilian clothing at prices far in excess of the maximum established by law. In these transactions petitioner and his corporation in conspiracy with the other person indicted used fictitious names, gave false descriptions of goods and prices, and falsified invoices, but the money paid for the goods arrived by circuitous and devious routes into the bank accounts of either petitioner or Daisart Sportswear, Inc. 4 Such evidence is amply sufficient to sustain petitioner's conviction on the informations and indictment, but he insists that he is immune from prosecution for the acts of which he stands convicted. He bases his claim to immunity on § 202 of the Emergency Price Control Act of 1942, as amended, 56 Stat. 23, 58 Stat. 632, 50 U.S.C.A.Appendix, § 922, which reads as follows: 5 '(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. 6 '(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. 7 '(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.' 8 The Compulsory Testimony Act of February 11, 1893, 27 Stat. 443, 49 U.S.C. § 46, 49 U.S.C.A. § 46, provides: 9 '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, 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, * * * Provided, That no person so testifying shall be exempt from prosecution and punishment for perjury committed in so testifying.' 10 Petitioner's plea of immunity arose out of his testifying before an examiner of the Office of Price Administration in response to subpoenas issued by that office. In August, 1945, investigators of the War Production Board began an inquiry into the transactions of Daisart Sportswear, Inc. Two subpoenas were issued by the Office of Price Administration summoning petitioner individually and as an officer of Daisart to appear before an official of the Office of Price Administration. The subpoenas directed petitioner to produce all records and documents 'pertaining to the purchase, sale, manufacture, fabrication and/or finishing piece goods, materials, fabrics from January 1, 1945, up to the present time.' On April 30, 1946, pursuant to the subpoenas, petitioner appeared with counsel before an examiner of the O.P.A. After a ruling, unchallenged by respondent, that the appearance was under the compulsion of a valid subpoena, petitioner was sworn in as a witness and advised erroneously that he could not be compelled to make any self-incriminating statements and further advised that he had certain constitutional guarantees. This was an obvious reference to the Fifth Amendment's protection against self-incrimination as recognized by § 202 of the Emergency Price Control Act of 1942, quoted above. 11 After a few questions of a preliminary nature, petitioner stated: 'I want to claim privilege as to anything that I say.' Thereafter, in answer to questions by the examiner, petitioner explained that the records required by the subpoenas had either been destroyed, lost, or misplaced. He testified that he was the sole owner and officer of Daisart Sportswear, Inc., which until it went out of business in October, 1945, was engaged in the manufacture, purchase, and sale of textiles and allied products. In carrying on this business, the material out of which products were made was often furnished to Daisart by the organization, a so-called manufacturer, for whom Daisart contracted to make the product. Smith then testified that from various operations Daisart sold surplus fabrics and textiles; that for Metals Disintegrating Company, Daisart made bags and that for certain manufacturing operations Daisart had to acquire materials and fabrics. He denied that Daisart bought any material for the sole purpose of reselling it and stated that Daisart sold only material which was surplusage from its various operations. As examples of his company's operations, petitioner said that Daisart was a contractor for five companies which he specifically named and for many others whose names had slipped his mind, and that Daisart also manufactured ammunition bags as a subcontractor for Metals Disintegrating Company, which had a prime contract with the Government. In reply to the question as to how Daisart arrived at its selling price with respect to the material it sold, petitioner answered: 'Since it was surplus, it was sold at the price billed to me plus freight and haulage and less discount allowed to me.' 12 Petitioner gave the names of A. Steinman & Co., L. Lazarus & Co., and Southeastern Cottons as three of the firms from whom Daisart purchased materials and fabrics, stated that Daisart received invoices from the suppliers for its purchases, and that Daisart paid for its purchases by check at all times. He disclosed the Fidelity Union Trust Company of Newark, N.J., as the bank where Daisart maintained its account, and gave the name of the accountant who had the social security and bank statements of Daisart. He testified that these records would reflect the total overall business of Daisart, including the purchase and sale of all materials. According to petitioner, Daisart usually received the material from the manufacturer with whom it was contracting, and Daisart merely supplied labor and tr mming. The manufacturer did not bill Daisart for the material, but simply shipped it for use by Daisart, who in turn billed the manufacturer for the finished garments. It was tacitly understood that if Daisart could save any of the material, it could do as it pleased with that excess material. Petitioner said that the waste from the making of ammunition bags approximated the amount actually used in the bags, and that Metals Disintegrating knew this fact but never made any claim with respect to the waste. 13 After the foregoing evidence, there occurred the following colloquy between petitioner and the examiner: 14 'Question (by O.P.A. examiner): So that with respect to Daisart Sportswear, Inc., contracting activities on ammunition bag materials, were shipped by the manufacturer without bill? 15 'Answer (by petitioner): It was not. Metals Disintegrating Company being a foreign concern and being unable to furnish this material, they asked me to purchase materials for them. They were aware that I cannot do that without proper priorities. Those priorities were forthcoming in a blanket sum. No stipulated amount and I was further told to maintain a constant stock for any orders they may call. I mean Daisart Sportswear Inc., for any orders they may call for. Their orders came to me sometimes dated and never in any set size or specified form. They charged from day to day. I then went about purchasing material for their work. When and if I had a surplus, I would notify them and ask them if they had anything immediately on hand as I am overstocked, at which time they told me they had not and to dispose of it. 16 'Question: This is a voluntary statement. You do not claim immunity with respect to that statement? 17 'Answer: No. 18 'Question: I assume that anything you tell us Mr. Smith, is subject to verification? You state that after a time Metals Disintegrating Company, although it had a contract with the government, was not in a position to furnish you with the materials necessary for Daisart to manufacture this item? 19 'Answer: Right. 20 'Question. And that because of that situation, Daisart was required to obtain priorities so that Daisart could obtain the materials and that it did so? 21 'Answer: In a blanket amount. 22 'Question: And that pursuant to that priority, Daisart thereafter acquired materials, some of which were used in the manufacture of ammunition bags for Metals, and some of it was disposed of by Daisart, is that correct? 23 'Answer: Yes. 24 'Question: And those disposals by Daisart formed a good part of the sales of fabrics made by Daisart? 25 'Answer: They did.' 26 When the prosecution during the trial sought to introduce the transcript of this testimony before the O.P.A. official, petitioner moved for a dismissal of the informations and the indictment against him upon the ground that he was granted immunity from prosecution by the Price Control Act of 1942 for the acts concerning which he was questioned. Petitioner asserted that the hearing before the O.P.A. official covered essentially the same matters which formed the basis for the informations and the indictment. The trial judge reserved decision on the motion and received the transcript of the testimony in evidence against petitioner and the corporation. Subsequently the court ruled that the transcript was not admissible against petitioner, but was only admissible against the defendant corporation, and the jury was so instructed. The trial court also overruled the motion for a dismissal of the charges against petitioner and stated that 'the testimony does not prove any part or feature of the commission of a crime, nor will it tend to a conviction when combined with proof of other circumstances which others may supply.' This the trial court thought was the test. Conviction followed on 35 counts of each of the two informations and on the indictment for conspiracy. Petitioner was sentenced to pay $10,000 on each count, a total of $710,000 in fines and to imprisonment in such a way that he would have three years to serve. 27 The Court of Appeals reversed the conviction of petitioner on twelve counts of each of the two informations on the ground that because he had 'not waived immunity in respect to his earlier disclosure that A. Steinam & Co., L. Lazarus & Co., and Southeastern Cottons were sellers to the corporation, he cannot be prosecuted on the counts based on transactions with those companies.' 169 F.2d at page 861. These were the three companies specifically named by petitioner in his testimony before the examiner of the Office of Price Administration. This reversal reduced the amount of the fines imposed upon petitioner by $240,000, but not his sentence of three years' imprisonment. The Court of Appeals affirmed the rest of the sentences on the informations and the indictment. It held that petitioner's claim to immunity by reason of his testimony before the examiner was clear and good but for the statement made by petitioner set out above. This the Court thought was voluntary and waived all immunity on the facts therein stated and that these were the essential facts in the convictions. 169 F.2d at pages 860, 862. One judge dissented in part on the ground that by his testimony before the O.P.A. official petitioner had acquired immunity from prosecution for the transactions charged in the indictment. Because of the importance of the problem in the administration of federal criminal justice, we brought the case here by certiorari. 335 U.S. 882, 69 S.Ct. 233. 28 First. The evolution of congressional policy in dealing with immunity from criminal prosecution in return for evidence has been adequately discussed recently by this Court. United States v. Monia, 1943, 317 U.S. 424, 63 S.Ct. 409, 87 L.Ed. 376, and Shapiro v. United States, 1948, 335 U.S. 1, 68 S.Ct. 1375, 92 L.Ed. 1787. Through Counselman v. Hitchcock, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110, it was established that absolute immunity from federal criminal prosecution for offenses disclosed by the evidence must be given a person compelled to testify after claim of privilege against self-incrimination. To meet that requirement Congress amended the immunity provisions of the Interstate Commerce Act, 24 Stat. 383, § 12, 49 U.S.C.A. § 12, that protected a witness from use against him of evidence so given in any subsequent criminal proceeding so as to provide that the witness should not be 'prosecuted * * * for or on account of any transaction, matter or thing, concerning which he may testify * * *.' 337 U.S. 141, 69 S.Ct. 1002, supra. This remission of responsibility for criminal acts met the 'absolute' test of the constitutional provision against self-incrimination. Brown v. Walker, 161 U.S. 591, 16 S.Ct. 644, 40 L.Ed. 819. If a witness could not be prosecuted on facts concerning which he testified, the witness could not fairly say he had been compelled in a criminal case to be a witness against himself. He might suffer disgrace and humiliation but such unfortunate results to him are outside of constitutional protection. Id., 161 U.S. at page 598, 16 S.Ct. at page 647. Cf. 161 U.S. at pages 630—631, 16 S.Ct. at pages 652, 653. This compulsory testimony statute was further amended in 1906 to provide that the immunity should extend only to a natural person testifying under oath in obedience to a subpoena. 34 Stat. 798, 49 U.S.C.A. § 48. The Monia case, supra, decided in 1943 that it was not necessary for a witness to claim his privilege against self-incrimination under the compulsory testimony statute as thus amended. This conclusion was reached on an interpretation of the immunity statute, 317 U.S. at page 430, 63 S.Ct. at page 412, 87 L.Ed. 376, despite a contrary rule requiring a claim of privilege under the self-incrimination provision of the Fifth Amendment. See Vajtauer v. Commissioner, 273 U.S. 103, 113, 47 S.Ct. 302, 306, 71 L.Ed. 560. Cf. Heike v. United States, 227 U.S. 131, 33 S.Ct. 226, 57 L.Ed. 450, Ann.Cas.1914C, 128. 29 In the light of these decisions adjusting a witness' duty of testimony to his constitutional protection against self-incrimination, Congress has been enabled, through the use of the Compulsory Testimony Act of 1893 as a model, to legislate so as to force from the lips of the guilty testimony believed necessary to administer a variety of acts.5 By the date of the Monia decision, Congress had, foresightedly, added to the standard immunity clause, drawn from the Interstate Commerce Act, the provision that the witness must claim his privilege.6 By this addition the statute on compulsory testimony as to this requirement was put on a parity with the constitutional privilege against self-incrimination. It is such a supplemented immunity statute that we are called upon to apply in this case. 30 Petitioner was compelled to testify at the examination under the Price Control Act.7 He was subpoenaed and put under oath. At the beginning of the examination, he raised a question as to the validity of the subpoena so as to assure himself that he was not voluntarily present. He promptly declared: 'I want to claim privilege as to anything that I say.' In response to the examiner's queries as to his and Daisart's business activities, petitioner thereafter made the statements set out 337 U.S. at pages 143 to 145, 69 S.Ct. at pages 1003 to 1004, supra. These statements as to the organization of his business, his use of priorities, his suppliers and customers, his banking connections and the method of computing the selling price of surplus materials are clearly more than suggestions from which it might be imagined evidence as to his operations could be obtained. Brown v. Walker, supra, 161 U.S. at page 599, 16 S.Ct. at page 647, 40 L.Ed. 819. Some, at least, of the disclosures, such as the use of blanket priorities of Metals Disintegrating to procure textiles and the method of fixing prices on surplus sales, bore directly on the subsequent charges of misuse of priorities and the goods obtained thereby as well as the charge of conspiracy to violate the Price Control Act. The facts brought out in his examination are not facts disassociated from his prosecution as in Heike v. United States, 227 U.S. 131, 33 S.Ct. 226, 57 L.Ed. 450, Ann.Cas.1914C, 128, but in the language of the Compulsory Testimony Act are pertinent to the prosecution and 'concerning which' petitioner testified.8 The facts were links in the chain of evidence. The Government does not contest the conclusion that part of the testimony before the examiner concerns the criminal charges. 31 Second. The Government, however, contends that petitioner's immunity from prosecution on facts concerning which he was compelled to testify was waived by a subsequent voluntary statement. This statement as given in question and answer form is set out above, 337 U.S. at page 144, 69 S.Ct. at page 1004.9 Privilege can be waived and with the waiver the statutory immunity disappears.10 Since the purpose of the remission of penalties is to force out evidence that is protected by privilege against self-incrimination, a waiver of that protection makes the testimony available for protection of the witness. Nor do we see any reason why claim of privilege to all or any part of testimony may not be withdrawn. Although the privilege against self-incrimination must be claimed, when claimed it is guaranteed by the Constitution. Thereafter only absolute immunity from federal criminal prosecution is sufficient to compel the desired testimony. Waiver of constitutional rights, however, is not lightly to be inferred.11 A witness cannot properly be held after claim to have waived his privilege and consequent immunity upon vague and uncertain evidence. 32 It is plain here that petitioner relied from the beginning of his examination upon his privilege. The United States had notice that the witness sought protection against prosecution for any facts to which he was compelled to testify. The Government had then to decide whether to pay the price to secure the facts of the suspected criminal operation.12 Just before the question that opened the colloquy quoted, 337 U.S. at page 144, 69 S.Ct. at page 1004, the examination had elicited that Daisart often contracted with manufacturers to do work on goods bought and furnished by the manufacturer. Then came the question above quoted, 337 U.S. 144, 69 S.Ct. 1004, as to the practice on the ammunition-bag contract. The answer, we think, was responsive. Then came the question: 'This is a voluntary statement. You do not claim immunity with respect to that statement?' And the answer, 'No ' Whether the 'No' applied to first or second sentence is not known. In view of the specific claim of privilege, it seems unlikely that petitioner would waive the privilege and testify, voluntarily and without protection against prosecution, as to the details of his operations with Metals Disintegrating, the source of the blanket priorities that lay at the base of the charges by information and indictment. No question is made as to the correctness of the transcription. Without any effort to clarify the 'No', the examiner went ahead and had the witness restate the substance of the long answer quoted 337 U.S. on page 144, 69 S.Ct. on page 1004 without any further intimation that the subsequent answers were considered by the examiner to be voluntary.13 We do not think under these circumstances this equivocal 'No' is a waiver of the previous definite claim of general privilege against self-incrimination. 33 The trial court excluded the entire statement before the examiner, including the question just discussed, as evidence against petitioner. Since that court did not think the statement contained testimony proving any part of feature of the commission of a crime and did not tend to a conviction when combined with proof of other circumstances which others might supply, it refused the motion for a directed acquittal. 34 Furthermore, before the question was asked the answer to which the Government argues is a voluntary statement, petitioner, testifying under unquestioned privilege with immunity, gave the information that is detailed above, 337 U.S. at pages 143 to 144, 69 S.Ct. at pages 1003 to 1004, inclusive. Without restating the entire substance of the testimony, we think the statements concerning the necessity of Daisart to acquire for manufacturing, together with information as to the names of the suppliers, the name of Daisart's bank and as to the manner of Daisart's receipts, disbursements and sales prices, were sufficient to give petitioner the immunity claimed. 35 Third. Finally the Government presses upon us the argument that as to the indictment the testimony petitioner gave at the examination under the Price Control Act was wholly self-exonerating and therefore did not secure immunity for prosecution by the indictment. The contention is that since the immunity granted by § 202(g) of the Emergency Price Control Act was an exchange for the constitutional privilege against self-incrimination and since this evidence is not incriminating, it therefore cannot be used to secure immunity from prosecution for conspiracy to violate the Price Control Act. See Shapiro v. United States, 335 U.S. 1, 68 S.Ct. 1375, 92 L.Ed. 1787; Wigmore, Evidence, § 2282. 36 The indictment was for conspiracy to sell finished piece goods in excess of prices fixed under the Price Control Act. The position of the Government is that the only testimony relating to the charge of the indictment is that petitioner testified that he sold the goods at prices within the allowable limits.14 But the indictment also charged as a part of the conspiracy a plan through false invoices to secure payments for the goods by checks to fictitious persons which the conspirators cashed. 37 A glance at the details of the testimony set out 337 U.S. at pages 143, 144, 69 S.Ct. at pages 1003 through 1004, supra, will demonstrate that petitioner's testimony at the examination went beyond the exculpatory language concerning the sale price. Petitioner testified as to the business organization of Daisart, its acquisition of materials through the priorities furnished by Metals Disintegrating from named firms on their invoices and its payment for these goods at all times by check. Daisart's bank was named. Since the argument on this point relates only to exculpatory statements and not to waivers, it is also to be and not to waivers, it is also to be answer printed 337 U.S. on page 144, 69 S.Ct. on page 1004, above, is to be taken into consideration. Certainly many of these disclosures furnished leads that could have uncovered evidence of the unlawful conspiracy charged in the indictment. Petitioner testified concerning transactions, matters and things substantially connected with parts of the conspiracy for which he was indicted—for example, the testimony that he bought material under invoice from a named supplier and paid for it by check on a named bank. This evidence being substantially connected with the conspiracy, was ample to give immunity from the conspiracy prosecution. The Compulsory Testimony Act of February 11, 1893, gives immunity from prosecution on account 'of any transaction, matter or thing, concerning which' the witness is compelled to testify in return for such evidence. Consequently, we need not decide whether if only exculpatory evidence was given concerning matters pertinent to the criminal charge, the statute would grant immunity. 38 Reversed. 1 56 Stat. 177, 58 Stat. 827, 60 Stat. 868, 50 U.S.C.A.Appendix, § 633. 2 32 C.F.R., Cum.Supp. § 944.1—944.21; 32 C.F.R., Cum.Supp. § 944.23. 3 56 Stat. 23 et seq., as amended, 56 Stat. 767, 58 Stat. 632, 59 Stat. 306, 60 Stat. 664, 50 U.S.C.A.Appendix, § 901 et seq. 4 A footnote to the opinion of the Court of Appeals, 2 Cir., 169 F.2d 856, at page 859 states: 'These terms are explained in United States v. Bradford, 2 Cir., 160 F.2d 729, certiorari denied 331 U.S. 829, 67 S.Ct. 1351 (91 L.Ed. 1844). A preference rating is applied by the original recipient to obtain commodities from a supplier who then extends (uses) the rating to secure the needed commodities from subsuppliers.' 5 See Shapiro v. United States, supra, 335 U.S. at page 6, 68 S.Ct. at page 1378, 92 L.Ed. 1787; Heike v. United States, 227 U.S. 131, 142, 33 S.Ct. 226, 227, 57 L.Ed. 450, Ann.Cas.1914C, 128. 6 United States v. Monia, supra, 317 U.S. at page 429, 63 S.Ct. at page 411, 87 L.Ed. 376, cf. 317 U.S. at page 442, 63 S.Ct. at page 417, 87 L.Ed. 376, et seq. 7 United States v. Monia, supra, 317 U.S. at page 429, 63 S.Ct. at page 411, 87 L.Ed. 376. 8 In the Heike case, the accused had testified in a grand jury investigation as to violations of the Sherman Act, 15 U.S.C.A. § 1 et seq. Such testimony did not earn the immunity of the act of February 25, 1903, 32 Stat. 854, 904, on a subsequent indictment for a fraud on the revenue by the secret introduction of springs in scales to cause them to indicate less than the actual weight. A table of annual meltings of sugar had been given at the monopoly investigation by Heike. This Court said: 'The table of meltings by the year had no bearing on the frauds, as it was not confined to the sugar fraudulently weighed, and it does not appear how the number of pounds was made up. The mere fact that a part of the sugar embraced in the table was the sugar falsely weighed did not make the table evidence concerning the frauds. The same consideration shows that it did not tend to incriminate the witness. It neither led nor could have led to a discovery of his crime.' 227 U.S. at page 143, 33 S.Ct. at page 228, 57 L.Ed. 50, Ann.Cas.1914C, 128. See United States v. Monia, 317 U.S. 424, 430, 63 S.Ct. at page 412, 87 L.Ed. 376; Brown v. Walker, 161 U.S. 591, 599, 16 S.Ct. at page 647, 40 L.Ed. 819; United States v. Weisman, 2 Cir., 111 F.2d 260; United States v. Molasky, 7 Cir., 118 F.2d 128, 134. 9 The Government's argument is that voluntary statements are not protected by privilege and do not earn immunity. It is suggested, too, that the answers were not responsive to the question and that a witness cannot volunteer facts and secure immunity any more than he can secure remission of penalties by appearing as a witness without compulsion. Further, the Government relies upon the voluntary character of the above statement as a waiver of privilege, not only as to facts included in the statement but also as to similar facts that the witness had disclosed previously under compulsion after claim of privilege. This position is based on the opinion of the Court of Appeals, where it was said: 'Even where this testimony repeated previous answers which would have been subject to the witness' initial general claim of immunity, we see no reason why a witness cannot qualify and limit his claim as the examination proceeds, just as he can make new claims as to issues he has not waived.' 169 F.2d at page 861. 10 Raffel v. United States, 271 U.S. 494, 496, 46 S.Ct. 566, 567, 70 L.Ed. 1054, and cases cited; Vajtauer v. Commissioner, 273 U.S. 103, 113, 47 S.Ct. 302, 306, 71 L.Ed. 560; United States v. Monia, 317 U.S. 424, 427, 63 S.Ct. 409, 410, 87 L.Ed. 376; Johnson v. United States, 318 U.S. 189, 195, 63 S.Ct. 549, 552, 87 L.Ed. 704. 11 Hodges v. Easton, 106 U.S. 408, 412, 1 S.Ct. 307, 310, 27 L.Ed. 169; Ohio Bell Tel. Co. v. Public Utilities Comm'n, 301 U.S. 292, 306, 57 S.Ct. 724, 731, 81 L.Ed. 1093; Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 394, 57 S.Ct. 809, 812, 81 L.Ed. 1177; Johnson v. Zerbst, 304 U.S. 458, 464, 58 S.Ct. 1019, 1023, 82 L.Ed. 1461. 12 United States v. Monia, 317 U.S. 424, 430, 63 S.Ct. 409, 412, 87 L.Ed. 376. 13 Compare United States v. St. Pierre, 2 Cir., 128 F.2d 979, 980: 'Nor is it material that appellant stated to several points that he had committed no federal crime; such a contradiction, especially by a nervous or excitable witness would not overcome a clear claim of privilege if he was otherwise entitled to the privilege.' 14 The testimony referred to is as follows: 'Question: Can you tell me how Daisart Sportswear Inc., arrived at its selling price with respect to the items that it sold? 'Answer: Since it was surplus, it was sold at the price billed to me plus freight and haulage and less discount allowed to me. 'Question: In other words, Daisart Sportswear Inc., sold at cost plus freight less any discounts, ash or otherwise, received by Daisart Sportswear Inc.? 'Answer: Correct.'

01

337 U.S. 154 69 S.Ct. 995 93 L.Ed. 1276 EMPRESA SIDERURGICA, S.A., et al.v.COUNTY OF MERCED, CALIFORNIA, et al. No. 327. Argued Feb. 9, 1949. Decided May 31, 1949. Appeal from the Supreme Court of the State of California. Mr. Scott D. Kellogg, Oakland, Cal., for appellants. Mr. James E. Sabine, San Francisco, Cal., for appellees. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 There was a cement plant in Merced County, California, which was sold to petitioner—a corporation of Colombia—for export to South America. An export license was obtained and a letter of credit in favor of the seller deposited here. Title passed, and possession was taken for the urchaser. A company, which was a common carrier, was employed to do the dismantling and packaging for shipment. As the dismantling proceeded, shipments were labeled with appellant's name as consignee and delivered to a rail carrier. 2 Respondent acting under a California statute1 levied a personal property tax on the property for the tax year 1945—1946. The tax date was March 5, 1945. On that date 12 per cent of the plant had been shipped out of the county. That portion was relieved of the tax. The balance was taxed. That included the 10 per cent which had been dismantled and created or prepared for shipment, 34 per cent which had been dismantled but not crated or prepared for shipment, and 44 per cent which had not been dismantled. But before the end of January, 1946, all the property had been shipped by rail to a port and was en route to South America by ocean carrier. 3 Article I, § 10, Cl. 2 of the Constitution provides in part that, 'No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws * * *.' Appellant claimed that this tax was laid on an export and was therefore unconstitutional. It paid the tax under protest and brought this suit to recover it. The trial court, holding that the entire plant was an export on the tax assessment day, granted judgment for appellant. The Supreme Court of California reversed. 32 Cal.2d 68, 194 P.2d 527. The case is here on appeal. 28 U.S.C. § 1257(2), 28 U.S.C.A. § 1257(2). 4 '* * * goods do not cease to be part of the general mass of property in the state, subject, as such, to its jurisdiction, and to taxation in the usual way, until they have been shipped, or entered with a common carrier for transportation, to another state, or have been started upon such transportation in a continuous route or journey.' Coe v. Town of Errol, 116 U.S. 517, 527, 6 S.Ct. 475, 478, 29 L.Ed. 715. That test was fashioned to determine the validity under the Commerce Clause of a nondiscriminatory state tax. But as we noted in Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, 79, 67 S.Ct. 156, 91 L.Ed. 80, it is equally applicable to cases arising either under Art. I, § 10, Cl. 2 (The Import-Export Clause) or under Art. I, § 9, Cl. 5, which prohibits Congress from laying any tax on 'Articles exported from any State.'2 5 Under that test it is not enough that there is an intent to export, or a plan which contemplates exportation, or an integrated series of events which will end with it. See Turpin v. Burgess, 117 U.S. 504, 6 S.Ct. 835, 29 L.Ed. 988; Cornell v. Coyne, 192 U.S. 418, 24 S.Ct. 383, 48 L.Ed. 504. The tax immunity runs to the process of exportation and the transactions and documents embraced in it. Fairbank v. United States, 181 U.S. 283, 21 S.Ct. 648, 45 L.Ed. 862; United States v. Hvoslef, 237 U.S. 1, 35 S.Ct. 459, 59 L.Ed. 813, Ann.Cas.1916A 286; Thames & Mersey Marine Ins. Co. v. United States, 237 U.S. 19, 35 S.Ct. 496, 59 L.Ed. 821, Ann.Cas.1915D, 1087. Delivery of packages to an exporting carrier for shipment abroad, A. G. Spalding & Bros. v. Edwards, 262 U.S. 66, 43 S.Ct. 485, 67 L.Ed. 865, and the delivery of oil into the hold of the ship furnished by the foreign purchaser to carry the oil abroad, Richfield Oil Corp. v. State Board of Equalization, supra, have been held sufficient. It is the entrance of the articles into the export stream that marks the start of the process of exportation. Then there is certainty that the goods are headed for their foreign destination and will not be diverted to domestic use. Nothing less will suffice. 6 So in this case it is not enough that on the tax date there was a purpose and plan to export this property. Nor is it sufficient that in due course that plan was fully executed. The part of the plant that is taxed was dismantled, but it had not been delivered to any carrier for export or otherwise started on its journey on the tax date. It might still have been diverted into the domestic market. The fact that any such diversion would entail a breach of contract, that a part of the plant had already started on its export journey, that an export license had been obtained and a letter of credit deposited in this country increases the expectation on the tax date that exportation of the entire plant would eventuate. But that prospect, no matter how bright, does not start the process of exportation. On the tax date the movement to foreign shores had neither started nor been committed. 7 Some reliance is apparently placed on the fact that the dismantler was a licensed carrier for interstate and foreign commerce and that its employment included the loading of the property on railroad cars for shipment to the seaboard. But the dismantler had not in this case started the movement of the property to the carrier. Hence we need not determine whether that intermediate transportation would be part of the export process. 8 Affirmed. 9 Mr. Justice FRANKFURTER, dissenting. 10 Though figures of speech may aid analysis, they do not dispense with the need for it. When a State seeks to tax what is to leave the United States, we may agree that its privilege to do so ceases when the export enters 'the export stream.' But the problem for decision is to determine when that point has been reached. The Export-Import Clause of the Constitution (Art. I, § 10) embodies on phase of the accommodation between the States and the Union; it can be applied only by considering the bearing of a particular exertion of State power on the fulfillment or frustration of its purpose. A mechanistic formula, whether derived from phrases in Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715, or elsewhere culled, advances us little toward the solution of such a concrete problem. 11 The case before us is peculiarly ill-fitted for mechanical disposition; it presents unusual circumstances giving rise to unusual contentions. It involves the sale to a Colombian purchaser of what the contract of sale describes as 'all machinery, equipment, removable structures, removable facilities, spare parts, supplies and miscellaneous items comprising' the Yosemite Portland Cement Plant located at Merced, California, but 'excluding the land upon which the plan is situated' and various other specified items. The appellant urges that the objects of this sale, which are collectively referred to by the contract as 'the cement plant,' should be regarded as interdependent parts of an organic whole like a 200-inch telescope or a cyclotron. Since no such part has a separate usefulness comparable to its usefulness as a supporting member of the structure or as a link in the productive process for which the structure is designed, shipment of part—in this case 14 of an eventual total of 123 carloads—makes virtually certain that the rest will follow. In the case of such an export, so runs the argument, it is a degree of certainty fully equivalent to the certainty marked by delivery to a common carrier of a bulk cargo, like oil or grain or timber, for whatever part of a cargo of the latter sort has not actually left the country can even then be diverted and separately sold without loss in value either to the diverted or to the exported part. It is the degree of certainty, moreover, and not conformity to a prescribed ritual like delivery to a carrier, that is significant: 12 'The certainty that the goods are headed to sea and that the process of exportation has started may normally be best evidenced by the fact that they have been delivered to a common carrier for that purpose. But the same degree of certainty may exist though no common carrier is involved.' Richfield Oil Corp. v. State Board of qualization, 329 U.S. 69, 82, 67 S.Ct. 156, 163, 91 L.Ed. 80. 13 The case was submitted to the Superior Court of Merced County on an agreed statement of facts which leaves in doubt whether the items comprising the 'cement plant' were actually interdependent, as appellant contends, or consisted merely of a collection of machines and other pieces of equipment which could have been individually installed without loss of usefulness in any other cement plant. Tending to establish appellant's position are provisions of the dismantling contract which indicate that the existing structure was to be carefully taken apart like a Chinese puzzle so that it could be fitted together again in Colombia exactly the way it was before 'Contractor shall take at least one photograph of each machine or piece of equipment before dismantling said machine or piece of equipment, and shall also take at least one photograph after such machine or piece of equipment is dismantled.' 'All separations shall be made at the point of joinder, and there shall be no cutting or disassembling of any part of the Cement Plant which will have as its effect the weakening of the structure or parts when such structure or parts are reassembled * * *.' 'The Contractor shall match-mark all parts of the plant and equipment * * *.' Tending to look the other way is an itemized list of all the items to be exported which was attached to the export license issued to appellant by the War Production Board. Those items, ranging from thousand-ton kilns and locomotives to friction tape, seem to be things of a sort which are independently useful; each is assigned a dollar value and the total of all these separate values exactly equals the sale price of the 'plant.' Appellee insists, moreover, that so many parts of the original plant were excepted from the contract of sale that what was sold cannot be considered an organic unit. 14 The Superior Court resolved this issue of fact in favor of the interpretation urged by appellant and reached a conclusion based on that interpretation: 15 'I think that the payment for the property and proceeding to change it from parts in place of a complete building, into a mass of disconnected materials made the completion of the exportation economically imperative. This was not a mere preparation of the plant for exportation; by such action and change the parts had 'been started upon such transportation' with the degree of certainty demanded by Coe v. Town of Errol and the many cases which have endorsed it. * * * 16 'If the exportation of the materials of the plant was not before assured, that became certain when the twelve per cent of the corpus of the building had been sent abroad. * * * Whatever possibility there might have been that after plaintiff had torn the plant down and carried the parts off the premises that it would sell them or re-erect them into a plant in California would be rendered extremely improbable when it appeared that it had kept here only a part of the materials of the plant which of course could not be sold as the materials from which a plant could be built or used to reassemble the old one.' 17 The appellant presented the same contentions to the Supreme Court of California. Without explicitly rejecting these contentions, it referred to the objects of export and of taxation merely as 'the machinery and equipment of a cement plant' and alluded to the above-quoted portion of the Superior Court's opinion only as 'another basis for the decision.' Its opinion is open, therefore, to two very different interpretations. 18 1. The Supreme Court of California may have exercised a right under California law to draw its own inferences from uncontroverted facts and thus have found that what was called a 'plant' was really only a collection of machinery and equipment. If that is what it did, we would not, of course, reinstate the findings of the Superior Court merely in order to raise an interesting question under the Export-Import Clause. Affirmance would be amply supported by bare citation of cases holding that intent to export, no matter how firm, is not by itself enough to confer immunity from taxation. 19 2. The Supreme Court of California may have taken the view that only delivery to a carrier of each successive part even of an organic whole removed that part from the State's taxing power. This would have been in effect to say, 'Upon the facts as found by the Superior Court, it makes no difference to the taxing power of the County of Merced that parts of this integrated plant had left the country since the County is merely taxing the remaining parts.' Surely this is a doubtful proposition; it presents, at any rate, a difficult question of the adjustment of local needs to the protection of exports from local interference. 20 Between these two possible interpretations of the situation before the Supreme Court of California, therefore, lies the difference between a simple question of Constitutional power and a very troublesome one. Since the record leaves in doubt whether the troublesome question is presented, to assume that it is presented and then to pass upon it would be to embrace unnecessarily what may be a hypothetical issue. We should, therefore, remand the case for the resolution of the crucial question of fact upon which depends what Constitutional issue we are called upon to decide. Cf. City of Hammond v. Schappi Bus Line, Inc., 275 U.S. 164, 48 S.Ct. 66, 72 L.Ed. 218. 1 Rev. & Tax. Code 1939, Div. I, §§ 103, 106, 201, 202(e), 405. 2 The meaning of 'export' is the same under the two Clauses. See Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, 83, 67 S.Ct. 156, 163, 164, 91 L.Ed. 80 and cases cited.

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337 U.S. 75 69 S.Ct. 953 93 L.Ed. 1223 KILPATRICKv.TEXAS & P. RY. CO. No. 233 Misc. Argued on Motion for Leave to File Feb. 8, 1949. Decided May 31, 1949. Mr. Wm. H. DeParcq, Minneapolis, Minn., for petitioner. Mr. Porter R. Chandler, New York City, for respondent. Mr. Chief Justice VINSON, delivered the opinion of the Court. 1 This litigation has a rather involved history. In 1946, while in the employ of respondent rai road, petitioner was seriously injured in an accident at Big Spring, Texas. Petitioner promptly brought suit under the Federal Employers' Liability Act1 in the United States District Court for the Southern District of New York. That court dismissed the action on the ground that the railroad could not properly be served in that district. 1947, 72 F.Supp. 635. Petitioner appealed from this dismissal; and, some days after taking the appeal, instituted an action in the District Court for the Northern District of Texas. An answer was filed in the latter action and a number of depositions were taken. 2 In March, 1948, the Court of Appeals for the Second Circuit held that the railroad was subject to service in New York. 166 F.2d 788. Thereupon petitioner moved to dismiss his Texas action. When the district court refused to dismiss, petitioner appealed and also applied for a writ of prohibition to the Court of Appeals for the Fifth Circuit. That court declined to issue the writ. 1948, 167 F.2d 471. In No. 275 petitioner requests this Court to issue a writ of certiorari to review the Court of Appeals action. And in No. 119 Misc., we are asked to issue a writ of prohibition directing the District Court for the Northern District of Texas not to proceed with the trial. We are advised that counsel have arranged that further progress of the Texas trial shall be held in abeyance pending our decision. We are this day denying those petitions; see 337 U.S. 912, 69 S.Ct. 1148, 1151. 3 When the New York cause was returned to the district court, after we had denied the railroad's petition for certiorari to review the court of appeals' determination that it might be sued there, 1948, 335 U.S. 814, 69 S.Ct. 32, petitioner moved for a preference in the order of trial. The court below, the United States District Court for the Southern District of New York, denied this motion. Respondent filed a cross-motion for an order transferring the action to the United States District Court for the Northern District of Texas. This motion was granted. The order of transfer relies on the authority of 28 U.S.C. § 1404(a), 28 U.S.C.A. § 1404(a),2 and cites Hayes v. Chicago, R.I. & P.R. Co., D.C.1948, 79 F.Supp. 821, and Nunn v. Chicago, M., St. P. & P.R. Co., D.C.1948, 80 F.Supp. 745. To nullify this order, petitioner moved this Court for leave to file a petition for a writ of certiorari or a writ of mandamus or any appropriate relief. We assigned the case for hearing on the motion for leave to file. Ex parte Collett, 1948, 335 U.S. 897, 69 S.Ct. 295. 4 In support of his motion, petitioner, urges that the general purposes of the 1948 revision of Title 28 by the Congress indicate no intention to 'emasculate' the right to choose venue afforded under the Federal Employers' Liability Act; that 'any civil action', as used in § 1404(a) of the Code, refers only to civil actions specified in the Venue Chapter of Title 28, §§ 1391—1406, inclusive; and that the court below 'ignored the known temper of legislative opinion' as revealed chiefly by Congressional action on the Jennings Bill. 5 We fail to see anything in these contentions which can distinguish this case from Ex parte Collett, 337 U.S. 55, 69 S.Ct. 944. In that opinion we have demonstrated that the venue provisions of § 6 of the Federal Employers' Liability Act are one thing and the transfer provisions of § 1404(a) of the present Judicial Code another; that 'any civil action' means what it says; and that Congress was fully informed as to the significance of § 1404(a). For these reasons, e conclude that the District Court for the Southern District of New York acted within its statutory authority. The motion must be 6 Denied. 7 Mr. Justice BLACK and Mr. Justice DOUGLAS dissent for the reasons stated in the dissenting opinion of Mr. Justice DOUGLAS in United States v. National City Lines, 337 U.S. 78, 69 S.Ct. 955. 1 35 Stat. 65, as amended by 36 Stat. 291, and 53 Stat. 1404, 45 U.S.C. §§ 51—59, 45 U.S.C.A. §§ 51—59. 2 'For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.' This provision became effective Sept. 1, 1948. Pub.L.No.773, 80th Cong., 2d Sess., § 38, June 25, 1948, 28 U.S.C.A. § 1 note.

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337 U.S. 55 69 S.Ct. 959 93 L.Ed. 1207 Ex parte Joseph COLLETT, petitioner. Jessie A. KITPATRICK, petitioner,v.The TEXAS AND PACIFIC RAILWAY CO. The UNITED STATES of America, petitioner, v. NATIONAL CITY LINES, Inc., et al. Nos. 206, Misc., 233, Misc., and 269, Misc. Supreme Court of the United States May 31, 1949 Motion for Leave to File Petition for Writ of Mandamus and prohibition. Motion for Leave to File Petition for Writ of Mandamus or Certiorari. Motion for Leave to File Petition for Certiorari Under 28 U.S.C. § 1651, 28 U.S.C.A. § 1651. Concurring opinion. For majority opinions see 337 U.S. 55, 69 S.Ct. 944; 337 U.S. 75, 69 S.Ct. 953; 337 U.S. 78, 69 S.Ct. 955. Mr. Lloyd T. Bailey, Chicago, Ill., for petitioner. Mr. Robert P. Hobson, Louisville, Ky., for respondent. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 In this case we must decide whether the venue provisions of the Judicial Code1 render applicable the doctrine of forum non conveniens to actions under the Federal Employers' Liability Act.2 Petitioner instituted such an action against the Louisville and Nashville Railroad in October, 1947, in the court below, the United States District Court for the Eastern District of Illinois. No trial was had before September 1, 1948, the effective date of the present Judicial Code.3 Thereafter the Railroad filed a motion to transfer the case to the District Court for the Eastern District of Kentucky. 2 The court below found that all 35 witnesses and the petitioner himself live in Irvine, Kentucky, which also was the scene of the accident; that Irvine is 420 miles, 'approximately twenty-four hours * * * by public transportation,' from East St. Louis, where the court below sits, but only 26 miles from Richmond and 48 from Lexington, in which two cities the District Court for the Eastern District of Kentucky sits. Furthermore, the court below determined that jury schedules at both Richmond and Lexington made early trial possible. Thus concluding that the transfer would serve the convenience of parties and witnesses, and would be in the interest of justice, the District Court granted the Railroad's motion. Petitioner then filed directly in this Court a 'motion for leave to file petition for order to show cause why writs of mandamus (against the court below) and prohibition (against the Kentucky District Court) should not issue, and petition for same.' Petitioner makes no allegation that the court below abused its discretion; his sole contention is that the order of transfer exceeded the District Court's authority. Since that issue seemed of importance in the administration of justice,4 we assigned the case for hearing on the motion. 1948, 335 U.S. 897, 69 S.Ct. 295. 3 Prior to the current revision of Title 28 of the United States Code, forum non coveniens was not available in Federal Employers' Liability Act suits. Baltimore & Ohio R. Co. v. Kepner, 1941, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222; Miles v. Illinois Central R. Co., 1942, 315 U.S. 698, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104; see Gulf Oil Corp. v. Gilbert, 1947, 330 U.S. 501, 505, 67 S.Ct. 839, 91 L.Ed. 1055. The new Code, however, provides that 'For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.' This is § 1404(a). The reviser's notes, which accompany each section of the Code, here read as follows: 'Subsection (a) was drafted in accordance with the doctrine of forum non conve iens, permitting tranfer to a more convenient forum, even though the venue is proper. As an example of the need of such a provision, see Baltimore & Ohio R. Co. v. Kepner, 1941, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, which was prosecuted under the Federal Employer's Liability Act in New York, although the accident occurred and the employee resided in Ohio. The new subsection requires the court to determine that the transfer is necessary for convenience of the parties and witnesses, and further, that it is in the interest of justice to do so.'5 The precise issue before us is whether, despite these expressions, the law remains unchanged. Petitioner so contends. 4 First. The court below relied on the language of § 1404(a), supra, which it regarded as 'unambiguous, direct, clear.' We agree. The reach of 'any civil action'6 is unmistakable. The phrase is used without qualification, without hint that some should be excluded. From the statutory text alone, it is impossible to read the section as excising this case from 'any civil action.' 5 The only suggestion petitioner offers in this regard is that 'any civil action' embraces only those actions for which special venue requirements are prescribed in §§ 1394—1403 of Revised Title 28,7 since these sections immediately precede § 1404(a), and all are within the Venue Chapter, §§ 1391—1406, inclusive, of the Code. To accept this contention, we would be required completely to disregard the Congressional admonition that 'No inference of a legislative construction is to be drawn by reason of the chapter in Title 28 * * * in which any section is placed * * *.'8 Furthermore, petitioner's argument proves too much: §§ 1391—1393, which also are in the Venue Chapter and also refer to 'any civil action', would be read as applying only to actions for which special venue requirements are established in neightboring sections of the Code, although they were obviously intended by Congress to be the general venue sections applicable to ordinary actions. It seems more reasonable to hold that § 1404(a) in terms applies generally, i.e., to 'any civil action.' 6 Second. Although petitioner wishes to restrict the literal meaning of 'any civil action', he would expand the sense of 'may transfer * * * to any other district or division where it might have been brought' beyond the exact scope of those words. Obviously, the express language gives no clue as to where the action 'might have been brought.' Yet the essence of petitioner's position is that the order below, transferring his suit, effects a repeal of § 6 of the Federal Employers' Liability Act, which granted him the right to sue in any district 'in which the defendant shall be doing business at the time o commencing such action.'9 7 Section 6 of the Liability Act defines the proper forum; § 1404(a) of the Code deals with the right to transfer an action properly brought. The two sections deal with two separate and distinct problems.10 Section 1404(a) does not limit or otherwise modify any right granted in § 6 of the Liability Act or elsewhere to bring suit in a particular district. An action may still be brought in any court, state or federal, in which it might have been brought previously. 8 The Code, therefore, does not repeal § 6 of the Federal Employers' Liability Act. We agree with petitioner that Congress had no such intention, as demonstrated by its failure to list the section in the meticulously prepared schedule of statutes repealed.11 We cannot agree that the order before us effectuates an implied repeal. The inapplicability of forum non conveniens to Liability Act suits derives from the Kepner decision. And there this Court expressly stated that 'If it is deemed unjust, the remedy is legislative * * *.' 314 U.S. at page 54, 62 S.Ct. at page 10, 86 L.Ed. 28. That opinion discusses § 6 of the Liability Act, to be sure, but this Court did not and could not suggest that the legislative answer had necessarily to be addressed to that section. Since the words selected by Congress for § 6 denote nothing, one way or the other, respecting forum non conveniens, there was no occasion to repeal that section, expressly or impliedly; Congress chose to remove its judicial gloss via another statute. Discussion of the law of implied repeals is, therefore, irrelevant. 9 Third. Petitioner's chief argument proceeds not from one side or the other of the literal boundaries of § 1404(a), but from its legislative history. The short answer is that there is no need to refer to the legislative history where the statutory language is clear. 'The plain words and meaning of a statute cannot be overcome by a legislative history which through strained processes of deduction from events of wholly ambiguous significance, may furnish dubious bases for inference in every direction.' Gemsco v. Walling, 1945, 324 U.S. 244, 260, 65 S.Ct. 605, 614, 89 L.Ed. 921. This canon of construction has received consistent adherence in our decisions.12 10 Nevertheless, we need not rest our decision on it solely. For the legislative history does not support petitioner's position. Petitioner's argument is based on these twin premises: Congress intended no 'controversial change' to be incorporated in the Code; and § 1404(a) is such a change. 11 To establish the former premise, petitioner cites a number of statements by legislative leaders in charge of the Code revision. For example, Representative Keogh, Chairman of the House Committee on the Revision of the Laws which initiated the work, said at the hearing before the House Judiciary Subcommittee, 'The policy that we adopted * * * was to avoid wherever possible and whenever possible the adoption in our revision of what might be described as substantive changes of law.'13 And Senator Donnell, Chairman of the Senate Judiciary Subcommittee considering the Code, said on the floor that '* * * the purpose of this Bill is primarily to revise and codify and to enact into positive law with such corrections as were deemed by the committee to be of substantial and non-controversial nature.'14 But these statements, clearly, are not unequivocal promises that no changes would be made. The legislation was announced to be a revision as well as a codification. It is obvious that the changes in law retained in the Code were not considered as 'controversial' by these Congressional spokesmen. 12 Petitioner does not offer any definition of 'controversial,' but he does point to one concrete example of what he regards as a 'controversial' measure. This is the Jennings Bill,15 which was under consideration in the House in the spring of 1947, as was the Code revision.16 The Jennings Bill and § 1404(a) of the Code meet the same problem, the alleged abuses in the selection of forums for Liability Act suits.17 But the Jennings Bill was far more drastic than § 1404(a). The Jennings Bill would in large part have repealed § 6 of the Liability Act. It would have delimited the available forum for actions brought in state as well as federal courts.18 It would have eliminated the right to sue in any district in which the railroad did business. Initially, this applied only to Federal Employers' Liability Act plaintiffs, but in final draft the Jennings Bill generally restricted all, including passengers, who might sue railroads for personal injuries. Inasmuch as none of these changes in the law was contained in the Code, it is evident that § 1404(a) might well be considered, 'non-controversial' by the same Congress which would regard the Jennings Bill as 'controversial.'19 13 Moreover, even if we could distill from the legislative history of the Jennings Bill a usable concept of 'controversial change,' its application would destroy petitioner's case. For petitioner concedes that in fact § 1404(a) did not arouse controversy; he submits the Jennings Bill as contrast. His argument is obviously based not on the actual legislative history of § 1404(a), but on necessarily vague speculation as to what Congress might have done had it fully realized that forum non conveniens was henceforth to be applicable in Federal Employers' Liability Act suits. The requisite assumption, that Congress did not appreciate the significance of its action when it ratified the Code and § 1404(a) therein, is contrary to the facts shown by the legislative history which is of record. The lack of controversy reflected aware agreement and not the inertia of ignorance. 14 This was scarcely hasty, ill-considered legislation. To the contrary, it received close and prolonged study. Five years of Congressional attention supports the Code.20 And from the start, Congress obtained the most eminent expert assistance available. The spadework was entrusted to two law-book-publishing firms, the staffs of which had unique experience in statutory codification and revision.21 They formed an advisory committee, including distinguished judges and members of the bar, and obtained the services of special consultants.22 Furthermore, an advisory committee was appointed by the Judicial Conference.23 And to assist with matters relating to the jurisdiction of this Court, Chief Justice Stone appointed an advisory committee, consisting of himself and Justices Frank-furter and Douglas.24 15 That these experts assisted in drafting the Code does not mean that Congress blindly approved what outsiders did. This is demonstrated, for example, by the statement of Representative Robsion, Chairman of the House Judiciary Subcommittee, at the hearing conducted by his Subcommittee in 1947. 'We shall do the same as we did last year * * * just read them line by line and have you and other expert codifiers and other persons go over the bill with us.'25 16 Petitioner almost seems to imply that this very careful Committee consideration vitiates the legislation. But the Committee system is integral in typical legislative procedure; Congress could not function without it.26 A canon f construction which would discount statutory words pro tanto, the greater the expertise or the more meticulous the Committee consideration devoted thereto, or the longer and more complex the legislation, would be absurd, not least because it would make mockery of the techniques of statutory interpretation which have heretofore been used by the courts. 17 The experts and the Committees did not attempt to conceal the proposed revisions. 'The committee on revision of the laws in the preparation of those preliminary drafts sought to give them the widest possible circulation. We made certain that every member of the legislature got one; we made certain that they were sent to every United States attorney; that they were sent to every member of the Federal judiciary; that they were sent to the appropriate committees of the leading State and local bar associations; that they were sent to every-one who ever evidenced any interest in the work at all.'27 Indicative of the success in publicizing the provisions of the Code is the fact that there was specific treatment of § 1404(a) and its applicability to Federal Employers' Liability Act suits in a number of legal periodicals.28 18 The initial appearance of § 1404(a) was in the Second Draft of the Code, adopted by the meeting of May, 1945. Its text has remained unchanged. It was accompanied by a reviser's note, which recited that 'Subsection (a) is new. It was drafted in accordance with a memorandum of Mar. 7, 1945, from the author of Moore's Federal Practice, stating that recognition should be given the doctrine of forum non conveniens. * * *'29 The balance of that note was substantially the same as the present reviser's note; it expressly cited he Kepner case, an action under the Federal Employers' Liability Act, as demonstrating the need for § 1404(a). And the reviser's notes were before the Congress at every subsequent legislative step. 19 A preliminary draft of the Code was printed late in 1945 for the use of the House Committee on Revision of the Laws. In this draft, the reviser's notes appear directly below each related section or subsection. Section 1404(a) and its note were in this draft, which, as noted above, was given very wide circulation. 20 July 24, 1946, the House ordered to be printed the Report submitted by Representative Keogh of New York, Chairman of the House Committee on Revision of the Laws, on the codification of Title 28.30 This Report consisted of a preliminary statement and a full printing of the reviser's notes. Section 1404(a) appears in that Report, together with its note. There was no further action on the Code in the Seventy-Ninth Congress. 21 In the Eightieth Congress, under the Legislative Reorganization Act of 1946,31 the Code revision passed to the jurisdiction of the House Judiciary Committee and was assigned to a Subcommittee of which Representative Robsion of Kentucky was Chairman. At the hearing before this Sub-committee, Professor James William Moore of Yale University, special consultant to the revisers, in summarizing the Code proposals, testified that there were 'changes of importance' in the law of venue and specifically mentioned § 1404.32 In April, 1947, the House Judiciary Committee reported the bill with a unanimous recommendation that it be passed.33 This Report again fully reprinted the reviser's notes. In this Report, the section entitled 'Examples of Changes in Law,' which had appeared in the Report on the revision in the preceding Session of Congress, expressly referred to the reviser's notes for §§ 1391—1406.34 22 After this painstaking consideration, with its references to § 1404(a), the House initially passed the bill on July 7, 1947.35 At that time and in the subsequent consideration in the Senate, the Tax Court provisions occasioned the most discussion; but other specific sections did not pass unnoticed. Attention was directly called to § 1404(a) by one witness at the hearings before the Senate Judiciary Judiciary Subcommittee, although his interest was not in the Federal Employers' Liability Act issue.36 No change in § 1404(a) was included in the Senate amendments; and the revision of Title 28 was enacted by the Congress in June, 1948.37 23 Thus, at almost every stage of the legislative procedure, attention was directed to the fact of change, and in most instances specific mention was made of § 1404(a). At no stage subsequent to the first formal printing did § 1404(a) and its accompanying reviser's note fail to appear. From the start, § 1404(a) remained the same, and the reference in the note to a Federal Employers' Liability Act case as showing the need for permitting the application of forum non conveniens remained unchanged. Now to hold that Congress did not appreciate what it was enacting in that section would defy the legislative history. We must flatly reject petitioner's thesis that this section was so obscured that its enactment is meaningless. We cannot blind ourselves to the hearings, to the experts, to the Committee reports, to the reviser's notes and their incorporation in the Committee reports—to a history of the most meticulous Congressional consideration. 24 Fourth. Petitioner suggests that his action may not be transferred because it was instituted prior to the effective date of the Code. Clearly, § 1404(a) is a remedial provision applicable to pending actions. And 'No one has a vested right in any given mode of procedure * * *.' Crane v. Hahlo, 1922, 258 U.S. 142, 147, 42 S.Ct. 214, 216, 66 L.Ed. 514.38 25 Fifth.. Since the petition for mandamus and prohibition must be denied because of the view we must take as to the meaning of § 1404(a) and its applicability to this case, we need not decide whether denial might be placed on other grounds also. 'Mandamus, prohibition and injunction against judges are drastic and extraordinary remedies. * * * As extraordinary remedies, they are reserved for really extraordinary causes.' Ex parte Fahey, 1947, 332 U.S. 258, 259, 260, 67 S.Ct. 1558, 1559, 91 L.Ed. 2030.39 26 What we hold is that the plain meaning of the statutory words and the consistent course of the legislative history are opposed to petitioner's contention that we must disregard § 1404(a) because Congress knew not what it did. If petitioner's showing could sustain a decision that this section was not really enacted after all, little law would remain. The motion is 27 Denied. 28 Mr. Justice BLACK and Mr. Justice DOUGLAS dissent for the reasons stated in the dissenting opinion of Mr. Justice DOUGLAS in United States v. National City Lines, 337 U.S. 78, 69 S.Ct. 955. 29 Mr. Justice RUTLEDGE. 30 I concur in the result. But in doing so I feel impelled to say two things. 31 One is that in my view 28 U.S.C.A. § 1404(a), taken broadly to include 'any civil action', does effect a partial repeal of § 6 of the Federal Employers' Liability Act, 45 U.S.C.A. § 56, and of the other statutes mentioned by Mr. Justice DOUGLAS, including the venue provisions, § 12, of the Clayton Act, 15 U.S.C.A. § 22, involved in our decision in United States v. National City Lines, 334 U.S. 573, 68 S.Ct. 1169, 92 L.Ed. 1584. 32 The legislative history, for example, of the Clayton Act venue provisions demonstrates that the change § 1404(a) is said to have made was more than the mere removal of a judicial gloss. I think we should not now impugn the validity of our decisions in National City Lines, supra, and in Kepner and Miles1 by characterizing each as a mere 'judicial gloss' upon the pertinent statute. Those decisions in my opinion were true reflections of congressional intent as stated in the respective statutes and, accordingly, the changes made in them by § 1404(a) were in the nature of repeals, to the extent that the plaintiffs were deprived of their rights under the pre-existing statutes to have their causes of action tried in the forums where they were properly brought. 33 In the second place, those changes, although entirely within Congress' power to make, were neither insubstantial nor non-controversial, in view of the legislative history of the original provisions, for example, the venue provisions of the Clayton Act. Nor do I think the legislative history of § 1404(a) demonstrates either the insubstantial or the noncontroversial nature of the changes in § 1404(a), although they seem to have been so treated by those in charge of the bill.2 It is to be noted, moreover, that specific attention was drawn to the effect of § 1404(a) upon § 6 of the Employers' Liability Act through reference to the Kepner and Miles decisions, but no like specific reference was made to the venue provisions of the Clayton Act and the National City Lines decision. 34 These matters make it impossible for me to concur in the view that Congress was in fact 'fully informed as to the significance of § 1404(a).' This, however, is a matter affecting congressional procedure and the manner of conducting legislative business. Accordingly, notwithstanding my doubts that Congress intended to go so far, I acquiesce in the Court's decisions. 1 Pub.L.No.773, 80th Cong., 2d Sess., June 25, 1948, 28 U.S.C.A. § 1 et seq.: 'An Act To revise, codify, and enact into law title 28 of the United States Code entitled 'Judicial Code and Judiciary." 2 35 Stat. 65, as amended by 36 Stat. 291, and 53 Stat. 1404, 45 U.S.C. §§ 51—59, 45 U.S.C.A. §§ 51—59. 3 Pub.L.No.773. 80th Cong., 2d Sess., § 38, June 25, 1948, 28 U.S.C.A. § 1 note. 4 At least five district court decisions dealing with the relationship of § 1404(a) to FELA suits have been reported. Four have held that the section is applicable. Hayes v. Chicago, R.I. & P.R. Co. (and seven other cases), D.C.1948, 79 F.Supp. 821; White v. Thompson, D.C.1948, 80 F.Supp. 411; Nunn v. Chicago, St. P. & P.R. Co., D.C.1948, 80 F.Supp. 745; Scott v. New York Central R. Co., D.C.1948, 81 F.Supp. 815; cf. Brainard v. Atchison, T. & S.F.R. Co., D.C.1948, 81 F.Supp. 211; Perry v. Atchison, T. & S.F.R. Co., D.C.1948, 82 F.Supp. 912 (in both, motion to transfer denied, in exercise of 'discretionary powers'); Chaffin v. Chesapeake & O.R. Co., D.C.1948, 80 F.Supp. 957; Richer v. Chicago, R.I. & P.R. Co. D.C.1948, 80 F.Supp. 971. One reported decision has held that the Code section is inapplicable to such suits. Pascarella v. New York Central R. Co., D.C. 1948, 81 F.Supp. 95. 5 H.R.Rep.No.308, 80th Cong., 1st Sess. A 132 (1947); H.R.Rep.No.2646, 79th Cong., 2d Sess. A 127 (1946). 6 The reviser's notes make clear that the phrase was substituted for 'suit,' formerly used in various venue statutes, in the light of Federal Rules of Civil Procedure, rule 2, 28 U.S.C.A.: 'There shall be one form of action to be known as 'civil action." 7 Section 1394 deals with any civil action 'by a national banking association to enjoin the Comptroller of the Currency'; § 1395, proceedings 'for the recovery of a pecuniary fine' and 'for the forfeiture of property' under varying circumstances; § 1396, 'Any civil action for the collection of internal revenue taxes'; § 1397, 'of interpleader'; § 1398, 'any civil action to enforce, suspend or set aside in whole or in part an order of the Interstate Commerce Commission'; § 1399, 'for the partition of lands, where the United States is one of the tenants in common or joint tenants'; § 1400, actions 'relating to copyrights' or 'for patent infringement'; § 1401, 'by a stockholder on behalf of his corporation'; § 1402, 'against the United States'; and § 1403, 'to condemn real estate for the use of the United States.' 8 Pub.L.No.773, 80th Cong., 2d Sess., § 33, June 25, 1948, 28 U.S.C.A. § 1 note. 9 'Under this chapter an action may be brought in a district court of the United States, in the district of the residence of the defendant, or in which the cause of action arose, or in which the defendant shall be doing business at the time of commencing such action. * * *' 45 U.S.C. § 56, 45 U.S.C.A. § 56. For a brief historical sketch, see Baltimore & O.R. Co. v. Kepner, 1941, 314 U.S. 44, 49—50, 62 S.Ct. 6, 8, 86 L.Ed. 28. 10 In almost every state, the requirements for venue and for transfer are treated in different statutory sections. Brief for New York, C. & St. L.R. Co. as Amicus Curiae, pp. 11—2, Kilpatrick v. Texas & P. Ry. Co., 337 U.S. 75, 69 S.Ct. 953. See, e.g., N.Y. Civil Practice Act, §§ 182, 187. 11 Pub. No. 773, 80th Cong., 2d Sess., § 39, June 25, 1948, 62 Stat. 992. Congress did list the pertinent statutes, when Code provisions in fact changed the basic venue requirements. For example, §§ 1394, 1395, 1396 and 1400, respectively, prescribe a new definition of appropriate forums for actions against the Comptroller of the Currency, involving fines and forfeitures, internal revenue taxes and patent and copyright suits; and the following statutes are therefore listed as repealed: 28 U.S.C. § 110; 28 U.S.C. §§ 104, 107, 108; 28 U.S.C. § 105; 28 U.S.C. § 109 and 17 U.S.C. § 35, 28 U.S.C.A. §§ 104, 105, 107—110, and 17 U.S.C.A. § 35. 12 E.g., Packard Motor Car Co. v. National Labor Relations Board, 1947, 330 U.S. 485, 492, 67 S.Ct. 789, 793, 91 L.Ed. 1040; United States v. American Trucking Associations, 1940, 310 U.S. 534, 543, 60 S.Ct. 1059, 1063, 84 L.Ed. 1345; and cases there cited. The rule as to statutory revisions is the same. Continental Casualty Co. v. United States, 1942, 314 U.S. 527, 530, 62 S.Ct. 393, 395, 86 L.Ed. 426; Bate Refrige ating Co. v. Sulzberger, 1895, 157 U.S. 1, 45, 15 S.Ct. 508, 519, 39 L.Ed. 601; United States v. Bowen, 1880, 100 U.S. 508, 513, 25 L.Ed. 631. 13 Hearings before House Committee on the Judiciary on H.R. 1600, and H.R. 2055, 80th Cong., 1st Sess. 6 (1947). He also testified as follows: '* * * we proceeded upon the hypothesis that since that was primarily a restatement of existing law, we should not endanger its accomplishment by the inclusion in the work of any highly controversial changes in law.' And, in response to the Chairman's question, 'And this bill does not include controversial matters?' Rep. Keogh replied that 'We have sought to avoid as far as possible * * * any substantive changes that did not meet with unanimity of opinion.' Ibid., 11. 14 94 Cong.Rec. 7928 (1948). The Senator had just given an illustration of 'various changes that have been made.' 15 H.R. 1639, 80th Cong., 1st Sess.: 'A Bill to amend the Employers' Liability Act so as to limit venue. * * *' As ultimately reported to the House, it repealed all of § 6 of the Federal Employers' Liability Act, except the last sentence prohibiting removal of actions brought in state courts to federal courts; and added the following paragraph to the then general venue statute, § 51 of the Judicial Code, 28 U.S.C. § 112, 28 U.S.C.A. § 112: 'A civil suit for damages for wrongful death r personal injuries against any interstate common carrier by railroad may be brought only in a district court of the United States or in a State court of competent jurisdiction, in the district or county (parish), respectively, in which the cause of action arose, or where the person suffering death or injury resided at the time it arose: Provided, That if the defendant cannot be served with process issuing out of any of the courts aforementioned, then and only then, the action may be brought in a district court of the United States, or in a State court of competent jurisdiction, at any place where the defendant shall be doing business at the time of the institution of said action.' H.R.Rep.No.613, 80th Cong., 1st Sess. 9—10 (part 1) (1947). 16 The House Committee on the Judiciary held hearings on the Code, before Subcommittee No. 1, on Mar. 7, 1947, and four hearings on the Jennings Bill, before Subcommittee No. 4, from Mar. 28 to April 18, 1947. Congressman Jennings himself was a member of Subcommittee No. 1, considering the Code. Congressman Devitt, a member of Subcommittee No. 4, considering the Jennings Bill, testified in favor of the Code; Hearings before House Committee on the Judiciary on H.R. 1600 and H.R. 2055 (Code), 80th Cong. 1st Sess. 3 (1947); Hearings before Senate Committee on the Judiciary on H.R. 3214 (Code), 80th Cong., 2d Sess. 16 (1948). The unanimous Judiciary Committee Report favoring the Code was published in April, 1947. H.R.Rep.No.308, 80th Cong., 1st Sess. The divided Report on the Jennings Bill was submitted in June. H.R.Rep.No.613, 80th Cong., 1st Sess. (in three parts). On July 7, 1947, the House passed the proposed revision by a vote of 342 to 23. 93 Cong.Rec. 8392. Ten days later, the Jennings Bill was passed by 203 to 188. 93 Cong.Rec. 9193—4. 17 See, e.g., Hearings before House Committee on the Judiciary on H.R. 1639, 80th Cong., 1st Sess. 6—12, 17—22, 31—8 (1947); H.R.Rep.No.613, 80th Cong., 1st Sess. 3—6 (part 1), 1—2, 4 (part 2) (1947). 18 As one of its three grounds of opposition to the Jennings Bill, the minority Report stated, 'The bill restricts State courts in the administration of justice, deprives them of their prerogatives to require change of venue of lawsuits where necessary, and transcends the provisions of State laws governing the jurisdiction of State courts.' H.R.Rep.No.613, 80th Cong., 1st Sess. 1 (part 2) (1947). Doubt was expressed that Congress had constitutional power so to affect state courts. See, e.g., letter of Acting the Assistant to the Attorney General, Hearings before Senate Committee on the Judiciary on S. 1567 and H.R. 1639 (Jennings Bill), 80th Cong., 2d Sess. 215 (1948). 19 Furthermore, petitioner's argument suggests at most that § 1404(a) was as 'controversial' as the Jennings Bill, as of July, 1947. Thereafter, however, both the Code and the Jennings Bill were referred to the Senate Judiciary Committee, which held hearings on both. The same three Senators composed the Sub-committee holding these hearings: Sen. E. H. Moore, Chairman at the hearings on the Jennings Bill in January, 1948; Sen. Donnell, Chairman at the hearings on the Code in April and June, 1948; and Sen. McGrath. The relationship between the two proposals was expressly called to their attention. See Hearings before Senate Committee on the Judiciary on S. 1567 and H.R. 1639 (Jennings Bill), 80th Cong., 2d. Sess. 111—2 (1948). The Committee reported the Code favorably, albeit with amendments; but the Jennings Bill was not reported. It is clear that only the Tax Court provisions were regarded by the Senate Committee as sufficiently 'controversial' to be deleted. See Sen.Rep.No.1559, 80th Cong., 2d Sess. 2 (1948); 94 Cong.Rec. 7927 (1948). 20 June 28, 1943, Congress appropriated $100,000 'For preliminary work in connection with the preparation of a new edition of the United States Code, including the correction of errors * * *.' 57 Stat. 230. 21 See H.R.Rep.No.308, 80th Cong., 1st Sess. 2—3 (1947). 22 'This public-spirited group (the advisory committee) consisted of Judge Floyd E. Thompson, former chief justice of the Illinois Supreme Court and former president of the Chicago Bar Association; Hon. Justin Miller, former associate justice of the United States Court of Appeals for the District of Columbia; Judge John B. Sanborn, judge of the United States Circuit Court of Appeals for the Eighth Circuit; Hon. Walter P. Armstrong, of the Memphis bar and former president of the American Bar Association; and Hon. John Dickinson, of the Philadelphia bar, former assistant Attorney General of the United States. 'This advisory committee was ably assisted by Judge John J. Parker, senior circuit judge of the United States Circuit Court of Appeals for the fourth circuit, who rendered valuable service as a judicial consultant. The committee was also assisted by two special consultants each an expert in the field of Federal procedure: Judge Alexander Holtzoff, United States district Judge, District Court for the District of Columbia; and Prof. James W. Moore, of Yale University.' H.R.Rep.No.308, 80th Cong., 1st Sess. 3 (1947). See also Hearings before House Committee on the Judiciary on H.R. 1600 and H.R. 2055, 80th Cong., 1st Sess. 7—8, 12—4, 17—8, 24—6 (1947). 23 Circuit Judge Maris was Chairman, and District Judges Galston and W. F. Smith also served on the committee. Loc. cit. supra note 22. See 1944 Report of the Judicial Conference 24; 1945 id. 17—8; 1948 id. 41. 24 H.R.Rep.No.308, 80th Cong., 1st Sess. 4 (1947). 25 Hearings before House Committee on the Judiciary on H.R. 1600 and H.R. 2055, 80th Cong., 1st Sess. 23 (1947). 26 'Congressional government is Committee government. * * * The House sits, not for serious discussion, but to sanction the conclusions of its Committees as rapidly as possible. It legislates in its committee-rooms; not by the determinations of majorities, but by the resolutions of specially-commissioned minorities; so that it is not far from the truth to say that Congress in session is Congress on public exhibition, whilst Congress in its committee-rooms is Congress at work.' Woodrow Wilson, Congressional Government xvi, 79 (15th ed. 1900). Nor has this changed. 'The committees are the workshops of Congress. Committee work is the core of the legislative process. * * * It is the center of legislative activity where the law-making and supervisory functions of Congress are largely performed.' Gallo-way, Congress at the Crossroads 53 (1946). And see Bryce, The American Commonwealth c. XV (New Ed.1931); Chamberlain, Legislative Processes, cc. V—VI (1936); Kefauver and Levin, A Twentieth-Century Congress 114—53 (1947); Luce, Legislative Procedure, cc. IV—VIII (1922); Walker, The Legislative Process, c. 11 (1948). 27 Hearings before House Committee on the Judiciary on H.R. 1600 and H.R. 2055, 80th Cong., 1st Sess. 8 (1947). 28 Expressly reciting the reference to the Kepner case in the reviser's notes: Braucher, The Inconvenient Federal Forum, 60 Harv.L.Rev. 908, 933 (July, 1947); Note, New Limitations on Choice of Federal Forum, 15 U. of Chi.L.Rev. 332, 341, n. 54 (Winter (March), 1948); Comment, Forum Non Conveniens, A New Federal Doctrine, 56 Yale L.J. 1234, 1249, n. 115 (Aug., 1947). And see Barrett, The Doctrine of Forum Non Conveniens, 35 Calif.L.Rev. 380, 421 (Sept., 1947); Note, 32 Minn.L.Rev. 633, 636, n. 29 (May, 1948). Cf. Note 23 Ind.L.J. 82, 87, n. 26 (Oct., 1947) (quoting § 1404(a) but not referring to the reviser's notes). Of course the fact that the Judicial Code was being revised was publicized in discussions not directly bearing on the instant issue; e.g., Wechsler, Federal Jurisdiction and the Revision of the Judicial Code, 13 Law & Contemp.Prob. 216 (1948); Zinn, Revision of Federal Judicial Code, 48 Law Notes, Nos. 3—4, 11 (1944) (earliest reference); Note, The Proposed Revision of the Federal Judicial Code, 60 Harv.L.Rev. 424 (1947). 29 There is no doubt as to the meaning of § 1404(a) in the mind of the author of the memorandum. See 3 Moore's Federal Practice 2141 (2d ed. 1948), stating that the Code 'provides for the transfer * * * of any action to a proper and more convenient forum' (italics in original), with a footnote (107) citing § 1404(a) and declaring that 'Any action in § 1404(a) includes suits subject to special venue statutes, as suits for patent infringement and suits under the Federal Employers' Liability Act, as well as actions subject to the general venue statute.' And see articles by a member of the advisory committee appointed by the Judicial Conference, and by the Chief Reviser: Galston, An Introduction to the New Federal Judicial Code, 8 F.R.D. 201, 206 (1948); Barron, The Judicial Code 1948, Revision, 8 F.R.D. 439, 442 (1949). 30 H.R.Rep.No.2646, 79th Cong., 2d Sess. (1946). 31 60 Stat. 812, 826—827 (1946). 32 Hearings before House Committee on the Judiciary on H.R. 1600 and H.R. 2055, 80th Cong., 1st Sess. 29 (1947). 33 H.R.Rep.No.308, 80th Cong., 1st Sess. (1947). 34 Ibid., 6. 35 93 Cong.Rec. 8392 (1947). 36 Hearings before Senate Committee on the Judiciary on H.R. 3214, 80th Cong., 2d Sess. 73—4 (1948). 37 94 Cong.Rec. 7927—30, 8297, 8438, 8498—8501 (1948). While it lacks relevance to our holding as to Congressional intention and expression in June, 1948, the presentation of an up-to-date report of Congressional consideration of the Code revision requires noting that ov r 60 additional amendments to Title 28 have already become law. Pub.L.No.72, 81st Cong., 1st Sess., §§ 65—127, May 24, 1949. See 95 Cong.Rec. 3892—9 (April 4, 1949), 5929—30 (May 6, 1949), 6396—7 (May 16, 1949); H.R.Rep.No.352, 81st Cong., 1st Sess. 11—20, 38—51 (1949); Sen.Rep.No.303, 81st Cong., 1st Sess. (1949). While § 1406 is amended by adding 'shall dismiss, or if it be in the interest of justice' before 'shall transfer', § 81 of the Law, no change whatever was suggested or made in § 1404(a). 38 Gwin v. United States, 1902, 184 U.S. 669, 22 S.Ct. 526, 46 L.Ed. 741; National Exchange Bank of Baltimore v. Peters, 1892, 144 U.S. 570, 12 S.Ct. 767, 36 L.Ed. 545; Sherman v. Grinnell, 1887, 123 U.S. 679, 8 S.Ct. 260, 31 L.Ed. 278; McBurney v. Carson, 1878, 99 U.S. 567, 569, 25 L.Ed. 378. 39 Ex parte Mars, Inc., 1943, 320 U.S. 710, 64 S.Ct. 86, 88 L.Ed. 417; Roche v. Evaporated Milk Ass'n, 1943, 319 U.S. 21, 63 S.Ct. 938, 87 L.Ed. 1185, and cases there cited. Cf. United States Alkali Export Ass'n v. United States, 1945, 325 U.S. 196, 65 S.Ct. 1120, 89 L.Ed. 1554, and cases there cited. 1 Baltimore & Ohio R. Co. v. Kepner, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28; Miles v. Illinois Central R. Co., 315 U.S. 698, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104. 2 'At the same time great care has been exercised to make no changes in the existing law which would not meet with substantially unanimous approval.' S.Rep.No.1559, 80th Cong., 2d Sess. 2. '* * * I may say that the purpose of this bill is primarily to revise and codify and to enact into positive law, with such corrections as were deemed by the [Senate Judiciary] committee to be of substantial and non-controversial nature.' 94 Cong.Rec. 7928. For similar expressions by members of the House of Representatives, see Hearings before House Committee on the Judiciary on H.R. 1600 and H.R. 2055, 80th Cong., 1st Sess. 6, 11. A member of the House Judiciary Committee told the House that the only 'controversial aspects' of the 1947 draft of the code were certain subsequently deleted provisions concerning the Tax Court. 93 Cong.Rec. 8390. But cf. the legislative history of the contemporaneously pending Jennings Bill, citations to which are made in the Court's opinion.

89

337 U.S. 217 69 S.Ct. 960 93 L.Ed. 1320 NATIONAL LABOR RELATIONS BOARDv.CROMPTON-HIGHLAND MILLS, Inc. No. 197. Argued Jan. 31, 1949. Decided May 31, 1949. Rehearing Denied June 20, 1949. See 337 U.S. 950, 69 S.Ct. 1512. Mr. David P. Findling, Washington, D.C., for petitioner. Mr. Ralph Williams, Atlanta, Ga., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 In this case a collective bargaining representative was certified, under the National Labor Relations Act,1 to represent all employees working a certain appropriate bargaining unit. Their employer engaged in extended negotiations with this representative as to many matters, including rates of pay. December 19, 1945, the negotiations reached an impasse. The question here presented is whether this employer engaged in an unfair labor practice when, on January 1, 1946, it put into effect as of December 31, 1945, without prior consultation with the bargaining representative, a general increase in the rates of pay applicable to most of the employees who had been represented in the negotiations. This increase was substantially greater one than any which the employer had offered during the negotiations. For the reasons to be stated, we hold that, under the circumstances, this action constituted an unfair labor practice and that a decree should be entered enforcing an order prohibiting such conduct. The case also raises questions as to the nature of the impasse which was reached and as to the proper scope and terms of the enforcement decree. 2 August 13, 1945, the Textile Workers Union of America, Congress of Industrial Organizations, following an election under the statute, was certified as the exclusive collective bargaining representative for about 800 employees of Crompton-Highland Mills, respondent herein. These employees included most of its production and maintenance employees at Griffin, Georgia, where it manufactured cotton and other goods. Much of the material entering into those goods and most of the finished goods there produced were bought, sold or transported in interstate commerce, so that the unfair labor practice, if any, concededly affected such commerce. From August 31, 1945, at least until December 19, a committee of this union engaged in collective bargaining with the respondent on numerous appropriate subjects, including rates of pay. Many tentative agreements were reached. 3 January 1, 1946, without prior consultation with any member of the bargaining committee, the employer announced a general and substantial increase in the rates of pay of its employees, amounting to about two to six cents an hour, effective as of December 31, 1945. This increase applied to most, but not all of the employees in the bargaining unit. Simultaneously with its posting of t e announcement of this increase, the employer told the employee members of the bargaining committee about it. At the same time the employer mailed an announcement of it to one of the two nonemployee members of the bargaining committee. 4 January 31, 1946, the National Labor Relations Board, petitioner herein, in response to charges made by the union, filed a complaint against the employer, alleging several unfair labor practices.2 These included the above-described increase in rates of pay. After hearings before a trial examiner and consideration of that examiner's intermediate report, the employer's exceptions and brief relating to that report and the entire record and oral arguments, the Board, on August 21, 1946, issued a cease and desist order. 70 N.L.R.B. 206. The Court of Appeals for the Fifth Circuit denied a petition for enforcement. 167 F.2d 662. Because of the importance of the issue in the administration of the labor relations statutes, we granted certiorari. 335 U.S. 812, 69 S.Ct. 52. 5 The precise issue presented is what decree, if any, should be issued by the Court of Appeals for the enforcement of the order of the National Labor relations Board.3 If a decree is to be issued, its scope and terms should be based upon such part, or all, of the Board's cease and desist order as is supported by its findings of fact. Those findings are binding upon us to the extent that they are sustained by substantial evidence.4 We are satisfied that there is substantial evidence to support the material findings of fact made by the Board as to the issue before us and, therefore, see no need to set forth that evidence here. The primary issue for discussion is, rather, the extent to which the Board's findings of fact support its cease and desist order and justify a decree for the enforcement of that order. 6 The controlling specific findings of the Board are as follows: 'As fully discussed in the Intermediate Report, the respondent, during the course of negotiations with the Union, refused to accede to the Union's wage demands and it was not until their last conference on December 19, 1945, that the respondent made its first and only counterproposal of approximately 1 to 1 1/2 cents an hour raise, which the Union rejected. Thereafter, the r spondent made no further effort to settle the wage dispute but, instead, on January 1, 1946, only 12 days later, granted its employees a substantially larger increase than that previously offered to the Union, without consulting the Union or affording it an opportunity to negotiate with respect thereto. In our opinion, such action taken as (so) soon after the Union was attempting through the bargaining process to reach an agreement with the respondent, among other things, on wages, clearly shows that the respondent was not acting in good faith during the negotrations, and is manifestly inconsistent with the principle of collective bargaining. Nor are we impressed with the respondent's attempted justification for its action on the ground that the Union broke off negotiations on December 19 and that the respondent was therefore relieved of the obligation to deal with it. Concededly, the respondent never proposed to the Union as a possible basis of agreement a wage increase comparable to that granted on January 1, 1946. Moreover, the record fails to support the respondent's contention that the Union's representatives assumed an unequivocal position at the last meeting which foreclosed further bargaining concerning wages or other terms or conditions of employment. Under these circumstances, we find, as did the Trial Examiner, that the respondent, by its action with respect to the wage increase, failed to perform its statutory duty to bargain collectively with the Union and thereby interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed in the Act.' (Emphasis supplied.) 70 N.L.R.B. at pages 206-207.5 1. The employer engaged in an unfair labor practice when, without consulting the employees' collective bargaining representative, it put into effect, for most of its employees who had been represented in the bargaining negotiations, a general increase in rates of pay which was substantially greater than any that the employer had offered. 7 The specific findings of the Board, coupled with the findings adopted by it from the trial examiner's report, leave no room for doubt as to the adequacy of the facts upon which its cease and desist o der was based. For significant findings adopted from the examiner's report, see Appendix B, infra, 337 U.S. 230, 69 S.Ct. 966. The facts so found distinguish this case from any in which no collective bargaining representative has been certified or otherwise authorized to represent the employees in an appropriate unit.6 In the instant case, the wish of the employees to be consulted and to bargain collectively as to the terms of any general wage increase is established by the findings and the negotiations. Cf. National Labor Relations Board v. Columbian Enameling & Stamping Co., 306 U.S. 292, 297, 59 S.Ct. 501, 504, 83 L.Ed. 660. We do not have here a case where the bargaining had come to a complete termination cutting off the outstanding invitation of the certified collective bargaining representative to bargain as to any new issue on such a matter as rates of pay. Cf. National Labor Relations Board v. Sands Mfg. Co., 306 U.S. 332, 59 S.Ct. 508, 83 L.Ed. 682. The opening which a raise in pay makes for the correction of existing inequities among employees and for the possible substitution of shorter hours, vacations or sick leaves, in lieu of some part of the proposed increase in pay, suggests the infinite opportunities for bargaining that are inherent in an announced readiness of an employer to increase generally the pay of its employees. The occasion is so appropriate for collective bargaining that it is difficult to infer an intent to cut off the opportunity for bargaining and yet be consistent with the purposes of the National Labor Relations Act. 8 We do not here have a unilateral grant of an increase in pay made by an employer after the same proposal has been made by the employer in the course of collective bargaining but has been left unaccepted or even rejected in those negotiations. Such a grant might well carry no disparagement of the collective bargaining proceedings. Instead of being regarded as an unfair labor practice, it might be welcomed by the bargaining representative, without prejudice to the rest of the negotiations. See In the Matter of W. W. Cross & Co., 77 N.L.R.B. 1162; In the Matter of Exposition Cotton Mills Co., 76 N.L.R.B. 1289; In the Matter of Southern Prison Co., 46 N.L.R.B. 1268. 9 We hold that the Board's order to cease and desist is justified, under the circumstances of this case, to the extent that the order requires the employer to cease and desist from refusing to bargain collectively by taking action, without prior consultation with the authorized collective bargaining representative of the employees, with respect to general rates of pay which are substantially different from, or greater than, any which the employer has proposed during its negotiations with such representative. The need for this order depends in part upon the Board's finding that the action by the employer, on January 1, 1946, taken so soon after the meeting of December 19, 1945, showed that 'the respondent (employer) was not acting in good faith during the negotiations, and is manifestly inconsistent with the principle of collective bargaining.' 70 N.L.R.B. at page 207. See May Dept. Stores Co. v. National Labor Relations Board, 326 U.S. 376, 66 S.Ct. 203, 90 L.Ed 145; Medo Photo Supply Corp. v. National Labor Relations Board, 321 U.S. 678, 64 S.Ct. 830, 88 L.Ed. 1007; National Labor Relations Board v. Newark Morning Ledger Co., 3 Cir., 120 F.2d 262, 137 A.L.R. 849; Jeffery-De Witt Insulator Co. v. National Labor Relations Board, 4 Cir., 91 F.2d 134,7 112 A.L.R. 948. II. The decree of enforcement should not extend further than necessary to prevent the taking of the prohibited action by the employer. 10 There are no findings by the Board that establish a lack of good faith or lack of consistency with the principle of collective bargaining on the part of the employer other than in the connection above discussed. The Board declined to uphold the trial examiner in his findings and recommendations as to several alleged unfair labor practices other than this one. The Board's own finding as to the employer's interference with, and restraint and coercion of, its employees is expressly limited to this one item. It reads: 'Under these circumstances, we find, as did the Trial Examiner, that the respondent, by its action with respect to the wage increase, failed to perform its statutory duty to bargain collectively with the Union and thereby interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed in the Act.' (Emphasis supplied.) 70 N.L.R.B. at page 207. 11 Accordingly, there appears no reason for enlarging the scope of the enforcement decree beyond that feature, and little, if any, need for orders requiring either specific affirmative action to be taken by the employer or the posting of any notices by it.8 12 For these reasons, the judgment is reversed and the cause is remanded to the Court of Appeals for action consistent with this opinion. 13 It is so ordered. 14 Reversed and remanded. 15 Mr. Justice DOUGLAS, Mr. Justice MURPHY and Mr. Justice RUTLEDGE join in Part I of this opinion, but think the Board's order should be enforced without modification. 16 Appendix A. 17 Order of National Labor Relations Board In the Mat er of Crompton-Highland Mills, Inc., and Textile Workers Union of America, CIO, Case No. 10—C1812.—Decided August 21, 1946. 18 'Order. 19 'Upon the entire record in the case, and pursuant to Section 10(c) of the National Labor Relations Act, the National Labor Relations Board hereby orders that the respondent, Crompton-Highland Mills, Inc., Griffin, Georgia, and its officers, agents, successors, and assigns, shall: 20 '1. Cease and desist from: 21 '(a) Refusing to bargain collectively with Textile Workers Union of America, CIO, as the exclusive representative of the respondent's production and maintenance employees at the Griffin plant, including watchmen, but excluding office, clerical, technical, and laboratory employees, section men in the spinning room, head loom fixers in the weave room, head fixers in the card room, all supervisory employees of the grade of second hand and above, and all other supervisory employees with authority to hire, promote, discharge, discipline, or otherwise effect changes in the status of employees, or effectively recommend such action, by taking action, without prior consultation with said organization, with respect to rates of pay, wages, hours of employment, and other conditions of employment. 22 '(b) In any manner interfering with the efforts of Textile Workers Union of America, CIO, to bargain collectively with it as the representative of its employees in the appropriate unit described above. 23 '2. Take the following affirmative action, which the Board finds will effectuate the policies of the Act: 24 '(a) Upon request, bargain collectively with Textile Workers Union of America, CIO, as the exclusive representative of all its employees in the appropriate unit described above with respect to rates of pay, wages, hours of employment, and other conditions of employment; 25 '(b) Post at its plant at Griffin, Georgia, copies of the notice attached hereto, marked 'Appendix A.' Copies of such notice, to be furnished by the Regional Director for the Tenth Region, shall, after being duly signed by the respondent's representative, be posted by the respondent immediately upon receipt thereof, and maintained by it for sixty (60) consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the respondent to insure that said notices are not altered, defaced, or covered by any other material; 26 '(c) Notify the Regional Director for the Tenth Region (Atlanta, Georgia), in writing, within ten (10) days from the date of this Order, what steps the respondent has taken to comply herewith.' 70 N.L.R.B. at pages 208-209. 'Appendix A. 27 'Notice to All Employees. 28 'Pursuant to a Decision and Order of the National Labor Relations Board, and in order to effectuate the policies of the National Labor Relations Act, we hereby notify our employees that: 29 'We will bargain collectively with Textile Workers Union of America, CIO, as the exclusive representative of all employees in the bargaining unit described below, with respect to rates of pay, wages, hours of employment, and other conditions of employment. 30 'We will not make any changes with respect to rates of pay, wages, hours of employment, or other conditions of employment of our employees in the bargaining unit described below, without prior consultation with Textile Workers Union of America, CIO. 31 'We will not in any manner interfere with the efforts of Textile Workers Union of America, CIO, as the exclusive representative of our employees in the unit described below, to bargain collectively with us. 32 'The bargaining unit is: All production and maintenance employees at our Griffin plant, including watchmen, but excluding office, clerical, technical and laboratory employees, section men in the spinning room, head loom fixers in the weave room, head fixers in the card room, all supervisory employees of the grade of second hand and above, and all other supervisory employees with uthority to hire, promote, discharge, discipline, or otherwise effect changes in the status of employees, or effectively recommend such action. 33 'Crompton-Highland Mills, Inc. 34 'By .......... 35 (Representative.) (Title.) 36 'Dated ........ 37 'This notice must remain posted for 60 days from the date hereof, and must not be altered, defaced, or covered by any other material.' 70 N.L.R.B. at pages 210-211. Appendix B. 38 Quotations from the 'Findings of Fact' as to—'III. The Unfair Labor Practices, A. The refusal to bargain' as stated in the Intermediate Report of the Trial Examiner, adopted by the National Labor Relations Board and printed by the Board following its Decision and Order. 39 'No further conference was held until December 19, when a meeting was held at the request of the Union. 40 'The issues upon which the parties were still in disagreement at this time involved wages, work assignments, insurance provisions, severance pay, vacations, union security, arbitration, union activity upon company time, and the preamble of the contract, in which the respondent sought to define the parties to the agreement as the respondent and the 'employees' in the appropriate unit, as opposed to the Union's position that the Union be denominated as party to the contract. On the issue of union security, although the Union had offered to compromise for maintenance of membership, the respondent refused to grant any form of security. As to wages, although it had originally rejected the Union's proposals for any wage increase, it proposed what amounted to an increase of about one or one and one-half cents per hour at this time. 41 'On January 1, 1946, the members of the union negotiation committee, employed at the plant, were summoned to the office of Plant Manager Pickford and informed that the respondent was granting a general wage increase to all employees,18 amounting to about 2 to 6 cents per hour. Pickford read to the committee the following letter under that date, addressed to Union Director Douty: 42 'In the course of our extended contract negotiations we have repeatedly told you that our mill would be among the first to make wage adjustments in this locality. We have learned that certain of the mills in this locality are about to adjust their wages and we are, therefore, making comparable adjustments in our wage rates effective Monday, December 31st, 1945. A copy of the notice which has been posted in the mill today outlining the various rate adjustments is attached hereto. 43 'Attached to the letter were nitices directed to the respective departments listing the various wage increases. The letter was received by Douty the next day. While the negotiating committee was in Pickford's office, copies of the notices announcing the wage increases were being posted on the bulletin boards in the respective departments. 44 'It will be seen from the foregoing that neither the Union nor the negotiating committee was consulted from December 19, the date of the last conference, to January 1, 1946, the date of the granting of the wage increase. Nor was the committee consulted on the latter date. The respondent merely presented it with a fait accompli, without affording the Union an opportunity to negotiate with respect to the amount of the increase, the employees to whom the increase would be applicable,19 the effective date of the increase or any of the factors normally envisaged by the collective bargaining process. 45 'It cannot be disputed, nor does the respondent deny, that the granting of the wage increase at that time, constituted unilateral action. * * * 46 'While it is evident that the Union was insistent in its demand for some form of union security during its negotiatio § with the respondent, the preponderance of the credible evidence does not support the respondent's position that the Union had, in effect, presented an ultimatum that no contract would be consummated which did not afford union security. As has already been indicated, union security was only one of several matters, aside from the wage question, upon which agreement had not yet been reached. If, as the respondent contends, it had left no doubt as to its position on the issue of union security in the conferences of October 17 and 18, and it was convinced that the Union was adamant on this issue, it seems unlikely that the parties would have conferred on November 7 and 8, and again on December 19, when the Union submitted a written wage proposal. 47 'It is clear, therefore, and the undersigned finds, that, although the parties had reached a temporary impasse on December 19 on some issues, principally wages, union security, and check-off, there is no substantial basis for concluding that the Union had abandoned negotiations at this time. Moreover, even if the parties had reached an impasse in their negotiations, this obviously could not affect the Union's status as majority representative. The principle that 'a bargaining relationship once rightly established must be permitted to exist and function for a reasonable period in which it can be given a fair chance to succeed,' is well-established.20 Equally clear is the proposition that the granting of a unilateral wage increase or other concession by an employer to his employees while the designated union is attempting to bargain concerning the same subject matter, constitutes a violation of the employer's duty to bargain with the union.21 It is not a question, contrary to the respondent's argument, of giving the Union credit for a wage increase which it did not obtain, but rather of the conduct of the respondent in granting the increase in derogation of the Union's status as statutory representative, by depriving the Union of its right to bargain with respect to such increase. 48 'Upon the basis of the foregoing, and upon the entire record, the undersigned concludes and further finds that, by failing and refusing to furnish the Union with essential and pertinent information relating to the respondent's wage structure under its 'point plan,' job specifications, work assignments, and information appertaining thereto, and by granting its employees a unilateral wage increase on January 1, 1946, the respondent has from August 31, 1945, to December 19, 1945, and thereafter to date, including January 1, 1946, failed and refused to bargain with the Union as the exclusive collective bargaining representative of the employees in the appropriate unit above described, and has thereby interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed under the Act.' (Emphasis in this paragraph is supplied.) 70 N.L.R.B. at pages 220—221, 222, 223—224. 49 The Board left no doubt that it relied solely on the granting of the wage increase, when it issued its decision and order in this case. This appears from the following express statement in the Board's decision and order: '1. The Trial Examiner found that the respondent, in violation of Section 8(1) and (5) of the Act, failed to bargain collectively with the Union as the statutory representative of the respondent's employees by refusing to furnish the Union with certain detailed nformation relating to the incentive wage plan and by granting a wage increase to its employees without consulting the Union. Although we agree with the Trial Examiner's conclusion, we, however, rest our determination solely on the latter ground.' (Emphasis supplied.) 70 N.L.R.B. at page 206. 1 § 9 of the National Labor Relations Act, 49 Stat. 453, 29 U.S.C. (1940 Ed.) § 159, 29 U.S.C.A. § 159; In the Matter of Crompton-Highland Mills, 62 N.L.R.B. 1346. 2 Under §§ 7, 8(1) and (5), and 10 of the National Labor Relations Act, 49 Stat. 452—455, 29 U.S.C. (1940 Ed.) §§ 157, 158(1) and (5), and 160, 29 U.S.C.A. §§ 157, 158(1, 5), 160. 3 For the Board's order, see Appendix A., infra, 337 U.S. 227, 69 S.Ct. 965. 4 'The findings of the Board as to the facts, if supported by evidence, shall be conclusive.' § 10(e) of the National Labor Relations Act, 49 Stat. 454, 29 U.S.C. (1940 Ed.) § 160(e), 29 U.S.C.A. § 160(e). 'The findings of the Board with respect to questions of fact if supported by substantial evidence on the record considered as a whole shall be conclusive.' § 10(e), as amended by the Labor Management Relations Act. 1947, 61 Stat. 148, 29 U.S.C. (1946 Ed., Supp. I) § 160(e), 29 U.S.C.A. § 160(e). 'We have repeatedly held that Congress, by providing, § 10(c), (e) and (f), of the National Labor Relations Act, that the Board's findings 'as to the facts, if supported by evidence, shall be conclusive', precludes the courts from weighing evidence in reviewing the Board's orders, and if the findings of the Board are supported by evidence the courts are not free to set them aside, even though the Board could have drawn different inferences.' National Labor Relations Board v. Nevada Consolidated Copper Corp., 316 U.S. 105, 106—107, 62 S.Ct. 960, 961, 86 L.Ed. 1305. See also, Medo Photo Supply Corp. v. National Labor Relations Board, 321 U.S. 678, 681, note 1, 64 S.Ct. 830, 832, 88 L.Ed. 1007; Consolidated Edison Co. of New York v. National Labor relations Board, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126; Washington, Virginia & Maryland Coach Co. v. National Labor Relations Board, 301 U.S. 142, 146—147, 57 S.Ct. 648, 649—650, 81 L.Ed. 965. 5 In addition to its own findings, quoted in the text, the Board adopted, in general terms, all of the findings of the trial examiner, with certain modifications and exceptions not here material. A number of such adopted findings, which are of significance in securing a full appreciation of the basis for the Board's order, are set forth in Appendix B, infra, 337 U.S. 230, 69 S.Ct. 966. The increase in pay was explained by Herbert A. Pickford, manager of the respondent, as follows in his testimony before the trial examiner: 'Q. Mr. Pickford, explain why you made the wage increase on January 1, 1946.—A. We had heard the end of the previous week that numerous mills throughout the state had made wage adjustments, and we heard through rumor, more or less through the grape vine, that local mills were planning to make wage adjustments. I checked into that rumor with various mills and found that wage adjustments were going to be made, although I didn't get any specific dates as to when they would be made. 'We had steadfastly said throughout our bargaining conferences that if and when wage increases in our area were made, we would be amongst the first, as we had always been, to make such increases. And when we heard that wage increases were to take place, we wanted to maintain our position as being amongst the first to make the increase and also maintain our position in the local labor market by making an increase ourselves. 'Q. Do you know, Mr. Pickford, what wage increases were made by any of the other mills in Griffin?—A. I do not know the definite figures aside from what I saw in the paper. 'Q. Did you join with any mills in making any announcement about a wage increase?—A. No; we did not. We made our announcement independently of anyone else, as we have always done.' 6 'Sec. 8. (a) It shall be an unfair labor practice for an employer— '(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of Section 9(a).' 49 Stat. 452—453, and also in 61 Stat. 140—141, 29 U.S.C. (1946 Ed., Supp. I) § 158, 29 U.S.C.A. § 158. 'Sec. 9. (a) Representatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes, shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment: * * *.' 49 Stat. 453, and also in 61 Stat. 143, 29 U.S.C. (1946 Ed., Supp. I) § 159(a), 29 U.S.C.A. § 159(a). 7 Even though the employer, since January 1, 1946, may have carried on collective bargaining in good faith as to rates of pay and other matters, a decree enforcing the original order against making a general increase without consulting the collective bargaining representatives is justifiable. '* * * an order of the character made by the Board, lawful when made, does not become moot because it is obeyed or because changing circumstances indicate that the need for it may be less than when made.' National Labor Relations Board v. Pennsylvania Greyhound Lines, 303 U.S. 261, 271, 58 S.Ct. 571, 576, 82 L.Ed. 831, 115 A.L.R. 307. See, also, Federal Trade Commission v. Goodyear Tire & Rubber Co., 304 U.S. 257, 58 S.Ct. 863, 82 L.Ed. 1326. 8 '* * * The breadth of the order, like the injunction of a court, must depend upon the circumstances of each case, the purpose being 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 has found to have been committed by the employer in the past. * * * We hold only that the National Labor Relations Act does not give the Board an authority, which courts cannot rightly exercise, to enjoin violations of all the provisions of the statute merely because the violation of one has been found. To justify an order restraining other violations it must appear that they bear some resemblance to that which the employer has committed or that danger of their commission in the future is to be anticipated from the course of his conduct in the past. That justification is lacking here.' National Labor Relations Board v. Express Pub. Co., 312 U.S. 426, 436—437, and see pages 438—439, 61 S.Ct. 693, 700, 85 L.Ed. 930. See also, May Dept. Stores Co. v. National Labor Relations Board, 326 U.S. 376, 392—393, 66 S.Ct. 203, 212—213, 90 L.Ed. 145; J. I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 341—342, 64 S.Ct. 576, 582, 88 L.Ed. 762. 18 'As will be seen, certain employees were not included in the wage increase.' 19 'The increase did not affect janitors, sweepers, scrubbers, outside help, and various other categories of employees included in the unit represented by the Union.' 20 'See Franks Bros. Co. v. N.L.R.B., 321 U.S. 702, 705, 64 S.Ct. 817, 819, 88 L.Ed. 1020.' 21 'See Aluminum Ore Company v. N.L.R.B., 7 Cir., 131 F.2d 485, 487, 147 A.L.R. 1, enforcing 39 N.L.R.B. 1286, 1295—1299; May Department Stores v. N.L.R.B., 326 U.S. 376, 66 S.Ct. 203, 90 L.Ed. 145. See also, Majority Rule in Collective Bargaining, by Ruth Weyand, Columbia Law Review, Vol. XLV, 579—583, and footnotes at 581, for an excellent discussion and citation of authority on, The Power of a Statutory Representative to Bar Unilateral Changes by Employer.'

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337 U.S. 78 69 S.Ct. 955 93 L.Ed. 1226 UNITED STATESv.NATIONAL CITY LINES, Inc., et al. No. 269 Misc. Argued on Motion for Leave to File Feb. 8, 1949. Decided May 31, 1949. Mr. Charles Weston, Washington, D.C., for petitioner. Mr. C. Frank Reavis, New York City, for respondents. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 The issue here is whether the 1948 revision of the Judicial Code, Title 28, United States Code, 28 U.S.C.A. § 1 et seq., extends the doctrine of forum non conveniens to antitrust suits. The Government's complaint in this civil suit alleged that respondent corporations have conspired to obtain control of local transportation companies in at least 44 cities in 16 states in different sections of the country, in order to restrain and monopolize interstate commerce in busses and the petroleum and other supplies incident thereto, in 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. 2 This is the second time that an order of the court below, the United States District Court for the Southern District of California, attempting to effectuate a transfer of the case from Los Angeles to Chicago, has been before this Court. When respondents' motion was first granted, the District Court dismissed the action, 1947, 7 F.R.D. 456, inasmuch as the federal courts then lacked statutory power to transfer cases. We reversed, holding that forum non conveniens was not applicable in antitrust suits. United States v. National City Lines, 1948, 334 U.S. 573, 68 S.Ct. 1169, 92 L.Ed. 1584. After September 1, 1948, the effective date of the present Judicial Code,1 respondents filed a new motion under the doctrine of forum non conveniens, citing § 1404(a), which reads as follows: 'For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.' Again the District Court below granted the motion. It ordered the case transferred. D.C. 1948, 80 F.Supp. 734. The Government thereupon submitted in this Court a motion for leave to file petition for writ of certiorari. We assigned the case for hearing on this motion. 1948, 335 U.S. 897, 69 S.Ct. 296. 3 In taking the position that the District Court lacked authority to enter its order of transfer, the Government has advanced many of the arguments which we have already considered today—and rejected—in Ex parte Collett, 337 U.S. 55, 69 S.Ct. 944, and Kilpatrick v. Texas & Pacific R. Co., 337 U.S. 45, 69 S.Ct. 953, 959, in which we held that actions under the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., were now subject to the doctrine of forum non conveniens. The Government contends, for example, that Congress intended § 1404(a) to apply only to actions the venue provisions of which were formerly contained in Title 28, rather than to 'any civil action' (the venue requirements in antitrust cases are defined in 15 U.S.C. § 22, 15 U.S.C.A. § 22; in Liability Act cases, 45 U.S.C. § 56, 45 U.S.C.A. § 56); and that the legislative history establishes very clearly that Congress had no desire substantially t change the law—indeed, the Government urges us to disregard the reviser's notes which were printed in the House Reports.2 We cannot accept this position for the reasons discussed in our previous decisions today. The reviser's notes are so obviously authoritative in perceiving the meaning of the Code that the Government itself, in discussing a section other than § 1404(a), refers to them in its brief in this case. And we have already had occasion to look to the reviser's notes. Stainback v. Mo Hock Ke Lok Po, 1949, 336 U.S. 368, 376, n. 12, 69 S.Ct. 609, 610. 4 It is true that the reviser's notes to § 1404(a), although citing a Federal Employers' Liability Act decision, make no reference to the antitrust laws or to our previous decision in this litigation. The Government therefore urges that our disposition of the Liability Act cases is not conclusive. We disagree. The notes cite the Liability Act decision 'As an example of the need of such a provision.' Obviously, an example is not a complete catalogue. The use of an example implies no purpose to restrict the meaning of the statutory phrase 'any civil action' precisely to the illustration selected. Quite the contrary, the particular example noted demonstrates that Congress intended to effectuate changes in the law, in order to expand the transferability of cases. And the change in antitrust practice seems no more radical than the change in Federal Employers' Liability Act practice: Baltimore & Ohio R. Co. v. Kepner, 1941, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, cited in the reviser's note, was decided over six years before our initial decision in this case, 1948, 334 U.S. 573, 68 S.Ct. 1169, 92 L.Ed. 1584, which was the first ruling by this Court that forum non conveniens was inapplicable in antitrust suits. 5 Although no explanation is needed for the lack of Congressional reference to our former decision, simple chronology may be consulted. The reviser's notes appeared in House Report No. 308, 80th Congress, 1st Sess., which was published in April, 1947. The Code revision was initially passed by the House in July, 1947.3 With amendments, the revision was passed by the Senate on June 12, 1948,4 and by the House on June 16, 1948.5 Our decision in the first National City Lines case, 334 U.S. 573, 68 S.Ct. 1169, 92 L.Ed. 1584, was handed down on June 7, 1948. Clearly, the failure of Congress expressly to consider this decision proves nothing. 6 Nor was there anything in our decision which required unique Congressional discussion, in the face of the unmistakable statutory language and reviser's notes. We expressly held that 'Congress' mandate regarding venue and the exercise of jurisdiction is binding on the federal courts,' 334 U.S. at page 588—589, 68 S.Ct. at page 1177, 92 L.Ed. 1584, and that decision in this field must rest on 'the legislative purpose and the effect of the language used * * *', supra, 334 U.S. at page 597, 68 S.Ct. at page 1182, 92 L.Ed. 1584. Nothing in our previous opinion intimates that we could fail to respect whatever modification of the law Congress might enact. 7 Moreover, this change in th law must have been known to the Government in time for it to have addressed the protests which we have heard to the Congress. This was admitted on the oral argument; it could not possibly have been denied. When this litigation was previously before us, National City's brief, at pp. 25—26 and 45, expressly called attention to the imminent probability that § 1404(a) would be enacted and would be held applicable to antitrust suits. This brief was filed here on April 26, 1948. Not until June 7, 1948, was the final hearing on the Judicial Code revision held before the Senate Judiciary Subcommittee. Furthermore, the Code proposals were extensively publicized. See Ex parte Collett, 337 U.S. 55, 69 S.Ct. 944. The Department of Justice in particular was informed: each United States Attorney received a copy of the draft;6 a Department spokesman testified at the House hearing;7 the Attorney General was asked for an opinion by the Congressional Committee.8 The plain inference is either that the Government took no action with respect to the forthcoming alteration of the rule that forum non conveniens was inapplicable to antitrust suits, or that a protest was made which Congress disregarded. Neither alternative would offer the slightest justification for overriding the unequivocal words of § 1404(a) and the legislative history which establishes that Congress indeed meant what it said. 8 For these reasons, we can find no distinction between this case and the others decided today. We hold that § 1404(a) is applicable here. The motion is 9 Denied. 10 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting. 11 There are difficulties for me however the case is decided. But I have concluded that the fairer result is reached if the ambiguities and doubts, fully canvassed and disclosed in the Court's opinions in this case and in Ex parte Collett, 337 U.S. 55, 69 S.Ct. 944, are resolved by reading § 1404(a) as making the doctrine of forum non conveniens applicable to any civil action as to which the venue provisions are codified in revised Title 28. That gives full effect to the words 'any civil action' in the field in which Congress was legislating. And it authorizes, as respects that group of cases, a transfer to another district in lieu of outright dismissal as had previously obtained. That construction saves § 1404(a), the venue provisions of the Clayton Act and our decision in United States v. National City Lines, Inc., 334 U.S. 573, 68 S.Ct. 1169, 92 L.Ed. 1584, from mutilation. I am reluctant to conclude that Congress took the more drastic course in a mere revision of the code. So to hold would make a basic change not only in the two statutes involved in these cases but in the Sherman Act, 15 U.S.C. §§ 4, 5, 15 U.S.C.A. §§ 4, 5; the Jones Act, 46 U.S.C. § 688, 46 U.S.C.A. § 688; the Suits in Admiralty Act, 46 U.S.C. § 782, 46 U.S.C.A. § 782; Merchant Marine Act of 1936, 46 U.S.C. § 1128d, 46 U.S.C.A. § 1128d; the Securities Act, 15 U.S.C. §§ 77a, 77v, 15 U.S.C.A. §§ 77a, 77v; the Securities Exchange Act, 15 U.S.C. §§ 78a, 78aa, 15 U.S.C.A. §§ 78a, 78aa; the Public Utility Holding Company Act, 15 U.S.C. §§ 79, 79y, 15 U.S.C.A. §§ 79, 79y; The Investment Company Act, 15 U.S.C. §§ 80a, 80a—43, 15 U.S.C.A. §§ 80a, 80a—43; and perhaps in other statutes too. 1 Pub.L.No.773, 80th Cong., 2d Sess., § 38, June 25, 1948, 28 U.S.C.A. § 1 note. There has been apparently but one other reported case dealing with the instant issue. It is in accord with the holding below. United States v. E. I. Du Pont de Nemours & Co., D.C.1949, 83 F.Supp. 233. See, generally, Note, Venue in Antitrust Cases; Applicability of the New Discretionary Transfer Provision, 58 Yale L.J. 482 (1949). 2 The note to § 1404(a) appears at H.R.Rep.No.308, 80th Cong., 1st Sess. A 132 (1947) and H.R.Rep.No.2646, 79th Cong., 2d Sess. A 127 (1946). It reads as follows: 'Subsection (a) was drafted in accordance with the doctrine of forum non conveniens, permitting transfer to a more convenient forum, even though the venue is proper. As an example of the need of such a provision, see Baltimore & Ohio R. Co. v. Kepner, 1941, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, which was prosecuted under the Federal Employer's Liability Act in New York, although the accident occurred and the employee resided in Ohio. The new subsection requires the court to determine that the transfer is necessary for convenience of the parties and witnesses, and further, that it is in the interest of justice to do so.' 3 93 Cong.Rec. 8392 (1947). 4 94 Cong.Rec. 7930 (1948). 5 94 Cong.Rec. 8501 (1948). 6 Hearings before House Committee on the Judiciary on H.R. 1600 and H.R. 2055, 80th Cong., 1st Sess. 8 (1947). 7 Statement of Special Assistant to the Attorney General Baynton, Ibid., 33—34. 'With respect to the bill to codify title 28, the Department has been gathering memoranda from all its various divisions and from the United States attorneys with the hope of making a comprehensible report on that bill. We have that material.' (Emphasis added.) Id., 34. 8 Letter from Attorney General Tom C. Clark to Congressman Michener, Chairman of the Committee on the Judiciary, April 17, 1947, H.R.Rep.No.308, 80th Cong., 1st Sess. 8 (1947). The letter declares that the objectives of the revision are 'commendable and desirable,' and continues as follows: 'You will remember the discussions between members of the staff of the committee and of the Department last month at which the Department made some suggestions with reference to minor corrections of errors and omissions then in the draft of the bill being considered by your committee. 'I am advised that this conference agreed upon a number of corrections and changes and that these corrections and changes have now been incorporated in the bill with the one exception of the (Tax Court) portion. * * *' See 93 Cong.Rec. 8385 (1947).

89

337 U.S. 163 69 S.Ct. 1018 93 L.Ed. 1282 URIEv.THOMPSON. No. 129. Argued Jan. 3, 1949. Decided May 31, 1949. [Syllabus from pages 163-165 intentionally omitted] Mr. Guy W. Green Jr., Kansas City, Mo., for petitioner. Mr. Lyman J. Bishop, Belton, Mo., for respondent. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 The primary question is whether the coverage of the Federal Employers' Liability Act and the Boiler Inspection Act1 includes injuries in the nature of occupational disease, here silicosis, or is confined exclusively to injuries inflicted by accident. After having been twice before the Supreme Court of Missouri, the case is here on certiorari, 335 U.S. 809, 69 S.Ct. 41, for review of its final decision on the second appeal that recovery may not be had for other than accidental injuries. A statement of the course taken by the proceedings in the state courts, as well as of the facts, becomes necessary for resolving the issues presented. 2 In 1941 petitioner Tom Urie filed suit under the Federal Employers' Liabili y Act against respondent Thompson, trustee of the Missouri Pacific Railroad. According to petitioner's allegations, he had been employed as a fireman on steam locomotives of the interstate Missouri Pacific for roughly thirty years. In 1940 he had been forced to cease work by a pulmonary disease diagnosed as silicosis. This permanently disabling affliction had been caused by continuous inhalation of silica dust blown or sucked into the cabs of the locomotives on which he had worked. The injurious concentration of silica dust in the air breathed by petitioner arose from the railroad's use in its locomotives' sanding boxes of sand materials containing 80 to 90 per cent of silica or silicon dioxide and the emission by the locomotives' faultily adjusted 'sanders'2 of such sand materials in excessive amounts beyond those needed to provide traction for locomotive wheels. Respondent Thompson, trustee of the railroad since 1933, 'knew, or by the exercise of due care should have known,' of the danger of silicosis arising from the conditions of petitioner's employment.3 3 The trial court sustained respondent's demurrer to the complaint. On appeal the Missouri Supreme Court held that the action could not be maintained by virtue of the Federal Employers' Liability Act alone, for the reason that respondent could not have 'anticipated plaintiff's injury, and * * * therefore * * * the petition does not state facts sufficient to constitute a cause of action for negligence under the Federal Employers' Liability Act.' 352 Mo. 211, 219, 176 S.W.2d 471, 475. The court felt, however, that the claimed malfunctioning of the locomotives' sanders was in substance an allegation of breach of § 2 of the Boiler Inspection Act and that, since proof of breach of the latter Act would support a recovery under the Federal Employers' Liability Act without regard to respondent's negligence, Lilly v. Grand Trunk Western R. Co., 317 U.S. 481, 485 486, 63 S.Ct. 347, 350—351, 87 L.Ed. 411; petitioner had stated a cause of action. Furthermore, the court held that the Federal Employers' Liability Act's three-year statute of limitations, 45 U.S.C. § 56, 45 U.S.C.A. § 56, did not bar petitioner's claim since his 'cause of action accrued in May, 1940, when he became incapacitated * * *.' 352 Mo. at page 222, 176 S.W.2d at page 477. Accordingly the court reversed the judgment and remanded the cause for trial. 4 On remand petitioner amended his complaint to charge specifically violations of the Boiler Inspection Act. Section 2 of that Act, as amended, makes it 'unlawful for any carrier to use or permit to be used on its line and locomotive unless said locomotive, its boiler, tender, and all parts and appurtenances thereof are in proper condition and safe to operate in the service to which the same are put, that the same may be employed in the active service of such carrier without unnecessary peril to life or limb * * *.' 45 U.S.C. § 23, 45 U.S.C.A. § 23.4 The violations alleged were (1) that the sanders were broken or faultily adjusted so as to release too much sand and (2) that the locomotive decks and cabs were in a bad state of repair, admitting dust through various cracks and openings in the cab's floor and elsewhere which ought to have been sealed off. 5 The case was tried to a jury, under instructions that negligence was not in issue and that petitioner should prevail if he proved that he had contracted silicosis by reason of respondent's breach of an 'absolute and continuing duty to have such locomotive engines and all their parts and appurtenances thereof, in proper condition and safe to operate * * * without unnecessary peril to the life of Tom Urie * * *.' The jury found for petitioner in the amount of $30,000. 6 Upon respondent's appeal the Missouri Supreme Court reversed the judgment entered on this verdict. 357 Mo. 738, 210 S.W.2d 98. Noting that on the former review it did not 'treat with a contention that 'silicosis' is not an evil at which the Act is aimed,' id., 357 Mo. at page 746, 210 S.W.2d at page 102, the court concluded that the Boiler Inspection Act 'is aimed at promoting safety from accidental injury, as distinguished from injury due to the gradual inhalation of harmful dusts.' Id., 357 Mo. at page 749, 210 S.W.2d at page 105. It was to review the state supreme court's successive constructions of the Federal Employers' Liability and Bailer Inspection Acts that our writ was issued. I. 7 Two preliminary contentions first engage our attention. We are met at the outset by the question whether, without regard to the legal sufficiency of petitioner's claim under either Act, that claim is barred as to both Acts by operation of the Federal Employers' Liability Act's statute of limitations. 8 Urie filed suit on November 25, 1941. Under the terms of the then prevailing three-year statute of limitations,5 the court could not entertain the claim if Urie's 'cause of action accrued' before November 25, 1938. Respondent contends that Urie, having been exposed to silica dust since approximately 1910, must unwittingly have contracted silicosis long before 1938, and hence that his 'cause of action' must be deemed to have 'accrued' longer than three years before the institution of this action. Alternatively it may be argued that each inhalation of silica dust was a separate tort giving rise to a fresh 'cause of action,' and that Urie is therefore limited to a claim for inhalations between November 25, 1938, and the spring day in 1940 when he became incapacitated.6 9 In our view, however, neither of the outlined constructions of the statute of limitations can be sustained. For, if we assume that Congress intended to include occupational diseases in the category of injuries compensable under the Federal Employers' Liability and Boiler Inspection Acts, such mechanical analysis of the 'accrual' of petitioner's injury—whether breath by breath, or at one unrecorded moment in the progress of the disease—can only serve to thwart the congressional purpose. 10 If Urie were held barred from prosecuting this action because he must be said, as a matter of law, to have contracted silicosis prior to November 25, 1938, it would be clear that the federal legislation afforded Urie only a delusive remedy. It would mean that at some past moment in time, unknown and inherently unkn wable even in retrospect, Urie was charged with knowledge of the slow and tragic disintegration of his lungs; under this view Urie's failure to diagnose within the applicable statute of limitations a disease whose symptoms had not yet obtruded on his consciousness would constitute waiver of his right to compensation at the ultimate day of discovery and disability. 11 Nor can we accept the theory that each intake of dusty breath is a fresh 'cause of action.' In the present case, for example, application of such a rule would, arguably, limit petitioner's damages to that aggravation of his progressive injury traceable to the last eighteen months of his employment. Moreover petitioner would have been wholly barred from suit had he left the railroad, or merely been transferred to work involving no exposure to silica dust, more than three years before discovering the disease with which he was afflicted.7 12 We do not think the humane legislative plan intended such consequences to attach to blameless ignorance. Nor do we think those consequences can be reconciled with the traditional purposes of statutes of limitations, which conventionally require the assertion of claims within a specified period of time after notice of the invasion of legal rights. The record before us is clear that Urie became too ill to work in May of 1940 and that diagnosis of his condition was accomplished in the following weeks. There is no suggestion that Urie should have known he had silicosis at any earlier date. 'It follows that no specific date of contact with the substance can be charged with being the date of injury, inasmuch as the injurious consequences of the exposure are the product of a period of time rather than a point of time; consequently the afflicted employee can be held to be 'injured' only when the accumulated effects of the deleterious substance manifest themselves * * *.' Associated Indemnity Corp. v. Industrial Accident Commission, 124 Cal.App. 378, 381, 12 P.2d 1075, 1076. The quoted language, used in a state workmen's compensation case, seems to us applicable in every relevant particular to the construction of the federal statute of limitations with which we are here concerned. Accordingly we agree with the view expressed by the Missouri Supreme Court on the first appeal of this case, that Urie's claim, if otherwise maintainable, is not barred by the statute of limitations.8 13 We may readily dispose of another preliminary question concerning the issues which are now properly before us. Respondent argues, somewhat surprisingly, that the sufficiency of petitioner's original claim for negligence involved in the first appeal is not properly here, since it was neither raised nor considered on the second appeal to the Missouri Supreme Court. The short answer is that petitioner has brought the claim to this Court at his first opportunity; and it was not necessary for him to relitigate that claim a second time through the state courts in order to preserve it for our consideration on review of the final judgment rendered in the cause. 14 From the opinions of the state supreme court we know judicially9 that its judgment negating the general claim for negligence was coupled with its subsequently repudiated conclusion that petitioner had stated a cause of action under the Boiler Inspection Act and that, consequently, the court remanded the cause for trial, not for dismissal. The judgment therefore was not final; it was interlocutory and not reviewable here within the meaning of our jurisdictional statute. 28 U.S.C. § 344(b) (now § 1257(3)), 28 U.S.C.A. § 1257(3).10 15 Although the Missouri Supreme Court's disposition of the first appeal precluded review here at that time of the ruling adverse to petitioner, Urie did not waive that question by amending his complaint, in conformity with the court's mandate, to state his claim more specifically in terms of the Boiler Inspection Act or by proceeding with trial on that theory. As the case then stood, this was his only remaining chance for success unless he was to waive it, ask for final judgment to be entered against him on the general negligence issue, and rely solely upon securing review of that judgment and reversal by this Court. 16 Whatever the effect of the state supreme court's ruling for further proceedings in the state courts,11 it could not impose such an alternative upon petitioner. Local rules of practice cannot bar this Court's independent consideration of all substantial federal questions actually determined in earlier stages of the litigation by the court whose final adjudication is brought here for review. Zeckendorf v. Steinfeld, 225 U.S. 445, 454, 32 S.Ct. 728, 732, 56 L.Ed. 1156; Messinger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740, 56 L.Ed. 1152. Even so, we think sound practice would see to it that such questions were expressly preserved in the later stages of review. But, as this Court has had occasion heretofore to observe, its power to probe issues disposed of on appeals prior to the one under review is, in the last analysis, a 'necessary correlative' of the rule which limits it to the examination of final judgments. Louisiana Navigation Co. v. Oyster Commission of Louisiana 226 U.S. 99, 102, 33 S.Ct. 78, 80, 57 L.Ed. 138.12 17 Accordingly, even if it should be held that petitioner has stated no claim under the Boiler Inspection Act, the judgment now in review cannot stand unless the Missouri Supreme Court rightly concluded, on the first appeal, that petitioner's original complaint stated no cause of action for negligence under the Federal Employers' Liability Act, considered apart from any effect of the Boiler Inspection Act. That question is properly presented and to it we now turn. II. 18 Section 1 of the Federal Employers' Liability Act provides: 19 'Every common carrier by railroad while engaging in commerce * * * shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce * * * for such injury or death resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier, or by reason of any defect or insufficiency, due to its negligence, in its cars, engines, appliances, machinery, track, roadbed, works, boats, wharves, or other equipment.' 45 U.S.C. § 51, 45 U.S.C.A. § 51. (Emphasis added.) 20 The section does not define negligence, leaving that question to be determined, as the Missouri Supreme Court said, 'by the common law principles as established and applied in the federal courts.' 352 Mo. at page 218, 176 S.W.2d at page 474. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, has no application. What constitutes negligence for the statute's purposes is a federal question, not varying in accordance with the differing conceptions of negligence applicable under state and local laws for other purposes. Federal decisional law formulating and applying the concept governs.13 Hence the Missouri Supreme Court's decision on the first appeal, that the complaint did not state a cause of action for negligence, is subject to our independent review and is not to be taken as governed conclusively by the state court decisions which alone were cited in support of the determination. 21 Of course if silicosis caused by the employment is not an 'injury' within the statutes' intended coverage, no cause of action could be stated for that injury under the statute, even though the allegations of fault and causation were wholly sufficient. The Missouri Supreme Court's first decision, however, assumed that silicosis fell within the statute's broad term 'injury,' and held that it would not 'be reasonable to hold, under the facts admitted by the demurrer, that defendant should have anticipated plaintiff's injury * * *.' 352 Mo. at page 219, 176 S.W.2d at page 475. Accordingly, the court ruled that no cause of action for negligence under the Act had been stated. 22 Upon the assumption that silicosis when caused by the employment is a compensable employee 'injury,' the adequacy of petitioner's claim turns solely on whether his original complaint alleged facts raising a triable issue of negligence. We think that under the standards heretofore set and followed by this Court,14 the facts alleged in the complaint and taken as admitted by the demurrer clearly stated a cause of action for negligence. 23 Those facts have been briefly, though only partially, summarized above. They charged that respondent used in the locomotives' sanders a sand material containing a very high percentage of silica or silicon dioxide; that often the material would come to the rails from the sanders in excessive and unnecessary quantities and would there be ground to dust; that the dust containing 'such usual and unusual quantity of silican dioxide would come' into the engine cabs and, 'frequently of unusual quantity,' would be breathed by petitioner; and that respondent 'knew, or by the exercise of due care should have known,' that the sand contained the high percentage of silicon dioxide; that 'the dust would form and frequently of excessive quantity because of said sanders,' come into the cab and be breathed by petitioner; and that over a period of time the breathing was 'dangerous to the health and life and would likely cause to the plaintiff the condition resulting to the plaintiff.' The complaint then stated the further allegations set forth in the margin,15 together with the following paragraph: 24 'Plaintiff further alleges that the sanding devices on said engines were all of the usual and customary type and used for the usual and customary purpose and if ordinary care was exercised in keeping them adjusted such large quantities of such sandy silica material would not escape; that plaintiff does not know whether the same kind of sand containing such high quality of silica was used by other railroads operating over or through such parts of the country of Missouri; that such sanding devices operated in the same manner by the same means as devices on locomotives of other railroads, and if kept in normal and regular working condition would not allow such large quantities of silica dust to form as above stated.' 25 These and other allegations sufficiently charged respondent with knowingly having used, in excessive quantities due in part to faulty adjustment of the sanders and respondent's failure to use due care in adjusting them, a dangerous and material likely to cause silicosis and in fact causing petitioner to contract it and become permanently disabled. This would seem to be clearly adequate for stating a cause of action for negligence resulting in injury within the meaning of the statute and the applicable judicial standards to which we have referred. All the usual elements are comprehended, including want of due or ordinary care, proximate causation of the injury, and injury within our assumption for present purposes of statutory coverage. 26 To sustain the contrary view, however, the Missouri Supreme Court seems to have ruled as a matter of law the respondent had adhered to the customary standards of the trade, stressing the admission in petitioner's complaint that the sanding devices alleged to have been faultily adjusted were of the kind ordinarily used throughout the rail oad industry. Contrary to the court's apparent conclusion, this obviously was not an admission that respondent had complied with the usual standards of the trade. There was neither admission by petitioner nor evidence of anything more than that respondent's sanders were 'all of the usual and customary type' which, if kept properly adjusted by ordinary care, would not have allowed such large and excessive quantities of silica dust to escape, concentrate in the cab, and be breathed by petitioner. There was no admission that other railroads generally or in the region customarily used such high silica content materials for sanding purposes or that, if they did, they did not take steps to minimize potentially harmful effects. Moreover, assuming the premise that maintenance of trade standards negatives negligence, we cannot grasp its significance in this context absent any indication that faultily adjusted sanding devices are the rule rather than the exception on American steam locomotives. 27 But we also reject the premise, for we think that negligence, within the meaning of the Federal Employers' Liability Act, attached if respondent 'knew, or by the exercise of due care should have known,' that prevalent standards of conduct were inadequate to protect petitioner and similarly situated employees. Cf. Hill v. Atlantic Coast Line R. Co., 336 U.S. 911, 69 S.Ct. 507, reversing 229 N.C. 236, 49 S.E.2d 481. See also Sadowski v. Long Island R. Co., 292 N.Y. 448, 456—457, 55 N.E.2d 497.16 Respondent's knowledge, actual or constructive, of the alleged inadequacies of the sanding equipment was a jury question. Whether petitioner was then or now would be able to shoulder the burden of proving respondent's knowledge we need not surmise, though the evidence adduced by petitioner at trial under the Boiler Inspection Act—indicating that others besides petitioner had observed and reported defects in respondent's locomotive equipment—underscores our insistence that issues of fact are matters for the jury.17 28 Accordingly we think the state court's ruling that the facts stated in the original complaint were insufficient to constitute a charge of negligence on respondent's part, within the meaning of the Federal Employers' Liability Act considered apart from the effect of the Boiler Inspection Act, was wrong and must be overruled. What was said by the New York Court of Appeals in Sadowski v. Long Island R. Co., supra, 292 N.Y. at pages 455-456, 55 N.E.2d at page 500, in sustaining a recovery for silicosis under the Act, fits very closely the facts of this case and represents, in our opinion, the correct view: 29 'Ordinary care must be in proportion to the danger to be avoided and the consequences that might reasonably be anticipated from the neglect. Baltimore and Potomac Railroad Company v. Jones, 95 U.S. 439, 24 L.Ed. 506; Bailey v. Central Vermont R. Co., supra (319 U.S. 350, 63 S.Ct. 1062, 87 L.Ed. 1444). It must be commensurate with known dangers. Defendant created the place in which the work was done and supervised the doing of the work by plaintiff and was aware for a period of at least sixteen years of the conditions under which plaintiff was required to work and of the means and methods by which its work was accomplished. It is a matter of common knowledge that it is injurious to the lungs and dangerous to health to work in silica dust, a fact which defendant was bound to know.'18 30 The question remains whether silicosis is an 'injury' within the meaning of that term as used in the Federal Employers' Liability Act. It is a novel one for this Court. But we think silicosis is within the statute's coverage when it results from the employer's negligence. Considerations arising from the breadth of the statutory language, the Act's humanitarian purposes, its accepted standard of liberal construction in order to accomplish those objects, the absence of anything in the legislative history indicating a congressional intent to require a restricted interpretation or expressly to exclude such occupational disease, and the trend of existing authorities dealing with the question combine to support this conclusion. 31 We recognize of course that, when the statute was enacted, Congress' attention was focused primarily upon injuries and death resulting from accidents on interstate railroads.19 Obviously these were the major causes of injury and death resulting from railroad operations. But accidental injuries were not the only ones likely to occur. And nothing in either the language or the legislative history discloses expressly and intent to exclude from the Act's coverage any injury resulting 'in whole or in part from the negligence' of the carrier. If such an intent can be found, it must be read into the Act by sheer inference. 32 The language is as broad as could be framed: 'any person suffering injury while he is employed'; and 'such injury or death resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier'; 'by reason of any defect or insufficiency, due to its negligence, in its cars, engines, appliances,' etc. On its face, every injury suffered by any employee while employed by reason of the carrier's negligence was made compensable. The wording was not restrictive as to the employees covered; the cause of injury, except that it must constitute negligence attributable to the carrier; or the particular kind of injury resulting. 33 To read into this all-inclusive wording a restriction as to the kinds of employees covered, the degree of negligence required, or the particular sorts of harms inflicted, would be contradictory to the wording, the remedial and humanitarian purpose, and the constant and established course of liberal construction of the Act followed by this Court.20 34 We recognize, with respondent, that the Federal Employers' Liability Act is founded on common-law concepts of negligence and injury, subject to such qualifications as Congress has imported into those terms. If respondent were right in suggesting that the common law does not recognize occupational disease as a category of compensable injury, he would lend substance to the argument that Congress' use of the word 'injury' was less broad than the word's surface connotation indicates. However, although the contrary view has been advanced,21 we are satisfied that the difficulties which have attached to tort recovery for occupational disease inhere not in the nature of the wrong but in the difficulty of proving negligence. For, as the Ohio Supreme Court observed with reference to silicosis, 'In the early period of industrial development there was little medical knowledge regardint the origin of diseases peculiar to the various employments * * *.' Triff v. National Bronze & Aluminum Foundry Co., 135 Ohio St. 191, 195, 20 N.E.2d 232, 234, 121 A.L.R. 1131. We do not doubt that at 'common law the incurring of a disease or harm to health is such a personal wrong as to warrant a recovery if the other elements of liability for tort are present.'22 35 Viewing the Federal Employers' Liability Act as a negligence statute, we think that arguments drawn from the coverage accorded occupational diseases in state workmen's compensation statutes cannot control the present inquiry. And yet we may note in passing that decisions under such statutes, to whatever extent they may be thought relevant, offer little support to respondent's narrow view of the federal legislation before us. True it is that the British Workmen's Compensation Act of 1897, 60 & 61 Vict. c. 37, although covering anthrax contracted by claimant from a particular and identifiable processing of wool, Turvey v. Brinton's Ltd., 1904, 1 K.B. 328, affirmed, 1905, A.C. 230, was held to exclude gradual lead poisoning. Steel v. Cammell, Laird & Co., 1905, 2 K.B. 232. But it is equally true that the statute there construed provided for compensation only in cases of 'personal injury by accident,' (emphasis added), a limitation much stressed by the opinions in Steel v. Cammell, Laird & Co., supra. And see Walker v. Lilleshall Coal Co., 1900, 1 Q.B. 488. Decisions in this country have uniformly followed the early British rule in construing such terms as 'accident' and 'accidental injury,' as well as 'personal injury by accident.'23 36 But decisions construing 'personal injury'—more nearly akin to the simple 'injury' of the Federal Employers' Liability Act—are in conflict. Thus the Supreme Court of Ohio excluded occupational diseases in view of the special legislative and constitutional context of the statute considered, while recognizing that otherwise it would be 'no difficult matter to bring within the purview of the words 'personal injuries sustained in the course of employment' occupational diseases incurred in course of employment.' Industrial Commission of Ohio v. Brown, 92 Ohio St. 309, 312—313, 110 N.E. 744, 745, L.R.A.1916B, 1277; cf. Industrial Commission of Ohio v. Roth, 98 Ohio St. 34, 120 N.E. 172, 6 A.L.R. 1463. The Connecticut Supreme Court, relying on its common-law view that 'typical' occupational diseases were not compensable, likewise excluded occupational diseases from its 'personal injury' statute. Miller v. American Steel & Wire Co. of New Jersey, 90 Conn. 349, 97 A. 345, L.R.A.1916E, 510. But against this line of authority may be set the view of the Supreme Judicial Court of Massachusetts, speaking by Chief Justice Rugg, which held that blindness caused by noxious industrial vapors was a 'personal injury' within the meaning of the Massachusetts statute. Hurle's Case, 217 Mass. 223, 104 N.E. 336, L.R.A.1916A, 279, Ann.Cas.1915C, 919. 37 Consonant with the Massachusetts statute is the one compensation act the meaning of which may be thought directly to bear on congressional use of the word 'injury' in the federal negligence statute with which we are today concerned. The Federal Employees' Compensation Act of May 30, 1908, 35 Stat. 556, approved less than two months after the Federal Employers' Liability Act, provided compensation for certain classes of federal employees 'injured in the course of * * * employment.' Under this statute compensation was awarded f r, inter alia, inhalation of dust and fine scale,24 lead poisoning,25 cardiac hypertrophy caused by inhalation of ether,26 and throat tuberculosis aggravated by brass poisoning.27 In short, the workmen's compensation cases offer little comfort to respondent's view of the Federal Employers' Liability Act. 38 While no decision of this Court involving the Federal Employers' Liability Act has dealt specifically with silicosis, the New York Court of Appeals, as we have indicated above, has sustained recovery under the Act for that disease when resulting from the carrier's negligence. This was done in circumstances not substantially different from those alleged in petitioner's original complaint, except that the facts involved no possible application of the Boiler Inspection Act. Sadowski v. Long Island R. Co., supra. Moreover, other state and federal decisions have authorized recovery under the Act for injuries not caused by accidental or violent means. These include Shelton .v Thomson, 7 Cir., 148 F.2d 1; 7 Cir., 157 F.2d 709, where recovery was permitted for carbon monoxide poisoning; Baltimore & O.R. Co. v. Branson, 128 Md. 678, 98 A. 225, reversed on other grounds, 242 U.S. 623, 37 S.Ct. 244, 61 L.Ed. 534, in which recovery was allowed for paint poisoning. Cf. Chicago, R.I. & P.R. Co. v. Cheek, 105 Okl. 91, 231 P. 1078. Not all of these decisions could be sustained if the statutory term 'injury' were held to require that the harm suffered from the employer's negligence must be confined to that inflicted by 'external, violent and accidental' means or be an 'accidental injury,' as respondent's narrow view of the statute's coverage seems to contemplate. 39 We would be most hesitant to adopt a construction of 'injury' as used in this Act which would overrule the decisions last cited or seriously impair their authority. We think they were made in the spirit the statute contemplated for its administration and application. That spirit is one not in conformity with importing nice distinctions in applying the Act's broad and general terms or cutting down their full scope by inference or implication. 40 In our view, when the employer's negligence impairs or destroys an employee's health by requiring him to work under conditions likely to bring about such harmful consequences, the injury to the employee is just as great when it follows, often inevitably, from a carrier's negligent course pursued over an extended period of time as when it comes with the suddenness of lightning. Silicosis is as much 'injury,' leading in time as certainly to permanent disability, as scalding from a boiler's explosion. We do not think the mere difference in the time required for different acts of negligence to take effect and disclose their harmful, disabling consequences would justify excluding the one type of injury from the Act's coverage or that such an exclusion would be consistent with its language, purposes, or unvarying standards of construction. 41 Accordingly it follows, as the Missouri Supreme Court assumed on the first appeal, that petitioner's original complaint did not fail in stating a cause of action under the Federal Employers' Liability Act for want of allegation of sufficient injury. Petitioner was entitled to go to trial at that time without restriction requiring him to show violation of the Boiler Inspection Act. 42 This conclusion, if it were all that is involved in the case, would compel reversal of the state supreme court's decision and remand for trial upon the original complaint. However, it remains to consider the effect of the Boiler Inspection Act and whether the verdict rendered for petitioner under that Act, in conjunction with the Federal Employers' Liability Act, should be allowed to stand. III. 43 By virtue of the course taken by the case in the state courts, the Missouri Supreme Court did not squarely hold that silicosis was not an injury within the coverage of the Federal Employers' Liability Act considered apart from the Boiler Inspection Act. As the case took shape that question did not arise on the first appeal. And by virtue of the ruling on the remand for trial, that the only cause of action stated was that arising under the Boiler Inspection Act, the court on the second appeal treated the question whether silicosis was a compensable injury substantially as if the Boiler Inspection Act was a wholly independent statute, unrelated in the scope of its coverage, for purposes of employees' suits for breach of its provisions, to the Employers' Liability Act's terms, i.e., as if the question arose solely under the Boiler Inspection Act. 44 But by its own terms the Boiler Inspection Act, like the Safety Appliance Acts,28 does not purport to confer any right of action upon injured employees. It merely makes violation of its prohibitions 'unlawful.'29 Yet it has been held consistently that the Boiler Inspection Act supplements the Federal Employers' Liability Act by imposing on interstate railroads 'an absolute and continuing duty' to provide safe equipment. Lilly v. Grand Trunk Western R. Co., supra, 317 U.S. at page 485, 63 S.Ct. at pages 350, 351, 87 L.Ed. 411; Southern R. Co. v. Lunsford, 297 U.S. 398, 401, 56 S.Ct. 504, 506, 80 L.Ed. 740; cf. Baltimore & O.R. Co. v. Groeger, 266 U.S. 521, 528—529, 45 S.Ct. 169, 172, 173, 69 L.Ed. 419. 45 This conclusion stems, not from any express statutory language, but by implication from §§ 3 and 4 of the Federal Employers' Liability Act, 45 U.S.C. §§ 53, 54, 45 U.S.C.A. §§ 53, 54, which bar pleadings of, respectively, contributory negligence and assumption of risk 'in any case where the violation by such common carrier of any statute enacted for the safety of employees contributed to the injury or death of such employee.'30 But it is § 1 of the Federal Employers' Liability Act, and not §§ 3 and 4, which expressly creates a cause of action for negligence; and by the same token it is § 1 which is the basis of an employee's suit for violation of the Boiler Inspection or Safety Appliance Acts. For where § 1 'refers to 'any defect or insufficiency, due to its negligence, in its cars, engines, appliances,' etc., it clearly is the legislative intent to treat a violation of the safety appliance act as 'negligence,' what is sometimes called negligence per se.' San Antonio & A.P.R. Co. v. Wagner, 241 U.S. 476, 484, 36 S.Ct. 626, 630, 60 L.Ed. 1110. 46 In this view the Safety Appliance Acts, together with the Boiler Inspection Act, are substantively if not in form amendments to the Federal Employers' Liability Act. They dispense, for the purposes of employees' suits, with the necessity of proving that violations of the safety statutes constitute negligence; and making proof of such violations is effective to show negligence as a matter of law. Thus taken, as has been the consistent practice, the Boiler Inspection and Safety Appliance Acts cannot be regarded as statutes wholly separate from and independent of the Federal Employers' Liability Act. They are rather supplemental to it, having the purpose and effect of facilitating employee recover, not of restricting such recovery or making it impossible. 47 Regarded in this light, the Boiler Inspection and Safety Appliance Acts would take on highly incongruous character if, at the very time they were expediting employee recovery under the Employers' Liability Act by substituting the comparatively light burden of proving violation of their prohibitions for the heavier one of proving negligence, they were also contracting the scope of compensable injuries and to that extent defeating recovery altogether. We do not think that Congress intended to act so inconsistently or that, by dispensing with the employee's burden of proving negligence in certain classes of Employers' Liability Act suits, it had any purpose to withdraw from that Act's coverage any injury caused by the employment which was covered by its terms. In the absence of any specific sho ing that Congress had in mind such a restrictive and inconsistent object, we are not free to create one by inference, more especially when it is derived from approaching the problem as if the Boiler Inspection and Safety Appliance Acts were wholly independent of and separate in design and purpose from the Employers' Liability Act. 48 The congressional purpose underlying the Boiler Inspection Act is basically the same as that underlying the Safety Appliance Acts and the Employers' Liability Act. In requiring that the boiler and, not long after, that the entire locomotive, be maintained 'in proper condition and safe to operate,' Congress by its own statement was attempting to insure that such equipment 'be employed in * * * active service * * * without unnecessary peril to life or limb * * *.' 45 U.S.C. § 23, 45 U.S.C.A. § 23. Certain requirements of the Safety Appliance Acts, as for example the use of the automatic coupler, 45 U.S.C. § 2, 45 U.S.C.A. § 2, are made mandatory by express statutory language. Others, like those of the Boiler Inspection Act, simply outline a general standard which may be more specifically articulated in rules enunciated by the carriers subject to the approval of the Interstate Commerce Commission, 45 U.S.C. § 28, 45 U.S.C.A. § 28, or directly promulgated by the Commission, Napier v. Atlantic Coast Line R. Co., 272 U.S. 605, 611—613, 47 S.Ct. 207, 209, 210, 71 L.Ed. 432, on the basis of proper findings. United States v. Baltimore & O.R. Co., 293 U.S. 454, 55 S.Ct. 268, 79 L.Ed. 587. Violations of the Commission's rules are violations of the statute, giving rise not only to damage suits by those injured, Lilly v. Grand Trunk Western R. Co., supra, but also to money penalties recoverable by the United States. 45 U.S.C. § 34, 45 U.S.C.A. § 34. 49 As with the Employers' Liability Act, we do not doubt that the prime purpose of the Boiler Inspection Act was the protection of railroad employees and perhaps also of passengers and the public at large, cf. Fairport, P. & E.R. Co. v. Meredith, 292 U.S. 589, 54 S.Ct. 826, 78 L.Ed. 1446, from injury due to industrial accident. The safety of all those affected by railroading was uppermost in the legislative mind. But again, as with the Employers' Liability Act, we cannot accept the view that protection of employee health is not embraced by the congressional plan.31 Indeed, as to the Boiler Inspection Act, this Court has twice had occasion to make clear its contrary view, Napier v. Atlantic Coast Line R. Co., supra; United States v. Baltimore & O.R. Co., supra 293 U.S. at pages 458—459, 55 S.Ct. pages 270—271, 79 L.Ed. 587. 50 In the Napier case the question for decision was the validity of Wisconsin and Georgia regulations requiring locomotives to be equipped with, respectiv ly, cab curtains and an automatic fire door. Each state regulation was challenged as an invasion of power over interstate commerce which Congress, through enactment and amendment of the Boiler Inspection Act, had seen fit to exercise. Each regulation was defended as being directed to protection of the health, rather than the safety, of railroad employees. The unanimous Court, speaking through Mr. Justice Brandeis, struck down both regulations 'because the Boiler Inspection Act, as we construe it, was intended to occupy the field. The broad scope of the authority conferred upon the Commission leads to that conclusion. Because the standard set by the Commission must prevail, requirements by the states are precluded, however commendable or however different their purpose.' 272 U.S. at page 613, 47 S.Ct. at page 210, 71 L.Ed. 432. 51 This last-quoted sentence merely recognized that theretofore the Interstate Commerce Commission had not regulated with an eye to employee health; it did not and does not support the view that employee health was thought not to be wihthin the compass of the Act, as other language in Napier, 272 U.S. at pages 611-613, 47 S.Ct. at page 209, 71 L.Ed. 432; makes amply clear: 52 'The requirements here in question are, in their nature, within the scope of the authority delegated to the Commission. An automatic firedoor and an effective cab curtain may promote safety. Keeping firemen and engineers in good health, like preventing excess fatigue through limiting the hours of service, clearly does so, although indirectly. * * * 'If the protection now afforded by the Commission's rules is deemed inadequate, application for relief must be made to it. The Commission's power is ample.' 53 Thus the Boiler Inspection Act vests in the Interstate Commerce Commission rule-making power adequate to protect employees against disease as well as against accident; and the power to make rules for employee health has been exercised.32 54 In view of these considerations, it cannot be said that the Commission's rule-making power is confined to safeguarding against accidental injury; nor are we free to lay down a rule of law which would so restrict the Commission's authority. Since we are unable to find in the Boiler Inspection Act's terms, purposes or egislative history either explicit provision or any sufficient basis for inferring one cutting down the scope of recovery allowed under § 1 of the Employers' Liability Act, we conclude that the injury for which recovery may be had for violation of the Boiler Inspection Act is no narrower in scope than the injury for which recovery is authorized under § 1 of the Employers' Liability Act. 55 We hold that petitioner's injury is one compensable under the Boiler Inspection Act. We hold further, in the light of the trial instructions and such evidence as appears in the record before us,33 that the jury was justified in finding (1) that respondent breached the Boiler Inspection Act (as more specifically articulated in I.C.C. Rule 120, governing sanders)34 and (2) that such breach was a proximate cause of petitioner's injury. 56 We conclude that petitioner stated a valid claim for negligent injury under the Federal Employers' Liability Act on his first appeal and that petitioner stated on both appeals and proved on his second a valid claim for injury flowing from violation of the Boiler Inspection Act. The record before us reveals no error in the jury's verdict for petitioner, which was based on the second theory of the case; the damages awarded are consistent with either theory. We have considered and disposed of the various grounds of affirmance urged by respondent; grounds not urged, whether on the record before us or on such supplemental portions of the state court record as respondent might have asked us to review, are waived. Accordingly the judgment is reversed and the cause is remanded with instructions to reinstate the judgment on the verdict for petitioner. 57 Reversed. 58 Mr. Justice FRANKFURTER, concurring in part. 59 At the risk of wearisome reiteration it is relevant to say again that the common-law concept of negligence is an antiquated and uncivilized basis for working out rights and duties for disabilities and deaths inevitably due to the conduct of modern industry. In the conscious or unconscious endeavor not to have the human cost of industry fall with cruel injustice upon workers and their families, the law of negligence gives rise to endless casuistry. So long as the gamble of an occasional heavy verdict is not replaced by the security of a modern system of insurance, courts must continue to apply the notion of negligence in situations for which it was never intended. Therefore, if a claim is made that an injury is causally related to a carrier's failure to maintain standards of care appropriate for employment on a railroad, the Federal Employers' Liability Act entitles an employee to establish that claim to a jury's satisfaction. Damages are recoverable under that Act for suffering 'injury.' That term, it seems to me, is sufficiently broad to include bodily injury which nowadays is more specifically characterized as 'occupational disease.' Accordingly, I agree that recovery may be had under the Federal Employers' Liability Act for silicosis, where the facts sustain such a claim, as is illustrated by the case of Sadowski v. Long Island R. Co., 292 N.Y. 448, 55 N.E.2d 497. 60 On the other hand, I agree with the Missouri Supreme Court that occupational diseases cannot be fitted into the category of 'accidents' for which the Boiler Inspection Act devised a scheme of regulation and a basis of liability. 36 Stat. 913, as amended, 45 U.S.C. §§ 22—34, 45 U.S.C.A. §§ 22—34. I think I appreciate the humane impulse which seeks to bring occupational diseases within such a regime. But due regard for the limits of judicial interpretation precludes such free-han ed application of a statute to situations outside its language and its purpose. To do so, moreover, is, I believe, a disservice to the humane ends which are sought to be promoted. Legislation is needed which will effectively meet the social obligations which underlie the incidence of occupational disease. See National Insurance (Industrial Injuries) Act, 1946, 9 & 10 Geo. 6, 488, particularly Part IV. The need for such legislation becomes obscured and the drive for it retarded if encouragement is given to the thought that there are now adequate remedies for occupational diseases in callings subject to Congressional control. The result of the present decision is to secure for this petitioner the judgment which the jury awarded him. It does not secure a proper system for dealing with occupational diseases. 61 I would reverse this judgment and remand the case to the Supreme Court of Missouri for proceedings consistent with this opinion. 62 Mr. Justice REED, Mr. Justice JACKSON, and Mr. Justice BURTON join in this opinion. 1 Respectively 45 U.S.C. § 51 et seq., 45 U.S.C.A. § 51 et seq., and 45 U.S.C. § 23 et seq., 45 U.S.C.A. § 23 et seq. 2 'Sander' is, colloquially, the name given by railroad men to the entire apparatus appurtenant to a locomotive which stores and and pipes it to the rails, as needed, to provide traction. The apparatus is mandatory equipment in interstate commerce, I.C.C. Rule 120, 49 C.F.R. § 91.120; I.C.C. Rule 235, 49 C.F.R. § 91.235. For succinct descriptions of a compressed-air powered sanding apparatus, see the successive opinions in Anderson v. Baltimore & O.R. Co., 2 Cir., 89 F.2d 629 and 2 Cir., 96 F.2d 796. 3 See note 9. 4 The section continues, 'and unless said locomotive, its bailer, tender, and all parts and appurtenances thereof have been inspected from time to time * * * and are able to withstand suc test or tests as may be prescribed in the rules and regulations hereinafter provided for.' 45 U.S.C. § 23, 45 U.S.C.A. § 23, 36 Stat. 913, 38 Stat. 1192, 43 Stat. 659. Section 2 was first enacted in 1911 to cover the locomotive boiler and its appurtenances, 36 Stat. 913. It was broadened in 1915 to include the entire locomotive and tender, 38 Stat. 1192; and see the 1924 amendment. 43 Stat. 659. The second amended complaint, to which the demurrer involved in the first appeal applied, did not mention specifically either the Federal Employers' Liability Act or the Boiler Inspection Act, but set forth facts generally from which the state supreme court's conclusions concerning the applicability of those acts were drawn. 5 45 U.S.C. § 56, 45 U.S.C.A. § 56. The former two-year statute of limitations, 35 Stat. 66, was lengthened to three years by the 1939 amendment. 53 Stat. 1404. 6 Cf. Pieczonka v. Pullman Co., 2 Cir., 89 F.2d 353, 356—357. 7 See Pieczonka v. Pullman Co., 2 Cir., 89 F.2d 353, 356—357. 8 Compare the New York Court of Appeals' similar application, to a silicosis claim, of the Federal Employers' Liability Act's statute of limitations. Sadowski v. Long Island R. Co., 292 N.Y. 448, 457—458, 55 N.E.2d 497. 9 The opinion rendered on the first appeal, 352 Mo. 211, 176 S.W.2d 471, e tensively quotes the original complaint's allegations concerning negligence, id., 352 Mo. at pages 215—216, 176 S.W.2d 471; and a copy of that complaint appearing in the present record shows that the quotations comprehend substantially all of the allegations in that respect. The present record does not include a copy of the text of the judgment rendered on the first appeal; but that deficiency is merely formal, if it is a deficiency in any sense, since the opinions on both appeals supply us with full knowledge of the nature and effect of that judgment. 10 'As its judgment upon the first writ was merely for a reversal of the court below, and for a * * * trial, such judgment, not being final, could not be made the subject of a writ * * * from this court.' United States v. Denver & R.G.R. Co., 191 U.S. 84, 93, 24 S.Ct. 33, 36, 48 L.Ed. 106. See Coe v. Armour Fertilizer Works, 237 U.S. 413, 418—419, 35 S.Ct. 625, 626, 627, 59 L.Ed. 1027; Gospel Army v. City of Los Angeles, 331 U.S. 543, 67 S.Ct. 1428, 91 L.Ed. 1662, and authorities cited. 11 Cf. Creason v. Harding, 344 Mo. 452, 463—464, 126 S.W.2d 1179. 12 If it were otherwise, our corrective hand could be stayed by any local procedure which chose to resolve all substantial federal questions in an intermediate phase of litigation. The present case lends point to language used by this Court in dismissing a writ of error to a state court for lack of a final judgment: 'When the litigation in the state courts is brought to a conclusion, the case may be brought here upon the Federal questions already raised as well as any that may be raised hereafter; for although the state courts, in the proceedings still to be taken, presumably will feel themselves bound by the decision heretofore made by the (state) supreme court * * * as laying down the law of the case, this court will not be thus bound.' Grays Harbor Logging Co. v. Coats-Fordney Logging Co., 243 U.S. 251, 256 257, 37 S.Ct. 295, 297, 61 L.Ed. 702. Accordingly, even if it were assumed that no federal question of substance was decided on the second appeal and that the 'basis for our jurisdiction must be found, if at all, in the decision and opinion of the state Supreme Court upon a prior appeal in the same case,' petitioner Urie has 'invoked the jurisdiction of this court at the first opportunity open to (him), and the fede al question, having been considered by the state Supreme Court, is properly here.' Gant v. Oklahoma City, 289 U.S. 98, 100, 53 S.Ct. 530, 531, 77 L.Ed. 1058. See, generally, Boskey, Finality of State Court Judgments under the Federal Judicial Code, 43 Col.L.Rev. 1002, 1007, 1016. 13 Bailey v. Central Vermont R. Co., 319 U.S. 350, 352, 63 S.Ct. 1062, 1063, 1064, 87 L.Ed. 1444; Chesapeake & Ohio R. Co. v. Kuhn, 284 U.S. 44, 46—47, 52 S.Ct. 45, 46, 76 L.Ed. 157; St. Louis, I.M. & S.R. Co. v. McWhirter, 229 U.S. 265, 277, 33 S.Ct. 858, 862, 863, 57 L.Ed. 1179; Second Employers' Liability Cases (Mondou v. New York, N.H. & H.R. Co.), 223 U.S. 1, 54—55, 57—58, 32 S.Ct. 169, 176—177, 178, 56 L.Ed. 327, 38 L.R.A., N.S., 44. Cf. Schlemmer v. Buffalo, R. & P.R. Co., 205 U.S. 1, 27 S.Ct. 407, 51 L.Ed. 681. 14 See, e.g., Ellis v. Union Pacific R. Co., 329 U.S. 649, 67 S.Ct. 598, 91 L.Ed. 572; Western & Atlantic R. Co. v. Hughes, 278 U.S. 496, 49 S.Ct. 231, 73 L.Ed. 473. Cf. Brady v. Southern R. Co., 320 U.S. 476, 64 S.Ct. 232, 88 L.Ed. 239; Chicago, M. & St. P.R. Co. v. Coogan, 271 U.S. 472, 46 S.Ct. 564, 70 L.Ed. 1041. 15 '(2) Defendant negligently failed to furnish plaintiff a reasonably safe place in which to work in that the locomotives on which plaintiff was required to work as fireman were supplied with sand for the sanders thereof which contained a very high percentage of silica or silican dioxide as above, and defendant knew such fact and still defendant used same and used said engines under the conditions above described. '(3) Although the defendant was using sandy substance containing such quantity of silica, and using said locomotives that would cause and allow large quantities of silica dust containing silica to be created and come into the cab and be inhaled, yet defendant negligently failed to warn the plaintiff and negligently failed to furnish him with a respirator or device to prevent the inhalation of said silica dust.' 16 The decision in Sadowski v. Long Island R. Co., 292 N.Y. 448, 55 N.E.2d 497, sustaining a recovery for silicosis under the Federal Employers' Liability Act. contained the following statements, which are relevant to the apparent ruling of the Missouri Supreme Court with respect to compliance with customary trade standards: 'Evidence that some railroads furnished no such contrivances as plaintiff claimed were necessary for the use of men working under similar conditions or furnished similar places to work for men doing work similar to that required of plaintiff does not establish, as matter of law, that no such contrivances or no different place in which to work or no different applicances to carry on the work were required in the case at bar in the exercise of ordinary care. The ultimate question of fact was not what particular protective means someone else used in similar work. It was whether or not, under the particular conditions described in this case, the defendant furnished plaintiff a reasonably safe place in which to work and such protection in connection with his work against the inhalation of silica dust as would be expected of a person in the exercise of ordinary care under those conditions.' 292 N.Y. at pages 456—457, 55 N.E.2d at page 501. 17 After quoting petitioner's admission referred to above, the Missouri Supreme Court's opinion stated: 'The implication from this allegation is that the sanders as such were not defective, but that the trouble was maladjustment. Just what was wrong with the adjustment is not alleged, and plaintiff does not claim that the situation is one for the res ipsa loquitur rule.' 352 Mo. at page 219, 176 S.W.2d at page 475. The inference drawn by the court was, in effect, either a rule of law that using maladjusted sanders could not be negligence even though caused, as petitioner expressly alleged, by respondent's want of due care; or alternatively a ruling, as matter of law, that to constitute a sufficient § owing of negligence the allegation of maladjustment must specifically state the types and causes of it. Neither conclusion accords with applicable federal standards in such cases. If the latter was the court's intention, the matter was at most one for permitting amendment or cure by proof; if the former, the conclusion ran in the teeth both of federal and of generally accepted standards for showing negligence. 18 Nor do we find merit in respondent's contention that Urie, prior to the 1939 amendment abolishing assumption of risk as a defense to ordinary negligence suits under the Federal Employers' Liability Act, 45 U.S.C. § 54, 45 U.S.C.A. § 54, 53 Stat. 1404, amending 35 Stat. 66, assumed the risk of injury. Nothing in Urie's original complaint remotely suggests such knowledge on his part of the likelihood of contracting silicosis as would justify the conclusion that Urie 'anticipated and decided to chance the particular risk * * *.' Owens v. Union Pacific R. Co., 319 U.S. 715, 723, 63 S.Ct. 1271, 1275, 87 L.Ed. 1683. Accordingly we are not called on to determine whether any retroactive effect is to be given the 1939 amendment, which this Court has described as requiring that 'cases tried under the Federal Act * * * be handled as though no doctrine of assumption of risk had ever existed.' Tiller v. Atlantic Coast Line R. Co., 318 U.S. 54, 64, 63 S.Ct. 444, 450, 87 L.Ed. 610, 143 A.L.R. 967. Specifically we need not consider whether, even assuming the amendment was not intended to cover injuries accruing before its enactment but sued on thereafter (an open question in this Court, see Owens v. Union Pacific R. Co., supra, 319 U.S. at page 725, 63 S.Ct. at pages 1276, 1277, 87 L.Ed. 1683), the amendment nonetheless covers injuries which, like Urie's accrued and were sued on thereafter but where the beginning of the alleged assumption of risk may have antedated the amendment. 19 See 42 Cong.Rec. 4265, 4426—4439, 4526—4551, 4755; H.R.Rep.No. 1386, 60th Cong., 1st Sess., S.Rep.No. 460, 60th Cong., 1st Sess. 20 'The Act is not to be narrowed by refined reasoning * * *. It is to be construed liberally to fulfill the purposes for which it was enacted * * *.' Jamison v. Encarnacion, 281 U.S. 635, 640, 50 S.Ct. 440, 442, 74 L.Ed. 1082. Similarly, the Boiler Inspection Act, 'like the Safety Appliance Act, 45 U.S.C.A. § 1 et seq., is to be liberally construed in the light of its prime purpose, the protection of employees and others by * * * the use of safe equipment.' Lilly v. Grand Trunk Western R. Co., 317 U.S. 481, 486, 63 S.Ct. 347, 351, 87 L.Ed. 411. 21 See, e.g., Cell v. Yale & Towne Mfg. Co., 281 Mich. 564, 566, 275 N.W. 250; but cf. id., 281 Mich. at pages 567—568, 275 N.W. 250. 22 Hurle's Case, 217 Mass. 223, 224, 104 N.E. 336, 337, L.R.A.1916A, 279, Ann.Cas.1915C, 919; see Hood & Sons v. Maryland Casualty Co., 206 Mass. 223, 92 N.E. 329, 30 L.R.A.,N.S., 1192, 138 Am.St.Rep. 379; cf. Gentry v. Swann Chemical Co., 234 Ala. 313, 317 318, 174 So. 530. See Banks, Employer's Liability for Occupational Diseases, 16 Rocky Mt.L.Rev. 60, 61—64. 23 See, e.g., Jeffreyes v. Charles H. Sager Co., 198 App.Div. 446, 191 N.Y.S. 354, affirmed 233 N.Y. 535, 135 N.E. 907; Iwanicki v. State Industrial Accident Commission, 104 Or. 650, 205 P. 990, 29 A.L.R. 682. Restrictive constructions of the term 'accident' and its variants have generally been followed by agitation, now largely successful, for legislation specifically extending compensation to occupational disease. See, e.g., Perry, Occupational Disease Legislation, 2 Newark L.Rev. 83; Occupational Disease Compensation, 26 Am.Lab.Leg.Rev. 2; Andrews, The Tragedy of Silicosis, id. at 3. For local studies of the problems posed see Owens, Diseases and Injuries to Health under the Wisconsin Workmen's Compensation Act, 1945 Wis.L.Rev. 357; 3 John Marshall L.Q. 241. 24 Claim of Edward Edmonds, June 23, 1913, Opinions of Solicitor, U.S. Department of Labor (1915) 259. 25 Claim of Willard E. Jule, July 28, 1913, Opinions of Solicitor, U.S. Department of Labor (1915) 261; cf. Claim of C. M. Arata, Dec. 31, 1913, id. at 264 (lead poisoning and bronchitis). 26 Claim of Basil E. Clark, Apr. 11, 1914, Opinions of Solicitor, U.S. Department of Labor (1915) 270. 27 Claim of Edward Devine, Feb. 9, 1915, Opinions of Solicitor, U.S. Department of Labor (1915) 277. Whether the earlier decision that pneumonia was not compensable, Claim of John Sheeran, Apr. 25, 1910, 28 Op. Atty. Gen. 254, is consistent with the foregoing cases, or with cases awarding compensation for 'the bends,' Claim of Wm. Murray, Nov. 3, 1911, Opinions of Solicitor, U.S. Department of Labor (1915) 239, or sunstroke, Claim of J. J. Walsh, Mar. 16, 1911, id. at 231, we need not determine; Congress' dissatisfaction with the distinction is clear from the course of subsequent legislation: When the Federal Employees' Compensation Act of May 30, 1908, was superseded in 1916 by the broader and still extant general federal employee compensation system, 5 U.S.C. § 751 et seq., 5 U.S.C.A. § 751 et seq., the statute as originally enacted provided compensation for 'disability' or 'personal injury' without further qualification or definition. 39 Stat. 742. Proposals specifically to include occupational disease were rejected, at least in part, for the reasons that at the committee hearings 'there was considerable difficulty in defining the term 'occupational disease'; and it was also called to our attention that in quite a number of cases in a number of States the court held this language which we have in the bill would cover occupational diseases in certain cases—at least a number of them * * *.' 53 Cong.Rec. 10899. In 1924 the 1916 Act was amended, 43 Stat. 389, 'to correct two rulings of the Comptroller General of the United States * * *.' H.R.Rep.No. 280, 68th Cong., 1st Sess. 1. One of the rulings remedied was that occupational diseases were not included within the 1916 Act; the other uling was that the Comptroller General had power to review decisions of the United States Employees' Compensation Commission. As to the first of these errors, the House Judiciary Committee, in reporting out the 1924 amendment, expressly referred to its 1916 report, H.R.Rep.No. 678, 64th Cong., 1st Sess. 7, to show that in drafting the 1916 Act 'the committee intended to remedy the inadequacy of the act of May 30, 1908, with reference to 'occupational diseases." H.R.Rep.No. 280, 68th Cong., 1st Sess. 3. See 65 Cong.Rec. 8154. 28 45 U.S.C. § 1 et eq., 45 U.S.C.A. § 1 et seq. 29 See note 4 and text. 30 In ordinary negligence claims under the Federal Employers' Liability Act, contributory negligence while not a bar to the action is available in diminution of damages, 45 U.S.C. § 53, 45 U.S.C.A. § 53, 35 Stat. 66. Assumption of risk was a complete defense to negligence claims, Seaboard Air Line Ry. v. Horton, 233 U.S. 492, 503, 34 S.Ct. 635, 639, 58 L.Ed. 1062, L.R.A.1915C, 1, Ann.Cas.1915B, 475; until its abolition in 1939, 45 U.S.C. § 54, 45 U.S.C.A. § 54, 53 Stat. 1404, amending 35 Stat. 66. See Tiller v. Atlantic Coast Line R. Co., 318 U.S. 54, 63 S.Ct. 444, 87 L.Ed. 610, 143 A.L.R. 967. The quoted statutory phrase was held to acknowledge creation of a cause of action 'under the Federal Employers' Liability Act' for personal injury to an employee due to violation of the Safety Appliance Acts, 45 U.S.C. § 1 et seq., 45 U.S.C.A. § 1 et seq., since, 'By the phrase 'any statute enacted for the safety of employees,' the Congress evidently intended to embrace its Safety Appliance Acts.' Moore v. Chesapeake & O.R. Co., 291 U.S. 205, 210, 54 S.Ct. 402, 404, 78 L.Ed. 755. Similarly an employee injury suit alleging violation of the Boiler Inspection Act is brought 'under the Federal Employers' Liability Act * * *.' Lilly v. Grand Trunk Western R. Co., 317 U.S. 481, 485, 63 S.Ct. 347, 351, 87 L.Ed. 411. 31 Respondent places some reliance on the proposition that congressional limitation of the Boiler Inspection Act to accidental injury must be inferred from the provision requiring the carrier to report every locomotive 'accident' resulting in 'serious injury.' 45 U.S.C. § 32, 45 U.S.C.A. § 32. We see no reason to think that a policy requiring the reporting of all injuries the causes of which are readily identifiable in terms of time and place compels the conclusion that other injuries, the origins of which may be remote and ill-defined at the moment of diagnosis, should not be compensable when the carrier's underlying responsibility becomes a matter of demonstrable fact. It is to be noted, furthermore, that an argument similar to respondent's was rejected with reference to congressional intent to include occupational diseases in the 1916 Federal Employees' Compensation Act, H.R.Rep.No. 280, 68th Cong., 1st Sess. 3, and, although advanced with reference to the 1908 Federal Employees' Compensation Act, Claim of A. E. Clark, Dec. 17, 1908, Opinions of Solicitor, U.S. Department of Labor (1915) 188, 190, did not bar compensation of the questionably 'accidental' injuries described in the text at notes 24—27 supra. 32 E.g., the requirement for closing 'unnecessary or excessive openings in locomotive cabs,' imposed by I.C.C. Rule 116(g), 49 C.F.R. § 91.116(g), after the Napier decision, was, as the opinion announcing the rule makes plain, designed to protect the health of firemen and engineers from wind, snow and rain. Wisconsin R.R. Comm'n v. A. & R.R. Co., 142 I.C.C. 199. The rule, not squarely applicable to the present case since limited to the winter months, was formulated after extended hearings in a proceeding in which the Missouri Pacific, like almost every other major American railroad, was a named party defendant. Wisconsin R.R. Comm'n v. A. & R.R. Co., supra, Transcript of Record, Complaint of Railroad Commission of Wisconsin, p. 17. In the light of the instant case, it is of interest to note that the Engineer's Brotherhood and the Firemen's Brotherhood, interveners in support of the proposed rule, alleged need for protection from, inter alia, 'excessive * * * sand and dust storms.' Transcript of Record, supra, Joint Petition of Intervention of Alvanley Johnston and D. B. Robertson, p. 3; Amended Joint Petition of Intervention of Alvanley Johnston and D. B. Robertson, p. 3. No substantial evidence seems to have been adduced to support the allegation, Transcript of Record, supra, Brief for Intervening Brotherhoods, pp. 14—15, although there was evidence of severe winter wind in Missouri, Transcript of Record, supra, at 2056, and in other parts of the country, id. at 2136, 2369, 4541, 5005, 6088, 6350. The Interstate Commerce Commission noted in its opinion that 'The amendments to rule 116 should be regarded as minimum requirements which are not intended to take care of the most extreme conditions.' 142 I.C.C. 199, 210. 33 The only evidence before us is the partial summary of petitioner's case by the Missouri Supreme Court on the second appeal: 'Bruce Brill, a witness for plaintiff, testified he had worked at the Missouri Pacific roundhouse at Joplin for about 18 years and until November 4, 1942; that the 'engines that came in * * * I would say most of them, at least three out of five, would have the sanders reported in bad order * * * maybe it was a broken nipple, something in the dome, or a loose connection.' A broken nipple would cause the sand to dribble on to the rails under the drivers, and the 'speed would suck it up into the cab after it was ground under the wheels.' The dust would be sucked in 'through the deck and around the boiler head or openings in the grate shakers.' When the witness cleaned out the cabs he found sand particles and roadbed dust. * * * Plaintiff testified the (sand) dust would 'come up through the openings in the cab floors, around the grate shaker riggings and the stoker head in the deck of the engine on each side of the fire door against the boiler head. * * * Sometimes there would be wide cracks between the boiler head and the deck floor where the bolts were broken off and it was worn and loose. The deck boards would be cracked and sometimes slivered out, and it would come through any openings like that; * * * would collect on the lights; * * * would get our clothing very dusty; * * * make your mouth and nose very dry." 357 Mo. at pages 744—745, 210 S.W.2d at page 101. 34 I.C.C. Rule 120, 49 C.F.R. § 91.120, applicable to steam locomotives, provides: 'Locomotives shall be equipped with proper sanding apparatus, which shall be maintained in safe and suitable condition for service, and tested before each trip. Sand pipes must be securely fastened in line with the rails.' It is of no consequence that Rule 120 may not have been specifically called to the jury's attention. Lilly v. Grand Trunk Western R. Co., 317 U.S. 481, 488—489, 63 S.Ct. 347, 352, 353, 87 L.Ed. 411. It is urged upon us that Rule 120 was designed to insure an adequate auxiliary braking system rather than to protect employees against silicosis, and hence that, notwithstanding respondent's breach of the rule and the governing statute, petitioner cannot complain of an injury flowing from the breach which was not the injury the Interstate Commerce Commission sought to guard against. We do not dispute the narrow scope of Rule 120; nor do we doubt that conventional tort doctrine imposes absolute liability for violation of a statutory duty only where the injury is one the statute was designed to prevent. See, e.g., Di Caprio v. New York Central R. Co., 231 N.Y. 94, 131 N.E. 746, 16 A.L.R. 940; but cf. the remarks of Mr. Justice Brewer in Atchison, T. & S.F.R. Co. v. Reesman, 8 Cir., 60 F. 370, 373, 23 L.R.A. 768. But we think the liability imposed by the Boiler Inspection Act is of broader character and that the correct rule is the one laid down in Louisville & N.R. Co. v. Layton, 243 U.S. 617, 621, 37 S.Ct. 456, 457, 61 L.Ed. 931, which this Court has had repeated occasion to apply in connection with the Safety Appliance Acts: 'The language f the acts and the authorities we have cited make it entirely clear that the liability in damages to employees for failure to comply with the law springs from its being made unlawful to use cars not equipped as required,—not from the position the employee may be in, or the work which he may be doing at the moment he is injured. This effect can be given to the acts and their wise and humane purpose can be accomplished only by holding, as we do, that carriers are liable to employees in damages whenever the failure to obey these Safety Appliance Laws is the proximate cause of injury to them when engaged in the discharge of duty.' See Davis v. Wolfe, 263 U.S. 239, 243, 44 S.Ct. 64, 66, 68 L.Ed. 284; Coray v. Southern Pacific Co., 335 U.S. 520, 522—523, 69 S.Ct. 275, 276, 277; Brady v. Terminal R. Ass'n of St. Louis, 303 U.S. 10, 16, 58 S.Ct. 426, 429, 430, 82 L.Ed. 614; Swinson v. Chicago, St. P., M. & O.R. Co., 294 U.S. 529, 531, 55 S.Ct. 517, 518, 79 L.Ed. 1041, 96 A.L.R. 1136; Fairport, P. & E.R. Co. v. Meredith, 292 U.S. 589, 54 S.Ct. 826, 78 L.Ed. 1446. Cf. Minneapolis & St. Louis R. Co. v. Gotschall, 244 U.S. 66, 37 S.Ct. 598, 61 L.Ed. 995; St. Louis & San Francisco R. Co. v. Conarty, 238 U.S. 243, 35 S.Ct. 785, 59 L.Ed. 1290.

78

337 U.S. 198 69 S.Ct. 1009 93 L.Ed. 1308 UNITED STATESv.PENN FOUNDRY &MFG. CO., Inc. No. 253. Argued Jan. 7—10, 1949. Decided May 31, 1949. Mr. Melvin Richter, Washington, D.C., for petitioner. Mr. David G. Bress, Washington, D.C., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 This is an action in the Court of Claims by the respondent, Penn Foundry and Manufacturing Company, Inc., against the United States for loss of anticipated profits alleged to have been caused by the latter's cancellation of a contract for gun mounts for the Navy. The cancellation occurred a few days after the contract had been awarded by the United States to the respondent on February 23, 1942. The question presented is whether the findings of fact made by the Court of Claims are sufficient to sustain its judgment requiring the United States to pay for such loss. 75 F.Supp. 319, 110 Ct.Cl. 374. We hold that they are not. We so hold because of (1) the absence of any finding of the readiness and capacity of the respondent to perform certain of its contractual obligations upon which its profits were contingent and (2) the presence of certain affirmative findings which preclude the drawing of any sufficient inference of such readiness and capacity from the other findings. 2 The record includes only the pleadings and accompanying exhibits filed in the Court of Claims and that court's special findings of fact, conclusion of law, opinion, judgment and refusal to grant a new trial. We do not have before us the report which its Commissioner made to the Court of Claims or the testimony upon which he or that court relied. While additional claims were made by the respondent in its original petition to the Court of Claims and while the United States originally contested the binding force of the contract, the errors specified in the present proceeding question only the right of the respondent to recover $80,000 as damages for its alleged loss of anticipated profits. We granted certiorari because of the possible relation of the result in this case to claims under many war contracts cancelled by the United States. 335 U.S. 857, 69 S.Ct. 130. T e findings of fact show the following: 3 In 1911, the respondent bought a manufacturing plant consisting of six buildings in Waynesboro, Virginia. The main buildings, each 57 x 100 feet, had been built in 1890 and were referred to respectively as the machine shop, the foundry and the blacksmith shop. At one time the respondent manufactured circular saws and, at another, did work on brake shoes. Since 1931, the plant had been used only for minor engagements, requiring not more than four or five employees. It had been idle for some years when, late in 1940 or early in 1941, the respondent's officers became desirous of engaging in the National Defense Program. Most of those officers were then in other businesses at or near Pittsburgh, Pennsylvania. One stockholder and director was in the real estate business in Waynesboro. He had been the local manager of the plant when it was in operation and had continued thereafter as such and as the statutory agent of the company. 4 In January, 1941, the respondent engaged an additional man as assistant to the president and, on February 24, 1942, an engineer as general manager. In April, 1941, it submitted a proposal to the Navy for the manufacture of 500 3-inch 50-caliber gun mounts. In July, a representative of the Gun Mount Section of the Navy Department inspected the plant. Following a conference in September, the respondent was asked by the Government to furnish information as to financial ability, commitments of subcontractors, and a detailed study of the machine tool operations, predicated upon a possible award of 150 3-inch 50-caliber mounts. In October and December, the respondent submitted additional information and slightly modified its proposals. December 22, the respondent's proposal as to prices, quantities, delivery schedule, payments and options for additional mounts was accepted as satisfactory and the respondent agreed to secure a letter from a surety company indicating that a bond of the nature required by the Navy's Bureau of Supplies and Accounts would be furnished. 5 The respondent received a 'letter of intent,' dated December 29, 1941, signed by the Paymaster General of the Navy as contracting officer and approved by the Under Secretary of the Navy. It stated that it was anticipated that the Navy Department would place an order with the respondent for the manufacture of 150 gun mounts. It specified the delivery of two complete mounts in May, 1942, three in June, five in July, and thereafter at a minimum rate of ten mounts per month. The letter also authorized the respondent to purchase materials and spare parts, subject to confirmation by the Government's purchasing officer, and to proceed with the production of the mounts in anticipation of the placing of the order for their production. However, under date of January 7, 1942, the Government held up this authorization of expenditures until such time as the respondent furnished the Government with the firm commitment of an approved surety company to act as surety on a performance bond. January 10, the respondent accepted the letter of intent. January 29, the Navy Department stated that the necessary letter from a surety company had not been received and that failure promptly to submit such a letter might result in the termination of the letter of intent. February 3, the respondent's representatives submitted a letter from a surety company indicating that that company thought that a bond in connection with a contract of this size would have to be reinsured and that, unless some change were made in the financial setup, reinsurance would be declined. It added, however, that, if either of two suggested plans relative to refinancing were accomplished and if the respondent furnished certain information as to new key personnel to be engaged by the respondent, then the reinsurance could be obtained and the surety company could execute a bond. The findings of fact disclose a difference in the testimony as to the reaction of the Government's represent tive to this letter. There is no finding that the Government's requirement in this regard ever was met. 6 Much in the following findings of fact Nos. 5—8 is vital to the issue before us: 7 '5. On January 16 and 17, 1942, plaintiff's plant was visited by inspectors of the Philadelphia Inspection District of the Navy Department to instruct plaintiff's personnel as to the Navy inspection requirements. At the time there was no one at the plant except the watchman and the local manager. No work at all was being performed at the time. On February 19, 1942, a production specialist from the War Production Board visited the plant. His duties were to assist production in factories in the production of naval ordnance. At that time only the watchman was at the plant. The production specialist inspected the plant with the local manager, who was called from his real estate office, and also talked with Mr. Johnson (the new assistant to the president), who was called to Waynesboro for that purpose. Reports of these visits were given to the Navy Department. At that time the company was not prepared to undertake work of the character proposed by the contract, and would not for an indefinite time be prepared successfully to complete a contract for 150 gun mounts. Plaintiff's foundry was incapable of production of the cast steel forgings required for the gun mounts. It was plaintiff's plan, as shown by its proposal to the Government, to subcontract for these castings, as well as for other parts of the work. Plaintiff had contacted certain producers, who were willing to furnish castings and other parts, but no contracts for the castings or any other parts had been made by plaintiff. There was no reason to suppose that the plaintiff could not have obtained these parts from subcontractors. Plaintiff planned to use around 150 mechanics, skilled, semi-skilled, and unskilled, in the machining and assembling of the gun mounts. Plaintiff had expected to secure former railroad shop mechanics residing near Waynesboro as the bulk of its employees. The construction of gun mounts is difficult and exacting work. Manufacturers experienced in somewhat similar work with large organizations and trained mechanics required from seven months to one year from the time of receiving notice to proceed until the first gun mounts were produced. general manager was at this time a and no force of trained personnel to train unskilled employees. Plaintiff's proposed general manager was at this time a regular employee of another company in Ohio. He had been assisting plaintiff in its plans under the expectation that he would sever his connection with the other company and become plaintiff's general manager. A contract between plaintiff and the engineer under the terms of which the engineer was engaged as general manager was executed on February 24, 1942. 8 '6. Under date of February 23, 1942, the Navy Department mailed to plaintiff a notice of award of contract, No. LL96553, for gun mounts, in the amount of $2,087,555, which notice of award was received by the plaintiff on February 24, 1942. On February 24, 1942, after it had received the notice of award, plaintiff received a telegram as follows: 9 'NOTICE OF AWARD CONTRACT NOS 96553 FORWARDED IN ERROR RETURN FOR CANCELLATION NO AWARD TO YOU ACKNOWLEDGE REFERRING SYMBOL SPF— 10 'RAY SPEAR PAYMASTER GENERAL NAVY 11 'On March 5, 1942, the Navy Department prepared and mailed to plaintiff a letter as follows: 12 'As it is apparent that you cannot secure a bond to insure faithful performance of the contract, no contract will be issued to you, and the Letter of Intent LL—NOs—96553 (SPC), dated 29 December 1941, is hereby cancelled. 13 'Since no authority has been given you to incur any expenses under the Letter of Intent, there can be no liability on the Government by reason of the cancellation of the Letter of Intent. 14 'Please return the original and all copies of the Letter of Intent, unsigned, to the Bureau of Supplies and Accounts for cancellation 15 '7. * * * The evidence does not disclose that any expenditures or expenses were incurred in reliance on the letter of intent or notice of award of contract. 16 '8. If the plaintiff had been permitted to perform its contract, it would have made a net profit of not less than $80,000.' (Emphasis supplied.) 75 F.Supp. 319, 110 Ct.Cl. at pages 378—381. 17 We are bound by the foregoing findings in testing the court's conclusion of law and judgment that the respondent is entitled to recover $80,000 for the loss of anticipated but unearned profits. United States v. Causby, 328 U.S. 256, 267, 66 S.Ct. 1062, 1068, 90 L.Ed. 1206; United States v. Seminole Nation, 299 U.S. 417, 422, 57 S.Ct. 283, 287, 81 L.Ed. 316; United States v. Esnault-Pelterie, 299 U.S. 201, 205, 206, 57 S.Ct. 159, 161, 162, 81 L.Ed. 123; Crocker v. United States, 240 U.S. 74, 78, 36 S.Ct. 245, 246, 60 L.Ed. 533; Stone v. United States, 164 U.S. 380, 382, 383, 17 S.Ct. 71, 41 L.Ed. 477. 18 The restricted scope of the errors sought to be reached by the petition for certiorari has eliminated all questions as to the binding force of the contract.1 The Government, however, argues that, under the then existingstatutes and regulations, it had a right to cancel the contract at its option without incurring liability for the respondent's alleged loss of anticipated profits caused by such cancellation.2 It argues also that the practice of inserting, in each contract for war supplies, an express provision permitting such a cancellation by the United States had developed to such an extent that we should recognize the provisions as constituting a part of the formal contract which the Government stated was to follow the award made to the respondent, February 23, 1942.3 It is not necessary, however, to sustain those claims in order to support the disposition which we are making of this case. 19 The Government argues further that the amount of the damages claimed by the respondent is not established with reasonable certainty by the findings of fact. The only finding as to the amount of such damages is the ultimate finding of fact No. 8, which says that 'If the plaintiff had been permitted to perform its contract, it would have made a net profit of not less than $80,000.4 There are no findings of evidentiary or primary facts on the subject of damages or the computation of anticipated net profits. The total payment to be made to the respondent for full performance of its part of the contract was fixed by the award at $2,087,555. Accordingly, the amount of the gross receipts anticipated by the respondent is not a remote or speculative estimate of the kind often encountered in claims for anticipated profits. This Court long has recognized the right to recover damages for the loss of anticipated profits when they result from a breach of contract and when there is a sufficient basis for estimating them with reasonable certainty.5 However, finding No. 8 as to the anticipated net profits in the instant case stands alone. Its sufficiency is open to argument in the absence of any findings as to the costs of production. The respondent seeks support for it in the indirect light thrown upon it by the opinion of the court below. However, even if that opinion may be resorted to to help interpret, although not to supplement, the court's findings of fact, it does not materially strengthen the respondent's position. For example, after reciting certain of the respondent's handicaps in supplying the gun mounts, to say nothing of supplying them at a net profit, the opinion says, 75 F.Supp. 326, 110 Ct.Cl. at page 387: 20 'We think that the consideration and tolerance with which the Government, during the time here in question, treated contractors actually engaged in producing defense material, if the contractor in good faith did his best to perform, is an indication that the plaintiff, if allowed to perform, would probably have succeeded in making a profit. 21 'On the other hand, it must be said that the plaintiff would have had problems and difficulties that an active, going concern would not have had, and those difficulties would probably have adversely affected its profits. On the whole we can o only what a jury would do in a similar case. We conclude that the plaintiff would probably have made net profits of about 4% of the gross contract price, and we award it $80,000.' 22 The opinion contributes nothing on the subject of costs except an emphasis upon the burden of them. The opinion points only to a suggested rule of thumb as a means of estimating the respondent's anticipated net profits. It suggests that the net profits, under the circumstances of this case, should be 'about 4% of the gross contract price, * * *.' 23 Whether or not a reexamination of all the evidence that was before the court below might cure this uncertainty we cannot tell. We can conclude only that, on the limited findings before us, the amount, if any, of the respondent's anticipated net profit rests upon that court's rough estimate rather than upon its findings of evidentiary facts. We do not, however, decide the case on that issue. More fundamental to the respondent's case than the amount of its anticipated profits is the need for proof of the highly material facts of its willingness, readiness and capacity to manufacture and deliver the required gun mounts in the quantities and at the times specified. 24 1. There is no finding of the readiness and capacity of the respondent to deliver the gun mounts in the quantities and at the times required by the contract.—In the absence of actual tenders of the required gun mounts, such readiness and capacity are essential facts material to the respondent's right to receive payments under the contract. Without a right to such payments the respondent could realize no profits. See Restatement, Contracts §§ 284, 280(1), 281, 318(c), 395, 397 (1932). This issue goes deeper than that of the required reasonable certainty of the amount of the anticipated net profits claimed as damages. In a number of cases where this Court has allowed recovery for the loss of anticipated profits, it has emphasized its finding of a demonstrated willingness, readiness and capacity, on the part of the claimant, to perform the obligations which, if performed, would have entitled the claimant to payment under the contract. For example, in United States v. Purcell Envelope Co., 249 U.S. 313, 39 S.Ct. 300, 63 L.Ed. 620, the United States, without adequate cause to do so, cancelled a recently made contract to purchase, from the Purcell Envelope Company, a four-years' supply of envelopes and wrappears for the Post Office Department for $2,460,556.22. This Court affirmed a judgment of the Court of Claims awarding the company $185,331.76 for its loss of anticipated net profits which it would have received if it had been allowed to perform the contract. In that case this Court said, 249 U.S. at page 316, 39 S.Ct. 301, 63 L.Ed. 620: 'The Envelope Company had, however, already made arrangements and contracts for the supplying to it of the necessary materials to fulfill the terms of the contract and was ready and willing at all times to fully perform it according to its terms.' Again, 249 U.S. at page 319, 39 S.Ct. 302, 63 L.Ed. 620: 'There is no charge of default against the Envelope Company, no charge of inability to perform its contract, * * *.' And finally, 249 U.S. at page 321, 39 S.Ct. 302, 63 L.Ed. 620: 'The court (of Claims) in its opinion expressly declares that the findings showed that the Envelope Company had fulfilled all the requirements of the Postmaster General and was ready and willing to furnish the envelopes and wrappers * * *.' See also, Hinckley v. Pittsburgh Steel Co., 121 U.S. 264, 276, 7 S.Ct. 875, 880, 30 L.Ed. 967; Smoot's Case, 15 Wall. 36, 44, 21 L.Ed. 107; United States v. Speed, 8 Wall. 77, 84, 19 L.Ed. 449. 25 In its petition for a writ of certiorari in the instant case, the United States specified that the Court of Claims erred in failing to make the finding that the respondent had not proved that it could have successfully performed the contract and made a profit thereon. Whether or not it was error to fail to make such an express inding of the respondent's failure of proof, it is clear that there was wholly absent from the court's findings any express statement that the respondent was ready and capable of performing its obligations under the contract. It did constitute error to render judgment for recovery of damages by the respondent in the absence of that material fact. There remains only the question whether an inference of the required readiness and capacity of the respondent to perform its obligations under the contract can be inferred from the other findings. 26 2. The presence of certain affirmative findings precludes the drawing of any sufficient inference of the respondent's readiness and capacity to deliver the gun mounts in the quantities and at the times required.—The respondent has the burden of proof. Finding of fact No. 5, quoted in full, supra, 337 U.S. at pages 202, 203, 69 S.Ct. at pages 1011, 1012, tells the story. The affirmative evidentiary findings there made add up to an inescapable ultimate finding that the respondent was not either ready or capable of making the required deliveries of two complete gun mounts in May, 1942, three in June, five in July and thereafter at a minimum rate of ten gun mounts a month. February 19, about three and one-third months before the first delivery was due, production was not under way, even in a preliminary stage. 27 'At that time the company was not prepared to undertake work of the character proposed by the contract, and would not for an indefinite time be prepared successfully to complet a contract for 150 gun mounts. * * * Manufacturers experienced in somewhat similar work with large organizations and trained mechanics required from seven months to one year from the time of receiving notice to proceed until the first gun mounts were produced. Plaintiff had no manufacturing organization and no force of trained personnel to train unskilled employees.' Finding No. 5, 75 F.Supp. 321, 110 Ct.Cl. at page 379. 28 The findings of fact show also that the following statement was made to the respondent in the Government's letter of March 5, 1942, after the Government's insistence upon a performance bond: 'As it is apparent that you cannot secure a bond to insure faithful performance of the contract, no contract will be issued to you, * * *.' Finding No. 6, 75 F.Supp. 322, 110 Ct.Cl. at page 380. There is no finding that the respondent ever met or was capable of meeting this requirement. 29 As against these devastating findings, only finding of fact No. 8 even suggests the respondent's readiness and capacity to perform the obligations necessary to entitle it to compensation under the contract. It says: 'If the plaintiff had been permitted to perform its contract, it would have made a net profit of not less than $80,000.' 75 F.Supp. 322, 110 Ct.Cl. at page 381. 30 This is no more than a rough estimate by the Court of Claims of what would be the amount of the respondent's reasonably anticipated profits if the contract were completed. It is not a finding that the respondent was ready and capable of making the deliveries upon which such profits must depend. The striking fact is that the other findings of the Court of Claims show that the respondent was not prepared to make those deliveries and that this was due to the respondent's own lack of capacity to perform its obligations. To support the judgment of the court below, this ultimate finding of fact No. 8 would have to be read as itself supplying the missing finding of the respondent's readiness and capacity to perform its full obligations. In that role it fails utterly. It not only contains no evidentiary findings on the subject but if it is regarded as implying them they come into direct conflict with the evidentiary findings of fact, Nos. 5 and 6, to the contrary. 31 The possibility, suggested in the opinion, of securing from the Government gratuitous extensions of time or concessions in the numbers of gun mounts to be delivered may have justified the respondent's hope tha it might ultimately produce, with inexperienced labor in its rehabilitated plant, the new products called for by the contract. Such a possibility, however, cannot justify the award of money damages by the Court of Claims to equal a loss of unearned anticipated profits dependent upon such possible gratuitous extensions or concessions. Even assuming the willingness of the respondent to perform its obligations, proof of its essential readiness and capacity to do so is missing. 32 The judgment of the Court of Claims accordingly is reversed and the cause is remanded with direction to enter judgment in favor of the United States. 33 Reversed. 34 Mr. Justice REED and Mr. Justice JACKSON concur in the reversal and dissent from the order to enter judgment in favor of the United States. In their opinion, respondent should have an opportunity to meet the stated requirements of proof. 35 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK, Mr. Justice MURPHY, and Mr. Justice RUTLEDGE agree, concurring. 36 It is clear and undisputed that the contract which the parties made was to be reduced to formal terms. Both the 'letter of intent'1 and the 'official award'2 by their express terms state that a 'formal contract' was contemplated. That circumstance raises difficulties for respondent which neither it nor the Court of Claims nor this Court has surmounted. 37 During the period of time relevant here, the Navy (apart from exceptions inapplicable to the type of contract involved in this case) had 'standard termination clauses for fixed price contracts' which 'in general form and substance' were inserted 'in most contracts.'3 They provided that in the event of cancellation 'for the convenience of the Government' the contractor would be paid 'for all costs, including a proper allocation of overhead expenses to the contract, incurred up to the time of termination, plus an allowance of 6% or 7% profit on all such costs except purchases of materials and unfinished goods, for which the contractor was reimbursed at cost.'4 38 'Standard termination clauses for fixed price contracts were developed late in 1941, and in general form and substance have been inserted in most contracts entered into since that time except for ship-construction contracts, which constitute a separate problem. The Department has not undertaken to modify outstanding contracts by the insertion of such clauses. It is difficult to estimate the time which would be required to incorporate such a clause by amendment in all contracts. However, it is doubted that such action would be administratively feasible except upon the initiative of the contractor.' 39 And see letter of the Acting Secretary, Oct. 10, 1943, id., 270—271. 40 That policy of the Navy, revealed as it was in official communications to Congress, is a matter of which we can take judicial notice. We have heretofore amplified findings of facts by reports of the Secretary of War. Tempel v. United States, 248 U.S. 121, 130, 39 S.Ct. 56, 59, 63 L.Ed. 162. The official communications which disclose the policy of the Navy in this case, like reports, rules and regulations of agencies5 or other communications to Congress,6 are equally reliable and authoritative and need no further proof. 41 Respondent, however, has not carried the burden of showing that it would have been saved from the application of that policy. It has not shown that its contract falls in an exempt class. It has not shown that what was usual or customary for other contracts of this type would not be written into the formalized agreement to which its contract with the Government was to be reduced. It has not shown how it could escape application of the Navy's general policy and be granted the favor of a contract without a termination clause. 42 Yet unless it can make that showing, it has not established by 'clear and direct proof,' as United States v. Behan, 110 U.S. 338, 344, 4 S.Ct. 81, 83, 28 L.Ed. 168, requires, that it would have been free to make the profits which it claims as damages for breach of the contract. For the customary termination clause relieved the promisor of any liability for unearned profits of the character claimed here. Since respondent did not show that at least in all probability its contract would have been free of that provision, it failed at the threshould of the case to carry the burden which rested on it. 1 The Government's brief says in a footnote that 'The finding of the court below that a binding contract was consummated is, in our view, of doubtful soundness.' However, in the same brief, the Government says that 'The United States does not question in this Court the Court of Claims' holding that the notice of award sent by the Award Section of the Navy Department's Bureau of Supplies and Accounts created a binding contract between the United States and respondent on February 23, 1943 (1942).' The Court of Claims said in its opinion: 'We think that the Government made a contract with the plaintiff, and that no mistake of the kind which would vitiate a contract occurred.' 75 F.Supp. 319, 325, 110 Ct.Cl. at page 385. In its specification of errors to be urged, and in its statement of the questions presented by its petition for a writ of certiorari, the Government does not question the binding force of the contract. 'Only the questions specifically brought forward by the petition for writ of certiorari will be considered.' Rule 38, 2, of this Court. 2 Title II, First War Powers Act of 1941, c. 593, 55 Stat. 839, § 201, 50 U.S.C.App. § 611, 50 U.S.C.A.Appendix, § 611; Executive Order No. 9001, 50 U.S.C.A.Appendix, § 611 note, 3 C.F.R.Cum.Supp. 1054—1056. See also, Contract Settlement Act of 1944, c. 358, 58 Stat. 649, 41 U.S.C. § 101 et seq., 41 U.S.C.A. § 101 et seq.; Act of August 7, 1946, c. 864, 60 Stat. 902, 41 U.S.C. § 106 note, 41 U.S.C.A. § 106 note, Regulation No. 7, Office of Contract Settlement, 32 C.F.R. 1944 Supp., § 8006.3(c), p. 3065; Office of Contract Settlement, A History of War Contract Terminations and Settlements, p. 27 (July, 1947). As to comparable legislation affecting contracts for supplies in World War I, see Act of June 15, 1917, c. 29, 40 Stat. 182; Act of March 2, 1919, c. 94, 40 Stat. 1272, 50 U.S.C.A. § 80 note; DeLaval Steam Turbine Co. v. United States, 284 U.S. 61, 52 S.Ct. 78, 76 L.Ed. 168; Barrett Co. v. United States, 273 U.S. 227, 47 S.Ct. 409, 71 L.Ed. 621; College Point Boat Corp. v. United States, 267 U.S. 12, 45 S.Ct. 199, 69 L.Ed. 90; Russell Co. v. United States, 261 U.S. 514, 43 S.Ct. 428, 67 L.Ed. 778. 3 See letter from James Forrestal, Acting Secretary of the Navy, October 10, 1943, Hearings before a Subcommittee on Contract Termination of the Senate Committee on Military Affairs on S. 1268, S. 1280 and S.J.Res. 80, 78th Cong., 1st Sess. 270—273 (1943), in which he said (p. 271): 'The Navy Department commenced in the summer of 1941 the consideration of contract termination as it might affect procurement. At that time there were few actual terminations in contemplation. Contractors were, nevertheless, questioning the Government's right to terminate contracts and fair provisions permitting such termination without cause and defining the rights of the parties in such event were deemed necessary to facilitate the urgently needed procurement and to minimize difficulties in the event of changing needs. A contract clause endeavoring to meet the procurement problem and safeguard the interests of both the Government and the contractors was then adopted and, except in respect of the ship construction contracts (a special problem), is in general form and substance in use in Navy contracts today.' See also, memorandum of the Industrial Readjustment Branch, submitted by James Forrestal, as Under Secretary of the Navy, January 11, 1944, in which it was stated that in the Navy— 'Standard termination clauses for fixed price contracts were developed late in 1941, and in general form and substance have been inserted in most contracts entered into since that time except for ship-construction contracts, which constitute a separate problem. The Department has not undertaken to modify outstanding contracts by the insertion of such clauses.' Appendix II, id. at p. 553 (1944). 4 The scope of our review of judgments of the Court of Claims is a limited one. The early practice and rules are discussed in Luckenbach S.S. Co. v. United States, 272 U.S. 533, 536—540, 47 S.Ct. 186, 187, 188, 71 L.Ed. 394. At the time of all the proceedings in the Court of Claims in the instant case, the authority of this Court to review causes upon petition for a writ of certiorari was set forth expressly in the Act of February 13, 1925, c. 229, 43 Stat. 939, § 3(b), as amended by the Act of May 22, 1939, c. 140, 53 Stat. 752, which became 28 U.S.C. § 288(b), 28 U.S.C.A. § 288(b). It provided: '(b) In any case in the Court of Claims, * * * it shall be competent for the Supreme Court, upon the petition of either party, whether Government or claimant, to require, by certiorari, that the cause be certified to it for review and determination of all errors assigned, with the same power and authority, and with like effect, as if the cause had been brought there by appeal. In such event, the Court of Claims shall include in the papers certified by it the findings of fact, the conclusions of law, and the judgment or decree, as well as such other parts of the record as are material to the errors assigned, to be settled by the Court. 'In such cases the Supreme Court shall have authority to review, in addition to other questions of law, errors assigned to the effect that there is a lack of substantial evidence to sustain a finding of fact; that an ultimate finding or findings are not sustained by the findings of evidentiary or primary facts; or that there is a failure to make any finding of fact on a material issue.' (Emphasis supplied.) The foregoing expressly controlled the practice until repealed by the new Judicial Code, effective September 1, 1948. The new Code, 28 U.S.C. § 1255, 28 U.S.C.A. § 1255, said merely: 'Cases in the Court of Claims may be reviewed by the Supreme Court by the following methods: '(1) By writ of certiorari granted on petition of the United States or the claimant; * * *.' The Reviser's Notes to that Section said: 'Provisions for authority to review, in addition to other questions of law, 'errors assigned to lack of evidence to sustain a finding of facts; that an ultimate finding or findings are not sustained by findings of evidentiary or primary facts; or that there is a failure to make a finding of fact on a material issue,' were omitted as unnecessary.' (Emphasis supplied.) H.R.Rep.No.308, 80th Cong., 1st Sess. A107 (1947). 5 After discussing the general rule against the recovery of remote and speculative anticipated profits, this Court said in Howard v. Stillwell & Bierce Mfg. Co., 139 U.S. 199, 206, 11 S.Ct. 500, 503, 35 L.Ed. 147: 'But it is equally well settled that the profits which would have been realized had the contract been performed, and which have been prevented by its breach, are included in the damages to be recovered in every case where such profits are not open to the objection of uncertainty or of remoteness, or where from the express or implied terms of the contract itself, or the special circumstances under which it was made, it may be reasonably presumed that they were within the intent and mutual understanding of both parties at the time it was entered into. United States v. Behan, 110 , u.S. 338, 345—347, 4 S.Ct. 81, (84, 85, 28 L.Ed. 168); (Western Union) Tel. Co. v. Hall, 124 U.S. 444, 454, 456, 8 S.Ct. 577, (580, 581, 31 L.Ed. 479); Philadelphia, Wilmington & Baltimore Railroad Co. v. Howard, 13 How. 307 (14 L.Ed. 157).' See also, Anvil Mining Co. v. Humble, 153 U.S. 540, 550, 14 S.Ct. 876, 879, 38 L.Ed. 814; Cincinnati Gas Co. v. Western Siemens Co., 152 U.S. 200, 206, 14 S.Ct. 523, 525, 38 L.Ed. 411; United States v. Behan, 110 U.S. 338, 344, 4 S.Ct. 81, 83, 28 L.Ed. 168; United States v. Speed, 8 Wall. 77, 84, 19 L.Ed. 449; Masterton v. The Mayor of Brooklyn, 7 Hill, N.Y., 61, 71, 42 Am.Dec. 38; Restatement, Contracts § 331 (1932). 1 The 'letter of intent' indicated the manner in which respondent could approve the proposal, 'thereby constituting this letter a contract until the execution of a formal contract. * * *' 2 The 'official award' stated that the Navy's acceptance of respondent's proposal was authority to commence performance 'without waiting for the formal contract.' 3 Memorandum from James Forrestal, Under Secretary of the Navy, Jan. 11, 1944, Sen. Hearings on Sen. 1268, Sen. 1280, and Sen.J.Res. 80, 78th Cong., 1st Sess., 551, 553, where it is said: 4 See record p. 177 in Pownall v. United States, 334 U.S. 742, 68 S.Ct. 1294, 92 L.Ed. 1694, and record p. 227 in Alexander Wool Combing Co. v. United States, 334 U.S. 742, 68 S.Ct. 1294, 92 L.Ed. 1694. And see H.R. Hearings on H.R. 3022, 78th Cong., 1st Sess., 27. At the time Title II of the First War Powers Act, § 201, 55 Stat. 839, 50 U.S.C.App. § 611, 50 U.S.C.A.Appendix, § 611, was in effect empowering the President to authorize any department or agency exercising functions in connection with the prosecution of the war effort under regulations prescribed by him 'to enter into contracts and into amendments or modifications of contracts heretofore or hereafter made * * * without regard to the provisions of law relating to the making, performance, amendm nt, or modification of contracts whenever he deems such action would facilitate the prosecution of the war * * *.' By Executive Order 9001, dated Dec. 27, 1941, 50 U.S.C.A.Appendix, § 611 note, 6 Fed.Reg. 6787, 3 C.F.R. 1941, Supp. 330, the President delegated this authority to various agencies including the Navy Department. He also authorized the Navy 'by agreement' to modify or amend or settle 'claims' under contracts and provided that the amendments and modifications 'may be with or without consideration and may be utilized to accomplish the same things as any original contract could have accomplished hereunder, irrespective of the time or circumstances of the making of or the form of the contract amended or modified, or of the amending or modifying contract, and irrespective of rights which may have accrued under the contract, or the amendments or modifications thereof.' 5 See Lilly v. Grand Trunk R. Co., 317 U.S. 481, 488, 63 S.Ct. 347, 352, 87 L.Ed. 411; National Labor Board v. Atkins & Co., 331 U.S. 398, 406—407, 67 S.Ct. 1265, 1270, 91 L.Ed. 1563. 6 See Ludecke v. Watkins, 335 U.S. 160, 166—170, 68 S.Ct. 1429, 1432—1434, 92 L.Ed. 1881.

89

337 U.S. 86 69 S.Ct. 968 93 L.Ed. 1231 HYNES, Regional Director, Fish and Wildlife Service, Department of the Interior,v.GRIMES PACKING CO. et al. No. 24. Argued Oct. 21, 1948. Decided May 31, 1949. [Syllabus from pages 86-88 intentionally omitted] Mr. Roger P. Marquis, Washington, D.C., for petitioner. Messrs. W. C. Arnold and Frank L. Mechem, Seattle, Wash., for respondents. Mr. Justice REED delivered the opinion of the Court. 1 The Secretary of the Interior on May 22, 1943, issued Public Land Order 128. It is set out in full below.1 In this case the significant part of No. 128 is that the Secretary included in the reservation by paragraph 2, adjacent tidelands and coastal waters along the entire shore line of the uplands that touched Shelikof Strait between Kodiak Island and the Alaska Peninsula. The authority of the Secretary to utilize presidential power in the designation of this reservation out of public lands in Alaska flows from a delegation to the Secretary of presidential power to withdraw or reserve public lands and revoke or modify prior reservations. Executive Order No. 9146, of April 24, 1942, 1 C.F.R., Cum.Supp. 1149. The presidential power over reservations is made specific by the Act of June 25, 1910.2 Another statutory provision, however, is the principal basis for Order 128. This is s 2 of the Act of May 1, 1936, 49 Stat. 1250. This act was passed to extend to Alaska the benefits of the Wheeler-Howard Act of June 18, 1934, 48 Stat. 984, 25 U.S.C.A. § 461 et seq., and to provide for the designation of Indian reservations in Alaska. As § 2 is important in our discussion, the pertinent provisions are set out in full: 2 'Sec. 2. That the Secretary of the Interior is hereby authorized to designate as an Indian reservation any area of land which has been reserved for the use and occupancy of Indians or Eskimos by section 8 of the Act of May 17, 1884 (23 Stat. 26), or by section 14 or section 15 of the Act of March 3, 1891 (26 Stat. 1101), or which has been heretofore reserved under any executive order and placed under the jurisdiction of the Department of the Interior or any bureau thereof, together with additional public lands adjacent thereto, within the Territory of Alaska, or any other public lands which are actually occupied by Indians or Eskimos within said Territory: Provided, That the designation by the Secretary of the Interior of any such area of land as a reservation shall be effective only upon its approval by the vote, by secret ballot, of a majority of the Indian or Eskimo residents thereof who vote at a special election duly called by the Secretary of the Interior upon thirty days' notice: * * *' 3 The Native Village of Karluk held a meeting on May 23, 1944, and accepted 'the proposed Indian Reservation for this village. The adoption of said Reservation passed by a vote of 46 for and 0 against. 11 of the eligible voters were absent.' See note 26, infra. Under § 19 of the Wheeler-Howard Act, 25 U.S.C.A. § 479, the Alaskan aborigines are classified as Indians. 4 On March 22 and August 27, 1946, the Secretary of the Interior amended the Alaska Fisheries General Regulations, 50 C.F.R., 1946 Supp., § 208.23, that related to the commercial fishing for salmon in the Kodiak Area Fisheries by the addition of a subsection (r), reading as follows: 5 '(r) All waters within 3,000 feet of the shores of Karluk Reservation (Public Land Order No. 128, May 22, 1943), beginning at a point on the east shore of Shelikof Strait, on Kodiak Island, latitude 57 32 30 ' N., thence northeasterly along said shore to a point 57 39 40 '. 6 'The foregoing prohibition shall not apply to fishing by natives in possession of said reservation, nor to fishing by other pesons under authority granted by said natives (49 Stat. 1250; 48 U.S.C. 358a (48 U.S.C.A. § 358a)). Such authority shall be granted only by or pursuant to ordinance of the Native Village of Karluk, approved by the Secretary of the Interior or his duly authorized representative.' 7 The authority for the regulation is given as 34 Stat. 264 and 478, as amended by the Act of June 6, 1924, 43 Stat. 464, 48 U.S.C.A. § 221 et seq., an Act for the protection of the fisheries of Alaska, known as the White Act.3 As the controlling section of this statute also is important, it is set out here,4 44 Stat. 752: 8 'Section 1. That for the purpose of protecting and conserving the fisheries of the United States in all waters of Alaska the Secretary of Commerce from time to time may set apart and reserve fishing areas in any of the waters of Alaska over which the United States has j risdiction, and within such areas may establish closed seasons during which fishing may be limited or prohibited as he may prescribe. Under this authority to limit fishing in any area so set apart and reserved the Secretary may (a) fix the size and character of nets, boats, traps, or other gear and applicances to be used therein; (b) limit the catch of fish to be taken from any area; (c) make such regulations as to time, means, methods, and extent of fishing as he may deem advisable. From and after the creation of any such fishing area and during the time fishing is prohibited therein it shall be unlawful to fish therein or to operate therein any boat, seine, trap, or other gear or apparatus for the purpose of taking fish; and from and after the creation of any such fishing area in which limited fishing is permitted such fishing shall be carried on only during the time, in the manner, to the extent, and in conformity with such rules and regulations as the Secretary prescribes under the authority herein given: Provided, That every such regulation made by the Secretary of Commerce shall be of general application within the particular area to which it applies, and that no exclusive or several right of fishery shall be granted therein, nor shall any citizen of the United States be denied the right to take, prepare, cure, or preserve fish or shellfish in any area of the waters of Alaska where fishing is permitted by the Secretary of Commerce. * * *' See for definition of 'several,' 2 Bl.Com. 39—40. 9 These are the statutes and orders that created the situation that led to this litigation. 10 The issuance of the White Act regulation of March 22, 1946, brought concern to the commercial fishing interests of Alaska. This was because of its drastic penalties. See note 49, infra. The native village of Karluk spoken of in Order No. 128, establishing the reservation is situated on the Karluk River, long recognized as one of the most important salmon spawning streams of Alaska. The natives live at its mouth on Shelikof Strait. There the salmon must congregate from the Strait to enter the channel of the river leading to their spawning grounds in the interior of Kodiak Island. The waters included in the reservation are those stretching eight miles along the coast north and south of the mouth, 3,000 feet into the Strait. Thus the best of the Karluk salmon fishery is put into the reservation by Order No. 128.5 For an understanding of the locality, a sketch map is appended. 11 The importance of the Karluk fishery will be appreciated by reference to a few of the facts in connection with it. When Russia ceded Alaska to the United States in 1867, 15 Stat. 539, Karluk was already well known as an abundant salmon fishery.6 By 1885 the salmon canneries were flourishing and Bancroft reports the Karluk pack at 36,000 cases out of a total of 65,000.7 The production continued large.8 The red salmon was most prolific. There were variations in the catch but it was always valuable.9 In later years, the fluctuations continued and other varieties increased relatively.10 12 None of the respondent companies have packing plants at Karluk. All are, however, on Kodiak, Island, which is around 100 miles long and 50 broad, and within fishing distance of the reservation waters. There is a fish refrigeration plant on the river. These canners have canned fish from these waters for from seven to twenty-four years. The percentage of each canner's pack that comes from the reserved waters is so large that the trial court found irreparable injury to the packers if they could not obtain the catch of the reservation. '* * * no other replacement source of such salmon for their canneries on Kodiak Island is available to them.' The canners' investment is substantial, running from two to five hundred thousand dollars respectively. The fishing is done by men who own their own three- to four-man boats, use similar company boats or operate under boat buying contracts. Prices for the catch vary for these classifications. These packers employ over four hundred fishermen, chiefly residents of Alaska and over six hundred cannery employees, chiefly nonresidents. 13 The fishing season at Karluk begins around June 1 and continues intermittently, depending upon the run of fish, until Sept. 30. After the issuance of § 208.23(r) restricting the fishery at Karluk Reservation to Karluk natives and licensees, respondents brought this action against the Regional Director for the Territory of Alaska of the Fish and Wildlife Service to permanently enjoin the exclusion of their fishermen from the reservation on the ground that neither regulation § 208.23(r) nor Public Land Order No. 128 legally closed the fishery of the coastal waters to respondents. The District Court granted the permanent injunction and held invalid both the regulation and the land order. 67 F.Supp. 43. On the same grounds the Court of Appeals for the Ninth Circuit affirmed the order for permanent injunction. 165 F.2d 323. I. 14 (a) At the outset the United States contends that the Secretary of the Interior is an indispensable party who must be joined as a party defendant in order to give the District Court jurisdiction of this suit. In Williams v. Fanning, 332 U.S. 490, 68 S.Ct. 188, 92 L.Ed. 95, the test as to whether a superior official can be dispensed with as a party was stated to be whether 'the decree which is entered will effectively grant the relief desired b expending itself on the subordinate official who is before the court.' 332 U.S. at page 494, 68 S.Ct. at page 189. Such is the precise situation here. nothing is required of thE secretary; he does not have to perform any act, either directly or indirectly. Respondents merely seek an injunction restraining petitioner from interfering with their fishing. No affirmative action is required of petitioner, and if he and his subordinates cease their interference, respondents have been accorded all the relief which they seek. The issues of the instant suit can be settled by a decree between these parties without having the Secretary of the Interior as a party to the litigation. 15 (b) Petitioner, Regional Director for the Territory of Alaska of the Fish and Wildlife Service of the Interior Department, is charged with the duty of enforcing the acts of Congress relating to the fisheries of Alaska and regulations issued thereunder. The District Court found that since March 22, 1946, the effective date of § 208.23(r) of the Alaska Fisheries General Regulations, petitioner has continually threatened the seizure of all boats and equipment used to fish in the waters covered by this regulation to respondents' substantial and irreparable loss, and that the seasonal run of salmon in the reservation waters was essential for respondents' profitable operation. From the following facts it will be seen that there is sufficient evidence to support these findings. 16 After the promulgation of the fishery regulation, § 208.23(r), the Warden for the Fish and Wildlife Service on Kodiak Island, one of petitioner's subordinate agents, repeatedly informed officials of the canneries that the regulation would be enforced and that the necessary steps would be taken to prosecute any violations. He communicated to the representatives of the canneries the contents of a telegram in which petitioner directed that a case to test the regulation be arranged for the opening day of the fishing season. The contents of this telegram were relayed to the headquarters in Seattle of the Alaska Salmon Industry, Inc., a trade association of the canned salmon packers of which all but one of respondents are members. Thence the information was distributed to all interested parties. The Kodiak warden then reiterated to the cannery operators on that island his intention to enforce the regulation even though his force and equipment were inadequate for the purpose. 17 Thereafter two officers of the Indian Service were appointed special agents for the Fish and Wildlife Service to assist in the enforcement of the fishing regulations issued by the Interior Department. They arrived at Karluk June 24, 1946. These two deputies were armed and maintained a boat patrol in the waters of the reservation. They checked the names of boats fishing in the waters of the reservation against the permits issued by the village of Karluk. No boats were allowed inside the area which had been restricted for beach seining by vote of the Indian meeting of May 23, 1944,11 and which was marked off by buoys. 18 If respondents show that they are without an adequate remedy at law and will suffer irreparable injury unless the enforcement of the alleged invalid regulation is restrained, a civil court will enjoin.12 While ordinarily criminal prosecutions will not be restrained even under an invalid statute,13 a civil action will lie in exceptional circumstances that make an injunction necessary to effectually protect property rights.14 19 The facts heretofore detailed as to the investments of respondents in canneries and fishing equipment and their establish activities in the waters of the reservation make clear the serious effect on them of exclusion from the reservation. It is not a threat of a single prosecution, as in the Spielman case, but an ousting of respondents and their employees from the fishing grounds unless each individual person takes a fishing license. Under the findings the respondents could not operate profitably if prohibited from fishing in the reservation area. Many fishermen may stay away from the grounds for fear of punishment. In the pursuit of their otherwise lawful business respondents are threatened with criminal prosecution should they fish in the waters of the Karluk Reservation without a permit from the native village. For the violation of the applicable regulation under the White Act, severe penalties are imposed including fine, imprisonment, the summary seizure of boats, haul, gear, equipment, and their forfeiture to the United States.15 These sanctions deny to respondents an adequate remedy at law for to challenge the regulation in an ordinary criminal proceeding is to hazard a loss against the payment of a license fee and compliance with the fishing rules of the natives. Yet to stay out of the reservation prevents the profitable operation of the canneries. In such a situation a majority of the Court thinks that the 'danger of irreparable loss is both great and immediate' and properly calls forth the jurisdiction of the court of equity.16 II. 20 Respondents sought this injunction forbidding criminal proceedings aimed at excluding them from fishing in the coastal waters of Karluk Reservation on the ground that Public Land Order No. 128, note 1, supra, was invalid as a whole and particularly because of the inclusion of tidelands and coastal waters by § 2 of the order. 21 Respondents attack in their complaint the validity of the entire order because 'no part of the land area involved had been withdrawn by Executive Order and placed under the jurisdiction of the Department of the Interior prior to May 1, 1936, as required by the Act of May 1, 1936.' This position has not been pressed or decided.17 The final order for an injunction against petitioner does not include any ruling on that point. 22 Nor do we think the authority of the Secretary of the Interior to establish the Karluk Reservation, Public Land Order 128, by virtue of the use and occupancy of the area by the natives under § 8 of the Act of May 17, 1884, 23 Stat. 26, 48 U.S.C.A. § 356, or §§ 14 or 15 of the Act of March 3, 1891, 26 Stat. 1101, need be decided. While the point is referred to in the briefs, no such issue was tendered by the complaint; no such point was raised by the assignments of error; the question was specifically pretermitted by the opinion of the Court of Appeals, 165 F.2d at page 325; it is not included in the questions presented by the petition for certiorari and is not relied upon by the respondents to require affirmance of the Court of Appeals decree. 23 (a) The validity of Public Land Order 128 depends in this case on the scope of the power granted to the Secretary to establish this reservation by the language of § 2 of the Act of May 1, 1936, supra, authorizing the Secretary of the Interior to designate as a reservation 'any other public lands which are actually occupied by Indians or Eskimos within said Territory.' An administrative order is presumptively valid.18 24 In this instance, the Secretary acted by statute, § 2, Act of May 1, 1936, and through delegation of presidential authority.19 This delegation in turn rested on the Act of June 25, 1910, 36 Stat. 847.20 This chain of delegated authority for the allocation of public lands in Alaska retains for future congressional action the power for the ultimate disposition of the property, land and water, within the boundaries of the reservation. Withdrawals under the Act of June 25, 1910, are 'temporary' and 'until revoked by him or by an Act of Congress.' 25 The Wheeler-Howard Act of June 18, 1934, 'To conserve and develop Indian lands and resources,' which was extended to the Territory of Alaska by § 1 of the Act of May 1, 1936, authorized the Secretary of the Interior to restore to tribal ownership only the remaining surplus lands of any Indian reservation theretofore opened for sale or other disposition.21 It did not authorize the creation of reservations of any kind. Its only reference to acquisition of lands by or for Indians is in § 5, 25 U.S.C.A. § 465, where appropriations are authorized for that purpose. This section is inapplicable here. 26 Section 2 of the extending act, set out at the beginning of this opinion, 337 U.S. 91, 69 S.Ct. 972, supra, gives no power to the Secretary to dispose finally of federal lands. B the new section he is authorized simply 'to designate as an Indian reservation' any other public lands which are actually occupied by Indians or Eskimos within said Territory. There is no language in the various acts, in their legislative history, or in the Land Order 128, from which an inference can be drawn that the Secretary has or has claimed power to convey any permanent title or right to the Indians in the lands or waters of Karluk Reservation. Rather the contrary is true. In the Act of May 14, 1898, 30 Stat. 409, 48 U.S.C. § 411, 48 U.S.C.A. § 411, 'Extending the homestead laws and providing for right of way for reilroads in the District of Alaska, and for other purposes,' there is the express proviso that nothing contained in the Act 'shall be construed as impairing in any degree the title of any State that may hereafter be erected out of the Territory of Alaska, or any part thereof, to tide lands and beds of any of its navigable waters, or the right of such State to regulate the use thereof, nor the right of the United States to resume possession of such lands, it being declared that all such rights shall continue to be held by the United States in trust for the people of any State or States which may hereafter be erected out of said Territory. The term 'navigable waters,' as herein used, shall be held to include all tidal waters up to the line of ordinary high tide and all nontidal waters navigable in fact up to the line of ordinary high-water mark.' Indeed the United States affirms in its brief that Karluk Reservation is merely a reservation 'for a particular governmental use,' not a disposal of the area. The government says it is like Sioux Tribe v. United States, 316 U.S. 317, 62 S.Ct. 1095, 86 L.Ed. 1501, not like United States v. Holt State Bank, 270 U.S. 49, 46 S.Ct. 197, 70 L.Ed. 465. 27 An Indian reservation created by Executive Order of the President conveys no right of use or occupancy to the beneficiaries beyond the pleasure of Congress or the President. Such rights may be terminated by the unilateral action of the United States without legal liability for compensation in any form even though Congress has permitted suit on the claim. Sioux Tribe v. United States, 316 U.S. 317, 62 S.Ct. 1095, 86 L.Ed. 1501; see United States v. Santa Fe Pacific R. Co., 314 U.S. 339, at page 347, 62 S.Ct. 248, 252, 86 L.Ed. 260.22 When a reservation is established by a treaty ratified by the Senate or a statute, the quality of the rights thereby secured to the occupants of the reservation depends upon the language or purpose of the congressional action.23 Since Congress, under the Constitution, § 3 of Art. IV, has the power to dispose of the lands of the United States, it may convey to or recognize such rights in the Indians, even a title equal to fee simple, as in its judgment is just. Shoshone Indians v. United States, 324 U.S. 335, 339, 340, 65 S.Ct. 690, 692, 693, 89 L.Ed. 985. When Congress intends to delegate power to turn over lands to the Indians permanently, one would expect to and doubtless would find definite indications of such a purpose.24 28 In the present case a determination of the power delegated to the Secretary of the Interior by the Wheeler-Howard Act of June 18, 1934, and § 2 of the Act of May 1, 1936, is important. It is important for the reason that a statute that authorizes permanent disposition of federal property would be most strictly construed to avoid inclusion of fisheries by implication. Petitioner argues for a holding that the power granted covers water as well as land. If that power were broad enough to enable the Secretary to designate nonrevocable or permanent reservations of all Alaska fishing grounds for the sole benefit of natives living in villages adjacent to the fisheries, it might place in his hands the power to grant the natives the right to exclude all other fishermen from the fisheries. In this present case, for example, it might mean that the native residents of the Karluk Reservation would have the perpetual use and enjoyment of this valuable Karluk fishery for themselves and their licensees.25 On May 23, 1944, a year after Public Land Order 128, the petitioner shows that there were 57 residents eligible to vote for approval of the designation of the reservation.26 As indicated by the cases hereinbefore cited, a recognition of such ownership in Indians might require just compensation to them of the fair value of the fishery, if the United States should desire hereafter to reopen the area to the public under its regulations. There is much less reason to read such power of permanent disposition by the Secretary into § 2 than there was to read it into the President's 'implied grant of power' to create reservations. United States v. Midwest Oil Co., 236 U.S. 459, 475, 35 S.Ct. 309, 314, 59 L.Ed. 673. It would take specific and unambiguous legislation to cause us to rule that Congress intended to authorize the Secretary of the Interior to alienate the Alaska fisheries permanently from public control.27 The argument that Congress did not intend to authorize the designation of water or fisheries as a part of an Indian reservation has behind it the unarticulated premise that the United States must have complete power to protect, improve and regulate for the good of all our people these unrivalled sea fisheries with their wealth of food. It loses much of its force by our conclusion that Alaskan Indian reservations, established or enlarged under § 2 are subject to the unfettered will of Congress.28 29 (b) An argument that the reservation is a nonrevocable grant can be made. Under the Act of June 18, 1934, § 16, 25 U.S.C.A. § 476, applicable to Alaska, see § 13, 25 U.S.C.A. § 473, an Indian tribe was authorized to adopt a constitution and by-laws for its government. This was done by the Karluk Reservation Indians. There is a phrase in the section that has color of recognition of ownership of tribal lands in the Indians. It reads as follows: 30 'In addition to all powers vested in any Indian tribe or tribal council by existing law, the constitution adopted by said tribe shall also vest in such tribe or its tribal council the following rights and powers: * * * to prevent the sale, disposition, lease, or encumbrance of tribal lands, interests in lands, or other tribal assets without the consent of the tribe; * * *.' 48 Stat. 987.29 31 We think, however, in view of the breadth of the coverage of the Wheeler-Howard Act that this language would be effective only where there has been specific recognition by the United States of Indian rights to control absolutely tribal lands. 32 Persuasive of this conclusion is that the bill when originally introduced by Interior provided in § 7 of Title III that 'Title to any land acquired pursuant to the provisions of this section shall be taken in the name of the United States in trust for the Indian tribe or community for whom the land is acquired, but title may be transferred by the Secretary to such community under the conditions set forth in this Act.' The italicized words were omitted when this section was incorporated into § 5 of the Wheeler-Howard Act, 25 U.S.C.A. § 465. See Hearings before House Committee on Indian Affairs, 73d Cong., 2d Sess., on H.R. 7902, p. 9. 33 Turning to § 2 of the Act of May 1, 1936, the strongest argument for the nonrevocability of a reservation, created under § 2 of that Act comes from a letter of the Secretary of the Interior printed in the House and Senate Reports on the bill which became the Act in question.30 The reports, speaking of § 2, said: 34 'This provision in reality carries out the promise of this Government contained in its act approved on May 17, 1884 (23 Stat. 26), as follows: 35 "Provided, That the Indians or other persons in said district shall not be disturbed in the possession of any lands actually in their use or occupation or now claimed by them but the terms under which such persons may acquire title to such lands is reserved for future legislation by Congress." H.R.Rep.No.2244, 74th Cong., 2d Sess., p. 3. 36 The pertinent part of the letter is set out below.31 The legislation was, of course, a fulfillment of the aid foreshadowed in the statutes referred to in the letter. Such references to general legislation on public lands in the huge Territory of Alaska, however, cannot be treated as an adequate basis for courts to declare that power was given the Secretary of the Interior to dispose finally of Alaska lands. The first section of the Act of May 1 was a mere amendment of the Wheeler-Howard Act to bring Alaska under its coverage. The Wheeler-Howard Act did not authorize the creation of Indian reservations. Section 2 of the act extending the Wheeler-Howard Act to Alaska was intended to permit the organization of the Alaska natives so that they could avail themselves of the earlier Act.32 It cannot be said, we think, that such reservations may be permanent or nonrevocable. A reading of § 2 will show that there are no words with the connotation of recognition or conveyance of title. There are no words, such as appear in other statutes,33 reserving the right of exploration, discovery and claim for precious metals and valuable minerals. There is no discussion in the reports or the debates that show a definite intention of anyone to part with public property establish an Alaskan Indian communal system. Under such circumstances, we think the land and water reservations created under § 2 are reservations at will. 37 (c) We are convinced that § 2 of the Act of May 1, 1936, authorizes the Secretary of the Interior to include in the Karluk Reservation the waters described in § 2 of Public Land Order No. 128. To interpret the clause 'or any other public lands which are actually occupied by Indians or Eskimos within said Territory' to describe only land above mean low tide is too restrictive in view of the history and habits of Alaska natives and the course of administration of Indian affairs in that Territory. The title to the uplands and waters in question is in the United States.34 The fisheries as well as the uplands are subject to its present control.35 In 1868 Congress extended our laws relating to customs, commerce and navigation over the 'mainland, island, and waters of the territory.' 15 Stat. 240. The seal islands and the waters adjacent thereto were promptly made a reservation for the preservation and exploitation of the seal fishery. 15 Stat. 348, 16 Stat. 180. A civil government for the new territory was set up in 1884. 23 Stat. 24. In that act appeared the proviso referred to supra, n. 31, in the letter of the Secretary of the Interior. By § 12 a commission was empowered to report upon the condition of the Indians.36 On June 30, 1885, the Commission reported to the Secretary of the Interior as to the fisheries in the words in the margin below.37 38 By virtue of § 15 of the act of Congress of March 3, 1891, supra, note 28, the Congress set apart the 'body of lands known as Annette Islands' in Alaska for a reservation for the Metlakahtla Indians. Nothing was said as to fishing rights. A presidential proclamation of April 28, 1916, reserved to them the surrounding waters within 3 000 feet. 39 Stat. 1777.38 After the proclamation a proceeding was brought by the United States relying upon the statute and proclamation to oust a fish trap of the Alaska Pacific Fisheries from the waters mentioned in the proclamation. Such a decree was obtained in the District Court and affirmed by the United States Court of Appeals for the Ninth Circuit on the ground 'that the reservation of Annette Island by the act of Congress, and of its surrounding waters by the President's proclamation, is fully sustained.' Alaska Pacific Fisheries v. United States, 240 F. 274, 283. For the validity of the proclamation reliance was placed upon his power to reserve lands for reservations without specific authority. See United States v. Midwest Oil Co., supra. This Court affirmed the decree as to the waters within 3,000 feet of the shore lines. Although in the brief a vigorous attack was made on the power to issue the proclamation covering the waters, the proclamation was not referred to in the unanimous opinion here. This Court felt compelled to decide the fisheries were included in the language of the statute by the purpose to assist the Indians to train themselves. Fishing was said to give value to the islands. 'The use of the adjacent fishing grounds was equally essential. Without this the colony could not prosper in that location.' Alaska Pacific Fisheries v. United States, 248 U.S. 78, 89, 39 S.Ct. 40, 42, 63 L.Ed. 138. 39 The conditions as to the waters around the Annette Islands closely parallel those of other Alaska areas actually occupied by natives. The Annette Islands case was relied upon by the Secretary of the Interior for his authority to include the fisheries under § 2 of the Act of May 1, 1936. 56 Int.Dept. 110. The Alaska aborigines, like the Metlakahtlans, are fishermen. They, too, depend upon the waters for a large part of their support. For them the adjacent fisheries are as important, perhaps more important than the forests, the furbearing animals or the minerals. 40 Respondents urge upon us the cases in this and other courts which have held that the phrase 'public lands,' the term now under consideration, used in § 2 of the Act of May 1, 1936, does not include any area extending below mean high tide.39 As the respondents state, this case turns not on tidelands, the area between mean high and mean low tides, but on whether the Secretary could include coastal waters in the reservation, i.e., the area '3000 feet from the shore line at mean low tide.' As we understand respondents' argument and as we see this case, the question of tidelands is not significant. Reference to Mann v. Tacoma Land Co., 153 U.S. 273, 283, 14 S.Ct. 820, 821, 38 L.Ed. 714, will make clear respondents' positi n. Before the admission of Washington to statehood, November 11, 1889, 26 Stat. 1552, the United States issued land scrip to Mann for location on 'unoccupied and unappropriated public lands' and the holder made location on tidelands and received the register's certificate therefor. When Mann sought to restrain trespass on the land so obtained, this Court held: 'It is settled that the general legislation of congress in respect to public lands does not extend to tide lands. There is nothing in the act authorizing the Valentine scrip, or in the circumstances which gave occasion for its passage, to make an exception to the general rule.' 153 U.S. at page 284, 14 S.Ct. at page 822. Respondents assert that the reference to public lands in § 2 should be construed in the same manner since the federal land laws apply to Alaska40 as do the reasons for excluding waters seaward of mean high tide.41 41 The Government points out that the cases relating to the limits of 'public lands' are cases where final disposition not temporary use of the lands appeared. When one deals with a statute so large in purpose as to justify the above-quoted comment of the Secretary of the Interior that it 'provides a method by which the financial aid provisions of the Indian Reorganization Act may be extended to those Indians and Eskimos of Alaska who occupy established villages,' one may not fully comprehend the statute's scope by extracting from it a single phrase, such as 'public lands' and getting the phrase's meaning from the dictionary or even from dissimilar statutes. Section 2 of the Act of May 1, 1936, is but one of a series of enactments relating to Alaska natives, lands and fisheries. It must 'be taken as intended to fit into the existing system' and interpreted in that aspect.42 There is nothing that we have found in the statute or the legislative history to justify the significance put upon the use of the words 'public lands' in the clause of § 2 under discussion instead of 'lands' used in the preceding clauses. If a differentiation was intended, surely it would have been more definitely expressed. 42 Taking into consideration the importance of the fisheries to the Alaska natives, the temporary character of the reservation, the Annette Islands case, the administrative determination, the purpose of Congress to assist the natives by the Alaska amendment to the Wheeler-Howard Act, we have concluded that the Secretary of the Interior was authorized to include the waters in the reservation. No injunction therefore may be obtained because of the invalidity of Order No. 128. III. 43 Subdivision II of this opinion has been directed toward the determina ion of the scope of § 2 of the Act of May 1, 1936, extending the Wheeler-Howard Act to Alaska. We were led to hold that Order 128, set out in full in note, 1, supra, validly included in ther reservation the waters to a distance of 3,000 feet from its shores. In his handling of the problems of the Karluk natives as affected by their need for a reservation and fishing rights, the Secretary of the Interior took another step under the authority of § 1 of another act, the White Act. The section is set out at length in the text beginning on page 4 of this opinion (337 U.S. 93, 69 S.Ct. 973). The Act was for the protection of the fisheries of Alaska. Section 1 authorized the Secretary to set apart fishing areas in any of the waters of Alaska and establish in those preserves closed seasons 'during which fishing may be limited or prohibited.' 44 Pursuant to this statute detailed regulations were issued by the Secretary of Commerce and they have been continued by the Secretary of the Interior since Reorganization Plan No. II, note 4, supra.43 One area established was the Kodiak Area which included the waters here in question.44 Among the waters at first closed to commercial salmon fishing were the Karluk River spawning waters and those within 100 yards of its mouth.45 Later the Secretary of the Interior, still acting solely under § 1 of the White Act, added the waters of the Karluk Reservation to the prohibited areas.46 An exception was made in the regulation to the prohibition against fishing in the reservation waters. The precise language of the entire subsection (r) of the regulation, § 208.23, is on page 4 of this opinion. (337 U.S. 92, 69 S.Ct. 972). We repeat here the exception: 45 'The foregoing prohibition shall not apply to fishing by natives in possession of said reservation, nor to fishing by other persons under authority granted by said natives. 49 Stat. 1250; 48 U.S.C. 358a, 48 U.S.C.A. § 358a. Such authority shall be granted only by or pursuant to ordinance of the Native Village of Karluk, approved by the Secretary of the Interior or his duly authorized representative.' The citation to 49 Stat. 1250 is to the Act of May 1, 1936, authorizing the creation of the reservation. Perhaps it was thought that the creation of the reservation justified this exception in the White Act regulation but we do not understand that any support from that Act is claimed for the establishment of the White Act preserve. 46 The validity of the exception permitting fishing by natives in possession of the reservation and their licensees is challenged by respondents because of a proviso in § 1 of the White Act, reading: 47 'Provided, That every such regulation made by the Secretary of Commerce shall be of general application within the particular area to which it applies, and that no exclusive or several right of fishery shall be granted therein, nor shall any citizen of the United States be denied the right to take, prepare, cure, or preserve fish or shellfish in any area of the waters of Alaska where fishing is permitted by the Secretary of Commerce. * * *' 48 U.S.C.A. § 222. 48 Respondents alleged that the exception for fishing by natives and their licensees made § 208.23(r) wholly illegal because it was inconsistent with the proviso of § 1 of the White Act as to exclusive or several right of fishery. The District and Circuit Courts agreed with this argument and the District Court said that the regulation must be viewed in its entirety, 67 F.Supp. 43, 49. We agree that it is not possible to separate the closing of the area from the exception and thus hold the closing applicable to everyone. A right to fish locally is too important to the natives in Alaska for us to conclude from this record that the Secretary would have promulgated the prohibition to fish for salmon in reservation waters without the exception in favor of the natives. We have no doubt, however, that the White Act authorizes the establishment of White Act preserves or closed areas in reservations created, as the Karluk Reservation, under § 2 of the Act extending the Wheeler-Howard Act to Alaska. No implications can be drawn from the broad and clear language of the White Act that reservation waters, however valuable for fishing or fish propagation, must be left unprotected from ruthless exploitation. 49 What we have said heretofore in this opinion as to the importance of fisheries and their conservation to Alaska natives with reference to the Karluk River area in particular need not be repeated. The quoted section of the White Act gives power to the Secretary so that he may '(c) make such regulations as to time, means, methods and extent of fishing as he may deem advisable.' Then follows the proviso that every such regulation shall be of general application and that no exclusive or several right of fishing shall be granted therein. This section was enacted to correct alleged abuses that arose in the administration of the Act 'For the protection and regulation of the fisheries of Alaska,' approved June 26, 1906, 34 Stat. 478. By § 6 of the earlier act, streams or lakes could be set aside as permanent preserves but not coastal waters. Although the 1906 Act did not delegate regulatory powers in the amplitude of the White Act, fishing reservations in territorial waters were created by Executive Order and regulations were issued thereunder.47 The policy behind these regulations and their administration was to restrict the right to fish commercially to those who had formerly fished in these areas. See Fisheries Service Bulletin No. 92, Jan. 2, 1923. Congress did not propose that these rich fishing grounds should be monopolized by this defined group. The legislative history of the White Act only emphasizes what the statute clearly says, that is, no special privileges in Alaskan fishing preserves.48 The enforcement provisions of the White Act gave stern warning to prospective violators.49 50 For the conservation of the fisheries, it was recognized that administrative flexibility must be permitted. 51 'The maters of Alaska are so vast and the local conditions so varied that it is utterly impossible to prescribe by legislation in detail the provisions necessary to meet each situation. To attempt to do so would be to defeat the purposes sought. This can be done by placing broad powers and a wide discretion in the administrative branch having charge of the subject.' Sen. Rep. No. 449 on H.R. 8143 (which became the White Act), 68th Cong., 1st Sess., p. 2. Compare Dow v. Ickes, 74 App.D.C. 319, 123 F.2d 909, 913. 52 Although § 8 of the White Act50 left a power in the Territorial Legislature of Alaska to impose taxes or licenses for fishing, we do not read § 8 as limiting the power to license fishing to the Territorial Legislature. The section does not make the legislative power exclusive. Since § 1 of the White Act not only authorizes the establishment of fishing preserves but also requires that the fishing be carried on 'in conformity with such rules and regulations as the Secretary prescribes under the authority herein given,'51 we are of the opinion that licenses for fishing may be required in areas regulated under the White Act. We think, however, these licenses may be only regulatory in character and, within the discretion of the Secretary, must have their cost fixed so as not to exceed the estimated approximate cost of reasonable policing of the area. We do not read the White Act as empowering the Secretary to raise general funds for native welfare of general conservation purposes from White Act preserves. 53 As § 208.23(r) with its exception in favor of the natives in possession of Karluk Reservation and their licensees is based upon § 1 of the White Act, we think it clear that its proviso 'that no exclusive or several right of fishery shall be granted therein,' applies to commercial fishing by natives equally with fishing companies, nonresidents of Alaska or other American citizens and so applies whether those natives are or are not residents on a reservation. We find nothing in the White Act that authorizes the Secretary of the Interior to grant reservation occupants the privilege of exclusive commercial fishing rights. It seems also clear to us that the adoption of a corporate charter and a constitution by the Native Village of Karluk under §§ 16 and 17 of the Wheeler-Howard Act, 25 U.S.C.A. §§ 476, 477, discussed, supra, 337 U.S. 107, 69 S.Ct. 981, can add nothing to the power of the Secretary under the White Act. 'Exclusive,' as used in § 1 of the White Act forbids not only a grant to a single person or corporation but to any special group or number of people. The legislative history set out above shows this. The offending regulations which brought about the enactment of the roviso in § 1 of the White Act were administered so as to limit fishing to those who had been using the fisheries before the regulations. The White Act fishing preserves were not intended to furnish a monopoly to a favored few. Whatever may be the powers of the Department of the Interior or the natives as to regulating the entrance of persons other than natives in possession of Karluk Reservation into or on the area of land and water in that reservation,52 they are not broad enough to allow the use of the White Act sanctions to protect the reservation against trespass. White Act sanctions are for White Act violations. The Department of the Interior by § 208.23(r) has decided upon the conservation of fisheries in the described waters of the Karluk Reservation in accordance with the White Act with an exception in favor of the natives that seems to rest on the fact that the natives are on a reservation that includes the White Act conservation area. This cannot be done. The welfare of the 57 electors of Karluk Reservation and their families is important. The Secretary of the Interior, however, cannot given them such preferences as are here given under the authority of the White Act. Other American citizens are equally entitled to the benefits from White Act preserves.53 We hold that the regulation § 208.23(r) is void as a whole because it violates the proviso of the White Act. See 337 U.S. 92, 69 S.Ct. 973. IV. 54 There are problems cannected with the administration of the Karluk Reservation and the protection of the fishing preserves that have not been determined by the courts or the Department of the Interior. Our holding that coastal waters may be included in the reservation waters and that the White Act cannot be used to create a monopoly in the Indians establishes a different basis for administrative and judicial conclusions. The 1945 ordinance must be considered; it appears in the margin.54 It states that Public Land Order 128 restricts the right to fish commercially in the reservation waters to Karluk inhabitants. This ordinance antedates the regulation. See 337 U.S. 92, 69 S.Ct. 972, supra. It evidently is based on the theory that the creation of the reservation gave exclusive fishing rights to the natives in possession. Permits required the approval of the Secretary of the Interior or his authorized representative.55 An example of the permit is printed below.56 We know nothing from the record of the reasons for the $2 fee for residents or the $40 fee for nonresidents or their relation to the cost of policing the area. See Haavik v. Alaska Packers' Association, 263 U.S 510, 44 S.Ct. 177, 68 L.Ed. 414. So far as appears after once approving an ordinance, the Department's only direct control over the ordinance is by approval or disapproval of amendments.57 55 This is an equitable proceeding in which the respondents seek protection against unlawful action by petitioner, the Regional Director of the Fish and Wildlife Service of the Department of the Interior. The interests of respondents, the India § of Karluk Reservation, and the efforts of the Department of the Interior to administer its responsibilities fairly to fishermen and Indians are involved.58 These are questions of public policy which equity is alert to protect.59 This Court is far removed from the locality and cannot have the understanding of the practical difficulties involved in the conflicts of interest that is possessed by the District Court. Therefore we think it appropriate for us to refrain from now entering a final order disposing definitively of the controversy. With our conclusion on the law as to the establishment of the reservation and the invalidity of the regulation before them, the Department and the parties should have a reasonable time, subject to the action of the District Court on the new proposals, to adjust their affairs so as to comply with our determinations. 56 We therefore vacate the decrees of the District Court and the Court of Appeals and remand this proceeding to the District Court with directions to allow thirty days from the issuance of our mandate for the Secretary of the Interior to give consideration to the effect of our decision. Unless steps are taken in this proceeding the District Court, on the expiration of thirty days, shall enter a decree enjoining the defendant Hynes and all acting in concert with him substantially as ordered in the permanent injunction entered November 6, 1946.60 If timely steps are taken, the District Court will, of course, be free to enter such orders as it may deem proper and not inconsistent with the present decision. Pending the entry of further orders by the District Court, the preliminary injunction entered July 18, 1946, shall apply to protect the rights of the respondents. 57 It is so ordered. 58 Decrees vacated and proceedings remanded. 59 Mr. Justice RUTLEDGE, with whom Mr. Justice BLACK and Mr. Justice MURPHY agree, dissenting in part. I. 60 Jurisdictional questions aside, I am in full agreement with the Court's conclusion that Public Land Order 128, 8 F.R. 8557,1 is valid and was effective, according to its terms, to include in the reservation for the Karluk Indians the tidelands and coastal waters therein described. This action was taken pursuant to the statutory authorizations recited in the order and particularly the Act of May 1, 1936, 49 Stat. 1250, 48 U.S.C. § 358a, 48 U.S.C.A. § 358a. When approved by the Indians in accordance with the proviso of the latter Act, Order 128 withdrew the area covered from any general or public right of access for fishing or other purposes inconsistent with those of the reservation and set aside that area for the exclusive benefit of the Indian occupants and inhabitants. Cf. Alaska Pacific Fisheries v. United States, 248 U.S. 78, 39 S.Ct. 40, 63 L.Ed. 138. The necessary effect was to forbid others to enter the area for purposes inconsistent with the reservation's objects, thus making persons so entering trespassers and subject to such remedies as the law may afford to prevent or redress their wrongful entry. 61 By his 1946 amendments to the Alaska Fisheries General Regulations, 50 C.F.R. 1946 Supp., § 208.23(r), the Secretary of the Interior reinforced his prior action in setting aside the Karluk Reservation, prohibiting fishing within the coastal waters included in Public Land Order 128, except 'by natives in possession of said reservation' and 'by other persons under authority granted by said natives * * * by or pursuant to ordinance of the Native Village of Karluk' approved by the Secretary or his duly authorized representative.2 This action was taken pursuant to 34 Stat. 264, 478, as amended by the White Act of June 6, 1924, 43 Stat. 464, as amended June 18, 1926, 44 Stat. 752. 62 That Act, in the interest of 'protecting and conserving the fisheries of the United States in all waters of Alaska,' conferred upon the Secretary of Commerce (now Interior), broad powers to 'set apart and reserve fishing areas in any of the waters of Alaska over which the United States has jurisdiction' and within such areas to 'establish closed seasons during which fishing may be limited or prohibited as he may prescribe.' See Dow v. Ickes, 74 App.D.C. 319, 123 F.2d 909. Effective penal provisions by way of criminal sanctions and for seizure and forfeiture of offending boats, gear and appliances were enacted to prevent or redress violation of the regulations made pursuant to the statute's authorization.3 63 The promulgation of Amended Regulations § 208.23(r), pursuant to the White Act's provisions, reinforced the effect of Public Land Order 128 in withdrawing the area covered by the latter from public or common right of entry for fishing and other purposes. But it had also the further effect of notifying the public that trespass upon the reversed area by persons not entitled to enter and use it would be met with the White Act sanctions4 for enforcement of the order and the amended regulations. 64 Although holding Public Land Order 128 valid and effective to establish the reservation for the Indians' exclusive benefit, the Court finds Amended Regulations § 208.23(r) 'void as a whole.' The chief consequence held to follow is that the White Act sanctions cannot be applied to enforce the regulations or to prevent or redress trespass upon the reservation by others than the Indians in possession or their licensees. 65 With this conclusion I cannot agree. The amended regulations' invalidity is said to follow solely because of the exception permitting natives and their licensees to fish in reservation waters. This is said to violate the White Act proviso, which forbids any 'exclusive or several right of fishery' and denial to any citizen of the right to fish in any waters where fishing is permitted by the Secretary's regulations. In other words, because the Secretary allows the Indians to fish in the reservation waters he must allow all others to do so on equal terms, otherwise his regulations become totally void and the White Act sanctions unavailable for protection of the reservations and the Indians' rights. 66 This view, it seems to me, rests upon two fallacies. One is that the two statutes, of 1936 and 1924, are in irreconcilable collision and the Secretary cannot exercise the powers given to him by the 1936 Act and by the White Act consistently and simultaneously with reference to the same waters. The other fallacy is a corollary, namely, that the White Act proviso applies wherever the White Act prohibitions and sanctions may be made applicable, even though the area is a valid Indian reservation. 67 I do not think the two statutes are in such inescapable inconsistency as forbids their simultaneous and harmonious pplication in setting aside and protecting reservations for the exclusive use and benefit of the native Indian population. Indeed their legislative history and purposes demonstrate that they were intended to serve common objects in the conservation and protection of Alaskan fisheries. 68 The White Act was adopted in 1924. Its primary object was to preserve the fisheries of Alaska from the destructive private exploitation then taking place. That evil did not arise from any previous, existing, or anticipated policy of setting aside reservations for the exclusive benefit for the natives. It arose exclusively from quite the contrary policy of permitting widespread commercial exploitation by specially favored groups, not of Indians but of others who sought and secured monopolistic privileges and favors in fishing. There were therefore twin evils at which the White Act struck. One was the rapid and virtually unrestrained depletion and destruction of the fisheries; the other, the expanding creation of commercial monopolies fostered by preexisting policy in regulating the industry. 65 Cong.Rec. 9520 9521; see also 65 Cong.Rec. 9680—9682; H.R.REp. No. 357, 68th Cong., 1st Sess. 2; Sen.Rep. No. 449, 68th Cong., 1st Sess. 5; Hearings before Committee on Merchant Marine and Fisheries on H.R. 2714, 68th Cong., 1st Sess. 69 The White Act, accordingly, was not merely and exclusively an antimonopoly statute. It was both a conservation measure and one to outlaw private, commercial monopoly. The conservation features were contained in the basic general provisions giving the Secretary his broad powers of control over fishing. The more specific antimonopoly features were included in the proviso. The latter were important. But they did not override or minimize the more general provisions, apart from the proviso, giving the Secretary power to regulate the industry in the interest of 'protecting and conserving the fisheries of the United States in all waters of Alaska.' The proviso merely limited the manner in which his power was to be exercised in the situations to which the proviso was applicable. 70 So the questions arise whether the proviso was intended to have any effect in waters validly set aside by Congress, executive order, or the Secretary as reservations for the exclusive benefit of the native population and, correlatively, whether the policy of the proviso was meant to forbid the application of other provisions of the White Act, including its prohibitions and sanctions, in the protection and conservation of such reservations. In other words, was the general policy of the White Act in conflict with the policy existing at its enactment concerning Alaskan Indian reservations or later under the 1936 Act, so as to require that the two policies or statutes be kept entirely separate and distinct in their application and administration and to forbid them to be applied conjointly in executing their common conserving and protecting objects. 71 Certainly the White Act proviso had no purpose to throw open validly created Indian reservations to fishing by all comers. Its aim was not to destroy such reservations or to open them to general, common rights of fishing. In view of the legislative history cited above, which is consistently supported by subsequent administrative construction,5 the proviso cannot be construed as expressing any policy hostile to creating such reservations with exclusive rights of fishing for the native population and protecting them against wrongful invasion. On the contrary, the statute, including the proviso, was strongly supported by the delegates in Congress from Alaska and others representing the native interests6 as against those of commercial exploitation toward which the Act was aimed. There were numerous Indian reservations in existence at the time of the legislation, cf. Alaska Pacific Fisheries v. United States, supra, affording the natives exclusive fishing rights. But the extensive le islative history discloses no protest, complaint or concern arising on account of them. Indeed it gives strong reason for believing that the native interests joined with others in opposing continuance of the policy of monopolistic commercial exploitation and in support of the White Act, including the proviso, as a necessary method of preventing the imminent destruction of the natives' historic means of livelihood by that form of exploitation, and not at all by reason of any evils arising out of exclusive fishing rights granted to the native population in reservations validly created for its benefit. 72 Consequently, far from representing an attitude or purpose of hostility toward a policy of Indian reservations with exclusive native rights of fishing, the White Act constituted an effective step toward conserving the Alaskan fisheries, under the Secretary's broad regulatory powers, for such purposes as well as for the prevention of monopoly in open fishing areas where no reservations existed. 73 It follows, in my view that the White Act proviso has, and was intended to have, no application to validly created Indian reservations, either to forbid the Secretary to exclude others than natives from fishing in the reservation waters or to compel him, if he allows the natives to fish, to permit all other citizens to do so on equal terms. The proviso had no purpose so to restrict his powers in relation to reservation areas. It was directed solely against abuses by other than native interests in waters not included within areas set aside for the natives' exclusive benefit. 74 But it does not follow, in my opinion, that because the proviso is inapplicable the Secretary is forbidden to exercise his regulatory and enforcing powers under the White Act in protection of reservations and the natives' exclusive rights in them or that he cannot utilize those powers and the White Act sanctions conjointly with his authority under the 1936 Act to create reservations and protect them against unlawful invasion. The White Act proviso aside as inapplicable in purpose and intent to the specific situation, i.e., one involving a validly created reservation, nothing in either statute forbids his doing so. Each is in terms a conservation measure, having the common object of preserving and protecting the Alaskan fisheries from unrestricted exploitation and destruction by commercial interests. That community of purpose is not affected by the fact that the one Act secures this protection for the public generally, the other for the special benefit of the native population. That difference merely means that two interests require and are given protection against a third, not that the latter acquires immunity against protection afforded either or both of the other two. 75 Accordingly, in my opinion, the White Act proviso being inapplicable to waters included in a valid Indian reservation, the two statutes may be applied to serve their basic common objects of conserving and protecting fisheries in all Alaskan waters, including those set apart as valid Indian reservations, as against the private, commercial exploitation and monopoly which the White Act and the Act of 1936 were intended to prevent. The statutes should be construed and Congress, I think, intended them to be construed, so as to work together harmoniously, not irreconcilably, to achieve this object. 76 I therefore cannot regard Amended Regulations § 208.23(r) as 'void as a whole.' The regulations are valid, in my judgment, and enforceable by application of the White Act sanctions except possibly in one respect. This is the feature by which the Secretary has delegated to the Village of Karluk the authorit by ordinance to license others than natives of the village to fish on terms fixed by the ordinance subject to the Secretary's approval. Conceivably that power might be exercised by the village, through licensing others than native inhabitants, in a manner which would violate the spirit of the White Act proviso, i.e., by licensing favored commercial interests so as to create essentially the type or types of monopoly or favoritism the proviso intended to forbid. 77 It is one thing of course for the Secretary to give the natives exclusive rights of fishing in the reservation's waters. It may be entirely another for him to delegate to them the licensing of others, even retaining the power to approve the licensing ordinances as Amended Regulations § 208.23(r) does. II. 78 Whether or not the authority conferred by the regulations upon the village to license others is valid is a question, however, which I think it neither necessary nor appropriate to answer in this proceeding, for reasons affecting the existence and propriety of exercising equity jurisdiction in this case, now to be stated. 79 I seriously doubt the existence of equity jurisdiction on the showing made by this record. But in any event I do not think it should be exercised to afford respondents the relief they have sought. The Secretary of the Interior, whose regulations and authority are at stake, has not been made a party to the suit. Nor has the Village of Karluk, which obviously is vitally interested. Moreover, the allegations concerning threatened enforcement of the regulations by White Act sanctions seem questionably sufficient to establish the basis for equitable intervention, in view of circumstances appearing in the record and asserted in briefs filed here questioning their sufficiency. 80 But, if all these factors are put to one side, one other remains which in my opinion precludes granting the equitable relief respondents seek. Their claim was founded in the complaint, as I think it had to be, not only upon the alleged invalidity of Amended Regulations § 208.23(r), but also upon the asserted invalidity of Public Land Order 128. However, they have not been successful in the latter attack, for the Court holds that Public Land Order 128 is valid and was effective to create the Karluk Reservation according to that order's terms. 81 This ruling cuts all valid ground from beneath respondent's claim to aid from a court of equity. With it, they come not as persons entitled of right to enter the reservation and fish, but solely as trespassers having no right of entry, but seeking only to avert the incidence of possible remedies for threatened wrongful entry. In effect the Court's decision is that respondents, although they have not put forward their case in this light, are entitled to have it so determined and to have equitable relief which prevents possible application of White Act sanctions against them. I cannot agree that persons so situated have standing to invoke the assistance of a court of equity. Accordingly I think the judgment should be reversed and the cause should be remanded with instructions to dismiss it. 82 Mr. Justice DOUGLAS joins in Part I of this opinion. 1 8 Fed.Reg. 8557: 'Alaska 'Modification of Executive Order Designating Lands as Indian Reservation 'By virtue of the authority contained in the act of June 25, 1910, c. 421, 36 Stat. 847, as amended by the act of August 24, 1912, c. 369, 37 Stat. 497, U.S.C., Title 43, secs. 141—143 (43 U.S.C.A. §§ 141—143), and the act of May 1, 1936, c. 254, 49 Stat. 1250, U.S.C. Title 48, sec. 358a (48 U.S.C.A. § 358a), and pursuant to Executive Order No. 9146 of April 24, 1942: It is ordered, As follows: '1. Executive Order No. 8344 of February 10, 1940, withdrawing Kodiak and other islands, Alaska, for classification and in aid of legislation, is hereby modified to the extent necessary to permit the designation as an Indian reservation of the following-described area: 'Beginning at the end of a point of land on the shore of Shelikof Strait on Kodiak Island, said point being about one and one-quarter miles east of Rocky Point and in approximate latitude 57 39 40 ' N., longitude 154 12 20 ' W.; 'Thence south approximately eight miles to latitude 57 32 30 N.; 'Thence west approximately twelve and one-half miles to the confluence of the north shore of Sturgeon River with the east shore of Shelikof Strait; Thence northeasterly following the easterly shore of Shelikof Strait to the place of beginning, containing approximately 35,200 acres. '2. The area described above and the waters adjacent thereto extending 3,000 feet from the shore line at mean low tide, are hereby designated as an Indian reservation for the use and benefit of the native inhabitants of the native village of Karluk, Alaska, and vicinity: Provided, That such designation shall be effective only upon its approval by the vote of the Indian and Eskimo residents of the area involved in accordance with section 2 of the act of May 1, 1936, supra: And provided further, That nothing herein contained shall affect any valid existing claim or right nder the laws of the United States within the purview of that Section.' 2 The first section reads as follows, 36 Stat. 847, 43 U.S.C.A. § 141: 'That the President may, at any time in his discretion, temporarily withdraw from settlement, location, sale, or entry any of the public lands of the United States, including the District of Alaska, and reserve the same for water-power sites, irrigation, classification of lands, or other public purposes to be specified in the orders of withdrawals, and such withdrawals or reservations shall remain in force until revoked by him or by an Act of Congress.' There is a second section designed to keep the reservations free for mineral exploration and utilization. 43 U.S.C.A. § 142. 3 There is an amendment, immaterial here, see 44 Stat. 752. 4 Under Reorganization Plan No. II the authority of the Department of Commerce over the administration of the White Act was transferred to the Department of the Interior, effective July 1, 1939. 53 Stat. 1431, § 4(e), 5 U.S.C.A. § 133t note. 5 The river itself and all waters within 100 yards of its mouth are closed to all commercial salmon fishing. 50 C.F.R., 1946 Supp., § 208.23(d). 6 Bancroft, History of Alaska, 1730—1885, p. 228, n. 12. 7 Id., p. 743. 8 H.Mis.Doc.No.211, 51st Cong., 1st Sess., Report of the Salmon and Salmon Rivers of Alaska, p. 20: 'The number of salmon actually caught in Karluk Bay, near the river mouth and in the lower portion of the river, is so large as to make a true statement concerning them seem incredible. In 1888 the canneries put up over 200,000 cases, averaging about 13 red salmon to the case, or more than 2,500,000 fish. In 1889 the number of fish put up was still larger, reaching probably 250,000 cases, containing more than 3,000,000 salmon. As the number of fish arriving at Karluk Bay for a long period of years has been known to be far greater than in any of the other bays of southern Alaska, it is probable that most of these salmon were present at Karluk for the purpose of ascending the river to spawn. Now the number of spawning fish seen in the river, the lakes, and their connecting rivers was comparatively very small, indeed out of all proportion to the number taken on the beach.' Page 94 9 The highest reported by the Statistical Review of the Alaska Salmon Fisheries, June 13, 1930, Bureau of Fisheries Bulletin, vol. XLVI, p. 666, was nearly 4,000,000 fish in 1901 and the lowest about 400,000 in 1927. The report said: 'Many investigations of the Karluk red-salmon fishery have been made, much has been written about it, commercial interests have battled for exclusive control and domination of it, and dire prophecies have been heard concerning its ultimate destruction. Because of these things, Karluk has undoubtedly been given more close attention than any other fishery in Alaska. * * *' 10 Unchallenged figures by plaintiffs show large catches. A table from the largest operator is printed for illustration. 'The total catch of fish taken within the area now included in the Karluk Indian Reservation during the years specified * * *: Coho Chum Pink King Red Total 1941.. 1058. 632 9893 134 59958 71675 1942... 397. 14556 225323 57 58042 298375 1943.... 83. 825 2380 161 60273 63722 1944.... 33. 5803 219300 69 63535 288740 1945..... 4. 150 554 84 50907 51699 1946... 137. 8660 1024596 44 25381 1058818" 11 Minutes of Meeting: 'A meeting was called by the president and the same evening with Mr. Peters Mr. Watrous of Juneau and Mr. Leraas present. Following discussion and action: '1. The problems of setting aside an area for beach seining were discussed. It was agreed that 1000 yd. from the mouth of the river up the spit and from the mouth of the river to Julia Fort point approximately 500 yd. on the Improvement side, placing markers or buoys 500 yd. out from mean low water mark be the restricted area for Karluk beach seining only. Purse seining could be done outside this restricted area this year or until further action by the council.' 12 See Terrace v. Thompson, 263 U.S. 197, 214, 44 S.Ct. 15, 17, 68 L.Ed. 255; Petroleum Exploration v. Public Service Commission of Kentucky, 304 U.S. 209, 217—219, 58 S.Ct. 834, 838 839, 82 L.Ed. 1294. 13 Watson v. Buck, 313 U.S. 387, 61 S.Ct. 962, 85 L.Ed. 1416; Ex parte Sawyer, 124 U.S. 200, 8 S.Ct. 482, 31 L.Ed. 402. 14 Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315; Packard v. Banton, 264 U.S. 140, 44 S.Ct. 257, 68 L.Ed. 596; Truax v. Raich, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131, L.R.A.1916D, 545, Ann.Cas.1917B, 283; Philadelphia Co. v. Stimson, 223 U.S. 605, 620, second, 32 S.Ct. 340, 344, 56 L.Ed. 570. Cf. Watson v. Buck, 313 U.S. 387, 400, 61 S.Ct. 962, 966, 85 L.Ed. 1416; Spielman Motor Sales Co. v. Dodge, 295 U.S. 89, 55 S.Ct. 678, 79 L.Ed. 1322; Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 69 S.Ct. 606. 15 43 Stat. 466, 48 U.S.C. § 226, 48 U.S.C.A. § 226. 16 Parker v. Brown, supra, 317 U.S. at page 349, 63 S.Ct. at page 312, 87 L.Ed. 315. Seizure of a fisherman's boat is a drastic sanction. See Hearings before the Subcommittee on Alaskan fisheries of the Committee on Merchant Marine and Fisheries, 76th Cong., 1st Sess., pp. 45—47. 17 67 F.Supp. 43; 165 F.2d 323. 18 Thompson v. Consolidated Gas Utilities Co., 300 U.S. 55, 69, 57 S.Ct. 364, 371, 81 L.Ed. 510; Pacific States Box & Basket Co. v. White, 296 U.S. 176, 185, 56 S.Ct. 159, 163, 80 L.Ed. 138, 101 A.L.R. 853; Wampler v. Lecompte, 282 U.S. 172, 175, 51 S.Ct. 92, 93, 75 L.Ed. 276; Martin v. Mott, 12 Wheat. 19, 32, 6 L.Ed. 537. 19 Executive Order 9146, 1 C.F.R., Cum.Supp., p. 1149: 'By virtue of the authority vested in me by the act of June 25, 1910, c. 421, 36 Stat. 847, and as President of the United States, I hereby authorize the Secretary of the Interior to sign all orders withdrawing or reserving public lands of the United States, and all orders revoking or modifying such orders: * * *' Executive Order 8344, 1 C.F.R., 1940 Supp., p. 101, referred to in Public Land Order 128, temporarily withdrew Kodiak Island from settlement, location, sale or entry for classification. 20 So far as material that act is set out in note 2, supra. 21 It is unnecessary to appraise the effect of such restoration. Tribal ownership may vary from an unrecognized Indian title, see Northwestern Bands of Shoshone Indians v. United States, 324 U.S. 335, 338, 340, 65 S.Ct. 690, 692, 693, 89 L.Ed. 985, to land so set apart to an Indian tribe by definitive treaty as to require compensation to the tribe, if the United States thereafter appropriated lands within the area. See Shoshone Tribe v. United States, 299 U.S. 476, 486, 57 S.Ct. 244, 246, 81 L.Ed. 360; 44 Stat. 1349. The effect of restoration under the Wheeler-Howard Act will depend upon the provisions of law under which the separate reservations exist. Compare Cohen, Handbook of Federal Indian Law, c. 5, § 5A, p. 94. 22 Possible claims under the Indian Claims Commission Act of August 13, 1946, are not covered by this statement. See 60 Stat. 1049, 1050, § 2(5), 25 U.S.C.A. § 70a(5). It refers to claims 'based upon fair and honorable dealings that are not recognized by any existing rule of law or equity. No claim accruing after the date of the approval of this Act shall be considered by the Commission.' 23 United States v. Shoshone Tribe, 304 U.S. 111, 116, 58 S.Ct. 794, 82 L.Ed. 1213; Shoshone Tribe v. United States, 299 U.S. 476, 485, 486, 492, First, 57 S.Ct. 244, 246, 249, 81 L.Ed. 360; United States v. Creek Nation, 295 U.S. 103, 109, 55 S.Ct. 681, 683, 79 L.Ed. 1331; United States v. Holt State Bank, 270 U.S. 49, 58, 46 S.Ct. 197, 200, 70 L.Ed. 465; Confederate Bands of Ute Indians v. United States, 330 U.S. 169, 176, et seq., 67 S.Ct. 650, 653, 91 L.Ed. 823; Arenas v. United States, 322 U.S. 419, 64 S.Ct. 1090, 88 L.Ed. 1363, opinions on remand, United States v. Arenas, 9 Cir., 158 F.2d 730; Arenas v. United States, D.C., 60 F.Supp. 411. 24 For example in the Arenas case, 322 U.S. 419, 64 S.Ct. 1090, 88 L.Ed. 1363, the statute read: 'Sec. 5. That upon the approval of the allotments provided for in the preceding section by the Secretary of the Interior he shall cause patents to issue therefor in the name of the allottees, which shall be of the legal effect and declare that the United States does and will hold the land thus allotted for the period of twenty-five years, in trust for the sole use and benefit of the Indian to whom such allotment shall have been made, or, in case of his decease, of his heirs according to the laws of the State of California, and that at the expiration of said period the United States will convey the same by patent to the said Indian, or his heirs as aforesaid, in fee, discharged of said trust and free of all charge or incumbrance whatsoever. * * *' 26 Stat. 712, 713. 322 U.S. at page 422, 64 S.Ct. at page 1091. 25 One gets a sense of its value from the catch of a single operator. Note 10, supra. 26 We understand, although it is not a fact of weight, that the number includes both men and women over twenty-one. 49 Stat. 1251; Constitution and By-Laws of the Native Village of Karluk, Alaska, Official Publication, United States Department of the Interior, Office of Indian Affairs, GPO (1939); Constitutio , Art. V, § 1; Certificate of Adoption, p. 4; 48 Stat. 986—987, §§ 13 and 16, 25 U.S.C.A. §§ 473, 476. The population of Karluk around 1880 was 302. Report on the Population, Industries, and Resources of Alaska by Ivan Petroff, p. 37, H.R.Misc.Doc. 42, P. 8, 47th Cong., 2d Sess. In 1920 it was 99; in 1929 it was 192; in 1939 it was 189. 16th Census of the United States (1940), Population, vol. 1, Number of Inhabitants, p. 1193. 27 In the Act of May 14, 1898, 30 Stat. 409, 48 U.S.C.A. § 371 Note, which extended the homestead land laws of the United States to Alaska, it was specifically provided that 'no entry shall be allowed extending more than eighty rods along the shore of any navigable water, and along such shore a space of at least eighty rods shall be reserved from entry between all such claims, and that nothing herein contained shall be so construed as to authorize entries to be made, or title to be acquired, to the shore of any navigable waters within said District: * * *.' 28 Compare the statute creating the Metlakahtla Reservation, 26 Stat. 1101: 'Sec. 15. That until otherwise provided by law the body of lands known as Annette Islands, situated in Alexander Archipelago in Southeastern Alaska, on the north side of Dixon's entrance, be, and the same is hereby, set apart as a reservation for the use of the Metlakahtla Indians, and those people known as Metlakahtlans who have recently emigrated from British Columbia to Alaska, and such other Alaskan natives an may join them, to be held and used by them in common, under such rules and regulations, and subject to such restrictions, as may (be) prescribed from time to time by the Secretary of the Interior.' 48 U.S.C.A. § 358. See 34 Stat. 1411, 46 U.S.C.A. §§ 237, 238, and 48 Stat. 667, 8 U.S.C.A. § 601 Note. See a discussion of the limited power of the President to create even temporary reservations for Indian immigrants. 18 Op.Atty.Gen. 557. We have carefully considered the opinion in Miller v. United States, 9 Cir., 159 F.2d 997, where it is held, page 1001, that the Indian right of occupancy of Alaska lands is compensable. With all respect to the learned judges, familiar with Alaska land laws, we cannot express agreement with that conclusion. The opinion upon which they chiefly rely, United States v. Alcea Band of Tillamooks, 329 U.S. 40, 67 S.Ct. 167, 91 L.Ed. 29, is not an authority for this position. That opinion does not hold the Indian right of occupancy compensable without specific legislative direction to make payment. See also United States v. 10.95 Acres of Land in Juneau, D.C., 75 F.Supp. 841. 29 In Hearings before Senate Committee on Indian Affairs, 73d Cong., 2d Sess., on S. 3645, the bill which became the Act of June 18, 1934, p. 247, the following discussion took place as to the meaning of these words: 'Senator O'Mahoney. But what you are saying here is that the constitution shall vest in some person—what? The following rights and powers. And then you undertake to enumerate those powers. The first one that you enumerate is the right to employ counsel. The second one is the right to prevent individuals from selling and dis osing of their property. Then you come to a third one and it is to represent the tribe, and that seems to me to be hanging up in the air. 'The Chairman. The second one you stated incorrectly. 'Senator O'Mahoney. Have I? 'The Chairman. It is not to prevent them from selling individual lands; it is tribal lands. 'Senator O'Mahoney. Yes, that is right: tribal lands.' 30 H.R.Rep.No.2244 on H.R. 9866, 74th Cong., 2d Sess.; Sen.Rep.No.1748 on S. 4420, 74th Cong., 2d Sess. 31 'An even more important reason for the designation of reservations in Alaska is that by doing so the United States Government will have fulfilled in part its moral and legal obligations in the protection of the economic rights of the Alaska natives. In at least two acts f Congress this obligation is specifically acknowledged. The act approved on May 17, 1884, 23 Stat. 26, contains the following language: 'Provided, That the Indians or other persons in said district shall not be disturbed in the possession of any lands actually in their use or occupation or now claimed by them but the terms under which such persons may acquire title to such lands is reserved for future legislation by Congress.' 'The act of March 3, 1891, 26 Stat. 1100, contains similar language: 'That none of the provisions of the last two preceding sections of this act shall be so construed as to warrant the sale of any lands belonging to the United States which shall contain coal or the precious metals, or any townsite, or which shall be occupied by the United States for public purposes, or which shall be reserved for such purposes, or to which the natives of Alaska have prior rights by virtue of actual occupation.' Lands which should have been, by virtue of these acts, segregated for natives of Alaska have not been so segregated. The provisions of section 2 of H.R. 9866 will aid the Federal Government in rectifying this condition, and in protecting the interests of the natives in the future. Section 2 of the bill which gives to the Secretary of the Interior power to designate certain lands as Indian reservations is, therefore, a logical sequence of the legislative history regarding Indian lands in Alaska and provides a method by which the financial aid provisions of the Indian Reorganization Act may be extended to those Indians and Eskimos of Alaska who occupy established villages.' 32 This appears from the following excerpt from the Secretary's letter: 'Indian tribes do not exist in Alaska in the same sense as in continental United States. Section 19 of the Indian Reorganization Act defines the word 'tribe' as referring to 'Any Indian tribe, organized band, pueblo, or the Indians residing on one reservation.' With a few exceptions the lands occupied by natives of Alaska have not been designated as reservations. In order, therefore, to define an Alaskan tribe it is necessary to identify it with the land it occupies and in terms of the language of the act, 'reservation.' In addition, if native communities of Alaska are to set up systems of local government, it will be necessary to stipulate the geographical limits of their jurisdictions. Reservations set up by the Secretary of the Interior will accomplish this.' This, with the proviso of the first section, was deemed sufficient to enable the lands to be identified and to permit the Wheeler-Howard benefits to be available to the Alaska natives. 33 36 Stat. 847, § 2. 34 Treaty with Russia, proclaimed June 20, 1867, 15 Stat. 539, 541—542: Art. II. 'In the cession of territory and dominion made by the preceding article are included the right of property in all public lots and squares, vacant lands, and all public buildings, fortifications, barracks, and other edifices which are not private individual property. * * *' Art. III. 'The inhabitants of the ceded territory, according to their choice, reserving their natural allegiance, may return to Russia within three years; but if they should prefer to remain in the ceded territory, they, with the exception of uncivilized native tribes, shall be admitted to the enjoyment of all the rights, advantages, and immunities of citizens of the United States, and shall be maintained and protected in the free enjoyment of their liberty, property, and religion. The uncivilized tribes will be subject to such laws and regulations as the United States may, from time to time, adopt in regard to aboriginal tribes of that country.' 35 Alaska Pacific Fisheries v. United States, 248 U.S. 78, 87, 39 S.Ct. 40, 41, 63 L.Ed. 138; Shively v. Bowlby, 152 U.S. 1, 47, 14 S.Ct. 548, 565, 38 L.Ed. 331, and cases cited; Mann v. Tacoma Land Co., 153 U.S. 273, 283, 14 S.Ct. 820, 821, 38 L.Ed. 714. See also Tulee v. Washington, 315 U.S. 681, 62 S.Ct. 862, 86 L.Ed. 1115. In Knight v. United Land Association, 142 U.S. 161, at page 183, 12 S.Ct. 258, at page 264, 35 L.Ed. 974, the Court said: 'Upon the acquisition of the territory from Mexico the United States acquired the title to tide-lands equally with the title to upland; but with respect to the former they held it only in trust for the future states that might be erected out of such territory.' In Alaska Pacific Fisheries v. United States, supra, 248 U.S. at page 87, 39 S.Ct. at page 41, 63 L.Ed. 138, the statement is made, 'That Congress had power to make the reservation inclusive of the adjacent waters and submerged land as well as the upland needs little more than statement. All were the property of the United States and within a district where the entire dominion and sovereignty rested in the United States and over which Congress had complete legislative authority.' Compare also Borax Consolidated, Ltd., v. Los Angeles, 296 U.S. 10, 15, 56 S.Ct. 23, 25, 80 L.Ed. 9. 36 23 Stat. 27: 'Sec. 12. That the Secretary of the Interior shall select two of the officers to be appointed under this act, who, together with the governor, shall constitute a commission to examine into and report upon the condition of the Indians residing in said Territory, what lands, if any, should be reserved for their use, what provision shall be made for their education what rights by occupation of settlers should be recognized, and all other facts that may be necessary to enable Congress to determine what limitations or conditions should be imposed when the land laws of the United States shall be extended to said district; and to defray the expenses of said commission the sum of two thousand dollars is hereby appropriated out of any moneys in the Treasury not otherwise appropriated.' 37 'The General Land Laws of the United States should be extended over the Territory as early as possible. The natives claim only the land on which their houses are built and some garden patches near their villages; they ask or expect nothing more. A deed for their lots in severalty would be a very highly prized document by them. The fisheries occupied by them before the advent of the Whites should also be secured to them against encroachment. They ask only the same rights and protection given the white man.' 38 'Now, therefore, I, Woodrow Wilson, President of the United States of America, by virtue of the power in me vested by the laws of the United States, do hereby make known and proclaim that the waters within three thousand feet from the shore lines at mean low tide of Annette Island, Ham Island, Walker Island, Lewis Island, Spire Island, Hemlock Island, and adjacent rocks and islets, located within the area segregated by the broken line upon the diagram hereto attached and made a part of this proclamation; also the bays of said islands, rocks, and islets, are hereby reserved for the benefit of the Metlakahtlans and such other Alaskan natives as have joined them or may join them in residence on these islands, to be used by them under the general fisheries laws and regulations of the United States as administered by the Secretary of Commerce. 'Warning is hereby expressly given to all unauthorized persons not to fish in or use any of the waters herein described or mentioned.' A presidential proclamation had theretofore, 1892, set apart Afognak Island, Alaska, and its adjacent bays and territorial waters as a public reservation for fish culture without specific authority to reserve waters. 27 Stat. 1052. 39 Borax Consolidated, Ltd., v. Los Angeles, 296 U.S. 10, 17, 22, 56 S.Ct. 23, 26, 29, 80 L.Ed. 9. This case turned on the power of the United States to convey tideland seaward of the line of mean high tide after California's admission to the Union. Public lands there could not include tidelands as they passed to California when she became a state. The cases cited in the Borax case to support the statement as to public lands are cases that have nothing to do with tidelands or coastal waters but depend upon whether the lands in question were subject to disposal as property of the United States, i.e., public lands. See Newhall v. Sanger, 92 U.S. 761, 763, 23 L.Ed. 769; Barker v. Harvey, 181 U.S. 481, 490, 21 S.Ct. 690, 693, 45 L.Ed. 963; Union Pacific R. Co. v. Harris, 215 U.S. 386, 388, 30 S.Ct. 138, 54 L.Ed. 246. 40 Act of May 14, 1898, c. 299, 30 Stat. 409, 48 U.S.C. §§ 371, 48 U.S.C.A. § 371 (homestead laws); Act of March 3, 1899, c. 424, 30 Stat. 1098, 48 U.S.C. § 351, 48 U.S.C.A. § 351 (public land surveys); Act of March 2, 1907, c. 2537, 34 Stat. 1232, 48 U.S.C. § 365, 48 U.S.C.A. § 365 (land districts). 41 See also Miller v. United States, supra, note 28; Heckman v. Sutter, 9 Cir., 128 F. 393. 42 Cf. United States v. Jefferson Electric Mfg. Co., 291 U.S. 386, 397, 54 S.Ct. 443, 447, 78 L.Ed. 859. 43 Alaska Fisheries General Regulations, 50 CFR, c. II, p. 2333. 44 Id., p. 2355; 3 F.R. 393. 45 Id., p. 2359. 46 11 F.R. 3105, 9528. 47 Executive Order of Feb. 17, 1922, creating the Alaska Peninsula Fisheries Reservation; Executive Order No. 3752 of Nov. 3, 1922, creating the Southwestern Alaska Fisheries Reservation. Regulations issued under these two Executive Orders are printed in the Fisheries Service Bulletin of the Bureau of Fisheries, Dept. of Commerce, No. 92, Jan. 2, 1923. 48 65 Cong.Rec. 5974; 65 Cong.Rec. 9520—21; 65 Cong.Rec. 9681 et seq.; H.R.Rep.No.357, 68th Cong., 1st Sess., p. 2; SenRep.No.449, 68th Cong., 1st Sess., p. 5; House Hearings, Committee on Merchant Marine & Fisheries, Fisheries of Alaska (1924) H.R. 2714, January 31—February 8, 1924, p. 21, et seq. Note that this is a different bill than H.R. 8143 which became the White Act but the subject was the same. See H.R.Rep.No.357, supra, p. 1. Dow v. Ickes, 74 App.D.C. 319, 123 F.2d 909. 49 43 Stat. 466, 48 U.S.C.A. § 226: 'Sec. 6. Any person, company, corporation, or association violating any provision of this Act or of said Act of Congress approved June 26, 1906, or of any regulation made under the authority of either, shall, upon conviction thereof, be punished by a fine not exceeding $5,000 or imprisonment for a term of not more than ninety days in the county jail, or by both such fine and imprisonment; and in case of the violation of section 3 of said Act approved June 26, 1906, as amended, there may be imposed a further fine not exceeding $250 for each day the obstruction therein declared unlawful is maintained. Every boat, seine, net, trap, and every other gear and appliance used or employed in violation of this Act or in violation of said Act approved June 26, 1906, and all fish taken therein or therewith, shall be forfeited to the United States, and shall be seized and sold under the direction of the court in which the forfeiture is declared, at public auction, and the p oceeds thereof, after deducting the expenses of sale, shall be disposed of as other fines and forfeitures under the laws relating to Alaska. Proceedings for such forfeiture shall be in rem under the rules of admiralty. 'That for the purposes of this Act all employees of the Bureau of Fisheries, designated by the Commissioner of Fisheries, shall be considered as peace officers and shall have the same powers of arrest of persons and seizure of property for any violation of this Act as have United States marshals or their deputies.' 50 43 Stat. 467, 48 U.S.C.A. § 228: 'Sec. 8. Nothing in this Act contained, nor any powers herein conferred upon the Secretary of Commerce, shall abrogate or curtail the powers granted the Territorial Legislature of Alaska to impose taxes or licenses, nor limit or curtail any powers granted the Territorial Legislature of Alaska by the Act of Congress approved August 24, 1912, 'To create a legislative assembly in the Territory of Alaska, to confer legislative power thereon, and for other purposes." 51 See § 1 of the White Act, 337 U.S. 92, 69 S.Ct. p. 973, supra. 52 See 27 Stat. 631 relating to representation of Indians by the United States district attorneys; Cohen, Handbook of Federal Indian Law, pp. 252—53; Powers of Indian Tribes, Solicitor of the Interior, Nathan R. Margold, October 25, 1934, M27781 pp. 55—58. See United States v. Candelaria, 271 U.S. 432, 46 S.Ct. 561, 70 L.Ed. 1023; United States v. Berrigan, 2 Alaska 442; United States v. Cadzow, 5 Alaska 125. 53 Dow v. Ickes, 74 App.D.C. 319, 123 F.2d 909, 916: 'It prohibits monopoly, but it does not prohibit reasonable discriminations required by the purpose of conservation and limitations inherent in the type of fishing to which the Secretary's judgment must be applied.' 54 'An Ordinance. Whereas, under Public Land Order 128, of May 22, 1943, creating the Karluk Reservation, the right to fish commercially in the waters of said reservation is restricted to the inhabitants of the Native Village of Karluk and vicinity, and; 'Whereas, non-residents desire to continue their fishing operations in the waters of said reservat on; 'Now, Therefore, be it ordained by the Council of the Native Village of Karluk, a federal corporation chartered under the Act of June 18, 1934, as amended; 'Section 1. That it shall be unlawful for any person, partnership, firm, association or corporation, to fish for, take or catch any fish, or to operate any fishing vessel, gear or equipment, within the waters of the Karluk Reservation except under a permit issued by the Native Village of Karluk, for which the fee shall be as follows: '(A) For residents of the Territory of Alaska $1.00 '(B) For non-residents of the Territory of Alaska $25.00 'Provided further, that a person to qualify for a resident (Class A) permit must have resided in the Territory of Alaska for three consecutive years prior to the date of their application, or request, for a permit. 'Section 2. The possession of fish upon any vessel within said waters without a permit shall constitute prima facie evidence of a violation of this ordinance. 'Section 3. Any violation of this ordinance shall be punished by a fine of not exceeding Five Hundred Dollars ($500). 'Approved this 31st day of May, 1945.' The 1946 ordinance made the fee $2.00 for residents of Alaska and $40.00 for nonresidents. Karluk had received its corporate charter, constitution and by-laws August 23, 1939. Official publications, Office of Indian Affairs, Department of the Interior, See §§ 16 and 17, 48 Stat. 987. 55 Section 5 of the Corporate Charter of the Native Village of Karluk provides that 'In using its powers the corporation must not do the following things: * * * 'Make leases, permits or contracts covering any lands or waters set aside as a reserve for the Village without the approval of the Secretary of the Interior or his authorized representative.' 56 'Commercial Fishing Permit. 'Karluk Indian Reservation, Karluk, Alaska, June 30, 1946. 'Pursuant to an Ordinance passed by the Council of the Native Village of Karluk, Alaska, dated May 31, 1946, permission is hereby given by the Native Village of Karluk to Ray Harmon of Kodiak, Alaska, to enter the waters and land of the Karluk Reservation for the purpose of engaging in commercial fishing for salmon, S.J. F & P Co., during the period: June 1946 to September 1946. 'This permit is issued subject to the conditions printed on the back hereof. I accept: RAY HARMON PERMITTEE Boat No. or Name: Caroline Fishing for: (CANNERY) San Juan NAME UGANIK BAY, ALASKA ADDRESS 'Conditions EWAN M. NAUMOFF ISSUING OFFICER PRESIDENT KARLUK TITLE Approved: H. C. BINGHAM APPROVING OFFICER ASST. TEACHER A.N.S. TITLE 'This permit is valid only if approved by the General Superintendent of the Indian Service in Alaska or his duly authorized representative, and is revocable in the discretion of the issuing officer. It is not transferable and must be carried on the person of the permittee when engaged in fishing authorized hereunder, and must be exhibited by any person requesting to see it. This permit is issued and accepted by the permittee on the express condition that the permittee will comply with all of the provisions of law and regulations governing fishing on the Karluk Indian Reservation, Alaska. The permittee is warned not to interfere with the fishing activities of the Indians of the Karluk Indian Reservation nor use, disturb, or destroy any property belonging to said Indians.' 57 Article VI of the Constitution of the Native Village of Karluk provides that 'Changes in this Constitution and Bylaws may be made if the changes are approved by the Secretary of the Interior and by a majority vote of the Village members voting in an election called by the Secretary of the Interior at which at least 30 percent of the voting membership take part.' 58 For a discussion of the difficulties of the preparation of regulations, compare Addison v. Holly Hill Fruit Products, Co., 322 U.S. 607, 64 S.Ct. 1215, 88 L.Ed. 1488, 153 A.L.R. 1007. See also the statements of the Commissioner of Indian Affairs in Hearings before the House Committee on Indian Affairs, 73d Cong., 2d Sess., on H.R. 7902 (Wheeler-Howard act). 59 Virginian R. Co. v. System Federation, 300 U.S. 515, 552, 57 S.Ct. 592, 601, 81 L.Ed. 789; City of Harrisonville v. W. S. Dickey Clay Co., 289 U.S. 334, 338, note 2, 53 S.Ct. 602, 603, 77 L.Ed. 1208. 60 Compare Atlantic Coast Line R. Co. v. Florida, 295 U.S. 301, 314—315, 55 S.Ct. 713, 718—719, 79 L.Ed. 1451; Burford v. Sun Oil Co., 319 U.S. 315, 333, 63 S.Ct. 1098, 1107, 87 L,.ed. 1424; Addison v. Holly Hill Fruit Products Co., 322 U.S. 607, 620, 64 S.Ct. 1215, 1222, 88 L.Ed. 1488, 153 A.L.R. 1007. 1 Set forth at note 1 of the Court' opinion. 2 See text of the amended regulation as quoted in the Court's opinion 337 U.S. 92, 69 S.Ct. 972. 3 Reference is made to the Court's opinion, 337 U.S. 92, 69 S.Ct . 973, for the pertinent language of the statute and at note 49 for the Act's penal provisions. 4 See note 49, majority opinion. 5 See e.g., Department of Commerce, Laws and Regulations for Protection of Fisheries of Alaska (Dept. Circular No. 251, 10th ed.), Dec. 22, 1926; Op. of Solicitor, Dep't. of Interior, 56 I.D. 110. 6 See the legislative debates, reports and hearings cited in the text, supra.

12

337 U.S. 235 69 S.Ct. 1073 93 L.Ed. 1333 YOUNGv.RAGEN.* No. 50. Argued Nov. 17, 1948. Decided June 6, 1949. Mr. Edward H. Levi, Chicago, Ill., for petitioner. Mr. William C. Wines, Chicago, Ill., for respondent. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 We are once again faced with the recurring problem of determining what, if any, is the appropriate post-trial procedure in Illinois by which claims of infringement of federal rights may be raised. See Woods v. Nierstheimer, U.S. 211, 66 S.Ct. 996, 90 L.Ed. 1177; Marino v. Ragen, 332 U.S. 561, 68 S.Ct. 240, 92 L.Ed. 170; Loftus v. People of State of Illinois, 334 U.S. 804, 68 S.Ct. 1212, 92 L.Ed. 1737. In 1946, petitioner pleaded guilty to an indictment charging him with having committed burglary and larceny and was sentenced to five to seven years imprisonment. A year later he filed a petition for a writ or habeas corpus in the Circuit Court of Randolph County, Illinois, the sentencing court, containing allegations which, if true, raise substantial questions under the due process clause of the Fourteenth Amendment. The Attorney General of Illinois concedes that petitioner is entitled to a hearing into the truth or falsity of the charges. The court to which the petit on for a writ of habeas corpus was directed denied the petition without holding a hearing, however, for the reason that it 'is insufficient in law and substance.' We granted the petition for a writ of certiorari, 334 U.S. 810, 68 S.Ct. 1013, 92 L.Ed. 1742, to consider the question thus presented. 2 The Attorney General explains the circuit court's denial of the petition for the writ as based upon state procedural grounds: that habeas corpus was not an appropriate remedy for the relief of denials of due process. He contends, however, that while the circuit court was correct in its interpretation of Illinois law when it denied the petition, certain statements in the Illinois Supreme Court's opinions in People v. Loftus, 400 Ill. 432, 81 N.E.2d 495; People v. Shoffner, 400 Ill. 174, 79 N.E.2d 200; and People v. Wilson, 399 Ill. 437, 78 N.E.2d 514, all of which were handed down subsequent to the circuit court's denial of relief, strongly indicate that habeas corpus would now be the appropriate Illinois procedure in a case such as the one before us. His contention is, in other words, that while the petition for habeas corpus was properly denied when acted upon below, the decisions just cited probably broaden the scope of habeas corpus in Illinois, so that a denial of a hearing would be erroneous if the petition were again presented to the circuit court. 3 The situation is further complicated, however, by the fact that many circuit courts, whose decision upon habeas corpus are unreviewable by the state supreme court under Illinois law, have continued to deny petitions for habeas corpus on procedural grounds since the supreme court's 'announcement' in People v. Loftus, supra. The Attorney General's position concerning these denials, as we understand it, is that these decisions may be wrong, depending upon whether his interpretation of the Loftus 'announcement' is the correct one, but that whether right or wrong, they are decisions solely upon a question of Illinois procedural law and thus do not warrant invocation of the jurisdiction of this Court. 4 Of course we do not review decisions which rest upon adequate non-federal grounds, and of course Illinois may choose the procedure it deems appropriate for the vindication of federal rights. Loftus v. People of State of Illinois, supra. But it is not simply a question of state procedure when a state court of last resort closes the door to any consideration of a claim of denial of a federal right. And that is the effect of the denials of habeas corpus in a number of cases now before this Court, for in none of the cases does the Attorney General suggest that either of the other two Illinois post-trial remedies, writ of error and coram nobis, is appropriate. Unless habeas corpus is available, therefore, we are led to believe that Illinois offers no post-trial remedy in cases of this kind. The doctrine of exhaustion of state remedies, to which this Court has required the scrupulous adherence of all federal courts, see Ex parte Hawk, 321 U.S. 114, 64 S.Ct. 448, 88 L.Ed. 5721 and cases cited, presupposes that some adequate state remedy exists. We recognize the difficulties with which the Illinois Supreme Court is faced in adapting available state procedures to the requirement that prisoners be given some clearly defined method by which they may raise claims of denial of federal rights. Nevertheless, that requirement must be met. If there is now no post-trial procedure by which federal rights may be vindicated in Illinois, we wish to be advised of that fact upon remand of this case. 5 Seven other petitions for certiorari which raise substantial questions under the due-process clause of the Fourteenth Amendment are now before this Court following denials of habeas corpus by Illinois circuit courts or the Criminal Court of Cook County. In none of these cases was a hearing held or the petitioner permitted to submit proof of the truth of his allegations. In three instances, the denial of habeas corpus occurred prior to the supreme court's 'announcement' in People v. Loftus, supra, as was true in the case of Young. A similar disposition of these petitions is therefore required. 6 Four petitions for certiorari involve denials of habeas corpus subsequent to the Loftus 'announcement.' It may well be that these decisions represent the opinion of four Illinois circuit judges that habeas corpus is not an appropriate remedy under Illinois law despite the Loftus opinion. Out of an abundance of caution, we have concluded, however, that these cases should also be remanded to the state courts, since it is possible that the Loftus 'announcement' was not brought to their attention or its possible significance pointed out. As in the other cases, we wish to be advised, if a hearing is again denied, whether the court is of the opinion that habeas corpus is not an appropriate remedy in Illinois in cases raising questions under the due-process clause of the Fourteenth Amendment. 7 Accordingly, the order denying the petition for a writ of habeas corpus in No. 50, Young v. Ragen, is vacated and the cause remanded for consideration of the present applicability of habeas corpus in the light of the supreme court's 'announcement' in People v. Loftus, supra, and other relevant Illinois decisions. The petitions for certiorari in No. 47, Misc., Evans v. Nierstheimer; in No. 106, Misc., Willis v. Ragen; in No. 109, Misc., Thompson v. Ragen; in No. 184, Misc., Lewis v. Ragen; in No. 372, Misc., Sherman v. Ragen; and in No. 374, Misc., Banks v. Nierstheimer, are granted. The orders denying petitions for writs of habeas corpus in these cases, together with that in No. 265, Misc., Smith v. Ragen,2 are vacated and the causes remanded for similar consideration. 8 Orders will be entered accordingly. 9 Vacated and remanded. * Together with No. 47, Misc., Evans v. Nierstheimer, on certiorari to the Circuit Court of St. Clair County, Illinois; No. 106, Misc., Willis v. Ragen; No. 109, Misc., Thompson v. Ragen; No. 184, Misc., Lewis v. Ragen; and No. 372, Misc., Sherman v. Ragen, all on certiorari to the Criminal Court of Cook County, Illinois; No. 265, Misc., Smith v. Ragen, and No. 374, Misc., Banks v. Nierstheimer, both on certiorari to the Circuit Court of Will County, Illinois. 1 Existing law as declared by Ex parte Hawk was made a part of the statute by the new Judicial Code, 28 U.S.C. § 2254, 28 U.S.C.A. § 2254, which provides: '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.' 2 Certiorari granted, 336 U.S. 966, 69 S.Ct. 929.

01

337 U.S. 241 69 S.Ct. 1079 93 L.Ed. 1337 WILLIAMSv.PEOPLE OF STATE OF NEW YORK. No. 671. Argued April 21, 1949. Decided June 6, 1949. Rehearing Denied June 27, 1949. See 337 U.S. 961, 69 S.Ct. 1529. Appeal from the Court of Appeals of the State of New York. Mr. John F. Finerty, New York City, for appellant. Mr. Solomon Klein, Brooklyn, N.Y., for appellee. Mr. Justice BLACK delivered the opinion of the Court. 1 A jury in a New York state court found appellant guilty of murder in the first degree.1 The jury recommended life imprisonment, but the trial judge imposed sentence of death.2 In giving his reasons for imposing the death sentence the judge discussed in open court the evidence upon which the jury had convicted stating that this evidence had been considered in the light of additional information obtained through the court's 'Probation Department, and through other sources.' Consideration of this additional information was pursuant to § 482 of New York Criminal Code which provides: 2 '* * * Before rendering judgment or pronouncing sentence the court shall cause the defendant's previous criminal record to be submitted to it, including any reports that may have been made as a result of a mental, phychiatric (sic) or physical examination of such person, and may seek any information that will aid the court in determining the proper treatment of such defendant.' 3 The Court of Appeals of New York affirmed the conviction and sentence over the contention that as construed and applied the controlling penal statutes are in violation of the due process clause of the Fourteenth Amendment of the Constitution of the United States 'in that the sentence of death was based upon information supplied by witnesses with whom the accused had not been confronted and as to whom he had no opportunity for cross-examination or rebuttal * * *.' 298 N.Y. 803, 804, 83 N.E.2d 698. Because the statutes were sustained over this constitutional challenge the case is here on appeal under 28 U.S.C. § 1257(2), 28 U.S.C.A. § 1257(2). 4 The narrow contention here makes it unnecessary to set out the facts at length. The record shows a carefully conducted trial lasting more than two weeks in which appellant was represented by three appointed lawyers who conducted his defense with fidelity and zeal. The evidence proved a wholly indefensible murder committed by a person engaged in a burglary. The judge instructed the jury that if it returned a verdict of guilty as charged, without recommendation for life sentence, 'The Court must impose the death penalty,' but if such recommendation was made, 'the Court may impose a life sentence.' The judge went on to emphasize that 'the Court is not bound to accept your recommendation.' About five weeks after the verdict of guilty with recommendation of life imprisonment, and after a statutory pre-sentence investigation report to the judge, the defendant was brought to court to be sentenced. Asked what he had to say, appellant protested his innocence. After each of his three lawyers had appealed to the court to accept the jury's recommendation of a life sentence, the judge gave reasons why he felt that the death sentence should be imposed. He narrated the shocking details of the crime as shown by the trial evidence, expressing his own complete belief in appellant's guilt. He stated that the pre-sentence investigation revealed many material facts concerning appellant's background which though relevant to the question of punishment could not properly have been brought to the attention of the jury in its consideration of the question of guilt. He referred to the experience appellant 'had had on thirty other burglaries in and about the same vicinity' where the murder had been committed. The appellant had not been convicted of these burglaries although the judge had information that he had confessed to some and had been identified as the perpetrator of some of the others. The judge also referred to certain activities of appellant as shown by the probation report that indicated appellant possessed 'a morbid sexuality' and classified him as a 'menace to society.' The accuracy of the statements made by the judge as to appellant's background and past practices were not challenged by appellant or his counsel, nor was the judge asked to disregard any of them or to afford appellant a chance to refute or discredit any of them by cross-examination or otherwise. 5 The case presents a serious and difficult question. The question relates to the rules of evidence applicable to the manner in which a judge may obtain information to guide him in the imposition of sentence upon an already convicted defendant. Within limits fixed by statutes, New York judges are given a broad discretion to decide the type and extent of punishment for convicted defendants. Here, for example, the judge's discretion was to sentence to life imprisonment or death. To aid a judge in exercising this discretion intelligently the New York procedural policy encourages him to consider information about the convicted person's past life, health, habits, conduct, and mental and moral propensities. The sentencing judge may consider such information even though obtained outside the courtroom from persons whom a defendant has not been permitted to confront or cross-examine. It is the consideration of information obtained by a sentencing judge in this manner that is the basis for appellant's broad constitutional challenge to the New York statutory policy. 6 Appellant urges that the New York statutory policy is in irreconcilable conflict with the underlying philosophy of a second procedural policy grounded in the due process of law clause of the Fourteenth Amendment. That policy as stated in Re Oliver, 333 U.S. 257, 273, 68 S.Ct. 499, 507, 508, 92 L.Ed. 682, is in part that no person shall be tried and convicted of an offense unless he is given reasonable notice of the charges against him and is afforded an opportunity to examine adverse witnesses.3 That the due process clause does provide these salutary and time-tested protections where the question for consideration is the guilt of a defendant seems entirely clear from the genesis and historical evolution of the clause. See, e.g., Chambers v. State of Florida, 309 U.S. 227, 236—237, 60 S.Ct. 472, 476, 477, 84 L.Ed. 716, and authorities cited in note 10. 7 Tribunals passing on the guilt of a defendant always have been hedged in by strict evidentiary procedural limitations.4 But both before and since the American colonies became a nation, courts in this country and in England practiced a policy under which a sentencing judge could exercise a wide discretion in the sources and types of evidence used to assist him in determining the kind the extent of punishment to be imposed within limits fixed by law.5 Out-of-court affidavits have been used frequently, and of course in the smaller communities sentencing judges naturally have in mind their knowledge of the personalities and backgrounds of convicted offenders.6 A recent manifestation of the historical latitude allowed sentencing judges appears in Rule 32 of the Federal Rules of Criminal Procedure, 18 U.S.C.A. That rule provides for consideration by federal judges of reports made by probation officers containing information about a convicted defendant, including such information 'as may be helpful in imposing sentence or in granting probation or in the correctional treatment of the defendant * * *.'7 8 In addition to the historical basis for different evidentiary rules governing trial and sentencing procedures there are sound practical reasons for the distinction. In a trial before verdict the issue is whether a defendant is guilty of having engaged in certain criminal conduct of which he has been specifically accused. Rules of evidence have been fashioned for criminal trials which narrowly confine the trial contest to evidence that is strictly relevant to the particular offense charged. These rules rest in part on a necessity to prevent a time consuming and confusing trial of collateral issues. They were also designed to prevent trubunals concerned solely with the issue of guilt of a particular offense from being influenced to convict for that offense by evidence that the defendant had habitually engaged in other misconduct. A sentencing judge, however, is not confined to the narrow issue of guilt. His task within fixed statutory or constitutional limits is to determine the type and extent of punishment after the issue of guilt has been determined. Highly relevant—if not essential—to his selection of an appropriate sentence is the possession of the fullest information possible concerning the defendant's life and characteristics.8 And modern concepts individualizing punishment have made it all the more necessary that a sentencing judge not be denied an opportunity to obtain pertinent information by a requirement of rigid adherence to restrictive rules of evidence properly applicable to the trial. 9 Undoubtedly the New York statutes emphasize a prevalent modern philosophy of penology that the punishment should fit the offender and not merely the crime. People v. Johnson, 252 N.Y. 387, 392, 169 N.E. 619. The belief no longer prevails that every offense in a like legal category calls for an identical punishment without regard to the past life and habits of a particular offender. This whole country has traveled far from the period in which the death sentence was an automatic and commonplace result of convictions—even for offenses today deemed trivial.9 Today's philosophy of individualizing sentences makes sharp distinctions for example between first and repeated offenders.10 Indeterminate sentences, the ultimate termination of which are sometimes decided by nonjudicial agencies have to a large extent taken the place of the old rigidly fixed punishments.11 The practice of probation which relies heavily on non-judicial implementation has been accepted as a wise policy.12 Execution of the United States parole system rests on the discretion of an administrative parole board. 36 Stat. 819, 18 U.S.C. §§ 714, 716, (now §§ 4202—4204.) Retribution is no longer the dominant objective of the criminal law. Reformation and rehabilitation of offenders have become important goals of criminal jurisprudence.13 10 Modern changes in the treatment of offenders make it more necessary now than a century ago for observance of the distinctions in the evidential procedure in the trial and sentencing processes. For indeterminate sentences and probation have resulted in an increase in the discretionary powers exercised in fixing punishments. In general, these modern changes have not resulted in making the lot of offenders harder. On the contrary a strong motivating force for the changes has been the belief that by careful study of the lives and personalities of convicted offenders many could be less severely punished and restored sooner to complete freedom and useful citizenship. This belief to a large a large extent has been justified. 11 Under the practice of individualizing punishments, investigation techniques have been given an important role. Probation workers making reports of their investigations have not been trained to prosecute but to aid offenders. Their reports have been given a high value by conscientious judges who want to sentence persons on the best available information rather than on guesswork and inadequate information.14 To deprive sentencing judges of this kind of information would undermine modern penological procedural policies that have been cautiously adopted throughout the nation after careful consideration and experimentation. We must recognize that most of the information now relied upon by judges to guide them in the intelligent imposition of sentences would be unavailable if information were restricted to that given in open court by witnesse subject to cross-examination. And the modern probation report draws on information concerning every aspect of a defendant's life.15 The type and extent of this information make totally impractical if not impossible open court testimony with cross-examination. Such a procedure could endlessly delay criminal administration in a retrial of collateral issues. 12 The considerations we have set out admonish us against treating the due-process clause as a uniform command that courts throughout the Nation abandon their age-old practice of seeking information from out-of-court sources to guide their judgment toward a more enlightened and just sentence. New York criminal statutes set wide limits for maximum and minimum sentences.16 Under New York statutes a state judge cannot escape his grave responsibility of fixing sentence. In determining whether a defendant shall receive a one-year minimum or a twenty-year maximum sentence, we do not think the Federal Constitution restricts the view of the sentencing judge to the information received in open court. The due-process clause should not be treated as a device for freezing the evidential procedure of sentencing in the mold of trial procedure. So to treat the due-process clause would hinder if not preclude all courts—state and federal—from making progressive efforts to improve the administration of criminal justice. 13 It is urged, however, that we should draw a constitutional distinction as to the procedure for obtaining information where the death sentence is imposed. We cannot accept the contention. Leaving a sentencing judge free to avail himself of out-of-court information in making such a fateful choice of sentences does secure to him a broad discretionary power, one susceptible of abuse. But in considering whether a rigid constitutional barrier should be created, it must be remembered that there is possibility of abuse wherever a judge must choose between life imprisonment and death. And it is conceded that no federal constitutional objection would have been possible if the judge here had sentenced appellant to death because appellant's trial manner impressed the judge that appellant was a bad risk for society, or if the judge had sentenced him to death giving no reason at all. We cannot say that the due-process clause renders a sentence void merely because a judge gets additional out-of-court information to assist him in the exercise of this awesome power of imposing the death sentence. 14 Appellant was found guilty after a fairly conducted trial. His sentence followed a hearing conducted by the judge. Upon the judge's inquiry as to why sentence should not be imposed, the defendant made statements. His counsel made extended arguments. The case went to the highest court in the state, and that court had power to reverse for abuse of discretion or legal error in the imposition of the sentence.17 That court affirmed. We hold that appellant was not denied due process of law.18 15 Affirmed. 16 Mr. Justice RUTLEDGE dissents. 17 Mr. Justice MURPHY, dissenting. 18 A combination of factors in this case impels me to dissent. 19 Petitioner was convicted of murder by a jury, and sentenced to death by the judge. The jury which heard the trial unanimously recommended life imprisonment as a suitable punishment for the defendant. They had observed him throughout the trial, had heard all the evidence adduced against him, and in spite of the shocking character of the crime of which they found him guilty, were unwilling to decree that his life should be taken. In our criminal courts the jury sits as the representative of the community; its voice is that of the society against which the crime was committed. A judge even though vested with statutory authority to do so, should hesitate indeed to increase the severity of such a community expression. 20 He should be willing to increase it, moreover, only with the most scrupulous regard for the rights of the defendant. The record before us indicates that the judge exercised his discretion to deprive a man of his life, in reliance on material made available to him in a probation report, consisting almost entirely of evidence that would have been inadmissible at the trial. Some, such as allegations of prior crimes, was irrelevant. Much was incompetent as hearsay. All was damaging, and none was subject to scrutiny by the defendant. 21 Due process of law includes at least the idea that a person accused of crime shall be accorded a fair hearing through all the stages of the proceedings against him. I agree with the Court as to the value and humaneness of liberal use of probation reports as developed by modern penologists, but, in a capital case, against the unanimous recommendation of a jury, where the report would concededly not have been admissible at the trial, and was not subject to examination by the defendant, I am forced to conclude that the high commands of due process were not obeyed. 1 'The killing of a human being, unless it is excusable or justifiable, is murder in the first degree, when committed: '2. By an act imminently dangerous to others, and evincing a depraved mind, regardless or human life, although without a premeditated design to effect the death of any individual; or without a design to effect death, by a person engaged in the commission of, or in an attempt to commit a felony, either upon or affecting the person killed or otherwise * * *' New York Penal Law, Consol.Laws, c. 40, § 1044. 2 'Murder in the first degree is punishable by death, unless the jury recommends life imprisonment as provided by section ten hundred forty-five-a.' New York Penal Law, § 1045. 'A jury finding a person guilty of murder in the first degree, as defined by subdivision two of section ten hundred forty-four, 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.' New York Penal Law, § 1045-a. 3 Other due-process requirements mentioned in the Oliver case were that the defendant should be permitted to offer evidence in his own behalf and be represented by counsel. Appellant, however, was represented by counsel both when tried and sentenced, and the sentencing judge did not decline to permit introduction of any evidence. In response to the judge's inquiry, statements were made by appellant and his counsel. 4 Courts have treated the rules of evidence applicable to the trial procedure and the sentencing process differently. See, e.g., Snyder v. Commonwealth of Massachusetts, 291 U.S. 97, 107, 128 129, 54 S.Ct. 330, 332, 333, 340, 341, 78 L.Ed. 674, 90 A.L.R 575; Graham v. State of West Virginia, 224 U.S. 616, 619, 32 S.Ct. 583, 584, 56 L.Ed. 917; United States v. Dalhover, 7 Cir., 96 F.2d 355, 359—360. But cf. State v. Stevenson, 64 W.Va. 392, 62 S.E. 688, 19 L.R.A.,N.S., 713. 5 See cases collected in 14 A. & E. Ann.Cas. 968, et seq.; 77 A.L.R. 1211 et seq.; 86 A.L.R. 832 et seq. See also Note, The Admissibility of Character Evidence in Determining Sentence, 9 U. of Chi.L.Rev. 715 (1942). 6 See Pound, Criminal Justice in America 178 (1930). 7 See Stephan v. United States, 6 Cir., 133 F.2d 87, 100. See also 18 U.S.C. § 3655, 18 U.S.C.A. § 3655. 8 Myerson, Views on Sentencing Criminals, 7 Law Soc.J. 854, (1937); Glueck, Principles of a Rational Penal Code, 41 Harv.L.Rev. 453 (1928); Warner and Cabot, Administration of Criminal Jusice, 50 Harv.L.Rev. 583, 607 (1937); Comment, Reform in Federal Penal Procedure, 53 Yale L.J. 773 (1944). 9 2 Blackstone, Commentaries on the Laws of England 1756—1757 (Lewis' Ed. 1897). 10 With respect to this policy in the administration of the Probation Act (18 U.S.C.A. §§ 3651—3655) this Court has said: 'It is necessary to individualize each case, to give that careful, humane, and comprehensive consideration to the particular situation of each offender which would be possible only in the exercise of a broad discretion.' Burns v. United States, 287 U.S. 216, 220, 53 S.Ct. 154, 155, 77 L.Ed. 266. In Commonwealth of Pennsylvania ex rel. Sullivan v. Ashe, 302 U.S. 51, 55, 58 S.Ct. 59, 61, 82 L.Ed. 43, this Court further stated: 'For the determination of sentences, justice generally requires consideration of more than the particular acts by which the crime was committed and that there be taken into account the circumstances of the offense together with the character and propensities of the offender.' And see Wood and Waite, Crime and Its Treatment 438—442 (1941). 11 Wood and Waite, Crime and Its Treatment 437 (1941); Orfield, Criminal Procedure from Arrest to Appeal 556—565 (1947). See, e.g., Ill.Rev.Stat. c. 38, § 802 (1939); Cal.Pen.Code § 1168 (1941). 12 Glueck, Probation and Criminal Justice 232 (1933); National Probation Assn., Directory of Probation and Parole Officers 275 (1947); Cooley, Probation and Delinquency (1927). 13 Judge Ulman writing on The Trial Judge's Dilemma discusses the problems that confront the sentencing judge and quotes from one of his court opinions as to the factors that a judge should consider in imposing sentence: '1st. The protection of society against wrong-doers. '2nd. The punishment—or much better—the discipline of the wrong-doer. '3rd. The reformation and rehabilitation of the wrong-doer. '4th. The deterrence of others from the commission of like offenses. 'It should be obvious that a proper dealing with these factors involves a study of each case upon an individual basis. Was the crime a crime against property only, or did it involve danger to human life? Was it a crime of sudden passion or was it studied and deliberate? Is the criminal a man so constituted and so habituated to war upon society that there is little or no real hope that he ever can be anything other than a menace to society or is he obviously amenable to reformation?' Glueck, Probation and Criminal Justice 113 (1933). See also 12 Encyc. of Soc. Science, Penal Institutions 57—64 (1934). 14 The late Federal Judge Lewis B. Schwellenbach in his article on the difficulties that confront a sentencing judge wrote: 'The knowledge of the life of a man, his background and his family, is the only proper basis for the determination as to his treatment. There is no substitute for information. The sentencing judge in the Federal court has the tools with which to acquire that information. Failure to make full use of those tools cannot be justified.' Schwellenbach, Information vs. Intuition in the Imposition of Sentence, 27 J.Am.Jud.Soc. 52 (1943). And see McGuire and Holtzoff, The Problem of Sentence in the Criminal Law, 20 B.U.L.Rev. 423 (1940). 15 A publication circulated by the Administrative Office of the United States Courts contains a suggested form for all United States probation reports and serves as an example of the type of information contained in the reports. This form consists of thirteen 'marginal headings.' (1) Offense; (2) Prior Record; (3) Family History; (4) Home and Neighborhood; (5) Education; (6) Religion; (7) Interests and Activities; (8) Health (physical and mental); (9) Employment; (10) Resources; (11) Summary; (12) Plan; and (13) Agencies Interested. Each of the headings is further broken down into sub-headings. The form represents a framework into which information can be inserted to give the sentencing judge a composite picture of the defendant. Administrative Office of the United States Courts, The Presentence Investigation Report, Pub. No. 101 (1943). 16 A few New York criminal statutes will illustrate the broad statutory limits within which the sentencing judge must fix a defendant's penalty. Robbery in the first degree is punishable by imprisonment for not 'less than ten years' nor 'more than thirty years.' New York Penal Law, § 2125. Rape in the first degree is 'punishable by imprisonment for not more than twenty years.' New York Penal Law, § 2010. Burglary in the first degree is punishable by imprisonment from ten to thirty years, burglary in the second degree 'for a term not exceeding fifteen years.' New York Penal Law, § 407. 17 People v. Stein, 96 Misc. 507, 161 N.Y.S. 1107; People ex rel. Barone v. Fox, 202 N.Y. 616, 96 N.E. 1126; People v. Johnson, 252 N.Y. 387, 393, 169 N.E. 619. And see Commonwealth v. Johnson, 348 Pa. 349, 35 A.2d 312. As to English procedure see 28 Crim.App.R. 89, 90—91. Also see Note, Right of Criminal Offenders to Challenge Reports Used in Determining Sentence, 49 Col.L.Rev. 567 (1949). 18 What we have said is not to be accepted as a holding that the sentencing procedure is immune from scrutiny under the due-process clause. See Townsend v. Burke, 334 U.S. 736, 68 S.Ct. 1252, 92 L.Ed. 1690.

34

337 U.S. 265 69 S.Ct. 1097 93 L.Ed. 1353 FEDERAL COMMUNICATIONS COMMISSIONv.WJR, THE GOODWILL STATION, Inc., et al. No. 495. Argued April 22, 1949. Decided June 6, 1949. Sol. Gen. Philip B. Perlman, Washington, D.C., for petitioner. Mr. Louis G. Caldwell, Washington, D.C., for respondents. [Argument of Counsel from page 266 intentionally omitted] Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 Most broadly stated, the important question presented by this case is the extent to which due process of law, as guaranteed by the Fifth Amendment, requires federal administrative tribunals to accord the right of oral argument to one claiming to be adversely affected by their action, more particularly upon questions of law. Lest this spacious form of statement be taken as too sweeping and abstract to pose a justiciable issue, we think the specific context of fact and decision out of which the question has arisen must be set forth. But before this is done we should say that, as we understand the Court of Appeals' decision, it has ruled that Fifth Amendment procedural due process requires an opportunity for oral argument to be given 'on every question of law raised before a judicial or quasi-judicial tribunal, including questions raised by demurrer or as if on demurrer, except such questions of law as may be involved in interlocutory orders such as orders for the stay of proceedings pendente lite, for temporary injunctions and the like,' 174 F.2d 226, 233, and on this basis has remanded this cause to the Federal Communications Commission for oral argument. 2 Involved in the controversy are two radio stations and the Commission, which is the petitioner here. One of the stations is the respondent WJR. It is licensed by the Commission as a 'Class I A Station,'1 to broadcast day and night from Detroit, Michigan, on a frequency of 760 kilocycles and with a strength of 50 kilowatts. The other station is the intervenor, Coastal Plains (formerly Tarboro) Broadcasting Company. 3 Prior to August 22, 1946, Tarboro filed written application with the Commission for a permit to construct a 'Class II Station'2 to broadcast from Tarboro, North Carolina. On that date the Commission granted the application. The permit specified that the new station was to broadcast during the day from Tarboro at a strength of one kilowatt on the frequency of 760 kilocycles, which previously had been used exclusively by WJR. The construction permit was granted without notice to WJR and without oral hearing or other participation by it in the proceedings before the Commission. 4 On September 10 following, WJR filed with the Commission a written 'Petition for reconsideration and hearing.' This alleged that the proposed broadcasting range of the Coastal Plains station would cause 'objectionable interference' with respondent's broadcast signal. Interference was said to be anticipated principally in certain areas of Michigan where 'the field intensity of WJR averages 32 microvolts per meter or less during the daytime hours,'3 but where 'WJR provides the best signal available'; limited interference 'during the winter season' was also expected within 'contours' of field intensity 'much higher' than 32 microvolts; interference of unspecified extent was also thought likely in neighboring states, though as to such areas it was conceded that 'a better signal is provided by other stations.' 5 On the basis of these allegations WJR asked that the Commission hold a hearing on the Coastal Plains application to which WJR might be made a party or, in the alternative, postpone final action on the Coastal Plains application until the conclusion of the then pending 'Clear Channel'4 proceeding. In that proceeding, essentially legislative in character, the Commission was considering the desirability of changing its rules so as to allow WJR and other stations to increase their broadcast strengths to 500 kilowatts. The basis for the alternative request was WJR's fear that a grant of the Coastal Plains construction permit might prejudice a possible future WJR application for increased signal strength in the event the decision in the clear channel proceeding should so modify the Commission's rules as to facilitate such an application. 6 Coastal Plains filed an opposition to WJR's petition for reconsideration, asserting among other grounds for denial that WJR had not alleged that the proposed new operation 'would cause any interference within the normally protected service area of Station WJR' and had neither alleged nor proved 'any interference within its normally protected contours.' The opposition was based on the theory that under the Commission's regulations WJR's license conferred no right to protection against interference outside its normally protected contours as specified in the regulations, that the interference alleged was outside those contours, and hence WJR's petition was legally insufficient on its face to state any basis for WJR to be made a party to or to be heard in the Coastal Plains proceeding. 7 No response to the opposition was filed by WJR and some three months later, on December 17, 1946, the Commission denied WJR's application in a written opinion, rendered without prior oral argument. The opinion first disposed of the allegations of interference: 8 'Station WJR is a Class I—A station. Under the Commission's Rules and Standards, Class I—A stations are normally protected daytime to the 100 microvolt-permeter contour. The area sought by petitioner to be protected is, according to the engineering affidavit accompanying the petition, served by Station WJR during the daytime with a signal intensity of 32 microvolts-per-meter or less, and is therefore outside the normally protected contour.'5 9 As the Court of Appeals later treated this ruling, i was the equivalent of holding as a matter of law, in judicial parlance essentially as though raised upon demurrer, that WJR's petition did not state facts sufficient to raise any legal issue concerning (indirect) modification of WJR's license or rights under the license. The Commission also denied WJR's alternate request to stay the Coastal Plains application, concluding that postponement of the newly authorized service out of deference to any possi le 'future assignment of facilities' to WJR 'would not serve the public interest.' 10 WJR then appealed to the Court of Appeals. The court agreed that the Commission had not abused its discretion in refusing to stay the Coastal Plains permit until completion of the clear channel proceeding. It held, however, that WRJ's claim of objectionable interference with its broadcast signal presented a question of law and by a closely divided vote, in the broad language quoted above,6 that, concerning the merits of that question, the Fifth Amendment assured to WJR the right of oral argument before the Commission. Accordingly, it refused to consider whether the Commission was right in its legal conclusion that areas of signal intensity lower than 100 microvolts per meter were not within the 'normally protected contour' of a Class I—A station, reversed the Commission's denial of WJR's petition, and remanded the case for oral argument before the Commission. 174 F.2d 226. To consider the questions of importance to the administrative process thus determined, we issued our writ of certiorari. 336 U.S. 917, 69 S.Ct. 641. 11 At the outset we note our complete agreement with the Court of Appeals that the Commission was under no duty to WJR to postpone final action on the Coastal Plains permit until it had disposed of the clear channel proceeding. As the court pointed out, WJR had no vested right in the 'supposititious eventualities' that the Commission at some indeterminate time might modify its rules governing clear channel stations. Furthermore, the judicial regulation of an administrative docket sought by WJR 'would require (the Court of Appeals) to direct the order in which the Commission shall consider its cases.' And this, as the court said, it 'cannot do.' 174 F.2d 231. 'Only Congress could confer such a priority.' Federal Communications Commission v. Pottsville Broadcasting Co., 309 U.S. 134, 145, 60 S.Ct. 437, 443, 84 L.Ed. 656. 12 Obviously the most important question is the Court of Appeals' ruling that Fifth Amendment due process required the Commission to afford respondent an opportunity for oral argument upon its petition for reconsideration of Coastal Plains' application, together with its grounding of that ruling in the even broader one that such an opportunity is an inherent element of procedural due process in all judicial or quasi-judicial, i.e., administrative, determinations of questions of law, outside of such questions as may arise upon interlocutory matters involving stays pendente lite, temporary injunctions and the like. 13 That the scope of its decision might not be misunderstood, the court expressly stated: 'A ruling upon a demurrer is obviously not interlocutory for if the demurrer is sustained the pleader's cause (or defense) is dismissed upon the merits * * *.'7 Moreover, except as to the indicated interlocutory matters, the right of oral argument on questions of law ('as well as * * * those of fact' when raised) was said to be 'not conditional upon the ex parte view of the tribunal as to whether there is a substantial question as to the sufficiency of the allegations of a complainant.' 174 F.2d 240. 14 Accordingly, although it was urged both by the Commission and by WJR to consider and determine the 'threshold' question of law upon its merits, namely, whether the Commission's decision in denying WJR's petition was wrong, the Court refused to consider or decide that question. In its view the question of the Commission's duty to accord a hearing, 'i.e., to hear argument before deciding whether the allegations of WJR's petition were sufficient' in law, was 'a procedural question quite separate from the question on the merits whether or not the allegations of the petition, assuming their truth, were sufficient.' 174 F.2d 240. The statutory scheme of the Communications Act, 47 U.S.C.A. § 151 et seq., the court thought, 'contemplates, before review in this court, proper exercise of the Commission's primary jurisdiction, i.e., valid first instance hearings properly conducted from the procedural—due process—standpoint.' Ibid. Accordingly, the majority felt that the court 'must therefore remand the case with directions to the Commission to allow a hearing to WJR. Then if after hearing the Commission decides that the allegations were insufficient and dismisses the petition * * * an appeal to this court will bring properly before us the question of the correctness of the Commission's decision on the merits * * *.' Ibid.8 I. 15 Taken at its literal and explicit import, the Court's broad constitutional ruling cannot be sustained. So taken, it would require oral argument upon every question of law, apart from the excluded interlocutory matters, arising in administrative proceedings of every sort. This would be regardless of whether the legal question were substantial or insubstantial; of the substantive nature of the asserted right or interest involved; of whether Congress had provided a procedure, relating to the particular interest, requiring oral argument or allowing it to be dispensed with; and regardless of the fact that full opportunity for judicial review may be available. 16 We do not stop to consider the effects of such a ruling, if accepted, upon the work of the vast and varied administrative as well as judicial tribunals of the federal system and the equally numerous and diversified interests affected by their functioning; or indeed upon the many and different types of administrative and judicial procedures which Congress has provided for dealing adjudicatively with such interests. It is enough to say that due process of law, as conceived by the Fifth Amendment, has never been cast in so rigid and all-inclusive confinement. 17 On the contrary, due process of law has never been a term of fixed and invariable content.9 This is as true with reference to oral argument as with respect to other elements of procedural due process. For this Court has held in some situations that such argument is essential to a fair hearing, Londoner v. Denver, 210 U.S. 373, 28 S.Ct. 7 8, 52 L.Ed. 1103, in others that argument submitted in writing is sufficient. Morgan v. United States, 298 U.S. 468, 481, 56 S.Ct. 906, 911, 80 L.Ed. 1288. See also Johnson & Wimsatt v. Hazen, 69 App.D.C. 151, 99 F.2d 384; Mitchell v. Reichelderfer, 61 App.D.C. 50, 57 F.2d 416. 18 The decisions cited are sufficient to show that the broad generalization made by the Court of Appeals is not the law. Rather it is in conflict with this Court's rulings, in effect, that the right of oral argument as a matter of procedural due process varies from case to case in accordance with differing circumstances, as do other procedural regulations. Certainly the Constitution does not require oral argument in all cases where only insubstantial or frivolous questions of law, or indeed even substantial ones, are raised. Equally certainly it has left wide discretion to Congress in creating the procedures to be followed in both administrative and judicial proceedings, as well as in their conjunction. 19 Without in any sense discounting the value of oral argument wherever it may be appropriate or, by virtue of the particular circumstances, constitutionally required, we cannot accept the broad formula upon which the Court of Appeals rested its ruling. To do so would do violence not only to our own former decisions but also, we think, to the constitutional power of Congress to devise differing administrative and legal procedures appropriate for the disposition of issues affecting interests widely varying in kind.10 20 It follows also that we should not undertake in this case to generalize more broadly than the particular circumstances require upon when and under what circumstances procedural due process may require oral argument. That is not a matter, under our decisions, for broadside generalization and indiscriminate application. It is rather one for case-to-case determination, through which alone account may be taken of differences in the particular interests affected, circumstances involved, and procedures prescribed by Congress for dealing with them. Only thus may the judgment of Congress, expressed pursuant to its ower under the Constitution to devise both judicial and administrative procedures, be taken into account. Any other approach would be, in these respect, highly abstract, indeed largely in a vacuum. II. 21 Descending to the concrete setting of this case in the provisions of the Communications Act,11 we are unable to conclude that the procedure Congress has provided for determination of the questions respondent raises affords any semblance of due process deficiency. 22 The statute itself provides in terms for oral argument before the Commission in a single situation only, namely, in proceedings heard initially before an examiner under § 409(a).12 That provision however has no pertinence to this case, since it was not heard or assigned for hearing in the first instance before an examiner and respondent's claimed right of participation arises under § 312(b). 47 U.S.C. § 312(b), 47 U.S.C.A. § 312(b). That section authorizes the Commission to modify station licenses 'if in the judgment of the Commission such action will promote the public interest, convenience, and necessity,' but provides 'That no such order of modification shall become final until the holder of such outstanding license * * * shall have been notified in writing of the proposed action and the grounds or reasons therefor and shall have been given reasonable opportunity to show cause why such an order of modification should not issue.' 23 As bearing on the meaning of § 312(b), account must be taken also of two other factors. One is § 4(j) of the Act (47 U.S.C. § 154(j)), which provides: 'The Commission may conduct its proceedings in such manner as will best conduce to the proper dispatch of business and to the ends of justice. * * * Any party may appear before the Commission and be heard in person or by attorney. * * *' The other factor consists in this Court's decision in Federal Communications Commission v. National Broadcasting Co., 319 U.S. 239, 63 S.Ct. 1035, 87 L.Ed. 1374, the so-called KOA case. 24 That case held that the granting of a license to broadcast on a frequency and at a strength which would interfere with the broadcast signal of a prior licensee within the protection of the latter's license as afforded by the Commission's existing rules constitutes an indirect modification of the prior outstanding license. From this it was held to follow that § 312(b) gave the prior licensee the right to be made a party to the proceeding and hence to 'have notice in writing of the proposed action and the grounds therefor and * * * a reasonable opportunity to show cause why an order of modification should not issue.' 319 U.S. at pages 245—246, 63 S.Ct. at page 1038. Then followed the Court's conclusion that by virtue of KOA's right to be a party, it had also the right under § 402(b)(2), as a 'person aggrieved or whose interests are adversely affected' to appeal to the Court of Appeals from the Commission's denial of its petition to intervene and participate as a party in the proceedings before it. 25 It is in this context of statutory provisions and judicial decision that WJR's claim of right to participate in the Commission's proceedings, including the right of oral argument, and of denial of due process through the denial of its petition for reconsideration arises and must be considered. 26 WJR's petition presents the question whether upon its face it states facts sufficient to show (indirect) modification of its license by the granting of Coastal Plains' application. This in turn depends on whether allegations not asserting interference within the 100 microvolt-per-meter contour or, as the Commission held, allegations asserting interference only 'outside the normally protected contour' of WJR's license, set forth any legally § fficient basis for a claim of right to be made a party and participate in the proceedings. And, again, according to respondent, the answer to that question turns on whether the Commission's Standards of Good Engineering Practice Concerning Standard Broadcast Stations constitute a part of and a limitation upon WJR's license.13 27 Respondent insists that those Standards, as a matter of law, do not limit its license or measure the protection it affords against 'objectionable interference'; it necessarily argues in addition that the degree of interference its petition alleges brings about an (indirect) modification of its license (conversely stated, that the license protected it against the alleged degree of interference) and hence, as in the KOA case, the proposed grant of a new license entitles it under § 312(b) to be made a party to the Coastal Plains proceeding and to participate in it as § 312(b) provides. 28 This is the claim which the Court of Appeals purported expressly to refuse to consider or decide, prior to oral argument upon it before the Commission. But two things may be noted. One is that, contrary to the situation here, in the KOA case of the Commission's proposed grant of a new license to Station WHDH concededly created interference against which the existing rules of the Commission protected the prior license of KOA.14 29 In the second place, the majority's disclaimer here of decision upon the merits seems hardly consistent with its opinion's flat ruling, as we understand it, that WJR's allegations qualified it as a party to the proceeding and not, as the dissenting judges thought, merely as a stranger seeking to come in as an intervenor.15 For that question here, viz., whether WJR's allegations entitle it to standing as a party, is but another way of phrasing the issue whether its petition states a legally sufficient claim of (indirect) modification, since under § 312(b) only a prior licensee who states such a claim is entitled to be made a party and to participate in the proceedings. To decide that one has the status of a party is therefore to decide the question of modification vel non. 30 In view of the court's mandate, however, we think we must accept its disclaimer. But we also think that, in the light of the disclaimer, its ruling, if it was such, that WJR is entitled to be made a party must be rejected and that question must be regarded as inherently involved in, indeed as i entical with, the undetermined issue of modification vel non, if any effect is to be given to the provisions of § 312(b).16 31 We think the limitations of that section must be given effect. Indeed it is our view that the Act's procedural scheme and its application in this case have not deprived the respondent of any procedural right guaranteed by the due-process requirement of the Fifth Amendment. That is true, notwithstanding the Commission's failure to afford respondent an opportunity for oral argument upon its allegations in this case. 32 Congress, we think, has committed to the Commission's discretion, by the terms of § 312(b) and § 4(j) of the Communications Act, the questions whether and under what circumstances it will allow or require oral argument, except where the Act itself expressly requires it. As we have noted, Congress has required oral argument expressly in proceedings heard initially before an examiner under § 409(a). But no such requirement was made by § 312(b). While that section requires notice and statement of grounds for any proposed order of modification before such order 'shall become final,' it does not specify that further proceedings shall include the right to oral argument; it requires only that the holder of the outstanding license to be modified 'shall have been given reasonable opportunity to show cause why such an order of modification should not issue' before the order becomes final. 33 In view of the contrast between this language and that of § 409(a), it is hardly to be taken that Congress intended the 'reasonable opportunity to show cause' always to include opportunity for oral argument. Indeed, in the absence of any such explicit requirement as that of § 409(a), the terms of § 312(b) must be read in the light of the Act's general procedural authorization in § 4(j), which empowers the Commission to 'conduct its proceedings in such manner as will best conduce to the proper dispatch of business and to the ends of justice.' 34 In this wording Congress was mindful not only of the ends of justice but also of the proper dispatch of the Commission's business, a matter not unrelated to achieving the ends of justice, and left largely to its judgment the determination of the manner of conducting its business which would most fairly and reasonably accommodate those ends. Moreover it was dealing with substantive interests involving the use, pursuant to federal license, of channels of radio communication 'but not the ownership thereof,' § 301, as to which moreover the Act expressly provides that 'no such license shall be construed to create any right, beyond the terms, conditions, and periods of the license.' Ibid. 35 In this connection it cannot be recalled too often that "public convenience, interest, or necessity' was the touchstone for the exercise of the Commission's authority' in matters relating to construction permits and licensing, and that this criterion 'serves as a supple instrument for the exercise of discretion by the expert body which Congress has charged to carry out its legislative policy'. Federal Communications Commission v. Pottsville Broadcasting Co., 309 U.S. 134, 137—138, 60 S.Ct. 437, 439, 84 L.Ed. 656. 'Necessarily, therefore, the subordinate questions of procedure in ascertaining the public interest, when the Commission's licensing authority is invoked—the scope of the inquiry, whether applications should be heard contemporaneously or successively, whether parties should be allowed to intervene in one another's proceedings, and similar questions—were explicitly and by implication left to the Commission's own devising, so long, of course, as it observes the basic requirements designed for the protection of private as well as public interest.' Id., 309 U.S. at page 138, 60 S.Ct. at page 439. 36 We need not go again over the ground which was covered by this decision and others. Suffice it to say that the Commission has not seen fit to provide for oral argument in all such cases as this arising under § 312(b); nor is there any basis in the section or the Act for believing that Congress intended to require it to do so. 'Reasonable opportunity to show cause,' as used in § 312(b), comprehends in the light of § 4(j) and this Court's prior decisions that the Commission shall have broad discretion in determining whether and when oral argument shall be required or permitted, as it does with respect to other procedural matters.17 37 Respondent does not contend that it was denied any opportunity to present for the Commission's consideration any matter of fact or law in connection with its application or that the Commission has not given all matters submitted by it due and full consideration. We cannot say, in view of the statute and of the subject matter involved, that the Commission abused its discretion in hearing respondent's application on the written submission.18 38 Accordingly we think it was error for the court to decline to decide the merits of the question whether respondent's application stated a legally sufficient case of (indirect) modification of its license within the terms of § 312(b) as well as to decide, without determining that question, that respondent was entitled to be made a party to and participate as such in the Coastal Plains proceedings. As we have said, in the situation here presented, the two forms of statement pose the same question in substance, together with the further question, under the KOA decision, whether respondent has standing to appeal as a party aggrieved. The statutory sequence identifies (1) a legally sufficient claim of modification with (2) right to standing as a party and (3) right to appeal. 39 This threefold issue presents a question of law respondent is entitled to have determined. The dissenting judges in the Court of Appeals considered the question insubstantial, because they thought, contrary to respondent's position, that the Commission's Standards of Good Engineering Practice applied as a limitation upon respondent's license and therefore excluded it from protection against interference such as respondent alleged, i.e., outside the contours prescribed by the Standards. 40 That question, being one of law, might now be decided here. But since the statute, if it affords respondent a right of appeal, provides that it shall be to the Court of Appeals, and since that court has not decided the basic issue on the merits, we think the cause should be remanded to the Court of Appeals for decision of that question, uncomplicated by questions of constitutionality relating to the Commission's procedure. Accordingly the court's decision is reversed and the cause is remanded to it for further proceedings not inconsistent with this opinion. 41 Reversed and remanded. 42 Mr. Justice MURPHY took no part in the consideration or decision of this case. 1 Federal Communications Commission Rules Governing Standard Broadcast Stations § 3.22(a): 'A 'Class I Station' is a dominant station operating on a clear channel and designed o render primary and secondary service over an extended area and at relatively long distances. Its primary service area is free from objectionable interference from other stations on the same and adjacent channels, and its secondary service area free from interference, except from stations on the adjacent channel, and from stations on the same channel in accordance with the channel designation in Sec. 3.25 or in accordance with the 'Engineering Standards of Allocation'. The operating power shall be not less than 10 kw nor more than 50 kw (also see Sec. 3.25(a) for further power limitation).' 4 Fed.Reg. 2715. 2 Federal Communications Commission Rules Governing Standard Broadcast Stations § 3.22(b): 'A 'Class II Station' is a secondary station which operates on a clear channel (see Sec. 3.25) and is designed to render service over a primary service area which is limited by and subject to such interference as may be received from Class I stations. A station of this class shall operate with power not less than 0.25 kilowatts nor more than 50 kilowatts. Whenever necessary a Class II station shall use a directional antenna or other means to avoid interference with Class I stations and with other Class II stations, in accordance with the 'Engineering Standards of Allocation." 4 Fed.Reg. 2715. 3 For the meaning of the term 'field intensity,' and for the relation of a broadcast signal's 'field intensity' to the legal concept of a licensed radio station's 'normally protected contour,' see note 5. 4 Federal Communications Commission Rules Governing Standard Broadcast Stations § 3.21(a): 'A 'clear channel' is one on which the dominant station or stations render service over wide areas and which are cleared of objectionable interference, within their prima y service areas and over all or a substantial portion of their secondary service areas.' 4 Fed.Reg. 2715. 5 The dissenting opinion in the Court of Appeals decision here under review offers a succinct exposition of these technical terms: 'This concept of normal protection in the daytime is clear. The circumference of the protected area is a contour line, which is fixed by measurement of the strength of the radio waves from the particular station. That strength, or intensity, is measured in terms of microvolts (millionths of a volt) or millivolts (thousandths of a volt) per meter, abbreviated as uv/m and mv/m, respectively. The wave which is measured is the groundwave, which follows the surface of the earth and extends greater or less distances depending upon the nature of the earth, its topography, and such obstacles as noise and steel structures. Generally speaking, the greater the distance from the station, the less the strength of the station signal. The '100 uv/m ground wave contour' named in the Commission's Standards, is the imaginary line which connects all points at which the ground wave of the station is of 100 microvolts per meter strength.' 174 F.2d 226, 244. The 'Commission's Standards' to which the opinion refers are the Standards of Good Engineering Practice Concerning Broadcast Stations. Under the subheading 'Engineering Standards of Allocation,' § 2(a) provides as follows: 'The Class I stations in Group 1 are those assigned to the channels allocated by Section 3.25, paragraph (a) (including, inter alia, the 760 kilocycle frequency assigned to WJR, 4 Fed.Reg. 2716), on which duplicate nighttime operation is not permitted, that is, no other station is permitted to operate on a channel with a Class I station of this group within the limits of the United States (the Class II stations assigned the channels operate limited time or daytime only) and during daytime the Class I station is protected to the 100 uv/m ground wave contour.' 4 Fed.Reg. 2862. 6 The case was first argued before three justices, Chief Justice Groner and Justices Clark and Prettyman. By direction of the court it was reargued before Justices Stephens, Edgerton, Clark, Wilbur K. Miller and Prettyman. The decision was rendered pursuant to an opinion of Justice Stephens, in which Justices Clark and Miller concurred. Justice Prettyman filed a dissenting opinion in which Justice Edgerton joined. 7 The statement, taken in its context and the pervading sense of the opinion, related not merely to judicial rulings technically 'raised by demurrer' but also to judicial and administrative rulings 'as if on demurrer,' i.e., as expressly stated later in the opinion, to rulings 'raised by demurrer or motion to dismiss or, in an administrative proceeding, by some less formally named instrument of like purpose, or by the tribunal's sua sponte treatment of a petition as if under demurrer * * *.' 174 F.2d 236. 8 Both from the wording of the immediate reference, quoted above, and from other language in context, it is clear that the court's reference to 'the statutory scheme set up in the Communications Act' was not designed as a ruling that the statutory scheme itself, considered wholly as such and apart from any requirement of due process, affords the right of oral argument upon all questions of law, other than the interlocutory exceptions, before the Commission. Rather, the reference was intended to construe the Act as incorporating the court's reiterated conception of due-process requirements in this respect, in effect as a construction required by the Fifth Amendment. It is clear also that in this ruling the court identified 'hearing' with 'oral argument' insofar as determination of questions of law are concerned. We are thus confronted, so far as the court's decision went, with no question purely of statutory construction but solely, at bottom, with one of constitutional import and effect. 9 'The Fifth Amendment guarantees no particular form of procedure; it protects substantial rights.' National Labor Relations Board v. Mackay Radio & Telegraph Co., 304 U.S. 333, 351, 58 S.Ct. 904, 913, 82 L.Ed. 1381. 'The requirements imposed by that guaranty (Fifth Amendment due process) are not technical, nor is any particular form of procedure necessary.' Inland Empire Dist. Council v. Millis, 325 U.S. 697, 710, 65 S.Ct. 1316, 1323, 89 L.Ed. 1877. See also Bowles v. Willingham, 321 U.S. 503, 519 521, 64 S.Ct. 641, 649—650, 88 L.Ed. 892; Opp Cotton Mills v. Administrator, 312 U.S. 126, 152—153, 657, 61 S.Ct. 524, 536, 85 L.Ed. 624; Buttfield v. Stranahan, 192 U.S. 470, 496—497, 24 S.Ct. 349, 355, 48 L.Ed. 525; Anniston Mfg. Co. v. Davis, 301 U.S. 337, 342, 343, 57 S.Ct. 816, 819, 81 L.Ed. 1143; United States v. Ju Toy, 198 U.S. 253, 263, 25 S.Ct. 644, 646, 49 L.Ed. 1040; Chicago, B. & Q.R. Co. v. Chicago, 166 U.S. 226, 235, 17 S.Ct. 581, 584, 41 L.Ed. 979; Phillips v. Commissioner, 283 U.S. 589, 596—597, 51 S.Ct. 608, 611, 75 L.Ed. 1289. 10 For example, what may be appropriate or constitutionally required by way of procedure, including opportunity for oral argument, in protection of an alien's claims of right to enter the country, cf. United States ex rel. Johnson v. Shaughnessy, 336 U.S. 806, 69 S.Ct. 921, may be very different from what is required to determine an alleged citizen's right of entry or reentry, cf. Ng Fung Ho v. White, 259 U.S. 276, 282, 42 S.Ct. 492, 494, 66 L.Ed. 938; Carmichael v. Delaney, 9 Cir., 170 F.2d 239, 243—244; a claimed right of naturalization, Tutun v. United States, 270 U.S. 568, 576—578, 46 S.Ct. 425, 426, 427, 70 L.Ed. 738, a claim of just compensation for land condemned, cf. Roberts v. New York City, 295 U.S. 264, 277—278, 55 S.Ct. 689, 691, 79 L.Ed. 1429; or the right to defend against an indictment for crime. 11 Act of June 19, 1934, c. 652, 48 Stat. 1064, 1081, 47 U.S.C. § 301 ff, 47 U.S.C.A. § 301. 12 The section reads in part: 'In all cases heard by an examiner the Commission shall hear oral arguments * * *.' 47 U.S.C. § 409(a), 47 U.S.C.A. § 409(a). 13 The Standards, 4 Fed.Reg. 2862, expressly state that 'during daytime the Class I station is protected to the 100 uv/m ground wave contour.' § 1(2)(a). The Commission's Standards of Good Engineering Practice Concerning Standard Broadcast Stations were adopted in 1939 after formal and informal hearings. Fifth Annual Report of the Federal Communications Commission (1940) 37. 14 In other words, the interference alleged was within the conceded 'normal contours' of KOA's protection, not without them. There was therefore no question such as is presented here whether the existing station's license protected it against the interference alleged. The KOA decision therefore cannot be taken as ruling that one asserting interference outside the scope of its license protection, afforded by the Commission's rules and regulations, is entitled to be made a party and to participate in proceedings involving the issuance of a new license creating only such interference. 15 The court's opinion stated: 'WJR as an outstanding licensee is not a mere permissive intervener or, as the minority puts it, an 'outsider'.' 174 F.2d 240. The statement of the minority to which this rejoinder was made was: 'The ruling (of the majority) is that a petitioner for intervention in an administrative proceeding is entitled to an oral hearing as a matter of constitutional right, no matter what or how little he says in his petition. * * * (WJR's petition) was basically a petition to intervene, as it asked that WJR be made a party to the Coastal Plains proceeding.' 174 F.2d 243. 16 The Court of Appeals was not simply construing the statute, but was influenced throughout its opinion by its broad constitutional generalization concerning oral argument. In that view necessarily the Act's specific terms, including those of § 312(b), sank into the generalization's constitutional coloring. In that light, perhaps, the majority's disclaimer and its ruling that WJR was entitled to come in as a party bore semblance of consistency. But without the coloration, § 312(b) identifies showing of modification with standing as a party; and, unless this limitation is invalid for constitutional reasons, it must be given effect. 17 That is true even though § 4(j) also provides that 'Any party may appear before the Commission and be heard in person or by attorney.' That provision does not nullify the Commission's discretion as to the manner in which the 'reasonable opportunity to show cause' afforded by § 312(b) shall be given. It only assures the right to participate 'in person or by attorney' in the manner reasonably found by the Commission to be appropriate. 18 Federal Rules of Civil Procedure, rule 78, 28 U.S.C.A., the terms of which were noted by the dissent in the Court of Appeals, 174 F.2d 226, provides in part, as to United States District Courts: 'To expedite its business, the court may make provision by rule or order for the submission and determination of motions without oral hearing upon brief written statements of reasons in support and opposition.' Fed.Rules Civ.Proc. 78. Similar notice may be taken of Rule 7(2) of this Court, 28 U.S.C.A., which, governing not only motion practice in appellate cases but motions for leave to initiate original proceedings, provides in part: 'Oral argument will not be heard on any motion unless the court specially assigus it therefor * * *.'

34

337 U.S. 254 69 S.Ct. 1067 93 L.Ed. 1347 CITY OF MORGANTOWN, W. VA.v.ROYAL INS. CO., Ltd. No. 396. Argued Feb. 9, 10, 1949. Decided June 6, 1949. Mary Frances Brown, Clarksburg, W. Va., for petitioner. Mr. James M. Guiher, Washington, D.C., for respondent. Mr. Justice MURPHY delivered the opinion of the Court. 1 This case raises two questions: The appealability of an order denying a demand for trial by jury in a federal court, and whether the constitutional right to a jury applies to the trial of an issue of mutual mistake. 2 The facts are these. Petitioner in August of 1947 was carrying insurance with respondent on a hangar at its Municipal Airport. The policy by its terms insured petitioner against loss by fire or lightning in the amount of $22,000. On August 20, the hangar was completely destroyed by fire. Petitioner filed proof of loss. Shortly thereafter respondent instituted an action in the District Court for the Northern District of West Virginia for reformation and correction of the policy. It alleged in substance that during the preceding year petitioner had carried only windstorm insurance on the hangar, in the same amount; that the policy currently in force was intended by the parties to be a renewal of the rior policy; that the premium paid was the same as had been paid for windstorm insurance, an amount much less than the premium for fire insurance; and the policy had been written as a fire policy through the inadvertence of both parties and did not express the intent of either. It prayed for reformation to correct the mutual mistake and for a declaration of no liability for the loss by fire. Petitioner answered, denying mistake, and filed a counterclaim to recover on the policy as written. Respondent answered the counterclaim, alleging the same facts as in its complaint. Petitioner filed a demand for jury trial under Rule 38(b), Federal Rules of Civil Procedure, 28 U.S.C.A.; respondent moved to strike the demand; the court granted the motion and set the case for trial to the court without a jury. Petitioner appealed from this ruling. On motion of respondent, the Court of Appeals dismissed the appeal, 169 F.2d 713, and the case is here on a writ of certiorari. 335 U.S. 890, 69 S.Ct. 249. 3 In this posture of the case, we are first confronted with the question of the appealability of the trial court's order denying jury trial. Not being a final decision, it is appealable if at all only as an interlocutory decree granting or refusing an injunction under § 129 of the Judicial Code, 28 U.S.C.A. § 227.1 Petitioner urges Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, and Ettelson v. Metropolitan Life Ins. Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176, upon us as conclusive in favor of appealability. In each of those cases, the plaintiff had commenced an action to recover according to the terms of an insurance policy; in each of them the insurance company denied liability, alleging fraud in the procurement of the policy, and moved that the issue of fraud be tried to the court without a jury. The trial court in each case granted the motion, and this Court held on review that the rulings thus made were appealable under § 129. 4 The substance of § 129 has been a part of federal law since 1891, 26 Stat. 828, and its relation to other aspects of procedure has not been rigid. Since 1912 the history of the law governing procedure in the federal courts has manifested a slow but consistent process of coalescing of the practice in the law and equity sides of the courts. In that year this Court adopted new equity rules, of which rule 22 and rule 23 made a significant start in procedural unification. A major step occurred in 1915, with the enactment of the Law and Equity Act, 38 Stat. 956, which added §§ 274a and 274b to the Judicial Code. The net effect of these additions was to allow transfer of action begun on either side of the court to the other side, without the necessity of commencing a new action, to permit determination of law questions arising in equity actions in those actions, and to allow equitable defenses to be offered and equitable relief to be granted in an action at law. 5 In this state of a partly blended law and equity procedure arose the Enelow case, supra. The Court there held, with regard to an order denying trial by jury, that by analogy to practice at common law the order was one granting an injunction within the meaning of § 129. 6 The coalescing of law and equity procedure was completed in 1938, with the adoption of the Rules of Civil Procedure. Their purpose, among others, was 'to secure the just, speedy, and inexpensive determination of every action,' rule 1, and to that end they prescribed identical procedure for all actions, whether cognizable formerly at law or in equity. After their adoption, the identical problem present d by the Enelow case arose in Ettelson v. Metropolitan Life Ins. Co., supra. It was argued that the adoption of the rules had so unified the federal procedure that the type of order in question could no longer be considered an injunction and appealable. We held the order appealable, since the rules had not changed it substantial effect, noting that the position of the parties was the same as it would have been if a state equity court had enjoined an action at law. 7 Whatever the present validity of the analogy to common-law practice which supported those cases, it is of no help here. This is not a situation where a 'chancellor' in denying a demand for jury trial can be said to be enjoining a 'judge' who has cognizance of a pending action at law. This is rather a case of a judge making a ruling as to the manner in which he will try one issue in a civil action pending before himself. The fiction of a court with two sides, one of which can stay proceedings in the other, is not applicable where there is no other proceeding in existence to be stayed. The ruling from which the appeal in this case was prosecuted is an order interlocutory in form and substance. Nothing in the language of the rules or the Judicial Code brings it within the class of appealable decisions, and distinctions from common-law practice which supported our conclusions in the Enelow and Ettelson cases supply no analogy competent to make an injunction of what in any ordinary understanding of the word is not one. 8 Trial by jury is a vital and cherished right, integral in our judicial system. It is argued that the importance of an interlocutory order denying or granting jury trial is such that it should be appealable. Many interlocutory orders are equally important, and may determine the outcome of the litigation, but they are not for that reason converted into injunctions. The Constitution guarantees to litigants in the federal courts the right to have their case tried by a jury, and Rule 38 of the Rules of Civil Procedure explicitly implements that guarantee. Denial of the right in a case where the demanding party is entitled to it is of course error. The rulings of the district courts granting or denying jury trial are subject to the most exacting scrutiny on appeal. 9 But piecemeal appeals have never been encouraged. The growth of the law of procedure in the United States during the last half-century has been steadily in the direction of simplicity and directness in the administration of justice. To that end, and with careful regard for the constitutional rights of the parties, this Court, pursuant to specific authorization by Congress, adopted the Rules of Civil Procedure, abolishing procedural distinctions between law and equity and establishing a single unified practice. We would ill serve the stated purposes of the Rules of Civil Procedure were we to perpetuate by analogy distinctions which the rules expressly disavow. The Court of Appeals was correct in dismissing the appeal and its judgment is affirmed. 10 With the case disposed of in this manner, we do not reach the second question presented: whether petitioner is entitled to a jury on the issue of mutual mistake. 11 Affirmed. 12 Mr. Justice BURTON concurs in the judgment of the Court. 13 Mr. Justice FRANKFURTER, concurring. 14 On occasion a problem arises which calls for a more discriminating analysis than is conveyed by the phrase 'law and equity are now fused' to indicate the procedural development whereby an action at law and a suit in equity in relation to it may be disposed of in a single litigation. In this case, the deeply rooted historical distinction between an action at law and a suit in equity becomes decisive. Since I would not reverse or impair the ruling in Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, and Ettelson v. Metropolitan Life Ins. Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176, I should like to add a few words to the Court's opinion, in which I join, to make clear why t e present decision leaves those decisions unimpaired. 15 In the two earlier cases an action at law was brought on an insurance policy. Of course this entitled the plaintiff to a trial by jury. The defendant asked for a cancellation of the policy because of fraud. The district court entered an order suspending the action at law, to be tried by a jury, until the later-begun equitable proceeding—trial without a jury—was concluded. This Court was called upon to construe § 129 of the Judicial Code allowing appeals in limited categories of interlocutory decisions. 28 U.S.C. § 227, 28 U.S.C.A. § 227, now § 1292. With due regard to the actualities of the situation, the Court held that the staying of an action at law by the chancellor is an interlocutory injunction and as such appealable, even though the chancellor who granted such an interlocutory order be the same judge before whom the earlier action at law was pending. The ground of the decision in the Enelow case leaves no doubt as to its scope. Section 129 of the Judicial Code, wrote Mr. Chief Justice Hughes for the Court, '* * * contemplates interlocutory orders or decrees which constitute an exercise of equitable jurisdiction in granting or refusing an injunction, as distinguished from a mere stay of proceedings which a court of law, as well as a court of equity, may grant in a cause pending before it by virtue of its inherent power to control the progress of the cause so as to maintain the orderly processes of justice. The power to stay proceedings in another court appertains distinctively to equity in the enforcement of equitable principles, and the grant or refusal of such a stay by a court of equity of proceedings at law is a grant or refusal of an injunction within the meaning of section 129, as amended. And, in this aspect, it makes no difference that the two cases, the suit in equity for an injunction and the action at law in which proceedings are stayed, are both pending in the same court * * *.' 293 U.S. at pages 381-382, 55 S.Ct. at page 311. 16 In this case the plaintiff instituted a suit in equity for the reformation of an instrument. The insured, by way of counterclaim, contested that suit and, in addition, sought recovery on the policy. The latter was a conventional action at law which, under the Constitution, entitled the defendant to a jury trial. The judge continued this action at law until the prior equitable proceeding could be concluded. The facts, therefore, are precisely the opposite of those in the Enelow case. Here there was no intervention by a court of equity in proceedings at law, but 'a mere stay of proceedings which a court of law, as well as a court of equity, may grant in a cause pending before it by virtue of its inherent power to control the progress of the cause so as to maintain the orderly processes of justice.' 293 U.S. at pages 381-382, 55 S.Ct. at page 311. Since an interlocutory proceeding in an action at law cannot possibly be brought within the limited class of appealable interlocutory decisions under the old § 129 of the Judicial Code, now 28 U.S.C. § 1292, 28 U.S.C.A. § 1292, there is an end to the matter. 17 A layman may see no difference between the postponement by a trial judge of an action at law, and the postponement of such an action by an equitable proceeding resulting in an interlocutory injunction. But the Congress has seen fit to allow an appeal from one such result and not from the other. Nonappealability of intermediate orders in the federal courts has been a deep-rooted general principle limiting those courts since their establishment. A very few types of interlocutory orders are appealable. The Enelow and Ettelson cases presented an order that was appealable because it was a stay by a court of equity of a common-law action. This is not such a stay, and in affirming the judgment the Court leaves Enelow and Ettelson untouched. 18 Mr. Justice BLACK, with whom Mr. Justice RUTLEDGE concurs, dissenting. 19 I think it an undesirable practice for this C urt to overrule past cases without saying so. The effect of the Court's holding here is to overrule Ettelson v. Metropolitan Life Ins. Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176, decided by a unanimous Court in 1942. The Court's holding today rejects the interpretation of § 129 of the Judicial Code, 28 U.S.C. § 227, as amended 28 U.S.C. § 1292, 28 U.S.C.A. § 1292, given that section in the Ettelson case and in Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440. And to support its new interpretation of that section the Court now adopts reasons and arguments that were expressly urged and expressly rejected in the Enelow and Ettelson cases. 20 Today the Court brushes aside the Enelow and Ettelson cases, implying that this, unlike either of the other two, is 'a case of a judge making a ruling as to the manner in which he will try one issue in a civil action pending before himself.' But this was true in the Enelow and Ettelson cases. In the Enelow case the Court said, 293 U.S. at page 382, 55 S.Ct. at page 311, that 'it makes no difference that the two cases * * * are both pending in the same court, in view of the established distinction between 'proceedings at law and proceedings in equity in the national courts and between the powers of those courts when sitting as courts of law and when sitting as courts of equity." The Court also implies that this case can be distinguished from the Enelow and Ettelson cases because the order in this case is 'interlocutory in form and substance.' But this was true in the Enelow and Ettelson cases. In the Enelow case the Court said, 293 U.S. at page 383, 55 S.Ct. at page 311, that 'although interlocutory, it (the order) was appealable * * * under section 129, as amended.' In the Enelow case the order of the trial court held appealable, 293 U.S. page 381, 55 S.Ct. page 311, required hearing of the equitable issue raised 'in advance of the trial by jury at law of any purely legal issues.' That was precisely the effect of the trial court's order in this case; it required hearing of the equitable issue of reformation in advance of a trial by jury of the legal issues raised by the counterclaim. Today the Court says this order is not an 'injunction * * * in any ordinary understanding of the word * * *.' In the Enelow case this Court said that such an order 'in effect grants or refuses an injunction * * *.' 293 U.S. page 383, 55 S.Ct. page 311. 21 The Court today seems to rest its departure from the Enelow case on the Federal Rules of Civil Procedure and their purpose as set out in Rule 1 'to secure the just, speedy, and inexpensive determination of every action.' The Ettelson case, supra, came to this Court after adoption of these rules. The insurance company there specifically pointed to Rule 1 as a reason why this Court should not follow the Enelow case. We unanimously rejected the contention. We pointed out, 317 U.S. at page 191, 63 S.Ct. at page 164, that 'As in the Enelow case * * * the result of the District Judge's order is the postponement of trial of the jury action based upon the (insurance) policies; and it may, in practical effect, terminate that action. It is as effective in these respects as an injunction issued by a chancellor. * * * The plaintiffs are * * * in no different position than if a state equity court had restrained them from proceeding in the law action. Nor are they differently circumstanced than was the plaintiff in the Enelow case. The relief afforded by section 129 is not restricted by the terminology used. The statute looks to the substantial effect of the order made.' 22 Thus despite our unanimous rejection of the contention in Ettelson the Court now holds that the Rules of Civil Procedure have displaced both the Enelow and Ettelson interpretation of § 129 of the Judicial Code. The basis for overruling the Enelow and Ettelson cases appears to be the Court's hostility to 'piecemeal appeals' and the Court's belief that overruling the two cases will promote 'simplicity nd directness in the administration of justice.' But to grant appeal here would not sustain appeals from every adverse ruling made in the process of a trial. Denial of trial by jury is not to be classified with ordinary trial errors, such as an admission or rejection of evidence. The question here relates to the whole trial of the issues involved, what tribunal shall hear and resolve the evidence, judge or jury? And neither simplicity nor directness of judicial administration are necessarily furthered by compelling two trials where one would suffice. Moreover, there is much to be said against the idea of inflexibly barring appeals in regard to alleged substantial errors that may fatally invalidate an entire trial procedure.* 23 In considering whether the dogma against 'piecemeal appeals' is to be unduly exalted in this case we should not lose sight of the fact that the Bill of Rights guarantees trial by jury in appropriate cases. Had petitioner here filed a common-law suit on its policy in a state court it would have been entitled to trial by jury. In that event the federal court could have restrained trial, if at all, only by an injunction, which confessedly would have been appealable under § 129. But under Federal Rules of Civil Procedure 2 and 13(a) petitioner was compelled to sue on its policy by filing counterclaim in federal court. Cf. American Mills Co. v. American Surety Co., 260 U.S. 360, 364, 366, 43 S.Ct. 149, 151, 67 L.Ed. 306. Because of that federal compulsion the Court now penalizes petitioner by denying it a right of appeal. As a result, petitioner's alleged constitutional right to have the facts of its case determined by a jury is at least postponed. There are many prior decisions of this Court that justify a more considerate treatment of contentions that invoke the Bill of Rights guarantee of trial by jury. See, e.g., Scott v. Neely, 140 U.S. 106, 109, 110, 11 S.Ct. 712, 713, 714, 35 L.Ed. 358; Phoenix Mutual Life Ins. Co. v. Bailey, 13 Wall. 616, 20 L.Ed. 501. 1 'Where * * * an injunction is granted, continued, modified, refused, or dissolved by an interlocutory order or decree, or an application to dissolve or modify an injunction is refused, * * * an appeal may be taken from such interlocutory order or decree * * *.' The substance of this provision has been retained in Revised Title 28 U.S.C. § 1292, 62 Stat. 869, 28 U.S.C.A. § 1292. * Moore and Vestal, Present and Potential Role of Certification in Federal Appellate Procedure, 35 Va.L.Rev. 1 (1949); see dissenting opinion by Judge Frank in American Machine and Metals, Inc., v. De Bothezat Impeller Co., 2 Cir., 173 F.2d 890.

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337 U.S. 286 69 S.Ct. 1075 93 L.Ed. 1366 JOY OIL CO., Limited,v.STATE TAX COMMISSION OF MICHIGAN. No. 223. Argued Jan. 6, 7, 1949. Decided June 13, 1949. Mr. Clayton F. Jennings, Lansing, Mich., for petitioner. Mr. Edmund E. Shepherd, Lansing, Mich., for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 On December 29, 1945, petitioner Joy Oil Company, Ltd., purchased 1,500,000 gallons of gasoline from Mid-West Refineries, Inc., of Grand Rapids, Michigan. The bills of lading issued by the railroad to which the gasoline was delivered were marked 'For Export Only,' but the gasoline was consigned to petitioner at Detroit. In order to secure the benefits of lower export freight rates and exemption from the federal transportation and manufacturers' excise taxes, petitioner furnished Mid-West Refineries and the railroad with prescribed forms certifying that the gasoline was purchased for export. Rail shipments were begun in January and completed in February of 1946. As the gasoline reached Detroit it was accumulated in storage tanks leased by petitioner at Dearborn. 2 On April 1, 1947, the city of Dearborn assessed an ad valorem property tax on the gasoline, all of which, except 20,000 gallons, shipped to Canada by truck over the Ambassador Bridge, had then been in the Dearborn tanks for fifteen months. Shipment by truck was halted by a federal regulation prohibiting the transportation of inflammables over any international bridge, and petitioner apparently chose not to ship the gasoline by rail across the Detroit River. In July of 1947, petitioner began to ship it to Canada by water; the last tanker load departed on August 22, 1947. Petitioner explains the delay as due to inability to obtain shipping space at any earlier date. 3 Petitioner resisted payment of the tax on the ground that it infringed Art. I, § 10, cl. 2, of the Constitution. The Tax Commission of Michigan sustained Dearborn's assessment of the tax, and the Supreme Court of Michigan affirmed. 321 Mich. 335, 32 N.W.2d 472. We granted certiorari because the case presented a sufficiently important question in the accommodation of State and Federal interests under the Constitution. 335 U.S. 812, 69 S.Ct. 55. 4 The circumstances which tended, at the time when the tax was assessed, to establish petitioner's intent to export the gasoline and the fact that the gasoline was eventually exported are not enough, by themselves, to confer immunity from local taxation. See, e.g., Cornell v. Coyne, 192 U.S. 418, 24 S.Ct. 383, 48 L.Ed. 504; Empresa Siderurgica v. County of Merced, 337 U.S. 154, 69 S.Ct. 995. Nor is it enough that by the rail shipment to Detroit one step in the process of exportation had been taken or that a part of the total bulk had already departed for its foreign destination. It is of course true that commodities destined for shipment by water must be transshipped at the water's edge and so may require a brief period of storage at that point which will not be deemed a delay sufficient to interrupt the continuity of the export process. Carson Petroleum Corp. v. Vial, 279 U.S. 95, 49 S.Ct. 292, 73 L.Ed. 626, see Southern Pacific Terminal Co. v. Interstate Commerce Comm., 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310; Texas & N.O.R. Co. v. Sabine Tram Co., 227 U.S. 111, 33 S.Ct. 229, 57 L.Ed. 442. But here the period of storage at Dearborn was so long as to preclude holding that the first step toward exportation would inevitably be followed by others. See, by way of contrast, Hughes Bros. Timber Co. v. Minnesota, 272 U.S. 469, 47 S.Ct. 170, 71 L.Ed. 359. While in storage, the gasoline might have been diverted to domestic markets without disruption of any existing arrangement for its transshipment and without even breach of any contractual commitment to a foreign purchaser. Neither the character of the property nor any event equivalent to its redelivery to a common carrier made export certain for all practical purposes. See Richfield Oil Corp. v. State Board, 329 U.S. 69, 82, 67 S.Ct. 156, 163, 91 L.Ed. 80. 5 The Export-Import Clause was meant to confer immunity from local taxation upon property being exported, not to relieve property eventually to be exported from its share of the cost of local services. See Coe v. Errol, 116 U.S. 517, 527—528, 6 S.Ct. 475, 478, 29 L.Ed. 715. The fifteen-month delay at Dearborn barred immunity of petitioner's gasoline from the taxing power of the municipality. 6 Affirmed. 7 Mr. Chief Justice VINSON, with whom Mr. Justice DOUGLAS and Mr. Justice JACKSON join, dissenting. 8 The Court holds that fifteen months' delay in transshipment of the gasoline in question was so long that continuity of the process of exportation was broken, because during that period it might have been diverted to domestic markets. I think that this rationale and the conclusion which follows therefrom mark a substantial and unwarranted departure from our previous decisions in this field. 9 As I understand it, the Court's opinion reflects the view that a long delay in transshipment makes it uncertain whether the gasoline will eventually be exported, and further, that a delay of fifteen months makes it possible for this Court to say as a matter of law that the uncertainty is so great that the process of exportation has ceased, whatever the reason for the delay. But the Court concedes that petitioner intended to export the gasoline at the time the tax was imposed, and petitioner's uncontradicted evidence shows that it had that intent throughout the period of delay, which was caused by its inability to procure water transportation. That intent was manifested in a number of ways. The bills of lading by which the gasoline moved from Grandville and Alma, Michigan, to Dearborn, a Great Lakes port, were marked 'For export to Canada'; petitioner certified that the gasoline was to be exported in order to secure an exemption under the federal manufacturer's excise tax and to qualify for lower freight rates accorded exports; it transported 50,000 gallons of the gasoline by truck over the Ambassador Bridge into Canada until a federal regulation closed the bridge to inflammable materials; and finally, petitioner exported all of the gasoline to Canada when shipping space became available. There is nothing in the record to indicate either that petitioner at any time deviated from that expressed intent, or that the delay was not due solely to lack of shipping space. 10 The Court is in the anomalous position, therefore, of holding as a matter of law that a fifteen-month delay in transshipment breaks the 'stream of export' because of the resulting uncertainty that the goods will ultimately be exported, when all of the evidence is to the effect that the shipper's intent to export has never waivered; that exportation was as certain as of the date of the tax as it had been fifteen months before. The Court has previously considered the question to be quite a different one. We have held that 11 'The character of the shipment in such a case depends upon all the evidential circumstances looking to what the owner has done in the preparation for the journey and in carrying it out. The mere power of the owner to divert the shipment already started does not take it out of interstate commerce if the other facts show that the journey has already begun in good faith and temporary interruption of the passage is reasonable and in furtherance of the intended transportation, as in the Champlain case (Champlain v. Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309, 25 A.L.R. 1195).' Hughes Brothers Timber Co. v. Minnesota, 1926, 272 U.S. 469, 475—476, 47 S.Ct. 170, 172, 71 L.Ed. 359. 12 This test was quoted with approval by Mr. Chief Justice Hughes in State of Minnesota v. Blasius, 1933, 290 U.S. 1, 10, 54 S.Ct. 34, 37, 78 L.Ed. 131, and he added, 'The question is always one of substance, and in each case it is necessary to consider the particular occasion or purpose of the interruption during which the tax is sought to be levied.' See also to the same effect, Champlain Realty Co. v. Town of Brattleboro, 1922, 260 U.S. 366, 377, 43 S.Ct. 146, 149, 67 L.Ed. 309, 25 A.L.R. 1195; Carson Petroleum Co. v. Vial, 1929, 279 U.S. 95, 102, 49 S.Ct. 292, 293, 73 L.Ed. 626; United States v. Erie R. Co., 1929, 280 U.S. 98, 102, 50 S.Ct. 51, 53, 74 L.Ed. 187. The Court now refuses to look at any circumstances except the delay—not even the reason for the delay. 13 It is true that petitioner could have moved the gasoline more quickly had it used the more expensive all-rail service. But in almost every case of delay a quicker method of moving the goods might have been devised. No doubt the logs held up by low water in Coe v. Errol, 1886, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715, could have been drawn overland by mules or oxen. And it would have been possible, though not practical, for oil to have been transferred directly from tank cars to waiting ships in Carson Petroleum Co. v. Vial, supra, yet this Court found that the delay necessarily attendant upon the accumulation of oil in tanks at the waterfront to await the arrival of ships did not constitute interruption of the process of exportation. The delay was 'reasonable and in furtherance of the intended transportation.' (279 U.S. 95, 49 S.Ct. 294.) 14 Concededly, he gasoline here involved was in the process of exportation when taxed unless the delay was alone enough to break the stream of export. It had been started on its journey with every indication that it was to be transshipped for export. If actual exportation had followed its arrival in Dearborn by a few days or weeks, there is no question but that it would have been a commodity in the process of exportation and thus exempt from tax. In this situation, the Court has always, until today, applied 'a liberal construction of what is continuity of the journey, in cases where the court finds from the circumstances that export trade has been actually intended and carried through.' Carson Petroleum Co. v. Vial, supra, 279 U.S. at pages 105—106, 49 S.Ct. at page 295, 73 L.Ed. 626. But the Court now treats as immaterial the fact that the process of exportation had started, which has always been considered the decisive factor, Cornell v. Coyne, 1904, 192 U.S. 418, 24 S.Ct. 383, 48 L.Ed. 504; Empresa Siderurgica v. County of Merced, 1949, 337 U.S. 154, 69 S.Ct. 995, and assumes that a delay of fifteen months conclusively demonstrates that certainty of exportation had been undermined. It is almost always possible in cases of this kind that the owner of the goods may change his mind before exportation is actually carried out, as Mr. Justice Holmes pointed out in A. G. Spaulding & Brothers v. Edwards, 1923, 262 U.S. 66, 70, 43 S.Ct. 485, 486, 67 L.Ed. 865. Delay undoubtedly increases the possibility, but it does not work such a change as a matter of law. The question, instead, is that previously pointed out, namely, whether 'the journey has already begun in good faith and (whether) temporary interruption of the passage is reasonable and in furtherance of the intended transportation.' Hughes Brothers Timber Co. v. Minnesota, supra. 15 The result is that the Court, without consideration of the fact that the gasoline had been started on its journey with the intent that it be transshipped for immediate export to Canada, holds that fifteen months' unavoidable delay is so productive of uncertainty that the process of exportation ceases as a matter of law. It might be pointed out that in the leading case of Coe v. Errol, supra, logs being floated down a river were held up by low water for about a year, but this Court did not consider that delay enough to break the continuity of the interstate journey. The line now seems to be drawn somewhere between twelve and fifteen months, whatever the other circumstances. Such an arbitrary demarcation is hardly consonant with 'the liberal protection that hitherto (exports) have received.' A. G. Spaulding & Bros. v. Edwards, supra, 262 U.S. at page 70, 43 S.Ct. at page 486. I would adhere to the test set out in our previous decisions: whether the delay was reasonable under all the circumstances and in furtherance of the intended transportation.

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337 U.S. 293 69 S.Ct. 1051 93 L.Ed. 1371 STANDARD OIL CO. OF CALIFORNIA AND STANDARD STATIONS, Inc.v.UNITED STATES. No. 279. Argued March 3, 4, 1949. Decided June 13, 1949. As Amended On Denial of Rehearing Oct. 10, 1949. Appeal from the United States District Court for the Southern District of California. Mr. John M. Hall, Los Angeles, Cal., for appellants. Mr. Herbert A. Bergson, Washington, D.C., for appellee. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 This is an appeal to review a decree enjoining the Standard Oil Company of California and its wholly-owned subsidiary, Standard Stations, Inc.,1 from enforcing or entering exclusive supply contracts with any independent dealer in petroleum products and automobile accessories. The use of such contracts was successfully assailed by the United States as violative of § 1 of the Sherman Act2 and § 3 of the Clayton Act.3 2 The Standard Oil Company of California, a Delaware corporation, owns petroleum-producing resources and refining plants in California and sells petroleum products in what has been termed in these proceedings the 'Western area'—Arizona, California, Idaho, Nevada, Oregon, Utah and Washington. It sells through its own service stations, to the operators of independent service stations, and to industrial users. It is the largest seller of gasoline in the area. In 1946 its combined sales amounted to 23% of the total taxable gallonage sold there in that year: sales by company-owned service stations constituted 6.8% of the total, sales under exclusive dealing contracts with independent service stations, 6.7% of the total; the remainder were sales to industrial users. Retail service-station sales by Standard's six leading competitors absorbed 42.5% of the total taxable gallonage; the remaining retail sales were divided between more than seventy small companies. It is undisputed that Standard's major competitors employ similar exclusive dealing arrangements. In 1948 only 1.6% of retail outlets were what is known as 'split-pump' stations, that is, sold the gasoline of more than one supplier. 3 Exclusive supply contracts with Standard had been entered, as of March 12, 1947, by the operators of 5,937 independent stations, or 16% of the retail gasoline outlets in the Western area, which purchased from Standard in 1947 $57,646,233 worth of gasoline and $8,200,089.21 worth of other products. Some outlets are covered by more than one contract so that in all about 8,000 exclusive supply contracts are here in issue. These are of several types, but a feature common to each is the dealer's undertaking to purchase from Standard all his requirements of one or more products. Two types, covering 2,777 outlets, bind the dealer to purchase of Standard all his requirements of gasoline and other petroleum product as well as tires, tubes, and batteries. The remaining written agreements, 4,368 in number, bind the dealer to purchase of Standard all his requirements of petroleum products only. It was also found that independent dealers had entered 742 oral contracts by which they agreed to sell only Standard's gasoline. In some instances dealers who contracted to purchase from Standard all their requirements of tires, tubes, and batteries, had also orally agreed to purchase of Standard their requirements of other automobile accessories. Of the written agreements, 2,712 were for varying specified terms; the rest were effective from year to year but terminable 'at the end of the first 6 months of any contract year, or at the end of any such year, by giving to the other at least 30 days prior thereto written notice. * * *' Before 1934 Standard's sales of petroleum products through independent service stations were made pursuant to agency agreements, but in that year Standard adopted the first of its several requirements-purchase contract forms, and by 1938 requirements contracts had wholly superseded the agency method of distribution. 4 Between 1936 and 1946 Standard's sales of gasoline through independent dealers remained at a practically constant proportion of the area's total sales; its sales of lubricating oil declined slightly during that period from 6.2% to 5% of the total. Its proportionate sales of tires and batteries for 1946 were slightly higher than they were in 1936, though somewhat lower than for some intervening years; they have never, as to either of these products, exceeded 2% of the total sales in the Western area. 5 Since § 3 of the Clayton Act was directed to prohibiting specific practices even though not covered by the broad terms of the Sherman Act,4 it is appropriate to consider first whether the enjoined contracts fall within the prohibition of the narrower Act. The relevant provisions of § 3 are: 6 'It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States * * * on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods * * * of a competitor or competitors of the * * * seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.' 7 Obviously the contracts here at issue would be proscribed if § 3 stopped short of the qualifying clause beginning, 'where the effect of such lease, sale, or contract for sale * * *.' If effect is to be given that clause, however, it is by no means obvious, in view of Standard's minority share of the 'line of commerce' involved, of the fact that that share has not recently increased, and of the claims of these contracts to economic utility, that the effect of the contracts may be to lessen competition or tend to create a monopoly. It is the qualifying clause, therefore, which must be construed. 8 The District Court held that the requirement of showing an actual or potential lessening of competition or a tend ncy to establish monopoly was adequately met by proof that the contracts covered 'a substantial number of outlets and a substantial amount of products, whether considered comparatively or not.' Given such quantitative substantiality, the substantial lessening of competition—so the court reasoned—is an automatic result, for the very existence of such contracts denies dealers opportunity to deal in the products of competing suppliers and excludes suppliers from access to the outlets controlled by those dealers. Having adopted this standard of proof, the court excluded as immaterial testimony bearing on 'the commercial merits or demerits of the present system as contrasted with a system which prevailed prior to its establishment and which would prevail if the court declared the present arrangement (invalid).' The court likewise deemed it unnecessary to make findings, on the basis of evidence that was admitted, whether the number of Standard's competitors had increased or decreased since the inauguration of the requirements-contract system, whether the number of their dealers had increased or decreased, and as to other matters which would have shed light on the comparative status of Standard and its competitors before and after the adoption of that system. The court concluded: 9 'Grant that, on a comparative basis, and in relation to the entire trade in these products in the area, the restraint is not integral. Admit also that control of distribution results in lessening of costs and that its abandonment might increase costs. * * * Concede further, that the arrangement was entered into in good faith, with the honest belief that control of distribution and consequent concentration of representation were economically beneficial to the industry and to the public, that they have continued for over fifteen years openly, notoriously and unmolested by the Government, and have been practised by other major oil companies competing with Standard, that the number of Standard outlets so controlled may have decreased, and the quantity of products supplied to them may have declined, on a comparative basis. Nevertheless, as I read the latest cases of the Supreme Court, I am compelled to find the practices here involved to be violative of both statutes. For they affect injuriously a sizeable part of interstate commerce, or,—to use the current phrase—'an appreciable segment' of interstate commerce.' 10 The issue before us, therefore, is whether the requirement of showing that the effect of the agreements 'may be to substantially lessen competition' may be met simply by proof that a substantial portion of commerce is affected or whether it must also be demonstrated that competitive activity has actually diminished or probably will diminish.5 11 Since the Clayton Act became effective, this Court has passed on the applicability of § 3 in eight cases, in five of which it upheld determinations that the challenged agreement was violative of that Section. Three of these—United Shoe Machinery Corp. v. United States, 258 U.S. 451, 42 S.Ct. 363, 66 L.Ed. 708; International Business Machines Corp. v. United States, 298 U.S. 131, 56 S.Ct. 701, 80 L.Ed. 1085; International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20—involved contracts tying to the use of a patented article all purchases of an unpatented product used in connection with the patented article. The other two cases—Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346, 42 S.Ct. 360, 66 L.Ed. 653; Fashion Originators' Guild v. Federal Trade Comm'n, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949—involved requirements contracts not unlike those here in issue. 12 The Standard Fashion case, the first of the five holding that the Act had been violated, settled one question of interpretation of § 3. The Court said: 13 'Section 3 condemns sales or agreements where the effect of such sale or contract of sale 'may' be to substantially lessen competition or tend to create monopoly. * * * 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.' 258 U.S. at pages 356, 357, 42 S.Ct. at page 362, 66 L.Ed. 653. See also Federal Trade Comm. v. Morton Salt Co., 334 U.S. 37, 46, n. 14, 68 S.Ct. 822, 828, 92 L.Ed. 1196, 1 A.L.R.2d 260. 14 The Court went on to add that the fact that the Section 'was not intended to reach every remote lessening of competition is shown in the requirement that such lessening must be substantial', but because it deemed the finding of two lower courts that the contracts in question did substantially lessen competition and tend to create monopoly amply supported by evidence that the defendant controlled two-fifths of the nation's pattern agencies, it did not pause to indicate where the line between a 'remote' and a 'substantial' lessening should be drawn. 15 All but one of the later cases also regarded domination of the market as sufficient in itself to support the inference that competition had been or probably would be lessened. In the United Shoe Machinery case, referring, inter alia, to the clause incorporated in all United's leases of patented machinery requiring the use by the lessee of materials supplied by United, the Court observed: 16 'That such restrictive and tying agreements must necessarily lessen competition and tend to monopoly is, we believe, * * * apparent. When it is considered that the United Company occupies a dominating position in supplying shoe machinery of the classes involved, these covenants, signed by the lessee and binding upon him, effectually prevent him from acquiring the machinery of a competitor of the lessor, except at the risk of forfeiting the right to use the machines furnished by the United Company, which may be absolutely essential to the prosecution and success of his business.' 258 U.S. at pages 457—458, 42 S.Ct. at page 365, 66 L.Ed. 708. 17 In the International Business Machines case, the defendants were the sole manufacturers of a patented tabulating machine requiring the use of unpatented cards. The lessees of the machines were bound by tying clauses to use in them only the cards supplied by the defendants, who, between them, divided the whole of the $3,000,000 annual gross of this business also. The Court concluded: 18 'These facts, and others, which we do not stop to enumerate, can leave no doubt that the effect of the condition in appellant's leases 'may be to substantially lessen competition,' and that it tends to create monopoly, and has in fact been an important and effective step in the creation of monopoly.' 298 U.S. at page 136, 56 S.Ct. at page 704, 80 L.Ed. 1085. 19 The Fashion Originators' Guild case involved an association of dress manufacturers which sold more than 60% of all but the cheapest women's garments. In rejecting the relevance of evidence that the Guild's use of requirements contracts was a 'reasonable and necessary' measure of protection against 'the devastating evils growing from the pirating of original designs,' the Court again emphasized the presence and the consequences of economic power: 20 'The purpose and object of this combination, its potential power, its tendency to monopoly, the coercion it could and did practice upon a rival method of competition, all brought it within the policy of the prohibition declared by the Sherman and Clayton Acts.' 312 U.S. at pages 467—468, Ct. at pages 707—708, 85 L.Ed. 949. 21 It is thus apparent that none of these cases controls the disposition of the present appeal, for Standard's share of the retail market for gasoline, even including sales through company-owned stations, is hardly large enough to conclude as a matter of law that it occupies a dominant position, nor did the trial court so find. The cases do indicate, however, that some sort of showing as to the actual or probable economic consequences of the agreements, if only the inferences to be drawn from the fact of dominant power, is important, and to that extent they tend to support appellant's position. 22 Two of the three cases decided by this Court which have held § 3 inapplicable also lend support to the view that such a showing is necessary. These are, Federal Trade Comm. v. Sinclair Co., 261 U.S. 463, 43 S.Ct. 450, 67 L.Ed. 746, and Pick Mfg. Co. v. General Motors Corp., 299 U.S. 3, 57 S.Ct. 1, 81 L.Ed. 4. The third Federal Trade Comm. v. Curtis Pub. Co., 260 U.S. 568, 43 S.Ct. 210, 67 L.Ed. 408—went off on the ground that the contract involved was one of agency and so is of no present relevance. The Sinclair case involved the lease of gasoline pumps and storage tanks on condition that the dealer would use them only for Sinclair's gasoline, but Sinclair did not own patents on the pumps or tanks and evidently did not otherwise control their supply. Although the Trade Commission had found that few dealers needed more than one pump, the Court concluded that 'the record does not show that the probable effect of the practise will be unduly to lessen competition.' 261 U.S. at page 475, 43 S.Ct. at page 454, 67 L.Ed. 746. The basis of this conclusion was thus summarized: 23 'Many competitors seek to sell excellent brands of gasoline and no one of them is essential to the retail business. The lessee is free to buy wherever he chooses; he may freely accept and use as many pumps as he wishes and may discontinue any or all of them. He may carry on business as his judgment dictates and his means permit, save only that he cannot use the lessor's equipment for dispensing another's brand. By investing a comparatively small sum, he can buy an outfit and use it without hindrance. He can have respondent's gasoline, with the pump or without the pump, and many competitors seek to supply his needs.' Id. at page 474, 43 S.Ct. at page 453, 67 L.Ed. 746. 24 The present case differs of course in the fact that a dealer who has entered a requirements contract with Standard cannot consistently with that contract sell the petroleum products of a competitor of Standard's no matter how many pumps he has,6 but the case is significant for the importance it attaches, in the absence of a showing that the supplier dominated the market, to the practical effect of the contracts. The same is true of the Pick case, in which this Court affirmed in a brief per curiam opinion the finding of the District Court, concurred in by the Court of Appeals, that the effect of contracts by which dealers agreed not to sell other automobile parts than those manufactured by General Motors 'had not been in any way substantially to lessen competition or to create a monopoly in any line of commerce.' 299 U.S. at page 4, 57 S.Ct. at page 2, 81 L.Ed. 4. 25 But then came International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20. That decision, at least as to contracts tying the sale of a nonpatented to a patented product, rejected the necessity of demonstrating economic consequences once it has been established that 'the volume of business affected' is not 'insignificant or insubstantial' and that the effect of the contracts is to 'foreclose competitors from (a) substantial market.' Id. at page 396, 68 S.Ct. at page 15, 92 L.Ed. 20. Upon that basis we affirmed a summary judgment granting an injunction against the leasing of machines for the utilization of salt products on the condition that the lessee use in them only salt supplied by defendant. It was established by pleadings or admissions that defendant was the country's largest producer of salt for industrial purposes, that it owned patents on the leased machines, that about 900 leases were outstanding, and that in 1944 defendant sold about $500,000 worth of salt for use in these machines. It was not established that equivalent machines were unobtainable, it was not indicated what proportion of the business of supplying such machines was controlled by defendant, and it was deemed irrelevant that there was no evidence as to the actual effect of the tying clauses upon competition.7 It is clear, therefore, that unless a distinction is to be drawn for purposes of the applicability of § 3 between requirements contracts and contracts tying the sale of a nonpatented to a patented product, the showing that Standard's requirements contracts affected a gross business of $58,000,000 comprising 6.7% of the total in the area goes far toward supporting the inference that competition has been or probably will be substantially lessened.8 26 In favor of confining the standard laid down by the International Salt case to tying agreements, important economic differences may be noted. Tying agreements serve hardly any purpose beyond the suppression of competition. The justification most often advanced in their defense the protection of the good will of the manufacturer of the tying device—fails in the usual situation because specification of the type and quality of the product to be used in connection with the tying device is protection enough. If the anufacturer's brand of the tied product is in fact superior to that of competitors, the buyer will presumably choose it anyway. The only situation, indeed, in which the protection of good will may necessitate the use of tying clauses is where specifications for a substitute would be so detailed that they could not practicably be supplied. In the usual case only the prospect of reducing competition would persuade a seller to adopt such a contract and only his control of the supply of the tying device, whether conferred by patent monopoly or otherwise obtained, could induce a buyer to enter one. See Miller, Unfair Competition 199 et seq. (1941); Note, 49 Col.L.Rev. 241, 246 (1949). The existence of market control of the tying device, therefore, affords a strong foundation for the presumption that it has been or probably will be used to limit competition in the tied product also. 27 Requirements contracts, on the other hand, may well be of economic advantage to buyers as well as to sellers, and thus indirectly of advantage to the consuming public. In the case of the buyer, they may assure supply, afford protection against rises in price, enable long-term planning on the basis of known costs,9 and obviate the expense and risk of storage in the quantity necessary for a commodity having a fluctuating demand. From the seller's point of view, requirements contracts may make possible the substantial reduction of selling expenses, give protection against price fluctuations, and—of particular advantage to a newcomer to the field to whom it is important to know what capital expenditures are justified—offer the possibility of a predictable market. See Stockhausen, The Commercial and Anti-Trust Aspects of Term Requirements Contracts, 23 N.Y.U.L.Q.Rev. 412, 413 14 (1948). They may be useful, moreover, to a seller trying to establish a foothold against the counterattacks of entrenched competitors. See id. at 424 et seq.; Excelsior Motor Mfg. & Supply Co. v. Sound Equipment, Inc., 7 Cir., 73 F.2d 725, 728; General Talking Pictures Corp. v. American Tel. & Tel. Co., D.C.Del., 18 F.Supp. 650, 666.10 Since these advantages of requirements contracts may often be sufficient to account for their use, the coverage by such contracts of a substantial amount of business affords a weaker basis for the inference that competition may be lessened than would similar coverage by tying clauses, especially where use of the latter is combined with market control of the tying device. A patent, moreover, although in fact there may be many competing substitutes for the patented article, is at least prima facie evidence of such control. And so we could not dispose of this case merely by citing International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20. 28 Thus, even though the qualifying clause of § 3 is appended without distinction of terms equally to the prohibition of tying clauses and of requirements contracts, pertinent considerations support, certainly as a matter of economic reasoning, varying standards as to each for the proof necessary to fulfill the conditions of that clause. If this distinction were accepted, various tests of the economic usefulness or restrictive effect of requirements contracts would become relevant. Among them would be evidence that competition has flourished despite use of the contracts, and under this test much of the evidence tendered by appellant in this case would be important. See, as examples of the consideration of such evidence, B. S. Pearsall Butter Co. v. Federal Trade Comm., 7 Cir., 292 F. 720; Pick Mfg. Co. v. General Motors Corp., 7 Cir., 80 F.2d 641, 644, affirmed, 299 U.S. 3, 57 S.Ct. 1, 81 L.Ed. 4. Likewise bearing on whether or not the contracts were being used to suppress competition, would be the conformity of the length of their term to the reasonable requirements of the field of commerce in which they were used. See Corn Products Refining Co. v. Federal Trade Comm., 7 Cir., 144 F.2d 211, 220, affirmed, 324 U.S. 726, 65 S.Ct. 961, 89 L.Ed. 1320; United States v. Pullman Co., D.C.E.D.Pa., 50 F.Supp. 123, 127—129. Still another test would be the status of the defendant as a struggling newcomer or an established competitor. Perhaps most important, however, would be the defendant's degree of market control, for the greater the dominance of his position, the stronger the inference that an important factor in attaining and maintaining that position has been the use of requirements contracts to stifle competition rather than to serve legitimate economic needs. See Standard Fashion Co. v. Magrane-Houston Co., supra, 258 U.S. 346, 42 S.Ct. 360, 66 L.Ed. 653; Fashion Originators' Guild v. Federal Trade Comm., supra, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949.11 29 Yet serious difficulties would attend the attempt to apply these tests. We may assume, as did the court below, that no improvement of Standard's competitive position has coincided with the period during which the requirements-contract system of distribution has been in effect. We may assume further that the duration of the contracts is not excessive and that Standard does not by itself dominate the market. But Standard was a major competitor when the present system was adopted, and it is possible that its position would have deteriorated but for the adoption of that system. When it is remembered that all the other major suppliers have also been using requirements contracts, and when it is noted that the relative share of the business which fell to each has remained about the same during the period of their use,12 it would not be farfetched to infer that their effect has been to enable the established suppliers individually to maintain their own standing and at the same time collectively, even though not collusively, to prevent a late arrival from wresting away more than an insignificant portion of the market. If, indeed, this were a result of the system, it would seem unimportant that a short-run by-product of stability may have been greater efficiency and lower costs, for it is the theory of the antitrust laws that the long-run advantage of the community depends upon the removal of restraints upon competition. See Fashion Originators' Guild v. Federal Trade Comm., 312 U.S. 457, 467—468, 61 S.Ct. 703, 707—708, 85 L.Ed. 949; United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 427—429. 30 Moreover, to demand that bare inference be supported by evidence as to what would have happened but for the adoption of the practice that was in fact adopted or to require firm prediction of an increase of competition as a probable result of ordering the abandonment of the practice, would be a standard of proof if not virtually impossible to meet, at least most ill-suited for ascertainment by courts.13 Before the system of requirements contracts was instituted, Standard sold gasoline through independent service-station operators as its agents, and it might revert to this system if the judgment below were sustained. Or it might, as opportunity presented itself, add service stations now operated independently to the number managed by its subsidiary, Standard Stations, Inc. From the point of view of maintaining or extending competitive advantage, either of these alternatives would be just as effective as the use of requirements contracts, although of course insofar as they resulted in a tendency to monopoly they might encounter the anti-monopoly provisions of the Sherman Act. See United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416. As appellant points out, dealers might order petroleum products in quantities sufficient to meet their estimated needs for the period during which requirements contracts are now effective, and even that would foreclose competition to some degree. So long as these diverse ways of restricting competition remain open, therefore, there can be no conclusive proof that the use of requirements contracts has actually reduced competition below the level which it would otherwise have reached or maintained. 31 We are dealing here with a particular form of agreement specified by § 3 and not with different arrangements, by way of integration or otherwise, that may tend to lessen competition. To interpret that section as requiring proof that competition has actually diminished would make its very explicitness a means of conferring immunity upon the practices which it singles out. Congress has authoritatively determined that those practices are detrimental where their effect may be to lessen competition. It has not left at large for determination in each case the ultimate demands of the 'public interest,' as the English lawmakers, considering and finding inapplicable to their own situation our experience with the specific prohibition of trade practices legislatively determined to be undesirable, have recently chosen to do.14 Though it may be that such an alternative to the present system as buying out independent dealers and making them dependent employees of Standard Stations, Inc., would be a greater detriment to the public interest than perpetuation of the system, this is an issue, like the choice between greater efficiency and freer competition, that has not been submitted to our decision. We are faced, not with a broadly phrased expression of general policy, but merely a broadly phrased qualification of an otherwise narrowly directed statutory provision. 32 In this connection it is significant that the qualifying language was not added until after the House and Senate bills reached Conference. The conferees responsible for adding that language were at pains, in answering protestations that the qualifying clause seriously weakened the Section, to disclaim any intention seriously to augment the burden of proof to be sustained in establishing violation of it.15 It seems hardly likely that, having with one hand set up an express prohibition against a practice thought to be beyond the reach of the Sherman Act, Congress meant, with the other hand, to reestablish the necessity of meeting the same tests of detriment to the public interest as that Act had been interpreted as requiring.16 Yet the economic investigation which appellant would have us require is of the same broad scope as was adumbrated with reference to unreasonable restraints of trade in Chicago Board of Trade v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683.17 To insist upon such an investigation would be to stultify the force of Congress' declaration that requirements contracts are to be prohibited wherever their effect 'may be' to substantially lessen competition. If in fact it is economically desirable for service stations to confine themselves to the sale of the petroleum products of a single supplier, they will continue to do so though not bound by contract, and if in fact it is important to retail dealers to assure the supply of their requirements by obtaining the commitment of a single supplier to fulfill them, competition for their patronage should enable them to insist upon such an arrangement without binding them to refrain from looking elsewhere. 33 We conclude, therefore, that the qualifying clause of § 3 is satisfied by proof that competition has been foreclosed in a substantial share of the line of commerce affected. It cannot be gainsaid that observance by a dealer of his requirements contract with Standard does effectively foreclose whatever opportunity there might be for competing suppliers to attract his patronage, and it is clear that the affected proportion of retail sales of petroleum products is substantial. In view of the widespread adoption of such contracts by Standard's competitors and the availability of alternative ways of obtaining an assured market, evidence that competitive activity has not actually declined is inconclusive. Standard's use of the contracts creates just such a potential clog on competition as it was the purpose of § 3 to remove wherever, were it to become actual, it would impede a substantial amount of competitive activity. 34 Since the decree below is sustained by our interpretation of § 3 of the Clayton Act, we need not go on to consider whether it might also be sustained by § 1 of the Sherman Act. 35 One last point remains to be disposed of. Appellant contends that its requirements contracts with California dealers, because nearly all the products sold to them are produced in California, do not substantially affect interstate commerce and therefore should have been exempted from the decree. It finds support for this contention in Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 247, 20 S.Ct. 96, 109, 44 L.Ed. 136. But the effect of appellant's requirements contracts with California retail dealers is to prevent them from dealing with suppliers from outside the State as well as within the State and is thus to lessen competition in both interstate and intrastate commerce. Appellant has not suggested that if these dealers were not bound by their contracts with it that they would continue to purchase only products originating within the State. The Addyston case, on the other hand, dealt not with the diminution of competition between suppliers brought about by the action of one at the expense of the rest, whether within or without the State, but a combination among them to restrain competition. Modification of the decree was required only to make clear that it did not reach a combination among the defendants doing business in a single State which was confined to transactions taking place within that same State. 36 The judgment below is affirmed. 37 Affirmed. 38 Mr. Justice DOUGLAS. 39 The economic theories which the Court has read into the Anti-Trust Laws have favored rather than discouraged monopoly. As a result of the big business philosophy underlying 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 Corp., 251 U.S. 417, 40 S.Ct. 293, 64 L.Ed. 343, 8 A.L.R. 1121; United States v. International Harvester Co., 274 U.S. 693, 47 S.Ct. 748, 71 L.Ed. 1302, big business has become bigger and bigger. Monopoly has flourished. Cartels have increased their hold on the nation. The trusts wax strong.1 There is less and less place for the independent. 40 The full force of the Anti-Trust Laws has not been felt on our economy. It has been deflected. Niggardly interpretations have robbed those laws of much of their efficacy. There are exceptions. Price fixing is illegal per se.2 The use of patents to obtain monopolies on unpatented articles is condemned.3 Monoploy that has been built as a result of unlawful tactics, e.g., through practices that are restraints of trade, is broken up.4 But when it comes to monopolies built in gentlemanly ways—by mergers, purchases of assets or control and the like—the teeth have largely been drawn from the Act. 41 We announced that the existence of monopoly power, coupled with the purpose or intent to monopolize, was unlawful.5 But to date that principle has not shown bright promise in application.6 Under the guise of increased efficiency big business has received approval for easy growth. United States v. Columbia Steel Co., 334 U.S. 495, 68 S.Ct. 1107, 92 L.Ed. 1533, represents the current attitude of the Court on this problem. In that case United States Steel—the giant of the industry—was allowed to fasten its tentacles tighter on the economy by acquiring the assets of a steel company in the Far West where competition was beginning to develop. 42 The increased concentration of industrial power in the hands of a few has changed habits of thought. A new age has been introduced. It is more and more an age of 'monopoly competition.' Monopoly competition is a regime of friendly alliances, of quick and easy accommodation of prices even without the benefit of trade associations, of what Brandeis said was euphemistically called 'cooperation.'7 While this is not true in all fields, it has become alarmingly apparent in many. 43 The lessons Brandeis taught on the curse of bigness have largely been forgotten in high places. Size is allowed to become a menace to existing and putative competitors. Price control is allowed to escape the influences of the competitive market and to gravitate into the hands of the few. But beyond all that there is the effect on the community when independents are swallowed up by the trusts and entrepreneurs become employees of absentee owners. Then there is a serious loss in citizenship. Local leadership is diluted. He who was a leader in the village becomes dependent on outsiders for his action and policy. Clerks responsible to a superior in a distant place take the place of resident proprietors beholden to no one. These are the prices which the nation pays for the almost ceaseless growth in bigness on the part of industry. 44 These problems may not appear on the surface to have relationship to the case before us. But they go to the very heart of the problem. 45 It is common knowledge that a host of filling stations in the country are locally owned and operated. Others are owned and operated by the big oil companies. This case involves directly only the former. It pertains to requirements contracts that the oil companies make with these independents. It is plain that a filling station owner who is tied to an oil company for his supply of products is not an available customer for the products of other suppliers. The same is true of a filling station owner who purchases his inventory a year in advance. His demand is withdrawn from the market for the duration of the contract in the one case and for a year in the other. The result in each case is to lessen competition if the standard is day-to-day purchases. Whether it is a substantial lessening of competition within the meaning of the Anti-Trust Laws is a question of degree and may vary from industry to industry. 46 The Court answers the question for the oil industry by a formula which under our decisions promises to wipe out large segments of independent filling station operators. The method of doing business under requirements contracts at least keeps the independents alive. They survive as small business units. The situation is not ideal from either their point of view8 or that of the nation. But the alternative which the Court offers is far worse from the point of view of both. 47 The elimination of these requirements contracts sets the stage for Standard and the other oil companies to build service-station empires of their own. The opinion of the Court does more than set the stage for that development. It is an advisory opinion as well, stating to the oil companies how they can with impunity build their empires. The formula suggested by the Court is either the use of the 'agency' device, which in practical effect means control of filling stations by the oil companies, cf. Federal Trade Commission v. Curtis Co., 260 U.S. 568, 43 S.Ct. 210, 67 L.Ed. 408, or the outright acquisition of them by subsidiary corporations or otherwise. See United States v. Columbia Steel Co., supra. Under the approved judicial doctrine either of those devices means increasing the monopoly of the oil companies over the retail field. 48 When the choice is thus given, I dissent from the outlawry of the requirements contract on the present facts. The effect which it has on competition in this field is minor as compared to the damage which will flow from the judicially approved formula for the growth of bigness tendered by the Court as an alternative. Our choice must be made on the basis not of abstractions but of the realities of modern industrial life. 49 Today there is vigorous competition between the oil companies for the market. That competition has left some room for the survival of the independents. But when this inducement for their survival is taken away, we can expect that the oil companies will move in to supplant them with their own stations. There will still be competition between the oil companies. But there will be a tragic loss to the nation. The small, independent business man will be supplanted by clerks. Competition between suppliers of accessories (which is involved in this case) will diminish or cease altogether. The oil companies will command an increasingly larger share of both the wholesale and the retail markets. 50 That is the likely result of today's decision. The requirements contract which is displaced is relatively innocuous as compared with the virulent growth of monopoly power which the Court encourages. The Court does not act unwittingly. It consciously pushes the oil industry in that direction. The Court approves what the Anti-Trust Laws were designed to prevent. It helps remake America in the image of the cartels. 51 Mr. Justice JACKSON, with whom The CHIEF JUSTICE and Mr. Justice BURTON join, dissenting. 52 I am unable to join the judgment or opinion of the Court or reasons I will state, but shortly. 53 Section 3 of the Clayton Act does not make any lease, sale, or contract unlawful unless 'the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.' 38 Stat. 730, 731, 15 U.S.C. § 14, 15 U.S.C.A. § 14. It is indispensable to the Government's case to establish that either the actual or the probable effect of the accused arrangement is to substantially lessen competition or tend to create a monopoly. 54 I am unable to agree that this requirement was met. To be sure, the contracts cover 'a substantial number of outlets and a substantial amount of products, whether considered comparatively or not.' But that fact does not automatically bring the accused arrangement within the prohibitions of the statute. The number of dealers and the volume of sales covered by the arrangement of course was sufficient to be substantial. That is to say, this arrangement operated on enough commerce to violate the Act, provided its effects were substantially to lessen competition or create a monopoly. But proof of their quantity does not prove that they had this forbidden quality and the assumption that they did, without proof, seems to me unwarranted. 55 Moreover, the trial court not only made the assumption but he did not allow the defendant affirmatively to show that such effects do not flow from this arrangement. Such evidence on the subject as was admitted was not considered in reaching the decision that these contracts are illegal. 56 I regard it as unfortunate that the Clayton Act submits such economic issues to judicial determination. It not only leaves the law vague as a warning or guide, and determined only after the event, but the judicial process is not well adapted to exploration of such industry-wide, and even nation-wide, questions. 57 But if they must decide, the only possible way for the courts to arrive at a fair determination is to hear all relevant evidence from both parties and weigh not only its inherent probabilities of verity but also compare the experience, disinterestedness and credibility of opposing witnesses. This is a tedious process and not too enlightening, but without it a judicial decree is but a guess in the dark. That is all we have here and I do not think it is an adequate basis on which to upset long-standing and widely practiced business arrangements. 58 I should therefore vacate this decree and direct the court below to complete the case by hearing and weighing the Government's evidence and that of defendant as to the effects of this device. 59 However, if the Court refuses to do that, I cannot agree that the requirements contract is per se an illegal one under the antitrust law, and that is the substance of what the Court seems to hold. I am not convinced that the requirements contract as here used is a device for suppressing competition instead of a device for waging competition. If we look only at its effect in relation to particular retailers who become parties to it, it does restrain their freedom to purchase their requirements elsewhere and prevents other companies from selling to them. Many contracts have the effect of taking a purchaser out of the market for goods he already has bought or contracted to take. But the retailer in this industry is only a conduit from the oil fields to the driver's tank, a means by which the oil companies compete to get the business of the ultimate consumer—the man in whose automobile the gas is used. It means to me, if I must decide without evidence, that these contracts are an almost necessary means to maintain this all-important competition for consumer business, in which it is admitted competition is keen. The retail stations, whether independent or company-owned, are the instrumentalities through which competition for this ultimate market is waged. 60 It does not seem to me inherently to lessen this real competition when an oil company tries to establish superior service by providing the consumer with a responsible dealer from which the public can purchase adequate and timely supplies of oil, gasoline and car accessories of some known and reliable standard of quality. No retailer, whether agent or independent, can long remain in business if he does not always, and not just intermittently, have gas to sell. Retailers' storage capacity usually is limited and they are in no position to accumulate large stocks. They can take gas only when and as they can sell it. The Government can hardly force someone to contract to stand by, ever ready to fill fluctuating demands of dealers who will not in turn undertake to buy from that supplier all their requirements. And it is important to the driving public to be able to rely on retailers to have gas to retail. It is equally important that the wholesaler have some incentive to carry the stocks and have the transport facilities to make the irregular deliveries caused by varied consumer demands. 61 It may be that the Government, if required to do so, could prove that this is a bad system and an illegal one. It may be that the defendant, if permitted to do so, can prove that it is, in its overall aspects, a good system and within the law. But on the present record the Government has not made a case.1 62 If the courts are to apply the lash of the antitrust laws to the backs of businessmen to make them compete, we cannot in fairness also apply the lash whenever they hit upon a successful method of competing. That, insofar as I am permitted by the record to learn the facts, appears to be the case before us. I would reverse. 1 Standard Stations, Inc., has no independent status in these proceedings; since 1944 its activities have been confined to managing service stations owned by the Standard Oil Co. of California. 2 '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: * * *.' 26 Stat. 209, as amended, 50 Stat. 693, 15 U.S.C. § 1, 15 U.S.C.A. § 1. 3 'It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, 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, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.' 38 Stat. 731, 15 U.S.C. § 14, 15 U.S.C.A. § 14. 4 After the Clayton Bill, H.R. 15657, had passed the House, the Senate struck § 4, the section prohibiting tying clauses and requirements contracts, on the ground that such practices were subject to condemnation by the Federal Trade Commission under the then pending Trade Commission Bill. In support of a motion to reconsider this vote, Senator Reed of Missouri argued that the Trade Commission would be unlikely to outlaw agreements of a type held by this Court, in Henry v. A. B. Dick Co., 224 U.S. 1, 32 S.Ct. 364, 56 L.Ed. 645, Ann.Cas.1913D, 880, not to be in violation of the Sherman Act. See 51 Cong.Rec. 14088, 14090—92. The motion was agreed to. Id. at 14223. 5 It is clear, of course, that the 'line of commerce' affected need not be nationwide, at least where the purchasers cannot, as a practical matter, turn to suppliers outside their own area. Although the effect on competition will be quantitatively the same if a given volume of the industry's business is assumed to be covered, whether or not the affected sources of supply are those of the industry as a whole or only those of a particular region, a purely quantitative measure of this effect is inadequate because the narrower the area of competition, the greater the comparative effect on the area's competitors. Since it is the preservation of competition which is at stake, the significant proportion of coverage is that within the area of effective competition. Cf. Indiana Farmer's Guide Publishing Co. v. Prairie Farmer Publishing Co., 293 U.S. 268, 279, 55 S.Ct. 182, 185, 79 L.Ed. 356; United States v. Yellow Cab Co., 332 U.S. 218, 226, 67 S.Ct. 1560, 1564, 91 L.Ed. 2010. The criteria of substantiality deemed relevant in cases involving a nation-wide market are thus also relevant in measuring the effect of Standard's requirements contracts in the seven-state Western area. 6 Standard u ges that the effect of its contracts is similarly confined in view of the fact that they apply not to all sales by a dealer but only to those made through a designated service station. Putting aside the fact that it does not appear that dealers commonly own more than one service station, there is marked difference between a contract which confines an entire retail outlet to the sale of a single brand and a contract which merely confines the use of a dispensing mechanism to a single brand: service-station sites, and therefore retail outlets, are limited in number; the number of pumps which a dealer may choose to set up is not, or so, at least, the Court assumed in the Sinclair case. It is reasonable to assume, therefore, that competition between suppliers is directed rather toward exclusive contracts with the maximum number of strategically located outlets than toward exclusive arrangements with dealers as such. 7 The Court considered and found inadequate defendant's attempt to establish that the successful use of the machines depended upon a quality of salt which only it could supply, but the Court's willingness to consider such evidence does not weaken the holding that coverage of a more than insignificant volume of business by such tying clauses is an adequate basis for finding a lessening of competition or a tendency to monopoly. 8 It may be noted in passing that the exclusive supply provisions for tires, tubes, batteries, and other accessories which are a part of some of Standard's contracts with dealers who have also agreed to purchase their requirements of petroleum products should perhaps be considered, as a matter of classification, tying rather than requirements agreements. 9 This advantage is not conferred by Standard's contracts, each of which provides that the price to be paid by the dealer is to be the 'Company's posted price to its dealers generally at time and place of delivery.' 10 Some members of the House opposed § 4 of H.R. 15657 (the equivalent of what is now § 3) as denying this benefit to the newcomer, see 51 Cong.Rec.9267, and Representative McCoy of New Jersey offered an amendment, id. at 9398, to make the agreements in question illegal only when entered 'with the intent of obtaining or establishing a monopoly or of destroying the business of a competitor,' which he and others supported on this ground. See id. at 9400—02, 9409. The amendment was rejected. Id. at 9410. 11 For an exposition of the considerations here summarized, see Stockhausen, The Commercial and Anti-Trust Aspects of Term and Requirements Contracts, 23 N.Y.U.L.Q.Rev. 412, 417—31 (1948). 12 Upon the request of Standard, its six largest competitors filled out questionnaires showing the number of retail dealers who distributed their products during the years 1937 through 1946. Though their position relative to each other has fluctuated, the figures show that as a group they have maintained or improved their control of the market. Together with Standard, these six companies distributed, as of 1946, through 26,439 of approximately 35,000 independent service stations in the Western area. 13 The dual system of enforcement provided for by the Clayton Act must have contemplated standards of proof capable of administration by the courts as well as by the Federal Trade Commission and other designated agencies. See 38 Stat. 734, 736, as amended, 15 U.S.C. §§ 21, 25, 15 U.S.C.A. §§ 21, 25. Our interpretation of the Act, therefore, should recognize that an appraisal of economic data which might be practicable if only the latter were faced with the task may be quite otherwise for judges unequipped for it either by experience or by the availability of skilled assistance. 14 The Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948, adopted July 30, 1948, provides, as one mode of procedure, for reference of restrictive trade practices by the Board of Trade to a permanent Commission for investigation in order to determine 'whether any such things as are specified in the reference * * * operate or may be expected to operate against the public interest.' 11 & 12 Geo. VI, c. 66, § 6(2). The Act does not define what is meant by 'the public interest,' although in § 14 it sets up broad criteria to be taken into account. It is noteworthy, however, hat, having established so broad a basis for investigation, the Act entrusts the task to an expert body without provision for judicial review. This approach was repeatedly contrasted in debate with that of the United States. See 449 H.C.Deb. 2046—47, 2058, 2063 (5th ser. 1948); 157 H.L.Deb. 350 (5th ser. 1948). Compare § 5(2) of the Interstate Commerce Act, as amended, 41 Stat. 480, 49 U.S.C. § 5(2), 49 U.S.C.A., § 5(2), referring to the Interstate Commerce Commission determination of the more defined issues of 'public interest' under review in New York Central Securities Corp. v. United States, 287 U.S. 12, 24, 53 S.Ct. 45, 48, 77 L.Ed. 138; United States v. Lowden, 308 U.S. 225, 60 S.Ct. 248, 84 L.Ed. 208. 15 Representative Floyd of Arkansas, one of the managers on the part of the House, explained the use of the word 'substantially' as deriving from the opinion of this Court in Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136, and quoted the passage from Id. 175 U.S. at page 229, 20 S.Ct. at page 99, in which it is said that 'the power of Congress to regulate interstate commerce comprises the right to enact a law prohibiting a citizen from entering into these private contracts which directly and substantially, and not merely indirectly, remotely, incidentally and collaterally, regulate to a greater or less degree commerce among the States.' 51 Cong.Rec. 16317—18. Senator Chilton, one of the managers on the part of the Senate, denying that the clause weakened the bill, stated that the words 'where the effect may be' mean 'where it is possible for the effect to be.' Id. at 16002. Senator Overman, also a Senate conferee, argued that even the elimination of competition in a single town would substantially lessen competition. Id. at 15935. 16 See United States v. American Tobacco Co., 221 U.S. 106, 179, 31 S.Ct. 632, 648, 55 L.Ed. 663: 'Applying the rule of reason to the construction of the statute, it was held in the Standard Oil Case that, as the words 'restraint of trade' at common law and in the law of this country at the time of the adoption of the anti-trust act only embraced acts or contracts or agreements or combinations which operated to the prejudice of the public interests by unduly restricting competition, or unduly ob tructing the due course of trade, or which, either because of their inherent nature or effect, or because of the evident purpose of the acts, etc., injuriously restrained trade, that the words as used in the statute were designed to have and did have but a like significance.' See also Handler, A Study of the Construction and Enforcement of the Federal Antitrust Laws 3—9 (T.N.E.C. Monograph No. 38, 1941). Compare § 4 of the Australian Industries Preservation Act, 1906, which forbids combinations entered 'with intent to restrain trade or commerce to the detriment of the public,' construed in Attorney General v. Adelaide S.S. Co., (1913) A.C. 781, as requiring proof of actual economic detriment. 17 'The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine that question the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts.' 246 U.S. at page 238, 38 S.Ct. at page 244, 62 L.Ed. 683. 1 See Final Report and Recommendations of the Temporary National Economic Committee, Sen. Doc. No. 35, 77th Cong., 1st Sess. (1941). For more detailed analyses, see Competition and Monopoly in American Industry (TNEC Monograph 21, 1940) pp. 299 et seq.; The Structure of Industry (TNEC Monograph 27, 1941) pp. 231 et seq.; The Distribution of Ownership in the 200 Largest Nonfinancial Corporations (TNEC Monograph 29, 1940); Relative Efficiency of Large, Medium-Sized, and Small Business (TNEC Monograph 13, 1941). The merger and acquisition movement, which has been evident since the turn of the century and which contributed to the spiraling concentration of corporate wealth into the hands of the few, has not ended. We are presently in the midst of a similar movement. See the Federal Trade Commission report, The Present Trend of Corporate Mergers and Acquisitions, Sen. Doc. No. 17, 80th Cong., 1st Sess. (1947), p. 6, where it is shown that 'the increase in the merger movement following V-J day parallels very closely the sharp upward movement which took place at the end of World War I.' The causes which have recently contributed to the growing bigness of big corporations are varied. See Lynch, The Concentration of Economic Power (1946), pp. 3—4 where it is said: 'Even before the entrance of the United States into the war the placing of defense contracts served to augment the growth of bigness in industry and to intensify the struggle for survival by small concerns. By 1941 the pattern of defense contracts which, with modifications, was to remain for the duration of the war had been established. It is reported that in that year fifty-six firms, less than one-half of 1 percent of the manufacturing establishments of the country, were awarded 75 percent of all the contracts. Concentration was even more marked within this group, however, inasmuch as six corporations held 31 percent of the total. Between June, 1940, and March, 1943, more than 100 million dollars worth of prime war-supply contracts were awarded. Seventy percent of these were held by the leading 100 corporations; 10 corporations held 32 percent, and the leading 50 held 60 percent. 'Studies by the United States Department of Commerce during 1943—1944 throw additional light on this trend toward industrial concentration. After Pearl Harbor the total number of firms in business declined precipitously. Despite the wartime industrial boom, the number of firms which discontinued operations was greater than that replaced by new entries; it is estimated that the number in business in 1943 was nearly 17 percent less than in 1941. There are numerous inlications that the relative importance of small business has declined during the war period and that the dominance of big business has become more marked. Between 1938 and 1942 it appears that the total number of workers employed by 95 percent of the nation's corporations (the smallest) declined 23 percent, whereas those employed by 5 percent of the corporations (the largest) increased 22 percent. A related study indicates that between January 1, 1941, and January 1, 1943, business firms employing fewer than 125 workers each experienced an increase in employment of 1 percent and an increase in the value of their product (attributable principally to price increases) of 16 percent; during the same period, however, the increase in employment by the large establishments employing more than 125 workers was 62 percent and the increase in the value of the product, 96 percent.' 2 See for example United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129. 3 See for example Mercoid Corp. v. Mid-Continent Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376. 4 See United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, 92 L.Ed. 1236; Schine Theatres v. United States, 334 U.S. 110, 68 S.Ct. 947, 92 L.Ed. 1245; United States v. Paramount Pictures, 334 U.S. 131, 172, 68 S.Ct. 915, 936, 92 L.Ed. 1260. Those cases have largely expended the force of Hartford Empire Co. v. United States, 323 U.S. 386, 65 S.Ct. 373, 89 L.Ed. 322—an indefensible decision whereby the Court allowed those who had built one of the tightest monopolies in American history largely to retain their illgotten gains and continue their hold on the economy. The philosophy of that decision can be summed up in the words Brandeis used to describe the decree effecting a so-called dissolution of the American Tobacco Co. He said that its defenders 'appear to have discovered in the Constitution a new implied prohibition: 'What man has illegally joined together, let no court put asunder." The Curse o Bigness (1935) p. 103. 5 See Schine Theatres v. United States, supra, 334 U.S. at pages 129—130, 68 S.Ct. at pages 957—958, 92 L.Ed. 1245. 6 It should be noted in this connection that a majority of the Court could not be obtained for holding illegal per se the vertical integration in the motion picture industry. See United States v. Paramount Pictures, supra, 334 U.S. at pages 173—174, 68 S.Ct. at pages 936, 937, 92 L.Ed. 1260. 7 Other People's Money (1933) p. 110. 8 For the plight of the independent service station operator see Control of the Petroleum Industry by Major Oil Companies (TNEC Monograph No. 39, 1941) pp. 46, 47, 52. See also Review and Criticism on Behalf of Standard Oil Co. (New Jersey) and Sun Oil Co. of Monograph No. 39 with Rejoinder by Monograph Author (TNEC Monograph 39—A, 1941). 1 The Government can derive no comfort for this sort of thing from International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20. There the defendant started with a patent monopoly of the machine for utilization of its product. The customers, canners, were in effect the ultimate consumers of salt as such. But they could get the advantages of the invention only if they tied themselves to use no other salt therein.

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337 U.S. 346 69 S.Ct. 1108 93 L.Ed. 1406 UNITED STATESv.WITTEK. No. 473. Argued April 20, 21, 1949. Decided June 13, 1949. Asst. Attorney General A. Devitt Vanech for petitioner. Mr. Ward B. McCarthy, Washington, D.C., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 The question presented is whether the United States, as the owner of Bellevue Houses, a defense-housing project in the District of Columbia, is a 'landlord' within the meaning of the District of Columbia Emergency Rent Act,1 with particular reference to rights of occupancy and rates of rental. For the reasons to be stated, we hold that it is not. 2 The United States of America, petitioner herein, filed its amended complaint in the Municipal Court for the District of Columbia against Wittek, the respondent, seeking possession of the premises occupied by him in the defense-housing project in the District of Columbia known as Bellevue Houses. The complaint alleged that the premises were owned by the United States and that the housing accommodations had been constructed by the Navy Department under authority of § 201 of the Second Supplemental National Defense Appropriation Act, 1941.2 This summary proceeding was brought under § 20, 31 Stat. 1193, 41 Stat. 555, D.C.Code 1940, § 11—735. The respondent's tenancy had been terminated by notice to quit, served by § 1219, 31 Stat. 1382, D.C.Code 1940, § by § 1219, 3u Stat. 1382, D.C.Code 1940, § 45—902, and the United States claimed that he no longer had any right to possession.3 The respondent's defense, now before us, is that the United States did not establish any of the additional facts which the District of Columbia Emergency Rent Act required a landlord to establish as a condition of such landlord's recovery of possession of housing accommodations to which the Act applied.4 The parties agreed that the cause be disposed of by the Municipal Court upon the pleadings, pretrial stipulations and certain exhibits. That court found that it had jurisdiction, that the Emergency Rent Act did not apply to the United States as the landlord of the premises in question and it ordered possession of the premises to be given to the United States. The Municipal Court of Appeals for the District of Columbia affirmed the judgment.5 The United States Court of Appeals for the District of Columbia Circuit allowed an appeal, limited to two questions.6 It disposed of one by sustaining the jurisdiction of the Municipal Court. It answered the other by holding that the District of Columbia Emergency Rent Act did apply to he United States as the landlord in this proceeding. It ordered the judgment reversed and the cause remanded to the Municipal Court of Appeals. 83 U.S.App.D.C. 377, 171 F.2d 8. We granted certiorari because of the substantial importance of the decision to the administration of Government-owned, low-rent housing, as well as to Government-owned, defense housing, in the District of Columbia. 336 U.S. 931, 69 S.Ct. 737. 3 When the circumstances are appreciated, it is practically inconceivable that Congress would have subjected its Government-owned, low-rent housing program in the District of Columbia to the additional control prescribed by the District of Columbia Emergency Rent Act. Yet the interpretation by which the court below held that Act applicable to the United States as a landlord of defense housing might make the Act equally applicable to the United States as a landlord of all other housing accommodations including its low-rent housing. The District of Columbia Emergency Rent Act came before Congress, late in 1941, through and with the support of the Congressional Committees on the District of Columbia in the House of Representatives and the Senate. It was designed as a model, prewar, temporary, emergency measure to forestall the skyrocketing of rentals of housing accommodations for defense workers then concentrating in the District of Columbia. Obviously, it was directed, at least primarily, at private landlords.7 It sought to stabilize housing rentals at about the level of January 1, 1941, which it selected as 'a level fixed (so far as practicable) by free competition; * * *'8 4 Congress traditionally has relied heavily upon its Committees on the District of Columbia in District matters. Through them it must have seen this measure in the light of its own long-term, low-rent housing program for the District. In appraising the attitude of these Committees and of Congress toward Government-owned, low-rent housing as a substitute for substandard housing in the District, it is impossible to overemphasize either the seriousness of the need or the long-standing concern of Congress about that need. The substandard housing in the District has been a frequent subject of congressional debate, study and legislation since the Civil War. The narrow alleys in the interior of 200 or more of the large downtown city blocks of the District, although unfitted for habitation, have been notoriously congested with a large population for which adequate housing never has existed. This condition has been widely publicized and only partial success has been attained through the efforts to improve it. Out of this need there has evolved a long-term congressional program to eliminate these substandard dwellings. Due to an obvious lack of suitable private housing, this program has led to the construction of a number of Government-built, owned and operated low-rent housing accommodations. In 1934, Congress enacted the District of Columbia Alley Dwelling ct, 48 Stat. 930, D.C.Code 1940, § 5—103 et seq. It authorized the President to acquire land adjacent to the inhabited alleys in the District, erect buildings thereon and rent them 'upon such terms and conditions as he may determine: * * *.'9 Pursuant to this Act, he designated the Chairman (officially entitled the President) of the Board of Commissioners of the District of Columbia, the Executive Officer (later the Director) of the National Capital Park and Planning Commission and the Director of Housing of the Federal Emergency Administration of Public Works to carry out its purposes. He named the group The Alley Dwelling Authority.10 In 1938, he substituted the Architect of the Capitol for the third official constituting the Authority,11 and, in 1943, he changed its name to that of the National Capital Housing Authority.12 It is this presidentially designated Authority that has operated, for the United States, all of its low-rent housing projects in the District. It is this Authority that has fixed the rentals and passed upon the respective rights of tenants to occupy premises in those projects. Its composition, including two United States officials and the President of the Board of Commissioners of the District, demonstrates the incongruity of an attempt, such as is here suggested, to subject it to the control of the District's Administrator of Rent Control, himself appointed by the Board of Commissioners of the District. The recognized responsibility of this Authority as a federal housing agency further appears from the fact that, in due course, it was chosen by the Government to be the operating lessee of more than 5,000 Government-owned, defense-housing, dwelling units, which were built by the United States in or near the District, including the Bellevue Houses. 5 The issue before us does not turn upon what particular agency is operating the Bellevue Houses or the other Government-owned housing of the United States. The issue is whether the United States, through whatever agency it operates, is to be controlled in its rental policies by the District Administrator of Rent Control. In determining the meaning of the District of Columbia Emergency Rent Act, approved December 2, 1941, which created the District Administrator of Rent Control, it therefore is material to note that the United St tes, in 1941, already was acting as a landlord of much Government-owned housing in the District and that, in each instance, it had placed those operations in the control of a national or presidentially designated authority or official with authorization fitted to the particular and varied purposes of that housing. This fact is of crucial significance in connection with the low-rent housing in the District which had been in operation for several years. Its distinctly social welfare and relief purposes already were in the hands of The Alley Dwelling Authority. 6 Beginning in 1934, The Alley Dwelling Authority built and put into operation five Government-owned, low-rent housing projects (including 112 dwelling units) and three commercial properties.13 In 1938, Title II was added to the District of Columbia Alley Dwelling Act, 52 Stat. 1188, D.C.Code 1940, § 5—112 et seq., and the Authority was designated also as a public housing agency to carry out the purposes of the United States Housing Act of 1937, 50 Stat. 888 et seq. See 42 U.S.C. (1940 ed.) § 1401 et seq, 42 U.S.C.A. § 1401 et seq. This enabled it to secure loans to build low-rent, housing accommodations and its program promptly expanded. By the end of 1941 it had completed, under Title II, six more low-rent projects, including 1,613 dwelling units, and the Government's brief in the instant case states that it is now managing, under that Title, 3,147 such dwellings. The character of these dwellings is plain from the definition of 'low-rent housing' in the Housing Act.14 This was prewar, poor-relief, low-rent housing, rather than defense housing. These projects were subsidized. The rentals were keyed to the inadequacy of the income of the respective tenants. The rentals did not purport to equal the level of those fixed by free competition for comparable privately owned housing. It was an important feature of the operating policy of these projects that a tenant be dispossessed, or 'graduated' as the Authority termed it, whenever that tenant's financial needs no longer entitled him to the subsidized privileges. The inappropriateness of applying to such projects rentals based upon levels fixed by free competition as of January 1, 1941, under the District of Columbia Emergency Rent Act, is evident. That Act's policy of rent control fostered the continuance of tenancies regardless of the financial status of the individual tenant. If applied to low-rent housing it would give vested rights to relief clients once installed, rather than to new clients in greater need. In the absence of an express statement by Congress, it is not conceivable that Congress, with its familiarity with these relief operations of the United States as the landlord of such low-rent, relief housing, would subject The Alley Dwelling Authority in the rental policy of such housing to the control of a local Administrator of Rent Control under an Act designed to meet the problems of employed war workers rather than the problems of indigent families, already wholly or partially dependent upon public support. Such a subjection, however, apparently would follow from the reasoning of the court below that the use by Congress of the general term 'landlord,' in the District of Columbia Emergency Rent Act, must subject the United States, as the landlord of Government-owned, defense-housing accommodations, to the provisions of that Act. The District of Columbia Emergency Rent Act makes no distinction between the United States as a landlord of low-rent housing and as a landlord of defense housing. If the Act applies to the Bellevue Houses, it apparently may be applied equally to all of the activities of the United States as a landlord. Therefore, while the complaint in the instant case does not seek to dispossess a tenant of a Government-owned, low-rent housing unit, we note the warning of Government counsel that, if we hold that the District of Columbia Emergency Rent Act is applicable in the instant case, we soon may be compelled to hold it applicable also to the United States as the landlord of low-rent housing. 7 A. The Act contains no express reference to the United States as a landlord or to the application of the Act to Government-owned housing of any kind.15 A general statute imposing restrictions does not impose them upon the Government itself without a clear expression or implication to that effect.16 The text, surrounding circumstances and legislative history of this District Act neither express nor imply a change in the authority already vested in permanent federal agencies in their management of the Government-owned housing in the District. The District of Columbia Emergency Rent Act thus appears to have been enacted as a temporary measure supplementing, rather than superseding, the contribution already being made by the permanent federal housing authorities toward meeting the housing crisis. We find no evidence that Congress believed that the managers of any of its housing projects in the District would be 'tempted * * * to demand exorbitant rentals' or engage in the 'rent-gouging practices * * *' against which the new Act was directed.17 It seems obvious that the need for District rent control was not in the operation of Government-owned housing, where the Federal Government already had complete control over the rentals, but was in the operation of privately owned housing, where neither the Federal nor District Governments had any control. 8 B. Government-owned, defense housing did not require the new rental control, in the District, that Congress imposed upon privately owned housing by the District of Columbia Emergency Rent Act. The increasing number of Government-owned, defense-housing units testified to the satisfaction of Congress and of the Administration with such projects. Rental rates in them were under complete governmental control. At the time of the enactment of the District of Columbia Emergency Rent Act, December 2, 1941, defense housing could be constructed in the District, and elsewhere, under § 201 of the Second Supplemental National Defense Appropriation Act, 1941, approved September 9, 1940, 54 Stat. 872, 883, or under the Lanham Act, approved October 14, 1940, 54 Stat. 1125.18 Bellevue Houses were built by the Navy under the first of those Acts. The rent control of defense housing under that Act was, in the first instance, expressly vested in the discretion of the Secretary of War or of the Navy, and the tenants were restricted to war workers.19 This provision was amended, June 28, 1941, so as to give to the agencies administering that housing the same powers and duties as had been given to the Federal Works Administrator as to defense housing constructed under the Lanham Act.20 The rental policy under the Lanham Act, at that time, provided: 'That the (Federal Works) Administrator shall fix fair rentals, on projects developed pursuant to this Act, which shall be within the financial reach of persons engaged in national defense: * * *.' (Emphasis supplied.) § 7, 54 Stat. 1127, renumbered § 304, 55 Stat. 363. This rental policy was thus expressly fitted to the purposes of the defense housing. Those purposes did not call for its further subordination to the control of a District Administrator of Rent Control under other statutory standards fitted to private landlords. This special defense-housing rental policy was further expressly emphasized by Congress in another amendment made applicable to the Lanham Act defense housing January 21, 1942.21 Therefore, whether or not these further provisions were also to be applicable to Bellevue Houses, which had been constructed under an earlier Act, they became applicable to the many Government-owned, defense-housing units, constructed in the District under the Lanham Act. Congress thus evidenced its purpose to insist upon special standards of rentals for its defense housing. It is significant that it did so by Acts approved June 28, 1941, and January 21, 1942. One was enacted before, and the other after, the enactment of the District of Columbia Emergency Rent Act on December 2, 1941. This emphasis was repeated on April 10, 1942, in a manner which demonstrated still further that Congress, in its consideration of the Lanham Act, had not overlooked the substantial extent to which that Act related to the construction of defense housing in the District of Columbia. On that date Congress amended the Lanham Act with special reference to operations in the District. It added Title IV. This authorized a $30,000,000 appropriation 'to provide housing in or near the District of Columbia (including living quarters for single persons and for families) for employees of the United States whose duties are determined by the National Housing Administrator to be essential to national defense and to require them to reside in or near the District of Columbia.' 56 Stat. 212, 42 U.S.C. (1946 ed.) § 1561, 42 U.S.C.A. § 1561. The rental control provisions amended on January 21, 1942 (see note 21, supra), already were applicable to such housing. The very § 304 which contained those amended rental control provisions was further amended so as expressly to include the District of Columbia in the term 'local municipalities' to which land could be conveyed for street or other public use incidental to a project. See 54 Stat. 1127, 55 Stat. 363, 56 Stat. 212, 42 U.S.C. (1946 ed.) § 1544, 42 U.S.C.A. § 1544.22 9 In the light of the foregoing express provisions for the control of rents in the public interest on Government-owned, defense-housing projects, there is no ground for implication that the District of Columbia Emergency Rent Act conflicts with it. III. The National Emergency Price Control Act of 1942 emphasizes the conclusion that the District of Columbia Emergency Rent Act does not apply to Government-owned housing in the District. 10 Although the National Emergency Price Control Act of 1942, approved January 30, 1942, expressly empowered the National Price Administrator, under certain limitations, to establish maximum rentals in so-called defense-rental areas23 he never did so in the District of Columbia. That Act, therefore, does not have a direct application to the issue in this case. However. the language of that Act and its policy toward the rent control of Government-owned, housing accommodations, both inside and outside of the District of Columbia, has a bearing upon the proper construction of the District of Columbia Emergency Rent Act. The National Act is not only consistent with our interpretation of the District Act but it lends support to that interpretation. The National Act left the control over rent to local authorities, except where the National Price Administrator found it necessary to intervene. The decision of the National Price Administrator not to intervene in the District of Columbia was an especial compliment to the existing controls, because the District of Columbia was a typical area calling for competent rent control and, in fact, had been declared by the statute itself to be a 'defense-rental area * * *.' § 302(d), 56 Stat. 36, 50 U.S.C.App. (1946 ed.) § 942(d), 50 U.S.C.A.Appendix, § 942(d). His satisfaction with the conditions in the District indicates that the local practice followed by the District Administrator of Rent Control, in not attempting to fix the rentals in Governent-owned housing, had produced no conditions which seemed to the National Price Administrator to call for federal intervention. A still more significant point is that, if he had intervened, under the National Act, he nd not the District Administrator of Rent Control, would have been the one vested with control over the rental policy of the Government-owned, housing accommodations. 11 In contrast to the omission, in the District of Columbia Emergency Rent Act, of any express reference to the United States as a landlord, the National Act expressly included the United States as a 'person' to whom it applied.24 Thus, within two months after the omission of the United States from such a definition in the District of Columbia Emergency Rent Act, Congress demonstrated that when it sought to include control of Government-owned housing under conditions where the established procedures and local controls might fail to meet the needs of the times, it expressly said so. The same section provided that the punishments prescribed for private violators did not apply to the United States. 12 The National Price Administrator, however, never published any regulations even potentially applicable to the District of Columbia. On the other hand, he did publish regulations stating his general policy as to Government-owned, housing accommodations elsewhere which might come under his control. Such regulations stated that, for housing constructed and owned by the United States, a state or any political subdivision of either, the maximum rents were to be those generally prevailing for comparable housing accommodations on the maximum rent date 'as determined by the owner of such accommodations: * * *.' Similarly, for housing accommodations rented to Army or Navy personnel, including civilian employees of the War and Navy Departments, for which rent is fixed by the national rent schedule of the War or Navy Departments, the maximum rents were to be those established by such rent schedule.25 13 Later, when Congress enacted the Housing and Rent Act of 1947, 61 Stat. 193—201, 50 U.S.C.App. (1946 ed., Supp. I) §§ 1881 1901, 50 U.S.C.A.Appendix, §§ 1881—1901, it expressly excluded the District of Columbia from the Act and struck out the previous express inclusion of the United States as a 'person' subject to the Act.26 14 The effect of the National Emergency Price Control Act, therefore, is to emphasize, both in its form and its practical operation, that Congress did not seek by the District of Columbia Emergency Rent Act to place Government-owned housing under a local rent administrator. IV. The District Administrator of Rent Control has not taken part in this proceeding and there is no evidence before us that at any time he has sought to exercise jurisdiction over the United States as a landlord of either low-rent housing or defense housing. 15 The District of Columbia Emergency Rent Act has been in effect since 1941 and the United States as landlord has owned and operated several thousand housing units in the District. There is nothing in the Rules and Regulations or the General Orders of the Office of the Administrator of Rent Control suggesting the application of the Act to the United States as a landlord of Government-owned housing. The absence of evidence of asserted control by the District official, coupled with the absence of complaint by the National Price Administrator during the life of the National Emergency Price Control Act, is thoroughly consistent with a widely accepted interpretation of the local Act in accordance with the conclusion which we have found to be fully justified by the language of Congress. 16 The judgment accordingly is reversed and the cause is remanded to the Court of Appeals for the District of Columbia Circuit for further proceedings consistent with this opinion. 17 It is so ordered. 18 Reversed and remanded. 1 The District of Columbia Emergency Rent Act was approved December 2, 1941, 55 Stat. 788, D.C.Code 1940, Supp. VI, §§ 45 1601 to 45—1611. It took effect January 1, 1942, and was to terminate December 31, 1945. Id. §§ 2(1), 1(b), § 45—1602(1), and see § 45—1601(b). Its life, however, was extended to December 31, 1946, 59 Stat. 592; to December 31, 1947, 60 Stat. 340; to March 31, 1948, 61 Stat. 713; to April 30, 1948, 62 Stat. 100; to March 31, 1949, 62 Stat. 205; to April 30, 1949, 63 Stat. 30; to June 30, 1950, 63 Stat. 48. It has been amended in a few other provisions, none of which are material here. 2 Approved September 9, 1940, 54 Stat. 883—884. The management and administration of Bellevue Houses were transferred by the Navy Department to the National Housing Administration under authorization of this section and also under § 7 of the Lanham Act, approved October 14, 1940, 54 Stat. 1125, 1127, 42 U.S.C. (1946 ed.) § 1544, 42 U.S.C.A. § 1544, and Executive Order No. 9070, 3 C.F.R.Cum.Supp. 1095, 50 U.S.C.App. (1946 ed.) § 601 note, p. 5711, 50 U.S.C.A.Appendix, § 601 note. The authority to operate and manage Bellevue Houses later was delegated, by lease, to the National Capital Housing Authority, which was responsible for the rental of the premises involved in the instant case at the time of this proceeding. In making this delegation, the United States relied upon the same Acts, together with § 5 of the Act of June 28, 1941, 55 Stat. 363, and amendments made to the Lanham Act by the Act of January 21, 1942, 56 Stat. 11 et seq. 3 The amended complaint, the proceedings and the opinions below refer also to allegations, stipulations and evidence to the effect that the United States had rented the premises in question to the respondent for $38.20 a month, including gas heating and other utility services, but that it had increased such rental to $43 a month, beginning February 1, 1946. The United States claimed that this increase was essential in order for it to meet a substantial rise in operating expenses, due to the necessary substitution of commercial gas to be used for space heating purposes in place of surplus sludge gas supplied by the District of Columbia free or at nominal cost. The United States also alleged that the respondent refused to execute a new lease and refused to pay rent at the increased rate, with the result that, on February 28, 1946, it served its 30-day notice terminating the respondent's tenancy. It further alleged that this increase in rent had been made under its previously cited authority to operate the project and without reference to the District of Columbia Emergency Rent Act. This increase in rent presents (under §§ 2 to 4 of that Act, D.C.Code 1940, Supp. IV, §§ 45—1602 to 45—1604) the same issue, based upon the applicability of the Act to the United States as a landlord, as is presented (under § 5(b), D.C.Code 1940, Supp. IV, § 45—1605(b)) by the maintenance of this proceeding for possession of the premises in question without making any of the additional allegations called for by that Act. We deal with the issue as presented under § 5(b) because it is there less involved in factual controversy than it is under §§ 2 to 4. 4 'Sec. 5. Prohibitions. * * * '(b) No action or proceeding to recover possession of housing accommodations shall be maintainable by any landlord against any tenant, notwithstanding that the tenant has no lease or that his lease has expired, so long as the tenant continues to pay the rent to which the landlord is entitled, unless— '(1) The tenant is (a) violating an obligation of his tenancy (other than an obligation to pay rent higher than rent permitted under this Act or any regulation or order thereunder applicable to the housing accommodations involved or an obligation to surrender possession of such accommodations) or (b) is committing a nuisance or using the housing accommodations for an immoral or illegal purpose or for other than living or dwelling purposes, or '(2) The landlord seeks in good faith to recover possession of the property for his immediate and personal use and occupancy as a dwelling, or '(3) The landlord has in good faith contracted in writing to sell the property for immediate and personal use and occupancy as dwelling by the purchaser and that the contract of sale contains a representation by the purchaser that the property is being purchased by him for such immediate and personal use and occupancy, or '(4) The landlord seeks in good faith to recover possession for the immediate purpose of substantially altering, remodeling, or demolishing the property and replacing it with new construction, the plans for which altered, remodeled, or new construction having been filed with and approved by the Commissioners of the District of Columbia, or '(5) The housing accommodations are nonhousekeeping, furnished, accommodations located within a single dwelling unit not used as a rooming or boarding house as defined by this Act and the remaining portion of which dwelling unit is occupied by the lessor or his immediate family, or '(6) The landlord, being a recognized school or an accredited nonprofit university, has a bona fide need for the premises for educational, research, administrative, or dormitory use.' 55 Stat. 791, 56 Stat. 759, 61 Stat. 721, D.C.Code 1940, Supp. VI, § 45 1605(b). 5 Wittek v. United States, D.C.Mun.App., 54 A.2d 747. For an earlier proceeding in the same case, see United States v. Wittek, D.C.Mun.App., 48 A.2d 805. 6 Appeal was taken under 56 Stat. 196, D.C.Code 1940, Supp. VI, § 11—773. The question now before us was stated as follows: 'Whether the conditions imposed by the District of Columbia Emergency Rent Act on suits for possession apply where such a suit is brought by the United States as landlord.' Wittek v. United States, 83 U.S.App.D.C. 377, 378, 171 F.2d 8, 9. I. If the District of Columbia Emergency Rent Act is now applied to Government-owned, defense housing in the District, such as Bellevue Houses, we are warned that we soon may be compelled to hold the same interpretation applicable to Government-owned, law-rent housing in the District. 7 'Section 1. Purposes—Time Limit. (a) It is hereby found that the national emergency and the national-defense program (1) have aggravated the congested situation with regard to housing accommodations existing at the seat of government; (2) have led or will lead to profiteering and other speculative and manipulative practices by some owners of housing accommodations; (3) have rendered or will render ineffective the normal operations of a free market in housing accommodations; and (4) are making it increasingly difficult for persons whose duties or obligations require them to live or work in the District of Columbia to obtain such accommodations. Whereupon it is the purpose of this Act and the policy of the Congress during the existing emergency to prevent undue rent increases and any other practices relating to housing accommodations in the District of Columbia which may tend to increase the cost of living or otherwise impede the national-defense program. '(b) The provisions of this Act, and all regulations, orders, and requirements thereunder, shall terminate on December 31, 1945; * * *.' (Emphasis supplied.) 55 Stat. 788, D.C.Code 1940, Supp. VI, § 45—1601. In seven steps the termination date has been extended to June 30, 1950. See note 1, supra. 8 The Committee Reports refer by implication to private landlords, rather than to the United States—either as the established landlord of the widespread, low-rent housing in the District or as the landlord of the future defense housing then being developed in the District by the United States as an additional means of combating the housing shortage. 'With a population influx at a higher rate than ever before in its history, the Nation's Capital today is faced with a demand for housing accommodations which threatens to create a situation more serious than that existing during the last war. The present demand for living quarters on the part of those whom the defense effort requires to live and work in Washington, has tempted some owners and managers of rental properties to demand exorbitant rentals. It is true, and gratifying to note, that a large majority of owners and managers have refrained from taking advantage of the rental situation created by the national emergency as it affects the Nation's Capital. This bill is designed to protect this group as well as present and future tenants in the District of Columbia from the rent-gouging practices of a minority of landlords. 'The most appropriate regulation of rental properties to meet the present emergency situation is regulation designed to stabilize the rent level at a level fixed (so for as practicable) by free competition; competition before it was seriously affected by an acute housing shortage and by restrictions on new construction caused by shortages in certain building materials required by the military needs of the Nation. 'It is particularly appropriate that the Congress immediately enact legislation of this type for the Nation's Capital legislation that may serve as a model for enactments by States which may desire control for those areas within their borders suffering from similar rental housing dislocations caused by the national emergency and the national-defense program.' (Emphasis supplied.) H.R.Rep. No. 1317, 77th Cong., 1st Sess. 2, 6 (1941). And see S. Rep. No. 827, 77th Cong., 1st Sess. 3 (1941). See also, discussion of the bill on the floor of the House of Representatives by Representative Randolph of West Virginia, Chairman of the Committee on the District of Columbia, 87 Cong.Rec., Pt. 8, 8447—8454 (1941). 9 The nature of the need was reflected in the original statement of the purpose of the Act. '* * * to enable the President, in the interest of public health, comfort, morals, safety, and welfare, to provide for the discontinuance of the use as dwellings of buildings situated in alleys and to eliminate the hidden communities in inhabited alleys of the District of Columbia, and to carry out the policy declared in the Act approved May 16, 1918, as amended, of caring for the alley population of the District of Columbia, The President is hereby authorized and empowered, * * *— '(a) To purchase, or acquire by condemnation or gift, and land, buildings, or structures, or any interest therein, situated in or adjacent to any inhabited alley in the District of Columbia, * * *; '(b) * * * to demolish, move, or alter any buildings or structures situated thereon and erect such buildings or structures thereon as deemed advisable: * * *; '(c) To lease, rent, maintain, equip, manage, exchange, sell, or convey any such lands, buildings, or structures upon such terms and conditions as he may determine: * * *.' (Emphasis supplied.) 48 Stat. 930—931. See also, 52 Stat. 1186, D.C.Code 1940, § 5—103. 10 Executive Order No. 6868, October 9, 1934 (published in Report of the National Capital Housing Authority for the Ten-Year Period 1934—1944, p. 3), and see Executive Order No. 8033, Jan. 11, 1939, 3 C.F.R. Cum.Supp. 443. This was pursuant to the authorization contained in 48 Stat. 931, D.C.Code 1940, § 5—104. 11 Executive Order No. 7784-A, Jan. 5, 1938, 3 Fed.Reg. 51 (1938). 12 Executive Order No. 9344, May 21, 1943, 3 C.F.R. Cum.Supp. 1279. 13 For this and the other factual material relating to this Authority, see Report of the National Capital Housing Authority for the Ten-Year Period 1934—1944, submitted by it to the President December 28, 1944, and by him to Congress March 1, 1945, 91 Cong.Rec., Pt. 2, 1597 (1945). See also, the Annual Reports of this Authority to the President, all required by § 5(a) and (b) of the District of Columbia Alley Dwelling Act, 48 Stat. 932, D.C.Code 1940, § 5—107(a) and (b). 14 'Sec. 2. When used in this Act— '(1) The term 'low-rent housing' means decent, safe, and sanitary dwellings within the financial reach of families of low income, and developed and administered to promote serviceability, efficiency, economy, and stability, and embraces all necessary appurtenances thereto. The dwellings in low-rent housing as defined in this Act shall be available solely for families whose net income at the time of admission does not exceed five times the rental (including the value or cost to them of heat, light, water, and cooking fuel) of the dwellings to be furnished such families, except that in the case of families with three or more minor dependents, such ratio shall not exceed six to one.' (Emphasis supplied.) 50 Stat. 888, 42 U.S.C. (1940 ed.) § 1402(1), 42 U.S.C.A. § 1402(1). II. The District of Columbia Emergency Rent Act does not apply to Government-owned, defense housing in the District, such as the Bellevue Houses. 15 This contrasts with the language used by Congress about two months later in the rent control provisions of the National Emergency Price Control Act of 1942, 56 Stat. 24—26, 36—37. Congress there expressly included the United States in the definition of 'person.' See p. 19, infra. The court below relies particularly upon the following definitions of 'landlord' and 'person' in the District of Columbia Emergency Rent Act as being sufficiently broad to include the United States when read in the light of the purposes of the Act: 'Sec. 11. Definitions. As used in this Act— '(g) The term 'landlord' includes an owner, lessor, sublessor, or other person entitled to receive rent for the use or occupancy of any housing accommodations. '(h) The term 'person' includes one or more individuals, firms, partnerships, corporations, or associations and any agent, trustee, receiver, assignee, or other representative thereof.' 55 Stat. 794—795, D.C.Code 1940, Supp. VI, § 45—1611(g) and (h). 16 '* * * There is an old and well-known rule that statutes which in general terms divest pre-existing rights or privileges will not be applied to the sovereign without express words to that effect. It has been stated, in cases in which there were extraneous and affirmative reasons for believing that the sovereign should also be deemed subject to a restrictive statute, that this rule was a rule of construction only. Though that may be true, the rule has been invoked successfully in cases so closely similar to the present one, and the statement of the rule in those cases has been so explicit, that we are inclined to give it much weight here.' United States v. United Mine Workers, 330 U.S. 258, 272—273, 67 S.Ct. 677, 686, 91 L.Ed. 884. See also United States v. State of Wyoming, 331 U.S. 440, 449, 67 S.Ct. 1319, 1324, 91 L.Ed. 1590; United States v. Stevenson, 215 U.S. 190, 197, 30 S.Ct. 35, 36, 54 L.Ed. 153; United States v. American Bell Telephone Co., 159 U.S. 548, 554 555, 16 S.Ct. 69, 72, 40 L.Ed. 255; United States v. Herron, 20 Wall. 251, 263, 22 L.Ed. 275. 'The most general words that can be devised (for example, any person or persons, bodies politic or corporate) affect not him (the King of England) in the least, if they may tend to restrain or diminish any of his rights and interests. * * * The rule thus settled respecting the British Crown is equally applicable to this government, and it has been applied frequently in the different States, and practically in the Federal courts. It may be considered as settled that so much of the royal prerogatives as belonged to the King in his capacity of parens patriae, or universal trustee, enters as much into our political state as it does into the principles of the British constitutions.' Dollar Savings Bank v. United States, 19 Wall. 227, 239, 22 L.Ed. 80. 17 See note 8, supra. 18 Supplemented by the Urgent Deficiency Appropriation Act, 1941, approved March 1, 1941, 55 Stat. 14, and amended by the Acts of April 29, 1941, 55 Stat. 147, and June 28, 1941, 55 Stat. 361 et seq. 19 '* * * in carrying out the purposes of this section the Secretary of War and the Secretary of the Navy may utilize such other agencies of the United States as they may determine upon: Provided further, That the Secretary of War and the Secretary of the Navy, at their discretion, are hereby authorized to rent such housing units, upon completion, to enlisted men of the Army, Navy, Marine Corps with families, to field employees of the Military and Naval Establishments with families, and to workers with families who are engaged, or to be engaged, in industries essential to the military and naval national defense programs, including work on ships under the control of the Maritime Commission. * * *' § 201, Second Supplemental National Defense Appropriation Act, 1941, approved September 9, 1940, 54 Stat. 883—884. For comparable classification of eligible tenants under the Lanham Act, see § 2, 54 Stat. 1126, as amended, 56 Stat. 11—12, 42 U.S.C. (1946 ed.) § 1522, 42 U.S.C.A. § 1522. 20 'Sec. 5. The departments, agencies, or instrumentalities administering property acquired or constructed under section 201 of the Second Supplemental National Defense Appropriation Act, 1941, shall have the same powers and duties with respect to such property and with respect to the management, maintenance, operation, and administration thereof as are granted to the Federal Works Administrator with respect to property acquired or constructed under title I of such Act of October 14, 1940, and with respect to the management, maintenance, operation, and administration of such property so acquired or constructed under such title.' (Emphasis supplied.) 55 Stat. 363. Title I of the Lanham Act, approved October 14, 1940, consisted or §§ 1—3, and in the Act of June 28, 1941, it was given the title 'Defense Housing.' 55 Stat. 361. 21 'Sec. 6. The second proviso of section 304 of such (Lanham) Act, as amended, is amended to read as follows: Provided further, That the (Federal Works) Administrator shall fix fair rentals, on projects developed pursuant to this (Lanham) Act, which shall be based on the value hereof as determined by him, with power during the emergency, in exceptional cases, to adjust the rent to the income of the persons to be housed, and that rentals to be charged for Army and Navy personnel shall be fixed by the War and Navy Departments:' (Emphasis supplied.) 56 Stat. 12, 42 U.S.C. (1946 ed.) § 1544, 42 U.S.C.A. § 1544. 22 As evidencing a purpose that Government-owned defense housing constructed under the Lanham Act likewise remain under the general civil and criminal jurisdiction of the respective states and of the District of Columbia, whereever such housing might be located, § 307 of the Lanham Act was amended by the Act of April 10, 1942, to include expressly the District of Columbia. See 54 Stat. 1127, 55 Stat. 363, 56 Stat. 212, 42 U.S.C. (1946 ed.) § 1547, 42 U.S.C.A. § 1547. 23 §§ 2(b) and 302(d), 56 Stat. 25—26, and 36, 58 Stat. 633 634, 59 Stat. 306—307, 50 U.S.C.App. (1946 ed.) §§ 902(b), 942(d), 50 U.S.C.A.Appendix, §§ 902(b), 942(d). 24 It was made unlawful for 'any person' to violate the Act or a regulation issued pursuant to the Act, § 4, 56 Stat. 28, 50 U.S.C.App. (1946 ed.) § 904, 50 U.S.C.A.Appendix, § 904, and then 'person' was defined as follows: 'Sec. 302. As used in this Act— '(h) The term 'person' includes an individual, corporation, partnership, association, or any other organized group of persons, or legal successor or representative of any of the foregoing, and includes the United States or any agency thereof, or any other government, or any of its political subdivisions, or any agency of any of the foregoing: Provided, That no punishment provided by this Act shall apply to the United States, or to any such government, political subdivision, or agency.' 56 Stat. 36—37, 50 U.S.C.App. (1946 ed.) § 942(h), 50 U.S.C.A.Appendix, § 942(h). The Act also provided: 'Section 1. * * * '(c) The provisions of this Act shall be applicable to the United States, its Territories and possessions, and the District of Columbia.' 56 Stat. 23—24, 50 U.S.C.App. (1946 ed.) § 901(c), 50 U.S.C.A.Appendix, § 901(c). of the times, it expressly said so. The same section provided that the punishments prescribed for private violators did not apply to the United States. 25 'Sec. 4. Maximum rents. Maximum rents * * * shall be: '(g) Housing owned and constructed by the government. For housing accommodations constructed by the United States or any agency thereof, or by a State of the United States or any of its political subdivisions, or any agency of the State or any of its political subdivisions, and owned by any of the foregoing, the rent generally prevailing in the Defense-Rental Area for comparable housing accommodations on the maximum rent date, as determined by the owner of such accommodations: Provided, however, That any corporation formed under the laws of a State shall not be considered an agency of the United States within the meaning of this paragraph. The Administrator may order a decrease in the maximum rent as provided in section 5(c). '(h) Housing subject to rent schedule of War or Navy Department. For housing accommodations rented to either Army or Navy personnel, including civilian employees of the War and Navy Departments, for which the rent is fixed by the national rent schedule of the War or Navy Department, the rents established by such rent schedule.' 10 Fed.Reg. 13529—13530. For the exception of housing accommodations rented to Army or Navy personnel, including civilian employees of the War and Navy Departments, from provisions restricting removal of tenants, see § 6(c)(2), 10 Fed.Reg. 13534. 26 The Housing and Rent Act of 1947, 61 Stat. 193, 197, superseded the National Emergency Price Control Act of 1942. It provided: 'Se . 202. As used in this title (Maximum Rents)— '(a) The term 'person' includes an individual, corporation, partnership, association, or any other organized group of persons, or a legal successor or representative of any of the foregoing.' 61 Stat. 196, 50 U.S.C.App. (1946 ed., Supp. I) § 1892(a), 50 U.S.C.A.Appendix, § 1892(a). 'Sec. 209. * * * '(b) Notwithstanding any other provision of this Act, the United States or any State or local public agency may maintain an action or proceeding to recover possession of any housing accommodations operated by it where such action or proceeding is authorized by the statute or regulations under which such accommodations are administered: * * *.' 61 Stat. 200—201, 50 U.S.C.App. (1946 ed., Supp I) § 1899(b), 50 U.S.C.A.Appendix, § 1899(b). 'Sec. 211. The provisions of this title (Maximum Rents) shall be applicable to the several States and to the Territories and possessions of the United States but shall not be applicable to the District of Columbia.' 61 Stat. 201, 50 U.S.C.App. (1946 ed., Supp I) § 1901, 50 U.S.C.A.Appendix, § 1901.

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337 U.S. 325 69 S.Ct. 1086 93 L.Ed. 1392 UNITED STATESv.CORS. No. 132. Argued Feb. 3, 4, 1949. Decided June 13, 1949. Mr. Oscar H. Davis, Washington, D.C., for petitioner. Mr. John Lord O'Brian, Washington, D.C., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is suit in the Court of Claims under § 902 of the Merchant Marine act of 1936, as amended, 49 Stat. 2015, 53 Stat. 1255, 46 U.S.C. § 1242, 46 U.S.C.A. § 1242, to recover the balance of 'just compensation' alleged to be due respondent from the United States for requisition his steam tug, the MacArthur, in October, 1942. The tug was a Coast Guard boat built in 1895 and used by it in harbor duties at Baltimore until 1939. It was then transferred to the Coast Guard base at Portland, Maine. In September, 1941, the Coast Guard advertised it for sale to the highest bidder. Respondent was the highest bidder, purchasing the tug in Maine on March 19, 1942, for $2,875. Thereafter he expended $5,699.78 on labor and materials in repairing and improving the vessel, an amount which would have been substantially greater had he not performed part of the work himself. In April, 1942, respondent received from the Department of Commerce a certificate designating the vessel as a towing steam vessel and authorizing him to employ it in the coasting trade for one year. Respondent then brought the tug to Staten Island, New York, where it remained until requisitioned by the War Shipping Administration on October 15, 1942. A survey by the Navy had indicated it was suitable as a steam-heating plant for heating and pumping fuel oil from oil barges into naval combat vessels. Its condition was said to be 'fair to good'; and its original cost was estimated to be $45,000; its replacement cost, $56,000; and its present value $9,000. It was used as a steam plant to heat oil for use in combat ships. 2 The War Shipping Administration determined that $9,000 was 'just compensation' for the tug and offered that amount to respondent. Respondent accepted 75 per cent of the award, as he was permitted to do by § 902(d) of the Act, and brought suit to recover the balance of the $20,000 which he alleged was the 'just compensation' to which he was entitled, plus interest. 3 Section 902(a) of the Act,1 after providing that the owner of any vessel requisitioned by the Commission shall be paid 'just compensation for the property taken or for the use of such property,' goes on to state 'but in no case shall the value of the property taken or used be deemed enhanced by the causes necessitating the taking or use.' It is around this latter clause that the present controversy turns. 4 The Court of Claims found that the fair market value at the time of the taking was $15,500 and that respondent was entitled to receive that amount, less the sum already paid, plus interest. 75 F.Supp. 235, 110 Ct.Cl. 66. The importance of tha decision in the settlement of claims arising as a result of the requisitioning program during the period of recent hostilities led us to grant the petition for certiorari. 5 The United States admitted liability for only $10,500, claiming that $5,000 of the market value was due to an enhancement brought about by its need for vessels which necessitated their taking. The Court of Claims found that at the time of the requisitioning there existed in and about the Port of New York 'a rising market and a strong demand for tugs of all types' due in part at least to the government's requisitioning program. It found that the market value of the tug had been enhanced $5,000 by October 15, 1942, due (1) to the great increase in shipping and harbor traffic because of the war and (2) to the government's need for vessels in the prosecution of the war.2 But the Court of Claims held that an owner of property taken by the government was entitled to no less than he could have received on the market from others, which in the present case was $15,500. 6 The Comptroller General has ruled that § 902(a) prohibits the payment of compensation to the extent that it may be based on values in excess of those existing on the date of the President's proclamation of a limited national emergency (September 8, 1939),3 provided that such excess be determined as due to economic conditions directly caused by the national emergency.4 7 The Advisory Board on Just Compensation5 formulated various rules for the guidance of the War Shipping Administration in its requisitioning program, including the following: 8 'From the value at the time of taking, there should be deducted any enhancement due, to the Government's need of vessels which has necessitated the taking, to the previous taking of vessels of similar type, or to a prospective taking, reasonably probable, whether such need, taking, or prospect, occurred before or after the declaration of the national emergency of May 27, 1941. Enhancement due to a general rise in prices or earnings, whenever occurring, should not be deducted. In the application of this rule neither the proclamation of limited emergency of September 8, 1939, nor the facts existing at that time, are in themselves of significance. The Board does not determine whether any enhancement after May 27, 1941, other than as enumerated above as deductible, should be excluded; since the Board is advised that the value of oceangoing vessels was higher on May 27, 1941, than at the time of taking, and that any enhancement since May 27, 1941, in vessels of other types, not deductible under the foregoing, is attributable to a general rise in prices or earnings, and should therefore not be deducted.' 9 The Department of Justice agrees with both the Comptroller General and the Advisory Board that the enhancement which is excluded is not limited to that accruing in the period after the declaration of a national emergency on May 27, 19416 and contends for a construction which would eliminate any enhancement on values due to the war. It argues that the Act as so construed, though different from hitherto announced judicial rules of construction of 'just compensation' within the meaning of the Fifth Amendment, is nevertheless constitutional. 10 Respondent, relying largely on Monongahela Navigation Co. v. United States, 148 U.S. 312, 13 S.Ct. 622, 37 L.Ed. 463, argues that if that construction is adopted it makes the enhancement clause unconstitutional because it conflicts with the judicial construction of 'just compensation' and is therefore beyond the competence of Congress to prescribe. 11 First. We need not reach the question whether the measure of compensation which Congress wrote into the Act is in all of its applications identical with the judicial standard. We are satisfied that on the present facts the two are coterminous. 12 The Court in its construction of the constitutional provision has been careful not to reduce the concept of 'just compensation' to a formula. The political ethics reflected in the Fifth Amendment reject confiscation as a measure of justice. But the Amendment does not contain any definite standards of fairness by which the measure of 'just compensation' is to be determined. United States ex rel. and for Use of Tennessee Valley Authority v. Powelson, 319 U.S. 266, 279—280, 63 S.Ct. 1047, 1054—1055, 87 L.Ed. 1390; United States v. Petty Motor Co., 327 U.S. 327, 377, 66 S.Ct. 596, 599, 90 L.Ed. 729. The Court in an endeavor to find working rules that will do substantial justice has adopted practical standards, including that of market value. United States v. Miller, 317 U.S. 369, 374, 63 S.Ct. 276, 280, 87 L.Ed. 336, 147 A.L.R. 55. But it has refused to make a fetish even of market value, since it may not be the best measure of value in some cases. At times some elements included in the criterion of market value have in fairness been excluded, as for example where the property has a special value to the owner because of its adaptability to his needs or where it has a special value to the taker because of its peculiar fitness for the taker's project. See United States v. Miller, supra, 317 U.S. 375, 63 S.Ct. 280 and cases cited. Moreover, where the government lays out a project involving the taking of lands, no increment of value arising by virtue of the fact that a particular tract is clearly or probably within the project may be added. Id., 317 U.S. 376-379, 63 S.Ct. 281-282 and cases cited. Any increase in value due to that fact would reflect speculation as to what the government could be compelled to pay and hence in fairness should be excluded from the determination of what compensation would be just. Id., 317 U.S. 377, 63 S.Ct. 281. 13 The Court of Claims recognized these rules. But it concluded that they represented the only exceptions to the requirement that market value be paid, that they were inapplicable here, and that therefore there was no enhancement in the value of the vessel that should be excluded from the fair market value in making the award to respondent. We believe, however, that these exceptions are merely illustrations of a principle which excludes enhancement of value resulting from the government's special or extraordinary demand for the property. 14 The special value to the condemner as distinguished from others who may or may not possess the power to condemn has long been excluded as an element from market value. See United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 76, 33 S.Ct. 667, 677, 57 L.Ed. 1063. In time of war or other national emergency the demand of the government for an article or commodity often causes the market to be an unfair indication of value. The special needs of the government create a demand that outruns the supply. The market, sensitive to the bullish pressure, responds with a spiraling of prices. The normal market price for the commodity becomes inflated. And so the market value of the commodity is enhanced by the special need which the government has for it. 15 That seems to have been the situation in the present case. For as we have seen the Court of Claims found that at the time of the requisition there was 'a rising market and a strong demand for tugs of all types' in and around the Port of New York, due in part at least to the shortage of tugs resulting from the government's requisitioning program. 16 It is not fair that the government be required to pay the enhanced price which its demand alone has created. That enhancement reflects elements of the value that was created by the urgency of its need for the article. It does not reflect what 'a willing buyer would pay in cash to a willing seller,' United States v. Miller, supra, 317 U.S. 374, 63 S.Ct. 280, 87 L.Ed. 336, 147 A.L.R. 55, in a fair market. It represents what can be exacted from the government whose demands in the emergency have created a sellers' market. In this situation, as in the case of land included in a proposed project of the government, the enhanced value reflects speculation as to what the government can be compelled to pay. That is a hold-up value, not a fair market value. That is a value which the government itself created and hence in fairness should not be required to pay. 17 Second. What we have said is in accord with our reading of the Report of the Advisory Board. Any enhancement of value must be deducted where it is due (a) 'to the Government's need of vessels which has necessitated the taking,' (b) 'to the previous taking of vessels of similar type,' or (c) 'to a prospective taking, reasonably probable. * * *' 18 The government's need of vessels which has necessitated the taking is its need for the precise ship taken, for the type or class of ship taken, or for ships which perform the same or related functions. The government's need for cargo vessels may affect indirectly the price level of many commodities. It may, for example affect the price of rowboats. But if the government takes a rowboat, the enhancement to be excluded is that which results from the government's activities in the particular market. It is the government's demand in that market that is the measure of the 'causes necessitating the taking or use' in this situation.7 19 We also agree with the Advisory Board that the enhancement which is excluded is that which arises before as well as after the declaration of the national emergency of May 27, 1941. Section 902(a) does not have any limiting factor so far as time is concerned. But we cannot say from this record whether any part of the $15,500 that the Court of Claims found to be the fair market value of the tug at the time of the taking includes any deductible enhancement in value. The Court of Claims found, to be sure, that there was no reasonable prospect of the condemnation of the tug and hence no enhancement in value due to that reason. Yet as we have seen, that is only one source of the enhancement in value which is deductible. There are no findings as to the effect on the market either of the previous taking, if any, of vessels of a similar type, or of the government's need of vessels necessitating the taking, as we have construed it. The only findings at all relevant to these factors are (1) that the increase in market values of 'nearly all vessels in and about the Port of New York' between September 8, 1939 and May 27, 1941 was due to 'the demand for vessels which followed the outbreak of war in Europe'; and (2) that such increase after May 27, 1941, and particularly after December 7, 1941, was due to 'the Government's need for vessels, which necessitated the taking of many vessels and to the great increase in shipping and in harbor traffic' during the war.8 These findings, however, are not sufficiently discriminating. They do not show the effect on the market of the government's need for this particular ship, for this type or class of vessel, or for ships which perform the same or related functions. The findings as to the rising market for tugs in and about the Port of New York tell us that some of that enhancement is due to the government's need. But we are left in the dark as to how much it may be. 20 In sum the findings do not tell us with sufficient particularity what was the effect of the government's activities in the particular market. Nor do we know whether increases in value of the vessel up to March 19, 1942, when the United States sold it to respondent were reflected in the sale price. If they were, the United States has received any enhancement in value that resulted from its need up to that date. 21 Finally, respondent argues that the actual basis for the increase in value of the vessel between March and October, 1942 (the period when respondent owned it) is due to causes other than the government's need. He points out that his total monetary expenditure on the vessel amounted to $8,574.78, of which $5,699.78 represented labor and materials. The latter amount, however, would have been substantially greater had not respondent himself performed part of the labor. Respondent plainly would be entitled to any increase in value due to that factor. Moreover, when respondent repaired and reconditioned the boat it was certificated as a towing steam vessel, a substantially new use for the tug. These two factors alone, plus the general price increase, are said to account for the $5,000 enhancement in value found by the Court of Claims. 22 We start with findings that tell us that some of the enhancement in market value is due to the government's need. It is sheer speculation to say that there are offsets against that enhancement which so reduce it as to render the construction of the Act an abstract question. Cf. Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 324, 56 S.Ct. 466, 472, 80 L.Ed. 688. The inadequacies in the findings are due to the erroneous construction of the Act by the Court of Claims. 23 Reversed. 24 Mr. Chief Justice VINSON dissents. 25 Mr. Justice FRANKFURTER, with whom Mr. Justice JACKSON and Mr. Justice BURTON join, dissenting. 26 We brought this case here on certiorari to the Court of Claims under 28 U.S.C. § 1255(1), 28 U.S.C.A. § 1255(1), because it seemed to present constitutional issues important in the award of compensation for vessels requisitioned by the Government during the recent national emergency under § 902(a) of the Merchant Marine Act of 1936.1 27 The following facts are the basis of the claim that the scope and validity of that section of the Merchant Marine Act call for adjudication. 28 The steam tug Guthrie was owned by the United States and operated by the Coast Guard continuously from 1895, when she was built, until 1941. In that year a special Board of Survey appointed to determine her condition found her in need of a new boiler and extensive repairs. In view of 'the present emergency and the great need of vessels,' the Board recommended that the necessary reconditioning be undertaken. The Coast Guard, however, directed that she be sold to the highest bidder. Respondent's was the highest bid received, and on March 19, 1942, the Guthrie was sold to him for $2,875. He proceeded to carry out the repairs that had been indicated by the Coast Guard survey, doing most of the work himself with the aid of a crew of four; the rest was done by a shipyard at Portland. His total expenditure on labor and materials was $5,699.78 but would have been substantially greater had he not been experienced in this type of work. 29 On April 20 and 21, the Department of Commerce licensed the Guthrie as a 'towing steam vessel' permitted to navigate in 'bays, sounds, rivers and harbors' and also authorized respondent to employ her in the coasting trade. Respondent then brought her under her own power to New York where she was rechristened the MacArthur and where she remained inactive until September, 1942, when the Navy surveyed her for use as a steam-heating plant for heating and pumping fuel oil from barges into combat vessels. On October 15, 1942, the War Shipping Administration requisitioned the MacArthur for the Navy and later offered respondent $9,000 as compensation for her. This figure was based upon the Coast Guard survey, the Navy survey, and the rules adopted by the Advisory Board on Just Compensation which had been appointed to clarify the measure of compensation payable by the War Shipping Administration nder § 902(a) of the Merchant Marine Act.2 Respondent protested against the award and, as he was entitled to do under § 902(d) of the Act, accepted 75% of it, and brought suit in the Court of Claims for the difference between the amount he had been offered and the amount he alleged to be due as just compensation. 30 The Court of Claims found that the market value of the MacArthur on the date of taking was $15,500. 75 F.Supp. 235. 110 Ct.Cl. 66. The Government does not dispute that there was a market nor that value on the market was as found, but insists that there should have been deducted from it an amount representing enhancement 'by the causes necessitating the taking' under the terms of § 902(a). It bases this contention on two findings of the Court of Claims. The first is that 'At the time of the requisition, there existed in and about the Port of New York a rising market and a strong demand for tugs of all types, including the MacArthur. This situation was due to the greatly increased traffic in the harbor during the period of war, and to the fact that the Government had been requisitioning tugs and to the resulting shortage of tugs.' 75 F.Supp. 235, 110 Ct.Cl. at pages 75-76. The second is that the market value of the MacArthur had been enhanced between September 8, 1939, when the President proclaimed a limited national emergency, and October 15, 1942, when she was requisitioned, by the sum of $5,000, part of which, after proclamation of a general national emergency on May 27, 1941, 'was due to the Government's need for vessels, which necessitated the taking of many vessels * * *.' Id. 75 F.Supp. 235, 110 Ct.Cl. at page 77. But the Court of Claims concluded that 'it is not possible to allocate to the (Government's need) a definite part of the increase in market value, but even if it were possible to do so, we do not think that the defendant is entitled to a deduction from market value on this account.' Id., 75 F.Supp. 235, 110 Ct.Cl. at page 78. 31 The Government's arguments in support of its claim that all or part of the $5,000 enhancement in market value of the MacArthur should be deducted in computing just compensation to respondent ultimately reduce to two. The first is that there should be deducted any speculative increase of value due to the probability of the taking. It is clear that such a deduction must be made where the increase is traceable to the probability that the Government would take the particular property for which compensation is sought. United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336, 147 A.L.R. 55. But the application of this principle is impossible here in the face of the Court of Claims' explicit finding that 'prior to the time that the defendant requisitioned the MacArthur there was no reasonable prospect that she would be requisitioned, and no part of the enhancement of her value was due to such a prospect.' It is arguable, however, that the rationale of the Miller case should be extended to property of a less unique character than land—property of a class any member of which would fulfill the taker's need more or less equally well. As to such property there may be speculative increase in value because of the dual expectation that some members of the class will be taken and that the taker may be forced to pay, when the time comes for the award of compensation, something more than what would have been market value had not speculation occurred. See McGovern v. City of New York, 229 U.S. 363, 372, 33 S.Ct. 876, 877, 57 L.Ed. 1228, 46 L.R.A.,N.S., 391. And this might be true even though it could not be said that it was probable that a particular member of the class—in this case a particular tug would be taken.3 32 But this is a question we do not need to pass on now because, in addition to the finding that it was not probable that the MacArthur would be taken, the record contains evidence of the most conclusive kind that a taking was improbable: the Government had got rid of the tug only seven months before the taking, with complete awareness that she was capable of being adequately reconditioned. Among those whose dealings in tugs established market value, therefore, whatever may have been the tendency of their activities to bring about speculative increase in the value of tugs generally, it must have seemed so unlikely that the Government would reverse itself and take the MacArthur back that the market value found by the Court of Claims for this particular tug could hardly have reflected enhancement due to speculation at the expense of the Government's need for her. It may be suggested, to be sure, that the need which prompted this reversal might have been anticipated by one shrewd enough to foresee a growing shortage of tugs more accurately than those responsible for the Government's decisions in these matters. But whatever might conceivably be the effect on the market of the operations of such persons, it would be an effect so far beyond the possibility of measurement that it would be futile in the extreme to remand for a finding on the point, especially when it is remembered that the MacArthur was requisitioned not for use as a tug but as a heating plant. 33 We must reject, therefore, speculation by purchasers of tugs at the expense of the Government's need as a factor contributing to the market value of the MacArthur at the time she was requisitioned. The only other way that has been suggested in which her market value could have been increased by the Government's need is as a result of the increase in demand presumably brought about by previous Government seizures of tugs during a period when, as the Court of Claims found, there was a shortage of tugs due to a great 'increase in shipping and harbor traffic.' In this indirect way, the Government's need can be regarded as a 'cause' of the increase in the MacArthur's market value. Because this need could be foreseen at least by the time of the declaration of limited national emergency on September 8, 1939, the Government argues that all enhancement in the value of vessels since that date should therefore be deducted from their market price in determining just compensation. In the alternative, it urges that there should be deducted that proportion of this increase which is allocable to the Government's intervention in the market. 34 Whether regarded as founded upon § 902(a) of the Merchant Marine Act or upon judicial principles of just compensation, both these contentions, in my judgment, must be rejected. When the Government first took out of commercial operation some of the tugs which had been thus employed, it could requisition them at a price uninfluenced by its own need. A subsequent increase in the market value, though precipitated by the shortage caused by the earlier taking, could be a direct result only of the tug operators' need for the remaining tugs, not of the Government's for those it had taken. Leaving enhancement attributable to speculation out of account, as the record obliges us to do, the Government could then requisition still more tugs at a market value at most no higher than the level at which the new price had settled. Unlike an increase due to speculation by buyers of tugs that awards for requisitioned tugs would exceed the price likely to be paid by commercial operators purchasing tugs for their own use, an increase due to shortage would affect the price to any purchaser and enhance value to any owner even though no further requisitions were anticipated and even though none were made. Exactly the same increase would result whether the shortage were induced by the expanded business of a commercial operator or by Government requisition. It simply is not true, therefore, that the enhanced price resulting from shortage is a price which the need necessitating the taking, as opposed to need of the tug operators, created. 35 The need of the tug operators, moreover, not merely for the tugs that had been taken, but for additional tugs, was in its turn only one factor in the complex which makes up demand in a period of high costs, high wages, shortages, and inflation. We speak, in referring to the interacting forces of such a period, of the 'inflationary spiral,' and although a requisition by the Government in the midst of this dynamic process undoubtedly has some effect in accelerating it, it is an effect which loses its ascertainable significance by being merged with countless other factors. Whatever may be the proper scope of the declaration in § 902(a) that the value of vessels taken during the national emergency shall not 'be deemed enhanced by the causes necessitating the taking or use,' the wartime economy itself cannot be regarded as such a cause. Even assuming that there may be other circumstances than those of gambling on the result o an award in which a connection between the taker's intervention in the market and an enhancement of price might be traced, on this record it would be asking for the impossible to insist on an attempt to trace one. The Government has advanced no basis for the undertaking; it points to no evidence already offered which would justify it and suggests none that it might have offered. Under the circumstances, we should not require the Court of Claims to embark upon so murky a sea of speculation. Cf. International Harvester Co. of America v. Commonwealth of Kentucky, 234 U.S. 216, 223, 224, 34 S.Ct. 853, 855-856, 58 L.Ed. 1284. 36 If what I have said appeals to common sense, market values which have been increased as the result of the interaction of supply and demand in a wartime economy cannot be rejected as the applicable measure of just compensation merely because the competition of the Government, regarded from the point of view of an exercise in tracing ultimate causes, may theoretically be deemed to have contributed to the increase. Nor is it to make a fetish of market value to affirm its selection as a standard in a case where no other standard that offers the possibility of observance has been put forward. The record rules out any increase due to speculation, the only other suggested form of enhancement attributable to the Government's need. Since it is our duty to avoid constitutional adjudication, see the concurring opinion of Mr. Justice Brandeis in Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 341, 346 et seq., 56 S.Ct. 466, 480, 482, 80 L.Ed. 688, and Rescue Army v. Municipal Court, 331 U.S. 549, 568 et seq., 67 S.Ct. 1409, 1419, 91 L.Ed. 1666, the decision below should be affirmed without reaching the constitutional issues raised by the Government's construction of § 902(a). 1 Section 902(a) provides: 'Whenever the President shall proclaim that the security of the national defense makes it advisable or during any national emergency declared by proclamation of the President, it shall be lawful for the Commission to requisition or purchase any vessel or other watercraft owned by citizens of the United States, or under construction within the United States, or for any period during such emergency, to requisition or charter the use of any such property. The termination of any emergency so declared shall be announced by a further proclamation by the President. When any such property or the use thereof is so requisitioned, the owner thereof shall be paid just compensation for the property taken or for the use of such property, but in no case shall the value of the property taken or used be deemed enhanced by the causes necessitating the taking or use. If any property is taken and used under authority of this section, but the ownership thereof is not required by the United States, such property shall be restored to the owner in a condition at least as good as when taken, less ordinary wear and tear, or the owner shall be paid an amount for reconditioning sufficient to place the property in such condition. The owner shall not be paid for any consequential damages arising from a taking or use of property under authority of this section.' (Italics added.) 2 The findings on these issues were as follows: 'At the time of the requisition, there existed in and about the Port of New York a rising market and a strong demand for tugs of all types, including the MacArthur. This situation was due to the greatly increased traffic in the harbor during the period of the war, to the fact that the Government had been requisitioning tugs and to the resulting shortage of tugs. Tugs were operated day and night in an effort to handle the increased business and, under those conditions, most tug owners were reluctant to sell. However, from August 1941 to February 1943, six tugboats were sold on the open market in or near the Port of New York. None of these sales involved a vessel closely comparable to the MacArthur in design, power, and equipment. * * *' 'Beginning on September 8, 1939, the date on which the President proclaimed the existence of a limited national emergency, and continuing up to the date that plaintiff's vessel was requisitioned, there was a general rise in the market values of nearly all vessels in and about the Port of New York. This increase in values between September 8, 1939 and May 27, 1941, the date on which the President proclaimed the existence of a general national emergency, was due to the demand for vessels which followed the outbreak of war in Europe. After May 27, 1941 and particularly after December 7, 1941, the date of the Japanese attack on Pearl Harbor, the rise in market values was due to the Government's need for vessels, which necessitated the taking of many vessels, and to the great increase in shipping and in harbor traffic which occurred during the period of the war. These conditions combined to create a demand for and a shortage of tugs. As a result, the market value of the MacArthur had been enhanced by the sum of $5,000.00 by October 15, 1942. 'Prior to the time the defendant requisitioned the MacArthur there was no reasonable prospect that she would be requisitioned, and no part of the enhancement in her value was due to such a prospect.' 3 See 3 C.F.R.Cum.Supp. 114; 3 C.F.R., 1939 Supp. 59. 4 22 Comp.Gen. 497, 608. 5 See Exec.Order 9387, Oct. 15, 1943, 8 Fed.Reg. 14105, 3 C.F.R.1943 Supp. 48—49. The Executive Order provided in part: 'The Board, in accordance with the applicable provisions of the Constitution and the laws of the United States, shall establish fair and e uitable standards, rules and formulae of general applicability for the guidance of the War Shipping Administration in determining the just compensation to be paid for all vessels requisitioned, purchased, chartered or insured by the Administration. The Board may prescribe such rules, regulations and procedures as it deems necessary or advisable in carrying out its functions. 'In determining the amount of just compensation which should be paid for each vessel, the War Shipping Administration will be guided by the general standards, rules and formulae established by the Board.' This Board was composed of Learned Hand, John J. Parker, and Joseph C. Hutcheson, Jr. 6 3 C.F.R.Cum.Supp. 234. 7 Whether there might be a different measure of those causes in other situations is a question we do not reach. 8 See note 2, supra. 1 'Whenever the President shall proclaim that the security of the national defense makes it advisable or during any national emergency declared by proclamation of the President, it shall be lawful for the Commission to requisition or purchase any vessel or other watercraft owned by citizens of the United States, or under construction within the United States, or for any period during such emergency, to requisition or charter the use of any such property. The termination of any emergency so declared shall be announced by a further proclamation by the President. When any such property or the use thereof is so requisitioned, the owner thereof shall be paid just compensation for the property taken or for the use of such property, but in no case shall the value of the property taken or used be deemed enhanced by the causes necessitating the taking or use. If any property is taken and used under authority of this section, but the ownership thereof is not required by the United States, such property shall be restored to the owner in a condition at least as good as when taken, less ordinary wear and tear, or the owner shall be paid an amount for reconditioning sufficient to place the property in such condition. The owner shall not be paid for any consequential damages arising from a taking or use of property under authority of this section.' 49 Stat. 2011, 2015, as amended, 46 U.S.C. § 1242, 46 U.S.C.A. § 1242. 2 The Advisory Board on Just Compensation, consisting of Judge Learned Hand, Judge John J. Parker, and Judge Joseph C. Hutcheson, Jr., was appointed under Exec.Order 9387, Oct. 15, 1943, 8 Fed.Reg. 14105, 3 C.F.R.1943 Supp. 48—49. The following is the most important of the rules adopted by the Board: 'Rule 4. From the value at the time of taking, there should be deducted any enhancement due, to the Government's need of vessels which has necessitated the taking, to the previous taking of vessels of similar type, or to a prospective taking, reasonably probable, whether such need, taking, or prospect, occurred before or after the declaration of the national emergency of May 27, 1941. Enhancement due to a general rise in prices or earnings, whenever occurring, should not be deducted. In the application of this rule neither the proclamation of limited emergency of September 8, 1939, nor the facts existing at that time, are in themselves of significance. The Board does not determine whether any enhancement after May 27, 1941, other than as enumerated above as deductible, should be excluded; since the Board is advised that the value of oceangoing vessels was higher on May 27, 1941, than at the time of taking, and that any enhancement since May 27, 1941, in vessels of other types, not deductible under the foregoing, is attributable to a general rise in prices or earnings, and should therefore not be deducted.' House Committee on the Merchant Marine and Fisheries Doc. No. 47, 78th Cong., 1st Sess. 3 The core of the problem emerged in the following colloquy at the hearing held before the Advisory Board on Just Compensation: 'Judge Hand: It comes to this, that a society which foresees a shortage, a consequent shortage in one kind of supply, must either proceed at once to seize, or must subject itself and society at large to the disadvantage which comes from the shortage. But when the shortage comes, it may not say 'So far, and no farther. We leave the property in your hands for use, but we are helpless to prevent your further exploitation of society by your special interest.' 'Is that your position? 'Mr. McInnis: I think, your Honor, that that is the logical implication of my argument. 'Judge Hand: It does seem to me, if it is all perfectly clearly known in advance, to put a society in a rather helpless position as against a small group that has control of all of one vital commodity. You can imagine cases where that would work a result that no one would support. You can imagine the destruction of a large part of food in a community where there was no immediate relief, and, as I understand your argument, they either have to take it now, or when they would find it more convenient to take it they should have to submit to the increase in value, however clearly the owners were advised at a given point, 'This marks the end of that kind of profit—scarcity profit.' 'Mr. McInnis: I think that is correct, Judge. But I would agree— 'Judge Hand (interposing): It might be that the Constitution protects that kind of profit. I won't say now.' 1 Report of Proceedings of the Advisory Board 134—135 (United States Maritime Commission, War Shipping Administration, mimeographed, 1943).

34

337 U.S. 369 69 S.Ct. 1120 93 L.Ed. 1419 COMMISSIONER OF INTERNAL REVENUEv.WODEHOUSE. No. 84. Argued Dec. 10-13, 1948. Decided June 13, 1949. Rehearing Denied Oct. 10, 1949. See 70 S.Ct. 31. Miss Melva M. Graney, Washington, D. C., for petitioner. Mr. Watson Washburn, New York City, for respondent. [Argument of Counsel from page 370 intentionally omitted] Mr. Justice BURTON delivered the opinion of the Court. 1 The question before us is whether certain sums received in 1938 and 1941, by the respondent, as a nonresident alien author not engaged in trade or business within the United States and not having an office or place of business therein, were required by the Revenue Acts of the United States to be included in his gross income for federal tax purposes. Each of these sums had been paid to him in advance and respectively for an exclusive serial or book right throughout the United States in relation to a specified original story written by him and ready to be copyrighted. The answer turns upon the meaning of 'gross income from sources within the United States' as that term was used, limited and defined in §§ 212(a), 211 and 119 of the Revenue Act of 1938, and the Internal Revenue Code, as amended in 1940 and 1941.1 For the reasons hereinafter stated, we hold that these sums each came within those kinds of gross income from sources within the United States that w re referred to in those Acts as 'rentals or royalties for the use of or for the privilege of using in the United States, * * * copyrights, * * * and other like property,'2 and that, accordingly, each of these seems was taxable under one or the other of those Acts. 2 The respondent, Pelham G. Wodehouse, at the times material to this case, was a British subject residing in France. He was a nonresident alien of the United States not engaged in trade or business within the United States and not having an office or place of business therein during either the taxable year 1938 or 1941. He was a writer of serials, plays, short stories and other literary works published in the United States in the Saturday Evening Post, Cosmopolitan Magazine and other periodicals. 3 February 22, 1938, the Curtis Publishing Company (here called Curtis) accepted for publication in the Saturday Evening Post the respondent's unpublished novel "The Silver Cow." The story had been submitted to Curtis by the respondent's literary agent, the Reynolds Agency, and, on that date, Curtis paid the agency $40,000 under an agreement reserving to Curtis the American serial rights in the story, including in such rights those in the United States, Canada and South America. The memorandum quoted in Appendix B, infra, 337 U.S. page 398, 69 S.Ct. page 1134, constituted the agreement. Also in 1938, the respondent received $5,000 from Doubleday, Doran & Company for the book rights in this story. The story was published serially in the Saturday Evening Post, July 9 to September 3, 1939. 4 Pursuant to a like agreement, the respondent received $40,000 from Curtis, December 13, 1938, for serial rights in and to his story "Uncle Fred in the Springtime." It was published serially in the Saturday Evening Post, April 22 to May 27, 1939. 5 July 23, 1941, Hearst's International Cosmopolitan Magazine, through the respondent's same agent, paid the respondent $2,000 for "all American and Canadian serial rights (which include all American and Canadian magazine, digest, periodical and newspaper publishing rights)" to the respondent's article entitled "My Years Behind Barbed Wire." The agreement appears in Appendix C, infra, 337 U.S. page 400, 69 S.Ct. page 1134. Apparently this story was published shortly thereafter. 6 August 12, 1941, Curtis, trough the same agent, paid the respondent $40,000 for the "North American (including Canadian) serial rights' to respondent's novel entitled 'Money in the Bank." The agreement was in the form used by Curtis in 1938.3 The evidence does not state that this story was published but it shows that Curtis, pursuant to its agreements, took out a United States copyright on each of the respective stories named in the foregoing agreements. After each story's serial publication, Curtis reassigned to the respondent, on the latter's demand, all rights in and to the story excepting those rights which the respondent expressly had agreed that Curtis was to retain. The respective sums were thus paid to the respondent, in advance and in full, for the serial or book rights which he had made available. For United States income tax purposes, the respondent's literary agent, or some other withholding agent, withheld from the respondent, or from his wife as his assignee, a part of each payment. 7 In 1944 the Commissi ner of Internal Revenue, petitioner herein, gave the respondent notice of tax deficiencies assessed against him for the taxable years 1923, 1924, 1938, 1940 and 1941. In these assessments, among other items, the Commissioner claimed deficiencies in the respondent's income tax payments based upon his above-described 1938 and 1941 receipts. The respondent, in a petition to the Tax Court for a redetermination of such deficiencies, not only contested the additional taxes assessed against him, which were based upon the full amounts of those receipts, but he asked also for the refund to him of the amounts which had been withheld, for income tax purposes, from each such payment. The Tax Court entered judgment against him for additional taxes for 1938, 1940 and 1941, in the respective amounts of $11,806.71, $8,080,83 and $1,854,85. In speaking of the taxes for 1940 and 1941, the Tax Court said: 8 "The first issue, found also in the year 1938, presents the question of the taxability of lump sum payments for serial rights to literary works. Counsel for the petitioner (Wodehouse, the respondent here) concedes that substantially the same issue was raised and decided in Sax Rohmer, 5 T.C. 183; aff(irmed 2 Cir.), 153 F.2d 61, certiorari denied 328 U.S. 862 (66 S.Ct. 1367, 90 L.Ed. 1632). 9 "In Sax Rohmer, supra, we held that the lump sum payments for serial rights were royalties and, as such, were taxable to the recipient. The arguments advanced in the cases at bar follow the same pattern as those appearing in the Sax Rohmer case, as presented to this Court and to the Circuit Court of Appeals. The petitioner's contentions were rejected in both courts and for the same reasons stated in the opinions therein, they are rejected here." 8 T.C. 637, 653. 10 As the respondent's taxes for 1938 and 1941 had been paid to the Collector of Internal Revenue at Baltimore, Maryland, his petition for review of the Tax Court's judgment for those years was filed in the United States Court of Appeals for the Fourth Circuit. The judgment against him was there reversed, 166 F.2d 986, one judge dissenting on the authority and reasoning of Rohmer v. Commissioner, 2 Cir., 153 F.2d 61. Because of the resulting conflict between the Circuits and also because comparable issues as to this respondent's taxes for 1940 were pending before the Court of Appeals for the Second Circuit, we granted certiorari. 335 U.S. 807, 69 S.Ct. 34.4 11 The petitioner contends that receipts of the type before us long have been recognized as rentals or royalties paid for the use of or for the privilege of using in the United States, patents, copyrights and other like property. Keeping in mind that, before 1936, such receipts were expressly subject to withholding as part of the taxable income of nonresident alien individuals, he contends that those receipts remained taxable and subject to withholding in 1938 and 1941, after the standards for taxation of such aliens had been made expressly coterminous with the standards for subjecting this part of their income to withholding procedures. 12 In opposition, the re pondent argues, first, that each sum he received was a payment made to him in return for his sale of a property interest in a copyright and not a payment to him of a royalty for rights granted by him under the protection of his copyright. Being the proceeds of a sale by him of such a property interest he concludes that those proceeds were not required to be included in his taxable gross income because the controlling Revenue Acts did not attempt to tax nonresident alien individuals, like himself, upon income from sales of property. Secondly, the respondent argues that, even if his receipts were to be treated as royalties, yet each was received in a single lump sum and not 'annually' or 'periodically,' and that, therefore, they did not come within his taxable gross income. 13 The petitioner replies that, in this case, we do not properly reach the fine questions of title, or of sales or copyright law, thus raised by the respondent as to the divisibility of a copyright or as to the sale of some interest in a copyright. The petitioner states that the issue here is one of statutory interpretation. It is confined primarily to the taxability of the respondent's receipts within the broad, rather than narrow, language of certain Revenue Acts. Attention must be focused on those Revenue Acts. If their terms made these receipts taxable because of the general nature of the transactions out of which the receipts arise, namely, payments for the use of or for the privilege of using copyrights, then it is those statutory definitions, properly read in the light of their context and of their legislative history, that must determine the taxability of the receipts. He argues that the language of the Revenue Acts does not condition the right of the United States to its revenue upon any fine point of property law but covers these receipts in any event. Treating the respondent's receipts simply as representing payments for the use of or the privilege of using copyrights the petitioner argues that they constituted income that was subject both to withholding and to taxation in 1938 and 1941. He claims finally that the respondent cannot escape taxation of such receipts merely by showing that each payment was received by him in a lump sum in advance for certain uses of a copyright, instead of in several payments to be made at intermediate dates during the life of the copyright. I. 14 Sums received by a nonresident alien individual for the use of a copyright in the United States constituted gross income taxable to him under the Revenue Act of 1938 and the Internal Revenue Code. 15 Under the income tax laws of the United States, sums received by a nonresident alien author not engaged in trade or business within the United States and not having an office or place of business therein long have been required to be included in his gross income for our federal tax purposes. Such receipts have been an appropriate and readily collectible subject of taxation. A review of the statutes, regulations, administrative practices and court decisions discloses this policy and, at least from a revenue standpoint, no reason has appeared for changing it. 16 Since the early days of our income tax levies, rentals and royalties paid for the use of or for the privilege of using in the United States, patents, copyrights and other like property have been taxed to nonresident aliens and for many years at least a part of the tax has been withheld at the source of the income. To exempt this type of income from taxation in 1938 or 1941, in the face of this long record of its taxation, would require a clearness and positiveness of legislative determination to change the established procedure that is entirely absent here. 17 The policy of this Court in this general field of statutory interpretation was stated in 1934 in a case which dealt with the taxation of a somewhat comparable form of income of a foreign corporation. In Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 55 S.Ct. 50, 51, 79 L.Ed. 211, the question presented was that f the proper interpretation to be given to § 217(a)(1) of the Revenue Act of 1926, c. 27, 44 Stat. 9, 30, analogous to § 119(a)(1) of the Revenue Act of 1938, 52 Stat. 503, now before us. Certain sums had received by a foreign corporation from the United States Government in the form of interest upon a refund of an overpayment by that corporation of its income taxes. This Court held that such interest, in turn, constituted taxable gross income derived by the foreign corporation from a source within the United States, because it amounted to interest upon an interest-bearing obligation of a resident of the United States within the meaning of the Act. This interpretation was adopted in opposition to the foreign corporation's argument that the payment should be exempted because it amounted to interest on one of the "obligations of the United States" and that interest on such an obligation was expressly exempted from taxation by § 213(b)(4) of the Revenue Act of 1926, analogous to § 22(b) (4) of the Revenue Act of 1938. This Court distinguished between the meaning of the word 'obligations' in the context of the different sections of the Act and stated the applicable general principles of statutory construction as follows: 18 "The general object of this act is to put money into the federal treasury; and there is manifest in the reach of its many provisions an intention on the part of Congress to bring about a generous attainment of that object by imposing a tax upon pretty much every sort of income subject to the federal power. Plainly, the payment in question constitutes income derived from a source within the United States; and the natural aim of Congress would be to reach it. In Irwin v. Gavit, 268 U.S. 161, 166, 45 S.Ct. 475, 476, 69 L.Ed. 897, this court, rejecting the contention that certain payments there involved did not constitute income, said: 'If these payments properly may be called income by the common understanding of that word and the statute has failed to hit them it has missed so much of the general purpose that it expresses at the start. Congress intended to use its power to the full extent. Eisner v. Macomber, 252 U.S. 189, 203, 40 S.Ct. 189 (191), 64 L.Ed. 521, 9 A.L.R. 1570.' Although Congress intended, as the court held in the Viscose case, supra (American Viscose Corp. v. Commissioner, 3 Cir., 56 F.2d 1033), to include interest on a tax refund made to a domestic corporation, we are asked to deny such intention in respect of a competing foreign corporation. But we see nothing in the relationship of a foreign corporation to the United States, or in any other circumstance called to our attention, which fairly shows that such a discrimination was within the contemplation of Congress. On the contrary, the natural conclusion is that, if any discrimination had been intended, it would have been made in favor of, and not against, the demestic corporation, which contributes in a much more substantial degree to the support of the people and government of the United States." Id., 293 U.S. at pages 89-90, 55 S.Ct. at page 52, 79 L.Ed. 211. And further: 19 "in the foregoing discussion, we have not been unmindful of the rule, frequently stated by this court, that taxing acts 'are not to be extended by implication beyond the clear import of the language used,' and that doubts are to be resolved against the government and in favor of the taxpayer. The rule is a salutary one, but it does not apply here. The intention of the lawmaker controls in the construction of taxing acts as it does in the construction of other statutes, and that intention is to be ascertained, not by taking the word or clause in question from its setting and viewing it apart, but by considering it in connection with the context, the general purposes of the statute in which it is found, the occasion and circumstances of its use, and other appropriate tests for the ascertainment of the legislative will. Compare Rein v. Lane, L.R. 2 Q.B. Cases 144, 151. The intention being thus disclosed, it is enough that the word or clause is reasonably susceptible of a meaning consonant therewith, whatever might be its meaning in another and different connection. We are not at liberty to reject the meaning so established and adopt another lying outside the intention of the Legislature, simply because the latter would release the taxpayer or bear less heavily against him. To do so would be not to resolve a doubt in his favor, but to say that the statute does not mean what it means." Id., 293 U.S. at pages 93-94, 55 S.Ct. page 54, 79 L.Ed. 211. 20 A. These receipts unquestionably would have been taxed to a nonresident alien individual if received by him under the Revenue Act of 1934. 21 The background and development of the particular provisions before us emphasize the congressional purpose to tax this type of income. They disclose the full familiarity of Congress with this general type of transaction. Throughout the history of our federal income taxes since the Sixteenth Amendment to our Constitution, the Revenue Acts have expressly subjected to taxation the income received by nonresident alien individuals from sources within the United States. For example, there is no doubt that the receipts here in question would have been taxable to the respondent if they had been received by him under the Revenue Act of 1934, c. 277, 48 Stat. 680 et seq., 26 U.S.C.A. Int.Rev.Acts, page 359 et seq., and the present issue resolves itself largely into a determination whether such receipts were relieved from taxation by the Revenue Act of 1936, c. 690, 49 Stat. 1648 et seq., 26 U.S.C.A Int.Rev.Acts, page 813 et seq., through certain changes in the income tax laws that were made by that Act and which were still in effect in 1938 and 1941. 22 Under the Revenue Act of 1934, the income of a nonresident alien individual was taxed at the same rates as was the income of a resident citizen (§§ 11 and 12) but his taxable gross income was limited wholly to that which he had received "from sources within the United States," § 211(a).5 Such sources were described in § 119 of that Act, and the material portions of that Section have remained unchanged ever since. They give their own definition of rentals and royalties. These have been quoted from above and they are set forth in full in Appendix A, infra, 337 U.S. page 395, 69 S.Ct. page 1132. The Act of 1934 thus sought to include as taxable gross income any income which a nonresident alien individual received as royalties for the privilege of using any copyrights in the United States and also sought to tax his income from the sale of any personal property which he had produced (in whole or in part) outside the United States but had sold within the United States. § 119(a)(4) and (e)(2). As a mechanism of collection, the Act also sought to withhold from nonresident alien individuals, at the source of payment, the entire normal tax of 4% computed upon numerous classifications of their income named in § 143(b).6 This language is important in this case. It expressly included certain forms of interest and also "rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, of any nonresident alien individual, * * *." (Emphasis added.) While royalties were not mentioned specifically in this statutory withholding clause, they had been expressly listed in the Regulations, since long before 1934, so that there was no doubt that they were to be subject to withholding as a matter of interpretation. It was equally clear that income derived from a sale in the United States, of either real or personal property, was not included, either expressly or by implication or interpretation, in the income subject to a withholding of the tax on it at the source of the income. The Regulations, since the Act of 1924 (U.S. Treas. Reg. 65, Art. 362 (1924)) to the present time, have contained decisive statements on these points. Such Regulations have been substantially identical wi h the following which appeared in Treasury Regulations 86, Article 143-2 (1934): 23 "Only fixed or determinable annual or periodical income is subject to withholding. The Act specifically includes in such income, interest, rent, salaries, wages, premiums, annuities, compensations, remunerations, and emoluments. But other kinds of income are included, as, for instance, royalties. 24 "* * * The income derived from the sale in the United States of property, whether real or personal, is not fixed or determinable annual or periodical income." (Emphasis added.) Apart from these provisions requiring the withholding of taxes at the source of the income, the Revenue Acts have contained other provisions, in similar language, calling for the reporting to the Commissioner of Internal Revenue of material information as to certain income which might be taxable. This language has received an interpretation which is related to and consistent with that here given to the provisions as to withholding taxes.7 25 These statutes and Regulations show that, under the Act of 1934, Congress sought to tax (and withhold all or part of the tax on) the income of a nonresident alien individual insofar as it was derived from payments for the use of or for the privilege of using copyrights in the United States. It also sought to tax (although it could not generally withhold the tax on) any gain which the taxpayer derived from the sale of personal property produced by him without the United States but sold within the United States. Accordingly, if the receipts now before us had been received by the respondent under the Act of 1934, they would have been taxable whether they were treated as payments in the nature of royalties for the use of the copyrights under § 119(a) or were treated as payments of a sale's price for certain interests in copyrights under § 119(e). The Regulations helpfully carried this analysis further. They showed that, while both forms of income were taxable, yet it was only the royalty payments (and not the sales' proceeds) that were subject to the withholding procedure. A Treasury Decision made in 1933, under the Revenue Acts extending from 1921 to 1928,8 and a decision of the Court of Appeals for the Second Circuit made in 1938, under the Revenue Act of 1928, c. 852, 45 Stat. 791, sustain the above conclusions. The latter case was that of Sabatini v. Commissioner, 2 Cir., 98 F.2d 753,9 later discussed and approved in Rohmer v. Commissioner, 2 Cir., 153 F.2d 61, 63. Incidentally, these opinions declared not only that the taxes in question were imposed upon the receipts as royalties but that it made no difference whether such royalties were each received in lump sums in full payment in advance, to cover the use of the respective copyrights throughout their statutory lives, or whether the royalties were received from time to time and in lesser sums. 26 B. The Revenue Act of 1936 preserved the taxability of the several kinds of income of nonresident alien individuals which had been the subject of withholding at their respective sources, including receipts in the nature of royalties for the use of copyrights in the United States. 27 The Revenue Act of 1936 did not change materially the statutory definition of gross income from sources within the United States under § 119. It did, however, amend § 211(a)10 materially in its description of the taxable income of nonresident alien individuals. These amendments (1) substituted a special flat rate of 10% for the general normal tax and surtax rates, (2) required this entire special tax, in the usual case, to be withheld at the source of the taxable income, (3) limited the taxability of the income of each nonresident alien individual to those kinds of income to which the withholding provisions also applied, and (4) (except for the addition of dividends) inserted verbatim, as a new statement of the types of taxable income of a nonresident alien individual (not engaged in trade or business within the United States and not having an office or place of business therein), the language that previously had been used to state the specific types of income to which the withholding procedure was to apply. See its § 143(b)11 paralleling its amended § 211(a). By thus restricting the income tax to those specific types of income to which the withholding procedure had previously applied, Congress automatically relieved nonresident alien individuals from the taxation of their income from certain sales of real or personal property, previously taxed. This Amendment, on the other hand, retained and increased the tax on the very kind of income that is before us. It also increased the portion of such income to be withheld at ts source to meet the new and higher flat rate of tax. 28 The legislative history of the Revenue Act of 1936 confirms the special meaning thus apparent on its face. It emphasizes the policy which expressly marked the enactment of this Act, including particularly these Amendments. The practical situation was that it had been difficult for United States tax officials to ascertain the taxable income (in the nature of capital gains) which had been derived from sales of property at a profit by nonresident alien individuals, or by foreign corporations, when the respective taxpayers were not engaged in trade or business within the United States and did not have an office or place of business therein. This difficulty was in contrast to the ease of computing and collecting a tax from certain other kinds of income, including payments for the use of patents and copyrights, from which the United States income taxes were being, wholly or partially, withheld at the source. The Congressional Committee Reports expressed a purpose of Congress to limit future taxes on nonresident alien individuals to those readily collectible.12 With a view evidently to securing substantially as much revenue as before, Congress thereupon applied a new flat rate of 10% to nonresident alien individuals and of 15% to foreign corporations, the entire amount of this flat rate of tax to be withheld and collected at the source of the income. The reports referred also to increases in stock transfer taxes which might result from thus removing the income tax from profits of nonresident alien individuals on their stock sales. Congress recognized a value and a convenience in thus turning to the accessible, fixed and determinable income of nonresident aliens. There is no doubt that these steps sought to increase or at least to maintain the existing volume of revenue.13 No suggestion appears that Congress intended or wished to relieve from taxation the readily accessible and long-established source of revenue to be found in the payments made to nonre ident aliens for the use of patents or copyrights in the United States. Much less was any suggestion made that lump sum advance payments of rentals or royalties should be exempted from taxation while at the same time smaller repeated payments of rentals or royalties would be taxed and collected at the source of the income. To have exempted these nonresident aliens from these readily collectible taxes derived from sources within the United States would have discriminated in their favor against resident citizens of the United States who would be required to pay their regular income tax on such income, if treated as royalties within the meaning of our gross income provisions, or at least to pay a tax upon them as capital gains, if treated as income from sales of capital within the meaning of our capital gains provisions. No such purpose to discriminate can be implied. 29 Accordingly, at the time in 1936 when these Amendments were being enacted into § 211(a), the provisions for taxing the gross income of nonresident alien individuals under the Revenue Act of 1934 already had been long and officially interpreted as covering receipts from royalties as expressly and broadly defined in § 119(a) and subjected to withholding at the source of income under § 143(b). The legislative history of the 1936 Amendments is, therefore, a refutation of any claim that Congress, at that time, was seeking to exempt such taxpayers from those appropriate and readily collectible items. On the other hand, that history shows that Congress was seeking to continue to tax, and even to increase the tax upon, those kinds of income which had been found to be readily withholdable at their respective sources. Accordingly, what Congress did was to incorporate the very language of the withholding provisions of § 143(b) into the language of the taxing § 211(a). The Regulations under § 143(b), quoted above substantially as being in effect since 1924, had already settled that royalties were included in § 143(b). The Treasury Bulletin also showed that lump sum payments made in advance for limited rights under copyrights were included in the "royalties" thus subject to withholding and taxation. The type of transactions and the kind of payments were thus identified. The broad language there used is entitled to be interpreted in accordance with its plain meaning and established usage. Therefore, after the 1936 Amendments, it became equally clear that these receipts in the nature of royalties which were previously withheld at their source were included in the sources of income specified in § 211(a) but that profits from sales of property were not included in the sources of income specified in § 211(a) any more than they had been under § 143(a). The decisions of the Court of Appeals of the Second Circuit in Sabatini v. Commissioner, supra, in 1938, in relation to the Revenue Act of 1928 and in Rohmer v. Commissioner, supra, in 1946, in relation to the Internal Revenue Code, as amended in 1940, reflected the same point of view. 30 None of these provisions of the Act of 1936 were changed by the Revenue Act of 1938, the Internal Revenue Code, or the 1940 or 1941 Amendments to that Code, except in relation to the size of the tax rates. The principal changes even in those rates were to provide higher taxes in the higher brackets, rather than to reduce the taxes on nonresident aliens.14 II. 31 The receipt of the respective amounts by the respondent in single lump sums as payments in full, in advance, for certain rights under the respective copyrights did not exempt those receipts from taxation. 32 Once it has been determined that the receipts of the respondent would have been required to be included in his gross income for federal income tax purposes if they had been received in annual payments, or from time to time, during the life of the respective copyrights, it becomes equally clear that the rece pt of those same sums by him in single lump sums as payments in full, in advance, for the same rights to be enjoyed throughout the entire life of the respective copyrights cannot, solely by reason of the consolidation of the payment into one sum, render it tax exempt. No Revenue Act can be interpreted to reach such a result in the absence of inescapably clear provisions to that effect. There are none such here. 33 The argument for the exemption was suggested by the presence in §§ 211(a) and 143(b) of the words "annual" and "periodical." If read apart from their text and legislative history and supplemented by the gratuitous insertion after them of the word "payments," they might support the limiting effect here argued for them. However, when taken in their context, and particularly in the light of the legislative history of those Acts, and the interpretation placed upon them by the Treasury Department and the lower courts, they have no such meaning. Those words are merely generally descriptive of the character of the gains, profits and income which arise out of such relationships as those which produce readily withholdable interest, rents, royalties and salaries, consisting wholly of income, especially in contrast to gains, profits and income in the nature of capital gains from profitable sales of real or personal property.15 34 In the instant case, each copyright which was to be obtained had its full, original life of 28 years to run after the advance payment was received by the author covering the use of or the privilege of using certain rights under it. Fixed and determinable income, from a tax standpoint, may be received either in annual or other payments without altering in the least the need or the reasons for taxing such income or for withholding a part of it at its source. One advance payment to cover the entire 28-year period of a copyright comes within the reason and reach of the Revenue Acts as well as, or even better than, two or more partial payments of the same sum. 35 Article 143-2 of Treasury Regulations 101, issued under the Revenue Act of 1938, provided: 36 "The income need not be paid annually if it is paid periodically; that is to say, from time to time, whether or not at regular intervals. That the length of time during which the payments are to be made may be increased or diminished in accordance with someone's will or with the happening of an event does not make the payments any the less determinable or periodical." 37 Substantially this liberal language in the Regulations has been used in this connection since 1918. (U.S. Treas. Reg. 45, Art. 362, (1918).) Single lump sum payments of royalties were held to be taxable under the Revenue Acts of 1921, 1924, 1926 and 1928, I.T. 2735, XII-2 Cum. Bull. 131 (1933); under the Revenue Act of 1928, Sabatini v. Commissioner, supra; and under the Internal Revenue Code, as amended in 1940, Rohmer v. Commissioner, supra. 38 For the foregoing reasons, we hold that the receipts in question were required to be included in the gross income of the respondent for federal income tax purposes. The judgment of the Court of Appeals accordingly is reversed and remanded for further proceedings consistent with this opinion. 39 Reversed and remanded. 40 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 41 APPENDIX A. 42 Material provisions of §§ 212(a), 211 and 119 of the Revenue Act of 1938 and the Internal Revenue Code: 43 'Sec. 212. Gross income 44 "(a) General rule.—In the case of a nonresident alien individual gross income includes only the gross income from sources within the United States." (Emphasis added.) 52 Stat. 528, and 53 Stat. 76, 26 U.S.C. § 212(a), 26 U.S.C.A. § 212(a). 45 "Sec. 211. Tax on nonresident alien individuals 46 "(a) No United States business or office. 47 "(1) General rule.—There shall be levied, collected, and paid for each taxable year, in lieu of the tax imposed by sections 11 and 12 (normal tax and surtax imposed generally upon individuals and applicable in the instant case, under paragraphs (a)(2) and (c), because the respondent's gross income for each taxable year exceeded the allowable maximum there specified), upon the amount received, by every nonresident alien individual not engaged in trade or business within the United States and not having an office or place of business therein, from sources within the United States as interest (except interest on deposits with persons carrying on the banking business), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, a tax of 10 per centum of such amount, * * *. 48 "(2) Aggregate More Than $21,600.—The tax imposed by paragraph (1) shall not apply to any individual if the aggregate amount received during the taxable year from the sources therein specified is more than $21,600. 49 "(c) No United States business or office and gross income of more than $21,600.—A nonresident alien individual not engaged in trade or business within the United States and not having an office or place of business therein who has a gross income for any taxable year of more than $21,600 from the sources specified in subsection (a)(1), shall be taxable without regard to the provisions of subsection (a)(1), except that— 50 "(1) The gross income shall include only income from the sources specified in subsection(a)(1); 51 "(2) The deductions (other than the so-called 'charitable deduction' provided in section 213(c)) shall be allowed only if and to the extent that they are properly allocable to the gross income from the sources specified in subsection (a)(1); 52 "(3) The aggregate of the normal tax and surtax under sections 11 and 12 shall, in no case, be less than 10 per centum of the gross income from the sources specified in subsection (a)(1); and * * *." (Emphasis added.) 52 Stat. 527-528. 53 The above provisions of §§ 212 and 211 were reenacted in the Internal Revenue Code, 53 Stat. 75-76. The tax rates were changed by the Revenue Act of 1940, c. 419, 54 Stat. 516-517 as follows: the surtaxes were increased generally in § 12(b), the flat rates were increased from 10% to 15% and the allowable maximum income subject to the flat rates was raised from $21,600 to $24,000 in § 211(a) and (c), 54 Stat. 518. The Revenue Act of 1941, c. 412, 55 Stat. 687, 688, again increased the surtaxes in § 12(b), increased the flat rates from 15% to 27 1/2% and decreased the allowable maximum income subject to the flat rates from $24,000 to $23,000 in § 211(a) and (c), 55 Stat. 694. Since then, the normal tax and surtax rates have been increased still further, the flat rate applicable to nonresident alien individuals has been increased from 27 1/2% to 30% and the allowable maximum income to which the flat rates apply has been reduced to $15,400. 26 U.S.C. § 211(a) and (c), 26 U.S.C.A. § 211(a, c). 54 "Sec. 119. Income from sources within United States. 55 "(a) Gross income from sources in United States.—The following items of gross income shall be treated as income from sources within the United States: 56 "(1) Interest.—* * * 57 "(2) Dividends.—* * * 58 "(3) Personal services.—* * * 59 "(4) Rentals and royalties—Rentals or royalties from property located in the United States or from any interest in such property, including rentals or royalties for the use of or for the privilege of using in the United States, patents, copyrights, secret processes and formulas, good will, trade-marks, trade brands, franchises, and other like property; and 60 "(5) Sale of real property.—Gains, profits, and income from the sale of real property located in the United States. SU"(6) Sale of personal property.—For gains, profits, and income from the sale of personal property, see subsection (e). 61 "(b) Net income from sources in United States.—From the items of gross income specified in subsection (a) of this section there shall be deducted the expenses, losses, and other deductions properly apportioned or allocated thereto and a ratable part of any expenses, losses, or other deductions which can not definitely be allocated to some item or class of gross income. The remainder, if any, shall be included in full as net income from sources within the United States. 62 "(c) Gross income from sources without United States.—The following items of gross income shall be treated as income from sources without the United States: 63 "(1) Interest other than that derived from sources within the United States as provided in subsection (a)(1) of this section; 64 "(2) Dividends other than those derived from sources within the United States as provided in subsection (a)(2) of this section; 65 "(3) Compensation for labor or personal services performed without the United States; 66 "(4) Rentals or royalties from property located without the United States or from any interest in such property, including rentals or royalties for the use of or for the privilege of using without the United States, patents, copyrights, secret processes and formulas, good will, trade-marks, trade brands, franchises, and other like properties; and 67 "(5) Gains, profits, and income from the sale of real property located without the United States. 68 "(d) Net income from sources without United States.—* * * 69 "(e) Income from sources partly within and partly without United States.—* * * Gains, profits, and income from— 70 "(1) transportation or other services rendered partly within and partly without the United States, or 71 "(2) from the sale of personal property produced (in whole or in part) by the taxpayer within and sold without the United States, or produced (in whole or in part) by the taxpayer without and sold within the United States, 72 shall be treated as derived partly from sources within and partly from sources without the United States. Gains, profits and income derived from the purchase of personal property within and its sale without the United States or from the purchase of personal property without and its sale within the United States, shall be treated as derived entirely from sources within the country in which sold, * * *. 73 "(f) Definitions—* * *.' (Emphasis added.) 52 Stat. 503-506, 53 Stat. 53-55, 26 U.S.C. § 119, 26 U.S.C.A. § 119. 74 APPENDIX B. 75 "The Curtis Publishing Company Independence Square Philadelphia February 22, 1938 76 'Paul R. Reynolds, & Son 599 Fifth Avenue New York City We inclose herewith 77 our check Forty Thousand Dollars 78 in payment for Serial: The Silver Cow By P. G. Wodehouse $40,000.00 79 "Important 80 "This check is offered and accepted with the understanding that The Curtis Publishing Company buys all rights in and of all stories and special articles appearing in its publications and with the further understanding that every number of these publications in which any portion thereof shall appear shall be copyrighted at its expense. After publication in a Curtis periodical is completed it agrees to reassign to the author on demand all rights, except American (including Canadian and South American) serial rights. "Motion Picture Rights 81 "Please note that our reservation of serial rights (which includes publication in one installment) includes new story versions based on motion-picture or dramatic scenarios of short stories and serials that have appeared in Curtis publications, and that we permit the use of such versions only under the following conditions: Such synopsis, scenario, or new story version shall not exceed fifteen hundred (1500) words in length when based on a short story appearing complete in one issue, or five thousand (5000) words when based on a serial appearing in two or more issues, o a series of not less than three connected short stories from which a single picture is to be made. Such synopsis shall appear only in circular matter, press books, press notices, trade journals and in magazines devoted exclusively to dramatic or motion-picture matter, and shall in no event appear as having been written by the author. When selling motion-picture or dramatic rights of matter, you must notify the producer to this effect, so that there may be no misunderstanding on his part and no infringement of our rights. 82 "The Curtis Publishing Company" 83 Respondent's exhibit containing the foregoing memorandum agreement also included the statement rendered and the checks issued by the agent to the respondent and to the respondent's wife for $17,100 each, including the following: 84 "March 3, 1938 85 "P. G. Wodehouse 86 in account with Paul R. Reynolds & Son 87 "Received from Saturday Evening Post for All American, Canadian & South American serial rights to No issue is before us relating to the computation of the amount withheld or the division of the payments between the respondent and his wife. In the statements rendered by the agent as to the payments received for serial rights to "Uncle Fred in the Springtime," the initial amount withheld was 10% of the full payment without deduction of the agent's commission. 88 APPENDIX C. 89 "Hearst's International Cosmopolitan Hearst Magazine Building Fifty-seventh Street and Eighth Avenue New York City July 23, 1941 July 24 1941 90 "Mr. Paul R. Reynolds, Sr. 91 "599 Fifth Avenue 92 "New York City 93 "Dear Mr. Reynolds: 94 "This will confirm our purchase of the article entitled My Year Behind Barbed Wire by P. G. Wodehouse for Two Thousand Dollars ($2,000.00). We are buying all American and Canadian serial rights (which include all American and Canadian magazine, digest, periodical and newspaper publishing rights). 95 "It is understood and agreed that the author, and you as his agent, will not use or permit the use of this article or any part or parts thereof (1) in any manner or for any purpose until thirty (30) days after magazine publication and (2) in connection with or as the basis for any motion and/or talking picture(s), radio broadcast(s), television, dramatic production(s) or public performance(s) throughout the world unless the words 'Based on (or taken from) literary material originally published in Cosmopolitan' immediately precede or follow or otherwise accompany the title of any and all such motion and/or talking pictures, radio broadcasts, telecasts, dramatic productions or public performances. 96 "Your signature hereon will constitute an agreement between us. 97 "Sincerely yours, 98 "Frances Whiting Frances Whiting 99 "Accepted: 100 Date: .......... 101 "I am accepting the above letter on the condition that publication of this article can be released in England simultaneously with publication in Cosmopolitan Magazine (despite the wording of (1) in the second paragraph); 102 with the further understanding that Cosmopolitan will permit no digest or newspaper publication of this article without the consent of the author or his agent in writing; and with the further condition that we receive payment not later than September 1, 1941." (Emphasis added.) 103 Mr. Justice FRANKFURTER, with whom Mr. Justice MURPHY and Mr. Justice JACKSON join, dissenting. 104 In the exercise of its power "To promote the Progress of Science and useful Arts," Congress, by granting copyrights, has created valuable property rights. See American Tobacco Co. v. Werckmeister, 207 U.S. 284, 28 S.Ct. 72, 52 L.Ed. 208, 12 Ann.Cas. 595; White-Smith Music Pub. Co. v. Apollo Co., 209 U.S. 1, 18, 19, 28 S.Ct. 319, 323, 52 L.Ed. 655, 14 Ann.Cas. 628. Because of a conflict between two Circuits we must now for the first time pass on the amenability to our revenue law of proceeds derived from the transfer of some of these interests. A ruling of the Treasury and a supporting decision of the Court of Appeals for the Second Circuit have made taxability turn on the notion that a copyright is indivisible. As a corollary it was assumed that a transfer of less than all the rights conferred by § 1 of the Copyright Law1 makes the transaction, regardless of the intent of the parties, a "mere license." On that ground the Government has here pressed its claim of taxability. The Court of Appeals for the Fourth Circuit has rejected the notion of indivisibility and consequently found lump-sum payments by a purchaser of the exclusive serial publication rights not to be within § 211(a)(1)(A) of the Internal Revenue Code, 26 U.S.C.A. § 211(a)(1)(A). By the plain implication of its silence regarding the basis of the Government's claim and of the decisions that have heretofore sustained it, this Court likewise rejects the notion of indivisibility while clinging to a conclusion hitherto entirely derived from it. 105 The case calls for inquiry into the scheme of taxation of American income of alien copyright holders as well as review of administrative and judicial treatment of such income. To put this discussion in the perspective of concreteness, however, the facts out of which the controversy arises should first be stated. The transaction which produced the income found taxable by the Commissioner for the year 1941 is typical of the other transactions that yielded the proceeds claimed to be covered by § 211(a)(1)(A) for the various tax years here involved.2 106 Wodehouse, the writer of popular stories and novels, a nonresident alien and "not engaged in trade or business within the United States," transferred, on August 12, 1941, through his American literary agent, to the Curtis Publishing Company for $40,000 "all rights in and of all stories and special articles appearing in its publications' of a certain novel, entitled, 'Money in the Bank." The contract provided that after publication in a Curtis magazine, Curtis was to reassign to Wodehouse "on demand all rights, except North American (including Canadian) serial rights." The documents involved in each of the various transactions made clear beyond question that Curtis, as buyer, intended to secure, if legally possible, an absolute, exclusive, and irrevocable transfer of the serial rights for all of North America, including Canada, and that Wodehouse, as transferor, intended to transfer, with no desire to retain any control whatsoever, all the North American serial rights of the novel. Indeed, to assure Curtis unqualified control, Wodehouse agreed to exercise other rights in a way to assure Curtis full protection and enjoyment in the serial publication rights.3 107 The Tax Court never questioned that these transactions were intended to be absolute transfers. Instead, it relied on Sax Rohmer, 5 T.C. 183, affirmed 2 Cir., 153 F.2d 61, which had held that an assignment of less than substantially all of the rights conferred by a copyright was necessarily only a license, and therefore that the proceeds received had to be regarded as for the use, rather than the sale, of the copyright. 8 T.C. 637. The Court of Appeals for the Fourth Circuit, upon full consideration of the Rohmer case, rejected its notion that there cannot be a sale of less than the whole, and, finding no barrier to the law's recognition of the true nature of the transaction, namely irrevocable transfers of an interest in personal property, reversed the Tax Court. 4 Cir., 166 F.2d 986 (one judge dissenting). 108 This Court now reverses the Court of Appeals without facing the question which the Treasury, the Tax Court, and the two Courts of Appeals deemed controlling on each occasion when the problem was presented. Instead, the Court appears to be guided, in however low a key that consideration is pitched, in construing the applicable provisions of the Internal Revenue Code by the urgent need for revenue. To let this need determine judicial construction of the Internal Revenue Code would largely dispense with explicitness and technical precision in revenue measures. 'Long prior practice' is invoked to support the fiscal considerations. This reliance is illusory. It completely ignores that the practice of which we have been advised is tenuous and, in any event, rests solely on the notion of the indivisibility of copyrights. To derive the existence of a practice from a single pronouncement by the Treasury, constituting not the formulation of a fiscal policy but expressing a metaphysical view of copyright law not adopted by this Court, gives a very loose meaning to the word 'practice.' 109 1. The Commissioner here determined a deficiency and the Tax Court sustained the deficiency under § 211(c)(1).4 That section deals with gross incomes of more than $24,000 received by nonresident aliens 'not engaged in trade or business within the United States.' 26 U.S.C. § 211(c)(1) (1941), 26 U.S.C.A. § 211(c)(1). For the sources of taxable gross income it refers to § 211(a)(1) (A), which specifically deals with the taxation of nonresident aliens like Wodehouse.5 The authority under which the tax was here levied provides: 'There shall be levied, collected, and paid (a tax on) * * * the amount received * * * from sources within the United States as * * * other fixed or determinable annual or periodical gains, profits, and income * * *.' 26 U.S.C. § 211(a)(1)(A), 26 U.S.C.A. § 211(a)(1). 110 2. The Court draws on § 119(a)(4) to support the tax.6 But proceeds within § 119(a) cannot be considered within § 211(a)(1)(A) unless the definition of § 211(a)(1)(A) is also satisfied, that is, unless the proceeds are 'fixed or determinable annual or periodical income.' Cf. U.S. Treas. Reg. 111, § 29.143-2. The subsection of § 119(a) serve merely to define what proceeds are to be deemed localized in the United States for tax purposes; they settle only the geographic question; § 119(a) is not a tax-imposing provision; other sections of the Code serve that function. 111 3. An analysis of the relevant provisions, in light of the changes made in 1936, makes this perfectly clear. Until 1936, the tax-imposing provisions were coterminous with the provisions of § 119(a) in defining the taxable gross income of a nonresident alien. This was so because taxability was limited only by § 211(a) of the Revenue Act of 1934 which provided that "In the case of a nonresident alien individual gross income includes only the gross income from sources within the United States." 48 Stat. 735. Supplement H of the Revenue Act of 1934 provided for deductions and credits, §§ 212-215, 48 Stat. 736-737, but there was no other provision further defining or limiting the type of receipts to be included in gross income. See 48 Stat. 735-737, 684. Thus, whatever was gross income from a source within the United States was taxed. By the Revenue Act of 1936, Congress changed the scheme of taxing nonresident aliens. 49 Stat. 1714; see 8 Mertens, The Law of Federal Income Taxation, § 45.16, et seq. (1942). For those who have a place of business in the United States it retained the system of taxing all proceeds from sources within the United States. Revenue Act of 1936, § 211(b), 49 Stat. 1714. As to such aliens the provisions of § 119 continued to determine what receipts were to be included. And that has remained the law. 26 U.S.C. § 211(b), 26 U.S.C.A. § 211(b). But as to those who are "not engaged in trade or business within the United States," the only type of proceeds to be taxed were those which were attributable to sources within the United States but only if there were "fixed or determinable annual or periodical gains, profits, and income." Such has remained the law and controls this case. Compare 26 U.S.C. § 211(a)(1)(A), 26 U.S.C.A. § 211(a)(1)(A), the applicable provision when the nonresident alien is not engaged in trade or business within the United States, with 26 U.S.C. § 211(b), 26 U.S.C.A. § 211(b), the section applicable when the nonresident alien has a place of business in the United States. 112 The specifically defined receipts—fixed or determinable annual or periodical gains, profits, or income—are not words giving rise to an exemption, and as such to be strictly construed. They are the controlling basis for taxation. To be taxable under § 211(a)(1)(A) the proceeds must be from sources within the United States, as set forth in § 119(a), but also of the nature defined in § 211(a)(1)(A). See 54 Yale L.J. 879, 881-882 (1945); 48 Col.L.Rev. 967 (1948); cf. U.S. Treas. Reg. 111, § 29.14 -2. Since the reach of § 211(a)(1)(A) does not include the proceeds from a sale, receipts from a sale are not taxable even though such proceeds are from a source within the United States and, as such, are listed in § 119(a)(5)-(6). The Regulations have made this explicit. U.S. Treas. Reg. 111, §§ 29.211-7, 29.143-2; see also S. Rep. No. 2156, 74th Cong., 2d Sess., p. 21 (1936); H.R. Rep. No. 2475, 74th Cong., 2d Sess., pp. 9-10 (1936). 113 The changes made in 1936 in the method of taxing income of a nonresident alien "not engaged in trade or business within the United States" make the taxing provisions coterminous, not with § 119(a), but with § 143(b), the section providing for withholding taxes at the source. Section 143(b) emphasizes that proceeds within § 119(a) do not come within the scope of § 143(b) unless the additional qualification contained in § 143(b) is also met. Section 143(b) provides that the tax should be withheld in come which is "fixed or determinable annual or periodical gains, profits, and income (but only to the extent that any of the above items constitutes gross income from sources within the United States) * * *." 26 U.S.C. § 143(b), 26 U.S.C.A. § 143(b). Here again, since "the income derived from the sale in the United States of property, whether, real or personal, is not fixed or determinable annual or periodical income," it is not included. U.S. Treas. Reg. 111, §§ 29.143-2. Only by not observing the requirement that the proceeds must not only be from a source in the United States but also "annual or periodical" to the subject either to withholding under § 143(b), or to taxation under § 211(a)(1)(A), can it be said that proceeds which prior to 1936 were held to be under § 119(a)(4) are ipso facto within § 211(a)(1)(A) after 1936 regardless of the nature of the revenue. 114 Therefore, inquiry which seeks to discover prior practice as an aid to construction should properly address itself to whether such proceeds were withheld under § 143(b) before 1936. Inquiry as to § 119(a) is completely irrelevant because it is clear that before 1936 many items were included in § 119(a) which were not withheld under § 143(b). Since 1936 the only proceeds which are taxed to a nonresident alien not engaged in a trade or business in the United States are those which are "fixed or determinable annual or periodical gains, profits, and income," which is the only type of proceeds on which taxes were withheld at the source before as well as after 1936. Therefore Treasury practice regarding the withholding requirement prior to the 1936 legislation would be relevant. There is a total absence of any showing that the Treasury before 1936 regarded such proceeds subject to withholding under § 143(b). And in the analogous situation of lump-sum payments for the absolute transfer of some but not all of the exclusive rights conferred by the patent law, courts have held such proceeds not subject to withholding under § 143(b). General Aniline & Film Corp. v. Commissioner, 2 Cir., 139 F.2d 759; cf. Commissioner of Internal Revenue v. Celanese Corp., 78 U.S.App.D.C. 292, 140 F.2d 339. 115 The Regulations, to be sure, give "royalties" as an example of proceeds which are within the phrase "fixed or determinable annual or periodical gains, profits, and income." See U.S. Treas. Reg. 111, § 29.211-7. But proceeds sought to be brought within the term "royalties" must be of a nature which justifies that classification. Royalties are within the section only because they meet the above description. It completely ignores the intrinsic character of "royalties," and therefore the basis of including them in the larger category of "fixed or determinable annual or periodical gains, profits, and income," to infer that proceeds which do not meet that description but result from the use of another method of realizing economic gain from a property right that of sale rather than a license producing a recurring income are also "royalties." See 48 Col.L.Rev. 967, 969 (1948). By such reasoning pr ceeds from the sale of a house would also be within § 211(a)(1)(A) because another way that the owner could have realized gain on the property would have been to have leased it over its lifetime.7 116 Free judicial rendering of needlessly imprecise legislation is sufficiently undesirable in that it encourages Congress to be indifferent to the duty of giving laws attainable definiteness. Here was are dealing with legislation that is precise. Yet the Court chooses not to give it effect and it does so on the basis of fiscal considerations which Congress, by what it enacted, chose not to write into law. 117 It must be remembered that the problem here is not to determine what is income in either a constitutional or an economic sense. The proceeds from the sale of a house over and above its cost to the seller are as much income as is a judge's salary. Nor is the problem one of determining whether something which is usually regarded as income is to escape a tax because the parties by agreement act in such a way as to cause the proceeds to be received in a different manner. Cf. Lyeth v. Hoey, 305 U.S. 188, 59 S.Ct. 155, 83 L.Ed. 119, 119 A.L.R. 410. There is no suggestion that the transaction as it appears on the surface was not the transaction in truth. The fact that the incidences of income taxation may have been taken into account by arranging matters one way rather than another so long as the way chosen was the way the law allows, does not make a transaction something else than it truly is—it does not turn a sale into a license. Helvering v. Gregory, 2 Cir., 69 F.2d 809, 810. Therefore, the principle of tax evasion is irrelevant to the disposition of this case, except on the assumption that Congress itself evaded its own tax purposes and that the Court must close what Congress left open. It is taking too much liberty even with tax provisions to read out a defining clause that Congress has written in merely because Congress permitted desirable revenue to escape the tax collector's net. The only judicial problem is whether the proceeds constitute a type of income which Congress has designated as taxable. That type must have the characteristic of being "fixed or determinable annual or periodical gains, profits, and income." A lump-sum payment for an exclusive property right, transferable and transferred by the taxpayer, simply does not meet that qualification. Unless there is something inherent in the copyright law to prevent it, such a transaction is the familiar "sale of personal property." U.S. Treas. Reg. 111, § 29.211-7. Surely it is a sale of a capital asset. See Learned Hand, J., in Goldsmith v. Commissioner, 2 Cir., 143 F.2d 466, 467. As such it is not subject to the tax. The legislative history leaves no doubt on this point.8 118 4. So far it has been assumed that these proceeds would be within § 119(a) (4). But neither this Court nor Congress has ever said so; indeed no court other than the Court of Appeals for the Second Circuit, and the Tax Court (but only after its contrary determination was reversed by the Court of Appeals for the Second Circuit) has said so. But it is urged that a 'long prior practice' of including under § 119(a)(4) proceeds received as lumpsum payments for the absolute transfer of some but not all of the rights conferred by the copyright law, and therefore taxing them to nonresident aliens under the prior statute, prevents this Court from applying § 211(a)(1)(A) according to the fair meaning of its own terms. It is suggested that no matter what Congress has written on the statute books it is to be assumed that Congress would not give up a source of revenue it had once tapped. This suggestion is made despite the fact that Congress said that it was changing the method of taxing the income of nonresident aliens and that it also said that certain items, previously taxed, would now be exempt. S.Rep.No.2156, 74th Cong., 2d Sess., pp. 9-10 (1936); H.R.Rep.No.2475, 71st Cong.2d Sess., p. 21 (1936). What is this long prior practice that has encrusted the phrase, "royalties for the use of the privilege of using in the United States, patents, copyrights * * * and other like property," with a meaning that contradicts its own terms not otherwise defined by Congress, yet precludes this Court from construing it according to the obvious purport of familiar words? 119 Section 119(a)(4), or a provision with similar phrasing, has been part of the Revenue Laws since 1921. See Revenue Act of 1921, § 217(a)(4), 42 Stat. 244. Soon after its enactment the Bureau ruled that receipts from the absolute transfer by a nonresident alien of the rights to serial publication in the United States of certain literary works were not derived from a source in the United States. The reason given was that the transaction did not constitute a license for use, but a sale. O.D. 988, 5 Cum.Bull. 117 (1921); see also I.T. 2169, IV-1 Cum.Bull. 13 (1925) (sale of motion picture right to play deemed a sale of a capital asset). The ruling prevailed through the subsequent reenactment of the phrasing in § 119(a)(4) in 1924, 1926, 1928, and 1932, see 43 Stat. 273, 44 Stat. 30, 45 Stat. 826, 827, 47 Stat. 208, 209. In 1933 the Bureau made a contrary ruling which expressly revoked the one made in 1921. But the facts on which the Bureau took this action are important. 120 The taxpayer had received the income in question pursuant to contracts with a number of publishers and producers under which he had granted serial rights in books already written, reserving a "stipulated royalty per copy sold." The Bureau characterized all but one of these contracts as requiring "stipulated sums * * * to be paid him as royalties." Moreover, in some of these contracts yearly licenses were granted, renewable at the taxpayer's option, with stipulated royalties per copy. In one contract a company was granted first American and Canadian serial rights in the taxpayer's exclusive output of both long and short stories for which the company was to pay a stipulated sum of money, and in another contract the taxpayer granted motion-picture rights throughout the world, the consideration to be paid in installments. The Bureau ruled that these proceeds were within the phrase "* * * royalties from * * * (or) for the use of or for the privilege of using in the United States * * * copyrights * * *." 26 U.S.C. § 119(a)(4), 26 U.S.C.A. § 119(a)(4). 121 The reasoning on which this conclusion was based deserves attention.9 This is the crux of it: 122 "The taxpayer in these contracts granted the publishers and producers licenses to use in particular ways his literary property and his copyright therein, and exacted from them certain payments for that use. These were not, and could not be, contracts of sales; they were in fact contracts of license, and the payments for such licenses constituted rentals or royalties subject to tax as such. * * * 123 "* * * Since the grant by the taxpayer in each instance is so clearly the grant of a particular right in all the rights constituting the taxpayer's literary property and copyright, the conclusion is obvious that the grant is a license and not a sale. 124 "In Office Decision 988, supra, a grant of all rights of serial publications in the United States in certain literary works was through error said to be a sale. Such a grant could only be a license. Office Decision 988 is accordingly revoked." I.T. 2735, XII-2, Cum.Bull. 131, 135 (1933). 125 Thus it is seen that on the Bureau's earlier construction that the Copyright Law permitted a sale, such proceeds were excluded. O.D. 988, 5 Cum.Bull. 117 (1921). After twelve years the Bureau decided that, as a matter of Copyright Law, and not by way of formulating a fiscal policy, there could be no sale of serial rights, and that such a transaction had to be treated as a license, periodically producing income. Plainly the Bureau was not interpreting tax law but copyright law. Deference no doubt is due to an administrative body's interpretation of law dealing with its specialty—particularly to interpretations by those whose task it is to administer the Revenue Laws. But the Bureau's expertness does not extend to the Copyright Law. Such matters do not involve the subtleties of tax concepts. The determination rather is like that of a question of common law, and such questions have never been thought to be of a the tax provisions pertaining to nonresident given to the administrative view. Cf. Bingham's Trust v. Commissioner, 325 U.S. 365, 377, 381, 65 S.Ct. 1232, 1238, 1240, 89 L.Ed. 1670, 163 A.L.R. 1175. Under these circumstances the Bureau's determination has little weight, and certainly does not bar this Court from properly construing the Copyright Law, especially where Congress had thoroughly overhauled the tax provisions pertaining to nonresident aliens less than three years after the Bureau ruling was made. As one swallow does not make a summer, this one ruling hardly establishes a practice, and certainly does not disclose a consistency which deserves to be called 'long.' 126 Balanced against this one Bureau decision, such as it is, is the significant fact that at the crucial time—in 1936, when Congress devised the present scheme of taxing non-resident aliens a more authoritative decision was explicitly to the contrary. This was the holding of the Board of Tax Appeals in Refael Sabatini, 32 B.T.A. 705.10 In the Sabatini case the Board held that the lump-sum payments received for exclusive orld motion-picture rights were not within § 119(a)(4). About such proceeds it said: 127 "The situation respecting the granting of motion picture rights is quite different from the other rights above discussed. In none of the motion picture contracts did petitioner obtain any income from the reproduction and sale or other use of his writings in the United States as in the case of the Houghton Mifflin Co. and Wagner contracts. Here the granting of rights was made in consideration of a lump sum. The sale of these rights took place in England (citing a case), and there was no subsequent income in the nature of rents or royalties from sources within the United States. We are accordingly of the opinion that the lump sums received by petitioner for the motion picture rights do not come within the statutory definition of income from sources within the United States and are not taxable income." Rafael Sabatini, 1935, 32 B.T.A. 705, 712-713, reversed on this point, 2 Cir., 1938, 98 F.2d 753, 755.11 128 Thus at the time of the adoption of the present § 211(a)(1)(A) this was the authoritative administrative ruling as to § 119(a)(4). It is not suggested that knowledge of this ruling must be attributed to Congress but this ruling refutes the assumption that there was a settled practice the other way. To the extent that it could be considered settled, it was contrary to the Court's account of it. Finally it shows at least that what administrative practice there was could not be considered settled. 129 After the Board was reversed in the Sabatini case it of course followed the decision of the Court of Appeals. The passage of the Internal Revenue Code, including § 211(a)(1)(A) is hardly a ground for implying legislative adoption of the construction placed on § 119(a)(4) by the Court of Appeals for the Second Circuit 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. When the entirely distinct problem involved in § 211(a)(1)(A) came before the Court of Appeals for the Second Circuit, it based its decision on the determination that the proceeds were for the use of the copyright rather than a sale.12 That decision, like the Sabatini case, was based primarily on the doctrine of the indivisibility of a copyright.13 When that doctrine is rejected it has been held to follow, as we have seen, that the proceeds are not included. That was the basis of decision in the Fourth Circuit, now under review. Moreover, the Court of Appeals for the Second Circuit has reached a result contrary to its copyright cases when dealing with the proceeds from the transfer of some but not all of the rights conferred by the patent statute.14 It did so despite the fact that the term 'royalties' includes proceeds for the use of patents, 26 U.S.C. § 119(a)(4), 26 U.S.C.A. § 119(a)(4), and that, as will be seen, the theory of the indivisibility of a copyright had its genesis in a doctrine first applied in the patent field. 130 5. Thus we are brought to the question which the Treasury, the courts and the parties here have regarded as determinative of this controversy: may serial rights under a copyright be sold in law as they constantly are sold in the literary market? Specifically, is there some inherent obstacle of law which precludes the sale of such serial rights from having the usual incidents of a commercial sale? If it were impossible to make a sale, then the proceeds arguably are 'royalties' because in that event the transfer can have been only for the use. There would still remain the difficulty of getting the lumpsum payments within the reasonable meaning of § 211(a)(1)(A). For, it is fair to recall that, § 119(a)(4) would only determine whether the payment is from a source within the United States, not whether it is taxable. There would be the further difficulty of calling a payment a 'royalty' when its amount bears only that relation to the future proceeds obtained by the transferee in exploiting the literary product as would be reflected in the purchase price of any income-producing property. If, on the other hand, the valuable right that, commercially speaking, was in fact sold, may as a matter of law also be treated as a sale, the proceeds would not be included. This conclusion, derived from a reading of § 211(a)(1)(A), is made explicit by the Regulations and the House and Senate Reports. See 337 U.S. 409, 69 S.Ct. 1139. 131 The notion that the attributes of literary property are by nature indivisible and therefore incapable of being sold separately, is derived from a misapplication by lower courts of two early cases in this Court. These were concerned with the right of the transferee of less than all the rights conferred by a patent to sue an infringer. The inherent nature of the interests in intellectual property and their commercial negotiability were not involved. The Court determined the procedural problem before it so that the infringer would not 'be harassed by a multiplicity of suits instead of one,' and would be not subjected to 'successive recoveries of damages by different persons holding different portions of the patent right in the same place.' Gayler v. Wilder, 1850, 10 How. 477, 94-495, 13 L.Ed. 504; Waterman v. Mackenzie, 138 U.S. 252, 255, 11 S.Ct. 334, 335, 34 L.Ed. 923. But in its bearing on the procedural point, one of these cases recognized the saleability of less than all of the patented rights so long as the transfer consisted of at least one of the three rights separately listed in the patent statute. Waterman v. Mackenzie, supra. 132 We thus find scant illumination of the intrinsic and legal nature of property rights in a copyright in the procedural analysis of these cases. Keener insight into such rights has been given by Mr. Justice Holmes in a case involving substantive questions in the law of copyrights: 133 'The notion of property starts, I suppose, from confirmed possession of a tangible object, and consists in the right to exclude others from interference with the more or less free doing with it as one wills. But in copyright property has reached a more abstract expression. The right to exclude is not directed to an object in possession or owned, but is in vacuo, so to speak. It restrains the spontaneity of men where, but for it, there would be nothing of any kind to hinder their doing as they saw fit. It is a prohibition of conduct remote from the persons or tangibles of the party having the right. It may be infringed a thousand miles from the owner and without his ever becoming aware of the wrong. It is a right which could not be recognized or endured for more than a limited time, and therefore, I may remark, in passing, it is one which hardly can be conceived except as a product of statute, as the authorities now agree.' White-Smith Music Pub. Co. v. Apollo Co., 209 U.S. 1, 18, 19, 28 S.Ct. 319, 324, 52 L.Ed. 655, 14 Ann.Cas. 628; see also Learned Hand, J., in Photo Drama Motion Picture Co. v. Social Uplift Film Corp., D.C.S.C.N.Y., 213 F. 374, 378. 134 The 'right to exclude others from interference with the more or less free doing with it as one wills' is precisely the right that Wodehouse transferred to Curtis. To the extent that the Copyright Law gave Wodehouse protection in the United States, he transferred all he had in property of considerable value—the serial rights in his novels—and Curtis acquired all of it. For the duration of the monopoly granted by the Copyright Law, Curtis could assert the monopoly against the whole world, including Wodehouse himself. 135 Nothing in the law of copyrights bars or limits sale of any one of the numerous exclusive rights conferred by the various subdivisions of § 1. Congress has not disallowed such sales and nothing in the due enforcement of the Copyright Law suggests their disallowance. Quite the contrary. See II Ladas, The International Protection of Literary and Artistic Property, pp. 775-792 (1938). The scheme and details of the Copyright legislation manifest a separate treatment of the various exclusive rights conferred by the statute. 61 Stat. 652, 17 U.S.C. § 1 et seq., 17 U.S.C.A. § 1 et seq. It segregates these rights into separately numbered paragraphs.15 In each paragraph there is listed, in the alternative, a more detailed subdivision of the various rights. Each of these rights is substantial and exists separately from the others,16 and has of course been considered a property right. See Photo Drama Motion Picture Co. v. Social Uplift Film Corp., D.C.S.D.N.Y., 213 F. 374, 377; see Fulda, Copyright Assignments and the Capital Gains Tax, 58 Yale L.J. 245, 256 (1949). Moreover, the Copyright Office will record these partial assignments, thus protecting the transferee and thereby increasing the marketability of the separate rights. 61 Stat. 652, 17 U.S.C. § 30, 17 U.S.C.A. § 30; see Photo Drama Motion Picture Co. v. Social Uplift Film Corp., D.C., 213 F. 374, 376-377; see II Ladas, The International Protection of Literary and Artistic Property, p. 802 (1938). 136 Only the other day the House of Lords, dealing with a similar copyright law, held that the sums received from the transfer of the motion picture rights in a novel were proceeds from a sale of property rather than a license and therefore not taxable as 'annual profits or gains.' Withers v. Nethersole, (1948) 1 All.E.R. 400. There was there, as here, the need to determine if the proceeds were from a sale. The taxpayer had transferred for ten years 'the sole and exclusive motion picture rights throughout the world.' The House of Lords held that the proceeds were not 'annual profits or gains' since the transaction was an outright sale, not a license to use the copyright. This portion of the late Lord Uthwatt's judgment is especially pertinent: 137 'The fact that the same commercial result as that produced by the assignment might equally well have been achieved by an appropriately worded license is irrelevant. It is irrelevant that the consideration may be assumed to represent the value of the whole copyright so far as it relates to motion pictures for a period of years, but the consideration was paid, not in respect of the temporary use of another's property, but for the purchase of property with a limited life. The taxpayer may have exploited her property, but she did so only by dividing it and selling part of it. * * * The relevant fact is that an owner of an asset, entitled by law to divide it into two distinct assets, has done so by selling one of those assets for an agreed consideration payable in a lump sum. A sale, not in the way of a trade, of an asset does not attract tax on the consideration. Whatever else comes within the ambit of annual profits and gains, the consideration received by the taxpayer does not.' Withers v. Nethersole, (1948) 1 All.E.R. 400, 405. 138 I am not suggesting that the decision of the House of Lords requires our concurrence. To pass it over in silence, however, is not to answer it. 139 Another case likewise deserves attention. In the Second Circuit, interestingly enough, it was held that a transfer of exclusive motion-picture rights was 'a sale' of a 'capital asset' for the purpose of § 117. Goldsmith v. Commissioner, 2 Cir., 143 F.2d 466. But if the transfer was a sale of a capital asset, it could not also have been within § 211(a)(1)(A). See S. Rep. No. 2156, 74th Cong., 2d Sess., p. 21 (1936); H.R. Rep. No. 2475, 74th Cong., 2d Sess., pp. 9-10 (1936). 140 To treat the transfer of any one of the various rights conferred by the Copyright Law as a sale would accord not only with analysis of their essential character and the scheme of the Copyright Law, but with the way these rights are treated by authors and purveyors of products of the mind for whose protection the Copyright Law was designed because of the belief that the interests of society would be furthered. The various exclusive rights have different attributes and therefore different significance. For that reason they may be sold separately and form the basis for a new copyright. The author 'could sell separately the right to dramatize and the right to make a moving picture play.' Photo Drama Motion Picture Co. v. Social Uplift Film Corp., D.C.S.D.N.Y., 213 F. 374, 377, affirmed 2 Cir., 220 F. 448. See as to the commercial practice, Fulda, Copyright Assignments and the Capital Gains Tax, 58 Yale L.J. 245, 253-54 (1949); see also Ladas, The International Protection of Literary and Artistic Property, passim (1938). 141 Thus it would seem as a matter of legal doctrine that where a person transfers absolutely to another, under terms of payment which do not depend on future use by the transferee, a distinct right conferred by the Copyright Law granting the transferee a monopoly in all the territory to which the Copyright Law itself extends, legal doctrine should reflect business practice in recognizing that the proceeds are from 'the sale of personal property,' rather than amounts received as 'fixed or determinable annual or periodical gains, profits, and income.' 142 It is argued that Congress doubtless intended to tax an alien author for the proceeds of a sale of serial rights, because such proceeds are taxable to an American author. By this mode of reasoning the Court ought to hold that since an American author is taxed when he sells all his rights, the proceeds derived by an alien author from the sale of all his rights in this country are also taxable for that is a much larger source of potential revenue. Yet Congress has chosen not to tax the alien author for such larger income than is received from the sale merely of serial rights, although the native author is so taxed. It is for Congress to make differentiations between alien and American authors and we should respect the differentiations Congress has made for the sale both of serial and total rights as between alien and American authors. The need for revenue is no justification for warping the provisions of the 1936 legislation to deny immunity from taxation to a nonresident alien author for the entire transfer of some of the property interests explicitly conferred by § 1, particularly in view of the fact that Congress knowingly chose to leave untouched the more sizeable source of revenue available where the nonresident alien ells all the rights conferred by § 1. Wodehouse made an absolute transfer of some of those rights. He did not receive royalties but instead gave up that chance in return for a lump sum just as the seller of a house gives up the right to receive rent in return for the purchase price. That transaction can only be regarded as a sale. As the revenue laws now stand, it was nontaxable. 143 I would affirm the judgment below. 1 The material provisions were identical in the Revenue Act of 1938, enacted May 28, 1938, c. 289, 52 Stat. 447 et seq., and in the Internal Revenue Code, enacted February 10, 1939, 53 Stat. 1 et seq. Amendments to these provisions in 1940 and 1941 changed only the rates of the taxes. For text of the material provisions, see Appendix A, infra, 337 U.S. pages 395-398, 69 S.Ct. pages 1132, 1133, following this opinion. 2 § 119(a)(4), 52 Stat. 504, 53 Stat. 54, 26 U.S.C. § 119(a)(4), 26 U.S.C.A. § 119(a)(4). For full text of the material provisions of § 119, see Appendix A, infra, 337 U.S. page 397, 69 S.Ct. page 1133. 3 See Appendix B, infra, 337 U.S. page 398, 69 S.Ct. page 1134. 4 As the court below held that the respondent's 1938 and 1941 receipts were not subject to taxation, it did not reach the subsidiary issues which had been raised as the proper amount of those taxes if they were sustained. Similarly, the court below did not pass upon the claim that certain of the assessments were subject to the three-year statute of limitations rather than the five-year statute here applied. See § 275(a) and (c), 52 Stat. 539, 53 Stat. 86, 26 U.S.C. § 275(a) and (c), 26 U.S.C.A. § 275(a, c). This claim turned upon the recognition to be given to certain assignments made by the respondent to his wife. Those assignments, if fully recognized, might have reduced the tax to be assessed against the respondent to an amount less than 25% of the amount originally stated by him in his return and thus rendered the five-year statute inapplicable. However, the effect of those assignments was not passed upon by the court below. 5 "Supplement H—Nonresident Alien Individuals "Sec. 211. Gross Income "(a) General Rule.—In the case of a nonresident alien individual gross income includes only the gross income from sources within the United States." § 211(a), 48 Stat. 735. 6 "Sec. 143. Withholding of Tax at Source "(a) Tax-Free Covenant Bonds—* * * "(b) Nonresident Aliens.—All persons, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of the United States, having the control, receipt, custody, disposal, or payment of interest (except interest on deposits with persons carrying on the banking business paid to persons not engaged in business in the United States and not having an office or place of business therein), rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, of any nonresident alien individual, or of any partnership not engaged in trade or business within the United States and not having any office or place of business therein and composed in whole or in part of nonresident aliens, * * * deduct and withhold from such annual or periodical gains, profits, and income a tax equal to 4 per centum thereof: * * *." Emphasis added.) 48 Stat. 723-724. 7 "Sec. 147. Information at Source "(a) Payments of $1,000 or More.—All persons, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, and employers, making payment to another person, of interest, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income * * * of $1,000 or more in any taxable year, * * * shall render a true and accurate return to the Commissioner, under such regulations and in such form and manner and to such extent as may be prescribed by him with the approval of the Secretary, * * *." (Emphasis added.) 48 Stat. 726. Treasury Regulation 86, under the Act of 1934, showed among other things, that this Section applied generally to fixed or determinable income, that royalties were included as fixed and determinable income and that information as to them was not required when such royalties did not exceed the taxpayer's exemptions. Also, such information at the source was not required where the income had been withheld, at the source, from a nonresident alien individual and a report had been made to that effect. See, for example: "Art. 147-1. * * * Although to make necessary a return of information the income must be fixed or determinable, it need not be annual or periodical. * * *" "Art. 147-3. Cases where no return of information required. Payments of the following character, although over $1,000, need not be reported in returns of information * * *: "(h) Payments of salaries, rents, royalties, interest (except bond interest required to be reported on ownership certificates), and other fixe or determinable income aggregating less than $2,500 made to a married individual; * * *." "Art. 147-5. Return of information as to payments to other than citizens or residents.—In the case of payments of fixed or determinable annual or periodical income to nonresident aliens (individual or fiduciary), * * * the returns filed by withholding agents on Form 1042 (required by Art. 143-8) whall constitute and be treated as returns of information. (See sections 143 and 144.)" (Emphasis added.) 8 This opinion was rendered in response to a request to the Treasury for advice as to whether certain payments received during the years 1921 to 1928 by the taxpayer, a nonresident alien author, were taxable as income from sources within the United States. The payments were received pursuant to contracts granting certain volume, serial and motion picture rights in consideration of stipulated royalties payable in various ways. Some contracts prescribed a royalty on each copy sold, others a total stipulated sum, and, in at least one case, this sum was payable in several parts. The opinion reviewed the practice of many years and gave a positive answer to guide future practice. The answer was that all these receipts were taxable insofar as they came from sources within the United States. The opinion contained the following significant statements which indicate the administrative practice which had been applied and thereafter was to apply to these Sections: 'The fact that a payment in the nature of a rent or royalty is in a lump sum rather than so much per annum, per unit of property, per performance, per book sold, or a certain percentage of the receipts or profits, does not alter the character of the payment as rent or royalty. (O.D. 1028, C.B. 5, 83; Appeal of J.M. & M. S. Browning Co., 6 B.T.A. 914, acquiescence C.B. VII-1, 5.) Nor is it material whether the royalty is paid in advance. (Appeal of Bloedel's Jewelry, Inc., 2 B.T.A. 611.) It is accordingly the opinion of this office that the payments in question are "rentals or royalties from * * * (or) for the use of or for the privilege of using * * * copyr ghts * * * and other like property." Since the grant by the taxpayer in each instance is so clearly the grant of a particular right in all the rights constituting the taxpayer's literary property and copyright, the conclusion is obvious that the grant is a license and not a sale. "The applicable Revenue Acts regard royalties from American copyrights (or for the use of or for the privilege of using in the United States copyrights and other like property) as income from sources within the United States, and royalties from foreign copyrights (or for the use of or for the privilege of using without the United States copyrights and other like property) as income from sources without the United States. Substantially all the income here in question constitutes royalties from, or for the use of, or for the privilege of using American copyrights." I.T. 2735, XII-2 Cum.Bull. 131 (1933). 9 "The fact that one lump sum was received for the privilege of using the property of the author instead of a series of payments does not alter the real character of what the taxpayer received. It was payment for the use of his literary property for the purpose named and in so far as it was in payment for use in the United States was taxable as a royalty paid in advance and received for the granting of that privilege. While there seems to be no direct authority for this view of the meaning of the statute, we believe it correct in principle and the order of the Board in this respect is reversed." Id., 98 F.2d at page 755. This decision effectively supplements the Treasury Bulletin of 1933 and emphasizes the general language of the statute in taxing proceeds of the type of transaction that is before us. It reversed an intermediate holding made by the Board of Tax Appeals in 1935 in Sabatini v. Commissioner, 32 B.T.A. 705. That intermediate decision, accordingly, was in the process of review when the Revenue Act of 1936 was enacted and, therefore, it cannot be argued that Congress carried its interpretation into the Revenue Act of 1936. If anything, the contrary might be argued as to Sabatini v. Commissioner, 2 Cir., 98 F.2d 753, which was decided before the enactment of the Internal Revenue Code. 10 "Sec. 211. Tax on Nonresident Alien Individuals. "(a) No United States business or office.—There shall be levied, collected, and paid for each taxable year, in lieu of the tax imposed by sections 11 and 12, upon the amount received, by every nonresident alien individual not engaged in trade or business within the United States and not having an office or place of business therein, from sources within the United States as interest (except interest on deposits with persons carrying on the banking business), dividends, rents, salaries, wages, premiums, annuties, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, a tax of 10 per centum of such amount, * * *." (Emphasis added.) 49 Stat. 1714. 11 "Sec. 143. Withholding of Tax at Source. "(b) Nonresident aliens.—All persons, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of the United States, having the control, receipt, custody, disposal, or payment of interest (except interest on deposits with persons carrying on the banking business paid to persons not engaged in business in the United States and not having an office or place of business therein), dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income (but only to the extent that any of the above items constitutes gross income from sources within the United States) of any nonresident alien individual, or of any partnership not engaged in trade or business within the United States and not having any office or place of business therein and composed in whole or in part of nonresident aliens, shall * * * deduct and withhold from such annual or periodical gains, profits, and income a tax equal to 10 per centum thereof, * * *." (Emphasis added.) 49 Stat. 1700-1701. 12 "Nonresident Aliens and Foreign Corporations "It has also been necessary to recommend substantial changes in our present system of taxing nonresident aliens and foreign corporations. * * * In section 211, it is proposed that the tax on a nonresident alien not engaged in a trade or business in the United States and not having an office or place of business therein, shall be at the rate of 10 percent on his gross income from interest, dividends, rents, wages, and salaries and other fixed and determinable income. The tax (in the usual case) is collected at the source by withholding as provided for in section 143. Such a nonresident will not be subject to the tax on capital gains, including gains from hedging transactions, as at present, it having been found impossible to effectually collect this latter tax. It is believed that this exemption from tax will result in additional revenue from the transfer taxes and from the income tax in the case of persons carrying on the brokerage business. * * * "* * * In the case of a foreign corporation not engaged in trade or business within the United States and not having an office or place of business therein, it is proposed to levy a flat rate of tax of 15 percent on the gross income of such corporation from interest, dividends, rents, salaries wages, and other fixed and determinable income (not including capital gains). This tax is to be collected in the usual case by withholding at the source. * * * "It is believed that the proposed revision of our system of taxing nonresident aliens and foreign corporations will be productive of substantial amounts of additional revenue, since it places a theoretical system impractical of administration in a great number of cases." (Emphasis added.) H.R.Rep.No.2475, 74th Cong., 2d Sess. 9-10 (1936). To the same effect, see S.Rep.No.2156, 74th Cong., 2d Sess. 21, 23 (1936). 13 On the floor of the House, Representative Hill of Washington, of the Committee on Ways and Means, supporting these Amendments, said: "We have placed a flat tax of 10 percent on nonresident aliens, that is, people not citizens of the United States and not residing in the United States; and this 10-percent tax is withheld at the source. We expect to get considerably more revenue out of both nonresident aliens and foreign corporations having no place of business or not engaged in trade or business in this country, than we have been getting under the present plan, because we are going to withhold it at the source, and not take a chance on their making a report of it, or having to send our representatives to some foreign country to find what their net income is, and seek to induce them to pay their tax." 80 Cong.Rec. 6005 (1936). On the floor of the Senate, Senator King of Utah, a member of the Finance Committee and in charge of the bill, said, in supporting these Amendments: "The House bill changes the method of taxing nonresident aliens and foreign corporations. A nonresident alien not engaged in a trade or business in the United States, or not having an office or place of business therein, is taxed at a flat rate of 10 percent on his income from interest, dividends, rents, ages, salaries, and other fixed or determinable income, which are collected at the source. * * * These nonresident aliens are exempted under the House bill from the tax on capital gains, including hedging transactions, it being found administratively almost impossible to collect the capital-gains tax in such cases. This exemption will result in increased revenue from transfer taxes or from the income tax in the case of persons carrying on the brokerage business." 80 Cong.Rec. 8650 (1936). 14 Particularly in the Revenue Act of 1938, § 211, was amended to provide, that, if the aggregate amount of a taxpayer's income of the types included from sources within the United States was more than $21,600, during a taxable year, then the regular rate of tax imposed by §§ 11 and 12 became applicable, subject to the proviso that in no case it be less than 10% of the gross income subject to the tax. § 211(a) and (c), 52 Stat. 527-528, and see Appendix A, infra, 336 U.S. page 395, 69 S.Ct. page 1132. 15 "* * * While payment ordinarily is at a certain rate for each article or certain per cent of the gross sale, that in itself is not determinative. The purpose for which the payment is made and not the manner thereof is the determining factor." Commissioner of Internal Revenue v. Affiliated Enterprises, 10 Cir., 123 F.2d 665, 668. 1 61 Stat. 652, 17 U.S.C. § 1, 17 U.S.C.A. § 1. 2 This particular year was selected because the Internal Revenue Code was then in effect, and this makes reference to the applicable statutory provisions easier. In 1941 Wodehouse also sold publication rights in an article to Hearst's International Cosmopolitan Co. The transaction was, in effect, similar to the one described in the text. 3 The memorandum of acceptance provided in part: "Please note that our reservation of serial rights (which includes publication in one installment) includes new story varisions based on motion-picture or dramatic scenarios of short stories and serials that have appeared in Curtis publications, and that we permit the use of such versions only under the following conditions: Such synopsis, scenario, or new story version shall not exceed fifteen hundred (1500) words in length when based on a short story appearing complete in one issue, or five thousand (5000) words when based on a serial appearing in two or more issues, or a series of not less than three connected short stories from which a single picture is to be made. Such synopsis shall appear only in circular matter, press books, press notices, trade journals and in magazines devoted exclusively to dramatic or motion-picture matter, and shall in no event appear as having been written by the author. When selling motion-picture or dramatic rights of matter you must notify the producer to this effect, so that there may be no misunderstanding on his part and no infringement of our rights." 4 "Sec. 211. Tax on nonresident alien individuals '(c) No United States business or office and gross income of more than $24,000.—A nonresident alien individual not engaged in trade or business within the United States and not having an office or place of business therein who has a gross income for any taxable year of more than $24,000 from the sources specified in subsection (a)(1), shall be taxable without regard to the provisions of subsection (a)(1), except that— "(1) The gross income shall include only income from the sources specified in subsection (a)(1) * * *." 53 Stat. 76, 54 Stat. 518. 5 The subsection reads as follows: "Sec. 211. Tax on Nonresident Alien Individuals "(a) No United States business or office.— "(1) General rule.— "(A) Imposition of Tax—There shall be levied, collected, and paid for each taxable year, in lieu of the tax imposed by sections 11 and 12, upon the amount received, by every nonresident alien individual not engaged in trade or business within the United States and not having an office or place of business therein, from sources within the United States as interest (except interest on deposits with persons carr ing on the banking business), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, a tax of 15 per centum of such amount * * *." 53 Stat. 75, 54 Stat. 518. 6 "Sec. 119. Income from sources within United States. "(a) Gross income from sources in United States.—The following items of gross income shall be treated as income from sources within the United States: "(4) Rentals and royalties.—Rentals or royalties from property located in the United States or from any interest in such property, including rentals or royalties for the use of or for the privilege of using in the United States, patents, copyrights, secret processes and formulas, good will, trade-marks, trade brands, franchises, and other like property * * *." 53 Stat. 54. 26 U.S.C. § 119(a)(4), 26 U.S.C.A. § 119(a)(4). 7 Rent is specifically included within § 211(a)(1)(A); proceeds from the sale of real property, however, are excluded. U.S.Treas.Reg. 111, § 29.211-7. 8 The Reports in both the House and Senate say specifically that a result of § 211(a)(1)(A) is that "such a nonresident alien will not be subject to the tax on capital gains * * *." S.Rep.No.2156, 74th Cong., 2d Sess., p. 21 (1936); H.R.Rep.No.2475, 74th Cong., 2d Sess., pp. 9-10 (1936); see Fulda, Copyright Assignments and the Capital Gains Tax, 58 Yale L.J. 245, 259, 260—266 (1949). 9 "In 13 Corpus Juris (1094-1095) it is stated that a copyright is an indivisible thing and can not be split up and partially assigned, either as to time, place, or particular rights or privileges, less than the sum of all the rights comprehended in the copyright; that exclusive rights may, however, be granted, limited as to time, place, or extent of privileges which the grantee may enjoy; and that the better view is that such limited grants operate merely as licenses and not technical assignments, although often spoken of as assignments. (Citing two lower court cases having to do with procedural questions.) "It is apparent from the facts in this case that in no instance did the taxpayer assign his literary property in its entirety or his copyright therein, or his indivisible rights therein in granting the serial, the volume, the book, the second serial, the dramatic or motion picture rights to the various contracting parties. The taxpayer in these contracts granted the publishers and producers licenses to use in part cular ways his literary property and his copyright therein, and exacted from them certain payments for that use. These were not, and could not be, contracts of sales; they were in fact contracts of license, and the payments for such licenses constituted rentals or royalties subject to tax as such. "* * * Since the grant by the taxpayer in each instance is so clearly the grant of a particular right in all the rights constituting the taxpayer's literary property and copyright, the conclusion is obvious that the grant is a license and not a sale. "In Office Decision 988 supra, a grant of all rights of serial publications in the United States in certain literary works was through error said to be a sale. Such a grant could only be a license. Office Decision 988 is accordingly revoked. "In I.T. 1231, supra, it was stated that there was a sale of serial rights of publication. Since it is held that such a grant could only be a license, I.T. 1231 is modified to accord with the views herein expressed." I.T. 2735, XII-2, Cum.Bull. 131, 134-35 (1933). 10 In the Sabatini case the transfer of the motion-picture rights, as was true of the book rights, took place in England, but the attempt was made to bring the proceeds within § 119(a)(4) on the ground that the rights were to be exercised in the United States. Since the proceeds from the book rights were tied to use in the United States, they were held to be included within § 119(a)(4). But the proceeds from the transfer of the motion-picture rights were not included because the proceeds were not tied to a subsequent use in the United States. There, as here, it was urged that the subsequent exploitation of the copyright by the transferee in the United States brought the proceeds within § 119(a)(4) because it was not possible for the transfer to have been anything other than for the use, rather than the sale, of rights in the copyright. But this contention can rest only on the assumption that a copyright is indivisible. 11 This reversal of the Board of Tax Appeals did not occur until 1938, two years after Congress had revised the provisions taxing nonresident aliens. In reversing, the Court of Appeals first determined that the transfer of less than all the rights precluded a sale. It then held that the proceeds should be included admitting however that there "seems to be no direct authority for this view of the meaning of the statute * * *." Sabatini v. Commissioner, 2 Cir., 98 F.2d 753, 755. 12 This case was not decided until 1946. Rohmer v. Commissioner, 2 Cir., 153 F.2d 61. Molnar v. Commissioner, 2 Cir., 156 F.2d 924, is not such a case. The court there dealt solely with the apportionment problem involved in computing taxpayer's income when the copyright was to be used in both the United States and other parts of the world. 13 In Rohmer v. Commissioner, 2 Cir., 153 F.2d 61, the court said: "Where a copyright owner transfers to any particular transferee substantially less than the entire "bundle of rights" conferred by the copyright, then payment therefor, whether in one sum or on several payments, constitutes royalties within the meaning of § 211(a)(1)(A). For such a transfer is the grant of a license. Payment for the grant of such a license is measured by reference to the future use or expected use of the license by the licensee. * * * It is like interest paid for several years." 153 F.2d page 63. That the doctrine of indivisibility determined decision appears from Standard Oil Co. v. Clark, 2 Cir., 163 F.2d 917, 936, 939. The decision in Sabatini v. Commissioner, 2 Cir., 98 F.2d 753, 755, also turned on the doctrine of the indivisibility of a copyright. 14 General Aniline & Film Corp. v. Commissioner, 2 Cir., 139 F.2d 759; see also Commissioner of Internal Revenue v. Celanese Corp., 78 U.S.App.D.C. 292, 140 F.2d 339. Both cases are under § 143(b), the section with which § 211(a) (1)(A) was made coterminous. 15 Section one of the Copyright Law provides: § 1. Exclusive rights as to copyrighted works.—Any person entitled thereto, upon complying with the provisions of this title, shall have the exclusive right: (a) To print, reprint, publish, copy, and vend the copyrighted work; '(b) To translate the copyrighted work into other languages or dialects, or make any other version thereof, if it be a literary work; to dramatize it if it be a nondramatic work; to convert it into a novel or other nondramatic work if it be a drama; to arrange or adapt it if it be a musical work; to complete, execute, and finish it if it be a model or design for a work of art; '(c) To deliver or authorize the delivery of the copyrighted work in public for profit if it be a lecture, sermon, address, or similar production; '(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; and "(e) To perform the copyrighted work publicly for profit if it be a musical composition; and for the purpose of public performance for profit, and for the purposes set forth in subsection (a) hereof, to make any arrangement or setting of it or of the melody of it in any system of notation or any form of record in which the thought of an author may be recorded and from which it may be read or reproduced: * * *." 61 Stat. 652, 17 U.S.C. § 1, 17 U.S.C.A. § 1. 16 "A man having general statutory dramatic rights like Kauffman might make a play and perform it under his common-law rights without publication, or he might copyright the play, and he would still not have copyrighted or published his moving picture rights. If he wrote such a scenario and made his film, he could get a separate copyright upon that. Of course, he could sell his statutory or common-law copyright of the play and keep the moving picture copyright, or he could sell each. 'It seems to me clear that, if he could do this, he could sell separately the right to dramatize and the right to make a moving picture play, dividing his statutory dramatizing rights, and thus giving each assignee the right when he had exercised those rights to get his own copyright for a drama, or for a moving picture show.' Learned Hand, J., in Photo Drama Motion Picture Co. v. Social Uplift Film Corp., D.C.S.D.N.Y., 213 F. 374, 377. See also Withers v. Nethersole, (1948) 1 All.E.R. 400. 'The effect of a partial assignment of copyright for a period less than the whole term is not to create any new right, but only to divide the existing right. In the result, there are two separate owners each with a distinct property. Neither holds under the other.' At page 404.

1112

337 U.S. 472 69 S.Ct. 1333 93 L.Ed. 1480 PROPPERv.CLARK, Attorney General. No. 390. Argued March 28, 29, 1949. Decided June 20, 1949. Rehearing Denied Oct. 10, 1949. See 70 S.Ct. 33. [Syllabus from pages 472-474 intentionally omitted] Messrs. A. Walter Socolow and Joseph M. Cohen, New York City, for petitioner. Mr. David Schwartz, New York City, for respondent. Mr. Louis D. Frohlich, New York City, for A.S.C.A.P. Mr. Justice REED delivered the opinion of the Court. 1 The Alien Property Custodian1 on April 22, 1946, began this action under § 17 of the Trading with the Enemy Act, 50 U.S.C.A.Appendix, § 17, in the United States District Court for the Southern District of New York to obtain the payment, and a declaration of title in him as against the petitioner as receiver, of certain royalties owed by the American Society of Composers, Authors and Publishers (ASCAP) to Staatlich Genehmigte Gesellschaft der Autoren, Komponisten and Musikverleger (AKM), an Austrian association, pursuant to the provisions of vesting order No. 2097, Office of Alien Property Custodian, September 4, 1943, 8 F.R. 16463, whereby the Custodian had vested in himself title to certain property of AKM, specifically claims for royalties under copyrights for the performance of musical compositions. By contract ASCAP had been authorized by AKM to license on royalty the use in this country of musical copyrights belonging to AKM. ASCAP and the petitioner, who is the state-appointed receiver of the royalties involved, were made defendants. The District Court, on motions for summary judgment or judgment on the pleadings, entered a judgment declaring that the petitioner had no right, title or interest in the claim in question, Markham v. Taylor, 70 F.Supp. 202, and later, a second judgment directing ASCAP to pay the debt to the Custodian. The United States Court of Appeals for the Second Circuit, on appeal by the petitioner,2 affirmed. Clark v. Propper, 169 F.2d 324. 2 The pertinent facts underlying this controversy are as follows: On June 12, 1941, on an ex parte application by a creditor of AKM, the New York Supreme Court appointed petitioner temporary receiver of that association, pursuant to § 977-b of the New York Civil Practice Act, which provides for the liquidation of the local assets of a foreign corporation when it has ceased to do business for one reason or an ther not here important. Proceedings under this Act are to enable claimants against the foreign corporation to secure payment of their claims by an equitable apportionment of the available assets. The order of appointment directed him 'to take, receive, and reduce to his possession any and all assets * * * tangible and intangible, within the State of New York of the defendant (AKM), and hold the same until the further order of this Court.' On June 14, 1941, pursuant to § 5(b) of the Trading with the Enemy Act of 1917, 40 Stat. 411, 415, as amended,3 the President promulgated Executive Order No. 8785,4 a so-called freezing order, which prohibited certain transactions involving Austrian property except as they were specifically licensed by the Secretary of the Treasury. On July 29, 1941, petitioner, as receiver, began an action in the courts of New York against ASCAP to recover the royalties which it owed AKM.5 Its disposition is awaiting the outcome of this case. On September 29, 1941, petitioner, upon the default of AKM, was appointed permanent receiver of that association's assets. Thereafter followed the vesting order, September 4, 1943, and this suit, April 22, 1946. 3 Upon the limited grant of the petition for certiorari, 355 U.S. 902, 69 S.Ct. 405, the issues argued to this Court and now to be decided are whether the appointment of petitioner as temporary receiver on June 12, 1941, or his appointment as permanent receiver on September 29, 1941, by relation back, passed title to him of the claim for royalties as of June 12, 1941. Furthermore, since, as will subsequently appear, we conclude these issues against petitioner, we must consider whether the freezing order barred a subsequent unlicensed judicial transfer by the order appointing the petitioner permanent receiver.6 4 First. The appointment as permanent receiver on September 29, 1941, concededly would have vested in petitioner as permanent receiver all right, title and interest of AKM in its claim against ASCAP if the freezing order of June 14, 1941, had not intervened after petitioner's appointment as temporary receiver on June 12, 1941. Accepting that position, the question of whether the appointment as permanent receiver related back to the date of the temporary receivership, so as to place title to the claim in the permanent receiver as of June 12, 1941, and the question as to whether the appointment as permanent receiver itself vested title in the petitioner, notwithstanding the prior freezing order, depend alike upon a determination as to whether the freezing order made invalid any subsequent transfer of title by judicial action. 5 The vesting order here in question, Vesting Order No. 2097, was executed on September 4, 1943, a date subsequent to the appointment of petitioner as permanent receiver. So far as the parties to this litigation are concerned, by its specific terms it vested in the Custodian title to the property of AKM only.7 Nothing presented in this case calls our attention to any effort made by the Custodian to vest in himself any title to the claim that might be in the perm nent receiver for the benefit of creditors and ultimately for AKM or those entitled to its assets on distribution,8 nor do we adjudicate his right to do so. The order, so far as is pertinent, vested in the Custodian 'All * * * claim (of AKM to) all right to receive monies * * * by way of royalty, share of profits or other emolument,' together with 'all causes of action * * * with respect to' the aforesaid copyrights. This claim was a debt of ASCAP to AKM, property of AKM, as defined in the regulations of April 10, 1940, 5 F.R. 1401(c), and June 14, 1941, 6 F.R. 2905. The latter citation refers to the regulation defining property, under the Trading with the Enemy Act, effective at the time of the vesting order.9 6 Prior to petitioner's appointment as permanent receiver and the later vesting order, the President, on June 14, 1941, had prescribed by Executive Order No. 8785, 6 F.R. 2897, that certain transactions by or on behalf of Austrian associations such as AKM were prohibited unless licensed. No license for the judicial order appointing petitioner as permanent receiver was asked for or obtained. 7 Order No. 8785 was issued pursuant to the authority granted the President by § 5(b) of the Act of October 6, 1917, as amended, particularly by the Joint Resolution of May 7, 1940.10 The order forbade, § 1(A), 'All transfers of credit between any banking institutions within the United States; * * *.' Authority during war or any other period of national emergency to prohibit such transfers was given the President by the Joint Resolution. Order No. 8785 declared 'the existence of a period of unlimited national emergency.' 8 The same resolution authorized the President to issue rules and regulations and specifically to define 'banking institutions.' The President had on April 10, 1940, issued a similar order prohibiting similar transfers applicable to nationals of Norway and Denmark to guard against such transfers brought about by the German invasion of those countries. Executive Order No. 8389, 5 F.R. 1400. It contained to all intents and purposes the same definition of 'banking institutions.' See § 11C thereof. The order and regulations thereunder and therefor the definition were approved by the Joint Resolution.11 The definition applicable to transactions of this Austrian national, AKM, under the freezing order of June 14, 1941, is set out below.12 We accept this definition as authorized by the Resolution. 9 By the order appointing a permanent receiver the claim of AKM against ASCAP was directed to be transferred from AKM to the petitioner. From ASCAP's point of view it was a debt; from AKM's a claim. The shift of obligation contemplated by the order for a permanent receiver was a transaction that involved 'property in which' there was an 'interest of any nature whatsoever, direct or indirect' in aliens of designated countries, including Austria.13 But the Executive Order of June 14, 1941, did not prohibit all transactions without license involving Austrian-owned property. It specified the prohibited transactions, however, by categories so all-inclusive as to make it clear the purpose was to require transactions involving property of nationals of designated foreign countries to be carried out under regulations of this Government except certain transactions such as are provided for in General Ruling No. 12, April 21, 1942, 7 F.R. 2991. The Executive Order forbids transfers of credit. As 'credit' is not defined by the Order or regulation, we, in considering credits as property subject to vesting under the Trading with the Enemy Act, give it is ordinary meaning of the obligation due on accounting between parties to transactions. This credit, owed by ASCAP to AKM, was in effect directed to be transferred by the permanent receiver order from AKM to the petitioner as receiver. There is, we think, no doubt that a voluntary transfer by a bank of a credit in the transferring bank from the account of a known Austrian to the account of another banking institution would violate Executive Order No. 8785 as a transfer of credit between banking institutions. 10 It remains, then, to determine whether ASCAP and petitioner are banking institutions of such a character as to be subject to the prohibition of Executive Order No. 8785, § 1A against 'transfers of credit between any banking institutions.' A reading of the President's definition, note 12 supra, shows that they do fall within the words 'any person holding credits for others as a direct or incidental part of his business * * *.' It is true that to make ASCAP or the petitioner a banking institution by definition is a departure from the ordinary conception of the meaning of 'banking institution.' Petitioner says to so construe the definition is 'utter fantasy.' The definition, however, as we have pointed out, has had congressional ratification. Furthermore, the obvious intention of Congress to allow flexibility to the term 'banking institution' by leaving its definition to the President sheds light on its purpose. The phrase 'banking institution' used and defined in the Bank Holiday Proclamation of March 6, 1933, 48 Stat. 1689, 1690, was adopted by the Emergency Banking Relief Act of March 9, 1933, 48 Stat. 1, with a delegation to the President of the power of definition. Evidently the delegation was to permit him to bring atypical forms of financial institutions within the reach of the emergency act. The Act of March 9 was grafted on to the Trading with the Enemy Act of 1917 and when that Act was again extended to meet the foreign assets problem the President's wide power to define banking institution was a ready instrument to cope with the myriad circumstances arising in the control of shifts of foreign assets. The power in peace and in war must be given generous scope to accomplish its purpose. Through the Trading with the Enemy Act, in its various forms, the nation sought to deprive enemies, actual or potential Of the opportunity to secure advantages to themselves or to perpetrate wrongs against the United States or its citizens through the use of assets that happened to be in this country.14 To do so has necessitated some inconvenience to our citizens and others who, as here, are not involved in any actions adverse to the nation's interest. That fact, however, cannot lead us to narrow the broad coverage of the Executive Order. Our prior decisions have made that clear.15 ASCAP and petitioner The receiver, each hold credits for others as an 'incidental part of (their) business,' and are therefore 'banking institutions.' ASCAP held a credit for AKM and after the permanent receivership order held that credit for the receiver who in turn would hold it for AKM's creditors and AKM. 11 We hold that the transfer of this credit from a liability owed by ASCAP to AKM, to a liability owed by ASCAP to the receiver, violates the prohibition against transfers of credit. 12 We turn now to an examination of the effect of the federal Executive Order No. 8785 of June 14, 1941, the so-called 'freezing order' on the subsequent state court order of September 29, 1941, appointing the petitioner permanent receiver. That examination is to be made with recognition of the fact that at the time of the state order, title to the AKM claim against ASCAP had not been vested in the Custodian. That development did not take place until the vesting order of September 4, 1943. 13 It is petitioner's contention that a mere freezing order does not prohibit a subsequent judicial order transferring title to blocked assets covered by the previous freezing order. We will deal subsequently in this opinion with the question of whether the title to the claim passed to the temporary receiver, under New York law, on his appointment. At this point, we assume this did not happen and examine only the question of the effect of a freezing order on the subsequent judicial order. Petitioner's argument is that such a construction would immobilize frozen property until it suits the Custodian's convenience to vest, contrary to the need for protection against transfers of foreign funds. These needs, petitioner says, will be served by the provision against payments to claimants from frozen funds without a license. E.O. 8785, § 1(B).16 He further argues that by the Joint Resolution Congress did not empower the President to deprive New York of all power to deal with the ASCAP debt in a proceeding under Civil Practice Act § 977-b, covering actions of receivers to liquidate local assets of defunct foreign corporations. 14 It is true that state litigation between local claimants and foreign owners or those in possession of blocked or frozen assets could proceed to a determination of rights between the claimant and the foreign national without the blocked property passing into hands that might use it to the detriment of the welfare of this nation, so long as payment could not be made without a license. Nothing in the Trading with the Enemy Act or regulations specifically forbids eo nomine litigation in state courts. The plan for prohibition of unlicensed transactions by foreign nationals comprehends blocking of transfers of credits and vesting of local assets of such nationals under the Trading with the Enemy Act and regulations thereunder. If transactions are blocked, vesting may or may not follow. When the Custodian vests blocked property, title passes to the Custodian and his authority to vest and hold cannot be questioned except as provided in the Trading with the Enemy Act.17 The freezing order of June 14, 1941, immobilized the assets covered by its terms so that title to them might not shift from person to person except by license until the Government could determine whether those assets were needed for prosecution of the threatened war or to compensate our citizens or ourselves for the damages done by the governments of the nationals affected. United States v. Chemical Foundation, 272 U.S. 1, 11, 47 S.Ct. 1, 4, 71 L.Ed. 131; Silesian-American Corp. v. Clark, 332 U.S. 469, 476, 68 S.Ct. 179, 182, 92 L.Ed. 81. 15 We assume that the Court of Appeals of New York held in Singer v. Yokohama Specie Bank that title to blocked assets could pass without license from a statutory receiver to a creditor.18 As the Trading with the Enemy Act is federal legislation founded on federal constitutional provisions, however, the United States has authority to make all laws necessary and proper for carrying the power into execution. The power to enact carries with it final authority to declare the meaning of the legislation. Prudence Realization Corp. v. Geist, 316 U.S. 89, 95, 62 S.Ct. 978, 982, 86 L.Ed. 1293. Federal courts have so held as to this issue in this case, 169 F.2d 324, 327, and in Bernstein v. N. V. Nederlandsche Amerikaansche etc., 2 Cir., 173 F.2d 71, 73. The Trading with the Enemy Act is national in range. The effect of a federal freezing order should be the same on subsequent transfers of title in all states. State law determines the effect of the appointment of a receiver on title to the property administered, but federal law determines whether the event of appointment can free the property from the prior control. Cf. Lyeth v. Hoey, 305 U.S. 188, 191, et seq., 59 S.Ct. 155, 157, 83 L.Ed. 119, 119 A.L.R. 410. 16 Petitioner contends also that the administrative interpretation of the Executive Order of June 14, 1941, has been to permit litigation as to rights in the frozen assets. That is borne out by General Ruling No. 12 of April 21, 1942, 7 F.R. 2991, promulgated after petitioner had begun his suit against ASCAP and referring to Executive Order No. 8389, as amended June 14, 1941. The applicable section is set out in the margin.19 It is to be observed, however, that the proviso of § d limits the rights a litigant may obtain to such right as the owner of blocked property could confer by voluntary act. General Ruling No. 12, as it came after the suit by the receiver against ASCAP was started and after the order appointing petitioner as permanent receiver, is not treated by us as decisive in this case. It is useful only as a statement of the administrative determination as to the effect of litigation without a license. 17 It is our conclusion that the Joint Resolution of May 7, 1940, and the Executive Order of April 10, 1940, put into effect a valid plan for control of the property covered by the regulation that prohibited any change of title to that property by reason of the subsequent appointment of petitioner as permanent receiver. We do not now undertake to say whether every determination of rights concerning blocked property in unlicensed litigation is voidable. We base our determination on the purpose of Congress to prevent shifts in title to blocked assets and the prohibition of the Executive Order against transfers of such a credit as this. This language of the order prohibits more than payment. It prohibits transfers of credit. We do not think the administrative rulings are to the contrary. 18 Second. The petitioner advances the contention, however, that title to AKM's claim against ASCAP had passed to him by his appointment as temporary receiver on June 12, 1941, prior to the freezing or blocking order of June 14, 1941. Therefore, petitioner argues, AKM had nothing that could be frozen by the immobilization order or taken by the vesting order. 19 The precise issue of state law involved, i.e., whether the temporary receiver under § 977-b of the New York Civil Practice Act is vested with title by virtue of his appointment, is one which has not been decided by the New York courts. Both the District Court and the Court of Appeals faced this question and answered it in the negative. In dealing with issues of state law that enter into judgments of federal courts, we are hesitant to overrule decisions by federal courts skilled in the law of particular states unless their conclusions are shown to be unreasonable. Estate of Spiegel v. Commissioner, 335 U.S. 701, 707—708, 69 S.Ct. 301, 303, 304; Helvering v. Stuart, 317 U.S. 154, 63 S.Ct. 140, 87 L.Ed. 154; MacGregor v. State Mutual Co., 315 U.S. 280, 62 S.Ct. 607, 86 L.Ed. 864. We shall examine the problem from that point of view. 20 Having no state case on the precise statute before it, the Court of Appeals turned to cases dealing with temporary receiverships in equity pr ceedings and under analogous statutes. These cases seem to hold that neither temporary receivers of the equity20 nor statutory21 class obtain title, but, on the contrary, merely a right to possession. The courts below found nothing in § 977-b which evidenced an intent that the result under that section should be otherwise. Admittedly there is no express declaration of such an intent. 21 The statutory language is easily susceptible to varying interpretations. See subsections 4, 10, 11, 12 and 19. These sections are not clear as to the title taken by the temporary receiver or the authority granted to him for the holding or handling of claims against debtors. The Court of Appeals concluded, however, that where in subsection 12 the statute said that 'any receiver appointed * * * shall have all the powers and duties * * * possessed by and conferred upon receivers and trustees by the laws of the state of New York,' the meaning was 'that a temporary receiver under this provision takes the usual powers of other temporary receivers in New York.' 169 F.2d 324, 326, 327. It was pointed out that otherwise the specific and restricted grant of powers to a temporary receiver by subsection 4 would be purposeless. 22 Petitioner contends here for the first time that a vesting of title in the temporary receiver is an essential prerequisite to the exercise of jurisdiction in rem over the assets within the state of a nonresident association which is served by publication. The contention is that an affirmance of the court below on the issue of state law will render proceedings under § 977-b subject to an attack on constitutional grounds under the doctrine of Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565. In our opinion the argument is without merit. Pennoyer v. Neff merely holds that a personal judgment cannot be obtained against a nonresident on service by publication. It recognizes at pages 733 of 95 U.S., that for an in rem action it is sufficient that the property be within the state, subject to the control of the Court, and that there be some form of service which is reasonably calculated to give notice to parties whose interests may be affected by the judgment. Cf. Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278, 132 A.L.R. 1357. The first requirement can be met in other ways than seizure of title, e.g., by an injunction against transfer of the property, Pennington v. Fourth National Bank, 243 U.S. 269, 37 S.Ct. 282, 61 L.Ed. 713, L.R.A.1917F, 1159; by an attachment Herbert v. Bicknell, 233 U.S. 70, 34 S.Ct. 562, 58 L.Ed. 854; or by personal service on the party holding the property within the state, Security Savings Bank v. California, 263 U.S. 282, 44 S.Ct. 108, 68 L.Ed. 301, 31 A.L.R. 391. We have no doubt that where property is in a state and comes under the control of a court, as here by appointment of the temporary receiver, it is fair to permit substituted service. Anderson Nat. Bank v. Luckett, 321 U.S. 233, 240, et seq., 64 S.C . 599, 603, 88 L.Ed. 692, 151 A.L.R. 824; see McDonald v. Mabee, 243 U.S. 90, 37 S.Ct. 243, 61 L.Ed. 608, L.R.A.1917F, 458. 23 Since the determination of the state law issue concerning the title of the temporary receiver by the court below is not unreasonable, we accept it as correct for the purposes of this case. 24 A suggestion appears in petitioner's briefs, but not in the questions presented by the petition for certiorari, that the judgments below should be vacated and the case remanded to the District Court to be held until the parties can secure from the courts of New York a decision as to whether the temporary receiver took title to the claim against ASCAP. Waiving the failure to raise the issue by the petition for certiorari,22 we consider the contention in deference to the earnestness with which the point is pressed in the dissent.23 If the state law is that title passed to the temporary receiver on his appointment prior to the freezing order, the Custodian, by the assumption of the opinion, would obtain nothing by his order vesting AKM property. Such a ruling would make unnecessary consideration of any other issue. 25 This suggested procedure has been followed in order to avoid a decision on a federal constitutional issue—Spector Motor Co. v. McLaughlin, 323 U.S. 101, 65 L.Ed. 152, 89 L.Ed. 101; Chicago v. Fieldcrest Dairies, 316 U.S. 168, 62 S.Ct. 986, 86 L.Ed. 1355; Railroad Comm'n v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971; but cf. Public Utilities Comm'n v. United Fuel Gas Co., 317 U.S. 456, 462, 463, 63 S.Ct. 369, 373, 87 L.Ed. 396—and where the only issue in the case was one of state law, although federal jurisdiction was based on the Bankruptcy Act, 11 U.S.C.A. § 1 et seq. Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 60 S.Ct. 628, 84 L.Ed. 876. We have refused in a diversity of citizenship case to allow the difficulty of an issue of state law to deter us from exercising our jurisdiction when federal determination was subject to equitable discretion and the state issue was the only one in the case. Meredith v. Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9.24 To refrain from deciding it, we there said, would be to enervate diversity jurisdiction. 26 Where a case involves a nonconstitutional federal issue, however, the necessity for deciding which depends upon the decision on an underlying issue of state law, the practice in federal courts has been, when necessary, to decide both issues. This was the course we followed in Markham v. Allen, 326 U.S. 490, 495—496, 66 S.Ct. 296, 298, 299, 90 S.Ct. 256, a case arising under the Trading with the Enemy Act, where an issue was the construction of a state statute. The state law question in Estate of Spiegel v. Commissioner, supra, was concededly difficult and unsettled; its decision admittedly controlled the existence of a federal question, since a finding that there was no possibility of reverter under Illinois law would have finally determined the issue on which the case was decided. And yet, although a method may have existed for obtaining an adjudication on the issue from the Illinois courts, 335 U.S. 632, 673—674, 69 S.Ct. 337, 348, this Court followed the p ocedure which we adopt here of depending upon the determination of state law by the Court of Appeals. 335 U.S. 701, 707—708, 69 S.Ct. 301, 303, 304. In so doing it followed the decision in Helvering v. Stewart, 317 U.S. 154, 161, et seq., 63 S.Ct. 140, 144, 87 L.Ed. 154. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, a common-law case, is itself a precedent against any general ruling that cases properly in the federal courts that depend upon state law should have that issue submitted to state courts for decision. See the later decision in the same case, Tompkins v. Erie R. Co., 2 Cir., 98 F.2d 49. 27 The cases mentioned above where this Court required submission of single issues, exercised from the controversy, to state courts were cases in equity. The discretion of equity as to the terms upon which it would grant its remedies in the light of our rule to avoid an interpretation of the Federal Constitution unless necessary was relied upon to justify a departure from normal procedure. In the Magnolia case, we directed that the trustee file plenary proceedings to determine title in a state court litigation necessarily complete in itself. The complaint here in a single count seeks recovery of the debt from ASCAP and determination of the Custodian's title to the claim vis-a -vis the receiver. Assuming that quieting title to a chattel is an equitable proceeding and that the District Court can, by cutting out the title issue and by refusing to proceed in the controversy unless obeyed, compel the Custodian by whatever proceedings New York may provide to litigate only the narrow issue of title in the temporary receiver, there would remain the problem of control of the receiver, by threats of contempt action, to keep him from raising in such proceedings federal issues such as the right to secure title as permanent receiver through state judicial action after the freezing or immobilization order. This federal issue we decided above. Furthermore, as the state court could reasonably require complete adjudication of the controversy, the District Court would perhaps be compelled to stay proceedings in the state court to protect its own jurisdiction. 28 U.S.C. § 2283, 28 U.S.C.A. § 2283. Otherwise in sending a fragment of the litigation to a state court, the federal court might find itself blocked by res judicata with the result that the entire federal controversy would be ousted from the federal courts where it was placed by Congress. See note 17, supra. 28 The submission of special issues is a useful device in judicial administration in such circumstances as existed in the Magnolia, Spector, Fieldcrest and Pullman cases, supra, but in the absence of special circumstances, 320 U.S. at page 236, 237, 64 S.Ct. at pages, 11, 12, 88 L.Ed. 9, it is not to be used to impede the normal course of action where federal courts have been granted jurisdiction of the controversy. 29 We reject the suggestion that a decision in this case in the federal courts should be delayed until the courts of New York have settled the issue of state law. 30 Third. The petitioner makes the further point that the judgment below determining that he had no right, title or interest to the claim of AKM against ASCAP is beyond the competence of the federal district court because that property was in the hands of the state court by virtue of the receivership. Even if title did not pass, he argues, he, and through him the state court, had possession of the claim by virtue of his appointment as temporary receiver before the promulgation of the freezing order. Reliance is placed on the rulings of cases like Kline v. Burke Construction Co., 260 U.S. 226, 229, 231, 43 S.Ct. 79, 81, 67 L.Ed. 226, 24 A.L.R. 1077; Princess Lida v. Thompson, 305 U.S. 456, 466, 59 S.Ct. 275, 83 L.Ed. 285; and Farmers' Loan, etc., co. v. Lake St. R. Co., 177 U.S. 51, 61, 20 S.Ct. 564, 568, 44 L.Ed. 667. The rule declared by these cases is that when one court has taken possession and control of a res, a second court is disabled from exercising a power over that res. The circumstances of this controversy do not present such an interference with state control of a res. We are dealing with a situation more closely resembling determinations of rights to participate in res in the hands of state courts.25 What the state court had, at most, was a claim against a debtor, ASCAP. The judgment enabled the Custodian to collect the debt that ASCAP owed AKM. Although this judgment determined title to AKM's claim against ASCAP when the adverse claimant was a state receiver, those facts did not prevent the federal court from giving a judicial declaration of the right to the claim. The scheme of the Trading with the Enemy Act contemplates that federal courts may provide such determinations. § 17; cf. Markham v. Allen, 326 U.S. 490, 495, 66 S.Ct. 296, 298, 90 L.Ed. 256. The congressional purpose to put control of foreign assets in the hands of the President through the Custodian, so that there might be a unified national policy in the administration of the Act, argues strongly for federal determination of issues of rights in the blocked assets. Comity does not require abnegation to the extent that a federal court cannot adjudicate rights to the claim involved. 31 Affirmed. 32 Mr. Chief Justice VINSON took no part in the consideration or decision of this case. 33 Mr. Justice JACKSON dissents on the ground that ASCAP is not a banking institution under the definition in Executive Order No. 8785. 34 Mr. Justice FRANKFURTER, dissenting in part. 35 The Court recognizes that central to determining the effect of the Alien Property Custodian's freezing and vesting orders is the effect under New York law of petitioner's appointment as temporary receiver on June 13, 1941. It observes that 'The precise issue of state law involved, i.e., whether the temporary receiver under § 977-b of the New York Civil Practice Act is vested with title by virtue of his appointment, is one which has not been decided by the New York courts.' And it concedes that the language of the relevant New York statutes 'is easily susceptible to varying interpretations.' Yet it puts its own interpretation on those statutes though that interpretation may be displaced tomorrow by the only courts which have power to render an authoritative interpretation of New York law—the courts of the State of New York. 36 In other cases that have come before us in which decision of a federal issue of the necessity for its decision depended on a seriously doubtful question of State law, we have directed that application should first be made to the courts of the State for final disposition of the State question. Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 60 S.Ct. 628, 84 L.Ed. 876; Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971; Chicago v. Fieldcrest Dairies, Inc., 316 U.S. 168, 62 S.Ct. 986, 86 L.Ed. 1355; Spector Motor Service, Inc. v. McLaughlin, 323 U.S. 101, 65 S.Ct. 152, 89 L.Ed. 101; A.F. of L. v. Watson, 327 U.S. 582, 66 S.Ct. 761, 90 L.Ed. 873. In each of these cases the discretion of a federal court of equity could practicably be exercised in a way which retained ultimate jurisdiction of the case while permitting adjudication of the State question in the State courts. In each there were available State procedures capable of providing a prompt decision, and the litigation had not already consumed such an unconscionable amount of time as to make recourse to them inexpedient. Cf. Public Utilities Comm'n v. United Fuel Gas Co., 317 U.S. 456, 63 S.Ct. 369, 87 L.Ed. 396. The present case meets all those conditions, see N.Y.Civ.Prac.Act § 473, and should receive the same disposition. 37 It is true that in all but one of these cases recourse to the State courts also served the purpose of avoiding what might have proved to be unnecessary decision of a constitutional issue. But see Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 60 S.Ct. 628, 84 L.Ed. 876. Even more fundamental, however, was recognition of the importance of maintaining harmonious relations between parallel systems of State and federal courts in a situation where, because State law controlled, the State courts had the last word and so a federal court at best could make only an informed guess. That this was a dominant consideration in the mind of the Court appears plainly in the language of its opinions. The following passages are illustrative: 38 1. 'The last word on the meaning of Article 6445 of the Texas Civil Statutes, and therefore the last word on the statutory authority of the Railroad Commission in this case, belongs neither to us nor to the district court but to the supreme Court of Texas. In this situation a federal court of equity is asked to decide an issue by making a tentative answer which may be displaced tomorrow by a state adjudication. * * * The reign of law is hardly promoted if an unnecessary ruling of a federal court is thus supplanted by a controlling decision of a state court. * * * 39 'Few public interests have a higher claim upon the discretion of a federal chancellor than the avoidance of needless friction with state policies, whether the policy relates to the enforcement of the criminal law, Fenner v. Boykin, 271 U.S. 240, 46 S.Ct. 492, 70 L.Ed. 927; Spielman Motor (Sales) Co. v. Dodge, 295 U.S. 89, 55 S.Ct. 678, 79 L.Ed. 1322; or the administration of a specialized scheme for liquidating embarrassed business enterprises, Pennsylvania v. Williams, 294 U.S. 176, 55 S.Ct. 380, 79 L.Ed. 841, 96 A.L.R. 1166; or the final authority of a state court to interpret doubtful regulatory laws of the state, Gilchrist v. Interborough Co., 279 U.S. 159, 49 S.Ct. 282, 73 L.Ed. 652; cf. Hawks v. Hamill, 288 U.S. 52, 61, 53 S.Ct. 240, 243, 77 L.Ed. 610. These cases reflect a doctrine of abstention appropriate to our federal system whereby the federal courts, 'exercising a wise discretion,' restrain their authority because of 'scrupulous regard for the rightful independence of the state governments' and for the smooth working of the federal judiciary. See Cavanaugh v. Looney, 248 U.S. 453, 457, 39 S.Ct. 142, 143, 63 L.Ed. 354; Di Giovanni v. Camden Ins. Ass'n, 296 U.S. 64, 73, 56 S.Ct. 1, 5, 80 L.Ed. 47.' Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496, 499—501, 61 S.Ct. 643, 644, 645, 85 L.Ed. 971. 40 2. 'We are of the opinion that the procedure which we followed in the Pullman case should be followed here. Illinois has the final say as to the meaning of the ordinance in question. It also has the final word on the alleged conflict between the ordinance and the state Act. The determination which the District Court, the Circuit Court of Appeals or we might make could not be anything more than a forecast—a prediction as to the ultimate decision of the Supreme Court of Illinois. * * * As we said in the Pullman case, 'The resources of equity are equal to an adjustment that will avoid the waste of a tentative decision' and any 'needless fiction with state policies.' * * * It is an exercise of a 'sound discretion, which guides the determination of courts of equity.' Beal v. Missouri Pacific R. Co., supra, 312 U.S. (45), at page 50, 61 S.Ct. (418), at page 421, 85 L.Ed. 577. In this case that discretion calls for a remission of the parties to the state courts which alone can give a definitive answer to the major questions posed. Plainly they constitute the more appropriate forum for the trial of those issues. See 54 Harv.L.Rev. 1379. Considerations of delay, inconvenience, and cost to the parties, which have been urged upon us, do not call for a different result. For we are here concerned with the much larger issue as to the appropriate relationship between federal and state authorities functioning as a harmonious whole.' Chicago v. Fieldcrest Dairies, 316 U.S. 168, 171—173, 62 S.Ct. 986—988, 86 L.Ed. 1355. 41 3. '* * * if, as the District C urt thought, this Florida law is not self-executing, suits seeking to raise the due process question or any constitutional question would be premature until Florida supplied sanctions for its enforcement. A decision today on the merits might, therefore, amount to no more than an advisory opinion. * * * The resources of equity are not inadequate to deal with the problem so as to avoid unnecessary friction with state policies, while selective cases go forward in the state courts for an orderly and expeditious adjudication of the state law questions.' A.F. of L. v. Watson, 327 U.S. 582, 598—599, 66 S.Ct. 761, 769, 90 L.Ed. 873. 42 So here, though no constitutional issue is present, regard for the respective orbits of State and federal tribunals is the best of reasons, as a matter of judicial administration, for requiring a definitive adjudication by the New York courts rather than proceeding on the basis of our own tentative guess as to the meaning of the New York statutes. That federal issues may remain is no justification for refusing to submit to the New York courts a separable issue of New York law. We have no occasion to assume that they will go on to decide these federal questions when a federal court has expressly retained jurisdiction to decide them. Cf. Federal Power Comm'n v. Pacific Power & L. Co., 307 U.S. 156, 160, 59 S.Ct. 766, 768, 83 L.Ed. 1180. 43 We should remand the case to the District Court with instructions to retain jurisdiction pending submission proceedings of New York by appropriate proceedings of the question whether title to AKM's claim against ASCAP passed to petitioner upon his appointment as temporary receiver. 1 Tom C. Clark, Attorney General, as Successor to the Alien Property Custodian was duly substituted for the latter. 2 ASCAP, having stipulated to the entry of a judgment against it, did not appeal. It filed a motion here to be made a party. It was permitted to argue and there is now no occasion to grant the motion. It is denied. 3 By the Joint Resolution of May 7, 1940, 54 Stat. 179. 4 6 F.R. 2897, 12 U.S.C.A. § 95a note. 5 For opinions of the New York courts relating to the petitioner's action against ASCAP, see Propper v. Buck, N.Y. Law Journal, October 29, 1941, p. 1268, col. 5; Propper v. Buck, 1st Dept., 263 App.Div. 807, 32 N.Y.S.2d 103; Propper v. Buck, Sup.Ct.N.Y.Co., 178 Misc. 76, 33 N.Y.S.2d 11, affirmed 263 App.Div. 948, 34 N.Y.S.2d 134; Propper v. Taylor, Sup.Ct.N.Y.Co., 186 Misc. 70, 58 N.Y.S.2d 829, affirmed 1st Dept., 270 App.Div. 890, 62 N.Y.S.2d 602; Propper v. Taylor, Sup.Ct.N.Y.Co., 186 Misc. 72, 58 N.Y.S.2d 831, modified, 1st Dept., 270 App.Div. 890, 63 N.Y.S.2d 601. 6 This latter issue was brought forward by the petition for certiorari, Question Presented No. 3, and before argument its discussion by brief and at the bar was formally requested by this Court, although no order to that effect was entered. 7 See Trading with the Enemy Act, 50 U.S.C.App. §§ 7(c) and 616, 50 U.S.C.A.Appendix, §§ 7(c), 616: § 616. * * * and any property or interest of any foreign country or national thereof shall vest, when, as, and upon the terms, directed by the President, in such agency or person as may be designated from time to time by the President, and upon such terms and conditions as the President may prescribe such interest or property shall be held, used, administered, liquidated, sold, or otherwise dealt with in the interest of and for the benefit of the United States, and such designated agency or person may perform any and all acts incident to the accomplishment or furtherance of these purposes; * * *.' See Clark v. Uebersee Finanz-Korp., 332 U.S. 480, 68 S.Ct. 174, 92 L.Ed. 88. 8 Compare Great Northern R. Co. v. Sutherland, 273 U.S. 182, 47 S.Ct. 315, 71 L.Ed. 596, where the Custodian vested himself by order on a corporation the shares of stock appearing on the corporation's books in the name of an alien enemy. It may be that all property subject to blocking may not be subject to vesting. Trading with the Enemy Act, as amended by First War Powers Act, 55 Stat. 838, 839, Title III(1)(B). Compare Bishop, Judicial Construction of the Trading with the Enemy Act, 62 Harv.L.Rev. 721, 723. 9 55 Stat. 838, 840, 50 U.S.C.App. § 617, 50 U.S.C.A.Appendix, § 617. 10 54 Stat. 179: 'During time of war or during any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise, investigate, regulate, or prohibit, under such rules and regulations as he may prescribe, by means of licenses or otherwise, any transactions in foreign exchange, transfers of credit between or payments by or to banking institutions as defined by the President, * * *.' 11 54 Stat. 179: 'Sec. 2. Executive Order Numbered 8389 of April 10, 1940, and the regulations and general rulings issued thereunder by the Secretary of the Treasury are hereby approved and confirmed.' 12 6 F.R. 2898, § 5: 'F. The term 'banking institution' as used in this Order shall include any person engaged primarily or incidentally in the business of banking, of granting or transferring credits, or of purchasing or selling foreign exchange or procuring purchasers and sellers thereof, as principal or agent, or any person holding credits for others as a direct or incidental part of his business, or brokers; and, each principal, agent, home office, branch or correspondent of any person so engaged shall be regarded as a separate 'banking institution." 13 Executive Order No. 8785, supra. 14 See United States Treasury Department, Administration of the Wartime Financial & Property Controls of the United States Government (1942), pp. 1—4. 15 Central Trust Co. v. Garvan, 254 U.S. 554, 41 S.Ct. 214, 65 L.Ed. 403; United States v. Chemical Foundation, 272 U.S. 1, 47 S.Ct. 1, 71 L.Ed. 131; Great Northern R. Co. v. Sutherland, 273 U.S. 182, 47 S.Ct. 315, 71 L.Ed. 596; Markham v. Allen, 326 U.S. 490, 66 S.Ct. 296, 90 L.Ed. 256; Clark v. Uebersee Finanz-Korp., 332 U.S. 480, 68 S.Ct. 174, 92 L.Ed. 88. 16 There is a suggestion that Congress could not, because of the Tenth Amendment, constitutionally abrogate the power of New York through its courts, in peacetime, to deal with the local assets of defunct foreign corporations. The chief reliance is placed upon Clark v. Williard, 294 U.S. 211, 55 S.Ct. 356, 79 L.Ed. 865, 98 A.L.R. 347, a case that held that as between states, the tate of the location of corporation assets had control of their distribution in liquidation. It cannot be seriously doubted that the danger of war was sufficiently grave at the time of the freezing order, June 14, 1941, to justify the President's action respecting Austrian property. Cf. Silesian-American Corp. v. Clark, 332 U.S. 469, 474—477, 68 S.Ct. 179, 181, 182, 92 L.Ed. 81. 17 50 U.S.C.App. §§ 7(c), 9(a), 50 U.S.C.A.Appendix, §§ 7(c), 9(a). Cf. Clark v. Uebersee Finanz-Korp., 332 U.S. 480, 487, 68 S.Ct. 174, 177, 92 L.Ed. 88; Central Trust Co. v. Garvan, 254 U.S. 554, 567—568, 41 S.Ct. 214, 215, 65 L.Ed. 403; Great Northern R. Co. v. Sutherland, 273 U.S. 182, 194, 47 S.Ct. 315, 319, 71 L.Ed. 596; Becker Steel Co. v. Cummings, 296 U.S. 74, 79, 56 S.Ct. 15, 18, 80 L.Ed. 54; Josephberg v. Markham, 2 Cir., 152 F.2d 644, 649. 18 293 N.Y. 542, 550, 58 N.E.2d 726, 728: 'The fact that Federal regulations governing transactions in foreign exchange prevent the payment to Standard until a license under Executive Order No. 8389, as amended, * * * is procured does not make conditional the obligation of the New York Agency to pay. (See United States Treasury Department, General Ruling No. 12(4) under Executive Order No. 8389 as amended; also Feuchtwanger v. Central Hanover Bank, 88 N.Y. 342, 43 N.E.2d 434.)' Cf. Id., 299 N.Y. 113, 85 N.E.2d 894. Compare Commission for Polish Relief v. Banca N. A. Rumaniei, 288 N.Y. 332, 43 N.E.2d 345. 19 '(d) Any transfer affected by the Order and/or this general ruling and involved in, or arising out of, any action or proceeding in any Court within the United States shall, so far as affected by the Order and/or this general ruling, be valid and enforceable for the purpose of determining for the parties to the action or proceeding the rights and liabilities therein litigated; Provided, however, That no attachment, judgment, decree, lien, execution, garnishment, or other judicial process shall confer or create a greater right, power, or privilege with respect to, or interest in, any property in a blocked account than the owner of such property could create or confer by voluntary act prior to the issuance of an appropriate license.' See also Public Circular No. 31, August 2, 1946, 11 F.R. 8351. 20 E.g., Decker v. Gardner, 124 N.Y. 334, 26 N.E. 814, 11 L.R.A. 480; see Keeney v. Home Insurance Co., 71 N.Y. 396, 401, 27 Am.Rep. 60. 21 E.g., Mutual Brewing Co. v. New York & C.P.F. Co., 16 App.Div. 149, 45 N.Y.S. 101; Metropolitan Life Ins. Co. v. Sanborn, 34 Misc. 531, 69 N.Y.S. 1009; see N.Y. General Corporation Law, McKinney's Consol.Laws, c. 23, §§ 162, 163, 168, and annotations thereto. Petitioner calls our attention to Nealis v. American Tube & Iron Co., 150 N.Y. 42, 45, 44 N.E. 944, a case not cited to the Court of Appeals. This case says that a temporary receiver under a different statute 'is vested with title, and represents the corporation and its creditors as fully as a permanent receiver after final judgment of dissolution.' Page 45 of 150 N.Y., page 945 of 44 N.E. This case, however, involved the right of a temporary receiver to sue and the opinion deals with that problem rather than the distinction between a right to obtain possession and title. See In re Warren E. Smith Co., 31 App.Div. 39, 52 N.Y.S. 877, 884. 22 Connecticut R. & L. Co. v. Palmer, 305 U.S. 493, 59 S.Ct. 316, 83 L.Ed. 309. 23 Cf. West v. Edward Rutledge Timber Co., 244 U.S. 90, 100, 37 S.Ct. 587, 591, 61 L.Ed. 1010. 24 Where there is no suggestion to hold and send to a state court for the resolution of a state issue, we decide issues of state law. See cases in federal courts under diversity jurisdiction. Wichita Royalty Co. v. City National Bank, 306 U.S. 103, 59 S.Ct. 420, 83 L.Ed. 515; West v. A.T. & T. Co., 311 U.S. 223, 61 S.Ct. 179, 85 L.Ed. 139, 132 A.L.R. 956; Fidelity Trust Co. v. Field, 311 U.S. 169, 61 S.Ct. 176, 85 L.Ed. 109; Six Companies v. Highway Dist., 311 U.S. 180, 61 S.Ct. 186, 85 L.Ed. 114; Stoner v. New York Life Ins. Co., 311 U.S. 464, 61 S.Ct. 336, 85 L.Ed. 284; Palmer v. Hoffman, 318 U.S. 109, 117, 63 S.Ct. 477, 482, 87 L.Ed. 645, 144 A.L.R. 719. 25 See Markham v. Allen, 326 U.S. 490, 66 S.Ct. 296, 90 L.Ed. 256; Commonwealth Trust Co. v. Bradford, 297 U.S. 613, 56 S.Ct. 600, 80 L.Ed. 920; Clark v. Tibbetts, 2 Cir., 167 F.2d 397, 401.

34

337 U.S. 498 69 S.Ct. 1251 93 L.Ed. 1499 FEDERAL POWER COMMISSIONv.PANHANDLE EASTERN PIPE LINE CO. et al. No. 558. Argued April 22, 1949. Decided June 20, 1949. Mr. Bradford Ross, Washington, D.C., for petitioner. Messrs. Robert P. Patterson, New York City, and Jeff A. Robertson, Topeka, Kan., for respondents. Mr. Justice REED delivered the opinion of the Court. 1 Stated broadly this certiorari brings before us for review a problem involving the scope of the power over the gas reserves of a natural-gas company given to the Federal Power Commission by the Natural Gas Act. 52 Stat. 821, as amended, 56 Stat. 83, 15 U.S.C.A. § 717 et seq. Specifically the question to be decided is whether a natural-gas company, subject to the Act, may sell the leases covering an estimated twelve per cent of its total gas reserves without the approval and contrary to an order of the Commission. 2 The issue is made very sharply because the District Court and the Court of Appeals have refused an injunction, sought by the Commission, to hold the consummation of the sale in abeyance until the Commission, through an admittedly permissible investigation, can determine whether the disposal of these reserves will impair the ability of Panhandle to supply its present and prospective customers in the area which it has undertaken to serve as a public utility. The Commission may find that public interest will best be served by requiring Panhandle to retain these reserves. The public interest has strong appeal to a court of equity for its remedies once a legal right is fairly in controversy.1 3 Respondent, Panhandle Eastern Pipe Line Company (herein called Panhandle), a Delaware corporation, transports and markets natural gas in interstate commerce by means of its pipe-line system which runs from Texas into Michigan. In addition it owns or controls gas-producing properties in Kansas, Oklahoma, and Texas. 4 In September, 1948, Panhandle organized Hugoton Production Company (hereinafter called Hugoton), also a Delaware corporation. On October 11, 1948, pursuant to a written agreement between the two companies, Panhandle transferred to Hugoton gas leases on approximately 97,000 acres of land in Kansas and $675,000 in cash. In return Panhandle received all the outstanding capital stock of Hugoton and the option to purchase on or after January 1, 1965, all or part of the gas produced from this land, which is at present undeveloped and not connected with any pipe-line system. The gas reserves under this acreage are estimated at approximately 700 billion cubic feet. Hugoton thereafter contracted to sell to the Kansas Power and Light Company for a period of fifteen years from November 1, 1949, to November 1, 1964, the gas produced from these leases, which, according to the contract, was to be consumed wholly within the State of Kansas. 5 On the same date as the transaction between Panhandle and Hugoton, Panhandle declared a dividend of the Hugoton stock to the holders of its common stock at the rate of one-half share of Hugoton stock for each share of common stock of Panhandle. The dividend was to be paid November 17, 1948, to Panhandle's stockholders of record on October 29, 1948. Nothing called to our attention indicates any control retained by Panhandle over the Hugoton stock. 6 On October 26, 1948, the Federal Power Commission (hereinafter called the Commission) ordered an investigation 'pursuant to the provisions of Section 14 of the Natural Gas Act, of the fa ts and circumstances involved in the formation and proposed operation of the Hugoton Production Company and the transfer to said company by Panhandle Eastern of the naturalgas reserves * * *.' By supplementary order of November 10, 1948, Hugoton was joined as a party, a date for a public hearing was fixed, and Hugoton and Panhandle ordered to show cause why they should not be directed to cancel the contract, and why Panhandle should not be prohibited from transferring the leases without the consent of the Commission and from distribution the Hugoton stock to its stockholders. Pending a final determination the Commission ordered that the status quo be maintained by Panhandle and Hugoton. 7 Upon the apparent refusal of Panhandle to company with this order the Commission on November 13, 1948, instituted the instant suit in the United States District Court for the District of Delaware, seeking a preliminary injunction and a temporary restraining order to compel Panhandle to proceed no further with the stock distribution and to maintain the status quo pending the final determination of the questions for which the hearing before the Commission had been set. The district court issued the temporary pestraining order which has been kept in effect by successive orders and which enjoined Panhandle from issuing to its stockholders the dividend of Hugoton stock. Panhandle was ordered to cause Hugoton to refrain from transferring any of the gas leases and from issuing or transferring any of it capital stock. After a hearing the district court refused to grant the preliminary injunction on the ground that there had not been shown any basis for the relief sought by the Commission. 8 On appeal the Court of Appeals for the Third Circuit affirmed the judgment of the district court on the ground that § 1(b) of the Natural Gas Act, excluding 'the production or gathering of natural gas' from the Commission's jurisdiction left the transfer of gas leases to state regulation and outside the scope of the Commission's regulatory powers. 172 F.2d 57. The State Corporation Commission of Kansas had been granted leave to intervene in the Court of Appeals in opposition to the Federal Power Commission. 9 To consider the important question of the applicability of the Natural Gas Act, to this transaction, we granted certiorari. 336 U.S. 935, 69 S.Ct. 748. 10 Without entering upon another review of its legislative history,2 suffice it to say that the Natural Gas Act did not envisage federal regulation of the entire natural-gas field to the limit of constitutional power. Rather it contemplated the exercise of federal power as specified in the Act, particularly in that interstate segment which the states were powerless to regulate because of the Commerce Clause of the Federal Constitution.3 The jurisdiction of the Federal Power Commission was to complement that of the state regulatory bodies.4 Accordingly, Congress in § 1(b) of the Act not only prescribed the intended reach of the Commission's power, but also specified the areas into which this power was not to extend. Section 1(b) provides as follows: 11 '(b) The provisions of this Act shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.' 12 'This section determines the Act's coverage and does so in the light of the situation existing at the time. Three things and three only Congress drew within its own regulatory power, delegated by the Act to its agent, the Federal Power Commission. These were: (1) The transportation of natural gas in interstate commerce; (2) its sale in interstate commerce for resale; and (3) natural gas companies engaged in such transportation or sale.' Panhandle Eastern Pipe Line Co. v. Public Service Commission of Indiana, 332 U.S. 507, 516, 68 S.Ct. 190, 195, 92 L.Ed. 128. The Act, moreover, expressly exempts from its coverage5 (1) any other transportation or sale of natural gas; (2) the local distribution of natural gas; (3) the facilities used for local distribution; and (4) the production and gathering of natural gas. 13 The Commission seeks to distinguish between the activities of production and gathering, such as drilling, spacing wells, or collecting gas, and the facilities, such as reserves and gas leases, used therefor and argues that only the former were excluded from the coverage of the Act. In support of this position it is pointed out that the section specifically exempts both the local distribution and the facilities used therefor while it makes no mention of the facilities used for production or gathering.6 In the face of the unambiguous language of the Act and its legislative background, we cannot ascribe such a narrow meaning to the words, 'the production or gathering of natural gas.' In Colorado Interstate Gas Co. v. Federal Power Commission, 324 U.S. 581, 603, 65 S.Ct. 829, 839, 89 L.Ed. 1206, we said that this phrase comprehended the producing properties and gathering facilities of a natural-gas company. We now adhere to this natural and clear meaning of the words and their obvious expression of congressional intent.7 Of course leases are an essential part of production. 14 The Commission cites §§ 5(b), 6(a) and (b), 8(a), 9(a), 10(a), and 14(b) to show that Congress intended 'to confer a certain measure of authority upon the Commission' over the production and gathering of gas. These sections empower the Commission to make investigations, to prescribe rules for the keeping of accounts and records by the natural-gas companies, and to require that the companies file such reports as are deemed necessary by the Commission in the proper administration of the Act. These powers are inquisitorial in nature and were designed to aid the Commission in exercising its powers and 'to serve as a basis for recommending further legislation to the Congress.' Section 14(b), quoted below, comes closest to supporting the Commission's argument but that confers only power to obtain information.8 Although these sections bear evidence of congressional consideration of the relationship of production properties to other elements of the natural-gas business, they do not even by implication suggest to us an extension of the regulatory provisions of the Act to cover incidents connected with the production or gathering of gas. 15 In Colorado Interstate Gas Co. v. Federal Power Commission, supra, 324 U.S. at page 602, 65 S.Ct. at page 839, the Court in considering the more important of these sections said that they described powers which were aids to the 'normal conventions' of rate making. We held that the Commission in exercising its rate-making authority could include the fair value of the producing and gathering facilities in the rate base of a natural-gas company. The primary duty of the Commission is to fix just and reasonable rates for the transportation and sale of natural gas in interstate commerce for resale. For this purpose the Court permitted the Commission to examine and consider the cost of production and gathering. The use of such data for rate making is not a precedent for regulation of any part of production or marketing. Before the Colorado Interstate decision, it was apparent that the value of producing facilities and the cost of gas bought by a natural-gas company from producers would be weighty factors in rate making whether a rate-base method or other method for fixing rates was used. Low valuation by the Commission of producing properties or low-cost allowance for purchased gas discourages exploration for gas or its sale in interstate commerce.9 Congress knew this necessary relationship between production and distribution but excluded the Commission from exercising any direct control or regulation over the actual production and gathering of natural gas. 16 The Commission urges it has jurisdiction over the transaction between Panhandle and Hugoton from the powers granted to it by § 7(c) of the Act which authorizes it to issue certificates of convenience and necessity for the interstate transportation and sale of natural gas and those granted to it by §§ 4 and 5 to determine reasonable rates for such transportation and sale. It is point out that Panhadle in three applications for certificates of convenience and necessity to construct additional pipeline facilities had included the acreage here involved as part of its gas reserves, and certificates were issued upon the finding by the Commission that Panhandle had adequate reserves to warrant its expansion.10 Moreover Panhandle had been permitted to include these reserves in its rate base as 'used and useful property.' The Commission, therefore, argues that these gas leases which Panhandle proposes to grant to Hugoton have been dedicated to the discharge of Panhandle's public-utility obligation to render adequate service at reasonable and nondiscriminatory rates. From these circumstances, the Commission concludes that these leases cannot be relinquished by Panhandle without the consent of the Commission, which has the implied power to protect its rate making function and to insure the maintenance of adequate service by a natural-gas company. Sections 4, 5 and 7 do not concern the producing or gathering of natural gas; rather they have reference to the interstate sale and transportation of gas and are so limited by their express terms. Thus §§ 4(a), (b), (c), 5(a) and 7(c) speak of 'transportation or sale of natural gas subject to the jurisdiction of the Commission' while § 7(a) and (b) refer respectively to 'transportation facilities' and 'facilities subject to the jurisdiction of the Commission.'11 Nothing in the sections indicate that the power given to the Commission over natural-gas companies by § 1(b) could have been intended to swallow all the exceptions of the same section and thus extend the power of the Commission to the constitutional limit of congressional authority over commerce. The repetition of the words 'subject to the jurisdiction' makes clear to us the intent to keep the Commission's hands out of the excepted local matters. The same answer applies to petitioner's argument that § 16 gives it authority to stop sales of leases.12 The power to do the things appropriate to carry out the provisions of the Act can hardly be taken to rescind a prohibition against certain actions. 17 The Federal Power Commission leans heavily upon § 7(b) which provides that no natural-gas company may abandon any of its facilities subject to the jurisdiction of the Commission without the prior approval of the Commission.13 The argument here is that since natural gas is the 'lifeblood' of a pipe-line system, a company by disposing of its gas reserves, unhampered by Commission control, may render itself unable to continue service; consequently abandonment of facilities and service without the consent of the Commission will result. The argument begs the question. The section like those above, covers only 'facilities subject to the jurisdiction of the Commission.' 18 To accept these arguments springing from power to allow interstate service, fix rates, and control abandonment would establish wide control by the Federal Power Commission over the production and gathering of gas. It would invite expansion of power into other phases of the forbidden area.14 It would be an assumption of powers specifically denied the Commission by the words of the Act as explained in the report and on the floor of both Houses of Congress.15 The legislative history Footnote 15--Continued. amended, was reported by the Committee on Interstate and Foreign Commerce of the Seventy-fourth Congress, second session, with a recommendation that it pass. If enacted, the present bill would for the first time provide for the regulation of natural-gas companies transporting and selling natural gas in interstate commerce. It confers jurisdiction upon the Federal Power Commission over the transportation of natural gas in interstate commerce, and the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use. The States have, of course, for many years regulated sales of natural gas to consumers in intrastate transactions. The States have also been able to regulate sales to consumers even though such sales are in interstate commerce, such sales being considered local in character and in the absence of congressional prohibition subject to State regulation. (See Pennsylvania Gas Co. v. Public Service Commission (1920), 252 U.S. 23 (40 S.Ct. 279, 64 L.Ed. 434).) There is no intention in enacting the present legislation to disturb the States in their exercise of such jurisdiction. However, in the case of sales for resale, or so-called wholesale sales, in interstate commerce (for example, sales by producing companies to distributing companies) the legal situation is different. Such transact ons have been considered to be not local in character and, even in the absence of Congressional action, not subject to State regulation. (See Missouri v. Kansas Gas Co. (1924), 265 U.S. 298 (44 S.Ct. 544, 68 L.Ed. 1027), and Public (Utilities) Commission v. Attleboro Steam & Electric Co. (1927), 273 U.S. 83 (47 S.Ct. 294, 71 L.Ed. 549).) The basic purpose of the present legislation is to occupy this field in which the Supreme Court has held that the States may not act. '* * * The bill takes no authority from State commissions, and is so drawn as to complement and in no manner usurp State regulatory authority, and contains provisions for cooperative action with State regulatory bodies. * * * 'Your committee believes that this legislation is highly desirable to fill the gap in regulation that now exists by reason of the lack of authority of the State commissions.' H.R.Rep.No.709, 75th Cong., 1st Sess., pp. 1—3. During the debate on the bill in the House its sponsor, Chairman Lea of the Committee on Interstate and Foreign Commerce made the following explanatory statements: Footnote 15--Continued. 19 'The primary purpose of the pending bill is to provide Federal regulation, in those cases where the State commissions lack authority, under the interstate-commerce law. This bill takes nothing from the State commissions; they retain all the State power they have at the present time. This bill would apply to the transportation of natural gas in interstate commerce and to the sale of natural gas in interstate commerce for resale or public consumption. 20 'The bill does not apply to the production and gathering of gas.' 81 Cong.Rec. 6721. 21 Likewise on the floor of the Senate, Chairman Wheeler of the Committee on Interstate Commerce gave a similar interpretation to the Act: 22 'Mr. Austin. Mr. President, may I ask the Senator from Montana (Mr. Wheeler) a question concerning this bill? Does the bill undertake to regulate the production of natural gas, or does it undertake to regulate the producers of natural gas? 23 'Mr. Wheeler. It does not attempt to regulate the producers of natural gas or the distributors of natural gas; only those who sell it wholesale in interstate commerce. * * * 24 'Mr. Austin. Mr. President, will the Senator yield for one other inquiry? 25 'Mr. Wheeler. Yes. 26 'Mr. Austin. Is the bill limited in its scope to the regulation of transportation? 27 'Mr. Wheeler. Yes; it is limited to transportation in interstate commerce, and it affects only those who sell gas wholesale. 28 'Mr. King. Mr. President, I should like to obtain information from the Senator as to the implications that arise from the bill, and what States it would affect. As an illustration, if gas is produced in Wyoming and is transported for consumption into the Senator's State or my Stat, would the Federal Power Commission have to do with such an activity? 29 'Mr. Wheeler. No; and let me say to the Senator that, as a matter of fact, the bill does not interfere with the State regulation, in any way, shape or form.' 81 Cong.Rec. 9312. 30 'Mr. Connally. Is it not also true, even though the utility commissioners advocate it, that whenever a Federal agency takes over an activity such as this the State authorities begin to shift of lose of this Act is replete with evidence of the care taken by Congress to keep the power over the production and gathering of gas within the states.16 This probably occurred because the state legislatures, in the interests of conservation, had delegated broad and elaborate power to their regulatory bodies over all aspects of producing gas.17 The Natural Gas Act was designed to supplement state power and to produce a harmonious and comprehensive regulation of the industry.18 Neither state nor federal regulatory body was to encroach upon the jurisdiction of the other.19 Congress enacted this Act after full consideration of the problems of production and distribution. It considered the state interests as well as the national interest. It had both producers and consumers in mind. Legislative adjustments were made to reconcile the conflicting views. 31 The District Court found as a fact, and the finding is undisputed by the Commission, that, 'It has been the practice in the natural gas industry for companies to trade freely in gas leases, and the Commission has never heretofore asserted the right to regulate transfers of such leases.' Thus for over ten years the Commission has never claimed the right to regulate dealings in gas acreage. Failure to use such an important power for so long a time indicates to us that the Commission did not believe the power existed.20 In the light of that history we should not by an extravagant, even if abstractly possible, mode of interpretation push powers granted over transportation and rates so as to include production. If possible all sections of the Act must be reconciled so as to produce a symmetrical whole.21 We cannot attribute to Congress the intent to grant such far-reaching powers as implicit in the Act when that body has endeavored to be precise and explict in defining the limits to the exercise of federal power.22 32 The Commission sought by injunction to enforce its order halting the transaction between Panhandle and Hugoton pending the outcome of its investigation. The Commission argues that at any rate the transfer should be enjoined until it can determine its own power and the necessity of using it. Injunctive aid was requested under § 20(a)23 of the Act and the general equiry power of the district court. To be entitled to judicial assistance, however, the order issued by the Commission must be valid and based on a statutory grant of power to the Commission. As we have held above that the transfer of undeveloped gas leases is an activity related to the production and gathering of natural gas and beyond the coverage of the Act, the authority of the Commission cannot reach the sales. A proposed transfer cannot be stopped by the Commission. It should not be permitted to delay what it cannot prevent.24 If the Commission is of the opinion that it should have power to control the disposition of leases by natural-gas companies, it is authorized to call the attention of Congress to that fact.25 33 The judgment of the Court of Appeals is accordingly affirmed. 34 Affirmed. 35 Mr. Justice MURPHY took no part in the consideration or decision of this case. 36 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS and Mr. Justice RUTLEDGE concur, dissenting. 37 The Court's judgment and opinion in this case go far toward scuttling the Natural Gas Act. 52 Stat. 821, as amended, 56 Stat. 83, 15 U.S.C.A. § 717 et seq. In that Act Congress declared it 'necessary in the public interest' for the Federal Government to regulate natural-gas companies engaged in the interstate transportation and sale of natural gas. Many sections of the Act detailed the authority granted the Federal Power Commission to regulate such companies and in addition § 16 granted broad congressional authority to the Commission 'to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules, and regulations as * * * necessary or appropriate to carry out the provisions' of the Act. Today's opinion interprets this Act as denying the Commission all authority to perform any action or issue any order to regulate an interstate company's interest in natural-gas properties. This interpretation deprives the Commission of the power to discharge its congressionally imposed duty to protect the public interest. 38 The Court's sterilizing interpretation rests on an exception to Commission authority appearing in § 1(b) of the Act.1 That exception provides that the Act shall not apply to 'the production or gathering of natural gas.' I agree with the Court that this language is 'unambiguous' and that this Court should give the language its 'clear and natural meaning.' 'Production' of gas would thus mean the act of bringing forth gas from the earth, and 'gathering' would mean the act of collecting gas after it has been brought forth. Such are the 'clear and natural' meanings we had heretofore attributed to these word symbols. Colorado Interstate Gas Co. v. Comm., 324 U.S. 581, 597 604, 65 S.Ct. 829, 837—840, 89 L.Ed. 1206; Interstate Natural Gas Co. v. Federal Power Comm., 331 U.S. 682, 689—691, 67 S.Ct. 1482, 1486—1487, 91 L.Ed. 1742. It was the physical acts incident to the 'production and gathering' of gas—local activities—that our prior decisions emphasized Congress intended to leave states free to regulate. Today the Court reads this congressionally granted privilege of states to regulate the act of 'production' as an absolute bar to the Federal Power Commission's regulation of the ownership of gas-reserve properties. Gas reserves are indispensable to proper service of interstate customers of an interstate natural-gas company. And in thus limiting the Commission's jurisdiction the Court leaves the Commission impotent to protect the public's interest in having interstate companies maintain adequate gas reserves. This disabling interpretation reads the Federal Act as though it contemplated 'ineffective regulation,' an interpretation directly opposed to that we gave the Ac in Panhandle Eastern Pipe Line Co. v. Public Service Comm., 332 U.S. 507, 520, 68 S.Ct. 190, 196, 92 L.Ed. 128. 39 Section 7(e) of the Act requires the Commission to issue certificates of convenience and necessity only if an interstate company is 'able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of the Act and the requirements, rules, and regulations of the Commission thereunder * * *.' As authorized by § 7(d), the Commission requires applicants for certificates to show 'the gas reserves which are to supply the market which is proposed to be served.'2 And § 7(b) denies a company power to 'abandon all or any portion of its facilities subject to the jurisdiction of the Commission * * *.' If evidence were needed to show the importance Congress attributed to the gas reserve facilities of a company, that evidence appears in §§ 7(b), 7(c) and 7(e). Jurisdiction to regulate a natural-gas company without jurisdiction to regulate its gas reserves would be like granting jurisdiction to regulate railroads without power to regulate the tracks, routes, rights-of-way, etc. And we have held that the Commission has jurisdiction under the Natural Gas Act to consider the gas producing properties in fixing rates. Colorado Interstate Gas Co. v. Federal Power Commission, 324 U.S. 581, 65 S.Ct. 829, 89 L.Ed. 1206; Panhandle Eastern Pipe Line Co. v. Federal Power Comm., 324 U.S. 635, 648—649, 65 S.Ct. 821, 827—828, 89 L.Ed. 1241. 40 The respondent company had its rate base fixed and its ability to serve the public determined on its claim to ownership of the very gas reserve properties the Court now permits it to sell to an affiliate over the protest of the Commission. According to allegations in the Commission's complaint the respondent gas company has already received from its customers large sums of money from rates which reflected expenses incurred in maintaining these reserves and for exploration and development costs in relation to them. But under the Court's holding today, these properties, increased in value by consumer contributions, can be given away by the respondent company to its newly formed affiliate. Congress could not have intended to render the Commission powerless to protect gas reserves necessary to continued consumer service and paid for by rates fixed to allow development of the reserves. 41 Furthermore the reserves, costing only $160,000, have now apparently been capitalized by the respondent's affiliated 'purchaser' at $10,000,000. If the gas reserves continue to be held by the respondent company the rates will be fixed on the basis of the original $160,000 cost. Panhandle Eastern Pipe Line Co. v. Federal Power Comm., 324 U.S. 635, 648, 65 S.Ct. 821, 827, 89 L.Ed. 1241. It is at least doubtful whether after today's holding the company can be prevented from hereafter charging rates based on the $10,000,000 inflated valuation. Thus the unwholesome practices that the Natural Gas Act was primarily designed to p event are given a new lease on life. For a purpose of the Act was to protect consumers and one of the evils it was aimed to prevent was the holding company technique of transfers and retransfers between parent corporations, their offsprings and affiliates. Federal Power Comm. v. Hope Natural Gas Co., 320 U.S. 591, 610, 64 S.Ct. 281, 291, 88 L.Ed. 333. 42 It seems inconceivable that Congress would have passed an Act to regulate natural gas companies with a wholly neutralizing exception to bar regulation of the gas reserves upon which the whole gas business depended. I cannot attribute such a meaningless and deceptive action to the Congress. While the Act itself grants broad Commission powers effectively to regulate gas companies, the Court's interpretation deprives the Commission of power essential to fixing fair rates and to protecting continued services during the life of a company's gas reserves. 43 Today's opinion regards Congress' action like that of the parent who ordered his offspring to go swimming with a stern admonition not to go near the water. 44 I would reverse. 1 Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.ct. 1086, 1089, 90 L.Ed. 1332; Yakus v. United States, 321 U.S. 414, 440, 64 S.Ct. 660, 674, 88 L.Ed. 834; Hecht Co. v. Bowles, 321 U.S. 321, 331, 64 S.Ct. 587, 592, 88 L.Ed. 754; Virginia R. Co. v. System Federation, 300 U.S. 515, 552, 57 S.Ct. 592, 601, 81 L.Ed. 789; City of Harrisonville v. W. S. Dickey Clay Co., 289 U.S. 334, 338, 53 S.Ct. 602, 603, 77 L.Ed. 1208. 2 The legislative history has been discussed by our prior opinions in Panhandle Eastern Pipe Line Co. v. Public Service Comm. of Indiana, 332 U.S. 507, 514—521, 68 S.Ct. 190, 193—197, 92 L.Ed. 128; Interstate Natural Gas Co. v. Federal Power Comm., 331 U.S. 682, 689—690, 67 S.Ct. 1482, 1486—1487, 91 L.Ed. 1742; Colorado Interstate Gas Co. v. Federal Power Comm., 324 U.S. 581, 601—603, 65 S.Ct. 829, 838—839, 89 L.Ed. 1206; Federal Power Comm. v. Hope Natural Gas Co., 320 U.S. 591, 609—613, 64 S.Ct. 281, 291 292, 88 L.Ed. 333; Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U.S. 498, 506—508, 62 S.Ct. 384, 387—388, 86 L.Ed. 371. 3 See H.R.Rep.No.2651, 74th Cong., 2d Sess., pp. 1—3; H.R.Rep.No.709, 75th Cong., 1st Sess., pp. 1—4; S.Rep.No.1162, 75th Cong., 1st Sess., pp. 1—3. 4 See Public Utilities Comm. v. United Fuel Gas Co., 317 U.S. 456, 467, 63 S.Ct. 369, 375, 87 L.Ed. 396; anhandle Eastern Pipe Line Co. v. Public Service Comm., 332 U.S. 507, 517—518, 68 S.Ct. 190, 195—196, 92 L.Ed. 128. 5 The House report on the Act, after quoting the exemption provisions of § 1(b), says: 'The quoted words are not actually necessary, as the matters specified therein could not be said fairly to be covered by the language affirmatively stating the jurisdiction of the Commission, but similar language was in previous bills, and, rather than invite the contention, however unfounded, that the elimination of the negative language would broaden the scope of the act, the committee has included it in this bill.' H.R.Rep.No.709, 75th Cong., 1st Sess., p. 3. 6 Actually, in the words of the House report, 'That part of the negative declaration stating that the act shall not apply to 'the local distribution of natural gas' is surplusage by reason of the fact that distribution is made only to consumers in connection with sales, and since no jurisdiction is given to the Commission to regulate sales to consumers the Commission would have no authority over distribution, whether or not local in character.' H.R.Rep.No.709, 75th Cong., 1st Sess., p. 3. 7 In a brief prepared by the Solicitor of the Federal Power Commission for the House Committee on Interstate and Foreign Commerce on the constitutionality of H.R. 11662, an earlier bill substantially similar to the Natural Gas Act, the following appears as part of the analysis of the bill: 'The bill makes no attempt to regulate the production or athering facilities of a natural-gas company, this function being purely local in character, nor is any attempt made to exercise control over distribution facilities.' Hearings before a subcommittee of the House Committee on Interstate and Foreign Commerce on H.R. 11662, 74th Cong., 2d Sess., p. 17. The Solicitor of the Federal Power Commission in testifying at the same hearing also answered the following question: 'Mr. Cole (Member of Committee). Does this bill give anywhere the Commission power over the source of natural gas in the different fields in a manner which we might call comparable to that which your Commission now has over hydro-electric generating plants? 'Mr. DeVane (Solicitor of the F.P.C.). It does not; no, it does not attempt to regulate the gathering rates or the gathering business. Section 11, I believe it is, of the bill deals with that.' P. 34. 8 '(b) The Commission may, after hearing, determine the adequacy or inadequacy of the gas reserves held or controlled by any natural-gas company, or by anyone on its behalf, including its owned or leased properties or royalty contracts; and may also, after hearing, determine the propriety and reasonableness of the inclusion in operating expenses, capital, or surplus of all delay rentals or other forms of rental or compensation for unoperated lands and leases. For the purpose of such determinations, the Commission may require any natural-gas company to file with the Commission true copies of all its lease and royalty agreements with respect to such gas reserves.' See H.R.Rep.No.709, 75th Cong., 1st Sess., p. 7. 9 Colorado Interstate Gas Co. v. Federal Power Comm., 324 U.S. 581, 603, 65 S.Ct. 829, 839, 89 L.Ed. 1206; Federal Power Comm. v. Hope Natural Gas Co., 320 U.S. 591, 610, 612, 64 S.Ct. 281, 291, 292, 88 L.Ed. 333. 10 5 F.P.C. 544, 546, 949, 952; F.P.C. Docket G—876, Order of June 10, 1948. 11 Colorado Interstate Gas Co. v. Federal Power Comm., 324 U.S. 581, 598, 65 S.Ct. 829, 837, 89 L.Ed. 1206. 12 'Sec. 16. The Commission shall have power to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules, and regulations as it may find necessary or appropriate to carry out the provisions of this act. * * *' 13 '(b) No natural-gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without the permission and approval of the Commission first had and obtained, after due hearing, and a finding by the Commission that the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or that the present or future public convenience or necessity permit such abandonment.' 14 Would it soon be contended that statutory power to require extension of service, § 7(a), included power to require exploration or acquisition of leases or allocation of production to interstate pipe lines in order to serve the public interest? 15 The report of the House Committee on Interstate and Foreign Commerce on H.R.6586, which became the Natural Gas Act, was adopted without change by the Senate Committee on Interstate Commerce as its report on the same bill. See note 3, supra. The following excerpts are taken from the report as particularly pertinent: 'The bill is substantially identical with H.R.12680 which, as their responsibility? If we turn this over to the Interstate Commerce Commission, essentially what they do will be reflected all over the country, because the interstate rates will be superimposed on the State commissions and they must necessarily be governed by them. Did not that happen to the railroads? 'Mr. Wheeler. There is no doubt about that, but this is an entirely different situation. 'Mr. Connally. Yes; one involves the railroads and the other involves gas. 'Mr. Wheeler. No. There is no attempt and can be no attempt under the provisions of the bill to regulate anything in the field except where it is not regulated at the present time. It applies only as to interstate commerce and only to the wholesale price of gas.' 81 Cong.Rec. 9313. 'Mr. Austin. Then, it would leave to the future the right to meet any effort o the part of the central government to acquire the natural resources of the State of Montana, or the State of Vermont, or any other State? 'Mr. Wheeler. Oh, yes. It does not touch it in any way, shape, or form, except to require the furnishing of information. 'Mr. Austin. I have great fear of these occult methods of acquiring the natural resources of our several States.' 81 Cong.Rec. 9314. 16 While Congress was considering the passage of the Natural Gas Act, a bill (H.R. 5711 and S.1919, 75th Cong., 1st Sess.) was introduced in both houses of Congress on March 17, 1937, which provided that 'this Act shall apply to the procurement of natural gas for the purpose of its transmission through pipe lines and its sale, exchange, transmission, or distribution in interstate commerce * * *.' The jurisdiction of the Federal Power Commission was defined as follows: 'The (Federal Power) Commission shall have jurisdiction over all facilities for the procurement of natural gas for its transmission through pipe lines and its sale, or for exchange, or distribution in interstate commerce, and over the transmission of natural gas in pipe lines in interstate commerce and over the sale, or exchange of natural gas in interstate commerce, and over all facilities connected therewith as parts of a system of natural-gas transmission operated in more than one State.' The provisions of this bill, however, failed of adoption; instead Congress enacted § 1(b) with its specific exemptions from the coverage of the Act. 17 See, for example, Kansas Gen.Stat., c. 55, §§ 701—713 (Supp.1947); Mich.Stat.Ann., c. 97, §§ 13.138(1)—13.140(10) (Supp.1947); Okla.Stat.Ann., tit. 52, c. 3, §§ 81—247; Texas Rev.Civ.Stat., tit. 102, § 6008 et seq. (Vernon, 1925, with Supp.1948); La.Gen.Stat. §§ 4766—4826.2. 18 Public Utilities Comm. v. United Fuel Gas Co., 317 U.S. 456, 467, 63 S.Ct. 369, 375, 87 L.Ed. 396. 19 Interstate Natural Gas Co. v. Federal Power Comm., 331 U.S. 682, 690, 67 S.Ct. 1482, 1487, 91 L.Ed. 1742. 20 Federal Trade Comm. v. Bunte Brothers, 312 U.S. 349, 352, 61 S.Ct. 580, 582, 85 L.Ed. 881; Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 315, 53 S.Ct. 350, 358, 77 L.Ed. 796. 21 Colorado Interstate Gas Co. v. Federal Power Comm., 324 U.S. 581, 602, 65 S.Ct. 829, 839, 89 L.Ed. 1206. 22 Section 5(b) reads: '(b) The Commission upon its own motion, or upon the request of any State commission, whenever it can do so without prejudice to the efficient and proper conduct of its affairs, may investigate and determine the cost of the production or transportation of natural gas by a natural-gas company in cases where the Commission has no authority to establish a rate governing the transportation or sale of such natural gas.' When the provisions of the bill which became the Natural Gas Act were being read for amendment on the floor of the House, § 5(b) was amended by inserting the italicized words. Mr. Boren, a member of the House Committee on Interstate and Fore gn Commerce, who submitted this amendment explained the purpose of it as follows: 'Mr. Boren. Mr. Chairman, my amendment has been agreed to by the committee. I offer the amendment in order to keep the jurisdiction of the Federal Government as clearly defined as possible from the jurisdiction of the State government in cases arising under the provisions of this bill. 'During the hearings I offer this amendment and made the following statement: "Mr. Chairman, I would like to make this observation for the record and as a challenge to the proponents of this bill: That subsection B of section 5 provides for a growth and for the extension of the influence of a Federal bureau, or commission, in a realm wherein this proposal submits on its own acknowledgment that the Federal authority and responsibility does not rightfully exist.' 'Mr. Chairman, this amendment clarifies the jurisdiction as between the Federal and State governments, and assures us that the Federal Government will not go into a realm where the State government already has proper authority to handle the problem. 'The committee has approved the amendment, and I have nothing further to say.' 81 Cong.Rec. 6728. 23 'Sec. 20. (a) Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this act, or of any rule, regulation, or order thereunder, it may in its discretion bring an action in the proper district court of the United States, the District Court of the United States for the District of Columbia, or the United States courts of any Territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices and to enforce compliance with this act or any rule, regulation, or order thereunder, * * *.' 24 Cf. Public Utilities Comm. v. United Fuel Gas Co., 317 U.S. 456, 468, 63 S.Ct. 369, 375, 87 L.Ed. 396. 25 In an analogous situation before the institution of this litigation, there had been uncertainty of opinion in the Commission as to the reach of the Act toward sales by independent producers and gatherers to natural-gas companies for transportation in interstate commerce. See reports of the Federal Power Commission on its Natural Gas Investigation (Docket G—580), transmitted to Congress on April 28, 1948. In part IV of the report subscribed to be Commissioners Smith and Wimberly, it is concluded at pp. 38 and 40: 'No reasonable basis is found in the Act or its legislative history for a conclusion that, although the 'activities' of production and gathering are exempt under Section 1(b), sales of natural gas which are made at arm's length by producers and gatherers who do not thereafter transport it in interstate commerce may be regulated. Unless such a distinction is specifically disclaimed, doubts and uncertainties will ontinue to be felt and expressed regarding the possible jurisdiction under the Natural Gas Act of those who only produce and gather natural gas an then sell it to others transporting such gas in interstate commerce.' Pp. 38—39. 'In view of the present unsettled state of this matter, it is desirable, as the Commission has heretofore recommended, that the Congress should adopt appropriate amendatory legislation to make it clear that independent producers or gatherers of natural gas, and their sales thereof to interstate pipe lines, are not subject to the provisions of the Natural Gas Act. Such action will confirm what clearly appears to have been the original intent of Congress when it enacted the Natural Gas Act in 1938.' Pp. 40—41. See also the report subscribed to by Commissioners Draper and Olds, pp. 12—14. Congress is now giving consideration to this problem. See H.R.79, H.R.1758, H.R.982, S.1498, and S.1831, 81st Cong., 1st Sess., and committee hearings thereon. 1 Today's opinion also relies on a 'finding of fact' by the District Court that the Commission had never heretofore 'asserted the right to regulate transfers of such leases.' The majority opinion views this 'finding' as an evidence that for ten years 'the Commission did not believe the power existed.' But this 'finding' of fact rests only on affidavits offered in respect to a motion for a preliminary injunction and should not be utilized as a prop to support the Court's interpretation of the Act. Moreover, the Commission points out that until the present time no such trading as is involved here had taken place. The Commission states in its brief that the finding of fact 'does not reflect the full picture. Until this time, such trading has taken place with the view of blocking in reserves and improving service, and so far as the Commission is presently aware, not to achieve results which would derogate from the Commission's jurisdiction.' 2 § 57.5(f) of the Commission's Order No. 99 (7 Fed.Reg. 6844).

78

337 U.S. 541 69 S.Ct. 1221 93 L.Ed. 1528 COHEN et al.v.BENEFICIAL INDUSTRIAL LOAN CORPORATION. BENEFICIAL INDUSTRIAL LOAN CORPORATION v. SMITH et a . Nos. 442, 512. Argued April 18, 1949. Decided June 20, 1949. Messrs. Philip B. Kurland, New York City, Charles Hershenstein, Jersey City, N.J., for Hannah Cohen, Ex'x and another. [Argument of Counsel from page 542 intentionally omitted] Mr. John M. Harlan, New York City, for Beneficial Industrial Loan corporation. Mr. Justice JACKSON delivered the opinion of the Court. 1 The ultimate question here is whether a federal court, having jurisdiction of a stockholder's derivative action only because the parties are of diverse citizenship, must apply a statute of the forum state which makes the plaintiff, if unsuccessful, liable for all expenses, including attorney's fees, of the defense and requires security for their payment as a condition of prosecuting the action. 2 Petitioners' decedent as plaintiff, brought in the United States District Court for New Jersey an action in the right of the Beneficial Industrial Loan Corporation, a Delaware corporation doing business in New Jersey. The defendants were the corporation and certain of its managers and directors. The complaint alleged generally that since 1929 the individual defendants engaged in a continuing and successful conspiracy to enrich themselves at the expense of the corporation. Specific charges of mismanagement and fraud extended over a period of eighteen years and the assets allegedly wasted or diverted thereby were said to exceed $100,000,000. The stockholder had demanded that the corporation institute proceedings for its recovery but, by their control of the corporation, the individual defendants prevented it from doing so. This stockholder, therefore, sought to assert the right of the corporation. One of 16,000 stockholders, he owned 100 of its more than two million shares, so that his holdings, together with 150 shares held by the intervenor, approximated 0.0125% of the outstanding stock and had a market value that had never exceeded $9,000. 3 The action was brought in 1943, and various proceedings had been taken therein when, in 1945, New Jersey enacted the statute which is here involved.1 Its general effect is to make a plaintiff having so small an interest liable for all expenses and attorney's fees of the defense if he fails to make good his complaint and to entitle the corporation to indemnity before the case can be prosecuted. These conditions are made applicable to pending actions. The corporate defendant therefore moved to require security, pointed to its by-laws by which it might be required to indemnify the individual defendants, and averred that a bond of $125,000 would be appropriate. 4 The District Court was of the opinion that the state enactment is not applicable to such an action when pending in a federal court, 7 F.R.D. 352. The Court of Appeals were of a contrary opinion and reversed, 3 Cir., 170 F.2d 44, and we granted certiorari. 336 U.S. 917, 69 S.Ct. 639. 5 Appealability. 6 At the threshold we are met with the question whether the District Court's order refusing to apply the statute was an appealable one. Title 28 U.S.C. § 1291, 28 U.S.C.A. § 1291, provides, as did its predecessors, for appeal only 'from all final decisions of the district courts,' except when direct appeal to this Court is provided. Section 1292 allows appeals also from certain interlocutory orders, decrees and judgments, not material to this case except as they indicate the purpose to allow appeals from orders other than final judgments when they have a final and irreparable effect on the rights of the parties. It is obvious that, if Congress had allowed appeals only from those final judgments which terminate an action, this order would not be appealable. 7 The effect of the statute is to disallow appeal from any decision which is tentative, informal or incomplete. Appeal gives the upper court a power of review, not one of intervention. So long as the matter remains open, unfinished or inconclusive, there may be no intrusion by appeal. But the District Court's action upon this application was concluded and closed and its decision final in that sense before the appeal was taken. 8 Nor does the statute permit appeals, even from fully consummated decisions, where they are but steps towards final judgment in which they will merge. The purpose is to combine in one review all stages of the proceeding that effectively may be reviewed and corrected if and when final judgment results. But this order of the District Court did not make any step toward final disposition of the merits of the case and will not be merged in final judgment. When that time comes, it will be too late effectively to review the present order and the rights conferred by the statute, if it is applicable, will have been lost, probably irreparably. We conclude that the matters embraced in the decision appealed from are not of such an interlocutory nature as to affect, or to be affected by, decision of the merits of this case. 9 This decision appears to fall in that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated. The Court has long given this provision of the statute this practical rather than a technical construction. Bank of Columbia v. Sweeney, 1 Pet. 567, 569, 7 L.Ed. 265; United States v. River Rouge Improvement Co., 269 U.S. 411, 414, 46 S.Ct. 144, 145, 70 L.Ed. 339; Cobbledick v. United States, 309 U.S. 323, 328, 60 S.Ct. 540, 542, 84 L.Ed. 783. 10 We hold this order appealable because it is a final disposition of a claimed right which is not an ingredient of the cause of action and does not require considerat on with it. But we do not mean that every order fixing security is subject to appeal. Here it is the right to security that presents a serious and unsettled question. If the right were admitted or clear and the order involved only an exercise of discretion as to the amount of security, a matter the statute makes subject to reconsideration from time to time, appealability would present a different question. 11 Since this order may be reviewed on appeal, the petition in No. 512, whereby the corporation asserts the right to compel security by mandamus, is dismissed. 12 Constitutionality. 13 Petitioners deny the validity of the statute under both Federal and New Jersey Constitutions. The latter question is ultimately for the state courts, and since they have made no contrary determination, we shall presume in the circumstances of this case that the statute conforms with the State constitution. 14 Federal Constitutional questions we must consider, because a federal court would not give effect, in either a diversity or nondiversity case, to a state statute that violates the Constitution of the United States. 15 The background of stockholder litigation with which this statute deals requires no more than general notice. As business enterprise increasingly sought the advantages of incorporation, management became vested with almost uncontrolled discretion in handling other people's money. The vast aggregate of funds committed to corporate control came to be drawn to a considerable extent from numerous and scattered holders of small interests. The director was not subject to an effective accountability. That created strong temptation for managers to profit personally at expense of their trust. The business code became all too tolerant of such practices. Corporate laws were lax and were not self-enforcing, and stockholders, in face of gravest abuses, were singularly impotent in obtaining redress of abuses of trust. 16 Equity came to the relief of the stockholder, who had no standing to bring civil action at law against faithless directors and managers. Equity, however, allowed him to step into the corporation's shoes and to seek in its right the restitution he could not demand in his own. It required him first to demand that the corporation vindicate its own rights but when, as was usual, those who perpetrated the wrongs also were able to obstruct any remedy, equity would hear and adjudge the corporation's cause through its stockholder with the corporation as a defendant, albeit a rather nominal one. This remedy born of stockholder helplessness was long the chief regulator of corporate management and has afforded no small incentive to avoid at least grosser forms of betrayal of stockholders' interests. It is argued, and not without reason, that without it there would be little practical check on such abuses. 17 Unfortunately, the remedy itself provided opportunity for abuse which was not neglected. Suits sometimes were brought not to redress real wrongs, but to realize upon their nuisance value. They were bought off by secret settlements in which any wrongs to the general body of share owners were compounded by the suing stockholder, who was mollified by payments from corporate assets. These litigations were aptly characterized in professional slang as 'strike suits.' And it was said that these suits were more commonly brought by small and irresponsible than by large stockholders, because the former put less to risk and a small interest was more often within the capacity and readiness of management to compromise than a large one. 18 We need not determine the measure of these abuses or the evils they produced on the one hand or prevented and redressed on the other. The Legislature of New Jersey, like that of other states,2 considered them sufficient to warrant some remedial measures. 19 The very nature of the stockholder's derivative action makes it one in the regulation of which the legislature of a state has wide powers. Whatever theory one may hold as to the nature of the corporate entity, it remains a wholly artificial creation whose internal relations between management and stockholders are dependent upon state law and may be subject to most complete and penetrating regulation, either by public authority or by some form of stockholder action. Directors and managers, if not technically trustees, occupy positions of a fiduciary nature, and nothing in the Federal Constitution prohibits a state from imposing on them the strictest measure of responsibility, liability and accountability, either as a condition of assuming office or as a consequence of holding it. 20 Likewise, a stockholder who brings suit on a cause of action derived from the corporation assumes a position, not technically as a trustee perhaps, but one of a fiduciary character. He sues, not for himself alone, but as representative of a class comprising all who are similarly situated. The interests of all in the redress of the wrongs are taken into his hands, dependent upon his diligence, wisdom and integrity. And while the stockholders have chosen the corporate director or manager, they have no such election as to a plaintiff who steps forward to represent them. He is a self-chosen representative and a volunteer champion. The Federal Constitution does not oblige the State to place its litigating and adjudicating processes at the disposal of such a representative, at least without imposing standards of responsibility, liability and accountability which it considers will protect the interests he elects himself to represent. It is not without significance that this Court has found it necessary long ago in the Equity Rules3 and now in the Federal Rules of Civil Procedure4 to impose procedural regulations of the class action not applicable to any other. We conclude that the state has plenary power over this type of litigation. 21 In considering specific objections to the way in which the State has exercised its power in this particular statute, it should be unnecessary to say that we are concerned only with objections which go to constitutionality. The wisdom and the policy of this and similar statutes are involved in controversies amply debated in legal literature5 but not for us to judge, and, hence not for us to remark upon. The Federal Constitution does not invalidate state legislation because it fails to embody the highest wisdom or provide the best conceivable remedies. Nor can legislation be set aside by courts because of the fact, if it be such, that it has been sponsored and promoted by those who advantage from it.6 In dealing with such difficult and controversial subjects, only experience will verify or disclose weaknesses and defects of any policy and teach lessons which may be applied by amendment. Within the area of constitutionality, the states should not be restrained from devising experiments, even those we might think dubious, in the effort to preserve the maximum good which equity sought in creating the derivative stockholder's action and at the same time to eliminate as much as possible its defects and evils. 22 It is said that this statute transgresses the Due Process Clause, Amend. 14, by being 'arbitrary, capricious and unreasonable;' the Equal Protection Clause by singling out small stockholders to burden most heavily; that it violates the Contract Clause, art. 1, § 10, cl. 1, and that its application to pending litigation renders it unconstitutionally retroactive. 23 The contention that this statute violates the Contract Clause of the Constitution is one in which we see not the slightest merit. Plaintiff's suit is entertained by equity largely because he had no contract rights on which to base an action at law, and hence none which is impaired by this legislation. 24 In considering whether the statute offends the Due Process Clause we can judge it only by its own terms, for it has had no interpretation or application as yet. It imposes liability and requires security for 'the reasonable expenses, including counsel fees which may be incurred' (emphasis supplied) by the corporation and by other parties defendant. The amount of security is subject to increase if the progress of the litigation reveals that it is inadequate or to decrease if it is proved to be excessive. A state may set the terms on which it will permit litigations in its courts. No type of litigation is more susceptible of regulation than that of a fiduciary nature. And it cannot seriously be said that a state makes such unreasonable use of its power as to violate the Constitution when it provides liability and security for payment of reasonable expenses if a litigation of this character is adjudged to be unsustainable. It is urged that such a requirement will foreclose resort by most stockholders to the only available judicial remedy for the protection of their rights. Of course, to require security for the payment of any kind of costs or the necessity for bearing any kind of expense of litigation has a deterring effect. But we deal with power, not wisdom; and we think, notwithstanding this tendency, it is within the power of a state to close its courts to this type of litigation if the condition of reasonable security is not met. 25 The contention that the statute denies equal protection of the laws is based upon the fact that it enables a stockholder who owns 5% of a corporation's outstanding shares, or $50,000 in market value, to proceed without either security or liability and imposes both upon those who elect to proceed with a smaller interest. We do not think the state is forbidden to use the amount of one's financial interest, which measures his individual injury from the misconduct to be redressed, as some measure of the good faith and responsibility of one who seeks at his own election to act as custodian of the interests of all stockholders, and as an indication that he volunteers for the large burdens of the litigation from a real sense of grievance and is not putting forward a claim to capitalize personally on its harassment value. These may not be the best ways of precluding 'strike lawsuits,' but we are unable to say that a classification for these purposes, based upon the percentage or market value of the stock alleged to be injured by the wrongs, is an unconstitutional one. Where any classification is based on a percentage or an amount, it is necessarily somewhat arbitrary. It is difficult to say of many lines drawn by legislation that they give those just above and those just below the line a perfectly equal protection. A taxpayer with $10,000.01 of income does not think it is equality to tax him at a different rate than one who has $9,999.99, or to re uire returns from one just above and not from one just below a certain figure. It is difficult to say that a stockholder who has 49.99% of a company's stock should be unable to elect any representative to its Board of Directors while one who owns 50.01% may name the entire Board. If there is power, as we think there is, to draw a line based on considerations of proportion or amount, it is a rare case, of which this is not one, that a constitutional objection may be made to the particular point which the legislature has chosen. 26 The contention also is made that the provision which applies this statute to actions pending upon its enactment, in which no final judgment has been entered, renders it void under the Due Process Clause for retroactivity. While by its terms the statute applies to pending cases, it does not provide the manner of application; nor do the New Jersey courts appear to have settled what its effect is to be. Its terms do not appear to require an interpretation that it creates new liability against the plaintiff for expenses incurred by the defense previous to its enactment. The statute would admit of a construction that plaintiff's liability begins only from the time when the Act was passed or perhaps when the corporation's application for security is granted and that security for expenses and counsel fees which 'may be incurred' does not include those which have been incurred before one or the other of these periods. We would not, for the purpose of considering constitutionality, construe the statute in absence of a state decision to impose liability for events before its enactment. On this basis its alleged retroactivity amounts only to a stay of further proceedings unless and until security is furnished for expense incurred in the future, and does not extend either to destruction of an existing cause of action or to creation of a new liability for past events. 27 The mere fact that a statute applies to a civil action retrospectively does not render it unconstitutional. Blount v. Windley, 95 U.S. 173, 180, 24 L.Ed. 424; Western Union Telegraph Co. v. Louisville & N.R.Co., 258 U.S. 13, 42 S.Ct. 258, 66 L.Ed. 437; Chase Securities Corp. v. Donaldson, 325 U.S. 304, 65 S.Ct. 1137, 89 L.Ed. 1628. Looking upon the statute as we have indicated, its retroactive effect, if any, is certainly less drastic and prejudicial than that held not to be unconstitutional in these decisions. We do not find in the bare statute any such retroactive effect as renders it unconstitutional under the Due Process Clause, and of course we express no opinion as to the effect of an application other than we have indicated. 28 It is also contended that this statute may not be applied in this case because the cause of action derives from a Deleware corpuration and hence Delaware law governs it. But it is the plaintiff who has brought the case in New Jersey. The trial will very likely involve questions of conflict of laws as to which the law of New Jersey will apply, Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477; Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481, 134 A.L.R. 1462, and perhaps questions of full faith and credit. These are not before us now. A plaintiff cannot avail himself of the New Jersey forum and at the same time escape the terms on which it is made available, if the law is applicable to a federal court sitting in that State, which we later consider. 29 We conclude, therefore, that, so far as the Federal Constitution is concerned, New Jersey's security statute is a valid law of that State and the question remains as to whether it must be applied by federal courts in that State to suits brought therein on diversity grounds. 30 Applicability in Federal Court. 31 The Rules of Decision Act, in effect since the First Congress of the United States and now found at 28 U.S.C. § 1652, 28 U.S.C.A. § 1652, provides: 'The laws of the several states, except where the Constitution or treaties of the Un ted States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.' This Court in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, held that judicial decisions are laws of the states within its meaning. But Erie R. Co. v. Tompkins and its progeny have wrought a more far-reaching change in the relation of state and federal courts and the application of state law in the latter whereby in diversity cases the federal court administers the state system of law in all except details related to its own conduct of business. Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231. The only substantial argument that this New Jersey statute is not applicable here is that its provisions are mere rules of procedure rather than rules of substantive law. 32 Even if we were to agree that the New Jersey statute is procedural, it would not determine that it is not applicable. Rules which lawyers call procedural do not always exhaust their effect by regulating procedure. But this statute is not merely a regulation of procedure. With it or without it the main action takes the same course. However, it creates a new liability where none existed before, for it makes a stockholder who institutes a derivative action liable for the expense to which he puts the corporation and other defendants, if he does not make good his claims. Such liability is not usual and it goes beyond payment of what we know as 'costs.' If all the Act did was to create this liability, it would clearly be substantive. But this new liability would be without meaning and value in many cases if it resulted in nothing but a judgment for expenses at or after the end of the case. Therefore, a procedure is prescribed by which the liability is insured by entitling the corporate defendant to a bond of indemnity before the outlay is incurred. We do not think a statute which so conditions the stockholder's action can be disregarded by the federal court as a mere procedural device. 33 It is urged, however, that Federal Rule of Civil Procedure No. 23 deals with plaintiff's right to maintain such an action in federal court and that therefore the subject is recognized as procedural and the federal rule alone prevails. Rule 23 requires the stockholder's complaint to be verified by oath and to show that the plaintiff was a stockholder at the time of the transaction of which he complains or that his share thereafter devolved upon him by operation of law. In other words, the federal court will not permit itself to be used to litigate a purchased grievance or become a party to speculation in wrongs done to corporations. It also requires a showing that an action is not a collusive one to confer jurisdiction and to set forth the facts showing that the plaintiff has endeavored to obtain his remedy through the corporation itself. It further provides that the class action shall not be dismissed or compromised without approval of the court, with notice to the members of the class. These provisions neither create nor exempt from liabilities, but require complete disclosure to the court and notice to the parties in interest. None conflict with the statute in question and all may be observed by a federal court, even if not applicable in state court. 34 We see no reason why the policy stated in Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231, should not apply. 35 We hold that the New Jersey statute applies in federal courts and that the District Court erred in declining to fix the amount of indemnity reasonably to be exacted as a condition of further prosecution of the suit. 36 The judgment of the Court of Appeals is affirmed. 37 Affirmed. 38 Mr. Justice DOUGLAS, with whom Mr. Justice FRANKFURTER concurs, dissenting in part. 39 The cause of action on which this suit is brought is a derivative one. Though it belongs to the corporation, the stockholders are entitled under state law to enforce it. The measure of the cause of action is the claim which the corporation has against the alleged wrongdoers. This New Jersey statute does not add one iota to nor subtract one iota from that cause of action. It merely prescribes the method by which stockholders may enforce it. Each state has numerous regulations governing the institution of suits in its courts. They may favor the litigation or they may affect it adversely. But they do not fall under the principle of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, unless they define, qualify or delimit the cause of action or otherwise relate to it. 40 This New Jersey statute, like statutes governing security for costs, regulates only the procedure for instituting a particular cause of action and hence need not be applied in this diversity suit in the federal court. Rule 23 of the Federal Rules of Civil Procedure defines that procedure for the federal courts. 41 Mr. Justice RUTLEDGE, dissenting. 42 I am in accord with the dissenting opinion of Mr. Justice DOUGLAS in this case. I also agree with the dissenting views of Mr. Justice Jackson in Woods v. Interstate Realty Co., 337 U.S. 535, 69 S.Ct. 1235. And I have noted my dissent in Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233. 43 Without undertaking to discuss each case in detail, I think the three decisions taken together demonstrate the extreme extent to which the Court is going in submitting the control of diversity litigation in the federal courts to the states rather than to Congress, where it properly belongs. This is done in the guise of applying the rule of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487. But in my opinion it was never the purpose of that decision to put such matters as those involved here outside the power of Congress to regulate and to confer that authority exclusively upon the states. 44 What is being applied is a gloss on the Erie rule, not the rule itself. That case held that federal courts in diversity cases must apply state law, decisional as well as statutory, in determining matters of substantive law, in particular and apart from procedural limitations upon its assertion—whether a cause of action exists. I accept that view generally and insofar as it involves a wise rule of administration for the federal courts, though I have grave doubt that it has any solid constitutional foundation. 45 But the Erie case made no ruling that in so deciding diversity cases a federal court is 'merely another court of the state in which it sits,' and hence that in every situation in which the doors of state courts are closed to a suitor, so must be also those of the federal courts. Not only is this not true when the state bar is raised by a purely procedural obstacle. There is sound historical reason for believing that one of the purposes of the diversity clause was to afford a federal court remedy when, for at least some reasons of state policy, none would be available in the state courts. It is the gloss which has been put upon the Erie ruling by later decisions, e.g., Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231, which in my opinion is being applied to extend the Erie ruling far beyond its original purpose or intent and, in my judgment, with consequences and implications seriously impairing Congress' power, within its proper sphere of action, to control this type of litigation in the federal courts. 46 The accepted dichotomy is the familiar 'procedural-substantive' one. This of course is a subject of endless discussion, which hardly needs to be repeated here. Suffice it to say that actually in many situations procedure and substance are so interwoven that rational separation becomes well-nigh impossible. But, even so, this fact cannot dispense with the necessity of making a distinction. For, as the matter stands it is Congress which has the power to govern the procedure of the federal courts in diversity cases, and the states which have that power over matters clearly substantive in nature. Judges therefore cannot escape making the division. And they must make it where the two constituent elements are Siamese twins as well as where they are not twins or even blood brothers. The real question is not whether the separation shall be made, but how it shall be made, whether mechanically by reference to whether the state courts' doors are open or closed, or by a consideration of the policies which close them and their relation to accommodating the policy of the Erie rule with Congress' power to govern the incidents of litigation in diversity suits. 47 It is in these close cases, this borderland area, that I think we are going too far. It is one thing to decide that Pennsylvania does or does not create a cause of action in tort for injuries inflicted by specified conduct and to have that determination govern the outcome of a diversity suit in Pennsylvania or New York.1 It is another, in my view, to require a bond for costs or for payment of the opposing party's expenses and attorney's fees in the event the claimant is unsuccessful. Whether or not the latter is conceived as creating a new substantive right, it is too close to controlling the incidents of the litigation rather than its outcome to be identified with the former. It is a matter which in my opinion lies within Congress' control for diversity cases, not one for state control or to be governed by the fact that the state shuts the doors of its courts unless the state requirements concerning such incidents of litigation are complied with. 48 In my view Rule 23 of the Federal Rules of Civil Procedure, derived from the former Equity Rules and now having the sanction of Congress, is valid and governs in the Cohen case. If, however, the State of New Jersey has the power to govern federal diversity suits within its borders as to all matters having a substantive tinge or aspect, then it may be questioned whether, in the event of conflict with some local policy, a federal court sitting, in that state could give effect to the Rule's requirement that the complaint aver 'that the plaintiff was a shareholder at the time of the transaction of which he complains or that his share thereafter devolved on him by operation of law . . ..' For in any strict and abstract sense that provision would seem to be as much a 'substantive' one as the New Jersey requirements for bond, etc And, if so, then it would seem highly doubtful, on any automatic or mechanical application of the substantive-procedural dichotomy, that either Congress or this Court could create such a limitation on diversity litigation, since as a substantive matter this would be for the states to control. See 3 Moore, Federal Practice (2d Ed.) 3493—3506. 49 For myself I have no doubt of the validity of Rule 23 or of the power of Congress to enact such a rule, even though it has a substantive aspect. Notwithstanding that aspect, the rule is too closely related to procedural and other matters affecting litigation in the federal courts for me to conceive of its invalidity. So also in the present cases I think the state regulations, though each may be regarded as having a substantive aspect, are too closely related to the modes and methods of conducting litigation in the federal courts to be capable of displacing Congress' power or regulation in those respects or the federal courts' power to hear and determine the respective controversies. 50 Accordingly I would reverse the judgments in the Cohen and Ragan cases and affirm that in the Woods case. 1 Chapter 131, New Jersey Laws of 1945, N.J.S.A. 14:3—15 to 17, provides in pertinent part as follows: '1. In any action instituted or maintained in the right of any domestic or foreign corporation by the holder or holders of shares, or of voting trust certificates representing shares, of such corporation having a total par value or stated capital value of less than five per centum (5%) of the aggregate par value or stated capital value of all the outstanding shares of such corporation's stock of every class * * * unless the shares or voting trust certificates held by such holder or holders have a market value in excess of fifty thousand dollars ($50,000.00), the corporation in whose right such action is brought shall be entitled, at any stage of the proceeding before final judgment, to require the complainant or complainants to give security for the reasonable expenses, including counsel fees, which may be incurred by it in connection with such action and by the other parties defendant in connection therewith for which it may become subject pursuant to law, its certificate of incorporation, its by-laws or under equitable principles, to which the corporation shall have recourse in such amount as the court having jurisdiction shall determine upon the termination of such action. The amount of such security may thereafter, from time to time, be increased or ecreased in the discretion of the court having jurisdiction of such action upon showing that the security provided has or may become inadequate or is excessive. '2. In any action, suit or proceeding brought or maintained in the right of a domestic or foreign corporation by the holder or holders of shares, or of voting trust certificates representing shares, of such corporation, it must be made to appear that the complainant was a shareholder or the holder of a voting trust certificate at the time of the transaction of which he complains or that his share or voting trust certificate thereafter devolved upon him by operation of law. '3. This act shall take effect immediately and shall apply to all such actions, suits or proceedings now pending in which no final judgment has been entered, and to all future actions, suits and proceedings.' 2 See § 61-b, New York General Corporation Law, Consol. Laws, c. 23; 12 Pa. Stat.Ann. § 1322; c. 989, Laws of Maryland, 1945; Wisconsin Stat. § 180.13 (1945). 3 Old Equity Rule 94, 104 U.S. ix; Equity Rule 27, 226 U.S. 649, 656. 4 Rule 23(b), 28 U.S.C.A. 5 See Hornstein, Problems of Procedure is Stockholders' Derivative Suits, 42 Col.L.R. 574; Hornstein, Directors' Expenses in Stockholders' Suits, 43 id. 301; Koessler, The Stockholder's Suit: A Comparative View, 46 id. 238; Hornstein, New Aspects of Stockholders' Derivative Suits, 47 id. 1; Carson, Current Phases of Derivative Actions Against Directors, 40 Mich.L.R. 1125; P. E. Jackson, Reorganization of the Corporate Concept and the Effect of Section 61-b of the New York General Corporation Law, A5 Am.Bankr.Rev. 323; Carson, Further Phases of Derivative Actions Against Directors, 29 Cornell L.Q. 431; House, Stockholders' Suits And he Coudert-Mitchell Laws, 20 N.Y.U.L.Q.Rev. 377; Hornstein, The Death Knell of Stockholders' Derivative Suits in New York, 32 California L.R. 123; Zlinkoff, The American Investor And the Constitutionality of Section 61-b of the New York General Corporation Law, 54 Yale L.J. 352. See Douglas, Directors Who Do Not Direct, 47 Harv.L.R. 1305. 6 Daniel v. Family Security Life Insurance Co., 336 U.S. 220, 69 S.Ct. 550. 1 It may be noted that the disposition of the local law problem apparently presented in Erie was not consistent, either here or on remand, with the current view that a federal district court is required to treat a diversity case exactly as would a state court of the state in which the district court is sitting: The Erie case arose out of an alleged Pennsylvania tort, and this Court stated that the court of appeals had erred when it 'declined to decide the issue of state law,' 304 U.S. at page 80, 58 S.Ct. at page 823, 82 L.Ed. 1188, 114 A.L.R. 1487, i.e., 'the Pennsylvania law.' Id. But the Erie case was initiated by Tompkins, 'a citizen of Pennsylvania * * * in the federal court for Southern New York, which had jurisdiction because the company is a corporation of that State.' 304 U.S. at page 69, 58 S.Ct. at page 818 (emphasis added). Accordingly, as Erie is now construed, the issue on remand should have been what law a New York state court would have applied to the Pennsylvania tort. But the sole issue determined on remand was the applicable Pennsylvania law, without mention of the probable attitude of the New York courts. Tompkins v. Erie R. Co., 2 Cir., 98 F.2d 49. It was not until after Justice Brandeis had retired that this Court held that federal district courts were required to follow local conflict of laws doctrine in the resolution of diversity cases. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477.

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337 U.S. 535 69 S.Ct. 1235 93 L.Ed. 1524 WOODSv.INTERSTATE REALTY CO. No 465. Argued March 30, 31, 1949. Decided June 20, 1949. Mr. P. H. Eager, Jr., Jackson, Miss., for petitioner. Messrs. Phil Stone, Oxford, Miss., John A. Osoinach, Memphis, Tenn., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This case was brought in the District Court for Mississippi on the grounds of diversity of citizenship. Respondent, a Tennessee corporation, sued petitioner, a resident of Mississippi, for a broker's commission alleged to be due for the sale of real estate of petitioner in Mississippi. The District Court found on motion for summary judgment that the contract was void under Mississippi law, since respondent was doing business in Mississippi without qualifying under a Mississippi statute.1 It therefore dismissed the complaint with prejudice. 2 The Court of Appeals reversed. It reviewed the Mississippi decisions under the Mississippi statute and concluded that the contract was not void but only unenforcible in the Mississippi courts. It held in reliance on David Lupton's Sons Co. v. Automobile Club of America, 225 U.S. 489, 32 S.Ct. 711, 56 L.Ed. 1177, Ann.Cas.1914A, 699, that the fact that respondent could not sue in the Mississippi courts did not close the doors of the federal court sitting in that State. Accordingly it reversed the judgment of the District Court. 168 F.2d 701. 3 The case is here on a petition for writ of certiorari which we granted because of the seeming conflict of that holding with our recent ruling in Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832. 4 If the Lupton's Sons case controls, it is clear that the Court of Appeals was right in allowing the action to be maintained in the federal court. In that case a New York statute provided that no foreign corporation could 'maintain any action in this state' without a certificate that it had qualified to do business there. The Court held that a contract on which the corporation could not sue in the courts of New York by reason of that statute nevertheless could be enforced in the federal court in a diversity suit. The Court said, 225 U.S. at page 500, 32 S.Ct. at page 714, 56 L.Ed. 1177, Ann.Cas.1914A, 699, 'The state could not prescribe the qualifications of suitors in the courts of the United States, and could not deprive of their privileges those who were entitled under the Constitution and laws of the United States to resort to the Federal courts for the enforcement of a valid contract.' 5 We said in Angel v. Bullington that the case of Lupton's Sons had become 'obsolete' insofar as it was 'based on a view of diversity jurisdiction which came to an end with Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487.' 330 U.S. at page 192, 67 S.Ct. at page 662, 91 L.Ed. 832. Bullington had sued Angel in a North Carolina court for a deficiency judgment on the sale of realty under a deed of trust. The Supreme Court of North Carolina dismissed the action because of a North Carolina statute which disallowed a deficiency judgment in such a case and which the North Carolina Supreme Court construed to be 'a limitation of the jurisdiction of the courts of this state.' Bullington v. Angel, 220 N.C. 18, 16 S.E.2d 411, 412, 136 A.L.R. 1054. Thereafter Bullington sued in the federal court of North Carolina by reason of diversity of citizenship. We held that that suit could not be maintained because (1) the prior suit was res judicata; and (2) the policy of Erie R. Co. v. Tompkins precluded maintenance in the federal court in diversity cases of suits to which the State ad closed its courts. 6 The Court of Appeals concluded that the latter reason was argumentary, the real basis of the decision being that Bullington was denied recovery on the doctrine of res judicata. But where a decision rests on two or more grounds, none can be relegated to the category of obiter dictum. United States v. Title Ins. & Trust Co., 265 U.S. 472, 486, 44 S.Ct. 621, 623, 68 L.Ed. 1110; Commonwealth of Massachusetts v. United States, 333 U.S. 611, 623, 68 S.Ct. 747, 754, 755, 92 L.Ed. 968. 7 Angel v. Bullington in its alternative ground followed the view of Guaranty Trust Co. of New York v. York, 326 U.S. 99, 108, 65 S.Ct. 1464, 1469, 89 L.Ed. 2079, 160 A.L.R. 1231, that for purposes of diversity jurisdiction a federal court is 'in effect, only another court of the State. * * *.' In that case we required the federal court in a diversity case to apply the statute of limitations of the State in equity actions and thus to follow local law, as had previously been done in cases involving burden of proof, Cities Service Oil Co. v. Dunlap, 308 U.S. 208, 60 S.Ct. 201, 84 L.Ed. 196; cf. Stoner v. New York Life Ins. Co., 311 U.S. 464, 61 S.Ct. 336, 85 L.Ed. 284; contributory negligence, Palmer v. Hoffman, 318 U.S. 109, 117, 63 S.Ct. 477, 482, 87 L.Ed. 645, 144 A.L.R. 719; conflict of laws, Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477; Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481, 134 A.L.R. 1462; and accrual of the cause of action, West v. American Tel. & Tel. Co., 311 U.S. 223, 61 S.Ct. 179, 85 L.Ed. 139, 132 A.L.R. 956. The York case was premised on the theory that a right which local law creates but which it does not supply with a remedy is no right at all for purposes of enforcement in a federal court in a diversity case; that where in such cases one is barred from recovery in the state court, he should likewise be barred in the federal court. The contrary result would create discriminations against citizens of the State in favor of those authorized to invoke the diversity jurisdiction of the federal courts. It was that element of discrimination that Erie R. Co. v. Tompkins was designed to eliminate. 8 Reversed. 9 Mr. Justice RUTLEDGE dissents. See his dissenting opinion in Nos. 442 and 512, Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221. 10 Mr. Justice JACKSON, dissenting. 11 Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, required federal courts in diversity cases to apply state decisional law as the Rules of Decision Act required them to apply state statutes. 12 That is what the Court of Appeals tried to do in this case. The State of Mississippi has a statute which says that if a corporation does not qualify to do business within the State it 'shall not be permitted to bring or maintain any action or suit in any of the courts of this state.' (Emphasis supplied.) The Court of Appeals reviewed state court decisions, some of which are not free from ambiguity, and found that the law of Mississippi intends to go no farther than to withhold the aid of state-maintained courts from a noncomplying corporation and that the state law does not deprive contracts of their validity or intend to foreclose foreign corporations from resort to federal courts or to any self-enforcing remedies they may have. 13 This Court refuses to give the statute that limited effect. I understand it to rule that Mississippi cannot enact a law closing its own courts to such foreign corporations without also closing the federal courts. In this we seem to be doing the very thing we profess to avoid; that is, give the state law a different meaning in federal court than the state courts have given it. 14 The Mississippi statute follows a pattern general among the states in requiring qualification and payment of fees by foreign corporations. State courts have generally held such Acts to do no more than to withhold state help from the noncomplying corporation ut to leave their rights otherwise unimpaired. This interpretation left such corporations a basis on which to get the help of any other court—federal or state—that could otherwise take jurisdiction, and free to resort to pledged property, offset and various other methods of self-help. 15 The state statute as now interpreted by this Court is a harsh, capricious and vindictive measure. It either refuses to entertain a cause of action, not impaired by state law, or it holds it invalid with unknown effects on amounts already collected. In either case the amount of this punishment bears no relation to the amount of wrong done the State in failure to qualify and pay its taxes. The penalty thus suffered does not go to the State, which sustained the injury, but results in unjust enrichment of the debtor, who has suffered no injury from the creditors' default in qualification. If the state court had held its statute to have this effect, I should agree that federal courts should so apply it; but the whole basis of our decision is contrary to that of the state courts. 16 I think the Court's action in refusing to accept the state court's determination of the effect of its own statute is a perversion of the Erie R. Co. v. Tompkins doctrine. 17 I would affirm the court below. 18 Mr. Justice RUTLEDGE and Mr. Justice BURTON join in this opinion. 1 Miss. Code 1942, § 5319, requires a foreign corporation doing business in the State to file a written power of attorney designating an agent on whom service of process may be had. It also provides, 'Any foreign corporation failing to comply with the above provisions shall not be permitted to bring or maintain any action or suit in any of the courts of this state.'

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337 U.S. 656 69 S.Ct. 1283 93 L.Ed. 1602 NATIONAL LABOR RELATIONS BOARDv.PITTSBURGH S.S. CO. No. 258. Argued. April 19, 1949. Decided June 20, 1949. Mr. Robert L. Stern, Washington, D.C., for petitioner. Mr. Nathan L. Miller, New York City, for respondent. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 In 1945 the National Labor Relations Board, petitioner here, issued its complaint charging respondent with the commission of certain unfair labor practices in the course of operating its fleet of Great Lakes bulk cargo vessels. As developed at a hearing before a trial examiner, the Board's charges were in substance that in 1944 respondent interfered with attempts by the National Maritime Union to organize respondent's seamen, with the purpose and the ultimately achieved effect of causing the union's repudiation at a Board-sponsored election.1 Specifically, there was testimony tending to show that licensed personnel (officers) on certain of respondent's ships by word and deed had expressed to their unlicensed seamen bitter hostility to the union and its members; that respondent's president, one Ferbert, had written two letters to every seaman covertly suggesting in inaccurate fashion the possible disadvantages of NMU representation; and that one Shartle was discharged from respondent's employ for engaging in union organization. Some of the Board's testimony, tendered by union witnesses, was controverted by respondent's witnesses; and respondent also introduced testimony tending to show that it had strictly enjoined its licensed personnel to remain wholly neutral in the weeks leading up to and including the Board election. 2 The trial examiner concluded that respondent had interfered with NMU organization, in violation of §§ 7 and 8(1) of the Wagner Act, 29 U.S.C. §§ 157, 158(1), 29 U.S.C.A. §§ 157, 158(1), and had fired an employee for union activity, in violation of § 8(3), 29 U.S.C. § 158(3), 29 U.S.C.A. § 158(3). Respondent's exceptions to the trial examiner's findings were briefed and argued before the Board, in accordance with its usual p ocedure. On August 13, 1946, the Board adopted the trial examiner's findings without substantial change, and issued its order requiring respondent to cease and desist from its antiunion conduct and to reinstate the wrongfully discharged Shartle with full seniority and reimbursement for lost wages. 69 N.L.R.B. 1395. 3 Two months later respondent petitioned the Court of Appeals to review the Board's order; the Board filed a counterpetition for enforcement of the order. On April 5, 1948, the court announced its decision refusing enforcement. 6 Cir., 167 F.2d 126. The court did not determine whether the evidence, if credited, would support the findings. Instead it held the findings and the order based thereon invalidated by the latent, pervasive and unremedied bias of the trial examiner—a bias found apparent on the face of the record: 'Without exception, whenever there was a conflict of evidence, the witnesses for the (Company) were held to be untrustworthy and those for the union reliable. * * * It is enough to say that the unvarying repudiation of every witness for the petitioner because of falsity, evasion or faint recollection, along with the consistent exaltation of every union witness as truthful, forthright and accurate, destroys completely any confidence that might otherwise be placed in the findings of the trial examiner and stamp(s) them as arbitrary. The Labor Board having adopted them in toto, its blanket pro forma findings are in no better posture. * * * With due respect for the rule that the findings of the Board are binding upon us if based upon evidence, it becomes impossible to sustain an order upon the adoption of a trial examiner's report which, upon it face, so clearly bears the imprint of bias and prejudice that it lacks all semblance of fair judicial determination.' 167 F.2d at pages 128—129. To review the court's determination, we granted certiorari. 335 U.S. 857, 69 S.Ct. 130. 4 First: We are constrained to reject the court's conclusion that an objective finder of fact could not resolve all factual conflicts arising in a legal proceeding in favor of one litigant. The ordinary lawsuit, civil or criminal, normally depends for its resolution on which version of the facts in dispute is accepted by the trier of fact. Where the number of facts in dispute increases, the arithmetical chance of their uniform resolution diminishes—but it does not disappear. Yet it is not mere arithmetical chance which controls our present inquiry, for the facts disputed in litigation are not random unknowns in isolated equations—they are facts of related human behavior, and the chiseling of one facet helps to mark the borders of the next. Thus, in the determination of litigated facts, the testimony of one who has been found unreliable as to one issue may properly be accorded little weight as to the next. Accordingly, total rejection of an opposed view cannot of itself impugn the integrity of competence of a trier of fact. The gist of the matter has been put well by the Court of Appeals for the Fifth Circuit, speaking through Judge Hutcheson, in granting enforcement of an NLRB order: 5 'The fact alone * * * of which Respondent makes so much, that Examiner and Board uniformly credited the Board's witnesses and as uniformly discredited those of the Respondent, though the Board's witnesses were few and the Respondent's witnesses were many, would not furnish a basis for a finding by us that such a bias or partiality existed and therefore the hearings were unfair. Unless the credited evidence * * * carries its own death wound, that is, is incredible and therefore, cannot in law be credited, and the discredited evidence * * * carries its own irrefutable truth, that is, is of such nature that it cannot in law be discredited, we cannot determine that to credit the one and discredit the other is an evidence of bias.'2 6 Suffice it to say in this case that our attention has been called to no credited testimony which 'carries its own death wound,' and to none discredited which 'carries its own irrefutable truth.' Indeed, careful scrutiny of the record belies the view that the trial examiner did in fact believe all union testimony3 or that he even believed the union version of every disputed factual issue.4 Rather, the printed transcript suggests thoughtful and discriminating evaluation of the facts. 7 Second: A question remains as to the proper disposition of this case. It is urged upon us by the Board that, there being substantial evidence in the record to support the Board's findings and order, we should remand the case with instructions to enforce the Board's order without further delay. Without doubting the existence here of evidence substantial enough under the Wagner Act, Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126, to warrant the Board's findings, we are not certain whether that standard controls this case. For questions have arisen whether the Administrative Procedure Act, 60 Stat. 237, 5 U.S.C. § 1001 et seq., 5 U.S.C.A. § 1001 et seq., and the Taft-Hartley Act, 61 Stat. 136, 29 U.S.C. Supp. I, § 141 et seq., 29 U.S.C.A. § 141 et seq., enacted between issuance of the Board's order and the Court of Appeals' decision, are applicable to and if applicable in any way affect Board procedures and the scope of judicial review of Board orders. The applicability and possible effect of either or both of these statutes apparently were not dealt with by the Court of Appeals, which neither discussed the statutes nor cited cases discussing them; the statutes and their impact have not b en briefed with any elaboration before this Court. These questions should be considered in the first instance by the Court of Appeals. Accordingly, in order to afford such an opportunity, we remand the cause to the Court of Appeals for proceedings not inconsistent with this opinion. 8 Reversed and remanded. 9 Mr. Justice JACKSON reserves opinion as to the sufficiency of the evidence under the Wagner Act in view of the Court's determination to return the case to the Court of Appeals. 1 The question voted on was acceptance of the NMU as collective-bargaining agent: The NMU was rejected by a vote of 889 to 720. 2 National Labor Relations Board v. Robbins Tire & Rubber Co., 5 Cir., 161 F.2d 798, 800; see National Labor Relations Board v. Auburn Foundry, 7 Cir., 119 F.2d 33 , 333. 3 Thus, for example, the trial examiner had the following to say by way of footnote to his intermediate report: 'No attempt will be made to describe all statements and activities claimed by counsel for the Board to constitute part of the respondent's course of anti-union conduct. Thus, no mention is made of those incidents which the undersigned regards as insubstantial in character or as unsupported by a fair preponderance of credible evidence.' 69 N.L.R.B. at 1402, n. 6. 4 Important issues of fact arose, for example, over whether respondent had been responsible for distributing to the unlicensed seamen (1) copies of a speech hostile to the NMU delivered by a Member of Congress, (2) copies of a union pamphlet entitled 'NMU fights Jim Crow,' which the union wished to withhold from circulation for fear the unlicensed seamen would react unfavorably to a union advocating racial equality. As to these issues the trial examiner had the following to say: 'The respondent admitted responsibility for the issuance of the Ferbert letters (see text, supra), but denied that it distributed copies of the speech and pamphlet, both of which, the record establishes, came through the mails. There is no substantial evidence in the record showing that the respondent was responsible for the distribution of the speech. The Jim Crow pamphlet, which set forth the Union's opposition to racial discrimination in employment, was admittedly a publication of the Union. While there is evidence that the Union and its organizers did not issue or use that pamphlet as part of its campaign to organize the respondent's vessels, and some support for the assertion that the respondent was responsible for its distribution is to be found in the evidence * * * showing the manner in which the respondent's supervisory personnel used the pamphlet and its subject matter in playing upon the racial prejudices, antagonisms and fears of the employees, the record is likewise bare of substantial evidence tracing responsibility for its distribution to the respondent. Consequently, and in view of the respondent's disclaimer of responsibility, it is found that the respondent did not cause the distribution of the pamphlet or the speech.' 69 N.L.R.B. at 1400.

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337 U.S. 426 69 S.Ct. 1410 93 L.Ed. 1451 UNITED STATESv.INTERSTATE COMMERCE COMMISSION et al. No. 330. Argued March 2, 1949. Decided June 20, 1949. Appeal from the United States District Court for the District of columbia. Messrs. Stanley M. Silverberg and David O. Mathews, Washington, D.C., for appellant. [Argument of Counsel from page 427 intentionally omitted] Mr. Daniel W. Knowlton, Washington, D.C., for appellee Interstate Commerce Commission. Mr. Windsor F. Cousins, Philadelphia, Pa., for appellees railroads, interveners. Mr. Justice BLACK delivered the opinion of the Court. 1 It is contended here that the United States as a shipper is barred from challenging in federal courts an Interstate Commerce Commission order which denies the Government a recovery in damages for exaction of an allegedly unlawful railroad rate. Other contentions if sustained would deny federal courts all power to entertain an action by any shipper challenging a Commission order denying damages to the shipper. 2 During the war, existing tariffs of many railroads embodied wharfage charges to compensate the railroads for moving goods from railroad cars to piers and from piers to railroad cars. When the United States took over certain piers at Norfolk, Virginia, it began to perform these wharfage services for itself and requested the railroads to make the United States an allowance for the expenses incurred in performing the services. The railroads refused to make an allowance. Upon this refusal the Government requested the railroads to perform the services themselves. The railroads refused to perform the services. 3 The United States filed with the Interstate Commerce Commission a complaint against the railroads charging that exaction of pay for unperformed services was unjust, unreasonable, discriminatory, excessive, and in violation of certain sections of the Interstate Commerce Act.1 The Complaint asked the Commission to find the charges unlawful. Further relief asked, under the Interstate Commerce Act,2 was that the Government be awarded damages (reparations) on account of the alleged unlawful exactions. The Commission found that the charges were not unjustly discriminatory, unreasonable, or otherwise in violation of the Act. Accordingly, the Commission denied reparations and ordered the complaint dismissed. United States v. Aberdeen & Rockfish R. Co., 269 I.C.C. 141 (1947). 4 The United States brought this action in a United States District Court to set aside the Commission order. The complaint charged that the Commission's conclusions were not supported by its findings, that the findings were not supported by any substantial evidence, that the order was based on a misapplication of law and was 'otherwise arbitrary, capricious and without support in and contrary to law and the evidence.' The Interstate Commerce Commission was made a defendant. The United States was also made a defendant because of a statutory requirement that any action to set aside an order of the Interstate Commerce Commission 'shall be brought * * * against the United States.' 28 U.S.C. § 46. Railroads that collected the wharfage charges intervened as defendants under authority of 28 U.S.C. § 45a. The Attorney General appeared for the Government as both plaintiff and defendant. Without reaching the merits of the case, the District Court composed of three judges dismissed the cause on the theory that the Government could not maintain a suit against itself. The court also indicated its belief that a three-judge court was without jurisdiction of the suit. D.C., 78 F.Supp. 580. The case is here on direct appeal under 28 U.S.C. § 47a, as amended 28 U.S.C. § 1253, 28 U.S.C.A. § 1253. 5 In this Court the Commission and the railroad intervenor defendants support the District Court's dismissal for the reasons given by that court. Alternative reasons are also urged. We hold that the dismissal was error and that the case should have been considered on its merits. 6 First. There is much argument with citation of many cases to establish the long-recognized general principle that no person may sue himself. Properly understood the general principle is sound, for courts only adjudicate justiciable controversies. They do not engage in the academic pastime of rendering judgments in favor of persons against themselves. Thus a suit filed by John Smith against John Smith might present no case or controversy which courts could determine. But one person named John Smith might have a justiciable controversy with another John Smith. This illustrates that courts must look behind names that symbolize the parties to determine whether a justiciable case or controversy is presented. 7 While this case is United States v. United States, et al., it involves controversies of a type which are traditionally justiciable. The basis question is whether railroads have illegally exacted sums of money from the United States. Unless barred by statute, the Government is not less entitled than any other shipper to invoke administrative and judicial protection. To collect the alleged illegal exactions from the railroads the United States instituted proceedings before the Interstate Commerce Commission. In pursuit of the same objective the Government challenged the legality of the Commission's action. This suit therefore is a step in proceedings to settle who is legally entitled to sums of money, the Government or the railroads. The order if valid would defeat the Government's claim to that money. But the Government charged that the order was issued arbitrarily and without substantial evidence. This charge alone would be enough to present a justiciable controversy. Chicago Junction Case, 264 U.S. 258, 262—266, 44 S.Ct. 317, 318-320, 68 L.Ed. 667. Consequently, the established principle that a person cannot create a justiciable controversy against himself has no application here. 8 Second. It is contended that the provisions of the Act making the Government a statutory defendant in court actions challenging Commission orders, show a congressional purpose to bar the Government from challenging such orders. Legislative history is cited in support of this contention. If the contention be accepted, Congress by making the Government a statutory defendant in such cases has deprived the United States as a shipper of powers of self protection accorded all other shippers. We cannot agree that Congress intended to make it impossible for the Government to press a just claim which could be vindicated only by court challenge of a Commission order. See United States v. San Jacinto Tin Co., 125 U.S. 273, 279, 8 S.Ct. 850, 853, 31 L.Ed. 747. 9 In support of their contention that Congress did not intend for the Government to press its claims as a shipper, the Commission and railroads emphasize the anomaly of having the Attorney General appear on both sides of the same controversy. However anomalous, this situation results from the statutes defining the Attorney General's duties. The Interstate Commerce Act requires the Attorney General to appear for the Government as a statutory defendant in cases challenging Commission orders. 28 U.S.C. § 46. The Attorney General is also under a statutory duty 'to determine when the United States shall sue, to decide for what it shall sue, and to be responsible that such suits shall be brought in appropriate cases.' United States v. San Jacinto Tin Co., 125 U.S. 273, 279, 8 S.Ct. 850, 854. See also United States v. California, 332 U.S. 19, 26-29, 67 S.Ct. 1658, 1662-1663, 91 L.Ed. 1889. Nothing in the Interstate Commerce Act indicates a congressional purpose to amend prior statutes which had imposed primary responsibility on the Attorney General to seek judicial redress for the Government. 10 Although the formal appearance of the Attorney General for the Government as statutory defendant does create a surface anomaly, his representation of the Government as a shipper does not in any way prevent a full defense of the Commission's order. The Interstate Commerce Act contains adequate provisions for protection of Commission orders by the Commission and by the railroads when, as here, they are the real parties in interest. For, whether the Attorney General defends or not, the Commission and the r ilroads are authorized to interpose all defenses to the Government's charges and claims that can be interposed to charges and claims of other shippers. In this case the Commission and the railroads have availed themselves of this statutory authorization. They have vigorously defended the legality of the allowances and the validity of the Commission order at every stage of the litigation. 11 Third. 28 U.S.C. § 41(28)3 provides that 'The district courts shall have original jurisdiction * * * Of cases brought to enjoin, set aside, annul, or suspend in whole or in part any order of the Interstate Commerce Commission.' The legal consequences of this order if upheld will finally relieve the railroad of any obligations to the Government on account of the alleged unlawful charges; the order thus falls squarely within the type made subject to judicial review by § 41(28). Rochester Telephone Corp. v. United States, 307 U.S. 125, 131-132, 142-143, 59 S.Ct. 754, 757, 762-763, 83 L.Ed. 1147; El Dorado Oil Works v. United States, 328 U.S. 12, 18-19, 66 S.Ct. 843, 846, 90 L.Ed. 1053. 12 The Commission and the railroads contend, however, that § 9 of the Interstate Commerce Act, 49 U.S.C. § 9, 49 U.S.C.A. § 9, bars the United States or any other shipper from judicial review of an order denying damages in reparation proceedings initiated before the Commission. Section 9 provides in part: 13 'Any person or persons claiming to be damaged by any common carrier * * * may either make complaint to the commission * * * or may bring suit * * * for the recovery of the damages * * * in any district court of the United States of competent jurisdiction; but such person or persons shall not have the right to pursue both of said remedies, and must in each case elect which one of the two methods of procedure herein provided for he or they will adopt.' 14 The contention of the Commission and the railroads as to § 9 is this. A shipper has an alternative. He may bring his action before the Commission or before the courts. But he must make an election. If he elects to 'bring suit' in a court and is unsuccessful, he retains the customary right of appellate review. If he elects to 'make complaint to' the Commission, as the Government did, and relief is denied, he is said to be barred by the statutory language of § 9 from seeking any judicial review of the Commission order. Under the contention the order is final and not reviewable by any court even though entered arbitrarily, without substantial supporting evidence, and in defiance of law. 15 Such a sweeping contention for administrative finality is out of harmony with the general legislative pattern of administrative and judicial relationships.4 See, e.g., Shields v. Utah-Idaho Cent. R. Co., 305 U.S. 177, 181—185, 59 S.Ct. 160, 162 164, 83 L.Ed. 111; Stark v. Wickard, 321 U.S. 288, 307—310, 64 S.Ct. 559, 569—571, 88 L.Ed. 733. And this Court has consistently held Commission orders reviewable upon charges that the Commission had exceeded its lawful powers. See, e.g., Interstate Commerce Commission v. Louisville & N.R. Co., 227 U.S. 88, 91—93, 33 S.Ct. 185, 186—187, 57 L.Ed. 431; Chicago Junction Case, 264 U.S. 258, 266, 44 S.Ct. 317, 320, 68 L.Ed. 667. The language of § 9 does not suggest an abandonment of these consistent holdings. It does suggest that a shipper who elects either to 'make complaint to' the Commission or to 'bring suit' in a court is thereafter precluded from initiating a § 9 proceeding in the other. It may therefore be assumed that after a shipper has elected to initiate a Commission proceeding for damages, he could not later initiate an original district court action for the same damages. But forfeiture of the right to initiate his claim in the court under § 9 is one thing; forfeiture of his right under 28 U.S.C. § 41(28) to obtain judicial review of an unlawful Commission order is another. Section 9's language controls the forum in which reparation claims may be begun and tried to judgment or order; it does not purport to give complete finality to a court judgment or to a Commission order merely because a shipper elected to proceed in one forum rather than the other. So we can find nothing in the language of § 9 that bars a court from reviewing a reparation order upon allegations by a shipper that the order was entered in defiance of standards established by Congress to determine when reparations are due. 16 Furthermore, the section's careful provision for judicial protection of railroads against improper Commission awards argues against interpretation of the same section to deny to shippers any judicial review whatever. Under the suggested interpretation a shipper could recover nothing if the Commission decided against him. But a Commission award favorable to a shipper is not final or binding upon the railroad. Such an award 'only establishes a rebuttable presumption. It cuts off no defense, interposes no obstacle to a full contestation of all the issues, and takes no question of fact from either court or jury. * * * Nor does it in any wise work a denial of due process of law.' Meeker v. Lehigh Valley R. Co., 236 U.S. 412, 430, 35 S.Ct. 328, 335, 59 L.Ed. 644, Ann.Cas.1916B, 691. And see Pennsylvania R. Co. v. Weber, 257 U.S. 85, 90—91, 42 S.Ct. 18, 20, 66 L.Ed. 141. It hardly seems possible to find from the language of § 9 a congressional intent to guarantee railroads complete judicial review of adverse reparation orders while denying shippers any judicial review at all. 17 What we have said would dispose of the § 9 contention but for the argument of the Commission and the railroads that their suggested interpretation of the section is required by this Court's holding in Standard Oil Co. v. United States, 283 U.S. 235, 51 S.Ct. 429, 75 L.Ed. 999, and other cases that followed it. In that case the Standard Oil Co., a shipper, was denied the right to judicial review of a Commission order denying reparations. Judicial review was denied on four grounds: (1) The order in the Standard Oil case denying reparations was 'negative' in form, and was therefore beyond judicial appraisal under the 'negative order' doctrine. This doctrine was wholly abandoned in Rochester Telephone Corp. v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147. (2) The decision in the Standard Oil case held that the Commission order was supported by substantial evidence and was not otherwise in violation of law. The Government's claim here is that this order cannot meet that test. (3) The third ground for denial of judicial review was that having elected to test its damage claim before the Commission, Standard was precluded from judicial review. (4) A three-judge court was an improper tribunal to adjudicate damage claims under § 9. 18 The Standard Oil interpretation of § 9 denying shippers any judicial review was made by a court usually careful to protect against arbitrary or unlawful administrative action. And, as shown, the court there first satisfied itself that the Commission order was not the product of an unlawful exercise of power by the Commission. Furthermore, the negative order philosophy, then at its peak, clearly barred review of all orders denying reparations. Consequently, the Standard Oil § 9 interpretation barred judicial review of no class of Commission orders except orders already immune from such review under the 'negative order' doctrine. The Standard Oil holding was thus clearly supported by and rooted in the now rejected 'negative order' doctrine.5 19 Another reason for the Court's construction of § 9 in the Standard Oil case was that Standard's damage claim could have been adjudicated by a district court since it involved no question as to reasonableness of rates that called for exercise of the Commission's primary jurisdiction. The importance of this factor was emphasized by this Court in applying the Standard Oil construction of § 9 in Baltimore & O.R. Co. v. Brady, 288 U.S. 448, 458—459, 53 S.Ct. 441, 443, 77 L.Ed. 888. First pointing out that there was no question in that case 'requiring the exercise of the Commission's administrative powers,' the Court said: 20 'It is to be remembered that, by electing to call on the Commission for the determination of his damages, plaintiff waived his right to maintain an action at law upon his claim. But the carriers made no such election. Undoubtedly it was to the end that they be not denied the right of trial by jury that Congress saved their right to be heard in court upon the merits of claims asserted against them. The right of election given to a claimant reasonably may have been deemed an adequate ground for making the Commission's award final as to him.' 21 And see Terminal Warehouse Co. v. Pennsylvania R. Co., 297 U.S. 500, 507—508, 56 S.Ct. 546, 548—549, 80 L.Ed. 827. 22 Thus, a crucial support for the Court's holding in the Standard Oil and Brady cases was that the shippers in those cases could have commenced original § 9 actions in the district court. But it has been established doctrine since this Court's holding in Texas & P.R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, 9 Ann.Cas. 1075, that a shipper cannot file a § 9 proceeding in a district court where his claim for damages necessarily involves a question of 'reasonableness' calling for exercise of the Commission's primary jurisdiction.6 The Government's claim here does involve such a question of 'reasonableness.' For the allowances exacted from the Government were authorized in the railroads' published tariffs and were therefore not unlawful unless 'unreasonable.' Consequently the Government here had no 'right of election' between Commission and court that could be 'deemed an adequate ground for making the Commission's award final * * *.' Baltimore & O.R. Co. v. Brady, supra, 288 U.S. at page 458, 53 S.Ct. at page 443, 77 L.Ed. 888.7 23 Ashland Coal & Ice Co. v. United States, 325 U.S. 840, 65 S.Ct. 1573, 89 L.Ed. 1966, is the only case in this Court that relied on the Standard Oil decision after we had abandoned the negative order doctrine. And it is doubtful if the shipper in the Ashland Coal & Ice Co. case could have sought reparations in a district court under the primary jurisdiction doctrine. In affirming without argument the judgment of a three-judge court in the Ashland Coal & Ice Co. case, this Court's per curiam opinion cited two pages of the Standard Oil Opinion that support the interpretation of § 9 urged here by the Commission and railroads. It is a fair inference that the pages were cited for that interpretation although other grounds for the Court's decision also appear there. One such ground was that a three-judge court is an improper tribunal for the review of such Commission orders. Another ground was that there was 'nothing to suggest that the Commission acted arbitrarily or without evidence to support its conclusions, or that it transcended its constitutional of statutory powers.' The three-judge district court in the Ashland case in sustaining the Commission order had also held that a three-judge court was not a proper tribunal and that the Commission order was supported by substantial evidence and was in accordance with law. Ashland Coal & Ice Co. v. United States, D.C., 61 F.Supp. 708, 713. 24 We cannot accept the Ashland Coal Co. per curiam holding nor the Standard Oil case on which it rested as requiring the interpretation of § 9 which the railroads and Commission here urge. Our acceptance of that interpretation would mean that a shipper who submitted to the Commission only a question of the reasonableness of rates could have an adverse order reviewed by a court, Skinner & Eddy Corp. v. United States, 249 U.S. 557, 562 563, 39 S.Ct. 375, 377, 63 L.Ed. 772, while a shipper who asked for that administrative determination plus reparations could get no judicial review at all. Terminal Warehouse Co. v. Pennsylvania R. Co., supra, 297 U.S. at pages 507—508, 56 S.Ct. at pages 548 549, 80 L.Ed. 827. On any ground except the now discarded 'negative order' doctrine, this would appear to be an unsupportable and totally illogical limitation of the congressional command for judicial review.8 See Chicago Junction Case, 264 U.S. 258, 269—270, 44 S.Ct. 317, 321, 68 L.Ed. 667; Southern R. Co. v. Tift, 206 U.S. 428, 440, 27 S.Ct. 709, 712, 51 L.Ed. 1124, 11 Ann.Cas. 846. Accordingly we hold that § 9 does not impair the right of shippers to obtain judicial review of adverse Commission orders under § 41(28) merely because the order is sought as a basis for reparations. 25 Fourth. For reasons already stated we hold that a Commission order dismissing a shipper's claim for damages under 49 U.S.C. § 9, 49 U.S.C.A. § 9, is an 'order' subject to challenge under 28 U.S.C. § 41(28). The remaining question is whether a district court entertaining such a challenge shall be composed of one judge or three judges and whether the judgment of a district court in such a case can be appealed directly to this Court. 26 The Urgent Deficiencies Act from which § 41(28) was derived contains provisions for a three-judge district court to hear and determine suits brought to set aside a Commission 'order,' and authorizes judgments rendered in such cases to be appealed directly to this Court.9 For reasons now stated we hold that judicial review of an order denying reparations does not require a three-judge court. 27 The provisions of the Urgent Deficiencies Act here considered derive from a 1910 congressional enactment creating the Commerce Court, defining its powers and providing for review of its judgments.10 That court was given jurisdiction of all actions to enjoin, set aside and modify Commission orders. Section 2 provided for direct appeals from the Commerce Court to the Supreme Court. The purpose of cr ating the Commerce Court with such direct appeals was expedition of final determination of the validity of certain types of Commission orders. This expedition was sought for orders of national or widespread interest, such, for example, as railroad rate orders. Congress saw the necessity for an accelerated appellate procedure to prevent railroads from nullifying the effect of such orders in prolonged litigation.11 The Commerce Act itself indicated that the same expedition necessary in cases affecting the public generally was not necessary in other kinds of cases involving 'local and isolated questions which arise in the ordinary courts.'12 The Act's first section excluded from the Commerce Court's jurisdiction power to enforce 'any order of the Interstate Commerce Commission * * * for the payment of money.'13 28 Provisions of the Urgent Deficiencies Act of 1913 abolished the Commerce Court and transferred its jurisdiction to district courts composed of three judges. In considering this Act Congress was urged to bear in mind the necessity for providing a forum that could expeditiously review Commission orders of widespread importance.14 But in passing the 1913 Act Congress denied power to three-judge courts to enforce Commission orders for the payment of money.15 And in a case not involving reparations this Court held that orders relating merely to the payment of money are not likely to be of sufficient public importance to justify use of the three-judge procedure. See United States v. Griffin, 303 U.S. 226, 233, 234—237, 58 S.Ct. 601, 604, 605—607, 82 L.Ed. 764. But cf. El Dorado Oil Works v. United States, 328 U.S. 12, 18—19, 66 S.Ct. 843, 846, 90 L.Ed. 1053; United States v. Jones, 336 U.S. 641, 647, 69 S.Ct. 787, 791. The Urgent Deficiencies Act with 49 U.S.C. § 9, 49 U.S.C.A. § 9, which requires enforcement of Commission reparation awards in one-judge courts, indicates the belief of Congress that such orders are not of sufficient public importance to justify the accelerated judicial review procedure. 29 While the Government here does no seek enforcement of a Commission order for the payment of money, the root of the controversy concerns the payment of money damages under 49 U.S.C. §§ 8, 9, 49 U.S.C.A. §§ 8, 9. Had the Commission made an award to the Government it could have filed a civil suit to recover money damages under the provisions of 49 U.S.C. § 16(2), 49 U.S.C.A. § 16(2). That section provides that such a suit 'shall proceed in all respects like other civil suits for damages * * *'—that is, before one district judge. And an appeal from a judgment in such a case goes to the Court of Appeals. The same one-judge trial and appeal procedure available for enforcement of an award order would appear to be an equally appropriate and adequate tribunal for adjudication of validity of a Commission order denying reparations. For actions to enforce Commission orders awarding reparation, and actions to challenge Commission orders denying reparations, basically involve the same parties, the same disputes, the same claims for money damages, and the same statutes. We think the orders in both instances should be reviewed in the same one-judge tribunal. 30 We have frequently pointed out the emportance of limiting the three-judge court procedure within its expressly stated confines.16 We are confident that in holding the one judge rather than three should entertain cases challenging Commission reparation orders we interpret the congressional expediting procedure and the Interstate Commerce Act in accordance with their basic purpose. 31 Fifth. There remains the question of the proper disposition of this case. Three judges heard it. This, however, is no reason for dismissal of the cause. See Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 381, 69 S.Ct. 606, 613. If the allegations of the bill are true, the Commission's order cannot stand. Chicago Junction Case, 264 U.S. 258, 264—266, 44 S.Ct. 317, 319—320, 68 L.Ed. 667. Since the District Court did not pass on the merits of the allegations of the complaint, the cause is remanded to it for that purpose. 32 Reversed and remanded. 33 Mr. Justice FRANKFURTER, with whom Mr. Justice JACKSON and Mr. Justice BURTON join, dissenting. 34 Four times shippers have asked this Court to recognize the right to review orders of the Interstate Commerce Commission denying claims for reparations against carriers; four times the United States resisted the right to such judicial review; four times this Court sustained the United States and held that the courts were without jurisdiction to review orders of the Commission denying reparations. Twice the decisions followed full argument: Standard Oil Co. v. United States, 283 U.S. 235, 51 S.Ct. 429, 75 L.Ed. 999, in which the bar of the Interstate Commerce Act to such review was expounded, and Brady v. United States, 283 U.S. 804, 51 S.Ct. 559, 75 L.Ed. 1424, which relied on the Standard Oil case decided only a few weeks before. Twice thereafter the dismissal by district courts, for want of jurisdiction, of attempts to review such reparation orders was summarily affirmed without argument, so definitely had the Standard Oil case settled the matter. Allison & Co. v. United States, 296 U.S. 546, 56 S.Ct. 175, 80 L.Ed. 387, affirming D.C., 12 F.Supp. 862; Ashland Coal & Ice Co. v. United States, 325 U.S. 840, 65 S.Ct. 1573, 89 L.Ed. 1966, affirming D.C., 61 F.Supp. 708, decided less than four years ago. In order to recover a money claim of its own, the Government in this case has suddenly shifted a position in this case maintained by it for nearly twenty years against all other shippers and urges the right to review an order denying reparations. Indeed, at the very same time that the Government was arguing before the District Court for the District of Columbia for the right to review an order denying it reparations, the Government successfully resisted precisely the same argument by a private shipper in a suit in the District Court for the Eastern District of Michigan. Great Lakes Steel Corp. v. United States, D.C., 81 F.Supp. 450. And the Government did so on the basis of the controlling series of cases in this Court decided on grounds which we are now asked to disregard.1 35 We are vouchsafed no explanation for the fact that the United States should have urged four times upon this Court, and contemporarneously with these pro eedings in another district court, that an order resulting from a reparation proceeding before the Interstate Commerce Commission is not reviewable, and yet seeks review in this instance. The only explanation that lies on the surface is that in all the other cases the United States was resisting the claims of private shippers, while in this case the Government itself is the shipper. No doubt enlightenment sometimes comes through self-interest. But this Court's construction of the Interstate Commerce Act, long matured in a series of cases, ought not to shift with a shift in the Government's interest. The Interstate Commerce Commission rightly protests against it. To yield to the Government's new contention is not only to reverse a settled couse of decision. To do so is to mutilate the whole scheme of the Interstate Commerce Act by disregarding the distribution of authority Congress saw fit to make between the Commission and the courts for the enforcement of that Act. 36 One would suppose that four uniform decisions of this Court, rendered after thorough consideration of a statutory scheme, constitute such a body of law as not to be overruled, wholly apart from any argument that this Court's construction of legislation is confirmed by Congress by reenactment without change. The Transportation Act of 19402 reenacted the relevant provisions of the Interstate Commerce Act after this Court had ruled three times that a shipper who has unsuccessfully asked the Commission for damages is bound by its determination and cannot thereafter have another go at it in the courts. The construction which these decisions have made should be adhered to not only because the precise issue has already been decided by this Court but because the Interstate Commerce Act requires it. 'When judicial review is available and under what circumstances, are questions (apart from whatever requirements the Constitution may make in certain situations) that depend on the particular Congressional enactment under which judicial review is authorized.' National Labor Relations Board v. Cheney California Lumber Co., 327 U.S. 385, 388, 66 S.Ct. 553, 554, 90 L.Ed. 739. It will hardly be suggested that the Constitution requires judicial review of a reparation order by the Commission. Such a notion is precluded by Cary v. Curtis, 3 How. 236, 11 L.Ed. 576, and the whole unfolding of administrative law during the hundred years since that decision. This is not one of those exceptional cases where 'the sanction afforded by judicial proceedings' is implied in the guaranty of due process of law. Ng Fung Ho v. White, 259 U.S. 276, 284—285, 42 S.Ct. 492, 495, 66 L.Ed. 938. Therefore, it is as true of the Interstate Commerce Act as it is of the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., that 'Congress was entitled to determine what remedy it would provide, the way that remedy should be sought, the extent to which it should be afforded, and the means by which it should be made effective.' Mr. Chief Justice Hughes, speaking for the Court in Amalgamated Utility Workers v. Consolidated Edison Co., 309 U.S. 261, 264, 60 S.Ct. 561, 563, 84 L.Ed. 738. 37 In the reticulated scheme for enforcement of the new rights and obligations created by the Interstate Commerce Act, Congress clearly indicated where the judiciary comes in and where the judiciary is to keep out. More particularly, Congress has provided in detail for judicial review in certain aspects of reparation claims that come before the Commission; it has afforded an alternative procedure as between Commission and courts in some instances; it has specifically precluded resort to judicial review where the shipper has chosen resort to the Commission. If the scheme of legislation that Congress has devised is to be respected, judicial review of the Commission's order denying it reparations is not open to the Government. 38 A summary of what this case involves should precede a det iled analysis of the Act, so far as relevant to its disposition. 39 At the time this controversy arose it had long been the practice for railroads reaching Atlantic ports to absorb the cost of wharfage and handling services furnished by them for goods destined for shipment overseas. This applied only to services rendered on so-called public wharves, excluding, that is, services so required on wharves operated by a shipper himself. The wharves in question were piers owned by the Government, but leased by it for commercial peacetime operations as public terminal facilities of the railroads. Up to June 15, 1942, these piers were operated by the Transport Trading and Terminal Corporation, as agent of the defendant railroads. War conditions made it necessary for the Government to cancel its leases with the Terminal Corporation and, on June 15, 1942, it took over the operation of these piers for the movement of military freight, almost entirely outbound. The railroads refused allowances for the cost of services which they had theretofore absorbed, and declined a later request of the Army to perform the handling services because the Army, not the railroads, controlled the piers. 40 Claiming to be damaged by the refusal of the railroads to grant allowances for the Government's handling of its goods on its own piers, when it excluded the Terminal Corporation and took over the piers, the Government initiated these proceedings before the Commission for reparations under § 8 of the Interstate Commerce Act.3 It filed its complaint under §§ 9 and 13 of that Act.4 Claiming that the rates under the existing tariffs were unjust and unreasonable, and that it was discriminated against because other shippers were furnished wharfage and handling services which it performed at its own expense, the Government sought relief against continuance of alleged violations of §§ 1(5)(a), 1(6), and 15(13) of the Interstate Commerce Act. The complaint was sustained by Division 2, with one Commissioner dissenting. United States v. Aberdeen & Rockfish R. Co., 263 I.C.C. 303. The full Commission reversed the findings of Division 2 and ordered the complaint dismissed, four Commissioners dissenting. 264 I.C.C. 683. On reargument the full Commission adhered to its findings, five Commissioners dissenting.5 269 I.C.C. 141. At the time of its final report, it was assumed that the operation of the piers reverted to the situation existing prior to June 15, 1942, so that the purpose of the proceeding before the Commission was deemed to be for reparations only. 269 I.C.C. at 147. 41 Invoking the procedure of the Urgent Deficiencies Act of 1913, the Government then sought to set aside the order of the Commission dismissing the Government's complaint. Act of October 22, 1913, 38 Stat. 219—221, now 28 U.S.C. §§ 1253, 1336, 2101, 2284, 2321—2325, (1948 ed.), 28 U.S.C.A. §§ 1253, 1336, 2101, 2284, 2321—2325. A duly constituted district court, with three judges sitting, found itself without jurisdiction to review the Commission's order. 78 F.Supp. 580. This judgment should be affirmed, insofar as it held that an order of the Commission denying damages by way of reparations in proceedings brought before the Commission is not reviewable in the courts. 42 To ascertain whether an order of the Interstate Commerce Commission is open to judicial review, it should rigorously be borne in mind that jurisdiction to review such an order must have been conferred by Congress. To assume that an order of the Commission for which reviewing power is not conferred, is presumably reviewable by the courts is to start with the answer of the problem to be solved. Unless Congress has chosen to give the courts oversight of a determination by the Commission, the courts have not the power of oversight where, as here, the Constitution does not require it. If Congress has made no grant of power to courts to review the Commission's order denying a claim for reparation, and, in fact, has explicitly withheld resort to the courts after such denial by the Commission, it is wholly immaterial that as to other types of orders the right to review has been given to the courts, or that a determination by the Commission closely related to reparations, but not in fact a claim for damages, does not bar access to the courts. 43 When dealing with the Interstate Commerce Act we are dealing not with an episodic bit of legislation to which the general jurisdiction of the federal courts presumably applies. We are dealing with the oldest regulatory scheme which, by successive amendments and enlargements, established a comprehensive, self-contained regime both of administration and adjudication. The scheme as a whole ought not to be dislocated to meet the exigencies of a particular situation. 44 First. Judicial review of an order by the Commission dismissing a complaint for reparations has heretofore been urged exclusively on the basis of the Urgent Deficiencies Act. The jurisdiction of the district court in this case was invoked under that Act. This is the sole basis of jurisdiction urged by the Government here in its comprehensive brief and argument, and the Court rejects it. It rightly rejects it. But the compelling considerations for this rejection demand a further analysis of the structure and details of the jurisdictional provisions relating to orders of the Interstate Commerce Commission. Such analysis is essential to lay bare the equally compelling considerations against jurisdiction under the general equity powers of the district courts. 45 Section 8 of the Interstate Commerce Act created a civil liability of carriers for damages caused by violation of the new obligations imposed by that Act. In the absence of specific remedies, it would be fair to assume that these new rights were enforceable in the district courts under their general jurisdiction over suits 'arising under any Act of Congress regulating commerce.' 28 U.S.C. § 1337 (1948 ed.), 28 U.S.C.A. § 1337. But the Interstate Commerce Act did not stop with a mere declaration of liability. It defined a specific course of procedure; it particularized the remedies available to those to whom new rights were given and the way in which they were to be pursued. 'In such a case the specification of one remedy normally excludes another.' Switchmen's Union of North America v. National Mediation Board, 320 U.S. 297, 301, 64 S.Ct. 95, 97, 88 L.Ed. 61. For charging more than the tariff rate or charging a discriminatory rate, the Act provides alternative procedures set forth in detail in § 9. These are the relevant provisions: 'any person or persons claiming to be damaged by any common carrier * * * may either make complaint to the commission as hereinafter provided for, or may bring suit * * * in any district court of the United States of competent jurisdiction; but such person or persons shall not have the right to pursue both of said remedies, and must in each case elect which one of the two methods of procedure herein provided for he or they will adopt.' 24 Stat. 379, 382, as amended, 49 U.S.C. § 9, 49 U.S.C.A. § 9. With qualifications shortly to be noted, a suit begun in the district court follows the course of any other action there. On the other hand, if the shipper prefers to pursue the alternative course—the administrative route—to obtain damages for a violation of the Act, he files his complaint with the Commission. 46 As to a proceeding before the Commission, whether for damages or for a rate adjustment, § 13 defines the procedure;6 the role of the courts in relation to the Commission's orders is defined by §§ 167 and 17(9).8 Section 16 fixes the time for filing a complaint either in the courts or before the Commission; it also provides for the enforcement of an order awarding damages, limiting the time within which such an action must be brought, and stating the effect to be given to the Commission's award. Since 1940, the provisions of the Urgent Deficiencies Act of 1913, 38 Stat. 219 221, conferring on the district courts the jurisdiction in suits on orders of the Commission theretofore vested in the abolished Commerce Court, were incorporated in § 17(9). A few years previous the procedural provisions of the Urgent Deficiencies Act of 1913 became part of Title 28 of the United States Code. 47 By this scheme of law enforcement, carefully apportioned between Commission and courts, Congress has provided that insofar as any order, provided it is not one for money damages, can be enjoined, set aside and enforced it must be under the provisions dealing with suits to enforce, enjoin, or set aside orders of the Commission, 'but not otherwise.' 54 Stat. 916, 49 U.S.C. § 17(9), 49 U.S.C.A. § 17(9). By this limitation Congress has made it as clear as language can that if an order is not within § 16, because not one for money damages, if review is available, it must be under § 17. If the Commission action does not fall within § 16 or § 17, it is not reviewable at all. Orders under § 17 are reviewable only as provided for in the Urgent Deficiencies Act. But the Urgent Deficiencies Act furnishes only procedural details; it merely defines the method of review and not the kinds of cases for which review is available. It did not make reviewable actions previously unreviewable. 50 Cong.Rec. 4536, 4542. Cf. Standard Oil Co. v. United States, 283 U.S. 235, 241, 51 S.Ct. 429, 431, 75 L.Ed. 999; United States v. Jones, 336 U.S. 641, 647—648, 69 S.Ct. 787, 791. It is the body of law constituting the Interstate Commerce Act which determines whether and under what circumstances review may be had. A long course of judicial application in a field of law, fairly to be called technical, has gradually ascertained from the context of the comprehensive scheme of legislation the kind and the characteristics of orders that are reviewable. 48 If the dismissal of a reparation complaint is not within the phrase 'any order' in § 17(9) of the Interstate Commerce Act, it is also not with the 'any order' phrase of the sections of Title 28, § 41(28) and § 46 of the 1940 ed., and §§ 1336 and 2324 of the present Title 28 (1948 ed.), which embody the review provisions formerly in the Urgent Deficiencies Act of 1913, which provisions in turn were taken from the Commerce Court Act. 36 Stat. 539. Although § 2321 of Title 28 of the Revised Code requires that 'any order' of the Interstate Commerce Commission other than one 'for the payment of money' should be reviewed according to the procedure under the provisions providing for a three-judge court, it is clear that 'there are many orders of the Commission which are not judicially reviewable under the provisions now incorporated in the Urgent Deficiencies Act.' United States v. Los Angeles & S.L.R. Co. 273 U.S. 299, 309, 47 S.Ct. 413, 414, 71 L.Ed. 651. 49 In the Los Angeles & S.L.R. Co. case it was held that the district court had no jurisdiction to review a final valuation order—neither by virtue of the Urgent Deficiencies Act, nor under its general equity powers. This result was reached partly because of want of equity, but also because it was found, upon full consideration, that not every order of the Commission is 'any o der' within the jurisdictional authorization of the Interstate Commerce Act and the applicable provisions of the Urgent Deficiencies Act. So, also, an order refusing to increase the allowance for railroad mail compensation is not reviewable under the Urgent Deficiencies Act. United States v. Griffin, 303 U.S. 226, 58 S.Ct. 601, 82 L.Ed. 764, see also Great Northern R. Co. v. United States, 277 U.S. 172, 48 S.Ct. 466, 72 L.Ed. 838. The ground given in the Griffin case was that, although there was a case or controversy and final action, this type of order was not within the Urgent Deficiencies Act—and this, as we reaffirmed the other day, quite apart from the obsolete 'negative order' doctrine. United States v. Jones, 336 U.S. 641, 647, 69 S.Ct. 787, 791. Finally—and it ought to be decisive—on four occasions this Court has held that the Commission's refusal to award reparations, when the shipper, as here, proceeded under § 13 of the Act, is not reviewable. Standard Oil Co. v. United States, 283 U.S. 235, 51 S.Ct. 429, 75 L.Ed. 999; Brady v. I.C.C., D.C., 43 F.2d 847, affirmed per curiam after argument, Brady v. United States, 283 U.S. 804, 51 S.Ct. 559, 75 L.Ed. 1424; Allison & Co. v. United States, D.C., 12 F.Supp. 862, affirmed per curiam, 296 U.S. 546, 56 S.Ct. 175, 80 L.Ed. 387; Ashland Coal & Ice Co. v. United States, D.C., 61 F.Supp. 708, affirmed per curiam, 325 U.S. 840, 65 S.Ct. 1573, 89 L.Ed. 1966. These decisions were based upon the fact that the Interstate Commerce Act precludes review by the courts when the shipper had first sought damages before the Commission. 50 The extraordinary consequences of jurisdiction under the Urgent Deficiencies Act—direct appeal to this Court, a district court of three judges, precedence over other cases on both trial and appeal—were to come into play in strictly limited situations. These can be fairly summarized as covering only the kinds of administrative orders which generally are 'of public importance because of the widespread effect of the decisions' rendered by the Commission. United States v. Griffin, supra, 303 U.S. at page 233, 58 S.Ct. at page 604, 82 L.Ed. 764. The reparation orders here involved, as is true of all reparation orders, since the shipper much show actual damages, concern only the shipper and the common carrier which charged the rate. An underlying legal issue which may be of wider public importance can, of course, be adjudicated in a way which permits judicial review. Thus, an order dealing with future rates is reviewable under the provisions for a three-judge court. 51 But there is another reason why reparation orders are not reviewable under the three-judge court provisions. Section 17, incorporating the Urgent Deficiencies' mode of review, is not concerned with reparation claims but with a wholly different matter. Reparation claims have been specifically dealt with in other sections of the Act, and, to the extent that review was intended, it is specifically provided for. By the original Act, orders for the payment of money were enforceable in equity. Interstate Commerce Act of 1887, § 16, 24 Stat. 379, 384—385. On the suggestion that this was a denial of the common carrier's right to trial by jury guaranteed by the Seventh Amendment, see 19 Cong.Rec. 5149—50, Congress promptly provided that a successful shipper before the Commission had to sue at law on his award. 25 Stat. 855, 859—860, as amended, 49 U.S.C. § 16(2), 49 U.S.C.A. § 16(2). But there was no occasion for court review of a rate order because the original Interstate Commerce Act, while giving the shipper a right to damage for past violations, did not give the Commission rate-making authority. Interstate Commerce Commission v. Cincinnati, N.O. & T. Pac. R. Co., 167 U.S. 479, 17 S.Ct. 896, 42 L.Ed. 243. The rate-making power was first conferred by the Hepburn Act of 1906. 34 Stat. 584, 586—587. For the review of such rate orders Congress enacted what is now § 17(9). Then, for the first time, the courts were given jurisdicti n over a suit 'to enjoin, set aside, annual, or suspend any order or requirement of the Commission,' and 'jurisdiction to hear and determine such suits' (was thereby) vested in the circuit court of the district in which the common carrier was located. 34 Stat. 592; see H.R. Rep. No. 591, 59th Cong., 1st Sess. 4—5(1906); H.R. Rep. No. 4093, 58th Cong., 3d Sess. 2, 5(1905); United States v. Los Angeles & S.L.R. Co., 273 U.S. 299, 309, 47 S.Ct. 413, 414, 71 L.Ed. 651. 52 In 1910, this identical jurisdiction was transferred from the circuit courts and conferred upon the newly created Commerce Court, but it was expressly provided: 'Nothing contained in this Act shall be construed as enlarging the jurisdiction now possessed by the circuit courts of the United States * * *.' 36 Stat. 539. This provision was inserted in the legislation so 'that the creation of this court shall not be construed as giving to the Commerce Court any greater jurisdiction than is now possessed by the circuit courts of the United States over similar matters.' H.R. Rep. No. 923, 61st Cong., 2d Sess. 7(1910); see S. Rep. No. 355, 61st Cong., 2d Sess. 4, Pt. 2, 4—5(1910); see S. Doc. No. 606, Vov. 54, 61st Cong., 2d Sess. 2(1910). By this legislation of 1910, Congress merely provided for a shift of jurisdiction, from the old circuit courts to the new centralized Commerce Court, and not an enlargement of jurisdiction. When in 1913 the Commerce Court was abolished the same jurisdiction was revested in the district courts, the circuit courts having been abolished in the meantime: '(the jurisdiction) vested in said Commerce Court * * * (was) transferred to and vested in the several district courts of the United States.' 38 Stat. 219. Indisputably Congress did not make reviewable orders which could not have been reviewed by the Commerce Court.9 53 Therefore, even putting to one side § 9, the dismissal of the reparation complaint was clearly not within the words 'any order' in § 17(9): (1) if it were within § 17(9) it would be reviewable only by a three-judge court, but that reviewing device is not applicable to reparation claims; (2) reparation claims are not within § 17(9) because they have been treated by a different scheme throughout the history of the Act. If review is to be found within the Act, it must be because of provisions other than those in § 17(9). 54 Second. The only other provision in the Interstate Commerce Act which affords judicial review of an order is § 16. That section, however, comes into force only when an award for damages is made. Rejection by the Commission of a money claim is outside the express terms of that section and not within what can fairly be implied from any language in it. A general argument of fairness is made that since this section provides for court review when an award is made where the carrier loses, the shipper is entitled to review when the carrier wins. Leaving aside, temporarily, the fact that what Congress has written in § 9 forecloses court review, to yield to such an inference in favor of a shipper whose claim is denied raises insuperable difficulties once we leave the text and scheme of the Act and go at large as to court review. Thus there would be no limit on the time in which review of the Commission's dismissal of the reparation claim could be brought, whereas § 16 fixes a time limit for suits against the carrier on awards by the Commission. 43 Stat. 633, as amended, 49 U.S.C. § 16(3)(f), 49 U.S.C.A. § 16(3)(f). This is just one of the obstructions if we are to imply court review of orders disallowing reparation claims because Congress has seen fit to allow suits on orders granting an award. In other respects the Court would have to legislate for Congress. What effect is to be given to the Commission's finding? If the shipper receives an award of damages and sues the carrier thereon, § 16(2) provides that the Commission's findings are prima facie evidence. 41 Stat. 491, as amended, 49 U.S.C. § 16(2), 49 U.S.C.A. § 16(2). Are we to create the same rule judicially, though Congress has not done so, when the shipper fails before the Commission? May the shipper introduce new evidence in the district court? When the shipper sues the common carrier, the Commission's action in making an award 'cuts off no defense, interposes no obstacles to a full contestation of all the issues, and takes no question of fact from either court or jury. Meeker & Co. v. Lehigh Valley R. Co., 236 U.S. 412, 430, 35 S.Ct. 328, 335, 59 L.Ed. 644, Ann.Cas. 1916B , 691. But if the unsuccessful shipper can save up evidence until he gets in court, the advantages of a Commission hearing are destroyed. What will be the scope of the Court's jurisdiction? Would the district court determine only liability, or also the amount to be recovered, or only that the Commission acted without justification in fact or contrary to law? The answer to none of these questions can be found in § 16. Yet, one would suppose, if review in this situation is to be derived from § 16, some guides for its exercise should also be found in that section, considering the particularities with which it defines review in the instances authorizing court action. Therefore, this Court has held: 'Section 16(2) does not permit suit in the absence of an award, and, if the Commission denies him relief, a claimant is remediless.' Baltimore & Ohio R. Co. v. Brady, 288 U.S. 448, 458, 53 S.Ct. 441, 443, 77 L.Ed. 888. 55 Money damages are part of the regulatory scheme. Mitchell Coal & Coke Co. v. Pennsylvania R. Co., 230 U.S. 247, 258, 33 S.Ct. 916, 921, 57 L.Ed. 1472. But while the Commission may determine that rates for the future be reduced, it is not required to award damages for the higher rates in the past. Thus it is not at all strange that its action be not subject to court review where the shipper has failed to persuade the Commission to award damages. Baltimore & Ohio R. Co. v. Brady, 288 U.S. 448, 458, 53 S.Ct. 441, 443, 77 L.Ed. 888. Especially is this true when Congress has provided for an alternative procedure whereby the shipper would have been able to go to court. Therefore, even without any explicit provision it would be a reasonable inference that Congress did not intend to grant a review where the shipper has decided to seek his damages before the Commission. 56 Even though Congress provided alternate methods of securing damages, and authorized court review when the Commission sustained a money claim, but not when it denied such a claim, Congress did not leave merely to rational inference that upon denial of a money award by the Commission, the shipper could not again try his luck in court. By § 9 Congress gave the shipper his choice of forum: he cou d ask for damages either from the Commission or a court, but could 'not have the right to pursue both of said remedies'; he 'must in each case elect which one of the two methods of procedure herein provided for he * * * will adopt.' 24 Stat. 382, as amended, 49 U.S.C. § 9, 49 U.S.C.A. § 9. If the shipper asks the Commission to award him damages and it goes against him, Congress has barred review of the denial or revision of the amount of the award. Baltimore & O.R. Co. v. Brady, 288 U.S. 448, 458—459, 53 S.Ct. 441, 443, 77 L.Ed. 888. Since Congress gave the shipper the alternative of administrative or judicial relief, there can be no question but that Congress was constitutionally free to make final the administrative choice. 57 Third. Since access to court review of an order denying reparations was barred by the Interstate Commerce Act, such review is not available under the general jurisdiction of the district courts. 28 U.S.C. § 1337 (1948 ed.), 28 U.S.C.A. § 1337. It has never been suggested, during some sixty years of active litigation over this problem, that for review of such an order resort may be had to a court of equity outside the framework of the Interstate Commerce Act. Even the Government does not now suggest it, and naturally so. Due regard for the explicit provisions of the Act precludes it. And for these reasons: 58 (1) The specific terms of § 17(9) which alone give reviewing power to the courts, save in cases where the carrier has been held to owe money, do so 'under those provisions of law applicable in the case of suits to enforce, enjoin, suspend, or set aside orders of the Commission, but not otherwise.' 54 Stat. 916, 49 U.S.C. § 17(9), 49 U.S.C.A. § 17(9). It is obvious that review would be 'otherwise' if the unsuccessful shipper be permitted to bring an action under 28 U.S.C. § 1337 (1948 ed.), 28 U.S.C.A. § 1337. This reason exists independently of the fact that § 9 also prohibits court action after an attempt to recover damages is made before the Commission. It is also independent of the fact that provisions of Title 28 do not make reviewable orders for which the Interstate Commerce Act does not provide review. 59 (2) Because of these provisions, review of reparation claims differs from the situation in Shields v. Utah Idaho Cent. R. Co., 305 U.S. 177, 59 S.Ct. 160, 83 L.Ed. 111. There the Court was not confronted with an enactment which said that if a person sought the Commission's aid he could not thereafter go to court. The Shields case is inapposite on another ground. By determining that a certain railroad was subject to the Interstate Commerce Act, the Commission placed the railroad under the active hazards of criminal sanctions. Equity was invoked for one of its ancient functions of staying a multiplicity of criminal prosecutions to avoid irreparable harm. See 305 U.S. at page 183, 59 S.Ct. at page 163, and Switchmen's Union of North America v. National Mediation Board, 320 U.S. 297, 306, 64 S.Ct. 95, 99, 88 L.Ed. 61. Here there is not the remotest ground for appeal to equity. It is merely a matter of dollars and cents—not the hazards of criminal prosecution—and an insistence on having two modes of recovering money damages when Congress has given shippers the choice of one or the other. There is a total absence of any of the traditional grounds for equitable relief. Cf. United States v. Los Angeles & S.L.R. Co., 273 U.S. 299, 314—315, 47 S.Ct. 413, 416, 71 L.Ed. 651. 60 Nor is review permitted under § 1336 of Title 28 (1948 ed.), if it is determined that the type of order involved is not of the nature calling for a three-judge court. The Government relied on the special scheme of the Urgent Deficiencies Act as incorporated in the Interstate Commerce Act conferring jurisdiction to review orders of the Commission. This scheme requires review by a three-judge court. The court rejects that claim on the ground that a reparation order is not the type of order so reviewable. Instead the Court finds jurisdiction in the distric court to entertain a petition to review an order of the Commission denying reparation in § 41(28) of Title 28 (1940 ed.), now § 1336 of Title 28 (1948 ed.). But jurisdiction under § 41(28) carries also the requirement of a three-judge court. See §§ 41—47, now c. 157 of Title 28 of the 1948 Code. No jurisdiction can be derived from § 41(28) of Title 28 unless the order is of the type that is reviewable by a three-judge court. To reject the latter is necessarily to hold that no jurisdiction of the district court is derivable from § 41(28) of Title 28, now § 1336 of Title 28 (1948 ed.).10 61 Moreover, a suit filed under the jurisdiction of § 41(28) of Title 28 is one against the United States with the Interstate Commerce Commission as a party only if it chooses to intervene. 28 U.S.C. §§ 2322, 2323 (1948 ed.), 28 U.S.C.A. §§ 2322, 2323. Congressional consent is required to authorize such a suit and congressional consent has been authorized only under the conditions requisite for a three-judge court proceeding for which this Court finds no jurisdiction, 28 U.S.C. §§ 2321—2325 (1948 ed.), 28 U.S.C.A. §§ 2321—2325. On the basis of the result in this case the decision in the Great Lakes Steel case, 337 U.S. 952, 69 S.Ct. 1530, must of course be reversed. And so this Court would direct the allowance of a suit against the United States, although Congress has not given consent thereto. The only possible escape from this conclusion is that jurisdiction is to be denied when a private shipper seeks to go into court after the Commission has dismissed his complaint for damages, as in the Great Lakes Steel case, but jurisdiction somehow or other should be acknowledged when the Government is the shipper. The defense of sovereign immunity, moreover, cannot be avoided by directing that the suit proceed only against the Interstate Commerce Commission. There is no claim that the Commission acted unconstitutionally, or that it proceeded under an unconstitutional statute, or that it acted beyond the authority conferred by a valid statute. It merely acted within the scope of its authority and made a determination, as it was legally bound to do, based upon the law and the facts. The difficulty of sovereign immunity forcibly demonstrates again why a method or court review cannot be found outside the provisions of the Interstate Commerce Act. 62 Fourth. We now turn to § 9. The language leaves no room for doubt. But it is now urged (though the Government has not so argued in the four decisions that went against private shippers) that where the damage claim was based on other than a mere arithmetical overcharge, the election afforded by § 9 is illusory. This is so, it is argued, because when complaint is made that rates were unfair, prejudicial or unreasonable, the doctrine of Texas & Pac. R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, 9 Ann.Cas. 1075 is brought into operation. It is said that the Government never had an opportunity to go into court until the Commission dismissed its complaint. Sufficient respect is given to § 9, so the argument runs, by reading it to bar 'initiating' another action in the court after it has failed before the Commission, not to reviewing the Commission's action. So to argue is to rewrite what Congress has written. Congress did not bar 'initiating'; it barred 'the right to pursue.' The Court concedes that § 9 is a bar when a shipper could have gone in the first instance to the courts. This was so ruled in Baltimore & O.R. Co. v. Brady, 288 U.S. 448, 53 S.Ct. 441, 77 L.Ed. 888. But what language affords a basis for a distinction when a determination of a transportation issue must be made by the Commission before the case can proceed to judgment? Moreover, the result of the Court's decision is to make the Commission's decision final in those instances where the Commission is acting purely judicially—merely a matter of applying the law to the facts—but not final when the Commission, acting in the realm of its administrative expertness, found a practice legal, and therefore denied damages. Adjudication and settled practice before the Commission likewise disprove this discovery that the choice given by Congress in § 9 is a sham. 63 The Commission must often pass on the legality of a particular practice of a carrier; such proceedings may serve as the basis for reparations. Under Part I of the Transportation Act, relating to rail-carriers, the shipper may ask the Commission for a declaration that a practice has been illegal and base a claim of damages on such illegality under § 8 of the Act. His other course is to secure a Commission determination only as to the illegality of the practice and not ask for an award, reserving the claim of damages for court action. This may be done in one of two ways. He may begin by filing his suit in court and ask the court to hold the case until he has obtained an administrative determination from the Commission.11 There is no jurisdictional bar to such a procedure. In Texas & Pac. R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, 9 Ann.Cas. 1075, the Court said the case should be dismissed, but preoccupation was with the necessity for prior administrative determination, not with whether there was jurisdiction in the sense of power to hold the case until there had been a Commission determination. Cases—decided after the Abilene case—have clearly recognized that there is jurisdiction to hold the case, and this procedure has been suggested in a number of them.12 Mitchell Coal & Coke Co. v. Pennsylvania R. Co., 230 U.S. 247, 267, 33 S.Ct. 916, 924, 57 L.Ed. 1472; Morrisdale Coal Co. v. Pennsylvania R. Co., 230 U.S. 304, 314—315, 33 S.Ct. 938, 941, 57 L.Ed. 1494, see Smith v. Hoboken R. Co., 328 U.S. 123, 133, 66 S.Ct. 947, 953, 90 L.Ed. 1123, 168 A.L.R. 497; Thompson v. Texas, Mexican R. Co., 328 U.S. 134, 151, 66 S.Ct. 937, 947, 90 L.Ed. 1132, see also Bell Potato Chip Co. v. Aberdeen Truck Line, 43 M.C.C. 337, 343. 64 The other method open to a shipper who desires to avail himself of the court remedy given by § 9 is to initiate proceedings before the Commission and to ask merely for a declaration regarding the legality of a past practice, but not for damages. This course is manifested by the complaints before the Commission, asking merely for a declaration without any ad damnum. For the period between July, 1947, and February, 1949, 46 such cases were filed under Part I of the Act. Under Part II, 22 complaints have been filed since January 1, 1948, requesting such a declaration as to the legality of a practice.13 65 The Government thus had a real choice. Terminal Warehouse Co. v. Pennsylvania R. Co., 297 U.S. 500, 507—8, 56 S.Ct. 546, 548 549, 80 L.Ed. 827. But, having first sought the advantages of a Commission award, it foreclosed itself from pursuing a judicial remedy when its expectations failed. A double remedy which Congress denied this Court ought not to grant. The Government 'had a choice * * * between a remedy at the hands of the Commission and a remedy by suit, but by express provision of the statute it could not have been both.' Terminal Warehouse Co. v. Pennsylvania R. Co., supra, 297 U.S. at page 508, 56 S.Ct. at page 549. 66 The conclusion reached by a reading of the statute is reenforced by the adjudicated cases. In Standard Oil Co. v. United States, 283 U.S. 235, 51 S.Ct. 429, 75 L.Ed. 999, three distinct grounds were given for affirming the district court's dismissal for want of jurisdiction of a suit to review an order of the Commission dismissing a claim for damages. One reason was that the order was 'a negative order'; that reason has been displaced by Rochester Telephone Co. v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147. But the Standard Oil decision was left intact by the Rochester decision, for the opinion in that case explicitly pointed out that 'the main basis' of the Standard Oil decision 'was not the 'negative order' doctrine but (that) the statutory scheme dealing with reparations' precluded review of an order denying money damages. 307 U.S. at page 140, n. 23, 59 S.Ct. at page 762. The 'statutory scheme' was thus defined in the Standard Oil case: 'Having elected to proceed and having proceeded to a determination before the Commission, appellant was, by force of this provision (§ 9), precluded from seeking reparation upon the same claims by the alternative method of procedure.' 283 U.S. at page 241, 51 S.Ct. at page 431, 75 L.Ed. 999; see also Mr. Justice Cardozo for the Court in Terminal Warehouse Co. v. Pennsylvania R. Co., 297 U.S. 500, 507—508, 56 S.Ct. 546, 548—549, 80 L.Ed. 827. The Standard Oil Company as a shipper was precisely in the same situation as the United States, in this case; the United States pursued the same course in this case as did the Standard Oil Company. The Standard Oil Company was not 'initiating' an action in the district court but was seeking judicial review of the Commission's action, and this is precisely what the United States is doing in this case. The only difference between the Standard Oil case and this case is that in the earlier case the Standard Oil Company was the plaintiff, and in this case it is the Government. What the Court said in the Standard Oil case is equally applicable here. 'It is of no importance that the adjudication sought is to take the form of a direction to the Commission to grant the prayer of the complaints filed before that body, etc., instead of a plenary judgment to the same end, for the prayer in that form is nothing less than an attempt to avoid the statute by indirection.' 283 U.S. at page 241, 51 S.Ct. at page 431, 75 L.Ed. 999. 67 In view of the fact that the Rochester case expressly saved that phase of the Standard Oil decision which is decisive of the problem before us now—'the statutory scheme dealing with reparations'—the Court's holding that the Rochester case impliedly overruled the Standard Oil case means of course that to this extent the Court today overrules the Rochester case, not that the Rochester case had overruled the Standard Oil case, wholly apart from the fact that the Standard Oil decision was the basis of a decision long after the Rochester case.14 Ashland Coal & Ice Co. v. United States, 325 U.S. 840, 65 S.Ct. 1573, 89 L.Ed. 1966. 68 And to what end these dislocations of so many decisions? We have been vouchsafed no considerations of policy, no revealed injustice flowing from the construction thus far placed upon the reparations provision of the Interstate Commerce Act, no difficulties in their administration, no disclosure of new materials for the proper construction of an old statute. And the current of settled judicial construction as well as administrative practice is now reversed against the vigorous protest of the agency charged with the administration of the law although only a week ago we greatly relied on administrative practice as the basis of judicial interpretation. 69 The result reached in the Standard Oil case was not limited to controversies which did not involve the primary jurisdiction doctrine. The district court in that case did assume arguendo that the issue involved nothing which required administrative determination before it addressed itself to the basic jurisdictional question. See Standard Oil Co. v. United States, D.C., 41 F.2d 836. On appeal, however, this Court did not confine in any way the bar imposed by § 9 to resort to a district court after an unsuccessful resort to the Commission for reparations. It read § 9 as it was written, as a provision for a choice of tribunals so that, if damages are sought from the Commission and denied by it, the courts are closed to a further consideration of such a claim. 70 The suggestion at this late date that the election so specifically defined by § 9 applies only to those instances in which no need for Commission determination of transportation issues may be required is completely dispelled by Brady v. United States, 283 U.S. 804, 51 S.Ct. 559, 75 L.Ed. 1424. In the Brady case damages were based on the claim that the carrier's practices were unjust, unreasonable and unduly prejudicial—the exact grounds urged in this case. The Commission refused to award reparations in the amount claimed by Brady and the shipper brought precisely the same kind of suit that the United States as shipper brought here. Brady argued that since the controversy was within the Commission's so-called primary jurisdiction, he never had the choice of proceeding in court rather than going to the Commission. The district court dismissed his suit for want of jurisdiction to review the action of the Commission and this Court sustained that denial of jurisdiction. It did so on the basis of the Standard Oil decision which had been rendered a month before, for the Standard Oil case, as did the Brady case, and as does this case, involved questions which, as such, required preliminary Commission determination. 71 The scope of the Standard Oil and Brady cases is made unambiguously clear by reliance on them for the decision in Allison & Co. v. United States, 296 U.S. 546, 56 S.Ct. 175, 80 L.Ed. 387; Id., 296 U.S. 664, 56 S.Ct. 307, 80 L.Ed. 474, and Ashland Coal & Ice Co. v. United States, 325 U.S. 840, 65 S.Ct. 1573, 89 L.Ed. 1966. In each case issues were involved which indubitably fell under the requirement of the 'primary-jurisdiction' doctrine. In each of these cases the shipper relied on the claim that their cases were distinguishable from the Standard Oil and the Brady cases. The same distinctions which are now advanced by the Government were then advanced by the shipper but resisted by the Government. The Government then rightly insisted that the Standard Oil and the Brady cases could not be restricted to situations where the 'primary jurisdiction' doctrine was inoperative and that the decision in those cases—that § 9 is unqualified in precluding resort to judicial review in all cases where damages had first been denied by the Commission—was compelled by a proper construction of § 9. This position of the Gover ment was considered so incontestable that the Court deemed oral argument needless and granted the Government's motion to affirm. The Government's interest has changed, but not the force of its position when it was without self-interest. 72 I would affirm. 1 49 U.S.C. §§ 1(5)(a), 1(6), 2, 6(8), 15(13), 49 U.S.C.A. §§ 1(5)(a), (6), 2, 6(8), 15(13). 2 49 U.S.C. §§ 8, 9, 49 U.S.C.A. §§ 8, 9. The complaint also sought relief from future exactions, but prior to the Commission's final order the piers were returned to private ownership and this prayer was abandoned. 3 The substance of 28 U.S.C. § 41(28) of the 1946 United States Code now appears as § 1336 of the 1948 Code. The provision for judicial review of Interstate Commerce Commission orders first appeared in 1910 in an Act creating the Commerce Court. 36 Stat. 539. Congress abolished the Commerce Court in 1913 and transferred to district courts the Commerce Court's jurisdiction to review Commission orders. Urgent Deficiencies Act, 38 Stat. 208, 219—220. 4 The Administrative Procedure Act, 60 Stat. 237, 243, 5 U.S.C. §§ 1001(d), 1009, 5 U.S.C.A. §§ 1001(d), 1009, provides: 'Sec. 2(d). Order and Adjudication.—'Order' means the whole or any part of the final disposition (whether affirmative, negative, injunctive, or declaratory in form) of any agency in any matter other than rule making but including licensing. 'Adjudication' means agency process for the formulation of an order.' 'Sec. 10. Except so far as (1) statutes preclude judicial review or (2) agency action is by law committed to agency discretion— '(a) Right of Review.—Any person suffering legal wrong because of any agency action, or adversely affected or aggrieved by such action within the meaning of any relevant statute, shall be entitled to judicial review thereof.' 5 Mr. Justice Cardozo so treated the Standard Oil holding in I.C.C. v. United States, 289 U.S. 385, 388, 53 S.Ct. 607, 609, 77 L.Ed. 1273, a case decided prior to this Court's repudiation of the negative order doctrine. He there said that in denying reparations 'the Commission speaks with finality. Its orders purely negative—negative in form and substance—are not subject to review by this court or any other.' Authorities for this statement were 'negative order' cases. These same cases were relied on by the court in a later case that referred with approval to the Standard Oil § 9 interpretation. Terminal Warehouse v. Pennsylvania R. Co., 297 U.S. 500, 507—508, 56 S.Ct. 546, 548—549, 80 L.Ed. 827. 6 See cases collected in Rochester Telephone Corp. v. United States, 307 U.S. 125, 139, n. 22, 59 S.Ct. 754, 761, 83 L.Ed. 1147, and Armour & Co. v. Alton R. Co., 312 U.S. 195, 61 S.Ct. 498, 85 L. d. 771; Skinner & Eddy Corp. v. United States, 249 U.S. 557, 562, 39 S.Ct. 375, 377, 63 L.Ed. 772. 7 The Commission argues that § 9 does authorize a shipper to initiate damage claims in a district court even though the claim necessarily involves questions upon which the Commission's primary jurisdiction must be invoked. The railroads more cautiously say that such suits can be filed upon an initial showing by a shipper that it might work a hardship on a shipper for the court to refuse to entertain the case. Both contentions run counter to this Court's previous cases. Particular circumstances were held sufficient in one case to justify a court in staying further judicial proceedings to await Commission action. Mitchell Coal & Coke Co. v. Pennsylvania R. Co., 230 U.S. 247, 266—267, 33 S.Ct. 916, 924, 57 L.Ed. 1472. The same course was followed in another case, over the Commission's objection, where the action was in assumpsit, and the administrative problem did not emerge until the case was in course of litigation. General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 432, 60 S.Ct. 325, 331, 84 L.Ed. 361. 8 The negative order doctrine was first adopted by this Court in Procter & Gamble Co. v. United States, 225 U.S. 282, 32 S.Ct. 761, 56 L.Ed. 1091, decided in 1912. A shipper there rought action in the Commerce Court to set aside a Commission order dismissing the shipper's complaint. The complaint was that the charges were unjust and unreasonable. The Commerce Court was asked to annul the Commission's order of dismissal, to enjoin future collection of the charges, and to require the railroads to repay sums alleged to have been wrongfully collected from the shipper. The Commerce Court reviewed the action of the Commission and on the merits declined to grant the shipper the requested relief. This Court held that this 'negative' order was not reviewable at the instance of the shipper. The Court's ruling brought sharp criticism in Congress. Corrective legislative was proposed, exhaustive committee hearings were held, debate was taken to the floor of Congress. In spite of the strenuous efforts to get Congress to repudiate the 'negative order' doctrine, Congress in 1913 declined to act. But in all of the congressional hearings and debates on the subject, the critics of the Procter & Gamble 'negative order' rule urged without contradiction that repudiation of the 'negative order' rule would afford shippers the same judicial review of reparation and other orders then afforded to railroads. Not once do we find the argument suggested that 49 U.S.C. § 9, 49 U.S.C.A. § 9, would bar shippers from judicial review of adverse reparation orders by the Commission, although this section was at the time part of the original Interstate Commerce Act, enacted in 1887, more than a quarter of a century before this congressional consideration. This Court nevertheless abandoned the negative order doctrine in 1938, and in doing so effectively overruled a host of prior decisions. See cases collected in footnote to Mr. Justice Butler's concurring opinion in the Rochester case, 307 U.S. 146, 148, 59 S.Ct. 765, 83 L.Ed. 1147. The effect of today's decision is merely to recognize that the Standard Oil doctrine, barring judicial review to shippers, cannot stand consistently with the Rochester case which itself overruled the Procter & Gamble and other negative order decisions. It was therefore the Rochester case, not today's decision, that overruled a line of cases and granted relief where Congress had declined to afford any. H.R.Rep.No.1012, 62d Cong., 2d Sess. 1—4 (1912); Hearings before Committee on Appropriations on H.R. 7898, 63d Cong., 1st Sess. 140—148 (1913); Hearings before subcommittee of the Committee on Appropriations on H.R. 7898, 63d Cong., 1st Sess. 305—343 (1913); Hearings before Committee on Interstate and Foreign Commerce on H.R. 25596 and H.R. 25572, 62d Cong., 2d Sess. 1—298 (1912); 50 Cong.Rec. 4532 4537, 4542—4545 (1913). 9 38 Stat. 208, 219, 220; 28 U.S.C. § 2325 (1948 ed.), 28 U.S.C.A. § 2325. See also 28 U.S.C. § 47 (1946 ed.). 10 36 Stat. 539. 11 See President's Message to Congress, 45 Cong.Rec. 7567 7568 (1910). 12 Sen.Rep.No.355, 61st Cong., 2d Sess. 1—2 (1910). 13 See Procter & Gamble Co. v. United States, 225 U.S. 282, 32 S.Ct. 761, 56 L.Ed. 1091; Texas & P.R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, 9 Ann.Cas. 1075. 14 Hearings before Committee on Appropriations on H.R. 7898, 63d Cong., 1st Sess. 293—299, 300 (1913). 15 It is also significant that the new judicial code does not give a three-judge court jurisdiction to adjudicate the validity of commission orders 'for the payment of money.' 28 U.S.C. § 2321, 28 U.S.C.A. § 2321. 16 United States v. Griffin, supra, 303 U.S. at pages 234 237, 58 S.Ct. at pages 605—607, 82 L.Ed. 764; Ayrshire Collieries Corp. v. United States, 331 U.S. 132, 136—137, 67 S.Ct. 1168, 1170, 91 L.Ed. 1391; Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 378, n. 19, 69 S.Ct. 606, 612; Phillips v. United States, 312 U.S. 246, 250, 61 S.Ct. 480, 483, 85 L.Ed. 800. 1 Compare Brief for United States and Interstate Commerce Commission, pp. 7—22, Great Lakes Steel Corp. v. United States, D.C., 81 F.Supp. 450, with Brief for United States, pp. 14—39, United States v. Interstate Commerce Commission, D.C., 78 F.Supp. 580. Since the argument of this case the Great Lakes Steel case has been brought here on appeal, No. 749, this Term, and the Government has acknowledged the conflict. See Motion to Defer Consideration of the Statement of Jurisdiction, Great Lakes Steel Corp. v. United States, No. 749, this Term, 337 U.S. 952, 69 S.Ct. 1530. 2 54 Stat. 899, 49 U.S.C. § 1 et seq., 49 U.S.C.A. § 1 et seq. 3 24 Stat. 382, as amended, 49 U.S.C. § 8, 49 U.S.C.A. § 8. 4 24 Stat. 382, as amended, 49 U.S.C. § 9, 49 U.S.C.A. § 9, 24 Stat 383, as amended, 49 U.S.C. § 13, 49 U.S.C.A. § 13. 5 It held that the rates for export tariff applied only when the wharves were public, which these wharves were not. The Commission also pointed out that the railroads had made other concessions to the Government; that the rates charged, together with a reasonable allowance for the services not provided, were still below the upper limits of reasonableness; that the wharfage charges had been absorbed because of competitive conditions. 264 I.C.C. 683, 269 I.C.C. 141. 6 24 Stat. 383, as amended, 49 U.S.C. § 13, 49 U.S.C.A. § 13. 7 24 Stat. 384, as amended, 49 U.S.C. § 16, 49 U.S.C.A. § 16. 8 54 Stat. 916, 49 U.S.C. § 17(9), 49 U.S.C.A. § 17(9). 9 There was no Committee Report on this legislation; it was added to an appropriation bill. See 50 Cong.Rec. 4527—8. Mr. Fitzgerald, the sponsor of the amendment, said that its sole purpose was to abolish the Commerce Court and make provision for the litigation over which that court had jurisdiction. 'It does not give any new right to any party.' 50 Cong.Rec. 4532, 4536, 4542. There was an attempt to enlarge the review provision so as to give shippers review where previously it did not exist, but this amendment was defeated after debate. 50 Cong.Rec. 4532, 4543 44. It was said: 'The legislation contained in this bill simply abolishes a court that ought never to have been created and vests the jurisdiction which it now exercises in the district courts of the United States. That is all of it, and that is all there ought to be of it. There ought not to be any attempt to enact substantive law in this bill. There ought not to be any attempt to have an increase or decrease of the powers of the commission, and there ought not to be any attempt to increase or decrase the jurisdiction of the district courts over that of the Commerce Court. The only reason why the district courts are designated instead of the circuit courts is that the circuit courts have been abolished since the Commerce Court was created.' 50 Cong.Rec. 4536. 10 In United States v. Griffin, 303 U.S. 226, 58 S.Ct. 601, 82 L.Ed. 764, it was held that because the type of order there involved was not the type reviewable by a three-judge court, the phrase the 'district courts shall have jurisdiction 'of cases brought to enjoin, set aside, annul, or suspend in whole or in part any order of the Interstate Commerce Commission," did not confer jurisdiction on the district court. 303 U.S. at page 228, 58 S.Ct. at page 602. The quoted words are the provision in the Urgent Deficiencies Act and are precisely the same provision that was carried over to § 41(28). When we had this general problem here the other day in United States v. Jones, 336 U.S. 641, 69 S.Ct. 787, it was not suggested that there was jurisdiction to review an order of the Commission under § 41(28), now § 1336 of Title 28 (1948). Instead, the Court agreed with the Griffin case that the order there involved was not of a type calling for a three-judge court and therefore that the jurisdictional provisions of § 41(28), now § 1336, of Title 28 (1948 ed.), were not applicable. The Court significantly referred to the provisions of § 41(6), now § 1339 of Title 28 (1948 ed.), the section giving general jurisdiction over suits arising under the postal laws, as the only possible source of jurisdiction. In the context of this case the comparable provision is § 41(8), now § 1337 (1948 ed.). The only reason why the Court now seeks to warp the whole structure of Title 28 rather than to rely on the only section which conceivably gives jurisdiction to a one-judge court is in order to escape the embarrassing fact that such a suit would be squarely in the face of § 9 of the Interstate Commerce Act. Of course even the procedure adopted is in the face of § 9 of the Interstate Commerce Act as interpreted in four previous decisions of the Court. But reliance on § 41(8), now § 1337 (1948 ed.), would at least have the virtue of only mutilating one Act—that is the Interstate Commerce Act—rather than both that Act, and § 41(28) of Title 28 (1940 ed.), now § 1336 and c. 157 of Title 28 of the 1948 edition. 11 For the period since April 28, 1948, although there have been no instances in which the shipper has asked for a determination of the legality of a practice under Part I of the Act, in a complaint which also stated that a court action was being held in abeyance, there have been thirteen instances where complaints were filed before the Commission asking only for a determination of the legality of a practice because the complainant there was the defendant in a civil action in the courts. Since January, 1948, there have been five proceedings under Part II of the Act in which the shipper first instituted suit in the courts and then asked that the suit be held in abeyance until the Commission made a determination as to the legality of a particular practice. It should be pointed out that under Part II of the Act the Commission has no power to award damages; the doctrine of primary jurisdiction, however, is nevertheless applicable. Bell Potato Chip Co. v. Aberdeen Truck Line, 43 M.C.C. 337, 342—343. 12 The El Dorado Terminal Co. litigation did not involve a claim by a shipper for recovery of an overcharge by a carrier. Therefore, the decisions in General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 60 S.Ct. 325, 84 L.Ed. 361, and El Dorado Oil Works v. United States, 328 U.S. 12, 66 S.Ct. 843; 90 L.Ed. 1053, did not involve the statutory scheme relating to reparations. The cases have no bearing on the problem here—namely the jurisdictional requirements of § 9 in the context of the Interstate Commerce Act. The El Dorado litigation was an ordinary action on a contract. Entangled however in the proper construction of that contract was the ascertainment of a transportation fact, which, with due regard to the Abilene doctrine, made prior determination by the Interstate Commerce Commission appropriate. To that end it was held in the first El Dorado case, that the action in the District Court should be held for such administrative determination. General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 60 S.Ct. 325, 84 L.Ed. 361. That ruling does establish that simply because a prior determination by the Interstate Commerce Commission is required before a litigation can proceed to judgment does not deprive a district court of jurisdiction. This circumstance merely calls for the suspension of the exercise of jurisdiction until the appropriate fact is established by the Interstate Commerce Commission and then introduced in evidence in the pending court case, instead of being established independently in court, as is usually the case. 'While we rejected the Commission's contention that the District Court had no jurisdiction to hear the case, we accepted its contention that determination of the validity of the challenged past practices was for the Commission.' El Dorado Oil Works v. United States, 328 U.S. 12, 17, 66 S.Ct. 843, 846, 90 L.Ed. 1053. The order made by the Interstate Commerce Commission in response to the requirement of the first El Dorado case was not an order of dismissal in a reparation suit. Procedurally it did not make very much difference, therefore, whether this order of the Interstate Commerce Commission should have been entered in the pending litigation or was allowed to be considered in a new proceeding before the District Court. As a matter of procedural elegance it was more appropriate for it to have formed part of the then pending litigation which was suspended precisely for the purpose of obtaining such an order. In Armour & Co. v. Alton R. Co., 312 U.S. 195, 61 S.Ct. 498, 85 L.Ed. 771, the essential question was whether a particular issue could be determined by the court or, in conformity with the Abilene doctrine, required Commission determination. The preoccupation of the case was with that issue. After holding that the doctrine of the Abilene case was applicable, the Court affirmed the judgment below requiring a ruling fr m the Interstate Commerce Commission, without considering whether there was jurisdiction in the sense of power to entertain but hold the case. 13 These figures are not given to imply that in every instance, or even in most instances, that Commission action is followed by a suit in the court for damages. Their sole purpose is to show that, by not seeking damages from the Commission, a complaint leaves himself free, under § 9, to go to the courts. The Commission prefers that the shipper first file a suit in the court before asking the Commission for a declaration. This procedure has the advantage of preventing the statute of limitations from running on the shipper while awaiting Commission decision. Also, 'In circumstances such as described, it is apparent that precautions should be taken to prevent the filing of frivolous or moot complaints. Without attempting at this time to devise a precise rule, we think it pertinent to point out that, generally speaking, adversary proceedings involving past unreasonableness, unjust discrimination, or undue prejudice under part II should not be brought before us prior to the institution of a suit in court in which damages are sought predicated upon the unlawfulness alleged in the complaint. The complaint should show that such suit has been brought within the period allowed by the applicable statute of limitations. There may be other situations in which we should exercise this jurisdiction. In this connection, it may be noted that it is a recognized practice to hold in abeyance court proceedings pending the determination by the Commission of administrative questions.' Bell Potato Chip Co. v. Aberdeen Truck Line, 43 M.C.C. 337, 343. 14 No decision of this Court has ever expressly or impliedly overruled the decision in Standard Oil case. Least of all can it be said that Rochester Telephone Co. v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147, overruled the case for the opinion with great care stated that the Standard Oil case was not overruled in its holding that orders dismissing a claim for reparations were not reviewable because of § 9 of the Interstate Commerce Act. See 307 U.S. at page 140, n. 23, 59 S.Ct. at page 762. The Court there did only what the Court the other day did in United States v. Jones, 336 U.S. 641, 647—648, 69 S.Ct. 787, 791, that is, it decided that for reasons wholly unrelated to the 'negative order' doctrine an order of the Commission was not reviewable. If anything, the conclusion in the Standard Oil case was reinforced by the Rochester decision in that it was reaffirmed by the very decision that put the 'negative order' doctrine and decisions dealing with it under the strictest scrutiny. That examination revealed that only one case out of the whole series of cases examined was really determined by the 'negative order' doctrine. That was the only case the Court overruled. And even the concurring opinion did not say that other cases were being overruled. It objected, essentially, to their reexamination. The concurring opinion said: ,'the case presents no debatable question as to the jurisdiction of the district court. A statement of the facts alleged conclusively shows that in purpose, terms and effect the final order constitutes not mere determination or declaration but affirmative commands. There is no occasion to review earlier decisions dealing with affirmative and negative administrative orders and obviously none to overrule any of them or to repudiate or impair the doctrine they establish.' Rochester Telephone Co. v. United States, 307 U.S. 125, 146, 147—148, 59 S.Ct. 754, 765, 83 L.Ed. 1147. That the Rochester case did not overrule Standard Oil is conclusively proved by the fact that his Court relied on that case less than four years ago to affirm a judgment dismissing a petition to review an order dismissing a claim for reparation. Ashland Coal & Ice Co. v. United States, 325 U.S. 840, 65 S.Ct. 1573, 89 L.Ed. 1966.

89

337 U.S. 521 69 S.Ct. 1287 93 L.Ed. 1513 AERONAUTICAL INDUSTRIAL DIST. LODGE 727v.CAMPBELL et al. No. 333. Argued and Submitted Jan. 31, 1949. Decided June 20, 1949. Mr. Maurice J. Hindin, Los Angeles, Cal., for petitioner. Mr. H. Graham Morison, Washington, D.C., for respondents Campbell et al. Mr. Robert H. Canan, Burbank, Cal., for respondent Lockheed Aircraft Corporation. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 We brought this case here, 335 U.S. 869, 69 S.Ct. 166, to resolve a conflict of views between two Courts of Appeals in their interpretation of the rights given to veterans of World War II by § 8 of the Selective Training and Service Act of 1940, as amended, 54 Stat. 885, 890, 58 Stat. 798, 50 U.S.C.App. § 308, 50 U.S.C.A.Appendix, § 308. Three veterans brought this suit for compensation for the period of a layoff while employed at Lockheed Aircraft Corporation, a respondent here. The facts controlling the legal claims of all three may be represented by the circumstances attending Kirk's employment and layoff.1 2 The petitioner, Aeronautical Industrial District Lodge No. 727, was the duly recognized collective bargaining agent of the employees at Lockheed Aircraft Corporation. In September, 1941, the union had negotiated an agreement with Lockheed covering the range of subjects touching conditions of employment typical of such agreements in the aircraft industry. This agreement was in effect when Kirk was employed in August, 1942, by Vega Aircraft Corporation, which afterwards was merged with Lockheed. He joined the union and has remained a member throughout this controversy. He left Lockheed two years later to enter the Army, from which he was honorably discharged in January, 1946, and was restored to his job at Lockheed in accordance with § 8(a) of the Selective Service Act. 54 Stat. 885, 890, as amended, 50 U.S.C.App. § 308(a) 50 U.S.C.Appendix, § 308(a). While Kirk was in military service his union made a new agreement with Lockheed modifying the terms of the 1941 agreement in various particulars. Crucial to the issue here was a change in the seniority provisions of the former agreement. The change provided that 'Union Chairmen who have acquired seniority shall be deemed to have top seniority as long as they remain Chairmen.'2 In plain English this means that thereafter employees who served as union chairmen were entitled to be retained in case of layoffs regardless of their length of service in the plant. 3 In the latter part of June, 1946, and within a year after Kirk's reemployment, it was necessary to lay off employees in Kirk's industrial unit. These layoffs followed the conventional sequence of seniority, time for military service being duly credited, with the exception that union chairmen were retained in accordance with the 1945 agreement, even though they had less time with the company than those who were laid off, veterans or not. Kirk was among those laid off, and the retention as union chairmen of men who were junior to him is the basis of his claim that § 8 of the Act had been infringed.3 Kirk was brought back to work within a month, but Lockheed refused to pay him for the time he was laid off. For this sum he brought this suit. Petitioner Union was allowed to intervene in order to protect its labor contract. Judgment went for Kirk, and the Union alone took the case to the Court of Appeals for the Ninth Circuit. That court affirmed the judgment,4 169 F.2d 252, holding that § 8 of the Act forbade disregard of length of employment, so far as veterans are affected, in enforcing provisions in a collective agreement for the retention of union chairmen in the event of layoffs regardless of their length of service. In so holding it ran counter to a series of decisions in the Court of Appeals for the Third Circuit. Gauweiler v. Elastic Stop Nut Corp., 162 F.2d 448; Koury v. Elastic Stop Nut Corp., 162 F.2d 544; DiMaggio v. Elastic Stop Nut Corp., 162 F.2d 546, and Payne v. Wright Aeronautical Corp., 162 F.2d 549. 4 It is of the essence of collective bargaining that it is a continuous process. Neither the conditions to which it addresses itself nor the benefits to be secured by it remain static. They are not frozen even by war. Thus, under the Act the veteran accumulates time toward his seniority while in the service; he also becomes the beneficiary of those gains the achievement of which is the constant thrust of collective bargaining. In other words, the Act gives him the status of one who has been 'on furlough or leave of absence' but uninterruptedly a member of the working force on whose behalf successive collective agreements are made. In this way the Act protects the furloughed employee from being prejudiced by any change in the terms of a collective agreement because he is 'on furlough,' but he is not to be favored as a furloughed employee as against his fellows. This is the essence of our decision in Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 66 S.Ct. 1105, 90 L.Ed. 1230, 167 A.L.R. 110. 5 In providing that a veteran shall be restored to the position he had before he entered the military service 'without loss of seniority,' § 8 of the Act uses the term 'seniority' without definition. It is thus apparent that Congress was not creating a system of seniority but recognizing its operation as part of the process of collective bargaining. We must therefore look to the conventional uses of the seniority system in the process of collective bargaining in order to determine the rights of seniority which the Selective Service Act guaranteed the veteran. 6 Barring legislation not here involved, seniority rights derive their scope and significance from union contracts, confined as they almost exclusively are to unionized industry. See Trailmobile Co. v. Whirls, 331 U.S. 40, 53, note 21, 67 S.Ct. 982, 988, 91 L.Ed. 1328. There are great variations in the use of the seniority principle through collective bargaining bearing on the time when seniority begins, determination of the units subject to the same seniority, and the consequences which flow from seniority. All these variations disclose limitations upon the dogmatic use of the principle of seniority in the interest of the ultimate aims of collective bargaining. Thus, probationary conditions must often be met before seniority begins to operate; sometimes it becomes retroactive to the date of employment; in other instances it is effective only as from the qualifying date; in some industries it is determined on a company basis, in others the occupation or the plant is taken as the unit for seniority determination; sometimes special provisions are made for workers in key positions; and then again these factors are found in varying combinations. See Williamson & Harris, Tren § in Collective Bargaining, 100—102 (1945); Harbison, Seniority Policies and Procedures as Developed through Collective Bargaining 1—10 (1941). 7 To draw from the Selective Service Act an implication that date of employment is the inflexible basis for determining seniority rights as reflected in layoffs is to ignore a vast body of long-established controlling practices in the process of collective bargaining of which the seniority system to which that Act refers is a part. One of the safeguards insisted upon by unions for the effective functioning of collective bargaining is continuity in office for its shop stewards or union chairmen. To that end provision is made, as it was made here, against laying them off merely on the basis of temporal seniority. Because they are union chairmen they are not regarded as merely individual members of the union; they are in a special position in relation to collective bargaining for the benefit of the whole union. To retain them as such is not an encroachment on the seniority system but a due regard of union interests which embrace the system of seniority rights. 8 These considerations are decisive of the case. The agreements made by the Union with Lockheed represent familiar developments in the process of collective bargaining which the Selective Service Act presupposes and in the context of which it must be placed. Kirk's rights, including seniority, before he entered the service were derived from the agreement of 1941. So, likewise, were his rights, including seniority, as an employee on furlough defined by the agreement of 1945, inasmuch as that agreement in no wise disadvantaged his position because he was in the military service. 9 In the ordinary and orderly course of formulating the terms of employment, the 1945 agreement between the union and Lockheed in some directions modified the provisions of the 1941 agreement. A labor agreement is a code for the government of an industrial enterprise and, like all government, ultimately depends for its effectiveness on the quality of enforcement of its code. Because a labor agreement assumes the proper adjustment of grievances at their source, the union chairmen play a very important role in the whole process of collective bargaining. Therefore it is deemed highly desirable that union chairmen have the authority and skill which are derived from continuity in office. A provision for the retention of union chairmen beyond the routine requirements of seniority is not at all uncommon and surely ought not to be deemed arbitrary or discriminatory.5 The fact that it may involve, as in Kirk's case, the temporary layoff of a veteran while a nonveteran chairman with less time at the plant is retained, is wholly unrelated to the veteran's absence in the service. Under the 1945 agreement chairmen were to be elected once a year, and unless the election occurred on the day before a veteran returned to the plant, his chance of election would be the same as that of persons who had been continuously at work in the plant. 10 Of course, the Selective Service Act restricts a readjustment of seniority rights during the veteran's absence to the disadvantage of the veteran. But it would be an undue restriction of the process of collective bargaining (without compensating gain to the veteran) to forbid changes in collective bargaining arrangements which secure a fixed tenure for union chairmen, whereby veterans as well as nonveterans are benefited by promoting greater protection of their rights and smoother operation of labormanagement relations. 11 All this presupposes, obviously, that an agreement containing the 1945 provisions expresses honest desires for the protection of the interests of all members of the union and is not a skillful device of hostility to veterans. There is not the remotest suggestion that the 1945 agreement was other than what it purported to be—the means for securing both to veterans and to non-veterans better working conditions through elected leaders not subject to the contingencies of a labor turnover. 12 Reversed. 13 Mr. Justice DOUGLAS concurs in the result. 1 One of the three yeterans, James L. Campbell, withdrew from the Union on the first day of March, 1946, but this did not affect his status as an employee with the company. There is no contention that his withdrawal from the Union affects in any manner his rights under § 8 of the Act, or that withdrawal from the Union should cause a different result. 2 The collective bargaining agreement signed in 1941 so far as seniority was concerned provided: 'In case of a slack in production, layoffs are to be made primarily on the basis of the principle of seniority. Due consideration will be given, however, to (a) knowledge, training, ability, skill and efficiency, and (b) deportment record and other factors. If it becomes necessary to reduce the working force in any plant or department, a plan of layoff procedure will be prepared by the management and submitted to the Union for approval. If such plan is not acceptable to the nion the Company agrees to enter negotiations with the Union and to attempt to arrive at a mutually agreeable plan. If, however, at the end of one working week from the date the Company submitted its original plan of layoff procedure to the Union no new plan has been mutually agreed to, the Company may proceed according to its proposed plan of layoff subject to Article II, Section 6.' 1941 Agreement, Art. III, § 5. The later agreement provided: '(A) General Layoff Procedure. Layoffs shall be made in order of Company-wide seniority applied by occupation where ability, skill and efficiency are substantially equal. However, in the case of employees with four years' or more seniority, the Company may, in its discretion, retain them in order of their Company-wide seniority, regardless of occupation, where ability, skill and efficiency are substantially equal. Any claim of unjust discrimination in the exercise of such discretion may be taken up as a grievance. Employees who have not acquired seniority rights may be laid off without regard to relative length of service. '(D) Top Seniority for Union Chairmen for Purpose of Layoffs. For the purpose of applying the Temporary and General Layoff Procedures, Union Chairmen who have acquired seniority shall be deemed to have top seniority so long as they remain Chairmen. * * *' 1945 Agreement, Art. IV, § 3(A)(D). 3 These are the relevant statutory provisions: '(a) Any person inducted into the land or naval forces under this Act for training and service, who, in the judgment of those in authority over him, satisfactorily completes his period of training and service under section 3(b) shall be entitled to a certificate to that effect upon the completion of such period of training and service, which shall include a record of any special proficiency or merit attained. * * * '(b) In the case of any such person who, in order to perform such training and service, has left or leaves a position, other than a temporary position, in the employ of any employer and who (1) receives such certificate, (2) is still qualified to perform the duties of such position, and (3) makes application for reemployment within ninety days after he is relieved from such training and service or from hospitalization continuing after discharge for a period of not more than one year— '(B) if such position was in the employ of a private employer, such employer shall restore such person to such position or to a position of like § niority, status, and pay unless the employer's circumstances have so changed as to make it impossible or unreasonable to do so; '(c) Any person who is restored to a position in accordance with the provisions of paragraph (A) or (B) of subsection (b) shall be considered as having been on furlough or leave of absence during his period of training and service in the land or naval forces, shall be so restored without loss of seniority, shall be entitled to participate in insurance or other benefits offered by the employer pursuant to established rules and practices relating to employees on furlough or leave of absence in effect with the employer at the time such person was inducted into such forces, and shall not be discharged from such position without cause within one year after such restoration. * * *' 54 Stat. 885, 890, as amended, 50 U.S.C.App. § 308, 50 U.S.C.A.Appendix, § 308. 4 Lockheed, the respondent in the District Court, did not appeal. But since the judgment was not merely for money damages but also involved the construction of the collective agreement, the union had the right to appeal. Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 281—284, 66 S.Ct. 1105, 1109—1110, 90 L.Ed. 1230, 167 A.L.R. 110. 5 See Greenman, Getting Along With Unions 26 (1948); Union Agreements in the Cotton-Textile Industry, U.S. Dept. of Labor, Bull. No. 885 28 (1946); Thomas, Automobile Unionism 56 (1941); Collective Bargaining Provisions, Seniority Provisions, U.S. Dept. of Labor 28—29 (1948); Collective Bargaining in the Office, American Management Assn., Research Rep. No. 12 72. The advantage of this modification in seniority according to length of service in the plant is 'the mutual interest of union and management in preserving the continuity of the bargaining and grievance adjustment personnel.' Seniority Provisions in Union Agreements, U.S. Dept. of Labor, Serial No. R. 1308 7 (1941). While there is not complete agreement on the advantage of seniority for union chairmen, it is certainly within the area of collective bargaining. See Williamson and Harris, Trends in Collective Bargaining 101—103 (1945); see Greenman, Getting Along With Unions 85—86 (1948). The Nation l War Labor Board recognized 'that the functions of shop stewards and other local union officials were of value to a company as well as to its employees in settling and preventing labor grievances. For this reason, it usually directed seniority preference for union officials in disputes over the issue.' The Termination Report of the National War Labor Board, U.S. Dept. of Labor, Vol. I, p. 148.

12

337 U.S. 582 69 S.Ct. 1173 93 L.Ed. 1556 NATIONAL MUT. INS. CO. OF DISTRICT OF COLUMBIAv.TIDEWATER TRANSFER CO., INC. No. 29. Argued Nov. 8, 1948. Decided June 20, 1949. Mr. David G. Bress, Washington, D.C., for petitioner. Messrs. Wendell D. Allen and Francis B. Burch, Baltimore, Md., for respondent. Sol. Gen. Philip B. Perlman, Washington, D.C., for the United States, as amicus curiae, by special leave of Court. Mr. Justice JACKSON announced the judgment of the Court and an opinion in which Mr. Justice BLACK and Mr. Justice BURTON join. 1 This case calls up for review a holding that it is unconstitutional for Congress to open federal courts in the several states to action by a citizen of the District of Columbia against a citizen of one of the states. The petitioner, as plaintiff, commenced in the United States District Court for Maryland an action for money judgment on a claim arising out of an insurance contract. No cause of action under the laws or Constitution of the United States was pleaded, jurisdiction being predicated only upon an allegation of diverse citizenship. The diversity set forth was that plaintiff is a corporation created by District of Columbia law, while the defendant is a corporation chartered by Virginia, amenable to suit in Maryland by virtue of a license to do business there. The learned District Judge concluded that, while this diversity met jurisdictional requirements under the Act of Cognress,1 it did not comply with diversity requirements of the Constitution as to federal jurisdiction, and so dismissed.2 The Court of Appeals, by a divided court, affirmed.3 Of twelve district courts that had considered the question up to the time review in this Court was sought, all except three had held the enabling Act unconstitutional,4 and the two Courts of Appeals which had spoken on the subject agreed with that conclusion.5 The controversy obviously was an appropriate one for review here and writ of certiorari issued in the case.6 2 The history of the controversy begins with that of the Republic. In defining the cases and controversies to which the judicial power of the United States could extend, the Constitution included those 'between citizens of different States.'7 In the Judiciary Act of 1789, Congress created a system of federal courts of first instance and gave them jurisdiction of suits 'between a citizen of the State where the suit is brought, and a citizen of another State.'8 In 1804, the Supreme Court, through Chief Justice Marshall, held that a citizen of the District of Columbia was not a citizen of a State within the meaning and intendment of this Act.9 This decision closed federal courts in the states to citizens of the District of Columbia in diversity cases, and for 136 years they remained closed. In 1940 Congress enacted the statute challenged here. It confers on such courts jurisdiction if the action 'is between citizens of different States, or citizens of the District of Columbia, the Territory of Hawaii, or Alaska, and any State or Territory.'10 The issue here depends upon the validity of this Act, which, in substance, was reenacted by a later Congress11 as part of the Judicial Code.12 3 Before concentrating on detail, it may be well to place the general issue in a larger perspective. This constitutional issue affects only the mechanics of administering justice in our federation. It does not involve an extension or a denial of any fundamental right or immunity which goes to make up our freedoms. Those rights and freedoms do not include immunity from suit by a citizen of Columbia or exemption from process of the federal courts. Defendant concedes that it can presently be sued in some court of law, if not this one, and it grants that Congress may make it suable at plaintiff's complaint in some, if not this, federal court. Defendant's contention only amounts to this; that it cannot be made to answer this plaintiff in the particular court which Congress has decided is the just and convenient forum. 4 The considerations which bid us strictly to apply the Constitution to congressional enactments which invade fundamental freedoms or which reach for powers that would substantially disturb the balance between the Union and its component states, are not present here. In mere mechanics of government and administration we should, so far as the language of the great Charter fairly will permit, give Congress freedom to adapt its machinery to the needs of changing times. In no case could the admonition of the great Chief Justice be more appropriately heeded—'* * * we must never forget, that it is a constitution we are expounding.'13 5 Our first inquiry is whether, under the third, or Judiciary, Article of the Constitution,14 extending the judicial power of the United States to cases or controversies 'between citizens of different States,' a citizen of the District of Columbia has the standing of a citizen of one of the states of the Union. This is the question which the opinion of Chief Justice Marshall answered in the negative, by way of dicta if not of actual decision. Hepburn and Dundas v. Ellzey, 2 Cranch 445, 2 L.Ed. 332. To be sure, nothing was before that Court except interpretation of a statute15 which conferred jurisdiction substantially in the words of the Constitution with nothing in the text or context to show that Congress intended to regard the District as a state. But Marshall resolved the statutory question by invoking the analogy of the constitutional provisions of the same tenor and reasoned that the District was not a state for purposes of the Constitution and, hence, was not for purposes of the Act. The opinion summarily disposed of arguments to the contrary, including the one repeated here that other provisions of the Constitution indicate that 'the term state is sometimes used in its more enlarged sense.' Here, as there, 'on examining the passages quoted, they do not prove what was to be shown by them.' 2 Cranch 445, 453, 2 L.Ed. 332. Among his contemporaries at least Chief Justice Marshall was not generally censured for undue literalness in interpreting the language of the Constitution to deny federal power and he wrote from close personal knowledge of the Founders and the foundation of our constitutional structure. Noe did he underestimate the equitable claims which his decision denied to residents of the District, for he said that 'It is true that as citizens of the United States, and of that particular district which is subject to the jurisdiction of congress, it is extraordinary that the courts of the United States, which are open to aliens, and to the citizens of every state in the union, should be closed upon them. But this is a subject for legislative not for judicial consideration.'16 6 The latter sentence, to which much importance is attached, is somewhat ambiguous, because constitutional amendment as well as statutory revision is for legislative, not judicial, consideration. But the opinion as a whole leaves no doubt that the Court did not then regard the District as a state for diversity purposes. 7 To now overrule this early decision of the Court on this point and hold that the District of Columbia is a state would, as that opinion pointed out, give to the word 'state' a meaning in the Article which sets up the judicial establishment quite different from that which it carries in those Articles which set up the political departments and in other Articles of the instrument. While the word is one which can contain many meanings, such inconsistency in a single instrument is to be implied only where the context clearly requires it. There is no evidence that the Founders, pressed by more general and mmediate anxieties, thought of the special problems of the District of Columbia in connection with the judiciary. This is not strange, for the District was then only a contemplated entity. But had they thought of it, there is nothing to indicate that it would have been referred to as a state and much to indicate that it would have required special provisions to fit its anomalous relationship into the new judicial system, just as it did to fit it into the new political system. 8 In referring to the 'States' in the fateful instrument which amalgamated them into the 'United States,' the Founders obviously were not speaking of states in the abstract. They referred to those concrete organized societies which were thereby contributing to the federation by delegating some part of their sovereign powers and to those that should later be organized and admitted to the partnership in the method prescribed. They obviously did not contemplate unorganized and dependent spaces as states. The District of Columbia being nonexistent in any form, much less as a state, at the time of the compact, certainly was not taken into the Union of states by it, nor has it since been admitted as a new state is required to be admitted. 9 We therefore decline to overrule the opinion of Chief Justice Marshall, and we hold that the District of Columbia is not a state within Article III of the Constitution. In other words, cases between citizens of the District and those of the states were not included in the catalogue of controversies over which the Congress could give jurisdiction to the federal courts by virtue of Art. III. 10 This conclusion does not, however, determine that Congress lacks power under other provisions of the Constitution to enact this legislation. Congress, by the Act in question, sought not to challenge or disagree with the decision of Chief Justice Marshall that the District of Columbia is not a state for such purposes. It was careful to avoid conflict with that decision by basing the new legislation on powers that had not been relied upon by the First Congress in passing the Act of 1789. 11 The Judiciary Committee of the House of Representatives recommended the Act of April 20, 1940, as 'a reasonable exercise of the constitutional power of Congress to legislate for the District of Columbia and for the Territories.'17 This power the Constitution confers in broad terms. By Art. I, Congress is empowered 'to exercise exclusive Legislation in all Cases whatsoever, over such District.'18 And of course it was also authorized 'to make all Laws which shall be necessary and proper for carrying into Execution' such powers.19 These provisions were not relevant in Chief Justice Marshall's interpretation of the Act of 1789 because it did not refer in terms to the District but only to states. It is therefore significant that, having decided that District citizens' cases were not brought within federal jurisdiction by Art. III and the statute enacted pursuant to it, the Chief Justice added, as we have seen, that it was extraordinary that the federal courts should be closed to the citizens of 'that particular district which is subject to the jurisdiction of congress.' Such language clearly refers to Congress' Art. I power of 'exclusive Legislation in all Cases whatsoever, over such District.' And mention of that power seems particularly significant in the context of Marshall's further statement that the matter is a subject for 'legislative not for judicial consideration.' Even if it be considered speculation to say that this was an expression by the Chief Justice that Congress had the requisite power under Art. I, it would be in the teeth of his language to say that it is a denial of such power. The Congress had acted on the belief that it possesses that power. We believe their conclusion is well founded. 12 It is elementary that the exclusive responsibility of Congress for the welfare of the District includes both power and duty to provide its inhabitants and citizens with courts adequate to adjudge not only controversies among themselves but also their claims against, as well as suits brought by, citizens of the various states. It long has been held that Congress may clothe District of Columbia courts not only with the jurisdiction and powers of federal courts in the several states but with such authority as a state may confer on her courts. Kendall v. United States ex rel. Stokes, 12 Pet. 524, 619, 9 L.Ed. 1181; Capital Traction Co. v. Hof, 174 U.S. 1, 19 S.Ct. 580, 43 L.Ed. 873; O'Donoghue v. United States, 289 U.S. 516, 53 S.Ct. 740, 77 L.Ed. 1356. The defendant here does not challenge the power of Congress to assure justice to the citizens of the District by means of federal instrumentalities, or to empower a federal court within the District to run its process to summon defendants here from any part of the country. And no reason has been advanced why a special statutory court for cases of District citizens could not be authorized to proceed elsewhere in the United States to sit, where necessary or proper, to discharge the duties of Congress toward District citizens. 13 However, it is contended that Congress may not combine this function, under Art. I, with those under Art. III, in district courts of the United States. Two objections are urged to this. One is that no jurisdiction other than specified in Art. III can be imposed on courts that exercise the judicial power of the United States thereunder. The other is that Art. I powers over the District of Columbia must be exercised solely within that geographic area. 14 Of course there are limits to the nature of duties which Congress may impose on the constitutional courts vested with the federal judicial power. The doctrine of separation of powers is fundamental in our system. It arises, however, not from Art. III nor any other single provision of the Constitution, but because 'behind the words of the constitutional provisions are postulates which limit and control.' Chief Justice Hughes in Principality of Monaco v. State of Mississippi, 292 U.S. 313, 323, 54 S.Ct. 745, 748, 78 L.Ed. 1282. The permeative nature of this doctrine was early recognized during the Constitutional Convention. Objection that the present provision giving federal courts jurisdiction of cases arising 'under this Constitution' would permit usurpation of nonjudicial functions by the federal courts was overruled as unwarranted since it was 'generally supposed that the jurisdiction given was constructively limited to cases of a Judiciary nature.' 2 Farrand, Records of the Federal Convention, 430. And this statute reflects that doctrine. It does not authorize or require either the district courts or this Court to participate in any legislative, administrative, political or other nonjudicial function or to render any advisory opinion. The jurisdiction conferred is limited to controversies of a justiciable nature, the sole feature distinguishing them from countless other controversies handled by the same courts being the fact that one party is a District citizen. Nor has the Congress by this statute attempted to usurp any judicial power. It has deliberately chosen the district courts as the appropriate instrumentality through which to exercise part of the judicial functions incidential to exertion of sovereignty over the District and its citizens. 15 Unless we are to deny to Congress the same choice of means through which to govern the District of Columbia that we have held it to have in exercising other legislative powers enumerated in the same Article, we cannot hold that Congress lacked the power it sough to exercise in the Act before us. 16 It is too late to hold that judicial functions incidental to Art. I powers of Congress cannot be conferred on courts existing under Art. III for it has been done with this Court's approval. O'Donoghue v. United States, 289 U.S. 516, 53 S.Ct. 740, 77 L.Ed. 1356. In that case it was held that, although District of Columbia courts are Art. III courts, they can also exercise judicial power conferred by Congress pursuant to Art. I. The fact that District of Columbia courts, as local courts, can also be given administrative or legislative functions which other Art. III courts cannot exercise, does but emphasize the fact that, although the latter are limited to the exercise of judicial power, it may constitutionally be received from either Art. III, or Art. I, and that congressional power over the District, flowing from Art. I, is plenary in every respect. 17 It is likewise too late to say that we should reach this result by overruling Chief Justice Marshall's view, unless we are prepared also to overrule much more, including some of our own very recent utterances. Many powers of Congress other than its power to govern Columbia require for their intelligent and discriminating exercise determination of controversies of a justiciable character. In no instance has this Court yet held that jurisdiction of such cases could not be placed in the regular federal courts that Congress has been authorized to ordain and establish. We turn to some analogous situations in which we have approved the very course that Congress has taken here. 18 Congress is given power by Art. I to pay debts of the United States. That involves as an incident the determination of disputed claims. We have held unanimously that congressional authority under Art. I, not the Art. III jurisdiction over suits to which the United States is a party, is the sole source of power to establish the Court of Claims and of the judicial power which that court exercises. Williams v. United States, 289 U.S. 553, 53 S.Ct. 751, 77 L.Ed. 1372. In that decision we also noted that it is this same Art. I power that is conferred on district courts by the Tucker Act20 which authorizes them to hear and determine such claims in limited amounts. Since a legislative court such as the Court of Claims is 'incapable of receiving' Art. III judicial power, American Insurance Co. v. Canter, 1 Pet. 511, 546, 7 L.Ed. 242, it is clear that the power thus exercised by that court and concurrently by the district courts flows from Art. I, not Art. III. Indeed, more recently and again unanimously, this Court has said that by the Tucker Act the Congress authorized the district courts to sit as a court of claims21 exercising the same but no more judicial power. United States v. Sherwood, 312 U.S. 584, 591, 61 S.Ct. 767, 771, 772, 85 L.Ed. 1058. And but a few terms ago, in considering an Act by which Congress directed rehearing of a rejected claim and its redetermination in conformity with directions given in the Act, Chief Justice Stone, with the concurrence of all sitting colleagues, reasoned that 'The problem presented here is no different than if Congress had given a like direction to any district court to be followed as in other Tucker Act * * * cases.' Pope v. United States, 323 U.S. 1, 14, 65 S.Ct. 16, 23, 89 L.Ed. 3, Congress has taken us at our word and recently conferred on the district courts exclusive jurisdiction of tort claims cognizable under the Federal Tort Claims Act, 60 Stat. 842, 843, also enacted pursuant to Art. I powers.22 See Brooks v. United States, 337 U.S. 49, 69 S.Ct. 918. 19 Congress also is given power in Art. I to make uniform laws on the subject of bankruptcies. That this, and not the judicial power under Art. III, is the source of our system of reorganizations and bankruptcy is obvious, Continental Illinois Nat. Bank & Trust Co. v. Chicago Rock Island & Pacific R. Co., 294 U.S. 648, 55 S.Ct. 595, 79 L.Ed. 1110. But not only may the district courts be required to handle these proceedings but Congress may add to their jurisdiction cases between the trustee and others that, but for the bankruptcy powers, would be beyond their jurisdiction because of lack of diversity required under Art. III. Schumacher v. Beeler, 293 U.S. 367, 55 S.Ct. 230, 233, 79 L.Ed. 433. In that case, Chief Justice Hughes for a unanimous court wrote that by virtue of its Art. I authority over bankruptcies the Congress could confer on the regular district courts jurisdiction of 'all controversies at law and in equity, as distinguished from proceedings in bankruptcy, between trustees as such and adverse claimants' to the extent specified in § 23, sub. b of the Bankruptcy Act as amended, 11 U.S.C.A. § 46, sub. b. Such jurisdiction was there upheld in a plenary suit, in a district court, by which the trustee sought equitable relief relying on allegations raising only questions of Ohio law concerning the validity under that law of a sheriff's levy and execution. Possession by the trustee not being shown, and there being no diversity, jurisdiction in the district court could flow only from the statute. Chief Justice Hughes noted that the distinction between proceedings in bankruptcy and suits at law and in equity was recognized by the terms of the statute itself, but held that 'Congress (Const. Art. 1, § 8), by virtue of its constitutional authority over bankruptcies, could confer or withhold jurisdiction to entertain such suits and could prescribe the conditions upon which the federal courts should have jurisdiction. * * * Exercising that power, the Congress prescribed in section 23, sub. b the condition of consent on the part of the defendant sued by the trustee. Section 23, sub. b was thus in effect a grant of jurisdiction subject to that condition.' 293 U.S. 367, 374, 55 S.Ct. 230, 234, 79 L.Ed. 433. He concluded that the statute granted jurisdiction to the district court 'although the bankrupt could not have brought suit there if proceedings in bankruptcy had not been instituted * * *.' 293 U.S. 367, 377, 55 S.Ct. 230, 235, 79 L.Ed. 433. And he stated the correct view to be that § 23 conferred substantive jurisdiction, 293 U.S. 367, 371, 55 S.Ct. 230, 232, 79 L.Ed. 433, disapproving statements in an earlier case that Congress lacked power to confer such jurisdiction. Id., 293 U.S. at page 377, 55 S.Ct. at page 235, 79 L.Ed. 433. Thus the Court held that Congress had power to authorize an Art. III court to entertain a non-Art. III suit because such judicial power was conferred under Art. I. Indeed the present Court has assumed, without even discussion, that Congress has such power. In Williams v. Austrian, 331 U.S. 642, 657, 67 S.Ct. 1443, 1450, 91 L.Ed. 1718, the Chief Justice, speaking for the Court, said that '* * * Congress intended by the elimination of § 23 (from Chapter X of the Bankruptcy Act) to establish the jurisdiction of federal courts to hear plenary suits brought by a reorganization trustee, even though diversity or other usual ground for federal jurisdiction is lacking.' (Emphasis supplied.) There was vigorous dissent as to the meaning of the statute, but the dissenting Justices referred to the Court's holding that 'a Chapter X trustee may bring this plenary suit in personam in a federal district court not the reorganization court, although neither diversity of citizenship nor other ground of federal jurisdiction exists.' 331 U.S. 642, 664, 665, 67 S.Ct. 1443, 1454, 91 L.Ed. 1718. And the dissent continued: 'No doubt Congress could authorize such a suit. See Schumacher v. Beeler, 293 U.S. 367, 374, 55 S.Ct. 230, 233, 79 L.Ed. 433.' 20 This assumption by the Court in the Beeler and Austrian cases, that the Congress had power to confer on the district courts jurisdiction of nondiversity suits involving only state law questions made unnecessary any discussion of the source of the assumed power. In view of Congress' plenary control over bankruptcies, the Court may have grounded such assumption on Art. I. Or it might have considered that the jurisdiction was based on Art. III, and statutes enacted pursuant to it, giving the district courts jurisdiction over suits arising under the Constitution and laws of the United States. Had the Court held such a view, this latter might have commended itself as the most obvious answer. Consequently, silence in this respect, in the decision of each case, seems significant, particularly in contrast with repeated reference to Art. I power in the Beeler case, and sweeping language in the Austrian case that such jurisdiction existed despite lack of diversity 'or other usual ground for federal jurisdiction.' Nevertheless, it is now asserted, in retrospect, that those cases did arise under the laws of the United States. No justification is offered for that conclusion and there is no effort to say just why or how the cases did so arise. This would indeed be difficult if we still adhere to the doctrine of Mr. Justice Holmes that 'A suit arises under the law that creates the cause of action.' American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 586, 60 L.Ed. 987, for the cause of action in each case rested solely on state law. 21 But the matter does not rest on inference alone. Other decisions of this Court demonstrate conclusively that jurisdiction over the Beeler and Austrian suits was not and could not have been conferred under Art. III and statutes concerning suits arising under the laws of the United States. A most thoroughly-considered utterance of this Court on that subject was given by Mr. Justice Cardozo, in Gully v. First National Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70, where he said, without dissent, 'How and when a case arises 'under the Constitution or laws of the United States' has been much considered in the books. Some tests are well established. To bring a case within the statute, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action. * * * (Emphasis added.) The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another. * * * A genuine and present controversy, not merely a possible or conjectural one, must exist with reference thereto * * * and the controversy must be disclosed upon the face of the complaint * * *.' 299 U.S. 109, 112—113, 57 S.Ct. 96, 97, 81 L.Ed. 70. After reviewing previous cases, Mr. Justice Cardozo referred to a then recent opinion by Mr. Justice Stone in which he said, for a unanimous court, that federal jurisdiction 'may not be invoked where the right asserted is non-federal, merely because the plaintiff's right to sue is derived from federal law, or because the property involved was obtained under federal statute. The federal nature of the right to be established is decisive—not the source of the authority to establish it.' People of Puerto Rico v. Russell & Co., 288 U.S. 476, 483, 53 S.Ct. 447, 450, 77 L.Ed. 903. (Emphasis added.)23 See also Switchmen's Union of North America v. National Mediation Board, 320 U.S. 297, 64 S.Ct. 95, 88 L.Ed. 61; General Committee of Adjustment of Brotherhood of Locomotive Engineers for Missouri-Kansas-Texas R.R. v. Missouri-Kansas-Texas R. Co., 320 U.S. 323, 64 S.Ct. 146, 88 L.Ed. 76. 22 Neither the Austrian nor the Beeler case meets these tests, required before a case can be said to arise under the laws of the United States, any more than does the case before us. Austrian, as trustee, sued in equity for an accounting based on a charge that affairs of a state-created corporation had been conducted by the officers in violation of state law. Beeler, as trustee, sued on a contention that a levy on property b an Ohio sheriff was void under state law. Both controversies, like the one before us, called for a determination of no law question except those arising under state laws. The only way in which any law of the United States contributed to the case was in opening the district courts to the trustee, under Art. I powers of Congress, just as the present statute, under the same Article, opens those courts to residents of the District of Columbia. In each case, in the words of Chief Justice Stone, the federal law provided, not the right sought to be established, but only the authority of the trustee to establish it. The fact that the congressional power over bankruptcy granted by Art. I could open the court to the trustee does not mean that such suits arise under the laws of the United States; but it does mean that Art. I can supply a source of judicial power for their adjudication. The distinction is important and it is decisive on this issue. 23 Neither the Beeler nor the Austrian case was one arising under the laws of the United States within the clear language of recent holdings by this Court. Unless we are to deny the jurisdiction in such cases which has consistently been upheld, we must rely on the Art. I powers of the Congress. We have been cited to no holding that such jurisdiction cannot spring from that Article. Under Art. I the Congress has given the district courts not only jurisdiction over cases arising under the bankruptcy law but also judicial power over nondiversity cases which do not arise under that or any other federal law. And this Court has upheld the latter grant. 24 Consequently, we can deny validity to this present Act of Congress, only by saying that the power over the District given by Art. I is somehow less ample than that over bankruptcy given by the same Article. If Congress could require this district court to decide this very case if it were brought by a trustee, it is hard to see why it may not require its decision for a solvent claimant when done in pursuance of other Art. I powers. 25 We conclude that where Congress in the exercise of its powers under Art. I finds it necessary to provide those on whom its power is exerted with access to some king of court or tribunal for determination of controversies that are within the traditional concept of the justiciable, it may open the regular federal courts to them regardless of lack of diversity of citizenship. The basis of the holdings we have discussed is that when Congress deems that for such purposes it owes a forum to claimants and trustees, it may execute its power in this manner. The Congress, with equal justification apparently considers that it also owes such a forum to the residents of the District of Columbia in execution of its power and duty under the same Article. We do not see how the one could be sustained and the other denied. 26 We therefore hold that Congress may exert its power to govern the District of Columbia by imposing the judicial function of adjudicating justiciable controversies on the regular federal courts24 which under the Constitution it has the power to ordain and establish and which it may invest with jurisdiction and from which it may withhold jurisdiction 'in the exact degrees and character which to Congress may seem proper for the public good.' Lockerty v. Phillips, 319 U.S. 182, 187, 63 S.Ct. 1019, 1022, 87 L.Ed. 1339. 27 The argument that congressional powers over the District are not to be exercised outside of its territorial lim ts also is pressed upon us. But this same contention has long been held by this Court to be untenable. In Cohens v. Commonwealth of Virginia, 6 Wheat. 264, 429, 5 L.Ed. 257, Chief Justice Marshall, answering the argument that Congress, when legislating for the District, 'was reduced to a mere local legislature, whose laws could possess no obligation out of the ten miles square,' said 'Congress is not a local legislature, but exercises this particular power, like all its other powers, in its high character, as the legislature of the Union. The American peopel thought it a necessary power, and they conferred it for their own benefit. Being so conferred it carries with it all those incidental powers which are necessary to its complete and effectual execution.' In O'Donoghue v. United States, 289 U.S. 516, 539, 53 S.Ct. 740, 746, 77 L.Ed. 1356, this Court approved a statement made by Circuit Judge Taft, later Chief Justice of this Court, speaking for himself and Judge (later Mr. Justice) Lurton, that "The object of the grant of exclusive legislation over the district was, therefore, national in the highest sense, and the city organized under the grant became the city, not of a state, not of a district, but of a nation. In the same article which granted the powers of exclusive legislation over its seat of government are conferred all the other great powers which make the nation, including the power to borrow money on the credit of the United States. He would be a strict constructionist, indeed, who should deny to congress the exercise of this latter power in furtherance of that of organizing and maintaining a proper local government at the seat of government. Each is for a national purpose, and the one may be used in aid of the other.' * * *' And, just prior to enactment of the statute now challenged on this ground, the Court of Appeals for the District itself, sitting en banc, and relying on the foregoing authorities, had said that Congress 'possesses full and unlimited jurisdiction to provide for the general welfare' of District citizens 'by any and every act of legislation which it may deem conducive to that end. * * * when it legislates for the District, Congress acts as a legislature of national character, exercising complete legislative control as contrasted with the limited power of a state legislature, on the one hand, and as contrasted with the limited sovereignty which Congress exercises within the boundaries of the states, on the other.' Neild v. District of Columbia, 71 App.D.C. 306, 110 F.2d 246, 250. 28 We could not of course countenance any exercise of this plenary power either within or without the District if it were such as to draw into congressional control subjects over which there has been no delegation of power to the Federal Government. But as we have pointed out, the power to make this defendant suable by a District citizen is not claimed to be outside of federal competence. If Congress has power to bring the defendant from his home all the way to a forum within the District, there seems little basis for denying it power to require him to meet the plaintiff part way in another forum. The practical issue here is whether, if defendant is to be suable at all by District citizens, he must be compelled to come to the courts of the District of Columbia or perhaps to a special statutory court sitting outside of it, or whether Congress may authorize the regular federal courts to entertain the suit. We see no justification for holding that Congress in accomplishing an end admittedly within its power is restricted to those means which are most cumbersome and burdensome to a defendant. Since it may provide the District citizen with a federal forum in which to sue the citizens of one of the states, it is hard to imagine a fairer or less prejudiced one than the regular federal courts sitting in the defendant's own state. To vest the jurisdiction in them rather than in courts sitting in the District of Columbia would seem less harsh to defendan § and more consistent with the principles of venue that prevail in our system under which defendants are generally suable in their home forums. 29 The Act before us, as we see it, is not a resort by Congress to these means to reach forbidden ends. Rather, Congress is reaching permissible ends by a choice of means which certainly are not expressly forbidden by the Constitution. No good reason is advanced for the Court to deny them by implication. In no matter should we pay more deference to the opinions of Congress than in its choice of instrumentalities to perform a function that is within its power.25 To put federally administered justice within the reach of District citizens, in claims against citizens of another state, is an object which Congress has a right to accomplish. Its own carefully considered view that it has the power and that it is necessary and proper to utilize United States District Courts as means to this end, is entitled to great respect. Our own ideas as to the wisdom or desirability of such a statute or the constitutional provision authorizing it are totally irrelevant. Such a law of Congress should be stricken down only on a clear showing that it transgresses constitutional limitations. We think no such showing has been made.26 The Act is valid. 30 The judgment is reversed. 31 Reversed. 32 Mr. Justice RUTLEDGE, with whom Mr. Justice MURPHY agrees, concurring. 33 I join in the Court's judgment. But I strongly dissent from the reasons assigned to support it in the opinion of Mr. Justice JACKSON. 34 While giving lip service to the venerable decision in Hepburn and Dundas v. Ellzey, 2 Cranch 445, 2 L.Ed. 332, and purporting to distinguish it, that opinion ignores nearly a century and a half of subsequent consistent construction.1 In all practical consequence, it would overrule that decision with its laer reaffirmations. Pertinently it may be asked, how and where are those decisions to operate, if not just in the situation presented by this case? And, if there is no other, would they not be effectively overruled? 35 What is far worse and more important, the manner in which this reversal would be made, if adhered to by a majority of the Court, would entangle every district court of the United States for the first time in all of the contradictions, complexities and subtleties which have surrounded the courts of the District of Columbia in the maze woven by the 'legislative court—constitutional court' controversy running through this Court's decisions concerning them.2 36 In my opinion it would be better to continue following what I conceive to be the original error of the Hepburn decision and its progeny than thus to ensnarl the general system of federal courts. Jurisdictional and doctrinal troubles enough we have concerning them without adding others by ruling now that they have the origin and jurisdiction of 'legislative' courts in addition to that of 'constitutional' courts created under Article III, with which alone they heretofore have been held endowed. 37 Moreover, however this case may be decided, there is no real escape from deciding what the word 'State' as used in Article III, § 2 of the Constitution means. For if it is a limitation on Congress' power as to courts created under that Article, it is hard to see how it becomes no limitation when Congress decides to cast it off under some other Article, even one relating to its authority over the District of Columbia. If this may be done in the name of practical convenience and dual authority, or because Congress might find some other constitutional way to make citizens of the District suable elsewhere or to bring here for suit citizens from any part of the country, then what is a limitation imposed on the federal courts generally is none when Congress decides to disregard it by purporting to act under some other authorization. 38 The Constitution is not so self-contradictory. Nor are its limitations to be so easily evaded. The very essence of the problem is whether the Constitution meant to cut out from the diversity jurisdiction of courts created under Article III suits brought by or against citizens of the District of Columbia. That question is not answered by saying in one breath that it did and in the next that it did not. I. 39 Prior to enactment of the 1940 statute today considered, federal courts of the District of Columbia were the only federal courts which had jurisdiction to try nonfederal civil actions between citizens of the District and citizens of the several states. The doors of federal courts in every state, open to suits between parties of diverse state citizenship by virtue of Article III, § 2 (as implemented by continuous congressional enactment), were closed to citizens of the District of Columbia. The 1940 statute was Congress' first express attempt to remedy the inequality which has obtained over since Chief Justice Marshall, in Hepburn and Dundas v. Ellzey, supra, construed the first Judiciary Act to exclude citizens of the District of Columbia. Marshall's construction of the 1789 statute was founded on his conclusion that the comparable language of the diversity clause in Article III, § 2—'Citizens of different States'—did not embrace citizens of the District. 40 Marshall's view of the 1789 Act, iterated in his later dictum, Corporation of New Orleans v. Winter, 1 Wheat. 91, 94, 4 L.Ed. 44; cf. Sere v. Pitot, 6 Cranch 332, 336, 3 L.Ed. 240, has been consistently adhered to in judicial interpretation of later congressional grants of jurisdiction.3 And, by accretion, the rule of the Hepburn case has acquired the force of a considered determination that, within the meaning of Article III, § 2, 'the District of Columbia is not a state'4 and its citizens are therefore not citizens of any state within that Article's meaning. 41 The opinion of Mr. Justice JACKSON in words 'reaffirms' this view of the diversity clause. Nevertheless, faced with an explicit congressional command to extend jurisdiction in nonfederal cases to the citizens of the District of Columbia, it finds that Congress has power to add to the Article III jurisdiction of federal district courts such further jurisdiction as Congress may think 'necessary and proper,' Const., Art. I, § 8, cl. 18, to implement its power of 'exclusive Legislation,' Const., Art. I, § 8, cl. 17, over the District of Columbia; and thereby to escape from the limitations of Article III. 42 From this reasoning I dissent. For I think that the Article III courts in the several states cannot be vested, by virtue of other provisions of the Constitution, with powers specifically denied them by the terms of Article III. If we accept the elementary doctrine that the words of Article III are not self-exercising grants of jurisdiction to the inferior federal courts,5 then I think those words must mark the limits of the power Congress may confer on the district courts in the several states. And I do not think we or Congress can override those limits through invocation of Article I without making the Constitution a self-contradicting instrument. If Marshall correctly read Article III as preventing Congress from unlocking the courthouse door to citizens of the District, it seems past beliefd that Article I was designed to enable Congress to pick the lock. For the diversity jurisdiction here thus sustained is identical in all respects with the diversity jurisdiction thought to be closed to District citizens by Article III: It is justice administered in the same courtroom and under the supervision of the same judge; it is, presumptively, justice fashioned by the Federal Rules of Civil Procedure, 28 U.S.C.A., and, now, under the aegis of Erie R. Co. v. Tompkins.6 The jurisdiction today thus upheld is not simply an expurgated version of a banned original; it is the real thing. 43 To circumvent the limits of Article III, it is said, after finding a contrary and overriding intent in Article I, that Article III dis rict courts in the several states can also be vested with jurisdiction springing from Article I. The only express holding which conceivably could lend comfort to this doctrine of dual jurisdiction in this Court's conclusion in O'Donoghue v. United States, 289 U.S. 516, 53 S.Ct. 740, 77 L.Ed. 1356, that certain courts of the District of Columbia theretofore deemed legislative courts created under Article I,7 owe their jurisdiction to Article I and Article III. With the merits of the O'Donoghue decision in holding that Article III barred salary reductions for judges of the courts in question, we are not presently concerned. Suffice it to point out that the express language of the O'Donoghue decision negatives the view that federal courts in the several states share this hybrid heritage: 44 '* * * Congress derives from the District clause distinct powers in respect of the constitutional courts of the District which Congress does not possess in respect of such courts outside the District.'8 45 The limits of the O'Donoghue decision are only underscored by the dissenting view of Chief Justice Hughes and Justices Van Devanter and Cardozo that all District of Columbia courts are solely the creatures of Article I: 46 'As the courts of the District do not rest for their creation on section 1 of Article 3, that creation is not subject to any of the limitations of that provision. Nor would those limitations, if considered to be applicable, be susceptible of division so that some might be deemed obligatory and others might be ignored.' 289 U.S. at page 552, 53 S.Ct. at page 751, 77 L.Ed. 1356. 47 Comfort is sought to be drawn, however, from this Court's rationale in Williams v. United States, 289 U.S. 553, 53 S.Ct. 751, 77 L.Ed. 1372, which, in sanctioning salary reductions for judges of the Court of Claims, held that that court did not derive its jurisdiction from Article III. That conclusion stemmed in part from the proposition that suits against the United States are not 'Controversies to which the United States shall be a Party,' within the meaning of Article III, § 2. Hence, it is said, the permissible inference is that the long-established concurrent jurisdiction of district courts over claims against the United States is likewise not derived from Article III.9 We need not today determine the nature of district court jurisdiction of suits against the United States. Suffice it to say that, if such suits are not 'Controversies to which the United States shall be a Party,' they are presumptively within the purview of the federal-question jurisdiction to which Mr. Justice FRANKFURTER'S opinion directs our attention—the Article III, § 2 grant of power over 'Cases * * * arising under * * * the Laws of the United States.' This is, at least, the conventional view of district court jurisdiction under the Tucker Act. 2 Moore, Federal Practice (2d ed., 1948) 1633. 48 But, in any event, to rely on Williams as dispositive of the present case is to rely on a bending reed: Williams and O'Donoghue were companion cases, argued together and decided together; and the opinions were written by the same Justice. Accordingly, what was said in one must be read in the light of what was said in the other. O'Donoghue, as has been observed, expre sly rejected the proposition today announced—that Congress can vest in constitutional courts outside the District of Columbia jurisdiction derived from the District clause of Article I. 49 But O'Donoghue went further, and in so doing undermined any implication in Williams that Article III courts outside the District could be vested with any form of non-Article III jurisdiction, when it pointed out that no courts of the District of Columbia could be granted 'administrative and other jurisdiction,' if, 'in creating and defining the jurisdiction of the courts of the District, Congress were limited to article 3, as it is in dealing with the other federal courts * * *.' 289 U.S. at page 546, 53 S.Ct. at page 748, 77 L.Ed. 1356. Moreover, the Justices who dissented from the O'Donoghue rationale of dual jurisdiction expressed no disagreement with the Williams opinion. In these circumstances, certainly no more strength can be drawn from the language of a case upholding salary reductions for one group of judges than from the holding in a case striking down salary reductions for another group of judges. 50 Nor is there merit in the view that the bankruptcy jurisdiction of district courts does not stem from Article III. Of course it is true that Article I is the source of congressional power over bankruptcy, as it is the source of congressional power over interstate commerce, taxation, the coining of money, and other powers confided by the states to the exclusive exercise of the national legislature. But, as Mr. Justice FRANKFURTER'S opinion makes clear, federal court adjudication of disputes arising pursuant to bankruptcy and other legislation is conventional federal-question jurisdiction. And no case cited in any of today's opinions remotely suggests the contrary. 51 Furthermore, no case cited supports the view that jurisdiction over a suit to collect estate assets under § 23, sub. b of the Bankruptcy Act, brought by the trustee in a district court with the 'consent' of the defendant, is a departure from the general rule and is derived from Article I alone. To be sure, although this Court indicated a contrary view in the early case of Lovell v. Isidore Newman & Son, 227 U.S. 412, 426, 33 S.Ct. 375, 380, 57 L.Ed. 577, Chief Justice Hughes' opinion in Schumacher v. Beeler, 293 U.S. 367, 55 S.Ct. 230, 79 L.Ed. 433, made it perfectly clear that district courts can, with the consent of the proposed defendant, entertain trustee suits under § 23 sub. b which the bankrupt, but for the Bankruptcy Act, could not have prosecuted in a federal court absent diversity or some independent federal question 'arising under * * * the Laws of the United States.' The opinion stated: 52 'Conflicting views have been held of the meaning of the provision for consent in § 23, sub. b. In one view, the provision relates merely to venue, that is, only to a consent to the 'local jurisdiction.' * * * The opposing view was set forth by the court below in Toledo Fence & Post Co. v. Lyons, 6 Cir., 290 F. 637, 645, and that decisions was followed in the instant case. * * * It proceeds upon the ground that the Congress had power to permit suits by trustees in bankruptcy in the federal courts against adverse claimants, regardless of diversity of citizenship, and that by section 23, sub. b the Congress intended that the federal courts should have that jurisdiction in cases where the defendant gave consent, and, without that consent, in cases which fell within the stated exceptions. 53 'We think that the latter view is the correct one.' 293 U.S. at page 371, 55 S.Ct. at page 232, 79 L.Ed. 443. 54 Chief Justice Hughes' opinion does not intimate that this 'consent jurisdiction' arises solely from Article I. Quite the contrary, the opinion by Judge Denison outlining the 'view' which the Chief Justice described as 'the correct one' expressly stated that such suits are a segment of the district court's federal-question jurisdiction: 55 'The trustee must allege and prove that valid proceedings were taken under the Bankruptcy Act, leading to a valid adjudication, whereby title passed, and that by valid proceedings under the act he was chosen as trustee. If the proof fails in any of these particulars, the suit fails. The suit is one step in the collection of assets in the execution of the Bankruptcy Act. That such a case would be one 'arising under the laws of the United States' we think is the result of well-settled principles. It will be observed that under the constitutional limitations of the federal judicial power (article 3, sec. 2), and with exceptions not to this question important, Congress has no power to confer jurisdiction on the inferior federal courts excepting as to suits which do so arise; and every decision which upholds the right to sue in the federal court by one who merely acquires title through the operation of a federal law is therefore, by necessary implication, a holding that such a suit 'arises under' federal laws.' Toledo Fence & Post Co. v. Lyons, 6 Cir., 290 F. 637, 641; and cf. Beeler v. Schumacher, 6 Cir., 71 F.2d 831, 833. 56 There seems no reason therefore to suppose that this Court, in holding 'correct' the view that district courts have jurisdiction over a trustee suit which could not have been brought by the bankrupt, rejected the explicit Article III basis of that jurisdiction. 57 And neither reliance on Gully v. First National Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70; People of Puerto Rico v. Russell & Co., 288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903, and related cases, nor the suggestion that 'a suit arises under the law that creates the cause of action,' American Well Works Co. v. Layne & Bowler Co., 36 S.Ct. 585, 586, 60 L.Ed. 987, 241 U.S. 257, 260, compels the conclusion that Congress could not and did not classify § 23, sub. b suits to collect estate assets as federal-question cases arising under the Bankruptcy Act. As this Court has had occasion to observe, a "cause of action' may mean one thing for one purpose and something different for another.' United States v. Memphis Cotton Oil Co., 288 U.S. 62, 67—68, 53 S.Ct. 278, 280, 77 L.Ed. 619; and see Gully v. First National Bank, supra, 299 U.S. at page 117, 57 S.Ct. at pages 99, 100, 81 L.Ed. 70. Similarly, as students of federal jurisdiction have taken pains to point out, the 'substantial identity of the words' in the constitutional and statutory grants of federal-question jurisdiction, 'does not, of course, require, on that score alone, an identical interpretation.' Shulman and Jaegerman, Some Jurisdictional Limitations on Federal Procedure, 45 Yale L.J. 393, 405, n. 47 (1936). Confusion of the two is a natural, but not an insurmountable, hazard. The Gully and Puerto Rico cases were concerned with the general statutory grant to district courts of jurisdiction over federal questions; they were not concerned with the constitutional grant of jurisdiction, nor with the specific statutory grant of jurisdiction found in the Bankruptcy Act and approved in Schumacher v. Beeler, supra. 58 It has never heretofore been doubted that the constitutional grant of power is broader than the general federal-question jurisdiction which Congress has from time to time thought to confer on district courts by statute. In one of the federal land-grant cases relied on in Mr. Justice JACKSON'S opinion, this Court had occasion to make this distinction clear: 59 'By the Constitution (art. 3, § 2) the judicial power of the United States extends to 'all cases, in law and equity, arising under this Constitution, the laws of the United States' and to controversies 'between citizens of different states.' By article 4, § 3, cl. 2, Congress is given 'power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States.' Under these clauses Congress might doubtless provide that any controversy of a judicial nature arising in or growing out of the disposal of the public lands should be litigated only in the courts of the Unit d States. The question, therefore, is not one of the power of Congress, but of its intent. It has so constructed the judicial system of the United States that the great bulk of litigation respecting rights of property, although those rights may in their inception go back to some law of the United States, is in fact carried on in the courts of the several states.' Shoshone Mining Company v. Rutter, 177 U.S. 505, 506, 20 S.Ct. 726, 44 L.Ed. 864. 60 Indeed, were we to adopt the view that the Gully rule is a test applicable to the constitutional phrase, we would effectively repudiate Chief Justice Marshall's conclusion in Osborn v. Bank of the United States, 9 Wheat. 738, 6 L.Ed. 204, that Congress can allow a federally chartered corporation to bring all its litigation into federal courts for the reason that, solely by virtue of the corporation's federal origin, all suits to which the corporation is a party are suits 'arising under * * * the Laws of the United States' within the meaning of Article III. The rule of the Bank of the United States case, reiterated in The Pacific Railroad Removal Cases, (Union Pacific R. Co. v. Myers) 115 U.S. 1, 5 S.Ct. 1113, 29 L.Ed. 319; Matter of Dunn, 212 U.S. 374, 29 S.Ct. 299, 53 L.Ed. 558; American Bank & Trust Co. v. Federal Reserve Bank of Atlanta, 256 U.S. 350, 41 S.Ct. 499, 65 L.Ed. 983, 25 A.L.R. 971; Sowell v. Federal Reserve Bank of Dallas, Tex., 268 U.S. 449, 45 S.Ct. 528, 69 L.Ed. 1041; and Federal Intermediate Credit Bank of Columbia, S.C. v. Mitchell, 277 U.S. 213, 48 S.Ct. 449, 72 L.Ed. 854, has been limited by statute but never by subsequent constitutional construction. The survival of the rule was acknowledged by Mr. Justice Stone in People of Puerto Rico v. Russell & Co., supra, 288 U.S. at page 485, 53 S.Ct. at page 450, 77 L.Ed. 903, and by Mr. Justice Cardozo in Gully v. First National Bank, supra, 299 U.S. at page 114, 57 S.Ct. at page 98, 81 L.Ed. 70. 61 In short, Congress has at no time conferred on federal district courts original jurisdiction over all federal questions, preferring to leave trial of many and perhaps most such questions to state adjudication, subject to the ultimate review of this Court. But exceptions to the congressional policy of limitation there have been, and one of these is the trustee suit under § 23, sub. b. 2 Moore, Federal Practice, 2d ed., 1948, 1633. 62 Thus I see no warrant for gymnastic expansion of the jurisdiction of federal courts outside the District. At least as to these latter courts sitting in the states, I have thought it plain that Article III described and defined their 'judicial Power,' and that where 'power proposed to be conferred * * * was not judicial power within the meaning of the Constitution * * * (it) was, therefore, unconstitutional, and could not lawfully be exercised by the courts.'10 63 If Article III were no longer to serve as the criterion of district court jurisdiction, I should be at a loss to understand what tasks, within the constitutional competence of Congress, might not be assigned to district courts. At all events, intimations that district courts could only undertake the determination of 'justiciable' controversies seem inappropriate, since the very clause of Article I today relied on has long been regarded as the source of the 'legislative,' Keller v. Potmac Electric Power Co., 261 U.S. 428, 43 S.Ct. 445, 67 L.Ed. 731, and 'administrative,' Postum Cereal Co. v. California Fig Nut Co., 272 U.S. 693, 47 S.Ct. 284, 71 L.Ed. 478, powers of the courts of the District of Columbia. Moreover, the suggestion that the Constitutional Convention recognized a constructive limitation of federal jurisdictio to 'cases of a Judiciary nature,' II Farrand, Records of the Federal Convention 430, merely lays bare the ultimate fallacy underlying rejection of the boundaries of Article III. For the constructive limitation referred to in the Convention debates is a limitation imposed by Article III, and the opinion of Mr. Justice JACKSON by hypothesis denies that Article III expresses the full measure of power which can be delegated to federal district courts. If district courts are—as I agree they are—confined to 'cases of a Judiciary nature,' then too they are confined to cases 'between citizens of different States,' except insofar as other Article III provisions expand the potential grant of jurisdiction. For—to borrow the words of the O'Donoghue dissent the limitations of Article III, 'if considered to be applicable, (would not) be susceptible of division so that some might be deemed obligatory and others might be ignored.' 289 U.S. at page 552, 53 S.Ct. at page 751, 77 L.Ed. 1356. 64 In view of the rationale adopted by Mr. Justice JACKSON'S opinion, I do not understand the necessity for its examination of the limits of the diversity clause of Article III. That opinion has, however, made clear the view that the diversity clause excludes citizens of the District of Columbia, although where that view may now be applied it does not point out. If I concurred in that conception of the diversity clause I would vote to affirm the judgment of the Court of Appeals. II. 65 However, nothing but naked precedent, the great age of the Hepburn ruling, and the prestige of Marshall's name, supports such a result. It is doubtful whether anyone could be found who now would write into the Constitution such an unjust and discriminatory exclusion of District citizens from the federal courts. All of the reasons of justice, convenience, and practicality which have been set forth for allowing District citizens a furtive access to federal courts, point to the conclusion that they should enter freely and fully as other citizens and even aliens do. 66 Precedent of course is not lightly to be disregarded, even in the greater fluidity of decision which the process of constitutional adjudication concededly affords.11 And Marshall's sponsorship in such matters always is weighty. But when long experience has disclosed the fallacy of a ruling, time has shown its injustice, and nothing remains but a technicality the only effect of which is to perpetuate inequity, hardship and wrong, those are the circumstances which this Court repeatedly has said call for reexamination of prior decisions. If those conditions are fulfilled in any case, they are in this one. 67 The Hepburn decision was made before time, through later decisions here, had destroyed its basic premise and at the beginning of Marshall's judicial career, when he had hardly started upon his great work of expounding the Constitution. The very brevity of the opinion and its groundings, especially in their ambiguity, show that the master hand which later made his work immortal faltered.12 68 The sole reason Marshall assigned for the decision was 'a conviction that the members of the American confederacy only are the states contemplated in the constitution,' a conviction resulting as he said from an examination of the use of that word in the charter to determine 'whether Columbia is a state in the sense of that instrument.' 2 Cranch 445, at page 452, 2 L.Ed. 332. 'When the same term which has been used plainly in this limited sense (as designating a member of the union) in the articles respecting the legislative and executive departments, is also employed in that which respects the judicial department, it must be understood as retaining the sense originally given to it.' Ibid. 69 This narrow and literal reading was grounded exclusively on three constitutional provisions: the requirements that members of the House of Representatives be chosen by the people of the several states; that the Senate shall be composed of two Senators from each state; and that each state 'shall appoint, for the election of the executive,' the specified number of electors; all, be it noted, provisions relating to the organization and structure of the political departments of the government, not to the civil rights of citizens as such. Put to one side were other provisions advanced in argument as showing 'that the term state is sometimes used in its more enlarged sense' on the ground that 'they do not prove what was to be shown by them.' Ibid. But cf. 2 Cranch 445, 446—448, 450, 2 L.Ed. 332. 70 Whether or not this answer was adequate at the time,13 our Constitution today would be very different from what it is if such a narrow and literal construction of each of its terms had been transmuted into an inflexible rule of constitutional interpretation. It is to be remembered, as bearing on the very issue before us, that the Sixth Amendment's guarantee of 'an impartial jury of the State * * * wherein the crime shall have been committed' extends to criminal prosecutions in the Nation's capital.14 Similarly, the word 'Citizens' has a broader meaning in Article III, § 2, where it now includes corporations,15 than it has in the privileges and immunities clause of Article IV, § 2,16 or in the like clause of the Fourteenth Amendment.17 Instances might, but need not, be multiplied. 71 In construing the diversity clause we are faced with the apparent fact that the Framers gave no deliberate consideration one way or another to the diversity litigation of citizens of the District of Columbia. And indeed, since the District was not in existence when the Constitution was drafted, it seems in no way surprising that the Framers, after conferring on Congress' plenary power over the future federal capital, made no express provision for litigating outside the boundaries of a hypothetical city conjectured controversies between unborn citizens and their unknown neighbors. Under these circumstances I cannot accept the proposition that absence of affirmative inclusion is, here, tantamount to deliberate exclusion. 72 If exclusion of District citizens is not compelled by the language of the diversity clause, it likewise cannot be spelled out by inference from the historic purposes of that clause. We have, needless to say, no concern with the merits of diversity jurisdiction;18 nor need we resolve scholarly dispute over the substantiality of those local prejudices which, when the Constitution was drafted, the grant of diversity jurisdiction was designed to nullify.19 Our only duty is to determine the scope of the jurisdictional grant, and we must bow to congressional determination of whether federal adjudication of local issues does more good than harm. But, in resolving the immediate issue, we should not blink the fact that, whatever the need for federal jurisdiction over suits between litigant citizens of the several states, the same need equally compels the safeguards of federal trial for suits brought by citizens of the District of Columbia against citizens of the several states. Conversely, if we assume that today's ruling tacitly validates suits brought by state citizens against citizens of the District of Columbia, it would seem the plaintiff citizen of a state is as deserving of a federal forum when suing a District defendant as when suing a defendant in a neighbor state. 73 Marshall's sole premise of decision in the Hepburn case has failed, under the stress of time and later decision, as a test of constitutional construction. Key words like 'state,' 'citizen,' and 'person' do not always and invariably mean the same thing.20 His literal application disregarded any possible distinction between the purely political clauses and those affecting civil rights of citizens, a distinction later to receive recognition. 74 Moreover, Marshall himself recognized the incongruity of the decision: 'It is true that as citizens of the United States, and of that particular district which is subject to the jurisdiction of congress, it is extraordinary that the courts of the United States, which are open to aliens, and to the citizens of every state in the union, should be closed upon them.' But, he added, 'this is a subject for legislative, not for judicial consideration.' 2 Cranch, 445, at page 452, 2 L.Ed. 332. 75 With all this we may well agree, with one reservation. In spite of subsequent contrary interpretation and Marshall's own identification of the statutory word 'state' with the same word in the Constitution, we cannot be unreservedly sure that the last-quoted sentence referred to the process of constitutional amendment rather than congressional reconsideration. If the former had been the intent, it seems likely it would have been stated in words not so characteristic of the latter process. The Court was construing the statute,21 which made no explicit inclusion of citizens of the District. Whether, if it had done so, the Court's ruling would have been the same or, if a later act had sought to include District citizens, it would have been held unconstitutional, we can only speculate. 76 But I do not rest on this ambiguity, more especially in view of the later decisions clearly accepting the Hepburn decision as one of constitutional import. On the other hand, the later and general repudiation of the decision's narrow and literal rule for construing the Constitution, in which Marshall's own part was not small, has cut from beneath the Hepburn case its only grounding and with it, in my judgment, the anomaly in result which the ruling always has been. It is perhaps unnecessary to go so far in criticizing the decision as was done by a judge who long afterwards bowed to it.22 But the time has come when the hope he expressed for removing this highly unjust discrimination from a group of our citizens larger than the population of several states of the Union should be realized. III. 77 Pragmatically stated, perhaps, the problem is not of earth-shaking proportions. For, by present hypothesis, federal court disposition of diversity suits must be in accord with local law in all matters of substance. But symbolically the matter is of very considerable importance. Reasonable men may differ perhaps over whether or, more appropriately, to what extent citizens of the District should have political status and equality with their fellow citizens. But with reference to their civil rights, especially in such a matter as equal access to the federal courts, none now can be found to defend discrimination against them save strictly on the ground of precedent. 78 I cannot believe that the Framers intended to impose so purposeless and indefensible a discrimination, although they may have been guilty of understandable oversight in not providing explicitly against it. Despite its great age and subsequent acceptance, I think the Hepburn decision was ill-considered and wrongly decided. Nothing hangs on it now except the continuance or removal of a gross and wholly anomalous inequality applied against a substantial group of American citizens, not in relation to their substantive rights, but in respect to the forums available for their determination. This Court has not hesitated to override even long-standing decisions when much more by way of substantial change was involved and the action taken was much less clearly justified than in this case, a most pertinent instance being Erie R. Co. v. Tompkins, supra. 79 That course should be followed here. It should be followed directly, not deviously. Although I agree with the Court's judgment, I think it overrules the Hepburn decision in all practical effect. With that I am in accord. But I am not in accord with the proposed extension of 'legislative' jurisdiction under Article I for the first time to the federal district courts outside the District of Columbia organized pursuant to Article III, and the consequent impairment of the latter Article's limitations upon judicial power; and I would dissent from such a holding even more strongly than I would from a decision today reaffirming the Hepburn ruling. That extension, in my opinion, would be the most important part of today's decision, were it accepted by a majority of the Court. It is a dangerous doctrine which would return to plague both the district courts and ourselves in the future, to what extent it is impossible to say. The O'Donoghue and Williams decisions would then take on an importance they have never before had and were never considered likely to attain. 80 Mr. Chief Justice VINSON, with whom Mr. Justice DOUGLAS joins, dissenting. 81 While I agree with the views expressed by Mr. Justice FRANKFURTER and Mr. Justice RUTLEDGE which relate to the power of Congress under Art. I of the Constitution to vest federal district courts with jurisdiction over suits between citizens of States and the District of Columbia, and with the views of Mr. Justice FRANKFURTER and Mr. Justice JACKSON as to the proper interpretation of the word 'States' in the diversity clause of Art. III, I am constrained to state my views individually because of the importance of these questions to the administration of the federal court system. I. 82 The question whether Congress has the power to extend the diversity jurisdiction of the federal district courts to citizens of the District of Columbia by virtue of its authority over the District under Art. I of the Constitution depends, in turn, upon whether the enumeration in Art. III of the cases to which the judicial power of the United States shall extend defines the outer limits of that power or is merely a listing of the types of jurisdiction with which Congress may invest federal courts without invoking any of the specific powers granted that body by other Articles of the Constitution. It has long been settled that inferior federal courts receive no powers directly from the Constitution but only such authority as is vested in them by the Congress. Turner v. Bank of North America, 1799, 4 Dall. 8, 1 L.Ed. 718; McIntire v. Wood, 1813, 7 Cranch 504, 3 L.Ed. 420; Kendall v. United States, ex rel. Stokes, 1838, 12 Pet. 524, 9 L.Ed. 1181; Cary v. Curtis, 1845, 3 How. 236, 11 L.Ed. 576.1 Since, therefore, there is no minimum of power prescribed for the inferior federal courts, and Congress need not have established any such courts, Lockerty v. Phillips, 1943, 319 U.S. 182, 187, 63 S.Ct. 1019, 1022, 87 L.Ed. 1339, the question is whether the enumeration of cases in Art. III, § 2 prescribes a maximum of power or performs only the very limited office mentioned above.2 83 The theory that § 2 of Art. III is merely a supplement to the powers specifically granted Congress by the Constitution is not, however, accepted at face value even by those who urge it. For they still would require that a case or controversy be presented. We are told that 84 'Of course there are limits to the nature of duties which Congress may impose on the constitutional courts vested with the federal judicial power. * * * (but) this statute * * * does not authorize or require either the district courts or this Court to participate in any legislative, administrative, political or other nonjudicial function or to render any advisory opinion.' 337 U.S. 590, 69 S.Ct. 1177. 85 But as my brothers FRANKFURTER and RUTLEDGE have pointed out, if Art. III contains merely a grant of power to Congress, there is no more reason to find any limitation in the fact that the judicial power extends only to cases and controversies than in the specific enumeration of the kinds of cases or controversies to which it shall extend. The fundamental error in this position, as I see it, is the failure to distinguish between two entirely different principles embodied in Art. III, as elsewhere in the Constitution, both of which were repeatedly adverted to in the Constitutional Convention and have since been followed by this Court without substantial deviation. 86 The first of these principles is that the three branches of government established by the Constitution are of coordinate rank, and that none may encroach upon the powers and functions entrusted to the others by that instrument. This principle found expression in the requirement of Art. III that the judicial power shall extend only to cases and controversies. Of equal importance, however, was the second principle, that the Constitution contains a grant of power by the states to the federal government, and that all powers not specifically granted were reserved to the states or to the people.3 The powers granted the federal judiciary were spelled out with care and precision in Art. III by a delineation of the kinds of cases to which the judicial power could be extended. 87 The first principle is not now under attack but proper perspective in viewing the second requires some examination of its origin and history. The framers of the Constitution were presented with, and rejected, proposals which would have vested nonjudicial powers in the national judiciary. Charles Pinckney of South Carolina proposed, for example, that 'Each branch of the Legislature, as well as the Supreme Executive shall have authority to require the opinions of the supreme Judicial Court upon important questions of law, and upon solemn occasions.'4 Early in the Convention, however, the principle that the courts to be established should have jurisdiction only over cases became fixed. Thus it was that when the proposal was made on the floor of the Convention that the words, 'arising under this Constitution' be inserted before 'the laws of the United States,' in what is now Art. III, § 2, Madison's objection that it was 'going too far to extend the jurisdiction of the Court generally to cases arising Under the Constitution, & whether it ought not to be limited to cases of a Judiciary Nature' was met by the answer that it was, in his own words, 'generally supposed that the jurisdiction given was constructively limited to cases of a Judiciary nature—.'5 88 Clear as this principle is, however, it was attacked in this Court on precisely the same grounds now asserted to sustain the diversity jurisdiction here in question. In Keller v. Potomac Electric Power Co., 1923, 261 U.S. 428, 43 S.Ct. 445, 67 L.Ed. 731, where this Court had before it an Act under which the courts of the District of Columbia were given revisory power over rates set by the Public Utilities Commission of the District, the appellee sought to sustain the appellate jurisdiction given this Court by the Act on the basis that 'Although Art. III of the Constitution limits the jurisdiction of the federal courts, this limitation is subject to the power of Congress to enlarge the jurisdiction, where such enlargement may reasonably be required to enable Congress to exercise the express powers conferred upon it by the Constitution.' 261 U.S. at page 435, 43 S.Ct. 445, 67 L.Ed. 731. There, as here, the power relied upon was that given Congress to exercise exclusive jurisdiction over the District of Columbia, and to make all laws necessary and proper to carry such powers into effect. But this Court clearly and unequivocally rejected the contention that Congress could thus extend the jurisdiction of constitutional courts, citing the note to Hayburn's Case, 1792, 2 Dall. 409, 410, 1 L.Ed. 436; United States v. Ferreira, 1851, 13 How. 40, note 52, 14 L.Ed. 42, and Gordon v. United States, 1864, 117 U.S. 697. These and other decisions of this Court clearly condition the power of a constitutional court to take cognizance of any cause upon the existence of a suit instituted according to the regular course of judicial procedure, Marbury v. Madison, 1803, 1 Cranch 137, 2 L.Ed. 60, the power to pronounce a judgment and carry it into effect between persons and parties who bring a case before it for decision, Muskrat v. United States, 1910, 219 U.S. 346, 31 S.Ct. 250, 55 L.Ed. 246; Gordon v. United States, supra, the absence of revisory or appellate power in any other branch of Government, Hayburn's Case, supra; United States v. Ferreira, supra, and the absence of administrative or legislative issues or controversies, Keller v. Potomac Electric Power Co., supra; Postum Cereal Co. v. California Fig Nut Co., 1927, 272 U.S. 693, 47 S.Ct. 284, 71 L.Ed. 478. While 'judicial power,' 'cases,' and 'controversies' have sometimes been given separate definitions,6 these concepts are inextricably intertwined. The term 'Judicial power' was itself substituted for the phrase, 'The jurisdiction of the Supreme Court' to conform Art. III to the use of the terms 'legislative powers' and 'executive power' in Arts. I and II.7 It thus draws life from that to which it extends: to cases and controversies. That much, at any rate, is clear. Whether it draws life from any cases or controversies other than those specifically enumerated in Art. III must now be considered. 89 The second principle, that any powers not specifically granted to the national judiciary by Art. III were reserved to the states or the people, is here challenged. The reason such an attack is possible at this late date is, ironically enough, because of the implicit acceptance of that principle by the framers, by Congress, and by litigants ever since. Unlike the question of the relations between the branches of government, which first arose during Washington's presidency and subsequently gave rise, in the cases previously adverted to, to frequent definition of the nature of cases and controversies, acceptance of the principle that Art. III contains a limitation on the power of the federal judiciary was so complete that the question did not often arise directly. Nevertheless, it is possible to demonstrate in a number of contexts the true intent of the framers. 90 First, the examination and rejection of various alternative proposals concerning the jurisdiction of the national judiciary by the Convention throws considerable light upon the compromise reached.8 On the one hand were those who thought that no inferior federal tribunals should be authorized; that state courts should be entrusted with the decision of all federal questions, subject to appeal to one Supreme Court. Madison's notes reveal that 91 'Mr. Rutlidge havg. obtained a rule for reconsideration of the clause for establishing inferior tribunals under the national authority, now moved that that part of the clause * * * should be expunged: arguing that the State Tribunals might and ought to be left in all cases to decide in the first instance the right of appeal to the supreme national tribunal being sufficient to secure the national rights & uniformity of Judgmts: that it was making an unnecessary encroachment on the jurisdiction of the States, and creating unnecessary obstacles to their adoption of the new system.'9 92 The motion was carried and the clause establishing inferior federal tribunals excised from the draft Constitution. Madison, however, immediately moved 'that the National Legislature be empowered to institute inferior fe eral tribunals,' urging that some provision for such courts was a necessity in a federal system. Madison's notes then record the reaction of Pierce Butler of South Carolina to this proposal: 'The people will not bear such innovations. The States will revolt at such encroachments. Supposing such an establishment to be useful, we must not venture on it. We must follow the example of Solon who gave the Athenians not the best Govt. he could devise; but the best they wd. receive.'10 93 On the other hand, some members of the Convention favored a wider federal jurisdiction than was ultimately authorized. The Connecticut delegation, led by Roger Sherman, proposed 'That the legislature of the United States be authorized to institute one supreme tribunal, and such other tribunals as they may judge necessary for the purpose aforesaid, and ascertain their respective powers and jurisdictions.'11 This proposal, which is not substantially different in its effect from the interpretation now urged upon us, was not adopted by the Convention. When it became established that inferior federal courts were to be authorized by the Constitution, the limits of their jurisdiction immediately became an issue of paramount importance. The outline of federal jurisdiction was established only after much give and take, proposal and counterproposal, and—in the end—compromise. It was early proposed, for example, that federal jurisdiction be made to extend to 'all piracies & felonies on the high seas, captures from the enemy; cases in which foreigners or citizens of other States applying to such jurisdiction may be interested, or which respect the collection of the National revenue; impeachments of any National officers, and questions which involve the national peace and harmony.'12 But this was only one of many proposals concerning the extent of federal jurisdiction,13 and not before many concessions and compromises had been made was the enumeration of cases now found in Art. III, § 2 agreed upon. 94 The judicial power was thus jealously guarded by the states and unwillingly granted to the national judiciary. Only when it could be demonstrated that a particular head of jurisdiction was acutely needed for the purposes of uniformity and national harmony was it granted. In every state convention for ratification of the Constitution, advocates and opponents of ratification considered in detail the kinds of cases and controversies to which the national judicial power was to extend. Each had to be justified.14 Far from assuming that the judicial power could be, by any means short of constitutional amendment, extended beyond those cases expressly provided for in Art. III, that Article was subjected to severe attacks on the ground that those powers specifically given would destroy the state courts. A delegate to the Virginia Convention, for example, stated that 'My next objection to the federal judiciary is, that it is not expressed in a definite manner. The jurisdiction of all cases arising under the Constitution and the laws of the Unio is of stupendous magnitude.'15 If, in addition to justifying every particle of power given to federal courts by the Constitution, its defenders had been obliged to justify the competence of Congress—itself suspect by those who opposed ratificatin—to extend that jurisdiction whenever it was thought necessary to effectuate one of the powers expressly given that body, their task would have been insuperable. The debates make that fact plain. 95 That the federal judicial power was restricted to those classes of cases set forth in Art. III was clearly the opinion of those who had most to do with its drafting and acceptance. In the 80th Number of the Federalist, Hamilton listed the types of cases to which it was thought necessary that the judiciary authority of the nation should extend. All are found represented in Art. III.16 In the 81st Number, he wrote: 'The amount of the observations hitherto made on the authority of the judicial department is this: That it has been carefully restricted to those causes which are manifestly proper for the cognizance of the national judicature. * * *' (Emphasis added.) 96 while in No. 82, the following appears: 97 'The only outlines described (for inferior courts) are, that they shall be 'inferior to the Supreme Court,' and that they shall not exceed the specified limits of the federal judiciary.' (Emphasis added.) 98 And Madison, in a letter to a correspondent who had contended that the common law had been incorporated by the Constitution as federal law, wrote: 99 'A characteristic peculiarity of the Govt. of the U. States is, that its powers consist of special grants taken from the general mass of power, whereas other Govts. possess the general mass with special exceptions only. Such being the plan of the Constitution, it cannot well be supposed that the Body which framed it with so much deliberation, and with so manifest a purpose of specifying its objects, and defining its boundaries, would, if intending that the Common Law shd. be a part of the national code, have omitted to express or distinctly indicate the intention; when so many far inferior provisions are so carefully inserted, and such appears to have been the public view taken of the Instrument, whether we recur to the period of its ratification by the States, or to the federal practice under it.'17 100 Cases in this Court which support the view that Art. III, § 2 limits the power of con titutional courts are not lacking. In The Mayor v. Cooper, 1867, 6 Wall. 247, 252, 18 L.Ed. 851, the Court defined the jurisdiction of inferior federal courts as follows: 101 'As regards all courts of the United States inferior to this tribunal, two things are necessary to create jurisdiction, whether original or appellate. The Constitution must have given to the court the capacity to take it, and an act of Congress must have supplied it. Their concurrence is necessary to vest it. It is the duty of Congress to act for that purpose up to the limits of the granted power. They may fall short of it, but cannot exceed it.' (Emphasis added.) 102 And in a series of three cases decided between 1800 and 1809, the Court refused to give literal effect to § 11 of the Judiciary Act of 1789, which had extended the jurisdiction of Circuit Courts to suits 'where an alien is a party,' because of the limitations imposed by Art. III. In Mossman v. Higginson, 1800, 4 Dall. 12, 14, 1 L.Ed. 720, it was decided that 'as the legislative power of conferring jurisdiction on the federal Courts is, in this respect, confined to suits between citizens and foreigners, we must so expound the terms of the law, as to meet the case, 'where, indeed, an alien is one party,' but a citizen is the other.' This construction of the statute was adhered to in Montalet v. Murray, 1807, 4 Cranch 46, 2 L.Ed. 545, and in Hodgson v. Bowerbank, 1809, 5 Cranch 303, 3 L.Ed. 108, where Chief Justice Marshall dismissed the contention that 'The judiciary act gives jurisdiction to the circuit courts in all suits in which an alien is a party' with this admonition: 'Turn to the article of the constitution of the United States, for the statute cannot extend the jurisdiction beyond the limits of the constitution.' Other examples of the Court's consistent adherence to the principle that the judicial power of the United States is a constituent part of the concessions made by the states to the federal government and may not be extended may be cited. See Turner v. Bank of North America, supra; United States v. Hudson and Goodwin, 1812, 7 Cranch 32, 33, 3 L.Ed. 259; Den ex dem. Murray's Lessee v. Hoboken Land and Improvement Co., 1855, 18 How. 272, 280—281, 15 L.Ed. 372; Kline v. Burke Construction Co., 1922, 260 U.S. 226, 233—234, 43 S.Ct. 79, 82, 83, 67 L.Ed. 226, 24 A.L.R. 1077; Ex parte Bakelite Corp., 1929, 279 U.S. 438, 449, 49 S.Ct. 411, 412, 413, 73 L.Ed. 789; Federal Radio Commission v. General Electric Co., 1930, 281 U.S. 464, 469, 50 S.Ct. 389, 390, 391, 74 L.Ed. 969. Over a century and a half of consistent interpretation of Art. III is well summed up in one sentence from this Court's opinion in Sheldon v. Sill, 1850, 8 How. 441, 449, 12 L.Ed. 1147: 103 'The Constitution has defined the limits of the judicial power of the United States, but has not prescribed how much of its shall be exercised by the Circuit Court; consequently, the statute which does prescribe the limits of their jurisdiction, cannot be in conflict with the Constitution, unless it confers powers not enumerated therein.' (Emphasis added.) 104 The cases chiefly relied upon by those who contend that Art. III does not define the limits of the judicial power are O'Donoghue v. United States, 1933, 289 U.S. 516, 53 S.Ct. 740, 77 L.Ed. 1356, and Williams v. United States, 1933, 289 U.S. 553, 53 S.Ct. 751, 77 L.Ed. 1372, which concerned reductions in salary of judges of the District Court for the District of Columbia and the Court of Claims respectively. In these cases, this Court held that Art. III, § 1 of the Constitution forbade reduction of the salary of the former, who was found to be a judge of a 'constitutional' (i.e., an inferior court as used in Arts. I and III) court, but not of the latter, a judge of a 'legislative' court. 105 Two separate but related points concerning the O'Donoghue case should be emphasized. The first is that since District of Columbia courts may be given nonjudicial duties, Butterworth v. United States ex rel. Hoe, 884, 112 U.S. 50, 5 S.Ct. 25, 28 L.Ed. 656; Baldwin Co. v. R. S. Howard Co., 1921, 256 U.S. 35, 41 S.Ct. 405, 65 L.Ed. 816; Keller v. Potomac Electric Power Co., supra, reliance upon that case to support the Act now under consideration is incompatible with the position that constitutional courts may only decide 'cases' and 'controversies' of a judicial nature. The second is that the rationale of the O'Donoghue case is, by its terms, limited to courts of the District. For the Court said, 289 U.S. at page 546, 53 S.Ct. at page 748, 77 L.Ed. 1356: 'If, in creating and defining the jurisdiction of the courts of the District, Congress were limited to article 3, as it is in dealing with other federal courts, the administrative and other jurisdiction spoken of could not be conferred upon the former.' 106 In view of this express limitation, the O'Donoghue case lends no support to the Act now in question. To extend its applicability beyond the courts of the District is warranted neither by the language nor the reasoning of that case. The Court in no way diminished the authority of American Insurance Co. v. Canter, 1828, 1 Pet. 511, 7 L.Ed. 242, which had held that the courts of Florida Territory were legislative courts not created pursuant to Art. III and incapable of receiving the judicial power set out therein. Since territorial courts cannot be invested with Art. III power, the strict dichotomy between legislative and constitutional courts still exists—except in the District of Columbia. It is not enough to refer to the breadth of congressional power over the District; that such power is national in character rather than merely local. The power of Congress over the territories is equally broad, yet territorial courts cannot be invested with Art. III power under the O'Donoghue case. And some of the very statements now relied upon as indicating the scope of Congress' power over the District18 were quoted in the O'Donoghue case, but the rationale of that case was expressly limited to courts of the District, as noted above. The District of Columbia courts were there regarded as unique—different in powers and makeup from either territorial courts or other constitutional courts. Extension of the O'Donoghue case to all constitutional courts is clearly unwarranted under these circumstances, especially in the face of the uncontradicted constitutional history previously outlined. 107 Except in the District of Columbia, therefore, American Insurance Co. v. Canter, supra, and a long line of cases in the same vein19 prohibit the intermixture or combination of the personnel, powers, or duties of constitutional and legislative courts. Whether a court is of one category or the other depends upon what power of Congress was utilized in its creation. If it was the power to create inferior constitutional courts, the court may exercise only the judicial power outlined in Art. III. If Congress creates a judicial body to implement another of its constitutional powers, that body is a legislative court and may exercise none of the judicial power of Art. III.20 We have held that the answer to the question whether a court is of one kind or another 'lies in the power under which the court was created and in the jurisdiction conferred.' Ex parte Bakelite Corp., supra, 279 U.S. at page 459, 49 S.Ct. at page 416, 73 L.Ed. 789. I would adhere to that test. 108 What has been said does not mean, of course, that legislative courts cannot exercise jurisdiction over questions of the same nature as those enumerated in Art. III, § 2. It was clearly contemplated by the framers that state courts should have federal question jurisdiction concurrent with that exercised by inferior federal courts, yet they are not constitutional courts nor do they exercise the judicial power of Art. III. The legislative courts created by Congress also can and do decide questions arising under the Constitution and laws of the United States (and, in the case of territorial courts, other types of jurisdiction enumerated in Art. III, § 2 as well), but that jurisdiction is not, and cannot be, 'a part of that judicial power which is defined in the 3d article of the constitution.' These courts are 'incapable of receiving it.' American Insurance Co. v. Canter, supra, 1 Pet. 511, at page 546, 7 L.Ed. 242; Reynolds v. United States, supra, 98 U.S. 145, at page 154, 25 L.Ed. 244.21 109 The appellate jurisdiction of this Court is, in fact, dependent upon the fact that the case reviewed is of a kind within the Art. III enumeration. That article, after setting out the cases of which inferior courts may take cognizance and the original jurisdiction of this Court, extends the appellate jurisdiction of the Supreme Court only as far as 'all other Cases before memtioned.' (Emphasis added.) We can no more review a legislative court's decision of a case which is not among those enumerated in Art. III than we can hear a case from a state court involving purely state law questions. But a question under the Constitution and laws of the United States, whether arising in a constitutional court, a state court, or a legislative court may, under the Constitution, be a subject of this Court's appellate jurisdiction. It was long ago held that 110 'The appellate power is not limited by the terms of the third article to any particular courts. The words are, 'the judicial power (which includes the appellate power) shall extend to all cases,' &c., and 'in all other cases before mentioned the supreme court shall have appellate jurisdiction.' It is the case, then, and not the court, that gives the jurisdiction. If the judicial power extends to the case, it will be in vain to search in the letter of the constitution for any qualification as to the tribunal where it depends.' Martin v. Hunter's Lessee, 1816, 1 Wheat. 304, 338, 4 L.Ed. 97. 111 There is no anomaly, therefore, in the fact that legislative courts, as well as constitutional courts, exercise federal question jurisdiction, and that they sometimes exercise concurrent jurisdiction over the same matters. That does not make the former constitutional courts, American Insurance Co. v. Canter, supra; Ex parte Bakelite Corp., supra. Still less does it make the latter legislative courts, which is the effect of the statute now being considered. It is one thing to say that legislative courts may exercise jurisdiction over some of the same matters that are within Art. III judicial power. It is quite another thing to hold that constitutional courts may take cognizance of causes which are not within the scope of that power. 112 It may be argued that the distinction between constitutional and legislative courts is meaningless if the latter may be invested with jurisdiction over the subjects of Art. III judicial power. But there are limitations which insure the preservation of the system of federal constitutional courts distinct from legislative courts. In the first place, a legislative court must be established under some one of the specific powers given to Congress, and it is unlikely that all of the subjects of the judicial power could be justified as an exercise of those powers.22 Furthermore, we cannot impute to Congress an intent now or in the future to transfer jurisdiction from constitutional to legislative courts for the purpose of emasculating the former. Chief Justice Marshall suggested another limitation in the Canter case, when he said that within the States, admiralty jurisdiction can be exercised solely by constitutional courts, although that limitation does not apply to the Territories. It is at least open to question, therefore, whether all of the subjects of Art. III judicial power, or only federal question jurisdiction, may be transferred to legislative courts within the States. Finally, Ex parte Bakelite Corp., supra, has been read as suggesting that the jurisdiction of legislative courts is limited to matters which, while proper subjects of judicial determination, need not be so determined under the Constitution.23 The least that may be said is that no decisions of this Court have suggested that legislative courts may take over the entire field of federal judicial authority. 113 There is a certain surface appeal to the argument that if Congress may create statutory courts to hear these cases, they should be able to adopt the less expensive and more practical expedient of vesting that jurisdiction in the existing and functioning federal courts throughout the country. No doubt a similar argument was pressed upon the judges in Hayburn's Case. Unless expediency is to be the test of jurisdiction of the federal courts, however, the argument falls of its own weight. The framers unquestionably intended that the jurisdiction of inferior federal courts be limited to those cases and controversies enumerated in Art. III. I would not sacrifice that principle on the altar of expediency. II. 114 There are numerous sections of the Constitution which are concerned solely with the mechanics of government and, of necessity, set rather arbitrary limits upon the exercise of power by the three branches of government. No doubt requirements of this kind have proven in the past, and may, in the future, prove unduly restrictive and undesirable. Yet if a question concerning any one of them were before us, I do not suppose that any member of the Court would read into the Constitution the changes thought desirable in our day. 115 The only difference in respect of the most explicit of these limitations of power and the limitation imposed by the word 'State' in Art. III is that the meaning urged upon the Court is not expressly controverted by the language of the Constitution. That it was not the specific intent of the framers to extend diversity jurisdiction to suits between citizens of the District of Columbia and the States seems to be conceded. One well versed in that subject, writing for the Court within a few years of adoption of the Constitution, so held. 116 The question is, then, whether this is one of those sections of the Constitution to which time and experience were intended to give content, or a provision concerned I think there can be little doubt but that I think there can be little doubt but that it was the latter. That we would now write the section differently seems hardly a sufficient justification for an interpretation admittedly inconsonant with the intent of the framers. Ours is not an amendatory function. 117 I hardly need add that I consider a finding of unconstitutionality of a statute a matter of grave concern. Nevertheless, Congress cannot be that which the Constitution specifically forbids. I think that it has attempted to do so here. 118 Mr. Justice FRANKFURTER, with whom Mr. Justice REED concurs, dissenting. 119 No provisions of the Constitution, barring only those that draw on arithmetic, as in prescribing the qualifying age for a President and members of a Congress or the length of their tenure of office, are more explicit and specific than those pertaining to courts established under Article III. 'The judicial Power' which is 'vested' in these tribunals and the safeguards under which their judges function are enumerated with particularity. Their tenure and compensation, the controversies which may be brought before them, and the distribution of original and appellate jurisdiction among these tribunals are defined and circumscribed, not left at large by vague and elastic phrasing. The precision which characterizes these portions of Article III is in striking contrast to the imprecision of so many other provisions of the Constitution dealing with other very vital aspects of government. This was not due to chance or ineptitude on the part of the Framers. The differences in subject-matter account for the drastic differences in treatment. Great concepts like 'Commerce * * * among the several States,' 'due process of law,' 'liberty,' 'property' were purposely left to gather meaning from experience. For they relate to the whole domain of social and economic fact, and the statesmen who founded this Nation knew too well that only a stagnant society remains unchanged. But when the Constitution in turn gives strict definition of power or specific limitations upon it we cannot extend the definition or remove the translation. Precisely because 'it is a constitution we are expounding,' McCulloch v. State of Maryland, 4 Wheat. 316, 407, 4 L.Ed. 579; we ought not to take liberties with it. 120 There was deep distrust of a federal judicial system, as against the State judiciaries, in the Constitutional Convention. This distrust was reflected in the evolution of Article III.1 Moreover, when they dealt with the distribution of judicial power as between the courts of the States and the courts of the United States, the Framers were dealing with a technical subject in a professional way. More than that, since the judges of the courts for which Article III made provision not only and the last word (apart from amending the Constitution) but also enjoyed life tenure, it was an essential safeguard against control by the judiciary of its own jurisdiction, to define the jurisdiction of those courts with particularity. The Framers guarded against the self-will of the courts as well as against the will of Congress by marking with exactitude the outer limits of federal judicial power. 121 According to Article III only 'judicial power' can be 'vested' in the courts established under it. At least this limitation, which has been the law of the land since 1792, Hayburn's Case, 2 Dall. 409, 1 L.Ed. 436, is not yet called into question. And so the President could not today elicit this Court's views on ticklish problems of international law any more than Washington was able to do in 1793. See the exchange between Secretary of State Jefferson and Chief Justice Jay in 3 Johnston, Correspondence and Public Papers of John Jay, 486—89 (1891), and 10 Sparks, Writings of George Washington, 542—45 (1840). 122 But if courts established under Article III can exercise wider jurisdiction than that defined and confined by Article III, and if they are available to effectuate the various substantive powers of Congress, such as the power to legislate for the District of Columbia, what justification is there for interpreting Article III as imposing one restriction in the exercise of those other powers of the Congress—the restriction to the exercise of 'judicial power'—yet not interpreting it as imposing the retrictions that are most explicit, namely, the particularization of the 'cases' to which 'the judicial Power shall extend'? 123 It is conceded that the claim for which access is sought in the District Co rt for Maryland, one of the courts established under Article III, is not included among the 'cases' to which the judicial power can be made to extend. But if the precise enumeration of cases as to which Article III authorized Congress to grant jurisdiction to the United States District Courts does not preclude Congress from vesting these courts with authority which Article III disallows, by what rule of reason is Congress to be precluded from bringing to its aid the advisory opinions of this Court or of the Courts of Appeals? In the exercise of its constitutional power to regulate commerce, to establish uniform rules of naturalization, to raise and support armies, or to execute any of the other powers of Congress that are no less vital than its power to legislate for the District of Columbia, the Congress may be greatly in need of informed and disinterested legal advice. If Congress may grant to the United States District Courts authority to act in situations in which Article III denies it, why may not this Court respond to calls upon it by Congress if confronted with the conscientious belief of Congress that such a call is made under the Nedessary-and-Proper Clause in order to deal wisely and effectively with some substantive constitutional power of Congress? Again, if the United States District Courts are not limited to the jurisdiction rigidly defined by Article III, why is the jurisdiction of this Court restricted to original jurisdiction only in 'Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party?' Why is not Congress justified in conferring original jurisdiction upon this Court in litigation involving the exercise of its power to make all laws which shall be necessary and proper 'for carrying into Execution' its power 'To declare War,' or 'To raise and support Armies'? 124 Courts set up under Article III to exercise the judicial power of the United States do so either because of the nature of the subject-matter or because of the special position of the parties. So far as the subject-matter is concerned it extends to cases arising under the 'Constitution, the Laws of the United States, and Treaties,' as well as 'to all Cases of admiralty and maritime Jurisdiction.' Article I, § 8, is an enumeration of the subjects in relation to which the Constitution authorizes Congress to make laws. Its eighteen divisions of legislative power are the sources of federal rights and sanctions. Laws enacted under them are 'the Laws of the United States,' to which the 'judicial power,' granted by Article III, extends. Laws affecting revenue, war, commerce, immigration, naturalization, bankruptcy, and the rest, as well as the vast range of laws authorized by the 'Necessary-and-Proper' Clause, are the generating sources of 'all Cases, in Law and Equity, arising under * * * the Laws of the United States,' and therefore cognizable by the courts established under Article III. Congress can authorize the making of contracts; it can therefore authorize suit thereon in any district court. Congress can establish post offices; it can therefore authorize suits against the United States for the negligent killing of a child by a post-office truck. 125 Insofar as the courts established under Article III can entertain a case not involving the Constitution, the laws of the United States or treaties, nor concerning admiralty, they do so because of the status of the parties, enumerated with particularity in Article III. 126 We are here concerned with the power of the fedeal courts to adjudicate merely because of the citizenship of the parties. Power to adjudicate between citizens of different states, merely because they are citizens of different states, has no relation to any substantive rights created by Congress. When the sole source of the right to be enforced is the law of a State, the right to resort to a federal court is restricted to 'citizens of different States.' The right to enforce such State-created obligations derives ts sole strength from Article III. No other provision of the Constitution lends support. But for Article III, the judicial enforcement of rights which only a State, not the United States, creates would be confined to State courts. It is Article III and nothing outside it that authorizes Congress to treat federal courts as 'only another court of the State,' Guaranty Trust Co. of New York v. York, 326 U.S. 99, 108, 65 S.Ct. 1464, 1469, 89 L.Ed. 2079, 160 A.L.R. 1231, and Article III allows it to do so only when the parties are citizens of different 'States.' If Congress, in its law-making power over the District of Columbia, created some right for the inhabitants of the District, it could choose to provide for the enforcement of that right in any court of the United States, because the case would be one arising under 'the Laws of the United States.' But here the controversy is one arising not under the laws of the United States but under the laws of Maryland. By the command of the Constitution, this Maryland-created right can be enforced in a federal court only if the controversy is between 'citizens of different States' in relation to the State in which the federal court is sitting. 127 The diversity jurisdiction of the federal courts was probably the most tenuously founded and most unwillingly granted of all the heads of federal jurisdiction which Congress was empowered by Article III to confer. It is a matter of common knowledge that the jurisdiction of the federal courts based merely on diversity of citizenship has been more continuously under fire than any other.2 Inertia largely accounts for its retention. By withdrawing the meretricious advantages which diversity jurisdiction afforded one of the parties in some types of litigation, Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, has happily eliminated some practical but indefensible reasons for its retention. An Act for the elimination of diversity jurisdiction could fairly be called an Act for the relief of the federal courts. Concededly, no great public interest or libertarian principle is at stake in the desire of a corporation which happens to have been chartered in the District of Columbia, to pursue its claim against a citizen of Maryland in the federal court in Maryland on the theory that the right of this artificial citizen of the District of Columbia cannot be vindicated in the State courts of Maryland. 128 But in any event, the dislocation of the Constitutional scheme for the establishment of the federal judiciary and the distribution of jurisdiction among its tribunals so carefully formulated in Article III is too heavy a price to pay for whatever advantage there may be to a citizen of the District, natural or artificial, to go to a federal court in a particular State instead of to the State court in suing a citizen of that State. Nor is it merely a dislocation for the purpose of accomplishing a result of trivial importance in the practical affairs of life. The process of reasoning by which this result is reached invites a use of the federal courts which breaks with the whole history of the federal judiciary and disregards the wise policy behind that history. It was because Article III defines and confines the limits of jurisdiction of the courts which are established under Article III that the first Court of Claims Act fell, Gordon v. United States, 2 Wall. 561, 17 L.Ed. 921, 117 U.S. 697. And it was in observance of these Constitutional limits that this Court had to decline appellate powers sought to be con erred by the Congress in an exercise of its legislative power over the District. Keller v. Potomac Electric Power Co., 261 U.S. 428, 43 S.Ct. 445, 67 L.Ed. 731. 129 To find a source for 'the judicial Power,' therefore, which may be exercised by courts established under Article III of the Constitution outside that Article would be to disregard the distribution of powers made by the Constitution.3 The other alternative—to expand 'the judicial Power' of Article III to include a controversy between a citizen of the District of Columbia and a citizen of one of the States by virtue of the provision extending 'the judicial Power' to controversies 'between citizens of different States'—would disregard an explicit limitation of Article III. For a hundred and fifty years 'States' as there used meant 'States'—the political organizations that form the Union and alone have power to amend the Constitution. The word did not cover the district which was to become 'the Seat of the Government of the United States,' nor the 'Territory' belonging to the United States, both of which the Constitution dealt with in differentiation from the States. A decent respect for unbroken history since the country's foundation, for contemporaneous interpretation by those best qualified to make it, for the capacity of the distinguished lawyers among the Framers to express themselves with precision when dealing with technical matters, unite to admonish against disregarding the explicit language of Article III extending the diversity jurisdiction of the federal courts 'to Controversies * * * between citizens of different States,' not to controversies between 'Citizens of different States, including the District and the Territory of the United States.' 130 The Framers, in making provision in regard to 'States,' meant the States which sent them as delegates to the Philadelphia Convention and the States which were to be admitted later. It was not contemplated that the district which was to become the seat of government could ever become a State. Marshall had no mean share in securing adoption of the Constitution and took special interest in the Judiciary Article. He merely gave expression to the common understanding—the best test of the meaning of words—when he rejected summarily the notion that the Citizens of the District are included among Citizens of 'States.' The very subject matter of §§ 1 and 2 of Article III is technical in the esteemed sense of that term. These sections do not deal with generalities expanding with experience. Provisions for the organization of courts and their jurisdiction pre uppose definiteness and precision of phrasing. These requirements were heeded and met by those who were concerned with framing the Judiciary Article; Wilson and Madison and Morris and Rutledge and Sherman, were lawyers of learning and astuteness. The scope of the judicial power with which the federal courts were to be entrusted was, as I have said, one of the most sharply debated and thoroughly canvassed subjects in Independence Hall. When the Framers finally decided to extend the judicial Power to controversies 'between citizens of different States,' they meant to be restrictive in the use of that term. They were not unaware of the fact that outside the States there was the Northwest Territory, and that there was to be a Seat of Government. Considering their responsibility, their professional habits, and their alertness regarding the details of Article III, the precise enumeration of the heads of jurisdiction made by the Framers ought to preclude the notion that they shared the latitudinarian attitude of Alice in Wonderland toward language. 131 It is suggested that other provisions of the Constitution relating to 'States' apply to the District. If the mere repetition of an inaccuracy begets truth then that statement is true, not otherwise. Decisions concerned with the District involving trial by jury in criminal and civil cases, full faith and credit for its proceedings, and the power to tax residents, rest on provisions in the Constitution not limited to 'States.' There may be a decision in which the source of rights or obligations affecting the District of Columbia derives from a legal right relating solely to 'States' or a duty to which only 'States' must be obedient. I know of no such case. 132 Of course every indulgence must be entertained in favor of constitutionality when legislation of Congress can fairly be deemed an exercise of the discretion, in the formulation of policy, given to Congress by the Constitution. But the cases to which jurisdiction may be extended under Article III to the courts established under it preclude any claim of discretionary authority to add to the cases listed by Article III or to change the distribution as between original and appellate jurisdiction made by that Article. Congress need not establish inferior courts; Congress need not grant the full scope of jurisdiction which it is empowered to vest in them; Congress need not give this Court any appellate power; it may withdraw appellate jurisdiction once conferred and it may do so even while a case is sub judice. Ex parte McCardle, 7 Wall. 506, 19 L.Ed. 264. But when the Constitution defined the ultimate limits of judicial power exercisable by courts which derive their sole authority from Article III, it is beyond the power of Congress to extend those limits. If there is one subject as to which this Court ought not to feel inhibited in passing on the validity of legislation by doubts of its own competence to judge what Congress has done, it is legislation affecting the jurisdiction of the federal courts. When Congress on a rare occasion through inadvertence or generosity exceeds those limitations, this Court should not goodnaturedly ignore such a transgression of congressional powers. 133 A substantial majority of the Court agrees that each of the two grounds urged in support of the attempt by Congress to extend diversity jurisdiction to cases involving citizens of the District of Columbia must be rejected—but not the same majority. And so, conflicting minorities in combination bring to pass a result paradoxical as it may appear—which differing majorities of the Court find insupportable. 1 Act of April 20, 1940, c. 117, 54 Stat. 143. For terms of the statute see note 10. 2 No opinion was filed by the District Court, which in dismissing the complaint for lack of jurisdiction relied upon its former decision and opinion in Feely v. Sidney S. Schupper Interstate Hauling System, Inc., 72 F.Supp. 663. 3 165 F.2d 531. 4 The Act had been upheld in Winkler v. Daniels, D.C., 43 F.Supp. 265; Glaeser v. Acacia Mutual Life Association, D.C., 55 F.Supp. 925; and in Duze v. Woolley, D.C., 72 F.Supp. 422 (with respect to Hawaii). It had been held unconstitutional in the District Court in the instant case; in Central States Cooperatives v. Watson Bros. Transportation Co., affirmed, 7 Cir., 165 F.2d 392, and in McGarry v. City of Bethlehem, D.C., 45 F.Supp. 385; Behlert v. James Foundation of New York, D.C., 60 F.Supp. 706; Ostrow v. Samuel Brilliant Co., D.C., 66 F.Supp. 593; Wilson v. Guggenheim, D.C., 70 F.Supp. 417; Feely v. Sidney S. Schupper Interstate Hauling System, D.C., 72 F.Supp. 663; Willis v. Dennis, D.C., 72 F.Supp. 853; and in Mutual Ben. Health & Acc. Ass'n v. Dailey, D.C., 75 F.Supp. 832. 5 The Act had been held invalid by the Court of Appeals for the Fourth Circuit in the instant case, 165 F.2d 531, with Judge Parker dissenting; and by the Court of Appeals for the Seventh Circuit in Central States Cooperatives v. Watson Bros. Transportation Co., 165 F.2d 392, with Judge Evans dissenting. 6 333 U.S. 860, 68 S.Ct. 746, 92 L.Ed. 1139. 7 U.S.Const. Art. III, § 2, cl. 1. 8 § 11 of the Act of Sept. 24, 1789, c. 20, 1 Stat. 73, 78. 9 Hepburn and Dundas v. Ellzey, 2 Cranch 445, 2 L.Ed. 332. 10 The effect of the Act was to amend 28 U.S.C. § 41(1) so that it read in pertinent part: 'The district courts shall have original jurisdiction as follows: Of all suits of a civil nature, at common law or in equity * * * where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000 and * * * (b) Is between citizens of different States, or citizens of the District of Columbia, the Territory of Hawaii, or Alaska, and any State or Territory * * *.' 11 Act of June 25, 1948, c. 646, 62 Stat. 869, Pub.L. 773. 80th Cong., 2d Sess. 12 28 U.S.C. § 1332, 28 U.S.C.A. § 1332. 13 McCulloch v. State of Maryland, 4 Wheat. 316, 407, 4 L.Ed. 579. 14 U.S.Const. Art. III, § 2, cl. 1. 15 See note 8. 16 Hepburn and Dundas v. Ellzey, 2 Cranch 445, 453, 2 L.Ed. 332. 17 H.R.Rep.No.1756, 76th Cong., 3d Sess., p. 3. The Senate Judiciary Committee's report consists only of a recommendation that the bill (H.R.8822) be passed. Senate Report No.1399, 76th Cong., 3d Sess. Passage in each House was without discussion. 86 Cong.Rec., Pt. 3, p. 3015; 86 Cong.Rec., Pt. 4, p. 4286. 18 U.S.Const. Art. I, § 8, cl. 17. 19 U.S.Const. Art. I, § 8, cl. 18. 20 Act of March 3, 1887, c. 359, 24 Stat. 505. 21 This concurrent jurisdiction of the district courts has frequently been referred to in opinions of this Court with no indication that it presented any constitutional problem with respect to the jurisdiction of either the district courts or this Court. See, for example, Pope v. United States 323 U.S. 1, 65 S.Ct. 16, 89 L.Ed. 3; United States v. Sherwood, 312 U.S. 584, 61 S.Ct. 767, 85 L.Ed. 1058; United States v. Shaw, 309 U.S. 495, 60 S.Ct. 659, 84 L.Ed. 888; Williams v. United States, 289 U.S. 553, 53 S.Ct. 751, 77 L.Ed. 1372; Nassau Smelting & Refining Works v. United States, 266 U.S. 101, 45 S.Ct. 25, 69 L.Ed. 190; United States v. Pfitsch, 256 U.S. 547, 41 S.Ct. 569, 65 L.Ed. 1084; Tempel v. United States, 248 U.S. 121, 39 S.Ct. 56, 63 L.Ed. 162; United States v. Greathouse, 166 U.S. 601, 17 S.Ct. 701, 41 L.Ed. 1130; United States v. Jones, 131 U.S. 1, 9 S.Ct. 669, 33 L.Ed. 90. The legislative basis for the grant of jurisdiction to the district courts is delineated in Bates Mfg. Co. v. United States, 303 U.S. 567, 58 S.Ct. 694, 82 L.Ed. 1020. 22 The suggestion here that claims against the United States, adjudicated by the Court of Claims and by the district courts solely by virtue of the waiver of sovereign immunity and the jurisdiction granted under the Tucker Act, may be cases arising 'under the laws of the United States' is both erroneous and self-defeating. The unanimous decision in the Williams case, 289 U.S. 553, 53 S.Ct. 751, 77 L.Ed. 1372, holds clearly to the contrary, stating at 289 U.S. 577, 53 S.Ct. 759, 77 L.Ed. 1372, that controversies to which the United States may by statute be made a party defendant 'lie wholly outside the scope of the judicial power vested by article 3 * * *.' And see Principality of Monaco v. State of Mississippi, 292 U.S. 313, 321, 54 S.Ct. 745, 747, 78 L.Ed. 1282. Moreover, the Tucker Act simply opens those courts to plaintiffs already possessed of a cause of action. If that is sufficient to make the case one arising under the laws of the United States, the same is true of this suit and all others like it. No one urges that view of the present statute, nor could they. See note 23 and text. 23 The books are replete with authority on this point. For example, in Shoshone Mining Co. v. Rutter, 177 U.S. 505, at page 507, 20 S.Ct. 726, 44 L.Ed. 864, it was said: 'The suit must, in part at least, arise out of a controversy between the parties in regard to the operation and effect of the Constitution or laws upon the facts involved * * *.' And at page 513 of 177 U.S., at page 729 of 20 S.Ct., 44 L.Ed. 864: '* * * the mere fact that a suit is an adverse suit authorized by the statutes of Congress is not in and of itself sufficient to vest jurisdiction in the Federal courts.' And again at page 507 of 177 U.S., at page 726 of 20 S.Ct., 44 L.Ed. 864 it is considered 'well settled that a suit to enforce a right which takes its origin in the laws of the United States is not necessarily one arising under the Constitution or laws of the United States * * *.' In Bankers' Mut. Casualty Co. v. Minneapolis, St. P. & S.S.M.R. Co., 192 U.S. 371, at page 384, 24 S.Ct. 325, at page 329, 48 L.Ed. 484: '* * * suits, though involving the Constitution or laws of the United States, are not suits arising under the Constitution or laws where they do not turn on a controversy between the parties in regard to the operation of the Constitution or laws on the facts. * * *' And at page 385 of 192 U.S., at page 330 of 24 S.Ct., 48 L.Ed. 484: 'We repeat that the rule is settled that a case does not arise under the Constitution or laws of the United States unless it appears from plaintiff's own statement, in the outset, that some title, right, privilege, or immunity on which recovery depends will be defeated by one construction of the Constitution or laws of the United States, or sustained by the opposite construction.' In Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126, allegations designed to establish that the case arises under the Constitution are said to be insufficient if they do not show that 'the suit, that is, the plaintiff's original cause of action,' does so arise. 24 No question has been raised here as to the source of this Court's appellate jurisdiction over such cases. Nor do we see how that issue could be raised without challenging our past and present exercise of jurisdiction over cases adjudicated in the district courts and in the Court of Claims, solely under the Tucker Act, see Pope v. United States, 323 U.S. 1, 13—14, 65 S.Ct. 16, 23, 89 L.Ed. 3, and see notes 21, 22; and under the Federal Tort Claims Act, see Brooks v. United States, 337 U.S. 49, 69 S.Ct. 918. 25 Chief Justice Marshall, in McCulloch v. State of Maryland, 4 Wheat. 316, 420—421, 4 L.Ed. 579, said: 'The result of the most careful and attentive consideration bestowed upon this (the 'necessary and proper') clause is, that if it does not enlarge, it cannot be construed to restrain the powers of Congress, or to impair the right of the legislature to exercise its best judgment in the selection of measures to carry into execution the constitutional powers of the government. * * * We admit, as all must admit, that the powers of the government are limited, and that its limits are not to be transcended. But we think the sound construction of the constitution must allow to the national legislature that discretion, with respect to the means by which the powers it confers are to be carried into execution, which will enable that body to perform the high duties assigned to it, in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.' 26 It would not be profitable to review the numerous cases in which, during the consideration of other problems, this Court has made statements concerning the nature and extent of Congress' power to legislate for the District of Columbia and its control over the jurisdiction of both constitutional and legislative courts. The issue now presented squarely for decision was not decided in any of them. We adhere to Chief Justice Marshall's admonition in Cohens v. Commonwealth of Virginia, 6 Wheat. 264, 399, 5 L.Ed. 257, that 'Such expressions ought not to control the judgment in a subsequent suit when the very point is presented for decision.' 1 See notes 3 and 4 and text infra. 2 See text infra and authorities cited at notes 7—9. 3 Barney v. City of Baltimore, 6 Wall. 280, 18 L.Ed. 825; Hooe v. Jamieson, 166 U.S. 395, 17 S.Ct. 596, 41 L.Ed. 1049; Hooe v. Werner, 166 U.S. 399, 17 S.Ct. 994, 41 L.Ed. 1051. 4 Hooe v. Jamieson, 166 U.S. 395, 397, 17 S.Ct. 596, 597, 41 L.Ed. 1049; cf. Downes v. Bidwell, 182 U.S. 244, 270, 21 S.Ct. 770, 780, 45 L.Ed. 1088. 5 'Of all the Courts which the United States may, under their general powers, constitute, one only, the Supreme Court, possesses jurisdiction derived immediately from the constitution, and of which the legislative power cannot deprive it.' United States v. Hudson, 7 Cranch 32, 33, 3 L.Ed. 259. And see Justice Chase's remarks in Turner v. Bank of North America, 4 Dall. 8, 9, n. 1, 1 L.Ed. 718. But cf. Martin v. Hunter's Lessee, 1 Wheat. 304, 328 331, 4 L.Ed. 97. For recent reaffirmation of the prevailing view see Kline v. Burke Construction Co., 260 U.S. 226, 233—234, 43 S.Ct. 79, 82—83, 67 L.Ed. 226, 24 A.L.R. 1077. And see the comprehensive survey of congressional power over the jurisdiction of federal courts prepared for the Judiciary Committee of the House of Representatives by Mr. Justice Frankfurter before his accession to this bench. H.R.Rep.No.669, 72d Cong., 1st Sess. 12 14. 6 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487. If it were assumed that the Constitution requires the application of local law in traditional diversity suits (cf. id., 304 U.S. at pages 77—80, 58 S.Ct. at pages 822—823, 82 L.Ed. 1188, 114 A.L.R. 1487; Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co., 276 U.S. 518, dissenting opinion at page 533, 48 S.Ct. 404, 408, 409, 72 L.Ed. 681, 57 A.L.R. 426; but cf. Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, dissenting opinion 337 U.S. 557, 69 S.Ct. 1231), it may be wondered whether that requirement would also govern the rationale of jurisdiction today advanced: Under this rationale, Congress might well find in Article I power to authorize articulation of a body of federal substantive law for the decision of diversity cases involving citizens of the District of Columbia. 7 Federal Radio Commission v. General Electric Co., 281 U.S. 464, 50 S.Ct. 389, 74 L.Ed. 969; Postum Cereal Co. v. California Fig Nut Co., 272 U.S. 693, 47 S.Ct. 284, 71 L.Ed. 478; Keller v. Potomac Electric Power Co., 261 U.S. 428, 43 S.Ct. 445, 67 L.Ed. 731. Cf. Ex parte Bakelite Corp., 279 U.S. 438, 450, 49 S.Ct. 411, 413, 73 L.Ed. 789; Federal Radio Commission v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 274—276, 53 S.Ct. 627, 631—633, 77 L.Ed. 1166, 89 A.L.R. 406; United States v. Jones, 336 U.S. 641, 652, n. 12, 69 S.Ct. 787, 793. 8 O'Donoghue v. United States, 289 U.S. 516, 551, 53 S.Ct. 740, 750, 77 L.Ed. 1356. Cf. Pitts v. Peak, 60 App.D.C. 195, 197, 50 F.2d 485. 9 See Comment, 43 Yale L.J. 316, 319 (1933). 10 Note by Chief Justice Taney inserted by order of the Court after the opinion in United States v. Ferreira, 13 How. 40, 53, 14 L.Ed. 42, summarizing the Court's conclusions in Hayburn's Case, 2 Dall. 409, 1 L.Ed. 436, and United States v. Yale Todd, decided without opinion by this Court on February 17, 1794, and apparently unreported. 11 Cf. Screws v. United States, 325 U.S. 91, 112—113, 65 S.Ct. 1031, 1040—1041, 89 L.Ed. 1495, 162 A.L.R. 1330. See the trenchant discussion by Mr. Justice Brandeis of the lesser impact of stare decisis in the realm of constitutional construction, Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 405—410, 52 S.Ct. 443, 446—449, 76 L.Ed. 815, (dissenting opinion), and the views of Mr. Justice Frankfurter dissenting in Commissioner of Internal Revenue v. Estate of Church, 335 U.S. 632, 676—677, 69 S.Ct. 322, 345, 349, 350. Instances in which this Court has overruled prior constitutional determinations are catalogued in Burnet v. Coronado Oil & Gas Co., supra, 285 U.S. at pages 407, n. 2, 409, n. 4, 52 S.Ct. at pages 447—448, 76 L.Ed. 815, and in Helvering v. Griffiths, 318 U.S. 371, 401, n. 52, 63 S.Ct. 636, 652, 87 L.Ed. 843; compare Mr. Justice Brandeis' compilations in Burnet v. Coronado Oil & Gas Co., supra, 285 U.S. at page 406, n. 1, 52 S.Ct. at page 447, 76 L.Ed. 815, and in his dissenting opinion in State of Washington v. W. C. Dawson & Co., 264 U.S. 219, 238, n. 21, 44 S.Ct. 302, 309, 68 L.Ed. 646. Chief Justice Stone, speaking for the Court on the death of Mr. Justice Brandeis, took occasion to note the prime role played by the latter in liberating the Court from mechanical adherence to precedent where constitutional issues re at stake: 'He never lost sight of the fact that the Constitution is primarily a great charter of government, and often repeated Marshall's words: 'it is a constitution we are expounding' 'intended to endure for ages to come, and, consequently, to be adapted to the various crises of human affairs.' Hense, its provisions were to be read not with the narrow literalism of a municipal code or a penal statute, but so that its high purposes should illumine every sentence and phrase of the document and be given effect as part of a harmonious framework of government. Notwithstanding the doctrine of stare decisis, judicial interpretations of the Constitution, since they were beyond legislative correction, could not be taken as the final word. They were open to reconsideration, in the light of new experience and greater knowledge and wisdom.' 317 U.S. XLII, XLVII. 12 The Hepburn case was not the only one in those earlier years where the master touch was lacking. Cf. Bank of the United States v. Deveaux, 5 Cranch 61, 3 L.Ed. 38; Hope Insurance Co. v. Boardman, 5 Cranch 57, 3 L.Ed. 36; Maryland Insurance Co. v. Woods, 6 Cranch 29, 3 L.Ed. 143; Maryland Ins. Co. v. Wood, 7 Cranch 402, 3 L.Ed. 385; McGovney, A Supreme Court Fiction, 56 Harv.L.Rev. 853, 863—885 (1943). See particularly the discussion at 876—883. By positing the capacity of a corporation to sue or be sued under the diversity clause on the citizenship of its shareholders, the Deveaux decision opened the way for corporations ultimately to be brought within the diversity jurisdiction, but only by the long and tortuous evolution of the law through the stages first of rebuttable and finally of conclusive presumption (now most often contrary to the fact) that all the shareholders are citizens of the state of incorporation. See Louisville, C. & C.R. Co. v. Letson, 2 How. 497, 11 L.Ed. 353. 13 Counsel for the plaintiffs had made, among others, two different, though closely related, arguments. One was that 'state' as used in the diversity clause should be given what Marshall characterized as 'the signification attached to it by writers on the law of nations,' a political entity in a broad and general sense. To this argument his answer was obviously appropriate. But in view of other constitutional provisions relied upon in the argument, 2 Cranch 445, 446—448, 450, 2 L.Ed. 332, it seems at least questionable that the answer met the other contention, namely, that 'those territories which are under the exclusive government of the United States are to be considered in some respects as included in the term 'states,' as used in the constitution.' 2 Cranch 445, at page 446, 2 L.Ed. 332. 14 The Court's initial determination that District residents were entitled to a jury trial in criminal cases, Callan v. Wilson, 127 U.S. 540, 8 S.Ct. 1301, 32 L.Ed. 223, rested in large measure on the more inclusive language of Article III, § 2: 'The Trial of all Crimes, except in Cases of Impeachment, shall be by Jury; and such Trial shall be held in the State where the said Crimes shall have been committed; but when not committed within any State, the Trial shall be at such Place or Places as the Congress may be Law have directed.' The Court in the Callan case rejected the Government's argument that Article III, § 2, permits Congress to dispense with a jury when the crime takes place in the District rather than in a state. But Article III does not seem to have been the sole basis of decision, for the Court said, 127 U.S. at page 550, 8 S.Ct. at page 1304, 32 L.Ed. 223: 'In Reynolds v. United States, 98 U.S. (145), 154, (25 L.Ed. 244), it was taken for granted that the sixth amendment of the constitution secured to the people of the territories the right of trial by jury in criminal prosecutions; * * *. We cannot think that the people of this District have, in that regard, less rights than those accorded to the people of the territories of the United States.' See District of Columbia v. Clawans, 300 U.S. 617, 624, 57 S.Ct. 660, 661, 662, 81 L.Ed. 843; Capital Traction Co. v. Hof, 174 U.S. 1, 5, 19 S.Ct. 580, 582, 43 L.Ed. 873; cf. Thompson v. State of Utah, 170 U.S. 343, 348—349, 18 S.Ct. 620, 621—622, 42 L.Ed. 1061. But, though it be true that 'The Sixth Amendment was not needed to require trial by jury in cases of crimes', United States v. Wood, 299 U.S. 123, 142, 57 S.Ct. 177, 183, 184, 81 L.Ed. 78, nevertheless the recognized right of District residents to an 'impartial jury' is conferred by the force of the Sixth Amendment. See Frazier v. United States, 335 U.S. 497, 498, 514, 69 S.Ct. 201, 202, 210. Nor is this distinction a mere form of words: In United States v. Wood, supra, 299 U.S. at pages 142—143, 57 S.Ct. at page 184, 81 L.Ed. 78, Chief Justice Hughes, in weighing the impartiality of a District of Columbia jury, noted the Article III guarantee of a jury trial and then observed: 'The Sixth Amendment provided further assurances. It added that 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 compulsor process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence." Thus it has been uniformly assumed that in criminal prosecutions a resident of the District of Columbia is possessed of Sixth Amendment rights 'to a speedy * * * trial,' United States v. McWilliams, D.C., 69 F.Supp. 812, affirmed, 82 U.S.App.D.C. 259, 163 F.2d 695; 'to be informed of the nature and cause of the accusation', cf. Johnson v. United States, 225 U.S. 405, 409, 411, 32 S.Ct. 748, 56 L.Ed. 1142; 'to be confronted with the witnesses against him', Curtis v. Rives, 75 U.S.App.D.C. 66, 123 F.2d 936, 937; Jordon v. Bondy, 72 App.D.C. 360, 114 F.2d 599, 602, 'to have compulsory process for obtaining Witnesses in his favor,' ibid.; 'and to have the Assistance of Counsel for his defence', Noble v. Eicher, 79 U.S.App.D.C. 217; 143 F.2d 1001; see Williams v. Huff, 79 U.S.App.D.C. 31, 142 F.2d 91, Id., 79 U.S.App.D.C. 326, 146 F.2d 867. 15 See note 12 supra. Compare Louisville, C. & C.R. Co. v. Letson, 2 How. 497, 11 L.Ed. 353, with Bank of the United States v. Deveaux, 5 Cranch 61, 3 L.Ed. 38. 16 Paul v. State of Virginia, 8 Wall. 168, 177, 19 L.Ed. 357. It is to be noted, however, that Hamilton's 83th Federalist expressly justified the grant of diversity jurisdiction as effectively implementing the guaranties of the privileges and immunities clause of Article IV. 17 Hague v. C.I.O., 307 U.S. 496, 514, cf. id. at page 527, 59 S.Ct. 954, 963, 969, 83 L.Ed. 1423; Grosjean v. American Press Co., 297 U.S. 233, 244, 56 S.Ct. 444, 446, 447, 80 L.Ed. 660; Orient Insurance Company v. Daggs, 172 U.S. 557, 561, 19 S.Ct. 281, 282, 43 L.Ed. 552. 18 For contrasting views prior to Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, compare Yntema, The Jurisdiction of the Federal Courts in Controversies between Citizens of Different States, 19 A.B.A.J. 71 (1933), and Yntema and Jaffin, Preliminary Analysis of Concurrent Jurisdi tion, 79 U.Pa.L.Rev. 869 (1931), with Frankfurter, A Note on Diversity Jurisdiction—In Reply to Professor Yntema, 79 U.Pa.L.Rev. 1097 (1931), and Frankfurter, Distribution of Judicial Power between United States and State Courts, 13 Corn.L.Q. 499, 520—530 (1928). For post-Erie analyses see Shulman, The Demise of Swift v. Tyson, 47 Yale L.J. 1336 (1938); Clark, State Law in the Federal Courts: The Brooding Omnipresence of Erie R. Co. v. Tompkins, 55 Yale L.J. 267 (1946). 19 See note 18, and see also Friendly, the Historic Basis of Diversity Jurisdiction, 41 Harv.L.Rev. 483 (1928); Warren, New Light on the History of the Federal Judiciary Act of 1789, 37 Harv.L.Rev. 49, 81—90 (1923); Frank, Historical Bases of the Federal Judicial System, 13 L. & Contemp. Prob. 3, 22—28 (1948). 20 Cf. notes 14—17 supra and text. 21 The arguments for the defendant were two, one statutory, the other constitutional. They were stated as follows: 'Even if the constitution of the United States authorizes a more enlarged jurisdiction than the judiciary act of 1789 has given, yet the court can take no jurisdiction which is not given by the act. * * * 'This is not a case between citizens of different states, within the meaning of the constitution.' 2 Cranch 445, at pages 449—450, 2 L.Ed. 332. 22 After noting that the Hepburn decision had been extended by Corporation of New Orleans v. Winter, 1 Wheat. 91, 4 L.Ed. 44, to territories and their citizens, the opinion i Watson v. Brooks, C.C., 13 F. 540, stated at pages 543—544: 'But it is very doubtful if this ruling would now be made if the question was one of first impression; and it is to be hoped it may yet be reviewed and overthrown. 'By it, and upon a narrow and technical construction of the word 'state,' unsupported by any argument worthy of the able and distinguished judge who announced the opinion of the court, the large and growing population of American citizens resident in the District of Columbia and the eight territories of the United States are deprived of the privilege accorded to all other American citizens, as well as aliens, of going into the national courts when obliged to assert or defend their legal rights away from home. Indeed, in the language of the court in Hepburn and Dundas v. Ellzey, supra, they may well say: 'It is extraordinary that the courts of the United States, which are open to aliens, and to the citizens of every state in the Union, should be closed upon them.' But so long as this ruling remains in force, the judgment of this court must be governed by it.' 1 See also Sheldon v. Sill, 1850, 8 How. 441, 12 L.Ed. 1147; Kline v. Burke Construction Co., 1922, 260 U.S. 226, 43 S.Ct. 79, 67 L.Ed. 226, 24 A.L.R. 1077; Lauf v. E. G. Shinner & Co., 1938, 303 U.S. 323, 58 S.Ct. 578, 82 L.Ed. 872; Lockerty v. Phillips, 1943, 319 U.S. 182, 63 S.Ct. 1019, 87 L.Ed. 1339. 2 I.e., is an enumeration of cases to which Congress may extend the jurisdiction of the federal courts without invoking other of its powers under the Constitution. 3 This principle, implicit in the arguments at the Constitutional Convention, was made explicit in the 10th Amendment. 4 2 Farrand, Records of the Federal Convention 341, hereinafter cited as Farrand. 5 Id. at 430. 6 See Muskrat v. United States, 1911, 219 U.S. 346, 356, 31 S.Ct. 250, 253, 254, 55 L.Ed. 246. 7 2 Farrand 425. 8 The propriety of considering the proposals and debates of the Constitutional Convention was long ago considered by those most intimately concerned with its formulation. Washington, in his message to the House of Representatives refusing the demands of that body for the papers relating to Jay's treaty, stated: 'If other proofs than these, and the plain letter of the Constitution itself, be necessary to ascertain the point under consideration, they may be found in the Journals of the Great Convention, which I have deposited in the office of the Department of State. In those Journals it will appear, that a proposition was made, 'that no Treaty shall be binding on the United States which was not ratified by a law,' and that the proposition was explicitly rejected.' Annals of Congress, Fourth Congress, 1st Sess., p. 761. See also the comment of Madison at a later date. 3 Writings of James Madison, 515. 9 1 Farrand 124. See the argument of Luther Martin before the Maryland House of Representatives opposing ratification of the Constitution in 3 Farrand, 156. See also 2 Elliot, Debates 408; 3 id. at 562 et seq. 10 This account, taken from Madison's notes, is found in 1 Farrand 124—125. 11 1 Farrand 616. 12 Id. at 22. 13 Id. at 231. The sense of the Convention at this point was expressed in Yates' Notes as follows: 'Gov. Randolph observed the difficulty in establishing the powers of the judiciary—the object however at present is to establish this principle, to wit, the security of foreigners where treaties are in their favor, and to preserve the harmony of states and that of the citizens thereof. This being once established, it will be the business of a subcommittee to detail it; and therefore moved to obliterate such parts of the resolve so as only to establish the principle, to wit, that the jurisdiction of the national judiciary shall extend to all cases of national revenue, impeachment of national officers, and questions which involve the national peace and harmony. Agreed to unanimously.' 1 Farrand 238. 14 See, e.g., Madison's defense of the Judiciary Article before the Virginia Convention, 5 Writings of James Madison 216 225; 2 Elliott, Debates 109; id. at 409, where among the resolutions affecting Art. III was one which 'Resolved, as the opinion of this committee, that the jurisdiction of the Supreme Court of the United States, or of any other court to be instituted by the Congress, ought not, in any case, to be increased, enlarged, or extended, by any fiction, collusion, or mere suggestion'; id. at 489—494; 3 Elliott, Debates 517—584. 15 3 Elliott, Debates 565. And see Patrick Henry's remarks, id. at 539—546. 16 The cases enumerated were the following: '1st. To all those which arise out of the laws of the United States, passed in pursuance of their just and constitutional powers of legislation; 2d. To all those which concern the execution of the provisions expressly contained in the articles of union; 3d. To all those in which the United States are a party; 4th. To all those which involve the peace of the confederacy, whether they relate to the intercourse between the United States and foreign nations, or to that between the States themselves; 5th. To all those which originate on the high seas, and are of admiralty or maritime jurisdiction; and lastly, to all those in which the state tribunals cannot be supposed to be impartial and unbiased.' 17 9 Writings of James Madison 199—200. And see United States v. Hudson and Goodwin, 1812, 7 Cranch 32, 3 L.Ed. 259; Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487. 18 From Grether v. Wright, 6 Cir., 1896, 75 F. 742. 19 See e.g., Benner v. Porter, 1850, 9 How. 235, 13 L.Ed. 119; Clinton v. Englebrecht, 1871, 13 Wall. 434, 20 L.Ed. 659; Reynolds v. United States, 1878, 98 U.S. 145, 25 L.Ed. 244; McAllister v. United States, 1891, 141 U.S. 174, 11 S.Ct. 949, 35 L.Ed. 693; United States v. Burroughs, 1933, 289 U.S. 159, 53 S.Ct. 574, 77 L.Ed. 1096; Ex parte Bakelite Corp., 1929, 279 U.S. 438, 49 S.Ct. 411, 73 L.Ed. 789. 20 In Williams v. United States, 1933, 289 U.S. 553, 53 S.Ct. 751, 77 L.Ed. 1372, the Court found that the Court of Claims had been created pursuant to the power f Congress under Art. I to pay the debts of the United States and had been given powers and duties inconsistent with those of an Art. III court. The Court's consideration of the question whether 'Controversies to which the United States shall be a Party' in Art. III includes suits against the United States was therefore unnecessary to the decision, since an affirmative answer would not have converted the Court of Claims into a constitutional court. It is 'incapable of receiving' the Art. III power. American Insurance Co. v. Canter, supra. Furthermore, the Court recognized inferentially that the Court of Claims does exercise jurisdiction over some questions of the kind enumerated in Art. III when, with reference to claims founded upon the Constitution, it held that 'the requirement is one imposed by the Constitution and equally applicable whether jurisdiction be exercised by a legislative court or a constitutional court.' 289 U.S. at page 581, 53 S.Ct. at page 760, 77 L.Ed. 1372. Since Court of Claims jurisdiction also includes claims founded upon any Act of Congress, it is clear that that court exercises parallel jurisdiction with that of constitutional courts over cases arising under the Constitution and laws of the United States, although limited to suits involving claims against the United States. This points up the fact that the Court's discussion of the phrase, 'Controversies to which the United States shall be a Party,' was unnecessary to the decision. 21 It is argued that because federal district courts exercise jurisdiction over claims against the United States concurrent with that of the Court of Claims, the former are exercising jurisdiction of non-Art. III nature. Whether or not the dictum in Williams v. United States, 1933, 289 U.S. 553, 53 S.Ct. 751, 77 L.Ed. 1372, that suits against the United States are not within the Art. III phrase, 'Controversies to which the United States shall be a Party,' proves correct, see note 20, supra, such actions seem to be clearly within the Art. III federal question jurisdiction. See 2 Moore, Federal Practice (1948 ed.), 1633. Of course the fact that Congress extends the jurisdiction of federal courts to suits involving certain subject matter does not itself make them the subject of federal question jurisdiction. But the sovereign's immunity from suit has never been regarded simply as a question of unavailability of a forum. As Hamilton said in The Federalist, No. 81: 'The contracts between a Nation and an individual are only binding on the conscience of the sovereign and have no pretensions to compulsive force. They confer no right of action independent of the sovereign will.' When the sovereign consents to be sued, therefore, considerably more is involved than opening the courts to plaintiffs already possessed of causes of action. For as Mr. Justice Brandeis said in Lynch v. United States, 1934, 292 U.S. 571, 582, 54 S.Ct. 840, 845, 78 L.Ed. 1434: 'The sovereign's immunity from suit exists whatever the character of the proceeding or the source of the right sought to be enforced. It applies alike to causes of action arising under acts of Congress, * * * and to those arising from some violation of rights conferred upon the citizen by the Constitution, * * *. The character of the cause of action—the fact that it is in contract as distinguished from tort—may be important in determining (as under the Tucker Act (24 Stat. 505)) whether consent to sue was given. Otherwise it is of no significance. For immunity from suit is an attribute of sovereignty which may not be bartered away.' Since any right of action against the United States is completely and wholly dependent upon whether an Act of Congress has authorized the suit, see United States v. Minnesota Mutual Investment Co., 1926, 271 U.S. 212, 217, 46 S.Ct. 501, 502, 503, 70 L.Ed. 911, a question arising under the laws of the United States, as that phrase is used in Art. III, is clearly presented by any claim against the federal government. Since Congress has decreed that all such actions shall be brought in federal courts, the question presented in Gully v. First National Bank, 1936, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70; People of Puerto Rico v. Russell & Co., 1933, 288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903, and related cases is not involved. 22 Except, perhaps, when Congress legislates for the Territories or the District of Columbia. 23 Katz, Federal Legislative Courts, 43 Harv.L.Rev. 984, 916 917. 1 The story of the scope of jurisdiction of the federal courts devised by Article III is easily traceable through the admirable index in Farrand, The Records of the Federal Convention (Rev. ed., 1937); the data are assembled in Prescott, Drafting the Federal Constitution, ch. 17 (1941); see also Friendly, The Historic Basis of Diversity Jurisdiction, 41 Harv.L.Rev. 483 (1928). 2 See for example, Hearings and S.Rep.No.626, on S. 3151, 70th Cong., 1st Sess. (1928); S.Rep.No.691, on S. 4357, 71st Cong., 2d Sess. (1930); S. 937, S. 939, H.R. 10594, H.R. 11508, S.Rep.No.530 and S.Rep.No.701, 72d Cong., 1st Sess. (1932); Hearings on S. 466, 79th Cong., 1st Sess. (1945). Earlier attacks on diversity jurisdiction are summarized in Frankfurter and Landis, The Business of the Supreme Court, 90 et seq., 136 et seq. (1928). 3 Reliance on Williams v. Austrian, 331 U.S. 642, 657, 67 S.Ct. 1443, 1450, 91 L.Ed. 1718, seems singularly inapposite. When a petition for bankruptcy is filed there may be outstanding claims by the bankrupt against debtors and by creditors against the bankrupt. Of course Congress has power to determine whether all such claims—those for and those against, the bankrupt estate should be enforced through the federal courts. That a particular claim dissociated from the fact of bankruptcy would have to be brought in a State court for want of any ground of federal jurisdiction is irrelevant. This is so because in the exercise of its power to pass 'uniform laws on the subject of Bankruptcies' Congress may deem it desirable that the federal courts be utilized for all the claims that pertain to the bankrupt estate whether in the federal court in which the bankruptcy proceeding is pending or in a more convenient federal court. The congeries of controversies thus brought into being by reason of bankruptcy may be lodged in the federal courts because they arise under 'the Laws of the United States,' to wit, laws concerning the 'subject of Bankruptcies.' It is a matter of congressional policy whether there must be a concourse of all claims affecting the bankrupt's estate in the federal court in which the bankruptcy proceeding is pending or whether auxiliary suits be pursued in other federal courts.

89

337 U.S. 530 69 S.Ct. 1233 93 L.Ed. 1520 RAGANv.MERCHANTS TRANSFER & WAREHOUSE CO., Inc. No. 522. Argued April 20, 1949. Decided June 20, 1949. Rehearing Denied Oct. 10, 1949. See 70 S.Ct. 33. Mr. Cornelius Roach, Kansas City, Mo., for petitioner. Mr. Douglas Hudson, Fort Scott, Kan., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This case, involving a highway accident which occurred on October 1, 1943, came to the District Court for Kansas by reason of diversity of citizenship. Petitioner instituted it there on September 4, 1945, by filing the complaint with the court—the procedure specified by the Federal Rules of Civil Procedure, 28 U.S.C.A.1 As prescribed by those Rules, a summons was issued.2 Service was had on December 28, 1945. Kansas has a two-year statute of limitations applicable to such tort claims.3 Respondent pleaded it and moved for summary judgment. Petitioner claimed that the filing of the complaint tolled the statute. Respondent argued that by reason of a Kansas statute4 the statute of limitations was not tolled until service of the summons. 2 The District Court struck the defense and denied respondent's motion. A trial was had and a verdict rendered for petitioner. The Court of Appeals reversed. 10 Cir., 170 F.2d 987. It ruled, after a review of Kansas authorities, that the requirement of service of summons within the statutory period was an integral part of that state's statute of limitations. It accordingly held that Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231, governed and tha respondent's motion for summary judgment should have been sustained. The case is here on a petition for certiorari which we granted because of the importance of the question presented. 3 Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, was premised on the theory that in diversity cases the rights enjoyed under local law should not vary because enforcement of those rights was sought in the federal court rather than in the state court. If recovery could not be had in the state court, it should be denied in the federal court. Otherwise, those authorized to invoke the diversity jurisdiction would gain advantages over those confined to state courts. Guaranty Trust Co. v. York applied that principle to statutes of limitations on the theory that, where one is barred from recovery in the state court, he should likewise be barred in the federal court. 4 It is conceded that if the present case were in a Kansas court it would be barred. The theory of Guaranty Trust Co. v. York would therefore seem to bar it in the federal court, as the Court of Appeals held. The force of that reasoning is sought to be avoided by the argument that the Federal Rules of Civil Procedure determine the manner in which an action is commenced in the federal courts—a matter of procedure which the principle of Erie R. Co. v. Tompkins does not control. It is accordingly argued that since the suit was properly commenced in the federal court before the Kansas statute of limitations ran, it tolled the statute. 5 That was the reasoning and result in Bomar v. Keyes, 2 Cir., 162 F.2d 136, 141. But that case was a suit to enforce rights under a federal statute.5 Here, as in that case, there can be no doubt that the suit was properly commenced in the federal court. But in the present case we look to local law to find the cause of action on which suit is brought. Since that cause of action is created by local law, the measure of it is to be found only in local law. It carries the same burden and is subject to the same defenses in the federal court as in the state court. See Cities Service Co. v. Dunlap, 308 U.S. 208, 60 S.Ct. 201, 84 L.Ed. 196; Palmer v. Hoffman, 318 U.S. 109, 117, 63 S.Ct. 477, 482, 87 L.Ed. 645, 144 A.L.R. 719. It accrues and comes to an end when local law so declares. West v. American Tel. & T. Co., 311 U.S. 223, 61 S.Ct. 179, 85 L.Ed. 139, 132 A.L.R. 956; Guaranty Trust Co. v. York, supra. Where local law qualifies or abridges it, the federal court must follow suit. Otherwise there is a different measure of the cause of action in one court than in the other, and the principle of Erie R. Co. v. Tompkins is transgressed. 6 We can draw no distinction in this case because local law brought the cause of action to an end after, rather than before, suit was started in the federal court. In both cases local law created the right which the federal court was asked to enforce. In both cases local law undertook to determine the life of the cause of action. We cannot give it longer life in the federal court than it would have had in the state court without adding something to the cause of action. We may not do that consistently with Erie R. Co. v. Tompkins. 7 It is argued that the Kansas statute in question6 is not an integral part of the Kansas statute of limitations. But the Court of Appeals on a careful canvass of Kansas law in an opinion written by Judge Huxman, a distinguished member of the Kansas bar, has held to the contrary. We ordinarily accept the determination of local law by the Court of Appeals (see Huddleston v. Dwyer, 322 U.S. 232, 237, 64 S.Ct. 1015, 1018, 88 L.Ed. 1246), and we will not disturb it here. 8 Affirmed. 9 Mr. Justice RUTLEDGE dissents. See his dissenting opinion in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221. 1 Rule 3 provides, 'A civil action is commenced by filing a complaint with the court.' 2 Rule 4(a) provides: 'Upon the filing of the complaint the clerk shall forthwith issue a summons and deliver it for service to the marshal or to a person specially appointed to serve it. Upon request of the plaintiff separate or additional summons shall issue against any defendants.' An earlier summons issued on September 7, 1945, and thereafter served had been quashed. 3 Kan.Gen.Stats.1935, § 60-306. 4 Id., § 60-308 provides, 'An action shall be deemed commenced within the meaning of this article, as to each defendant, at the date of the summons which is served on him, or on a codefendant who is a joint contractor, or otherwise united in interest with him. Where service by publication is proper, the action shall be deemed commenced at the date of the first publication. An attempt to commence an action shall be deemed equivalent to the commencement thereof within the meaning of this article when the party faithfully, properly and diligently endeavors to procure a service; but such attempt must be followed by the first publication or service of the summons within sixty days.' 5 Civil Rights Act, 8 U.S.C. § 43, 8 U.S.C.A. § 43. 6 Note 4, supra.

910

337 U.S. 562 69 S.Ct. 1291 93 L.Ed. 1544 WHEELING STEEL CORPORATIONv.GLANDER, Tax Commissioner of Ohio. NATIONAL DISTILLERS PRODUCTS CORPORATION, N.Y., v. GLANDER, Tax Commissioner of Ohio. Nos. 447 and 448. Argued March 29, 30, 1949. Decided June 20, 1949. Appeals from the Supreme Court of the State of Ohio. Mr. John M. Caren, Columbus, Ohio, for appellant Wheeling Steel corporation. Mr. Charles H. Tuttle, New York City, for appellant National Distillers Products Corporation. Mr. W. H. Annat, Wooster, Ohio, for appellees. Mr. Justice JACKSON delivered the opinion of the Court. 1 The State of Ohio has laid an ad valorem tax against certain intangible property, consisting of notes, accounts receivable and prepaid insurance, owned by foreign corporations. As applied to appellants in these two cases, the tax is challenged as violating the Federal Constitution on serveral grounds which may conveniently be considered in a single opinion. Facts are not in dispute. 2 Appellant Wheeling Steel Corporation is organized under the laws of Delaware, where it maintains a statutory office. Ohio has authorized it to do business in that State and four of its eight manufacturing plants are located there. General offices, from which its entire business is controlled and conducted, are in Wheeling, West Virginia. Its officers there have custody of its money, notes and books of account. In twelve other states, including Ohio, it maintains sales offices which solicit and receive orders for its products subject to acceptance or rejection at the Wheeling office, to which all are forwarded. From this office only may credit be extended to purchasers. Accounts are billed and collected from the Wheeling office and the sales offices have no powers or duties with respect to collection. All accounts or notes receivable are payable at Wheeling, where the written evidences thereof are kept. Proceeds from receivables are taken into appellant's treasury at Wheeling and there applied to general purposes of the business. 3 Appellant National Distillers Products Corporation is organized under the laws of Virginia, where it has a statutory office and holds annual stockholders meetings. It is admitted to do business in Ohio, where it maintains a distillery, or rectifying plant, and warehouse, as it does also in six other states. Pay roll checks for plant employees are drawn on funds deposited in banks in the locality of the plant. Appellant also is licensed to do business in New York, where it maintains its principal business office and conducts its fiscal affairs and from which all business activities are directed and controlled. The Corporation maintains regional sales offices in various of those states which permit private distribution of liquor. In such states customers are solicited and orders taken, subject to acceptance or rejection at New York. It maintains no sales office in Ohio, where dispensing liquor is a state monopoly. Orders from Ohio state authorities are forwarded directly to the offices in New York and are subject to acceptance or rejection there. When the New York office accepts an order from any source, it sends shipping orders to various plants, none of which makes any shipments except upon such orders. Only in New York can any credits be approved and all books, records and evidences of accounts receivable are kept there. Collections are managed from New York, which is the place of payment of all receivables. During the tax year in question, the Corporation solicited and took orders through agents in states other than Ohio for a large quantity of liquor shipped from its plants and warehouses in Ohio to customers elsewhere. 4 It is stipulated that appellants each paid all franchise or other taxes required by Ohio for admission to do business in the State and paid all taxes assessed upon real and personal property located in said State. 5 The Wheeling Company also paid to the State of West Virginia, for the year in question, ad valorem taxes on all of its receivables, including those sought to be taxed by Ohio, pursuant to this Court's decision in Wheeling Steel Corp. v. Fox, 298 U.S. 193, 56 S.Ct. 773, 80 L.Ed. 1143. Neither Virginia nor New York has sought to tax the accounts receivable of National Distillers involved herein. 6 The Ohio Tax Commissioner, applying §§ 5328—1 and 5328—2 of the General Code of Ohio,1 assessed for taxation in Ohio a large amount of notes and accounts receivable which each appellant derived from shipments originating at Ohio manufacturing plants. The specific ground stated for assessment was that such receivables 'result from the sale of property from a stock of goods maintained within this State.' 7 The Board of Tax Appeals affirmed both assessments and in the Distiller's case set forth the above mentioned statutes and pointed out wherein its own views and practices as to their application to accounts receivable had been modified by decisions of the Ohio Supreme Court, whose interpretations, for our purposes, become a part of the statutes. The Board said: '* * * On a consideration of the statutory provisions above noted, the Board of Tax Appeals was of the view that before a business situs of accounts receivable and other intangible property, for purposes of taxation, could be given to a state other than the state of the domicile of the taxpayer, it must appear that such receivables or other intangible property not only arose in the conduct of the business of the taxpayer in such other state, but were therein so used as to become an integral part of the business carried on in such other state; and that it was not sufficient that such accounts receivable and other intangible property be used in business generally by the taxpayer. And on this view the Board held that the accounts receivable there in question, although they arose in the conduct of taxpayer's business in the States of Indiana and Michigan, did not have a business situs in such states, and that such accounts receivable were taxable in Ohio. 8 'On the appeal of the decision of the Board of Tax Appeals in The Ransom & Randolph Co. case to the Supreme Court of Ohio, that Court reversed the decision of the Board of Tax Appeals upon the point above indicated. 142 Ohio St. 398, 404, 52 N.E.2d 738. That Court, upon consideration of the applicable provisions of section 5328-2 and related sections of the General Code above noted, held that the accounts receivable of a taxpayer which arose in the conduct of its business in a state or states other than the state in which it had its domicile or place of residence, had a business situs in such other state or states if such accounts receivable or the avails thereof are being applied or are intended to be applied in the conduct of the taxpayer's business, whether in this State or elsewhere. This view of the Supreme Court as to the construction to be placed upon the statutory provisions here in question was later followed by that Court in its decisions in the cases of The Haverfield Company v. Evatt, Tax Comm., 143 Ohio St. 58, 54 N.E.2d 149, and National Cash Register Company v. Evatt, Tax Comm., 145 Ohio St. 597, 62 N.E.2d 327. 9 '* * * In this situation, and applying the statutory provisions here in question as the same have been construed by the Supreme Court of this State, it follows that since the accounts receivable of the appellant corporation involved in this case arose—as this Board hereby find—, in the conduct of its business in the State of Ohio by the sale of its products from a stock of goods located in this State, and since, further, such accounts receivable or the avails thereof were used or were intended to be used by the appellant in its business, whether in this State or elsewhere, such accounts receivable have a business and taxable situs in the State of Ohio, as found and determined by the tax commissioner. 10 'With respect to a question such as that here presented, to wit, that as to the taxation of the accounts receivable of a foreign corporation arising in the conduct of its business in this State, the application of the above noted provisions of sections 5328-1, 5328-2 and other related sections of the General Code, as the same have been construed by the Supreme Court, presents, to our mind, a serious question as to the constitutionality of said statutory provisions as so construed under the Due Process of Law clause of the Federal Constitution. * * *' 11 The Ohio Supreme Court affirmed in both cases,2 which were brought here by appeals.3 12 Appellants urge that the question which the Board of Tax Appeals regarded as serious should be resolved against the State on the ground that these intangibles had no situs in Ohio to sustain its power under the Due Process Clause so to tax them and also that to do so imposes an undue burden on interstate commerce in violation of the Commerce Clause. They point out that the credits sought to be taxed here were not created in Ohio, not payable there, and neither the payor nor payee, debtor nor creditor, was resident there. Moreover, the receivables arose from a contract for sale of goods, but the contracts were not made in Ohio nor performed in Ohio, and neither buyer nor seller resided there. On the assumption that Ohio could not follow tangible goods into a foreign state and tax them, either in the hands of the vendor before delivery or in the hands of a vendee after delivery, it is argued that she has no greater power to tax intangibles substituted in a foreign state for them and has no right to tax intangible proceeds of the sale of tangible goods that had passed beyond her taxing power. 13 In their original application of the statutory scheme the taxing authorities sought to overcome this hurdle by requiring an additional and more substantial connection between the taxed intangibles and the state taxing power. For purpose of an Ohio tax the Board of Tax Appeals held intangibles to have a situs in that State only when and to the extent 'so used as to become an integral part of the business carried on' in Ohio. It was this requirement which the Supreme Court of the State eliminated by Ransom & Randolph Co. v. Evatt, 142 Ohio St. 398, 52 N.E.2d 738, when it held that any use of the intangibles in the general business was sufficient to make them taxable. Thus was cut the connection which the Board of Tax Appeals originally invoked to confer jurisdiction to tax, and thus was raised the question of constitutionality regarded by the Board as serious. 14 However, we find it inappropriate to decide the Due Process question. The State action, which is reviewable under the Fourteenth Amendment, is the composite result of both legislation and its judicial interpretation. Ohio does not attempt and has not asserted power to tax all such intangibles, but only those owned by nonresidents and foreign corporations. It has given no indication that it intends to or would reach out to tax such intangibles as we have here unless it may at the same time exempt identical ones owned by its residents and domestic corporations. The contrary is indicated by § 5328-2, which makes the two inseparable. We deal with the taxing plan as an entirety as we find it in operation and pass only on the constitutionality of that which the State has asserted power and purpose to do. 15 The State action and policy resulting from statute and decisions is certified to us by the appellee, the Tax Commissioner or Ohio, to be as follows: 16 '* * * since the decision of he Supreme Court of Ohio in Ransom & Randolph v. Evatt, 142 Ohio St. 398, 52 N.E.2d 738 (January 12, 1944) and in obedience thereto, it has been the policy and practice of said Department of Taxation to construe and apply sections 5328-1 and 5328-2 of the General Code of Ohio 17 '(A) so as to exempt from taxation in Ohio accounts receivable of Ohio residents, including domestic corporations, which arise 18 '(1) from a sale of goods by an agent having an office in another state, even though such goods be shipped from Ohio, or 19 '(2) from a sale of goods shipped from another state, even though such goods be sold by an agent having an office in Ohio; '(B) so as to tax in Ohio accounts receivable of non-residents of Ohio, including foreign corporations, which arise either 20 '(1) from a sale of goods shipped from Ohio, even though such goods be sold by an agent having an office in another state, or 21 '(2) from a sale of goods by an agent having an office in Ohio, even though such goods be shipped from another state. 22 'That the foregoing have been in effect as the only tests of taxability of accounts receivable in Ohio since the decision of the Supreme Court of Ohio in the case of Ransom & Randolph v. Evatt, 142 Ohio St. 398, 52 N.E.2d 738, and that said tests have been applied without deviation both by affiant and by his predecessor in office, William S. Evatt, as the result of the holding in that case.' 23 Under long settled principles of our Federation, Ohio was not required to admit these foreign corporations to carry on intrastate business within its borders. The State may arbitrarily exclude them or may license them upon any terms it sees fit, apart from exacting surrender of rights derived from the Constitution of the United States. Hanover Insurance Co. v. Harding, 272 U.S. 494, 507, 47 S.Ct. 179, 182, 71 L.Ed. 372, 49 A.L.R. 713; Connecticut General Co. v. Johnson, 303 U.S. 77, 79—80, 58 S.Ct. 436, 82 L.Ed. 673. Ohio elected, however, to admit these corporations to transact businesses and operate manufacturing plants in the State. For that privilege they have paid all that the State required by way of franchise or privilege tax, which includes in its measure the value of all property owned and business done in Ohio. §§ 5495, 5497, 5498 and 5499 of the Ohio General Code. See International Harvester Co. v. Evatt, 329 U.S. 416, 67 S.Ct. 444, 91 L.Ed. 390. After a state has chosen to domesticate foreign corporations, the adopted corporations are entitled to equal protection with the state's own corporate progeny, at least to the extent that their property is entitled to an equally favorable ad valorem tax basis. Hanover Insurance Co. v. Harding, 272 U.S. 494, 510—511, 47 S.Ct. 179, 183, 71 L.Ed. 372, 49 A.L.R. 713; Power Co. v. Saunders, 274 U.S. 490, 493, 497, 47 S.Ct. 678, 679, 680, 71 L.Ed. 1165. Ohio holds this tax on intangibles to be an ad valorem property tax, Bennett v. Evatt, 145 Ohio St. 587, 62 N.E.2d 345, and in no sense a franchise, privilege, occupation or income tax. 24 The Ohio statutory scheme assimilates its own corporate creations to natural residents and all others to nonresidents. While this classification is a permissible basis for some different rights and liabilities, we have held, as to taxation of intangibles, that the federal right of a nonresident 'is the right to equal treatment.' Hillsborough v. Cromwell, 326 U.S. 620, 623, 66 S.Ct. 445, 448, 90 L.Ed. 358. 25 The certificate of the Tax Commissioner discloses how fundamentally discriminatory is the application of this ad valorem tax to intangibles when owned by a resident or a domestic corporation as contrasted with its application when those are owned by a domesticated corporation or a nonresident. If on the taxing date one of these petitioners and an Ohio competitor each owns an account receivable of the same amount from the same out-of-state customer of the same kind of commodity, both shipped from a manufacturing plant in Ohio and both sold out of Ohio by an agent having an office out of the State, appellant's account receivable would be subject to Ohio's ad valorem tax and the one held by the competing domestic corporation would not. It seems obvious that appellants are not accorded equal treatment, and the inequality is not because of the slightest difference in Ohio's relation to the decisive transaction, but solely because of the different resident of the owner. 26 The State does not seriously deny this unequal application of its own tax but claims that reciprocity provisions of the statute reestablish equality. Those provisions therefore require scrutiny. 27 This entire taxing plan rests on a statutory formula for fixing situs of intangible property both within and without the State. This is provided by § 5328-2 of the Code. These intangibles 'shall be considered to arise out of business transacted in a state other than that in which the owner thereof resides' under certain circumstances. (Emphasis supplied.) This basic rule separates the situs of intangibles from the residence of their owner whereas it has traditionally been at such residence, though with some exceptions. The effect is that intangibles of nonresident owners are assigned a situs within the taxing reach of Ohio while those of its residents are assigned a situs without. The plan may be said to be logically consistent in that, while it draws all such intangibles of nonresidents within the taxing power of Ohio, it by the same formula excludes those of residents. The exempted intangibles of residents are offered up to the taxing power of other states which may embrace this doctrine of a tax situs separate from residence. This is what is meant here by reciprocity, and the two provisions are declared inseparable; so that if the formula by which Ohio takes unto itself the accounts of nonresidents is held invalid, 'such decision shall be deemed also to affect such provision as applied to the property of a resident.' 28 It is hard to see that this offer of reciprocity restores to appellants any of the equality which the application of the Ohio tax, considered alone, so obviously denies. There is no indication of a readiness by other states to copy Ohio's situs scheme so as to tax that which Ohio exempts. The proffered exchange of residents for intangible tax purposes may not commend itself as an even bargain between states. Ohio, being large, populous and highly industrialized, with heavy and basic industries, may well have much more to gain from a plan the effect of which is to tax credit exports to other states, than most states would have from a privilege to tax its own exports into Ohio. In the several years that the Ohio statute has been on the books, no other state has sought to take advantage of the 'reciprocity' proffer. And if it did, the equality of rates which would also be necessary to equalize the burden between nonresidents and their resident competitors could be hardly expected nor is it provided for. Far from acceding to the situs doctrine which allocates these receivables to Ohio, the State of West Virginia stands on the very different situs doctrine approved by this Court in Wheeling Steel Corp. v. Fox, 298 U.S. 193, 56 S.Ct. 773, 80 L.Ed. 1143, and under its authority has for the year in question taxed all of the receivables of the Wheeling Company, including those Ohio seeks to claim as having situs in Ohio. It is clear that this plan of 'reciprocity' is not one which by credits or otherwise protects the nonresident or foreign corporation against the discriminations apparent in the Ohio statute. We think these discriminations deny appellants equal protection of Ohio law. 29 The judgments are reversed and the causes remanded for proceedings not inconsistent herewith. 30 Reversed. 31 By Mr. Justice JACKSON. 32 The writer of the Court's opinion deems it necessary to complete the record by pointing out why, in writing by assignment for the Court, he assumed without discussion that the protections of the Fourteenth Amendment are available to a corporation. It was not questioned by the State in this case, nor was it considered by the courts below. It has consistently been held by this Court that the Fourteenth Amendment assures corporations equal protection of the laws, at least since 1886, Santa Clara Co. v. Southern Pacific R. Co., 118 U.S. 394, 396, 6 S.Ct. 1132, 30 L.Ed. 118, and that it entitles them to due process of law, at least since 1889, Minneapolis R. Co. v. Beckwith, 129 U.S. 26, 28, 9 S.Ct. 207, 32 L.Ed. 585. 33 It is true that this proposition was once challenged by one Justice. Connecticut General Co. v. Johnson, 303 U.S. 77, 83, 58 S.Ct. 436, 439, 82 L.Ed. 673 (dissenting opinion). But the challenge did not commend itself, even to such consistent liberals as Mr. Justice Brandeis and Mr. Justice Stone, and I had supposed it was no longer pressed. See the same Justice's separate opinion in International Shoe Co. v. State of Washington, 326 U.S. 310, 322, 66 S.Ct. 154, 161, 90 L.Ed. 95, 161 A.L.R. 1057, making no mention of this issue. 34 Without pretending to a complete analysis, I find that in at least two cases during this current term the same question was appropriate for consideration, as here. In Railway Express v. New York, 336 U.S. 106, 69 S.Ct. 463, a corporation claimed to be deprived of both due process and equal protection of the law, and in Ott v. Mississippi Barge Line, 336 U.S. 169, 69 S.Ct. 432, a corporation claimed to be denied due process of law. At prior terms, in many cases the question was also inherent, for corporations made similar claims under the Fourteenth Amendment. See, e.g., Illinis Central R. Co. v. Minnesota, 309 U.S. 157, 60 S.Ct. 419, 84 L.Ed. 670; Lincoln Life Insurance Co. v. Read, 325 U.S. 673, 65 S.Ct. 1220, 89 L.Ed. 1861; Queenside Hills Co v. Saxl, 328 U.S. 80, 66 S.Ct. 850, 90 L.Ed. 1096. Although the author of the present dissent was the writer of each of the cited Court's opinions, it was not intimated therein that there was even doubt whether the corporations had standing to raise the questions or were entitled to protection of the Amendment. Instead, in each case the author, as I have done in this case, proceeded to discuss and dispose of the corporation's contentions in their merits, a quite improper procedure, I should think, if the corporation had no standing to raise the constitutional questions. Indeed, if the corporation had no such right, it is difficult to see how this Court would have jurisdiction to consider the case at all. 35 It may be said that in the foregoing cases other grounds might have been found upon which to defeat the corporations' claims, while in the present case apparently there is none. 36 However, in at least two cases this Court, joined by both Justices now asserting that corporations have no rights under the Fourteenth Amendment, recently has granted relief to corporations by striking down state action as conflicting with corporate rights under that Amendment. In Times-Mirror Co. v. California, companion case to Bridges v. California, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346, a newspaper corporation persuaded this Court that a $500 fine assessed against it violated its rights under the Fourteenth Amendment. In Pennekamp v. Florida, 328 U.S. 331, 66 S.Ct. 1029, 90 L.Ed. 1295, a newspaper corporation was convicted along with an individual defendant, and this Court set aside the conviction upon the ground that the Fourteenth Amendment prohibited such state action. In neither or these cases was the corporation's right to raise the issue questioned and the result in each case was irreconcilable with the position now asserted in dissent. 37 It cannot be suggested that in cases where the author is the mere instrument of the Court he must forego expression of his own convictions. Mr. Justice Cardozo taught us how Justices may write for the Court and still reserve their own postions, though overruled. Helvering v. Davis, 301 U.S. 619, 639, 57 S.Ct. 904, 908, 81 L.Ed. 1307, 109 .L.R. 1319. 38 In view of this record I did not, and still do not, consider it necessary for the Court opinion to review the considerations which justify the assumption that these corporations have standing to raise the issues decided. 39 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting. 40 It has been implicit in all of our decisions since 1886 that a corporation is a 'person' within the meaning of the Equal Protection Clause of the Fourteenth Amendment. Santa Clara Co. v. South. Pacific R. Co., 118 U.S. 394, 396, 6 S.Ct. 1132, 30 L.Ed. 118, so held. The Court was cryptic in its decision. It was so sure of its ground that it wrote no opinion on the point, Chief Justice Waite announcing from the bench: 41 'The court does not wish to hear arrgument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.' 42 There was no history, logic, or reason given to support that view. Nor was the result so obvious that exposition was unnecessary. 43 The Fourteenth Amendment became a part of the Constitution in 1868. In 1871 a corporation claimed that Louisiana had imposed on it a tax that violated the Equal Protection Clause of the new Amendment. Mr. Justice Woods (then Circuit Judge) held that 'person' as there used did not include a corporation and added, 'This construction of the section is strengthened by the history of the submission by congress, and the adoption by the states of the 14th amendment so fresh in all minds of as to need no rehearsal.' Insurance Co. v. New Orleans, Fed.Cas.No 7,052, 1 Woods 85, 88. 44 What was obvious to Mr. Justice Woods in 1871 was still plain to the Court in 1873. Mr. Justice Miller in the Slaughter House Cases, 16 Wall. 36, 71, 21 L.Ed. 394, adverted to events 'almost too recent to be called history' to show that the purpose of the Amendment was to protect human rights—primarily the rights of a race which had just won its freedom. And as respects the Equal Protection Clause he stated, 'The existence of laws in the States where the newly emancipated negroes resided, which discriminated with gross injustice and hardship against them as a class, was the evil to be remedied by this clause, and by it such laws are forbidden.' 16 Wall. at page 81, 21 L.Ed. 394. 45 Moreover what was clear to these earlier judges was apparently plain to the people who voted to make the Fourteenth Amendment a part of our Constitution. For as Mr. Justice Black pointed out in his dissent in Connecticut General Co. v. Johnson, 303 U.S. 77, 87, 58 S.Ct. 436, 441, 82 L.Ed. 873, the submission of the Amendment to the people was on the basis that it protected human beings. There was no suggestion in its submission that it was designed to put negroes and corporations into one class and so dilute the police power of the States over corporate affairs. Arthur Twining Hadley once wrote that 'The Fourteenth Amendment was framed to protect the negroes from oppression by the whites, not to protect corporations from oppression by the legislature. It is doubtful whether a single one of the members of a Congress who voted for it had any idea that it would touch the question of corporate regulation at all.'1 46 Both Mr. Justice Woods in Insurance Co. v. New Orleans, supra, Fed.Cas.No. 7,052, 1 Woods page 88, and Mr. ustice Black in his dissent in Connecticut General Co. v. Johnson, supra, 303 U.S. at pages 88-89, 58 S.Ct. at pages 441-442, 82 L.Ed. 673, have shown how strained a construction it is of the Fourteenth Amendment so to hold. Section 1 of the Amendment provides: 47 '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.' (Italics added.) 48 'Persons' in the first sentence plainly include only human beings, for corporations are not 'born or naturalized.' 49 Corporations are not 'citizens' within the meaning of the first clause of the second sentence. Western Turf Ass'n v. Greenberg, 204 U.S. 359, 363, 27 S.Ct. 384, 385, 51 L.Ed. 520; Selover, Bates & Co. v. Walsh, 226 U.S. 112, 126, 33 S.Ct. 69, 72, 57 L.Ed. 146.2 50 It has never been held that they are persons whom a State may not deprive of 'life' within the meaning of the second clause of the second sentence. 51 'Liberty' in that clause is 'the liberty of natural, not artificial, persons.' Western Turf Ass'n v. Greenberg, supra, 204 U.S. at page 363, 27 S.Ct. at page 385, 386, 51 L.Ed. 520. 52 But 'property' as used in that clause has been held to include that of a corporation since 1889 when Minneapolis R. Co. v. Beckwith, 129 U.S. 26, 9 S.Ct. 207, 32 L.Ed. 585, was decided. 53 It requires distortion to read 'person' as meaning one thing, then another within the same clause and from clause to clause. It means, in my opinion, a substantial revision of the Fourteenth Amendment. As to the matter of construction, the sense seems to me to be with Mr. Justice Woods in Insurance Co. v. New Orleans, supra, Fed.Cas.No. 7,052, 1 Woods at page 88, where he said, 'The plain and evident meaning of the section is, that the persons to whom the equal protection of the law is secured are persons born or naturalized or endowed with life and liberty, and consequently natural and not artificial persons.' 54 History has gone the other way. Since 1886 the Court has repeatedly struck down state legislation as applied to corporations on the ground that it violated the Equal Protection Clause.3 Every one of our decisions upholding legislation as applied to corporations over the objection that it violated the Equal Protection Clause has assumed that they are entitled to the constitutional protection. But in those cases it was not necessary to meet the issue since the state law was not found to contain the elements of discrimination which the Equal Protection Clause condemns. But now that the question is squarely presented I can only conclude that the Santa Clara case was wrong and should be overruled. 55 One hesitates to overrule cases even in the constitutional field that are of an old vintage. But that has never been a deterrent heretofore4 and should not be now. 56 We are dealing with a question of vital concern to the people of the nation. It may be most desirable to give corporations this protection from the operation of the legislative process. But that question is not for us. It is for the people. If they want corporations to be treated as humans are treated, if they want to grant corporations this large degree of emancipation from state regulation,5 they should say so. The Constitution provides a method by which they may do so. We should not do it for them through the guise of interpretation. 1 Pertinent parts of the Ohio law read as follows: 'Sec. 5328-1: * * * Property of the kinds and classes mentioned in section 5328-2 of the General Code, used in and arising our of business transacted in this state by, for or on behalf of a non-resident person * * * shall be subject to taxation; and all such property of persons residing in this state used in and arising out of business transacted outside of this state by, for or on behalf of such persons * * * shall not be subject to taxation * * *. 'Sec. 5328-2: Property of the kinds and classes herein mentioned, when used in business, shall be considered to arise out of business transacted in a state other than that in which the owner thereof resides in the cases and under the circumstances following: 'In the case of accounts receivable, when resulting from the sale of property sold by an agent having an office in such other state or from a stock of goods maintained therein, or from services performed by an officer, agent or employe connected with, sent from, or reporting to any officer or at any office located in such other state. 'The provisions of this section shall be reciprocally applied, to the end that all property of the kinds and classes mentioned in this section having a business situs in this state shall be taxed herein and no property of such kinds and classes belonging to a person residing in this state and having a business situs outside of this state shall be taxed. It is hereby declared that the assignment of a business situs outside of this state to property of a person residing in this state in any case and under any circumstances mentioned in this section is inseparable from the assignment of such situs in this state to property of a person residing outside o this state in a like case and under similar circumstances. * * * Sec. 5-1: * * * Moneys, deposits, investments, accounts receivable and prepaid items, and other taxable intangibles shall be considered to be 'used' when they or the avails thereof are being applied, or are intended to be applied in the conduct of the business, whether in this state or elsewhere. * * * 'Sec. 5638: Annual taxes are hereby levied on the kinds and classes of intangible property, hereinafter enumerated, on the classified tax list in the offices of the county auditors and duplicates thereof in the offices of the county treasurers at the following rates, to wit: '* * * moneys, credits and all other taxable intangibles so listed, three mills on the dollar. * * * 'Sec. 5327: The term 'credits' as so used, means the excess of the sum of all current accounts receivable and prepaid items (used) in business when added together estimating every such account and item at its true value in money, over and above the sum of current accounts payable of business, other than taxes and assessments. * * *' Ohio Gen.Code Ann. (1945). 2 150 Ohio St. 229, 80 N.E.2d 863. 3 28 U.S.C. § 1257(2), 28 U.S.C.A. § 1257(2). 1 The Constitutional Position of Property in America, 64 Independent 834, 836 (1908). He went on to say that the Dartmouth College case, 4 Wheat. 518, 4 L.Ed. 629, and the construction given the Fourteenth Amendment in the Santa Clara case 'have had the effect of placing the modern industrial corporation in an almost impregnable constitutional position.' Id., p. 836. As to whether the framers of the Amendment may have had such an undisclosed purpose see Graham, The 'Conspiracy Theory' of the Fourteenth Amendment, 47 Yale L.J. 371. 2 Cf. McGovney, A Supreme Court Fiction, 56 Harv.L.Rev. 853, 1090, 1225, dealing with corporations in the diverse citizenship jurisdiction of the federal courts. 3 See Chicago & R. Co. v. Minnesota, 134 U.S. 418, 10 S.Ct. 462, 702, 33 L.Ed. 970; Gulf, Colorado & Santa Fe R. Co. v. Ellis, 165 U.S. 150, 17 S.Ct. 255, 41 L.Ed. 666; Cotting v. Kansas City Stockyards Co., 183 U.S. 79, 22 S.Ct. 30, 46 L.Ed. 92; Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 22 S.Ct. 431, 46 L.Ed. 679; Southern R. Co. v. Greene, 216 U.S. 400, 30 S.Ct. 287, 54 L.Ed. 536; Herndon v. Chicago, Rock Island & Pac. R. Co., 218 U.S. 135, 30 S.Ct. 633, 54 L.Ed. 970; Roach v. Atchison, T. & Santa Fe R. Co., 218 U.S. 159, 30 S.Ct. 639, 54 L.Ed. 978; Atchison & Santa Fe R. Co. v. Vosburg, 238 U.S. 56, 35 S.Ct. 675, 59 L.Ed. 1119, L.R.A.1915E, 953; Gast Realty Co. v. Schneider Granite Co., 240 U.S. 55, 36 S.Ct. 400, 60 L.Ed. 1239; McFarland v. American Sugar Co., 241 U.S. 79, 36 S.Ct. 498, 60 L.Ed. 899; Royster Guano Co. v. Virginia, 253 U.S. 12, 40 S.Ct. 560, 64 L.Ed. 989; Bethlehem Motors Co. v. Flynt, 256 U.S. 421, 41 S.Ct. 571, 65 L.Ed. 1029; Kansas City So. 14 Co. v. Road Imp. Dist. No. 6, 256 U.S. 658, 41 S.Ct. 604, 65 L.Ed. 1151; Chicago & N.W.R. Co. v. Nye Co., 260 U.S. 35, 43 S.Ct. 55, 67 L.Ed. 115; Sioux City Bridge v. Dakota County, 260 U.S. 441, 43 S.Ct. 190, 67 L.Ed. 340, 28 A.L.R. 979; Thomas v. Kansas City So. R. Co., 261 U.S. 481, 43 S.Ct. 440, 67 L.Ed. 758; Kentucky Co. v. Paramount Exch., 262 U.S. 544, 43 S.Ct. 636, 67 L.Ed. 1112; Air-Way Corp. v. Day, 266 U.S. 71, 45 S.Ct. 12, 69 L.Ed. 169; Hanover Ins. Co. v. Harding, 272 U.S. 494, 47 S.Ct. 179, 71 L.Ed. 372, 49 A.L.R. 713; Power Co. v. Saunders, 274 U.S. 490, 47 S.Ct. 678, 71 L.Ed. 1165; Louisville Gas Co. v. Coleman, 277 U.S. 32, 48 S.Ct. 423, 72 L.Ed. 770; Quaker City Cab Co. v. Pennsylvania, 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927; Cumberland Coal Co. v. Board, 284 U.S. 23, 52 S.Ct. 48, 76 L.Ed. 146; Liggett Co. v. Lee, 288 U.S. 517, 53 S.Ct. 481, 77 L.Ed. 929, 85 A.L.R. 699; Concordia Ins. Co. v. Illinois, 292 U.S. 535, 54 S.Ct. 830, 78 L.Ed. 1411; Stewart Dry Goods Co v. Lewis, 294 U.S. 550, 55 S.Ct. 525, 79 L.Ed. 1054; Mayflower Farms v. Ten Eyck, 297 U.S. 266, 56 S.Ct. 457, 80 L.Ed. 675; Hartford Co. v. Harrison, 301 U.S. 459, 57 S.Ct. 838, 81 L.Ed. 1223. 4 In re Ayers, 123 U.S. 443, 8 S.Ct. 164, 31 L.Ed. 216, overruled in part Osborn v. United States Bank, 9 Wheat. 738, 6 L.Ed. 204, a decision 63 years old; Leisy v. Hardin, 135 U.S. 100, 10 S.Ct. 681, 34 L.Ed. 128, overruled Peirce v. New Hampshire, 5 How. 504, 12 L.Ed. 256, a decision 42 years old. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, overruled Swift v. Tyson, 16 Pet. 1, 10 L.Ed. 865, a decision 95 years old; Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927, 120 A.L.R. 1466, overruled Collector v. Day, 11 Wall. 113, 20 L.Ed. 122, a decision 68 years old. United States v. South Eastern Underwriter's Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440, overruled in part Paul v. Virginia, 8 Wall. 168, 19 L.Ed. 357, a decision 75 years old. 5 The restrictions on state power which are contained in the Commerce Clause and which may prevent the States from burdening interstate commerce, see Southern Pacific Co. v. Arizona, 325 U.S. 761, 65 S.Ct. 1515, 89 L.Ed. 1915; Morgan v. Virginia, 328 U.S. 373, 66 S.Ct. 1050, 90 L.Ed. 1317, 165 A.L.R. 574; or discriminating against it, see Nippert v. Richmond, 327 U.S. 416, 66 S.Ct. 586, 90 L.Ed. 760, 162 A.L.R. 844, rise from a different source and are not relevant here.

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337 U.S. 662 69 S.Ct. 1264 93 L.Ed. 1613 INTERSTATE OIL PIPE LINE CO.v.STONE, Chairman State Tax Commission. No. 287. Argued Jan. 13, 1949. Decided June 20, 1949. Rehearing Denied Oct. 10, 1949. See 70 S.Ct. 32. Appeal from the Supreme Court of the State of Mississippi. Mr. Phelan H. Hunter, Tulsa, Okl., for appellant. Mr. J. H. Sumrall, Jackson, Miss., for appellee. Mr. Justice RUTLEDGE announced the judgment of the Court and the following opinion, in which Mr. Justice BLACK, Mr. Justice DOUGLAS and Mr. Justice MURPHY join. 1 This appeal questions the power of Mississippi, as affected by the commerce clause, to impose a tax measured by gross receipts from the operation of a pipe line wholly within the state. 2 Appellant is a Delaware corporation which has qualified to do business in Mississippi as a foreign corporation. It owns and operates pipe lines which are used to transport oil from lease tanks in various oil fields in Mississippi to loading racks adjacent to railroads elsewhere in the state.1 From these racks the oil is pumped into railroad tank cars for shipment outside the state. If there are no tank cars available the oil is stored in tanks near the racks. But such delays in loading are usually of short duration and never exceed a week, according to appellant's uncontradicted statement. When delivered to appellant the oil is accompanied by shipping orders from the producer or owner directing that the oil be transported to out-of-state destinations. There are no refineries in Mississippi. There is no through bill of lading from the point of origin at the fields to the destination outside the state. Appellant ships the oil by rail as agent of the owner on bills of lading showing the owner as shipper, the appellant as agent of the shipper and indicating the destination specified in the shipping orders issue to appellant. Appellant is paid by the producer at the rate per barrel specific in its tariff2 from the gathering point to the rack and is paid an additional charge for loading the oil in the tank cars. 3 The chairman of the Mississippi State Tax Commission, appellee, levied a tax against appellant for the years 1944, 1945 and the first half of 1946, in the sum of $20,296.36, measured by appellant's receipts for transporti g oil from the lease tanks to the railroad loading platforms, pursuant to the following sections of the Mississippi Code, Miss. Code, 1942, Ann., tit. 40, c. 3, §§ 10105, 10109 (Supp. 1948), which provide: 4 '10105. There is hereby levied and shall be collected annual privilege taxes, measured by the amount or volume of business done, against the persons, on account of the business activities, and in the amounts to be determined by the application of rates against values, or gross income, or gross proceeds of sales, as the case may be, as follows (see sections following):' 5 '10109. * * * Upon every person engaging or continuing within this state in the business of operating a pipe line for transporting for compensation or hire from one point to another in this state oil or natural gas or artificial gas through pipes or conduits in this state, there is likewise hereby levied and shall be collected a tax, on account of the business engaged in, equal to two per cent of the gross income of the business. * * * 'There shall be excepted from the gross income used in determining the measure of the tax imposed in this section so much thereof as is derived from the business conducted in commerce between this state and other states of the United States, or between this state and foreign countries which the state of Mississippi is prohibited from taxing under the constitution of the United States of America. * * *'3 6 The State Tax Commission sustained the assessment. The trial court dismissed a declaration seeking review of the Commission's action. The Supreme Court of Mississippi affirmed that judgment, overruling appellant's contention that because the tax was levied on the privilege of conducting an interstate business and measured by gross receipts therefrom the tax could not be imposed without offending the commerce clause of the Federal Constitution. 203 Miss. 715, 35 So.2d 73. 7 The state supreme Court held that the operation of these pipe lines between points within the state was intrastate rather than interstate commerce, and that the tax was therefore 'merely on the privilege of operating a pipe line wholly within this State as a local activity. * * * a tax on the privilege of doing an intrastate business, and measured by a percent of gross income as a matter of convenience.' 203 Miss. at 715, 35 So.2d at page 81. 8 Appellant contends that operation of the pipe lines between points in Mississippi was in fact interstate commerce, and that the tax was construed by the Supreme Court of Mississippi to be a tax on the privilege of operating the pipe lines. From these premises, together with the major premise that no state can tax the privilege of engaging in interstate commerce, appellant concludes that the tax may not constitutionally be imposed. 9 We do not pause to consider whether the business of operating the intrastate pipe lines is interstate commerce for, even if we assume that it is, Mississippi has power to impose the tax involved in this case. Further, we do not find it necessary to dispute that the Supreme Court of Mississippi construed the statute as imposing a tax on the privilege of operating a pipe line wholly within the state, and not a tax solely upon the 'local activities of 'maintaining, keeping in repair, and otherwise in manning the facilities" situated in Mississippi, Memphis Gas Co. v. Stone, 335 U.S. 80, 92—93, 68 S.Ct. 1475, 1481, 92 L.Ed. 1832, or upon the gross receipts themselves, Central Greybound Lines v. Mealey, 334 U.S. 653, 68 S.Ct. 1260, 92 L.Ed. 1633. While we are of course bound by the constructio given a state statute by the highest court of the State,4 we are concerned with the practical operation of challenged state tax statutes, not with their descriptive labels.5 10 The statute is not invalidated by the commerce clause of the Federal Constitution merely because, unlike the statute attacked in Memphis Gas Co. v. Stone, supra, it imposes a 'direct' tax on the 'privilege' of engaging in interstate commerce.6 Any notions to the contrary should not have survived Maine v. Grand Trunk R. Co., 142 U.S. 217, 12 S.Ct. 121, 163, 35 L.Ed. 994, which flatly rules the case at bar. That case sustained a state statute which imposed upon an interstate railroad corporation 'an annual excise tax (measured by apportioned gross receipts), for the privilege of exercising its franchises in this State.'7 The Grand Trunk decision has been approved by this Court as recently as the other controlling case of Central Greyhound Lines v. Mealey, supra, 334 U.S. at page 658, 663, 68 S.Ct. at pages 1263, 1266, 92 L.Ed. 1633, in which the Court permitted New York to impose a tax on the gross receipts from the operation of an interstate bus line, provided that tax was apportioned according to mileage traveled within the state. The Mealey case is not distinguished by saying that it involved only a tax on gross receipts and not a tax on interstate commerce itself, for gross receipts taxes have long been regarded as 'direct' in cases which are supposed to support the proposition that 'direct' taxes on interstate commerce are invalid under the commerce clause.8 11 Since all the activities upon which the tax is imposed are carried on in Mississippi, there is no due process objection to the tax.9 The tax does not discriminate against interstate commerce in favor of competing intrastate commerce of like character.10 The nature of the subject of taxation makes apportionment unnecessary; there is no attempt to tax interstate activity carried on outside Missi sippi's borders. No other state can repeat the tax.11 For these reasons the commerce clause does not invalidate this tax. 12 The judgment is affirmed. 13 Affirmed. 14 Mr. Justice BURTON, concurring. 15 I join in the judgment of affirmance announced by the Court but do not join in the opinion rendered in support of it. 16 I concur in the judgment solely on the ground that the tax imposed by the State of Mississippi was a tax on the privilege of operating a pipe line for transporting oil in Mississippi in intrastate commerce and that, as such, it was a valid tax. The Supreme Court of Mississippi, in the case below, 203 Miss. 715, 35 So.2d 73, held that this tax had been authorized by a statute of that State, Miss. Code Ann. §§ 10105, 10109 (1942), and, for the reasons stated by that court, I believe that neither the statute nor the application of the tax in the present instance violated the Constitution of the United States. On that basis, there is no issue here as to the validity of a tax upon the privilege of transporting oil in Mississippi in interstate commerce. 17 Mr. Justice REED, with whom The CHIEF JUSTICE, Mr. Justice FRANKFURTER and Mr. Justice JACKSON joint dissenting. 18 Mississippi's effort to collect a privilege tax from this appellant for 'operating a pipe line' is upheld by this Court through two separately expressed theories. One, that the activities taxed are wholly intrastate and the other that even though the privilege taxed is for the carrying on of wholly intertate operations, such a privilege tax is permissible. As each theory may have effect far beyond this particular case, we think it advisable to state the reasons for our disagreement with both. 19 The tax which Mississippi demanded, and which appellant is now trying to recover, was computed only upon appellant's receipts as a common carrier for transporting oil from the lease tanks to the railroad loading platforms within the state. The Supreme Court of Mississippi upheld this tax on the ground that the activity producing the receipts was intra- rather than interstate commerce. At one point in its opinion, the Supreme Court of Mississippi said that the tax 'had been collected for the privilege of operating the pumping machinery and other pipe line equipment in the transportation of oil in the manner hereinbefore set forth * * *.' Interstate Oil Pipeline Co. v. Stone, 203 Miss. 715, 35 So.2d 73, 75. See an opinion of three members of this Court in Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832. The section here in question gives no indication of such a purpose. It thus differs widely from the statute under consideration in the Memphis case with its definition of 'doing business.' See Stone v. Memphis Natural Gas Co., 201 Miss. 670, 29 So.2d 268, 270. Since this statute did not apply to pipe lines reaching across the state line, we conclude that the Supreme Court did not mean by these words to indicate that the privilege tax of § 10109 for 'operating a pipe line' was for the privilege of operating pumping machinery or other equipment as incidents apart from the flow of the interstate commerce. Cf. Coverdale v. Pipe Line Co., 303 U.S. 604, 58 S.Ct. 736, 82 L.Ed. 1043. Such an interpretation would be inconsistent with the nonliability for the tax of pipe lines, admittedly doing an interstate business. The tax, it said, was 'merely on the privilege of operating a pipe line wholly within this State as a local activity. * * * a tax on the privilege of doing an intrastate business, and measured by a percent of gross income as a matter of convenience.' 35 So.2d at page 81. The opinion emphasizes that in the view of the state court it is the intrastate character of the transportation that makes it permissible to charge the appellant a tax for the privilege of 'engaging * * * in the business of operating a pipe line.' § 10109.1 It considered taxability of the transportation in the light of Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715, and Champlain Realty Co. v. Town of Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309, 25 A.L.R. 1195. 20 First. From the facts, §§ 10105 and 10109 of the statute, and the opinion of the Supreme Court of Mississippi, we believe that this statute was determined by the state to impose a privilege tax for carrying on the intrastate business of common carrier of oil in Mississippi and that the amount of that privilege tax was to be determined by a measure two percent of the gross income—of that intrastate business. Mississippi's interpretation of the meaning of its statute is binding on this Court.2 A federal question at once emerges—whether the shipment of the oil from the gathering point to the railroad loading racks, both points being in Mississippi, is intra- or interstate transportation. This we decide for ourselves from the undisputed facts in this record.3 Our first inquiry then must be as to whether the transportation of this oil, wholly within Mississippi from origin to railroad loading racks, is in interstate or intrastate commerce.4 21 In the absence of a rule written into the Constitution or enacted by Congress to determine what transportation is interstate and what intrastate, the courts have been required to determine the character of the transportation, case by case, as it became necessary to reach a judicial conclusion. It was decided years ago in The Daniel Ball, 10 Wall. 557, 19 L.Ed. 999, as to navigation on a waterway within a single state, disconnected from any other transportation system leading to or from other states, that the carriage of freight destined for or received from places outside the state of navigation was interstate commerce and made the boat subject to regulation by Congress.5 The wording of a judicial declaration of the precise line that marks the change from intrastate movement to interstate movement has been difficult. In Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715, a case that dealt with the taxability by New Hampshire of logs moved from her forests to a place of shipment in readiness for out-of-state transportation at the convenience of the owner, this Court held the logs taxable. The theory was that the first movement was preliminary to the interstate transportation,6 because of the deliberate detention to await a suitable time for shipment across a state line. Kelley v. Rhoads, 188 U.S. 1, 6, 23 S.Ct. 259, 261, 47 L.Ed. 359. But where there was no intentional delay, only they use of a 'harbor of refuge,' the interstate transportation by floatage began when the logs were put into the water. Champlain Realty Co. v. Town of Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309, 25 A.L.R. 1195.7 Incidental dealings with the moving commodity do not break the interstate journey.8 Recently we have considered the effect of 'split' means of transportation as to whether the transportation was interstate. United States v. Capital Transit Co., 325 U.S. 357, 363, 65 S.Ct. 1176, 1179, 89 L.Ed. 1663. There a traveler went from the District of Columbia via streetcar or bus to a bus terminal and from there by a different bus to nearby Virginia. We held this to be interstate transportation.9 22 Comment should be made as to several precedents that might be thought contrary to the rather definite line marking the beginning of interstate commerce that appears in the above cases. These are the so-called casual or incidental movements of transportation wholly within a single state immediately preceding or following recognized interstate transportation. They were referred to in Coe v. Errol, supra, as haulage preliminary to consignment to interstate carriers. This involves the vehicles that carry passengers or freight to or from terminals in their interstate movement.10 An int rstate journey must have a beginning and an end. Common sense rejects an extension of the journey to the traveler's front door or the producer's farm or factory when no through order for carriage is in effect. The exact limits of interstate commerce in such fringe situations are uncertain.11 23 We are of the view, however, that the reach of interstate commerce goes to the delivery to Interstate, a common carrier, of the oil by the producer with his tender of shipment. That offer, when accepted, by its form is an order covering the amount of oil, origin and out-of-state destination, and the route and tariff under which shipment is made. The commodity has been placed in the stream of commerce and will cross state lines in the regular course of business. We have held that shipping instructions, given to a freight conductor on a common carrier prior to any movement, put a car into interstate commerce12 when the instructions were for shipment to an out-of-state destination after a preliminary transit between points in the state of loading. When a shipper delivers his commodity to a common carrier with instructions for billing by such carrier without purposeful delay via another or other common carriers to an out-of-state destination, we think interstate commerce has begun. Such an application of the commerce clause to transportation accords with that given to regulation of other phases of interstate commerce.13 The absence of a through bill of lading is not significant. It is true that the shipment might be diverted to an intrastate destination without crossing a state line but that cannot change the character of the commerce until such diversion order is given. The movement in commerce has begun by the order and the delivery and continues until the commodity is restored to the mass of property whithin a state by the termination of the transportation. See Joy Oil Co. v. State Tax Commission, 337 U.S. 286, 69 S.Ct. 1075. 24 Second. Mississippi determined that this tax was a privilege tax for carrying on the intrastate business of common carrier of oil in Mississippi, measured by a percentage of the income from that business. The preceding subdivision of this opinion expounds the arguments for our conclusion that all the business of appellant in operating a pipe line for transporting oil committed to move out-of-state from one point to another in Mississippi is interstate transportation. The statute in question was interpreted by Mississippi as laying a tax solely upon that business of transporting oil, not upon the 'local activities of 'maintaining, eeping in repair and otherwise in manning the facilities" such as are discussed in the opinions in the undecisive case of Memphis Natural Gas Co. v. Stone, 335 U.S. 80, at page 92—93, 68 S.Ct. 1475, 1482, 92 L.Ed. 1832. 25 An opinion has been filed in this case, asserting that the Mississippi tax could be collected from the petitioner notwithstanding that its entire business is interstate of 'maintaining, keeping in repair and otherwise in manning the facilities" transportation business, the privilege tax exacted by Mississippi is actually a privilege tax for carrying on the interstate business of common carrier of oil, measured by a percentage of the gross income from that business, apportioned so as to include only income derived from that portion of the interstate commerce carried on wholly in Mississippi. The gross receipts from interstate commerce are the costs of carriage from point of origin the field tanks—to the point of destination—the out-of-state refinery. As only that portion of the costs covering the carriage from origin to pipe-line loading racks, both points in Mississippi, is used to measure the privilege tax, it is clear that the interstate gross receipts are apportioned to carriage wholly within the state. Our issue at this point is whether a privilege tax for carrying on a wholly interstate transportation business measured by a fairly apportioned part of gross receipts for carriage in interstate commerce is constitutionally permissible. 26 Phrased in terms of a privilege for carrying on an interstate business, such a tax historically has been deemed unconstitutional. The cases abound in statements to the effect that the privilege of carrying on interstate commerce itself is immune from state taxation. This is because it is a privilege beyond the power of a state to grant. '* * * it is a right which every citizen of the United States (and every corporation) is entitled to exercise under the constitution and laws of the United States; * * *'. Crutcher v. Kentucky, 141 U.S. 47, 57, 11 S.Ct. 851, 853, 35 L.Ed. 649; International Textbook Co. v. Pigg, 217 U.S. 91, 30 S.Ct. 481, 54 L.Ed. 678, 27 L.R.A.,N.S., 493, 18 Ann.Cas. 1103. The cases hold not only that a state may not exact a tax as a condition precedent to the doing of interstate business, but also that it may not levy privilege, excise or franchise taxes on a foreign corporation for the privilege of carrying on or the actual doing of solely interstate business after its admission to the state.14 Ozark Pipe Line Corp. v. Monier, 266 U.S. 555, 45 S.Ct. 184, 69 L.Ed. 439; Alpha Portland Cement Co. v. Massachusetts, 268 U.S. 203, 45 S.Ct. 477, 69 L.Ed. 916, 44 A.L.R. 1219; Cf. Anglo-Chilean Nitrate Sales Corp. v. Alabama, 288 U.S. 218, 53 S.Ct. 373, 77 L.Ed. 710, in the light of Southern Natural Gas Corp. v. Alabama, 301 U.S. 148, 153, 57 S.Ct. 696, 698, 81 L.Ed. 970.15 The decisions in these cases were reached in spite of the fact that in each of them the tax sought to be levied was fairly measured according to the connections of the corporate taxpayer with the state. Thus in Ozark the tax was measured by a percentage of the capital stock and surplus of the corporation employed in business in the state, that proportion being deemed employed within the state 'that its property and assets in this state bears to all its property and assets wherever located' (266 U.S. 555, 45 S.Ct. 185); in Alpha by a percentage of the value of the 'corporate excess' employed within the commonwealth (determined as in Ozark) and a percentage of 'that part of its net income * * * which is derived from business carried on within the commonwealth' (268 U.S. 203, 45 S.Ct. 477) (also determined as in Ozark); in Anglo-Chilean by a percentage of capital employed in the state. 27 A recent pronouncement of this Court has recognized this limitation on state power. In Aero Mayflower Transit Co. v. Com'rs, 332 U.S. 495, 68 S.Ct. 167, 92 L.Ed. 99, we upheld a tax on motor carriers only after stressing the fact that the tax was 'affirmatively laid for the privilege of using the state's highways' and was not imposed upon 'the privilege of doing the interstate business.' 332 U.S. at p. 504, 68 S.Ct. at page 172, 92 L.Ed. 99. See Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 88, note 10, 68 S.Ct. 1475, 1479, 92 L.Ed. 1832. Where the corporate taxpayer conducts intrastate as well as interstate business, a franchise privilege or excise tax on the former is of course permissible.16 We have frequently upheld such a tax although it was measured by property or receipts which were used in or attributable to interstate business.17 28 The growth of commerce that is carried on in more than one state has brought responsibilities to states other than the one in which the commerce may be said to have originated. Producers either directly or through middlemen and independent dealers distribute natural resources, agricultural and manufactured products on a nation-wide scale. Transportation runs across state lines. All states are called upon to give governmental services for this commerce—service that costs and should be paid for by those who profit from its maintenance. In the absence of congressional direction as to the taxation of interstate commerce, this Court has interpreted the commerce clause to permit state nondiscriminatory taxation for the use of state facilities, upon the property used in interstate commerce, upon production for commerce and upon net proceeds therefrom. Through such taxes, the states may exact payment for their protection and encouragement of commerce. Joseph v. Carter & Weekes Stevedoring Co., 330 U.S. 422, 429, 67 S.Ct. 815, 819, 91 L.Ed. 993, and cases cited. We have upheld a tax on gross receipts from interstate transportation when 'apportioned as to the mileage within the State.' Central Greyhound Lines v. Mealey, 334 U.S. 653, 663, 68 S.Ct. 1260, 1266, 92 L.Ed. 1633.18 29 Notwithstanding the wide latitude for taxation of incidents connected with interstate commerce, see Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832, this Court has never interpreted the commerce clause to allow a state tax for the privilege of carrying on interstate commerce or one upon that commerce itself. Joseph v. Carter & Weekes Stevedoring Co., 330 U.S. 422, 67 S.Ct. 815, 91 L.Ed. 993. This is not because of the financial burden. Other taxes may equally burden the commerce. It is not because in transportation the same result cannot be obtained by levying a tax for intrastate activities measured by gross receipts appropriately apportioned to the activities in the state. It is because the commerce clause of the Constitution does not leave to the states any power to permit or refuse the carrying on of interstate commerce. It likewise bars a state from taxing the privilege of doing interstate commerce or the doing of interstate commerce, with or without fair apportionment even if not discriminatory. 30 Maine v. Grand Trunk R. Co., commented upon in note 18, is inapposite to the taxation here attempted by Mississippi. Interstate did a wholly interstate business. Grand Trunk, concerning a tax on the privilege of exercising a franchise in Maine, can only be reconciled with the later cases commented upon at note 15 if Grand Trunk did an intrastate as well as an interstate business. A state franchise tax for this is permissible. See notes 16 and 17, supra. The method of apportionment employed in the Grand Trunk case has had approval as recently as the Greyhound case, 334 U.S. at page 663, 68 S.Ct. 1260, 1266, 92 L.Ed. 1633. There was no approval of Grand Trunk in Greyhound as a precedent for a tax on the privilege of doing an interstate business. See 334 U.S. at p. 658, 68 S.Ct. at page 1263, 92 L.Ed. 1633. 31 Control of interstate commerce passed into the hands of Congress and thus welded the Federation into a Nation So long as states are forbidden to impose taxes upon interstate commerce or for the privilege of carrying it on, a toll cannot be exacted from interstate commerce even if a similar tax is borne by local commerce. So, interstate commerce is not susceptible to taxation, as such, and thus has been protected against exactions aimed at it, no matter how nondiscriminatory. It may be taxed only under enactments which likewise tax intrastate commerce for like intrastate activities. It gets no advantage over intrastate commerce from anything furnished by the state and pays the state nothing for what the state doesn't possess, that is, the power to allow interstate business within its borders. 32 All interstate commerce thus has free access to local markets subject only to nondiscriminatory taxes such as the tax on apportioned gross receipts from intrastate mileage as in Central Greyhound Lines v. Mealey, supra, or the tax on disconnected local incidents as discussed in the opinions in Memphis Natural Gas Co. v. Stone, supra, or in International Harvester Co. v. Evatt, supra, or American Manufacturing Co. v. City of St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084. So long as a tax on the privilege of doing interstate business or a tax on the doing of that business is prohibited, interstate commerce remains free from state exactions levied on that commerce. Yet that commerce must bear like intrastate commerce the cost of those facilities or protections apart from the interstate commerce itself which the state furnishes or allows within its borders. Such as been and is the freedom that the commerce clause grants to those engaged in commerce between the states. 33 The judgment should be reversed. 1 Appellant also gathers oil which is transported through the Mississippi pipe lines directly into interstate trunk lines, through which the oil is carried outside the state. Mississippi has not attempted to tax the receipts attributable to shipments of this kind. 2 All appellant's transportation of oil in Mississippi is covered by tariffs which are published and filed with the Interstate Commerce Commission as required by the Interstate Commerce Act as amended, 49 U.S.C. §§ 1(1), 1(3), and 6, 49 U.S.C.A. §§ 1(1, 3), 6. 3 Other provisions of the Mississippi Code not here involved impose franchise, net income and ad valorem property taxes, all of which appellant paid for the years involved. This fact does not of course preclude Mississippi from exacting a different tax for the protection upon which one or more of these taxes is based. E.g., Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 85, 68 S.Ct. 1475, 1477, 92 L.Ed. 1832. 4 State of Minnesota ex rel. Pearson v. Probate Court. 309 U.S. 270, 273, 60 S.Ct. 523, 525, 84 L.Ed. 744, 126 A.L.R. 530; Guaranty Trust Co. v. Blodgett, 287 U.S. 509, 513, 53 S.Ct. 244, 245, 77 L.Ed. 463. 5 International Harvester Co. v. Dept. of Treasury, 322 U.S. 340, 346, 347, 64 S.Ct. 1019, 1022, 88 L.Ed. 1313; Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 363, 61 S.Ct. 586, 588, 85 L.Ed. 888, 132 A.L.R. 475. 6 See concurring opinion in Freeman v. Hewit, 329 U.S. 249, 259, 67 S.Ct. 274, 280, 91 L.Ed. 265. 7 Nothing in the Grand Trunk opinion suggests the explanation hazarded by Mr. Justice Holmes in Galveston, H. & S.A.R. Co. v. Texas, 210 U.S. 217, 226, 28 S.Ct. 638, 639, 52 L.Ed. 1031, that the tax in the Grand Trunk case was sustained on the ground that it was imposed in lieu of ad valorem taxes. A copy of the statute reprinted in the margin of the Reports discloses that the tax was 'in lieu of all taxes upon such railroad, its property and stock,' except that cities and towns were permitted to tax not only all buildings owned by the railroad but also railroad-owned 'lands and fixtures' outside the right of way. 142 U.S. 217—218, n. 1, 12 S.Ct. 163, 35 L.Ed. 994. 8 See the cases discussed in Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 255—257, 58 S.Ct. 546, 548, 549, 82 L.Ed. 823, 115 A.L.R. 944; Concurring opinion in Freeman v. Hewit, 329 U.S. 249, 264—266, 67 S.Ct. 274, 282, 283, 91 L.Ed. 265. As the cited discussions point out, most of the cases invalidating 'direct' taxes on interstate commerce are explicable on the ground that the taxes were not fairly apportioned. But cf. the following cases, which involve apportioned franchise or privilege taxes measured by a standard other than gross receipts: Ozark Pipe Line Corp. v. Monier, 266 U.S. 555, 45 S.Ct. 184, 69 L.Ed. 439; Alpha Portland Cement Co. v. Massachusetts, 268 U.S. 203, 45 S.Ct. 477, 69 L.Ed. 916, 44 A.L.R. 1219; cf. Anglo-Chilean Nitrate Sales Corp. v. Alabama, 288 U.S. 218, 53 S.Ct. 373, 77 L.Ed. 710. 9 Nippert v. City of Richmond, 327 U.S. 416, 423—424, 66 S.Ct. 586, 589, 590, 90 L.Ed. 760, 162 A.L.R. 844; Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444—445, 61 S.Ct. 246, 249, 250, 85 L.Ed. 267, 130 A.L.R. 1229, separate opinion in International Harvester Co. v. Dept. of Treasury, 322 U.S. 340, 352—353, 64 S.Ct. 1019, 1032, 88 L.Ed. 1313, concurring opinion in Freeman v. Hewit. 329 U.S. 249, 271, 67 S.Ct. 274, 286, 91 L.Ed. 265; concurring opinion in Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 96, 68 S.Ct. 1475, 1483, 92 L.Ed. 1832. 10 Best & Co. v. Maxwell, 311 U.S. 454, 61 S.Ct. 334, 85 L.Ed. 275; Hale v. Bimco Trading Co., 306 U.S. 375, 59 S.Ct. 526, 83 L.Ed. 771; Guy v. City of Baltimore, 100 U.S. 434, 25 L.Ed. 743. 11 Cf. Gwin, White & Prince v. Henneford, 305 U.S. 434, 439 440, 59 S.Ct. 325, 327, 328, 83 L.Ed. 272; Adams Mfg. Co. v. Storen, 304 U.S. 307, 311—312, 58 S.Ct. 913, 915, 916, 82 L.Ed. 1365, 117 A.L.R. 429; Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 255—257, 58 S.Ct. 546, 548, 549, 82 L.Ed. 823, 115 A.L.R. 944. 1 'Hence, the statute was designed only for the purpose of taxing the privilege of operating a pipe line for transporting the oil from one point to another in the State where it is then delivered to an interstate carrier prior to the beginning of its ultimate passage to a foreign state in interstate commerce. Most assuredly, no pipe line company would be deemed justified in installing an oil gathering system to transport oil other than that destined for ultimate interstate shipment, there being no oil refineries here.' 35 So.2d at page 77. 2 Southern Natural Gas Corp. v. Alabama, 301 U.S. 148, 153, 57 S.Ct. 696, 698, 81 L.Ed. 970; cf. Aero Transit Co. v. Railroad Comm'rs, 332 U.S. 495, 499, 68 S.Ct. 167, 169, 92 L.Ed. 99. Such determination may be rejected only if a palpable evasion for avoiding a contrary ruling under federal law. Union Pac. R. Co. v. Public Service Comm'n, 248 U.S. 67, 39 S.Ct. 24, 63 L.Ed. 131; Appleby v. City of New York, 271 U.S. 364, 379, 46 S.Ct. 569, 573, 70 L.Ed. 992; Milk Wagon Drivers Union v. Meadowmoor Co., 312 U.S. 287, 294, 61 S.Ct. 552, 555, 85 L.Ed. 836, 132 A.L.R. 1200. 3 Southern Natural Gas Corp. v. Alabama, supra, 301 U.S. at page 154, 57 S.Ct. at page 698, 81 L.Ed. 970; Hooven & Allison Co. v. Evatt, 324 U.S. 652, 658, 65 S.Ct. 870, 873, 89 L.Ed. 1252. See Caldarola v. Eckert, 332 U.S. 155, 158, 67 S.Ct. 1569, 1570, 91 L.Ed. 1968; Standard Oil Co. of California v. Johnson, 316 U.S. 481, 483, 62 S.Ct. 1168, 1169, 86 L.Ed. 1611. 4 There is no problem as to any differentiation between 'in' commerce or 'affecting' commerce. Mississippi has decided that the statute applies only to transportation 'in' intrastate commerce. 35 So.2d 73. Cf. Schechter Poultry Corp. v. United States, 295 U.S. 495, 542, 55 S.Ct. 837, 848, 79 L.Ed. 1570, 97 A.L.R. 947; McLeod v. Threlkeld, 319 U.S. 491, 63 S.Ct. 1248, 87 L.Ed. 1538. 5 'So far as she was employed in transporting goods destined for other States, or goods brought from without the limits of Michigan and destined to places within that State, she was engaged in commerce between the States, and however limited that commerce may have been, she was, so far as it went, subject to the legislation of Congress. She was employed as an instrument of that commerce; for whenever a commodity has begun to move as an article of trade from one State to another, commerce in that commodity between the States has commenced. The fact that several different and independent agencies are employed in transporting the commodity, some acting entirely in one State, and some acting through two or more States, does in no respect affect the character of the transaction.' 10 Wall. at page 565, 19 L.Ed. 999. 6 'What we have already said, however, in relation to the products of a state intended for exportation to another state will indicate the view which seems to us the sound one on that subject, namely, that such goods do not cease to be part of the general mass of property in the state, subject, as such, to its jurisdiction, and to taxation in the usual way, until they have been shipped, or entered with a common carrier for transportation, to another state, or have been started upon such transportation in a continuous route or journey. * * * But this movement does not begin until the articles have been shipped or started for transportation from the one state to the other. The carrying of them in carts or other vehicles, or even floating them, to the depot where the journey is to commence, is no part of that journey. That is all preliminary work, performed for the purpose of putting the property in a state of preparation and readiness for transportation. Until actually launched on its way to another state, or committed to a common carrier for transportation to such state, its destination is not fixed and certain. It may be sold or otherwise disposed of within the state, and never put in course of transportation out of the state. Carrying it from the farm, or the forest to the depot is only an interior movement of the property, entirely within the state, for the purpose, it is true, but only for the purpose, of putting it into a course of exportation. It is no part of the exportation itself. Until shipped or started on its final journey out of the state its exportation is a matter altogether in fieri, and not at all a fixed and certain thing.' 116 U.S. at pages 527, 528, 6 S.Ct. at pages 478, 479, 29 L.Ed. 715. 7 'The interstate commerce clause of the Constitution does not give immunity to movable property from local taxation which is not discriminative unless it is in actual continuous transit in interstate commerce. When it is shipped by a common carrier from one state to another, in the course of such an uninterrupted journey it is clearly immune. The doubt arises when there are interruptions in the journey, and when the property in its transportation is under the complete control of the owner during the passage. It the interruptions are only to promote the safe or convendient transit, then the continuity of the interstate trip is not broken. * * * In other words, in such cases interstate continuity of transit is to be determined by a consideration of the various factors of the situation. Chief among these are the intention of the owner, the control he retains to change destination, the agency by which the transit is effected, the actual continuity of the transportation, and the occasion or purpose of the interruption during which the tax is sought to be levied.' 260 U.S. at pages 376, 377, 43 S.Ct. at pages 148, 149, 67 L.Ed. 309, 25 A.L.R. 1195. 8 State Tax Comm'n of Mississippi v. Interstate Natural Gas Co., 284 U.S. 41, 43, 52 S.Ct. 62, 76 L.Ed. 156 (reduction of pressure and metering gas). 9 'As previously pointed out, twice a day more than 15,000 government employees traveled between the Virginia agencies and their homes via one of the four bus systems. Most of them either went to or from these bus terminals from or the their homes over any of Transit's then available buses or streetcars. Their travel was at certain hours each day, at which special rush hour buses and cars were made available for their carriage. Their interstate journey to work actually began at the time they boarded a Transit bus or streetcar near their home, and actually ended when they alighted from the Virginia going bus at their place of work. On returning from work their interstate journey actually began when they boarded a bus near their work and actually ended when they alighted from a Transit streetcar or bus near their home. True, their interstate trip was broken at the District termini of the Virginia buses, when they stepped from one vehicle to another. But in the commonly accepted sense of the transportation concept, their entire trip was interstate. * * * And the fact that except as to Transit, they paid a combination of two rates, one for travel wholly within the District, and the other for travel between the District and Virginia, and the journey from their residences to Virginia and back again was taken in two segments, does not mean that the total interstate trip was not on a 'through route." 325 U.S. at page 363, 65 S.Ct. at page 1179, 89 L.Ed. 1663. 10 Interstate Commerce Comm'n v. Detroit, Grand Haven & Milwaukee R. Co., 167 U.S. 633, 17 S.Ct. 986, 42 L.Ed. 306; Pennsylvania R. Co. v. Knight, 192 U.S. 21, 24 S.Ct. 202, 48 L.Ed. 325; United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010. 11 United States v. Yellow Cab Co., supra, 332 U.S. at pages 232—233, 67 S.Ct. at pages 1567, 1568, 91 L.Ed. 2010; Interstate Commerce Comm'n v. Parker, 326 U.S. 60, 71, 65 S.Ct. 1490, 1495, 89 L.Ed. 2051, note 6. 12 Philadelphia & Reading R. Co. v. Hancock, 253 U.S. 284, 285, 40 S.Ct. 512, 513, 64 L.Ed. 907: 'The duties of the deceased never took him out of Pennsylvania; they related solely to transporting coal from the mines. When injured he belonged to a crew operating a train of loaded cars from Locust Gap Colliery to Locust Summit Yard, two miles away. The ultimate destination of some of these cars was outside of Pennsylvania. This appeared from instruction cards or memoranda delivered to the conductor by the shipping clerk at the mine. Each of these referred to a particular car by number and contained certain code letters indicating that such car with its load would move beyond the state.' 13 Dahnke-Walker Co. v. Bondurant, 257 U.S. 282, 42 S.Ct. 106, 66 L.Ed. 239; Lemke v. Farmers Grain Co., 258 U.S. 50, 42 S.Ct. 244, 66 L.Ed. 458; Walling v. Jacksonville Paper Co., 317 U.S. 564, 567, 63 S.Ct. 332, 335, 87 L.Ed. 460. 14 Since we perceive no difference for the purposes of this case between franchise, privilege, and excise taxes, insofar as they are exacted for the privilege of doing or the doing of interstate business, we have treated the as identical as far as their validity under the commerce clause is concerned. In Ozark and Anglo-Chilean Nitrate the taxes were called franchise taxes; in Alpha it was labeled an excise tax. 15 See the discussion of these cases in the opinion of Reed, J., in Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832. See also People of State of New York ex rel. Pennsylvania R. Co. v. Knight, 192 U.S. 21, 26, 24 S.Ct. 202, 203, 48 L.Ed. 325; State Tax Com'n v. Interstate Natural Gas Co., 284 U.S. 41, 43, 52 S.Ct. 62, 76 L.Ed. 156. 16 Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S.Ct. 857, 86 L.Ed. 1090; Ford Motor Co. v. Beauchamp, 308 U.S. 331, 60 S.Ct. 273, 84 L.Ed. 304; Atlantic Refining Co. v. Virginia, 302 U.S. 22, 58 S.Ct. 75, 82 L.Ed. 24; Southern Natural Gas Corp. v. Alabama, 301 U.S. 148, 57 S.Ct. 696, 81 L.Ed. 970; Pacific Tel. & Telegraph Co. v. Tax Comm'n, 297 U.S. 403, 56 S.Ct. 522, 80 L.Ed. 760, 105 A.L.R. 1; see collection of cases 105 A.L.R. 11, 36—56. 17 International Harvester Co. v. Evatt, 329 U.S. 416, 67 S.Ct. 444, 91 L.Ed. 390; Atlantic Lumber Co. v. Com'r of Corp. and Tax'n, 298 U.S. 533, 56 S.Ct. 887, 80 L.Ed. 1328; Matson Nav. Co. v. State Bd. of Equalization, 297 U.S. 441, 56 S.Ct. 553, 80 L.Ed. 791. 18 This decision followed a prolonged controversy over the taxability of the proceeds of interstate commerce. Maine v. Grand Trunk R. Co., 142 U.S. 217, 12 S.Ct. 121, 163, 35 L.Ed. 994, has been cited for the same proposition, see e.g., Adams Mfg. Co. v. Storen, 304 U.S. 307, 329, 58 S.Ct. 913, 924, 82 L.Ed. 1365, 117 A.L.R. 429, although there is in the report of the case, 142 U.S. at page 218, 12 S.Ct. at page 121, 35 L.Ed. 994, § 2 of the Act there in question, support for Mr. Justice Holmes' treatment of it in Galveston, H. & S.A.R. Co. v. Texas, 210 U.S. 217, 226, 28 S.Ct. 38, 639, 52 L.Ed. 1031, as a tax in lieu of ad valorem taxes. See Joseph v. Carter & Weekes, 330 U.S. 422, at page 427, notes 5, 6 and 7, 67 S.Ct. 815, 818, 91 L.Ed. 993, and cases cited. Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 255, 58 S.Ct. 546, 548, 82 L.Ed. 823, 115 A.L.R. 944. Powell, More Ado about Gross Receipts Taxes, 60 Harv.L.Rev. 501, 710, 747, et seq.; Dunham, Gross Receipts Taxes on Interstate Transactions, 47 Col.L.Rev. 211, 220 et seq.

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337 U.S. 810 69 S.Ct. 1330 93 L.Ed. 1709 v.SHEPARD S.S. CO. GAYNOR v. AGWILINES, Inc. Nos. 360, 430. Argued Feb. 2, 1949. Decided June 27, 1949. Mr. James Landye, Portland, Or., for petitioner Fink. Mr. Abraham E. Freedman, Philadelphia, Pa., for petitioner Gaynor. Mr. Leavenworth Colby, Washington, D.C., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 These two cases raise issues which, as the facts set out below indicate, are controlled by our decision in Cosmopolitan Shipping Co. v. McAllister, 337 U.S. 783, 69 S.Ct. 1317. 2 The petitioner, Fink, signed on the S. S. George Davidson on June 8, 1943, as an able seaman. The shipping articles showed as the 'Registered Managing Owner or Manager' the 'War Shipping Administration (Owner) Shepard Steamship Co. (Gen. Agents).' The contract pursuant to which respondent, Shepard Steamship Co., handled certain phases of the ship's business was the standard form General Agency Agreement, GAA 4—4—42. Petitioner was procured by respondent from a union hiring hall for employment by the master of the vessel. 3 In August, 1943, while the ship was at sea, Fink was ordered by the master and boatswain to empty a garbage can overboard. No one was assigned to help him although the can was heavy, the rail high and the sea rough. The roll of the ship caused the can to be thrown backwards against petitioner injuring him. 4 Petitioner instituted this action for damages against respondent under the Jones Act1 in a Circuit Court of Oregon, alleging that respondent was 'in possession of, controlled, navigated, managed and operate' the Davidson and was negligent in ordering petitioner to dump the garbage in a heavy sea without assistance.2 Respondent denied all these allegations. The jury was charged that the officers of the ship were agents of respondent and that their negligence, if any, should be imputed to respondent. Judgment was entered on a jury verdict for petitioner. The Supreme Court of Oregon reversed, Fink v. Shepard S.S. Co., Ore., 192 P.2d 258, holding that the remedy for an injury caused by the negligence of the ship's officers on a government-operated vessel such as this, subsequent to the enactment of the Clarification Act, was exclusively by suit against the United States under the Suits of Admiralty Act. It thus distinguished Hust v. Moore-McCormack Lines, 328 U.S. 707, 66 S.Ct. 1218, 90 L.Ed. 1534, on the ground that there the injury occurred before the effective date of the Clarification Act.3 A petition for certiorari was granted and the case set for argument along with Cosmopolitan Shipping Co. v. McAllister, supra. 5 The question here is identical with that in McAllister, i.e., whether the general agent of a vessel owned by the government and operated by the War Shipping Administration is liable under the Jones Act to a seaman who is injured at sea after the date of enactment of the Clarification Act by the negligence of the officer of the vessel. The reasons and arguments supporting our negative answer to that question in McAllister are equally applicable here. No purpose would be served by repeating them. 6 We desire to point out, however, that the testimony in this case confirms the conclusions which we have drawn from a study of the standard from General Agency Agreement. It establishes that respondent was neither the employer of officers on vessels such as the Davidson nor a party to such a relation ith them that it could be held vicariously liable for their torts. It shows that such officers were required to fill out an application form for employment captioned 'War Shipping Administration, Division of Operations Service Record.' Consideration and approval of these applications by the W.S.A. made the applicants employees of the United States. Thereafter, transfer to other W.S.A. vessels for which different companies were general agents, could be accomplished by furnishing to W.S.A. a transfer form. No new application for employment was required. It shows that the general agent had no voice in determining the destination or route of the vessel, in what service it could be operated, or how it would be handled in foreign ports. The soliciting and loading of cargo and the collection of freight were functions of the berth agents. 7 Petitioner Gaynor signed shipping articles in 1945 as a member of the crew of the S. S. Christopher Gadsden, a vessel which was owned by the United States and operated by the War Shipping Administration. The articles referred to 'Agwilines, Inc., as gen. agts. for WSA,' and also stated, '* * * The Master, Officers, and all other members of the Crew are employees of the United States subject to the provisions of (the Clarification Act, 57 Stat. 45, 50 U.S.C.Appendix, § 1291, 50 U.S.C.A.Appendix, § 1291), and are not employees of Agwilines, Inc.' Respondent Agwilines was the general agent for the ship under standard form contract GAA 4—4—42. The Gadsden departed from Philadelphia on a foreign voyage and stopped en route at Charleston where, while on authorized shore leave, petitioner was injured in a highway accident. Neither the ship, the general agent, nor the W.S.A. was directly involved in any way in the accident. 8 Petitioner sued respondent for wages and maintenance and cure, alleging that respondent 'possessed, owned, operated and controlled' the vessel. Agwilines denied these allegations, averred that it was merely the general agent under the standard form contract, that the ship was 'owned, operated and controlled by the United States,' and that petitioner had failed to comply with the Clarification Act, which required complaints of this sort to be brought pursuant to the Suits in Admiralty Act. 9 On the pleadings, an agreed statement of facts as summarized above, the shipping articles, the standard form agreement, and the delivery and redelivery certificates evidencing the allocation of the vessel to respondent by the W.S.A., the United States District Court for the Eastern District of Pennsylvania dismissed the action on the ground that petitioner's only remedy was a suit against the United States pursuant to the Clarification Act. 76 F.Supp. 617. The United States Court of Appeals for the Third Circuit affirmed. Gaynor v. Agwilines, Inc., 169 F.2d 612. We granted certiorari and assigned the case for argument along with Cosmopolitan Shipping Co. v. McAllister, and Fink v. Shepard Steamship Co., supra. 10 Although this case involves the right to wages and maintenance and cure, whereas McAllister and Fink concern damages for negligent injury, the reasoning and decisions in those cases are dispositive here. This is so because the right to maintenance and cure is 'annexed to the employment,' Cortes v. Baltimore Insular Line, 287 U.S. 367, 371, 53 S.Ct. 173, 174, 77 L.Ed. 368; see The Osceola, 189 U.S. 158, 23 S.Ct. 483, 47 L.Ed. 760; is 'an incident of the marine employer-employee relationship,' Aguilar v. Standard Oil Co., 318 U.S. 724, 730, 63 S.Ct. 930, 934, 87 L.Ed. 1107; 1 Benedict, Admiralty (6th ed., 1940) 61, 253; and because only the owner or owner pro hac vice of a vessel is liable for wages, which also stem from the contract of employment. Shilman v. United States, 2 Cir., 164 F.2d 649, 652; The John E. Berwind, 2 Cir., 56 F.2d 13; Everett v. United States, 9 Cir., 284 F. 203; Cox v. Lykes Brothers, 237 N.Y. 376, 383, 143 N.E. 226. Thus liability for wages and maintenance and cure depends upon the sam relationship that is required to support an action for negligent injury. That relationship does not exist between petitioner and respondent.4 11 The delivery certificate, relied upon by petitioner as showing that the Gadsden was in the possession and control of Agwilines, recites in pertinent part that the ship 'was on the 31st day of December, 1942 * * * delivered * * * by the War Shipping Administration to Agwilines, Inc. Under Terms and Conditions of 'Service Agreement, Form GAA' * * *.' It is quite obvious, we think, that this certificate refers only to a 'delivery' for the purposes contemplated by the General Agency Agreement and adds nothing of significance to that agreement, which we have already held, McAllister, supra, to be insufficient to establish liability on the part of the general agent. 12 Nos. 360 and 430 affirmed. 13 Mr. Justice BLACK, Mr. Justice DOUGLAS, Mr. Justice MURPHY and Mr. Justice RUTLEDGE dissent. 1 41 Stat. 1007, 46 U.S.C. § 688, 46 U.S.C.A. § 688. 2 He also filed claim on account of his injuries with the War Shipping Administration and sued the United States pursuant to the Suits in Admiralty Act, 46 U.S.C.A. § 741 et seq., and the War Shipping Administration, Clarification Act, 57 Stat. 45, 50 U.S.C.Appendix, § 1291, 50 U.S.C.A.Appendix, § 1291. This suit was later dismissed without prejudice. 3 See Hust v. Moore-McCormack Lines, supra, 328 U.S. at page 727, 66 S.Ct. at page 1228, 90 L.Ed. 1534. 4 Note that wages and maintenance and cure are treated along with claims for injuries in § 1 of the Clarification Act, which, in the case of seamen employed on United States or foreign vessels as employees of the United States through the W.S.A., directs that all of these rights shall be enforced pursuant to the provisions of the Suits in Admiralty Act.

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338 U.S. 68 69 S.Ct. 1354 93 L.Ed. 1815 HARRISv.STATE OF SOUTH CAROLINA. No. 76. Argued Nov. 16, 1948. Decided June 27, 1949. Messrs. Julian B. Salley, Jr., Leonard A. Williamson, Aiken, S.C., for petitioner. Mr. B. D. Carter, Bamberg, S.C., for respondent. Mr. Justice FRANKFURTER announced the judgment of the Court and an opinion in which Mr. Justice MURPHY and Mr. Justice RUTLEDGE join. 1 On Sunday morning, April 28, 1946, Edward L. Bennett and his wife were killed in their store in Aiken County, South Carolina. Bennett's last words were, 'A big negro shot me and robbed me.' Petitioner, Harris, age twenty-five, a slightly built Negro, was subsequently indicted in the Court of General Sessions for Aiken County and found guilty of the murder of the Bennetts. The jury's verdict required imposition of the death sentence. The Supreme Court of South Carolina denied the claim that a confession introduced at the trial was obtained under circumstances which precluded its admission under the Due Process Clause and sustained the conviction, 212 S.C. 124, 46 S.E.2d 682, 692, by a 3—2 vote, two judges dissenting on the ground that the facts show that the confession 'was not freely and voluntarily made.' We brought the case here to consider the validity of this claim. 334 U.S. 837, 68 S.Ct. 1490, 92 L.Ed. 1762. 2 When the disputed testimony is resolved in favor of the State, the following facts emerge: 3 The police of Aiken County spent two and a half months in fruitless investigation of the murders. Many suspects had been held for interrogation and then released. Suspicion was finally directed toward petitioner by reports that he possessed a pistol and had left for Nashville, Tennessee, soon after the murders. The Sheriff of Aiken County then obtained a warrant ostensibly for the purpose of arresting petitioner for the theft of his aunt's pistol but actually to secure his return from Nashville. He was taken into custody there on Friday, July 12, 1946. No warrant was read to him and he was not informed of the charge against him. He was brought back to Aiken County and lodged in its jail on Sunday afternoon at about four o'clock. He first learned that he was suspected of the murder of Bennett on Monday afternoon. He denied the accusation. At that time he was briefly interrogated by the sheriff and the jailer. 4 On Monday night questioning began in earnest. At least five officers worked in relays, relieving each other from time to time to permit respite from the stifling heat of the cubicle in which the interrogation was conducted. Throughout the evening petitioner denied that he had killed the Bennetts. On Tuesday the questioning continued under the same conditions from 1:30 in the afternoon until past one the following morning with only an hour's interval at 5:30. On Wednesday afternoon the Chief of the State Constabulary, with half a dozen of his men, questioned petitioner for about an hour, and the local authorities carried on the interrogation for three and a half hours longer. At 6:30 that evening the examination resumed. Petitioner continued to deny implication in the killings. The sheriff then threatened to arrest petitioner's mother for handling stolen property. Petitioner replied, 'Don't get my mother mixed up in it and I will tell you the truth.' Petitioner then stated in substance what appears in the confession introduced at the trial. The session ended at midnight. 5 Petitioner was not informed of his rights under South Carolina law, such as the right to secure a lawyer, the right to request a preliminary hearing, or the right to remain silent. No preliminary hearing was ever given and his confession does not even contain the usual statement that he was told that what he said might be used against him. During the whole period of interrogation he was d nied the benefit of consultation with family and friends and was surrounded by as many as a dozen members of a dominant group in positions of authority. It is relevant to note that Harris was an illiterate. 6 The trial judge in his charge told the jury that without the confession there was no evidence which would support a conviction and instructed them that they could consider the confession only if they found it to have been 'voluntary.' Upon appeal, the highest court of the State made a conscientious effort to measure the circumstances under which petitioner's confession was made against the circumstances surrounding confessions which we have held to be the product of undue pressure. It concluded that this confession was not so tainted. We are constrained to disagree. The systematic persistence of interrogation, the length of the periods of questioning, the failure to advise the petitioner of his rights, the absence of friends or disinterested persons, and the character of the defendant constitute a complex of circumstances which invokes the same considerations which compelled our decisions in Watts v. State of Indiana, 338 U.S. 49, 69 S.Ct. 1347, and Turner v. Commonwealth of Pennsylvania, 338 U.S. 62, 69 S.Ct. 1352. The judgment is accordingly reversed. 7 Reversed. 8 Mr. Justice BLACK concurs in the judgment on the authority of Chambers v. State of Florida, 309 U.S. 227, 60 S.Ct. 472, 84 L.Ed. 716; Ashcraft v. State of Tennessee, 322 U.S. 143, 64 S.Ct. 921, 88 L.Ed. 1192. 9 For dissenting opinion of Mr. Justice JACKSON, see 338 U.S. 49, 69 S.ct. 1357. 10 On the record before us and in view of the consideration given to the evidence by the state courts and the conclusion reached, THE CHIEF JUSTICE, Mr. Justice REED and Mr. Justice BURTON believe that the judgment should be affirmed. 11 Mr. Justice DOUGLAS (concurring). 12 The undisputed facts concerning the arrest and interrogation of the petitioner are as follows: 13 A storekeeper and his wife were killed in Aiken, South Carolina. The killing seemed similar to other crimes which had been committed in the community and which constituted a local crime wave. Local feeling was running high and the sheriff's office was anxious to find a solution. Numerous persons were interrogated. Nearly three months later suspicion fell on petitioner, because it became known that he possessed a pistol and had left the community for Nashville, Tennessee, shortly after the murder had occurred. The sheriff secured a warrant of arrest for the petitioner, allegedly for possessing a stolen pistol. The authorities in Nashville were notified that petitioner was wanted, and he was picked up there and placed in custody on a Friday. On the next Sunday he was delivered to the South Carolina officers. He was not read the warrant of arrest, nor was he informed that he was suspected of having committed the murder with which he was later charged and now stands convicted. While handcuffed, he was driven back to Aiken and lodged in the Aiken jail late that afternoon without being brought before a magistrate. That was Sunday. It was not until Monday afternoon that he was informed that he was under suspicion of having committed the murder. He was questioned a short time. He denied his guilt. A more extended questioning was held that night. The next day, Tuesday, the vigor of the questioning was increased. Petitioner was interrogated in the afternoon and again in the evening until around midnight. It was during this session that two incidents occurred. Petitioner had denied his guilt, but finally made a statement implicating another negro, who denied guilt when confronted with the accusation. It was also on Tuesday evening that one of the officers laid a hand on the petitioner. Sharp issue is taken on the nature of this act. Petitioner contends that he was struck with force. The officer testified that he merely placed his hand on petitioner's shoulder with no malice and that he merely stated that he did not believe certain statements that the petitioner had made. 14 On Wednesday afternoon the questioning was begun again. Petitioner still denied guilt. Wednesday evening he finally broke. The sheriff was alone with petitioner late at night. He threatened to have petitioner's mother arrested for having stolen property. It was then that petitioner offered to make the confession that was eventually used against him. Petitioner made his confession, and he was then removed to the state penitentiary for protection. 15 These interrogations had been held in a small room eight feet by beleven. Small groups of different officers conducted these interrogations, which went on and on in the heat of the days and nights. But during this time he was denied counsel and access to family and friends. 16 This is another illustration of the use by the police of he custody of an accused to wring a confession from him. The confession so obtained from literate and illiterate alike should shand condemned. See Haley v. State of Ohio, 332 U.S. 596, 68 S.Ct. 302, 92 L.Ed. 224.

01

338 U.S. 96 69 S.Ct. 1377 93 L.Ed. 1836 SECURITIES AND EXCHANGE COMMISSIONv.CENTRAL-ILLINOIS SECURITIES CORPORATION et al. STREETER et al. v. CENTRAL-ILLINOIS SECURITIES CORPORATION et al. HOME INS. CO. et al. v. CENTRAL-ILLINOIS SECURITIES CORPORATION et al. CENTRAL-ILLINOIS SECURITIES CORPORATION et al. v. SECURITIES AND EXCHANGE COMMISSION et al. Nos. 226, 227, 243, 266. Argued Jan. 12, 13, 1949. Decided June 27, 1949. [Syllabus from pages 96-98 intentionally omitted] Mr. Roger S. Foster, for Securities & Exchange Commission, washington, D.C. Mr. Lawrence R. Condon, New York City, for Thomas W. Streeter and others. Mr. Francis H. Scheetz, Philadelphia, Pa., for Home Ins. Co. and others. Mr. Louis Boehm, New York City, for Lucille White and others. Mr. Alfred Berman, New York City, for Central-Illinois Securities Corp. and others. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 The case involves an amended plan filed under § 11(e) of the Public Utility Holding Company Act of 19351 by Engineers Public Service Company. The plan provided, inter alia, for satisfying the claims of Engineers' preferred stockholders in cash as a preliminary to distributing the remaining assets to common stockholders and dissolving the company. Broadly, the question is whether the Securities and Exchange Commission, in reviewing the plan, correctly applied the 'fair and equitable' standard of § 11(e) in determining the amounts to be paid the preferred stockholders in satisfaction of their claims. 2 As will appear, the ultimate effect of the Commission's determination was to allow the holders of the three series of Engineers' outstanding cumulative preferred stock to receive the call (or voluntary liquidation and redemption) prices for their shares, namely, $105 per share, $110 per share and $110 per share, rather than the involuntary liquidation preference which, for each of the three series, was $100 per share. Common shareholders oppose the allowance to the preferred of the call price value, insisting that the maximum to which the preferred are entitled is the involuntary liquidation preference of $100. 3 In this view the District Court and, generally speaking, the Court of Appeals have concurred, declining to give effect to the plan as approved in this respect by the Commission. Consequently we are confronted not only with issues concerning the propriety of the Commission's action in applying the 'fair and equitable' standard of § 11(e), but with the further question whether its judgment in these matters is to be given effect or that of the District Court, either as exercised by it or as modified in certain respects by the Court of Appeals. 4 The facts and the subsidiary issues involved in the various determinations are of some complexity and must be set forth in considerable detail for their appropriate understanding and disposition. 5 At the time the Public Utility Holding Company Act was enacted, the holding company system dominated by Engineers consisted of 17 utility and nonutility companies. Of these, nine were direct subsidiaries of Engineers and eight were indirect subsidiaries. Integration proceedings under § 11(b)(1) of the Act were instituted with respect to Engineers and its subsidiaries in 1940. In a series of orders issued in 1941 and 1942 the Securities and Exchange Commission directed Engineers to dispose of its interests in all companies except either Virginia Electric and Power Company or Gulf States Utilities Company, and designated Virginia as the principal system if Engineers failed to elect between it and Gulf States.2 At the time the plan now under review was filed Engineers had complied with the divestment orders to the extent of disposing of all its properties except its interest in Virginia, consisting of 99.8 per cent of that company's common stock, and its interest in Gulf States and El Paso Electric Company, consisting of all their common stock. Engineers' principal assets were the securities representing its interest in these companies and $14,650,000 in cash and United States Treasury securities. 6 Engineers had no debts. It had outstanding three series of cumulative preferred stock of equal rank: 143,951 shares of $5 annual dividend series, 183,406 shares of $5.50 series, and 65,098 shares of $6 series. As has been said, all three series had involuntary liquidation preferences of $100 per share, call prices of $105 for the $5 series and $110 for the $5.50 and $6 series, and voluntary liquidation preferences equal to the call prices. 7 Proceedings before the Commission. The Plan as Originally Filed. The plan as originally filed by Engineers provided for the retirement of all three series of preferred stock by payment of the involuntary liquidation preference of $100 per share, plus accrued dividends to the date of payment.3 The remaining properties of Engineers were then to be distributed among the common stockholders, and Engineers was to dissolve.4 8 In order to insure adequate presentation of the views of the preferred stockholders, Engineers' board of directors authorized one of its members, Thomas W. Streeter, who was primarily interested in the preferred stock, to retain counsel partly at the company's expense. Streeter and members of his family are petitioners in No. 227. These preferred stockholders and representatives of a group of institutional investors who held preferred stock, the Home Insurance Company and Tradesmens National Bank and Trust Company, petitioners in No. 243, appeared before the Commi sion in opposition to the plan. They contended that they should receive amounts equal to the voluntary liquidation preference of the preferred. 9 After summarizing the issuing prices,5 the dividend history,6 and the market history7 of the three series of preferreds, the Commission analyzed the assets coverage and earnings coverage of the stock. The preferred stock of Engineers represented 17.5 per cent of the consolidated capitalization and surplus of the system. That stock was junior to the 66.2 per cent of the consolidated capitalization and surplus which consisted of securities of Engineers' subsidiaries held by the public, and senior to 16.3 per cent, consisting of Engineers' total common stock and surplus. 10 The system's average earnings coverage of fixed charges and preferred dividends for the last five years prior to the submission of the plan was 1.4 times. For these five years Engineers' average earnings coverage of preferred dividends was 1.5 times. 11 Certain expert testimony concerning the going-concern or investment value of the preferred stock was adduced before the Commission. Dr. Ralph E. Badger was an expert witness on behalf of certain preferred stockholders. He made a detailed analysis of the earnings and assets of Engineers and of the three series of preferred stock. He then compared Engineers and the preferred stock with relevant information concerning other comparable companies and securities.8 He concluded that, apart from their call provisions and on the basis of quality and yield, the three series of preferred stock should be valued at $108.70, $119.57, and $130.33 respectively, but that because of the redemption privilege, 'the present investment values are represented by their call price, plus a slight premium to account for the time required to effect a call.' The fair investment values of the preferred, in view of the redemption privilege, were: $5 series—$106.25; $5.50 series—$111.38; $6 series—$111.50. No rebuttal testimony was introduced, and there was no serious challenge to Badger's conclusions that the fair investment value of each series of the preferred exceeded the call prices. 12 Donald C. Barnes, Engineers' president, testified that apart from the impact of § 11 of the Act and taking into account the call prices, the fair value of the preferreds, i.e., 'what a willing buyer would pay and what a willing seller would take in today's market for such securities,' was somewhat above the redemption prices. Barnes spoke of several factors, viz., possibilities of continued inflation, of depression, government competition, adverse changes in regulatory policy, or developments in atomic energy, all 'common to the utilities industry generally,' which might have a future adverse effect on the value of Engineers preferred. Both witnesses agreed, however, as Engineers stated in its brief before the Commission, that 'the present value or investment worth of these three series of stock, on a going concern basis and apart from the Act, under prevailing yields applied to comparable securities' was in excess of the call prices. Barnes also testified that the preferred stock would have been called if it had not been for the impact of § 11. 13 The Commission first held that 'the dissolution of Engineers (was) 'necessary' under the standards of the Act.' However, since such a liquidation, under Otis & Co. v. Securities and Exchange Commission, 323 U.S. 624, 65 S.Ct. 483, 89 L.Ed. 511, 'does not mature preferred stockholders' claims' the so-called involuntary liquidation provision of Engineers' charter was not operative. The Otis case ruled 'that Congress did not intend that its exercise of power to simplify should mature rights, created without regard to the possibility of simplification of system structure, which otherwise would only arise by voluntary action of stockholders or, involuntari y, through action of creditors.' 323 U.S. at page 638, 65 S.Ct. at page 490. 14 After announcing that in a § 11 reorganization 'a security holder must receive, in the order of his priority, from that which is available for the satisfaction of his claim, the equitable equivalent of the rights surrendered,' the Commission considered all the charter provisions which affected the preferred, 'such as the dividend rate and the call price as well as the liquidation preferences,' and analyzed the financial condition of the company 'with particular regard to the asset and earnings coverage of the preferred.' On the basis of the undisputed testimony the Commission found that the going concern or investment value of the preferred was at least equal to the respective call prices. Since the call prices operated as ceilings on the value of the security by providing with respect to each series, 'a means, apart from the Act, whereby the security can be retired at a maximum price,'9 no attempt was made to determine whether the investment value of any series of preferred would exceed the call price if there were no call provision. 15 The Commission concluded that the payment of only $100 per share, plus accrued dividends, would not be fair and equitable to the preferred stockholders. It therefore refused to approve that provision of the plan which provided for retirement of the preferred at involuntary liquidation preferences. 16 Turning its attention to whether the plan was fair to the common stock, the Commission stated that, because of the accumulation of large amounts of idle cash,10 elimination of preferred stock having fixed dividend requirements was 'highly beneficial to the common.' Moreover, by implementing adjustment of the system to compliance with the Act, retirement of the preferred brought the common closer to the time when it would begin receiving dividends. 17 Engineers' contended that payment to the preferred of any amount in excess of $100 per share was unfair, because certain divestments required by the Act resulted in losses to the common stock and also eliminated the advantages of a 'diversified portfolio of securities.' In reply to this the Commission noted that it did not accept the hypothesis that losses were incurred by divestments caused by the Act,11 and stated that the preferred claims, measured by their going-concern value, were entitled to absolute priority, and that what remained to junior security holders after satisfying this priority was necessarily their fair share. 18 Certain mechanical features of the plan were also disapproved by the Commission.12 19 The Amended Plan. Engineers then acquiesced in the Commission's determination and submitted an amended plan. In addition to meeting the Commission's mechanical objections to the original plan, the amended plan provided for payment of the preferred stocks at their voluntary liquidation or call prices. 20 Over the objections of certain common stockholders, the Commission approved the plan as amended. It stated that, in the event the common stockholders continued to litigate the fairness of the plan after approval by the district court, it would be appropriate 'to achieve expeditious compliance with the Act and fairness to the persons affected * * * for Engineers to make prompt payment of $100 per share and accrued dividends in order to stop the accrual of further dividends, and set up an escrow arrangement.' The escrow would secure the payment of the amount in issue and also 'an additional amount to provide the preferred 'for the period of the escrow a return on the amount in escrow which is measured by the return which would have been received by it if the stock had remained outstanding." Such an escrow could be established under court supervision without returning the plan to the Commission. Holding Co. Release No. 7119, p. 6. By later order the Commission provided for the establishment of such an escrow at the option of Engineers if it appeared likely that common stockholders would litigate beyond the district court. Holding Co. Release No. 7190.13 21 Proceedings in the District Court. The Commission applied to the District Court for the District of Delaware for approval of the plan as amended. § 11(e). Certain common stockholders, respondents in Nos. 226, 227, and 243, and petitioners in No. 266, filed objections to the plan, contending that the Commission had erred in awarding to the preferred stockholders the equivalent of the voluntary liquidation preferences of their shares. The Streeter group of preferred stockholders o jected to the Commission's finding of the appropriateness of an escrow arrangement to stop the accrual of further dividends in the event of continued litigation. 22 The District Court considered the case on the record made before the Commission. It preferred not to determine whether the involuntary liquidation preferences controlled, but stated that (71 F.Supp. 797, 802) 'in each case the inquiry is one of relative rights based on colloquial equity.' That standard, thought the court, necessitated consideration of various factors to which it was thought the Commission had attached little or no importance. Thus it was important to consider not only the charter provisions but the issuing price in terms of what the company received for the securities, and the market history of the preferred. These factors might more than offset the factor of investment value, the testimony as to which the court accepted. In any event, thought the court, several other considerations have this effect. The Act, in addition to compelling the preferred stockholders to surrender 'this present enhanced value,' worked hardships on the common. All classes of securities, the court said, suffered losses as a result of the divestment orders issued by the Commission under the Act. Earnings retained in the system at a sacrifice to the common contributed to the enhancement of the value of the preferred. These standards of 'colloquial equity,' which the District Court conceived to be controlling in our decision in Otis & Co. v. Securities and Exchange Commission, supra, compelled the conclusion that it would not be fair and equitable to give the preferred more than $100 per share. Arguments concerning the worth of the preferred in the absence of a Public Utility Holding Company Act were thought not profitable to consider 'for there is a Public Utility Holding Company Act.' In effect amending the plan to provide for payment of the preferred at $100 per share, the District Court approved the plan as thus amended. The escrow agreement prescribed by the Commission was approved, the court concluding that there was no merit in the preferred stockholders' objections to this feature. 71 F.Supp. 797. 23 Proceedings in the Court of Appeals. The Court of Appeals for the Third Circuit regarded as a central issue in the case the question whether the District Court had exceeded the scope of review properly exercised by a district court reviewing a plan under § 11(e) of the Public Utility Holding Company Act. It concluded that the District Court was charged with the duty of exercising a full and independent judgment as to the fairness and equity of a plan, 'to function as an equity reorganization tribunal within the limitations prescribed by the Act.' 168 F.2d 722, 736. 24 Turning to the various factors which should have been taken into consideration in arriving at the equitable equivalent to the rights surrendered by the preferred shareholders, the Court of Appeals criticized the Commission for finding the investment value of the preferred as if there were no Holding Company Act while omitting to evaluate the common by the same standard, and for failing to consider factors other than the investment value. It was thought that the Commission should have estimated the future earning power of Engineers, absent a Holding Company Act, and apportioned that power between preferred and common stockholders in accordance with their respective claims. It was also thought that, in the process of valuing the preferred and the common by the same approach, the Commission should have considered 'the substantial losses which occurred to Engineers by virtue of divestitures compelled by the Act.'14 Losses of this nature 'should be returned to the credit side of the enterprise's balance sheet as a matter of bookkeeping.' Id. at pages 737—738. 25 The District Court, however, was held to have erred in one particular: it had amended the plan by substituting its own valuation of $100 per share for the preferred stock for that of the Commission. The court had no power to do this. It could only reject the Commission's valuation, and return the case to the Commission for further action in the light of the court's views. 26 At the time the opinion of the Court of Appeals was rendered, the plan had been consummated, with the exception of the payment of the disputed amounts in excess of the involuntary liquidation preferences of the preferred. The escrow arrangement, which had been employed to preserve the issue of the amount to which the preferred was entitled after having been approved by the Commission and the District Court, was held to be proper. 27 We granted certiorari because of the importance of the questions presented in the administration of the Public Utility Holding Company Act. 335 U.S. 851, 69 S.Ct. 80. I. 28 The Court of Appeals was of the view that the question of the extent of 'the power conferred on the district courts * * * by the Act' was one which went 'to the heart of the instant controversy.' 168 F.2d at page 729. The Commission apparently took the position before that court that the District Court had erred in setting aside the agency's conclusions unless those conclusions lacked 'any rational and statutory foundation.'15 This view was rejected by the Court of Appeals. Distinguishing judicial review under § 24(a) as being limited to the inquiry whether the Commission 'has plainly abused its discretion in these matters,' Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194, 67 S.Ct. 1575, 1583, 1760, 91 L.Ed. 1995,16 the Court of Appeals held that a § 11(e) court was charged with the duty of exercising a full and independent judgment as to the fairness and equity of a plan, 'to function as an equity reorganization tribunal within the limitations prescribed by the Act.' 168 F.2d at page 736. 29 This position is maintained before this Court by the representatives of the common stockholders. The preferred stockholders' representatives urge that the Court of Appeals erred in this regard, and that the conclusion of the Commission should not have been disturbed by the District Court, because that conclusion was supported by substantial evidence and was within the agency's statutory authority. The District Court, in their view, exceeded the proper scope of review. 30 The Commission apparently no longer takes so restrictive a view of the District Court's function as it formerly held. It now concedes that that court had power to eview 'independently' the method of valuation employed. But it urges that in this case the question, whether a proper method of valuation was employed, is one of law, since Congress has itself prescribed the standard for compensating the various classes of security holders instead of delegating to the Commission the task of fixing that standard. 31 In the alternative the Commission argues that 'If, as the court below seemed to assume, the question is not one of law, * * * the scope of review under Section 11(e) is limited in the same manner as that applicable to determinations of the Interstate Commerce Commission under Section 77 of the Bankruptcy Act (11 U.S.C.A. § 205),' which is said to embody a similar statutory scheme and under which administrative determinations of valuation are sustained if supported by substantial evidence and not contrary to law. Ecker v. Western Pacific R.R. Corp., 318 U.S. 448, 473, 63 S.Ct. 692, 707, 87 L.Ed. 892; R.F.C. v. Denver & Rio Grande W.R. Co., 328 U.S. 495, 505—509, 66 S.Ct. 1282, 1288—1290, 1384, 90 L.Ed. 1400. 32 The problem of the scope of review which Congress intended the district court to exercise under § 11(e) arises from and is complicated by the fact that Congress provided not one, but two procedures for reviewing Commission orders of the type now in question. 33 The first is afforded by § 11(e) itself. It relates to orders approving voluntary plans submitted by any registered holding company or subsidiary for compliance with subsection (b). The Commission is authorized to approve such a plan if, after notice and opportunity for hearing, it 'shall find such plan, as submitted or as modified, necessary to effectuate the provisions of subsection (b) and fair and equitable to the persons affected by such plan.' Then follows the provision that 'the Commission, at the request of the company, may apply to a court * * * to enforce and carry out the terms and provisions of such plan. If * * * the court, after notice and opportunity for hearing, shall approve such plan as fair and equitable and as appropriate to effectuate the provisions of section 11,' the court is authorized 'as a court of equity' to take exclusive jurisdiction and possession of the company or companies and their assets, and to appoint a trustee, which may be the Commission, for purposes of carrying out the plan.17 34 The alternative mode of review is provided by § 24(a). It applies to all orders issued by the Commission under the Act and in abbreviated form is as follows: 35 'Any person or party aggrieved by an order issued by the Commission * * * may obtain a review of such order in the circuit court of appeals * * * by filing in such court, within sixty d ys * * * a written petition * * *. The Commission shall certify and file in the court a transcript of the record upon which the order complained of was entered * * * (S)uch court shall have exclusive jurisdiction to affirm, modify, or set aside such order, in whole or in part. No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission or unless there were reasonable grounds for failure so to do. The findings of the Commission as to the facts, if supported by substantial evidence, shall be conclusive.'18 36 The District Court and the Court of Appeals, focusing their attention primarily on § 11(e), emphasized the section's requirement of approval by the District Court, that court's declared status 'as a court of equity,' and the absence from § 11(e) of such explicit provisions as those of § 24(a) making the Commission's findings of fact conclusive, if supported by substantial evidence; limiting the court to consideration of objections urged before the Commission in the absence of reasonable grounds for failure to urge them; and restricting the court's consideration to the record made before the Commission in the absence of any showing requiring remand to the Commission for the taking of additional evidence. 37 Chiefly from these factors the two courts reached their respective conclusions that the District Court was required to exercise a full and independent judgment as to the fairness and equit of the plan, functioning as an equity reorganization tribunal within the limitations prescribed by the Act. However, they differed, as has been noted, concerning the scope of those limitations. 38 The District Court thought it was authorized to substitute its own judgment for that of the Commission as to whether the plan was 'fair and equitable,' after considering independently the various matters it denominated as 'colloquial equities.' Accordingly, after reaching numerous conclusions on those matters contrary to the Commission's or not given final effect in its determinations, the court arrived at an over-all judgment opposite to that of the Commission and held the plan not 'fair and equitable' to the common stockholders in awarding the preferred more than $100 per share. Modifying the plan to allow the latter only that amount, the court ordered it enforced as modified. 39 The Court of Appeals was in general agreement with the District Court concerning its power to exercise a full and independent judgment in giving or withholding approval of the plan as 'fair and equitable' and, on the whole, was in accord with the District Court's dispositions of the matters of 'colloquial equity.' Stressing statements appearing in the legislative history of § 11, the court thought they gave basis for a strong analogy between the functions of district courts under § 11(e) and those of such courts 'when called upon under the Sherman and Hepburn Acts (15 U.S.C.A. §§ 1—7, 15 note, 49 U.S.C.A. § 1 et seq.) to effect compulsory corporate readjustments required by the public policy expressed in those acts.'19 The court's opinion then added: 'We think that it will not be contended that a district court * * * adjudging a controversy arising under the Sherman Act would function other than as in an original equity proceeding, exercising all the powers and duties inherent in a court of equity under such circumstances.' 168 F.2d at page 729. Accordingly, the court upheld the District Court's view that it had power, as a court of equity, to withhold approval and enforcement of the plan upon its own independent judgment of the 'colloquial equities,' notwithstanding the Commission's contrary judgment and, apparently even though the Commission's judgment involved no clear error of law or abuse of discretion. 40 The Court of Appeals, however, viewed somewhat differently the limitations placed by the Act upon the power of review. 'The proceedings before the equity reorganization court are not strictly de novo since the district court can only approve a plan when it has been approved by the Commission. See Application of Securities and Exchange Commission, D.C.Del., 50 F.Supp. 965, 966.' 168 F.2d at page 732. The district court, it was said, could receive evidence aliunde the Commission's record, could decide on that evidence and the Commission's record that the plan is unfair and inequitable, and remand the cause to the Commission for further consideration, or could remand without taking new evidence. The District Court therefore was wrong in ordering enforcement of the plan as modified by itself. It could only approve and enforce or refuse approval and remand. Only a plan approved by the Commission and by the court could be enforced. 41 These views were thought supported by the history of the law of reorganization, including equity receiverships, reorganization of insolvent companies under former § 77B of the Bankruptcy Act, 11 U.S.C. § 207, 11 U.S.C.A. § 207, and Chapter X reorganizations (id. at § 501 et seq.), although the court did not 'mean to imply that Congress intended to grant a Section 11(e) court the same full and untrammeled scope that a court of bankruptcy would have in a Chapter X proceeding.' 168 F.2d at pages 735—736. Nevertheless, 'Any question which goes to the issue of what is fair and equitable may be raised and must be passed upon.' 168 F.2d at page 735. Moreover, since 'the critical phra e employed alike by courts of equity and by Congress in framing the test under which a plan shall be approved or disapproved, has always embraced the phrase 'fair and equitable' or its substantial equivalent,' the court thought that the power and functions of the district courts in review of plans submitted did not 'vary much from statute to statute and from case to case,' 168 F.2d at page 734, i.e., whether the plan was to be consummated by way of equity receivership, by action under former § 77B, by suit under Chapter X, by a proceeding under § 77, 11 U.S.C. § 205, 11 U.S.C.A. § 205, or by petition to a district court under § 11(e). 42 The variant views held respectively by the Commission, the District Court, the Court of Appeals, and the parties to the proceeding demonstrate the complexity of the problem. Each view has a rational basis of support but none is without its difficulties, either in statutory terms, history and intent or in practical consequences. 43 The legislative history of § 11(e) throws little light on the problem. There was, surprisingly, only casual, indeed tangental, discussion of it. The analogy to proceedings under § 77 of the Bankruptcy Act, drawn by the Commission and referred to by the Court of Appeals, rests chiefly upon the statement of Senator Wheeler, cosponsor of the bill, made during a colloquy in debate on the Senate floor and set forth in the margin.20 But that statement did not occur in any detailed consideration of the scope and incidence of judicial review. It arose only as it were incidentally in the course of extended discussion which centered about the receivership provisions of § 11(e) as it stood at the time of the debate. 44 Moreover, the discussion did not and could not take account of the fact that, under our subsequent decisions in the Western Pacific and Denver & Rio Grande cases, supra, matters of valuation in § 77 reorganizations have been held to be exclusively for the Interstate Commerce Commission, not for the district courts, except as stated above. Ecker v. Western Pacific R.R. Corp., supra; R.F.C. v. Denver & Rio Grande W.R. Co., supra. Significantly, this fact seems not to have been taken into account when the Court of Appeals included the § 77 proceedings among its general grouping of reorganization procedures for analogical purposes. And in this respect the Commission makes clear its difference from the Court of Appeals, pointing out that under the Western Pacific and Rio Grande decisions the Commission decides questions of valuation, subject only to the narrow scope of review there allowed. 45 But, as if to complicate the matter further, the Commission's analogy is somewhat weakened by the fact that the Western Pacific and Rio Grande rulings concerning review of valuation matters rested upon language in § 77 not repeated in § 11(e) of the Act presently in question. That language, appearing in subsection (e) of § 77, provided: 'If it shall be necessary to determine the value of any property for any purpose under this section, the Commission shall determine such value and certify the same to the court in its report on the plan.' This, the Court held, left to the Interstate Commerce Commission the determination of value 'without the necessity of a reexamination by the court, when that determination is reached with material evidence to support the conclusion and in accordance with legal standards.' 318 U.S. at pages 472—473, 63 S.Ct. at page 707, 87 L.Ed. 892. 46 On the other hand, the opposing analogy drawn by the Court of Appeals from the history of the law of reorganization in general is highly indiscriminate. Insofar as it includes equity receiverships, e.g., pursuant to Sherman and Hepburn Act readjustments, it ignores the important fact that in such proceedings there is no effort to brigade the administrative and judicial processes. Nor does it take account of the substantial differences 'from statute to statute,' e.g., between proceedings under § 77 of the Bankruptcy Act as construed in the Western Pacific and Rio Grande cases, on the one hand, and Chapter X reorganizations, on the othr. Moreover, and perhaps most important, it substitutes analogy drawn from other statutes and judicial proceedings, together with a reading of § 11(e) in comparative isolation from the other provisions of the Act, for a consideration of that section in the context of the Act, as a whole and particularly with reference to any effort toward harmonizing the section with § 24(a) and bringing the two as close together as possible in practical operation. 47 Of course Congress could provide two entirely dissimilar procedures for review, depending on whether appeal were taken by an aggrieved person to a Court of Appeals or the plan were submitted by the Commission at the Company's request to a district court. But it is hard to imagine any good reason that would move Congress to do this deliberately. The practical effect of assuming that Congress intended the review under § 11(e) to be conducted wholly without reference to or consideration of the limitations expressly provided for the review under § 24(a) certainly would produce incongruous results which would be very difficult to impute to Congress in the absence of unmistakably explicit command. 48 For one thing the consequence would be, in effect, to create to a very large possible extent differing standards for administration and application of the act, depending upon which mode of review were invoked. In the one instance, apart from reviewable legal questions, the Commission's expert judgment on the very technical and complicated matters to deal with which the Commission was established, would be controlling. In the other instance, it would have to give way to the contrary view of whatever district court the plan might be submitted to. 49 Conceivably the same plan might be brought under review by both routes. Indeed, in one instance the District Court for Delaware, to which the plan here was submitted, held that its determination of the issues in a § 11(e) proceeding was precluded by a prior affirmation of the same order by a Court of Appeals in a § 24(a) review proceeding. See L. J. Marquis & Co. v. Securities & Exchange Commission, 3 Cir., 134 F.2d 822, and Application of Securities and Exchange Commission, D.C., 50 F.Supp. 965. Presumably, under the views now taken by the District Court and the Court of Appeals, if district court review under § 11(e) could be had first, that determination likewise would be conclusive as against contrary views held by the Commission and a Court of Appeals in a later § 24(a) proceeding. 50 Moreover, apart from legal questions, the controlling standard would be fixed by the discretion of the district court to which the plan might be submitted. And since such a court might be any of the many district courts available for that purpose, there hardly could be the uniform application of the 'fair and equitable' standard which Congress undoubtedly had in mind when it entrusted its primary administration to the Commission's expert judgment and experience, and when it drafted the detailed provisions of § 24(a) for review. To the extent at least that the standard contemplated an area of expert discretion, its content under the view taken by the District Court and the Court of Appeals could not be uniform, but would vary from court to court as the judicial discretion might differ from that of the Commission or other courts. 51 In contrast with the specific limitations of § 24(a), the very brevity and lack of specificity of § 11(e), together with the paucity and tentative character of the legislative history, concerning the scope of review under the latter section, give caution against reading its terms as importing a breadth of review highly inconsistent with the limitations expressly provided by § 24(a). Both sections are parts of the same statute, designed to give effect to the same ligislative policies and to secure uniform application of the statutory standards. That statutory context and those objects should outweigh any general considerations or analogies drawn indiscriminately from differing statutes or from the history of reorganizations in general, leading as these do to incongruities and diversities in practical application of the Act's terms and policies. 52 Indeed we think it is fair to conclude that the primary object of § 11(e) was not to provide a highly different scope of judicial review from that afforded by § 24(a), but was to enable the Commission, by giving it the authority to invoke the court's power, to mobilize the judicial authority in carrying out the policies of the Act. To do this the court 'as a court of equity' was authorized to 'take exclusive jurisdiction and possession of' the company or companies and their assets and to appoint a trustee to hold and administer the assets under the court's direction. 53 True, the court was to approve the plan as fair and equitable but nothing was said expressly as to the scope of review or the resolution of differences in discretionary matters between the Commission and the court. The court's characterization as 'a court of equity' was appropriate in relation to the powers of enforcement conferred. We do not think it was intended to define with accuracy the scope of review to be exercised over matters committed to the Commission's discretion and expert judgment, not involving questions of law, or to set up a different and conflicting standard in those matters from the one to be applied in proceedings under § 24(a). This view is not inconsistent with Senator Wheeler's comparison with § 77 proceedings under the Bankruptcy Act, which perhaps, despite its rather casual interjection, most nearly approaches disclosure of the legislative intent as to the present problem. 54 It may be added that in general the courts which have dealt with the problem appear to have taken the view we take,21 as against the one prevailing in the District Court and the Court of Appeals which reviewed this case,22 although in no case has the question been so sharply focused as here. While § 11(e), as we have noted, does not contain language the equivalent of subsection (e) of § 77 of the Bankruptcy Act upon which this Court rested its ruling concerning review of valuations in the Western Pacific case, that lack may be supplied in this case by the correlation we think is required between the terms of § 11(e) and those of § 24(a). Accordingly we are unable to accept the c nclusion of the Court of Appeals and the District Court that the latter was free in passing upon the Commission's valuations to disregard its judgment in the large areas of discretion committed by the Act to that judgment. 55 Administrative finality is not, of course, applicable only to agency findings of 'fact' in the narrow, literal sense. The Commission's findings as to valuation, which are based upon judgment and prediction, as well as upon 'facts,' like the valuation findings of the Interstate Commerce Commission in reorganizations under § 77 of the Bankruptcy Act, Ecker v. Western Pacific R.R. Corp., supra, are not subject to reexamination by the court unless they are not supported by substantial evidence or were not arrived at 'in accordance with legal standards.' Administrative determinations of policy, often based upon undisputed basic facts, in an area in which Congress has given the agency authority to develop rules based upon its expert knowledge and experience, are exemplified by Securities and Exchange Commission v. Chenery Corp., supra, in which the Commission determined that preferred stock purchased by management in the over-the-counter market during the formulation of a holding company reorganization plan could not be exchanged for common stock participation in the reorganized company, as could other preferred stock; instead management was to be paid cost plus interest for the preferred stock so purchased. 56 The Commission's determination was made in the exercise of its duty to determine that a plan is 'fair and equitable' within the meaning of § 11(e) and that it is not 'detrimental to the public interest or the interest of investors or consumers' within the meaning of § 7(d)(6) and § 7(e), 15 U.S.C.A. § 79g(d) (6), (e). On certiorari to the Court of Appeals which had reviewed the Commission's order under § 24(a) of the Act, we held that the Commission's action was 'an allowable judgment which we cannot disturb.' (332 U.S. 194, 67 S.Ct. 1583) This holding was not based upon the fact that the Commission's order was reviewed under § 24(a) of the Act rather than under § 11(e), but upon the ground that the Commission's determination was made in an area in which Congress had delegated policy decisions of this sort to the Commission, and therefore that the agency determination was 'consistent with the authority granted by Congress.' We think this view is applicable when review is had under § 11(e) as much as when it arises under § 24(a). 57 Even with the latitude allowed by our present ruling for play of the Commission's judgment, it remains to consider whether in this case the Commission has complied with the statutory standards in its determination that the plan as amended by it is fair and equitable. The common shareholders deny this. And, contrary to the preferred shareholders' position, the Commission has argued, alternatively to its contentions concerning the scop of review, that application of the 'fair and equitable' standard of § 11(e) in this case presents questions of law which have been decided erroneously by the District Court and the Court of Appeals. 58 Taken most broadly, this argument of the Commission seems to be that the entire matter of applying the 'fair and equitable' standard involves only legal issues, with the result that each subsidiary question raised and determined in that process becomes independently reviewable and judicially determinable. If so, of course, the question of the proper scope of review would become irrelevant, at any rate for the purposes of this case, since it was determined solely on the record made before the Commission. 59 But the Commission does not stop with this broad argument. It goes on to consider particular questions which arose in the valuation process and to urge that they presented questions of law which the reviewing courts erroneously determined. Among these are whether the cour's dispositions violated the 'absolute priority' standard attributed to the Otis case; whether their requirement that the Commission value the common stock in the same manner as it did the preferred, rather than simply awarding to the common shareholders all of Engineers' assets remaining after giving the preferred the equitable equivalent of their shares as determined, violated the statutory standard; whether the courts rightly required the Commission to take into account alleged losses incurred by Engineers in earlier dispositions of company properties made to comply with the Act; and whether the Commission improperly failed to take into account other matters of 'colloquial equity' the courts considered not only proper but essential to a fair and equitable determination. 60 We think at least some of these matters do raise legal issues, particularly in the light of the Otis decision, which should now be considered and resolved. Accordingly we turn to them for that purpose. II. 61 Challenges to the Investment Value Theory of Valuation. The principal effect of the Otis decision was to rule that in simplification proceedings pursuant to §§ 11(b)(2) and (e) of the Act the involuntary charter liquidation preference does not of itself determine the amounts shareholders are to receive, but instead the amounts allocated should be the equitable equivalent of the securities' investment value on a going-concern basis. 62 The common shareholders seek to avoid the effect of this ruling by various arguments presently to be stated, which should be considered and determined in the light of the Otis decision and the Commission's practice consistent with that decision, a summary of which practice is set forth in the Appendix to this opinion. 63 In the Otis case the plan called for the dissolution of the United Light and Power Company, the top holding company in the system, in obedience to a Commission order requiring the elimination of that company, whose existence violated the 'great-grandfather clause' of § 11(b)(2). Since both common and preferred stockholders were to receive, in exchange for their stock in United Power, stock in its subsidiary, the United Light and Railways Company, which was itself a holding company, the effect of the dissolution was to eliminate the top holding company in a multi-tiered holding company system, leaving both classes of security holders with an investment in a continuing holding company enterprise. 64 The assets of United Power were insufficient to satisfy the claims of the company's preferred stockholders, if the charter liquidation preference of the preferred was applicable. The Commission found however that 'if all the assumed earnings materialized and were applied to liquidating the preferred current and deferred dividends, in approximately fifteen years the arrearages would be paid and the common would be in a position to receive dividends,' 323 U.S. at page 632, 65 S.Ct. at page 487, 89 L.Ed. 511, and that only by forced liquidation could the common be d prived of all right to future earnings and the preferred be given the right to prospective earnings in excess of the dividends guaranteed by charter. The Commission concluded that 'in its 'overall judgment' Power's common had a legitimate investment value of a proportion of 5.48 per cent of Power's assets to the preferred's value of 94.52 per cent.' Ibid. Relying on the legislative history of the Act, 323 U.S. at pages 636—637, 65 S.Ct. at pages 489—490, and upon the fact that the charter provision was not drafted in contemplation of the legislative policy embodied in the Act, 323 U.S. at pages 637—638, 65 S.Ct. at page 490, we held that the Commission had not erred in its method of valuation. By this ruling we rejected the easier solution of permitting liquidations or reorganizations compelled by the Act to mature charter rights and thus to shift investment values from one class of security holders to another. 65 In so ruling this Court did not abandon the 'absolute priority' standard insofar as embodied in the requirement that the plan be 'fair and equitable.'23 That standard requires that each security holder be given the equitable equivalent of the rights surrendered, but the equitable equivalent is not invariably the charter liquidation preference, as it is in the case of liquidations or reorganizations brought about through the action of creditors or stockholders. The principle of the Otis case is that the measure of equitable equivalence for purposes of simplification proceedings compelled by the Holding Company Act is the value of the securities 'on the basis of a going business and not as though a liquidation were taking place.' 323 U.S. at page 633, 65 S.Ct. at page 488. 66 The decisions of the Commission, from the commencement of its enforcemen of the Public Utility Holding Company Act to the present time, show a consistent and developing application of the investment value rule approved in the Otis case.24 At least since its decision in that case charter provisions have been held invariably not to be determinative. Federal courts which have had occasion to speak in this connection have recognized that charter liquidation provisions are not the measures of stockholders' rights in liquidations and reorganizations compelled by the Act.25 67 Seeking to distinguish the Otis case, the representatives of the common stockholers contend that here the charter liquidation provisions are applicable, from which of course it would follow that those provisions are the measure of equitable equivalence. 68 It is urged first that Engineers' charter liquidation provision is phrased in more comprehensive terms than was the one in Otis, and that the framers of Engineers' charter contemplated the possibility of governmental act on of the kind required by the Holding Company Act. A comparison of the two charter provisions reveals no significant difference between them.26 Engineers' charter was drafted some four years earlier than the Otis charter. Each contract was made at a time when the legislative policy embodied in the Holding Company Act 'was not foreseeable.' 323 U.S. at page 638, 65 S.Ct. at page 490, 89 L.Ed. 511.27 69 A further asserted distinction is that there is here a 'genuine liquidation,' i.e., a termination of the holding company enterprise by the liquidation of the last holding company in the system; while in the Otis case 'the holding company enterprise continued essentially unchanged, even though the particular corporation there involved was being dissolved pursuant to the mandate of the Act, as an incident to the simplification of the continuing system.' 70 It would probably suffice to observe that the word 'liquidation,' as used in Engineers' charter liquidation provision, quite obviously means liquidation of Engineers, not liquidation of other corporations or of the holding company enterprise of which Engineers is a part. But there are nore fundamental reasons which require the rejection of this argument. The legislative history relied upon in the Otis case, 323 U.S. at pages 636-637, 65 S.Ct. at pages 489-490, contains no hint that Congress intended to preserve investment values only when the policy of the Act required a reduction in the number of holding companies in a system rather than the elimination of the system's last holding company.28 And the Otis opinion rejected the Commission's argument in that case that the result there was justified by the fact that the holding company enterprise was to continue. We said that the reason for the inapplicability of charter provisions '* * * does not lie in the fact that the business of Power continues in another form. That is true of bankruptcy and equity reorganization. It lies in the fact that Congress did not intent that its exercise of power to simplify should mature rights, created without regard to the possibility of simplification of system structure, which otherwise would only arise by voluntary action of stockholders or, involuntarily, through action of creditors.' 323 U.S. at page 638, 65 S.Ct. at page 490. 71 Far from aiding the distinction urged by the common stockholders, Schwabacher v. United States, 334 U.S. 182, 68 S.Ct. 958, 92 L.Ed. 1305, supports the conclusion that investment values rather than charter provisions provide the measure of the preferred stockholders' rights. In that case the Court held that the charter liquidation provision of a railroad corporation merging with another railroad under § 5 of the Interstate Commerce Act was not determinative of the amount to which holders of cumulatie preferred stock were entitled, and that '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 constitutent company but what value he is contributing to the merger that is to be made good.' 334 U.S. at page 199, 68 S.Ct. at page 967, 92 L.Ed. 1305. 72 Again this result depended, not upon the fact that the merger left a continuing enterprise, but upon the fact that Congress, in its efforts to achieve a particular economic goal, wished to avoid shifting investment values from one class of securities to another by maturing contract rights which would not otherwise have matured. As did the Otis opinion, which was said to construe 'a federal statute of very similar purposes,'29 the Schwabacher opinion assumed 'that Congress intended to exercise its power with the least possible harm to citizens.' Otis & Co. v. Securities and Exchange Commission, supra, 323 U.S. at page 638, 65 S.Ct. at page 490, 89 L.Ed. 511. 73 The final reason for rejecting the asserted distinction between liquidation of the particular corpoation and liquidation of the holding company enterprise serves also to answer a further, related argument made by the representatives of the commom stockholders. It is said that payment of the preferred stockholders in cash rather than in securities of a new corporation and the consequent termination of these stockholders' investment 'matures' the preferred claims and makes this a 'genuine liquidation.' These arguments, which necessarily imply that the Commission may not choose the elimination of one company in a system rather than another or payment in cash rather than securities as means of conforming the enterprise to the requirements of the Act, without varying the standard by which stockholders are to be compensated, are answered in the Otis opinion. We held there that security values should not 'be made to depend on whether the Commission, in enforcing compliance with the Act, resorts to dissolution of a particular company in the holdi g company system, or resorts instead to the devices of merger or consolidation, which would not run afoul of a charter provision formulated years before adoption of the Act in question. The Commission in its enforcement of the policies of the Act should not be hampered in its determination of the proper type of holding company structure by consideratons of avoidance of harsh effects on various stock interests which might result from enforcement of charter provisions of doubtful applicability to the procedures undertaken.' 323 U.S. at pages 637—638, 65 S.Ct. at page 490. 74 The common stockholders argue also that even if the charter liquidation provision by deemed inapplicable, the 'fair and equitable' standard requires the application of the 'doctrine of frustration.' It is said that frustration of a contract by governmental edict or any other supervening event not contemplated by the parties requires that 'the loss * * * lie where it falls. Neither party can be compelled to pay for the other's disappointed expectations.'30 In such a case, it is said, 'the face amount of the security—which theoretically mirrors the senior security holder's contribution to the enterprise—is all that he is entitled to recover.' Again the Otis case is said to be distinguishable in that there the preferred stockholders were to receive a participation in the continuing enterprise, which here their investment is terminated by payment in cash. But, as we observed above, the Commission is not to be hampered in its enforcement of the policies of the Act 'by considerations of avoidance of harsh effects on various stock interests.' 75 The authorities relied upon in support of the frustration argument would not compel the result for which the common stockholders contend, even in the absence of the Otis decision. Considerable reliance is placed upon The United Light & Power Co., 10 S.E.C. 1215, and the affirmance of that decision by the Court of Appeals for the Second Circuit in New York Trust Co. v. Securities and Exchange Commission, 131 F.2d 274. In that case the plan, a different feature of which was reviewed in the Otis case, provided for payment to the company's debenture holders in cash. The Commission, after deciding that voluntary liquidation preferences were not payable, and that the bondholders had no right to receive the premium 'by virtue of any other recognized legal or equitable principle,' held that there was no right to compensation for the termination of the investment, which, like the termination of the stockholders' investments, had been 'brought about by the act of a sovereign power—in this case a congressional mandate.' 10 S.E.C. at 1223, 1228. In affirming the Commission's determination, the Court of Appeals held that 'the contract is no longer binding and further performance is excused. * * * where, as here, the essential existence of one of the parties to a contract has become illegal and impossible because contrary to a new concept of public policy which was unforeseeable when the contract was made.' 131 F.2d at page 276. Since the corporation was undewr no obligation to call the bonds, 'it might well let the rights of those in interest be determined as though there had been no call option. The order under review was, accordingly, fair and reasonable to all parties in interest since it provided for the payment of the bonds in a way which discharged in full the contract obligations of the dissolved corporation.' Ibid. 76 Even if it is assumed that no distinction is to be made between bonds and preferred stock,31 neither the decision of the Court of Appeals nor that of the Commission in the New York Trust case is inconsistent with the later Otis decision or with the position of the Commission in this case, insofar as each holds that performance of the charter contract is excused.32 Engineers is no longer required by its contract either to continue the payment of preferred dividends beyond the dissolution date provided in the plan or to redeem the preferred at either voluntary or involuntary charter liquidation prices. 77 Moreover the New York Trust case need not be construed to fix the measure of the senior security holder's claim at the face amount of his security. In Massachusetts Mutual Life Insurance Co. v. Securities and Exchange Commisson, 151 F.2d 424,33 the Court of Appeals for the Eighth Circuit recognized that the doctrine of impossibility or frustration applied in the New York Trust case excused the corporation from its contractual obligations and agreed with the Commission that it would not be fair and equitable to pay redemption premiums in the circumstances of that case. But the Court observed that 'whether, upon retirement of outstanding bonds * * * payment of principal, accrued interest and redemption premiums is the equitable equivalent of the bondholders' rights depends upon the facts of each particular case.' 151 F.2d at page 430.34 78 The doctrine of impossibility or frustration explains the conclusion that the corporation is excused from performing its contract, but it does not provide a measure of the security holders' claims. For that measure, we must look to the intention of Congress, as we did in the Otis case. III. 79 Application of the Investment Value Theory: The Commission's Alleged Failure to Take Account of Prior Divestment Losses Sustained by Engineers; Its Alleged Failure to Value the Common Stock by the Same Method as Was Used in Valuing the Preferred; 'Colloquial Equities.' It was the Commission's duty in passing upon the fairness and equity of the plan to accord each security holder, in the order of his priority, the investment or going-concern value of his security. Here, as in the Otis case, the manifest solvency of Engineers 'simplifies the problem of stockholers' rights * * *. The creditors are satisfied.' 323 U.S. at pages 633—634, 65 S.Ct. at page 488, 89 L.Ed. 511. Valuation on the basis of a going con ern necessarily has primary relationship to value as of the time the shareholders' surrender becomes effective, not as of some earlier, remote period or one long afterward. Moreover, 80 'Like the bankruptcy and reorganization statutes, the Public Utility Holding Company Act, in providing that plans for simplification be 'fair and equitable,' incorporates the principle of full priority in the treatment to be accorded various classes of security interests. This right to priority in assets which exists between creditors and stockholders, exists also between various classes of stockholders. When by contract as evidenced by charter provisions one class of stockholders is superior to another in its claim against earnings or assets that superior position must be recognized by courts or agencies which deal with the earnings or assets of such a company. Fairness and equity require this conclusion.'35 81 These are the governing principles to be applied in consideration of the differences between the Commission and the reviewing courts concerning the matters listed in the heading of this paragraph. It is important to note that the doctrine of allowing equitable equivalents on present going-concern value to replace stated charter liquidation value as the measure of security satisfaction did not and was not intended to destroy charter or contract right to priority of satisfaction. 82 A. The investment value or going-concern value theory rests upon the premise that Congress intended to exercise its power to simplify holding company systems and to remove uneconomic companies without destroying legitimate investment value. It is consistent with this premise that the investment value determined by the Commission by the investment value the securities would have if it were not for the liquidation required by the Act. This does not mean, however, that the agency must value the stock as if the Act had never affected the holding company system of which the particular company dealt with in the plan is a part.36 When the Commission values a security interest by determining the value that interest would have if it were not for the present liquidation or reorganization required by the Act, it substantially complies with the statutory mandate. 83 There are at least two sufficient reasons, both of which are illustrated by the present case. It would be administratively impossible, in determining the investment value of securities in a corporation being liquidated, to revaluate every transaction in the gradual simplification of the system of which the company is a part, as if the Act had never been passed.37 If the Commission were required to reconstitute Engineers' balance sheet as if the Act had never been passed, it would be necessary, for example, retroactively to evaluate the economic consequences of the compelled divestment of Engineers' interest in Puget Sound Power and Light Corporation in 1943 and to determine whether and to what extent Engineers would have gained or lost by retaining its interest in Puget Sound to the present time.38 The difficulties of going through such a procedure, multiplied by the number of divestments compelled by the Act over many years,39 would be insuperable. 84 The second reason lies in the basis for the Otis rule itself. Since Congress intended that investment values should be preserved in each liquidation or divestiture required by the Act, we may assume that it intended the Commission to value securities in a particular liquidation as if that liquidation were not taking place, but not as if the Act had never been passed; for if investment values have been preserved in th early divestitures, it is useless to reconstitute the balance sheet as if the divestitures had not taken place. The Commission's determinations upon which the various divestiture orders were based may not be collaterally attacked. 85 B. We have observed that the standard of compensation to be accorded security holders does not depend upon whether their security interests are to be retired by exchanging them for new securities in a continuing enterprise or by payment in cash. However, these different methods of compensating the security holder determine which of varying methods of arriving at investment value will be employed by the Commission. Where the security holder is to receive new securities, the Commission is faced with a dual valuation problem. It must evaluate the securit to be surrendered and the securities to be received in exchange. Recognizing the inherent complexity of this problem this Court has held that a security holder may be accorded the equitable equivalent of the rights surrendered without placing a dollar valuation upon either the rights surrendered or the securities given in compensation therefor.40 In the Otis case, in which the plan contemplated compensating both preferred and common stockholders of United Power in common stock of Power's sole subsidiary, the Commission was required to apportion the Power common between the two classes by evaluating the expectation of income from the new stock and the risk factor of that stock in relation to the rights being surrendered. In effect the Commission's task was to apportion to the new stock earning power substantially equivalent to that surrendered. 86 But when the claims of the senior security holders are to be satisfied by payment in cash, the Commission appropriately varies its approach. In such a case it holds that 'the most workable hypothesis for finding a fair equivalent between cash received and the security surrendered under the compulsion of the plan, is that of reinvestment in a security of comparable risk.' The question to which the Commission seeks the answer is, 'How much money would it cost the preferred stockholders to replace their securities with comparable ones?' 87 Badger sought to provide an answer to this question by deriving from his analysis and comparison a proper yield basis for Engineers' preferred,41 which, taking into account the effect of the risk factor, he found to be 4.6%. Capitalization of this rate gave the preferreds values ranging from $108.70 per share to $130.33 per share, amounts well in excess of the call prices. The testimony of Engineers' president, Barnes, as to 'what a willing buyer would pay and what a willing seller would take in today's market for such securities,' absent a Public Utility Holding Company Act, coincided with that of Badger, as to the estimated going-concern value in cash of the preferred.42 88 The Commission did not rely exclusively on this expert testimony but made its own study of the market and dividend history and the earnings coverage and assets coverage of the preferred. This served not only as a check upon the accuracy of Badger's premises but as a basis for the Commission's exercise of its independent judgment. The Commission found it unnecessary to make its own independent estimate of the dollar value of the preferred stock, absent a Holding Company Act.43 When it became apparent that the going-concern value would exceed the call prices of the stocks by a considerable amount, the exact going-concern valu became immaterial, because the call price, at which the corporation could always retire the preferred without reference to the Act, marked the limits of the preferreds' claims. 89 The commn stockholders contend that this method of valuation, as employed in this case, produced only 'a hypothetical market value of the preferreds based on market prices as of the time when the testimony of Badger and Barnes was given (the first few months of 1946).' They criticize Badger, whose evidence was undisputed and was accepted by the Commission, for failing to employ, as a basis for comparison, median prices and yields of the securities chosen for comparisom, computed on the basis of prices covering a representative period of time; they complain that the low yield rates and high market levels of January, 1946, were abnormal. And it is said that the Commission and Badger failed property to evaluate Engineers' economic future, absent a Holding Company Act, i.e., failed to make 'a prediction as to what will occur in the future, an estimate * * * based on an informed judgment which embraces all facts relevant to future earning capacity and hence to present worth, including, of course, the nature and condition of the properties, the past earnings record, and all circumstances which indicate whether or not that record is a reliable criterion of future performance.' Consolidated Rock Products Co. v. Du Bois, 312 U.S. 510, 526, 61 S.Ct. 675, 685, 85 L.Ed. 982. 90 We may concede that even though the preferred is to be paid in cash and thus should receive cash sufficient to purchase a comparable investment with a comparable yield, the Commission would be wrong in selecting, as a basis for valuation, abnormal or highly speculative market values of a transient nature. But this was not done. Badger stated that 'The prices of preferred stocks today are predicated on fundamental conditions prevailing in the money markets, conditions which are of a permanent nature.' He added that the values he placed upon the preferreds were 'values of a permanent nature and * * * not values of a temporary or speculative nature.'44 His conclusion was supported by a summary of the pertinent economic considerations, including the effects of Government financing and the large Government debt, together with a comparison of yields of Government bonds, high grade corporate bonds, and high grade preferred stocks from 1932 to 1945. Finally, Badger's analysis of Engineers' economic status, absent a Holding Company Act, of Engineers' preferred, and of comparable securities of other companies was thorough and adequate. 91 The Commission made its own independent study of Engineers' economic record. In evaluating Badger's testimony regarding the quality of Engineers' preferreds, the proper yield basis for the stock, and economic considerations underlying the prediction that current yields and price levels were relatively permanent, the Commission exercised its informed and expert judgment. At the time it passed upon the plan it was able to say that 'no serious challenge was made in the proceedings to Badger's conclusion that the fair investment value of the preferred on a going concern basis is in excess of the call price.' Holding Company Act Release No. 7041, p. 31. Engineers, in its brief before the Commission, conceded that 'these amounts ($106.25, $111.38, $111.50, respectively) are substantially the present value or investment worth of these three series of stock, on a going concern basis and apart from the Act, under prevailing yields applied to comparable securities.' Ibid. The Commission's determination that the investment values of the preferreds were in excess of their call prices has ample support in the record. 92 But the common stockholders contend that a drop in yield rates, caused by a lowering of support levels of Government securities, should be taken into consideration by this Court in appraising the Commission's determination. Any changes which had occurred since the date of consummation would of course be irrelevant, for the preferred stockholders could not be required to surrender their investment and their advantageous dividend rate and yet remain subjected to the risk of fluctuation in the value of their erstwhile investment. But the common stockholders have failed to show that the investment values of the preferreds have fallen below the call prices even after that date.45 93 An argument which has been variously articulated by the District Court, the Court of Appeals, and the common stockholders runs to the effect that the Commission's method of valuation, which assigned no value to the common stock, amounts to giving the preferred the investment value it would have had in the absence of a § 11 liquidation, while giving the common something less than its investment value apart from the liquidation. As the District Court phrased it, 'The argument for payment of the premium is comparable to dealing cards off the top of a deck. When full hands (based on theoretical 'investment value') have been dealt to all the senior security holders, the common would merely get whatever happens to remain. Under the Act the interests of all investors must be considered.' 71 F.Supp. at page 802.46 94 The initial error in this argument is its assumption that the Commission deals from less than a full deck, that the impact of § 11 has caused losses to Engineers. For if investment values have not been destroyed by the operation of § 11, giving the preferred stockholders the investment value of their shares will not deprive the common of any part of the investment value of their stock. We have already dealt with the hypothesis accepted by the District Court and the Court of Appeals that the impact of the Act prior to the liquidation involved here has caused losses by forcing the company to divest itself of its interests in numerous operating companies.47 95 In addition, however, it is said that value disappeared in the liquidation of Engineers itself, in spite of the fact that when Engineers' management came forward with a plan for the liquidation of Engineers, they had asserted that there was no economic justification for the continued existence of that corporation, in fact had characterized it as an 'economic monstrosity.'48 In the light of the present record it seems futile to argue that the dissolution of Engineers injured the common stockholders by depriving them of the so-called advantages of 'leverage,'49 diversity of investment and a centralized management, arguments which, incidentally, were largely rejected by Congress at the time of the passage of the Act.50 The record indicates that whatever tax advantage would be derived from reporting income on a consolidated basis was not commensurate with the cost of preserving Engineers. 96 Even if we could find that investment value had been destroyed by the liquidation of Engineers, or if we could find that the operation of the Act prior to the formulation of Engineers' plan had inflicted losses on the Engineers system and could take such losses into account, these facts would be irrelevant, except to the extent that such losses had impaired the investment value of Engineers' preferred by lowering its assets coverage or otherwise adversely affecting the economic prospects of the company apart from the Act. For the 'fair and equitable' standard requies that, before the junior security holder may share, the senior security holder must receive the equitable equivalent of the rights surrendered, in this case the investment value. Since the investment value of the preferred must be measured in cash in this case, there is no occasion for 'an examination of the correlative rights of the preferred and common stockholders.' The rights of the common are not entitled to recognition until the rights of the preferred have been fully satisfied. 97 C. The District Court, with the apparent approval of the Court of Appeals, cast the standard of 'fair and equitable' in the mold of 'colloquial equities.' Making payment of the preferred in excess of $100 per share unfair, it thought, were various 'colloquial equities,' which may or may not have had an incidental bearing on the investment value of the shares. The issuing price was one such factor. The 'important consideration' was 'not what the preferred security holders paid, but how much the company received for their stock,' and since it was 'practically certain' that the company received no more than $98 per share for any of the three series of preferreds and that the public paid no more than $100 per share, there was 'no consideration of colloquial equity why the preferreds should be paid a premium.' 71 F. Supp. at page 801. Other 'colloquial equities' were the market history of the preferred,51 the fact that earnings had been retained in the system, thus enhancing the value of the preferred at a sacrifice to the common,52 and the hardship worked by the Act upon the common stock in the form of forced divestitures53 and frustration of the enterprise. 98 In deciding the case on the assumption that 'the inquiry is one of relative rights based on colloquial equity,' and that the Otis case accorded participation to security holders 'in accordance with the standard of colloquial equity,' the District Court erred insofar as by 'colloquial equities' it meant considerations which do not bear upon the investment or going-concern value the preferred would have absent the liquidation compelled by the Act. Congress, perhaps believing that the application of such an amorphous standard as that of 'colloquial equity' was beyond the competence of courts and commissions, has instead prescribed the requirement that investment values be preserved. IV. 99 The Escrow Arrangement. As we have stated, the plan has been consummated by the payment to the preferred of $100 per share, and the difference between the amount paid and the amount which would be payable under the plan approved by the Commission has been deposited in escrow, together with an amount sufficient to give the preferred, during the period of the litigation, a return on the sum in escrow 'measured by the return which would have been received by (the prefered stockholders) if the stock remained outstanding.'54 The preferred stockholders, who received $100 per share at the time of the consummation of the plan, will thus receive, on the additional $5 or $10 per share held in escrow, substantially the same return they would have derived by the retention of $5 or $10 worth of Engineers' preferred stock. 100 But the preferred stockholders contend that the plan should not have been consummated until such time as they were paid in full the amounts due them in satisfaction of their claims; that, in addition to the principal amount in escrow and interest thereon, they should receive an amount equal to dividends on the $100 per share received at the time of consummation, to the date of payment of the $5 or $10 held in escrow. Their argument is a technical one: it is said that the Commission actually applied the redemption provision to limit the amount of payment to them, since in the absence of that provision they would have been entitled to an investment value higher than the call prices; that by the terms of that provision the company had no right to terminate dividends except by payment of the full call prices. The answer is that the Commission did not apply the redemption provision, which, like the involuntary liquidation provision, was inoperative, but held that fairness required that the preferreds be paid no more than the call price, since the company could have called the stock at that price at any time, absent the Act. 101 The total sum in escrow is not sufficient to meet the preferred stockholders' demand. It is not apparent how they could recover the difference between the sum in escrow and the sum they claim in this proceeding. But we need not learn, for the escrow provision adopted by the District Court on the recommendation of the Commission in order to expedite consummation of the plan was fair to the preferred stockholders.55 The $100 per share received at the time of the consummation of the plan could have been invested in comparable securities at the current rate of return. On the $5 or $10 per share held in escrow the preferred stockholders will receive, for the period between the date of consummation and the date of payment, a return which approximates the favorable rate of return they received on their preferred stock in Engineers. Their position is at least substantially the same as it would have been had they received $105 or $110 per share at the time of the consummation of the plan. 102 Our specific consideration has applied to the major features of difference between the Commission and the reviewing courts. In our opinion, in these respects, the Commission's action has not been contrary to law and its findings were sustained by adequate evidence. Consequently, in accordance with the views we have stated concerning the scope of judicial review, the Commission's order should have been sustained. We have considered other contentions advanced by the parties and find nothing in them which would warrant a different conclusion. 103 The judgment of the Court of Appeals is reversed and the case is remanded to the District Court for further proceedings not inconsistent with this opinion. 104 Reversed and remanded. 105 Mr. Justice DOUGLAS and Mr. Justice JACKSON took no part in the consideration or decision of this case. 106 Appendix. 107 Securities and Exchange Commission's Development and Application of Investment Value Theory.* 108 The Commission first applied the investment value standard in a series of cases holding common stock entitled to participate with preferred in the new securities given to satisfy claims in the dissolving corporation, although in each case the book value of the corporation's assets was exceeded by the charter claims of the preferred.1 This application of the standard was approved by this Court in Otis & Co. v. Securities and Exchange Commission, 323 U.S. 624, 65 S.Ct. 483, 89 L.Ed. 511. Satisfaction of preferred claims at less than their face amount by payment partly in cash and partly in new securities has also been approved by the Commission.2 In other cases holding that, in the circumstances of the particular case, retirement of preferred stock having a call or voluntary liquidation price in excess of the involuntary liquidation price by payment in cash at the latter price is fair and equitable, the Commission has considered a number of factors other than charter provisions.3 109 In a number of contemporaneous cases, the Commission approved plans which provided for liquidation of bonds by payment in cash at the face amount of the bonds without premium.4 Even in the earliest of these cases, in addition to holding that the indenture provision requiring payment of a premium in the event of voluntary call was inapplicable, the Commission observed the absence of other legal or equitable considerations which might have made payment of a premium fair and equitable.5 And in the later cases, the Commission's opinions 'emphasized such circumstances, not articulated in the earlier cases, as the interest rate, maturity date, and risk factors incident to the particular security which is to be prepaid as bearing upon the fairness of the proposed discharge of the security.' American Power & Light Co., Holding Company Act Release No. 6176, p. 12. 110 In American Power & Light Co., Holding Company Act Release No. 6176, the Commission applied the investment value theory to allow payment of premiums on bonds retired under compulsion of § 11(e). After pointing out the trend observed in the preceding paragraph and attributing it to experience gained in considering a large number of cases, the Commission held that the investment value theory should be applied where its application resulted in the payment of the bonds at prices in excess of their face value. Commissioner Healy, who had persistently dissented in the line of cases finally approved by this Court in the Otis case,6 dissented vigorously. He contended that the Otis case should be limited to its facts and that the earlier cases refusing to require payment of premiums on bonds should be taken as holding that payment of bonds at their face amount without premium 'was fair because * * * contract rights were satisfied, not because the debentures were valued and found to be worth their principal.' Id. at 46.7 He thought it highly significant that a consistent application of the investment value standard would require retirement of bonds at less than their principal amount, in cases in which the bonds were not 'worth their principal,' and that the Commission had not suggested that its approach should extend so far. Id. at 47—48.8 111 Less than one year later the Commission made a parallel application of the investment value theory to a case involving the retirement of noncallable preferred stock, holding unfair a plan providing for the retirement of that stock by payment in cash equivalent to the liquidation preference. The United Light and Power Co., Holding Company Act Release No. 6603. Commissioner Healy, who died November 16, 1946, dissented, stating for the last time his view that the claim should be paid at its liquidation preference, i.e., that the contract controlled.9 After this decision, in which the Commission divided 3—2,10 a rehearing was granted. While decision on rehearing was pending, the company proposed a substitute voluntary proposal, which the Commission approved. The United Light and Power Co., Holding Company Act Release No. 7951. 112 The next application of the investment value theory employed by the Commission's majority was made in this case, decided December 5, 1946. Since this decision and the decision of the Court of Appeals on review, the Commission has again applied the investment value theory to require payment of preferred stock in cash at investment values equal to call prices. Pennsylvania Edison Co., Holding Company Act Release No. 8550. 113 In a number of cases the Commission has approved plans which provided for the payment of preferred stock at call prices, where there was no contention that the premium was not payable.11 But these cases have not been regarded as precedents in cases in which the company resists payment of the preferred stock or bonds in amounts in excess of the face value or involuntary liquidation price. The United Light and Power Co., 10 S.E.C. 1215, 1227. 1 49 Stat. 803, 822, 15 U.S.C. § 79k(e), 15 U.S.C.A. § 79k(e). 2 Engineers Public Service Co., 9 S.E.C. 764; The Western Public Service Co., 10 S.E.C. 904; Engineers Public Service Co., 12 S.E.C. 41; Engineers Public Service Co., 12 S.E.C. 268. The latter two orders were reviewed on the petition of Engineers by the Court of Appeals for the District of Columbia, which, on November 22, 1943, set aside those orders and remanded the case to the Commission for further proceedings in accordance with its opinion. Engineers Public Service Co. v. Securities and Exchange Commission, 78 U.S.App.D.C. 199, 138 F.2d 936. On the applications of both Engineers and the Commission, this Court granted certiorari. 322 U.S. 723, 64 S.Ct. 1273, 88 L.Ed. 1561. We were prevented by lack of a quorum from deciding the case, and when we were advised that the partial consummation of the plan now under consideration rendered the question moot, we ordered the decision of the Court of Appeals vacated. 332 U.S. 788, 68 S.Ct. 96, 92 L.Ed. 370. 3 The cash with which the preferred was to be paid was to consist of treasury cash on hand, cash obtained by a stortterm bank loan, and $21,964,632 in cash which Engineer's common stockholders were to pay into the company's treasury in exchange for warrants entitling them to purchase one share of Gulf State's common stock at $11.50 per share, for each share of Engineers owned. The provision for the bank loan was deleted from the amended plan, by requirement of the Commission, and the cash which would have been thus obtained was to be obtained from special dividends declared by the three operating subsidiaries. 4 After retirement of the preferred, the common stock of El Paso and Virginia (the two remaining companies whose common stock was owned by Engineers) was to be distributed among the 13,000 common stockholders of Engineers as a final liquidation dividend, after which Engineers and the system's service company were to dissolve. 5 The $5 series was issued in March, 1928, and was sold, with a conversion privilege which had since expired, to the public at $100 per share. The $5.50 preferred was issued in October of the same year and was sold, with warrants (inoperative at the time the plan was proposed) entitling holders to purchase common stock, to the public at $99.50 per share. The $6 series was issued in September, 1930, and sold to the public at $100. 6 Except for the period from July 1, 1933, to July 31, 1936, dividends on the preferred stock were never in arrears. The arrearages for this single period of delinquency were satisfied in 1936 and 1937. 7 'The $5.00 series reached a high of $123 in 1929; its average price with the conversion privilege was $60.94; and $80.50 since the expiration of that privilege, its overall average since issue is.$67.16. The $5.50 series had an average of $53.98 while its warrant right existed, and an average of $85.23 since; it reached a high of $109.00 in 1929, and its overall average since issue is $64.52. The $6.00 preferred reached its highest market price in 1945; its average price since issue is $62.77. As of February 13, 1946, the latest date covered in the hearings, the $5.00 series was selling at 105 1/8, the $5.50 series at 105 3/4, and the $6.00 series at 109. 'Engineers common, issued in 1925, reached a high of 79 5/8 in 1929 and a low of 1 1/8 in 1935. On February 13, 1946 it was selling at 36.' Holding Company Act Release No. 7041, p. 27, n. 45. Quotations in the text through note 11 are from this Release, unless otherwise indicated. 8 The Commission summarized Badger's testimony as follows: 'After analyzing the earnings and assets of Engineers, he (Badger) selected for comparison the preferred stocks of five public utility holding companies which he believed to be similar to Engin ers. These companies were compared with Engineers for the years 1940 to 1945 with reference to 'times all charges and preferred dividends earned,' 'proportion of prior obligations to total capitalization,' 'book value of equity per share of preferred,' 'percent of net quick assets to prior obligations' and 'times parent company dividends were earned.' It appeared that in general the position of Engineers' preferred was somewhat below the average of the five other companies until the disposition of Puget Sound in 1943. As a consequence of that disposition, its position improved to slightly over the average for those companies. Badger concluded that on an overall basis Engineers was in a median or average position as compared to the five companies studied. On the basis of a comparison of the yields of the five securities studied, he concluded that the $5.00 preferred of Engineers had an average value of $107.49 a share, the $5.50 preferred an average value of $118.31 a share, and the $6.00 preferred an average value of $129.07 a share. 'Badger also prepared a study of the preferred stocks of ten operating and holding companies selected for the similarity of their earnings to those of Engineers. These companies on an average earned all charges and preferred dividends 1.49 times in 1943, as against 1.40 times for Engineers. In 1944 they earned overall charges 1.48 times, as against 1.54 times for Engineers. They covered preferred dividends, 2.52 times in 1943, as against 2.48 for Engineers, and in 1944 covered preferred dividends 2.46 times, as against a similar coverage of 3.20 for Engineers. The stocks selected sold at prices to yield between 3.9 and 5.4%, or an average yield for the ten stocks of 4.5%. Badger applied this yield to the several classes of Engineers' preferred and obtained corresponding values of $111.11 for the $5.00 preferred, $122.22 for the $5.50 preferred, and $133.33 for the $6.00 preferred. Badger concluded, however, that in his opinion, and in view of the 'investment characteristics' of the company and the conditions of the money market, a proper yield for the Engineers preferred, absent a call price, would be 4.6%, so that the corresponding investment worth per share of the three series would be * * *' the amounts stated in the text. Holding Company Act Release No. 7041, p. 30. 9 The Commission cited several of its previous opinions for support of this result: Buffalo, Niagara & Eastern Power Corp., Holding Co. Act Release No. 6083; New England Power Associates et al., Holding Company Act Release No. 6470; American Power & Light Co., Holding Company Act Release No. 6176. 10 At the time of the hearings the company had on hand in its treasury some $14,650,000 in idle cash, and it was estimated that by the end of 1946 this sum would reach $16,825,000. These funds had accumulated from property dispositions and retained earnings, the management having pursued a policy of withholding dividends on the common until it was satisfied that the system had made the adjustments required by the Act. 11 The Commission observed: 'In all of its divestments, Engineers has been free in its choice of methods, and, within in limits, to choose the time for divestment. All sales have been negotiated by Engineers at arm's-length. If, as in the case of Puget Sound, the sale brought less than the carrying value on the books of Engineers, the indication is that the carrying value was excessive and not that the sales price was low. It is significant that the market price of Engineers' common when the plan was filed was the highest since 1932 and that the price has been rising steadily since 1942 when the program of simplification got under way. * * * Engineers' common reached a low of 1 1/8 in 1935. By 1945, when the plan was filed, it had reached a hig of 37.' Holding Company Act No. 7041, p. 34, n. 55. See also note 38 infra. 12 The bank loan which the plan proposed in order to raise cash with which to pay off the preferred was found by the Commission to be unnecessary. See note 3 supra. Retention of $65,000,000 of Virginia stock by a trusteeship arrangement which necessitated retention of a large part of Engineers' staff was found unnecessary. All stock of Virginia could be distributed immediately upon payment of the preferred at $100 per share and creation of an appropriate escrow to protect the preferred shareholders' rights to additional payments found due. The plan was also found 'incomplete and unfair' because it failed to include a provision for supervision by the Commission over the payment of fees and expenses incurred in connection with the plan. 13 Counsel for the Commission has taken the position in these proceedings that this provision regarding an escrow did not constitute an 'amendment' to the plan, stating that 'The Commission expressly refused to amend the plan and said if an escrow turns out to be necessary it can be done under the aegis of the Court, and we have viewed the escrow device simply as a device in connection with the mechanics of consummation.' Commissioner Caffrey, while joining fully in the Commission's opinion, added that Engineers, as a holding company of a single utility company, would have been subject to proceedings under § 11(b)(2) of the Act had it not come forward with a plan. Its dissolution, therefore, was a logical step following the required compliance with the Commission's orders under § 11(b)(1), and was not voluntary. Commissioner Hanrahan concurred but thought the discussion of the investment values of the preferred wholly unnecessary, for in his view the liquidation was voluntary, and the preferred should therefore receive the voluntary liquidation preferences provided in Engineers' charter. Holding Co. Release No. 7119. 14 Examples selected by the court were divestitures of interests in Puget Sound Power & Light Company and El Paso Natural Gas Company. See note 11 supra and note 38 infra. But even an investment value figure properly arrived at is 'only one of a series of factors to be used in arriving at equitable equivalents.' The Commission was required to consider 'All pertinent factors and all substantial equities,' which presumably included the 'colloquial equities' adverted to by the District Court. Id. at page 738. 15 'The Commission takes the position before us that 'Unless the conclusions of the Commission lack 'any rational and statutory foundation' they should not have been disturbed by the court below for the 'fair and equitable" rule of Section 11(e) * * * (was) inserted by the framers of the act in order to protect the various interests at stake. * * * The very breadth of the statutory language precludes a reversal of the Commission's judgment save where it has plainly abused its discretion in these matters,' citing, among other authorities, Securities (& Exchange) Commission v. Chenery Corp. (the second Chenery case), 332 U.S. 194, 195 at pages 207, 208, 67 S.Ct. 1575, at pages 1582, 1583 (91 L.Ed. 1995).' 168 F.2d at page 729. See note 16 infra. 16 The Court of Appeals held that the rule of review declared in the Chenery case was inapplicable in the present case because Shenery involved a proceeding for review under § 24(a) of the Act, while this is a proceeding under § 11(e). But see text infra. 17 The pertinent part of § 11(e) is in terms as follows: 'If, after the notice and opportunity for hearing, the Commission shall find such plan, as submitted or as modified, necessary to effectuate the provisions of subsection (b) and fair and equitable to the persons affected by such plan, the Commission shall make an order approving such plan; and the Commission, at the request of the company, may apply to a court, in accordance with the provisions of subsection (f) of section 18, to enforce and carry out the terms and provisions of such plan. If, upon any such application, the court, after notice and opportunity for hearing, shall approve such plan as fair and equitable and as appropriate to effectuate the provisions of section 11, the court as a court of equity may, to such extent as it deems necessary for the purpose of carrying out the terms and provisions of such plan, take exclusive jurisdiction and possession of the company or companies and the assets thereof, wherever located; and the court shall have jurisdiction to appoint a trustee, and the court may constitute and appoint the Commission as sole trustee, to hold or administer, under the direction of the court and in accordance with the plan theretofore approved by the court and the Commission, the assets so possessed.' 18 The full text of § 24(a) is as follows: 'Sec. 24. (a) Any person or party aggrieved by an order issued by the Commission under this title may obtain a review of such order in the circuit court of appeals of the United States within any circuit wherein such person resides or has his principal place of business, or in the United States Court of Appeals for the District of Columbia, by filing in such court, within sixty days after the entry of such order, a written petition praying that the order of the Commission be modified or set aside in whole or in part. A copy of such petition shall be forthwith served upon any member of the Commission, or upon any officer thereof designated by the Commission for that purpose, and thereupon the Commission shall certify and file in the court a transcript of the record upon which the order complained of was entered. Upon the filing of such transcript such court shall have exclusive jurisdiction to affirm, modify, or set aside such order, in whole or in part. No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission or unless there were reasonable grounds for failure so to do. The findings of the Commission as to the facts, if supported by substantial evidence, shall be conclusive. If application is made to the court for leave to adduce additional evidence, and it is shown to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the proceeding before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Commission may modify its findings as to the facts by reason of the additional evidence so taken, and it shall file with the court such modified or new findings, which, if supported by substantial evidence, shall be conclusive, and its recommendation, if any, for the modification or setting aside of the original order. The judgment and decree of the court affirming, modifying, or setting aside, in whole or in part, any such order of the Commission shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification as provided in sections 239 and 240 of the Judicial Code, as amended (U.S.C., title 28, secs. 346 and 347).' 15 U.S.C. § 79x, 15 U.S.C.A. § 79x. 19 S.Rep.No.621, 74th Cong., 1st Sess. 13; 168 F.2d at page 729. 20 79 Cong.Rec. 8845: 'Mr. Borah. Mr. President, I desire to ask the Senator from Montana a question. 'On page 50, beginning with line 2 the bill provides as follows: "In any such proceeding a reorganization plan for a registered holding company or any subsidiary company thereof shall not become effective unless such plan shall have been approved by the Commission after opportunity for hearing prior to its submission to the court.' 'I do not exactly understand that language. Does it mean that the court's jurisdiction with reference to the reorganization, or what shall be permitted by decree of the court, is limited; or is it simply recommendatory to the court? 'Mr. Wheeler. We do exactly the same thing at the present time, as I understand, with reference to the Interstate Commerce Commission. A plan for the reorganization of a railroad is supposed to be submitted to the Interstate Commerce Commission for its approval before it is approved by the court. We put this provision in here in practically the same manner, as I recall, as the existing provision with reference to the Interstate Commerce Commission in the case of railroad reorganizations. * * * 'The Senator from Indiana (Mr. Minton) has called my attention to the fact that the provision does not oust the jurisdiction of the court at all, because the court has to approve the plan even though the Commission approves it. In other words there is really a double check upon the plan, and final determination rests as in the past in the courts.' 21 Lahti v. New England Power Ass'n, 1 Cir., 1947, 160 F.2d 845, affirming In re New England Power Ass'n, D.C.Mass.1946, 66 F.Supp. 378; Massachusetts Mutual Life Ins. Co. v. S.E.C., 8 Cir., 1944, 151 F.2d 424, affirming In re Laclede Gas Light Co., D.C.E.D.Mo.1946, 57 F.Supp. 997; In re Electric Bond & Share Co., D.C.S.D.N.Y.1946, 73 F.Supp. 426; In re Eastern Minnesota Power Corp., D.C.Minn.1947, 74 F.Supp. 528; In re Kings County Lighting Co., D.C.E.D.N.Y.1947, 72 F.Supp. 767, affirmed sub. nom., Public Service Commission of N.Y. v. S.E.C., 2 Cir., 1948, 166 F.2d 784; In re New England Public Service Co., D.C.Me.1947, 73 F.Supp. 452. 22 In re Community Gas & Power Co., 3 Cir., 1948, 168 F.2d 740, affirming D.C.Del.1947, 71 F.Supp. 171; In re North West Utilities Co., D.C.Del.1948, 76 F.Supp. 63; In re Interstate Power Co., D.C.Del.1947, 71 F.Supp. 164; accord Illinois Iowa Power Co. v. North American Light & Power Co., D.C.Del.1943, 49 F.Supp. 277; but see In re Standard Gas & Electric Co., 3 Cir., 1945, 151 F.2d 326, reversing D.C.Del.1945, 59 F.Supp. 274. 23 Group of Institutional Investors v. Chicago, M., St. P. & P.R. Co., 318 U.S. 523, 565, 63 S.Ct. 727, 749, 87 L.Ed. 959; Northern Pacific R. Co. v. Boyd, 228 U.S. 482, 33 S.Ct. 554, 57 L.Ed. 931; Case v. Los Angeles Lumber Products Co., 308 U.S. 106, 60 S.Ct. 1, 84 L.Ed. 110; Consolidated Rock Products Co. v. Du Bois, 312 U.S. 510, 61 S.Ct. 675, 85 L.Ed. 982; Marine Harbor Properies v. Manufacturer's Trust Co., 317 U.S. 78, 63 S.Ct. 93, 87 L.Ed. 64; Ecker v. Western Pacific R.R. Corp., 318 U.S. 448, 63 S.Ct. 692, 87 L.Ed. 892; Otis & Co. v. S.E.C., 323 U.S. 624, 634, 65 S.Ct. 483, 488, 89 L.Ed. 511. 24 See the Appendix to this opinion. 25 Massachusetts Mutual Life Insurance Co. v. Securities and Exchange Commission, 8 Cir., 151 F.2d 424, 430. The Court of Appeals in this case agreed that charter provisions were not determinative, 168 F.2d at page 736. While the district judge declined to decide whether the involuntary liquidation preference applied in this case, he has else-where indicated his awareness that charter provisions do not control in liquidations compelled by the Act. In re Consolidated Electric & Gas Co., D.C., 55 F.Supp. 211, 216; In re North Continent Utilities Corp., D.C., 54 F.Supp. 527, 530—531. 26 Engineers' charter provides that preferred shareholders shall receive $100 per share, plus accrued dividends, 'In the event of any liquidation, dissolution or winding up of this Corporation.' In Otis the liquidation preference was payable 'Upon the dissolution or liquidation of the corporation, whether voluntary or involuntary.' 323 U.S. at page 630, note 6, 65 S.Ct. at page 486, 89 L.Ed. 511. 27 The conclusion that liquidation compelled by governmental edict was not foreseen at the time Engineers' charter was drafted is reenforced by a statement appearing in the record, made by counsel for Engineers, one of the draftsmen of the charter, apparently in connection with another case, that a § 11 liquidation 'is an arbitrarily and forced statutory termination of the enterprise, and it has no relation whatsoever to any factors which the parties could have had in mind when they entered the enterprise.' 28 The common stockholders contend that the repeated references in the legislative history of the Holding Company Act to Continental Insurance Company v. United States, 259 U.S. 156, 42 S.Ct. 540, 66 L.Ed. 871 (S. Rep. No. 621, 74th Cong., 1st Sess. 33; H.R. Rep. No. 1318, 74th Cong., 1st Sess. 49—50; 79 Cong.Rec. 4607, 8432) 'leave no doubt that at least when a genuine liquidation is compelled by the Act,' charter provisions were intended to control. But these congressional references to the Continental case were in support of propositions other than that charter liquidation provisions are applicable to liquidations compelled by the Act. The Otis opinion pointed out that the Continental case 'turned * * * on the charter rights of the preferred to share equally with the common in earnings which had be ome assets, * * * not on whether a right to share was matured or varied by governmental action.' 323 U.S. at page 639, 65 S.Ct. at page 491, 89 L.Ed. 511. The opinion proceeds to refute expressly the contentions made by the common stockholders here: 'We do not feel constrained by (the Continental case's) dealing with charter rights as in a normal liquidation to hold that where liquidation is adopted as a matter of administrative routine, the preferences are thereby matured.' Ibid. 29 The Otis case was described as follows: '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 were taking place.' Consequently the liquidation preferences were only one factor in valuation rather than determinative of amounts payable.' 334 U.S. at page 199, 68 S.Ct. at page 967. 30 American Law Institute, Restatement, Contracts § 468, comment on subsection 3. 31 The analogy between bonds and preferred stock, cf. 2 Dewing, The Financial Policy of Corporations 1247, n.r. (4th ed., 1941) is subject to obvious limitations. For example, if the claims of bondholdes rather than preferred stockholders had been in issue in the Otis case, United Power would have been an insolvent rather than a solvent corporation and so subject to bankruptcy. At least with reference to the issue of whether amounts in excess of the face value of a security are payable, we need not distinguish between treatment to be accorded bonds and preferred stock. The Commission's tendency has been to treat both the same. See, e.g., The United Light & Power Co., 10 S.E.C. 1215, 1226—1227; Cities Service Co., Holding Company Act Release No. 4944. 32 The citation by the Otis majority, 'Compare New York Trust Co. v. Securities & Exchange Commission, 2 Cir., 131 F.2d 274; In re Laclede Gas Light Co., D.C., 57 F.Supp. 997,' is of no assistance to the common stockholders here, for it is in support of and directly following the sentence: 'Where pre-existing contract provisions exist which produce results at variance with a legislative policy which was not foreseeable at the time the contract was made, they cannot be permitted to operate.' 323 U.S. at page 638, 65 S.Ct. at page 490, 89 L.Ed. 511. 33 Affirming In re Laclede Gas Light Co., D.C., 57 F.Supp. 997. 34 Two other decisions in the courts of appeals, which cite and purport to follow the New York Trust case, reason that the premium is payable only in the event of voluntary redemption of the bond, that the redemption is not voluntary, nd therefore that the premium is not payable. Since this syllogism disposes of each case without reference to the doctrine of frustration, the frustration rationale of the New York Trust case is an alternative ground in both cases. City National Bank & Trust Co. of Chicago v. S.E.C., 7 Cir., 134 F.2d 65; In re Standard Gas & Electric Co., 3 Cir., 151 F.2d 326. 35 323 U.S. at page 634, 65 S.Ct. at page 488. See also the quoted statement of the Commission's views, as opposed to those of Commissioner Healy, set forth 323 U.S. at page 635, note 17, 65 S.Ct. at page 489; Holding Company Act Release No. 4215, p. 12. 36 The Court of Appeals took the Commission's method to be valuation 'as if the Act had never been passed.' It criticized the Commission for valuing the preferreds on this basis but not valuing the common in the same manner. 168 F.2d at pages 737—738. 37 The Court of Appeals thought that if the Commission wished to value the securities 'ex the Act, losses of the sort referred to in this paragraph must be weighed into the calculation, i.e., such losses should be returned to the credit side of the enterprise's balance sheet as a matter of bookkeeping.' 168 F.2d at page 738. 38 In the Puget Sound reorganization Engineers received as of 1943 approximately a 3% interest in the new common stock in return for its old 99.3% common stock interest. The old common was estimated to be 18 to 34 years away from dividends in the absence of a reorganization. 13 S.E.C. 226. As in the Otis case, the controversy was over the question of whether Engineers was entitled to any participation in the new company, in view of the remote and contingent character of its earnings expectations. Engineers subsequently sold the interest it received in the reorganization for $764,765. The Court of Appeals' conclusion that Engineers lost through the Puget Sound divestment is based upon the premise that actual earnings of the new company were considerably higher during 1946 and the first half of 1947 than the estimated earnings upon which the Commission based its reorganization allowance to Engineers. 168 F.2d at page 737, citing Moody's Public Utility Manual (1947) 53, and supp. Vol. 19, at 1914. The Commission correctly observes that this is an oversimplification of the complex problems involved in the valuation of Engineers' interest in Puget Sound and of the relationship between that interest in 1943 and its hypothetical value today if no recapitalization and divestment had occurred. It notes that the carnings figures taken from Moody's fail to reflect the use of a much lower depreciation allowance that the Commission thought appropriate in making its earnings estimate, capital expenditures since 1943, and divestment of certain properties after Puget Sound had ceased to be subject to the Act. The period taken by the Court of Appeals can hardly be assumed to provide a reliable average earnings figure. Absent the impact of the Act, recapitalization of Puget Sound would probably have been necessary in the exercise of sound business judgment, a consideration which imports numerous additional uncertainties. Further, the evaluation of the Puget Sound divestiture required by the Court of Appeals would compel the Commission to estimate the effects of Engineers' hypothetical lack of the $764,765 received from the sale of the securities received in the Puget recapitalization, funds which were actually used to purchase additional interests in other companies and to make payments to Engineers' preferred stocks. Certain tax advantages derived from the sale of Puget would have to be taken into account. The Court of Appeals also cited the El Paso Natural Gas Company divestiture as an example of a loss to Engineers caused by the Act, saying, 'Under this divestiture Engineers lost a profit of at least $4,000,000.' 168 F.2d at page 737. In 1931 Engineers loaned El Paso $3,500,000 and received in return $3,500,000 in bonds and an option to purchase 192,119 shares of El Paso's common stock. As a result of the exercise or assignment of some of these options and the resale in 1936, 1937 and 1944 of stock acquired by their exercise, Engineers realized a profit, in addition to the repayment of the loan, of $2,700,000 on its El Paso investment. The statement that these transactions involved a loss of $4,000,000 to Engineers is based upon the assumptions that the timing of the sales was compelled by § 11 and not by managerial judgment, that in the absence of § 11 management would have sold the stock at the very peak of the market, and upon other equally dubious premises. 39 Engineers' system consisted of 17 companies before the Commission began its integration proceedings. See note 2 and text, supra. 40 Ecker v. Western Pacific R.R. Corp., 318 U.S. 448, 482 483, 63 S.Ct. 692, 711—712, 87 L.Ed. 892; Group of Institutional Investors v. Chicago, M., & St. P.R. Co., 318 U.S. 523, 565—566, 63 S.Ct. 727, 749, 87 L.Ed. 959; Otis & Co. v. Securities and Exchange Commission, 323 U.S. 624, 639—640, 65 S.Ct. 483, 490—491, 89 L.Ed. 511. 41 Badger's analysis, as summarized by the Commission, is stated in note 8, supra. 42 See text supra, paragraph following note 8. 43 The Court of Appeals stated that the Commission erred in failing to 'give any substantial consideration to the future earning power of Engineers and its subsidiaries which the Supreme Court has held is one of the fundamental tests for reorganization valuation.' 168 F.2d at pages 736—737. A precise finding as to prospective earnings of a continuing Engineers would be the controlling subsidiary finding upon which a precise finding as to going-concern value 'ex the Act' would be based. See Group of Institutional Investors v. Chicago, M., St. P. & P.R. Co., 318 U.S. 523, 540, 63 S.Ct. 727, 738, 87 L.Ed. 959; Consolidated Rock Products Co. v. Du Bois, 312 U.S. 510, 525, 61 S.Ct. 675, 684, 85 L.Ed. 982; 6 Collier, Bankruptcy 3849—3855 (14th ed., 1947). But where it is clear that the prospective earnings of the corporation would be more than enough to continue payment of preferred dividends and to carry the going-concern value, absent call provisions, well above the call price, there is no necessity for making a precise forecast of future earnings, for the call price marks the ceiling. Cf. Ecker v. Western Pacific R.R. Corp., 318 U.S. 448, 479—483, 63 S.Ct. 692, 710—712, 87 L.Ed. 892. 44 The District Court made a finding with respect to Badger's conclusion as to the permanence of the current yield rate and concluded that 'The extremely low money rates which resulted in Badger's finding that the preferred tocks of Engineers have an 'investment value' greater than $100 per share, largely reflect artificial factors which are clearly subject to changes at any time and may well be of purely transitory character.' It is difficult to reconcile this 'finding' with the following statement which appears in the court's published opinion: 'I accept Dr. Badger's values and, in the absence of a showing of changed circumstances. I shall assume that those values are applicable at the present time.' 71 F.Supp. at page 801. At any rate, this is predominately a question of fact, and the Commission's determination, supported as it was by substantial evidence, should not have been disturbed, absent supervening economic developments prior to the consummation of the plan which clearly required reconsideration. 45 The changes in interest rates which had occurred at the time of the decisions of the District Court and the Court of Appeals were merely cited to indicate that future changes might affect the accuracy of Badger's predictions. 46 The Court of Appeals states that the Commission 'made no finding as to the 'value' of the common stock,' and that 'the Commission ascribed 'investment value' to the preferreds but failed to make a similar approach to the common.' 168 F.2d at page 737. Central-Illinois Securities Corpoation and Christian A. Johnson, representing the common stockholders, complain t at 'the Commission's determination of the equitable equivalent of the rights surrendered by Engineers' stockholders failed utterly to take account of the correlative rights of the preferred and common.' 47 See note 38 and text, supra. 48 The Commission stated in its opinion that 'Engineers has produced an abundance of evidence showing that once it has disposed of El Paso and Gulf, it will have no reason to continue as a separate corporate entity for it would then be the parent of a single operating company, Virginia. In that situation, Engineers admits that it would be an 'economic monstrosity' and all participants in this proceeding seem to be in agreement with that conclusion. The record does not clearly indicate what it will cost to maintain Engineers after Gulf States and El Paso have been divested. Estimates range from $172,000 to $365,000 a year. The company freely admits that Engineers could in no way justify any such continuing expenditure. Virginia is able to undertake its own financing and service and is large enough to stand independently. Any functions Engineers might perform should more properly be carried out by Virginia's own management.' Holding Company Act Release No. 7041, p. 18. 49 'Leverage' is the term used to describe the advantage gained by junior interests through the rental of capital at a rate lower than the rate of return which they receive in the use of that borrowed capital. Assuming that the hypothetical Engineers could have used to advantage the $39,000,000 in capital supplied by the preferred stockholders, the Commission could properly have found that such 'leverage' was not worth the risk that earnings might drop below the amount required to pay dividends on the preferred, thereby endangering the junior equity of $66,768,148 (the market value of the securities received by the common under the plan, as of the date of consummation, less the amount paid in the exercise of Gulf warrants). In the light of the facts stated in the following quotation from the Commission's opinion, it is highly unlikely that the hypothetical Engineers would have had use for the capital supplied by the preferred stockholders: 'The retirement of the preferred stock will be of immediate benefit to the common stockholders. As indicated above, the company at the time of the hearings had on hand idle treasury cash of over $14,650,000, while it is estimated tha this sum will reach approximately $16,825,000 by the end of 1946. These funds have been accumulated through property dispositions and retained earings. The management has pursued a policy of withholding dividends on the common stock until it is satisfied that the system has made all the adjustments that will be required of it under the Holding Company Act. As a consequence the company has now accumulated a large amount of idle funds while it continues to have outstanding three substantial issues of preferred stock having fixed dividened requirements. Under the circumstances the elimination of this prior charge is highly beneficial to the common.' Holding Company Act Release No. 7041, p. 32. 50 S. Rep. No. 621, 74th Cong., 1st Sess. 11—12; Additional Views by Representative Eicher, H.R.Rep. No. 1318, 74th Cong., 1st Sess. 46—47; Statement of House Managers, H.R.Rep. No. 1903, 74th Cong., 1st Sess. 70—71; Committee of Public Utility Executives, Summary of S. 2796, 74th Cong., 1st Sess., with Annotations, June, 1935, 5, 7. 51 See note 7, supra. 52 Cf. Continental Insurance Co. v. United States, 259 U.S. 156, 42 S.Ct. 540, 66 L.Ed. 871, in which the principal issue was whether, when the charter provided that preferred and common should share equally on dissolution in the assets of the corporation, earnings retained in the systems should be regarded as assets and shared with the preferred in a dissolution forced by the antitrust laws. It was held that these retained earnings were assets and should be shared by the preferred. 53 See note 38 and text supra. 54 In escrow is the sum of $4,000,000, comprised as follows: $3,204,795, which is equal to $5, $10, and $10 per share respectively of the three series of preferred; $484,325, which is an amount equal to simple interest for three years at the rate of 4.76% on the $5 preferred, 5% on the $5.50 preferred, and 5.45% on the $6 preferred; $310,880, which will cover all fees and other compensation and all remuneration or expenses claimed in connection with the plan. 55 The preferred stockholders object that the Commission fail d to give them notice and an opportunity to be heard on the recommendation that an escrow be established. The escrow recommendation was made by way of an amending order, Holding Company Act Release No. 7190, and the Commission seems to have insisted throughout that its recommendation did not have the effect of amending the plan, but that the establishment of an escrow was within the power of the District Court. See note 13, supra. The District Court, which ordered the creation of the escrow, afforded the preferred stockholders a hearing on the propriety of that provision and upon whether the plan should be consummated prior to a final determination by the court of last resort of the amounts due the preferred stock. Applications for stay of consummation were denied in turn by the District Court, by the Court of Appeals and by a Justice of this Court. There was no occasion to hold a hearing on the question of whether the plan should be consummated by payment of $100 and the creation of an escrow at the time the Commission passed on the plan, for it approved the plan's provision for payment of $105 and $110. The necessity of deciding whether there should be consummation and an escrow first arose in the District Court. It was proper for the Commission, when it became apprised of determined opposition to the plan on the part of certain common stockholders, to recommend that the plan be consummated and that an escrow be created to protect the rights of the preferred, in the interest of expeditiously bringing the remmant of the Engineers system into compliance with the Act, without holding a hearing on the propriety of its recommendation. In the District Court and in the Court of Appeals, the preferred stockholders were accorded full hearing. * This Appendix is merely a summary of Commission decisions and does not purport to declare any rulings of law. 1 Community Power and Light Co., 6 S.E.C. 182; Federal Water Service Corp., 8 S.E.C. 893; United Power and Light Co., 13 S.E.C. 1 (the Otis case); Puget Sound Power & Light Co., 13 S.E.C. 226; Sout ern Colorado Power Co., Holding Company Act Release No. 4501; Virginia Public Service Co., Holding Company Act Release No. 4618. These cases are discussed in Dodd, The Relative Rights of Preferred and Common Shareholders in Recapitalization Plans Under the Holding Company Act, 57 Harv.L.Rev. 295. Commissioner Healy, who concurred in the result in the Community Power Case, dissented in the other cases, contending that the claim of the preferred was measured by the contract right. His view of the meaning of § 11(e) led him to dissent in cases involving applications of the investment value rule which produced the results reached in this case. See Text, at note 6, infra. 2 In re New England Power Ass'n, Holding Company Act Release No. 6470, D.C., 66 F.Supp. 378, affirmed sub nom. Lahti v. New England Power Ass'n, 1 Cir., 160 F.2d 845. 3 Cities Service Co., Holding Company Act Release No. 4944, pp. 16—17; Georgia Power & Light Co., Holding Company Act Release No. 5568, pp. 16—17, 20—27. 4 The United Light and Power Co., 10 S.E.C. 1215, 1222, affirmed sub nom. New York Trust Co. v. S.E.C. 2 Cir., 131 F.2d 274; North American Light & Power Co., 11 S.E.C. 820, 824, affirmed sub nom. City National Bank & Trust Co. of Chicago v. S.E.C., 7 Cir., 134 F.2d 65; In re North Continent Utilities Corp., Holding Company Act Release No. 4686, p. 12, approved and enforced, D.C., 54 F.Supp. 527; Consolidated Electric & Gas Co., Holding Company Act Release No. 4900, p. 7, approved and enforced, In re Laclede Gas Light Co., D.C., 57 F.Supp. 997, affirmed sub nom. Massachusetts Mutual Life Insurance Co. v. S.E.C., 8 Cir., 151 F.2d 424. 5 The United Light and Power Co., 10 S.E.C. 1215, 1222; North American Light & Power Co., 11 S.E.C. 820, 824. 6 See note 1, supra. 7 While contending that the majority's approach was not consistent with the cases refusing to allow premiums, he admitted 'that a close reading of the Commission's opinions in those cases discloses some language which the investing public may or may not have realized vaguely heralded the present doctrine.' Holding Company Act Release No. 6176 at p. 47. 8 The Commission, in its brief in the case at bar, declines to predict what it would do if faced with the problem suggested by Commissioner Healy, asserting that much would depend on the exact nature of the security and the circumstances of the particular case. 9 Commissioner Healy's position is explained in the following statement: 'When I signed the Report of the National Power Policy Committee to President Roosevelt I understood the much quoted reference to preservation of investment values to refer to the values of operating company securities in holding company portfolios. I did not then and do not now believe it was intended as a basis for denying the senior security holders their full priority rights or for compelling common stockholders to pay premiums upon the redemption or retirement of senior securities forced by federal statute.' The United Light and Power Co., Holding Company Act Release No. 6603, pp. 43—44. 10 Commissioner Caffrey thought the liquidation preference applicable for a reason irrelevant here. See El Paso Electric Co., holding Company Act Release No. 5499. 11 E.g., Minnesota Power & Light Co., Holding Company Act Release No. 5850; Mississippi River Power Co., Holding Company Act Release No. 5776; The North American Co., Holding Company Act Release No. 5796.

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338 U.S. 49 69 S.Ct. 1357 93 L.Ed. 1801 Robert A. WATTS, Petitioner,v.STATE OF INDIANA. L. D. HARRIS, Petitioner, v. STATE OF SOUTH CAROLINA. Aaron TURNER, Petitioner, v. COMMONWEALTH OF PENNSYLVANIA. Nos. 610, 76 and 107. Supreme Court of the United States June 27, 1949 On Writ of Certiorari to the Supreme Court of the State of Indiana. On Writ of Certiorari to the Supreme Court of the State of South Carolina. On Writ of Certiorari to the Supreme Court of the Commonwealth of Pennsylvania. Messrs. Thurgood Marshall, Franklin H. Williams, New York City, for petitioner. Mr. Frank E. Coughlin, Indianapolis, Ind., for respondent. Mr. Justice FRANKFURTER announced the judgment of the Court and an opinion in which Mr. Justice MURPHY and Mr. Justice RUTLEDGE join. 1 Although the Constitution puts protection against crime predominantly in the keeping of the States, the Fourteenth Amendment severely restricted the States in their administration of criminal justice. Thus, while the State courts have the responsibility for securing the rudimentary requirements of a civilized order, in discharging that responsibility there hangs over them the reviewing power of this Court.1 Power of such delicacy and import must, of course, be exercised with the greatest forbearance. When, however, appeal is made to it, there is no escape. And so this Court once again must meet the uncongenial duty of testing the validity of a conviction by a State court for a State crime by what is to be found in the Due Process Clause of the Fourteenth Amendment. This case is here because the Supreme Court of Indiana rejected petitioner's claim that confessions elicited from him were procured under circumstances rendering their admission as evidence against him a denial of due process of law.2 Ind.Sup., 82 N.E.2d 846. The grounds on which our review was sought seemed sufficiently weightly to grant the petition for certiorari. 336 U.S. 917, 69 S.Ct. 636. 2 On review here of State convictions, all those matters which are usually termed issues of fact are for conclusive determination by the State courts and are not open for reconsideration by this Court. Observance of this restriction in our review of State courts calls for the utmost scruple. But 'issue of fact' is a coat of many colors. It does not cover a conclusion drawn from uncontroverted happenings, when that conclusion incorporates standards of conduct or criteria for judgment which in themselves are decisive of constitutional rights. Such standards and criteria, measured against the requirements drawn from constitutional provisions, and their proper applications, are issues for this Court's adjudication. Hooven & Allison Co. v. Evatt, 324 U.S. 652, 659, 65 S.Ct. 870, 874, 89 L.Ed. 1252, and cases cited. Especially in cases arising under the Due Process Clause is it important to distinguish between issues of fact that are here foreclosed and issues which, though cast in the form of determinations of fact, are the very issues to review which this Court sits. See Norris v. State of Alabama, 294 U.S. 587, 589, 590, 55 S.Ct. 579, 580, 79 L.Ed. 1074; Marsh v. State of Alabama, 326 U.S. 501, 510, 66 S.Ct. 276, 280, 281, 90 L.Ed. 265. 3 In the application of so embracing a constitutional concept as 'due process,' it would be idle to expect at all times unanimity of views. Nevertheless, in all the cases that have come here during the last decade from the courts of the various States in which it was claimed that the admission of coerced confessions vitiated convictions for murder,3 there has been complete agreement that any conflict in testimony as to what actually led to a contested confession is not this Court's concern. Such conflict comes here authoritatively resolved by the State's adjudication. Therefore only those elements of the events and circumstances in which a confession was involved that are unquestioned in the State's version of what happened are relevant to the constitutional issue here. But if force has been applied, this Court does not leave to local determination whether or not the confession was voluntary. There is torture of mind as well as body; the will is as much affected by fear as by force. And there comes a point where this Court should not be ignorant as judges of what we know as men. See Taft, C.J., in the Child Labor Tax Case (Bailey v. Drexel Furniture Co.), 259 U.S. 20, 37, 42 S.Ct. 499, 450, 451, 66 L.Ed. 817, 21 A.L.R. 1432. 4 This brings us to the undisputed circumstances which must determine the issue of due process in this case. Thanks to the forthrightness of counsel for Indiana, these circumstances may be briefly stated. 5 On November 12, 1947, a Wednesday, petitioner was arrested and held as the suspected perpetrator of an alleged criminal assault earlier in the day. Later the same day, in the vicinity of this occurrence, a woman was found dead under conditions suggesting murder in the course of an attempted criminal assault. Suspicion of murder quickly turned towards petitioner and the police began to question him. They took him from the county jail to State Police Headquarters, where he was questioned by officers in relays from about eleven thirty that night until sometime between 2:30 and 3 o'clock the following morning. The same procedure of persistent interrogation from about 5:30 in the afternoon until about 3 o'clock the following morning, by a relay of six to eight officers, was pursued on Thurday the 13th, Friday the 14th, Saturday the 15th, Monday the 17th. Sunday was a day of rest from interrogation. About 3 o'clock on Tuesday morning, November 18, the petitioner made an incriminating statement after continuous questioning since 6 o'clock of the preceding evening. The statement did not satisfy the prosecutor who had been called in and he then took petitioner in hand. Petitioner, questioned by an interrogator of twenty years' experience as lawyer, judge and prosecutor, yielded a more incriminating document. 6 Until his inculpatory statements were secured, the petitioner was a prisoner in the exclusive control of the prosecuting authorities. He was kept for the first two days in solitary confinement in a cell aptly enough called 'the hole' in view of its physical conditions as described by the State's witnesses. Apart from the five night sessions, the police intermittently interrogated Watts during the day and on three days drove him around town, hours at a time, with a view to eliciting identifications and other disclosures. Although the law of Indiana required that petitioner be given a prompt preliminary hearing before a magistrate, with all the protection a hearing was intended to give him, the petitioner was not only given no hearing during the entire period of interrogation but was without friendly or professional aid and without advice as to his constitutional rights. Disregard of rudimentary needs of life—opportunities for sleep and a decent allowance of food—are also relevant, not as aggravating elements of petitioner's treatment, but as part of the total situation out of which his confessions came and which stamped their character. 7 A confession by which life becomes forfeit must be the expression of free choice. A statement to be voluntary of course need not be volunteered. But if it is the product of sustained pressure by the police it does not issue from a free choice. When a suspect speaks because he is overborne, it is immaterial whether he has been subjected to a physical or a mental ordeal. Eventual yielding to questioning under such circumstances is plainly the product of the suction process of interrogation and therefore th reverse of voluntary. We would have to shut our minds to the plain significance of what here transpired to deny that this was a calculated endeavor to secure a confession through the pressure of unrelenting interrogation. The very relentlessness of such interrogation implies that it is better for the prisoner to answer than to persist in the refusal of disclosure which is his constitutional right. To turn the detention of an accused into a process of wrenching from him evidence which could not be extorted in open court with all its safeguards, is so grave an abuse of the power of arrest as to offend the procedural standards of due process. 8 This is so because it violates the underlying principle in our enforcement of the criminal law. Ours is the accusatorial as opposed to the inquisitorial system. Such has een the characteristic of Anglo-American criminal justice since it freed itself from practices borrowed by the Star Chamber from the Continent whereby an accused was interrogated in secret for hours on end. See Ploscowe, The Development of Present-Day Criminal Procedures in Europe and America, 48 Harv. L. Rev., 433, 457—58, 467—473 (1935). Under our system society carries the burden of proving its charge against the accused not out of his own mouth. It must establish its case, not by interrogation of the accused even under judicial safeguards, but by evidence independently secured through skillful investigation. 'The law will not suffer a prisoner to be made the deluded instrument of his own conviction.' 2 Hawkins, Pleas of the Crown c. 46, § 34 (8th ed., 1824). The requirement of specific charges, their proof beyond a reasonable doubt, the protection of the accused from confessions extorted through whatever form of police pressures, the right to a prompt hearing before a magistrate, the right to assistance of counsel, to be supplied by government when circumstances make it necessary, the duty to advise an accused of his constitutional rights—these are all characteristics of the accusatorial system and manifestations of its demands. Protracted, systematic and uncontrolled subjection of an accused to interrogation by the police for the purpose of eliciting disclosures or confessions is subversive of the accusatorial system. It is the inquisitorial system without its safeguards. For while under that system the accused is subjected to judicial interrogation, he is protected by the disinterestedness of the judge in the presence of counsel. See Keedy, The Preliminary Investigation of Crime in France, 88 U. of Pa. L. Rev., 692, 708-712 (1940). 9 In holding that the Due Process Clause bars police procedure which violates the basic notions of our accusatorial mode of prosecuting crime and vitiates a conviction based on the fruits of such procedure, we apply the Due Process Clause to its historic function of assuring appropriate procedure before liberty is curtailed or life is taken. We are deeply mindful of the anguishing problems which the incidence of crime presents to the States. But the history of the criminal law proves overwhelmingly that brutal methods of law enforcement are essentially self-defeating, whatever may be their effect in a particular case. See, e.g., Radzinowicz, A History of English Criminal Law and its Administration from 1750, passim (1948). Law triumphs when the natural impulses aroused by a shocking crime yield to the safeguards which our civilization has evolved for an administration of criminal justice at once rational and effective. 10 We have examined petitioner's other contentions and do not sustain them. Reversed 11 Mr. Justice BLACK concurs in the judgment of the Court on the authority of Chambers v. State of Florida, 309 U.S. 227, 60 S.Ct. 472, 84 L.Ed. 716; Ashcraft v. State of Tennessee, 322 U.S. 143, 64 S.Ct. 921, 88 L.Ed. 1192. 12 On the records before us and in view of the consideration given to the evidence by the state courts and the conclusion reached, THE CHIEF JUSTICE, Mr. Justice REED and Mr. Justice BURTON believe that the judgments should be affirmed in all three cases. 13 Mr. Justice DOUGLAS, concurring. The following are the undisputed facts: 14 Petitioner was taken into custody early in the afternoon on Wednesday, November 12, 1947. He was first detained on suspicion of having committed a criminal assault, and it was not until later in the day of his arrest that he was suspected of having committed the murder for which he was later tried and convicted. He was held without being arraigned, until the following Tuesday when he gave a confession that satisfied the police. At no time was he advised of his right to remain silent, nor did he have the advice of family, friends or counsel during his confinement. He was not promptly arraigned as Indiana law requires. 15 During this confinement, petitioner was held in the county jail. The first two days he was placed in solitary confinement in a cell known among the prisoners as 'the hole.' There was no place on which to sit or sleep except the floor. Throughout this six-day confinement petitioner was subjected each day, except Sunday, to long periods of interrogation. He was moved to the State Police Headquarters for these questionings. The question period would usually begin about six o'clock in the evening, except for the first night when it began about eleven thirty. Each question period would extend to two or three o'clock the following morning. These interrogations were conducted by relays of small groups of officers. On several occasions petitioner was given lie-detector tests. Following the evening's interrogation, he would be returned to the county jail. Even then he was not always given respite until the next evening's ordeal commenced. He was subjected to intermittent questioning during the day, and on three afternoons he was driven about the town for several hours by the police in an attempt to elicit further information and to reconstruct petitioner's activities the day of the crime. 16 It was about two or three o'clock Tuesday morning after about seven hours' interrogation that petitioner gave the confession used against him over objection at his trial. This was after six days of confinement. 17 It would be naive to think that this protective custody was less than the inquisition. The man was held until he broke. Then and only then was he arraigned and given the protection which the law provides all accused. Detention without arraignment is a time-honored method for keeping an accused under the exclusive control of the police. They can then operate at their leisure. The accused is wholly at their mercy. He is without the aid of counsel or friends; and he is denied the protection of the magistrate. We should unequivocally condemn the procedure and stand ready to outlaw, as we did in Malinski v. People of State of New York, 324 U.S. 401, 65 S.Ct. 781, 89 L.Ed. 1029, and Haley v. State of Ohio, 332 U.S. 596, 68 S.Ct. 302, 92 L.Ed. 224, any confession obtained during the period of the unlawful detention. The procedure breeds coerced confessions. It is the root of the evil. It is the procedure without which the inquisition could not flourish in the country. 18 For concurring opinion of Mr. Justice JACKSON, see 338 U.S. 49, 69 S.Ct. 1357. 19 Mr. Justice JACKSON concurring in the result in No. 610 and dissenting in Nos. 76 and 107. 20 These three cases, from widely separated states, present essentially the same problem. Its recurrence suggests that it has roots in some condition fundamental and general to our criminal system. 21 In each case police were confronted with one or more brutal murders which the authorities were under the highest duty to solve. Each of these murders was unwitnessed, and the only positive knowledge on which a solution could be based was possessed by the killer. In each there was reasonable ground to suspect an individual but not enough legal evidence to charge him with guilt. In each the police attempted to meet the situation by taking the suspect into custody and interrogating him. This extended over varying periods. In each, confessions were made and received in evidence at the trial. Checked with external evidence, they are inherently believable, and were not shaken as to truth by anything that occurred at the trial. Each confessor was convicted by a jury and state courts affirmed. This Court sets all three convictions aside. 22 The seriousness of the Court's judgment is that no one suggests that any course held promise of solution of these murders other than to take the suspect into custody for questioning. The alternative was to close the books on the crime and forget it, with the suspect at large. This is a grave choice for a society in which two-thirds of the murders already are closed out as insoluble. 23 A concurring opinion, however, goes to the very limit and seems to declare for outlawing any confession, however freely given, if obtained during a period of custody between arrest and arraignment—which, in practice, means all of them. 24 Others would strike down these confessions because of conditions which they say make them 'involuntary.' In this, on only a printed record, they pit their judgment against that of the trial judge and the jury. Both, with the great advantage of hearing and seeing the confessor and also the officers whose conduct and bearing toward him is in question, have found that the confessions were voluntary. In addition, the majority overrule in each case one or more state appellate courts, which have the same limited opportunity to know the truth that we do. 25 Amid muc that is irrelevant or trivial one serious situation seems to me to stand out in these cases. The suspect neither had nor was advised of his right to get counsel. This presents a real dilemma in a free society. To subject one without counsel to questioning which may and is intended to convict him, is a real peril to individual freedom. To bring in a lawyer means a real peril to solution of the crime because, under our adversary system, he deems that his sole duty is to protect his client guilty or innocent—and that in such a capacity he owes no duty whatever to help society solve its crime problem. Under this conception of criminal procedure, any lawyer worth his salt will tell the suspect in no uncertain terms to make no statement to police under any circumstances. 26 If the State may arrest on suspicion and interrogate without counsel, there is no denying the fact that it largely negates the benefits of the constitutional guaranty of the right to assistance of counsel. Any lawyer who has ever been called into a case after his client has 'told all' and turned any evidence he has over to the Government, knows how helpless he is to protect his client against the facts thus disclosed. 27 I suppose the view one takes will turn on what one thinks should be the right of an accused person against the State. Is it his right to have the judgment on the facts? Or is it his right to have a judgment based on only such evidence as he cannot conceal from the authorities, who cannot compel him to testify in court and also cannot question him before? Our system comes close to the latter by any interpretation, for the defendant is shielded by such safeguards as no system to law except the Anglo-American concedes to him. 28 Of course, no confession that has been obtained by any form of physical violence to the person is reliable and hence no conviction should rest upon one obtained in that manner. Such treatment not only breaks the will to conceal or lie, but may even break the will to stand by the truth. Nor is it questioned that the same result can sometimes be achieved by threats, promises, or inducements, which torture the mind but put no scar on the body. If the opinion of Mr. Justice Frankfurter in the Watts case were based solely on the State's admissions as to the treatment of Watts, I should not disagree. But if ultimate quest in a criminal trial is the truth and if the circumstances indicate no violence or threats of it, should society be deprived of the suspect's help in solving a crime merely because he was confined and questioned when uncounseled? 29 We must not overlook that in these, as in some previous cases, once a confession is obtained it supplies ways of verifying its trustworthiness. In these cases before us the verification is sufficient to leave me in no doubt that the admissions of guilt were genuine and truthful. Such corroboration consists in one case of finding a weapon where the accused has said he hid it, and in others that conditions which could only have been known to one who was implicated correspond with his story. It is possible, but it is rare, that a confession, if repudiated on the trial, standing alone will convict unless there is external proof of its verity. 30 In all such cases, along with other conditions criticized, the continuity and duration of the questioning is invoked and it is called an 'inquiry', 'inquest' or 'inquisition,' depending mainly on the emotional state of the writer. But as in some of the cases here, if interrogation is permissible at all, there are sound reasons for prolonging it—which the opinions here ignore. The suspect at first perhaps makes an effort to exculpate himself by alibis or other statements. These are verified, found false, and he is then confronted with his falsehood. Sometimes (though such cases do not reach us) verification proves them true or credible and the suspect is released. Sometimes, as here, more than one crime is involved. The duration of an interrogation may well depend on t e temperament, shrewdness and cunning of the accused and the competence of the examiner. But assuming a right to examine at all, the right must include what is made reasonably necessary by the facts of the particular case. 31 If the right of interrogation be admitted, then it seems to me that we must leave it to trial judges and juries and state appellate courts to decide individual cases, unless they show some want of proper standards of decision. I find nothing to indicate that any of the courts below in these cases did not have a correct understanding of the Fourteenth Amendment, unless this Court thinks it means absolute prohibition of interrogation while in custody before arraignment. 32 I suppose no one would doubt that our Constitution and Bill of Rights, grounded in revolt against the arbitrary measures of George III and in the philosophy of the French Revolution, represent the maximum restrictions upon the power of organized society over the individual that are compatible with the maintenance of organized society itself. They were so intended and should be so interpreted. It cannot be denied that, even if construed as these provisions traditionally have been, they contain an aggregate of restrictions which seriously limit the power of society to solve such crimes as confront us in these cases. Those restrictions we should not for that reason cast aside, but that is good reason for indulging in no unnecessary expansion of them. 33 I doubt very much if they require us to hold that the State may not take into custody and question one suspected reasonably of an unwitnessed murder. If it does, the people of this country must discipline themselves to seeing their police stand by helplessly while those suspected of murder prowl about unmolested. Is it a necessary price to pay for the fairness which we know as 'due process of law'? And if not a necessary one, should it be demanded by this Court? I do not know the ultimate answer to these questions; but, for the present, I should not increase the handicap on society. 1 Of course this Court does not have the corrective power over State courts that it has over the lower federal courts. See, e.g., McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819. In the main, the proper administration of the criminal law of the States rests with the State courts. The nature of the Due Process Clause, however, potentially gives wide range to the reviewing power of this Court over State-court convictions. 2 In the petitioner's statements there was acknowledgment of the possession of an incriminating gun, the existence of which the police independently established. But a coerced confession is inadmissible under the Due Process Clause even though statements in i may be independently established as true. See Lisenba v. People of State of California, 314 U.S. 219, 236—237, 62 S.Ct. 280, 289, 290, 86 L.Ed. 166. 3 The validity of a conviction because an allegedly coerced confession was used has been called into question in the following cases: (A) Confession was found to be procured under circumstances violative of the Due Process Clause in Haley v. State of Ohio, 332 U.S. 596, 68 S.Ct. 302, 92 L.Ed. 224; Malinski v. People of State of New York, 324 U.S. 401, 65 S.Ct. 781, 89 L.Ed. 1029; Ashcraft v. State of Tennessee, 322 U.S. 143, 64 S.Ct. 921, 88 L.Ed. 1192; Ward v. State of Texas, 316 U.S. 547, 62 S.Ct. 1139, 86 L.Ed. 1663; Lomax v. State of Texas, 313 U.S. 544, 61 S.Ct. 956, 85 L.Ed. 1511; Vernon v. State of Alabama, 313 U.S. 547, 61 S.Ct. 1092, 85 L.Ed. 1513; White v. State of Texas, 310 U.S. 530, 60 S.Ct. 1032, 84 L.Ed. 1342; Canty v. State of Alabama, 309 U.S. 629, 60 S.Ct. 612, 84 L.Ed. 988; White v. State of Texas, 309 U.S. 631, 60 S.Ct. 706, 84 L.Ed. 989; Chambers v. State of Florida, 309 U.S. 227, 60 S.Ct. 472, 84 L.Ed. 716; Brown v. State of Mississippi, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682; and see Ashcraft v. State of Tennessee, 327 U.S. 274, 66 S.Ct. 544, 90 L.Ed. 667. (B) Confession was found to have been procured under circumstances not violative of the Due Process Clause in Lyons v. State of Oklahoma, 322 U.S. 596, 64 S.Ct. 1208, 88 L.Ed. 1481, and Lisenba v. People of State of California, 314 U.S. 219, 62 S.Ct. 280, 86 L.Ed. 166.

01

338 U.S. 84 69 S.Ct. 1447 93 L.Ed. 1826 CHRISTOFFELv.UNITED STATES. No. 528. Argued April 20, 1949. Decided June 27, 1949. Mr. O. John Rogge, Washington, D.C., for petitioner. Mr. Alexander M. Campbell, Asst. Attorney General, for respondent. Mr. Justice MURPHY delivered the opinion of the Court. 1 In March of 1947, the committee on Education and Labor was, as it is now, a standing committee of the House of Representatives.1 During the first session of the 80th Congress it held frequent hearings on proposed amendments to the National Labor Relations Act. On March 1, 1947, petitioner appeared as a witness before the committee, under oath, and in the course of the proceedings was asked a series of questions directed to his political affiliations and associations. In his answers he unequivocally denied that he was a Communist or that he endorsed, supported or participated in Communist programs. As a result of these answers he was indicted for perjury under Title 22, § 2501 of the District of Columbia Code,2 and after a trial by jury was convicted. The Court of Appeals affirmed the conviction, 171 F.2d 1004, and we granted certiorari to review its validity. 336 U.S. 934, 69 S.Ct. 745. 2 No question is raised as to the relevancy or propriety of the questions asked. Petitioner's main contention is that the committee was not a 'competent tribunal' within the meaning of the statute, in that a quorum of the committee was not present at the time of the incident on which the indictment was based. As to this, the record reveals the following: the Committee on Education and Labor consists of twenty-five members, of whom thirteen constitute a quorum. At the commencement of the afternoon session on Saturday, March 1, 1947, shortly after two o'clock, a roll call showed that fourteen members were present. Petitioner's testimony started some time after four o'clock. The responses said to constitute offenses were given just prior to five p.m. 3 Evidence was adduced was adduced at the trial from which a jury might have concluded that at the time of the allegedly perjurious answers less than a quorum—as few as six—of the committee were in attendance. Counsel for the petitioner contended vigorously at the trial, on appeal and in this Court that unless a quorum were found to be actually present when the crucial questions were asked, the statutory requirement of a competent tribunal was not met and that absent such a finding a verdict of acquittal should follow. 4 The trial court agreed that the presence of a quorum was an indispensable part of the offense charged, and instructed the jury that to find the defendant guilty they had to find beyond a reasonable doubt 'That the defendant Christoffel appeared before a quorum of at least thirteen members of the said Committee,' and 'that at least that number must have been actually and physically present. * * * If such a Committee so met, that is, if thirteen members did meet at the beginning of the afternoon session of March 1, 1947, and thereafter during the progress of the hearing some of them left temporarily or otherwise and no question was raised as to the lack of a quorum, then the fact that the majority did not remain there would not affect, for the purposes of this case, the existence of that Committee as a competent tribunal provided that before the oath was administered and before the testimony of the defendant was given there were present as many as 13 members of that Committee at the beginning of the afternoon session. * * *' 5 This charge is objected to insofar as it allows the jury to find a quorum present simply by finding that thirteen or more members were in attendance when the committee was convened, without reference to subsequent facts. 6 The Constitution of the United States provides that 'Each House may determine the Rules of its Proceedings,' Art. I, § 5, and we find that the subject of competency, both of the House as a whole and of its committees, has been a matter of careful consideration. Rule XI(2)(f) of the House of Representatives reads in part, 'The rules of the House are hereby made the rules of its standing committees so far as applicable. * * *' Rule XV of the House provides for a call of the House if a quorum is not present, and it has been held under this rule that such a call, or a motion to adjourn, is the only business that may be transacted in the absence of a quorum. IV Hind's Precedents 2950; IV id. 2988. See IV id. 2934, 2939; VI Cannon's Precedents 653; VI id. 680. It appears to us plain that even the most highly privileged business must be suspended in the absence of a quorum in the House itself. 7 A similar situation obtains in the committees.3 The Legislative Reorganization Act of 1946, 60 Stat. 812, provides, referring to the standing committees, in § 133(d), 'No measure or recommendation shall be reported from any such committee unless a majority of the committee were actually present.' The rule embodied in this subsection was effective as long ago as 1918 to keep off the floor of the House a bill from a committee attended by less than a quorum, even though no objection was raised i the committee meeting itself. It appeared that the situation in the committee was much like the one with which we are concerned, with members coming and going during the meeting. No point of no quorum was raised at the committee meeting. When the Chairman proposed in the House to bring up the bill considered in the meeting, the Speaker ruled, on objection being made from the floor, that in spite of the point's not having been raised in committee, the bill could not be reported. The absence of a quorum of the committee, though at the time unobjected to, had made effective action impossible. VIII Cannon's Precedents 2212. Witnesses in committee hearings cannot be required to be familiar with the complications of parliamentary practice. Even if they are, the power to raise a point of no quorum appears to be limited to members of the committee. We have no doubt that if a member of the committee had raised a point of no quorum and a count had revealed the presence of less than a majority, proceedings would have been suspended until the deficiency should be supplied. In a criminal case affecting the rights of one not a member, the occasion of trial is an appropriate one for petitioner to raise the question. 8 Congressional practice in the transaction of ordinary legislative business is of course none of our concern, and by the same token the considerations which may lead Congress as a matter of legislative practice to treat as valid the conduct of its committees do not control the issue before us. The question is neither what rules Congress may establish for its own governance, nor whether presumptions of continuity may protect the validity of its legislative conduct. The question is rather what rules the House has established and whether they have been followed. It of course has the power to define what tribunal is competent to exact testimony and the conditions that establish its competency to do so. The heart of this case is that by the charge that was given it the jury was allowed to assume that the conditions of competency were satisfied even though the basis in fact was not established and in face of a possible finding that the facts contradicted the assumption. 9 We are measuring a conviction of crime by the statute which defined it. As a consequence of this conviction, petitioner was sentenced to imprisonment for a term of from two to six years. An essential part of a procedure which can be said fairly to inflict such a punishment is that all the element of the crime charged shall be proved beyond a reasonable doubt. An element of the crime charged in the instant indictment is the presence of a competent tribunal, and the trial court properly so instructed the jury. The House insists that to be such a tribunal a committee must consist of a quorum, and we agree with the trial court's charge that to convict, the jury had to be satisfied beyond a reasonable doubt that there were 'actually physically present' a majority of the committee.4 10 Then to charge, however, that such requirement is satisfied by a finding that there was a majority present two or three hours before the defendant offered his testimony, in the face of evidence indicating the contrary, is to rule as a matter of law that a quorum need not be present when the offense is committed. This not only seems to us contrary to the rules and practice of the Congress but denies petitioner a fundamental right. That right is that he be convicted of crime only on proof of all the elements of the crime charged against him. A tribunal that is not competent is no tribunal, and it is unthinkable that such a body can be the instrument of criminal conviction. The Court of Appeals erred in affirming so much of the instructions to the jury as allowed them to find a quorum present without reference to the facts at the time of the alleged perjurious testimony, and its judgment is reversed. 11 Reversed. 12 Mr. Justice JACKSON, dissenting. 13 THE CHIEF JUSTICE, Mr. Justice REED, Mr. Justice BURTON, and I think the Court is denying to the records of the Congress and its committees the credit and effect to which they are entitled, quite contrary to all recognized parliamentary rules, our previous decisions, and the Constitution itself. 14 No one questions that the competency of a Committee of either House of Congress depends upon the action of the House in constituting the Committee, and in determining the rules governing its procedure. Nor does any one deny that each House has the power to provide expressly that a majority of the entire membership of any of its Committees shall constitute a quorum for certain purposes and that, for other purposes, a different number shall be sufficient. For example, either House may provide expressly that, for the purpose of convening a session of a Committee or of approving a report, a majority of the Committee's entire membership shall be necessary and that, for the purpose of taking sworn testimony, one or more Committee members shall be sufficient to constitute a quorum. Similarly, each House may spell out a formal rule that a Committee shall constitute a competent tribunal to take sworn testimony if a majority of its members shall be present at the beginning of the session at which the testimony is taken and that such competency shall continue, although the attendance of Committee members may drop, during the Committee's session, to some smaller number. The reasonableness of such a rule is apparent because the value of the testimony taken by such a Committee is measured not so much by the number of people who hear it spoken at the session as it is by the number and identity of those who read it later. 15 But what Congress may do by express rule it may do also by its custom and practice. There is no requirement, constitutional or otherwise, that its body of parliamentary law must be recorded in order to be authoritative. In the absence of objection raised at the time, and in the absence of any showing of a rule, practice or custom to the contrary, this Court has the duty to presume that the conduct of a Congressional Committee, in its usual course of business, conforms to both the written and unwritten rules of the House which created it. 'Each House may determine the Rules of its Proceedings, * * *.' Art. I, § 2, cl. 2. This Court accordingly can neither determine the rules for either House of Congress nor require those rules to be expressed with any degree of explicitness other than that chosen by the respective Houses. 16 The record shows a quorum of this committee present when the session began and neither Christoffel nor anyone else had raised the point of no quorum up to the time he gave false testimony. On trial for perjury he introduced oral testimony tending to show that, at the moment he so testified, less than a quorum were actually present. The trial court charged that, in the absence of ch llenge or proof to the contrary, the quorum established at the beginning of the session is presumed to continue and the jury could find Christoffel guilty of perjury if he gave false testimony before such a body. He was found guilty. The Court now holds the charge was erroneous and that if the Government cannot show positively that there was a quorum present when he falsified, the committee was not a 'competent tribunal' within the Perjury Statute of the District and his conviction thereunder is invalid. 17 Thus the issue is not whether a quorum is required in order for the committee to be a competent tribunal, but whether committee rules, practices and records, and congressional rules, practices and records in analogous situations, are subject to attack by later oral testimony and to invalidation by the courts. 18 All the parliamentary authorities, including those cited by the Court, agree that a quorum is required for action, other than adjournment, by any parliamentary body; and they agree that the customary law of such bodies is that, the presence of a quorum having been ascertained and recorded at the beginning of a session, that record stands unless and until the point of no quorum is raised. This is the universal practice. If it were otherwise, repeated useless roll calls would be necessary before every action. 19 In this case, therefore, the record on the subject of quorum was entitled to full credit. Christoffel himself did not, during his testimony, raise the question of no quorum. Whether one not a member of the body would have been permitted to do so and what effect it would have, had he been refused, we need not decide. The fact is, he made no effort to raise the point. To have then even suggested the objection would have given opportunity to the Committee to correct it. And if there were not enough committee members present to make a legal body, he would be at liberty, if his objection were overruled, to walk out. Instead, he chose to falsify to the committee and now says that, despite the record, he should be allowed to prove that not enough members were present for his lie to be legal perjury. The Court agrees and holds that the House Rules requiring a quorum for action require this result. Since the constitutional provision governing the House itself also requires a quorum before that body can do business, this raises the question whether the decision now announced will also apply to the House itself. If it does, it could have the effect of invalidating any action taken or legislation passed without a record vote, which represents a large proportion of the business done by both House and Senate. The effect is illustrated by noting that such a rule would make possible the invalidation of not only this conviction for perjury, but the Perjury Act1 itself, as well as the Judicial Code2 which is now the source of this Court's authority to review the conviction. Moreover, this rule is in direct contravention of the Constitution which does not require either House or Senate, much less a committee, to take a record vote except3 'at the Desire of one-fifth of those Present.' Art. I, § 5, cl. 3. 20 The Court significantly omits citation of any prior decision in support of its present conclusion.4 The reason is fairly clear—the others are inconsistent with this one. For example, in United States v. Ballin, 144 U.S. 1, 12 S.Ct. 507, 509, 36 L.Ed. 321, we held it to be within the competency of the House to prescribe any method reasonably certain to ascertain the fact of a quorum; that the courts are not concerned with the wisdom or advantages of any such rule—'with the courts the question is only one of power.' The House has adopted the rule and practice that a quorum once established is presumed to continue unless and until a point of no quorum is raised. By this decision, the Court, in effect, invalidates that rule despite the limitations consistently imposed upon courts where such an issue is tendered. See Field v. Clark, 143 U.S. 649, 669—673, 12 S.Ct. 495, 496—498, 36 L.Ed. 294; United States v. Ballin, 144 U.S. 1, 5, 12 S.Ct. 507, 509, 36 L.Ed. 321; Flint v. Stone Tracy Co., 220 U.S. 107, 143, 31 S.Ct. 342, 345, 346, 55 L.Ed. 389, Ann.Cas. 1912B, 1312; cf. Leser v. Garnett, 258 U.S. 130, 137, 42 S.Ct. 217, 218, 66 L.Ed. 505. And see Coleman v. Miller, 307 U.S. 433, 453—456, 59 S.Ct. 972, 981—983, 83 L.Ed. 1385, 122 A.L.R. 695 and concurring opinions at 307 U.S. 456—460, and 460—470, 59 S.Ct. 983 990. 21 We do not think we should devise a new rule for this particular case to extend aid to one who did not raise his objection when it could be met and who has been prejudiced by absence of a quorum only if we assume that, although he told a falsehood to eleven Congressmen, he would have been honest if two more had been present. But in no event should we put out a doctrine by which every Congressional Act or Committee action, and perhaps every judgment here, can be overturned on oral testimony of interested parties. 22 We should affirm the conviction. 1 Legislative Reorganization Act of 1946, 60 Stat. 812, 822, § 121, Rule X, House of Representatives; H.R. Rep. No. 111, adopted Feb. 26, 1947 (93 Cong.Rec. 1504). 2 'Title 22, Sec. 2501—Perjury—Subornation of perjury. Every person who, having taken an oath or affirmation before a competent tribunal, officer, or person, in any case in which the law authorized such oath or affirmation to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed is true, wilfully and contrary to such oath or affirmation states or subscribes any material matter which he does not believe to be true, shall be guilty of perjury; and any person convicted of perjury or subornation of perjury shall be punished by imprisonment in the penitentiary for not less than two no more than ten years * * *.' 31 Stat. 1329. 3 There is some difference between procedure in the full House and in its committees. In the former, business is transacted on the assumption that a quorum is present at all times, unless a roll call or a division indicate the contrary. In committee meetings, however, the presence of a quorum must be affirmatively shown before the committee is deemed to be legally met. VIII Cannon's Precedents 2222. 4 In Meyers v. United States, D.C.Cir., 171 F.2d 800, the appellant made contentions similar to those of petitioner. The Court of Appeals for the District of Columbia Circuit held the same view expressed here. 'On October 6, 1947, however, only two senators were present at the hearing. Since they were a minority of the subcommittee, they could not legally function except to adjourn. For that reason, the testimony of Lamarre given on that day cannot be considered as perjury nor can appellant be convicted of suborning it.' 171 F.2d at page 811. The conviction was affirmed on the ground that all the perjurious statements alleged in th indictment were made on October 4, when a quorum was present. 171 F.2d at page 812. 1 Passed without record vote by the Senate, 34 Cong.Rec., Pt. 4, pp. 3496—97, and by the House without a record vote, 34 Cong.Rec., Pt. 4, p. 3586. 2 Passed by the Senate without a record vote, 94 Cong.Rec., Pt. 7, p. 7930, and motion to reconsider withdrawn, 94 Cong.Rec., Pt. 7, p. 8297. Passed by the House without a record vote, 94 Cong.Rec., Pt. 7, p. 8501. 3 A separate provision requires a record vote on the question of overriding a Presidential veto. Art. I, § 7, cl. 2. 4 This is not because others have not tried to raise the issue. In Meyers v. United States, D.C.Cir., 171 F.2d 800, certiorari denied 336 U.S. 912, 69 S.Ct. 602, the petitioner was convicted of subornation of perjury committed before a committee of Congress on two separate days—October 4 and October 6. The conviction was allowed to stand despite a charge to the jury that the quorum on October 4 was presumed to continue unless and until a committee member raised the point of no quorum, and that false testimony given before the point is raised is perjurious under this same statute. That charge is practically identical with the charge given in this case, of which this Court now says 'The heart of this case is that by the charge that was given it the jury was allowed to assume that the conditions of competency were satisfied even though the basis in fact was not established and in face of a possible finding that the facts contradicted the assumption.' This perfectly describes the Meyers case, considering only the October 4th testimony, on which it is said the conviction rested. Considering only that part of each count, Meyers was convicted and is now imprisoned for suborning perjury given under identical conditions as did Christoffel; and Meyers' guilt was determined by a jury which received the same ruling the Court now holds to be error as applied to Christoffel. Yet the Meyers conviction was affirmed and we denied his plea for review. Such a denial here of course does not imply approval of the law announced below but, on the undisputed facts, Meyers conviction rests on a basis which this Court says is 'unthinkable' as to Christoffel whose conviction is reversed. Moreover, the Meyers jury was permitted to convict partly at least on the basis of testimony given before a Committee on October 6 when the committee records showed, and the Government admits, that no quorum was present at any time. Today's opinion is diametrically opposed to the Meyers conviction based on the October 4th testimony alone, but the Meyers conviction also rests in part on testimony before a body which demonstrably and admittedly never amounted to a quorum, while Christoffel's is reversed merely because the charge permitted the jury to ignore oral testimony 'indicating' that a quorum once admittedly established may have evaporated. I do not see how the Court can justify such discrimination. The court below evidently could not, for it relied on the Meyers case as a precedent for affirming the conviction of Christoffel on this identical issue. 171 F.2d 1004, 1005, n. 1.

01

337 U.S. 755 69 S.Ct. 1274 93 L.Ed. 1672 FARMERS RESERVOIR & IRRIGATION CO.v.McCOMB, Administrator of Wage and Hour Division, U.S. Dept. of Labor. McCOMB, Administrator of Wage and Hour Division, U.S. Dept. of Labor, v. FARMERS RESERVOIR & IRRIGATION CO. Nos. 128 and 196. Argued Dec. 16, 1948. Decided June 27, 1949. Rehearing Denied Oct. 10, 1949. See 70 S.Ct. 31. Messrs. John P. Akolt, Frank N. Bancroft, Denver, Colo., for Farmers Reservoir & Irrigation Co. Mr. Jeter S. Ray, Washington, D.C., for McComb. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 The principal question to be decided in this case is whether the employees of a mutual ditch company are exempt from the provisions of the Fair Labor Standards Act1 as persons employed in agriculture. The company is the Farmers Reservoir & Irrigation Company, a Colorado corporation having an authorized capital stock of $1,050,000 and an authorized bonded indebtedness of $850,000, $450,000 of which is presently outstanding in the hands of the public. The company has central offices in Denver. It owns four large and several small reservoirs and a system of canals from 200 to 300 miles long, all in Colorado. The sole activity of the corporation is the collection, storage and distribution of water for irrigation purposes. The water is diverted from the public streams of Colorado, stored in the company's reservoirs and distributed to farmers through the company's canals. 2 The company is a mutual one. It does not sell water. It distributes it only to its own stockholders, who are each entitled to a limited quantity for each share of stock held. The income of the company is derived largely from assessments levied on the stockholders annually to pay for the costs of operating the system. There are no profits and no dividends. 3 The company did not comply with either the record keeping or the wages and hours provisions of the Fair Labor Standards Act, and the Administrator sought an injunction directed against continuation of these alleged violations. The company claimed that its employees were not subject to the Act. These employees fall into two categories. First, there are the field employees—ditch riders, lake tenders and maintenance men. Their activity, in general, consists of the physical operation, control and maintenance of the company's canals, reservoirs, and headgates. The second category comprises the company's office force in Denver. For purposes of this case it contains only one occupant the company's bookkeeper. 4 The District Court held that the field employees were engaged in the production of goods for commerce, as those terms are defined in § 3 of the Act, but that the bookkeeper was not. It held, however, that all of the company's employees were exempt under § 13(a)(6) as persons 'employed in agriculture.' This second holding was reversed, as to the field employees, by the Court of Appeals for the Tenth Circuit,2 one judge dissenting, and, in No. 128, we granted the company's petition for certiorari on the exemption issue. The Court of Appeals did not pass on the bookkeeper's status. It regarded his case as moot because his salary was said by the company, in its brief, to have been raised to $210 per month while the appeal was pending. The court regarded this as sufficient to establish his exemption as an administrative employee under § 13(a)(1) of the Act and therefore limited its consideration and its reversal of the District Court to the field employees. In No. 196, we granted the Administrator's cross-petition with respect to the bookkeeper. 5 It is conceded here that the courts below were correct in holding that the field employe § are engaged in the production of goods for commerce. The company, however, argues that this requires the conclusion that they are employed in agriculture. This argument rests on the fact that the activities of the company and its employees are entirely confined within the State of Colorado. The company diverts water in Colorado, stores it in Colorado, distributes it in Colorado to farmers who, finally, consume it in Colorado. The only products moving in interstate commerce are the agricultural commodities produced by the farmers who consume the company's water. Hence, it is said that we can hold that the company's employees are engaged in the production of goods for interstate commerce only if we say that their work in supplying water to the farmers is an integral part of the production of the farm products which are shipped in interstate commerce. But that production is, of course agriculture. Hence, the company's employees, if they are engaged in the production of goods for commerce, must be exempt as persons employed in agriculture. 6 The argument rests on a misconstruction of § 3(j) of the Fair Labor Standards Act3—the section which the courts below relied on in concluding that the field employees of the company are engaged in the production of goods for commerce. Section 3(j) provides that 'for purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed * * * in any process or occupation necessary to the production thereof.'4 From the beginning, this Court has refused either to read this provision out of the Act by limiting the coverage of the Act to those actually engaged in production or, on the other hand, to expand it so as to include every process or occupation affecting production for commerce. We have held that if an occupation, not itself production for commerce, has 'a close and immediate tie' with the process of production, it comes within the provisions of § 3(j).5 Applying this standard, the Court of Appeals quite properly held that the field employees here are engaged in an occupation necessary, in the statutory sense, for the production of agricultural commodities shipped in commerce.6 7 But the conclusion that the work is necessary to agricultural production does not require us to say that it is agricultural production. This distinction between necessity and identity, or, differently phrased, between production in the normal sense and production in the special sense defined in § 3(j) disposes of the company's contention. The question here is whether the occupation of the field employees of the ditch company can itself be termed agriculture. The answer to that question is not predetermined by the fact that the occupation is within the scope of the Act because it has a necessary connection, in commerce, with agricultural production.7 8 Agriculture, as an occupation, includes more than the elemental process of planting, growing and harvesting crops. There are a host of incidental activities which are necessary to that process. Whether a particular type of activity is agricultural depends, in large measure. upon the way in which that activity is organized in a particular society. The determination cannot be made in the abstract. In less advanced societies the agricultural function includes many types of activity which, in others, are not agricultural. The fashioning of tools, the provision of fertilizer, the processing of the product, to mention only a few examples, are functions which, in some societies, are performed on the farm by farmers as part of their normal agricultural routine. Economic progress, however, is characterized by a progressive division of labor and separation of function. Tools are made by a tool manufacturer, who specializes in that kind of work and supplies them to the farmer. The compost heap is replaced by factory produced fertilizers. Power is derived from electricity and gasoline rather than supplied by the farmer's mules. Wheat is ground at the mill. In this way functions which are necessary to the total economic process of supplying an agricultural product, become, in the process of economic development and specialization, separate and independent productive functions operated in conjunction with the agricultural function but no longer a part of it. Thus, the question as to whether a particular type of activity is agricultural is not determined by the necessity of the activity to agriculture nor by the physical similarity of the activity to that done by farmers in other situations. The question is whether the activity in the particular case is carried on as part of the agricultural function or is separately organized as an independent productive activity. The farmhand who cares for the farmer's mules or prepares his fertilizer is engaged in agriculture. But the maintenance man in a power plant8 and the packer in a fertilizer factory9 are not employed in agriculture, even if their activity is necessary to farmers and replaces work previously done by farmers. The production of power and the manufacture of fertilizer are independent productive functions, not agriculture. 9 In the absence of a detailed definition of agriculture we should be compelled to determine whether the activity concerned in the present case—the diversion, storage and distribution of wate for irrigation purposes—is carried on as part of the agricultural function or is so separately organized and conducted as to be treated as an independent, nonagricultural productive function. Fortunately, however, the Fair Labor Standards Act provides a carefully considered definition which is of substantial aid in helping us to make that determination. 10 The definition is contained in § 3(f) of the Fair Labor Standards Act. It says: 11 'Sec. 3(f). 'Agriculture' includes farming in all its branches and among other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities (including commodities defined as agricultural commodities in section 15(g) of the Agricultural Marketing Act, as amended), the raising of livestock, bees, furbearing animals, or poultry, and any practices (including any forestry or lumbering operations) performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market.' 12 As can be readily seen this definition has two distinct branches. First, there is the primary meaning. Agriculture includes farming in all its branches. Certain specific practices such as cultivation and tillage of the soil, dairying, etc., are listed as being included in this primary meaning. Second, there is the broader meaning. Agriculture is defined to include things other than farming as so illustrated. It includes any practices, whether or not themselves farming practices, which are performed either by a farmer or on a farm, incidently to or in conjunction with 'such' farming operations. 13 Dealing with these two branches of the definition in order it is clear, first, that the occupation in which the company's employees are engaged is not farming. The company owns no farms and raises no crops. Irrigation, strictly defined—that is the actual watering of the soil-may no doubt be called farming. And the work of the farmers in seeing to it that the water released from the company's ditches is properly distributed to the growing plants undoubtedly is included in farming as being part of the process of cultivating and tilling the soil. But the significant fact in this case is that this work is not done by the company's employees. There is a clear and definite division of function. The ditch company carries the water in its own canals to the lands of the farmers. When a farmer desires water so that he can irrigate his fields he notifies the company. Its employees then operate the headgates, which are located on the company's canals and which the farmers are forbidden to operate,10 so that the appropriate quantity of water can pass out of the company's canals and off the company's land into the farmer's irrigation ditches. The responsibility of the company's employees ceases when they so release the water. The water is supplied to the farmer at the headgates and he takes it over there and uses it, in his own laterals, as he sees fit, to irrigate his crops. 14 The ditch company, then, is not engaged in cultivating or tilling the soil or in growing any agricultural commodity. It is contended, however, that it is nevertheless engaged in farming because of the use, in the definition, of the words 'production * * * of any agricultural * * * commodities' in addition to the words cultivation, tillage, harvesting, etc. Since produce is defined in § 3(j) of the Act so as to include, 'for the purposes of this Act,' any occupation necessary t production, it is argued that production of agricultural commodities includes any occupation necessary to the production of agricultural commodities. It is thus argued that in the case of agriculture, as distinguished from other exemptions, Congress did provide that the exemption should include not only the occupation named but also all of those other occupations whose work is necessary to it. 15 If Congress intended to convey that meaning by using the word production in the definition of agriculture we should, of course, give the definition its intended scope. But we do not 'make a fortress out of the dictionary.'11 And we have, therefore, consistently refused to pervert the process of interpretation by mechanically applying definitions in unintended contexts. Lawson v. Suwanee Fruit & S.S. Co., 1949, 336 U.S. 198, 69 S.Ct. 503; Atlantic Cleaners & Dyers v. United States, 1932, 286 U.S. 427, 52 S.Ct. 607, 76 L.Ed. 1204. In the present case, the legislative history confirms what a natural reading of the language of the agricultural exemption would indicate—the word production was not there used in the artificial and special sense in which it was defined in § 3(j). Certainly, if it were meant in that sense, it would make surplusage of the remainder of the carefully wrought definition. And it would hardly have been innocuously placed among such specific terms as 'cultivation,' 'tillage,' 'growing,' and 'harvesting.' But we need not speculate on the congressional meaning. The history of the use of the word production is crystal clear. It was added to the definition of agriculture in order to take care of a special situation—the production of turpentine and gum rosins by a process involving the tapping of living trees. There had been indications that such activity would not be considered agriculture, since turpentine is neither cultivated nor grown.12 And a special amendment, § 15(g), had been added to the Agricultural Marketing Act specifying that commodities so produced were to be considered agricultural commodities for the purposes of that Act.13 To insure the inclusion of the process within the agricultural exemption of the Fair Labor Standards Act, the word production was added to § 3(f) in conjunction with the words 'including commodities defined as agricultural commodities in § 15(g) of the Agricultural Marketing Act as amended.'14 16 It is unnecessary to decide whether, in view of this history, the word production in the agricultural exemption should be limited to those specific products defined in § 15(g) of the Agricultural Marketing Act or should be given its normal meaning. The only question here is whether the word was used in the special expanded meaning defined in § 3(j) of the present Act. It is clear that it was not used in this special sense. And it follows that it does not encompass the work of the company's employees who cannot be said, in any normal use of the term, to be engaged in the production of agricultural commodities. Their work is necessary to agricultural production, but it is not production. 17 The work of the company's employees is not, then, farming. But, coming to the second branch of the definition of agriculture, it is equally clear that it does constitute a practice performed as an incident to or in conjunction with farming. If the Act exempted all such practices the company would be exempt. But the exemption is limited. Such practices are exempt only if they are performed by a farmer or on a farm.15 18 This language was carefully considered by Congress. As originally introduced, the exemption covered such practices only if performed by a farmer. On the floor of the Senate it was objected that this would exclude the threshing of wheat or other functions necessary to the farmer if those functions were not performed by the farmer and his hands, but by separate companies organized for and devoted solely to that particular job.16 To take care of that situation to words 'or on a farm' were added to the definition. Thus, the wheat threshing companies, even though they were separate enterprises, were included in the exemption because their work was incidental to farming and was done on the farm.17 In the face of this careful use of language, we are required to limit the exemption as Congress intended it should be limited, to practices performed by a farmer or on a farm. In the present case it is clear that the work of the company's employees is done neither on a farm or by farmers. 19 learly, it is not done on a farm. Nor, we think, is it done 'by a farmer.' Since we have already said that the company's employees are not engaged in farming, it is perhaps too obvious that the work that they do is not done by farmers. But an argument to the contrary is made. It is based on the fact that the company is a mutual one, owned by the farmers whom it serves. It is argued that the company is therefore merely a formal conduit or agent, by which the farmers cooperatively operate their common water supply system and cooperatively employ the men. The men are, therefore, said to be farmers because they are said to be employed by farmers. 20 Even if it were conceded that the exemption includes the work of persons who do no farming but are employed by farmers, it still does include the company's employees because they are not, in fact, so employed. There is a difference between the hiring of mutual servants by a group of employers and the creation by them of a separate business organization, with its own officers, property, and bonded indebtedness, which in turn hires working men. Those working men are in no real sense employees of the shareholders of the organization. They are hired by the organization, fired by the organization, controlled and directed by the organization, and paid by it. The fact that the organization is a corporate one adds to the picture but is not controlling. The controlling fact is that the company has been set up by the farmers as an independent entity to operate an integrated, unitary water supply system. The function of supplying water has thus been divorced by the farmers from the farming operation and set up as a separate and self-contained activity in which the farmers are forbidden, by the company's by-laws, to interfere.18 Those employed in that activity are employed by the company, not by the farmers who own the company. The fact that the company is not operated for profit is immaterial. It is nonetheless the employer. Of course, if Congress had intended the absence of profit to be material and had provided that the employees of agricultural cooperatives should be exempted because their work is done for the benefit of the farmers who own the cooperatives we should honor that provision. But the legislative history of the existing definition clearly shows that no such result was intended.19 21 We conclude therefore that the Court of Appeals correctly determined that the field employees of the company are not exempt from the provisions of the Fair Labor Standards Act as persons employed in agriculture.20 There remains for consideration the bookkeeper's case. The Court of Appeals limited its reversal of the District Court to the field employees because it regarded the bookkeeper as exempt, in any event, as an administrative employee. We need not decide whether it erred in so doing since the company in this Court disclaims—as it did in the District Court—any reliance on the administrative exemption. And our discussion with regard to the field employees makes it clear that the Court of Appeals decision is, in the absence of any claim of administrative exemption, equally applicable to the bookkeeper. It has been stipulated that his work is a necessary part of the operation of the company's water supply system. The fact that it is clerical rather than manual is immaterial. Borden Co. v. Borella, 1945, 325 U.S. 679, 65 S.Ct. 12 3, 89 L.Ed. 1865, 161 A.L.R. 1258. It follows that his case is on all fours with that of the field workers and that he is engaged, as they are, in the production of goods for commerce and is not exempt as employed in agriculture. The judgment of the Court of Appeals, reversing the District Court and remanding the case to it, should, therefore, be treated as applicable to both types of employee. 22 As so modified, the judgment is affirmed. 23 Modified and affirmed. 24 Mr. Justice FRANKFURTER, concurring. 25 Both in the employments which the Fair Labor Standards Act covers and in the exemptions it makes the Congress has cast upon the courts the duty of making distinctions that often are bound to be so nice as to appear arbitrary in relation to each other. A specific situation, like that presented in this case, presents a problem for construction which may with nearly equal reason be resolved one way rather than another. Except when a conflict between Courts of Appeals requires settlement by this Court, it does not seem to me very profitable to bring the individual cases here for adjudication. But since this case is here it has to be decided. The nature of the problem being what it is, I acquiesce in the judgment that commends itself to the majority of my brethren. 26 Mr. Justice JACKSON, dissenting. 27 If employees operating these irrigation works are so necessary to the raising of crops destined for interstate commerce that they are 'producing goods for commerce' within the Fair Labor Standards Act, I cannot agree that they are not 'employed in agriculture' within its exemptions. 28 It is admitted that as a separate enterprise this handling of irrigation water does not bring these employees within the Act regulating interstate commerce, because the water is captured, stored, transmitted, delivered and consumed solely within one state. The reasoning by which they are nevertheless brought under the Act is this: To deliver water on arid lands is so inseparable from agriculture thereon that it is to produce goods, that is, agricultural crops, for commerce. 29 However, 29 U.S.C. § 213(a)(6), 29 U.S.C.A. § 213(a)(6), exempts individuals 'employed in agriculture.' It would seem logical that one who is producing agricultural products for commerce is 'employed in agriculture.' But according to the Court he is not. The irrigation activity seems endowed with some esoteric duplicity not apparent on its face. When we read 29 U.S.C. § 206 or § 207, 29 U.S.C.A. §§ 206, 207, the irrigator is producing crops because his activity is inseparable from crop production; but when we read on a half-dozen sections and get to 29 U.S.C. § 213(a)(6), 29 U.S.C.A. § 213(a), (6), the irrigation has been converted into a distinct and disconnected enterprise. 30 This paradox is attributed to the definition of agricuture in 29 U.S.C. § 203(f), 29 U.S.C.A. § 203(f), which is said to make a distinction between agricultural production 'in the normal sense' and the same thing 'in the special sense' of § 3(j) of the statute, 29 U.S.C. § 203(j), 29 U.S.C.A. § 203(j). However, its text and history seem to show that the congressional purpose was not to make the agricultural exemption less comprehensive than 'normal' agricultural operations but to make certain that nothing connected with farming remained subject to the Act. It exempted 'any practices * * * performed by a farmer or on a farm as an incident to or in conjunction with farming * * * operations.' Thus the farm exemption did not end at the line fence. 31 This irrigation seems to me to be 'performed by a farmer' and hence, by definition, part of the operation of agriculture. Certainly the agricultural exemption is not lost because farmers pool their capital through a mutual, nonprofit corporation for no other purpose whatever than to carry water to their own arid lands to make it possible to produce crops. The only purpose of the corporate form is to limit individual liability for a project which is subsidiary to each farmer's main enterprise but which is beyond the means or demands of any of them as individuals. Only the landowners can become stockholders; only the stockholders can become water users, and the operating costs and capital charges are met by assessing them in proportion to their water benefits. Employees engaged in the water operation would be on a quite different footing if it were a water company selling water to the public or the farmer for profit. 32 If, as the Court holds, these employees are engaged in production of agricultural crops for commerce, I do not see how it can hold that they are not engaged in agriculture. If the Court could say 'To be or not to be: that is the question,' it might reasonably answer in support of either side. But here the Court tells us that the real solution of this dilemma is 'to be' and 'not to be' at the same time. While this is a unique contribution to the literature of statutory construction, I can only regret the great loss to the literature of the drama that this possibility was overlooked by the Bard of Avon. It will probably now be as great a surprise to the proponents of the agricultural exemption as it would have been to Shakespeare, had it been suggested to him. 1 52 Stat. 1060, 29 U.S.C. §§ 201—219, 29 U.S.C.A. §§ 201 219. 2 1948, 167 F.2d 911. 3 52 Stat. 1061, 29 U.S.C. § 203(j), 29 U.S.C.A. § 203(j). 4 Emphasis added. 5 Kirschbaum Co. v. Walling, 1942, 316 U.S. 517, 525, 62 S.Ct. 1116, 1120, 1121, 86 L.Ed. 1638; Armour & Co. v. Wantock, 1944, 323 U.S. 126, 65 S.Ct. 165, 89 L.Ed. 118; Roland Electric Co. v. Walling, 1946, 326 U.S. 657, 663, 66 S.Ct. 413, 415, 416, 90 L.Ed. 383. 6 'Necessary' understates the case, The water supplied by the company's employees is, in this case, an indispensable prerequisite for agricultural production. Cultivation began only with irrigation and it will end if the irrigation ceases. Under such circumstances, there can be no doubt of the immediacy of the connection between the production, by the farmers, for commerce and the work of the petitioner's field employees in providing water for irrigation. 7 The fallacy of the notion that an exemption carries with it all occupations whose nexus with interstate commerce is the exempted occupation is demonstrated by authority as well as by logic. In Boutell v. Walling, 1946, 327 U.S. 463, 66 S.Ct. 631, 90 L.Ed. 786; for example, the question was whether men who wer employed by a service company to service trucks carrying goods in interstate commerce were exempt, under § 13(b)(1), as the employees of an interstate carrier subject to regulation by the Interstate Commerce Commission. Their only connection with commerce was their work on the trucks of the interstate carrier. The Court divided as to whether the employees were themselves employed by the carrier within the meaning of the Motor Carrier Act, 49 U.S.C.A. § 301 et seq., and, therefore, exempt. But there was no suggestion in either of the opinions in the case that, if not employed by the carrier, they were nevertheless exempt because their only connection with interstate commerce was through an enterprise which was itself exempt. In only one case brought to our attention was a contention presented similar to that made here. In Dize v. Maddrix, 4 Cir., 1944, 144 F.2d 584, affirmed, 1945, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296; the local manufacture of boxes was held to be within the Act because the boxes were used by fishermen to ship their fish in interstate commerce. The fishermen were exempt under a specific exemption in the Act covering fishing, and it was argued that the manufacturer of the boxes should therefore be exempt as 'fishing' because its only connection with commerce was through fishing. The argument was rejected summarily. 8 Meeker Cooperative Light & Power Ass'n v. Phillips, 8 Cir., 1946, 158 P.2d 698. 9 McComb v. Super-A Fertilizer Works, 1 Cir., 1948, 165 F.2d 824. 10 Article VII, § 5 of the Company's By-Laws provides as follows: 'All headgates in the Company's canals shall be operated and maintained by and under the exclusive control of this company and no stockholder or any other person shall have the right to interfere with, reconstruct, repair, change, or alter, open or close said headgates or any of them in any manner whatsoever.' 11 L. Hand, J., in Cabell v. Markham, 2 Cir., 1945, 148 F.2d 737, 739, affirmed Markham v. Cabell, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165. 12 See S.Rep.No.230, 71st Cong., 2d Sess. (1930). 13 46 Stat. 1550, 12 U.S.C. § 1141j(g), 12 U.S.C.A. § 1141j(g). This language originated in S. 2354, 71st Congress. That bill was reported to the Senate (S.Rep.No.230) and passed. 72 Cong.Rec. 7016 (1930). It did not come to a vote in the House. Its substance was added by the Senate to H.R. 16836, an amendment to the oleomargarine tax laws, and in this form became law. See 74 Cong.Rec. 6688, 7196 (1931). 14 The word 'production' was not actually contained in either the House or Senate bills as originally passed. The Senate bill, S. 2475, 75th Cong., 1st Sess., as passed, contained the reference to § 15(g) of the Agricultural Marketing Act in the following way: '. . . 'agriculture' * * * further includes the definition contained in subdivision (g) of Section 15 of the Agricultural Marketing Act. * * *' See 81 Cong.Rec. 7659 (1937). This language was faulty, since the section referred to was not a definition of agriculture but of an agricultural commodity. The language was retained in this form when the bill was first debated in the House. See 82 Cong.Rec. 1580, 1690 (1937). The House voted to recommit the bill. Id. at 1835. In committee, the definition of agriculture was completely redrafted and the reference to the Agricultural Marketing Act omitted. See H.R.Rep.No.2182, 75th Cong., 3d Sess. (1938). The bill passed the House in this form. In conference, it was agreed that the House version of the definition of agriculture should be adopted, with three stated exceptions. Only one of the three is relevant here—the reinsertion of the reference to the Agricultural Marketing Act. The word 'production' was added in conjunction with that reference and was obviously used only to make the reference grammatically correct. The committee report states the change in this way: 'The production of commodities defined as agricultural commodities in section 15(g) of the Agricultural Marketing Act is included within the definition of agriculture. * * *' H.R.Rep.No.2738, 75th Cong., 3d Sess., p. 29 (1938). 15 Although not relevant here, there is the additional requirement that the practices be incidental to 'such' farming. Thus processing, on a farm, of commodities produced by other farmers is incidental to or in conjunction with the farming operation of the other farmers and not incidental to or in conjunction with the farming operation of the farmer on whose premises the processing is done. Such processing is, therefore, not within the definition of agriculture. Bowie v. Gonzalez, 1 Cir., 1941, 117 F.2d 11. 16 'Mr. Tydings. * * * In the case I vizualize * * * the farmer is not performing the service. The man to whom I refer makes a business of doing nothing but threshing. He owns his own machine, and hauls it from farm to farm, and enters into contracts with farmers to thresh their crops; the point being that while he is dealing with an agricultural commodity, he is not necessarily a farmer, and he is not doing work ordinarily done by a farmer. 'Mr. Borah. He is doing the exact work which the farmer did before he took it up. 'Mr. Tydings. That is true; but I do not think the bill is drawn in sufficient detail to bring the man to whom I refer under its provisions of exemption.' 81 Cong.Rec. 7653 (1937). See also the comments of Senator Bone, id. at 7659. 17 81 Cong.Rec. 7888 (1937). 18 See n. 10, supra. 19 The debate in both Houses shows a clear awareness that the employees of farmers cooperative associations would not be exempted as employees of farmers. At various times amendments were offered, and adopted, exempting the employees of certain types of cooperatives. See 81 Cong.Rec. 7947 (1937), 82 Cong.Rec. 1783 (1937). All such special exemptions were, however, omitted from the bill as it finally became law. See also Interpretative Bulletin No. 10, issued by the Administrator, Wage & Hour Division, 29 C.F.R. § 780, 81—82 (Supp.1947). 20 While it lacks relevance to the question of congressional intention in 1938, we may note that the precise question here involved was discussed at length on the Senate floor in 1946 in connection with certain amendments to the Fair Labor Standards Act. It was clearly stated, without objection, that employees of an irrigation company which supplied water to farmers were, like the employees of a power company which supplies electricity to farmers, not exempt as employed in agriculture. 92 Cong.Rec. 2318 2319 (1946).

67

337 U.S. 773 69 S.Ct. 1247 93 L.Ed. 1686 GIBBSv.BURKE, Warden. No. 418. Argued April 21, 22, 1949. Decided June 27, 1949. Mr. Frederick Bernays Wiener, of Washington, D.C., for petitioner. Mr. Karl W. Johnson, of Media, Pa., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 This case raises the question whether under the circumstances of pet tioner's trial for larceny in a state court without counsel, Pennsylvania deprived him of a federal constitutional right, protected by the due process clause of the Fourteenth Amendment. 2 Petitioner, a man in his thirties, was arrested in Pennsylvania in 1947 for the larceny of certain clothing and other personal effects allegedly belonging to one James Blades. Upon the return of an indictment he pleaded not guilty, was tried before a jury which found him guilty, and was sentenced to a term of two and one-half to five years in the penitentiary. The record shows neither a request for counsel by the petitioner nor an offer of counsel by the court. Petitioner conducted his own defense. 3 On May 24, 1948, Gibbs filed in the Supreme Court of Pennsylvania, a petition for habeas corpus in which he alleged his arrest, trial, conviction and sentence, and in which he also stated that he 'was denied counsel and through ignorance of law and fact was forced to act as his own counsel' and that he 'was denied his constitutional Rights as set forth in the Ten Original Amendments, Article VI.' Upon the issuance of a rule to show cause, respondent answered, admitting the formal allegations and the fact of trial and sentence, but alleging the following concerning the denial of right to counsel: 'The transcript of the notes of testimony taken in the matter does not disclose that the relator demanded counsel nor requested that counsel be appointed to represent him. * * * It is also averred by way of answer that the relator's examination of witnesses and questions asked during the course of the trial fully disclosed his familiarity with legal process in the criminal courts.' The answer also attached a transcript of the proceedings at the trial and a transcript of petitioner's criminal record. It showed eight convictions and nine acquittals, discharges, and no true bills. On July 6, 1948, the Supreme Court of Pennsylvania denied the writ. As the allegations of the petition raised grave doubts as to whether petitioner had been accorded due process in his trial, we granted the motion for leave to proceed in forma pauperis and the petition for a writ of certiorari. 335 U.S. 867, 69 S.Ct. 139. 4 James Blades, the prosecuting witness, Mrs. Lafield, his mother, Constable Fleming, the arresting officer, and James Silverstein, a secondhand dealer, testified for the state. Briefly summarized, their testimony tended to prove that petitioner came to Blades' home on the morning of the alleged theft, looked in Blades' room, where the stolen articles were in plain view, and, finding Blades absent, departed. When Blades returned home that day he noticed that the articles were missing from his room and, upon learning from his mother that Gibbs had been there, he notified the police. He and Constable Fleming found some of the missing articles in a pawnshop and found the petitioner in a taproom wearing Blades' had and watch. Later Blades' wallet was found in the jail cell in which petitioner was incarcerated. Silverstein, the secondhand dealer in the pawnshop, testified that Gibbs had brought the missing clothing in and had sold them to him. Petitioner, by means of cross-examination, sought to establish that the articles had been taken, and some of them sold, pursuant to an understanding between him and Blades. 5 Several events occurring at the trial are pertinent to petitioner's claim that failure to appoint counsel violated the federal Constitution. (1) Considerable inadmissible hearsay and otherwise incompetent evidence was allowed to go in without objection by Gibbs.1 (2) When petitioner recalled the prosecuting witness Blades for further cross-examination the trial judge accepted the prosecutor's suggestion and made Blades the petitioner's witness for the purpose of the unfavorable, testimony then elicited.2 Thus he made this testimony binding on the petitioner although the Pennsylvania rule would seem to be that an adverse itness can be so examined and yet remain the witness of the opposing party.3 (3) Although, as we have already noted, petitioner attempted to defend himself on the ground that he took and sold the articles pursuant to an agreement with the prosecuting witness, he was prevented from proving a fact clearly relevant to that defense,4 i.e., that Blades had previously made a baseless criminal charge against him under similar circumstances.5 (4) The trial judge also advised petitioner in the presence of the jury, so far as the record shows, as to his opportunity to avail himself of the privilege againt self-incrimination which was his under Pennsylvania law. In doing so he made reference to possible past convictions.6 So to require him to claim his constitutional safeguard in the presence of the jury was, petitioner claims, a violation of Pennsylvania law. Cf. Philadelphia v. Cline, 158 Pa.Super. 179, 185, 44 A.2d 610; Commonwealth v. Valeroso, 273 Pa. 213, 116 A. 828. Respondent does not claim otherwise. The information given by the judge as to past convictions could have been given by a lawyer to the petitioner beyond the jury's hearing. (5) Finally, when sentencing petitioner, the judge used language which, it is claimed, evinced a hostile and thoroughly unjudicial attitude.7 6 Two procedural points require but brief attention. The federal question was adequately if inartistically raised in the petition for a writ of habeas corpus. We consider insignificant under these circumstances the fact that petitioner cited the Sixth rather than the Fourteenth Amendment to the Constitution.8 Meticulous insistence upon regularity in procedural allegations is foreign to the purpose of habeas corpus.9 The state does not contest the propriety of a considerations of the case on its merits.10 Thus it apparently concedes that habeas corpus was a proper method of testing the constitutionality of the conviction and that it was within the original jurisdiction of the Supreme Court of Pennsylvania.11 7 Since it is clear that a failure to request counsel does not constitute a waiver when the defendant does not know of his right to counsel, Uveges v. Pennsylvania, 335 U.S. 437, 69 S.Ct. 184, we proceed to the merits. We consider this case on the theory upheld in Betts v. Brady, 316 U.S. 455, 62 S.Ct. 1252, 86 L.Ed. 1595, that the Constitution does not guarantee to every person charged with a serious crime in a state court the right to the assistance of counsel regardless of the circumstances. Betts v. Brady rejected the contention that the Fourteenth Amendment automatically afforded such protection. In so doing, however, it did not, of course, hold or int mate that counsel was never required in noncapital cases in state courts in order to satisfy the necessity for basic fairness which is formulated in that Amendment. 8 There have been made to this Court without avail arguments based on the long practice as to counsel in state courts to convince us that under the Fourteenth Amendment a state may refuse to furnish counsel even when needed by the accused in serious felonies other than capital. Our decisions have been that where the ignorance, youth, or other incapacity of the defendant made a trial without counsel unfair, the defendant is deprived of his liberty contrary to the Fourteenth Amendment.12 Counsel necessary for his adequate defense would be lacking. 9 Respondent argues that to hold to such precedents leaves the state prosecuting authorities uncertain as to whether to offer counsel to all accused who are without adequate funds and under serious charges in state courts. We cannot offer a panacea for the difficulty. Such an interpretation of the Fourteenth Amendment would be an unwarranted federal intrusion into state control of its criminal procedure. The due process clause is not susceptible to reduction to a mathematical formula.13 10 Furthermore, the fair conduct of a trial depends largely on the wisdom and understanding of the trial judge. He knows the essentials of a fair trial. The primary duty falls on him to determine the accused's need of counsel at arraignment and during trial. He may guide a defendant without a lawyer past the errors that make trials unfair. Cf. Uveges v. Pennsylvania, supra. Failure to protect properly the rights of one accused of serious offenses is unusual. Obviously a fair trial test necessitates an appraisal before and during the trial of the facts of each case to determine whether the need for counsel is so great that the deprivation of the right to counsel works a fundamental unfairness. The recent discussion of the problem in Uveges v. Pennsylvania, supra, makes further elaboration unnecessary. We think that the facts of this case, particularly the events occurring at the trial, reveal, in the light of that opinion and the precedents there cited, that petitioner was handicapped by lack of counsel to such an extent that his constitutional right to a fair trial was denied. This case is of the type referred to in Betts v. Brady, supra, 316 U.S. at page 473, 63 S.Ct. at page 1261, 86 L.Ed. 1595, as lacking fundamental fairness because neither counsel nor adequate judicial guidance or protection was furnished at the trial. 11 A defendant who pleads not guilty and elects to go to trial is usually more in need of the assistance of a lawyer than is one who pleads guilty. The record in this case evidences petitioner's helplessness, without counsel and without more assistance from the judge, in defending himself against this charge of larceny. We take no note of the tone of the comments at the time of the sentence. The trial was over. The questionable issues allowed to pass unnoticed as to procedure, evidence, privilege, and instructions detailed in the first part of this opinion demonstrate to us that petitioner did not have a trial that measures up to the test of fairness prescribed by the Fourteenth Amendment. 12 Reversed and remanded for proceedings not inconsistent with this opinion. 13 Reversed and remanded. 14 Mr. Justice BLACK and Mr. Justice DOUGLAS concur in the judgment of the Court. They think that Betts v. Brady should be overruled. If that case is to be followed, however, they agree with the Court's opinion insofar as it holds that petitioner is entitled to relief under the Betts v. Brady doctrine. 15 Mr. Justice MURPHY and Mr. Justice RUTLEDGE concur i the result. 1 Blades: 'Then she (witness's mother) tells me about him (petitioner) being there.' Constable Fleming: 'I got a telephone call from the Chief of Police, Mr. Miller, to go up to Mrs. Lafield's to investigate a robbery that occurred there. * * * I asked Jim, where was the suitcase. He said, the suitcase was by the bed. * * *' 'I went to three pawnshops and they gave me a description of Edward Gibbs * * *.' The District Attorney's unsworn offer of proof concerning the missing articles was as follows: 'Mr. Johnson: I want to offer into evidence the wallet, the watch, which were identified and found—The watch was found in the possession of the defendant. This wallet, containing the papers of Mr. Blade, which was found in the jail cell that had been occupied by the defendant. 'The Court: What about the radio? 'Mr. Johnson: It has been recovered and returned to the owner.' 2 'The Defendant: May I call the prosecutor (Blades) back on the stand? 'Mr. Johnson: He desires to call the prosecutor as his witness.' 'In his charge to the jury the judge said with reference to this episode: 'As he has presented no evidence of his own, except having called Mr. Blades and certain questions were asked Mr. Blades and certain answers made; that is the only evidence he presented.' 3 Commonwealth v. Reeves, 267 Pa. 361, 362—363, 110 A. 158; Commonwealth v. Eisenhower, 181 Pa. 470, 476, 37 A. 521, 59 Am.St.Rep. 670. 4 Commonwealth v. Farrel, 187 Pa. 408, 423—424, 41 A. 382; see 3 Wigmore, Evidence (3d ed., 1940) § 950. 5 'Q. Last fall, last year, didn't you wreck your own automobile and enter a complaint that I stole your car and wrecked it? 'Mr. Johnson: Objected to. 'The Court: Objection sustained. It has nothing to do with this case. 'The Defendant: All right.' 6 'The Court: Now then, Gibbs, you may, if you want to, take the stand and say anything you want to say, but I warn you if you do, if you have any record of any prior conviction, any felonies or any misdemeanors in the nature of what we call crimen falsi, the commonwealth may offer the record of any convictions you may have had. I am warning you in advance. You may, however, take the stand and testify or you may refuse to take the stand and if you do refuse to take the stand, the commonwealth and the court may not comment unfavorably about your failure to take the stand and testify. I want to warn you fully before you do take the stand. 'Do you want to take the stand? 'The Defendant: No, I don't have anything to say in court.' 7 'By the Court: 'Q. Gibbs, do you have anything to say before we impose sentence? 'A. No, I guess not. 'Q. How long have you been in jail? 'A. Two months and a half. 'Q. What is the matter with you; why can't you keep out of trouble? 'A. I don't know, sir. 'Q. You don't know why you can't do it? What do you do, get drunk or something, or are you just ornery? 'Mr. Johnson: Don't you think this man would be better if he were sent to the Eastern Penitentiary? 'By the Court: 'Q. Do you realize you can be put away for the rest of your life? 'A. (No answer.) 179, 185, 44 A.2d 610; Commonwealth attorney doesn't indict you for it. You can be indicted. 'Mr. Johnson: If he comes back again, I will take it as my personal job to indict him. 'The Court: In 1928 you were found guilty of burglary, larceny, receiving stolen goods, before Judge Fronefield—one to two years, county jail. In 1931, plead guilty to larceny—$100 fine and costs, one to two years, Judge MacDade. 1932 found guilty of larceny and receiving stolen goods, $50 fine and costs, six months to three years in county jail, Judge Morrow. That is three. 1934 larceny, found guilty, $100 fine and costs, six months to three years in county jail; sentenced to one year in county jail for violation of parole; Judge Fronefield. That is four. 1937, receiving stolen goods, $10 fine and costs, one to three years county jail, sentence suspended by Judge MacDade. That is five. 1938, larceny; found guilty, one and half to three years county jail, Judge Crichton. I don't believe there is anyone you missed up to now. You were before me a year ago. No, just last March. You beat that, not guilty. Now, here you are the seventh time. 'All I can do is give him two and a half to five years, if you don't want to indict these fourth offenders. 'Sentence. 'On No. 417 September Sessions 1947, the sentence of the court is that you undergo imprisonment in the Eastern State Penitentiary at solitary confinement and hard labor for two and a half to five years and stand committed until this sentence be complied with. If I could give you life, I would do it. 'Take him away.' 8 Cf. Price v. Johnston, 334 U.S. 266, 292, 68 S.Ct. 1049, 1066, 92 L.Ed. 1056, and cases there cited. 9 Tomkins v. Missouri, 323 U.S. 485, 487, 65 S.Ct. 370, 371, 89 L.Ed. 407. 10 Respondent's brief states: 'The issue now to be determined is whether he was properly charged with the offense, tried, convicted and sentenced, under the laws of the Commonwealth of Pennsylvania and the Constitution of the United States, more particularly the portion of the Fourteenth Amendment. * * *' 11 See Commonwealth ex rel. McGlinn v. Smith, 344 Pa. 41, 24 A.2d 1; Commonwealth ex rel. Penland v. Ashe, 341 Pa. 337, 19 A.2d 464. 12 Uveges v. Pennsylvania, 335 U.S. 437, 441, 69 S.Ct. 184, and cases there cited. 13 Betts v. Brady, 316 U.S. 455, 62 S.Ct. 1252, 86 L.Ed. 1595; Bute v. Illinois, 333 U.S. 640, 676, 68 S.Ct. 763, 781, 92 L.Ed. 986; Townsend v. Burke, 334 U.S. 736, 739, 68 S.Ct. 1252, 1254, 92 L.Ed. 1690.

01

338 U.S. 189 69 S.Ct. 1453 93 L.Ed. 1897 EISLERv.UNITED STATES. No. 255. Argued March 28, 1949. Decided June 27, 1949. Mr. David Rein, Washington, D.C., Mr. Abraham J. Isserman, Los Angeles, Cal., for petitioner. Mr. Philip B. Perlman, Solicitor General, Washington, D.C., for respondent. PER CURIAM. 1 Petitioner's flight from the country after the grant of his petition for writ of certiorari, 335 U.S. 857, 69 S.Ct. 130, and after the submission of his cause on the merits necessitates a decision as to the disposition now to be made of this case. Since the petitioner by his own volition may have rendered moot any judgment on the merits, we must, as a matter of our own practice, decide whether the submission should be set aside the the writ of certiorari dismissed or whether we should postpone review indefinitely by ordering the case removed from the docket, pending the return of the fugitive. 2 Our practice, however, has been to order such cases to be removed from the docket. Smith v. United States, 94 U.S. 97, 24 L.Ed. 32; Bonahan v. State of Nebraska, 125 U.S. 692, 8 S.Ct. 1390, 31 L.Ed. 854. We adhere to those precedents. Accordingly after this term the cause will be left off the docket until a direction to the contrary shall issue. 3 While Mr. Justice BURTON has not participated in the consideration of the merits of this case, he has participated in this procedural action based upon the memorandum filed by the United States of America calling the attention of the Court to the petitioner's flight from justice. 4 Mr. Justice FRANKFURTER, with whom THE CHIEF JUSTICE joins, dissenting. 5 The Government has brought to the Court's attention the circumstances which, in its view, have deprived the Court of jurisdiction to adjudicate this case. Accordingly the Government, by way of suggestion, has moved the Court for its dismissal. The motion should be granted for the following reasons: 1. Eisler was convicted for contempt of Congress by the United States District Court for the District of Columbia and invoked the jurisdiction of this Court by a petition for certiorari filed August 31, 1948, seeking the determination of questions some of which at least we regarded as important enough to warrant review. We accordingly granted his petition. 335 U.S. 857, 69 S.Ct. 130. The case was argued March 28, 1949, and awaited only final disposition when, on May 6, 1949, the petitioner fled the United States. On May 13, the Attorney General requested the Secretary of State to make application through the usual diplomatic channels for the return of Eisler to the United States. That application was made, it was resisted by Eisler, and on May 27 the English court with final authority in such matters dismissed it on the ground that the crime for which Eisler's extradition was sought—the making of false statements in an application for an exit permit—was not extraditable. Since then Eisler has formally repudiated the jurisdiction of this country and has been elected to political office in a foreign country. The Attorney General has abandoned all attempts to secure his return. The upshot is that the abstract questions brought before the Court by Eisler are no longer attached to any litigant. No matter remains before us as to which we could issue process. 6 2. Very early after the Republic was founded it was confronted by an emergency in which its very existence was threatened. Serious questions touching the legal power of the President to deal with the crisis arose, and Washington sought answers to these legal questions from this Court. Even under circumstances so compelling the first Chief Justice and his Associates had to deny President Washington's request for aid because the Constitution gave this Court no power to give answers to legal questions as such but merely the authority to decide them when a litigant was before the Court. See 3 Johnston, Correspondence and Public Papers of John Jay 486 (1891); 10 Sparks, Writings of George Washington 542 (1840). That recognition of the limited power of this Court has been unquestioned ever since 1793. It has been the principle by which cases formally before the Court have again and again been dismissed as beyond its jurisdiction. The circumstances which have called forth application of the principle have varied greatly, but all the instances of its application illustrate and confirm the basic limitation under which this Court functions, namely, that it can entertain a case and decide it only if there is a litigant before it against whom the Court may enforce its decision. 7 3. If legal questions brought by a litigant are to remain here, the litigant must stay with them. When he withdraws himself from the power of the Court to enforce its judgment, he also withdraws the questions which he had submitted to the Court's adjudication. The questions brought by Eisler have evaporated so far as the Court's power to deal with them is concerned because the rights and obligations of a litigant no longer depend on their answer. The Court therefore lacks jurisdiction as it lacked jurisdiction to answer Washington's questions. Not to dismiss the case for want of jurisdiction can only mean that the Court has jurisdiction and therefore must retain the case. And this, in turn, can only mean that the Court's eventual action must await the pleasure of Eisler and of every future litigant who, having invoked the Court's jurisdiction, withdraws himself beyond the means of asserting it. Eisler's political affiliation, of course, does not distinguish him from other litigants. It was irrelevant when the Court took his case at a time that it had jurisdiction over him; it is equally irrelevant to recognition of the fact that Eisler has put himself definitively beyond the Court's process were it to decide against him. Since the Court is without power effectively to decide against him, it is without power to decide at all. In short, the Court no longer has jurisdiction, and it would be equally without jurisdiction if Eisler were the Bourbon pretender. 8 4. This case has nothing in common with instances cited as precedent for leaving it off the docket until a direction to the contrary shall issue. Smith v. United States, 94 U.S. 97, 24 L.Ed. 32; Bonahan v. State of Nebraska, 125 U.S. 692, 8 S.Ct. 1390, 31 L.Ed. 854. In those cases convicts had broken jail while their cases were pending in this Court and remained at large. As a matter of practical good sense, apparently upon informal suggestion, the Court suspended disposition of the cases until it should receive word from the sheriff who reported the escape that a recapture had been accomplished. Such jailbreaks, indeed, as often as not imply a merely temporary separation from confinement. But whatever may be thought of such a light-reined way of dealing with a jailbreak from our local jails, the situation presented by this case is totally different. Here we have the most formal kind of resistance to the jurisdiction of this Court. It has been adjudicated successful, and the Attorney General has had to yield. Since the Court's power to reassert jurisdiction has been incontestably denied, the motion should be granted. 9 Mr. Justice MURPHY, dissenting. 10 The petitioner is an alien, a Communist, and a fugitive from justice. He was convicted of willful default before a Committee of Congress. We decided to hear this case after determining that the issues he presented were of importance. We heard argument, read briefs, and all but made the announcement of our decision. 11 Then the petitioner left the country. Efforts at extradition in Great Britain were unsuccessful. The petitioner is now beyond the territorial jurisdiction of this Court. It is argued that we are therefore without jurisdiction in the case. 12 We can decide only cases or controversies. A moot case is not a 'ca e' within the meaning of Art. III. United States v. Evans, 213 U.S. 297, 29 S.Ct. 507, 53 L.Ed. 803. But a moot case is one in which the particular controversy confronting the Court has ended. That is not true when a prisoner has simply escaped. We are not at liberty to assume that all escaped defendants will never return to the jurisdiction. And the importance of a criminal judgment is not limited to the imprisonment of the defendant. Thus an alien convicted of crime is excluded from admission to the United States, 8 U.S.C. § 136(e), 8 U.S.C.A. § 136(e). 13 Since the question is one of jurisdiction, the unlikelihood of prejudice to this petitioner is irrelevant. Equally irrelevant on the question of mootness is President Washington's request for an advisory opinion. That the case may become moot if a defendant does not return does not distinguish it from any other case we decide. For subsequent events may render any decision nugatory. The petitioner having subjected himself to our jurisdiction by filing a petition for review, he cannot now revoke or nullify it and thus prevent an adjudication of the questions at issue merely by leaving the country and repudiating its authority. Thus I entirely agree with those of my brethren who believe we have jurisdiction. 14 But the Court adopts another alternative. It exercises its discretion and refuses to decide the issue. It is clear, however, as Mr. Justice JACKSON points out, that it is the importance of the legal issues, not the parties, which bring the case to this Court. Those issues did not leave when Eisler did. They remain here for decision; they are of the utmost importance to the profession and to the public. 15 Law is at its loftiest when it examines claimed injustice even at the instance of one to whom the public is bitterly hostile. We should be loath to shirk our obligations, whatever the creed of the particular petitioner. Our country takes pride in requiring of its institutions the examination and correction of alleged injustice whenever it occurs. We should not permit an affront of this sort to distract us from the performance of our constitutional duties. 16 I dissent. 17 Mr. Justice JACKSON, dissenting. 18 I cannot agree that a decision of Eisler's case should be indefinitely deferred, awaiting what I do not know. The case is fully submitted and all that remains is for members of the Court to hand down their opinions and the decision. Eisler's presence for that would be neither necessary nor usual. The case has reached this stage at considerable detriment to the country, since this Court's grant of his petition for review was what delayed Eisler's commencement of sentence and afforded him opportunity to escape. If ever there were good reasons to grant him a review, they are equally good reasons for now deciding its issues. 19 The Rules of this Court provide that we shall grant a petition for review here only where there are 'special and important reasons therefor.' They limit such cases to those that present 'a question of general importance * * * which has not been, but should be, settled by this court.' Rule 38, 28 U.S.C.A. (Emphasis supplied.) 20 Under our practice, the grant of Eisler's petition meant that four Justices of ths Court, at least, were in agreement that the questions he raised were of this description. If they were then, they are still. His petition challenged the power of Congress and its investigating committees to hold, and to control the procedures of, investigations of this nature. These questions are recurring ones, certain to be repeated, for the grant of a review has cast doubt not only on the validity of Eisler's conviction but upon congressional procedures as well. No one can know what the law is until this case is decided or until someone can carry a like case through the two lower courts again to get the question here. 21 Decision at this time is not urged as a favor to Eisler. If only his interests were involved, they might well be forfeited by his flight. But t is due to Congress and to future witnesses before its committees that we hand down a final decision. I therefore dissent from an expedient that lends added credence to Eisler's petition, which I think is without legal merit. I do not think we can run away from the case just because Eisler has. 22 I should not want to be understood as approving the use that the Committee on Un-American Activities has frequently made of its power. But I think it would be an unwarranted act of judicial usurpation to strip Congress of its investigatory power, or to assume for the courts the function of supervising congressional committees. I should affirm the judgment below and leave the responsibility for the behavior of its committees squarely on the shoulders of Congress.1 1 What the Congress can with safety do, after this Court's decision in Christoffel v. United States, 338 U.S. 84, 69 S.Ct. 1447, seems to present a good question.

89

338 U.S. 74 69 S.Ct. 1372 93 L.Ed. 1819 LUSTIGv.UNITED STATES. No. 1389. Argued Oct. 19, 1948. Decided June 27, 1949. Mr. Edward Halle, New York City, for petitioner. Mr. Philip B. Perlman, Sol. Gen., Washington, D.C., for respondent. Mr. Justice FRANKFURTER announced the judgment of the Court and an opinion in which Mr. Justice DOUGLAS, Mr. Justice MURPHY and Mr. Justice RUTLEDGE join. 1 This is a prosecution under the counterfeiting statutes. Rev.Stat. § 5430, 35 Stat. 1116, 18 U.S.C. § 264 (now § 474). he sole question before us is the correctness of the denial of a pretrial motion, sustained by the Court of Appeals for the Third Circuit, 159 F.2d 798, to suppress evidence claimed to have been seized in contravention of the Fourth Amendment as it is to be applied under the doctrine of Byars v. United States, 273 U.S. 28, 47 S.Ct. 248, 71 L.Ed. 520.1 2 Since the legal issue turns on the precise circumstances of this case they must be stated with particularity. 3 At about 2 p.m. on Sunday, March 10, 1946, Secret Service Agent Greene received two telephone calls, one from the police of Camden, New Jersey, the other from the manager of a hotel in that city, indicating violations of the counterfeiting statutes being carried on in Room 402 of the hotel. Lustig, the petitioner here, and one Raynolds were registered for this room under assumed names. It is to be noted that the Secret Service is the agency of the Government charged with enforcement of the laws pertaining to counterfeiting. On looking through the keyhole of the suspect room after reaching the hotel, Greene saw Lustig, two brief cases and a large suitcase, but no evidence pertinent to counterfeiting. He questioned the chambermaid whose suspicions had led to this investigation. She recounted the hearing of noises 'like glass hitting against glass or metal hitting against metal' emanating from the suspect room. She also remarked that she had seen what looked like money on the table. 4 Greene thereupon reported to Detective Arthur of the Camden police at the Camden Police Station that he had seen no evidence of counterfeiting but was confident that 'something was going on.' Arthur reported the affair by telephone to his superior, Captain Koerner, at his home, who then came to the police station. In his account of the affair Greene gave to Koerner the names under which the occupants of the room had registered. In reply to inquiry by Captain Koerner, Sergeant Murphy of the Camden police stated that one of the names was that of a 'racehorse man or a tout or a bookie.' After verifying the names on the hotel register and on the assumption that the occupants of the room 'might be trying to counterfeit racetrack tickets' rather than currency, Koerner secured warrants for the arrest of persons bearing the names on the register in order to 'get into that room and find out what was in there.' The offense charged against those bearing the assumed names was the violation of a Camden ordinance requiring 'known criminals' to register with the local police within twenty-four hours after their arrival in town. At about four o'clock in the afternoon of the same day Koerner and three city detectives secured a key from the manager of the hotel and entered Room 402. The police officers proceeded to empty the bags and the drawers of a bureau and thus came upon the evidence sought to be suppressed. What they found indicated counterfeiting of currency rather than of race-track tickets. 5 During all this time, Greene had remained at police headquarters because he 'was curious to see what they would find.' On finding what they did find, Koerner sent word to Greene, who came to the hotel and examined the evidence in controversy. When Lustig and Reynolds eventually returned they were arrested and searched by the detectives. As various articles were taken out of their pockets, those deemed to have bearing on counterfeiting currency were turned over to Greene. He observed that the ink on a $100 bill taken from Reynolds had not been tampered with. Greene was trying to discover what had been used to make the impression on the 'similitude' found in the room. After the search was completed, Greene and the city police gathered up the articles revealed by the search and carried them to the police station. Some of these articles were given to Greene before he left Room 402; all were eventually turned over to him. 6 We are confronted by a ruling of the District Court, sustained by the Court of Appeals, admitting the evidence. But the question before us is not foreclosed by the respect to be accorded to a ruling on an issue of fact by the trial court until analysis discloses that the ruling was merely on an issue of fact and that no issue of law was entwined in the ruling. Insofar as what the lower courts found as facts may properly be so regarded, they are to be accepted; but their constitutional significance is another matter. 7 On the basis of what was before him the trial judge admitted the evidence because he did not 'see any connivance or arrangement on the part of the Federal officers to have an illegal search made to get evidence they could not secure under the Federal law.' We therefore accept as a fact that Greene did not request the search, that, beyond indicating to the local police that there was something wrong, he was not the moving force of the search, and that the search was not undertaken by the police to help enforcement of a federal law. But search is a functional, not merely a physical, process. Search is not completed until effective appropriation, as part of an uninterrupted transaction, is made of illicitly obtained objects for subsequent proof of an offense. Greene's selection of the evidence deemed important for use in a federal prosecution for counterfeiting, as part of the entire transaction in Room 402, was not severable, and therefore was part of the search carried on in that room. The uncontroverted facts show that before the search was concluded Greene was called in, and although he himself did not help to empty the physical containers of the seized articles he did share in the critical examination of the uncovered articles as the physical search proceeded. It surely can make no difference whether a state officer turns up the evidence and hands it over to a federal agent for his critical inspection with the view to its use in a federal prosecution, or the federal agent himself takes the articles out of a bag. It would trivialize law to base legal significance on such a differentiation. Had Greene accompanied the city police to the hotel, his participation could not be open to question even though the door of Room 402 had not been opened by him. See Johnson v. United States, 333 U.S. 10, 68 S.Ct. 367, 92 L.Ed. 436. To differentiate between participation from the beginning of an illegal search and joining it before it had run its course, would be to draw too fine a line in the application of the prohibition of the Fourth Amendment as interpreted in Byars v. United States, supra, 273 U.S. 28, 47 S.Ct. 248, 71 L.Ed. 520. 8 The crux of that doctrine is that a search is a search by a federal official if he had a hand in it; it is not a search by a federal official if evidence secured by state authorities is turned over to the federal authorities on a silver platter. The decisive factor in determining the applicability of the Byars case is the actuality of a share by a federal official in the total enterprise of securing and selecting evidence by other than sanctioned means. It is immaterial whether a federal agent originated the idea or joined in it while the search was in progress. So long as he was completely accomplished, he must be deemed to have participated in it. Where there is participation on the part of federal officers it is not necessary to consider what would be the result if the search had been conducted entirely by State officers. Evidence secured through such federal participation is inadmissible for the same considerations as those which made 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, the governing pri ciple in federal prosecutions. 9 Though state officers preceded Greene in illegally rummaging through the bags and bureau drawers in Room 402, they concerned themselves especially with turning up evidence of violations of the federal counterfeiting laws after Greene joined them. He was an expert in counterfeiting matters and had a vital share in sifting the evidence as the search proceeded. He exercised an expert's discretion in selecting or rejecting evidence that bore on counterfeiting. The fact that state officers preceded him in breach of the rights of privacy does not negative the legal significance of this collaboration in the illegal enterprise before it had run its course. Greene himself acknowledged such participation by his remark about 'leaving the room after we had gathered all this evidence together.' 10 Nor is the search here defensible as incidental to a lawful arrest. Greene never made the arrest, he knew that Lustig and Reynolds were not present when he entered their room and he had an active hand in the continuation of the search without warrant before Lustig and Reynolds had returned. The ruling in Davis v. United States, 328 U.S. 582, 66 S.Ct. 1256, 90 L.Ed. 1453, does not come into play. Neither is it material that Greene may have been informed as to what he was likely to find before he joined the searchers. Vindicated anticipation of what an illegal search may reveal does not validate a search otherwise illegal. Trupiano v. United States, 334 U.S. 699, 708—709, 68 S.Ct. 1229, 1223—1234, 92 L.Ed. 1663. With every respect for the rulings of the lower court, we find that the unquestioned facts disclose that the evidence on which the conviction rests was illicit and the motion to suppress it should have been granted. Reversed. 11 Mr. Justice BLACK concurs in the judgment of the Court substantially for reasons set out in his dissent in Feldman v. United States, 332 U.S. 487, 494, 64 S.Ct. 1082, 1085, 88 L.Ed. 1408, 154 A.L.R. 982. 12 Mr. Justice MURPHY, with whom Mr. Justice DOUGLAS and Mr. Justice RUTLEDGE join, concurring. 13 Mr. Justice FRANKFURTER finds it unnecessary to decide whether an illegal search by state officers bars the introduction of the fruits of the search in a federal court. I join in his opinion, and in the judgment of reversal. But my dissenting views in Wolf v. Colorado, 338 U.S. 25, 69 S.Ct. 1359, make clear my position on the question he reserves. In my opinion the important consideration is the presence of an illegal search. Whether state or federal officials did the searching is of no consequence to the defendant, and it should make no difference to us. 14 Mr. Justice REED, with whom THE CHIEF JUSTICE, Mr. Justice JACKSON and Mr. Justice BURTON join, dissenting. 15 My understanding of the rule as to the use of evidence in a federal criminal trial obtained by state officers through a search and seizure conducted by them under state authority is this. 16 'While it is true that the mere participation in a state search of one who is a federal officer does not render it a federal undertaking, the court must be vigilant to scrutinize the attendant facts with an eye to detect and a hand to prevent violations of the Constitution by circuitous and indirect methods.' Byars v. United States, 273 U.S. 28, 32, 47 S.Ct. 248, 249, 71 L.Ed. 520. In the Byars opinion this Court went on to say that the federal government had the right 'to avail itself of evidence improperly seized by state officers operating entirely upon their own account. But the rule is otherwise when the federal government itself, through its agents acting as such, participates in the wrongful search and seizure.' 273 U.S. at page 33, 47 S.Ct. at page 250. This is the rule which the Court reaffirms today. 17 It is the application of that rule to the facts of this case which causes me to dissent. Although it may seem only a difference of view as to the facts of a particular case, it becomes important in the administration of the criminal law. If federal pea e officers are to be restricted in their duties to the extent indicated in the opinion, they should have full warning so that their work in detecting crime will not be frustrated through the officer's inadvertence in accepting evidence turned over to him by state officers. The trial court found that Greene did not participate in the search and seizure. We should accept that finding. If we undertake to reexamine the testimony to see whether there was participation by Greene, I should reach the same conclusion as the lower courts did. 18 In my view Secret Service Agent Greene did not participate in this search and seizure and the motion to suppress the evidence obtained was properly overruled in the trial court, and the trial court's action was properly sustained in the Court of Appeals for the Third Circuit. 19 The Court accepts 'as a fact that Greene did not request the search, that, beyond indicating to the local police that there was something wrong, he was not the moving force of the search, and that the search was not undertaken by the police to help enforcement of a federal law.' The record shows clearly to me that Agent Greene did not participate in the search and seizure. 20 Only state police entered the room of Lustig, opened his brief cases and found all the articles useful in counterfeiting. It was not until after all the articles were found that were offered in evidence that Agent Greene was called.1 It was stated thus in the brief for appellant: 'When he arrived at the hotel, all of the material that had been taken out of the brief case was on the bed. Capt. Koerner and Sgt. Murphy then put the exhibits back in the brief cases.' This was Greene's testimony. Greene examined the articles that had been taken by the state police from the satchels. He then left the room and returned as Lustig and his companion Reynolds were in the act of opening the door to Room 402 where the state officers were. The state officers then arrested Reynolds and Lustig on a warrant for a state offense. The prisoners were searched. On Reynolds a $100 bill was found that was shown to Agent Greene by Captain Koerner.2 The $100 bill had not been tampered with, was not evidence against Lustig and has nothing to do with the case against him. 21 Unless the fact that Agent Greene looked at the evidence secured by the state police before it was removed from the room involves the United States in the search and seizure, the lower courts were correct in holding that Agent Greene had no part in the search and seizure. Greene did not 'share in the critical examination of the uncovered articles as the physical search proceeded.'3 The search had ended before he came into the room. The subsequent arrest, examination, and the $100 bill ound on Reynolds had nothing to do with the alleged unlawful search and seizure. The search and seizure had run its course and we should not hold that the appearance of a federal officer at the place of unlawful search and seizure after evidence has been found makes him a participant in the act. This evidence should not be suppressed and the conviction of Lustig should be affirmed. 1 After this Court denied a petition for writ of certiorari, a petition for rehearing was granted. The order entered June 16, 1947, 331 U.S. 853, 67 S.Ct. 1737, 91 L.Ed. 1861, denying certiorari was vacated and the petition for writ of certiorari to the Court of Appeals for the Third Circuit was granted on February 16, 1948. 333 U.S. 835, 68 S.Ct. 601, 92 L.Ed. 1119. 1 Testimony of Captain Koerner: 'Q. After you discovered these articles, what did you do? 'A. I called agent Greene, of the United States Secret Service. 'Greene came over in the neighborhood of five o'clock after we made a thorough search and found all this evidence I have presented.' Testimony of Sergeant Murphy: 'Q. When did Mr. Greene come there? 'A. After we searched the room, seeing what was in it, and finding the three notes, I talked to Captain Koerner and I told him we had enough to charge him with a Federal violation, and I called Mr. Greene from the hotel and explained to him over the telephone just about what we had found, and he came over later.' 2 Testimony of Agent Greene: 'Q. There was a hundred dollar bill found on Mr. Reynolds? 'A. Well, a new one. 'Q. Did you match the hundred dollar bill with that impression? 'A. No, sir. I observed that the ink on this new hundred dollar bill had not been tampered with. In other words, the bill was new in appearance and I concluded it was not the pattern bill from which this hundred dollars was made. 'Q. You gave the hundred dollars did you to Mr. Reynolds? 'A. No, sir. At the time I looked at the bill it was in Captain Koerner's possession.' 3 Court opinion, 338 U.S. 77, 69 S.Ct. 1373.

01

338 U.S. 1 69 S.Ct. 1434 93 L.Ed. 1765 KIMBALL LAUNDRY CO.v.UNITED STATES. No. 63. Argued Dec. 7, 8, 1948. Decided June 27, 1949. [Syllabus from pages 1-3 intentionally omitted] Mr. William J. Hotz, Omaha, Neb., for petitioner. Mr. George T. Washington, Asst. Sol. Gen., Washington, D.C., for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 On November 21, 1942, the United States filed a petition1 in the United States District Court for the District of Nebraska to condemn the plant of the Kimball Laundry Company in Omaha, Nebraska, for use by the Army for a term initially expiring June 30, 1943, and to be extended from year to year at the election of the Secretary of War. The District Court granted the United States immediate possession of the facilities of the company, except delivery equipment, for the requested period. The term was subsequently extended several times. The last year's extension was to end on June 30, 1946, but the property was finally returned on March 23, 1946. 2 The Kimball Laundry Company is a family corporation the principal stockholders of which are three brothers who are also its officers. The Laundry's business has been established for many years; its plant is large and well equipped with modern machinery. After the Army took over the plant, the Quartermaster Corps ran it as a laundry for personnel in the Seventh Service Command. Most of the Laundry's 180 employees were retained, and one of the brothers stayed on as operating manager. Having no other means of serving its customers the Laundry suspended business for the duration of the Army's occupancy. 3 On November 19, 1943, a board of appraisers appointed by the District Court, in accordance with Nebraska law, reported that 'the just compensation for the value of the use of the premises taken by the United States of America is the sum of $74,940 per annum * * *.' The appraisers made no award of damages for the loss of patrons which they recognized to be probable because at that time the amount of the loss could not be appraised. The Government and the Laundry both appealed the appraisers' award, and the question of just compensation was tried to a jury in March of 1946. The jury awarded an annual rental of $70,000—a total of $252,000 for the whole term—and $45,776.03 for damage to the plant and machinery beyond ordinary wear and tear. The rental award was intended to cover taxes, insurance, normal depreciation, and a return on the value of the Laundry's physical assets. Interest at the rate of 6 per cent was added from November 22, 1942, the day on which the Army took possession, on the amount due for the period between that date and June 30, 1943, and on the rental for each year thereafter from the beginning of the year until paid. Interest on the sum awarded for damage to the plant and machinery was adjudged to run from the date of the verdict, since the plant had not then been returned. 4 The Laundry appealed to the Court of Appeals for the Eighth Circuit assigning numerous errors in the admission and exclusion of testimony and in the instructions to the jury. The Court of Appeals affirmed the District Court, 8 Cir., 166 F.2d 856, and we granted the Laundry's petition for certiorari, 335 U.S. 807, 69 S.Ct. 30, because it raised novel and serious questions in determining what is 'just compensation' under the Fifth Amendment. 5 These questions are not resolved by the familiar formulas available for the conventional situations which gave occasion for their adoption. As Mr. Justice Brandeis observed, 'V lue is a word of many meanings.' Southwestern Bell Telephone Co. v. Public Service Comm., 262 U.S. 276, 310, 43 S.Ct. 544, 554, 67 L.Ed. 981, 31 A.L.R. 807. For purposes of the compensation due under the Fifth Amendment, of course, only that 'value' need be considered which is attached to 'property,'2 but that only approaches by one step the problem of definition. The value of property springs from subjective needs and attitudes; its value to the owner may therefore differ widely from its value to the taker. Most things, however, have a general demand which gives them a value transferable from one owner to another. As opposed to such personal and variant standards as value to the particular owner whose property has been taken, this transferable value has an external validity which makes it a fair measure of public obligation to compensate the loss incurred by an owner as a result of the taking of his property for public use. In view, however, of the liability of all property to condemnation for the common good, loss to the owner of nontransferable values deriving from his unique need for property or idiosyncratic attachment to it, like loss due to an exercise of the police power is properly treated as part of the burden of common citizenship. See Omnia Commercial Co. v. United States, 261 U.S. 502, 508—509, 43 S.Ct. 437, 438, 67 L.Ed. 773. Because gain to the taker, on the other hand, may be wholly unrelated to the deprivation imposed upon the owner, it must also berejected as a measure of public obligation to requite for that deprivation. McGovern v. New York, 229 U.S. 363, 33 S.Ct. 876, 57 L.Ed. 1228, 46 L.R.A.,N.S., 391; United States ex rel. T.V.A. v. Powelson, 319 U.S. 266, 63 S.Ct. 1047, 87 L.Ed. 1390. 6 The value compensable under the Fifth Amendment, therefore, is only that value which is capable of transfer from owner to owner and thus of exchange for some equivalent. Its measure is the amount of that equivalent. But since a transfer brought about by eminent domain is not a voluntary exchange, this amount can be determined only by a guess, as well informed as possible, as to what the equivalent would probably have been had a voluntary exchange taken place. If exchanges of similar property have been frequent, the inference is strong that the equivalent arrived at by the haggling of the market would probably have been offered and accepted, and it is thus that the 'market price' becomes so important a standard of reference.3 But when the property is of a kind seldom exchanged, it has no 'market price,' and then recourse must be had to other means of ascertaining value, including even value to the owner as indicative of value to other potential owners enjoying the same rights. Cf. Old South Association v. Boston, 212 Mass. 299, 99 N.E. 235. These considerations have special relevance where 'property' is 'taken' not in fee but for an indeterminate period. 7 Approaching thus the question of compensation for the temporary taking of petitioner's land, plant, and equipment, we believe that the award made by the District Court was correct. Petitioner insists, however, that the measure of compensation for a temporary taking which should have been applied is the difference between the market value of the fee on the date of the taking and its market value on the date of its return. But it was known from the outset that this taking was to be temporary, and determination of the value of temporary occupancy can be approached only on the supposition that free bargaining between petitioner and a hypothetical lessee of that temporary interest would have taken place in the usual framework of such negotiations. We agree with both lower courts, therefore, that the proper measure of compensation is the rental that probably could have been obtained, and so this Court has held in the two recent cases dealing with temporary takings. United States v. General Motors Corp., 323 U.S. 373, 65 S.Ct. 357, 89 L.Ed. 311, 156 A.L.R. 390; United States v. Petty Motor Co., 327 U.S. 372, 66 S.Ct. 596, 90 L.Ed. 729. Indeed, if the difference between the market value of the fee on the date of taking and that on the date of return were taken to be the measure, there might frequently be situations in which the owner would receive no compensation whatever because the market value of the property had not decreased during the period of the taker's occupancy. 8 The courts below also awarded compensation to petitioner for damage to its machinery and equipment in excess of ordinary wear and tear, the award of rental having been adjusted to include an allowance for normal depreciation. The Government does not object to this award, but we think it appropriate to point out that we find it justified on the theory that such indemnity would be payable by an ordinary lessee, though not fixed in advance as part of his rent because not then capable of determination. 9 The petitioner makes numerous objections to the sufficiency of the evidence in support of the amounts fixed by the jury as the rental value of the physical property and as compensation for damage to the plant and equipment in excess of ordinary wear and tear. Suffice it to say that we find these awards adequately supported. 10 At the core of petitioner's claim that it has been denied just compensation is the contention that there should have been included in the award to it some allowance for diminution in the value of its business due to the destruction of its 'trade routes.' The term 'trade routes' serves as a general designation both for the lists of customers built up by solicitation over the years and for the continued hold of the Laundry upon their patronage. 11 At the trial petitioner offered to prove the value of the trade routes by testimony of an expert witness based on the gross receipts attributable to each class of customers, and the testimony of one of its officers was offered to show that this value had wholly disappeared during the three and one-half years of the Army's use of the plant.4 It further offered to show the cost of building up the customer lists, which had not been capitalized but charged to expense, and losses which would be incurred after the resumption of operations while they were being rebuilt. The petitioner also attempted to introduce evidence of its gross and net income for the eighteen years preceding the taking, the amount of dividends paid, and the ratio of officers' salaries to capital stock and surplus, on the theory that this evidence would shed additional light on the value of the Laundry as a going business. The trial court rejected these offers as not bearing upon the 'fair market value or fair use value of the property taken' and instructed the jury that it should not consider diminution in the value of the business. The Court of Appeals affirmed because, in its opinio , whatever may have been the loss in value of the business or the trade routes brought about by the taking, 'The Government did not take or intend to take, and obviously could not use the Company's business, trade routes or customers.' 166 F.2d at page 860. 12 The market value of land as a business site tends to be as high as the reasonably probable earnings of a business there situated would justify, and the value of specially adapted plant and machinery exceeds its value as scrap only on the assumption that it is income-producing. And income, in the case of a service industry, presupposes patronage. Since petitioner has been fully compensated for the value of its physical property, and separate value that its trade routes may have must therefore result from the contribution to the earning capacity of the business of greater skill in management and more effective solicitation of patronage than are commonly given to such a combination of land, plant, and equipment. The product of such contributions is an intangible which may be compendiously designated as 'going-concern value,' but this is a portmanteau phrase that needs unpacking. 13 Though compounded of many factors in addition to relations with customers, that element of going-concern value which is contributed by superior management may be transferable to the extent that it has a momentum likely to be felt even after a new owner and new management have succeeded to the business property. But because this momentum can be maintained only by the application of continued energy and skill, it would gradually spend itself if the effort and skill of the new management were not in its turn expended. See Paton, Advanced Accounting 427, 435 (1941). Only that exercise of managerial efficiency, however, which has contributed to the future profitability of the business will have a transferable momentum that may give it value to a potential purchaser; that which has had only the effect of increasing current income of reducing expenses of operation has spent itself from year to year. The value contributed by the expenditure of money in soliciting patronage, although likewise of limited duration, differs from managerial efficiency in that it derives not merely from the contribution of personal qualities but from original investment or the plowing back of income. As such it may sometimes be more readily recognized as an asset of the business.5 It is clear, at any rate, that the value of both these elements, in combination, must be regarded as identical with the value alleged to inhere in the trade routes. 14 Assuming, then, that petitioner's business may have going-concern value as defined above, the question arises whether the intangible character of such value alone precludes compensation for it. The answer is not far to seek. The value of all property, as we have already observed, is dependent upon and inseparable from individual needs and attitudes, and these, obviously, are intangible. As fixed by the market, value is no more than a summary expression of forecasts that the needs and attitudes which made up demand in the past will have their counterparts in the future. See Ithaca Trust Co. v. United States, 279 U.S. 151, 155, 49 S.Ct. 291, 73 L.Ed. 647; cf. 1 Bonbright, The Valuation of Property 222 (1937). The only distinction to be made, therefore, between the attitudes which generate going-concern value and those of which tangible property is compounded is as to the tenacity of the past's hold upon the future: in the case of the latter a forecast of future demand can usually be made with greater certainty, for it is more probable on the whole that people will continue to want particular goods or services than hat they will continue to look to a particular supplier of them. It is more likely, in other words, that people will persist in wanting to have their laundry done than that they will keep on sending it to a particular laundry. But as the probability of continued patronage gains strength, this distinction become obliterated, and the intangible acquires a value to a potential purchaser no different from the value of the business's physical property. Since the Fifth Amendment requires compensation for the latter, the former, if shown to be present and to have been 'taken,' should also be compensable. As Mr. Justice Brandeis observed for the Court in Galveston Electric Co. v. Galveston, 258 U.S. 388, 396, 42 S.Ct. 351, 355, 66 L.Ed. 678. 'In determining the value of a business as between buyer and seller, the good will and earning power due to effective organization are often more important elements than tangible property. Where the public acquires the business, compensation must be made for these, at least under some circumstances.' See also Des Moines Gas Co. v. Des Moines, 238 U.S. 153, 165, 35 S.Ct. 811, 814, 59 L.Ed. 1244; McCardle v. Indianapolis Water Co., 272 U.S. 400, 414, 47 S.Ct. 144, 149, 71 L.Ed. 316. 15 What, then, are the circumstances under which the Fifth Amendment requires compensation for such an intangible? Not, indeed, those of the usual taking of fee title to business property, but the denial of compensation in such circumstances rests on a very concrete justification: the going-concern value has not been taken. Such are all the cases, most of them decided by State courts under constitutions with provisions comparable to the Fifth Amendment, in which only the physical property has been condemned, leaving the owner free to move his business to a new location. E.g., Bothwell v. United States, 254 U.S. 231, 41 S.Ct. 74, 65 L.Ed. 238; Banner Milling Co. v. State of New York, 240 N.Y. 533, 148 N.E. 668, 41 A.L.R. 1019. In such a situation there is no more reason for a taker to pay for the business' going-concern value than there would be for a purchaser to pay for it who had not secured from his vendor a covenant to refrain from entering into competition with him. It is true that there may be loss to the owner because of the difficulty of finding other premises suitably situated for the transfer of his good will, and that such loss, like the cost of moving, is denied compensation as consequential. See Joslin Mfg. Co. v. Providence, 262 U.S. 668, 676, 43 S.Ct. 684, 688, 67 L.Ed. 1167. But such value as the good will retains, the owner keeps, and the remainder dissipated by removal would not contribute to the value paid for by a transferee of the vacated premises, except perhaps to the extent that the prospect of its loss would induce the owner to hold out for a higher price for his land and building. Cf. United States v. General Motors Corp., 323 U.S. 373, 383, 65 S.Ct. 357, 361, 89 L.Ed. 311, 156 A.L.R. 390. When a condemnor has taken fee title to business property, there is reason for saying that the compensation due should not vary with the owner's good fortune or lack of it in finding premises suitable for the transference of going-concern value. In the usual case most of it can be transferred; in the remainder the amount of loss is so speculative that proof of it may justifiably be excluded. See Sawyer v. Commonwealth, 182 Mass. 245, 65 N.E. 52, 59 L.R.A. 726, per Holmes, C.J. By an extension of that reasoning the same result has been reached even upon the assumption that no other premises whatever were available. Mitchell v. United States, 267 U.S. 341, 45 S.Ct. 293, 69 L.Ed. 644. 16 The situation is otherwise, however, when the Government has condemned business property with the intention of carrying on the business, as where public-utility property has been taken over for continued operation by a governmental authority. If, in such a case, the taker acquires going-concern value, it must pay for it. City of Omaha v. Omaha Water Co., 18 U.S. 180, 30 S.Ct. 615, 54 L.Ed. 991, 48 L.R.A.,N.S., 1084, see Denver v. Denver Union Water Co., 246 U.S. 178, 191, 38 S.Ct. 278, 282, 62 L.Ed. 649; Orgel, Valuation under Eminent Domain § 214 (1936), and cases there cited. Since a utility cannot ordinarily be operated profitably except as a monopoly, investment by the former owner of the utility in duplicating the condemned facilities could have no prospect of a profitable return. The taker has thus in effect assured itself of freedom from the former owner's competition. The owner retains nothing of the going-concern value that it formerly possessed; so far as control of that value is concerned, the taker fully occupies the owner's shoes. 17 But the public-utility cases plainly cannot be explained by the fact that the taker received the benefit of the utility's going-concern value. If benefit to the taker were made the measure of compensation, it would be difficult to justify higher compensation for farm land taken as a firing range than for swamp or sandy waste equally suited to the purpose. But see Mitchell v. United States, 267 U.S. 341, 344—345, 45 S.Ct. 293, 294, 69 L.Ed. 644. It would be equally difficult to deny compensation for value to the taker in excess of value to the owner. But compare, e.g., McGovern v. New York, 229 U.S. 363, 33 S.Ct. 876, 57 L.Ed. 1228, 46 L.R.A.,N.S., 391; United States ex rel. T.V.A. v. Powelson, 319 U.S. 266, 63 S.Ct. 1047, 87 L.Ed. 1390. The rationale of the public-utility cases, as opposed to those in which circumstances have brought about a diminution of going-concern value although the owner remained free to transfer it, must therefore be that an exercise of the power of eminent domain which has the inevitable effect of depriving the owner of the going-concern value of his business is a compensable 'taking' of property. See United States v. General Motors Corp., 323 U.S. 373, 378, 65 S.Ct. 357, 359, 89 L.Ed. 311, 156 A.L.R. 390; cf. United States v. Causby, 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206. If such a deprivation has occurred, the going-concern value of the business is at the Government's disposal whether or not it chooses to avail itself of it. Since what the owner had has transferable value, the situation is apt for the oft-quoted remark of Mr. Justice Holmes, '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. 18 We think that the situation before us comes within this principle. The Government's temporary taking of the Laundry's premises could no more completely have appropriated the Laundry's opportunity to profit from its trade routes than if it had secured a promise from the Laundry that it would not for the duration of the Government's occupancy of the premises undertake to operate a laundry business anywhere else in the City of Omaha. The taking was from year to year; in the meantime the Laundry's investment remained bound up in the reversion of the property. Even if funds for the inauguration of a new business were obtainable otherwise than by the sale or liquidation of the old one, the Laundry would have been faced with the imminent prospect of finding itself with two laundry plants on its hands, both of which could hardly have been operated at a profit. There was nothing it could do, therefore, but wait. Besides, though trade routes may be capable of transfer independently of the physical property with which they have been associated, it is wholly beyond the realm of conjecture that they could have been sold from year to year or that the Laundry would have bound itself to give them up for a longer period when at any time its plant might be returned. It is equally farfetched, moreover, to suppose that they could have been transferred for a limited period and then recaptured. 19 It is arguable, to be sure, that since an equally suitable plant might conceivably have been available to the petitioner at reasonable terms for the § me period as the Government's occupancy of its own plant, and since that would have enabled it to stay in business without loss of going-concern value, it is irrelevant that no such premises happened to be available, as it would have been irrelevant, under a strict application of Mitchell v. United States, 267 U.S. 341, 45 S.Ct. 293, 69 L.Ed. 644, had the Government taken the fee. When fee title to business property has been taken, however, it is fair on the whole that the amount of compensation payable should not include speculative losses consequent upon realization of the remote possibility that the owner will be unable to find a wholly suitable location for the transfer of going-concern value. But when the Government has taken the temporary use of such property, it would be unfair to deny compensation for a demonstrable loss of going-concern value upon the assumption that an even more remote possibility—the temporary transfer of going-concern value—might have been realized. The temporary interruption as opposed to the final severance of occupancy so greatly narrows the range of alternatives open to the condemnee that it substantially increases the condemnor's obligation to him. It is a difference in degree wide enough to require a difference in result. Compare United States v. General Motors Corp., 323 U.S. 373, 65 S.Ct. 357, 89 L.Ed. 311, 156 A.L.R. 390, with United States v. Petty Motor Co., 327 U.S. 372, 66 S.Ct. 596, 90 L.Ed. 729.6 20 We conclude, therefore, that since the Government for the period of its occupancy of petitioner's plant has for all practical purposes preempted the trade routes, it must pay compensation for whatever transferable value their temporary use may have had. The case must accordingly be remanded to the District Court to determine what that value, if any, was. In making that determination, the Court should consider any evidence which would have been likely to convince a potential purchaser as to the presence and amount of petitioner's going-concern value, for this, as we have pointed, out, must be considered identical with the value alleged to inhere in the trade routes. Though we do not mean to foreclose the consideration of other types of evidence or the application of other techniques of appraisal, it may shed some light on the problem to indicate as briefly as possibl the relevance of the evidence rejected at the trial to the determination of the presence and amount of this value. 21 One index of going-concern value offered by petitioner is the record of its past earnings. If they should be found to have been unusually high in proportion to investment in its physical property, that might have been a persuasive indication to an informed purchaser of the business that more than tangible factors were at work.7 Such a purchaser might well have measured the value thus contributed by capitalizing, at a rate taking into account the element of risk8 and the number of years during which these factors would probably have effect, the excess of the probable future return upon investment in the business over a return which would be adequate compensation for the risk of investment in it.9 If the figure chosen as representing investment were cost however, the possibility would probably have been recognized that the capitalized value of the excess income might involve duplication of value already reflected in the valuation of the site.10 22 In addition to or as a substitute for net income as an index of going-concern value, a purchaser might have been influenced by such evidence of expenditure upon building up the business as petitioner's records of payments to deliverymen for the solicitation of new customers. Instead of beginning with excess earnings resulting in part from expenditure on solicitation and then capitalizing them to reach going-concern value, such expenditure can be regarded as a direct contribution, in proportion to the amount of its long-term effectiveness, to the capital assets of the business. But the legitimacy of the inference that expenditures for the purpose of soliciting business have resulted in a value which will continue to contribute to the earning capacity of the business in later years and which is therefore a value that a purchaser might pay for, necessarily depends on the character of the business and the experience of those who are familiar with it.11 This, at any rate, is a matter which is open to proof. 23 Though not capitalized and carried on the books, it is obvious that such an asset may be present even in a business losing money or at any rate not making enough to have any 'excess' income. A relevant measure of its value, however, would be the gross income of the business, as is recognized by the method of estimating going-concern value that has been employed in cases dealing with the excess-profits tax base of laundry businesses. See Appeal of Metropolitan Laundry Co., 2 B.T.A. 1062; Pioneer Laundry Co. v. Commissioner, 5 B.T.A. 821. Petitioner offered proof of the value of its trade routes based on just such a method and further offered to show that it was a method generally used in the laundry business. If so, it would also be relevant.12 24 But even though evidence in one or more of these categories may tend to establish the value of petitioner's trade routes, the consequence of its inadequacy may require complete denial of compensation where that would not be the result in the case of its tangible property. The reason is this: evidence which is needed only to fix the amount of the value of the tangible property is required to establish the very existence of an intangible value as well as its amount. Since land and buildings are assumed to have some transferable value, when a claimant for just compensation for their taking proves that he was their owner, that proof is ipso facto proof that he is entitled to some compensation. The claimant of compensation for an intangible, on the other hand, who cannot demonstrate a value that a purchaser would pay for has failed to sustain his burden of proving that he is entitled to any compensation whatever. This is a burden, moreover, which must be sustained by solid evidence; only thus can the probability of future demand be shown to approximate that for tangible property. Particularly is this true where these issues are to be left for jury determination, for juries should not be given sophistical and abstruse formulas as the basis for their findings nor be left to apply even sensible formulas to factors that are too elusive. 25 If the District Court, bearing in mind these cautions, should find petitioner's evidence adequate to submit to the jury for a finding as to the presence and amount of the value of the trade routes, it will then be necessary also to instruct it as to computation of the compensation due. Consistently with an approach which seeks with the aid of all relevant data to find an amount representing value to any normally situated owner or purchaser of the interests taken, no value greater than the value of their temporary control would be compensable. Since, as we have noted, value of this sort can have only a limited duration, the value of the trade routes for the period of the Army's occupancy of the physical property might be estimated by computing the discounted value as of the beginning of the period of the net contribution likely to have been made to the business during that period had it been carried on; its value for each year would be the net contribution for that year.13 But here, as hitherto, we mean only to illustrate and not to prescribe the course which may be taken upon remand of the case. 26 Petitioner also protests against the basis chosen by the lower courts for the award of interest. It argues that the Government, having taken the whole property on November 21, 1942, should pay interest from that day on the total amount of the award. We have already rejected, however, the only possible theory upon which this claim could rest—that the proper method of computing the award is to determine the difference between the value of the business on the date of taking and its value on the date of return. It follows from our holding that the proper measure of compensation was an annual rental which came due only at the beginning of each renewal of the Army's occupancy, that interest should be payable on each installment of rental only from that date. 27 For proceedings not inconsistent with this opinion, the case is reversed and remanded. 28 Reversed and remanded. 29 Mr. Justice RUTLEDGE, concurring. 30 As I understand the opinion of t e Court, its effect is simply to recognize that short-term takings of property entail considerations not present where complete title has been taken. Rules developed for the simple situation in which all the owner's interests in the property have been irrevocably severed should not be forced to fit the more complex consequences of a piecemeal taking of successive short-term interests. Such takings may involved compensable elements that in the nature of things are not present where the whole is taken. 31 With this much I agree. But having recognized the possible compensability of intangible interests, I would not subscribe to a formulation of theoretical rules defining their nature or prescribing their measurement. What seems theoretically sound may prove unworkable for judicial administration. But I do not understand the opinion of the Court to do more than indicate possible approaches to the compensation of such interests. Since remand of the case will permit the empirical testing of these approaches, I join in the Court's opinion. 32 Mr. Justice DOUGLAS, with whom THE CHIEF JUSTICE, Mr. Justice BLACK and Mr. Justice REED concur, dissenting. 33 The United States took this plant in order to run a laundry for the Army, not for the public. The trade-routes were wholly useless to it. It never used them. Yet it is forced to pay for them under a new constitutional doctrine that is forged for this case. 34 Heretofore it was settled that the owner could not receive compensation under the Fifth Amendment for the destruction of a business which resulted from the taking of his physical property, even though the business could not be reestablished elsewhere. Mitchell v. United States, 267 U.S. 341, 45 S.Ct. 293, 69 L.Ed. 644; Bothwell v. United States, 254 U.S. 231, 41 S.Ct. 74, 65 L.Ed. 238. That result followed from the rule that consequential damages resulting from the taking were not compensable. See United States ex rel. T.V.A. v. Powelson, 319 U.S. 266, 281—283, 63 S.Ct. 1047, 1055—1056, 87 L.Ed. 1390; United States v. Petty Motor Co., 327 U.S. 372, 377—378, 66 S.Ct. 596, 599, 90 L.Ed. 729. 35 And so in this case if the United States had taken this plant for a permanent laundry to run for the Army and not for the public1 it need not pay for the trade-routes. As Justice Brandeis said in Mitchell v. United States, supra, 267 U.S. at page 345, 45 S.Ct. at page 294, 69 L.Ed. 644, 'If the business was destroyed, the destruction was an unintended incident of the taking of land.' As much seems to be conceded by the Court in the present case. That concession is necessary if precedent is to control. For in United States v. General Motors Corp., 323 U.S. 373, 383, 65 S.Ct. 357, 361, 89 L.Ed. 311, 156 A.L.R. 390, we said that a temporary taking and a permanent taking were to be treated alike in that respect. In that case the cost of moving out and preparing the space for the new occupancy was allowed insofar as it bore on the market value of the temporary occupancy. But we ruled that 'proof of value peculiar to the respondent, or the value of goodwill or of injury to the business of the respondent' must in that case 'as in the case of the condemnation of a fee,' be excluded from the reckoning, 323 U.S. at page 383, 65 S.Ct. at page 362. The Court today repudiates that ruling when it holds that the United States must pay for the trade-routes of petitioner when its taking of the laundry was only temporary. There would be a complete destruction of the trade-routes if the taking of the plant were permanent and a depreciation of them (I assume) where it is temporary. Why the latter is compensable when the former is not is a mystery. Even the academic dissertation on valuation which the opinion imports into the Fifth Amendment from accounting literature conceals the answer. 36 The truth of the matter is that the United States is being forced to pay not for what it gets but for what the owner loses. The value of trade-routes represents the patronage of the customers of the laundry. Petitioner, I assume, lost some of them as a result of the government's temporary taking of the laundry. But the government did not take them. There was indeed no possible way in which it could have used them. Hence the doctrine that makes the United States pay for them is new and startling. It promises swollen awards which Congress in its generosity might permit but which it has never been assumed the Constitution compels. 37 Petitioner has received all that it is entitled to under the Constitution. It has obtained after three years and seven months of use of its plant by the United States a sum of money equal to almost half the market value of the fee. That award was based on the market rental value of the plant2 plus an allowance to restore the property to its original condition.3 Under the authorities that award cannot be increased unless we are to sit as a Committee on Claims of the Congress and award consequential damages. 1 The petition was filed under § 201 of Title II of the Second War Powers Act of 1942, 56 Stat. 177, 50 U.S.C.Appendix, § 632, 50 U.S.C.A.Appendix, § 632. 2 U.S. Const. Amend. V: '* * * nor shall private property be taken for public use, without just compensation.' 3 Once taken, of course, property can have no actual market value except as giving rise to a claim against the taker. See 1 Bonbright, The Valuation of Property 414 (1937). In view of the resulting necessity of postulating a hypothetical sale, care must be taken to avoid the extremes on the one hand of excluding the value of the property for special uses and on the other of supposing the hypothetical purchaser to have either the same idiosyncrasies as the owner, compare Little Rock Junction Ry. v. Woodruff, 49 Ark. 381, 5 S.W. 792, 4 Am.St.Rep. 51, with Producers' Wood Preserving Co. v. Commissioners of Sewerage, 227 Ky. 159, 12 S.W.2d 292, or the same opportunities for use of the property as a taker armed with the power of eminent domain, see e.g., United States v. Chandler-Dunbar Co., 229 U.S. 53, 33 S.Ct. 667, 57 L.Ed. 1063; McGovern v. New York 229 U.S. 363, 33 S.Ct. 876, 57 L.Ed. 1228, 46 L.R.A.,N.S., 391; Olson v. United States, 292 U.S. 246, 54 S.Ct. 704, 78 L.Ed. 1236; United States ex el. T.V.A. v. Powelson, 319 U.S. 266, 63 S.Ct. 1047, 87 L.Ed. 1390. 4 Although the theory upon which petitioner's various offers of proof were made was not always well defined, their import is clear enough to preclude rejecting them as meaningless. 5 Indeed, for tax purposes the Treasury may insist that such 'deferred charges' be capitalized. See note 11 post. 6 The line drawn in these two cases between inclusion of removal costs in compensation for a temporary taking of less than a lessee's full term and their exclusion where the whole term has been taken is likewise based on a recognition of a difference in the degree of restriction of the condemnee's opportunity to adjust himself to the taking. In United States v. General Motors Co., 323 U.S. at page 382, 65 S.Ct. at page 361, 89 L.Ed. 311, 156 A.L.R. 390, the Court, comparing a temporary with a fee taking, observed: 'It is altogether another matter when the Government does not take his entire interest, but by the form of its proceeding chops it into bits, of which it takes only what it wants, however few or minute, and leaves him holding the remainder, which may then be altogether useless to him, refusing to pay more than the 'market rental value' for the use of the chips so cut off. This is neither the 'taking' nor the 'just compensation' the Fifth Amendment contemplates.' In United States v. Petty Motor Co., 327 U.S. at page 379, 66 S.Ct. at page 600, 90 L.Ed. 729, the Court said: 'There is a fundamental difference between the taking of a part of a lease and the taking of the whole lease. That difference is that the lessee must return to the leasehold at the end of the Government's use or at least the responsibility for the period of the lease, which is not taken, rests upon the lessee. This was brought out in the General Motors decision. Because of that continuing obligation in all takings of temporary occupancy of leaseholds, the value of the rights of the lessees, which are taken, may be affected by evidence of the cost of temporary removal.' 7 The Government argues that if petitioner's testimony as to the value of its physical property were accepted, it could have no going-concern value because its average net earnings for the five years preceding the taking were too low to establish any excess return. The alleged value was about $650,000, and the average annual earnings $39,375.39, a return on that value of about 6%. On the other hand, the Government's own expert witnesses respectively valued the physical property, after allowing depreciation, at $455,000 and $433,500, and on that basis the rate of return would be about 9%. It is not for us, at any rate, to assume that 6% rather than 5% or some lower figure is the lowest that would compensate investment in the physical property. 8 The importance of varying in accordance with varying risks the percentage at which income is capitalized to obtain business value has been emphasized by the Securities Exchange Commission in computing value for purposes of § 77 B reorganizations. (11 U.S.C.A. § 207) See Note, 55 Harv.L.Rev. 125, 133 (1941). See also Fisher, The Nature of Capital and Income c. 16, 'The Risk Element' (1906); Angell, Valuation Problems 14 (Practicing Law Institute, 1945). 9 See Yang, Goodwill and Other Intangibles cc. 5, 6 (1927); Simpson, Goodwill in 6 Encyc.Soc.Sci. 698, 699 (1931). For a systematic discussion of the steps involved in making such an estimate, see Accountants' Handbook 869 et seq. (Paton ed., 1944). It would be theoretically possible, of course, to arrive at the total value of the business not by adding going-concern value obtained by capitalization of excess income to a valuation of the physical property obtained in some other way, but by capitalization of all income. See 1 Bonbright, The Valuation of Property cc. 11, 12 (1937); 1 Dewing, Financial Policy of Corporations, bk. II, c. 1 (4th ed., 1941); cf. Consolidated Rock Products Co. v. Du Bois, 312 U.S. 510, 525—526, 61 S.Ct. 675, 684 685. 85 L.Ed. 982; Group of Institutional Investors v. Chicago, M., St. P. & P.R. Co., 318 U.S. 523, 540—542, 63 S.Ct. 727, 738 739, 87 L.Ed. 959. But a forecast of future earnings is subject to inaccuracy resulting both from the difficulty of discounting the nonrecurrent circumstances which entered into the record of past earnings upon which the forecast is based (even if no projection of future earnings is expressly made, past earnings can be used as a basis of capitalization only on the assumption that they will continue), and to the hazards of any prediction of future conditions of business. See May, A footnote on Value, 72 J. of Accountancy 225 (1941); Orgel, Valuation under Eminent Domain § 216 (1936). The consequences of inaccuracy are reduced by confining the capitalization to excess income, but of course it is a question of fact whether future excess income can be predicted with certainty sufficient to persuade a purchaser of the business o pay for its capitalized value. See p. 18, post. 10 This possibility would arise wherever cost of the physical property, because the neighborhood was undeveloped at the time the business site was acquired or for some other reason, did not wholly reflect enhancement in its market value by the advantages of its location, since these advantages would increase total income. Such duplication could be avoided, however, by using as the measure of investment not cost but market value. 11 In the case of a business like the laundry business which must entice patrons from already established competitors in an area confined by the range of delivery service, it may be that expenditure upon solicitation is regarded as a capital expenditure for part of a combination of income-producing assets quite as much as investment in the land and building. Compare Houston Natural Gas Corp. v. Commissioner, 4 Cir., 90 F.2d 814, holding the salaries and expenses of solicitors of new customers for a public utility to be a capital expenditure non-deductible from current income because contributing to income in future years. The Tax Court, its predecessor, the Board of Tax Appeals, and the Courts of Appeals have frequently held such analogous expenditures as those made to increase the circulation of newspapers and for certain forms of advertising to be capital expenditures. For collections of such cases, see 4 Mertens, Law of Federal Income Taxation § 25.18 and § 25.27 (1942). See also Dodd and Baker, Cases and Materials on Business Associations 1125—26 (1940). Compare the materials on valuation of good will as part of a decedent's gross estate collected in 2 Paul, Federal Estate and Gift Taxation § 18.16 (1942), and Paul, Federal Estate and Gift Taxation § 18.16 (1946 Supplement). 12 Proceeding from the assumption that laundry businesses are a class having uniform characteristics, this method presupposes informed opinion both as to the normal ratio of a given volume of expenditure on solicitation to a given volume of gross income and as to the normal duration of the contribution to gross of a given amount of such expenditure. The Board of Tax Appeals cases cited as well as petitioner's offer of proof involved the further refinement that the ratios chosen varied wi h the gross income attributable to each class of customers. 13 That contribution would not of course continue from year to year in a straight line, though it may prove more convenient to treat it as if it did. The analysis of compound-interest methods of depreciation accounting in Paton, Advanced Accounting c. 12 (1941), gives insight into ways in which the rate of decline in the value of such an intangible might be computed. See also id. at 435; Canning, The Economics of Accountancy, cc. 13, 14 (1929); Yang, Goodwill and Other Intangibles 201 et seq. (1927). 1 As respects payment for the going-concern value when the government takes over a business to run it as such see City of Omaha v. Omaha Water Co., 218 U.S. 180, 202—203, 30 S.Ct. 615, 619 620, 54 L.Ed. 991, 48 L.R.A.,N.S., 1084. 2 That is the measure of compensation for the taking of a temporary interest in property. United States v. General Motors Corp., 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, 378, 66 S.Ct. 596, 599, 90 L.Ed. 729. 3 Compensation for ordinary wear and tear is included in fixing the market rental value of the property. But wear and tear above that amount is separately compensable. See In re Condemnation of Lands, D.C., 250 F. 314, 315; United States v. Certain Parcels of Land, D.C., 55 F.Supp. 257, 263; United States v. 5,901.77 Acres of Land, D.C., 65 F.Supp. 454; United States v. 14.4756 Acres of Land, D.C., 71 F.Supp. 1005.

34

338 U.S. 160 69 S.Ct. 1302 93 L.Ed. 1879 BRINEGARv.UNITED STATES. No. 12. Argued Oct. 18, 19, 1948. Decided June 27, 1949. Rehearing Denied Oct. 10, 1949. See 70 S.Ct. 31. Mr. Irvine E. Ungerman, Tulsa, Okl., for petitioner. Mr. Stanley M. Silverberg, Washington, D.C., for respondent. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 Brinegar was convicted of importing intoxicating liquor into Oklahoma from Missouri in violation of the federal statute which forbids such importation contrary to the laws of any state.1 His conviction was based in par on the use in evidence against him of liquor seized from his automobile in the course of the alleged unlawful importation. 2 Prior to the trial Brinegar moved to suppress this evidence as having been secured through an unlawful search and seizure.2 The motion was denied, as was a renewal of the objection at the trial. 3 The Court of Appeals affirmed the conviction, 10 Cir., 165 F.2d 512, and certiorari was sought solely on the ground that the search and seizure contravened the Fourth Amendment and therefore the use of the liquor in evidence vitiated the conviction. We granted the writ to determine this question. 333 U.S. 841, 68 S.Ct. 662, 92 L.Ed. 1125. 4 The facts are substantially undisputed. At about six o'clock on the evening of March 3, 1947, Malsed, an investigator of the Alcohol Tax Unit, and Creehan, a special investigator, were parked in a car beside a highway near the Quapaw Bridge in northeastern Oklahoma. The point was about five miles west of the Missouri-Oklahoma line. Brinegar drove past headed west in his Ford coupe. Malsed had arrested him about five months earlier for illegally transporting liquor; had seen him loading liquor into a car or truck in Joplin, Missouri, on at least two occasions during the preceding six months; and knew him to have a reputation for hauling liquor. As Brinegar passed, Malsed recognized both him and the Ford. He told Creehan, who was driving the officers' car, that Brinegar was the driver of the passing car. Both agents later testified that the car, but not especially its rear end, appeared to be 'heavily loaded' and 'weighted down with something.' Brinegar increased his speed as he passed the officers. They gave chase. After pursuing him for about a mile at top speed, they gained on him as his car skidded on a curve, sounded their siren, overtook him, and crowded his car to the side of the road by pulling across in front of it. The highway was one leading from Joplin, Missouri, toward Vinita, Oklahoma, Brinegar's home. 5 As the agents got out of their car and walked back toward petitioner, Malsed said, 'Hello, Brinegar, how much liquor have you got in the car?' or 'How much liquor have you got in the car this time?' Petitioner replied, 'Not too much,' or 'Not so much.' After further questioning he admitted that he had twelve cases in the car. Malsed testified that one case, which was on the front seat, was visible from outside the car, but petitioner testified that it was covered by a lap robe. Twelve more cases w re found under and behind the front seat. The agents then placed Brinegar under arrest and seized the liquor. 6 The district judge, after a hearing on the motion to suppress at which the facts stated above appeared in evidence, was of the opinion that 'the mere fact that the agents knew that this defendant was engaged in hauling whiskey, even coupled with the statement that the car appeared to be weighted, would not be probable cause for the search of this car.' Therefore, he thought, there was no probable cause when the agents began the chase. He held, however, that the voluntary admission made by petitioner after his car had been stopped constituted probable cause for a search, regardless of the legality of the arrest and detention, and that therefore the evidence was admissible. At the trial, as has been said, the court overruled petitioner's renewal of the objection. 7 The Court of Appeals, one judge dissenting, took essentially the view held by the District Court. The dissenting judge thought that the search was unlawful and therefore statements made during its course could not justify the search. 8 The crucial question is whether there was probable cause for Brinegar's arrest, in the light of prior adjudications on this problem, more particularly Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543, 39 A.L.R. 790, which on its face most closely approximates the situation presented here.3 9 The Carroll decision held that, under the Fourth Amendment, a valid search of a vehicle moving on a public highway may be had without a warrant, but only if probable cause for the search exists.4 The court then went on to rule that the facts presented amounted to probable cause for the search of the automobile there involved. 267 U.S. 132, 160, 45 S.Ct. 280, 287. 10 In the Carroll case three federal prohibition agents and a state officer stopped and searched the defendants' car on a highway leading from Detroit to Grand Rapids, Michigan, and seized a quantity of liquor discovered in the search. About three months before the search, the two defendants and another man called on two of the agents at an apartment in Grand Rapids and, unaware that they were dealing with federal agents, agreed to sell one of the agents three cases of liquor. Both agents noticed the Oldsmobile roadster in which the three men came to the apartment and its license number. Presumably because the official capacity of the proposed purchaser was suspected by the defendants, the liquor was never delivered. 11 About a week later the same two agents, while patrolling the road between Grand Rapids and Detroit on the lookout for violations of the National Prohibition Act, were passed by the defendants, who were proceeding in a direction from Grand Rapids toward Detroit in the same Oldsmobile roadster. The agents followed the defendants for some distance but lost trace of them. Still later, on the occasion of the search, while the officers were patrolling the same highway, they met and passed the defendants, who were in the same roadster, going in a direction from Detroit toward Grand Rapids. Recognizing the defendants, the agents turned around, pursued them, stopped them about sixteen miles outside Grand Rapids, searched their car and seized the liquor it carried. 12 This Court ruled that the information held by the agent , together with the judicially noticed fact that Detroit was 'one of the most active centers for introducing illegally into this country spirituous liquors for distribution into the interior,' 267 U.S. at page 160, 45 S.Ct. at page 287, constituted probable cause for the search. I. 13 Obviously the basic facts held to constitute probable cause in the Carroll case were very similar to the basic facts here. In each case the search was of an automobile moving on a public highway and was made without a warrant by federal officers charged with enforcing federal statutes outlawing the transportation of intoxicating liquors (except under conditions not complied with).5 In each instance the officers were patrolling the highway in the discharge of their duty. And in each before stopping the car or starting to pursue it they recognized both the driver and the car, from recent personal contact and observation, as having been lately engaged in illicit liquor dealings.6 Finally, each driver was proceeding in his identified car in a direction from a known source of liquor supply toward a probable illegal market, under circumstances indicating no other probable purpose than to carry on his illegal adventure.7 14 These are the ultimate facts. Necessarily the concrete, subordinate facts on which they were grounded in the two cases differed somewhat in detail. The more important of the variations in details of the proof are as follows: 15 In Carroll the agent's knowledge of the primary and ultimate fact that the accused were engaged in liquor running was derived from the defendants' offer to sell liquor to the agents some three months prior to the search, while here that knowledge was derived largely from Malsed's personal observation, reinforced by hearsay; the officers when they bargained for the liquor in Carroll saw the number of the defendants' car, whereas no such fact is shown in this record; and in Carroll the Court took judicial notice that Detroit was on the international boundary and an active center for illegal importation of spirituous liquors for distribution into the interior, while in this case the facts that Joplin, Missouri, was a ready source of supply for liquor and Oklahoma a place of likely illegal market were known to the agent Malsed from his personal observation and experience as well as from facts of common knowledge. 16 Treating first the two latter and less important matters, in view of the positive and undisputed evidence concerning Malsed's identification of Brinegar's Ford, we think no significance whatever attaches, for purposes of distinguishing the cases, to the fact that in the Carroll case the officers saw and recalled the license number of the offending car while this record discloses no like recollection. 17 Likewise it is impossible to distinguish the Carroll case with reference to the proof relating to the source of supply, the place of probable destination and illegal market, and consequently the probability that the known liquor operators were usi g the connecting highway for the purposes of their unlawful business. 18 There were of course some legal as well as some factual differences in the two situations. Under the statute in review in Carroll the whole nation was legally dry. Not only the manufacture, but the importation, transportation and sale of intoxicating liquors were prohibited throughout the country. Under the statute now in question only the importation of such liquors contrary to the law of the state into which they are brought and in which they were seized is forbidden. 19 In the Carroll case the Court judicially noticed that Detroit was located on the international boundary with Canada and had become an active center for illegally bringing liquor into the country for distribution into the interior. This was pertinent in connection with other circumstances, for showing the probability under which the agents acted that use of the highway connecting Detroit and Grand Rapids by the known operators in liquor was for the purpose of carrying on their unlawful traffic. 20 In this case, the record shows that Brinegar had used Joplin, Missouri, to Malsed's personal knowledge derived from direct observation, not merely from hearsay as seems to be suggested, as a source of supply on other occasions within the preceding six months. It also discloses that Brinegar's home was in Vinita, Oklahoma, and that Brinegar when apprehended was traveling in a direction leading from Joplin to Vinita, at a point about four or five miles west of the Missouri-Oklahoma line. 21 Joplin, like Detroit in the Carroll case, was a ready source of supply. But unlike Detroit it was not an illegal source. So far as appears, Brinegar's purchases there were entirely legal. And so, we may assume for present purposes, was his transportation of the liquor in Missouri, until he reached and crossed the state line into Oklahoma. 22 This difference, however, is insubstantial. For the important thing here is not whether Joplin was an illegal source of a supply; it is rather that Joplin was a ready, convenient and probable one for persons disposed to violate the Oklahoma and federal statutes. That fact was demonstrated fully, not only by the geographic facts, but by Malsed's direct and undisputed testimony of his personal observation of Brinegar's use of liquor dispensing establishments in Joplin for procuring his whiskey. Such direct evidence was lacking in Carroll as to Detroit, and for that reason the Court resorted to judicial notice of the commonly known facts to supply that deficiency. Malsed's direct testimony, based on his personal observation, dispensed with that necessity in this case. 23 The situation relating to the probable place of market, as bearing on the probability of unlawful importation, is somewhat different. Broadly on the facts this may well have been taken to be the State of Oklahoma as a whole or its populous northeastern region. From the facts of record we know, as the agents knew, that Oklahoma was a 'dry' state. At the time of the search, its law forbade the importation of intoxicating liquors from other states, except under a permit not generally procurable8 and which there is no pretense Brinegar had secured or attempted to secure. This fact, taken in connection with the known 'wet' status of Missouri and the location of Joplin close to the Oklahoma line, affords a very natural situation for persons inclined to violate the Oklahoma and federal statutes to ply their trade. The proof therefore concerning the source of supply, the place of probable destination and illegal market, and hence the probability that Brinegar was using the highway for the forbidden transportation, was certainly no less strong than the showing in these respects in the Carroll case.9 24 Finally, as for the most important potential distinction, namely, that concerning the primary and ultimate fact that the petitioner was engaging in liquor running, Malsed's personal observation of Brinegar's recent activities established that he was so engaged quite as effectively as did the agent's prior bargaining with the defendants in the Carroll case. He saw Brinegar loading liquor, in larger quantities than would be normal for personal consumption, into a car or a truck in Joplin on other occasions during the six months prior to the search. He saw the car Brinegar was using in this case in use by him at least once in Joplin within that period and followed it. And several months prior to the search he had arrested Brinegar for unlawful transportation of liquor and this arrest had resulted in an indictment which was pending at the time of this trial. Moreover Malsed instantly recognized Brinegar's Ford coupe and Brinegar as the driver when he passed the parked police car. And at that time Brinegar was moving in a direction from Joplin toward Vinita only a short distance inside Oklahoma from the state line. 25 All these facts are undisputed. Wholly apart from Malsed's knowledge that Brinegar bore the general reputation of being engaged in liquor running, they constitute positive and convincing evidence that Brinegar was engaged in that activity, no less convincing than the evidence in Carroll that the defendants had offered to sell liquor to the officers. The evidence here is undisputed, is admissible on the issue of probable cause, and clearly establishes that the agent had good ground for believing that Brinegar was engaged regularly throughout the period in illicit liquor running and dealing. 26 Notwithstanding the variations in detail, therefore, we think the proof in this case furnishes support quite as strong as that made in the Carroll case, indeed stronger in some respects, to sustain the ultimate facts there held in the aggregate to constitute probable cause for a search identical in all substantial and material respects with the one made here. Nothing in the variations of detail affords a substantial basis for undermining here any of the ultimate facts held to be sufficient in Carroll or for distinguishing the cases. Each of the ultimate facts found in Carroll to constitute probable cause, when taken together, is present in this case and is fully substantiated by the proof. Accordingly the Carroll decision must be taken to control this situation, unless it is now to be overruled. 27 This is true, although the trial court and the Court of Appeals, including the dissenting judge, were of the opinion, as stated by the latter court, 'that the facts within the knowledge of the investigators and of which they had reasonable trustworthy information prior to the time the incriminating statements were made by Brinegar were not sufficient to lead a reasonable discreet and prudent man to believe that intoxicating liquor was being transported in the coupe, and did not constitute probable cause for a search.' 165 F.2d at page 514. If, as we think, the Carroll case is indistinguishable from this one on the material facts, and that decision is to continue in force, it necessarily follows that the quoted 'finding' or 'conclusion' was erroneous.10 In the absence of any significant difference n the facts, it cannot be that the Fourth Amendment's incidence turns on whether different trial judges draw general conclusions that the facts are sufficient or insufficient to constitute probable cause. II. 28 It remains to consider one further asserted difference between this case and the Carroll case, having to do with the admissibility or inadmissibility at the trial of the evidence on which the agents acted in making the search, particularly the evidence concerning their knowledge that the defendants were engaging in illicit liquor running. 29 It is argued first that this case can be distinguished from Carroll because Malsed's knowledge of this primary and ultimate fact rested wholly or largely on surmise or hearsay. This argument is disproved by the facts of record which we have set forth above. There was hearsay, but there was much more. Indeed, as we have emphasized, the facts derived from Malsed's personal observations were sufficient in themselves, without the hearsay concerning general reputation, to sustain his conclusion concerning the illegal character of Brinegar's operations. 30 But a further distinction based upon inadmissibility of the evidence is asserted. It is said that, while in Carroll the defendants' offer to sell liquor to the agents was admissible and was admitted at the trial, here the evidence that Malsed had arrested Brinegar for illegal transportation of liquor several months before the search, though admitted on the hearing on the motion to suppress, was excluded at the trial. Cf. Michelson v. United States, 335 U.S. 469, 69 S.Ct. 213. The inference seems to be that the evidence concerning the prior arrest should not have been received at the hearing on the motion. In any event the conclusion is drawn that the factors relating to inadmissibility of the evidence here, for purposes of proving guilt at the trial, deprive the evidence as a whole of sufficiency to show probable cause for the search and therefore distinguish this case from the Carroll case. 31 Apart from its failure to take account of the facts disclosed by Malsed's direct and personal observation, even if his testimony concerning the prior arrest were excluded, the so-called distinction places a wholly unwarranted emphasis upon the criterion of admissibility in evidence, to prove the accused's guilt, of the facts relied upon to show probable cause. That emphasis, we think, goes much too far in confusing and disregarding the difference between that is required to prove guilt in a criminal case and what is required to show probable cause for arrest or search. It approaches requiring (if it does not in practical effect require) proof sufficient to establish guilt in order to substantiate the existence of probable cause. There is a large difference between the two things to be proved, as well as between the tribunals which determine them, and therefore a like difference in the quanta and modes of proof required to establish them. 32 For a variety of reasons elating not only to probative value and trustworthiness, but also to possible prejudicial effect upon a trial jury and the absence of opportunity for cross-examination, the generally accepted rules of evidence throw many exclusionary protections about one who is charged with and standing trial for crime. Much evidence of real and substantial probative value goes out on considerations irrelevant to its probative weight but relevant to possible misunderstanding or misuse by the jury. 33 Thus, in this case, the trial court properly excluded from the record at the trial, cf. Michelson v. United States, 335 U.S. 469, 69 S.Ct. 213, Malsed's testimony th t he had arrested Brinegar several months earlier for illegal transportation of liquor and that the resulting indictment was pending in another court at the time of the trial of this case. This certainly was not done on the basis that the testimony concerning arrest, or perhaps even the indictment, was surmise or hearsay or that it was without probative value. Yet the same court admitted the testimony at the hearing on the motion to suppress the evidence seized in the search, where the issue was not guilt but probable cause and was determined by the court without a jury.11 34 The court's rulings, one admitting, the other excluding the identical testimony, were neither inconsistent nor improper. They illustrate the difference in standards and latitude allowed in passing upon the distinct issues of probable cause and guilt. Guilt in a criminal case must be proved beyond a reasonable doubt and by evidence confined to that which long experience in the common-law tradition, to some extent embodied in the Constitution, has crystallized into rules of evidence consistent with that standard. These rules are historically grounded rights of our system, developed to safeguard men from dubious and unjust convictions, with resulting forfeitures of life, liberty and property. 35 However, if those standards were to be made applicable in determining probable cause for an arrest or for search and seizure, more especially in cases such as this involving moving vehicles used in the commission of crime, few indeed would be the situations in which an officer, charged with protecting the public interest by enforcing the law, could take effective action toward that end.12 Those standards have seldom been so applied.13 36 In dealing with probable cause, however, as the very name implies, we deal with probabilities These are not technical; they are the factual and practical considerations of everyday life on which reasonable and prudent men, not legal technicians, act. The standard of proof is accordingly correlative to what must be proved. 37 'The substance of all the definitions' of probable cause 'is a reasonable ground for belief of guilt.' McCarthy v. De Armit, 99 Pa. 63, 69, quoted with approval in the Carroll opinion. 267 U.S. at page 161, 45 S.Ct. at page 288, 69 L.Ed. 543, 39 A.L.R. 790. And this 'means less than evidence which would justify condemnation' or conviction, as Marshall, C.J., said for the Court more than a century ago in Locke v. United States, 7 Cranch 339, 348, 3 L.Ed. 364. Since Marshall's time, at any rate,14 it has come to mean more than bare suspicion: Probable cause exists where 'the facts and circumstances within their (the officers') knowledge and of which they had reasonably trustworthy information (are) sufficient in themselves to warrant a man of reasonable caution in the belief that' an offense has been or is being committed. Carroll v. United States, 267 U.S. 132, 162, 45 S.Ct. 280, 288, 69 L.Ed. 543, 39 A.L.R. 790.15 38 These long-prevailing standards seek to safeguard citizens from rash and unreasonable interferences with privacy and from unfounded charges of crime. They also seek to give fair leeway for enforcing the law in the community's protection. Because many situations which confront officers in the course of executing their duties are more or less ambiguous, room must be allowed for some mistakes on their part. But the mistakes must be those of reasonable men, acting on facts leading sensibly to their conclusions of probability. The rule of probable cause is a practical, nontechnical conception affording the best compromise that has been found for accommodating these often opposing interests. Requiring more would unduly hamper law enforcement. To allow less would be to leave law-abiding citizens at the mercy of the officers' whim or caprice. 39 The troublesome line posed by the facts in the Carroll case and this case is one between mere suspicion and probable cause. That line necessarily must be drawn by an act of judgment formed in the light of the particular situation and with account taken of all the circumstances. No problem of searching the home or any other place of privacy was presented either in Carroll or here. Both cases involve freedom to use public highways in swiftly moving vehicles for dealing in contraband, and to be unmolested by investigation and search in those movements. In such a case the citizen who has given no good cause for believing he is engaged in that sort of activity is entitled to proceed on his way without interference.16 But one who recently and repeatedly has given substantial ground for believing that he is engaging in the f rbidden transportation in the area of his usual operations has no such immunity, if the officer who intercepts him in that region knows that fact at the time he makes the interception and the circumstances under which it is made are not such as to indicate the suspect going about legitimate affairs. 40 This does not mean, as seems to be assumed, that every traveler along the public highways may be stopped and searched at the officers' whim, caprice or mere suspicion.17 The question presented in the Carroll case lay on the border between suspicion and probable cause. But the Court carefully considered that problem and resolved it by concluding that the facts within the officers' knowledge when they intercepted the Carroll defendants amounted to more than mere suspicion and constituted probable cause for their action. We cannot say this conclusion was wrong, or was so lacking in reason and consistency with the Fourth Amendment's purposes that it should now be overridden. Nor, as we have said, can we find in the present facts any substantial basis for distinguishing this case from the Carroll case. 41 Accordingly the judgment is affirmed. 42 Affirmed. 43 Mr. Justice MURPHY dissents. 44 Mr. Justice BURTON, concurring. 45 I join in the opinion of the Court that there was probable cause for the search within the standards established in Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543, 39 A.L.R. 790. 46 Whether or not the necessary probable cause for a search of the petitioner's car existed before the government agents caught up with him and said to him, 'How much liquor have you got in the car this time?' and he replied, 'Not too much,' it is clear, and each of the lower courts found, that, under all of the circumstances of this case, the necessary probable cause for the search of the petitioner's car then existed. If probable cause for the search existed at that point, the search which then was begun was lawful without a search warrant as is demonstrated in the opinion of the Court. That search disclosed that a crime was in the course of its commission in the presence of the arresting officers, precisely as those officers had good reason to believe was the fact. The ensuing arrest of the petitioner was lawful and the subsequent denial of his motion to suppress the evidence obtained by the search was properly sustained. 47 It is my view that it is not necessary, for the purposes of this case, to establish probable cause for the search at any point earlier than that of the above colloquy. The earlier events, recited in the opinion of the Court, disclose at least ample grounds to justify the chase and official interrogation of the petitioner by the government agents in the manner adopted. This interrogation quickly disclosed indisputable probable cause for the search and for the arrest. In my view, these earlier events not only justified the steps taken by the government agents but those events imposed upon the government agents a positive duty to investigate further, in some such manner as they adopted. It is only by alertness to proper occasions for prompt inquiries and investigations that effective prevention of crime and enforcement of law is possible. Government agents are commissioned to represent the interests of the public in the enforcement of the law and this requires affirmative action not only when there is reasonable ground for an arrest or probable cause for a search but when there is reasonable ground for an investigation. This is increasingly true when the facts point directly to a crime in the course of commission in the presence of the agent. Prompt investigation may then not only discover but, what is still more important may interrupt the crime and prevent some or all of its damaging consequences. 48 In the present case, from the moment that the agents saw this petitioner driving his heavily laden car in Oklahoma, evidently en route from Missouri, the events justifying and calling for an interrogation of him rapidly gained cumulative force. Nothing occurred that even tended to lessen the reasonableness of the original basis for the suspicion of the agents that a crime within their particular line of duty was being committed in their presence. Nothing occurred to make it unlawful for them, in line of duty, to make the interrogation which suggested itself to them. When their interrogation of the petitioner to his voluntary response as quoted above, that response demonstrated ample probable cause for an immediate search of the petitioner's car for the contraband liquor which he had indicated might be found there. The interrogation of the petitioner, thus made by the agents in their justifiable investigation of a crime reasonably suspected by them to be in the course of commission in their presence, cannot now be resorted to by the petitioner in support of a motion to suppress the evidence of that crime. Government agents have duties of crime prevention and crime detection as well as the duty of arresting offenders caught in the commission of a crime or later identified as having committed a crime. The performance of the first duties is as important as the performance of the last. In this case the performance of the first halted the commission of the crime and also resulted in the arrest of the offender. 49 Mr. Justice JACKSON, dissenting. 50 When this Court recently has promulgated a philosophy that some rights derived from the Constitution are entitled to 'a preferred position,' Murdock v. Pennsylvania, 319 U.S. 105, 115, dissent at page 166, 63 S.Ct. 870, 876, 882, 87 L.Ed. 1292, 146 A.L.R. 81; Saia v. New York, 334 U.S. 558, 562, 68 S.Ct. 1148, 1150, 92 L.Ed. 1574, I have not agreed. We cannot give some constitutional rights a preferred position without relegating others to a deferred position; we can establish no firsts without thereby establishing seconds. Indications are not wanting that Fourth Amendment freedoms are tacitly marked as secondary rights, to be relegated to a deferred position. 51 The Fourth Amendment states: '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.' 52 These, I protest, are not mere second-class rights but belong in the catalog of indispensable freedoms. Among deprivations of rights, none is so effective in cowing a population, crushing the spirit of the individual and putting terror in every heart. Uncontrolled search and seizure is one of the first and most effective weapons in the arsenal of every arbitrary government. And one need only briefly to have dwelt and worked among a people possessed of many admirable qualities but deprived of these rights to know that the human personality deteriorates and dignity and self-reliance disappear where homes, persons a d possessions are subject at any hour to unheralded search and seizure by the police. 53 But the right to be secure against searches and seizures is one of the most difficult to protect. Since the officers are themselves the chief invaders, there is no enforcement outside of court. 54 Only occasional and more flagrant abuses come to the attention of the courts, and then only those where the search and seizure yields incriminating evidence and the defendant is at least sufficiently compromised to be indicted. If the officers raid a home, an office, or stop and search an automobile but find nothing incriminating, this invasion of the personal liberty of the innocent too often finds no practical redress. There may be, and I am convinced that there are, many unlawful searches of homes and automobiles of innocent people which turn up nothing incriminating, in which no arrest is made, about which courts do nothing, and about which we courts do nothing, an about which we never hear. 55 Courts can protect the innocent against such invasions indirectly and through the medium of excluding evidence obtained against those who frequently are guilty. Federal courts have used this method of enforcement of the Amendment, in spite of its unfortunate consequences on law enforcement, although many state courts do not. This inconsistency does not disturb me, for local excesses or invasions of liberty are more amenable to political correction, the Amendment was directed only against the new and centralized government, and any really dangerous threat to the general liberties of the people can come only from this source. We must therefore look upon the exclusion of evidence in federal prosecutions if obtained in violation of the Amendment as a means of extending protection against the central government's agencies. So a search against Brinegar's car must be regarded as a search of the car of Everyman. 56 We must remember that the extent of any privilege of search and seizure without warrant which we sustain, the officers interpret and apply themselves and will push to the limit. We must remember, too, that freedom from unreasonable search differs from some of the other rights of the Constitution in that there is no way the innocent citizen can invoke advance protection. For example, any effective interference with freedom of the press, or free speech, or religion, usually requires a course of suppressions against which the citizen can and often does go to the court and obtain an injunction. Other rights, such as that to an impartial jury or the aid of counsel, are within the supervisory power of the courts themselves. Such a right as just compensation for the taking of private property may be vindicated after the act in terms of money. 57 But an illegal search and seizure usually is a single incident, perpetrated by surprise, conducted in haste, kept purposely beyond the court's supervision and limited only by the judgment and moderation of officers whose own interests and records are often at stake in the search. There is no opportunity for injunction or appeal to disinterested intervention. The citizen's choice is quietly to submit to whatever the officers undertake or to resist at risk of arrest or immediate violence. 58 And we must remember that the authority which we concede to conduct searches and seizures without warrant may be exercised by the most unfit and ruthless officers as well as by the fit and responsible, and resorted to in case of petty misdemeanors as well as in the case of the gravest felonies. 59 With this prologue I come to the case of Brinegar. His automobile was one of his 'effects' and hence within the express protection of the Fourth Amendment. Undoubtedly the automobile presents peculiar problems for enforcement agencies, is frequently a facility for the perpetration of crime and an aid in the escape of criminals. But if we are to make judicial exceptions to the Fourth Amendment for these reasons, it seems to me they should depend somewhat upon t e gravity of the offense. If we assume, for example, that a child is kidnaped and the officers throw a roadblock about the neighborhood and search every outgoing car, it would be a drastic and undiscriminating use of the search. The officers might be unable to show probable cause for searching any particular car. However, I should candidly strive hard to sustain such an action, executed fairly and in good faith, because it might be reasonable to subject travelers to that indignity if it was the only way to save a threatened life and detect a vicious crime. But I should not strain to sustain such a roadblock and universal search to salvage a few bottles of bourbon and catch a bootlegger. 60 The Court sustains this search as an application of Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543, 39 A.L.R. 790. I dissent because I regard it as an extension of the Carroll case, which already has been too much taken by enforcement officers as blanket authority to stop and search cars on suspicion. I shall confine this opinion to showing the several ways in which this decision seems to expand the already expansive right to stop and search automobiles. 61 In the first place, national prohibition legislation was found in the Carroll case to have put congressional authority back of the search without warrant of cars suspected of its violation. No such congressional authority exists in this case. The Court is voluntarily dispensing with warrant in this case as matter of judicial policy, while in the Carroll case the Court could have required a warrant only by holding an Act of Congress unconstitutional.1 62 A second and important distinction is that in the Carroll case the lower court had found that the evidence showed probable cause for that search, while in this case two courts below have held that (except for evidence turned up after the search, which we consider later) there was not probable cause. If we assume the facts to be indistinguishable, this important distinction emerges from the decisions: Carroll held only that these facts permitted a District Court, if so convinced, to find probable cause from them. The Court now holds these facts require a finding of probable cause. This shift from a permissive to a mandatory basis is a shift of no inconsiderable significance. 63 While the Court sustained the search without warrant in the Carroll case, it emphatically dec ined to dispense with the necessity for evidence of probable cause for making such a search. It said: 'It would be intolerable and unreasonable if a prohibition agent were authorized to stop every automobile on the chance of finding liquor, and thus subject all persons lawfully using the highways to the inconvenience and indignity of such a search. Travelers may be so stopped in crossing an international boundary because of national self- protection reasonably requiring one entering the country to identify himself as entitled to come in, and his belongings as effects which may be lawfully brought in. But those lawfully within the country, entitled to use the public highways, have a right to free passage without interruption or search unless there is known to a competent official, authorized to search, probable cause for believing that their vehicles are carrying contraband or illegal merchandise.' 267 U.S. 132 at page 153, 45 S.Ct. at page 285. 64 Analysis of the Carroll facts shows that while several facts are common to the two cases, the setting from which those facts take color and meaning differ in essential respects. 65 In the Carroll case the primary and the ultimate fact that the accused was engaged in liquor running was not surmise or hearsay, as it is here. Carroll and his companion, some time before their arrest, had come to meet the two arresting officers, not then known as officials, upon the understanding that they were customers wanting liquor. Carroll promised to sell and deliver them three cases at $130 a case. For some reason there was a failure to deliver, but when the officers arrested them they had this positive and personal knowledge that these men were trafficking in liquor. Also, it is to be noted that the officers, when bargaining for liquor, saw and learned the number of the car these bootleggers were using in the business and, at the time of the arrest, recognized it as the same car. 66 Then this Court took judicial notice that the place whence Carroll, when stopped, was coming, on the international boundary, 'is one of the most active centers for introducing illegally into this country spiritous liquors for distribution into the interior.' 267 U.S. at page 160, 45 S.Ct. at page 287. These facts provided the very foundation of the opinion of this Court on the subject of probable cause, which it summed up as follows: 67 'The partners in the original combination to sell liquor in Grand Rapids were together in the same automobile they had been in the night when they tried to furnish the whisky to the officers, which was thus identified as part of the firm equipment. They were coming from the direction of the great source of supply for their stock to Grand Rapids, where they plied their trade. That the officers, when they saw the defendants, believed that they were carrying liquor, we can have no doubt, and we think it is equally clear that they had reasonable cause for thinking so.' 267 U.S. at page 160, 45 S.Ct. at page 288. 68 Not only did the Court rely almost exclusively on information gained in personal negotiations of the officers to buy liquor from defendants to show probable cause, but the dissenting members asserted it to be the only circumstance which could have subjected the accused to any reasonable suspicion. And that is the sort of direct evidence on personal knowledge that is lacking here. 69 In contrast, the proof that Brinegar was trafficking in illegal liquor rests on inferences from two circumstances, neither one of which would be allowed to be proved at a trial: One, it appears that the same officers previously had arrested Brinegar on the same charge. But there had been no conviction and it does not appear whether the circumstances of the former arrest indicated any strong probability of it. In any event, this evidence of a prior arrest of the accused would not even be admissible in a trial to prove his guilt on this occasion. 70 As a second basis for inference, the officers also say that Brinegar had the r putation of being a liquor runner. The weakness of this hearsay evidence is revealed by contrasting it with the personal negotiations which proved that Carroll was one. The officers' testimony of reputation would not be admissible in a trial of defendant unless he was unwise enough to open the subject himself by offering character testimony. See Greer v. United States, 245 U.S. 559, 560, 38 S.Ct. 209, 210, 62 L.Ed. 469. 71 I do not say that no evidence which would be inadmissible to prove guilt at a trial may be considered in weighing probable cause, but I am surprised that the Court is ready to rule that inadmissible evidence alone, as to vital facts without which other facts give little indication of guilt, establish probable cause as matter of law. The only other fact is that officer Malsed stated that twice, on September 23 and on September 30, about six months before this arrest, he saw Brinegar in a Missouri town where liquor is lawful, loading liquor into a truck, not the car in this case. That is all. The Court from that draws the inference which the courts below, familiar we presume with the local conditions, refused to draw, viz., that to be seen loading liquor into a truck where it is lawful is proof that defendant is unlawfully trafficking in liquor some distance away. There is not, as in the Carroll case, evidence that he was offering liquor for sale to anybody at any time. In the Carroll case, the offer to sell liquor to the officers would itself have been a law violation. It seems rather foggy reasoning to say that the courts are obliged to draw the same conclusion from legal conduct as from illegal conduct. 72 I think we cannot say the lower courts were wrong as matter of law in holding that there was no probable cause up to the time the car was put off the road and stopped, and that we cannot say it was proper to consider the deficiency supplied by what followed. When these officers engaged in a chase at speeds dangerous to those who participated, and to other lawful wayfarers, and ditched the defendant's car, they were either taking the initial steps in arrest, search and seizure, or they were committing a completely lawless and unjustifiable act. That they intended to set out on a search is unquestioned, and there seems no reason to doubt that in their own minds they thought there was cause and right to search. They have done exactly what they would have done, and done rightfully, if they had been executing a warrant. At all events, whatever it may have lacked technically of arrest, search and seizure, it was a form of coercion and duress under color of official authority-and a very formidable type of duress at that. 73 I do not, of course, contend that officials may never stop a car on the highway without the halting being considered an arrest or a search. Regulations of traffic, identifications where proper, traffic census, quarantine regulations, and many other causes give occasion to stop cars in circumstances which do not imply arrest or charge of crime. And to trail or pursue a suspected car to its destination, to observe it and keep it under surveillance, is not in itself an arrest nor a search. But when a car is forced off the road, summoned to stop by a siren, and brought to a halt under such circumstances as are here disclosed, we think the officers are then in the position of one who has entered a home: the search at its commencement must be valid and cannot be saved by what it turns up. Johnson v. United States, 333 U.S. 10, 68 S.Ct. 367, 92 L.Ed. 436; McDonald v. United States, 335 U.S. 451, 69 S.Ct. 191; and see Nueslein v. District of Columbia, 73 App.D.C. 85, 115 F.2d 690. 74 The findings of the two courts below make it clear that this search began and proceeded through critical and coercive phases without the justification of probable cause. What it yielded cannot save it. I would reverse the judgment. 75 Mr. Justice FRANKFURTER and Mr. Justice MURPHY join in this opinion. 1 Section 3(a) of the Liquor Enforcement Act of 1936, 49 Stat. 1928, 27 U.S.C. § 223 (see 18 U.S.C.A. § 1262), provides: 'Whoever shall import, bring, or transport any intoxicating liquor into any State in which all sales (except for scientific, sacramental, medicinal, or mechanical purposes) of intoxicating liquor containing more than 4 per centum of alcohol by volume are prohibited, otherwise than in the course of continuous interstate transportation through such State, or attempt so to do, or assist in so doing, shall: (1) If such liquor is not accompanied by such permit or permits, license or licenses therefor as are now or hereafter required by the laws of such State; or (2) if all importation, bringing, or transportation of intoxicating liquor into such State is prohibited by the laws thereof; be guilty of a misdemeanor and shall be fined not more than $1,000 or imprisoned not more than one year, or both.' Okl.Sess.Laws 1939, c. 16, Art. 1, § 1, 37 O.S.1941 § 41, in effect at the time of petitioner's arrest, made it unlawful to import or cause to be imported into that state, without a permit, any intoxicating liquor containing more than 4 per cent of alcohol by volume. 2 '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.' U.S.Const.Amend.IV. 3 Neither the opinion of the Court of Appeals nor the unpublished opinion of the trial court refers to the Carroll case. 4 'The Fourth Amendment does not denounce all searches or seizures, but only such as are unreasonable. * * * On reason and authority the true rule is that if the search and seizure without a warrant are made upon probable cause, that is, upon a belief, reasonably arising out of circumstances known to the seizing officer, that an automobile or other vehicle contains that which by law is subject to seizure and destruction, the search and seizure are valid.' Carroll v. United States, 267 U.S. 132, 147, 149, 45 S.Ct. 280, 283. 5 The substantive offense charged in Carroll was violation of the National Prohibition Act, 41 Stat. 305, 27 U.S.C.A. § 1 et seq.; here, violation of the Liquor Enforcement Act of 1936. 6 In this case identification of the car as having been previously used by Brinegar in his liquor running activities was inferential, although identification of its use by him in Joplin, Mo., his source of supply, was direct and undisputed. 7 The Government also stresses the fact, not present in the Carroll case, of flight by Brinegar after he realized he was being pursued. We find it is unnecessary to take account of this factor in deciding this case. As to the factor of flight, see Husty v. United States, 282 U.S. 694, 700-701, 51 S.Ct. 240, 241, 75 L.Ed. 629, 74 A.L.R. 1407; Talley v. United States, 5 Cir., 159 F.2d 703; United States v. Heitner, 2 Cir., 149 F.2d 105, 107; Jones v. United States, 10 Cir., 131 F.2d 539, 541; Levine v. United States, 2 Cir., 138 F.2d 627, 629. 8 It was unlawful to import into Oklahoma, without a permit, any intoxicating liquor, as defined by the laws of that state, containing more than four per cent of alcohol by volume. See note 1 supra. Manufacture, sale, furnishing or tra sportation of intoxicating liquor was forbidden in Oklahoma. 37 Okl.Stat.1941 § 1. 9 Indeed the showing here was stronger because there was no necessity, as there was in the Carroll case, for resorting to judicial notice to establish either the probable source of supply or that it was illegal. On the present record judicial notice is hardly needed to give us cognizance of the differing laws of Missouri and Oklahoma, or of Joplin's proximity to the state line, and its ready convenience to one living as near by as Vinita who might be disposed to use it as a base of supply for importing liquor into Oklahoma in violation of the state and federal statutes. 10 As has been noted above, the Carroll case is neither cited nor referred to in any of the opinions filed in the trial court and the Court of Appeals. Nor is there anything in the record before us showing that the Carroll decision was considered in any of the rulings made in the hearing on the motion to suppress, at the trial, or in the Court of Appeals. 11 The court however thought that, even with the fact of the arrest before it, the evidence was insufficient to show probable cause at the time Brinegar passed the police car. 12 The inappropriateness of applying the rules of evidence as a criterion to determine probable cause is apparent in the case of an application for a warrant before a magistrate, the context in which the issue of probable cause most frequently arises. The ordinary rules of evidence are generally not applied in ex parte proceedings, 'partly because there is no opponent to invoke them, partly because the judge's determination is usually discretionary, partly because it is seldom final, but mainly because the system of Evidence rules was devised for the special control of trials by jury.' 1 Wigmore, Evidence (3d ed., 1940) 19. See also Note, 46 Harv.L.Rev. 1307, 1310-1311. 13 But see, e. g., Grau v. United States, 287 U.S. 124, 128, 53 S.Ct. 38, 40, 77 L.Ed. 212, in which it was said by way of dictum, that 'A search warrant may issue only upon evidence which would be competent in the trial of the offense before a jury (Giles v. United States, 1 Cir., 284 F. 208; Wagner v. United States, 8 Cir., 8 F.2d 581). * * *' For this proposition there was no authority in the decisions of this Court. It was stated in a case in which the evidence adduced to prove probable cause was not incompetent, but was insufficient to support the inference necessary to the existence of probable cause. The statement has not been repeated by this Court. The Wagner case relies solely upon Giles, the other case cited in Grau, and holds a warrant bad which issued on the basis of 'hearsay and conclusions.' (8 F.2d 583) The Grau dictum occasionally has been applied or stated as dictum by the courts of appeals and district courts: Simmons v. United States, 10 Cir., 18 F.2d 85, 88; Worthington v. United States, 6 Cir., 166 F.2d 557, 564-565; see also Reeve v. Howe, D.C., 33 F.Supp. 619, 622; United States v. Novero, D.C., 58 F.Supp. 275, 279. Cf. Davis v. United States, 5 Cir., 35 F.2d 957. See Note, 46 Harv.L.Rev. 1307, 1310-1311, for a criticism of the Grau dictum. And see note 15, infra, and text. 14 Marshall's full statement in Locke v. United States was: 'It may be added, that the term 'probable cause,' according to its usual acceptation, means less than evidence which would justify condemnation; and, in all cases of seizure, has a fixed, and well known meaning. It imports a seizure made under circumstances which warrant suspicion.' 7 Cranch 339, 348, 3 L.Ed. 364. 15 To the same effect are: Husty v. United States, 282 U.S. 694, 700-701, 51 S.Ct. 240, 241, 75 L.Ed. 629, 74 A.L.R. 1407; Dumbra v. United States, 268 U.S. 435, 441, 45 S.Ct. 546, 548, 69 L.Ed. 1032; Steele v. United States No. 1, 267 U.S. 498, 504-505, 45 S.Ct. 414, 416-417, 69 L.Ed. 757; Stacey v. Emery, 97 U.S. 642, 645, 24 L.Ed. 1035. The Carroll opinion also quotes with approval the following statement: 'If the facts and circumstances before the officer are such as to warrant a man of prudence and caution in believing that the offense has been committed, it is sufficient.' 267 U.S. at page 161, 45 S.Ct. at page 288, 69 L.Ed. 543, 39 A.L.R. 790. Ascription of the statement to Locke v. United States, 7 Cranch 339, 3 L.Ed. 364, appears to be an error in citation. 16 See the discussion of exceptions in the Carroll opinion, 267 U.S. 132, 149ff, 45 S.Ct. 280, 283, 69 L.Ed. 543, 39 A.L.R. 790. 17 'It would be intolerable and unreasonable if a prohibition agent were authorized to stop every automobile on the chance of finding liquor, and thus subject all persons lawfully using the highways to the inconvenience and indignity of such a search. Travelers may be so stopped in crossing an international boundary because of national self-protection reasonably requiring one entering the country to identify himself as entitled to come in, and his belongings as effects which may be lawfully brought in. But those lawfully within the country, entitled to use the public highways, have a right to free passage without interruption or search unless there is known to a competent official, authorized to search, probable cause for believing that their vehicles are carrying contraband or illegal merchandise.' Carroll v. United States, 267 U.S. 132, 153-154, 45 S.Ct. 280, 285. 1 The Carroll case was based on the National Prohibition Act, 41 Stat. 305. Section 26 of that statute provided that when an officer discovered any person transporting liquor in violation of the law, in any vehicle, it was the officer's duty to seize the liquor, take possession of the vehicle, and arrest any person found in charge thereof. The officer was required to proceed at once against any such person but, if no one was found claiming the vehicle, it was to be sold after appropriate notice and the proceeds paid into the Treasury. Section 25 of the Act authorized search warrants for private dwellings but only if they were being used in the illicit liquor business. It had been proposed to amend the statute to forbid search of an automobile without warrant. After disagreement between House and the Senate, that restriction was finally rejected. In the Carroll case, the legislative history of this proposed (Stanley) amendment was considered at length. 267 U.S. 144-146, 45 S.Ct. 282. The Court then concluded, 267 U.S. 147, 45 S.Ct. 283, that, without the amendment, the Act 'left the way open for searching an automobile * * * without a warrant, if the search was not malicious or without probable cause.' And it stated the issue thus: 'The intent of Congress to make a distinction between the necessity for a search warrant in the searching of private dwellings and in that of automobiles and other road vehicles in the enforcement of the Prohibition Act is thus clearly established by the legislative history of the Stanley Amendment. Is such a distinction consistent with the Fourth Amendment? * * *'

01

337 U.S. 682 69 S.Ct. 1457 93 L.Ed. 1628 LARSONv.DOMESTIC & FOREIGN COMMERCE CORPORATION. No. 31. Argued Nov. 12, 1948. Decided June 27, 1949. Rehearing Denied Oct. 10, 1949. See 70 S.Ct. 31. [Syllabus from pages 682-684 intentionally omitted] Mr. H. G. Morison, Washington, D.C., for petitioner. Mr. T. Peter Ansberry, Washington, D.C., for respondent. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 This suit was brought in the United States District Court for the District of Columbia by the Domestic & Foreign Commerce Corporation against Robert M. Littlejohn, the then head of the War Assets Administration.1 The complaint alleged that the Administration had sold certain surplus coal to the plaintiff; that the Administrator refused to deliver the coal but, on the contrary, had entered into a new contract to sell it to others. The prayer was for an injunction prohibiting the Administrator from selling or delivering the coal to any one other than the plaintiff and for a declaration that the sale to the plaintiff was valid and the sale to the second purchaser invalid. 2 A temporary restraining order was issued ex parte. At the subsequent hearing on the issuance of a preliminary injunction, the defendant moved to dismiss the complaint on the ground, among others, that the court did not have jurisdiction because the suit was one against the United States. The motion was granted. The Court of Appeals reversed, holding that the jurisdictional capacity of the court depended on whether or not title to the coal had passed.2 Since this was also one of the questions on the merits, it remanded the case for trial. We granted certiorari, 333 U.S. 872, 68 S.Ct. 903, 92 L.Ed. 1149.3 3 The controversy on the merits concerns the interpretation to be given to the contract of sale. The War Assets Administration construed the contract as requiring the plaintiff to deposit funds to pay for the coal in advance and, when an unsatisfactory letter of credit was offered in place of a deposit, it considered that the contract was breached. The respondent, on the other hand, construed the contract as requiring payment only on delivery of the documents covering the coal shipment. In its view, it was not obliged to deposit any funds in advance of shipment and, therefore, had not breached the contract by failing to do so. 4 A second question, related to but different from the question of breach, was whether legal title to the coal had passed to the responden when the contract was made. If the contract required the deposit of funds then, of course, title could not pass until the contract terms were complied with. If, on the other hand, the contract required payment only on the delivery of documents, a question remained as to whether title nevertheless passed at the time the contract was made. 5 Since these questions were not decided by the courts below we do not pass on them here. They are important only insofar as they illuminate the basis on which it was claimed that the district court had jurisdiction over the suit. It was not alleged that the contract for the sale of the coal was a contract with the officer personally.4 The basis of the action, on the contrary, was that a contract had been entered into with the United States. Nor was it claimed that the Administrator had any personal interest in this coal or, indeed, that he himself had taken any wrongful action. The complaint was directed against him because of his official function as chief of the War Assets Administration.5 It asked for an injunction against him in that capacity, and against 'his agents, assistants, deputies and employees and all persons acting or assuming to act under their direction.' The relief sought was, in short, relief against the Administration for wrongs allegedly committed by subordinate officials in that Administration. The question presented to the courts below was whether such an injunction was barred by the sovereign's immunity from suit. 6 Before answering that question it is perhaps advisable to state clearly what is and what is not involved. There is not involved any question of the immunization of Government officers against responsibility for their wrongful actions. If those actions are such as to create a personal liability, whether sounding in tort or in contract, the fact that the officer is an instrumentality of the sovereign does not, of course, forbid a court from taking jurisdiction over a suit against him. Sloan Shipyards Corp. v. Emergency Fleet Corp., 1922, 258 U.S. 549, 567, 42 S.Ct. 386, 388, 66 L.Ed. 762. As was said in Brady v. Roosevelt S.S. Co., 1943, 317 U.S. 575, 580, 63 S.Ct. 425, 428, 87 L.Ed. 471, the principle that an agent is liable for his own torts 'is an ancient one and applies even to certain acts of public officers or public instrumentalities.' But the existence of a right to sue the officer is not the issue in this case. The issue here is whether this particular suit is not also, in effect, a suit against the sovereign. If it is, it must fail, whether or not the officer might otherwise be suable. 7 If the denomination of the party defendant by the plaintiff were the sole test of whether a suit was against the officer individually or against his principal, the sovereign, our task would be easy. Our decision then would be that the United States is not being sued here because it is not named as a party. This would be simple and would not leave room for controversy. But controversy there has been, in this field above all others, because it has long been established that the crucial question is whether the relief sought in a suit nominally addressed to the officer is relief against the sovereign.6 In a suit against the officer to recover damages for the agent's personal actions that question is easily answered. The judgment sought will not require action by the sovereign or disturb the sovereign's property. There is, therefore, no jurisdictional difficulty.7 The question becomes difficul and the area of controversy is entered when the suit is not one for damages but for specific relief: i.e., the recovery of specific property or monies, ejectment from land, or injunction either directing or restraining the defendant officer's actions. In each such case the question is directly posed as to whether, by obtaining relief against the officer, relief will not, in effect, be obtained against the sovereign. For the sovereign can act only through agents and, when the agents' actions are restrained, the sovereign itself may, through him, be restrained. As indicated, this question does not arise because of any distinction between law and equity. It arises whenever suit is brought against an officer of the sovereign in which the relief sought from him is not compensation for an alleged wrong but, rather, the prevention or discontinuance, in rem, of the wrong. In each such case the compulsion, which the court is asked to impose, may be compulsion against the sovereign, although nominally directed against the individual officer. If it is, then the suit is barred, not because it is a suit against an officer of the Government, but because it is, in substance, a suit against the Government over which the court, in the absence of consent, has no jurisdiction. 8 The relief sought in this case was not the payment of damages by the individual defendant.8 To the contrary, it was asked that the court order the War Assets Administrator, his agents, assistants, deputies and employees and all persons acting under their direction, not to sell the coal involved and not to deliver it to anyone other than the respondent.9 The district court held that this was relief against the sovereign and therefore dismissed the suit. We agree. 9 There may be, of course, suits for specific relief against officers of the sovereign which are not suits against the sovereign. If the officer purports to act as an individual and not as an official, a suit directed against that action is not a suit against the sovereign. If the War Assets Administrator had completed a sale of his personal home, he presumably could be enjoined from later conveying it to a third person On a similar theory, where the officer's powers are limited by statute, his actions beyond those limitations are considered individual and not sovereign actions. The officer is not doing the business which the sovereign has empowered him to do or he is doing it in a way which the sovereign has forbidden. His actions are ultra vires his authority and therefore may be made the object of specific relief. It is important to note that in such cases the relief can be granted, without impleading the sovereign, only because of the officer's lack of delegated power. A claim of error in the exercise of that power is therefore not sufficient. And, since the jurisdiction of the court to hear the case may depend, as we have recently recognized,10 upon the decision which it ultimately reaches on the merits, it is necessary that the plaintiff set out in his complaint the statutory limitation on which he relies. 10 A second type of case is that in which the statute or order conferring power upon the officer to take action in the sovereign's name is claimed to be unconstitutional. Actions for habeas corpus against a warden and injunctions against the threatened enforcement of unconstitutional statutes are familiar examples of this type. Here, too, the conduct against which specific relief is sought is beyond the officer's powers and is, therefore, not the conduct of the sovereign. The only difference is that in this case the power has been conferred in form but the grant is lacking in substance because of its constitutional invalidity. 11 These two types have frequently been recognized by this Court as the only ones in which a restraint may be obtained against the conduct of Government officials. The rule was stated by Mr. Justice Hughes in Philadelphia Co. v. Stimson, 1912, 223 U.S. 605, 620, 32 S.Ct. 340, 344, 56 L.Ed. 570, where he said: '* * * in case of an injury threatened by his illegal action, the officer cannot claim immunity from injunction process. The principle has frequently been applied with respect to state officers seeking to enforce unconstitutional enactments. (Citing cases.) And it is equally applicable to a Federal officer acting in excess of his authority or under an authority not validly conferred.'11 12 It is not contended by the respondent that the present case falls within either of these categories. There was no claim made that the Administrator and his agents, etc., were acting unconstitutionally or pursuant to an unconstitutional grant of power. Nor was there any allegation of a limitation on the Administrator's delegated power to refuse shipment in cases in which he believed the United States was not obliged to deliver. There was, it is true, an allegation that the Administrator was acting 'illegally,' and that the refusal to deliver was 'unauthorized.' But these allegations were not based and did not purport to be based upon any lack of delegated power.12 Nor could they be, since the Administrator was empowered by the sovereign to administer a general sales program encompassing the negotiation of contracts, the shipment of goods and the receipt of payment. A normal concomitant of such powers, as a matter of general agency law, is the power to refuse delivery when, in the agent's view, delivery is not called for under a contract and the power to sell goods which the agent believes are still his principal's to sell. 13 The respondent's contention, which the Court of Appeals sustained, was that there exists a third category of cases in which the action of a Government official may be restrained or directed. If, says the respondent, an officer of the Government wrongly takes or holds specific property to which the plaintiff has title then his taking or holding is a tort, and 'illegal' as a matter of general law, whether or not it be within his delegated powers. He may therefore be sued individually to prevent the 'illegal' taking or to recover the property 'illegally' held. 14 If this is an adequate theory on which to rest the conclusion that the relief asked is not relief against the sovereign, then the respondent's complaint made out a sufficient basis for jurisdiction. The complaint alleged that the respondent's contract with the United States was an immediate contract of sale under which title to the coal had passed. The coal was thus alleged to be the respondent's coal, not the United States' coal. Retention of it by the Administrator after demand was claimed to be a conversion; sale to a third party would aggravate the conversion. Since these actions were tortious they were 'illegal' in the respondent's sense and hence were contended to be individual actions, not properly taken on behalf of the United States, which could be enjoined without making the United States a party. 15 We believe the theory to be erroneous. It confuses the doctrine of sovereign immunity with the requirement that a plaintiff state a cause of action. It is a prerequisite to the maintenance of any action for specific relief that the plaintiff claim an invasion of his legal rights, either past or threatened. He must, therefore, allege conduct which is 'illegal' in the sense that the respondent suggests. If he does not, he has not stated a cause of ction. This is true whether the conduct complained of is sovereign or individual. In a suit against an agency of the sovereign, as in any other suit, it is therefore necessary that the plaintiff claim an invasion of his recognized legal rights. If he does not do so, the suit must fail even if he alleges that the agent acted beyond statutory authority13 or unconstitutionally.14 But, in a suit against an agency of the sovereign, it is not sufficient that he make such a claim. Since the sovereign may not be sued, it must also appear that the action to be restrained or directed is not action of the sovereign. The mere allegation that the officer, acting officially, wrongfully holds property to which the plaintiff has title does not meet that requirement. True, it establishes a wrong to the plaintiff. But it does not establish that the officer, in committing that wrong, is not exercising the powers delegated to him by the sovereign. If he is exercising such powers the action is the sovereign's and a suit to enjoin it may not be brought unless the sovereign has consented. 16 It is argued, however, that the commission of a tort cannot be authorized by the sovereign. Therefore, the argument goes, the allegation that a Government officer has acted or is threatening to act tortiously toward the plaintiff is sufficient to support the claim that he has acted beyond his delegated powers. It is on this contention that the respondent's position fundamentally rests, since it is admitted that, if the action to be prevented or compelled is authorized by the sovereign, the demand for it must fail as a demand against the sovereign. It has been said, in a very special sense, that, as a matter of agency law, a principal may never lawfully authorize the commission of a tort by his agent. But that statement, in its usual context, is only a way of saying that an agent's liability for torts committed by him cannot be avoided by pleading the direction or authorization of his principal.15 The agent is himself liable whether or not he has been authorized or even directed to commit the tort. This, of course, does not mean that the principal is not liable nor that the tortious action may not be regarded as the action of the principal. It does not mean, therefore, that the agent's action, because tortious, is, for that reason alone, ultra vires his authority. An argument to that effect was at one time advanced in connection with corporate agents, in an effort to avoid corporate liability for torts, but was decisively rejected.16 17 There is, therefore, nothing in the law of agency which lends support to the contention that an officer's tortious action is ipso facto beyond his delegated powers. Nor, do we think, is there anything in the doctrine of sovereign immunity which requires us to adopt such a view as regards Government agencies. If, of course, it is assumed that the basis of the doctrine of sovereign immunity is the thesis that the king can do no wrong then it may be also assumed that if the king's agent does wrong that action cannot be the action of the king. It is on some such argument that the position of the respondent rests. It is argued that an officer given the power to make decisions is only given the power to make correct decisions. If his decisions are not correct, then his action based on those decisions is beyond his authority and not the action of the sovereign. There is no warrant for such a contention in cases in which the decision made by the officer does not relate to the terms of his statutory authority. Certainly the jurisdiction of a court to decide a case does not disappear if its decision on the merits is wrong. And we have heretofore rejected the argument that official action is invalid if based on an incorrect decision as to law or fact, if the officer making the decision was empowered to do so. Adams v. Nagle, 1938, 303 U.S. 532, 542, 58 S.Ct. 687, 692, 82 L.Ed. 999. We therefore reject the contention here. We hold that if the actions of an officer do not conflict with the terms of his valid statutory authority, then they are the actions of the sovereign, whether or not they are tortious under general law, if they would be regarded as the actions of a private principal under the normal rules of agency. A Government officer is not thereby necessarily immunized from liability, if his action is such that a liability would be imposed by the general law of torts. But the action itself cannot be enjoined or directed, since it is also the action of the sovereign. 18 United States v. Lee, 1882, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171, is said to have established the rule for which the respondent contends. It did not. It represents, rather, a specific application of the constitutional exception to the doctrine of sovereign immunity. The suit there was against federal officers to recover land held by them, within the scope of their authority, as a United States military station and cemetery. The question at issue was the validity of a tax sale under which the United States, at least in the view of the officers, had obtained title to the property. The plaintiff alleged that the sale was invalid and that title to the land was in him. The Court held that if he was right the defendants' possession of the land was illegal and a suit against them was not a suit against the sovereign. Prima facie, this holding woud appear to support the contention of the plaintiff. Examination of the Lee case, however, indicates that the basis of the decision was the assumed lack of the defendants' constitutional authority to hold the land against the plaintiff. The Court said (106 U.S. at page 219, 1 S.Ct. at page 260): 19 'It is not pretended, as the case now stands, that the president had any lawful authority to (take the land), or that the legislative body could give him any such authority except upon payment of just compensation. The defense stands here solely upon the absolute immunity from judicial inquiry of every one who asserts authority from the executive branch of the government, however clear it may be made that the executive possessed no such power. Not only that no such power is given, but that it is absolutely prohibited, both to the executive and the legislative, to deprive any one of life, liberty, or property without due process of law, or to take private property without just compensation. 20 'Shall it be said * * * that the courts cannot give a remedy when the citizen has been deprived of his property by force, his estate seized and converted to the use of the government without any lawful authority, without any process of law, and without any compensation, because the president has ordered it and his officers are in possession?' 21 The Court thus assumed that if title had been in the plaintiff the taking of the property by the defendants would be a taking without just compensation and, therefore, an unconstitutional action.17 On that assumption, and only on that assumption, the defendants' possession of the property was an unconstitutional use of their power and was, therefore, not validly authorized by the sovereign. For that reason, a suit for specific relief, to obtain the property, was not a suit against the sovereign and could be maintained against the defendants as individuals. 22 The Lee case, therefore, offers no support to the contention that a claim of title to property held by an officer of the sovereign is, of itself, sufficient to demonstrate that the officer holding the property is not validly empowered by the sovereign to do so. Only where there is a claim that the holding constitutes an unconstitutional taking of property without just compensation does the Lee case require that conclusion.18 The cases which followed Lee's do not require a different result. There are a great number of such cases and, as this Court has itself remarked, it is not 'an easy matter to reconcile all the decisions of the Court in this class of cases.'19 With only one possible exception, however, specific relief in connection with property held or injured by officers of the sovereign acting in the name of the sovereign has been granted only where there was a claim that the taking of the property or the injury to it was not the action of the sovereign because unconstitutional20 or beyond the officer's statutory powers.21 Certainly, the Court has repeatedly stated these to be the cases in which such relief could be granted.22 A contrary doctrine was stated in Goltra v. Weeks, 1926, 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074. In that case the United States had leased barges to the plaintiff under a contract which gave it a right to repossess under certain conditions. Believing that those conditions existed, officers of the Government attempted to repossess the barges. The Court held that a suit to enjoin them from doing so was not a suit against the United States. The Court said that the taking of the barges was alleged to be a trespass and hence 'illegal.' Therefore, the actions of the officers were personal actions, not the actions of the United States and injunction against them would not be injunction against the United States. 271 U.S. at page 544, 46 S.Ct. at page 616, 70 L.Ed. 1074. For this conclusion the Court relied entirely upon the opinion of Mr. Justice Hughes in Philadelphia Co. v. Stimson, 1912, 223 U.S. 605, 32 S.Ct. 340, 56 L.Ed. 570. The reliance was misplaced since the opinion in that case clearly and specifically rested on the claim that there was a lack of statutory power to act, not simply on a claim of tortious injury to the plaintiff.23 23 Opposed to the rationale of the Goltra opinion is the decision, by Mr. Justice Holmes, in Goldberg v. Daniels, 1913, 231 U.S. 218, 34 S.Ct. 84, 58 L.Ed. 191. There, as here, the question concerned the effect of a claimed sale of Government surplus property. The plaintiff submitted a sealed bid for a surplus war vessel, accompanied in that case by a certified heck as payment in advance. When the bids were opened his was the highest. The Secretary of the Navy, however, determined not to accept the bid and refused to deliver the vessel. The plaintiff brought mandamus. He alleged that the sale was complete when the bids were opened and that the ownership of the vessel was therefore in him, and he asked that the Secretary be compelled to deliver it. The lower courts examined the details of the transaction and concluded that the sale was not complete until the Secretary announced his acceptance of the bid. On appeal here, it was expressly held that it was not necessary to decide whether the lower courts were correct. The suit must fail as one against the United States, the Court said, whether or not the sale was complete. In so holding the Court said, in effect, that the question of title was immaterial to the court's jurisdiction. Wrongful the Secretary's conduct might be, but a suit to relieve the wrong by obtaining the vessel would interfere with thesovereign behind its back and hence must fail.24 24 Both cases are pressed upon us. The petitioner argues, and correctly, that the result in the Goldberg case calls for a similar result in this case—a dismissal of the suit for want of jurisdiction. The respondent argues, with equal correctness, that the theory of the Goltra opinion—that an allegation that the actions of Government officers are wrongful under general law is sufficient to show that they are 'unauthorized'—calls for an affirmance of the decision below. Since we must therefore resolve the conflict in doctrine25 we adhere to the rule applied in the Goldberg case and to the principle which has been frequently repeated by this Court, both before and after the Goltra case: the action of an officer of the sovereign (be it holding, taking or otherwise legally affecting the plaintiff's property) can be regarded as so 'illegal' as to permit a suit for a specific relief against the officer as an individual only if it is not within the officer's statutory powers or, if within those powers, only if the powers, or their exercise in the particular case, are constitutionally void.26 25 The application of this principle to the present case is clear. The very basis of the respondent's action is that the Administrator was an officer of the Government, validly appointed to administer its sales program and therefore authorized to enter, through his subordinates, into a binding contract concerning the sale of the Government's coal. There is no allegation of any statutory limitation on his powers as a sales agent. In the absence of such a limitation he, like any other sales agent, had the power and the duty to construe such contracts and to refuse delivery in cases in which he believed that the contract terms had not been complied with. His action in so doing in this case was, therefore, within his authority even if, for purposes of decision here, we assume that his construction was wrong and that title to the coal had, in fact, passed to the respondent under the contract. There is no claim that his constituted an unconstitutional taking.27 It was, therefore, inescapably the action of the United States and the effort to enjoin it must fail as an effort to enjoin the United States. 26 It is argued that the principle of sovereign immunity is an archaic hangover not consonan with modern morality and that it should therefore be limited wherever possible. There may be substance in such a viewpoint as applied to suits for damages. The Congress has increasingly permitted such suits to be maintained against the sovereign and we should give hospitable scope to that trend.28 But the reasoning is not applicable to suits for specific relief. For, it is one thing to provide a method by which a citizen may be compensated for a wrong done to him by the Government. It is a far different matter to permit a court to exercise its compulsive powers to restrain the Government from acting, or to compel it to act. There are the strongest reasons of public policy for the rule that such relief cannot be had against the sovereign. The Government as representative of the community as a whole, cannot be stopped in its tracks by any plaintiff who presents a disputed question of property or contract right. As was early recognized, 'the interference of the Courts with the performance of the ordinary duties of the executive departments of the government, would be productive of nothing but mischief. * * *'29 27 There are limits, of course. Under our constitutional system, certain rights are protected against governmental action and, if such rights are infringed by the actions of officers of the Government, it is proper that the courts have the power to grant relief against those actions. But in the absence of a claim of constitutional limitation, the necessity of permitting the Government to carry out its functions unhampered by direct judicial intervention outweights the possible disadvantage to the citizen in being relegated to the recovery of money damages after the event. 28 It is argued that a sales agency such as the War Assets Administration, is not the type of agency which requires the protection from direct judicial interference which the doctrine of sovereign immunity confers. We do not doubt that there may be some activities of the Government which do not require such protection. There are others in which the necessity of immunity is apparent. But it is not for this Court to examine the necessity in each case. That is a function of the Congress. The Congress has, in many cases, entrusted the business of the Government to agencies which may contract in their own names and which are subject to suit in their own names. In other cases it has permitted suits for damages, but, significantly, not for specific relief, in the Court of Claims. The differentiations as to remedy which the Congress has erected would be rendered nugatory if the basis on which they rest—the assumed immunity of the sovereign from suit in the absence of consent—were undermined by an unwarranted extension of the Lee doctrine. 29 The cause is reversed with directions that the complaint be dismissed. 30 It is so ordered. 31 Reversed with directions. 32 Mr. Justice DOUGLAS. 33 I think that the principles announced by the Court are the ones which should govern the selling of government property. Less strict applications of those principles would cause intolerable interference with public administration. To make the right to sue the officer turn on whether by the law of sales title had passed to the buyer would clog this governmental function with intolerable burdens. So I have joined the Court's opinion. 34 Mr. Justice RUTLEDGE concurs in the result. 35 Mr. Justice JACKSON dissents. 36 Mr. Justice FRANKFURTER, with whom Mr. Justice BURTON concurs, dissenting. 37 Case-by-case adjudication gives to the judicial process the impact of actuality and thereby saves it from the hazards of generalizations insufficiently nourished by experience. There is, however, an attendant weakness to a system that purports to pass merely on what are deemed to be the particular circumstances of a case. Consciously or unconsciously the p onouncements in an opinion too often exceed the justification of the circumstances on which they re based, or, contrariwise, judicial preoccupation with the claims of the immediate leads to a succession of ad hoc determinations making for eventual confusion and conflict. There comes a time when the general considerations underlying each specific situation must be exposed in order to bring the too unruly instances into more fruitful harmony. The case before us presents one of those problems for the rational solution of which it becomes necessary, as a matter of judicial self-respect, to take soundings in order to know where we are and whither we are going. 38 The case before us is this. 39 The Government had some surplus coal at an Army camp in Texas. On March 11, 1947, the War Assets Administration, through the Regional Office in Dallas, Texas, invited a bid from the plaintiff, respondent here, for purchase of the coal. The Dallas office expressed thus its approval of the bid submitted by the plaintiff: '* * * your terms of placing $17,500 with the First National Bank, Dallas, Texas, for payment upon presentation of our invoices to said bank are accepted.' Thereupon the plaintiff arranged for resale of the coal and its shipment abroad. On April 1, 1947, the Dallas office wired the plaintiff that unless the sum of $17,500 was deposited in the First National Bank in Dallas by noon April 4, 'the sale will be cancelled and other disposition made.' Though claiming that this demand was in the teeth of the contract, the plaintiff arranged for an irrevocable letter of credit payable through the First National Bank of Dallas to the War Assets Administration. The Dallas office now insisted that unless cash was deposited 'the sale of 10,000 tons of coal * * * will be cancelled ten days from this date.' That office disregarded further endeavors by the plaintiff to adjust the matter, and on April 16 it informed the plaintiff that the contract was canceled. Having learned that the coal was to be sold to another concern, the plaintiff, asserting ownership in the coal and the threat of irreparable damage, brought this suit in the District Court of the United States for the District of Columbia to restrain the War Assets Administrator and those under his control from transferring the coal to any other person than the plaintiff.1 40 After issuing a temporary restraining order the District Court on May 6, 1947, dismissed the suit with this oral observation: 'I am satisfi d that this suit is in effect a suit for specific performance and the United States is a necessary party, and this Court is without jurisdiction.' The Court of Appeals took a different view: 'Appellant, * * * did not seek the curt's aid to interfere in the use of official discretion by the appellee. Such discretion was exercised at the time the contract with appellant was entered into. If that contract served to vest title immediately in appellant then it follows that the ruling in Philadelphia Co. v. Stimson, 223 U.S. 605, 32 S.Ct. 340, 56 L.Ed. 570, is controlling here. * * * Clearly, then, it was incumbent upon the lower court in determining its jurisdictional capacity to decide the ultimate question of whether or not a contract of sale had been consummated between appellant and appellee.' 165 F.2d 235, 237. 41 The conflict between the District Court and the Court of Appeals on these facts reflects fairly enough the seeming disharmony of the numerous opinions in which this Court has dealt with the claim of immunity of government from unconsented suit. As to the States, legal irresponsibility was written into the Constitution by the Eleventh Amendment; as to the United States, it is derived by implication. Principality of Monaco v. Mississippi, 292 U.S. 313, 321, 54 S.Ct. 745, 747, 78 L.Ed. 1282; see Block, Suits Against Government Officers and the Sovereign Immunity Doctrine, 59 Harv.L.Rev., 1060, 1064—1065 (1946). The sources of the immunity are formally different but they present the same legal issues. 42 The subject is not free from casuistry. This is doubtless due to the fact that a steady change of opinion has gradually undermined unquestioned acceptance of the sovereign's freedom from ordinary legal responsibility. The vehement speed with which the Eleventh Amendment displaced the decision in Chisholm v. Georgia, 1793, 2 Dall. 419, 1 L.Ed. 440, proves how deeply rooted that doctrine was in the early days of the Republic. See State of New Hampshire v. Louisiana, 108 U.S. 76, 86—88, 2 S.Ct. 176, 179—181, 27 L.Ed. 656. In the course of a century or more a steadily expanding conception of public morality regarding 'governmental responsibility' has led to a 'generous policy of consent for suits against the government' to compensate for the negligence of its agents as well as to secure obedience to its contracts. Keifer & Keifer v. Reconstruction Finance Corp., 306 U.S. 381, 396, 59 S.Ct. 516, 521, 83 L.Ed. 784; see also Borchard's bibliography in 20 A.B.A.J. 747, and the materials in Judge Mack's opinion in the Pesaro, D.C., 277 F. 473, reversed, 271 U.S. 562, 46 S.Ct. 611, 70 L.Ed. 1088. 43 The course of decisions concerning sovereign immunity is a good illustration of the conflicting considerations that often struggle for mastery in the judicial process, at least implicitly. In varying degrees, at different times, the momentum of the historic doctrine is arrested or deflected by an unexpressed feeling that governmental immunity runs counter to prevailing notions of reason and justice. Legal concepts are then found available to give effect to this feeling, and one of its results is the multitude of decisions in which this Court has refused to permit an agent of the government to claim that he is pro tanto the government and therefore sheltered by its immunity. Multitudinous as are these cases and the seeming inconsistencies among them, analysis reveals certain common considerations. The cases in which claim was made that a suit against one who holds public office is in fact a suit against the government fall into well defined categories. See the Appendix, post, 337 U.S. 729 to 732, 69 S.Ct. 1481 to 1483. Though our opinions have not always been consciously directed toward this classification, it is supported not only by what was actually decided but also by much that is expressly said. Our decisions fall under these heads: 44 (1) Cases in which the plaintiff seeks an interest in property which concededly, even under the allegation of the comp aint, belongs to the government, or calls for an assertion of what is unquestionably official authority.2 45 (2) Cases in which action to the legal detriment of a plaintiff is taken by an official justifying his action under an unconstitutional statute.3 46 (3) Cases in which a plaintiff suffers a legal detriment through action of an officer who has exceeded his statutory authority.4 47 (4) Cases in which an officer seeks shelter behind statutory authorty or some other sovereign command for the commission of a common-law tort.5 48 1. The series of cases which come within the first category began with Governor of Georgia v. Madrazo, 1828, 1 Pet. 110, 7 L.Ed. 73. There a claim was made upon the Governor of Georgia, as Governor, for moneys in the treasury of the State and slaves in its possession. The Court in an opinion by Chief Justice Marshall held that the State was actually though not formally the defendant in the suit. This was a departure by Marshall from what he had said a few years earlier in Osborn v. Bank of the United States, 9 Wheat. 738, 6 L.Ed. 204, to the effect that the Eleventh Amendment is 'limited to those suits in which a State is a party on the record.' Id. 9 Wheat. at page 857, 6 L.Ed. 204. Such a formal test could not long survive experience, and it was explicitly laid to rest in Re Ayers, 123 U.S. 443, 487, et seq., 8 S.Ct. 164, 173, 31 L.Ed. 216. 49 The crucial question in this class of cases is when does a suit against one holding official office inevitably involve the exercise of powers that are his as a functionary of government. Marshall's decision in the case of the Governor of Georgia disposed of this question with his sententious characterization of the nature of the claim against the Governor: 'The demand made upon him, is not made personally, but officially.' Governor of Georgia v. Madrazo, supra, 1 Pet. 110, 123, 7 L.Ed. 73. But the answer is not always as manifest as it was in that case, for the Governor was asked to surrender moneys actually in the State's treasury and property in its possession. The fact that a defendant has no personal connection with conduct for which redress is sought is an indication that he is being sued because his position empowers him to carry out the desired relief. On the other hand, the mere fact that his official capacity is ascribed to the agent against whom relief is sought is not conclusive that he is being sued as for his sovereign. See e.g., Perkins v. Elg, 307 U.S. 325, 59 S.Ct. 884, 83 L.Ed. 1320. 50 The pervasive manifestations of modern government beget situations in which it is not always obvious whether the demand made upon an individual is, in Marshall's phraseology, 'not made personally, but officially.' Such an ambiguity as to the meaning of particular circumstances is a commonplace task for the judicial process. The governing principle is clear enough. If a defendant is asked to transfer the possession or title of property which is the Government's, judged by the conventional tests of possession or ownership, or if he is asked to exercise authority with which the State has invested him and the desired action is in fact governmental action so far as an individual is ever pro tanto the impersonal government, such demands are effectively demands upon the sovereign, which require the sovereign's consent as a prerequisite to the grant of judicial remedies. 51 2. To the second category belong the cases where an official asserts the authority of a statute for his action but the injured plaintiff challenges the constitutionality of the statute. Threatened injury will then be enjoined if the plaintiff otherwise satisfies the requirements for equitable intervention. Allen v. Baltimore & O.R. Co., 114 U.S. 311, 5 S.Ct. 925, 29 L.Ed. 200; Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362, 14 S.Ct. 1047, 38 L.Ed. 1014; Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714, 13 L.R.A., N.S., 932, 14 Ann.Cas. 764; Rickert Rice Mills Co. v. Fontenot, 297 U.S. 110, 56 S.Ct. 374, 80 L.Ed. 513. So also recovery may be had of property in an action against an official when the statute under which the seizure of the property was made is unconstitutional. Poindexter v. Greenhow, 114 U.S. 270, 5 S.Ct. 903, 29 L.Ed. 185. In these cases the suit against one holding office is deemed 'a suit against him personally, as a wrongdoer, and not against the state.' Ex parte Young, supra, 209 U.S. 123, 151, 28 S.Ct. 441, 450, 52 L.Ed. 714, 13 L.R.A., N.S., 932, 14 Ann.Cas. 764. 52 These cases likewise apply a principle that is clear. There is an appearance of inconsistency in some of the cases only because opinions also are prey to the frailties of composition. Familiar phrases are not always used with critical precision or with due relevance to the circumstances of a particular case. 53 Specifically, there are instances where the unconstitutionality of a statute was conceded and yet the language of sovereign immunity was invoked to bar suit. See, e.g., State of North Carolina v. Temple, 134 U.S. 22, 10 S.Ct. 509, 33 L.Ed. 849; Christian v. Atlantic & N.C.R. Co., 133 U.S. 233, 10 S.Ct. 260, 33 L.Ed. 589; New York Guaranty & Indemnity Co. v. Steele, 134 U.S. 230, 10 S.Ct. 511, 33 L.Ed. 891. These cases do not qualify the principle of the cases in category two. Regard for the facts of these cases brings them within the first category because the nature of the relief requested makes them either cases in which Government property would have to be transferred, or cases where the person sued could satisfy the court decree only by acting in an official capacity. The tortfeasor, that is, is not immunized because he happened to hold office, but because the tort cannot be redressed, or if threatened, averted, without bringing into operation governmental machinery. 54 Thus, even though a plaintiff's rights under a bond are unconstitutionally sought to be diminished, he cannot have his bond respected if to do so a court would have to order the levying and collecting of a tax. Only the State can exact taxes, and that sovereign function cannot be enforced without the State's consent by pretending to sue a tax collector as an individual even though the individual sued had the duty, under the statute, to collect the tax. State of North Carolina v. Temple, 134 U.S. 22, 10 S.Ct. 509, 33 L.Ed. 849. Again, if title to property is in the Government, a suit to secure transfer of that property to the plaintiff will not lie against an official sued as an individual even though the State acquired title by way of an unconstitutional statute. Cunningham v. Macon & Brunswick R. Co., 109 U.S. 446, 3 S.Ct. 292, 609, 27 L.Ed. 992; Christian v. Atlantic & N.C.R. Co., 133 U.S. 233, 10 S.Ct. 260, 33 L.Ed. 589; see Land v. Dollar, 330 U.S. 731, 737-738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209. So, also, if the relief sought by an injured plaintiff would involve, in part at least, destruction of the Government's interest in property, that part of relief cannot be granted even though a tort committed by a governmental agent gave rise to the injury. Belknap v. Schild, 161 U.S. 10, 16 S.Ct. 443, 40 L.Ed. 599; Hopkins v. Clemson Agricultural College, 221 U.S. 636, 31 S.Ct. 654, 55 L.Ed. 890, 35 L.R.A.,N.S., 243. To the extent that relief can be granted without affecting property rights of a State, not a consenting party to a controversy, an action is not barred. Hopkins v. Clemson Agricultural College, supra, 221 U.S. 636, 649, 31 S.Ct. 654, 659, 55 L.Ed. 890, 35 L.R.A.,N.S., 243; see International Postal Supply Co. v. Bruce, 194 U.S. 601, 605-606, 24 S.Ct. 820, 821, 48 L.Ed. 1134. 55 Since the cases to which reference has just been made usually involve State debts and money in a State treasury, they have served to sponsor the proposition that a suit will not be permitted where the relief sought would 'expend itself on the public treasury or domain, or interfere with the public administration.' Land v. Dollar, 330 U.S. 731, 738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209. This is a way of saying that a court cannot entertain an action, when the sovereign has not consente to be sued, if the judgment sought from the court would require an official to do that which he could only do by virtue of the fact that he is an official, that quod hoc, he is the State. But the statement quoted does not mean that the mere fact that a State's revenue is adversely affected, is conclusive of a court's jurisdiction to entertain suit against one who happens to hold a public office. For example, in Board of Liquidation v. McComb, 92 U.S. 531, 23 L.Ed. 623, a bondholder was permitted to enjoin an issue of bonds which would have reduced the value of his holdings because the issue was authorized by a statute which offended the impairment-of-obligation clause. And see Allen v. Baltimore & O.R. Co., 114 U.S. 311, 5 S.Ct. 925, 29 L.Ed. 200; Atchison, T. & S.F.R. Co. v. O'Connor, 223 U.S. 280, 32 S.Ct. 216, 56 L.Ed. 436, Ann.Cas.1913C, 1050. And suits have lain to obtain public lands where the decree involved no discretion on the part of the individual whom the decree bound. Santa Fe Pac. R. Co. v. Fall, 259 U.S. 197, 42 S.Ct. 466, 66 L.Ed. 896; Noble v. Union River Logging R. Co., 147 U.S. 165, 13 S.Ct. 271, 37 L.Ed. 123; Payne v. Central Pac. R. Co., 255 U.S. 228, 41 S.Ct. 314, 65 L.Ed. 598. 56 The matter boils down to this. The federal courts are not barred from adjudicating a claim against a governmental agent who invokes statutory authority for his action if the constitutional power to give him such a claim of immunity is itself challenged. Sovereign immunity may, however, become relevant because the relief prayed for also entails interference with governmental property or brings the operation of governmental machinery into play. The Government then becomes an indispensable party and without its consent cannot be implicated. See Mr. Justice Brandeis in Morrison v. Work, 266 U.S. 481, 486-487, 45 S.Ct. 149, 151, 152, 69 L.Ed. 394. 57 It should also be noted that a cause of action which would, for one reason or another fail, if brought against a private agent, is not saved because it is brought against one holding public office purporting to act under an unconstitutional statute. The action may fail because there is no 'case' or 'controversy,'6 or because the plaintiff has not suffered invasion of a legally protected interest,7 or because the foundation for equitable relief is wanting,8 or because the particular defendant has committed no wrong.9 Such situations present no problem of sovereign immunity, but language pertaining to sovereign immunity sometimes creeps into opinions disposing of them. 58 3. Recovery has been sustained where, although the official acts under a valid statute, he actually exceeded the authority with which the statute had invested him. An action then lies against the agent because 'he is not sued as, or because he is, the officer of the government, but as an individual, and the court is not ousted of jurisdiction because he asserts authority as such officer. To make out his defense, he must show that his authority was sufficient in law to protect him.' Pennoyer v. McConnaughy, 140 U.S. 1, 14, 11 S.Ct. 699, 703, 35 L.Ed. 363; Scully v. Bird, 209 U.S. 481, 28 S.Ct. 597, 52 L.Ed. 899; Philadelphia Co. v. Stimson, 223 U.S. 605, 32 S.Ct. 340, 56 L.Ed. 570. Here also the traditional criteria for judicial action are prerequisite; see, e.g., State of Louisiana v. McAdoo, 234 U.S. 627, 34 S.Ct. 938, 58 L.Ed. 1506, if they are not satisfied the question of sovereign immunity does not emerge. And if the relief necessarily implicates a resort to State funds the State becomes an indispensable party and without its consent the suit must fail. See State of Louisiana v. McAdoo, supra; Lankford v. Platte Iron Works, 235 U.S. 461, 35 S.Ct. 173, 59 L.Ed. 316. 59 4. The fourth category of cases brings us to the controversy immediately before the Court and demands detailed analysis. These are the cases, it will be recalled, in which an official seeks to screen himself behind the sovereign in a suit against him based on the commission of a common-law tort. See Appendix, Part II, C, post, 69 S.Ct. 1483. A plaintiff's right 'under general law to recover possession of specific property wrongfully withheld' may be enforced against an official and he cannot plead the sovereign's immunity against the court's power to afford a remedy. Land v. Dollar, 330 U.S. 731, 736, 67 S.Ct. 1009, 1011, 91 L.Ed. 1209; Belknap v. Schild, 161 U.S. 10, 18—20, 16 S.Ct. 443, 445, 446, 40 L.Ed. 599; Hopkins v. Clemson Agricultural College, 221 U.S. 636, 643, 31 S.Ct. 654, 656, 55 L.Ed. 890, 35 L.R.A.,N.S., 243. 60 The starting point of this line of cases is, United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171. Familiar as that case is, its controlling facts bear rehearsal. The Arlington estate of General Robert E. Lee was seized for nonpayment of taxes. These taxes had in fact been tendered by a friend, but the official had interpreted his authority as permitting payment of the taxes only by the record owner. After seizure, the United States established a fort and cemetery on the land. The plaintiff, in whom title to the Arlington estate vested if its seizure could not be justified, brought an action of ejectment against the governmental custodians of the estate. After the overruling of a suggestion by the Attorney General of the United States that the Circuit Court was without jurisdiction because the property was in possession of the United States, the action was sustained against the defendants since they could not justify their possession by proof of a valid title in the Government. This Court affirmed, holding that the lower court was competent to decide the issues between the parties without the need of impleading the Government whose consent was withheld. 61 While there was some talk in the Lee opinion, as well as in some of the cases which followed that decision, about taking property without compensation, the basis of the action was that the defendants were ordinary tortfeasors, not immunized for their wrongful invasion of the plaintiff's property by the fact that they claimed to have acted on behalf of the Government.10 This group of cases is quite different from those in which the plaintiff claimed that the defendant, purporting to act in an official capacity, exceeded the authority which a statute conferred upon him, or that the statute under which he justified his action exceeded the power of the legislature to confer such authority. In this class of cases the governmental agent had valid statutory authority but he determined erroneously the condition which had to exist before he could exercise it. The basis of action in this class of cases is the defendant's personal responsibility for the commission of a tort, which makes it irrelevant that by waiving the case against the governmental agent the plaintiff might choose to sue the Government as for a contract. A detailed consideration of four recent cases should leave no doubt regarding the settled course and decision in conformity with this principle. 62 (a) In Sloan Shipyards Corp. v. United States Fleet Corp., 258 U.S. 549, 42 S.Ct. 386, 66 L.Ed. 762, the controversy arose in connection with a contract between Sloan Shipyards and the Fleet Corporation, a Government corporation. A proviso in the contract authorized the United States to take over the plant and complete the contract on Sloan Shipyards' failure to perform. Under a statute the United States could also condemn the land and the business, if that were deemed necessary for the successful conduct of the war. That would bring into play a right to compensation enforceable in the Court of Claims. The Fleet Corporation seized the plaint, but it was not made manifest that the seizure of the plant was an exercise of the Government's power of condemnation. Sloan Shipyards brought suit for the return of the property. The lower courts treated this as a suit for compensation, pursuable as such against the Government, in the Court of Claims. This Court, speaking through Mr. Justice Holmes, reversed, took the bill on its face as one based on the wrongful acts of the Fleet Corporation and as such entertainable regardless of the fact that the conduct of the Fleet Corporation might also give rise to a claim for compensation against the Government.11 63 This decision, which had thorough consideration here, would have to be overruled if the theory now proposed for this class of cases is to be accepted. The crux of the Court's opinion leaves no room for doubt: 'The plaintiffs are not suing the United States but the Fleet Corporation, and if its act was unlawful, even if they might have sued the United States, they are not cut off from a remedy against the agent that did the wrongful act. In general the United States cannot be sued for a tort, but its immunity does not extend to those that acted in its name. It is not impossible that the Fleet Corporation purported to act under the contract giving it the right to take possession in certain events, but that the plaintiffs can show that the events have not occurred.' 258 U.S. 549, 567—568, 42 S.Ct. 386, 388, 66 L.Ed. 762. 64 (b) So, too, Goltra v. Weeks, 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074, would have to go by the board if the theory now proposed were accepted. The Government had leased its barges for operation by the plaintiff. Following a seizure of some of the barges and a threat to seize the rest for alleged failure to comply with the lease terms, the plaintiff brought a bill against the Secretary of War and the Chief of Engineers to enjoin the threatened seizure and to secure restoration of the barges already seized. This Court found that it was error for the Court of Appeals to hold that the United States was a necessary party and to have dismissed the bill for that reason. The governing principle was thus formulated by Mr. Chief Justice Taft: 'The bill was suitably framed to secure the relief from an alleged conspiracy of the defendants without lawful right to take away from the plaintiff the boats of which by lease or charter he alleged that he had acquired the lawful possession and enjoyment for a term of five years. He was seeking equitable aid to avoid a threatened trespass upon that property by persons who were government officers. If it was a trespass, then the officers of the government should be restrained whether they professed to be acting for the government or not. Neither they nor the government which they represent could trespass upon the property of another, and it is well settled that they may be stayed in their unlawful proceeding by a court of competent jurisdiction, even though the United States for whom they may profess to act is not a party and can not be made one. By reason of their illegality, their acts or threatened acts are personal and derive no official justification from their doing them in asserted agency for the government.' 271 U.S. 536, 544, 46 S.Ct. 613, 616, 70 L.Ed. 1074. 65 (c) This line of cases, beginning with United States v. Lee, supra, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171, was again followed in Ickes v. Fox, 300 U.S. 82, 57 S.Ct. 412, 81 L.Ed. 525. There a bill was sustained against the defendant, the Secretary of the Interior, based on the claim that compliance by the plaintiff with the terms of an agreement made with a predecessor Secretary of the Interior rendered the Secretary's action a trespass and as such enjoinable, though the action was justified as a governmental prerogative. In reaching this result, the Court specifically referred to the principles formulated in Goltra v. Weeks, above quoted. 66 (d) Only the other day this Court decided Land v. Dollar, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209. There is was ruled that a claim by the plaintiff for the recovery of the possession of property physically controlled by members of the United States Maritime Commission but alleged to have been wrongfully withheld was not inherently a suit against the Government and gave jurisdiction to the court 'to determine its jurisdiction by proceeding to a decision on the merits'—that is to determine whether the plaintiffs' claim that withholding of the pledged property was, under the circumstances, tortious and therefore subject to relief against the agents as individuals. 330 U.S. at page 739, 67 S.Ct. at page 1013, 91 L.Ed. 1209. The Court once more applied the principle of United States v. Lee, supra, reinforced by reference to the cases that apply the Lee doctrine, including Sloan Shipyards Corp. v. United States Fleet Corp., supra, Goltra v. Weeks, supra, and Ickes v. Fox, supra. It also pointed out that the fact that there existed a remedy in the Court of Claims against the Government was irrelevant. 330 U.S. at page 738, 67 S.Ct. at page 1012, 91 L.Ed. 1209. 67 In each of these cases this Court sanctioned a suit against an officer of the Government merely because the officer misconceived the facts, or misapplied the legal principles, on which rested the plaintiff's right 'under general law to recover possession of specific property wrongfully withheld.' Land v. Dollar, supra, 330 U.S. at page 736, 67 S.Ct. at page 1011, 91 L.Ed. 1209. Under such circumstances an officer acquires no immunity even though he committed a tort while attempting to discharge what would be his duty if he were correct on his assumption as to the ownership of the property or as to the right to its possession under the legal instruments governing the transaction. See Holmes, J., in Miller v. Horton, 152 Mass. 540, 26 N.E. 100, 10 L.R.A. 116, 23 Am.St.Rep. 850; Belknap v. Schild, 161 U.S. 10, 18—19, 16 S.Ct. 443, 445, 446, 40 L.Ed. 599; Hopkins v. Clemson Agricultural College, 221 U.S. 636, 643—645, 31 S.Ct. 654, 656, 657, 55 L.Ed. 890, 35 L.R.A.,N.S., 243; Sloan Shipyards Corp. v. United States Fleet Corp., 258 U.S. 549, 567, 42 S.Ct. 386, 388, 66 L.Ed. 762. In this class of cases the officer can escape liability only if 'special remedies have been provided by statute that displace those th t otherwise would be at the plaintiff's command.' Sloan Shipyards Corp. v. United States Fleet Corp., supra, 258 U.S. at page 567, 42 S.Ct. at page 388, 66 L.Ed. 762. When there is such a special remedy the suit against the officer is barred not because he enjoys the immunity of the sovereign but because the sovereign can constitutionally change the traditional rules of liability for the tort of the agent by providing a fair substitute. Crozier v. Fried Krupp Aktiengesselschaft, 224 U.S. 290, 32 S.Ct. 488 56 L.Ed. 771; Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 48 S.Ct. 194, 72 L.Ed. 303. But the general statute permitting suit in the Court of Claims in certain instances against the Government is not a statute that provides that remedies otherwise at the plaintiff's command are to be displaced.12 A holding that the availability of an action for monetary damages in the Court of Claims against the United States prevents a suit at law, or, if the necessary requisites for equity jurisdiction are present, in equity, against the governmental agent, would be as novel as it is indefensible in the light of the settled course of decisions. Indeed, this argument is not novel; it has been explicitly negatived in at least two cases. See Sloan Shipyards Corp. v. United States Fleet Corp., 258 U.S. 549, 567, 568, 42 S.Ct. 386, 388, 66 L.Ed. 762; Land v. Dollar, 330 U.S. 731, 738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209. 68 'Sovereign immunity' carries an august sound. But very recently we recognized that the doctrine is in 'disfavor.' Federal Housing Administration v. Burr, 309 U.S. 242, 245, 60 S.Ct. 488, 490, 84 L.Ed. 724.13 It ought not to be extended by discrediting a long line of decisions. No considerations of policy warrant the overruling of United States v. Lee, supra, and th cases which have applied it in giving a remedy for wrongdoing without harm to any public interest that deserves protection. To overrule the Lee case would at least have the merit of candor. To attempt to explain it on the ground that the Government itself was not suable for the wrongdoing at the time of the Lee decision is to invent a new theory to explain away a decision which has held its ground for nearly seventy years. 69 This liability for torts committed by defendants even though they conceive themselves to be acting as officials and for the public good, rests ultimately on the conviction that the policy behind the immunity of the sovereign from suit without its consent does not call for disregard of a citizen's right to pursue an agent of the government for a wrongful invasion of a recognized legal right unless the legislature deems it appropriate to displace the right of suing the individual defendant with the right to sue the Government. The fact that the governmental agent cannot claim the immunity of the sovereign of course does not apell liability, under all circumstances, for the discharge of what he conceived to be his duty. See, e.g., Seavey v. Preble, 64 Me. 120; Fields v. Stokley, 99 Pa. 306, 44 Am.Rep. 109; the conflicting considerations are presented in Miller v. Horton, 152 Mass. 540, 26 N.E. 100, 10 L.R.A. 116, 23 Am.St.Rep. 850. Similarly, equitable considerations bearing on the propriety of granting the extraordinary remedy of an injunction may here come into play as is true whenever a private claim cuts across the public interest.14 But these are matters wholly beside the issue of sovereign immunity. 70 Of course where the United States is the owner in possession of property a court cannot interfere without the Government's consent. But if it is to be denied that a court cannot decide the question, when properly presented, whether property held by an official belongs to the plaintiff, Goltra v. Weeks, Sloan Shipyards Corp. v. United States, Ickes v. Fox, Land v. Dollar, and the other cases cited in Part II, C of the Appendix, post, 337 U.S. 732, 69 S.Ct. p. 1483, must be overruled. 71 Only the other day we said: 'Where the right to possession or enjoyment of property under general law is in issue, and the defendants claim as officers or agents of the sovereign, the rule of United States v. Lee, supra, has been repeatedly approved. * * * In U ited States v. Lee, supra, record title of the land was in the United States and its officers were in possession. The force of the decree in that case was to grant possession to the private claimant. Though the judgment was not res judicata against the United States, * * * it settled as between the parties the controversy over possession. Precisely the same will be true here, if we assume the allegations of the complaint are proved.' Land v. Dollar, supra, 330 U.S. at page 737, 67 S.Ct. at page 1012, 91 L.Ed. 1209. 72 When a pleading raises a substantial claim that the defendant is wrongfully withholding from the plaintiff property belonging to him, the defendant has not heretofore been permitted to shield himself behind the immunity of the sovereign. Only after the preliminary question of ownership is decided against the plaintiff does the claim of sovereign immunity come into play. Only then can it be said that the decree will affect property of the sovereign. 73 The Court tries to explain away Land v. Dollar, supra, by suggesting that it was a case where the officers acted in excess of their authority although the opinion in that case makes clear that even if the officers had authority there still remained the issue whether the shares of stock were sold or pledged to the United States. If the latter, to hold after satisfaction of the pledge would be tortious, and the stock could be recovered in the suit against the defendants. The Court seeks to avoid the decision in Ickes v. Fox, supra, by saying that the ground of decision is not made clear. But not even these most dubious arguments can explain away Goltra v. Weeks, 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074. Accordingly, the Court impliedly overrules that decision. No reason of policy is vouchsafed for overruling a decision that carries the authority that the Goltra case does. It was based on a long series of prior cases, it was decided by a unanimous Court and delivered by a Chief Justice who brought to the Court from his Presidential experience a partiality toward freedom for executive action, as evinced by his opinion in the contemporaneous case of Myers v. United States, 272 U.S. 52, 47 S.Ct. 21, 71 L.Ed. 160. The Goltra case has since been frequently, and always approvingly, cited, most recently in Land v. Dollar, supra, as an application of the Lee doctrine. See also Ickes v. Fox, 300 U.S. 82, 97, 57 S.Ct. 412, 417, 81 L.Ed. 525. The Goltra case is now thrown into the discard because it did not cite Goldberg v. Daniels, 231 U.S. 218, 34 S.Ct. 84, 58 L.Ed. 191. That earlier case is deemed in conflict with the later Goltra decision and therefore the later case, so we are told, must yield to the earlier case. One would suppose that the failure of a fulldress opinion in a later case, which was thoroughly argued and not hastily decided, to cite an earlier opinion would not be attributed either to the Court's unawareness of the earlier opinion or its silent overruling of it. That the Court could not have been unaware of the decision in the Goldberg case is incontestably proved by the fact that it was referred to in the briefs in the Goltra case. That there was not obvious inconsistency between the two decisions is indicated by the fact that Mr. Justice Holmes, who wrote the Goldberg opinion joined in the Goltra opinion. It is too much to assume that there was concerted silence about the Goldberg decision by the Court in Goltra. 74 A more obvious explanation lies on the surface. Goldberg was not cited in Goltra for the conclusive reason that Goldberg had nothing to do with Goltra. In the Goldberg case the Court, on the basis of the pleadings before it, was dealing with a suit where 'the United States is the owner, in possession of the vessel.' 231 U.S. 218, 221—222, 34 S.Ct. 84, 58 L.Ed. 191. Accordingly, the suit was not for a tortious withholding of the plaintiff's property and the Government's immunity barred suit. In Goltra, on the contrary, the claim was for the delivery of property allegedl belonging to the plaintiff and tortiously in possession of the individual defendants, and the Court held that the plaintiff is entitled to establish such a claim as he can, 'even though the United States for whom they (the defendants) may profess to act is not a party and can not be made one.' 271 U.S. at page 544, 46 S.Ct. at page 616, 70 L.Ed. 1074. That is this case. 75 As is true of the present case, the right of control over property may depend on compliance with the terms of a contract. The fact of compliance may rest, certainly in the first instance, in the judgment of a particular official. But that would not authorize him to rescind a valid contract if there had been full compliance. Of course, even that power may be conferred by agreement or by statute. But in the absence of such an agreement, or such a provision in a statute, a plaintiff may have redress against a defendant who has wrongfully rescinded a valid contract fully performed if a property right of the plaintiff is thereby tortiously affected. He may also have his day in court if he denies the right of an official to determine definitively want of compliance, when the issue of compliance is decisive of the defendant's alleged wrongdoing. A these are precisely the issues tendered by this complaint. It is no answer at this stage of the case, to say that it was in fact within the agent's authority to do what he did. If a valid statute gives him power to withhold property which belongs to another, or if he has the power to revest title in the Government after a valid contract has vested it in another then of course he is free from liability. But these are matters that go to the merits. The very purpose of this suit is to determine whether what the governmental agent did here was within his power. To decide whether the 'authority is rightfully assumed is the exercise of jurisdiction, and must lead to the decision of the merits of the question.' United States v. Lee, 106 U.S. 196, 219, 1 S.Ct. 240, 259, 27 L.Ed. 171. The issues outlined above are issues which may be contested against a defendant, even though he hold office. Noble v. Union River Logging R. Co., 147 U.S. 165, 13 S.Ct. 271, 37 L.Ed. 123; Payne v. Central Pacific R. Co., 255 U.S. 228, 41 S.Ct. 314, 65 L.Ed. 598; Santa Fe Pacific R. Co. v. Fall, 259 U.S. 197, 42 S.Ct. 466, 66 L.Ed. 896; Land v. Dollar, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209. 76 The District Court therefore had jurisdiction over the controversy because only after a consideration of the merits of the respondent's claim could it be determined whether the decree would affect Government property. Since that court has jurisdiction it can also determine whether a cause of action was stated and whether there are any considerations which would cause a court of equity not to grant the relief requested. 77 I would affirm the judgment of the Court of Appeals. 78 Appendix. 79 Cases since Osborn v. Bank of the United States, 1824, 9 Wheat. 738, 6 L.Ed. 204, concerning suits against governmental agents in which defense of sovereign immunity was raised. 80 I. Cases in which jurisdiction was found wanting. 81 A. Plaintiff sought interest in property which concededly belonged to the Government, or demanded relief calling for an assertion of what was unquestionably official authority. 82 Governor of Georgia v. Madrazo, 1828, 1 Pet. 110, 7 L.Ed. 73; State of Louisiana v. Jumel, 107 U.S. 711, 2 S.Ct. 128, 27 L.Ed. 448; Cunningham v. Macon & Brunswick R. Co., 109 U.S. 446, 3 S.Ct. 292, 27 L.Ed. 992; Hagood v. Southern R. Co., 117 U.S. 52, 6 S.Ct. 608, 29 L.Ed. 805; Christian v. Atlantic & N.C.R. Co., 133 U.S. 233, 10 S.Ct. 260, 33 L.Ed. 589; State v. North Carolina v. Temple, 134 U.S. 22, 10 S.Ct. 509, 33 L.Ed. 849; New York Guaranty & Indemnity Co. v. Steele, 134 U.S. 230, 10 S.Ct. 511, 33 L.Ed. 891; Belknap v. Schild, 161 U.S. 10, 16 S.Ct. 443, 40 L.Ed. 599; State of Oregon v. Hitchcock, 202 U.S. 60, 26 S.Ct. 568, 50 L.Ed. 935; State of Louisiana v. Garfield, 211 U.S. 70, 9 S.Ct. 31, 53 L.Ed. 92; Murray v. Wilson, 213 U.S. 151, 29 S.Ct. 458, 53 L.Ed. 742; Hopkins v. Clemson Agricultural College, 221 U.S. 636, 31 S.Ct. 654, 55 L.Ed. 890, 35 L.R.A., N.S., 243; Goldberg v. Daniels, 231 U.S. 218, 34 S.Ct. 84, 58 L.Ed. 191; State of Louisiana v. McAdoo, 234 U.S. 627, 34 S.Ct. 938, 58 L.Ed. 1506; Lankford v. Platte Iron Works, 235 U.S. 461, 35 S.Ct. 173, 59 L.Ed. 316; Wells v. Roper, 246 U.S. 335, 38 S.Ct. 317, 62 L.Ed. 755; Morrison v. Work, 266 U.S. 481, 45 S.Ct. 149, 69 L.Ed. 394; State of Minnesota v. United States, 305 U.S. 382, 59 S.Ct. 292, 83 L.Ed. 235. 83 B. Decisions couched in terms of sovereign immunity or later so interpreted but which actually turned on other considerations. 84 1. No legally protected interest of the plaintiff was affected. 85 State of Louisiana v. McAdoo, 234 U.S. 627, 34 S.Ct. 938, 58 L.Ed. 1506; Tennessee Electric Power Co. v. Tennessee Valley Authority, 306 U.S. 118, 59 S.Ct. 366, 83 L.Ed. 543. 86 2. The particular defendant was unrelated to the plaintiff's claim because he was not threatening plaintiff's interest. 87 In re Ayers, 123 U.S. 443, 8 S.Ct. 164, 31 L.Ed. 216; Fitts v. McGhee, 172 U.S. 516, 19 S.Ct. 269, 43 L.Ed. 535; Worchester County Trust Co. v. Riley, 302 U.S. 292, 58 S.Ct. 185, 82 L.Ed. 268; Mine Safety Appliance Co. v. Forrestal, 326 U.S. 371, 66 S.Ct. 219, 90 L.Ed. 140 (alternative reason). 88 3. Nature of the adjudication required presence of the sovereign as a necessary party. 89 Christian v. Atlantic & North Carolina R. Co., 133 U.S. 233, 10 S.Ct. 260, 33 L.Ed. 589; Stanley v. Schwalby, 162 U.S. 255, 16 S.Ct. 754, 40 L.Ed. 960; State of New Mexico v. Lane, 243 U.S. 52, 37 S.Ct. 348, 61 L.Ed. 588. 90 4. Case dismissed for want of ordinary requirements of equity jurisdiction. 91 Hawks v. Hamill, 288 U.S. 52, 53 S.Ct. 240, 77 L.Ed. 610; Morrison v. Work, 266 U.S. 481, 45 S.Ct. 149, 69 L.Ed. 394 (alternative ground). 92 C. Cases in which legislation specifically provided that only the sovereign itself could be sued for action authorized by statute. 93 Crozier v. Fried Krupp Aktiengesell-schaft, 224 U.S. 290, 32 S.Ct. 488, 56 L.Ed. 771; Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 48 S.Ct. 194, 72 L.Ed. 303. 94 D. Cases in which the plaintiff pursued a statutory procedure indicating consent to suit against the sovereign and is therefore bound by its limitations. 95 Smith v. Reeves, 178 U.S. 436, 20 S.Ct. 919, 44 L.Ed. 1140; Great Northern Life Ins. Co. v. Read, 322 U.S. 47, 64 S.Ct. 873, 88 L.Ed. 1121; Ford Motor Co. v. Department of Treasury of Indiana, 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389; Kennecott Copper Corp. v. State Tax Comm'n, 327 U.S. 573, 66 S.Ct. 745, 90 L.Ed. 862. 96 II. Cases in which jurisdiction was entertained. 97 A. Cases in which an official justified his action under an unconstitutional statute. 98 Osborn v. Bank of the United States, 1824, 9 Wheat, 738, 6 L.Ed. 204; Board of Liquidation v. McComb, 92 U.S. 531, 23 L.Ed. 623; Poindexter v. Greenhow, 114 U.S. 270, 5 S.Ct. 903, 29 L.Ed. 185; White v. Greenhow, 114 U.S. 307, 5 S.Ct. 923, 29 L.Ed. 199; Chaffin v. Taylor, 114 U.S. 309, 5 S.Ct. 924, 29 L.Ed. 198; Allen v. Baltimore & O.R. Co., 114 U.S. 311, 5 S.Ct. 925, 29 L.Ed. 200; Pennoyer v. McConnaughy, 140 U.S. 1, 11 S.Ct. 699, 35 L.Ed. 363; Ex parte Tyler, 149 U.S. 164, 13 S.Ct. 785, 37 L.Ed. 689; Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362, 14 S.Ct. 1047, 38 L.Ed. 1014; Scott v. Donald, 165 U.S. 58, 17 S.Ct. 265, 41 L.Ed. 632; Scott v. Donald, 165 U.S. 107, 17 S.Ct. 262, 41 L.Ed. 648; Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819; Prout v. Starr, 188 U.S. 537, 23 S.Ct. 398, 47 L.Ed. 584; Mississippi R. Co. v. Illinois C.R. Co., 203 U.S. 335, 27 S.Ct. 90, 51 L.Ed. 209; Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714, 13 L.R.A., N.S., 932, 14 Ann.Cas. 764; General Oil Co. v. Crain, 209 U.S. 211, 28 S.Ct. 475, 52 L.Ed. 754; Ludwig v. Western Union Telegraph Co., 216 U.S. 146, 30 S.Ct. 280, 54 L.Ed. 423; Western Unio Telegraph Co. v. Andrews, 216 U.S. 165, 30 S.Ct. 286, 54 L.Ed. 430; Herndon v. Chicago, R.I. & Pac. R. Co., 218 U.S. 135, 30 S.Ct. 633, 54 L.Ed. 970; Truax v. Raich, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131, L.R.A.1916D, 545, Ann.Cas.1917B, 283; Tanner v. Little, 240 U.S. 369, 36 S.Ct. 379, 60 L.Ed. 691; Greene v. Louisville & I.R. Co., 244 U.S. 499, 37 S.Ct. 673, 61 L.Ed. 1280, Ann.Cas.1917E, 88; Public Service Co. v. Corboy, 250 U.S. 153, 39 S.Ct. 440, 63 L.Ed. 905; Sterling v. Constantin, 287 U.S. 378, 53 S.Ct. 190, 77 L.Ed. 375; Rickert Rice Mills Co. v. Fontenot, 297 U.S. 110, 56 S.Ct. 374, 80 L.Ed. 513. 99 B. Cases in which an officer exceeded his statutory authority. 100 Rolston v. Missouri Fund Commissioners, 120 U.S. 390, 7 S.Ct. 599, 30 L.Ed. 721; Scully v. Bird, 209 U.S. 481, 28 S.Ct. 597, 52 L.Ed. 899; Atchison, T. & S.F.R. Co. v. O'Connor, 223 U.S. 280, 32 S.Ct. 216, 56 L.Ed. 436, Ann.Cas.1913C, 1050; Philadelphia Co. v. Stimson, 223 U.S. 605, 32 S.Ct. 340, 56 L.Ed. 570; Waite v. Macy, 246 U.S. 606, 38 S.Ct. 395, 62 L.Ed. 892; Payne v. Central Pac R. Co., 255 U.S. 228, 41 S.Ct. 314, 65 L.Ed. 595; Santa Fe Fac. R. Co. v. Fall, 259 U.S. 197, 42 S.Ct. 466, 66 L.Ed. 896; Work v. State of Louisiana, 269 U.S. 250, 46 S.Ct. 92, 70 L.Ed. 259. 101 C. Cases in which an officer sought shelter behind statutory authority or some other sovereign command for the commission of a common-law tort. 102 1. Cases in which an officer was not relieved S.Ct. 418, 259; Scranton v. Wheeler, was acting for the sovereign. 103 Stanley v. Schwalby, 147 U.S. 508, 13 S.Ct. 418, 37 L.Ed. 259; Scranton v. Wheeler, 179 U.S. 141, 21 S.Ct. 48, 45 L.Ed. 126; Sloan Shipyards Corp. v. United States Fleet Corp., 258 U.S. 549, 42 S.Ct. 386, 66 L.Ed. 762; Goltra v. Weeks, 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074; Ickes v. Fox, 300 U.S. 82, 57 S.Ct. 412, 81 L.Ed. 525; Land v. Dollar, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209. 104 2. Cases in which an officer was held liable for a common-law tort, but the opinion made reference to a situation involving an unconstitutional taking. 105 United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171; Noble v. Union River Logging R. Co., 147 U.S. 165, 13 S.Ct. 271, 37 L.Ed. 123; State of South Carolina v. Wesley, 155 U.S. 542, 15 S.Ct. 230, 39 L.Ed. 254; Tindal v. Wesley, 167 U.S. 204, 17 S.Ct. 770, 42 L.Ed. 137; Hopkins v. Clemson Agricultural College, 221 U.S. 636, 31 S.Ct. 654, 55 L.Ed. 890, 35 L.R.A., N.S., 243. 1 Littlejohn resigned on November 28, 1947. On April 19, 1948, we granted the Government's motion to substitute his successor, Jess Larson, as petitioner here. 2 Domestic & Foreign Commerce Corp. v. Littlejohn, 1947, 83 U.S.App.D.C. 13, 165 F.2d 235. 3 The judgment of the Court of Appeals was not a final one, but we considered it appropriate for review here since, in our view, the jurisdictional issue was 'fundamental to the further conduct of the case.' See Land v. Dollar, 1947, 330 U.S. 731, 734, 67 S.Ct. 1009, 1010, 91 L.Ed. 1209. 4 Cf. Sloan Shipyards v. United States Fleet Corp., 1922, 258 U.S. 549, 42 S.Ct. 386, 66 L.Ed. 762, where the question was whether a corporate agency of the United States could be sued where it, not the United States, was the contractor. 5 For this reason, there obviously was no objection to the substitution in this Court of the present Administrator for his predecessor, although all the actions complained of in the complaint were taken during the predecessor's administration. 6 In re Ayers, 1887, 123 U.S. 443, 8 S.Ct. 164, 31 L.Ed. 216. As was said in State of Minnesota v. Hitchcock, 1902, 185 U.S. 373, 387, 22 S.Ct. 650, 656, 46 L.Ed. 954: '* * * whether a suit is one against a state is to be determined, not by the fact of the party named as defendant on the record, but by the result of the judgment or decree which may be entered * * *.' 7 There are, of course, limitations on the right to recover damages from public officers. See Gibson v. Reynolds, 8 Cir., 1949, 172 F.2d 95; Glass v. Ickes, 1940, 73 App.D.C. 3, 117 F.2d 273, 132 A.L.R. 1328; Harper, Torts (1933) § 298. These limitations are matters of substantive law, applicable in suits indubitably addressed to the officer, not the sovereign. They are not necessarily coincidental with the limitations on the court's jurisdiction to hear a suit directed against the sovereign. See Jennings, Tort Liability of Administrative Officers, 21 Minn.L.Rev. 263 (1937), and note the differing treatment accorded the claim for compensation and the claim for specific relief in Belknap v. Schild, 1896, 161 U.S. 10, 27, 16 S.Ct. 443, 449, 40 L.Ed. 599. 8 Whether such relief is obtainable from any Government officer on the basis of the facts set out in the complaint is, as stated, not the question here. But it may seriously be doubted whether damages could, in any event, be recovered from Jess Larson, the present War Assets Administrator or from his predecessor, Robert M. Littejohn. The complaint did not charge them with any personal wrongdoing nor even with knowledge of the alleged wrongdoing of their subordinates. Cf. Robertson v. Sichel, 1888, 127 U.S. 507, 515—516, 8 S.Ct. 1286, 1290, 32 L.Ed. 203. Since the complaint did not ask for damages but for specific relief the Administrator, in his official capacity, was of course, a proper party. Cf. Williams v. Fanning, 1947, 332 U.S. 490, 68 S.Ct. 188, 92 L.Ed. 95. 9 The complaint also asked for declaratory relief even more clearly directed at the sovereign. It was asked that the court declare that 'the sale of this coal * * * is still valid and in effect.' The Administrator, an agent for a disclosed principal, was not a party to the contract of sale. See 2 Restatement, Agency (1933) § 320. The request f r an adjudication of the validity of the sale was thus, even in form, a request for an adjudication against the sovereign. Such a declaration of the rights of the respondent vis-a -vis the United States would clearly have been beyond the court's jurisdiction. See Stanley v. Schwalby, 1896, 162 U.S. 255, 16 S.Ct. 754, 40 L.Ed. 960. We do not rest our conclusion here on the request for such a declaration, since the district court could have granted only the injunctive relief requested. 10 Land v. Dollar, 1947, 330 U.S. 731, 739, 67 S.Ct. 1009, 1013, 91 L.Ed. 1209. Since jurisdiction in this type of case does rest on the decision on the merits there can be no question that dismissal of a suit in which 'the alleged claim under the Constitution or federal statutes clearly appears to be * * * made solely for the purpose of obtaining jurisdiction or * * * is wholly insubstantial and frivolous' would be dismissal for lack of jurisdiction. See Bell v. Hood, 1946, 327 U.S. 678, 682—683, 66 S.Ct. 773, 776, 90 L.Ed. 939. 11 Of course, a suit may fail, as one against the sovereign, even if it is claimed that the officer being sued has acted unconstitutionally or beyond his statutory powers, if the relief requested cannot be granted by merely ordering the cessation of the conduct complained of but will require affirmative action by the sovereign or the disposition of unquestionably sovereign property. North Carolina v. Temple, 1890, 134 U.S. 22, 10 S.Ct. 509, 33 L.Ed. 849. 12 This case must, therefore, be clearly distinguished from cases like Noble v. Union River Logging R. Co., 1893, 147 U.S. 165, 13 S.Ct. 271, 37 L.Ed. 123. In that case, it was held that the officer being sued lacked power to refuse delivery because, under the statutory scheme, his predecessor's determination that the plaintiff was entitled to delivery was binding. A similar case would be presented here if the statute expressly provided that the Administrator's interpretations of contracts should be binding and irrevocable and if a later, or subordinate, official refused to follow a prior, binding interpretation. In such a case the issue would not be the correctness or incorrectness of the later decision under general law but simply the power of the official, under the statute, to make a decision at all. Cf. Ickes v. Fox, 1937, 300 U.S. 82, 57 S.Ct. 412, 81 L.Ed. 525. 13 Perkins v. Lukens Steel Co., 1940, 310 U.S. 113, 125, 60 S.Ct. 869, 875, 84 L.Ed. 1108. 14 Tennessee Electric Power Co. v. T.V.A., 1939, 306 U.S. 118, 137—139, 59 S.Ct. 366, 369, 370, 83 L.Ed. 543; Mine Safety Co. v. Forrestal, 1945, 326 U.S. 371, 66 S.Ct. 219, 90 L.Ed. 140. 15 Thus the Court said in Hopkins v. Clemson College, 1911, 221 U.S. 636, 643, 31 S.Ct. 654, 656, 55 L.Ed. 890, 35 L.R.A.,N.S., 243, '* * * neither a state nor an individual can confer upon an agent authority to commit a tort, so as to excuse the perpetrator.' (Emphasis added.) See also 2 Mechem, Agency (2d Ed., 1914) 1077. 16 See Philadelphia, Wilmington & Baltimore R. Co. v. Quigley, 1859, 21 How. 202, 209—210, 16 L.Ed. 73; 10 Fletcher, Cyclopedia Corporations, 1931, § 4877. The contention of the respondent in the present case is remarkably similar to that made, as regards corporate agents, in Chestnut Hill & Spring House Turnpike Co. v. Rutter, Pa.1818, 4 Serg. & R. 6, 8 Am.Dec. 675. The argument is reported as follows, id. at page 9 of 4 Serg. & R.: 'Now, a corporation never was and never can be authorized by law to commit a tort; they can invest no one with power for that purpose. If, therefore, an agent constituted for a legal purpose, inflict an injury, the corporation is no more answerable, than it would be for an act of that agent, done without any authority whatever derived from it, because being unauthorised to commit a wrong, it is out of the scope of its corporate powers.' The argumen was rejected by the Court. See also Thayer v. Boston, Mass., 1836, 19 Pick. 511, 515, 31 Am.Dec. 157. 17 The Lee case was decided in 1882. At that time there celarly was no remedy available by which he could have obtained compensation for the taking of his land. Whether compensation could be obtained today in such a case is, of course, not the issue here. 18 For this reason the availability of a remedy in the Court of Claims may, in some cases, be relevant to the question of sovereign immunity. Where the action against which specific relief is sought is a taking, or holding, of the plaintiffs' property, the availability of a suit for compensation against the sovereign will defeat a contention that the action is unconstitutional as a violation of the Fifth Amendment. Compare Hurley v. Kincaid, 1932, 285 U.S. 95, 52 S.Ct. 267, 76 L.Ed. 637. 19 Cunningha v. Macon & Brunswick R. Co., 1883, 109 U.S. 446, 451, 3 S.Ct. 292, 296, 609, 27 L.Ed. 992. The ensuing years have not made the task less difficult. See Brooks v. Dewar, 1941, 313 U.S. 354, 359, 61 S.Ct. 979, 981, 85 L.Ed. 1399; Land v. Dollar, 1947, 330 U.S. 731, 738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209. 20 Thus, in Tindal v. Wesley, 1897, 167 U.S. 204, 222, 17 S.Ct. 770, 777, 42 L.Ed. 137, the Court stated that a suit to recover the Court stated that a suit to recover possession of property owned by the plaintiff and withheld by officers of a State was analogous to a suit to enjoin the officers from enforcing an unconstitutional statute. Any other view, the Court said, would lead to the result 'that if a state, by its officers * * * should seize for public use the property of a citizen, without making or securing just compensation for him, and thus violate the constitutional provision declaring that no state shall deprive any person of property without due process of law * * * the citizen is remediless so long as the state, by its agents, chooses to hold his property * * *.' And in Scranton v. Wheeler, 1900, 179 U.S. 141, 152—153, 21 S.Ct. 48, 52, 53, 45 L.Ed. 126, the Court said that the state court 'was under a duty to inquire whether the defendant had or could have any authority in law to do what he had done; and the suit was not to be deemed one against the United States because in the consideration of that question it would become necessary to ascertain whether the defendant could constitutionally acquire from the United States authority to obstruct the plaintiff's access * * * without making or securing compensation to him. * * * 'The vital question, therefore, is * * * whether the prohibition in the Constitution of the United States, of the taking of private property for public use without just compensation, has any application to the case * * *.' 21 See, e.g., Payne v. Central Pacific R. Co., 1921, 255 U.S. 228, 238, 41 S.Ct. 314, 317, 65 L.Ed. 598, where the Court said that specific relief could be had because the Government officers had 'departed from a plain official duty,' 'through a mistaken conception of their authority,' and Santa Fe Pac. R. Co. v. Fall, 1922, 259 U.S. 197, 199, 42 S.Ct. 466, 467, 66 L.Ed. 896, where the contention was 'that the Secretary went beyond the powers conferred upon him by the statute.' The cases are myriad and it is unnecessary to review them here. 22 Poindexter v. Greenhow, 1884, 114 U.S. 270, 288, 5 S.Ct. 903, 912, 962, 29 L.Ed. 185, 207; Philadelphia Co. v. Stimson, supra, 223 U.S. 605, 32 S.Ct. 340, 56 L.Ed. 570. Although stated in reference to a suit for damages, the rule of the Lee line of cases was thus summed up by Mr. Justice Hughes, in Yearsley v. W. A. Ross Constr. Co., 1940, 309 U.S. 18, 21, 60 S.Ct. 413, 414, 84 L.Ed. 554: 'Where an agent or officer of the Government purporting to act on its behalf has been held to be liable for his conduct causing injury to another, the ground of liability has been found to be either that he exceeded his authority or that it was not validly conferred.' (Emphasis added.) 23 The Court in the Stimson case said, 223 U.S. at page 622, 32 S.Ct. at page 345, 56 L.Ed. 570: 'While the complainant's title lay at the foundation of the suit, and it would be necessary for the complainant to prove it, if denied, still, if its title to the land under water were established or admitted to be as alleged, the question would remain whether the defendant, in imposing restrictions upon the use of the property, was acting by virtue of authority validly conferred by a general act of Congress. This was the principal question which the complainant sought to have determined.' 24 The reasoning of the Goltra case is also contradicted by the conclusion reached by the Court in the converse case—where a suit is brought againstthe United States, in which it is claimed that the tortious actions of public officers, within the scope of their delegated powers, are the actions of the United States and give rise to a cause of action against it for breach of an implied contract. Portsmouth Co. v. United States, 1922, 260 U.S. 327, 43 S.Ct. 135, 67 L.Ed. 287, demonstrates that such suits cannot be defeated by arguing that the officers' actions, because tortious, are outside of their authority and hence not actions of the United States. Cf. Hooe v. United States, 1910, 218 U.S. 322, 31 S.Ct. 85, 54 L.Ed. 1055 (specific limitation on the agent's authority). See also United States v. Causby, 1946, 328 U.S. 256, 267, 66 S.Ct. 1062, 1068, 90 L.Ed. 1206. 25 Whether the actual decision in the Goltra case, on the basis of the facts there presented, was correct or not is not relevant to the disposition of the present case, and we express no opinion on that question. Goltra, unlike Goldberg, does not present a parallel to the facts in the case at bar. The action complained of there was a seizure with a strong hand which was claimed to be unconstitutional, as an arbitrary taking of property without due process of law. Indeed, the District Court took jurisdiction on the theory that the case before it, like the Lee case, was a case of unconstitutional action. There is no such claim in the present case. 26 In addition to Goltra v. Weeks, supra, three other cases are argued to be inconsistent with this principle: Sloan Shipyards v. United States Fleet Corp., 1922, 258 U.S. 549, 42 S.Ct. 386, 66 L.Ed. 762; Land v. Dollar, 1947, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209, and Ickes v. Fox, 1937, 300 U.S. 82, 57 S. t. 412, 81 L.Ed. 525. The Sloan Shipyards case is entirely inapposite. The suit there was against a corporate agency of the United States which had not acted in the name of the United States but in its own corporate name and right. The Court held only that the fact of agency did not immunize the agent from liability on its own contracts. In Land v. Dollar, where the plaintiffs alleged that they were entitled to stock held by the Maritime Commission because the stock was received by the Commission only as a pledge, it was contended that any other kind of acquisition would constitute a violation of § 207 of the Merchant Marine Act, 46 U.S.C.A. § 1117, which allegedly gave the Commission authority to acquire stock only as collateral. The complaint therefore alleged that the members of the Commission 'acted in excess of their authority as public officers.' 330 U.S. at page 738, 67 S.Ct. at page 1013, 91 L.Ed. 1209. The ground for decision in Ickes v. Fox is not altogether clear. The argument was made in that case that the Secretary of the Interior had no statutory power to overrule a determination of the rights of the plaintiffs made by his predecessor in office. 300 U.S. at page 86, 57 S.Ct. at pages 413, 417, 81 L.Ed. 525. The tortious injury to the plaintiffs was also argued, in reliance on Goltra v. Weeks, as a basis for avoiding the sovereign's immunity. The Court appears to have relied on both grounds without indicating which was controlling. It said: 'The suits * * * are brought to enjoin the Secretary of the Interior from enforcing an order, the wrongful effect of which will be to deprive respondents of vested property rights not only acquired under Congressional acts, state laws and government contracts, but settled and determined by his predecessors in office' (emphasis added). In support of the conclusion that the suit could be maintained, the Court relied first on Noble v. Union Logging R. Co., 1893, 147 U.S. 165, 13 S.Ct. 271, 37 L.Ed. 123, a decision resting entirely on the officer's lack of statutory power to overrule the decision of his predecessor. 27 There could not be since the respondent admittedly has a remedy, in a suit for breach of contract, in the Court of Claims. Such a suit, indeed, would be based on the theory that the action of the Administrator in refusing to deliver was the action of the United States and thus created a cause of action against it for breach of contract. Only if the Administrator's action was within his authority could such a suit be maintained. Hooe v. United States, 1910, 218 U.S. 322, 31 S.Ct. 85, 54 L.Ed. 1055. It has never been suggested that a suit in the Court of Claims for breach of an express contract could be defeated because the action of the officer in breaching it constituted a tort and was therefore 'unauthorized.' 28 See Brooks v. United States, 1949, 337 U.S. 49, 69 S.Ct. 918. 29 Decatur v. Paulding, 1840, 14 Pet. 497, 516, 10 L.Ed. 559. 1 The prayer for relief in the complaint is as follows: '(1) That this court issue its temporary restraining order against the defendant, his agents, assistants, deputies, and employees and all persons acting or assuming to act under their direction, enjoining and restraining them from: '(a) Carrying into effect the purported illegal and unauthorized cancellation of the sale to the plaintiff of this coal. '(b) Reselling or attempting to resell this coal to any other person whatsoever than the plaintiff, the legal owner thereof. '(c) Delivering any or all of this coal to any other person. '(2) That upon hearing of motion for a preliminary injunction that this Court continue the temporary restraining order as a preliminary injunction. '(3) That upon final hearing this Court make permanent the preliminary injunction. '(4) That upon hearing of this cause the Court decrees that: '(a) The sale of this coal to the plaintiff by letter of War Assets Administration, dated March 19, 1947, is still valid and in effect. '(b) That the purported sale to the Midland Coal Company is illegal, because title to this coal is in the plaintiff. '(c) That, in view of the delay and disruption of arrangements caused by the purported cancellation, plaintiff shall have thirty days from the date of this Court's final order in which to give shipping instructions. '(d) That the plaintiff may have such other further and different relief as may to the Court seem proper and just in the premises.' 2 E.g., Governor of Georgia v. Madrazo, 1828, 1 Pet. 110, 7 L.Ed. 73; State of Louisiana v. Jumel, 107 U.S. 711, 2 S.Ct. 128, 27 L.Ed. 448; Cunningham v. Macon & Brumswick R. Co., 109 U.S. 446, 3 S.Ct. 292, 27 L.Ed. 992; Hagood v. Southern R. Co., 117 U.S. 52, 6 S.Ct. 608, 29 L.Ed. 805; Christian v. Atlantic & North Carolina R. Co., 133 U.S. 233, 10 S.Ct. 260, 33 L.Ed. 589; State of North Carolina v. Temple, 134 U.S. 22, 10 S.Ct. 509, 33 L.Ed. 849; New York Guaranty & Indemnity Co. v. Steele, 134 U.S. 230, 10 S.Ct. 511, 33 L.Ed. 891; Belknap v. Schild, 161 U.S. 10, 16 S.Ct. 443, 40 L.Ed. 599; State of Oregon v. Hitchcock, 202 U.S. 60, 26 S.Ct. 568, 50 L.Ed. 935; Murray v. Wilson Distilling Co., 213 U.S. 151, 29 S.Ct. 458, 53 L.Ed. 742; Hopkins v. Clemson Agricultural College, 221 U.S. 636, 31 S.Ct. 654, 55 L.Ed. 890, 35 L.R.A.,N.S., 243; State of Louisiana v. McAdoo, 234 U.S. 627, 34 S.Ct. 938, 58 L.Ed. 1506; Lankford v. Platte Iron Works, 235 U.S. 461, 35 S.Ct. 173, 59 L.Ed. 316; Wells v. Roper, 246 U.S. 335, 38 S.Ct. 317, 62 L.Ed. 755; Morrison v. Work, 266 U.S. 481, 45 S.Ct. 149, 69 L.Ed. 394; see Land v. Dollar, 330 U.S. 731, 737—738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209. 3 E.g., Osborn v. Bank of the United States, 1824, 9 Wheat. 738, 6 L.Ed. 204; Board of Liquidation v. McComb, 92 U.S. 531, 23 L.Ed. 623; Poindexter v. Greenhow, 114 U.S. 270, 5 S.Ct. 903, 29 L.Ed. 185; White v. Greenhow, 114 U.S. 307, 5 S.Ct. 923, 29 L.Ed. 199; Chaffin v. Taylor, 114 U.S. 309, 5 S.Ct. 924, 29 L.Ed 198; Allen v. Baltimore & O.R. Co., 114 U.S. 311, 5 S.Ct. 925, 29 L.Ed. 200; Pennoyer v. McConnaughy, 140 U.S. 1, 11 S.Ct. 699, 35 L.Ed. 363; Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362, 14 S.Ct. 1047, 38 L.Ed. 1014; Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819; Mississippi R. Co. v. Illinois C.R. Co., 203 U.S. 335, 27 S.Ct. 90, 51 L.Ed. 209; Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714, 13 L.R.A., N.S., 932, 14 Ann.Cas. 764; Rickert Rice Mills Co. v. Fontenot, 297 U.S. 110, 56 S.Ct. 374, 80 L.Ed. 513. 4 E.g., Scully v. Bird, 209 U.S. 481, 28 S.Ct. 597, 52 L.Ed. 899; Atchison, T. & S.F.R. Co. v. O'Connor, 223 U.S. 280, 32 S.Ct. 216, 56 L.Ed. 436, Ann.Cas. 1913C, 1050; Philadelphia Co. v. Stimson, 223 U.S. 605, 32 S.Ct. 340, 56 L.Ed. 570; Waite v. Macy, 246 U.S. 606, 38 S.Ct. 395, 62 L.Ed. 892; Santa Fe Pac. R. Co. v. Fall, 259 U.S. 197, 42 S.Ct. 466, 66 L.Ed. 896; Work v. Louisiana, 269 U.S. 250, 46 S.Ct. 92, 70 L.Ed. 259. 5 E.g., United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171; State of South Carolina v. Wesley, 155 U.S. 542, 15 S.Ct. 230, 39 L.Ed. 254; Tindal v. Wesley, 167 U.S. 204, 17 S.Ct. 770, 42 L.Ed. 137; Hopkins v. Clemson Agricultural College, 221 U.S. 636, 31 S.Ct. 654, 55 L.Ed. 890, 35 L.R.A.,N.S., 243; Sloan Shipyards Corp. v. United States Fleet Corp., 258 U.S. 549, 42 S.Ct. 386, 66 L.Ed. 762; Goltra v. Weeks, 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074; Ickes v. Fox, 300 U.S. 82, 57 S.Ct. 412, 81 L.Ed. 525; Land v. Dollar, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209. In four cases before the Lee case suit was permitted against the governmental agent for trespass to property under the claim that it was owned by the government without any discussion that a question of sovereign immunity might be involved. Meigs v. M'Clung's Lessee, 1815, 9 Cranch 11, 3 L.Ed. 639; Wilcox v. Jackson, 1839, 13 Pet. 498, 10 L.Ed. 264; Brown v. Huger, U.S.1858, 21 How. 305, 16 L.Ed. 125; Grisar v. McDowell, U.S.1867, 6 Wall. 363, 18 L Ed. 863. And where the sovereign immunity argument was raised it was dismissed with 'it certainly can never be alleged, that a mere suggestion of title in a state to property, in the possession of an individual, must arrest the proceedings of the court, and prevent their looking into the suggestion, and examining the validity of the title.' United States v. Peters, U.S.1809, 5 Cranch 115, 139—40, 3 L.Ed. 53; see also The Davis, 1869, 10 Wall. 15, 19 L.Ed. 875. 6 See Fitts v. McGhee, 172 U.S. 516, 19 S.Ct. 269, 43 L.Ed. 535; see Block, Suits against Government Officers and the Sovereign Immunity Doctrine, 59 Harv.L.Rev. 1060, 1078, 1082 (1946). 7 State of Louisiana v. McAdoo, 234 U.S. 627, 34 S.Ct. 938, 58 L.Ed. 1506; In re Ayers, 123 U.S. 443, 8 S.Ct. 164, 31 L.Ed. 216. 8 Hawks v. Hamill, 288 U.S. 52, 53 S.Ct. 240, 77 L.Ed. 610; Morrison v. Work, 266 U.S. 481, 45 S.Ct. 149, 69 L.Ed. 394. 9 Fitts v. McGhee, 172 U.S. 516, 19 S.Ct. 269, 43 L.Ed. 535; Worchester County Trust Co. v. Riley, 302 U.S. 292, 58 S.Ct. 185, 82 L.Ed. 268. 10 The principle of the Lee case cannot be explained away by suggesting that at the time it was decided recovery could not be had against the United States in the Court of Claims for the misconduct of the governmental agent in seizing the Lee estate. The short and conclusive answer is that recovery against the United States could not be had today unless a whole series of cases is to be ov rruled. See, e.g., Tempel v. United States, 248 U.S. 121, 130, 39 S.Ct. 56, 59, 63 L.Ed. 162, and the cases cited therein; Russell v. United States, 182 U.S. 516, 535, 21 S.Ct. 899, 906, 45 L.Ed. 1210; Harley v. United States, 198 U.S. 229, 235, 25 S.Ct. 634, 636, 49 L.Ed. 1029; Hill v. United States, 149 U.S. 593, 13 S.Ct. 1011, 37 L.Ed. 862; United States v. North American Trans. & Trading Co., 253 U.S. 330, 335, 40 S.Ct. 518, 520, 64 L.Ed. 935; Juragua Iron Co. v. United States, 212 U.S. 297, 29 S.Ct. 385, 53 L.Ed. 520. And there is nothing in the Federal Torts Claim Act which would indicate that under its provision suit could be brought. 28 U.S.C. § 2680(a), 28 U.S.C.A. § 2680(a). 11 This case is clearly apposite to the question whether in a suit against an agent the defense of sovereign immunity is applicable. To take away the immunity of a governmental corporation merely prevents the corporation from claiming that it is immunized from suit. But a suit will still not lie if a decree will affect the Government's, rather than the corporation's, property. 12 When Congress has wished to displace the ordinary remedies against the agent, it has used explicit language to do so. See, e.g., 56 Stat. 1013, 35 U.S.C. §§ 89—96, 35 U.S.C.A. §§ 89—96; 36 Stat. 851, as amended, 40 Stat. 705, 35 U.S.C. § 68 (now 28 U.S.C.A. § 1498). It is of course not a denial of due process to make the remedy, even for unconstitutional action of the agents who do the Government's work, solely against the Government instead of the agent who committed the wrong. Cf. Coffman v. Federal Laboratories, Inc., 3 Cir., 171 F.2d 94; Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 48 S.Ct. 194, 72 L.Ed. 303; Crozier v. Fried Krupp Aktiengesselschaft, 224 U.S. 290, 32 S.Ct. 488, 56 L.Ed. 771. It is upon such cases, interpreting specific provisions, stating that relief should be only against the Government, that the Court relied in Yearsley v. Ross Construction Co., 309 U.S. 18, 60 S.Ct. 413, 84 L.Ed. 554. That case is based on the Richmond Screw Anchor Co. case and the Crozier case and is to be understood in the light of them. In the Yearsley case suit was brought against a governmental agent who had taken land under a statute which authorized the taking of that particular land. Impliedly the owner was to be compensated for it in the Court of Claims. The Court held that in an authorized taking there is no liability on the part of the Government's representatives who do the taking. The fact that there was entire compensation provided for emphasized the exclusive character of the remedy against the Government. In other words the Court was dealing with a situation like the one involved in the Richmond Screw Anchor Co. case. Thus the Yearsley case does not touch the cases decided, before and since that decision, on the basis of the Lee line of cases. Moreover, in this case petitioner alleges that there was no authority on the part of the defendant to rescind the contract. This Court has explicitly rejected the theory that the Government could be sued for a tort in such circumstances. Tempel v. United States, 248 U.S. 121, 129, 39 S.Ct. 56, 58, 63 L.Ed. 162, and cases cited; see also 28 U.S.C. § 2680(a), 28 U.S.C.A. § 2680(a). 13 'Whether this immunity is an absolute survival of the monarchial privilege, or is a manifestation merely of power, or rests on abstract logical grounds, see Kawananakoa v. Polyblank, 205 U.S. 349, 27 S.Ct. 526, 51 L.Ed. 834, it undoubtedly runs counter to modern democratic notions of the moral responsibility of the State. Accordingly, courts reflect a strong legislative momentum in their tendency to extend the legal responsibility of Government and to confirm Maitland's belief, expressed nearly fifty years ago, that 'it is a wholesome sight to see 'the Crown' sued and answering for its torts.' 3 Maitland, Collected Papers, 263.' Great Northern Life Ins. Co. v. Read, 322 U.S. 47, 57, 59, 64 S.Ct. 873, 878, 879, 88 L.Ed. 1121 (dissenting opinion). See also Kennecott Copper Corp. v. State Tax Comm'n, 327 U.S. 573, 580, 582, 66 S.Ct. 745, 748, 749, 90 L.Ed. 862 (dissenting opinion). 14 Of course if control is sought over property which the Government seeks to retain, the considerations as to whether the equitable relief should be granted might be different. Cf. State of Louisiana v. Garfield, 211 U.S. 70, 29 S.Ct. 31, 53 L.Ed. 92; Goldberg v. Daniels, 231 U.S. 218, 34 S.Ct. 84, 58 L.Ed. 191. Here, however, that question is not involved since the coal to which the plaintiff asserts title is, according to the complaint, to be sold to another dealer. As between the two, the plaintiff, if it be a fact that he has fully complied with the contract, is entitled to the property. The threatened transfer of property wrongfully withheld from the plaintiff may be enjoined if the conventional requirements of equitable relief are present.

78

338 U.S. 25 69 S.Ct. 1359 93 L.Ed. 1782 WOLFv.PEOPLE OF THE STATE OF COLORADO (two cases). Nos. 17 and 18. Argued Oct. 19, 1948. Decided June 27, 1949. Mr. Philip Hornbein, Denver, Colo., for petitioner. Mr. James S. Henderson, Denver, Colo., for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 The precise question for consideration is this: Does a conviction by a State court for a State offense deny the 'due process of law' required by the Fourteenth Amendment, solely because evidence that was admitted at the trial was obtained under circumstances which would have rendered it admissible in a prosecution for violation of a federal law in a court of the United States because there deemed to be an infraction of the Fourth Amendment as applied in 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? The Supreme Court of Colorado has sustained convictions in which such evidence was admitted, 117 Colo. 279, 187 P.2d 926; 117 Colo. 321, 187 P.2d 928, and we brought the cases here. 333 U.S. 879, 68 S.Ct. 910, 92 L.Ed. 1155. 2 Unlike the specific requirements and restrictions placed by the Bill of Rights, Amendments I to VIII, upon the administration of criminal justice by federal authority, the Fourteenth Amendment did not subject criminal justice in the States to specific limitations. The notion that the 'due process of law' guaranteed by the Fourteenth Amendment is shorthand for the first eight amendments of the Constitution and thereby incorporates them has been rejected by this Court again and again, after mpressive consideration. See, e.g., Hurtado v. California, 110 U.S. 516, 4 S.Ct. 111, 292, 28 L.Ed. 232; Twining v. New Jersey, 211 U.S. 78, 29 S.Ct. 14, 53 L.Ed. 97; Brown v. Mississippi, 297 U.S. 287, 56 S.Ct. 461, 80 L.Ed. 682; Palko v. Connecticut, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288. Only the other day the Court reaffirmed this rejection after thorough reexamination of the scope and function of the Due Process Clause of the Fourteenth Amendment. Adamson v. California, 332 U.S. 46, 47 S.Ct. 1672, 91 L.Ed. 1903, 171 A.L.R. 1223. The issue is closed. 3 For purposes of ascertaining the restrictions which the Due Process Clause imposed upon the States in the enforcement of their criminal law, we adhere to the views expressed in Palko v. Connecticut, supra, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288. That decision speaks to us L.Ed. 288. That decision speaks to us particularly in matters of civil liberty, of a court that included Mr. Chief Justice Hughes, Mr. Justice Brandeis, Mr. Justice Stone and Mr. Justice Cardozo, to speak only of the dead. In rejecting the suggestion that the Due Process Clause incorporated the original Bill of Rights, Mr. Justice Cardozo reaffimred on behalf of that Court at affirmed but deeper and more pervasive conception of the Due Process Clause. This Clause exacts from the States for the lowliest and the most outcast all that is 'implicit in the concept of ordered liberty.' 302 U.S. at page 325, 58 S.Ct. at page 152. 4 Due process of law thus conveys neither formal nor fixed nor narrow requirements. It is the compendious expression for all those rights which the courts must enforce because they are basic to our free society. as of any one time, even though, as a as of any one time, even though, as a matter of human experience, some may not too rhetorically be called eternal verities. It is of the very nature of a free society to advance in its standards of what is deemed reasonable and right. Representing as it does a living principle, due process is not confined within a permanent catalogue of what may at a given time be deemed the limits or the essentials of fundamental rights. 5 To rely on a tidy formula for the easy determination of what is a fundamental right for purposes of legal enforcement may satisfy a longing for certainty but ignores the movements of a free society. It belittles the scale of the conception of due process. The real clue to the problem confronting the judiciary in the application of the Due Process Clause is not to ask where the line is once and for all to be drawn but to recognize that it is for the Court to draw it by the gradual and empiric process of 'inclusion and exclusion.' Davidson v. New Orleans, 96 U.S. 97, 104, 24 L.Ed. 616. This was the Court's insight when first called upon to consider the problem; to this insight the Court has on the whole been faithful as case after case has come before it since Davidson v. New Orleans was decided. 6 The security of one's privacy against arbitrary intrusion by the police—which is at the core of the Fourth Amendment—is basic to a free society. It is therefore implicit in 'the concept of ordered liberty' and as such enforceable againt the States through the Due Process Clause. The knock at the door, whether by day or by night, as a prelude to a search, without authority of law but solely on the authority of the police, did not need the commentary of recent history to be condemned as inconsistent with the conception of human rights enshrined in the history and the basic constitutional documents of English-speaking peoples. 7 Accordingly, we have no hesitation in saying that were a State affirmatively to sanction such police incursion into privacy it would run counter to the guaranty of the Fourteenth Amendment. But the ways of enforcing such a basic right raise questions of a different order. How such arbitrary conduct should be checked, what remedies against it should be afforded, the means by which the right should be made effective, are all questions that are not to be so dogmatically answered as to preclude the varying solutions which spring from an allowable range of judgment on issues not susceptible of quantitative solution. 8 In Weeks v. United States, supra, this Court held that in a federal prosecution the Fourth Amendment barred the use of evidence secured through an illegal search and seizure. This ruling was made for the first time in 1914. It was not derived from the explicit requirements of the Fourth Amendment; it was not based on legislation expressing Congressional policy in the enforcement of the Constitution. The decision was a matter of judicial implication. Since then it has been frequently applied and we stoutly adhere to it. But the immediate question is whether the basic right to protection against arbitrary intrusion by the police demands the exclusion of logically relevant evidence obtained by an unreasonable search and seizure because, in a federal prosecution for a federal crime, it would be excluded. As a matter of inherent reason, one would suppose this to be an issue to which men with complete devotion to the protection of the right of privacy might give different answers. When we find that in fact most of the English-speaking world does not regard as vital to such protection the exclusion of evidence thus obtained, we must hesitate to treat this remedy as an essential ingredient of the right. The contrariety of views of the States is particularly impressive in view of the careful reconsideration which they have given the problem in the light of the Weeks decision. 9 I. Before the Weeks decision 27 States had passed on the admissibility of evidence obtained by unlawful search and seizure. 10 (a) Of these, 26 States opposed the Weeks doctrine. (See Appendix, Table A.) 11 (b) Of these, 1 State anticipated the Weeks doctrine. (Table B.) 12 II. Since the Weeks decision 47 States all told have passed on the Weeks doctrine. (Table C.) 13 (a) Of these, 20 passed on it for the first time. 14 (1) Of the foregoing States, 6 followed the Weeks doctrine. (Table D.) 15 (2) Of the foregoing States, 14 rejected the Weeks doctrine. (Table E.) 16 (b) Of these, 26 States reviewed prior decisions contrary to the Weeks doctrine. 17 (1) Of these, 10 States have followed Weeks, overruling or distinguishing their prior decisions. (Table F.) 18 (2) Of these, 16 States adhered to their prior decisions against Weeks. (Table G) 19 (c) Of these, 1 State adhered to its prior formulation of the Weeks doctrine. (Table H.) 20 III. As of today 30 States reject the Weeks doctrine, 17 States are in agreement with it. (Table I.) IV. Of 10 jurisdictions within the United Kingdom and the British Commonwealth of Nations which have passed on the question, none has held evidence obtained by illegal search and seizure inadmissible. (Table J.) 21 The jurisdictions which have rejected the Weeks doctrine have not left the right to privacy without other means of protection.1 Indeed, the exclusion of evidence is a remedy which directly serves only to protect those upon whose person or premises something incriminating has been found. We cannot, therefore, regard it as a departure from basic standards to remand such persons, together with those who emerge scatheless from a search, to the remedies of private action and such protection as the internal discipline of the police, under the eyes of an alert public opinion, may afford. Granting that in practice the exclusion of evidence may be an effective way of deterring unreasonable searches, it is not for this Court to condemn as falling below the minimal standards assured by the Due Process Clause a State's reliance upon other methods which, if consistently enforced, would be equally effective. Weighty testimony against such an insistence on our own view is the opinion of Mr. Justice (then Judge) Cardozo in People v. Defore, 242 N.Y. 13, 150 N.E. 585.2 We cannot brush aside the experience of State which deem the incidence of such condust by the police too slight to call for a deterrent remedy not by way of disciplinary measures but by overriding the relevant rules of evidence. There are, moreover, reasons for excluding evidence unreasonable obtained by the federal police which are less compelling in the case of police under State or local authority. The public opinion of a community can far more effectively be exerted against oppresive conduct on the part of police directly responsible to the community itself than can local opinion, sporadically aroused, be brought to bear upon remote authority pervasively exerted throughout the country. 22 We hold, therefore, that in a prosecution in a State court for a State crime the Fourteenth Amendment does not forbid the admission of evidence obtained by an unreasonable search and seizure. And though we have interpreted the Fourth Amendment to forbid the admission of such evidence, a different question would be presented if Congress under its legislative powers were to pass a statute purporting to negate the Weeks doctrine. We would then be faced with the problem of the respect to be accorded the legislative judgment on an issues as to which, in default of that judgment, we have been forced to depend upon our own. Problems of a converse character, also not before us, would be presented should Congress under § 5 of the Fourteenth Amendment uindertake to enforce the rights there guaranteed by attempting to make the Weeks doctrine binding upon the States. 23 Affirmed. APPENDIX.* 24 TABLE A. STATES WHICH OPPOSED THE WEEKS DOCTRINE BEFORE THE WEEKS CASE HAD BEEN DECIDED. 25 ALA. Shields v. State, 104 Ala. 35, 16 So. 85, 53 Am.St.Rep. 17. 26 ARK. Starchman v. State, 62 Ark. 538, 36 S.W. 940. 27 CONN. State v. Grisworld, 67 Conn. 290, 34 A. 1046, 33 L.R.A. 227. 28 GA. Williams v. State, 100 Ga. 511, 28 S.E. 624, 39 L.R.A. 269. 29 IDAHO State v. Bond, 12 Idaho 424, 439, 86 P. 43, 47. 30 ILL. Siebert v. People, 143 Ill. 571, 583, 32 N.E. 431. 31 KANS. State v. Miller, 63 Kan. 62, 64 P. 1033. 32 ME. See State v. Gorham, 65 Me. 270, 272. 33 MD. Lawrence v. State, 103 Md. 17, 35, 63 A. 96, 103. 34 MASS. Commonwealth v. Dana, 2 Metc. 329. 35 MICH. People v. Aldorfer, 164 Mich. 676, 130 N.W. 351. 36 MINN. State v. Strait, 94 Minn. 384, 102 N.W. 913. 37 MO. State v. Pomeroy, 130 Mo. 489, 32 S.W. 1002. 38 MONT. See State v. Fuller, 34 Mont. 12, 19, 85 P. 369, 373, 8 L.R.A.,N.S., 762, 9 Ann.Cas. 648. 39 NEB. Geiger v. State, 6 Neb. 545. N.H. State v. Flynn, 36 N.H. 64. 40 N.Y. People v. Adams, 176 N.Y. 351, 68 N.E. 636, 63 L.R.A. 406, 98 Am.St.Rep. 675. 41 N.C. State v. Wallace, 162 N.C. 622, 78 S.E. 1, Ann.Cas.1915B, 423. 42 OKLA. Silva v. State, 6 Okl.Cr. 97, 116 P. 199. 43 ORE. State v. McDaniel, 39 Or. 161, 169—170, 65 P. 520, 523. 44 S.C. State v. Atkinson, 40 S.C. 363, 371, 18 S.E. 1021, 1024, 42 Am.St.Rep. 877. 45 S.D. State v. Madison, 23 S.D. 584, 591, 122 N.W. 647, 650. 46 TENN. Cohn v. State, 120 Tenn. 61, 109 S.W. 1149, 17 L.R.A.,N.S., 451, 15 Ann.Cas. 1201. 47 Vt. State v. Mathers, 64 Vt. 101, 23 A. 590, 15 L.R.A. 268, 33 Am.St.Rep. 921. 48 WASH. State v. Royce, 38 Wash. 111, 80 P. 268, 3 Ann.Cas. 351. 49 W. Va. See State v. Edwards, 51 W.Va. 220, 229, 41 S.E. 429, 432—433, 59 L.R.A. 465. 50 TABLE B. 51 STATE WHICH HAD FORMULATED THE WEEKS DOCTRINE BEFORE THE WEEKS DECISION. 52 IOWA State v. Sheridan, 121 Iowa 164, 96 N.W. 730. 53 TABLE C. 54 STATES WHICH HAVE PASSED ON THE WEEKS DOCTRINE SINCE THE WEEKS CASE WAS DECIDED. 55 Every State except Rhode Island. But see State v. Lorenzo, 72 R.I. 175, 48 A.2d 407, 49 A.2d 316 (holding that defendant had consented to the search, but that even if he had not and even if the federal rule applied, the evidence was admissible because no timely motion to suppress had been made). TABLE D. 56 STATES WHICH PASSED ON THE WEEKS DOCTRINE FOR THE FIRST TIME AFTER THE WEEKS DECISION AND IN SO DOING FOLLOWED IT. 57 FLA. Atz v. Andrews, 84 Fla. 43, 94 So. 329. 58 IND. Flum v. State, 193 Ind. 585, 141 N.E. 353. 59 KY. Youman v. Commonwealth, 189 Ky. 152, 224 S.W. 860, 13 A.L.R. 1303. 60 MISS. Tucker v. State, 128 Miss. 211, 90 So. 845, 24 A.L.R. 1377. 61 WIS. Hoyer v. State, 180 Wis. 407, 193 N.W. 89, 27 A.L.R. 673. 62 WYO. State v. George, 32 Wyo. 223, 231 P. 683. 63 TABLE E. 64 STATES WHICH PASSED ON THE WEEKS DOCTRINE FOR THE FIRST TIME AFTER THE WEEKS DECISION AND IN SO DOING REJECTED IT. 65 ARIZ. Argetakis v. State, 24 Ariz. 599, 212 P. 372. 66 CALIF. People v. Mayen, 188 Cal. 237, 205 P. 435, 24 A.L.R. 1383 (adopting the general rule but distinguishing the cases then decided by this Court on the ground that they apply only when a timely motion for return of the property seized has been made). 67 COLO. Massantonio v. People, 77 Colo. 392, 236 P. 1019. 68 DEL. State v. Chuchola, 32 W.W.Harr. 133, 120 A. 212 (distinguishing this Court's decisions). 69 LA. State v. Fleckinger, 152 La. 337, 93 So. 115. The constitutional convention of 1921 refused to adopt an amendment incorporating the federal rule. See State v. Eddins, 161 La. 240, 108 So. 468. 70 NEV. State v. Chin Gim, 47 Nev. 431, 224 P. 798. 71 N.J. Statev. Black, 135 A. 685, 5 N.J.Misc 48. 72 N.M. State v. Dillon, 34 N.M. 366, 281 P. 474, 88 A.L.R. 340. 73 N.D. State v. Fahn, 53 N.D. 203, 205 N.W. 67. 74 OHIO State v. Lindway, 131 Ohio St. 166, 2 N.E.2d 490. 75 PA. Commonwealth v. Dabbierio, 290 Pa. 174, 138 A. 679. 76 TEX. Welchek v. State, 93 Tex.Cr.R. 271, 247 S.W. 524. In 1925, a statute changed the rule by providing that 'no evidence obtained by an officer or other person in violation of any provisions of the Constitution or laws of the State of Texas, or of the Constitution of the United States of America, shall be admitted in evidence against the accused on the trial of any criminal case.' Texas Laws 1925, c. 49, as amended, Texas Code Crim.Proc. § 727a (Vernon, 1948). 77 UTAH State v. Aime, 62 Utah 476, 220 P. 704, 32 A.L.R. 375. 78 VA. Hall v. Commonwealth, 138 Va. 727, 121 S.W. 154. 79 TABLE F. 80 STATES WHICH, AFTER THE WEEKS DECISION, OVERRULED OR DISTINGUISHED PRIOR CONTRARY DECISIONS. 81 IDAHO Idaho expressly refused to follow the Weeks decision in State v. Myers, 36 Idaho 396, 211 P. 440, but repudiated the Myers case and adopted the federal rule in State v. Arregui, 44 Idaho 43, 254 P. 788, 52 A.L.R. 463. 82 ILL. After two cases following the former state rule, Illinois adopted the federal rule in People v. Castree, 311 Ill. 392, 143 N.E. 112, 32 A.L.R. 357. 83 MICH. People v. Marxhaus n, 204 Mich. 559, 171 N.W. 557, 3 A.L.R. 1505 (distinguishing earlier cases on the ground that in them no preliminary motion to suppress had been made). 84 MO. State v. Graham, 295 Mo. 695, 247 S.W. 194, supported the old rule in a dictum, but the federal rule was adopted in State v. Owens, 302 Mo. 348, 259 S.W. 100, 32 A.L.R. 383 (distinguishing earlier cases on the ground that in them no preliminary motion to dismiss had been made). 85 MONT. State ex rel. King v. District Court, 70 Mont. 191, 224 P. 862. 86 OKLA. Gore v. State, 24 Okl.Cr. 394, 218 P. 545. 87 S.D. State v. Gooder, 57 S.D. 619, 234 N.W. 610. But cf. S.D. Laws 1935, c. 96, now S.D. Code § 34.1102 (1939), amending Rev.Code 1919, § 4606 (all evidence admissible under a valid search warrant is admissible notwithstanding defects in the issuance of the warrant). 88 TENN. Hughes v. State, 145 Tenn. 544, 238 S.W. 588, 20 A.L.R. 639 (distinguishing Cohn v. State, supra, Table A). 89 WASH. State v. Gibbons, 118 Wash. 171, 203 P. 390. 90 W. VA. State v. Andrews, 91 W.Va. 720, 114 S.E. 257 (distinguishing earlier cases). 91 TABLE G. 92 STATES WHICH, AFTER THE WEEKS DECISION, REVIEWED PRIOR CONTRARY DECISIONS AND IN SO DOING ADHERED TO THOSE DECISIONS. 93 ALA. Banks v. State, 207 Ala. 179, 93 So. 293, 24 A.L.R. 1359. 94 ARK. Benson v. State, 149 Ark. 633, 233 S.W. 758. 95 CONN. State v. Reynolds, 101 Conn. 224, 125 A. 636. 96 GA. Jackson v. State, 156 Ga. 647, 119 S.E. 525. 97 KANS. State v. Johnson, 116 Kan. 58, 226 P. 245. 98 ME. State v. Schoppe, 113 Me. 10, 16, 92 A. 867 (alternative holding, not noticing Weeks). 99 MD. Meisinger v. State, 155 Md. 195, 141 A. 536, 142 A. 190. But cf. Md. Laws, 1929, c. 194, as amended, Md. Code Ann., Art. 35, § 5 (1947 Supp.) (in trial of misdemeanors, evidence obtained by illegal search and seizure is inadmissible). 100 MASS. Commonwealth v. Wilkins, 243 Mass. 356, 138 N.E. 11. 101 MINN. State v. Pluth, 157 Minn. 145, 195 N.W. 789. 102 NEB. Billings v. State, 109 Neb. 596, 191 N.W.2d 721. 103 N.H. State v. Agalos, 79 N.H. 241, 242, 107 A. 314 (not noticing Weeks). 104 N.Y. People v. Defore, 242 N.Y. 13, 150 N.E. 585; People v. Richter's Jewelers, 291 N.Y. 161, 169, 51 N.E.2d 690, 693, 50 A.L.R. 560 (holding that adoption og Amendment to State Con stitution in same language as Civil Rights Law, McK. Consol. Laws, c. 6, construed in the Defore case is not occasion for changing interpretation, especially since proceedings of the conviction which framed the amendment show that no change was intended). 105 N.C. State v. Simmons, 183 N.C. 684, 110 S.E. 591 (distinguishing between evidentiary articles and corpus delicti). 106 ORE. See State v. Folkes, 174 Or. 568, 588—589, 150 P.2d 17, 25. But see State v. Laundy, 103 Or. 443, 493—495, 204 P. 958, 974 975, 206 P. 290. 107 S.C. After granting a motion to return illegally seized property in Blacksburg v. Beam, 104 S.C. 146, 88 S.E. 441, L.R.A.1916E, 714; South Carolina reaffirmed its agreement with the general rule in State v. Green, 121 S.C. 230, 114 S.E. 317. 108 VT. State v. Stacy, 104 Vt. 379, 401, 160 A. 257, 266, 747. 109 TABLE H. 110 STATE WHICH HAS ADHERED TO ITS PRIOR FORMULATION OF THE WEEKS DOCTRINE. 111 IOWA State v. Rowley, 197 Iowa 977, 195 N.W. 881 (recognizing the Weeks case but following earlier Iowa cases). 112 TABLE I. 113 SUMMARY OF PRESENT POSITION OF STATES WHICH HAVE PASSED ON THE WEEKS DOCTRINE. 114 (a) States that reject Weeks: 115 Ala., Ariz., Ark., Calif., Colo., Conn., Del., Ga., Kans., La., Me., Md., Mass., Minn., Neb., Nev., N.H., N.J., N.M., N.Y., N.C., N.D., Ohio, Ore., Pa., S.C., Texas, Utah, Vt., Va. 116 (b) States that are in agreement with Weeks: 117 Fla., Idaho, Ill., Ind., Iowa, Ky., Mich., Miss., Mo., Mont., Okla., S.D., Tenn., Wash., W. Va., Wis., Wyo. 118 TABLE J. 119 JURISDICTIONS OF THE UNITED KINGDOM AND THE BRITISH COMMONWEALTH OF NATIONS WHICH HAVE HELD ADMISSIBLE EVIDENCE OBTAINED BY ILLEGAL SEARCH AND SEIZURE. 120 AUSTRALIA Miller v. Noblet, (1927) S.A.S.R. 385. 121 CANADA ALTA. Rex v. Nelson, (1922) 2 W.W.R. 381, 69 D.L.R. 180. 122 MAN. ex v. Durousel, 41 Man. 15, (1933) 2 D.L.R. 446. 123 ONT. Regina v. Doyle, 12 Ont. 347. 124 SASK. Rex v. Kostachuk, 24 Sask. 485, 54 Can.C.C. 189. 125 ENGLAND See Elias v. Pasmore, (1934) 2 K.B. 164. 126 INDIA ALL. Ali Ahmad Khan v. Emperor, 81 I.C. 615(1). 127 CAL. Baldeo Bin v. Emperor, 142 I.C. 639. 128 RANG. Chwa Hum Htive v. Emperor, 143 I.C. 824. 129 SCOTLAND See Hodgson v. McPherson, (1913) S.C.(J.) 68, 73. 130 Mr. Justice BLACK, concurring. 131 In this case petitioner was convicted of a crime in a state court on evidence obtained by a search and seizure conducted in a manner that this Court has held 'unreasonable' and therefore in violation of the Fourth Amendment. And under a rule of evidence adopted by this Court evidence so obtained by federal officers cannot be used against defendants in federal courts. For reasons stated in my dissenting opinion in Adamson v. California, 332 U.S. 46, 68, 67 S.Ct. 1672, 1683, 91 L.Ed. 1903, 171 A.L.R. 1223. I agree with the conclusion of the Court that the Fourth Amendment's prohibition of 'unreasoanble searches and seizures' is enforceable against the states. Consequently, I should be for reversal of this case if I thought the Fourth Amendment not only prohibited 'unreasonable searches and seizures,' but also, of itself, barred the use of evidence so unlawful obtained. But I agree with what appears to be a plain implication of the Court's opinion that the federal exclusionary rule is not a command of the Fourth Amendment but is a judicially created rule of evidence which Congress might negate. See McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819. This leads me to concur in the Court's judgment of affirmance. 132 It is not amiss to repeat my belief that the Fourteenth Amendment was intended to make the Fourth Amendment in its entirety applicable to the states. The Fourth Amendment was designed to protect people against unrestrained searches and seizures by sheriffs, policemen and other law enforcement officers. Such protection is an essential in a free society. And I am unable to agree that the protection of people from over-Zealous or ruthless state officers is any less essential in a country of 'ordered liberty' than is the protection of people from over-zealous or ruthless federal officers. Certainly there are far more state than federal enforcement officers and their activities, up to now, have more frequently and closely touched the intimate daily lives of people than have the activities of federal officers. A state officer's 'knock at the door * * * as a prelude to a search, without authority of law,' may be, as our experience shows, just as ominous to 'ordered liberty' as though the knock were made by a federal officer. 133 Mr. Justice DOUGLAS, dissenting. 134 I believe for the reasons stated by Mr. Justice BLACK in his dissent in Adamson v. California, 332 U.S. 46, 68, 67 S.Ct. 1672, 1684, 91 L.Ed. 1903, 171 A.L.R. 1223, that the Fourth Amendment is applicable to the States. I agree with Mr. Justice MURPHY that the evidence obtained in violation of it must be excluded in state prosecutions as well as in federal prosecutions, since in absence of that rule of evidence the Amendment would have no effective sanction. I also agree with him that under that test this evidence was improperly admitted and that the judgments of conviction must be reversed. 135 Mr. Justice MURPHY, with whom Mr. Justice RUTLEDGE joins, dissenting. 136 It is disheartening to find so much that is right in an opinion which seems to me so fundamentally wrong. Of course I agree with the Court that the Fourteenth Amendment prohibits activities which are proscribed by the search and seizure clause of the Fourth Amendment. See my dissenting views, and those of Mr. Justice Black, in Adamson v. California, 332 U.S. 46, 68, 123, 67 S.Ct. 1672, 1684, 1711, 91 L.Ed. 1903, 171 A.L.R. 1223. Quite apart from the blanket application of the Bill of Rights to the States, a devotee of democracy would ill suit his name were he to suggest that his home's protection against unlicensed governmental invasion was not 'of the very essence of a scheme of ordered liberty.' Palko v. Connecticut, 302 U.S. 319, 325, 58 S.Ct. 149, 152, 82 L.Ed. 288. It is difficult for me to understand how the Court can go this far and yet be unwilling to make the step which can give some meaning to the pronouncements it utters. 137 Imagination and zeal may invent a dozen methods to give content to the commands of the Fourth Amendment. But this Court is limited to the remedies currently available. It cannot legislate the ideal system. If we would attempt the enforcement of the § arch and seizure clause in the ordinary case today, we are limited to three devices: judicial exclusion of the illegally obtained evidence; criminal prosecution of violators; and civil action against violators in the action of trespass. 138 Alternatives are deceptive. Their very statement conveys the impression that one possibility is as effective as the next. In this case their statement is blinding. For there is but one alternative to the rule of exclusion. That is no sanction at all. 139 This has been perfectly clear since 1914, when a unanimous Court decided 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,' we said, '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.' 'It would reduce the Fourth Amendment to a form of words.' Holmes, J., for the Court, in Silverthorne Lumber Co. v. United States, 251 U.S. 385, 392, 40 S.Ct. 182, 183, 64 L.Ed. 319, 24 A.L.R. 1426. 140 Today the Court wipes those statements from the books with tis bland citation of 'other remedies.' Little need be said concerning the possibilities of criminal prosecution. Self-scrutiny is a lofty ideal, but its exaltation reaches new heights if we expect a District Attorney to prosecute himself or his associates for well-meaning violations of the search and seizure clause during a raid the District Attorney or his associates have ordered.1 But there is an appealing ring in another alternative. A trespass action for damages is a venerable means of securing reparation for unauthorized invasion of the home. Why not put the old writ to a new use? When the Court cites cases permitting the action, the remedy seems complete. 141 But what an illusory remedy this is, if by 'remedy' we mean a positive deterrent to police and prosecutors tempted to violate the Fourth Amendment. The appealing ring softens when we recall that in a trespass action the measure of damages is simply the extent of the injury to physical property. If the officer searches with care, he can avoid all but nominal damages—a penny, or a dollar. Are punitive damages possible? Perhaps. But a few states permit none, whatever the circumstances.2 In those that do, the plaintiff must show the real ill will or malice of the defendant,3 and surely it is not unreasonable to assume that one in honest pursuit of crime bears no malice toward the search victim. If that burden is carried, recovery may yet be defeated by the rule that there must be physical damages before punitive damages may be awarded.4 In addition, some states limit punitive damages to the actual expenses of litigation. See 61 Harv.L.Rev. 113, 119—120. Others demand some arbitrary ratio between actual and punitive damages before a verdict may stand. See Morris, Punitive Damages in Tort Cases, 44 Harv.L.Rev. 1173, 1180—1181. Even assuming the ill will of the officer, his reasonable grounds for belief that the home he searched harbored evidence of crime is admissible in mitigation of punitive damages. Gamble v. Keyes, 35 S.D. 644, 153 N.W. 888; Simpson v. McCaffrey, 13 Ohio 508. The bad reputation of the plaintiff is likewise admissible. Banfill v. Byrd, 122 Miss. 288, 84 So. 227. If the evidence seized was actually used at a trial, that fact has been held a complete justification of the search, and a defense against the trespass action. Elias v. Pasmore (1934) 2 K.B. 164. And even if the plaintiff hurdles all these obstacles, and gains a substantial verdict, the individual officer's finances may well make the judgment useless—for the municipality, of course, is not liable without its consent. Is it surprising that there is so little in the books concerning trespass actions for violation of the search and seizure clause? 142 The conclusion is inescapable that but one remedy exists to deter violations of the search and seizure clause. That is the rule which excludes illegally obtained evidence. Only by exclusion can we impress upon the zealous prosecutor that violation of the Constitution will do him no good. And only when that point is driven home can the prosecutor be expected to emphasize the importance of observing constitutional demands in his instructions to the police. 143 If proof of the efficacy of the federal rule were needed, there is testimony in abundance in the recruit training programs and in-service courses provided the police in states which follow the federal rule.5 St. Louis, for example, demands extensive training in the rules of search and seizure, with emphasis upon the ease with which a case may collapse if it depends upon evidence obtained unlawfully. Current court decisions are digested and read at roll calls. The same general pattern prevails in Washington, D.C.6 In Dallas, officers are thoroughly briefed and instructed that 'the courts will follow the rules very closely and will detect any frauds.'7 In Milwaukee, a stout volume on the law of arrest and search and seizure is made the basis of extended instruction.8 Officer preparation in the applicable rules in Jackson, Mississippi, has included the lectures of an Associate Justice of the Mississippi Supreme Court. The instructions on evidence and search and seizure given to trainees in San Antonio carefully note the rule of exclusion in Texas, and close with this statement: 'Every police officer should know the laws and rules of evidence. Upon knowledge of these facts determines whether the * * * defendant will be convicted or acquitted. * * * When you investigate a case * * * remember throughout your investigation that only admissible evidence can be used.' 144 But in New York City, we are informed simply that 'copies of the State Penal Law and Code of Criminal Procedure' are given to officers, and that they are 'kept advised' that illegally obtained evidence may be admitted in New York courts. In Baltimore, a 'Digest of Laws' is distributed, and it is made clear that the statutory section excluding evidence 'is limited in its application to the trial of misdemeanors. * * * It would appear * * * that * * * evidence illegally obtained may still be admissible in the trial of felonies.' In Cleveland, recruits and other officers are told of the rules of search and seizure, but 'instructed that it is admissible in the courts of Ohio. The Ohio Supreme Court has indicated very definitely and clearly that Ohio belongs to the 'admissionist' group of states when evidence obtained by an illegal search is presented to the court.' A similar pattern emerges in Birmingham, Alabama. 145 The contrast between states with the federal rule and those without it is thus a positive demonstration of its efficacy. There are apparent exceptions to the contrast—Denver, for example, appears to provide as comprehensive a series of instructions as that in Chicago, although Colorado permits introduction of the evidence and Illinois does not. And, so far as we can determine from letters, a fairly uniform standard of officer instruction appears in other cities, irrespective of the local rule of evidence. But the examples cited above serve to grand an assumption that has motivated this Court since the Weeks case: that this is an area in which judicial action has positive effect upon the breach of law; and that without judicial action, there are simply no effective sanctions presently available. 146 I cannot believe that we should decide due process questions by simply taking a poll of the rules in various jurisdictions, even if we follow the Palko 'test.' Today's decision will do inestimable harm to the cause of fair police methods in our cities and states. Even more important, perhaps, it must have tragic effect upon public respect for our judiciary. For the Court now allows that is indeed shabby business: lawlessness by officers of the law. 147 Since the evidence admitted was secured in violation of the Fourth Amendment, the judgment should be reversed. 148 Mr. Justice RUTLEDGE, dissenting. 149 'Wisdom too often never comes, and so one ought not to reject it merely because it comes late.' Similarly, one should not reject a piecemeal wisdom, merely because it hobbles toward the truth with backward glances. Accordingly, although I think that all 'the specific guarantees of the Bill of Rights should be carried over intact into the first section of the Fourteenth Amendment,' Adamson v. California, 332 U.S. 46, dissenting opinion at page 124, 67 S.Ct. 1672, at page 1683, 91 L.Ed. 1903, 171 A.L.R. 1223, I welcome the fact that the Court, in its slower progress toward this goal, today finds the substance of the Fourth Amendment 'to be implicit in the concept of ordered liberty, and thus, through the Fourteenth Amendment, * * * valid as againt the states.' Palko v. Connecticut, 302 U.S. 319, 325, 58 S.Ct. 149, 152, 82 L.Ed. 288. 150 But I reject the Court's simultaneous conclusion that the mandate embodied in the Fourth Amendment, although binding on the states, does not carry with it the one sanction—exclusion of evidence taken in violation of the Amendment's terms—failure to observe which means that 'the protection of the 4th Amendment * * * might as well be stricken from the Constitution.' 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. For I agree with my brother MURPHY'S demonstration that the Amendment without the sanction is a dead letter. Twenty-nine years ago this Court, speaking through Justice Holmes, refused to permit the Government to subpoena documentary evidence which it had stolen, copied and then returned, for the reason that such a procedure 'reduces the Fourth Amendment to a form of words.' Silverthorne Lumber Co. v. United States, 251 U.S. 385, 392, 40 S.Ct. 182, 183, 64 L.Ed. 319, 24 A.L.R. 1426. But the version of the Fourth Amendment today held applicable to the states hardly rises to the dignity of a form of words; at best it is a pale and frayed carbon copy of the original, bearing little resemblance to the Amendment the fulfillment of whose command I had heretofore thought to be 'an indispensable need for a democratic society.' Harris v. United States, 331 U.S. 145, dissenting opinion at page 161, 67 S.Ct. 1098, at page 1106, 91 L.Ed. 1399. 151 I also reject any intimation that Congress could validly enact legislation permitting the introduction in federal courts of evidence seized in violation of the Fourth Amendment. I had thought that issue settled by this Court's invalidation on dual grounds, in Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746, of a federal statute which in effect required the production of evidence thought probative by Government counsel—the Court there holding the statute to be 'obnoxious to the prohibition of the fourth amendment of the constitution, as well as of the fifth.' Id., at page 632, 6 S.Ct. at page 533. See Adams v. New York, 192 U.S. 585, 597, 598, 24 S.Ct. 372, 375, 48 L.Ed. 575. The view that the Fourth Amendment itself forbids the introduction of evidence illegally obtained in federal prosecutions is one of long standing and firmly established. See Olmstead v. United States, 277 U.S. 438, 462, 48 S.Ct. 564, 567, 72 L.Ed. 944, 66 A.L.R. 376. It is too late in my judgment to question it now. We apply it today in Lustig v. United States, 338 U.S. 74, 69 S.Ct. 1372. 152 As Congress and this Court are, in my judgment, powerless to permit the admission in federal courts of evidence seized in defiance of the Fourth Amendment, so I think state legislators and judges—if subject to the Amendment, as I believe them to be—may not lend their offices to the admission in state courts of evidence thus seized. Compliance with the Bill of Rights betokens more than lip service. 153 The Court makes the illegality of this search and seizure its inarticulate premise of decison. I acquiesce in that premise and think the conviction should be reversed. 154 Mr. Justice MURPHY joins in this opinion. 1 The common law provides actions for damages against the searching officer, e.g., Entick v. Carrington, 2 Wils. 275, 19 How.St.Tr. 1030; Grumon v. Raymond, 1 Conn. 40, 6 Am.Dec. 200; Sandford v. Nichols, 13 Mass. 286, 7 Am.Dec. 151; Halsted v. Brice, 13 Mo. 171; Hussey v. Davis, 58 N.H. 317; Reed v. Lucas, 42 Tex. 529; against one who procures the issuance of a warrant maliciously and without probable cause, e.g., Gulsby v. Louisville & N.R. Co., 167 Ala. 122, 52 So. 392; Whitson v. May, 71 Ind. 269; Krehbiel v. Henkle, 152 Iowa 604, 129 N.W. 945, 133 N.W. 115, Ann.Cas. 1913B, 1156; Olson v. Tvete, 46 Minn. 225, 48 N.W. 914; Boeger v. Langenberg, 97 Mo. 390, 11 S.W. 223, 10 Am.St.Rep. 322; Doane v. Anderson, 60 Hun 586, 15 N.Y.S. 459; Shall v. Minneapolis, St. P. & S.S.M.R. Co., 156 Wis. 195, 145 N.W. 649, 50 L.R.A.,N.S., 1151, against a magistrate who has acted without jurisdiction in issuing a warrant, e.g., Williams v. Kozak, 4 Cir., 280 F. 373; Grumon v. Raymond, 1 Conn. 40, 6 Am.Dec. 200; Kennedy v. Terrill, Hardin, Ky., 490; Shaw v. Moon, 117 Or. 558, 245 P. 318, 45 A.L.R. 600, against persons assisting in the execution of an illegal search, e.g., Hebrew v. Pulis, 73 N.J.L. 621, 625, 64 A. 121, 122, 7 L.R.A., N.S., 580, 118 Am.St.Rep. 716; Cartwright v. Canode, Tex.Civ.App. 138 S.W. 792, affirmed 106 Tex. 502, 171 S.W. 696. One may also without liability use force to resist an unlawful search. E.g., Commonwealth v. Martin, 105 Mass. 178; State v. Mann, 27 N.C. 45. Statutory sanctions in the main provide for the punishment of one maliciously procuring a search warrant or willfully exceeding his authority in exercising it. E.g., 18 U.S.C. §§ 53a, 630, 631 (now §§ 2234—2236); Ala.Code Ann.1940, tit. 15, § 99; Ariz.Code Ann. § 44-3513 (1939); Fla.Stat.Ann. §§ 933.16, 933.17; Iowa Code §§ 751.38, 751.39 (1946), I.C.A.; Mont.Rev.Code Ann. §§ 10948, 10952 (1935); Nev.Comp.Laws §§ 10425, 10426 (1929); N.Y.Crim.Code §§ 811, 812; N.Y.Penal Law, McK.Consol.Laws, C. 40, §§ 1786, 1847; N.D.Rev.Code §§ 12-1707, 12-1708 (1943); Okl.Stat.Ann.tit. 21, §§ 536, 585, tit. 22, §§ 1239, 1240; Or.Comp.Laws Ann. § 26—1717 (1940); S.D.Code. §§ 13.1213, 13.1234, 34.9904, 34.9905 (1939); Tenn.Code Ann. § 11905 (1934). Some statutes more broadly penalize unlawful searches. E.g., 18 U.S.C. § 53a (now 2236); Idaho Code Ann. §§ 17-1004, 17-1024 (1932); Minn.Stat.Ann. §§ 613.54, 621.17; Va.Code Ann. § 4822d (Michie, 1942); Wash.Rev.Stat.Ann. §§ 2240—1, 2240—2. Virginia also makes punishable one who issues a general search warrant or a warrant unsupported by affidavit. Va.Code Ann. § 4822e (Michie, 1942). A few States have provided statutory civil remedies. See, e.g., Ga.Code Ann. § 27-301 (1935); Ill.Rev.Stat. c. 38, § 698 (Smith-Hurd); Miss.Code Ann. § 1592 (1942). And in one State, misuse of a search warrant may be an abuse of process punishable as contempt of court. See Mich.Stat.Ann. § 27.511 (1938), Comp.Laws 1948, § 605.1. 2 'We hold, then, with the defendant that the evidence against him was the outcome of a trespass. The officer might have been resisted, or sued for damages, or even prosecuted for oppression. Penal Law, §§ 1846, 1847. He was subject to removal or other discipline at the hands of his superiors. These consequences are undisputed. The defendant would add another. We must determine whether evidence of crim nality, procured by an act of trespass, is to be rejected an incompetent for the misconduct of the trespasser. * * * 'Those judgments (Weeks v. United States and cases which followed it) do not bind us, for they construe provisions of the Federal Constitution, the Fourth and Fifth Amendments, not applicable to the States. Even though not binding, they merit our attentive scrutiny. * * * 'In so holding (i.e., that evidence procured by unlawful search is not incompetent), we are not unmindful of the argument that, unless the evidence is excluded, the statute becomes a form and its protection an illusion. This has a strange sound when the immunity is viewed in the light of its origin and history. The rule now embodied in the statute was received into English law as the outcome of the prosecution of Wilkes and Entick. * * * Wilkes sued the messengers who had ransacked his papers, and recovered a verdict of 4,000 against one and 1,000 against the other. Entick, too, had a substantial verdict. * * * We do not know whether the public, represented by its juries, is today more indifferent to its liberties than it was when the immunity was born. If so, the change of sentiment without more does not work a change of remedy. Other sanctions, penal and disciplinary, supplementing the right to damages, have already been enumerated. No doubt the protection of the statute would be greater from the point of view of the individual whose privacy had been invaded if the government were required to ignore what it had learned through the invasion. The question is whether protection for the individual would not be gained at a disproportionate loss of protection for society. On the one side is the social need that crime shall be repressed. On the other, the social need that law shall not be flouted by the insolence of office. There are dangers in any choice. The rule of the Adams case (People v. Adams, 176 N.y. 351, 68 N.E. 636, 63 L.R.A. 406, 98 Am.St.Rep. 675) strikes a balance between opposing interests.' 242 N.Y. at pages 19, 20, 24—25, 150 N.E. at pages 586 587, 588—589. * In the case of jurisdictions which have decided more than one case is point, the following Tables cite only the leading case. 1 See Pound, Criminal Justice in America (New York, 1930): 'Under our legal system the way of the prosecutor is hard, and the need of 'getting results' puts pressure upon prosecutors to * * * indulge in that lawless enforcement of law which produces a vicious circle of disrespect for law.' And note the statement of the Wickersham Commission, with reference to arrests: '* * * in case of persons of no influence or little or no means the legal restrictions are not likely to give an officer serious trouble.' National Commission on Law Observance and Enforcement, Report on Criminal Procedure (1931), p. 19. 2 See McCormick, Damages, § 78. See Willis, Measure of Damages When Property is Wrongfully Taken by a Private Individual, 22 Harv.L.Rev. 419. 3 Id., § 79. See Fennemore v. Armstrong, 6 Boyce 35, 29 Del. 35, 96 A. 204. 4 'It is a well settled and almost universally accepted rule in the law of damages that a finding of exemplary damages must be predicated upon a finding of actual damages.' 17 Iowa L.Rev. 413, 414. This appears to be an overstatement. See McCormick, supra, § 83; Restatement of Torts, § 908, comment c. 5 The material which follows is gleaned from letters and other material from Commissioners of Police and Chiefs of Police in twenty-six cities. Thirty-eight large cities in the United States were selected at random, and inquiries directed concerning the instruction provided police on the rules of search and seizure. Twenty-six replies have been received to date. Those of any significance are mentioned in the text of this opinion. The sample is believed to be representative, but it cannot, of course, substitute for a thoroughgoing comparison of present-day police procedures by a completely objective observer. A study of this kind would be of inestimable value. 6 E.g., Assistant Superintendent Truscott's letter to the Washington Police Force of January 3, 1949, concerning McDonald v. United States, 335 U.S. 451, 69 S.Ct. 191. 7 Recently lectures have included two pages of discussion of the opinions in Harris v. United States, 331 U.S. 145, 67 S.Ct. 1098, 91 L.Ed. 1399. 8 Chief of Police John W. Polcyn notes, in a Foreword to the book, that officers were often not properly informed with respect to searches and seizures before thoroughgoing instruction was undertaken. One of their fears was that of 'losing their cases in court, only because they neglected to do what they might have done with full legal sanction at the time of the arrets, or did what they had no legal right to do at such time.'

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337 U.S. 801 69 S.Ct. 1326 93 L.Ed. 1704 WEADE et al.v.DICHMANN, WRIGHT & PUGH, Inc. No. 179. Argued Feb. 1, 1949. Decided June 27, 1949. Mr. William E. Leahy, Washington, D.C., for petitioners. Mr. Leavenworth Colby, Washington, D.C., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 On August 3, 1945, at Old Point Comfort, Virginia, petitioners, Mrs. Lillian A. Weade and Mrs. Roberta L. Stinemeyer, purchased tickets and embarked as passengers on the Meteor, a steamboat owned by the United States through the War Shipping Administration and operating between Norfolk, Virginia, and Washington, D.C. The ladies retired to their stateroom about 11:00 p.m. and because of the warm weather opened both the glass and the shutter of the window which faced onto the boat deck. During the night the second cook of the Meteor entered the stateroom through the open window and raped Mrs. Weade, who was sleeping upon the lower berth. Mrs. Stinemeyer suffered fright and shock from witnessing this atrocity. The perpetrator of the crime was subsequently tried, convicted And executed. 2 This case involves the liability of a general agent to passengers under a contract similar to that discussed in Cosmopolitan Shipping Co. v. McAllister, 337 U.S. 783, 69 S.Ct. 1317, No. 351, 1948 Term, decided this day. The agency agreement covered passenger boats through an addendum to the contract providing for additional services by the general agent.1 3 Petitioners Lillian A. Weade and her husband, instituted a civil action for damages against respondent in the United States District Court for the Eastern District of Virginia. The husband alleged as his damages loss of consortium and the expenses of the hospitalization of his wife. Petitioner Mrs. Stinemeyer brought a separate civil action for her damages in the same court. Jurisdiction in both actions was based on diversity of citizenship, and the two civil actions were consolidated for trial. In addition, Mrs. Weade filed a libel in admiralty against the United States, which action has been continuing pending the final determination of the present proceedings. 4 The complaint of Mr. and Mrs. Weade, alleged, so far as now important, that the steamboat was operated as a common carrier by respondent and that petitioners were injured through the failure of respondent to provide adequate protection for its passengers from the personal misconduct of its employees, and through the failure to use due care in the selection of reliable, careful, and competent employees. The complaint of Mrs. Stinemeyer is substantially the same as to the specifications of negligence, though it did not assert that respondent itself was a common carrier, but did allege that the injury occurred through the act of respondent's employees. The respondent's answer denied that the vessel was operated by it as a common carrier and that the master and crew of the vessel were its employees. The answer further alleged that the vessel was operated by the War Shipping Administration, and that respondent only performed certain services for the owner of the ship as general agent in accordance with the standard service agreement. 5 The jury as triers of fact in this civil proceeding were instructed as a matter of law that by virtue of the contract respondent was the actual operator of the vessel as a common carrier owing the highest degree of care to its passengers. The trial judge further charged that as a common carrier, this duty to exercise the highest degree of care extended to all acts of the carrier and included the providing of safe accommodations and protection for passengers, the providing of a suitable number of watchmen, and the selection of competent, careful, and sober employees. The jury returned verdicts for petitioners, and the trial judge denied the motion of the respondent for judgment notwithstanding the verdict, stating as his reason therefor (168 F.2d 914, 916): 'While the case of Hust v. Moore-McCormack Lines, Inc., 328 U.S. 707, 66 S.Ct. 1218, 90 L.Ed. 1534, is not precisely in point, it is my view that it is controlling so far as the liability of the defendant is concerned.' On appeal the Court of Appeals for the Fourth Circuit reversed and held that under Caldarola v. Eckert, 332 U.S. 155, 67 S.Ct. 1569, 91 L.Ed. 1968, respondent was not the owner pro hac vice in possession and control of the vessel and thus could not be liable as a common carrier for the safety of the passengers. Dichmann, Wright & Pugh & Weade, 4 Cir., 168 F.2d 914. 6 Under our holding today in No. 351, Cosmopolitan Shipping Co. v. McAllister, the instructions referred to above were erroneous. Respondent was not the owner pro hac vice, was not a common carrier operating the vessel, and was not the employer of the master or crew. The trial of the present proceeding revolved around these questions and did not concern the problem of negligence on the part of respondent or of its own agents in handling the ship or crew on voyage as an agent of the United States as distinguished from an employer of the master and crew or owner pro hac vice. 7 Petitioners urge in point 3 of their brief as a ground for upholding the decision of the trial court that respondent, because of the duties imposed upon it by the General Agency Agreement, was liable as a common carrier as far as the public was concerned. In support of this contention they point to the duties of the general agent to issue tickets, maintain the vessel n the service directed by the United States, maintain terminals and offices, arrange for the loading and unloading of passengers, arrange for advertising, provisioning of the ship, and the procuring of officers and crew for hire by the master. The performance of such shoreside duties, however, does not make the agent liable as a common carrier to the public or anyone.2 8 At the insistence of the Navy, the War Shipping Administration in 1945 instituted a nightly service of two steamboats between Norfolk and Washington. The name given to this service was the Washington-Hampton Roads Line, and the Meteor was one of the two vessels employed therein. These two vessels were assigned to respondent as general agent by a passenger addendum to the standard GAA 4-4-42 agreement,3 under which respondent had been general agent for some twenty cargo vessels. It will be noted that under Article 3A(f) of the addendum, the general agent was to arrange for the transportation of passengers and to issue tickets for this purpose. The ticket, which is set out in the margin,4 bears the express notation that the steamboat line was 'Operated by United States of America, War Shipping Administration,' and that respondent was serving in the capacity of an agent. 9 Respondent's duties were to service the ships and 'to arrange for the transportation' of passengers on them. The duty of a common carrier, on the other hand, is to transport for hire whoever employs it.5 Here the contract called for the actual transportation to be carried out by the War Shipping Administration. The respondent's duties ended at the shore line. Cosmopolitan Shipping Co. v. McAllister, No. 351, supra. The cases cited by petitioner holding a transportation agent liable as a common carrier involve situations where the actual movement of goods or passengers was carried out by the agent.6 Under the contract respondent here was not in any way engaged in the carriage of passengers between Norfolk and Washington and had never held itself out to the public as ready to engage in such traffic. As a mere arranger of transportation it does not incur the liability of a common carrier. 10 Apart from their reliance upon respondent's control of the vessel on voyage under the agency contract, petitioners further argue that respondent as an agent is independently liable for its negligence in procuring unsuitable crew members. This theory of liability was not relied upon at the trial. Instructions upon the point were not given or requested. The court did charge that as principal and operator of the vessel the respondent was responsible for any tort committed by the steamship personnel and as a common carrier was under the duty to exercise the highest degree of care for the safety of the passengers including the selection of personnel. It was upon the basis of respondent's liability as common carrier that petitioners developed their causes of action, and upon that theory the jury under the instructions discussed above returned a verdict in their favor. At the conclusion of the trial judge's charge, counsel for petitioners stated, 'If your Honor please, we have no exceptions.' Under these circumstances, error cannot be urged as to this point. See Rule 8(1), Supreme Court of the United States, 28 U.S.C.A.; Rule 51 of the Federal Rules of Civil Procedure, 28 U.S.C.A.; United States v. Atkinson, 297 U.S. 157, 56 S.Ct. 391, 80 L.Ed. 555. 11 By the decision below, the trial court was directed to enter a judgment for respondent, which had filed a motion for judgment notwithstanding the verdict. As there were suggestions in the complaint and evidence of alleged liability of respondent to petitioners for respondent's own negligence while acting as general agent, this direction should not have been given. See Brady v. Roosevelt S.S. Co., 317 U.S. 575, 63 S.Ct. 425, 87 L.Ed. 471.7 The decision is modified so as to eliminate the direction to enter judgment.8 12 We express no opinion as to what circumstances might fix liability upon the respondent for its own actions as general agent. 13 Affirmed as modified. 14 Mr. Justice BLACK, Mr. Justice DOUGLAS, Mr. Justice MURPHY, and Mr. Justice RUTLEDGE dissent. 1 See note 3, infra, and 46 C.F.R.Cum. Supp. § 306.44. 2 See Cosmopolitan Shipping Co. v. McAllister, 337 U.S. 783, 69 S.Ct. 1317, No. 351, 1948 Term. 3 'Whereas, the United States of America (Herein called the 'United States') acting by and through the Administrator, War Shipping Administration, and Dichmann, Wright & Pugh, Inc. (herein called the 'General Agent') entered into an Agreement (Contract WSA—4098) dated January 9, 1943 (herein called the 'Service Agreement') whereby the United States appointed the General Agent as its agent to manage and conduct the business of cargo vessels assigned to it by the United States; and 'Whereas, it is desirable to have as far as practicable both cargo vessels and passenger vessels operated under the uniform provisions of one agreement. 'Now, Therefore: 'The United States and the General Agent agree that passenger vessels heretofore or hereafter allocated to the General Agent to conduct the business of the vessels as agent of the Unitd States shall be governed by the provisions of the Service Agreement modified as follows: 'Section 1. Article 3A of the Service Agreement is hereby amended by adding a provision following subsection (e) thereof as follows: "(f) Shall arrange for the transportation of passengers when so directed, and issue or cause to be issued to such passengers customary passenger tickets. After a uniform passenger ticket shall have been adopted by the United States, such passenger ticket shall be used in all cases as soon as practicable after receipt thereof by the General Agent. Pending the issuance of such uniform passenger ticket, the General Agent may continue to use its customary form of passenger ticket.' 'Section 2. The vessels to which the Service Agreement will apply be operation of this Part II, are as listed on Exhibit B attached hereto and made a part hereof, and such additional vessels as may from time to time be assigned to the General Agent by letter agreement. 'In witness whereof * * *.' 4 'Issued by 'Washington-Hampton Roads Line 'Operated by United States of America, War Shipping Administration 'One First Class Passage 'Norfolk, or Old Point Comfort Va. to Washington, D.C. 'Subject to the Following contract: 'This ticket is void unless officially stamped and dated. 'Baggage valuation is limited to $100 for and adult and $50 for a child, unless purchaser hereof declares a greater valuation at time baggage is presented for transportation and pays excess valuation charges according to tariff rates, rules and regulations. 'The company will under no circumstances be responsible for any moneys or valuables unless deposited with the Purser on Steamer, nor will they be responsible for any baggage unless properly checked. 'This ticket is imited for passage within in thirty days from date of sale stamped on back. 'Dichmann, Wright & Pugh, Inc., Agent. 'I. S. Walker, Gen. Passenger Agent.' 5 The Propeller Niagara v. Cordes, 21 How. 7, 22, 16 L.Ed. 41; Washington ex rel. Stimson Lumber Co. v. Kuykendall, 275 U.S. 207, 211, 48 S.Ct. 41, 42, 72 L.Ed. 241; United States v. Brooklyn Eastern District Terminal, 249 U.S. 296, 305—306, 39 S.Ct. 283, 285, 286, 63 L.Ed. 613, 6 A.L.R. 527; Cf. Lehigh Valley R. Co. v. United States, 243 U.S. 444, 37 S.Ct. 434, 61 L.Ed. 839; I.C.C. v. Delaware, Lackawanna & Western R. Co., 220 U.S. 235, 31 S.Ct. 392, 55 L.Ed. 448. 6 United States v. Brooklyn Terminal, 249 U.S. 296, 39 S.Ct. 286, 63 L.Ed. 613, 6 A.L.R. 527; Union Stock Yard & Transit Co. v. United States, 308 U.S. 213, 60 S.Ct. 193, 84 L.Ed. 198. 7 See Restatement, Agency § 358. 8 Globe Liquor Co. v. San Roman, 332 U.S. 571, 68 S.Ct. 246, 92 L.Ed. 177; Cone v. West Virginia Paper Co., 330 U.S. 212, 67 S.Ct. 752, 91 L.Ed. 849.

78

338 U.S. 62 69 S.Ct. 1352 93 L.Ed. 1810 TURNERv.COMMONWEALTH OF PENNSYLVANIA. No. 107. Argued Nov. 16, 17, 1948. Decided June 27, 1949. Mandate Conformed to Aug. 4, 1949. See 67 A.2d 441. Mr. Edwin P. Rome, Philadelphia, Pa., for petitioner. Mr. Colbert C. McClain, Philadelphia, Pa., for respondent. Mr. Justice FRANKFURTER, announced the judgment of the Court and an opinion in which Mr. Justice MURPHY and Mr. Justice RUTLEDGE join. 1 Our ruling in Watts v. State of Indiana, 338 U.S. 49, 69 S.Ct. 1347, is decisive of the present case. It is also a capital case in which the petitioner claims that his conviction for first-degree murder resulted from the use of incriminatory statements obtained under circumstances which should have barred their admission. The Supreme Court of Pennsylvania, in affirming the conviction, rejected this claim. 358 Pa. 350, 58 A.2d 61. We brought the case here to measure against the requirements of due process the circumstances giving rise to the claim. 334 U.S. 858, 68 S.Ct. 1521, 92 L.Ed. 1778. Again we take conflicts of testimony as they were resolved by the State's adjudication. 2 For six months the Philadelphia police had been investigating the felonious death of one Frank Andres. At 10:30 in the morning of June 3, 1946, they arrested Aaron Turner, the petitioner, on suspicion of the homicide and took him to the office of the Homicide Division at the City Hall Building. The officers making the arrest had no warrant and did not tell the petitioner why he was being a rested. These officers began to question the petitioner as soon as they reached the City Hall police station. One of them examined the petitioner for three hours on that afternoon and again that night from eight to eleven o'clock. From time to time other officers joined in the interrogation. Petitioners persistently denied any knowledge of the murder. 3 The next morning, June 4, the petitioner was booked on the police records as being held for questioning. Later that day he was questioned for about four hours more. On June 5 he was interrogated for another four hours and on the 6th for day and night sessions totaling six hours. The questioning was conducted sometimes by one officer and at other times by several working together; it appears, in fact, that whenever one of the police officers interested in the investigation had any free time he would have the petitioner brought from his cell for questioning. 4 On June 7, the day when a confession was finally obtained, questioning began in the afternoon and continued for three hours. Later that day the officers who had been present during the afternoon returned with others to resume the examination of petitioner. Despite the fact that he was falsely told that other suspects had 'opened up' on him, petitioner repeatedly denied guilt. But finally, at about eleven o'clock, petitioner stated that he had killed the person for whose murder he was later arraigned. At nine o'clock the following morning the same police officers stated to reduce his statement to writing, interrupted this process to bring him for a preliminary hearing before a magistrate sitting in the same building, and returned to the transcript of his statement which was completed by about noon. 5 The petitioner was not permitted to see friends or relatives during the entire period of custody; he was not informed of his right to remain silent until after he had been under the pressure of a long process of interrogation and had actually yielded to it. With commendable candor the district attorney admitted that a hearing was withheld until interrogation had produced confession. The delay of five days thus accounted for was in violation of a Pennsylvania statute which requires that arrested persons be given a prompt preliminary hearing. 6 At the trial, petitioner objected to the introduction of his statement on the ground that it was the product of police conduct of a nature condemned by our previous cases. The trial judge overruled petitioner's objection to the use of the confession but told the jury to disregard it if they found it to have been involuntary. He also told them that it was common sense 'not to send them (suspects) to the magistrate before you have sufficient information to hold an alleged culprit for the Grand Jury.' He refused to charge that in considering the voluntariness of the confession the prolonged interrogation should be considered. 7 The jury returned a verdict of guilty and recommended the death penalty. The Supreme Court of Pennsylvania affirmed the conviction in an opinion stressing the probable guilt of the petitioner and assuming that the alternatives before it were either to approve the conduct of the police or to turn the petitioner 'loose upon (society) after he has confessed his guilt.' 358 Pa. at page 367, 58 A.2d at page 69. 8 Putting this case beside the considerations set forth in our opinion in Watts v. State of Indiana, 338 U.S. 69 S.Ct. 1347, leaves open no other possible conclusion than that petitioner's confession was obtained under circumstances which made its use at the trial a denial of due process. We must, accordingly, reverse the judgment and remand the case. 9 There remains, however, an additional complication. The police arrested two other men, Johnson and Lofton, who were suspected as co-principals with Turner in the Andres murder. These two also made confessions involving Turner as well as themselves. Turner signed their confessions and they were introduced against him at the trial. Since a new trial is called for, issues raised by these confessions call for notice. 10 Clearly the same considerations that bar admission of the confession by Turner made over his own name extend to his contemporaneous adoption of the Johnson and Lofton confessions. But these statements may be introduced not as his own confessions but as confessions by co-principals. In that event Pennsylvania may, as a matter of local evidentiary law, hold that the hearsay rule requires the exclusion of statements by co-principals not on trial. Assuming, however, that as a matter of local law these statements are admissible, there would then arise the question whether under the Fourteenth Amendment a coerced statement may be excluded on objection of one not coerced into making it. At this stage, however, this is a wholly hypothetical question which, as a constitutional issue, we ought not hypothetically to answer. We could not answer it, in any event, without knowledge that Johnson's and Lofton's confessions were also coerced, and the facts necessary to that determination are not before us. 11 Such other contentions as the use of statements made at a magistrate's hearing when the accused had no counsel may be disposed of by Pennsylvania cases, or for other reasons fail to arise on retrial of the case. See, e.g., Commonwealth v. Lenousky, 206 Pa. 277, 55 A. 977, cited with approval in Commonwealth v. Westwood, 324 Pa. 289, 188 A. 304. 12 Reversed. 13 Mr. Justice BLACK concurs in the judgment on the authority of Chambers v. State of Florida, 309 U.S. 227, 60 S.Ct. 472, 84 L.Ed. 716; 14 For dissenting opinion of Mr. Justice JACKSON see 338 U.S. 49, 69 S.Ct. 1357. 15 On the record before us and in view of the consideration given to the evidence by the state courts and the conclus on reached, The CHIEF JUSTICE, Mr. Justice REED and Mr. Justice BURTON believe that the judgment should be djQ Mr. Justice DOUGLAS (concurring). 16 The undisputed facts surrounding the arrest and confession of the petitioner in this case are as follows: 17 Petitioner was arrested June 3, 1946, on suspicion of committing a homicide about six months after the crime had been committed. At the time of his arrest he was not taken before a committing magistrate, as required by Pennsylvania law. He was held five days before being lawfully committed to custody. During this confinement he did not have the aid of family, friends or counsel. He was not informed of his constitutional rights at the outset of his detention. 18 During this confinement petitioner was subject to continual interrogations by a number of police officers, who questioned him individually and in small groups. The day of his arrest he was questioned about three hours in the afternoon and again in the evening. The next two days he was questioned three to four hours in the afternoon. The next day the questioning was intensified and he was again subjected to both day and evening sessions. On the 7th of June, the day he finally confessed, the interrogations were intensive, once again being held afternoon and evening. Petitioner denied his guilt, even after being informed that other suspects had issued statements incriminating him. About eleven o'clock in the evening, after three hours of interrogation, petitioner finally indicated that he wished to make a statement. This confession was set down on paper the next day, and petitioner signed it after he had been committed by a magistrate. 19 These interrogations had been conducted by at least seven different officers. They were conducted in petitioner's cell in a small office, and in a room which had a stand-up screen where suspects were put for identification. It was admitted that the reason petitioner was not brought before a magistrate was because he had not given the answers which the police wanted and which they believed he could give. 20 The case is but another vivid illustration of the use of illegal detentions to exact confessions. It is governed by Watts v. state of Indiana, 338 U.S. 49, 69 S.Ct. 1347.

01

337 U.S. 783 69 S.Ct. 1317 93 L.Ed. 1692 COSMOPOLITAN SHIPPING CO., Inc.v.McALLISTER. No. 351. Argued Feb. 1, 2, 1949. Decided June 27, 1949. Rehearing Denied Oct. 10, 1949. See 70 S.Ct. 32. Mr. Leavenworth Colby, Washington, D.C., for petitioner. Mr. Jacob Rassner, New York City, for respondent. [Argument of Counsel from page 784 intentionally omitted] Mr. Justice REED delivered the opinion of the Court. 1 This case, like Hust v. Moore-McCormack Lines, 328 U.S. 707, 66 S.Ct. 1218, 90 L.Ed. 1534, and Caldarola v. Eckert, 332 U.S. 155, 67 S.Ct. 1569, 91 L.Ed. 1968, presents questions concerning the liability for injury to third persons of a general agent who, under the terms of the wartime standard form of agency agreement, GAA 4-4-42,1 manages certain phases of the business of ships owned by the United States and operated by the War Shipping Administration. More specifically the issue raised by these facts is whether such a general agent is liable under the Merchant Marine Act of 1920, § 33, known as the Jones Act,2 to a member of the crew who suffered physical injury through the negligence of the master and officers of such a vessel, when the injury occurred after March 24, 1943, the date of enactment of the War Shipping Administration (Clarification) Act.3 2 Respondent was procured from the union hiring hall by petitioner in accordance with the terms of the standard agreement4 and made available to the master for employment by him. The master is designated by the contract as an agent and employee of the United States. In July of 1945 respondent was signed on the S. S. Edward B. Haines at New York by the master of that vessel as second assistant engineer. In the space on the shipping articles entitled 'Operating Company on this Voyage' there was written 'Cosmopolitan Shipping Co., Inc., as general agent for the United States.' The articles were stamped at the top as follows: 'You Are Being Employed By the United States.'5 3 In November, 1945, when The Haines was on voyage and either in port or off the coast of China, respondent contracted poliomyelitis. At that time the master exercised 'full control, responsibility and authority with respect to the navigation and management of the vessel' as provided in § 3A(d) of the contract. See 337 U.S. 796, 69 S.Ct. p. 1324, infra. Because of alleged negligence of the master and officers in furnishing proper treatment he suffered permanent injury from the disease. McAllister sued the petitioner, Cosmopolitan, under the Jones Act. The complaint alleged that Cosmopolitan 'managed, operated and controlled' The Haines under a General Agency Agreement with its owner, that McAllister was in the employ of Cosmopolitan, and that his injuries resulted from the negligence of Cosmopolitan, 'its agents, servants, and employees' in failing to take precautions against a known poliomyelitis epidemic and in failing to provide proper treatment. The answer denied these allegations. The jury found a verdict for respondent for $100,000. 4 On appeal the United States Court of Appeals for the Second Circuit affirmed. McAllister v. Cosmopolitan Shipping Co., 169 F.2d 4. While recognizing that Cosmopolitan was 'a shipping company which contracted with the War Shipping Administration to attend to the accounting and certain other shoreside business of The Haines * * * in accordance with the standard form of General Agency Service Agreement,' Id. 169 F.2d at p. 5, the court felt itself bound by the decision of this Court in Hust v. Moore-McCormack Lines, supra. It relied upon the fact that we expressly distinguished the Hust case in Caldarola. The Court of Appeals reached this conclusion despite the fact that the injury to Hust occurred prior to the Clarification Act, and the injury here occurred subsequent to that act. In its view the Hust case held, as a matter of law, that before the Clarification Act a seaman under the Jones Act could recover for a tort against a service agreement general agent, as an employer. The Court did not perceive how the Clarification Act changed this liability. 169 F.2d 4, 8. I. 5 We are impelled to the conclusion that the Clarification Act affords no basis for distinguishing the present case from the Hust case and that the reasoning in the later Caldarola case, which we accept as sound, calls for the rejection of the basis of the Hust case. The Hust case went on the theory that the general agents for the United States under the same standard service agreement were employers of the injured seaman, Hust, for the purposes of liability under the Jones Act.6 The general agent was found to be liable to the seaman by two steps of reasoning: first, that the overruling of U.S. Shipping Board Emergency Fleet Corporation v. Lustgarten, 280 U.S. 320, 50 S.Ct. 118, 74 L.Ed. 451, by Brady v. Roosevelt S.S. Co., 317 U.S. 575, 63 S.Ct. 425, 87 L.Ed. 471, gave a seaman a right to sue under the Jones Act such general agents as were employed under contracts like Moore-McCormack's for torts committed against seamen by masters and crew, 328 U.S. 716—722, 66 S.Ct. 1222, 1225, 90 L.Ed. 1534, second, that although 'technically the agreement made Hust an employee of the United States,' 328 U.S. at p. 723, 66 S.Ct. at page 1226, 90 L.Ed. 1534, the 'rules of private agency,' 328 U.S. at p. 724, 66 S.Ct. at page 1227, 90 L.Ed. 1534, should not be applied to take away 'protections' from seamen. See 332 U.S. 165—166, 67 S.Ct. 1574, 91 L.Ed. 1968.7 This second step was said to find support in the election given to seamen by § 1 of the Clarification Act to proceed under the new Act for claims arising after October 1, 1941, and before the enactment of the Clarification Act, March 24, 1943. 328 U.S. at page 725, et seq., 66 S.Ct. at page 1227, 90 L.Ed. 1534.8 6 As to the first conclusion, we think it arises from a misconception of the ruling of the Brady case. The Brady case decided no more, directly or by implication, than that an action could be maintained against agents of the United States at common law for the agents' own torts. The case did not involve the right to recover against employers under the Jones Act. Brady was a customs inspector suing for injuries sustained when a ship's ladder broke. The opinion said, 317 U.S. at page 577, 63 S.Ct. at page 426, 427, 87 L.Ed. 471, 'The sole question here is whether the Suits in Admiralty Act makes private operators such as respondent nonsuable for their torts.'9 Cf. Caldarola v. Eckert, 332 U.S. at pages 159—160, 67 S.Ct. at page 1571, 91 L.Ed. 1968. 7 As to the second conclusion we are unable to perceive in the statutes relating to sailors' rights or the history behind their enactment any legislative purpose to create in seamen employees of the United States through the War Shipping Administration a right to enforce tort claims under the Jones Act against others than their employers or any recognition that such right existed. The Jones Act was welfare legislation that created new rights in seamen for damages arising from maritime torts. As welfare le islation, this statute is entitled to a liberal construction to accomplish its beneficent purposes. Compare Aguilar v. Standard Oil Co., 318 U.S. 724, 63 S.Ct. 930, 87 L.Ed. 1107; American Stevedores v. Porello, 330 U.S. 446, 67 S.Ct. 847, 91 L.Ed. 1011. In considering similar legislation in other fields, we have concluded that Congress intended that the purposes of such enactments should not be restricted by common-law concepts of control so as to bar from welfare legislation as independent contractors persons who were as a matter of economic reality a part of the processes and dependent upon the businesses to which they render service.10 8 The issue in this case is whether a construction of the Jones Act carrying out the intention of Congress to grant those new rights to seamen against their employers requires or permits a holding that the general agent under the contract here in question is an employer under the Jones Act. The decision depends upon the interpretation of the contract between respondent and Cosmopolitan on one hand and that between Cosmopolitan and the United States on the other. We assume without deciding that the rule of the Hearst case applies, that is, the word 'employment' should be construed so as to give protection to seamen for torts committed against them by those standing in the proximate relation of employer, and the rules of private agency should not be rigorously applied.11 Yet this Court may not disregard the plain and rational meaning of employment and employer to furnish a seaman a cause of action against one completely outside the broadest lines or definitions of employment or employer. We have no doubt that under the Jones Act only one person, firm, or corporation can be sued as employer. Either Cosmopolitan or the Government is that employer.12 The seaman's substantive rights are the same whoever is the employer. Under the Jones Act, his remedy permits him to demand a jury trial. If the Government is the employer, his remedy is in Admiralty without a jury. See the excerpt from the House Report, p. 8, infra. 9 It was said in Hust that the election of remedies granted seamen injured between October 1, 1941, and the effective date of the Clarification Act, March 24, 1943, indicated that a seaman had broader rights before the Clarification Act than he did after. 328 U.S. at page 725, 66 S.Ct. at page 1227, 91 L.Ed. 1968, Part III. The suggestion was that Congress could not have intended to restrict suits against general agents. This statement springs from the Court's then understanding of the Brady case, which we have heretofore considered. The reason for the election given by the Clarification Act was quite different. It was to give seamen employees of the United States through the War Shipping Administration on public vessels or foreign-flag vessels or otherwise an election to employ the means for redress theretofore possessed by them, such as those mentioned in § of the Clarification Act, note 8, supra, or to enjoy the same rights as similar employees on merchant vessels.13 Nothing has been presented to us from the Act or from its legislative history indicative of congressional purpose to do anything other than to extend existing rights of merchant seamen to all seamen employed through the War Shipping Administration. This was specifically declared in H.R. Rep. No. 107, 78th Cong., 1st Sess., p. 21: 10 'The various rights and remedies under statute and general maritime law with respect to death, injury, illness, and other casualty to seamen, have been rather fully set forth hereinabove. Under clause 2 of section 1(a) these substantive rights would be governed by existing law relating to privately employed seamen. The only modification thereof arises from the remedial provision that they shall be enforced in accordance with the provisions of the Suits in Admiralty Act (46 U.S.C.A. § 741 et seq.). This procedure is appropriate in view of the fact that the suits will be against the Government of the United States. In such a suit no provision is made for a jury trial as may otherwise be had in a proceeding such as one under the Jones Act for reasons set forth in the letter of the Attorney General (September 14, 1942).' 11 See S. Rep. No. 62, 78th Cong., 1st Sess., pp. 11—12; S. Rep. No. 1813, 77th Cong., 2d Sess., p. 6; Hearings before the Committee on the Merchant Marine and Fisheries, House of Representatives, 77th Cong., 2d Sess., on H.R. 7424, p. 33. 12 The Caldarola case, 332 U.S. 155, 67 S.Ct. 1569, 91 L.Ed. 1968, undermined the foundations of Hust. See the dissent therein, 332 U.S. at pp. 161—163, 67 S.Ct. at pages 1572, 1573. Caldarola held that the general agents under the standard form contract were not in possession and control of the vessel so as to make them liable under New York law to an invitee for injuries arising from negligence in its maintenance, 332 U.S. at pp. 158—159, 67 S.Ct. at pages 1570, 1571. Our ruling was based on 'the interpretation of that contract' as 'a matter of federal concern.' We do not think it consistent to hold that the general agent has enough 'possession and control' to be an employer under the Jones Act but not enough to be responsible for maintenance under New York law. It is true, as respondent argues, that Caldarola dealt only with the general agent's liability to a stevedore, as opposed to a crew member, under the law of New York. We think, however, that vicarious liability to anyone must be predicated on the relation which exists under the standard form agreement and the shipping articles between the general agent on the one hand and the master and crew of the vessel on the other. Caldarola held that this relation was not one which involved that proximity necessary to a finding of liability in the general agent for the torts of the master and crew. We perceive no reason why the rationale of this holding does not apply with equal force to a suit under the Jones Act. Under common-law principles of agency such a conclusion is required. We think it equally compelled even if we are to adopt, as the Court in Hust suggested, the perhaps less technical and more substantial tests propounded in National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170. 13 Hust was decided June 10, 1946; Caldarola June 23, 1947. Certainly from the latter date, the danger of relying on Hust was apparent to the world though it must be admitted there was enough uncertainty in the aw properly to give concern to Congress.14 Notwithstanding there may be some undesirable results in overruling Hust, such as loss of rights under the Suits in Admiralty Act by reliance on Hust, we think that in view of Caldarola, the uncertainty as to remedies that the two decisions generate, and the desirability of clarifying the position of the United States as an employer through the War Shipping Administration, that case should be and is overruled. II. 14 A reexamination of the present standard service agreement will make clear the conclusion set out in Part I of this opinion. 46 C.F.R.Cum.Supp. § 306.44 et seq. The solution of the problem of determining the employer under such a contract depends upon determining whose enterprise the operation of the vessel was. Such words as employer, agent, independent contractor are not decisive. No single phrase can be said to determine the employer. One must look at the venture as a whole. Whose orders controlled the master and the crew? Whose money paid their wages? Who hired the crew? Whose initiative and judgment chose the route and the ports? It is in the light of these basic considerations that one must read the contract. No evidence has come to our attention that indicates the general agent ever undertook to give orders or directions as to the route or management of the ship while on voyage. 15 An examination of the terms of the contract and the actual conduct of the parties under this agreement, so far as shown by the record, demonstrates that the United States had retained for the entire voyage the possession, management, and navigation of the vessel and control of the ship's officers and crew to the exclusion of the general agent. Under the General Agency Agreement the general agent is appointed by the United States 'as its agent and not as an independent contractor, to manage and conduct the business of vessels assigned to it.' Art. I. The general agent agrees to 'manage and conduct the business for the United States, in accordance with such directions, orders, or regulations as the latter has prescribed, or from time to time may prescribe.' Art. 2. The general agent engages itself to maintain the vessels in such trade or service as the United States may direct,' to 'collect all moneys due the United States' under the agreement, to 'equip, victual, supply and maintain the vessel, § bject to such directions, orders, regulations and methods of supervision and inspection as the United States may from time to time prescribe,' Art. 3A, to 'arrange for the repairs of the vessels' and to 'exercise reasonable diligence in making inspections and obtaining information with respect to the state of repair and condition of the vessels.' Art. 14. The agreement provides in Art. 3A(d) that: 16 '(d) The General Agent shall procure the Master of the vessels operated hereunder, subject to the approval of the United States. The Master shall be an agent and employee of the United States, and shall have and exercise full control, responsibility and authority with respect to the navigation and management of the vessel. The General Agent shall procure and make available to the Master for engagement by him the officers and men required by him to fill the complement of the vessel. Such officers and men shall be procured by the General Agent through the usual channels and in accordance with the customary practices of commercial operators and upon the terms and conditions prevailing in the particular service or services in which the vessels are to be operated from time to time. The officers and members of the crew shall be subject only to the orders of the Master. All such persons shall be paid in the customary manner with funds by the United States hereunder.' 17 It is thus seen that the duties of the respondent were expressly and intentionally limited to those of a ship's husband who has been engaged to take care of the shoreside business of the ship and who has no part in the actual management or navigation of the vessel. This view is reinforced by the considerations which led to the establishment of the War Shipping Administration to control 'the operation, purchase, charter, requisition, and use of all ocean vessels under the flag or control of the United States.'15 Secrecy, speed, and efficiency of operation were of paramount importance. Direct governmental operation of the merchant fleet insured sovereign immunity from regulation, taxation, and inspection, by other sovereignties both local and foreign. At the same time the services of private shipping companies could be utilized because they possessed personnel skilled in the shoreside business of a ship and familiar with local port facilities and conditions. In addition these private companies were favorably situated through their union and other connections to secure seamen to man the vessels. As a result service agreements were designed whereby the shoreside services and administration of the merchant fleet were to be handled by existing private companies while the United States through the master of the ship retained full control over the navigation and physical operation of the vessel. 18 Two types of service agreements were drafted—the General Agency Agreement, with which we are presently concerned, and the Berth Agency Agreement.16 The general agent has the responsibility of husbanding the vessel and his duties are to victual, supply, maintain, and repair the ship. The duties of the berth agent relate primarily to the handling and loading of cargo and other port services such as wharfage and pilotage needed by the vessel. In foreign ports the berth agent also takes care of the husbanding services. There is necessarily a certain overlapping of duties, but to avoid any conflict of authority both the general agent and the berth agent were made subject to 'such directions, orders or regulations as the (United States) has prescribed, or from time to time may prescribe.'17 This division of duties between the general agent and the berth agent emphasizes the fact that neither the possession nor management of the vessel was conferred on either of them There could be no occasion for any conflict of authority with regard to orders received by the master as to the actual operation of the ship for he was expressly made, in Art. 3A(d), the agent and employee of the United States with 'full control, responsibility and authority with respect to the navigation and management of the vessel.' 19 Even the discretion vested in the agents was decreased by the master contracts which the United States executed for the furnishing of numerous services and supplies required by the vessels.18 There were also detailed instructions issued by the War Shipping Administration as to the terms of the contracts which the agents were authorized to enter into,19 and these contracts were required to be executed in the name of the United States as principal.20 20 At the time of the wartime requisition of the privately owned merchant fleet the government administrative agencies concerned gave careful study to the question of whether the crews were to be employees of the shipping companies or of the United States.21 There were outstanding many collective bargaining agreements between the private shipping companies and the maritime unions. It was manifestly undesirable to disturb these existing agreements and for the government to negotiate new ones.22 Yet it was essential that the masters and crews be government employees in order to obviate strikes and work stoppages, to insure sovereign immunity for the vessels, and to preserve wartime secrecy by confining all litigation concerning operation of the vessels to the admiralty courts where appropriate security precautions could be observed. The service agreements, therefore, provided that the officers and men to fill the complement of the vessel should be procured by the general agent through the usual channels upon the terms and conditions customarily prevailing in the services in which the vessels were to be operated.23 These men, however, were to be hired by the master of the ship and were to be subject to his orders only. The responsibility of employing the officers, so the Regulations show, was vested exclusively in the master,24 and the men so hired became employees of the United States and not of the general agent.25 21 Previously existing collective bargaining agreements were adhered to so that seamen's conditions of employment would be disrup ed as little as possible by the change-over occasioned by government requisition of the vessels. See the War Shipping Administration's over-all collective bargaining arrangement with the nine principal maritime unions, known as the 'Statements of Policy,' WSA Operations Regulation 1, May 25, 1942. Although the War Shipping Administration seamen fell within the exclusion of employees of the United States from the coverage of the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., the Administrator arranged to utilize the facilities of the National Labor Relations Board for the designation of bargaining units, while specifically reserving the Administration's rights with respect to the Board's absence of jurisdiction over personnel aboard WSA operated vessels.26 The House Committee on Merchant Marine and Fisheries, in reporting the Clarification Act, expressly approved of this practical solution of the collective bargaining problem.27 A similar practical arrangement was made in connection with the functioning of the War Labor Board. 22 The shipping articles summarized above, 337 U.S. 796, 69 S.Ct. p. 1324, complied with the tenor of the General Agency Agreement by making it clear that respondent was an employee of the United States. In order to pay the crew and the other expenses incidental to the operation of the ship, the War Shipping Administration deposited funds in a special joint bank account set up in the name of the agent 'as general agent for the War Shipping Administration.' From this special account the general agent drew the funds and turned them over to the master to pay the crew. No money of the general agent was used for this purpose or in the operation of the vessel. 23 Thus the cases and an analysis of the relations established by the standard form agreement lead to the conclusion that an agent such as Cosmopolitan, who contracts to manage certain shoreside business of a vessel operated by the War Shipping Administration, is not liable to a seaman for injury caused by the negligence of the master or crew of such a vessel. 24 Reversed. 25 Mr. Justice BLACK, Mr. Justice DOUGLAS, Mr. Justice MURPHY and Mr. Justice RUTLEDGE dissent. 1 46 C.F.R.Cum.Supp. § 306.44. 2 41 Stat. 1007, 46 U.S.C. § 688, 46 U.S.C.A. § 688, which provides in pertinent part: 'Any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right of trial by jury, and in such action all statutes of the United States modifying or extending the common-law right or remedy in cases of personal injury to railway employees shall apply; * * *.' 3 57 Stat. 45, 50 U.S.C.Appendix, § 1291, 50 U.S.C.A.Appendix, § 1291. 4 See text, p. 12, infra. 5 Under 46 U.S.C. §§ 564, 565, 713, 46 U.S.C.A. §§ 564, 565, 713, the crewman signs the shipping articles in the presence of a United States Shipping Commissioner who certifies that the crewman fully understands the contents of the instrument. 6 Note 2, supra. As § 33 shows on its face, a seaman has the advantages of the Act only against his employer. Panama R. Co. v. Johnson, 264 U.S. 375, 389, 44 S.Ct. 391, 394, 68 L.Ed. 748; Nolan v. General Seafoods Corp., 1 Cir., 112 F.2d 515, 517; The Norland, 9 Cir., 101 F.2d 967; Baker v. Moore-McCormack Lines, D.C., 57 F.Supp. 207, 208; Eggleston v. Republic Steel Corp., D.C., 47 F.Supp. 658, 659; Gardiner v. Agwilines, Inc., .d.C., 29 F.Supp. 348. 7 It should be noted that a concurring opinion added to the grounds given in the Court's opinion an argument that Moore-McCormack was owner pro hac vice. 328 U.S. 734, 66 S.Ct. 1231, 90 L.Ed. 1534. This view was again rejected in Caldarola v. Eckert, 332 U.S. at page 159, 67 S.Ct. at page 1571, 91 L.Ed. 1968. A contract such as this does not give 'exclusive possession, command, and navigation of the vessel,' Reed v. United States, 11 Wall. 591, 600, 20 L.Ed. 220, and therefore fails to give the operator an owner's power. Leary v. United States, 14 Wall. 607, 611, 20 L.Ed. 756; United States v. Shea, 152 U.S. 178, 186—189, 14 S.Ct. 519, 521, 522, 38 L.Ed. 403. 8 57 Stat. 45, 50 U.S.C.Appendix, § 1291, 50 U.S.C.A.Appendix, § 1291. '(a) officers and members of crews (hereinafter referred to as 'seamen') employed on United States or foreign flag vessels as employees of the United States through the War Shipping Administration shall, with respect to (1) laws administered by the Public Health Service and the Social Security Act, as amended by subsection (b)(2) and (3) of this section; (2) death, injuries, illness, maintenance and cure, loss of effects, detention, or repatriation, or claims arising therefrom not covered by the foregoing clause (1); and (3) collection of wages and bonuses and making of allotments, have all of the rights, benefits, exemptions, privileges, and liabilities, under law applicable to citizens of the United States employed as seamen on privately owned and operated American vessels. Such seamen, because of the temporary wartime character of their employment by the War Shipping Administration, shall not be considered as officers or employees of the United States for the purposes of the United States Employees Compensation Act, as amended; the Civil Service Retirement Act, as amended; the Act of Congress approved March 7, 1942 (Public Law 490, Seventy-seventh Congress); or the Act entitled 'An Act to provide benefits for the injury, disability, death, or detention of employees of contractors with the United States and certain other persons or reimbursement therefor,' approved December 2, 1942 (Public Law 784, Seventy-seventh Congress). Claims arising under clause (1) hereof shall be enforced in the same manner as such claims would be enforced if the seaman were employed on a privately owned and operated American vessel. Any claim referred to in clause (2) or (3) hereof shall, if administratively disallowed in whole or in part, be enforced pursuant to the provisions of the Suits in Admiralty Act, notwithstanding the vessel on which the seaman is employed is not a merchant vessel within the meaning of such Act. Any claim, right, or cause of action of or in respect of any such seaman accruing on or after October 1, 1941, and prior to the date of enactment of this section may be enforced, and upon the election of the seaman or his surviving dependent or beneficiary, or his legal representative to do so shall be governed, as if this section had been in effect when such claim, right, or cause of action accrued, such election to be made in accordance with rules and regulations prescribed by the Administrator, War Shipping Administration. Rights of any seaman under the Social Security Act, as amended by subsection (b)(2) and (3), and claims therefor shall be governed solely by the provisions of such Act, so amended. When used in this subsection the term 'administratively disallowed' means a denial of a written claim in accordance with rules or regulations prescribed by the Administrator, War Shipping Administration. * * *' 9 See the discussion of the Brady case at 328 U.S. 745—747, 66 S.Ct. at pages 1237, 1238, 90 L.Ed. 1534. 10 Newsboys, National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 120, 128—131, 64 S.Ct. 851, 859, 860, 88 L.Ed. 1170; unloaders of coal cars, United States v. Silk, 331 U.S. 704, 713, 67 S.Ct. 1463, 1468, 91 L.Ed. 1757; meat boners, Rutherford Food Corp. v. McComb, 331 U.S. 722, 67 S.Ct. 1473, 91 L.Ed. 1772. 11 But compare Robinson v. Baltimore & Ohio R. Co., 237 U.S. 84, 94, 35 S.Ct. 491, 494, 59 L.Ed. 849: 'We are of the opinion that Congress used the words 'employee' and 'employed' in the statute in their natural sense, and intended to describe the conventional relation of employer and employee.' Hull v. Philadelphia & Reading R. Co., 252 U.S. 475, 40 S.Ct. 358, 64 L.Ed. 670. 12 It is much the same type of problem as was presented in Bartels v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947, 172 A.L.R. 317. There we concluded that the leader and organizer of a traveling orchestra was the employer of the band members rather than the various dance hall proprietors for whom the orchestra performed. 13 For a full discussion see the dissent in Hust v. Moore-McCormack, 328 U.S. 707, 744, 66 S.Ct. 1218, 1237, 90 L.Ed. 1534, and the excerpts from the Senate and House Reports, footnotes 9 and 10. For the background of the statutory distinctions drawn between public vessels and merchant vessels, see Canadian Aviator, Ltd. v. United States, 324 U.S. 215, 218—222, 65 S.Ct. 639, 641, 643, 89 L.Ed. 901; American Stevedores v. Porello, 330 U.S. 446, 450—454, 67 S.Ct. 847, 849, 851, 91 L.Ed. 1011. 14 Although Congress has not enacted legislation to make entirely clear the remedies of W.S.A. seamen against the United States for torts, there has been an effort to do so. H.R.4873, 80th Cong., 2d Sess., sought to do so by amending the Suits in Admiralty Act, § 5, so as to make the remedy in admiralty of that act exclusive as to the same subject matter so as to protect the general agent from suits such as Hust or Caldarola. The bill was passed by the House June 8, 1948, 94 Cong.Rec. 7388—89, but was not passed by the Senate. H.R. 483 and 4051 of the 81st Cong., 1st Sess., to the same effect are now pending. In H.R.Rep.No.2060 on H.R.4873, the Committee on the Judiciary said, p. 2: 'Then the Supreme Court on June 23, 1947, handed down its decision in Caldarola v. Eckert, 332 U.S. 155, 67 S.Ct. 1569, 91 L.Ed. 1968, which clarified, in the opinion of the committee, the rule previously announced so as to make it plain that the agent while liable for the negligence of its own employees was not liable for the negligence of the civil-service masters and crews with whom the United States manned the vessels. For the negligence of those, the United States was the only responsible party. The committee believes that litigants should not be made the victims of the legal confusion regarding the proper remedy in such cases, and are not responsible for the conditions brought about by the lack of clarity in the opinions of the Supreme Court. Legislative relief is requisite not only to save to litigants possessing meritorious claims their right to a day in court, but also to settle the question of remedy in future cases.' 15 Executive Order 9054 of February 7, 1942, 50 U.S.C.A.Appendix, § 1295, note, issued under the First War Powers Act of December 18, 1941, 55 Stat. 838, 50 U.S.C.A.Appendix, § 601 et seq. 3 C.F.R. Cum.Supp. 1086. 16 Promulgated by the Administrator, War Shipping Administration, in General Order No. 21, Sept. 22, 1942, and Supp. 4 thereto, Dec. 29, 1943. 7 Fed.Reg. 7561; 8 Fed.Reg. 17512. 17 Article 2 of the General Agency Agreement, form GAA 4—4 42, and Article 2 of the Berth Agency Agreement, form BA 12—29—43. 18 Examples of such contracts are contained in the record of Caldarola v. Eckert, 332 U.S. 155, 67 S.Ct. 1569, 91 L.Ed. 1968, No. 625, 1946 Term. 19 For example, see Operation Regulations Nos. 27 (towage contracts); 84 (duties of berth agents, general agents, and agents); 97 (bunker oil contracts); 99, Supp. 1 and 2 (pilferage). 20 General Order No. 42 of the War Shipping Administration, 9 F.R. 4110. 21 See letter of April 28, 1947, from the General Counsel of the Maritime Commission to the Department of Justice. 22 See the Statements of Policy of May 4 and May 12, 1942, issued by the War Shipping Administration and the various maritime unions. WSA Operation Regulation No. 1. 23 Article 3A(d) of the General Agency Agreement, set out in text of opinion 337 U.S. 796, at 69 S.Ct. p. 1324. 24 Operations Regulation No. 15, Directive No. 2, issued by the War Shipping Administration provided: 'The Master of a vessel has full discretion in signing on crew members and may reject any person seeking employment. * * * Records shall be kept of the names of those rejected and of the reason for rejection and shall be submitted to the port office of the Recruitment and Manning Organization of the War Shipping Administration in the port in which the rejection occurs.' 25 See Restatement Agency, § 79, comment (a). 26 See letter of October 20, 1942, from the War Shipping Administration to the National Labor Relations Board, and the reply of October 26, 1942. 27 H.R.Rep.No.107, 78th Cong., 1st Sess., pp. 23—24.

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337 U.S. 733 69 S.Ct. 1210 93 L.Ed. 1659 COMMISSIONER OF INTERNAL REVENUEv.CULBERTSON et al. No. 313. Argued Feb. 7, 1949. Decided June 27, 1949. Mr. Arnold Raum, Washington, D.C., for petitioner. [Argument of Counsel from page 734 intentionally omitted] Mr. Be jamin L. Bird, Fort Worth, Tex., for respondents. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 This case requires our further consideration of the family partnership problem. The Commissioner of Internal Revenue ruled that the entire income from a partnership allegedly entered into by respondent and his four sons must be taxed to respondent,1 and the Tax Court sustained that determination. The Court of Appeals for the Fifth Circuit reversed. 168 F.2d 979. We granted certiorari, 335 U.S. 883, 69 S.Ct. 235, to consider the Commissioner's claim that the principles of Commissioner v. Tower, 1946, 327 U.S. 280, 66 S.Ct. 532, 90 L.Ed. 670, 164 A.L.R. 1135, and Lusthaus v. Commissioner, 1946, 327 U.S. 293, 66 S.Ct. 539, 90 L.Ed. 679, have been departed from in this and other courts of appeals decisions. 2 Respondent taxpayer is a rancher. From 1915 until October 1939, he had operated a cattle business in partnership with R. S. Coon. Coon, who had numerous business interests in the Southwest and had largely financed the partnership, was 79 years old in 1939 and desired to dissolve the partnership because of ill health. To that end, the bulk of the partnership herd was sold until, in October of that year, only about 1,500 head remained. These cattle were all registered Herefords, the brood or foundation herd. Culbertson wished to keep these cattle and approached Coon with an offer of $65 a head. Coon agreed to sell at that price, but only upon condition that Culbertson would sell an undivided one-half interest in the herd to his four sons at the same price. His reasons for imposing this condition were his intense interest in maintaining the Hereford strain which he and Culbertson had developed, his conviction that Culbertson was too old to carry on the work alone, and his personal interest in the Culbertson boys. Culbertson's sons were enthusiastic about the proposition, so respondent thereupon bought the remaining cattle from the Coon and Culbertson partnership for $99,440. Two days later Culbertson sold an undivided one-half interest to the four boys, and the following day they gave their father a note for $49,720 at 4 per cent interest due one year from date. Several months later a new note for $57,674 was executed by the boys to replace the earlier note. The increase in amount covered the purchase by Culbertson and his sons of other properties formerly owned by Coon and Culbertson. This note was paid by the boys in the following manner: Credit for overcharge.......... $ 5,930 Gifts from respondent........... 21,744 One-half of a loan procured by Culbertson & Sons partnership.. 30,000 3 The loan was repaid from the proceeds from operation of the ranch. 4 The partnership agreement between taxpayer and his sons was oral. The local paper announced the dissolution of the Coon and Culbertson partnership and the continuation of the business by respondent and his boys under the name of Culbertson & Sons. A bank account was opened in this name, upon which taxpayer, his four sons and a bookkeeper could check. At the time of formation of the new partnership, Culbertson's oldest son was 24 years old, married, and living on the ranch, of which he had for two years been foreman under the Coon and Culbertson partnership. He was a college graduate and received $100 a month plus board and lodging for himself and his wife both before and after formation of Culbertson & Sons and until entering the Army. The second son was 22 years old, was married and finished college in 1940, the first year during which the new partnership operated. He went directly into the Army following graduation and rendered no services to the partnership. The two younger sons, who were 18 and 16 years old respectively in 1940, went to school during the winter and worked on the ranch during the summer.2 5 The tax years here involved are 1940 and 1941. A partnership return was filed for both years indicating a division of income approximating the capital attributed to each partner. It is the disallowance of this division of the income from the ranch that brings this case into the courts. 6 First. The Tax Court read our decisions in Commissioner v. Tower, supra, and Lusthaus v. Commissioner, supra, as setting out two essential tests of partnership for income-tax purposes: that each partner contribute to the partnership either vital services or capital originating with him. Its decision was based upon a finding that none of respondent's sons had satisfied those requirements during the tax years in question. Sanction for the use of these 'tests' of partnership is sought in this paragraph from our opinion in the Tower case: 7 'There can be no question that a wife and a husband may, under certain circumstances, becomes partners for tax, as for other, purposes. If she either invests capital originating with her or substantially contributes to the control and management of the business, or otherwise performs vital additional services, or does all of these things she may be a partner as contemplated by 26 U.S.C. §§ 181, 182, 26 U.S.C.A. §§ 181, 182. The Tax Court has recognized that under such circumstances the income belongs to the wife. A wife may become a general or a limited partner with her husband. But when she does not share in the management and control of the business, contributes no vital additional service, and where the husband purports in some way to have given her a partnership interest, the Tax Court may properly take these circumstances into consideration in determining whether the partnership is real within the meaning of the federal revenue laws.' 327 U.S. at page 290, 66 S.Ct. at page 537, 90 L.Ed. 670, 164 A.L.R. 1135. It is the Commissioner's contention that the Tax Court's decision can and should be reinstated upon the mere reaffirmation of the quoted paragraph. 8 The Court of Appeals, on the other hand, was of the opinion that a family partnership entered into without thought of tax avoidance should be given recognition taxwise whether or not it was intended that some of the partners contribute either capital or services during the tax year and whether or not they actually made such contributions, since it was formed 'with the full expectation and purpose that the boys would, in the future, contribute their time and services to the partnership.'3 We must consider, therefore, whether an intention to contribute capital or services sometime in the future is sufficient to satisfy ordinary concepts of partnership, as required by the Tower case. The sections of the Internal Revenue Code involved are §§ 181 and 182,4 which set out the method of taxing partnership income, and §§ 11 and 22(a),5 which relate to the taxation of individual incomes. 9 In the Tower case we held that despite the claimed partnership, the evidence fully justified the Tax Court's holding that the husband, through his ownership of the capital and his management of the business, actually c eated the right to receive and enjoy the benefit of the income and was thus taxable upon that entire income under §§ 11 and 22(a). In such case, other members of the partnership cannot be considered 'Individuals carrying on business in partnership' and thus 'liable for income tax * * * in their individual capacity' within the meaning of § 181. If it is conceded that some of the partners contributed neither capital nor services to the partnership during the tax years in question, as the Court of Appeals was apparently willing to do in the present case, it can hardly be contended that they are in any way responsible for the production of income during those years.6 The partnership sections of the Code are, of course, geared to the sections relating to taxation of individual income, since no tax is imposed upon partnership income as such. To hold that 'Individuals carrying on business in partnership' include persons who contribute nothing during the tax period would violate the first principle of income taxation: that income must be taxed to him who earns it. Lucas v. Earl, 1930, 281 U.S. 111, 50 S.Ct. 241, 74 L.Ed. 731; Helvering v. Clifford, 1940, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788; National Carbide Corp. v. Commissioner, 1949, 336 U.S. 422, 69 S.Ct. 726. 10 Furthermore, our decision in Commissioner v. Tower, supra, clearly indicates the importance of participation in the business by the partners during the tax year. We there said that a partnership is created 'when persons join together their money, goods, labor, or skill for the purpose of carrying on a trade, profession, or business and when there is community of interest in the profits and losses.' This is, after all, but the application of an often iterated definition of income—the gain derived from capital, from labor, or from both combined7—to a particular form of business organization. A partnership is, in other words, an organization for the production of income to which each partner contributes one or both of the ingredients of income—capital or services. Ward v. Thompson, 1859, 22 How. 330, 334, 16 L.Ed. 249. The intent to provide money, goods, labor, or skill sometime in the future cannot meet the demands of §§ 11 and 22(a) of the Code that he who presently earns the income through his own labor and skill and the utilization of his own capital be taxed therefor. The vagaries of human experience preclude reliance upon even good faith intent as to future conduct as a basis for the present taxation of income.8 11 Second. We turn next to a consideration of the Tax Court's approach to the family partnership problem. It treated as essential to membership in a family partnership for tax purposes the contribution of either 'vital services' or 'original capital.'9 Use of these 'tests' of partnership indicates, at best, an error in emphasis. It ignores what we said is the ultimate question for decision, namely, 'whether the partnership is real within the meaning of the federal revenue laws' and makes decisive what we d scribed as 'circumstances (to be taken) into consideration' in making that determination.10 12 The Tower case thus provides no support for such an approach. We there said that the question whether the family partnership is real for income-tax purposes depends upon 'whether the partners really and truly intended to join together for the purpose of carrying on the business and sharing in the profits and losses or both. And their intention in this respect is a question of fact, to be determined from testimony disclosed by their 'agreement, considered as a whole, and by their conduct in execution of its provisions.' Drennen v. London Assurance Co., 113 U.S. 51, 56, 5 S.Ct. 341 (343), 344, 28 L.Ed. 919; Cox v. Hickman, 8 H.L.Cas. 268. We see no reason why this general rule should not apply in tax cases where the Government challenges the existence of a partnership for tax purposes.' 327 U.S. at page 287, 66 S.Ct. at page 536, 90 L.Ed. 670, 164 A.L.R. 1135. 13 The question is not whether the services or capital contributed by a partner are of sufficient importance to meet some objective standard supposedly established by the Tower case, but whether, considering all the facts—the agreement, the conduct of the parties in execution of its provisions, their statements, the testimony of disinterested persons, the relationship of the parties, their respective abilities and capital contributions, the actual control of income and the purposes for which it is used, and any other facts throwing light on their true intent—the parties in good faith and acting with a business purpose intended to join together in the present conduct of the enterprise.11 There is nothing new or particularly difficult about such a test. Triers of fact are constantly called upon to determine the intent with which a person acted.12 The Tax Court, for example, must make such a determination in every estate tax case in which it is contended that a transfer was made in contemplation of death, for 'The question, necessarily, is as to the state of mind of the donor.' United States v. Wells, 1931, 283 U.S. 102, 117, 51 S.Ct. 446, 451, 75 L.Ed. 867. See Allen v. Trust Co. of Georgia, 1946, 326 U.S. 630, 66 S.Ct. 389, 90 L.Ed. 367. Whether the parties really intended to carry on business as partners is not, we think, any more difficult of determination or the manifestations of such intent any less perceptible than is Mich. 70, 242 N.W. 841; Zuback v. Bakmaz, 14 But the Tax Court did not view the question as one concerning the bona fide intent of the parties to join together as partners. Not once in its opinion is there even an oblique reference to any lack of intent on the part of respondent and his sons to combine their capital and services 'for the purpose of carrying on the business.' Instead the court, focusing entirely upon concepts of 'vital services' and 'original capital,' simply decided that the alleged partners had not satisfied those tests when the facts were compared with those in the Tower case. The court's opinion is replete with such statements as 'we discern nothing constituting what we think is a requisite contribution to a real partnership. * * * We find no son adding 'vital additional service' which would take the place of capital contributed because of formation of a partnership * * * it is clear that the sons made no capital contribution within the meaning of the Tower case.'13 15 Unquestionably a court's determination that the services contributed by a partner are not 'vital' and that he has not participated in 'management and control of the business'14 or contributed 'original capital' has the effect of placing a heavy burden on the taxpayer to show the bona fide intent of the parties to join together as partners. But such a determination is not conclusive, and that is the vice in the 'tests' adopted by the Tax Court. It assumes that there is no room for an honest difference of opinion as to whether the services or capital furnished by the alleged partner are of sufficient importance to justify his inclusion in the partnership. If, upon a consideration of all the facts, it is found that the partne § joined together in good faith to conduct a business, having agreed that the services or capital to be contributed presently by each is of such value to the partnership that the contributor should participate in the distribution of profits, that is sufficient. The Tower case did not purport to authorize the Tax Court to substitute its judgment for that of the parties; it simply furnished some guides to the determination of their true intent. Even though it was admitted in the Tower case that the wife contributed no original capital, management of the business, or other vital services, this Court did not say as a matter of law that there was no valid partnership. We said, instead, that 'There was, thus, more than ample evidence to support the Tax Court's finding that no genuine union for partnership purposes was ever intended, and that the husband earned the income.' 327 U.S. at page 292, 66 S.Ct. at page 538, 90 L.Ed. 670, 164 A.L.R. 1135. (Italics added.) 16 Third. The Tax Court's isolation of 'original capital' as an essential of membership in a family partnership also indicates an erroneous reading of the Tower opinion. We did not say that the donee of an intra-family gift could never become a partner through investment of the capital in the family partnership, any more than we said that all family trusts are invalid for tax purposes in Helvering v. Clifford, supra. The facts may indicate, on the contrary, that the amount thus contributed and the income therefrom should be considered the property of the donee for tax, as well as general law, purposes. In the Tower and Lusthaus cases this Court, applying the principles of Lucas v. Earl, supra; Helvering v. Clifford, supra; and Helvering v. Horst, supra; 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75, 131 A.L.R. 655, found that the purported gift, whether or not technically complete, had made no substantial change in the economic relation of members of the family to the income. In each case the husband continued to manage and control the business as before, and income from the property given to the wife and invested by her in the partnership continued to be used in the business or expended for family purposes. We characterized the results of the transactions entered into between husband and wife as 'a mere paper reallocation among the family members,' noting that 'The actualities of their relation to the income did not change.' This, we thought, provided ample grounds for the finding that no true partnership was intended; that the husband was still the true earner of the income. 17 But application of the Clifford-Horst principle does nto follow automatically upon a gift to a member of one's family, followed by its investment in the family partnership. If it did, it would be necessary to define 'family' and to set precise limits of membership therein. We have not done so for the obvious reason that existence of the family relationship does not create a status which itself determines tax questions,15 but is simply a warning that things may not be what they seem. It is frequently stated that transactions between members of a family will be carefully scrutinized. But more particularly, the family relationship often makes it possible for one to shift tax incidence by surface changes of ownership without disturbing in the least his dominion and control over the subject of the gift or the purposes for which the income from the property is used. He is able, in other words, to retain 'the substance of full enjoyment of all the rights which previously he had in the property.' Helvering v. Clifford, supra, 309 U.S. at page 336, 60 S.Ct. at page 557, 84 L.Ed. 788.16 18 The fact that transfers to members of the family group may be mere camouflage does not, however, mean that they invariably are. The Tower case recognized that one's participation in control and management of the business is a circumstance indicating an intent to be a bona fide partner despite the fact that the capital contributed originated elsewhere in the family.17 If the donee of property who then invests it in the family partnership exercises dominion and control over that property—and through that control influences the conduct of the partnership and the disposition of its income—he may well be a true partner. Whether he is free to, and does, enjoy the fruits of the partnership is strongly indicative of the reality of his participation in the enterprise. In the Tower and Lusthaus cases we distinguished between active participation in the affairs of the business by a donee of a share in the partnership on the one hand, and his passive acquiescence to the will of the donor on the other.18 This distinction is of obvious importance to a determination of the true intent of the parties. It is meaningless if 'original capital' is an essential test of membership in a family partnership. 19 The cause must therefore be remanded to the Tax Court for a decision as to which, if any, of respondent's sons were partners with him in the operation of the ranch during 1940 and 1941. As to which of them, in other words, was there a bona fide intent that they be partners in the conduct of the cattle business, either because of services to be performed during those years, or because of contributions of capital of which they were the true owners, as we have defined that term in the Clifford, Horst, and Tower cases? No question as to the allocation of income between capital and services is presented in this case, and we intimate no opinion on that subject. 20 The decision of the Court of Appeals is reversed with directions to remand the cause to the Tax Court for further proceedings in conformity with this opinion. 21 Reversed and remanded. 22 Mr. Justice BLACK and mr. Justice RUTLEDGE think that the Tax Court properly applied the principles of the Tower and Lusthaus decisions, 327 U.S. 280, 66 S.Ct. 532, 90 L.Ed. 670, 164 A.L.R. 1135, 327 U.S. 293, 66 S.Ct. 539, 90 L.Ed. 679, in this case. However, they consider it of paramount importance in this case to have a court interpretation of the applicable taxing statute, for guidance in its application. Accordingly, they acquiesce in the Court's opinion and judgment. 23 Mr. Justice BURTON, concurring, states that, upon remand of the cause to the Tax Court, there is nothing in the facts which have been presented here which, as a matter of law, will preclude that court from finding that the 1940 and 1941 income was properly taxable on a partnership basis. The physical absence of some of the Culbertson boys from the ranch does not necessarily preclude them or others from the obligations or the benefits of the partnership for tax purposes. Their contributions of capital, their participation in the income and their commitments to return to the ranch or otherwise to render service to the partnership are among the material factors to be considered. A present commitment to render future services to a partnership is in itself a material consideration to be weighed with all other material considerations for the purposes of taxation as well as for other partnership purposes. 24 Mr. Justice JACKSON would affirm on the opinion of the court below, being of the view that the ordinary common-law tests of validity of partnerships are the tests for tax purposes and that they were met in this case. 25 Mr. Justice FRANKFURTER, concurring. 26 The Court finds that the Tax Court applied wrong legal standards in determining that the arrangement in controversy did not constitute a partnership. It remands the case to the Tax Court because it is for that court, and not for the Court of Appeals, to ascertain, on the basis of appropriate legal criteria, the existence of a partnership within the provisions of Int.Rev.Code, §§ 181 and 182, 26 U.S.C.A. §§ 181, 182. With these conclusions I agree. I think, however, that it is due to the Tax Court, the Courts of Appeals, the Treasury and the bar to make more explicit what the appropriate legal criteria are. 27 The Tax Court's decision rested on a misconception of our decision in Commissioner v. Tower, 327 U.S. 280, 66 S.Ct. 532, 90 L.Ed. 670, 164 A.L.R. 1135. It is, however, fair to say that it was led into that misconception by phrases which it culled from the Tower opinion with inadequate attention to the opinion in its entirety—both what it said and what it significantly did not say. The Tower opinion did not say what the Government now urges upon this Court; the Court's opinion did not take the position of the concurring opinion. In short, the opinion did not say that family partnerships are not did not even announce hobbling presumptions purposes even though they be genuine commercial partnerships; the opinion did nto even announce hobbling presumptions under the income-tax law against such partnerships. 28 On the contrary, in defining the relevant considerations for determining the existence of a partnership, the Court in the Tower case relied on familiar decisions formulating the concept of partnership for purposes of various commercial situations in which the nature of that concept was decisive. It is significant that among the cases cited was the leading case of Cox v. Hickman, 8 H.L.Cas. 268. The Court today reaffirms this reliance by its quotation from the Tower case. The final sentence of the portion quoted underlines the fact that the Court did not purport to announce a special concept of 'partnership' for tax purposes differing from the concept that rules in ordinary commercial-law cases. The sentence is: 29 'We see no reason why this general rule should not apply in tax cases where the Government challenges the existence of a partnership for tax purposes.' 327 U.S. t page 287, 66 S.Ct. at page 535, 90 L.Ed. 670, 164 A.L.R. 1135. 30 The taxability of income under §§ 181 and 182 is not a purely economic problem like the determination under § 22(a) of what is income and to whom it is attributable. The word 'income' has none but an economic significance, and so the application of § 22(a) is properly a matter of economic analysis. Cf. Lucas v. Earl, 281 U.S. 111, 50 S.Ct. 241, 74 L.Ed. 731. But §§ 181 and 182 import a concept of a different sort. These sections make taxability turn on the existence of the relation of 'partnership.' The term carries its own meaning, just as does 'negligence' in the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., because such a common-law concept has a content familiar throughout the country to those to whom the law speaks. The basic criteria which determine its applicability have been so well and so long established that they were implicitly incorporated by the Internal Revenue Code's definition of 'partnership.'1 Congress has thereby stamped a nationwide meaning upon the term which disregards minor local variants or an occasional legal sport. Only in the application to a given case of the criteria thus incorporated do economic data become relevant, and such data are inevitably subject to differing inferences by different triers of fact. It is in the appraisal of facts, therefore, that difficulty arises, and this difficulty is reflected by an appellate court in the degree of respect it accords to the particular tribunal whose appraisal of the facts is before it for review. 31 That, as I see it, is the crux of the problem that is presented by these family partnerships in their relation to the income tax. Men may put on the habiliments of a partnership whenever it advantages them to be treated as partners underneath, although in fact it may be a case of 'The King has no clothes on' to the sharp eyes of the law. Since there are special temptations to appear as a partnership in order to avoid the hardships of heavy taxation, the tribunal which presumably is gifted with superior discernment in differentiating between the real thing and the imitation—the Tax Court—will naturally be on the alert against being taken in. Therefore, a finding by the Tax Court that that which has the outward appearance of an arrangement to engage in a common enterprise is not in fact such an associated business venture ought to be respected when challenged in another court, unless such a determination is wholly without warrant in fact or, as in this case, the wrong standards for judgment have been applied. 32 A fair reading of our Tower opinion in its entirety reflects the formulation of the concept of partnership which is set forth at the beginning of its analysis and which the Court now quotes. While recognizing the importance of the question 'who actually owned a share of the capital attributed to the wife on the partnership books,' the Tower opinion states the ultimate issue to be 'whether this husband and wi e really intended to carry on business as a partnership.' 327 U.S. at page 289, 66 S.Ct. at page 537, 90 L.Ed. 670, 164 A.L.R. 1135. To that determination it was of course relevant that no new capital was brought into the business as a result of the formation of the partnership, that the wife drew on income of the partnership only to pay for the type of things she had previously bought for the family, and that the consequence was a mere paper reallocation of income. But these circumstances were not cited as giving the term 'partnership' a content peculiar to the Internal Revenue Code. They were characterized, rather, simply as 'more than ample evidence to support the Tax Court's finding that no genuine union for partnership business purposes was ever intended' and, as a corollary, 'that the husband earned the income.' 327 U.S. at page 292, 66 S.Ct. at page 538, 90 L.Ed. 670, 164 A.L.R. 1135. 33 Recognition of the importance, in applying §§ 181 and 182, of the appraisal of facts makes manifest why, quite apart from the definition contained in § 3797, a determination by a State court should not, as the Tower opinion pointed out, foreclose a contrary determination by a federal tribunal charged with administration of the tax laws. Such an inconsistency would not mean that the legal standards applied by each were inconsistent; it would be a result simply of the common-place that no finder of fact can see through the eyes of any other finder of fact. See Texas v. Florida, 306 U.S. 398, 411, 59 S.Ct. 563, 570, 83 L.Ed. 817, 121 A.L.R. 1179. Nor would inconsistency be created by a State court's concern for the protection of creditors which lead it to seize upon adoption of the outward form as the vital fact. So, indeed, might the taxing authorities refuse to be precluded from holding the taxpayer to his election to adopt the form of a partnership. Cf. Higgins v. Smith, 308 U.S. 473, 477, 60 S.Ct. 355, 357, 84 L.Ed. 406. The need for guarding against misuse of the outward form of a partnership as a device for obtaining tax advantages is properly satisfied by reliance on the vigilance of the Tax Court, not by distorting the concept of partnership. It is not for this Court, by redefinition or the erection of presumptions, to amend the Internal Revenue Code so as virtually to ban partnerships composed of the members of an intimate family group. 34 The present case, nevertheless, is not the first manifestation of an impression that the Tower opinion had precisely such an effect.2 It seems to me important, therefore, to make crystal clear that there is no special concept of 'partnership' for tax purposes, while at the same time recognizing that in view of the temptations to assume a virtue that they have not for the sake of tax savings, men and women may appear in a guise which the gimlet eye of the Tax Court is entitled to pierce. We should leave no doubt in the minds of the Tax Court, of the Courts of Appeals, of the Treasury and of the bar that the essential holding of the Tower case is that there is 'no reason' why the 'general rule' by which the existence of a partnership is determined 'should not apply in tax cases where the Government challenges the existence of a partnership for tax purposes.' 35 In plain English, if an arrangement among men is not an arrangement which puts them all in the same business boat, then they cannot get into the same boat merely to seek the benefits of §§ 181 and 182. But if they are in the same business boat, although they may have varying rewards and varied responsibilities, they do not cease to be in it when the tax collector appears. 1 Gladys Culbertson, the wife of W. O. Culbertson, Sr., is joined as a party because of her community of interest in the property and income of her husband under Texas law. 2 A daughter was also made a member of the partnership some time after its formation upon the gift by respondent of one-quarter of his one-half interest in the partnership. Respondent did not contend before the Tax Court that she was a partner for tax purposes. 3 5 Cir., 168 F.2d 979 at page 982. The court further said: 'Neither statute, common sense, nor impelling precedent requires the holding that a partner must contribute capital or render services to the partnership prior to the time that he is taken into it. These tests are equally effective whether the capital and the services are presently contributed and rendered or are later to be contributed or to be rendered.' 168 F.2d at page 983. See Note, 47 Mich.L.Rev. 595. 4 26 U.S.C. §§ 181, 182, 26 U.S.C.A. §§ 181, 182. 5 26 U.S.C. §§ 11, 22(a), 26 U.S.C.A. §§ 11, 22(a). 6 Of course one who has been a bona fide partner does not lose that status when he is called into military or government service, and the Commissioner has not so contended. On the other hand, one hardly becomes a partner in the conventional sense merely because he might have done so had he not been called. 7 Eisner v. Macomber, 1920, 252 U.S. 189, 207, 40 S.Ct. 189, 193, 64 L.Ed. 521, 9 A.L.R. 1570; Merchants Loan & Trust Co. v. Smietanka, 1921, 255 U.S. 509, 519, 41 S.Ct. 386, 388, 65 L.Ed. 751, 15 A.L.R. 1305. See Treas. Reg. 101, Art. 22(a)—1. See 1 Mertens, Law of Federal Income Taxation, 159 et seq. 8 The reductio ad absurdum of the theory that children may be partners with their parents before they are capable of being entrusted with the disposition of partnership funds or of contributing substantial services occurred in Tinkoff v. Commissioner, 120 F.2d 564, where a taxpayer made his son a partner in his accounting firm the day the son was born. 9 While the Tax Court went on to consider other factors, it is clear from its opinion that a contribution of either 'vital services' or 'original capital' was considered essential to membership in the partnership. After finding that none of respondent's sons had, in the court's opinion, contributed either, the court continued: 'In addition to the above inquiry as to the presence of those elements deemed by the Tower case essential to partnerships recognizable for Federal tax purposes, * * *' 6 CCH TCM 692, 699. Again, the court commented: 'Though the petitioner urges that many cattle businesses are composed of fathers and sons, and that the nature of the industry so requires, we think the same is probably equally true of other industries where men wish to take children into business with them. Nevertheless, we think that fact does not override the many decisions to the general effect that partners must contribute capital originating with them, or vital services.' Id. at 700. 10 See Mannheimer and Mook, A Taxwise Evaluation of Family Partnerships, 32 Iowa L.Rev. 436, 447—48. 11 This is not, as we understand it, contrary to the approach taken by the Bureau of Internal Revenue in its most recent statement of policy. I.T. 3845, 1947 Cum.Bull. 66, states at p. 67: 'Where persons who are closely related by blood or marriage enter into an agreement purporting to create a so-called family partnership or other arrangement with respect to the operation of a business or income-producing venture, under which agreement all of the arties are accorded substantially the same treatment and consideration with respect to their designated interests and prescribed responsibilities in the business as if they were strangers dealing at arm's length; where the actions of the parties as legally responsible persons evidence an intent to carry on a business in a partnership relation; and where the terms of such agreement are substantially followed in the operation of the business or venture, as well as in the dealings of the partners or members with each other, it is the policy of the Bureau to disregard the close family relationship existing between the parties and to recognize, for Federal income tax purposes, the division of profits prescribed by such agreement. However, where the instrument purporting to create the family partnership expressly provides that the wife or child or other member of the family shall not be required to participate in the management of the business, or is merely silent on that point, the extent and nature of the services of such individual in the actual conduct of the business will be given appropriate evidentiary weight as to the question of intent to carry on the business as partners.' 12 Nearly three-quarters of a century ago, Bowen, L.J., made the classic statement that 'the state of a man's mind is as much a fact as the state of his digestion.' Edgington v. Fitzmaurice, 29 L.R.Ch.Div. 459, 483. State of mind has always been determinative of the question whether a partnership has been formed as between the parties. See, e.g., Drennen v. London Assurance Co., 1884, 113 U.S. 51, 56, 5 S.Ct. 341, 343, 28 L.Ed. 919; Meehan v. Valentine, 1892, 145 U.S. 611, 621, 12 S.Ct. 972, 974, 36 L.Ed. 835; Barker v. Kraft, 1932, 259 mich. 70, 242 N.W. 841; Zuback v. Bakmaz, 1943, 346 Pa. 279, 29 A.2d 473; Kennedy v. Mullins, 1930, 155 Va. 166, 154 S.E. 568. 13 In the Tower case the taxpayer argued that he had a right to reduce his taxes by any legal means, to which this Court agreed. We said, however, that existence of a tax avoidance motive gives some indication that there was no bona fide intent to carry on business as a partnership. If Tower had set up objective requirements of membership in a family partnership, such as 'vital services' and 'original capital,' the motives behind adoption of the partnership form would have been irrelevant. 14 Although 'management and control of the business' was one of the circumstances emphasized by the Tower case, along with 'vital services' and 'original capital,' the Tax Court did not consider it an alternative 'test' of partnership. See discussion, infra, at part Third, and note 17. 15 Except, of course, when Congress defines 'family' and attaches tax consequences thereto. See, e.g. 26 U.S.C. § 503(a)(2), 26 U.S.C.A. § 503(a) (2). 16 It is not enough to say in this case, as we did in the Clifford case, that 'It is hard to imagine that respondent felt himself the poorer after this (partnership agreement) had been executed or, if he did, that it had any rational foundation in fact.' 309 U.S. at page 336, 60 S.Ct. at page 557, 84 L.Ed. 788. Culbertson's interest in his partnership with Coon was worth about $50,000 immediately prior to dissolution of the partnership. In order to sustain the Tax Court, we would have to conclude that he felt himself worth approximately twice that much upon his purchase of Coon's interest, even though he had agreed to sell that interest to his sons at the same price. 17 As noted above (note 13), participation in control and management of the business, although given equal prominence with contributions of 'vital services' and 'original capital' as circumstances indicating an intent to enter into a partnership relation, was discarded by the Tax Court as a 'test' of partnership. This indicates a basic and erroneous assumption that one can never make a gift to a member of one's family without retaining the essentials of ownership, if the gift is then invested in a family partnership. We included participation in management and control of the business as a circumstance indicative of intent to carry on business as a partner to cover the situation in which active dominion and control of the subject of the gift had actually passed to the donee. It is a circumstance of prime importance. 18 There is testimony in the record as to the participation by respondent's sons in the management of the ranch. Since such evidence did not fall within either of the 'tests' adopted by the Tax Court, it failed to consider this testimony. Without intimating any opinion as to its probative value, we think that it is clearly relevant evidence of the intent to carry on business as partners. 1 The Code defines 'partnership' in the following terms: § 3797. Definitions. '(2) Partnership and partner. 'The term 'partnership' includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a trust or estate or a corporation; and the term 'partner' includes a member in such a syndicate, group, pool, joint venture, or organization.' This definition carries two necessary implications: (1) recourse to the law of a particular State is precluded, see Treas. Reg. 111, §§ 29.3797(1), 29.3797(4); see also Lyeth v. Hoey, 305 U.S. 188, 193—194, 59 S.Ct. 155, 158, 83 L.Ed. 119, 119 A.L.R. 410; (2) use of the words 'The term 'partnership' includes' presupposes that the term has a recognized content. If this is not to be found in the law of a particular State, it can only be found in the general law of partnership. 2 See, e.g., Fletcher v. Commissioner, 2 Cir., 164 F.2d 182; Hougland v. Commissioner, 6 Cir., 166 F.2d 815. In this connection see also Tuttle and Wilson, The Confusion on Family Partnerships, 9 Ga.B.J. 353 (1947).

1112

338 U.S. 263 70 S.Ct. 26 94 L.Ed. 55 BOYDv.GRAND TRUNK WESTERN R. CO. No. 17. Argued Oct. 11, 1949. Decided Nov. 7, 1949. Mr. Melvin L. Griffith, Chicago, Ill., for petitioner. Messrs. George F. Gronewold, Battle Creek, Mich., H. Victor Spike, Detroit, Mich., for respondent. PER CURIAM. 1 In issue here is the validity of a contract restricting the choice of venue for an action based upon the Federal Employers' Liability Act.1 Petitioner was injured in the course of his duties as an employee of respondent railroad in November, 1946. Twice during the following month petitioner was advanced fifty dollars by respondent. On each of these occasions petitioner signed an agreement stipulating that if his claim could not be settled and he elected to sue, 'such suit shall be commenced within the county or district where I resided at the time my injuries were sustained, or in the county or district where my injuries were sustained and not elsewhere.'2 Although this provision defined the available forum as either the Circuit Court of Calhoun County, Michigan, or the United States District Court for the Eastern District of Michigan, petitioner brought an action in the Superior Court of Cook County, Illinois. To enjoin petitioner's prosecution of the Illinois case, respondent instituted this suit. The Michigan Circuit Court held that the contract restricting the choice of venue was void and dismissed the suit. The Michigan Supreme Court reversed, 1948, 321 Mich. 693, 33 N.W.2d 120. 2 Certiorari was granted, 1949, 337 U.S. 923, 69 S.Ct. 1166, because the federal and state courts which have considered the issue have reached conflicting results.3 We agree with those courts which have held that contracts limiting the choice of venue are void as conflicting with the Liability Act. 3 Section 6 of the Liability Act provides that 'Under this Act an action may be brought in a district court of the United States, in the district of the residence of the defendant, or in which the cause of action arose, or in which the defendant shall be doing business at the time of commercing such action. The jurisdiction of the courts of the United States under this Act shall be concurrent with that of the courts of the several States, and no case arising under this Act and brought in any State court of competent jurisdiction shall be removed to any court of the United States.' It is not disputed that respondent is liable to suit in Cook County, Illinois, in accordance with this provision. We hold that petitioner's right to bring the suit in any eligible forum is a right of sufficient substantiality to be included within the Congressional mandate of § 5 of the Liability Act: 'Any contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this Act, shall to that extent be void * * *.' The contract before us is therefore void. 4 Any other result would be inconsistent with Duncan v. Thompson, 1942, 315 U.S. 1, 62 S.Ct. 422, 86 L.Ed. 575. That opinion reviewed the legislative history and concluded that 'Congress wanted Section 5 to have the full effect that its comprehensive phraseology implies.' 315 U.S. at page 6, 62 S.Ct. at page 424. In that case as in this, the contract before the Court was signed after the injury occurred. The court below, in holding that an agreement delimiting venue should be enforced if it was reached after the accident, disregarded Duncan. 5 The vigor and validity of the Duncan decision was not impaired by Callen v. Pennsylvania R. Co., 1948, 332 U.S. 625, 68 S.Ct. 296, 92 L.Ed. 242. We there distinguished a full compromise enabling the parties to settle their dispute without litigation, which we held did not contravene the Act, from a device which obstructs the right of the Liability Act plaintiff to secure the maximum recovery if he should elect judicial trial of his cause.4 And nothing in Ex parte Collett, 1949, 337 U.S. 55, 69 S.Ct. 944, affects the initial choice of venue afforded Liability Act plaintiffs. We stated expressly that the section of the Judicial Code there involved, 28 U.S.C. § 1404(a), 28 U.S.C.A. § 1404(a), 'does not limit or otherwise modify any right granted in § 6 of the Liability Act or elsewhere to bring suit in a particular district. An action may still be brought in any court, state or federal, in which it might have been brought previously.' 337 U.S. at page 60, 69 S.Ct. at page 947. 6 The right to select the forum granted in § 6 is a substantial right. It would thwart the express purpose of the Federal Employers' Liability Act to sanction defeat of that right by the device at bar. 7 Reversed. 8 Mr. Justice FRANKFURTER and Mr. Justice JACKSON concur in the result but upon the grounds stated by Chief Judge Hand in Krenger v. Pennsylvania R. Co., 2 Cir., 1949, 174 F.2d 556, at page 560. 9 Mr. Justice DOUGLAS and Mr. Justice MINTON took no part in the consideration or decision of this case. 1 35 Stat. 65, as amended, 45 U.S.C. § 51, 45 U.S.C.A. § 51. 2 The agreement also provided that the sums advanced would be deducted from whatever settlement or recovery petitioner finally achieved. As to this, the proviso in § 5 of the Liability Act specifies 'That in any action brought against any such common carrier under or by virtue of any of the provisions of this Act, such common carrier may set off therein any sum it has contributed or paid to any insurance, relief benefit, or indemnity that may have been paid to the injured employee or the person entitled thereto on account of the injury or death for which said action was brought.' Referring to this provision, and interpreting a contract similar to the one here involved, at least one federal court has held that 'The contract to waive the venue provisions is of no effect * * * because there was no consideration for it.' Akerly v. New York Cent. R. Co., 6 Cir., 1948, 168 F.2d 812, 815. 3 In accord with the decision below are: Roland v. Atchison, T. & S.F.R. Co., D.C.N.D.Ill.1946, 65 F.Supp. 630; Herrington v. Thompson, D.C.W.D.Mo.1945, 61 F.Supp. 903; Clark v. Lowden, D.C.D.Minn.1942, 48 F.Supp. 261; Detwiler v. Chicago, R.I. & P.R. Co., D.C.D.Minn.1936, 15 F.Supp. 541; Detwiler v. Lowden, 1936, 198 Minn. 185, 188, 269 N.W. 367, 369, 838, 107 A.L.R. 1054, 1059. In conflict with the ruling before us are: Krenger v. Pennsylvania R. Co., 2 Cir., 1949, 174 F.2d 556, petition for certiorari denied 338 U.S. 866, 70 S.Ct. 140, infra; Akerly v. New York Cent. R. Co., 6 Cir., 1948, 168 F.2d 812; Fleming v. Husted, D.C.D.Iowa 1946, 68 F.Supp. 900; Sherman v. Pere Marquette R. Co., D.C.N.D.Ill.1945, 62 F.Supp. 590; Peterson v. Ogden Union Railway & Depot Co., 1946, 110 Utah 573, 175 P.2d 744; cf. Porter v. Fleming, D.C.D.Minn.1947, 74 F.Supp. 378. 4 See Krenger, supra note 3, 174 F.2d at page 558; 174 F.2d at page 561 (concurring opinion of L. Hand, C.J.); Akerly, supra note 3, 168 F.2d at page 815; Peterson, supra note 3, 110 Utah at page 579, 175 P.2d at page 747.

89

338 U.S. 241 70 S.Ct. 4 94 L.Ed. 31 McGRATH, Attorney General,v.MANUFACTURERS TRUST CO. MANUFACTURERS TRUST CO. v. McGRATH, Attorney General. Nos. 11 and 15. Argued Oct. 12, 1949. Decided Nov. 7, 1949. Mr. Joseph W. Bishop, Jr., Washington, D.C., for J. Howard McGrath, Attorney General etc. Mr. Leonard G. Bisco, New York City, for Manufacturers Trust Co. Mr. Justice BURTON delivered the opinion of the Court. 1 Numbers 11 and 15 are cross appeals from Clark v. Manufacturers Trut Co., 2 Cir., 169 F.2d 932.1 Certiorari was granted in No. 11, 337 U.S. 953, 69 S.Ct. 1525, on petition of the Custodian,2 to resolve a conflict between the judgment below and that in Clark v. E. J. Lavino & Co., 3 Cir., 175 F.2d 897. The conflict is confined to the Custodian's claim to the allowance of interest, in his favor, in a summary proceeding under § 17 of the Trading with the Enemy Act.3 He claims interest from the date that his Turnover Directive4 was served upon the Manufacturers Trust Company, here referred to as the bank, and computes such interest upon the sum which he ordered turned over. For the reasons hereinafter stated, we agree with the judgment below in its denial of interest. We granted certiorari also on the cross appeal of the bank in No. 15. 337 U.S. 953, 69 S.Ct. 1526. This was to enable us to reexamine the pleadings and, if they were found to permit it, to consider the bank's claim that the District Court lacked authority to order it to turn over to the Custodian the principal sum in question, in the face of the bank's denial of its indebtedness to the enemy creditor for that sum, its claim of a setoff in excess of the alleged debt, and its claim to a lien upon the proceeds of the debt. We find that the record does not permit us to reach that issue. 2 February 1, 1946, the Custodian issued his Vesting Order No. 5791, 11 Fed.Reg. 3005, under authority of s 5(b) of the Trading with the Enemy Act,5 vesting himself with the following described 'property': 'That certain debt or other obligation owing to Deutsche Reichsbank, by Manufacturers Trust Company, 55 Broad Street, New York, New York, arising out of a dollar account, entitled Reichsbank Direktorium Divisen Abteilung, and any and all rights to demand, enforce and collect the same, * * *.' 3 January 30, 1947, the Custodian served on the bank his Turnover Directive based upon his Vesting Order and thereby directed that the sum of $25,581.49, 'together with all accumulations to and increments thereon, shall forthwith be turned over to the undersigned (the Custodian) to be held, used, administered, liquidated, sold or otherwise dealt with in the interest of and for the benefit of the United States'. 4 October 29, 1947, the Custodian filed in the United States District Court for the Southern District of New York his petition against the bank seeking summary enforcement of his order under § 17 of the Act, supra. November 13, 1947, the bank answered.6 5 December 12, 1947, the District Court, without opinion, directed the bank to pay to the Custodian $25,581.49, plus interest at 6% per annum from January 30, 1947. The Court of Appeals for the Second Circuit struck out the interest but otherwise affirmed the judgment. One judge said he would have preferred to limit that court's holding to the point that the answer did not allege a sufficiently unequivocal claim to a setoff to raise that defense. Another dissented from the denial of interest. Petitions for certiorari were denied to both parties, January 17, 1949. 335 U.S. 910, 69 S.Ct. 480, 482. 6 June 16, 1949, the Custodian asked leave to file a petition for rehearing and for a writ of certiorari on the ground that, on June 1, 1949, the Court of Appeals for the Third Circuit had decided Clark v. E. J. Lavino & Co., supra, in which it had expressly allowed interest to the Custodian, under circumstances largely comparable to those in the case below. The bank asked leave to present its contentions shoul the Custodian's petition for certiorari be granted. All applications were granted. 337 U.S. 953, 69 S.Ct. 1525, 1526. I. 7 The Trading with the Enemy Act is a war measure.7 It creates powerful and swift executive and summary procedures particularly for the seizure of the property of enemies by legal process as an effective alternative to seizure by military force. The Act expressly provides for the seizure of enemy-held claims to money owed on debts. Kohn v. Jacob & Josef Kohn, Inc., D.C.S.D.N.Y., 264 F. 253. Special proceedings are provided to try the merits of claims to property seized in such summary possessory procedures.8 The present action is a summary possessory proceeding under § 17.9 Section 16, which has accompanied § 17 in the Act since 1917, prescribes fines, sentences and forfeitures as special sanctions to punish willful violations of vesting orders or turnover directives as follows: 'That whoever shall willfully violate any of the provisions of this Act or of any license, rule, or regulation issued thereunder, and whoever shall willfully violate, neglect, or refuse to comply with any order of the President issued in compliance with the provisions of this Act shall, upon conviction, be fined not more than $10,000, or, if a natural person, imprisoned for not more than ten years, of both; and the officer, director, or agent of any corporation who knowingly participates in such violation shall be punished by a like fine, imprisonment, or both, and any property, funds, securities, papers, or other articles or documents, * * * concerned in such violation shall be forfeited to the United States.' 40 Stat. 425, 50 U.S.C.App. § 16, 50 U.S.C.A.Appendix, § 16.10 8 The Act makes no mention of interest charges in connection with the enforcement of these summary procedures. We recognize that, in the absence of express statutory provision for it, interest sometimes has been allowed in favor of the Government under other statutes when the Government's position has been primarily that of a creditor collecting from a debtor.11 See Rodgers v. United States, 332 U.S. 371, 373, 68 S.Ct. 5, 6, 92 L.Ed. 3, in which the rule was stated and interest disallowed. In the present case, however, we are not dealing with interest accruing to the Government upon contractual indebtedress or upon indebtedness such as that arising out of customs duties or taxes. We have here quite a different matter, the violation of a summary order of the Alien Property Custodian to turn over to him the physical possession of certain funds as a protective war measure. The Turnover Directive in the instant case is, in its essence, the same kind of an order as would have been issued to compel the delivery to the Custodian of the physical possession of a $25,000 bond owned by the Deutsche Reichsbank but held by the Manufacturers Trust Company in the latter's safe-deposit vaults. Statutory fines, sentences and forfeitures are prescribed for willful violation of such an order and, in the case of the bond, it is obvious that there would be no basis for the addition of an interest charge, computed at a statutory or judicially determined rate on the face or estimated value of the bond and running merely from the date of the Turnover Directive. Similarly, we find no basis for adding such an interest charge in the instant case. 9 No claim of the Custodian for any interest accruing under the terms of the agreement of deposit is before us. The Custodian, in his Turnover Directive and in his petition, called for the delivery to him of the $25,581.49 owing to Deutsche Reichsbank on the date of the Vesting Order, February 1, 1946, together with all accumulations and increments thereon since that date. He made no showing of a contractual basis for any additions to such principal sum and, accordingly, judgment was rendered for the delivery to him of precisely $25,581.49, and no claim is made here that such sum is not the correct total amount of the indebtedness. The District Court, however, also ordered the bank to turn over to the Custodian 6% interest on $25,581.49 from January 30, 1947. This additional item reflected no terms of the deposit agreement. Whatever those terms may have been, they had not changed since February 1, 1946, so that any possible basis for the 6% interest from January 30, 1947, must be sought in the Trading with the Enemy Act. We find no authority in that Act for a 6% rate or for any other rate of coercive interest to be added as an incident to a summary order for the transfer of possession of funds. Accordingly, in No. 11, we affirm the judgment of the Court of Appeals, which omitted the interest. II. 10 In No. 15, the parties have discussed several questions which would have been presented if the answer had contained a denial of the alleged debt, an unequivocal plea of setoff, or a claim of a lien upon the Deutsche Reichsbank's interest in the debt or in its proceeds. The answer, however, did not present those issues and we do not consider them. When read as a whole, the answer did not deny the existence of the credit balance of $25,581.49 which the Custodian claimed was on deposit and which was the subject of the Custodian's Vesting Order. Nor did it unequivocally assert a setoff. Instead, the answering bank alleged, on information and belief, that an offsetting indebtedness of the Deutsche Reichsbank to it arose from the fact that the Deutsche Reichsbank was an instrumentality and part of the German Government, that the German Government had guaranteed to the answering bank the payment to it of the debts of various German banks, and that, on the date of the Vesting Order, the indebtedness of said German banks to the answering bank was in excess of $25,581.49. Those allegations did not state that the Deutsche Reichsbank was such an instrumentality and such a part of the German Government as would make the Reichsbank automatically the guarantor of the debts of other German banks to the answering bank.12 The answer did not even allege the status of the guaranteed debts to be such as to entitle the answering bank to resort to the alleged guaranty of their payment by the Deutsche Reichsbank.13 The bank's claim to a lien upon the deposit depended, likewise, upon the inadequately alleged indebtedness of the Deutsche Reichsbank to it. 11 For the foregoing reasons the judgment in No. 11 is affirmed, and the judgment in No. 15 is vacated so as to permit such amendments of the pleadings or further proceedings as shall be consistent with this opinion. 12 It is so ordered. 13 Judgment affirmed in part and vacated in part. 14 Mr. Justice DOUGLAS and Mr. Justice CLARK took no part in the consideration or decision of either of these cases. 1 J. Howard McGrath was substituted for Tom C. Clark, as Attorney General, 338 U.S. 807, 70 S.Ct. 52. 2 The term 'Custodian' is used to refer either to the Alien Property Custodian or to the Attorney General who succeeded to the powers and duties of the Alien Property Custodian under Executive Order No. 9788, 50 U.S.C.A.Appendix, § 6 note, effective October 15, 1946, 1 C.F.R. 1946 Supp. 169. 3 'Sec. 17. That the district courts of the United States are hereby given jurisdiction to make and enter all such rules us to notice and otherwise, and all such orders and decrees, and to issue such process as may be necessary and proper in the premises to enforce the provisions of this Act, with a right of appeal from the final order or decree of such court as provided in sections one hundred and twenty-eight and two hundred and thirty-eight of the Act of March third, nineteen hundred and eleven, entitled 'An Act to codify, revise, and amend the laws relating to the judiciary.' 40 Stat. 425, 50 U.S.C.App. § 17, 50 U.S.C.A.Appendix, § 17. 4 Issued under § 7(c), 40 Stat. 418, as amended, 40 Stat. 1020, 50 U.S.C.App. § 7(c), 50 U.S.C.A.Appendix, § 7(c), and Executive Order No. 9193, 1 C.F.R.Cum.Supp. 1174, as amended by Executive Order No. 9567, 50 U.S.C.A.Appendix, § 6 note, 1 C.F.R. 1945 Supp. 77. 5 § 5(b), 40 Stat. 415, as amended, 55 Stat. 839, 50 U.S.C.App. § 5(b), 50 U.S.C.A.Appendix, § 5(b), and Executive Order No. 9095, 50 U.S.C.A.Appendix, § 6 note, 1 C.F.R.Cum.Supp. 1121. 6 The following parts of the answer are especially material to our decision in No. 15: '7. Furthermore, by a vesting order the Alien Property Custodian can only vest property or a debt which was in existence at the time of the issuance of the Vesting Order. Manufactuerers Trust Company did not hold any property for or on behalf of the Deutsche Reichsbank. The relationship between Manufacturers Trust Company as a depository and the Deutsche Reichsbank as a depositor of Manufacturers Trust Company is a debtor and creditor relationship. The existence of a debt from Manufacturers Trust Company to the Deutsche Reichsbank can not be predicated upon the status of a particular account. Manufacturers Trust Company can not be a debtor of the Deutsche Reichsbank unless the total of their mutual credits exceeds the total of their mutual debits. At the time ofthe issuance of the Vesting Order No. 5791, Deutsche Reichsbank's indebtedness to Manufacturers Trust Company was in excess of $25,581.49 and therefore there was no debt owing from Manufacturers Trust Company to Deutsche Reichsbank arising out of the Reichsbank Direktorium Divisen Ab(t)eilung account. The indebtedness of the Deutsche Reichsbank arose from the fact tht Deutsche Reichsbank was upon information and belief, an instrumentality and part of the German Government. The German Government guaranteed to Manufacturers Trust Company the payment of debts of various German Banks to Manufacturers Trust Company. On June 1st, 1940 and June 14th, 1941, the indebtedness of the said banks to Manufacturers Trust Company, was in excess of $25,581.49. '8. In addition to the foregoing, Manufacturers Trust Company is advised by counsel that a lien of a bank on a depositor's balance for the amount of depositor's indebtedness to the bank is well recognized by law. Manufacturers Trust Company is further advised by counsel that Section 8 of the Trading with the Enemy Act recognizes the lien of any person who is not an enemy or an ally of an enemy and the lienor's right to realize thereon in satisfaction of the liener's claims.' (Emphasis supplied.) 7 'The Trading with the Enemy Act, whether taken as originally enacted, October 6, 1917 * * * or as since amended, March 28, 1918 * * * November 4, 1918 * * * July 11, 1919 * * * June 5, 1920 * * * is strictly a war measure, and finds its sanction in the constitutional provision, Art. I, § 8, cl. 11, empowering Congress 'to declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water.' * * * 'It is with parts of the act which relate to captures on land that we now are concerned. * * * (After discussing particularly §§ 7(c), 9, and 12): 'That Congress in time of war may autorize and provide for the seizure and sequestration through executive channels of property believed to be enemyowned, if adequate provision be made for a return in case of mistake, is not debatable. * * * There is no warrant for saying that the enemy ownership must be determined judicially before the property can be seized; and the practice has been the other way. The present act commits the determination of that question to the President, or the representative through whom he acts, but it does not make his action final.' Stoehr v. Wallace, 255 U.S. 239, 241—242, 245—246, 41 S.Ct. 293, 294, 295, 296, 65 L.Ed. 604. See also, Central Union Trust Co. of New York v. Garvan, 254 U.S. 554, 568, 41 S.Ct. 214, 215, 65 L.Ed. 403; Rubin, 'Inviolability' of Enemy Private Property, 11 Law and Contemp. Prob. 166 (1945). 8 Section 9(a) of the Act, 42 Stat. 1511, 50 U.S.C.App. § 9(a), 50 U.S.C.A.Appendix, § 9(a), provides for the administrative consideration and allowance of claims to property transferred to the Custodian. A claimant also may sue in a District Court for an adjudication of the validity of his claim. Section 32, 60 Stat. 50, as amended, 60 Stat. 930, 50 U.S.C.App. § 32, 50 U.S.C.A.Appendix, § 32, authorizes the administrative recognition of claims to property in the possession of the Custodian and § 34, 60 Stat. 925, 50 U.S.C.App. § 34, 50 U.S.C.A.Appendix, § 34, authorizes a procedure for the allowance, and payment to claimants, of debts owed by the person whose property has been seized by the Custodian. See also, Central Union Trust Co. of New York v. Garvan, 254 U.S. 554, 568, 41 S.Ct. 214, 215, 65 L.Ed. 403; Garvan v. $20,000 Bonds, 2 Cir., 265 F. 477; Simon v. Miller, D.C.S.D.N.Y., 298 F. 520, 524; Kahn v. Garvan, D.C.S.D.N.Y., 263 F. 909, 916. 9 Petition filed October 29, 1947. Order to show cause issued that day. Answer filed November 13. Case heard and decided that day. Judgment entered December 12. 10 See also, penalties for willful violation added to § 5, 48 Stat. 1, 50 U.S.C.App. § 5(b)(3), 50 U.S.C.A.Appendix, § 5(b)(3). The Custodian may make the required Presidential determinations under § 7(c). 'In short, a personal determination by the President is not required; he may act through the Custodian, and a determination by the latter is in effect the act of the President.' Stoehr V. Wallace, 255 U.S. 239, 245, 41 S.Ct. 293, 296, 65 L.Ed. 604; and see Central Union Trust Co. of New York v. Garvan, 254 U.S. 554, 567, 41 S.Ct. 214, 215, 65 L.Ed. 403. 11 E.g., Royal Indemnity Co. v. United States, 313 U.S. 289, 296, 61 S.Ct. 995, 997, 85 L.Ed. 1361; Billings v. United States, 232 U.S. 261, 34 S.Ct. 421, 58 L.Ed. 596; see also, Board of Commissioners of Jackson County, Kansas, v. United States, 308 U.S. 343, 350, 352, 60 S.Ct. 285, 288, 289, 84 L.Ed. 313. 12 For a description of the contemporary monetary and banking system of Germany and of the part played in it by the Deutsche Reichsbank, see Military Government Handbook, Germany, Section 5: Money and Banking. Army Service Forces Manual, M356—5 Revised (March 1945), pp. 4, 66—73. For examples of differences between the liabilities of foreign public or semipublic corporations and those of the foreign governments to which they are related, see United States v. Deutsches Kalisyndikat Gesellschaft, D.C.S.D.N.Y., 31 F.2d 199 and Coale v. Societe Co-op., D.C.S.D.N.Y., 21 F.2d 180. 13 5 Michie, Banks and Banking, Perm. Ed., §§ 126—128, and cases cited; 7 Zollmann, Banks and Banking, Perm. Ed., §§ 4392, 4563, 4590. See also, restrictions on assertion, without a federal license, of any right of setoff which did not exist before June 14, 1941. Executive Order No. 8785, §§ 1A and 1E, 12 U.S.C.A. § 95a note, 1 C.F.R.Cum.Supp. 948, and see Propper v. Clark, 337 U.S. 472, 69 S.Ct. 1333.

34

338 U.S. 217 70 S.Ct. 10 94 L.Ed. 3 UNITED STATESv.SPELAR. No. 42. Argued Oct. 18, 1949. Decided Nov. 7, 1949. Mr. Samuel D. Slade, Washington, D.C., for petitioner. Mr. Arnold B. Elkind, New York City, for respondent. Mr. Justice REED delivered the opinion of the Court. 1 The Federal Tort Claims Act is inapplicable by its terms to 'any claim arising in a foreign country.'1 The Court of Appeals for the Second Circuit has held that this provision does not bar suit against the Government for an allegedly wrongful death occurring at a Newfoundland air base under long-term lease to the United States.2 We are hwer asked to review that decision. 2 Flight engineer Mark Spelar, an employee of American Overseas Airlines, was killed on October 3, 1946, in a take-off crash at Harmon Field, Newfoundland. This airbase is one of the areas leased for ninety-nine years by Great Britain to the United States pursuant to the same executive agreement and leases discussed at length in Vermilya-Brown Co., Inc., v. Connell, 335 U.S. 377, 69 S.Ct. 140. Spelar's administratrix, respondent here, initiated this action against the United States under the Federal Tort Claims Act in the District Court of the United States for the Eastern District of New York, the district where she resides. She alleges that the fatal accident was caused by the Government's negligent operation of Harmon Field. The local law which underlies her cause of action is Newfoundland's wrongful death statute authorizing the executor or administrator to bring suit for death arising from negligence.3 Upon the Government's motion, the District Court held the claim to be one 'arising in a foreign country,' and dismissed the complaint for want of jurisdiction. The Court of Appeals reversed. Our decision in Vermilya-Brown that the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., applies to such leased military bases was deemed 'persuasive, if not well-nigh conclusive' of the issue here.4 Because of this broad interpretation put upon our opinion in Vermilya-Brown, and because the decision substantially affects the area of private suit against the Government, we granted certiorari, 336 U.S. 950, 69 S.Ct. 884. 3 We are of the opinion that the court below has erred. Sufficient basis for our conclusion lies in the express words of the statute. We know of no more accurate phrase in common English usage than 'foreign country' to denote territory subject to the sovereignty of another nation.5 By the exclusion of 'claims arising in a foreign country,' the coverage of the Federal Tort Claims Act was geared to the sovereignty of the United States. We repeat what was said in Vermilya-Brown, 335 U.S. at page 380, 69 S.Ct. page 142. '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.' Harmon Field, where this claim 'arose,' remained subject to the sovereignty of Great Britain and lay within a 'foreign country.' The claim must be barred. 4 If the words of the statute were not enough, however, to sustain our result, we think the legislative history behind this provision concludes all doubt. The Federal Tort Claims Act of 1946 was the product of some twenty-eight years of congressional drafting and redrafting, amendment and counter-amendment.6 The draft being considered in 1942 by the House Committee on the Judiciary exempted all claims 'arising in a foreign country in behalf of an alien.'7 At the suggestion of the Attorney General, the last five words were excised in a revised version of the bill,8 so that the exemption provision assumed the form which was ultimately enacted into law.9 The superseded draft had made the waiver of the Government's traditional immunity turn upon the fortuitous circumstance of the injured party's citizenship. The amended version identified the coverage of the Act with the scope of United States sovereignty. The record of the Hearings tells us why. We quote the pertinent colloquy between Assistant Attorney General Francis M. Shea, who explained the Attorney General's revised version of the bill to the House Committee on the Judiciary, and Congressman Robsion of that committee. 5 'Mr. Shea. * * * Claims arising in a foreign country have been exempted from this bill, H.R. 6463, whether or not the claimant is an alien. Since liability is to be determined by the law of the situs of the wrongful act or omission it is wise to restrict the bill to claims arising in this country. This seems desirable because the law of the particular State is being applied. Otherwise, it will lead I think to a good deal of difficulty. 6 'Mr. Robsion. You mean by that any representative of the United States who committed a tort in England or some other country could not be reached under this? 7 'Mr. Shea. That is right. That would have to come to the Committee on Claims in Congress.'10 8 In brief, though Congress was ready to lay aside a great portion of the sovereign's ancient and unquestioned immunity from suit, it was unwilling to subject the United States to liabilities depending upon the laws of a foreign power. The legislative will must be respected. The present suit, premised entirely upon Newfoundland's law, may not be asserted against the United States in contravention of that will. 9 To the extent that Vermilya-Brown Co., Inc., v. Connell has any application to the case at bar, it stands as authority for our result here, for it postulates that the executive agreement and leases effected no transfer of sovereignty with respect to the military bases concerned.11 For the rest, we there held no more than that the word 'possessions' does not necessarily imply sovereignty, and concluded as a matter of interpretation of the legislative history of the Fair Labor Standards Act that the leased bases, not in existence at the time the Act was passed, were to be included as 'possessions' in the sense in which that word was used in that statute. The statutory language and the legislative record relating to the ambit of the Federal Tort Claims Act differ entirely from those pertinent to the Fair Labor Standards Act; and since the bases had been leased to the United States prior to the enactment of the statute here involved, the Vermilya-Brown problem of determining what Congress would have done when faced with a new situation does not exist at all in the present case. 10 In Foley Bros. v. Filardo,12 we had occasion to refer to the 'canon of construction which teaches that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States * * * .' That presumption, far from being overcome here, is doubly fortified by the language of this statute and the legislative purpose underlying it. 11 The decision must be reversed. 12 Reversed. 13 Mr. Justie DOUGLAS took no part in the consideration or decision of this case. 14 Mr. Justice FRANKFURTER, concurring. 15 In some aspects, no doubt, every statute presents a unique problem for interpretation. But the presupppositions of the judicial process in construing legislation should be neither capricious nor ad hoc. While normally, therefore, it is not very fruitful to express disagreement either with the rendering of a particular statute or the mode by which that is reached, where this involves implications touching the very process of judicial construction silence may carry significance beyond the immediate case. 16 I agree that the Federal Tort Claims Act does not afford a right of action for the negligent conduct of the Government, through its employees, at one of the bases held by the United States under the longterm arrangements made with Great Britain. But the road traveled by the Court's opinion in reaching this result does not seem to me the way to get there. 17 The Court's opinion finds the phrase 'foreign country,' in that Act's restriction against 'claims arising in a foreign country,' to be as compelling in excluding the Newfoundland air base, under the kind of control that the United States exercises at these bases, as less than a year ago it found the term 'possessions' in the Fair Labor Standars Act to be compelling in including these bases. Vermilya-Brown Co. v. Connell, 335 U.S. 377, 69 S.Ct. 140. To assume that terms like 'foreign country' and 'possessions' are self-defining, not at all involving a choice of judicial judgment, is mechanical jurisprudence at its best. These terms do not have fixed and inclusive meanings, as is true of mathematical and other scientific terms. Both 'possessions' an 'foreign country' have penumbral meanings, which is not true, for instance, of the verbal designations for weights and measures. It is this precision of content which differentiates scientific from most political, legislative and legal language. 18 A 'foreign country' in which the United States has no territorial control does not bear the same relation to the United States as a 'foreign country' in which the United States does have the territorial control that it has in the air base in Newfoundland. In the entangling relationships between such nations as Great Britian and this country, it is not compelling that 'foreign country' means today what it may have meant in the days of Chief Justice Marshall, or even in those of Mr. Justice Brown. The very concept of 'sovereignty' is in a state of more or less solution these days. To find a single and undeviating content for 'foreign country' necessarily excluding these bases, while 'POSSESSIONS' OF THE UNITED STATES IS To be deemed as necessarily incLuding them, despite the momentum of historic meaning and experience leading to a contrary significance of 'possessions,' is to give the appearance of logically compulsive force to decisions. It fails to recognize the scope of supple words that are the raw materials of legislation and adjudication and is unmindful of those considerations of policy which underlie, consciously or unconsciously, seemingly variant decisions. When so many able judges can so misconceive the implications of our decision in Vermilya-Brown Co. v. Connell, supra, as they have been found to misconceive them, the source of difficulty cannot be wholly with these able lawyer court judges. 19 The considerations that led me to join in the dissent in Vermilya-Brown Co. v. Connell, supra, lead me to concur with the Court's construction of the Tort Claims Act in this case. 20 Mr. Justice JACKSON, concurring. 21 I reach the same result; but I could hardly do so, as does the Court, by reiteration of the prevailing opinion in Vermilya-Brown Co. v. Connell, 335 U.S. 377, 69 S.Ct. 140. That decision, taken with the present one, adds up to this: If an employee should chance to work overtime on a leased air base, he can maintain an action for extra wages, penalties and interest, because the Court finds the air base to be a 'possession' of the United States. However, if he is injured at the same place, he may not proceed under the Tort Claims Act to recover, because the Court finds the air base then to be a 'foreign country.' To those uninitiated in modern methods of statutory construction it may seem a somewhat esoteric doctrine that the same place at the same time may legally be both a possession of the United States and a foreign country. This disparity results from holding that Congress, when it refers to our leased air bases, at one time calls them 'possessions' and at another 'foreign countries.' While congressional incoherence of thought or of speech is not unconstitutional and Congress can use a contrariety of terms to describe the same thing, we should pay Congress the respect of not assuming lightly that it indulges in inconsistencies of speech which make the English language almost meaningless. There is some reason to think the inconsistency lies in the Court's rendering of the statutes rather than in the way Congress has written them. At all events, the present decision seems to me correct, and, so far as it is contradicted by the effect of Vermilya-Brown, I think we should retreat from the latter. 1 62 Stat. 984, 28 U.S.C. (Supp. II), § 2680(k), 28 U.S.C.A. § 2680(k). The language was identical at the time this suit was instituted though at that time contained in 60 Stat. 846, 28 U.S.C. § 943(k). 2 Spelar v. United States, 2 Cir., 171 F.2d 208. 3 Cons.Stats. of Newfoundland (3d Series), c. 213. Local law must be pleaded since the Federal Tort Claims Act permits suit only 'where the United States, if a private person, would be liable * * * in accordance with the law of the place where the act or omission occurred.' 60 Stat. 843, 28 U.S.C. § 931(a). The substance of this provision is now embodied in 62 Stat. 933, 28 U.S.C.(Supp. II), § 1346(b), 28 U.S.C.A. § 1346(b). 4 Spelar v. United States, 2 Cir., 171 F.2d 208, 209. 5 See Mr. Justice Brown for the Court in De Lima v. Bidwell, 182 U.S. 1, 180, 21 S.Ct. 743, 746, 45 L.Ed. 1041: 'A foreign country was defined by Mr. Chief Justice Marshall and Mr. Justice Story to be one exclusively within the sovereignty of a foreign nation, and without the sovereignty of the United States. The Eliza, 2 Gall. 4, Fed.Cas.No.4,346; Taber v. United States, 1 Story 1, Fed.Cas.No.13,722; The Adventure, 1 Brock. 235, 241, Fed.Cas.No.93.' 6 Agitation for reform of the cumbersome private bill procedure bore its first fruit in H.R. 14737 introduced in the third Session of the Sixty-fifth Congress in 1919. The subject was almost continuously before one House or the other until the final passage of the substance of the present Act by the Seventy-ninth Congress. In the revision of the Judicial Code, Act of June 25, 1948, 62 Stat. 869, minor amendments, not relevant here, were made. 7 H.R. 5373, 77th Cong., 2d Sess., § 303 (12). 8 Hearings, H.R. 5373 and H.R. 6463, 77th Cong., 2d Sess., pp. 29, 35, 66. The Attorney General's revised version was H.R. 6463, § 402(12). 9 The shape of the Federal Tort Claims Act was largely determined during its consideration in the course of the 77th Congress. Subsequently the bill was reintroduced without substantial modification or further hearings until its enactment during the 79th Congress. The revised version of the tort claims bill introduced during the 2d session of the 77th Congress, S. 2221, was reported favorably by the Senate Committee on the Judiciary (S. Rep. No. 1196, 77th Cong., 2d Sess.), and passed the Senate. 88 Cong.Rec. 3174. The House Committee on the Judiciary, to which it was then referred, and which had been holding hearings on H.R. 6463, the companion measure to S. 2221, the bill passed by the Senate, reported the bill favorably (H.Rep.No.2245, 77th Cong., 2d Sess.), but it was never considered by the House. It was reintroduced in the 78th Congress (H.R. 1356, 78th Cong., 1st Sess.; S. 1114, 78th Cong., 1st Sess.), but no action was taken and again in the 79th Congress (H.R. 181, reported in H.Rep.No.1287, 79th Cong., 1st Sess.). It was finally passed by the 79th Congress as part of the ominbus Legislative Reorganization Act. 60 Stat. 842. 10 Hearings, supra note 8, p. 35. 11 Vermilya-Brown Co., Inc., v. Connell, 335 U.S. 377, 380, 69 S.Ct. 140. 12 336 U.S. 281, 285, 69 S.Ct. 575, 577. The case holds the Eight Hour Law inapplicable to Government contractors working on military bases not under lease to the United States.

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338 U.S. 251 70 S.Ct. 1 94 L.Ed. 37 TREICHLERv.STATE OF WISCONSIN. No. 20. Argued Oct. 11, 12, 1949. Decided Nov. 7, 1949. Mr. Alexander W. Schutz, Milwaukee, Wis., for appellant. Mr. Harold H. Persons, Madison, Wis., for appellee. Mr. Jusice CLARK delivered the opinion of the Court. This is an appeal from a decision of the Supreme Court of Wisconsin, 254 Wis. 24, 35 N.W.2d 404, arising from an order of the County Court of Milwaukee County, levying certain death taxes on the estate of Fred A. Miller, deceased, under the applicable statutes of Wisconsin. The question for decision is the validity of the Wisconsin emergency tax on inheritances, § 72.74(2), Wis.Stat.1947, when tested in the light of the Due Process Clause of the Fourteenth Amendment to the Constitution of the United States. The decedent died testate on December 19, 1943, a resident of Wisconsin. At death his gross estate was $7,849,714.84. Property located in Wisconsin was valued at $6,869,778.61; the remainder of $979,936.23 consisted of real and tangible personal property situated in the States of Illinois and Florida.1 The Commissioner of Internal Revenue assessed net federal taxes against the estate in the sum of $3,076,131.19, inclusive of the 80% of the basic federal tax subject to credit for state estate taxes as provided by § 301(b) of the United States Revenue Act of 1926, 44 Stat. 70, as amended, 26 U.S.C. § 813(b), 26 U.S.C.A. § 813(b). This 80% credit was the sum of $630,709.62. Wisconsin has a triad of death taxes known as (1) normal inheritance tax, (2) estate tax, and (3) emergency tax. The normal Wisconsin inheritance tax, as levied by §§ 72.01 to 72.24, Wis.Stat.1947, was in this case $220,682.12. It is levied only on property within the State of Wisconsin and is not in controversy here. To take advantage of the credit provisions of the Revenue Act of 1926, the Wisconsin legislature also enacted an estate tax in the amount of 80% of the basic federal tax subject to credit, less 'the aggregate amount of all estates, inheritance, transfer, legacy and succession taxes paid to any state or territory or the District of Columbia, in respect to any property in the estate of said decedent.' § 72.50, Wis.Stat.1947. Wisconsin normal inheritance taxes as well as out-of-state taxes are deducted from the federal credit. The estate tax on this estate was computed at $352,701.79. However, this provision of the Wisconsin statutes is not under explicit attack here. The only statute, the validity of which is involved in this appeal, is § 72.74(2) of the Wisconsin statutes known as the Emergency Tax on Inheritances. The section under scrutiny provides: 'In addition to the taxes imposed by sections 72.01 to 72.24 and 72.50 to 72.61, an emergency tax for relief purposes, rehabilitation of returning veterans of World War II, construction and improvements at state institutions and other state property and for post-war public works projects to relieve post-war unemployment is hereby imposed upon all transfers of property which are taxable uner the provisions of said sections and which are made subsequent to March 27, 1935 and prior to July 1, 1949 which said tax shall be equal to 30 per cent of the tax imposed by said sections.' As is apparent, computation of the additional emergency tax involves only four factors: (1) the amount of the 80% federal credit, (2) the taxes paid to other jurisdictions, (3) Wisconsin normal inheritance taxes, and (4) the 30% rate imposed. In applying the yardstick of this section to the decedent's estate, the Wisconsin authorities took the total of the 80% federal credit, that is $630,709.62, and first deducted from it the taxes paid to states other than Wisconsin—Illinois ($35,616.26) and Florida ($21,709.45)—and Wisconsin's normal inheritance tax ($220,682.12), which left $352,701.79. The tax due was then calculated by taking 30% of the latter amount, plus 30% of the normal inheritance tax. The result, $172,015.20, was levied as the emergency inheritance tax due. It will be seen that as the taxing formula is reduced, the normal inheritance tax is no longer a factor in the computation. For while 30% thereof is added to 30% of the estate tax to give the emergency tax, the normal inheritance tax has already been subtracted in the computation of the basic estate tax. Hence, in extending the formula of the emergency tax, the inheritance taxes cancel.2 What is left, other than out-of-state taxes, is simply 80% of the basic federal tax, rated and measured by the entire estate, regardless of situs, and therefore including the property located in Illinois and Florida. The court below thought that the presence of 87.52% of Mr. Miller's property within Wisconsin justified its statement that the state taxed only Wisconsin property. And the state argues that the 'other 20%' over the federal basic estate tax 80% credit 'more than absorbs, or is, on any mathematical basis, attributable to' the 12.48% of property outside Wisconsin. But Wisconsin made but 80% of the federal tax its own; and as it did not apportion that 80% to property within the state, the presence of property therein is simply a fortuity which cannot help the taxing jurisdiction. See Owensboro National Bank v. Owensboro, 1899, 173 U.S. 664, 683, 19 S.Ct. 537, 542, 43 L.Ed. 850. The same must be said of deductions for out-of-state taxes, which have no necessary relation to the proportion of property outside Wisconsin.3 We think it clear that the order entered by the Supreme Court of Wisconsin authorized a tax on property rated and measured in part by tangible property, the situs of which was outside Wisconsin. (1) Wisconsin Normal Inheritence Taxes...$220,682.12 (2) Wisconsin Estate Tax:— 80% of U. S. Estate Tax... $630,709.62 Less:— (a) Wisconsin Normal Taxes (1) above....... $220,682.12 (b) Illinois Inheritance Taxes. 35,616.26 (c) Florida Inheritance Taxes. 21,709.45 Total State Taxes......... 278,007.83 Difference is Wisconsin Estate Tax... 352,701.79 (3) Wisconsin Emergency Tax:— Wisconsin Normal Taxes (1) above. $220,682.12 Wisconsin Estate Tax (2) above. 352,701.79 Total....... $573,383.91 Emergency Tax is 30%...... 172,015.20 Total Wisconsin Inheritance Taxes.... $745,399.11 This Wisconsin may not do. In Frick v. Pennsylvania, 1925, 268 U.S. 473, 45 S.Ct. 603, 607, 69 L.Ed. 1058, 42 A.L.R. 316, Pennsylvania levied an inheritance tax based upon real and personal property wherever located. Mr. Frick's art collection was located in New York. In a unanimous opinion this Court ruled that Pennsylvania's statute, 'in so far as it attempts to tax the transfer of tangible personalty having an actual situs in other states, contravenes the due process of law clause of the Fourteenth Amendment and is invalid.' Wisconsin's statute may be more sophisticated than Pennsylvania's, but in terms of ultimate consequences this case and the Frick case are one. It is quite unnecessary to know in either case what property is located within the taxing jurisdiction in order to compute the challenged exaction. Nor are we inclined to discard the Frick rule. We have consistently upheld the domicile's levy when it was based upon intangible property with technical title without the jurisdiction. Blodgett v. Silberman, 1928, 277 U.S. 1, 48 S.Ct. 410, 72 L.Ed. 749. And the economic effects of tax burdens in the federal system cannot control our results, limited as we are to the words of the Fourteenth Amendment. State Tax Commission of Utah v. Aldrich, 1942, 316 U.S. 174, 181, 62 S.Ct. 1008, 1011, 86 L.Ed. 1358, 139 A.L.R. 1436, citing Holmes, J., dissenting in Baldwin v. Missouri, 1930, 281 U.S. 586, 595, 50 S.Ct. 436, 439, 74 L.Ed. 1056, 72 A.L.R. 1303. But when a state reches beyond its borders and fastens upon tangible property, it confers nothing in return for its exaction. Since the state of location has all but complete dominion over the physical objects sought to be measured for tax, see Green v. Van Buskirk, 1869, 7 Wall. 139, 150, 19 L.Ed. 109; Curry v. McCanless, 1939, 307 U.S. 357, 363, 59 S.Ct. 900, 903, 83 L.Ed. 1339, 123 A.L.R. 162, and cases cited, no other state can offer a quid pro quo. A state is not equipped with the implements of power and diplomacy without its boundaries which are at the root of the Federal Government's undoubted right to measure its tax upon foreign property. United States v. Bennett, 1914, 232 U.S. 299, 34 S.Ct. 433, 58 L.Ed. 612; see Burnet v. Brooks, 1933, 288 U.S. 378, 53 S.Ct. 457, 77 L.Ed. 844, 86 A.L.R. 747. And if the state has afforded nothing for which it can ask return, its taxing statute offends against that due process of law it is our duty to enforce.4 We hold that Wisconsin's emergency inheritance tax is invalid insofar as it is measured by tangible property outside Wisconsin. The judgment must be reversed and the cause remanded for proceedings not inconsistent with this opinion. Reversed. Mr. Justice BLACK dissents. He agrees that the Court's holding logically follows from its interpretation of the due process clause in the Frick case, but believes that so interpreted the clause gives a more expansive control over state tax legislation than the due process clause justifies. Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 1 The record does not reveal the exact nature of the property, and we have held that whether the property is 'tangible' within the meaning of Frick v. Pennsylvania, 1925, 268 U.S. 473, 45 S.Ct. 603, 69 L.Ed. 1058, 42 A.L.R. 316, infra, is a federal question. Blodgett v. Silberman, 1928, 277 U.S. 1, 48 S.Ct. 410, 72 L.Ed. 749. In this case, however, the parties and the court below agree that the property is clearly 'tangible' within the Frick rule. We accept that assumption. 2 The formula is as follows: 30% Wisconsin normal inheritance tax 30% (80% federal basic tax—Wisconsin normal inheritance tax—taxes paid in Illinois and Florida). This reduces to: 30% (80% federal basic tax—taxes paid in Illinois and Florida). Deductions authorized in the computation of the normal inheritance tax are thus of no significance. The State's table of computation reads: 3 A different question might be presented, however, if the statute in question authorized computation to begin with 87.52% rather than all of the 80% federal credit. We intend to intimate no opinion as to that situation. 4 Of course we have refused to be governed by this consideration when so to do would have placed a premium upon the avoidance of all state taxes. New York ex rel. New York C. & H.R. Co. v. Miller, 1906, 202 U.S. 584, 597, 26 S.Ct. 714, 717, 50 L.Ed. 1155; Southern Pacific Co. v. Kentucky, 1911, 222 U.S. 63, 32 S.Ct. 13, 56 L.Ed. 96; cf. Northwest Airlines v. Minnesota, 1944, 322 U.S. 292, 64 S.Ct. 950, 88 L.Ed. 1283, 153 A.L.R. 245. See Commonwealth v. Pennsylvania Coal Co., 1901, 197 Pa. 551, 47 A. 740; Norfolk & W.R. Co. v. Board, 1899, 97 Va. 23, 32 S.E. 779.

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338 U.S. 232 70 S.Ct. 14 94 L.Ed. 22 GRAHAM et al.v.BROTHERHOOD OF LOCOMOTIVE FIREMEN & ENGINEMEN. No. 16. Argued Oct. 10, 1949. Decided Nov. 7, 1949. Mr. Joseph L. Rauh, Jr., Washington, D.C., for petitioners. Mr. Milton Kramer, Washington, D.C., for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 Twenty-one Negro firemen, sometime employed by southern railroads, brought this suit against the principal defendant, the Brotherhood of Locomotive Firemen and Enginemen, three railroads, two local lodges of the Brotherhood, and certain officers of those lodges. The complaint alleges in substance that the Brotherhood is an exclusively white man's union and, as it includes a majority of the craft, it is possessed of sole collective bargaining power in behalf of the entire craft including the Negro firemen in consequence of the Railway Labor Act. It has negotiated agreements and arrngements with the southern railroads which discriminate against colored firemen, who are denominated 'not-promotable' while white ones are 'promotable.' The effect of the agreements is to deprive them, solely because of their race, of rights and job assignments to which their seniority would entitle them. Many Negro firemen have been thus displaced or demoted and replaced by white firemen having less seniority. The complaint asked for a declaration of petitioner's rights, for an injunction restraining compliance with the above agreements, and for damages. In short, the cause of action pleaded is substantially the same as that which this Court sustained in Steele v. Louisville & Nashville R. Co., 323 U.S. 192, 65 S.Ct. 226, 89 L.Ed. 173, and Tunstall v. Brotherhood of Locomotive Firemen & Enginemen, 323 U.S. 210, 65 S.Ct. 235, 89 L.Ed. 187. 2 It is needless to recite additional details of the present case. What it adds to the governing facts of the earlier cases is a continuing and willful disregard of rights which this Court in unmistakable terms has said must be accorded to Negro firemen. 3 Upon the complaint, supplemented by evidence that the deliberate elimination of Negro firemen was proceeding at a rapid pace and that they would soon be entirely displaced, motion was made for a preliminary injunction to prevent further discrimination and loss of job assignments pending the outcome of the litigation. 4 The Brotherhood did not meet the allegations of the bill of complaint or the affidavits. It rested on a motion to dismiss, assigning as grounds that it had not been properly served with process and that venue was unlawfully laid in the District of Columbia. The trial court, after hearing evidence of the parties on these matters, denied the motion to dismiss and granted a preliminary injunction. 5 The Brotherhood alone petitioned the Court of Appeals under District of Columbia Code, § 17—101, for a special appeal and stay of the injunction. These were granted and that court reversed. Holding that venue was improperly laid in the District of Columbia, it ordered the case transferred to the Northern District of Ohio. 84 U.S.App.D.C. 67; 175 F.2d 802. We granted certiorari. 337 U.S. 954, 69 S.Ct. 1527. 6 At the outset we are met by the contention in support of the judgment below that service of process upon the Brotherhood was not legally perfected, in which case, of course, it would not properly be before the Court at all. The District Court, after hearing evidence upon the subject, held that service upon the Brotherhood was sufficient. The Court of Appeals noted that this question was raised but did not reverse upon this ground. 175 F.2d 802. Instead, it considered at length whether the action constitutionally be entertained by the courts of the District of Columbia, a subject which would hardly be ripe for decision if the action had not been properly commenced anywhere. Moreover, its decision transferred the cause to the Northern District of Ohio, a power which it could exert only if it considered the service adequate to confer jurisdiction of the parties. We accept the ruling of the District Court on the adequacy of service, based as it is essentially on matters of fact, and undisturbed and impliedly approved by the Court of Appeals. We hold that personal jurisdiction of the respondent is established. 7 This cause of action is founded on federal law, and the venue provision generally applicable to federal courts at the time this action was commenced required such actions to be brought in the district whereof defendant 'is an inhabitant.' 28 U.S.C.A. § 112. Effective September 1, 1948, this provision was modified to require that such actions be brought 'only in the judicial district where all defendants reside, except as otherwise provided by law.' 28 U.S.C. (Supp. II), § 1391b, 28 U.S.C.A. § 1391(b). It was assumed in the courts below, and since it involves a question of fact we do not stop to inquire as to whether they were correct in so doing, that if this general federal venue statute is the sole authority for bringing this case in the District of Columbia, the venue could not be supported, as this defendant claims neither to reside in nor inhabit the District. 8 But there is, additionally, a venue statute enacted by Congress, applicable to the courts of the District of Columbia, which permits an action to be maintained if the defendant shall be 'an inhabitant of, or found within, the District.' D.C.Code § 11 308. (Italics supplied.) See also § 11—306. The District Court concluded upon all the evidence that the Brotherhood was found within the District, and it based venue upon that finding. The Court of Appeals did not deny that the defendant was so 'found' within the meaning of this Act, but held the Act itself unavailing to this plaintiff because it believed that the constitutional power of Congress under Art. I, § 8, Cl. 17, to provide for the government of the District of Columbia, does not enable Congress to vest jurisdiction of such cases as this in District of Columbia courts. It based this reasoning on O'Donoghue v. United States, 289 U.S. 516, 53 S.Ct. 740, 77 L.Ed. 1356. 9 Little would be accomplished by reviewing the conflicting theories as to the origin and extent of congressional power over District of Columbia courts. It is enough to say that we do not read any prior decision of this Court to deny Congress power to invest these courts with jurisdiction to hear and decide such a cause as we have here. We hold that a party asserting a right under the Constitution or federal laws may invoke either the general venue statutes or the special District of Columbia statutes and that the courts of this District may exercise their authority in cases committed to them by either. 10 The respondent has strenuously urged throughout that in view of the provisions of the Norris-LaGuardia Act, 29 U.S.C. § 101 et seq., 29 U.S.C.A. § 101 et seq., the District Court was without jurisdiction to grant relief by injunction. 11 The Court of Appeals did not pass upon this contention, and were it a question of first impression we should not be disposed to consider it here at the rpesent stage of the proceedings. But this is not a question of first impression. In Virginian R. Co. v. System Federation No. 40, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789, we held that the Norris-LaGuardia Act did not deprive federal courts of jurisdiction to compel compliance with positive mandates of the Railway Labor Act, 45 U.S.C. § 151 et seq., 45 U.S.C.A. § 151 et seq., enacted for the benefit and protection within a particular field, of the same groups whose rights are preserved by the Norris-LaGuardia Act. To depart from those views would be to strike from labor's hands the sole judicial weapon it may employ to enforce such minority rights as these petitioners assert and which we have held are now secured to them by federal statute. To hold that this Act deprives labor of means of enforcing bargaining rights specifically accorded by the Railway Labor Act would indeed be to 'turn the blade inward.' We adhere to the views expressed in the Virginian case. 12 But the Brotherhood urges that the controversy in the Virginian case did not involve a labor dispute within the meaning of the Norris-LaGuardia Act and that accordingly that case must be distinguished on its facts. The Act defines a 'labor dispute' to include 'any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment * * *.' 29 U.S.C. § 113(c), 29 U.S.C.A. § 113(c). (Emphasis supplied.) We do not accept the Brotherhood's invitation to narrow the meaning of that term. The purpose of the Act would be vitiated and the scope of its protection limited were it to be construed as not extending to efforts of a duly certified bargaining agent to obtain recognition by an employer. Moreover, if this Court had considered that a labor dispute was not involved, it would hardly have taken the trouble, in the Virginian case, to refute contentions based upon parts of the Act, which as a whole extends its protection solely to such disputes. 13 The Steele and Tunstall cases, supra, arose under circumstances almost indistinguishable from those of the instant case, and the complaints asked the same kind of relief. We held there that, as the exclusive statutory representative of the entire craft under the Railway Labor Act, the Brotherhood could not bargain for the denial of equal employment and promotion opportunities to a part of the craft upon grounds of race. We pointed out that the statute which grants the majority exclusive representation for collective bargaining purposes strips minorities within the craft of all power of self-protection, for neither as groups nor as individuals can they enter into bargaining with the employers on their own behalf. Order of Railroad Telegraphers v. Railway Express Agency, 321 U.S. 342, 64 S.Ct. 582, 88 L.Ed. 788; J. I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 64 S.Ct. 576, 88 L.Ed. 762; Medo Photo Supply Corp. v. National Labor Relations Board, 321 U.S. 678, 64 S.Ct. 830, 88 L.Ed. 1007. And we held that abuse of its powers by perpetrating discriminatory employment practices based on racial considerations gives rise to a cause of action under federal law which federal courts will entertain and will remedy by injunction. But although the Norris-LaGuardia Act relates to the jurisdiction of the federa courts to grant injunctions in labor disputes, the issue was not pressed, and we did not discuss it at length. 14 However, the opinion left no doubt as to the Court's position: 'In the absence of any available administrative remedy, the right here asserted, to a remedy for breach of the statutory duty of the bargaining representative to represent and act for the members of a craft, is of judicial cognizance. That right would be sacrificed or obliterated if it were without the remedy which courts can give for breach of such a duty or obligation and whih it is their duty to give in cases in which they have jurisdiction. * * * For the present command there is no mode of enforcement other than resort to the courts, whose jurisdiction and duty to afford a remedy for a breach of statutory duty are left unaffected. The right is analogous to the statutory right of employees to require the employer to bargain with the statutory representative of a craft, a right which this Court has enforced and protected by its injunction in Texas & New Orleans R. Co. v. Brotherhood of Ry. & S.S. Clerks, supra, 281 U.S. (548) 556, 557, 560, 50 S.Ct. (427) 429, 430, 74 L.Ed. 1034, and in Virginian R. Co. v. System Federation, No. 40, supra, 300 U.S. 548, 57 S.Ct. 599, 81 L.Ed. 789, and like it is one for which there is no available administrative remedy.' Steele v. Louisville & Nashville R. Co., supra, 323 U.S. 207, 65 S.Ct. 234. And see Tunstall v. Brotherhood of Locomotive Firemen & Enginemen, supra, 323 U.S. 213, 65 S.Ct. 235. 15 It would serve no purpose to review at length the reasons which, in the Steele and Tunstall cases, supra, impelled us to conclude that the Railway Labor Act imposes upon the Brotherhood the duty to represent all members of the craft without discrimination and invests a racial minority of the craft with the right to enforce that duty. It suffices to say that we reiterate that such is the law. 16 Nor does the Norris-LaGuardia Act contain anything to suggest that it would deprive these Negro firemen of recourse to equitable relief from illegal discriminatory representation by which there would be taken from them their seniority and ultimately their jobs. Conversely there is nothing to suggest that, in enacting the subsequent Railway Labor Act provisions insuring petitioners' right to nondiscriminatory representation by their bargaining agent, Congress intended to hold out to them an illusory right for which it was denying them a remedy. If, in spite of the Virginian, Steele, and Tunstall cases, supra, there remains any illusion that under the Norris-LaGuardia Act the federal courts are powerless to enforce these rights, we dispel it now. The District Court has jurisdiction to enforce by injunction petitioners' rights to nondiscriminatory representation by their statutory representative. 17 Accordingly, the judgment of the Court of Appeals is reversed, the order of the District Court is reinstated, and the cause is remanded to the District Court for further proceedings not inconsistent with this opinion. Let the mandate go down forthwith. 18 Reversed and remanded. 19 Mr. Justice DOUGLAS and Mr. Justice MINTON took no part in the consideration or decision of this case.

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338 U.S. 267 70 S.Ct. 25 94 L.Ed. 62 FAULKNERv.GIBBS. No. 19. Argued Oct. 12, 1949. Decided Nov. 7, 1949. Rehearing Denied Dec. 5, 1949. See 338 U.S. 896, 70 S.Ct. 236. Messrs. Robert W. Fulwider, Los Angeles, Cal., James P. Burns, Washington, D.C., for petitioner. Mr. Herbert A. Huebner, Los Angeles, Cal., for respondent. PER CURIAM. 1 The controversy here concerned the validity of Patent No. 1,906,260, issued to respondent, May 2, 1933, and its alleged infringement by petitioner. The District Court found the patent to be valid and infringed. The Court of Appeals for the Ninth Circuit affirmed, 1948, 170 F.2d 34. Being moved by the petition for certiorari that there was a conflict with Halliburton Oil Well Cementing Co. v. Walker, 1946, 329 U.S. 1, 67 S.Ct. 6, 91 L.Ed. 3, we granted certiorari. 336 U.S. 935, 69 S.Ct. 746. 2 The record, briefs and arguments of counsel lead us to the view that Halliburton, supra, is inapposite. We there held the patent invalid because its language was too broad at the precise point of novelty. In the instant case, the patent has been sustained because of the fact of combination rather than the novelty of any particular element. 3 After the suit in this cause was initiated in the District Court, petitioner modified his device. The courts below held that this modification was insubstantial and did not place petitioner outside the scope of respondent's patent. 4 We will not disturb the concurrent findings upon the issues presented to us in the petition for certiorari. We are not persuaded that the findings are shown to be clearly erroneous. The judgment is affirmed. 5 Affirmed. 6 Mr. Justice BLACK is of the opinion that the language of the claims was too broad at the precise point where there was novelty, if there was novelty anywhere. 7 Mr. Justice DOUGLAS took no part in the consideration or decision of this case.

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338 U.S. 226 70 S.Ct. 22 94 L.Ed. 13 ROTH, Attorney General of Michican,v.DELANO, Comptroller of Currency of the United States et al. No. 24. Argued Oct. 24, 1949. Decided Nov. 7, 1949. Messrs. Julius H. Amberg, Grand Rapids, Mich., Archie C. Fraser, Detroit, Mich., for appellant. Mr. Stanley M. Silverberg, Washington, D.C., for appellee. Mr. Justice JACKSON delivered the opinion of the Court. 1 The First National Bank—Detroit, closed its doors in 1933 and, in its liquidation, dividends on proved claims, small in average but large in the aggregate, have remained for some years in the hands of the federal liquidators, unclaimed by their owners. Since this national banking institution was located in the State of Michigan, Attorneys General of that State have made persistent efforts at different stages of the liquidation to establish a right in the State to escheat the unclaimed dividends. Latest of these was this action, brought by the Attorney General against the Comptroller of the Currency of the United States1 and the Receiver of the First National Bank—Detroit, for a declaratory judgment that the Michigan discoery and escheat statute (Michigan Compiled Laws, 1929, Mason's 1940 Supp. c. 263), as amended by the statute known as Act 170, Public Acts of Michigan for 1941, applies to unclaimed dividends on claims duly proved in the liquidation. The Court of Appeals held the state statute ineffective as 'an unlawful interference with the liquidation of a national bank upon the same principles and authority fully discussed in our previous opinions.' If affirmed the District Court in dismissing the action 'on the merits', adopting the 'settled doctrine' of its own prior adjudications. 170 F.2d 966, 967. However, recourse to these opinions creates some doubt as to whether the Court of Appeals has held the Michigan statute to be invalid for conflict with the Constitution and laws of the United States or inapplicable by intendment of the Michigan Legislature. A review of these cited cases will expose the cause of our uncertainty. 2 In Starr v. O'Connor, 6 Cir., 1941, 118 F.2d 548, the then Circuit Court of Appeals reviewed the statutes of Michigan then in force, which did not include Act 170, here involved, and held them applicable to the First National liquidation but unconstitutional under our decision in First National Bank of San Jose v. California, 262 U.S. 366, 43 S.Ct. 602, 67 L.Ed. 1030. 3 In Rushton v. Schram, 6 Cir., 1944, 143 F.2d 554, the court considered whether the amendment affected by Act 170 was applicable to the First National receivership at that stage of the liquidation. The court said that it must determine at the threshold whether this Act should be construed as retroactive in effect; that is, whether it applied to a liquidation commenced before its passage. This, of course, was a state law question and it was decided by reference to state decisions. The court construed the Act, in the light of Michigan decisional law, not to apply retroactively. It is true that the court there reviewed federal decisions to show that it would raise a serious question of constitutionality if the Act were construed otherwise. But Anderson National Bank v. Luckett, 321 U.S. 233, 64 S.Ct. 599, 88 L.Ed. 692, 151 A.L.R. 824, had intervened and in reference to it the Court of Appeals said, 'In the light of that fresh authority, we do not say that if invoked for prospective application, and in a manner consistent with the federal statutes, the Michigan statute would conflict with the national banking laws and constitute an unlawful interference with the liquidation of a national bank. Discussion of that problem is deemed inappropriate in view of our conclusion that the Act under consideration carries no retroactive effect in the present situation.' 143 F.2d at page 559. 4 In Starr v. Schram, 6 Cir., 1944, 143 F.2d 561, the Court of Appeals on the same day passed on the receiver's request for a declaration that the escheat laws were at no time validly applicable to the receivership and that he was entitled to recover back certain dormant deposit balances and the dividends thereon which already had been paid over to the State pursuant to the Act. The District Court had held that the state statute was invalid as an 'unlawful interference' with the federal liquidation. This holding the Court of Appeals affirmed but, on considerations of state immunity from suit, it refused to allow recovery of what had been paid over. 5 Now comes Black v. Delano—the present case, Roth being substituted for Black—6 Cir., 1948, 170 F.2d 966, which the Court of Appeals rests on the 'settled doctrine' of these cases. 6 Anderson National Bank v. Luckett, supra, in substance, held that the Constitution of the United States does not prohibit a State from escheating deposits in a national bank located and actively doing business therein, abandoned by their owners or belonging to missing persons. The State, after a reasonable lapse of time may lawfully administer such assets, holding them for the benefit of the disappeared claimant or the missing owner for a period and providing for eventual escheat. This it may do through appointment of a personal representative, or a public administrator, or by utilizing its own public officials. We held that mere putting of the State itself, or its duly named officer, in the shoes of the claimant to take what the bank would otherwise be obliged to disburse to the claimant himself does not burden, obstruct or frustrate a going bank in discharging its federal functions. We also held no interference with a bank's federal function to result from a mere requirement that it make a report to the State of unclaimed property, any more than from a requirement that it report to the State tangible property therein for the purposes of taxation, and nothing in our decisions suggests that such a disclosure would be an interference with the liquidation function. It would not seem too much to ask that a federal officer, possessed of property claimed by the State to be subject to its taxing or escheat power, make reasonable disclosure thereof to such authority as the State designates. It is but a decent comity between governments. 7 Of course, these basic and general rights of the State, including the enforcement of its claims, might be asserted at a time, in a manner or through such means as to interfere with the federal function of orderly liquidation or to conflict with federal law; but absent such interference with a federal statute, the basic assumption of the State here that nothing in the Constitution prevents it from escheating the specific claims here involved is made clear in our recent decisions. Anderson National Bank v. Luckett, supra. See also Connecticut Mutual Life Insurance Co. v. Moore, 333 U.S. 541, 68 S.Ct. 682, 92 L.Ed. 863. 8 Reiteration of these general principles does not, of course, determine whether any peculiarity in the operation of Act 170 would go beyond the right of the State and constitute an unreasonable burden on federal functions of the receiver. But this question is not appropriate for decision here. If the judgment below rests, as well it may, upon earlier decisional law of the Circuit which held that this Act was not intended to apply to receiverships beginning before its enactment, we would hardly review such construction of the State Act. And there is a further reason why we should not now decide the principal question. Michigan has repealed Act No. 170 by Act 329, Public Laws of Michigan for 1947, reserving, however, from the effect of the repeal any 'pending suit or proceeding.' A possible consequence is that no new suit or proceeding could be maintained to enforce the repealed Act. Thus, to now decide this suit for a declaratory judgment might be to render an advisory opinion on the constitutionality of a repealed State Act. And, of course, a State cannot by reservation, any more than by affirmation, confer upon us the power or impose upon us the duty to render and advisory opinion. 9 In view of these considerations, we vacate and remand to the Court of Appeals for such action as it may consider appropriate in the light of the foregoing opinion. 10 Judgment vacated. 11 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 1 The trial court dismissed as to the Comptroller on the ground it had no jurisdiction over him and the Court of Appeals did not pass on the contention that he is a necessary party. 6 Cir., 170 F.2d 966, 967.

89

338 U.S. 258 70 S.Ct. 19 94 L.Ed. 51 COMMISSIONER OF INTERNAL REVENUEv.CONNELLY et al. No. 57. Argued Oct. 21, 1949. Decided Nov. 7, 1949. Mr. Ellis N. Slack, Washington, D.C., for petitioner. Mr. Caesar L. Aiello, Washington, D.C., for respondents. Mr. Justice MINTON delivered the opinion of the Court. 1 The question we have here is whether respondent William I. Connelly, hereafter referred to as the taxpayer, is entitled to the $1,500 exclusion from gross income provided by § 22(b)(13)(A) of the Internal Revenue Code.1 The taxpayer claimed this additional allowance for the taxable years 1943 and 1944. The Commissioner disallowed the sum deducted. The Tax Court sustained the Commissioner, 8 T.C. 848, and the Court of Appeals reversed, one judge dissenting. 84 U.S.App.D.C. 260, 172, F.2d 877. We granted certiorari. 337 U.S. 924, 69 S.Ct. 1170. 2 On February 19, 1943, taxpayer was a civil service employee in the legal division of the Coast Guard. On that date he was enrolled as a lieutenant commander within one of the six classifications which constituted the temporary members of the Coast Guard Reserve.2 His enrollment was under authority of the Coast Guard Auxiliary and Reserve Act which provided for the enrolling of 'persons (including Government employees without pay other than the compensation of their civilian positions).' 55 Stat. 12, as amended, 56 Stat. 1021, 14 U.S.C. § 307, 14 U.S.C.A. § 307 note. On April 24, 1944, he was reenrolled as a commander and his class was described as 'Coast Guard Civil Service Employees.' 3 After enrollment taxpayer performed duties identical with those which he had previously performed. At the time he was enrolled, his civil service ratng was P-5. Later this rating was raised to P-6 and his rank was increased at the same time to that of commander. He received the same pay after enrollment that he had received as a civil service employee. He received overtime pay as a civil service employee, deductions were made from his pay for civil service retirement, and he was subject to civil service regulations as to annual and sick leave. If he had been injured or killed, he would have received benefits as a civil employee of the United States. He was still subject to the Selective Training and Service Act, 50 U.S.C.A.Appendix, § 301 et seq. In the case of sickness or disease contracted while on active duty, taxpayer was entitled to the same hospital and medical care as members of the regular Coast Guard, but dental care was not included. While on active duty he was required to wear the uniform of and he received the courtesies due his rank. He was subject to the laws, regulations and orders of the Coast Guard and to disciplinary action. 4 It is apparent that taxpayer had a dual status. He had a limited military status with the rank of lieutenant commander and later that of commander. He had also the status of a civil service employee, carefully so limited and with all the privileges incident to such status. He was given just enough military status to enable him effectively to carry out his duties. All considerations of an economic character pertaining to his employment by the Government were related to his civil service status. 5 In Mitchell v. Cohen, 333 U.S. 411, 68 S.Ct. 518, 92 L.Ed. 774, we held that one employed in a department of the Federal Government as a civil service employee who was enrolled temporarily in the Volunteer Port Security Force of the Coast Guard Reserve and who worked part-time as a reservist without pay was not an 'exserviceman' within the meaning of the Veterans' Preference Act, 5 U.S.C.A. § 851 et seq. Looking to the legislative history of that statute, we found that the over-shadowing purpose of the Act was to favor those who had a real record of military service. 6 The Court of Appeals found in this case that by the application of (172 F. 880) 'long-established criteria—oath of office, military duty, and subjection to military discipline' taxpayer had acquired a military status and was thus entitled to the exclusion. We agree that he had a military status for some purposes. But the question for tax purposes is whether he received his pay in that status. To come within § 22(b)(13(A), he must have received his compensation 'for active service as a commissoned officer.' We understand this to mean that if taxpayer received his pay as a commissioned officer, he would be entitled to the exclusion. It seems equally plain that if he received his pay as a civil service employee and served without military pay and allowances, he is not entitled to the claimed exclusion.3 As in the Cohen case, the emphasis of the statute is on a military and not on a civilian status. 7 And it is clear that taxpayer received his compensation in a civilian status. As noted, § 307 of the Coast Guard Auxiliary and Reserve Act provided for the enrolling of 'persons (including Government employees without pay other than the compensation of their civilian positions).' The Committee on Merchant Marine and Fisheries referred to the amendment by which the parenthetical phrase was added to the statute as being 'advisable to clarify this authority (enrollment of temporary members without the pay of their military rank) and resolve any doubt of its applicability to Government employees by specifically providing for temporary membership in the Coast Guard Reserve of Government employees without military pay but with continuance in their civilian positions and the receipt of the compensation thereof.'4 8 From the date of the enactment of the enrollment statute there seems to have been no deviation from the view that the taxpayer was to be paid as a civil service employee and not as a commissioned officer. His pay came from congressional appropriations allocated to civilian positions. His pay was at the civil service scale for his grade, with overtime pay and appropriate deductions for civil service retirement. His continuing civilian status is underlined by his receipt of a civil service promotion, from which his military promotion resulted. Indeed, the taxpayer's certificate of disenrollment described the duty performed as 'Chief of Admiralty and Maritime Section having civil service status, receiving civilian but no military pay, and holding rank of Commander as a Temporary Member of the Coast Guard Reserve.' 9 The Court of Appeals ignored the status in which taxpayer was compensated and gave effect to his military status which was provided only to facilitate the performance of his duties in wartime.5 Taxpayer's rank was for the purpose of getting the job done, and not for the purpose of receiving compensation. 10 The judgment of the Court of Appeals is reversed. 11 Reversed. 12 Mr. Justice FRANKFURTER and Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 1 As amended by Revenue Act of 1945, § 141(a), 59 Stat. 571, 26 U.S.C.A. § 22(b)(13)(A): '(13) Additional allowance for military and naval personnel. '(A) In the case of compensation received * * * for active service as a commissioned officer * * * in the military or naval forces of the United States * * * so much of such compensation as does not exceed $1,500.' 2 These classifications and the organization of the Coast Guard Reserve are detailed in Mitchell v. Cohen, 333 U.S. 411, 412 414, 68 S.Ct. 518, 519, 520, 92 L.Ed. 774. 3 See Judge Edgerton, dissenting in part, below: '* * * I would be unable, in view of the rule that tax exemptions are strictly construed, to say that the compensation of a man who did not receive a commissioned officer's pay but served 'without pay other than the compensation of (his) civilian positions' was 'received * * * for active service as a commissioned officer." 84 U.S.App.D.C. at 263, 172 F.2d at page 880. 4 H.R.Rep. No. 2525, 77th Cong., 2d Sess., 3 (1942). The Committee added that the amendment 'would obviate any possible impairment of the right of such employees to continue to receive the compensation of their civilian positions for the entire period of their performance of active Coast Guard duty as such temporary members. There will be little, if any, change in the nature of their duties after enrollment.' 5 Office Memorandum No. 13—43 issued by the Commandant of the Coast Guard on July 24, 1943, states: '6. The attention of heads of offices and chiefs of divisions is invited to the fact that one of the principal reasons for the induction of civil service employees into the military establishment as temporary members of the Reserve was to obtain a homogeneous organization on a military basis and to eliminate differences in procedure and practices applicable to military personnel and civil service personnel engaged on exactly the same duty. * * *'

1112

338 U.S. 278 70 S.Ct. 119 94 L.Ed. 87 OAKLEYv.LOUISVILLE & NASHVILLE R. CO. HAYNES v. CINCINNATI, NEW ORLEANS & TEXAS PAC. RY. CO. et al. Nos. 28 and 29. Argued Oct. 17, 18, 1949. Decided Nov. 14, 1949. Mr. Morton Lipten, Washington, D.C., for petitioner. Mr. C. S. Landrum, Lexington, Ky., for Louisville & Nashville R. Co. Mr. Cornelius J. Petzhold, Cincinnati, Ohio, for Cincinnati, N.O. & T.P. Ry. Co. Mr. Richard R. Lyman, Toledo, Ohio, for System Federation No. 21 and others. Mr. Justice BURTON delivered the opinion of the Court. 1 In both No. 28 and No. 29, the issue is whether, under the Selective Training and Service Act of 1940,1 one year of reemployment of a veteran by his preservice employer terminated that veteran's right to the seniority to which he was entitled by virtue of that Act's treatment of him as though he had remained continuously in his civilian employment. For the reasons hereinafter stated, and pursuant to our previous decisions, our answer is 'No.' In No. 29, there is the further question whether, after the expiration of such year, a United States District Court could entertain a complaint filed by the veteran to enforce his right to such seniority. Our answer is 'Yes.' 2 In each case, a verteran sought, in the United States District Court for the Eastern District of Kentucky, a declaratory judgment and an order restoring him to the seniority which he claimed he would have had if he had remained continuously in his civilian employment. In No. 28, Oakley, the petitioner, alleged that when he was inducted into the Armed Forces on May 7, 1944, he was employed as a locomotive machinist at Loyall, Kentucky, by the respondent, Louisville & Nashville Railroad Company; that, on May 22, 1946, he was honorably discharged from the Armed Forces; that, on July 17, 1946, he was reemployed by the respondent as a locomotive machinist with seniority from that date; that, on July 1, 1945, while he was with the Armed Forces, the respondent's Loyall Shop was transferred to Corbin, Kentucky; 'that had he not been in the Armed Forces he would have been transferred to the Corbin Shop with seniority from July 1, 1945, * * *'; and that, because of the respondent's failure to credit him with seniority from the earlier date, he has been subjected to certain disadvantages in working hours and to an increased possibility of being laid off from his employment. He filed his complaint, April 14, 1947, under § 8(e) of the Selective Training and Service Act of 1940, 54 Stat. 891, as reenacted, 60 Stat. 341, 50 U.S.C.App. § 308(e), 50 U.S.C.A.Appendix, § 308(e). The court, on its own motion, assigned the case for argument 'upon the question whether, under the opinion of the Supreme Court in The Trailmobile Company, et al. v. Whirls (331 U.S. 40, 67 S.Ct. 982, 91 L.Ed. 1328) (No. 85, April 14, 1947), the cause has been rendered moot by the expiration of the statutory year to which Section 8(c) of the Selective Training and Service Act limited plaintiff's right to any special or preferential standing in respect to restored seniority.' Thereupon, the collective bargaining agent of the machinist employees of the respondent, which had intervened as a defendant, moved to dismiss the cause on the ground that more than one year had elapsed since the date of the petitioner's restoration to his employment. This motion is here considered upon the basis of the facts pleaded in the complaint.2 3 In No. 29, Haynes, the petitioner, alleged that, when he enlisted in the Armed Forces on February 1, 1942, he was employed as a machinist helper at Somerset, Kentucky, by the respondent, Cincinnati, New Orleans and Texas Pacific Railway Company (originally sued as the Southern Railway System); that, on October 31, 1945, he was honorably discharged from the Armed Forces; that, on November 16, 1945, he was reemployed by the respondent as a machinist helper, with seniority from that date; 'that during his service in the Armed Forces the defendant company promoted six helper machinists to helper apprentices, and that these six men were junior in seniority to himself, and that had he not entered the Armed Forces as above mentioned he would have been promoted to helper apprentice and would have been given the pay as such, * * *'; and that such rate of pay exceeded that of the petitioner during his reemployment. He filed his complaint, February 14, 1947, asking for restoration to his claimed status and for the additional compensation to which that status would have entitled him. The respondent answered, but certain intervening defendants, following a procedure similar to that in No. 28, filed a motion to dismiss the cause for the reasons there stated. 4 The District Court heard the motions together and dismissed both actions.3 The Court of Appeals for the Sixth Circuit affirmed. 170 F.2d 1008; 171 F.2d 128. We granted certiorari, 336 U.S. 943, 69 S.Ct. 812, because of the close relation of these dismissals to our decisions in Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 66 S.Ct. 1105, 90 L.Ed. 1230, 167 A.L.R. 110, and Trailmobile Co. v. Whirls, 331 U.S. 40, 67 S.Ct. 982, 91 L.Ed. 1328. 5 The court below recognized that § 8(c)4 granted to the respective veterans special statutory protection against discharge without cause and against loss of certain benefits during the first year of their reemployment. That court, however, concluded also that the expiration of that year not only terminated the veteran's right to such special statutory protection, but likewise automatically terminated his right to the seniority in the restored position which he would have had if he had remained continuously in his civilian employment. That additional conclusion is not justified by the opinions of this Court or by the terms of the Act. We reserved the point in the Trailmobile case, supra: 6 'We find it unnecessary therefore to pass upon petitioners' position in this case, namely, that all protection afforded by virtue of § 8(c) terminates with the ending of the specified year. We hold only that so much of it ends then as would give the reemployed veteran a preferred standing over employees not veterans having identical seniority rights as of the time of his restoration. We expressly reserve decision upon whether the statutory security extends beyond the one-year period to secure the reemployed veteran against impairment in any respect of equality with such a fellow worker.' 331 U.S. at page 60, 67 S.Ct. at page 392. 7 In the Fishgold case, we did not deal with the effect, if any, upon a veteran's seniority, of the expiration of his first year of reemployment. We there dealt with the initial terms of his restored position. We stated, in effect, that an honorably discharged veteran, covered by the statute, was entitled by the Act to be restored not to a position which would be the precise equivalent of that which he had left when he joined the Armed Forces, but rather to a position which, on the moving escalator of terms and conditions affecting that particular employment, would be comparable to the position which he would have held if he had remained continuously in his civilian employment. Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 284—285, 66 S.Ct. 1105, 1110—1111, 90 L.Ed. 1230, 167 A.L.R. 110; see also, Aeronautical Industrial Dist. Lodge 727 v. Campbell, 337 U.S. 521, 526, 69 S.Ct. 1287, 1289, 1290. In the Trailmobile case, supra, 331 U.S. at pages 56 and 60, 67 S.Ct. at pages 990, 992, 91 L.Ed. 1328, we dealt with the one year of special statutory protection given to the veteran in his restored position. We said, in effect, that this provision protected him not only from the total loss of that position by 'discharge' from it 'without cause,' but that it also protected him, for one year, against the loss of certain other benefits incidental to his restored position. 8 The instant cases take us one step further. In them we hold that the expiration of the year did not terminate the veteran's right to the seniority to which he was entitled by virtue of the Act's treatment of him as though he had remained continuously in his civilian employment; nor did it open the door to discrimination against him, as a veteran. Section 8(c) of the Act requires that the veteran shall be restored to his position 'without loss of seniority, * * *.' He therefore assumes, upon his reemployment, the seniority he would have had if he had remained in his civilian employment. His seniority status secured by this statutory wording continues beyond the first year of his reemployment, subject to the advantages and limitations applicable to the other employees. 9 In the instant cases, the respective complaints stated, in effect, that the complainants therein had not been restored to the places to which they were entitled on the escalators of their respective civilian employments. In No. 28, the allegation was that the petitioner was entitled, by virtue of the status he would have enjoyed had he remained continuously in his civilian employment, to the seniority of a locomotive machinist at Corbin from July 1, 1945, rather than from July 17, 1946. If he were entitled to the higher rating upon his reemployment, the Act did not deprive him of that rating merely by virtue of the expiration of his first year of reemployment. The motion to dismiss this action because of the expiration of that year, accordingly, should have been denied. 10 In No. 29, we reach the same result. That result is not affected by the failure of the veteran, in this case, to file his complaint until nearly three months after the expiration of his first year of reemployment. The Act did not establish a one-year statute of limitations upon the assertion of the veteran's initial rights of reemployment. It added special statutory protection, for one year, against certain types of discharges or demotions that might rob the veteran's reemployment of its substance, but the expiration of that year did not terminate the right of the veteran to the seniority to which he was, in the first instance, entitled by virtue of the Act's treatment of him as though he had remained continuously in his civilian employment. 11 The judgment of the Court of Appeals in each case is therefore reversed and the respective causes are remanded for further proceedings not inconsistent with this opinion. 12 Reversed and remanded. 13 Mr. Justice JACKSON concurs in the result. 14 Mr. Justice DOUGLAS took no part in the consideration or decision of these cases. 1 See especially, § 8(a), (b), (c) and (e), 54 Stat. 890, as amended, 56 Stat. 724, 58 Stat. 798, 60 Stat. 341, 50 U.S.C.App. § 308(a), (b), (c) and (e), 50 U.S.C.A.Appendix, § 308(a—c, e). See also, Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 278, 280, 281, 66 S.Ct. 1105, 1107, 1108, 1109, 90 L.Ed. 1230, 167 A.L.R. 110, for reprints of the material portions of the Act. 2 The respondent previously had answered, filed a request for admissions under Rule 36, Federal Rules of Civil Procedure, 28 U.S.C.A., received petitioner's admissions, and moved for summary judgment on the pleadings, the admissions, and an affidavit filed in support of the motion. In the meantime, System Federation No. 91 of the Railway Employes' Department of the American Federation of Labor, acting on its own behalf and as the collective bargaining agent of respondent's machinist employees, was permitted to intervene and to answer. It then filed the motion to dismiss the cause which was acted upon by the court. Accordingly, neither the answers nor the motion for summary judgment are before us, and we have considered the case on the petitioner's allegations in his complaint. 3 In No. 28, the court said: 'This cause coming on to be heard on the motion of the intervening defendants to dismiss the cause on the ground that the question presented has become moot, because more than one year has elapsed since the date of the plaintiff's restoration to employment with the defendant, L. & N. Railroad Company, and the Court being advised, it is ordered and adjudged that said motion be, and the same is hereby, sustained, and this action is now dismissed as moot, without cost to either the plaintiff, or the defendant, or the intervening defendants.' In No. 29, the entry was the same except for the name of the defendant railway. 4 'Sec. 8. * * * '(c) Any person who is restored to a position in accordance with the provisions of paragraph (A) or (B) of subsection (b) shall be considered as having been on Furlough or leave of absence during his period of (training and service in the land or naval forces), shall be so restored without loss of seniority, shall be entitled to participate in insurance or other benefits offered by the employer pursuant to established rules and practices relating to employees on furlough or leave of absence in effect with the employer at the time such person was (inducted) into such (forces), and shall not be discharged from such position without cause within one year after such restoration.' 54 Stat. 890, as reenacted, 60 Stat. 341, 50 U.S.C.App. § 308(c), 50 U.S.C.A.Appendix, § 308(c).

12

338 U.S. 269 70 S.Ct. 110 94 L.Ed. 63 REILLYv.PINKUS. No. 31. Argued Oct. 13, 1949. Decided Nov. 14, 1949. Mr. Robert L. Stern, Washington, D.C., for petitioner. Mr. Bernard C. Segal, Philadelphia, Pa., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 Federal statutes have long authorized the Postmaster General to forbid delivery of mail and payment of money orders to 'any person or company' found, 'upon evidence satisfactory' to him, to be 'conducting any * * * scheme or device for obtaining money * * * through the mails by means of false or fraudulent pretenses, representations, or promises * * *.'1 Following a hearing the Postmaster General issued such an order restricting respondent's use of the mails.2 2 The representations on which the order is based relate to respondent's anti-fat treatment, nationally advertised under the name of 'Dr. Phillips' Kelp-I-Dine Reducing Plan.' 'Kelp-I-Dine' is a name used by respondent for granulated kelp, a natural seaweed product containing iodine. The Reducing Plan is twofold: It requires users to take one-half teaspoonful of 'Kelp-I-Dine' per day, and suggests following a recommended daily diet which accompanies the vials of kelp. 3 Respondent's advertisements made expansive claims for its plan. They represented that persons suffering from obesity could 'eat plenty' and yet reduce 3 to 5 pounds in a week surely and easily, 'without tortuous diet' and without feeling hungry. Unhappy people eager to reduce but also eager to eat plenty were repeatedly reassured with alluring but subtly qualified representations such as these: 'Remember with the Kelpidine Plan, you don't cur out ice cream, cake, candy, or any other things you like to eat. You just cut down on them.' The alleged safety of the remedy and extraordinary efficacy of kelp were emphasized in advertisements stating that it 'makes no difference if you are 16 or 60, or if you have diabetes, rheumatism or any other ailment. Kelpidine is always safe and doctors approve the Kelpidine plan. You simply take a half teaspoon of Kelpidine once each day and eat three regular sensible meals. Kelpidine decreases your appetite.' 4 Two doctors with wide general knowledge in the field of dietetics and treatment for obesity were called by the Government in the fraud hearing. They testified that iodine, to which respondent chiefly attributed the fat-reducing powers of kelp, is valueless as an anti-fat; that kelp would not reduce hunger; that the suggested diet was too drastic to be safe for use without medical supervision, particularly where users suffered from chronic diseases such as diabetes and heart trouble. The one physician called by respondent testified that iodine was used by physicians as a weight reducer, and expressed his judgment that it did have value for such use. Even he, however, conceded that the daily dosage of iodine to reduce weight would be fifty to sixty times more than the iodine in respondent's daily dosage of kelp. The respondent's witness also admitted that the recommended diet was 'rigid,' and might prove harmful to persons suffering from tuberculosis, anemia, or heart disease. 5 The findings of the Postmaster General were that kelp is valueless as a weight reducer and that whatever efficacy there was in the remedy lay in the diet recommendations. He also found that the diet was neither uniformly safe nor harmless and might be particularly dangerous for persons afflicted with heart and kidney troubles; that the diet could not, as represented, be pursued in ease and comfort, without hunger, while eating the things respondent had led people to believe they could. On these findings the fraud order was entered. 6 The District Court granted an injunction against enforcement of the fraud order on the ground that the order was unsupported by factual evidence.3 Asserting that there was 'no exact standard of absolute truth' against which respondent's advertisements could be measured, the court held that the testimony of the two doctors on whch the Government's case rested was reduced by the conflicting testimony of respondent's witness to the status of mere opinion. As such, the evidence was held insufficient under the rule laid down by this Court in American School of Magnetic Healing v. McAnnulty, 187 U.S. 94, 23 S.Ct. 33, 47 L.Ed. 90. The Court of Appeals affirmed on substantially the same ground.4 Both courts distinguished Leach v. Carlile, 258 U.S. 138, 42 S.Ct. 227, 66 L.Ed. 511, where we held that a difference of opinion as to whether a product had any value at all did not bar a fraud order based on claims of far greater curative powers than the product could actually have. Important questions concerning the scope of the McAnnulty case and the sufficiency of evidence to support postoffice fraud orders prompted us to grant certiorari. 7 First. It is contended here, as both courts below held, that the findings of the Postmaster General must be set aside under the rule of the McAnnulty case. There the Postmaster General had forbidden use of the mails upon finding as a fact that petitioner was guilty of falsehood and fraud in obtaining money by representations based on claims that the 'mind of the human race is largely responsible for its ills, * * * and that the human race does possess the innate power, through proper exercise of the faculty of the brain and mind, to largely control and remedy the ills that humanity is heir to * * *.' (187 U.S. 94, 23 S.Ct. 37) This Court set aside the fraud order, pointing out that there were two widely held schools of opinion as to whether the mind could affect bodily diseases, and that scientific knowledge had not advanced to the point where an actual intent to deceive could be attributed to one who asserted either opinion. Thus there was 'no exact standard of absolute truth by which to prove the assertions false and a fraud.' At best, testimony either way was held to be no more than 'opinion' in a field where imperfect knowledge made proof 'as of an ordinary fact' impossible. 8 Respondent appears to argue that the McAnnulty case bars a finding of fraud whenever there is the least conflict of opinion as to curative effects of a remedy. The contention seems to be that even the testimony of the most experienced medical experts can never rise above a mere 'opinion' unless the expert has made actual tests of the drug to determine its effects in relation to the particular representations alleged to be false. The McAnnulty holding did not go so far. We do not understand or accept it as prescribing an inexorable rule that automatically bars reliance of the fact-finding tribunal upon informed medical judgment every time medical witnesses can be produced who blindly adhere to a curative technique thoroughly discredited by reliable scientific experiences. But we do accept the McAnnulty decision as a wholesome limitation upon findings of fraud under the mail statutes when the charges concern medical practices in fields where knowledge has not yet been crystallized in the crucible of experience. For in the science of medicine, as in other sciences, experimentation is the spur of progress. It would amount to condemnation of new ideas without a trial to give the Postmaster General power to condemn new ideas as fraudulent solely because some cling to traditional opinions with unquestioning tenacity. 9 In this case there is conflict, though slight, as to whether kelp or iodine is valueless as a weight reducer. But even if we assume that medical opinion is yet in a state of flux on this question, we think that there was sufficient evidence to support the findings that the efficacy of the 'Reducing Plan' as a whole was misrepresented in respondent's advertising. And we think those misrepresentations went beyond permissible 'puffing' of a seller's wares; they were material representations on which credulous persons, eager to reduce, were entitled to rely. Despite subtle qualifying phrases it is difficult to read these advertisements as a whole without receiving the impression that, contrary to facts justifiably found by the Postmaster General, kelp is a sure and drastic weight reducer; that a user can reduce without uncomfortably restricting his usual ample diet of fattening foods; that the treatment is absolutely safe and harmless to people of all ages, to the ill and the well. See Donaldson v. Read Magazine, 333 U.S. 178, 188—189, 68 S.Ct. 591, 596—597, 92 L.Ed. 628. These representations, if made with intent to deceive, fall squarely within the type which in Leach v. Carlile, 258 U.S. 138, 42 S.Ct. 227, 66 L.Ed. 511, were held to justify findings of fraud. 10 Second. Nevertheless we are constrained to hold that the present fraud order should not be enforced. It has been pointed out that the doctors' expert evidence rested on their general professional knowledge. To some extent this knowledge was acquired from medical text books and publications, on which these experts placed reliance. In cross-examination respondent sought to question these witnesses concerning statements in other medical books, some of which at least were shown to be respectable authorities. The questions were not permitted. We think this was an undue restriction on the right to cross-examine. It certainly is illogical, if not actually unfair, to permit witnesses to give expert opinions based on book knowledge, and then deprive the party challenging such evidence of all opportunity to interrogate them about divergent opinions expressed in other reputable books. 11 Petitioner seeks to justify exclusion of cross-examination based on some of these books by pointing out that they were merely medical dictionaries. Government experts testified they would not consult the dictionaries to ascertain the efficacy of a remedy, although they kept and used them for other purposes. But the books did assert the use of kelp as a fat reducer, and to some extent this tended to refute testimony by government experts that no reputable physicians would accept kelp or iodine as a weight reducer. 12 It is also contended that the error in restricting cross-examination was harmless here because the memorandum of the fact-finding official indicated that he had read the exluded materials and would have made the same adverse findings had the materials been held admissible. But the object of using the books on cross-examination was to test the expert's testimony by having him refer to and comment upon their contents. Respondent was deprived of this opportunity. The error of this deprivation could not be cured by having the fact-finder subsequently examine the material. 13 Moreover, the issues in postoffice fraud cases make such cross-examination peculiarly appropriate. Proof of fraudulent purposes is essential—an 'actual intent to deceive.' See Seven Cases v. United States, 239 U.S. 510, 517, 36 S.Ct. 190, 193, 60 L.Ed. 411, L.R.A.1916D, 164. Consequently fraud under the mail statutes is not established merely by proving that an incorrect statement was made. An intent to deceive might be inferred from the universality of scientific belief that advertising representations are wholly unsupportable; conversely, the likelihood of such an inference might be lessened should cross-examination cause a witness to admit that the scientific belief was less universal than he had first testified. 14 The power to refuse enforcement of orders for error in regard to evidence should be sparingly exercised. A large amount of discretion in the conduct of a hearing is necessarily reposed in an administrative agency. And what we have said is not to be taken as removing this discretion or as a compulsory opening of the gates for floods of medical volumes, even where shown to be authoritative. But in this kind of case as in others, one against whom serious charges of fraud are made must be given a reasonable opportunity to cross-examine witnesses on the vital issue of his purpose to deceive. And in this case any holding of harmless error is precluded by the fact that the assistant solicitor presiding at the hearings adopted the prosecutor's view that respondent was to be barred from using the mails 'regardless of good faith, even if the respondent believed in all of his representations * * * if they were false as a matter of fact.' 15 It is not amiss to point out that the Federal Trade Commission does have authority to issue cease-and-desist orders in cases like this without findings of fraud. 15 U.S.C. 45(a), (b), 15 U.S.C.A. § 45(a, b); F.T.C. v. Algoma Lumber Co., 291 U.S. 67, 81, 54 S.Ct. 315, 321, 78 L.Ed. 655. But that remedy does not approach the severity of a mail fraud order. In F.T.C. v. Raladam Co., 316 U.S. 149, 62 S.Ct. 966, 86 L.Ed. 1336, for instance, a business advertising its anti-fat product with extravagant statements similar in many respects to those of respondents here was ordered to cease and desist from making such statements. Except for this, the business was left free to sell its product as before. Unlike the Postmaster General, the FTC cannot bar an offender from using the mails, an order which could wholly destroy a business. See Brandeis, J., dissenting in United States ex rel. Milwaukee Social Democratic Pub. Co. v. Burleson, 255 U.S. 407, 417 et seq., 41 S.Ct. 352, 356, 65 L.Ed. 704. The strikingly different consequences of the orders issued by the two agencies on the basis of analogous misrepresentations emphasize the importance of limiting Post-office Department orders to instances where actual fraud is clearly proved. 16 The judgment of the Court of Appeals is affirmed, without prejudice to a reopening of the proceedings against respondent to permit additional hearings should the Postmaster General choose to do so. 17 It is so ordered. 18 Affirmed without prejudice. 19 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 1 R.S. 3929, as amended, 39 U.S.C. § 259, 39 U.S.C.A. § 259; R.S. 4041, as amended, 39 U.S.C. § 732, 39 U.S.C.A. § 732. 2 The order did not forbid delivery of mail to respondent Pinkus individually. It did forbid delivery to trade names used by respondent Pinkus, 'American Health Aids Company and Energy Food Center, and their officers and agents as such * * *.' 3 71 F.Supp. 993, 994. See also Pinkus v. Walker, D.C., 61 F.Supp. 610. 4 3 Cir., 170 F.2d 786.

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338 U.S. 286 70 S.Ct. 115 94 L.Ed. 93 UNITED STATES et al.v.CAPITAL TRANSIT CO. et al. WASHINGTON, VIRGINIA & MARYLAND COACH CO., Inc., et al. v. CAPITAL TRANSIT CO. et al. Nos. 40, 41. Argued Oct. 20—21, 1949. Decided Nov. 14, 1949. Motion for Issuance of Mandate Denied Nov. 21, 1949. See 70 S.Ct. 186. Mr. Philip Elman, Washington, D.C., for appellants, the United States and Interstate Commerce Commission. Mr. Manuel J. Davis, Washington, D.C., for appellant, Washington, Va. & Md. Coach Co. Inc. Mr. S. Harrison Kahn, Washington, D.C., for appellant, Alexandria, Barcroft & Washington Transit Co. Mr. Samuel O. Clark, Jr., Washington, D.C., for appellee, Capital Transit Co. Mr. Lloyd B. Harrison, Washington, D.C., for appellee, Public Utilities Commission of the District of Columbia. Mr. Henry E. Ketner, Richmond, Va., for State Corporation of the State of Va., as amicus curiae by special leave of Court. [Argument of Counsel from page 287 intentionally omitted] PER CURIAM. 1 In United States v. Capital Transit Co., 325 U.S. 357, 65 S.Ct. 1176, 89 L.Ed. 1663, we upheld the jurisdiction of the Interstate Commerce Commission to regulate certain of Capital Transit's bus and streetcar rates. The rates involved were in two different categories. Transit operated, as it still does, a bus and streetcar system within the District connecting the residential area with the central business area. It was also one of four bus companies carrying passengers from that central business area to the Pentagon Building and other defense establishments located just across the Potomac in Virginia. Each day thousands of Government employees living in the District boarded Transit's streetcars near their residences, rode to the District's business area, and there transferred to one of the Virginia busses for carriage to the nearby Virginia establishments. In the above case we sustained a Commission order fixing a through fare for the entire trip between the District residential area and the Virginia governmental installations. Transit had strongly urged that its bus and streetcar transportation between residential and business areas, being wholly within the District, could not be treated as part of an interstate movement. For reasons stated in our former opinion we rejected Transit's contention, holding that the daily stream of Government workers from the District to Virginia and back again was an interstate movement and therefore subject to regulation by the Commission. This holding applied to Transit carriage even where Transit passengers traveled between the District and Virginia on other bus lines. Transit also contended that jurisdiction of the Commission was precluded by a proviso in § 216(e) of the Motor Carrier Act, 49 U.S.C.A. § 316(e), exempting 'intrastate transportation' of motor carriers from regulation by the Commission. This contention was repeated on motion for rehearing. We rejected it. Our holding that Transit's part of the District-Virginia movements was 'interstate transportation' necessarily made the § 216(e) exemption inapplicable. 2 After our holding the Commission entered a new order putting into effect the rate order we had sustained. In the present cases, here on appeal from a three-judge District Court under 28 U.S.C. §§ 1253 and 2101(b), 28 U.S.C.A. §§ 1253, 2101(b), the new order was enjoined1 on the ground that Transit's transportation, which we had held to be interstate, had now become 'intrastate.' On the same ground, that court also held that Transit was exempt from Commission jurisdiction under the proviso in § 216(e). The District Court also cited to support its ruling our recent decision in United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010. 3 The District Court apparently took the position that changed conditions since our decision in the prior Transit case had deprived the Commission of its jurisdiction. When we sustained the Commission's order in that case, Transit was itself operating one of the four bus lines carrying Government workers from the District central business area to Virginia. It issued transfers to passengers on its busses and streetcars between the District business and residential areas. These transfers were good for rides on Transit's own District-Virginia busses, but Transit would not give transfers good on the three competitive lines. We adverted to and relied on this situation as one of the reasons supporting the Commission's requirement that Transit make similar arrangements for through fares with the other lines. April 1, 1947, Transit abandoned its District-Virginia bus line. Because of this the District Court held that since that date all of Transit's carriage of Virginia-bound passengers has been 'intrastate transportation.' 4 The District Court's annulment of the Commission's order on the above ground cannot stand. Our previous holding was that all of Transit's intra-District carriage of passengers bound to and from the Virginia establishments was part of an 'interstate' movement and therefore subject to Commission regulation throughout, upon proper Commission findings. United States v. Yellow Cab Co., supra, does not conflict with our prior holding that Transit's transportation was part of a continuous stream of interstate transportation. We adhere to that holding. Transit's intra-District streetcar and bus transportation of passengers going to and from the Virginia establishments is an integral part of an interstate movement. 5 In support of the District Court's judgment it is urged that there was no substantial evidence to support the Commission's findings that its exercise of jurisdiction was necessary to a national transportation system 'adequate to meet the needs of * * * the national defense.' The argument seems to be that the Commission should have altered this finding made in the prior proceedings because the nation is no longer at war. Another factor pointed out is that there are now fewer Army and Navy workers who work in the Virginia installations. Neither of these arguments is sufficient to justify setting aside findings made by the Commission on this point. The evidence before the Commission in the two proceedings indicates that the same reasons exist for Commission action now as before. And despite attempted interference with the Commission's power by the Public Utilities Commission of the District, it is still true that neither the District nor Virginia has adequate power to regulate the through rates for this daily stream of interstate travel. 6 It is also argued here that the orders should be set aside because they are confiscatory. But the record fails to show that this issue was properly presented to the Commission for its determination. Therefore the question of confiscation is not ripe for judicial review. 7 We have examined other contentions urged in support of the District Court's judgments and find that all are without merit. 8 The judgments of the District Court in these cases are reversed and the causes are remanded to it with directions to dismiss these actions. 9 Reversed and remanded. 10 It is so ordered. 11 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 12 The CHIEF JUSTICE, Mr. Justice REED, and Mr. Justice JACKSON dissenting. 13 The opinion in our view bases the judgment on a holding 'that all of Transit's intra-District carriage of passengers bound to and from the Virginia establishments was part of an 'interstate' movement and therefore subject to Commission regulation throughout, upon proper Commission findings.' Since the Court does not rest the applicability of the Motor Carrier Act, 49 Stat. 543, 49 U.S.C.A. § 301 et seq., to the Capital Transit Company on the existence of Transit's lines to Maryland, we, too, lay that problem aside. We understand the Court to assert that the statute empowers the Commission to enter the contested order whether or not Transit operates admitted interstate routes. 14 The present case differs from the former case involving the operations of the Transit Company. 325 U.S. 357, 65 S.Ct. 1176, 89 L.Ed. 1663. In the earlier case Transit served Virginia areas in competition with other interstate operators of busses. As the operator of interstate routes selling through tickets on its own lines, Transit was required also to sell and accept through tickets that were good for passage on other interstate lines. Such obligation was imposed by § 216(e), the section prohibiting anything 'unduly preferential or unduly prejudicial,' and § 216(c), the section regulating charges for voluntary through rates. 325 U.S. at 362, 65 S.Ct. 1178, 89 L.Ed. 1663. 15 Now Transit does not operate the interstate routes to the Virginia points. It is not an interstate carrier over the route for which it now is required to sell through tickets. Therefore, the Court's opinion finds it necessary to rely upon the stream of passengers between the District and Virginia to put Transit under the Motor Carrier Act as engaged in interstate commence so far as it transports, in the District, passengers with an ultimate out-of-state destination. We do not believe the Act permits such a construction. 16 Clearly the Act is limited to operations in interstate commerce.1 Congress has not used the full extent of its commerce power to reach incidents affecting interstate transportation. It has emphasized a contrary intention by providing for the exclusion from the coverage of the Act, in certain situations, of interstate passenger traffic in a municipality, contiguous municipalities or adjacent zones. § 203(b)(8), 49 U.S.C.A. § 303(b)(8). Likewise the Act specifically bars the Commission from regulating intrastate transportation on the ground that it affects interstate transportation.2 Since the Motor Carrier Act does not regulate carrier activities that merely affect interstate commerce, we think the stream of commerce theory inapplicable.3 We cannot agree that intrastate carriage of passengers who have an intention to continue their journey across state lines by way of another and wholly unconnected company makes the first carrier a company engaged in interstate commerce under the Motor Carrier Act as to that transportation. 17 The Court's decision may have unfortunate results. Its unlimited language sweeps into the hands of the Commission the regulation of all local transportation that carries a large proportion of passengers destined for or arriving from out-of-state points. For example, the Court's ruling would seem to include the New York City commuter traffic moving by local bus, subway and street car service on its way to and from interstate busses. 1 The District Court simultaneously enjoined enforcement of two subsequent related Commission orders. One order declined to permit cancellation of the prescribed through rates and schedules. 47 M.C.C. 205. The other increased the former prescribed maximum rates and provided for divisions of through fares among the companies carrying the District-Virginia passengers. 270 I.C.C. 651. 1 'Sec. 202(a), 49 U.S.C.A. § 302(a). The provisions of this part apply to the transportation of passengers or property by motor carriers engaged in interstate or foreign commerce and to the procurement of and the provision of facilities for such transportation, and the regulation of such transportation, and of the procurement thereof, and the provision of facilities therefor, is hereby vested in the Interstate Commerce Commission.' 2 'That nothing in this part shall empower the Commission to prescribe, or in any manner regulate, the rate, fare, or charge for intrastate transportation, or for any service connected therewith, for the purpose of removing discrimination against interstate commerce or for any other purpose whatever.' § 216(e). 3 See McLeod, v. Threlkeld, 319 U.S. 491, 63 S.Ct. 1248, 87 L.Ed. 1538; National Labor Relations Board v. Jones & Laughlin, 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352; Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 395, 66 L.Ed. 735, 23 A.L.R. 229.

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338 U.S. 304 70 S.Ct. 127 94 L.Ed. 107 MANUFACTURERS TRUST CO.v.BECKER et al. No. 55. Argued Oct. 20, 1949. Decided Nov. 21, 1949. Mr. Edward K. Hanlon, New York City, for petitioner. Mr. David W. Kahn, New York City, for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 This proceeding in bankruptcy is on objections to the allowance of claims equal to the principal amount of bonds of the debtor acquired at a discount during its insolvency by close relatives and an office associate of directors of debtor. Petitioner's objection that equitable considerations require limitation of the claims was dismissed by the referee, and the District Court affirmed. 80 F.Supp. 822. Following affirmance by a divided Court of Appeals for the Second Circuit, 173 F.2d 944, we granted certiorari because the issue presented has importance in the administration of the arrangement and corporate reorganization provisions of the Bankruptcy Act. 337 U.S. 923, 69 S.Ct. 1170. 2 On January 8, 1946, Calton Crescent, Inc., sold its only property, an apartment house located in New Rochelle, New York, for $300,000 pursuant to a contract entered into in October 1945. Being unable to discharge in full its obligations under debenture bonds maturing in 1953, outstanding in principal amount of $254,450, debtor filed in May 1946, a petition under Ch. XI of the Bankruptcy Act, 11 U.S.C. § 701 et seq., 11 U.S.C.A. § 701 et seq. Under the plan of arrangement, authorizing a dividend of 43.61% of the principal amount of the bonds, respondents Regine Becker, Emily K. Becker, and Walter A. Fribourg were to receive an aggregate dividend of.$64,237.53 on allowance of claims based on respective individual holdings of debentures which total $147,300 in principal sum but were acquired at a total cost of $10,195.43.1 Petitioner, Manufacturers Trust Company, appearing individually as creditor for fees and disbursements due it as indenture trustee and also as original trustee under said indenture, objected to allowance of respondents' claims as filed, on the ground that the circumstances of respondents' acquisitions require limitation of their claims to the cost of the debentures plus interest. 3 The circumstances pertinent to our consideration of petitioner's objections are as follows: The debtor was organized in 1933 to take title to the apartment property pursuant to a plan of reorganization. By January 1942 debtor had defaulted under the terms of the first mortgage and was operating with a deficit; at no time in the previous several years had its debentures been selling on the market at more than 8% of face value. 4 While debtor was then considering a sale of the property for $220,000, a suit to enjoin the sale was brought by Sanford Becker, son of respondent Regine Becker and husband of respondent Emily Becker.2 Thereafter he proposed to arrange a loan on second mortgage to debtor of $15,000 to pay off the arrearages on the first mortgage, all share and debenture holders being invited to participate. In April 1942 debtor accepted the offer, but none of its share or debenture holders elected to participate other than respondent Fribourg, who had desk room in the offices of Sanford Becker and his brother Norman Becker and was a long-time friend of the former. The loan was made by respondents Regine Becker, Emily Becker, and Fribourg. The second mortgage thus created was in default by the end of 1942, and in 1943 respondents took an assignment of rents but did not foreclose; nor was there change in management of the property. The second mortgage and interest were paid upon sale of the property in 1946. In addition to the second mortgage, sums aggregating $7,921.63 were advanced by respondents to pay taxes; this amount was repaid without interest in 1944 and 1945. Pursuant to provisions of the loan agreement in 1942, Sanford and Norman Becker were made directors of debtor, and when the remaining three directors resigned in 1944, the vacancies were filled by nominees of the Becker brothers. 5 The referee found that from early 1942 the market value of the property of debtor was insufficient to pay its debts. However, the record shows a tax valuation during the period of only slightly less than the outstanding indebtedness.3 And although the debtor's operating account frequently ran in arrears, it revealed a surplus in 1945. Prior to disposing of its property debtor was at all times a going concern.4 6 The debentures on which respondents claim were acquired, at prices varying from 3% to 14% of face value, after the Becker brothers became directors in 1942.5 Sanford Becker did not buy additional debentures after becoming a director. Norman Becker never owned any interest whatever in the debtor. Although neither of the Becker directors was interested in any purchase of the respondents, the debentures of Regine and Emily Becker were purchased through the agency of the Becker brothers and in the latter's judgment. The debentures of Regine Becker were purchased from an over-the-counter securities broker. Those of Emily Becker were acquired in part from the same dealer, in part from an estate whose attorneys were fully informed as to debtor's financial affairs, and in part from a Christian Association represented by a member of its investment committee who was fully advised as to the condition of debtor. 7 Some of Fribourg's debentures were bought from dealers in the over-the-counter market; others were acquired through an agent from the president and vice president of debtor when they withdrew from its management in 1944, and from other holders after the retiring president insisted that the offer made to him by Fribourg's agent be extended to all holders and be accompanied by a statement of the president's intention to accept. Fribourg was in the market for speculative securities and purchased the debentures as a 'gamble,' being influenced by the tax valuation of the apartment building. 8 All of respondents' debentures, with the exception of $2,000 in face value purchased by Fribourg from a dealer, were acquired in advance of the contract for sale of the apartment property and the filing of debtor's petition for arrangement.6 9 It was the referee's finding, left undisturbed by both courts below, that respondents' purchases were without overreaching or failure to disclose any material fact to the selling bondholders. Petitioner does not here contend that respondents' claims should be limited because of conduct by the Becker directors or by respondents amounting to bad faith or abuse of fiduciary advantage. Nor does petitioner contend that respondents' bondholdings influenced the conduct of corporate affairs to the injury of the corporation or other creditors. Indeed, the referee found that the purchases were not unfair to debtor, that at the time of respondents' purchases debtor was not in the field to settle its indebtedness on the debentures, and that the assistance rendered to debtor by respondents materially aided in its grave financial situation. Moreover, the findings indicate that the most generous suggestion of an offer for the apartment building after the Beckers became directors and prior to the sale was at a figure substantially less than the sale price. 10 Petitioner urges broadly that directors are precluded from profiting by the purchase of claims against an insolvent corporation. And, it contends, if directors may claim only the cost of debt securities acquired at a discount during a debtor's insolvency, those related as respondents are to the Becker directors should not be permitted to do more. Thus we view respondents' claims initially as if they were claims of directors. 11 This Court has repeatedly insisted on good faith and fair dealing on the part of corporate fiduciaries. It is especially clear, when claims in bankruptcy accrue to the benefit of a corporate officer or director, that the court must reject any claim that would not be fair and equitable to other creditors. Pepper v. Litton, 1939, 308 U.S. 295, 308—309, 60 S.Ct. 238, 246, 84 L.Ed. 281.7 12 Claims of a corporate officer or director arising out of transactions with the corporation have been enforced when good faith and fairness were found. Sanford Fork & Tool Co. v. Howe, Brown & Co., 1895, 157 U.S. 312, 15 S.Ct. 621, 39 L.Ed. 713; cf. Manufacturing Co. v. Bradley, 1892, 105 U.S. 175, 26 L.Ed. 1034; see Richardson's Ex'r v. Green, 1890, 133 U.S. 30, 43, 10 S.Ct. 280, 284, 33 L.Ed. 516; Twin-Lick Oil Co. v. Marbury, 1876, 91 U.S. 587, 589—591, 23 L.Ed. 323. Likewise a standard of good faith and fair dealing has been found applicable, where not superseded by a differing legislative or administrative rule, to purchases by directors of corporate shares, in the over-the-counter market, at less than book value on conversion under a plan of public utility reorganization. Securities and Exchange Commission v. Chenery Corporation, 1943, 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626; cf. id., 1947, 332 U.S. 194, 67 S.Ct. 1575, 91 L.Ed. 1995. In the first Chenery decision it was declared that equity has not imposed 'upon officers and directors of a corporation any fiduciary duty to its stockholders which precludes them, merely because they are officers and directors, from buying and selling the corporation's stock.' 318 U.S. at page 88, 63 S.Ct. at page 459, 87 L.Ed. 626. 13 When the transactions underlying respondents' claims here are drawn alongside a good faith standard of fiduciary obligation, they appear unobjectionable. There is no component of unfair dealing or bad faith.8 The findings negative any misrepresentation or deception, any utilization of inside knowledge or strategic position, or any rivalry with the corporation.9 During the period of the purchases the conduct of the Becker directors and of respondents with reference to the affairs of the debtor was to its substantial benefit and to the advantage of the other debenture holders. And there is nothing to suggest that had the debentures been acquired by the Becker directors, they would have been unjustly enriched. Cf. Securities and Exchange Commission v. Chenery Corporation, supra, 318 U.S. at page 86, 63 S.Ct. at page 458, 87 L.Ed. 626. 14 However, it is the contention of petitioner, and of the Securities and Exchange Commission as amicus curiae, that a standard of good faith and fair dealing is inadequate here. Relying particularly upon Magruder v. Drury, 1914, 235 U.S. 106, 35 S.Ct. 77, 59 L.Ed. 151, they invoke the principle that a trustee can make no profit from his trust. But Magruder v. Drury involved an express trust, and even during insolvency corporate assets 'are not, in any true and complete sense, trusts.' Hollins v. Brierfield Coal & Iron Co., 1893, 150 U.S. 371, 381—382, 14 S.Ct. 127, 129, 37 L.Ed. 1113.10 15 The Commission asserts, also, that if a director is free to acquire corporate obligations at a discount during insolvency and later enforce them in full, he will be subject to a possible conflict of interests inconsistent with his role as fiduciary to creditors of the corporation. Specifically it is argued that he may seek to postpone adjustment of claims or the institution of proceedings for relief, when such action would serve the interests of the corporation and its creditors, in order to continue his own purchase of corporate obligations at a market price lower than the valuation which he has made with the benefit of inside information. 16 This Court has recognized that equity must apply not only the doctrines of unjust enrichment when fiduciaries have yielded to the temptation of self-interest but also a standard of loyalty which will prevent a conflict of interests from arising. See Weil v. Neary, 1929, 278 U.S. 160, 173, 49 S.Ct. 144, 149, 73 L.Ed. 243; cf. Woods v. City Nat. Bank & Trust Co., 1941, 312 U.S. 262, 268, 61 S.Ct. 493, 497, 85 L.Ed. 820. In this case the consideration is whether or to what extent a conflict of interests would arise from a director's opportunity to purchase unmatured obligations of a corporation which, though technically insolvent, remains nevertheless a going concern. That 'there is no such conflict in the ordinary case of the purchase by a director in a going corporation of its outstanding obligations', Seymour v. Spring Forest Cemetery Ass'n, 1895, 144 N.Y. 333, 344, 39 N.E. 365, 367, 26 L.R.A. 859, would seem true not only of solvent corporations.11 Certainly the present record does not tend to establish that the opportunity for such purchases during insolvency would deprive a going corporation of the sound judgment of its officer. And in any event the potentiality of conflict must be weighed against the desirability of permitting reinforcement of the insolvent's position insofar as a director's acquisition of claims may help.12 On this record the probability that an actual conflict of loyalties arose from the opportunity to purchase respondents' claims, while the debtor was a going concern, is not great enough to justify the exercise of equity jurisdiction which petitioner urges.13 17 Undoubtedly the possibilities of a conflict of interests for the purchasing director are intensified as the corporation becomes less a going concern and more a prospective subject of judicial relief. And if it is clear that a fiduciary may ordinarily purchase debt claims in fair transactions during solvency of the corporation,14 the lower federal courts seem equally agreed that he cannot purchase after judicial proceedings for the relief of a debtor are expected or have begun.15 In this case, which lies between, it is unnecessary to determine precisely at what point the probability of conflict requires that equity declare ended the opportunity for profitable trading. It could hardly have been prior to the latest purchases of Regine and Emily Becker.16 18 The nature of the relation between Fribourg and the Becker directors makes immaterial that some of Fribourg's debentures may have been purchased after the corporation ceased to have the potency of a going concern, in expectation of or even after bankruptcy. Neither director had any indirect interest in Fribourg's holdings or served as his agent for purchase. Fribourg, moreover, had begun to acquire debentures some months before the negotiations leading to the election of the Beckers as directors of the debtor and, according to Fribourg's uncontradicted testimony, he began to purchase after looking over the apartment following Sanford Becker's mention of his own purchase. There is nothing in the record to indicate that Fribourg's purchases after the Beckers became directors were influenced by advice from them. Accordingly, any consideration of Fribourg's claim as that of a director is precluded. 19 A word of caution as to the scope of our decision is desirable in view of Judge Learned Hand's opinion below. He suggested that if in fact liquidation had been imminent at the time of respondents' purchases or if it were fairly demonstrable, as a matter of experience, that a director free from all potential self-interest would be more likely to initiate liquidation proceedings or to effect a debt settlement than one not wholly disinterested, a court of equity should explore such issues and not dismiss them out of hand. This decision is not meant to negative the relevance of these issues when raised by a proper record. We mention these matters because the Securities and Exchange Commission urges the importance of a decision in this case for questions that may well arise in proceedings under Ch. X, 11 U.S.C.A. 501 § et seq. In such proceedings the Securities and Exchange Commission, acting as the statutory advisor to the court, would be within its rightful function in submitting to the court the light of its experience on dealings of the general kind disclosed in this case. Here we have proven facts in a particular case, and not a body of evidence submitted by the Securities and Exchange Commission, presumably informed by expert understanding. 20 The decision of the Court of Appeals is affirmed. 21 Affirmed. 22 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 23 Mr. Justice BURTON, with whom Mr. Justice BLACK joins, dissenting. 24 While corporate directors are not classed as express trustees, their obligations to their respective corporations are fiduciary in character. The more precarious the condition of the corporation, the more it needs the undivided loyalty of its directors. Conflicts of interest must be resolved in its favor. An example of the need for doing so arises whenever, in the face of a prospect of the corporation's liquidation, some of its directors invest in its notes at a substantial discount. An inherent conflict of interests is thereby created. It may be necessary for them to choose between a corporate policy of reorganization which might be best for the corporation and one of liquidation which might yield more certain profits to them as noteholding directors. The fiduciary obligation of such directors to their corporation might thus conflict with their personal interests as noteholders. Their access to confidential corporate information emphasizes the good faith expected of them. The solution lies in making them accountable to their corporation for their profits from such an investment, much as a trustee must account to his beneficiaries for his profits from dealings in the subject matter of his trust. This result would spring wholly from the fiduciary nature of the obligations of directors to their corporation. It would need no proof of a breach of trust or of the actual overreaching of any one.1 25 As long as a corporation enjoys the healthy status of a going concern, its directors generally may invest freely in its securities without accountability for their resulting profits. Their directorships should make them accountable for such profits when their personal interests as purchasers of securities may conflict with their obligations as directors.2 A mere excess of a corporation's liabilities over its assets may not subject its directors to this accountability. Nevertheless, any evidence of the financial instability of their corporation obligates the directors to overcome whatever presumption of conflict of interests between their own and those of the corporation or of its creditors that such evidence presents. 26 In the instant case there should be a finding whether or not, at the time of the purchases of the debentures in question, there was a sufficient prospect of liquidation to bring the interests of directors as debenture purchasers into conflict with the interests of their corporation. If such a conflict is established, it then will be necessary to determine the extent, if any, to which the relatives and associates of such directors are to be identified with them. 27 I agree with the reasoning of the dissent below. 173 F.2d 944, 951. Accordingly, I would reverse the judgment and remand the cause for further findings in accordance with this opinion. 1 The amount and cost of the respective holdings of the respondents, insofar as objected to, are as follows: Principal Amount Cost Regine Becker....... $44,500. $3060.63 Emily K. Becker..... 52,800. 5010.00 Walter A. Fribourg.. 50,000. 2124.80 2 Sanford Becker and respondent Fribourg first became interested in the affairs of debtor in September 1941. Soon thereafter each purchased, independently, debentures of debtor of the face value of $5,000. No contest is made of these purchases. It appears that transactions in the debentures included the transfer of capital shares of the debtor which had no market apart from the debentures. 3 The major items of indebtedness consisted of (1) the first mortgage on the apartment building in original principal amount of $175,000, which had been reduced by 1946 to $154,000, of which reduction $7,875 had been paid since 1943; (2) the second mortgage and tax advances of the respondents totalling some $22,000, and (3) the debentures of $254,450, on which, however, interest was payable only if earned. The tax valuation was $421,630. 4 The District Court's characterization of debtor as a going concern was not upset by the Court of Appeals and is accepted here. 5 Regine Becker began purchases on February 10, 1944, and continued through August 30, 1945. The purchases of Emily Becker were made between May 24, 1944, and February 5, 1945. In addition to the purchases referred to in note 2 supra, Fribourg made purchases through June 4, 1946. 6 The latest purchase by a respondent clearly prior to the contract for sale was by Regine Becker on August 30 preceding the contract in October 1945. Fribourg apparently acquired $1,500 of debentures after the contract of sale and an additional $500 after the filing of debtor's petition. 7 Since the power of disallowance of claims, conferred on the bankruptcy court by § 2 of the Act, 30 Stat. 545, 11 U.S.C. § 11, 11 U.S.C.A. § 11, embraces the rejection of claims 'in whole or in part, according to the equities of the case', Pepper v. Litton, 1939, 308 U.S. 295, 304—305, 60 S.Ct. 238, 244, 84 L.Ed. 281, the court may undoubtedly require limitation of the amount of claims in view of equitable considerations. Cf. Bankruptcy Act, § 212, 52 Stat. 895, 11 U.S.C. § 612, 11 U.S.C.A. § 612. 8 Cf. In re The Van Sweringen Co., 6 Cir., 1941, 119 F.2d 231; In re Norcor Mfg. Co., 7 Cir., 1940, 109 F.2d 407. 9 Cf. In re Jersey Materials Co., D.C.N.J.1943, 50 F.Supp. 428; In re McCrory Stores Corp., D.C.S.D.N.Y.1935, 12 F.Supp. 267. 10 Other holdings upon which the Commission relies, Pepper v. Litton, supra, note 7, and Woods v. City Nat. Bank & Trust Co., 1941, 312 U.S. 262, 61 S.Ct. 493, 85 L.Ed. 820, were considered in Securities and Exchange Commission v. Chenery Corporation, 1943, 318 U.S. 80, 89, 63 S.Ct. 454, 460, 87 L.Ed. 626, and there distinguished on grounds which are also dispositive here. 11 Courts of equity, in defining the responsibility of officers of a corporation which is insolvent and yet a going concern, have frequently assigned greater importance to the corporation's vitality than to its insolvency. E.g., Sanford Fork & Tool Co. v. Howe, Brown & Co., 1895, 157 U.S. 312, 15 S.Ct. 621, 39 L.Ed. 713; White, Potter & Paige Mfg. Co. v. Henry B. Petters Importing Co., C.C.E.D.Mo.1887, 30 F. 864. 12 As respondents' purchases of debentures resulted in their securing control of debtor, see note 2 supra, the acquisitions arguably were a factor in preventing further financial deterioration of debtor. See also 62 Harv.L.Rev. 1391, 1392 (1949): Insolvency 'is the very time when such purchases may be of most benefit to the corporation, since the credit of the corporation may be improved if it is known that directors are purchasing the corporation's securities; also it may be possible to forestall a bankruptcy petition while the corporation improves its financial position.' 13 Cf. In the Matter of Wade Park Manor Corporation, Report of Special Master: Claims of Macklin et al. (N.D.Ohio, 1949); see 3 Collier, Bankruptcy (14th ed.), p. 1784, 1948 Supp. p. 124. 14 See In re Philadelphia & Western R. Co., D.C.E.D.Pa.1946, 64 F.Supp. 738, 739; Ripperger v. Allyn, D.C.S.D.N.Y.1938, 25 F.Supp. 554, 555; In re McCrory Stores Corp., note 9 supra, 12 F.Supp. at page 269. 15 Monroe v. Scofield, 10 Cir., 1943, 135 F.2d 725; In re Norcor Mfg. Co., note 8, supra; In re Philadelphia & Western R. Co., note 14, supra; In re Jersey Materials Co., note 9, supra; In re Los Angeles Lumber Products Co., D.C.S.D.Cal.1941, 46 F.Supp. 77. 16 Thus it becomes unnecessary to determine whether the relation of the Becker respondents to the directors was such as to require limitation of these respondents' claims if they would be disallowed in part as claims of directors. 1 Expression has been given to such a principle in many cases where there have also occurred breaches of trust of a nature so serious as not to require a final reliance upon the principle. See, e.g., In re The Van Sweringen Co., 6 Cir., 119 F.2d 231; In re Norcor Mfg. Co., 7 Cir., 109 F.2d 407; In re Philadelphia & Western R. Co., D.C.E.D.Pa., 64 F.Supp. 738; In re Jersey Materials Co., D.C.N.J., 50 F.Supp. 428; In re Los Angeles Lumber Products Co., D.C.S.D.Cal., 46 F.Supp. 77; In re McCrory Stores Corp., D.C.S.D.N.Y., 12 F.Supp. 267, 269. See also, 3 Fletcher, Cyclopedia of Corporations § 869.1 (1947); 2 Remington on Bankruptcy § 975.01 (Supp.1947). 2 Directors ordinarily may buy and sell the stock of their corporation, without accountability, except under special circumstances of unfairness in the particular transaction. 3 Fletcher, Cyclopedia of Corporations §§ 1171, 1174 (1947); Ballantine on Corporations § 80 (Rev. ed. 1946). Their purchase of stock increases their stake in the ultimate interests of the corporation they serve.

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338 U.S. 294 70 S.Ct. 105 94 L.Ed. 100 BROWNv.WESTERN RAILWAY OF ALABAMA. No. 43. Argued Oct. 19, 1949. Decided Nov. 21, 1949. Opinion Conformed to Feb. 2, 1950. See 57 S.E.2d 454. Mr. Richard M. Maxwell, Atlanta, Ga., for petitioner. Mr. Herman Heyman, Atlanta, Ga., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 Petitioner brought this action in a Georgia state court claiming damages from the respondent railroad under the Federal Employers' Liability Act. 45 U.S.C. § 51 et seq., 45 U.S.C.A. § 51 et seq. Respondent filed a general demurrer to the complaint on the ground that it failed to 'set forth a cause of action and is otherwise insufficient in law.' The trial court sustained the demurrer and dismissed the cause of action. The Court of Appeals affirmed, 77 Ga.App. 780, 49 S.E.2d 833, and the Supreme Court of Georgia denied certiorari. It is agreed that under Georgia law the dismissal is a final adjudication barring recovery in any future state proceeding. The petition for certiorari here presented the question of whether the complaint did set forth a cause of action sufficient to survive a general demurrer resulting in final dismissal. Certiorari was granted, 336 U.S. 965, 69 S.Ct. 939, because the implications of the dismissal were considered important to a correct and uniform application of the federal act in the state and federal courts. See Brady v. Southern R. Co., 320 U.S. 476, 64 S.Ct. 232, 88 L.Ed. 239. 2 First. The Georgia Court of Appeals held that 'Stripped of its details, the petition shows that the plaintiff was injured while in the performance of his duties when he stepped on a large clinker lying alongside the track in the railroad yards. * * * The mere presence of a large clinker in a railroad yard cannot be said to constitute an act of negligence. * * * Insofar as the allegations of the petition show, the sole cause of the accident was the act of the plaintiff in stepping on this large clinker, which he was able to see and could have avoided.' The court reached the foregoing conclusins by following a Georgia rule of practice to construe pleading allegations 'most strongly against the pleader.' Following this local rule of construction the court said that 'In the absence of allegations to the contrary, the inference arises that (the plaintiff's) vision was unobscured and that he could have seen and avoided the clinker.' 77 Ga.App. 783, 49 S.E.2d 835. Under the same local rule the court found no precise allegation that the particular clinker on which petitioner stumbled was beside the tracks due to respondent's negligence. 3 It is contended that this construction of the complaint is binding on us. The argument is that while state courts are without power to detract from 'substantive rights' granted by Congress in FELA cases, they are free to follow their own rules of 'practice' and 'procedure.' To what extent rules of practice and procedure may themselves dig into 'substantive rights' is a troublesome question at best as is shown in the very case on which respondent relies. Central Vermont R. Co. v. White, 238 U.S. 507, 35 S.Ct. 865, 59 L.Ed. 1433, Ann.Cas.1916B, 252. Other cases in this Court1 point up the impossibility of laying down a precise rule to distinguish 'substance' from 'procedure.' Fortunately, we need not attempt to do so. A long series of cases previously decided, from which we see no reason to depart, makes it our duty to construe the allegations of this complaint ourselves in order to determine whether petitioner has been denied a right of trial granted him by Congress. This federal right cannot be defeated by the forms of local practice. See American Ry. Exp. Co. v. Levee, 263 U.S. 19, 21, 44 S.Ct. 11, 12, 68 L.Ed. 140. And we cannot accept as final a state court's interpretation of allegations in a complaint asserting it. First National Bank of Guthrie Center v. Anderson, 269 U.S. 341, 346, 46 S.Ct. 135, 137, 70 L.Ed. 295; Davis v. Wechsler, 263 U.S. 22, 24, 44 S.Ct. 13, 14, 68 L.Ed. 143; Covington & L. Turnpike Road Co. v. Sandford, 164 U.S. 578, 595 596, 17 S.Ct. 198, 204—205, 41 L.Ed. 560. This rule applies to FELA cases no less than to other types. Reynolds v. Atlantic C.L.R. Co., 336 U.S. 207, 69 S.Ct. 507; Anderson v. Atchison, T. & S.F. Ry. Co., 333 U.S. 821, 68 S.Ct. 854, 92 L.Ed. 1108; cf. Lillie v. Thompson, 332 U.S. 459, 68 S.Ct. 140, 92 L.Ed. 73. 4 Second. We hold that the allegations of the complaint do set forth a cause of action which should not have been dismissed. It charged that respondent had allowed 'clinkers' and other debris 'to collect in said yards along the side of the tracks'; that such debris made the 'yards unsafe'; that respondent thus failed to supply him a reasonably safe place to work, but directed him to work in said yards 'under the conditions above described'; that it was necessary for petitioner 'to cross over all such material and debris'; that in performing his duties he 'ran around' an engine and 'stepped on a large clinker lying beside the tracks as aforesaid which caused petitioner to fall and be injured'; that petitioner's injuries were 'directly and proximately caused in whole or in part by the negligence of the defendant * * * (a) In failing to furnish plaintiff with a reasonably safe place to work as herein alleged. (b) In leaving clinkers * * * and other debris along the side of track in its yards as aforesaid, well knowing that said yards in such condition were dangerous for use by brakemen, working therein and that petitioner would have to perform his duties with said yards in such condition.' 5 Other allegations need not be set out since the foregoing if proven would show an injury of the precise kind for which Congress has provided a recovery. These allegations, fairly construed, are much more than a charge that petitioner 'stepped on a large clinker lying alongside the track in the railroad yeards.' They also charge that the railroad permitted clinkers and other debris to be left along the tracks, 'well knowing' that this was dangerous to workers; that petitioner was compelled to 'cross over' the clinkers and debris; that in doing so he fell and was injured; and that all of this was in violation of the railroad's duty to furnish petitioner a reasonably safe place to work. Certainly these allegations are sufficient to permit introduction of evidence from which a jury might infer that petitioner's injuries were due to the railroad's negligence in failing to supply a reasonably safe place to work. Bailey v. Central Vermont Ry., Inc., 319 U.S. 350, 353, 63 S.Ct. 1062, 1064, 87 L.Ed. 1444. And we have already refused to set aside a judgment coming from the Georgia courts where the jury was permitted to infer negligence from the presence of clinkers along the tracks in the railroad yard. Southern Ry. Co. v. Puckett, 244 U.S. 571, 574, 37 S.Ct. 703, 705, 61 L.Ed. 1321, Ann.Cas.1918B, 69, affirming 16 Ga.App. 551, 554, 85 S.E. 809, 811. 6 Here the Georgia court has decided as a matter of law that no inference of railroad negligence could be drawn from the facts alleged in this case. Rather the court itself has drawn from the pleadings the reverse inference that the sole proximate cause of petitioner's injury was his own negligence. Throughout its opinion the appellate court clearly reveals a preoccupation with what it deemed to be petitioner's failure to take proper precautions.2 But as that court necessarily admits, contributory negligence does not preclude recovery under the FELA. 7 Strict local rules of pleading cannot be used to impose unnecessary burdens upon rights of recovery authorized by federal laws. 'Whatever springes the State may set for those who are endeavoring to assert rights that the State confers, the assertion of Federal rights, when plainly and reasonably made, is not to be defeated under the name of local practice.' Davis v. Wechsler, supra, 263 U.S. at page 24, 44 S.Ct. at page 14. Cf. Maty v. Grasselli Chemical Co., 303 U.S. 197, 58 S.Ct. 507, 82 L.Ed. 745. Should this Court fail to protect federally created rights from dismissal because of over-exacting local requirements for meticulous pleadings, desirable uniformity in adjudication of federally created rights could not be achieved. See Brady v. Southern R. Co., 320 U.S. 476, 479, 64 S.Ct. 232, 234, 88 L.Ed. 239. 8 Upon trial of this case the evidence offered may or may not support inferences of negligence. We simply hold that under the facts alleged it was error to dismiss the complaint and that petitioner should be allowed to try his case. Covington & L. Turnpike Road Co. v. Sandford, supra, 164 U.S. at page 596, 17 S.Ct. 205, 41 L.Ed. 560; Anderson v. Atchison T. & S.F. Ry. Co., 333 U.S. 821, 68 S.Ct. 854, 92 L.Ed. 1108. 9 The cause is reversed and remanded for further proceedings not inconsistent with this opinion. 10 Reversed and remanded. 11 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 12 Mr. Justice FRANKFURTER, whom Mr. Justice JACKSON joins, dissenting. 13 Insignificant as this case appears on the surface, its disposition depends on the adjustment made between two judicial systems charged with the enforcement of a law binding on both. This, it bears recalling, is an important factor in the working of our federalism without needless friction. 14 Have the Georgia courts disrespected the law of the land in the judgment under review? Since Congress empowers State courts to entertain suits under the Federal Employers' Liability Act, a State cannot wilfully shut its courts to such cases. Second Employers' Liability Cases (Mondou v. New York, N.H. & H.R. Co.), 223 U.S. 1, 32 S.Ct. 169, 56 L.Ed. 327, 38 L.R.A., N.S., 44. But the courts so empowered are creatures of the States, with such structures and functions as the States are free to devise and define. Congress has not imposed jurisdiction on State courts for claims under the Act 'as against an otherwise valid excuse.' Douglas v. New York, New Haven & H.R. Co., 279 U.S. 377, 388, 49 S.Ct. 355, 356, 73 L.Ed. 747. Again, if a State has dispensed with the jury in civil suits or has modified the common-law requirements for trial by jury, a plaintiff must take the jury system as he finds it if he chooses to bring his suit under the Federal Employers' Liability Act in a court of that State. Minneapolis & St. L.R. Co. v. Bombolis, 241 U.S. 211, 36 S.Ct. 595, 60 L.Ed. 961, Ann.Cas.1916E, 505, L.R.A.1917A, 86. After all, the Federal courts are always available. 15 So also, States have varying systems of pleading and practice. One State may cherish formalities more than another, one State may be more responsive than another to procedural reforms. If a litigant chooses to enforce a Federal right in a State court, he cannot be heard to object if he is treated exactly as are plaintiffs who press like claims arising under State law with regard to the form in which the claim must be stated—the particularity, for instance, with which a cause of action must be described. Federal law, though invoked in a State court, delimits the Federal claim—defines what gives a right to recovery and what goes to prove it. But the form in which the claim must be stated need not be different from what the State exacts in the enforcement of like obligations created by it, so long as such a requirement does not add to, or diminish, the right as defined by Federal law, nor burden the realization of this right in the actualities of litigation. 16 Of course 'this Court is not concluded' by the view of a State court regarding the sufficiency of allegations of a Federal right of action or defense. This merely means that a State court cannot defeat the substance of a Federal claim by denial of it. Nor can a State do so under the guise of professing merely to prescribe how the claim should be formulated. American Ry. Express Co. v. Levee, 263 U.S. 19, 21, 44 S.Ct. 11, 12, 68 L.Ed. 140. 17 The crucial question for this Court is whether the Georgia courts have merely enforced a local requirement of pleading, however finicky, applicable to all such litigation in Georgia without qualifying the basis of recovery under the Federal Employers' Liability Act or weighting the scales against the plaintiff. Compare Norfolk, Southern R. Co. v. Ferebee, 238 U.S. 269, 35 S.Ct. 781, 59 L.Ed. 1303; with Central Vermont R. Co. v. White, 238 U.S. 507, 35 S.Ct. 865, 59 L.Ed. 1433, Ann.Cas.1916B, 252. Georgia may adhere to its requirements of pleading, but it may not put 'unreasonable obstacles in the way' of a plaintiff who seeks its courts to obtain what the Federal Act gives him. Davis v. Wechsler, 263 U.S. 22, 25, 44 S.Ct. 13, 14, 68 L.Ed. 143. 18 These decisive differences are usually conveyed by the terms 'procedure' and 'substance.' The terms are not meaningless even though they do not have fixed undeviating meanings. They derive content from the functions they serve here in precisely the same way in which we have applied them in reverse situations—when confronted with the problem whether the Federal courts respected the substance of State-created rights, as required by the rule in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, or impaired them by professing merely to enforce them by the mode in which the Federal courts do business. Review on this aspect of State court judgments in Federal Employers' Liability cases presents essentially the same kind of problem as that with which this Court dealt in Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231, applied at the last Term in Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, and Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 555, 69 S.Ct. 1221, 1229. Congress has authorized State courts to enforce Federal rights, and Federal courts State-created rights. Neither system of courts can impair these respective rights, but both may have their own requirements for stating claims (pleading) and conducting litigation (practice). 19 In the light of these controlling considertions, I cannot find that the Court of Appeals of Georgia has either sought to evade the law of the United States or did so unwittingly. That court showed full awareness of the nature and scope of the rights and obligations arising under the Federal Employers' Liability Act as laid down in this Court's decisions.1 It fully recognized that the right under the Act is founded on negligence by the carrier in whole or in part, that 'assumption of risk' must rigorously be excluded, that contributory negligence does not defeat the action but merely bears on damages. Nor is it claimed that by the use of presumptions or otherwise the State court placed on the plaintiff a burden of proof exceeding that of the Act. All that the Georgia court did was conscientiously to apply its understanding of what is necessary to set forth a claim of negligence according to the local requirement of particularity. Concretely it ruled that 'The mere presence of a large clinker in a railroad yard cannot be said to constitute an act of negligence.' For all that appears, the Georgia court said in effect, the clinker had been placed there under such circumstances that responsibility could not be charged against the defendant. On this and other assumptions not met by plaintiff's complaint, the court did not find in the phraseology used in the complaint that the defendant was chargeable with neglect for the presence of the offending clinker in a yard operated by itself as well as another carrier. I would not so read the complaint. But this does not preclude the Georgia court from taking a more constrained view. By so doing it has not contracted rights under the Federal Act nor hobbled the plaintiff in getting a judgment to which he may be entitled. 20 It is not credible that the Georgia court would be found wanting had it stated that under Georgia rules, as a matter of pleading, it was necessary to state in so many words that the presence of the particular clinker was due to the defendant's negligence, and to set forth the detailed circumstances that made the defendant responsible, although the range of inference open to a jury was not thereby affected. This is what that court's decision says in effect in applying the stiff Georgia doctrine of construing a complaint most strongly against the pleader. It is not a denial of a Federal right for Georgia to reflect something of the pernicketiness with which seventeenth-century common law read a pleading. Had the Georgia court given leave to amend in order to satisfy elegancies of pleading the case would of course not be here. With full knowledge of the niceties of pleading required by Georgia the plaintiff had that opportunity. Georgia Code § 81-1301 (1933).2 He chose to stand on his complaint against a general demurrer. If Georgia thereafter authorizes dismissal of the complaint the State does not thereby collide with Federal law. 21 I would affirm the judgment. 1 Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832; Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231; Garrett v. Moore-McCormack Co., 317 U.S. 239, 63 S.Ct. 246, 87 L.Ed. 239; St. Louis, S.F. & T.R. Co. v. Seale, 229 U.S. 156, 157, 33 S.Ct. 651, 652, 57 L.Ed. 1129, Ann.Cas.1914C, 156; and see same case Tex.Civ.App., 148 S.W. 1099; Toledo, St. L. & W.R. Co. v. Slavin, 236 U.S. 454, 457—458, 35 S.Ct. 306, 307, 59 L.Ed. 671; and see same case 88 Ohio St. 536, 106 N.E. 1077. Compare Brinkmeier v. Missouri P.R. Co., 224 U.S. 268, 32 S.Ct. 412, 56 L.Ed. 758, with Seaboard Air Line Ry. v. Renn, 241 U.S. 290, 36 S.Ct. 567, 60 L.Ed. 1006. 2 That court among other things said: 'In the absence of allegations to the contrary, the inference arises that the plaintiff's vision was unobscured and that he could have seen and avoided the clinker * * *. Insofar as the allegations of the petition show, the sole cause of the accident was the act of plaintiff in stepping on this large clinker, which he was able to see and could have avoided. It was he, who without any outside intervention, failed to look, stepped on the clinker, and fell.' 77 Ga.App. 783, 49 S.E.2d 835. 1 Indeed, the history of Georiga legislation and adjudication indicates that long before there was a Federal Employers' Liability Act that State was humane and not harsh in allowing recovery to railroad employees for injuries caused by the negligence of the carrier. Ga.Laws 1855—56, p. 155; Augusta & S.R. Co. v. McElmurry, 24 Ga. 75; Bodd, Administration of Workmen's Compensation 13—14 (1936). 2 See also Wells v. John G. Butler's Builders' Supply Co., 128 Ga. 37, 40, 57 S.E. 55, 57; Cahoon v. Wills, 179 Ga. 195, 175 S.E. 563; Note, 106 A.L.R. 570, 574 (1937); Davis and Shulman, Georgia Practice and Procedure § 96 (1948).

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338 U.S. 318 70 S.Ct. 123 94 L.Ed. 123 KINGSLAND, Commissioner of Patents,v.DORSEY. No. 53. Argued Oct. 18—19, 1949. Decided Nov. 21, 1949. Rehearing Denied Jan. 9, 1950. See 338 U.S. 939, 70 S.Ct. 341. Mr. Robert L. Stern, Washington, D.C., for petitioner. Mr. William E. Leahy, Washington, D.C., for respondent. PER CURIAM. 1 Acting under the provisions of § 487 of the Revised Statutes, 35 U.S.C. § 11, 35 U.S.C.A. § 11, the Commissioner of Patents found after hearings that petitioner, an attorney, had been guilty of gross misconduct, and entered an order barring him from practice before the United States Patent Office. Pursuant to authority granted by the same provisions, the District Court reviewed the Commissioner's order. Concluding that the hearings had been fairly conducted after due notice of charges and that there was substantial evidence to support the findings and action of the Commissioner, the District Court affirmed the order. 69 F.Supp. 788. The Court of Appeals reversed, 84 U.S.App.D.C. 264, 173 F.2d 405, 410. A majority of that court thought the notice of charges inadequate and the proceedings before the Commission unfair. It also held that the District Court had too narrowly restricted its scope of review in holding that substantial evidence was sufficient to support the findings. It apparently drew a distinction between the phrases 'substantial evidence' and 'substantial probative evidence.' Measuring the findings by the latter phrase, it held that the Commissioner's findings were not supported by 'substantial probative evidence.' Judge Edgerton, dissenting, thought the hearings had been fairly conducted and 'the result just.' He agreed with the District Court that 'substantial evidence' would have been sufficient but went on to say that he thought the 'proof conclusive.' 2 The statute under which the Commissioner acted represents congressional policy in an important field. It relates to the character and conduct of 'persons, agents, or attorneys' who participate in proceedings to obtain patents. We agree with the following statement made by the Patent Office Committee on Enrollment and Disbarment that considered this case: 'By reason of the nature of an application for patent, the relationship of attorneys to the Patent Office requires the highest degree of candor and good faith. In its relation to applicants, the Office * * * must rely upon their integrity and deal with them in a spirit of trust and confidence * * *.' It was the Commissioner, not the courts, that Congress made primarily responsible for protecting the public from the evil consequences that might result if practitioners should betray their high trust. Having serious doubts as to whether the Court of Appeals acted properly here in nullifying the Commissioner's order, we granted certiorari. 3 After an examination of the record we are satisfied that the findings were amply supported whether the measure be 'substantial evidence' or 'substantial probative evidence.' The charge of unfairness in the hearings is, we think, wholly without support. 4 Since the narration of evidence and discussion of the proceedings sufficiently appear in the District Court's opinion, reiteration here can serve no good purpose either for the parties or for the law. 5 The judgment of the Court of Appeals is reversed, and that of the District Court affirmed. It is so ordered. 6 Judgment of Court of Appeals reversed. 7 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 8 Mr. Justice JACKSON, whom Mr. Justice FRANKFURTER joins, dissenting. 9 I agree that the privilege of practicing before the Patent Office is one that may and should be withdrawn for professional misconduct. In defense of his privilege it also is true that the lawyer may not demand that conclusiveness of proof or invoke all of the protections assured to an accused by the criminal process. But while society may expect that his judges will show him no favor because he has lived respectably for eighty years and devoted fifty-nine of them to practice of his profession without blemish, an accused lawyer may expect that he will not be condemned out of a capricious self-righteousness or denied the essentials of a fair hearing. 10 The court below thought Dorsey had not been fairly judged and indignantly reversed his disbarment. Dorsey v. Kingsland, 84 U.S.App.D.C. 264, 173 F.2d 405. All questions of fact seem to have been resolved against Dorsey by his departmental triers, and I shall not here review all of those issues, even if on some of them Dorsey would seem entitled to prevail. Accepting the findings against him at their full face value, I think the disbarment order was properly set aside. 11 Back in 1926 the Haftford-Empire Co. conceived and executed a scheme to prepare and publish, over the signature of an apparently disinterested labor leader, an article to be published and then used in support of the company's pending patent application. Such a dissertation, entitled, 'Introduction of Automatic Glass Working Machinery; How Received by Organized Labor,' was prepared. It purported to be authored by one Clarke, president of a glass workers' union. It was published in a trade journal and then presented to the Patent Office as recognition by a 'reluctant witness' of the success of the device under consideration. Several years later, involved in litigation testing the validity of its patent, Hartford-Empire took steps to suppress evidence of the real authorship of the Clarke essay. It made a gift of $8,000 to Clarke, who had told investigators employed by Hartford-Empire's adversary that he had written the article and would so testify if called upon as a witness. Ultimately, this Court reviewed the actions of Hartford-Empire and held that the sum total of acts attributable to it constituted a fraud on the Patent Office and the federal courts. Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250, reversing Hartford-Empire Co. v. Hazel-Atlas Glass Co., 3 Cir., 137 F.2d 764. See also United States v. Hartford-Empire Co., D.C., 46 F.Supp. 541. 12 Dorsey was one of counsel for Hartford-Empire in the 1926 patent application and, shortly following our decision in Hazel-Atlas, supra, proceedings to suspend or exclude him from further practice before the Patent Office were commenced under 35 U.S.C. § 11, 35 U.S.C.A. § 11. Identical but separate proceedings were instituted against three other members of the patent bar involved in the transactions. All were disbarred. Only the Dorsey case is here. 13 Dorsey was charged with gross misconduct in that, as particularized in the notice which instituted the proceeding, he '* * * participated in the preparation of (the Clarke) article and/or the presentation thereof to the United States Patent Office during the prosecution of said patent application knowing that said article was not written by said William P. Clarke, and with the purpose of deceiving the Patent Office as to the authorship of said article and influencing the action of the Patent Office on said application. * * *' 14 A view of the facts least favorable to Dorsey indicates that he inspected and criticized a few details of an early draft of the Clarke article and that later, with knowledge that it had been prepared by a Hartford-Empire employee, he submitted it to the Patent Office as being what on its face it purported to be. This is the long and the short of the case against Dorsey. The case against Hartford-Empire, however, included much in which Dorsey is not shown to have had even a consenting part. In two respects only are his actions urged to be wrongdoing: first, in that he deceived the Patent Office as to the real author, and, second (not charged in the notice but advanced here), that Dorsey represented it as the work of a 'reluctant witness.' 15 While it is not decisive of the narrow issue of deception pressed against Dorsey, it should be noted as showing how narrow that issue really is, that it includes no claim that any statement in the Clarke article is false or misleading in any respect whatsoever. It stated facts truthfully, facts which a patent lawyer was entitled to bring to the attention of the Patent Office in any manner permitted by its practice. One might expect that the Patent Office would have required facts on which it issued a patent to be proved by affidavits whose truthfulness is encouraged, if not assured, by sanctions against perjury; but it was content to accept unsworn publications for its purposes. The worst that can be said of Dorsey is that he took advantage of this loose practice to use a trade journal article as evidence, without disclosing that it was ghost-written for the ostensible author. 16 Let us suppose the Patent Office had exacted more lawyerly standards of proof and had required such information to be laid before it in affidavit form. Clarke, let us say, was prevailed upon to make a deposition. Would it be deceit if the lawyer drafted every word of the affidavit, though it purported to be Clarke's testimony? I suppose that the practice is almost universal that the lawyer ascertains to what facts the witness can testify and puts them in presentable form and suitable words, and that the witness adopts the document as his testimony, with any correction necessary to convey his story. Nothing on the face of the usual affidavit discloses the fact that the composition is that of the attorney; on the contrary, it generally recites that it is the witness who 'deposes and says * * *.' Is a different standard to be applied to a trade journal article intended and accepted to serve the same end? 17 I should suppose that, so far as the law is concerned, one may as effectively father statements by adoption as by conception and that sincerely subscribing to what another has written for him does not constitute legal deceit or grounds for disbarment, impeachment or other penalty. And in this case, not only is there no claim that the Clarke article contained one false statement, but there is no denial that, whoever was the scribe, Clarke believed and knowingly adopted as his own every word of it. 18 I should not like to be second to anyone on this Court in condemning the custom of putting up decoy authors to impress the guileless, a custom which as the court below cruelly pointed out flourishes even in official circles in Washington. Nor do I contend that Dorsey's special adaptation of the prevailing custom comports with the highest candor. Ghost-writing has debased the intellectual currency in circulation here and is a type of counterfeiting which invites no defense. Perhaps this Court renders a public service in treating phantom authors and ghost-writers as legal frauds and disguised authorship as a deception. But has any man before Dorsey ever been disciplined or even reprimanded for it? And will any be hereafter? 19 It is added, though as something of an afterthought, that Dorsey in his brief to the Patent Office characterized Clarke as a 'reluctant witness.' I had supposed that such adjectives were in the nature of argument or, at most, of conclusion rather than representation or warranty. The arsenal of every advocate holds two bundles of adjectives for witnesses—such ones as 'reluctant,' 'unbiased,' disinterested,' and 'honest' are reserved for his own; others, such as 'partisan,' 'eager,' 'interested,' 'hostile,' and even 'perjured,' for those of his adversary. I have the greatest difficulty believing that a mischoice among these adjectives has deceived anyone fit to decide facts, or that in any case other than this it would subject the advocate to disbarment. But if wrong in this standard, I should think the use of 'reluctant' as applied to Clarke was justified. I should not expect a union president to be other than reluctant to point out the advantages of automatic machinery which tends to throw his membership out of employment. At least I hope we have not come to the time when to urge this inference is even a makeweight in disbarment proceedings. 20 If, however, a lawyer is to be called upon to be the first example of condemnation for an offense so tenuous, vague and novel, the least courts should require is that the case against him be clearly proved. I shall give but two of several reasons why I think that standard was not met in this case. 21 First, the Patent Office committee, convened to hear the charges against Dorsey, approached its duty upon the premise that this Court's Hazel-Atlas decision established not only Hartford-Empire's guilt but also Dorsey's, unless he should clear his name. The records from that case and from United States v. Hartford-Empire Co., supra, not only were introduced against Dorsey, who was neither a party nor of counsel in either, but were the sole evidence to support the direct case against him. The committee's recommendation was apparently based upon its conclusion that he failed in the imposed task of proving his innocence. I think this was error of a serious kind. 22 It should be remembered that our conclusion in that case was reached upon the total effect of many events participated in by many persons whose acts were attributable to Hartford-Empire as their principal. A considerable part was not attributable to Dorsey. The most important and prejudicial of these circumstances which incriminate Hartford-Empire, but not Dorsey, is involved in another error, which I think deprived the accused of a fair trial. 23 I think that Dorsey suffered prejudice again from receipt of evidence concerning Hartford-Empire's later payment to Clarke and the reliance upon that fact to find Dorsey guilty. this payment was not made as an inducement to sign the article and was made long after Dorsey's relationship to the case had ceased. The Government frankly concedes that there is no evidence it was made with the approval or even knowledge of Dorsey. The District Court found, and the Court of Appeals affirmed its finding, that 'There is nothing in the evidence that connects Dorsey with the payment of any money to Clarke.' (69 F.Supp. 800) We are bound by these concurrent findings. 24 Nevertheless, evidence of this payment was received against Dorsey and was thrown in the scales against him in the decision. Referring to the payment of money to Clarke, the Patent Office committee report on which Dorsey was disbarred says: 25 'Nearly six years elapsed after the article was filed in the Patent Office before other events, relevant to the conduct of these respondents with respect to it, occurred. These subsequent events cast their light backwardly on the activities of the parties during the time of preparation and filing of the Clarke article, giving added illumination with regard to the purposes, understandings, and intentions of respondents at that time.' (Italics supplied.) 26 Thus it is clear that Hartford-Empire's later corruption in trying to suppress evidence, which we properly considered as a factor in deciding its case, was the decisive factor in finding Dorsey guilty, though he admittedly had no part in it. Without this misapplication of evidence, nothing in the record explains or excuses the harsh judgment of disbarment. Even though courts lean backward to avoid suspicion of partiality to men of our own profession, they should not fear to protect a lawyer against loss of his right to practice on such a record as this.

56

338 U.S. 327 70 S.Ct. 161 94 L.Ed. 144 PARKER et al.v.LOS ANGELES COUNTY et al. STEINER v. LOS ANGELES COUNTY et al. Nos. 49, 50. Argued Nov. 8, 1949. Decided Dec. 5, 1949. Messrs. John T. McTernan, A. L. Wirin, Los Angeles, Cal., for petitioner. Mr. Gerald G. Kelly, Los Angeles, Cal., for respondents. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 In No. 49, twenty-five classified civil servants of the County of Los Angeles brought an action in the Superior Court of that County, and in No. 50, suit was brought by one such employee. The respective plaintiffs sought relief against enforcement by the County and its officials of what is colloquially known as a loyalty test, and they did so for themselves and 'in a representative capacity * * * on behalf of 20,000 employees of Los Angeles County similarly situated.' 2 The plaintiffs, petitioners here, alleged that on August 26, 1947, the Board of Supervisors of the County of Los Angeles adopted as part of its 'Loyalty Check' program the requirement that all County employees execute a prescribed affidavit. It consisted of four parts, fully set forth in the Appendix. By Part A each employee is required to support the Constitution of the United States, and the Constitution and laws of the State of California; by Part B he forswears that since December 7, 1941, he has been a member of any organization advocating the forcible overthrow of the Government of the United States or of the State of California or of the County of Los Angeles, that he now advocates such overthrow, or that he will in the future so advocate directly or through an organization; by Part C he is required to list his aliases; and by Part D he is asked to indicate whether he has ever been 'a member of, or directly or indirectly supported or followed' any of an enumerated list of 145 organizations. Asserting fear of penalizing consequences from the loyalty program, and claiming that the law of California and the Constitution of the United States barred coercive measures by the County to secure obedience to the alleged affidavit requirement, petitioners brought these actions. Demurrers to the complaints were sustained by the Superior Court and its judgments were affirmed by the District Court of Appeal for the Second Appellate District. 88 Cal.App.2d 481, 199 P.2d 429. After the Supreme Court of California denied discretionary review we brought the case here because, on the showing then before us, serious questions seemed raised as to the scope of a State's power to safeguard its security with due regard for the liberty guaranteed by the Due Process Clause of the Fourteenth Amendment. 337 U.S. 929, 69 S.Ct. 1494. In view, however, of the circumstances that became manifest after the cases came to argument, we are precluded from reaching these constitutional issues on their merits. 3 To begin with, the California decision under review does not tell us unambiguously what compulsion, if any, the loyalty order of August 26, 1947, carried. It is unequivocally clear that the lower court refused to decide whether an employee who discloses his so-called 'subversive' activities or connections may for that reason be discharged. It is not clear, however, whether, as petitioners contend, the lower court meant to hold that the Board of Supervisors may discharge an employee who refuses to file an affidavit.1 This ambiguity renders so doubtful whether an issue under the United States Constitution is before us that at most we would exercise jurisdiction to obtain clarification by the State court. See Honeyman v. Hanan, 300 U.S. 14, 57 S.Ct. 350, 81 L.Ed. 476; State of Minnesota v. National Tea Co., 309 U.S. 551, 60 S.Ct. 676, 84 L.Ed. 920; State Tax Commission of Utah v. Van Cott, 306 U.S. 511, 59 S.Ct. 605, 83 L.Ed. 950; Herb v. Pitcairn, 324 U.S. 117, 65 S.Ct. 459, 89 L.Ed. 789. But the circumstances which were called to our attention after the cases reached us leave no doubt that the issues which lead us to bring them here are not ripe for constitutional adjudication. American Wood Paper Co. v. Heft, 8 Wall. 333, 19 L.Ed. 379; Id., 131 U.S.Append. xcii, 19 L.Ed. 378; Commercial Cable Co. v. Burleson, 250 U.S. 360, 39 S.Ct. 512, 63 L.Ed. 1030. 4 As of July 20, 1948, nearly a year after the original loyalty order, all but 104 of the 22,000 officers and employees of the County had executed the prescribed affidavit. On that day, these noncomplying employees were advised that the Board of Supervisors had adopted an order providing (1) that unless they had executed Parts A, B and C of the affidavit by July 26 they would be discharged, and (2) that unless they had executed Part D by that time they would be discharged 'if and when the loyalty test litigation now pending is finally concluded with a determination that the County was justified in requiring from its employees the information embodied in Paragraph 'D."2 5 This order was the first explicit announcement of sanctions by the Board in furtherance of its loyalty program. By July 26 the entire affidavit had been executed by all but 45 employees. Of these, 29 had executed only Parts A, B and C. Sixteen stood their ground against any compliance. They invoked their administrative remedy of review before the Civil Service Commission which decided against them. On June 24 of this year these sixteen discharged employees sought a writ of mandate from the Superior Court of the County of Los Angeles to review the decision of the Civil Service Commission, with a prayer for reinstatement and back pay. We are advised that this litigation is now pending in the Superior Court. The petitioners here, except one in No. 49, signed Parts A, B and C, and that petitioner is a party in the case before the Superior Court. 6 From this it appears that the California courts have before them for the first time since the inception of the loyalty program an order which expressly threatens sanctions. These sanctions are being challenged under State law as well as under the United States Constitution. For all we know the California courts may sustain these claims under local law.3 The present cases are here from an intermediate State appellate court because the State Supreme Court did not deem the records before it to present issues deserving of its discretionary review. The explicit sanctions of the modified order may lead the Supreme Court of California to pass on them should the litigation now pending in the lower courts go against the contentions of these petitioners. It is relevant to note that when claims not unrelated to those now urged before us, but based on State law, have come before the Supreme Court of California that tribunal has not been insensitive to them. See Communist Party of United States of America v. Peek, 20 Cal.2d 536, 127 P.2d 889; James v. Marinship Corp., 25 Cal.2d 721, 155 P.2d 329, 160 A.L.R. 900. If their claims are recognized by the California courts, petitioners would of course have no basis for asserting denial of a Federal right. It will be time enough for the petitioners to urge denial of a Federal right after the State courts have definitively denied their claims under State law. 7 Due regard for our Federal system requires that this Court stay its hand until the opportunities afforded by State courts have exhausted claims of litigants under State law. This is not what is invidiously called a technical rule. The best teaching of this Court's experience admonishes us not to entertain constitutional questions in advance of the strictest necessity. Decent respect for California and its courts demands that this Court wait until the State courts have spoken with knowledge of the events brought to light for the first time at the bar of this Court. Since the writs must be dismissed because constitutional questions which brought these cases here are not ripe for decision, all subsidiary questions fall. See Rescue Army v. Municipal Court of City of Los Angeles, 331 U.S. 549, 585, 67 S.Ct. 1409, 1427, 91 L.Ed. 1666; Alabama State Federation of Labor, Local Union No. 103, United Brotherhood of Carpenters and Joiners of America v. McAdory, 325 U.S. 450, 65 S.Ct. 1384, 89 L.Ed. 1725; C.I.O. v. McAdory, 325 U.S. 472, 65 S.Ct. 1395, 89 L.Ed. 1741. 8 Dismissed. 9 Mr. JUSTICE DOUGLAS took no part in the consideration or disposition of these cases. 10 Appendix. 11 The affidavit prescribed by the Board of Supervisors of the County of Los Angeles on August 26, 1947, as part of its 'Loyalty Check' program is as follows: Oath and Affidavit 12 Department .......... A. Oath of Office or Employment 13 I, ......, do solemnly swear (or affirm) that I will support and defend the Constitution of the United States and the Constitution and laws of the State of California, against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office or employment on which I am about to enter or am now engaged. So Help Me God. B. Affidavit re Subversive Activity 14 I do further swear (or affirm) that I do not advocate, nor am I now a member, nor have I been since December 7, 1941, a member of any political party or organization that advocates the overthrow of the Government of the United States, or State of California, or County of Los Angeles, by force or violence, except those specified as follows: ...... and that during such time as I am an officer or employee of the County of Los Angeles, I will not advocate nor become a member of any political party or organization that advocates the overthrow of the Government of the United States, or State of California, or County of Los Angeles by force or violence. C. Affidavit re Aliases 15 I do further swear (or affirm) that I have never used or been known by any names other than those listed as follows: ............ D. Membership in Organizations 16 I do further swear (or affirm) that I have never been a member of, or directly or indirectly supported or followed any of the hereinafter listed organizations, except those which I indicate by an X mark. NAME 17 Abraham Lincoln Brigade. 18 Academic and Civil Rights Council of California. 19 After School Clubs. 20 Agitprop. 21 American Artists Congress. 22 America for Americans. 23 American Comm. for a Free Idonesia. 24 American Comm. for Democracy and Intellectual Freedom. 25 American Comm. for Protection of the Foreign Born. 26 American Comm. to Save Refugees. 27 Americans Communications Assn. 28 American Communist Party. 29 American Council on Soviet Relations. 30 American Federation for Political Unity. 31 American Friends of the Chinese People. 32 American Guard. 33 American League Against War and Fascism. 34 American League for Peace and Democracy. 35 American League of Christian Women. 36 American Peace Mobilization. 37 American Russian Institute. 38 American Society for Technical Aid for Spain. 39 American Student Union. 40 American Veterans Comm. 41 American Writers Congress. 42 American Youth Congress. 43 American Writers School. 44 American Youth for Democracy. 45 Anti-Axis Comm. 46 Anti-Hearst Examiner. 47 Anti-Nazi League. 48 Anti-Nazi League of Hollywood. Anti-ROTC Committee 49 Arcos Limited. 50 Artist Front to Win the War. 51 Arts Advisory Council. 52 Authors League. 53 Ballila. 54 Bay Area Council Against Discrimination. 55 California Conference for Democratic Action. 56 California Labor School. 57 California Youth Legislature. 58 Centro Anti-Communists. 59 China Aid Council of American League for Peace and Democracy. 60 Citizens Committee for Better Education. 61 Citizens Comm. for Defense of Mexican-American Youth. 62 Citizens Comm. to Free Earl Browder. 63 Citizens Comm. to Support Labors Right. 64 Citizens No Foreign Wars Coalition. 65 Civil Rights Congress. 66 Civil Rights Council for Northern California. 67 Comintern. 68 Comm. for Boycott Against Japanese Aggression. 69 Comm. for Defense of Mexican-American Youth. 70 Comm. for Support of S. W. Garson. 71 Comm. Protesting Attacks Against the Abraham Lincoln Brigade. 72 Comm. to Defend America by Keeping Out of War. 73 Communist International. 74 Communist Party's Little Theatre. 75 Communist Workers School. 76 Communist Political Assn. 77 Conference for Democratic Action. 78 Consumers National Federation. 79 Contemporary Theatre. 80 Co-ordinating Commission to Lift Embargo (To Spain). 81 Council for Pan American Democracy. 82 Cultural and Professional Projects Assn. 83 Congress of Mexican and Spanish-Mexican Peoples of U.S. 84 Daily Worker. 85 Democratic Youth Federation. 86 Elizabeth Curley Flynn Club. 87 Elizalde Anti-Discrimination Comm. 88 Emergency Comm. to Aid Spain. 89 Emergency Trade Union Conference to Aid Spanish Democracy. 90 Ex Combattanti Society. 91 Farmer Labor Party. 92 Federation of Architects, Engineers, Chemists and Technicians. 93 Field Workers School. 94 First Congress of Mexican and Spanish-American People of U.S. 95 Friends of Soviet Russia. 96 Friends of Soviet Union. 97 German-American Bund. 98 Greater New York Emergency Conference on Inalienable Rights. 99 Harry Bridges Defense Commn. 100 Hold the Price Line Commn. 101 Hollywood Anti Nazi League. 102 Hollywood Cultural Commission. 103 Hollywood Community Radio Group. 104 Hollywood Independent Citizens Comm. of Arts, Sciences and Professions. 105 Hollywood League for Democratic Action. 106 Hollywood Theatre Alliance. 107 Hollywood Writers Mobilization. 108 Humanist Society of Friends. 109 Independent Citizens Comm. of Arts, Sciences and Professions. 110 International Labor Defense. 111 International Red Aid. 112 International Workers Order. 113 Jewish Peoples Committee. 114 John Reed Clubs. 115 Joint Committee for Trade Union Rights. 116 Joint Anti-Fascists Refugee Committee. 117 League Against War and Fascism. 118 League for Democratic Action. 119 League for Peace and Democracy. 120 League for American Writers. 121 League for Struggle for Negro Rights. 122 League of Women Shoppers. 123 League to Save America First. 124 Los Angeles County Political Commission. 125 Los Angeles County Trade Union Commission. 126 Mooney Defense Commission. 127 Marine Cooks and Stewards Union. 128 Maritime Federation of the Pacific. 129 Mobilization for Democracy. 130 Motion Picture Cooperative Buyers Guild. 131 Motion Picture Democratic Committee. 132 National Citizens Political Action Committee. 133 National Committee to Abolish the Poll Tax. 134 National Council on Soviet American Friendship. 135 National Emergency Conference. 136 National Federation for Constitutional Liberties. 137 National Negro Women's Council. 138 National Negro Congress. 139 National Students League. 140 New Masses. 141 New Theatre League. 142 North American Commission to Aid Spanish Democracy. 143 Pen and Hammer Club. 144 Peoples Council of America. 145 Peoples Front. 146 Progressive Comm. to Rebuild the American Labor Party. 147 Refugee Scholarship and Peace Comm. 148 Second Annual California Model Legislature. 149 Simon J. Lubin Society. 150 Social Problems Club. 151 Spanish Relief Committee. 152 Student Rights Assn. 153 United Farmers League. 154 United Federal Workers. 155 Western Workers. 156 Workers Alliance. 157 World Committee Against War. 158 Workers School. 159 Young Communist League. 160 The Young Pioneers. 1 Clearly enough some discharges or demotions of classified employees by the Board of Supervisors are not final. The division of authority between the Board and the County Civil Service Commission is thus formulated by the lower court: 'In case the appointing power wishes to discharge a civil service employee the reasons therefor must be given and, thereupon, if the employee so desires he is entitled to a hearing before the commission. If the commission finds that the reasons are not sufficient, the discharge is void, despite anything the appointing power can do about it. 'From what has so far been said, it is self-evident that neither the Board nor its agents can discharge a civil service employee for any cause that the Civil Service Commission finds insufficient. Accordingly, if in the view of the Board of Supervisors, or its agents as the appointing power, a civil service employee should be discharged on the sole ground that the employee is 'subversive', the discharge or attempt to discharge on that ground is of no effect if, on hearing, the commission holds otherwise. 'Whether the appointing power will or will not discharge employees as claimed by the plaintiffs, for causes of the character enumerated, and whether the Civil Service Commission will uphold such discharges, if any, on such causes, are not matters upon which this Court may speculate or adjudicate at this time. * * *' 88 Cal.App.2d 481, 493, 497, 199 P.2d 429, 436, 438 439. See Los Angeles County Charter, Art. IX, § 34(13) in Cal.Laws 1913, p. 1495, as amended, Cal.Stat.1939, p. 3147. 2 The affidavit in the order of July 20, 1948, differed from the affidavit in the original order only in that Part B was elucidated to an extent not here relevant and a few organizations listed in Part D were omitted. 3 Article IX, § 41 of the Los Angeles Charter provides: 'No person in the classified service, or seeking admission thereto, shall be appointed, reduced or removed or in any way favored or discriminated against because of his political or religious opinions or affiliations.' Cal.Laws 1913, p. 1496. Article I, §§ 1, 4, 9, 10, 16, 21 of the California Constitution contains safeguards against infringement of the rights at which petitioners claim the loyalty investigation strikes.

89

338 U.S. 355 70 S.Ct. 166 94 L.Ed. 161 COLGATE-PALMOLIVE-PEET CO.v.NATIONAL LABOR RELATIONS BOARD et al. No. 47. Argued Nov. 17, 1949. Decided Dec. 5, 1949. Mr. Ricardo J. Hecht, San Francisco, Cal., for petitioner. Miss Ruth Weyand, Washington, D.C., for respondent. Mr. Justice MINTON delivered the opinion of the Court. 1 The question we have here is whether a closed-shop contract, entered into and performed in good faith, and valid in the state where made, protects an employer from a charge of unfair labor practices under the National Labor Relations Act.1 2 Petitioner was found by the National Labor Relations Board to have violated §§ 8(1) and 8(3) of the Act.2 On petition for review and cross-petition of the Board for enforcement of its order, the Court of Appeals for the Ninth Circuit entered a decree enforcing the Board's order.3 We granted certiorari limited to the question of the construction of § 8(3) of the Act in relation to this case,4 i.e., to examine the applicability of the so-called Rutland Court doctrine,5 here applied by the Board. The doctrine has been approved in the Second,6 Third,7 and Ninth Circuits,8 but disapproved in the Seventh Circuit.9 3 At the period of time in question in 1945, petitioner company was engaged in producing glycerin for war purposes. Petitioner has no record of antiunion or anti-organizational activities. Its employees were first organized and represented in 1936 by a union affiliated with the American Federation of Labor. In 1938 the International Longshoremen's and Warehousemen's Union, affiliated with the Congress of Industrial Organizations, became the representative of petitioner's employees. On July 9, 1941, the C.I.O. entered into a collective bargaining contract with petitioner which contained a closed-shop provision in these words: 4 'Section 3. The Employer agrees that when new employees are to be hired to do any work covered by Section One (1), they shall be hired through the offices of the Union, provided that the Union shall be able to furnish competent workers for work required. In the event the union is unable to furnish competent workers, the Employer may hire from outside sources, provided that employees so hired shall make application for membership in the Union within fifteen (15) days of their employment. The employees covered by this agreement shall be members in good standing of the Union and the Employer shall employ no workers other than members of the Union subject to conditions herein above prescribed. In the hiring of new help (for the warehouses), they shall be hired through the offices of the Warehouse Union, Local 1—6, I.L.W.U.' 5 This contract was entered into in good faith by the parties and served as a foundation for amicable labor relations for over four years. It was of indefinite duration. On July 24, 1945, the C.I.O. and petitioner entered into a supplemental agreement that their contract of July 9, 1941, 'shall remain in full force and effect' pending approval of certain agreed-upon items, other than the closed-shop provision, by the War Labor Board. In the instant proceedings, the closed-shop contract, as extended by the supplemental agreement, was found by the National Labor Relations Board to have been made in compliance with the proviso of § 8(3) of the Act.10 6 On July 26, 1945, shortly after the making of the supplemental agreement, open agitation for a change of bargaining representative began. On July 31 an unauthorized strike occurred which was participated in by a substantial majority of the employees and lasted two and one-half days, although the C.I.O. had pledged its membership not to strike during war-time. A group of employees formed an independent organization which later sought to affiliate with the A.F. of L. There was much propagandizing among the employees and warnings were issued by the C.I.O. that its members would be disciplined for rival union activity, and would if disciplined be discharged from their jobs under the closed-shop contract with petitioner. 7 Altogether some 37 employees were suspended and expelled by the C.I.O. for their activities in behalf of the A.F. of L. union during the fight between the two unions for control, and because of their participation in the strike contrary to C.I.O. policy. These suspended and expelled employees were discharged by petitioner, with the advice of counsel, upon demand by the C.I.O. The ground of the demand was that they were no longer 'members in good standing' of the C.I.O. as required by the closed-shop contract. Petitioner knew, as the Board found, that the discharge of these employees was demanded by the C.I.O. because of their rival union activity. 8 On October 16 the C.I.O. won an election held by the Board to determine the bargaining representative of petitioner's employees, and the open hostilities were substantially concluded.11 9 Petitioner was charged with violation of § 8(1) and § 8(3) of the Act and found guilty thereof by the Board for having carried out the terms of the closed-shop contract at the request of the bargaining representative. The Board ordered petitioner to restore the employees discharged at the request of the C.I.O. to their former positions without loss of seniority and pay. It is this order which the Court of Appeals decreed should be enforced and that is here for review. 10 There is no question but that the discharges had the effect of interfering with the employees' right, given by § 7 of the Act, to self-organization and to collective bargaining through representatives of their own choosing. Nor is there any question but that the discharges had the effect of discriminating, contrary to the prohibition of § 8(3), in the tenure of the employees. It is petitioner's contention that such interference and discrimination are taken out of the category of unfair labor practices where the employees are discharged in good faith, pursuant to an employer's obligations under a valid closed-shop contract entered into in good faith with the authorized representative of the employees, as permitted by the proviso contained in § 8(3) of the Act.12 The Board admits that petitioner's contention is supported by the proviso in § 8(3) but says that a contract of indefinite duration such as the one in the instant case is subject to the doctrine of Rutland Court Owners, Inc., 44 N.L.R.B. 587, 46 N.L.R.B. 1040. In the Rutland Court case the Board determined that an employer is not permitted to discharge employees pursuant to a closed-shop contract, even though the contract is valid under the proviso to § 8(3), when, to the employer's knowledge, the discharge is requested by the union for the purpose of eliminating employees who have sought to change bargaining representatives at a period when it is appropriate for the employees to seek a redetermination of representatives. The reason for this holding by the Board will be presently discussed. The doctrine as applied to the facts in this case is stated in the Board's brief as follows: 11 'The Board found the closed-shop agreement to have been validly entered into in conformity with the proviso to Section 8(3) of the Act. The Board concluded, however, that, by virtue of the indefinite term of the contract, which had run for more than four years, the employees undertook to oust the C.I.O. as their bargaining representative at a period during which it was appropriate to seek a redetermination of representatives.' 12 The Board contends that therefore the contract no longer protected petitioner. 13 We take it from this conclusion of the Board that there is no dispute as to the validity of the closed-shop contract as far as the Act is concerned. In Algoma Plywood & Veneer Co. v. Wisconsin Empl. Rel. Bd., 336 U.S. 301, 69 S.Ct. 584, it was held that nothing in the Act precludes a state from prohibiting closed-shop contracts in whole or in part. We therefore also look to the law of the state where the closed-shop contract was made, here California, to determine its validity. We think it is clear, and do not understand the Board to contend otherwise, that the closed-shop contract was valid under California law. Shafer v. Registered Pharmacists Union Local 1172, 16 Cal.2d 379, 106 P.2d 403; Park & Tilford Import Corp. v. International Brotherhood of Teamsters, etc., Local 848, 27 Cal.2d 599, 165 P.2d 891, 162 A.L.R. 1426; James v. Marinship Corp., 25 Cal.2d 721, 155 P.2d 329, 160 A.L.R. 900; In the Marinship case, supra, 25 Cal.2d at page 736, 155 P.2d at page 338, the California Supreme Court explicitly recognized that a union may expel persons who 'have interests inimical to the union' because of 'the right of the union to reject or expel persons who refuse to abide by any reasonable regulation or lawful policy adopted by the union'. See also Davis v. International Alliance, etc., Employees, 60 Cal.App.2d 713, 715, 141 P.2d 486, 488, where it is stated that under California law, 'An organization has the natural right of self preservation, and may with propriety expel members who show their disloyalty by joining a rival organization.' The contract was valid under the Act and under state law. 14 The claimed impotency of the contract as a defense here rests not upon any provision of the Act of Congress or of state law or the terms of the contract, but upon a policy declared by the Board. That policy has for its avowed purpose the solution of what the Board conceives to be an anomalous situation, in that § 7 guarantees employees the right to select freely their representative for collective bargaining, while the proviso to § 8(3) permits a closed-shop contract with inherent possibilities for invasion of the right guaranteed by § 7. The solution arrived at in the Rutland Court case, and urged here, is that the Board may not give full effect to the proviso of § 8(3) because to do so would permit circumvention of § 7. We turn to this contention. 15 One of the oldest techniques in the art of collective bargaining is the closed shop.13 It protects the integrity of the union and provides stability to labor relations. To achieve stability of labor relations was the primary objective of Congress in enacting the National Labor Relations Act.14 Congress knew that a closed shop would interfere with freedom of employees to organize in another union and would, if used, lead inevitably to discrimination in tenure of employment.15 Nevertheless, with full realization that there was a limitation by the proviso of § 8(3) upon the freedom of § 7, Congress inserted the proviso of § 8(3). It is not necessary for us to justify the policy of Congress. It is enough that we find it in the statute. That policy cannot be defeated by the Board's policy, which would make an unfair labor practice out of that which is authorized by the Act. The Board cannot ignore the plain provisions of a valid contract made in accordance with the letter and the spirit of the statute and reform it to conform to the Board's idea of correct policy. To sustain the Board's contention would be to permit the Board under the guise of administration to put limitations in the statute not placed there by Congress. In reality whatever interference or discrimination was present here came not from the employer, but from fellow-employees of the dischargees. Shorn of embellishment, the Board's policy makes interference and discrimination by fellow-employees an unfair labor practice of the employer. Yet the legislative history conclusively shows that Congress, by rejecting the proposed Tydings amendment to the Act, refused to word § 7 so as to hamper coercion of employees by fellow-employees.16 The emasculation of the contract pressed for by the Board in order to achieve that which Congress refused to enact into law cannot be sustained. 16 It must be remembered that this is a contest primarily between labor unions for control. It is quite reasonable to suppose that Congress thought it conducive to stability of labor relations that parties be required to live up to a valid closed-shop contract made voluntarily with the recognized bargaining representative, regardless of internal disruptions growing out of agitation for a change in bargaining representative. In the instant case the employees exercised their right to choose their bargaining representative. The representative bound them to a valid contract. The contract was lived under for four years and was subsisting at the period of time in question. It was made and carried out in good faith by petitioner, who cannot be held guilty of an unfair labor practice by administrative amendment of the statute. We reject the application of the so-called Rutland Court doctrine. 17 Nothing that this Court said in Wallace Corp. v. National Labor Relations Board, 323 U.S. 248, 65 S.Ct. 238, 89 L.Ed. 216, supports the Board's position here. In that case this Court said: 18 'It was as much a deprivation of the rights of these minority employees for the company discriminatorily to discharge them in collaboration with Independent as it would have been had the company done it alone. To permit it to do so by indirection, through the medium of a 'union' of its own creation, would be to sanction a readily-contrived mechanism for evasion of the Act.' 323 U.S. at page 256, 65 S.Ct. at page 242. 19 There the independent union was found to be a company-supported union, and the employer was found guilty of an unfair labor practice for supporting it. While the proviso to § 8(3) permits a closed-shop contract, it does not permit one made with a union 'established, maintained, or assisted by any action defined in this Act as an unfair labor practice.' So the Court concluded in the Wallace Corp. case that: 'The Board therefore is authorized by the Act to order disestablishment of such unions and to order an employer to renounce such contracts.' 323 U.S. at page 251, 65 S.Ct. at page 239. Thus the Wallace Corp. case does not deal with the scope of protection afforded an employer by a valid closed-shop contract, because there was not and could not have been a valid closed-shop contract in that case. 20 The judgment of the Court of Appeals is reversed, with directions to the Board to dismiss the complaint. 21 Reversed with directions. 22 Mr. Justice REED and Mr. Justice BURTON dissent. In their opinion the adjustment between § 7 and § 8(3) made by the National Labor Relations Board is permissible. The use of the closed-shop privilege to interfere with the free exercise of the laborers' choice does not seem to them to be within the purpose of the Labor Act. 23 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 1 49 Stat. 449 et seq., 29 U.S.C. § 151 et seq., 29 U.S.C.A. § 151 et seq. 2 Matter of Colgate-Palmolive-Peet Company, 70 N.L.R.B. 1202. 3 171 F.2d 956. 4 337 U.S. 913, 69 S.Ct. 1155. 5 Matter of Rutland Court Owners, Inc., 44 N.L.R.B. 587, 46 N.L.R.B. 1040. 6 National Labor Relations Board v. Geraldine Novelty Co., 173 F.2d 14; Colonie Fibre Co. v. National Labor Relations Board, 163 F.2d 65; National Labor Relations Board v. American White Cross Laboratories, 160 F.2d 75. 7 Labor Board v. Public Service Transport, 177 F.2d 119. 8 National Labor Relations Board v. Colgate-Palmolive-Peet Co., 171 F.2d 956; Local 2880, Lumber and Sawmill Workers Union, United Broth. of Carpenters and Joiners of America, A.F. of L., v. National Labor Relations Board, 158 F.2d 365, certiorari granted 331 U.S. 798, 67 S.Ct. 1305, 91 L.Ed. 1824, certiorari denied on motion of petitioner 332 U.S. 845, 68 S.Ct. 347, 92 L.Ed. 416. 9 Aluminum Co. of America v. National Labor Relations Board, 159 F.2d 523; Lewis Meier & Co. v. Labor Board, 21 L.R.R.M. 2093 (Nov. 1947). 10 Sec. 8. It shall be an unfair labor practice for an employer— '(3) By discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this Act, * * * or in any code or agreement approved or prescribed thereunder, or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization (not established, maintained, or assisted by any action defined in this Act as an unfair labor practice) to require as a condition of employment membership therein, if such labor organization is the representative of the employees as provided in section 9(a), in the appropriate collective bargaining unit covered by such agreement when made.' 49 Stat. 452, 29 U.S.C. § 158(3), 29 U.S.C.A. § 158(3). 11 This election was thereafter set aside by the Board, upon objections filed by the A.F. of L., on the ground that the employer's discharge of employees at the request of the C.I.O. prevented the result of the election from being truly representative of the employees' wishes. 12 Supra, n. 10. 13 See Peterson, American Labor Unions, p. 1 (1945). Rev. Jerome L. Toner in The Closed Shop in the American Labor Movement, published under auspices of The Catholic University of America, Studies in Economics, vol. 5, 1941, traces the principle of the closed shop to the English guild system, the forerunner of the American union movement, p. 16 et seq. In America the desire of workers for closed-shop conditions antedates the American Revolution and even unionism. Id. at 22, 58 et seq. 14 49 Stat. 449, 29 U.S.C. § 151, 29 U.S.C.A. § 151; S.Rep.No.573, 74th Cong., 1st Sess. 1 (1935); H.R.Rep.Nos.969, 972, 74th Cong., 1st Sess. 6 (1935); H.R.Rep.No.1147, 74th Cong., 1st Sess. 8 (1935). 15 See statement of Senator Wagner: Hearings before Senate Committee on Education and Labor on S.195, 74th Cong., 1st Sess. 47 (1935); Statement of Mr. Millis, id. at 179—180; and the Senate and House Reports accompanying the bill: S.Rep.No.573, 74th Cong., 1st Sess. 16 (1935); H.R.Rep.No.1147, 74th Cong., 1st Sess. 15—17 (1935). 16 During consideration of the bill on the Senate floor, Senator Tydings proposed to amend it by adding to § 7 the words, 'free from coercion or intimidation from any source.' In the debate which followed it became clear that the amendment would deal with employee-against-employee relations, while the bill was designed to deal only with employee-employer relations, and the amendment was defeated. See 79 Cong.Rec. 7653—7658, 7675.

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338 U.S. 338 70 S.Ct. 177 94 L.Ed. 150 UNITED STATESv.YELLOW CAB CO. et al. No. 22. Argued Nov. 14—15, 1949. Decided Dec. 5, 1949. Mr. Charles H. Weston, Washington, D.C., for appellant. Mr. Jesse Climenko, Washington, D.C., for appellees. Mr. Justice JACKSON delivered the opinion of the Court. 1 This suit in equity, under §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, 15 U.S.C.A. §§ 1, 2, originally included three charges of violation: (1) conspiracy to restrain and monopolize transportation of interstate travelers by taxicab between Chicago railroad stations and their homes, offices and hotels; (2) conspiracy to eliminate competition for the business of transporting passengers between different Chicago railroad stations; and (3) conspiracy to restrain and monopolize the sale of taxicabs by control of the principal companies operating them in Chicago, New York, Pittsburgh and Minneapolis. On a previous appeal this Court held the first of the charges not to state a case within the statute, and that charge no longer concerns us. United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010. The court below found that the Government failed to prove the second charge and no appeal is taken from that part of the judgment, so that charge has been eliminated. We have held that the residue of the complaint, embodying the third charge, alleges a cause of action within the statute, but only on the expressed assumption that the facts alleged are true, United States v. Yellow Cab Company, supra, 332 U.S. at page 224, 67 S.Ct. at page 1563; but the trial court has found that the Government, at the trial, has failed on all the evidence to prove its case. D.C., 80 F.Supp. 936. The cause is before us by a direct appeal under the Expediting Act, 15 U.S.C. § 29 (Revised Judicial Code, 28 U.S.C.A. § 2101), and not by an exercise of our discretionary jurisdiction. 2 The first question proposed by the Government is whether the evidence sustains the findings of fact by the District Court. This is the basic issue, and the Government raises no question of law that has an existence independent of it. This issue of fact does not arise upon the trial court's disregard or misunderstanding of some definite and well-established fact. It extends to almost every detail of the decision, the Government saying that the trial court 'ignored * * * substantially all of the facts which the Government deemed significant.' 3 What the Government asks, in effect, is that we try the case de novo on the record, reject nearly all of the findings of the trial court, and substitute contrary findings of our own. Specifications of error which are fundamental to its case ask us to reweigh the evidence and review findings that are almost entirely concerned with imponderables, such as the intent of parties to certain 1929 business transactions, whether corporate officers were then acting in personal or official capacities, what was the design and purpose and intent of those who carried out twenty-year-old transactions, and whether they had legitimate business motives or were intending to restrain trade of their competitors in car manufacture, such as General Motors, Ford, Chrysler and Packard. 4 These were the chief fact issues in a trial of three weeks' duration. The government relied in large part on inferences from its 485 exhibits, introduced by nine witnesses. The defendants relied heavily on oral testimony to contradict those inferences. The record is before us in 1,674 closely-printed pages. 5 The Government suggests that the opinion of the trial court 'seems to reflect uncritical acceptance of defendants' evidence and of defendants' views as to the facts to be given consideration in passing upon the legal issues before the Court.' We see that it did indeed accept defendants' evidence and sustained defendants' view of the facts. But we are unable to discover the slightest justification for the accusation that it did so 'uncritically.' Also, it rejected the inferences the Government drew from its documents, but we find no justification for the statement that it 'ignored' them. The judgment below is supported by an opinion, prepared with obvious care, which analyzes the evidence and shows the reasons for the findings. To us it appears to represent the considered judgment of an able trial judge, after patient hearing, that the Government's evidence fell short of its allegations—a not uncommon form of litigation casualty, from which the Government is no more immune than others. 6 Only last term we accepted the view then advanced by the Government that for triers of fact totally to reject an opposed view impeaches neither their impartiality nor the propriety of their conclusions. We said, 'We are constrained to reject the court's conclusion that an objective finder of fact could not resolve all factual conflicts arising in a legal proceeding in favor of one litigant. The ordinary lawsuit, civil or criminal, normally depends for its resolution on which version of the facts in dispute is accepted by the triers of fact. * * *' National Labor Relations Board v. Pittsburgh Steamship Co., 337 U.S. 656, 659, 69 S.Ct. 1283, 1285. 7 Rule 52, Federal Rules of Civil Procedure, 28 U.S.C.A., provides among other things: 'Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.' 8 Findings as to the design, motive and intent with which men act depend peculiarly upon the credit given to witnesses by those who see and hear them. If defendants' witnesses spoke the truth, the findings are admittedly justified. The trial court listened to and observed the officers who had made the records from which the Government would draw an inference of guilt and concluded that they bear a different meaning from that for which the Government contends. 9 It ought to be unnecessary to say that Rule 52 applies to appeals by the Government as well as to those by other litigants. There is no exception which permits it, even in an antitrust case, to come to this Court for what virtually amounts to a trial de novo on the record of such findings as intent, motive and design. While, of course, it would be our duty to correct clear error, even in findings of fact, the Government has failed to establish any greater grievance here than it might have in any case where the evidence would support a conclusion either way but where the trial court has decided it to weigh more heavily for the defendants. Such a choice between two permissible views of the weight of evidence is not 'clearly erroneous.' 10 Judgment affirmed. 11 Mr. Justice DOUGLAS and Mr. Justice CLARK took no part in the consideration or decision of this case. 12 Mr. Justice BLACK, with whom Mr. Justice REED, concurs, dissenting. 13 The evidence showed here without dispute that a manufacturer of taxicabs through a series of stock purchases obtained 62% of the stock of a corporation which itself had large stock interests in local companies operating taxicabs. The man who was president, general manager, director, and dominant stockholder in the taxicab manufacturing company also held an important managerial position in the corporate network that carried on the business of the local taxicab operating companies. The findings of the District Court were that the affiliated ownership, management and control were not the result of any deliberate or calculated purpose of the manufacturing company to control the operating companies' purchases of taxicabs, and that no compulsion had been exercised to control such purchases. Consequently the trial court held that despite the integration of corporate management there was no violation of the Sherman Act. I think that the trial court erred in holding that a formed intent to suppress competition is an indispensable element of violations of the Sherman Act. 14 In United States v. Griffith, 334 U.S. 100, 105, 106, 68 S.Ct. 941, 944, 92 L.Ed. 1236, we said: '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. Patten, 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 Corp., 316 U.S. 265, 275, 62 S.Ct. 1070, 1076, 86 L.Ed. 1461. To require a greater showing would cripple the Act. * * * (E)ven 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.' 15 Measured by this test the findings of the trial court here fail to support its legal conclusions that no violation of the Sherman Act had been proven. Since the trial court went on the assumption that subjective intent to suppress competition is an essential ingredient of Sherman law violations, it did not make specific findings as to whether the freedom of the taxicab companies to buy taxicabs from other manufacturers had been hobbled by the defendants' business arrangements, regardless of compulsion or intent to destroy competition. There was much evidence tending to show this hobbling of competition. I think that the allegations of the complaint were sufficiently broad to present this issue for adjudication by the court. Moreover, presentation of the issue was emphasized by the fact that a large amount of evidence to prove successful accomplishment of monopoly or restraints of trade was admitted without any objection by the defendants based on variance from the pleadings. See Federal Rule of Civil Procedure 15(b). 16 There is evidence in the record to the effect that as a result of the corporate arrangements here the manufacturing company obtained sufficient power to dictate the terms of purchases by the local companies; there is also evidence that those companies did thereafter limit their purchases of taxicabs almost exclusively to those sold by the manufacturing defendant. Moreover, the evidence shows that such taxicabs were in some instances bought by the local company at prices above those paid by other taxicab companies wholly free to buy taxicabs in a competitive market. This evidence, if accepted, would support a finding of illegal restraint of trade or monopoly under the Griffith rule. I think the cause should be remanded for the trial court to consider the evidence and make findings on this aspect of the case.

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338 U.S. 345 70 S.Ct. 172 94 L.Ed. 155 COLE et al.v.STATE OF ARKANSAS. No. 62. Argued Nov. 9, 1949. Decided Dec. 5, 1949. Mr. Thomas E. Harris, Washington, D.C., for petitioners. Mr. Jeff Duty, Little Rock, Ark., for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 In December 1945, 112 of the 117 employees of an oil company, including petitioners, went out on strike. About five o'clock one afternoon, petitioners, with several other strikers, assembled near the plant's entrance. Although a picket line was nearby, these men were not a part of it, and there is no suggestion that their acts were attributable either to the regular pickets or to the union representing them. As the five working employees left the plant for the day, the petitioner Jones called out to one named Williams to 'wait a minute, he wanted to talk to him.' When Williams replied that 'he didn't have time, he was on his way home and he would see him another day,' petitioner Jones gave a signal and said, 'Come on, boys.' Petitioner Cole, who was carrying a stick, told one of the other departing employees 'to go ahead on, that they wasn't after me.' Another striker named Campbell then attacked Williams and was killed in the ensuing struggle. It was further testified that these petitioners and others had that morning discussed talking to the men who were working 'and they agreed that if they didn't talk right, they were going to whip them.' While some of this was contradicted, such is the version which the jury could have found from the evidence. 2 The present case has had a curiously involved history. Convicted in 1946 of a statutory offense for their participation in the foregoing, petitioners secured a reversal in the Supreme Court of Arkansas for errors in the trial. 210 Ark. 433, 196 S.W.2d 582. Following the retrial, petitioners' second conviction was affirmed, 211 Ark. 836, 202 S.W.2d 770; and we granted certiorari and reversed on the ground that the affirmance below had been based upon a section of the statute other than that for violation of which these petitioners had been tried and convicted. Cole v. Arkansas, 333 U.S. 196, 68 S.Ct. 514, 92 L.Ed. 644.1 On remand, the State Supreme Court has reconsidered the appeal and has again affirmed in an opinion sustaining the convictions under the section of the statute on which the prosecution was based. 214 Ark. 387, 216 S.W.2d 402. Doubts as to whether the mandate in our earlier decision had been obeyed led us to grant certiorari. 337 U.S. 929, 69 S.Ct. 1496. 3 It appears on the surface, at least, that the Supreme Court of Arkansas has attempted to comply with our mandate and has now placed its affirmance upon the same section of the statute as that upon which the trial court submitted the case to the jury. The objection to this affirmance is, however, much more subtle and far-reaching than that involved in our previous decision. There it was clear that the Arkansas Supreme Court's affirmance was based upon an entirely different statutory offense from that charged and under which the case was submitted to the jury. It is now claimed that, although they both dealt with the same section of the Act involved, the trial court and the appellate court adopted contrasting interpretations of that section, and that the result was a repetition of the earlier error. 4 In addition to this contention, that the previous error has been repeated, it is also claimed that the statute now involved violates the Federal Constitution in that it abridges freedom of speech and assembly, and that the charge and statute are too vague and indefinite to conform to due process. All three claims involve serious charges of error, and if any one can be supported, petitioners are entitled to prevail. 5 Section 2 of Act 193, Acts of Arkansas 1943, provides: 'It shall be unlawful for any person acting in concert with one or more other persons, to assemble at or near any place where a 'labor dispute' exists and by force or violence prevent or attempt to prevent any person from engaging in any lawful vocation, or for any person acting either by himself, or as a member of any group or organization or acting in concert with one or more other persons, to promote, encourage or aid any such unlawful assemblage. * * *' (Italics supplied.) 6 In the opinion under review, the Supreme Court of Arkansas has indicated that as to one charged with a violation of the italicized portion, the statute requires that the accused aid the assemblage with the intention that force and violence would be used to prevent a person from working. Petitioners' quarrel, however, is not with this construction. Instead, petitioners contend that in the trial court, as the statute was construed and as the case was submitted to the jury, their convictions rested upon the theory that no more was required than mere presence in a group where unplanned and unconcerted violence was precipitated by another. The requirements of knowledge and intent, they claim were 'read into' the statute for the first time by the appellate court on review, and were absent in the trial court. 7 It thus becomes apparent that underlying each of the three contentions advanced on behalf of these petitioners is the basic premise that their case was submitted to the jury on the theory that nothing more was needed to convict them than mere presence at an assemblage where violence occurred without their participation, concert, or previous knowledge. This is the foundation, not only of the claim that the trial court and the appellate court adopted contrasting interpretations of the Act they are said to have violated, but also of the claim that application of that Act offends the fundamental rights of speech and assembly protected from state deprivation by the Fourteenth Amendment. Similarly the alleged difference between the trial court and the appellate court in rendering the Act is the basis of the argument that it is constitutionally invalid for vagueness, it being contended here that in this very case the Act has been demonstrated to be susceptible of at least two different interpretations in the Arkansas courts. 8 Did the trial court authorize the jury to convict for mere presence in an assemblage where unplanned and unintended violence occurred? This is the basis of the plea for reversal and we turn to the record to ascertain whether or not it is justified. 9 The information on which the petitioners were tried set forth that Campbell in concert with others had assembled at the plant where a labor dispute existed and by force and violence prevented Williams from engaging in a lawful vocation. It then charged that 'The said Roy Cole (and) Louis Jones * * * did unlawfully and feloniously, acting in concert with each other, promote, encourage and aid such unlawful assemblage, against the peace and dignity of the State of Arkansas.'2 10 As we have noted in Cole v. Arkansas, supra, 333 U.S. at page 198, 68 S.Ct. at page 515, 92 L.Ed. 644, the language employed in the information is substantially identical with that of § 2 of the Arkansas Act. 11 In explaining the Act, which was read to the jury, the trial court said that it included two offenses, '* * * First, the concert of action between two or more persons resulting in the prevention of a person by force and violence from engaging in a lawful vocation. And second, in promoting, encouraging or aiding of such unlawful assemblage by concert of action among the defendants as is charged in the information here. The latter offense is the one on trial in this case.' 12 In his second instruction, the trial court charged that '* * * if you further believe beyond a reasonable doubt that the defendants wilfully, unlawfully and feloniously, which (while) acting in concert with each other, promoted, encouraged and aided such unlawful assemblage, you will convict the defendants as charged in the indictment.' 13 Needless to say, the defendants presented no request for a charge that would construe the statute as unfavorable to themselves as they now contend it was construed. To the contrary, an opposite construction was embodied in the defendants' request to charge, all of which, with minor variations, were granted save one which duplicated a charge earlier made by the court. The ninth instruction requested by the defendants and granted by the court, said: 'The court instructs you that mere fact, if you find it to be a fact that the defendants, or either of them, were present at the time of an altercation between Campbell and Williams, such fact alone would not justify you in finding the defendants or either of them guilty.' 14 But it is contended that some portions of the opinion of the Supreme Court of Arkansas apparently 'read into' the statute the requirement that the accused 'promoted, encouraged and aided the assemblage—which was unlawful because of its purpose and its accomplished results' (216 S.W.2d 402, 407), and that it sustained the convictions upon a conclusion from the evidence that 'the defendants participated, aided, encouraged and abetted in an agreement with others to the effect that the workers * * * would be whipped if they did not agree to quit work.' Petitioners argue that this requirement of purpose and knowledge was supplied as an additional element by the appellate court, and that in so doing that court departed even further from the construction of the trial court. But the question was before the jury in almost the very language petitioners object to as originating in the State Supreme Court. 'You are instructed,' said the trial court in giving a charge requested by these petitioners, 'that before the defendants, or either of them can be convicted in this case, you must be convinced beyond a reasonable doubt that they promoted, encouraged, and aided in an unlawful assemblage at the plant of the Southern Cotton Oil Company, for the purpose of preventing Otha Williams from engaging in a lawful vocation.' 15 We do not find any such disparity between the instructions and the opinion of the Supreme Court as is suggested. At most, the appellate court spelled out what is implicit in the instructions of the trial court, and both were agreed that the statute authorized no conviction for a mere presence in an assemblage at which unplanned and unconcerted violence was precipitated by another. 16 What we have already said disposes of the contention that this Act as applied to petitioners abridges freedom of assembly. For this argument, too, rests on the assumption that this Act penalizes for mere presence in a gathering where violence occurs. As we have pointed out, the statutory text does not so read, the charge of the trial court expressly negatived this construction at the defendants' own request, and they themselves have complained of the appellate court that it went even further in this direction. 17 Accordingly, we are not called upon to decide whether a state has power to incriminate by his mere presence an innocent member of a group when some individual without his encouragement or concert commits an act of violence. It will be time enough to review such a question as that when it is asked by one who occupies such a status. Evidently these petitioners, in the minds of the jury, at least, did not.3 For, as we have seen, the case was submitted under a statutory construction and charge which forbade conviction without belief that the petitioners aided the assemblage 'for the purpose of preventing Otha Williams from engaging in a lawful vocation.' 18 As defined by the Arkansas Supreme Court, an unlawful assembly, the aiding of which is prohibited, is '* * * one where persons acting in concert have assembled in an attempt to prevent by force or violence some other person from engaging in a lawful occupation.' 19 Certainly the Act before us does not penalize the promotion, encouragement, or furtherance or peaceful assembly at or near any place where a labor dispute exists, nor does it infringe the right of expression of views in any labor dispute. 20 Quite another question is involved when one is convicted of promoting, encouraging and aiding an assemblage the purpose of which is to wreak violence. Such an assemblage has been denominated unlawful by the Arkansas legislature, and it is no abridgment of free speech or assembly for the criminal sanctions of the state to fasten themselves upon one who has actively and consciously assisted therein. 21 Similarly we find no merit in petitioners' contention that the Arkansas statute is unconstitutionally vague, so that its application in this case violated due process of law. Here again the premise upon which the argument is presented to us is that the two Arkansas courts differed in construing the statute, and we are asked to conclude from this fact that the test of definiteness which criminal statutes must meet under the due process clause, International Harvester Co. v. Kentucky, 234 U.S. 216, 223, 34 S.Ct. 853, 855, 58 L.Ed. 1284, has not been met. Since we cannot assume that the two courts were at odds in their interpretation of the statute, we find it unnecessary to explore the question as to whether such discrepancy, if it existed, would constitute a basis for concluding that the constitutional standards have not been achieved. We think that § 2, Act 193, Acts of Arkansas 1943, fairly apprises men of ordinary intelligence that for two or more to assemble and by force or violence prevent or attempt to prevent another from engaging in any lawful vocation constitutes an unlawful assemblage, and that the promotion, encouragement or aiding thereof is unlawful. 22 Judgment affirmed. 23 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 1 Act 193, Acts of Arkansas 1943, provides in pertinent part: 'Section 1. It shall be unlawful for any person by the use of force or violence, or threat of the use of force or violence, to prevent or attempt to prevent any person from engaging in any lawful vocation within this State. * * * 'Section 2. It shall be unlawful for any person acting in concert with one or more other persons, to assemble at or near any place where a 'labor dispute' exists and by force or violence prevent or attempt to prevent any person from engaging in any lawful vocation, or for any person acting either by himself, or as a member of any group or organization or acting in concert with one or more other persons, to promote, encourage or aid any such unlawful assemblage. * * *' The Supreme Court of Arkansas had affirmed the petitioners' convictions on the basis of § 1 of the above statute, although, as we observed, both the information drawn against the petitioners and the charge to the jury referred in unmistakable terms to a violation, not of § 1, but of § 2. Accordingly we reversed, holding it a violation of due process for the appellate court to appraise and affirm petitioners' convictions on considerations other than those governing the case as it was tried and as the issues were determined in the trial court. 2 The entire information was as follows: 'Comes Sam Robinson, Prosecuting Attorney within and for Pulaski County, Arkansas, and in the name, by the authority, and on behalf of the State of Arkansas information gives accusing Roy Cole, Louis Jones and Jessie Bean of the crime of felony, committed as follows to-wit: on the 26th day of December, A.D. 1945, in Pulaski County, Arkansas, Walter Ted Campbell, acting in concert with other persons, assembled at the Southern Cotton Oil Company's plant in Pulaski County, Arkansas, where a labor dispute existed, and by force and violence prevented Otha Williams from engaging in a lawful vocation. The said Roy Cole, Louis Jones, and Jessie Bean, in the County and State aforesaid, on the 26th day of December, 1945, did unlawfully and feloniously, acting in concert with each other, promote, encourage and aid such unlawful assemblage, against the peace and dignity of the State of Arkansas.' 3 One witness, whom the jury was entitled to believe, testified as follows: 'Q. You say you were down at the tent that morning? A. Yes, sir. 'Q. When these defendants here, Louis Jones and the others, were in a discussion and were talking about talking to the men that were working? A. Yes, sir. 'Q. And they agreed that if they didn't talk right, they were going to whip them? A. Yes sir.' Facts demonstrating the consummation of this plan were given to the jury by the testimony of another witness. As the men not on strike were leaving the plant, petitioner Jones, according to the witness, called upon Williams '* * * to wait a minute, he wanted to talk to him, and Otha told him he didn't have time, he was on his way home and he would see him another day. 'Q. Did he do anything else? A. He gave a signal and said 'Come on, boys.' * * * 'Q. What happened after Louis Jones gave the signal and said 'Come on boys'? A. They flew up like blackbirds and came fighting.'

23

338 U.S. 366 70 S.Ct. 207 94 L.Ed. 171 UNITED STATESv.AETNA CASUALTY & SURETY CO. and three other cases. Nos. 35, 36, 37 and 38. Argued Oct. 19, 20, 1949. Decided Dec. 12, 1949. Mr. Leavenworth Colby, Washington, D.C., for the United states. Mr. William A. Hyman, New York City, for Aetna Casualty & Surety Co. Mr. Jackson G. Akin, Albuquerque, N.M., pro hac vice, by special leave of court, for respondent World Fire & Marine Ins. Co. Mr. Abraham Frankel, Asbury Park, N.J., for Yorkshire Ins. Co. and Home Ins. Co. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 These cases, here on certiorari, present this important question under the Federal Tort Claims Act:1 May an insurance company bring suit in its own name against the United States upon a claim to which it has become subrogated by payment to an insured who would have been able to bring such an action? That question, in turn, requires our consideration of R.S. § 3477, the 'anti-assignment' statute.2 2 Three cases, each presenting a slightly different aspect of the problem, were heard by the Court. In No. 35, the complaint alleges that an employee of the Federal Reserve Bank of New York was injured as a result of the negligence of an United States Post Office Department employee. Respondent insurance carrier had insured the Federal Reserve Bank against its liability for workmen's compensation, and duly paid the injured person's claim under the New York Workmen's Compensation Law, Consol.Laws, c. 67. The complaint further alleges that the injured person failed to commence any action against the United States within one year after the accident, and that his inaction operated, according to New York law,3 as an assignment to the insurer of his cause of action against the United States. The District Court dismissed the complaint, but the Court of Appeals for the Second Circuit reversed and remanded the cause for trial. 170 F.2d 469. 3 In No. 36, the Government's motion to dismiss the complaint was denied, and, after trial, it was found as fact that an employee of the United States Forest Service had negligently driven a Government vehicle into a vehicle owned by one Harding, causing damages of $1,484.50; that Harding was insured by the respondent insurance carrier and, pursuant to the terms of the policy, had been paid $784.50 by the insurer, to which it was now subrogated. Judgment was thereupon entered against the United States in favor of Harding for $700 and in favor of respondent insurance company for $784.50. The Court of Appeals for the Tenth Circuit affirmed. 4 Nos. 37 and 38 present the situation in which two insurance companies, each of which has paid part of a claim of loss occasioned by the negligence of an employee of the United States, bring suits in their own names, each asking recovery of the amount it has paid to the assured. The District Court dismissed the complaints on motion of the Government, but the Court of Appeals for the Third Circuit reversed and remanded the causes. 171 F.2d 374. We granted certiorari in these cases, 336 U.S. 960, 69 S.Ct. 890, because of a conflict of decisions in the circuits4 and the manifest importance of the question. 5 The Federal Tort Claims Act provides in pertinent part that '* * * the United States district court for the district wherein the plaintiff is resident or wherein the act or omission complained of occurred, * * * sitting without a jury, shall have exclusive jurisdiction to hear, determine, and render judgment on any claim against the United States, for money only, * * * on account of damage to or loss of property or on account of personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant for such damage, loss, injury, or death in accordance with the law of the place where the act or omission occurred. Subject to the provisions of this chapter, the United States shall be liable in respect of such claims, to the same claimants, in the same manner, and to the same extent, as a private individual under like circumstances * * *.'5 6 While the language of the Act indicates a congressional purpose that the United States be treated as if it were a private person in respect of torts committed by its employees, except for certain specific exceptions enumerated in the Act,6 neither the terms of the Act nor its legislative history precludes the application of R.S. § 3477 in this situation. 7 It is the Government's position that R.S. § 3477, which in terms makes 'All transfers and assignments * * * of any claim upon the United States, or of any part or share thereof, or interest therein * * * absolutely null and void * * *' except for assignments made after payment of the claim and in accordance with certain prescribed safeguards, includes assignments by operation of law and prohibits suit by the subrogee in its own name. Petitioner reads R.S. § 3477 not as prohibiting transfer of a claimant's substantive rights to an insurer-subrogee and ultimate recovery by the insurer but as a procedural requirement that the insurance carrier sue and recover judgment in the name of the original claimant. United States v. American Tobacco Co., 1897, 166 U.S. 468, 17 S.Ct. 619, 41 L.Ed. 1081. Its purpose in invoking the anti-assignment statute is said to be two-fold: '(1) to insure that the United States may avoid involvement in any litigation as to the existence or extent of subrogation or other assignment of such claims; and (2) to insure that the suits and any judgments against the United States will be in the names of the original claimants so that the United States will be able to avail itself of its statutory rights in respect of venue, and of counterclaim and offset on account of any cross-claims it may have against the original claimants.' It is pointed out that 'The provisions of the statute making void an assignment or power of attorney by a Government contractor are for the protection of the Government. Hobbs v. McLean, 117 U.S. 567, 576, 6 S.Ct. 870, 874, 29 L.Ed. 940; McGowan v. Parish, 237 U.S. 285, 294, 295, 35 S.Ct. 543 (547), 59 L.Ed. 955. In the absence of such a rule, the Government would be in danger of becoming embroiled in conflicting claims, with delay and embarrassment and the chance of multiple liability.' Martin v. National Surety Co., 1937, 300 U.S. 588, 594, 57 S.Ct. 531, 534, 81 L.Ed. 822. The Government contends that the inconvenience, administrative and accounting difficulties, and procedural problems which, it is apprehended, may involve the Government if subrogees are permitted to bring suits under the Tort Claims Act in their own names make this an apt situation for application of R.S. § 3477, and that that was the congressional intent. 8 It should be noted at the outset, however, that in the courts below and until argument in this Court (and even in its petition for certiorari) the Government contended that R.S. § 3477 was a complete bar to recovery by a subrogee. Only in brief and argument here was it suggested that the insurance carrier could recover if suit was brought in the name of the insured to the use of the insurer, citing for the first time United States v. American Tobacco Co., supra, a decision reflecting common-law procedure, upon which reliance is now placed.7 It is for that reason that the opinions below were focused upon whether R.S. § 3477 is an absolute bar to recovery by the subrogee rather than merely a bar to recovery in the name of the subrogee. We think, however, that even this limited, and somewhat anomalous,8 reliance upon R.S. § 3477 is untenable, first, because of the uniform interpretation given that statute by this Court for the past 75 years, and, second, because of many affirmative indications of congressional intent that subrogation claims should not be excluded from suit in the name of the subrogee under the Tort Claims Act. 9 R.S. § 3477 was enacted in 1853 as part of a statute entitled 'An Act to prevent frauds upon the Treasury of the United States.'9 Its primary purpose was undoubtedly to prevent persons of influence from buying up claims against the United States, which might then be improperly urged upon officers of the Government.10 Spofford v. Kirk, 1878, 97 U.S. 484, 490, 24 L.Ed. 1032. Another purpose, that upon which the Government now relies, has been inferred by this Court from the language of the statute. That purpose was to prevent possible multiple payment of claims, to make unnecessary the investigation of alleged assignments, and to enable the Government to deal only with the original claimant. Spofford v. Kirk, supra; Goodman v. Niblack, 1880, 102 U.S. 556, 560, 26 L.Ed. 229. Most of the early cases construed the statute strictly, holding that all assignments were included within the statute and that such assignments conferred no rights of any kind upon the assignee; that R.S. § 3477 'incapacitates every claimant upon the Government from creating an interest in the claim in any other than himself.' Spofford v. Kirk, supra, 97 U.S. at pages 488 489, 24 L.Ed. 1032. See also National Bank of Commerce v. Downie, 1910, 218 U.S. 345, 31 S.Ct. 89, 54 L.Ed. 1065, 20 Ann.Cas. 1116; Nutt v. Knut, 1906, 200 U.S. 12, 26 S.Ct. 216, 50 L.Ed. 348; St. Paul & Duluth R. Co. v. United States, 1885, 112 U.S. 733, 5 S.Ct. 366, 28 L.Ed. 861. 10 The rigor of this rule was very early relaxed in cases which were thought not to be productive of the evils which the statute was designed to obviate. And one of the first such exceptions was to transfers by operation of law. In United States v. Gillis, 1877, 95 U.S. 407, 24 L.Ed. 503, the Court held that a provision in the Act creating the Court of Claims that suits on assignments may be brought in the name of the assignee did not mean that R.S. § 3477 was inapplicable to suits in the Court of Claims, but referred to claims which were excepted from the prohibition of that statute, such as 'devolutions of title by force of law, without any act of the parties, or involuntary assignments, compelled by law.' During the following term a case was presented in which an assignee in bankruptcy had sued the United States on a claim of the bankrupt. This Court held the suit maintainable despite R.S. § 3477, on the ground that 'The act of Congress of Feb. 26, 1853, to prevent frauds upon the treasury of the United States, which was the subject of consideration in the Gillis case, applies only two cases of voluntary assignment of demands against the government. It does not embrace cases where there has been a transfer of title by operation of law. The passing of claims to heirs, devisees or assignees in bankruptcy are not within the evil at which the statute aimed; nor does the construction given by this court deny to such parties a standing in the Court of Claims.' Erwin v. United States, 1878, 97 U.S. 392, 397, 24 L.Ed. 1065. 11 This construction of R.S. § 3477—that assignments by operation of law are not within the prohibition of the statute—was recognized as settled law in Goodman v. Niblack, supra, and has been repeated with approval in a great many subsequent cases.11 12 The Government now contends, contrary to the statements in all of the cases approving Erwin v. United States, supra, that an assignment by operation of law is not always exempt from the bar of R.S. § 3477, but that in addition the assignment must be of a kind that will not involve the Government in the procedural difficulties previously referred to. All of the cases in which R.S. § 3477 has been held inapplicable on the ground of assignment by operation of law are explained as presenting situations in which the Government could suffer no such procedural embarrassments. In cases of transfer by descent, Erwin v. United States, supra, consolidation of corporations, Seaboard Air Line R. Co. v. United States, 1921, 256 U.S. 655, 41 S.Ct. 611, 65 L.Ed. 1149, and purchase at a judicial sale in a corporate reorganization, Western Pacific R. Co. v. United States, 1925, 268 U.S. 271, 45 S.Ct. 503, 69 L.Ed. 951, it is pointed out that the Government may deal with the substituted representative as it would have dealt with the claimant if there had been no substitution. Rights of counterclaim and set-off are said to be retained against the universal successor, while such universal assignments by operation of law can give rise to no controversies as to the existence and extent of the transfer for adjudication between the United States and the original claimant and his trustee, receiver, or administrator. 13 Without considering whether some of the cases are not comprehended within this rationale,12 we do not think that it explains the exception made for transfers by operation of law in the cases referred to. In the first place, the Court has always stated the flat exception of all transfers by operation of law, as distinguished from voluntary transfers. If the cases rest upon the premise advanced by the Government, it has never been articulated in the opinions. In the second place, and consistent with the exception of all transfers by operation of law, this Court has a number of times indicated that neither of the purposes of R.S. § 3477 is contravened by transfers by operation of law. In Goodman v. Niblack, supra, it was held that 'The language of the statute, 'all transfers and assignments of any claim upon the United States, or any part thereof, or any interest therein,' is broad enough (if such were the purpose of Congress) to include transfers by operation of law, or by will. Yet we held it did not include a transfer by operation of law, or in bankruptcy, and we said it did not include one by will. The obvious reason for this is that there can be no purpose in such cases to harass the government by multiplying the number of persons with whom it has to deal, nor any danger of enlisting improper influences in advocacy of the claim, and that the exigencies of the party who held it justified and required the transfer that was made.' 102 U.S. at page 560, 26 L.Ed. 229; italics added. See also Hager v. Swayne, 1893, 149 U.S. 242, 247—248, 13 S.Ct. 841, 843, 37 L.Ed. 719. 14 The fact that some administrative problems may be the unintended by-products of an involuntary assignment was not thought to be an evil within the scope of a statute aimed at fraud and harassment. That interpretation has, for nearly a century, exempted all transfers by operation of law from the prohibition of R.S. § 3477. 15 That it was the understanding of Congress that subrogation claims were not within the bar of R.S. § 3477 when it passed the Tort Claims Act is abundantly clear from a number of different particulars: 16 1. The Small Tort Claims Act of 192213 provided that heads of departments 'may consider, ascertain, adjust, and determine any claim * * * on account of damages to or loss of privately owned property where the amount of the claim does not exceed $1,000, caused by the negligence of any officer or employee of the Government acting within the scope of his employment.' Such claims as were found due were certified to Congress for payment. A question was directed to the Attorney General in 1932 as to 'whether such a claim, which if made by the owner of the property damaged could have been certified, may properly be certified if made by an insurance company which has become subrogated to the rights of the owner to receive compensation for the damage suffered.' Attorney General Mitchell's opinion14 was: (1) that subrogation is a transfer by operation of law of the right to receive payment of the amount due; and (2) that R.S. § 3477 applies only to cases of voluntary assignment of demands against the Government. He thought, however, that inasmuch as the question was one concerning the purpose and intent of Congress in enacting the Small Tort Claims Act, that body should be asked to interpret the statute by passing upon subrogation claims certified to it and expressly called to its attention. Thereafter subrogation claims in the names of insurance carriers were regularly submitted to Congress and were consistently approved until the Act was repealed by the present Tort Claims Act. The Attorney General's opinion was approved and congressional acquiescence noted by the Comptroller General in opinions in 19 Compt.Gen. 503, 21 Compt.Gen. 341, and 22 Compt.Gen. 611. A unique interpretation by Congress of its own statute thus settled the question whether R.S. § 3477 was a bar to subrogation claims under the Small Tort Claims Act, which, in language nearly identical with that of the present Tort Claims Act, permitted recovery 'on account of damages to or loss of privately owned property * * *.' 17 2. That specific reference in the statute was necessary to preclude recovery by subrogees in their own names (i.e., that R.S. § 3477 is inapplicable to subrogees) was clearly the view of Congress when it enacted the Tort Claims Act. For in foreign claims legislation where it intended that result, Congress explicitly provided that Claims Officers should consider, ascertain, determine, and pay claims on account of injury or death, or property loss or damage to claimants in foreign countries, 'including claims of insured but excluding claims of subrogees.'15 The purpose of this provision, which was enacted in 1943, was to fulfill the very office which petitioner now contends is performed by R.S. § 3477.16 No such exception is found in the Tort Claims Act, although other exceptions are spelled out with great particularity. The significance of this provision in the foreign claims statute is, first, that when Congress wished to exclude claims by subrogees it said so; and second, that Congress did not think R.S. § 3477 performed that function. For a similar provision, see 49 Stat. 2194.17 18 3. Nor did executive departments themselves interpret R.S. § 3477 as applicable to subrogation claims, as the report of the hearings on H.R. 6442, 77th Cong., 2d Sess. (1942) makes plain. That bill, which was drafted by the Treasury Department, would have required subrogees to institute actions against their subrogors in some court of competent jurisdiction, which would then restrain the original claimant from receiving any funds from the Government until final decision was reached as to who was to receive the money. The Assistant General Counsel of the Treasury, in explaining the bill, stated: 19 'In 1877 the Supreme Court, in the case of United States v. Gillis, 95 U.S. 407, 24 L.Ed. 503, after stating in effect that section 3477 was of universal application and covered all claims against the United States in every tribunal in which they might be asserted, indicated in language not necessary to the decision that transfers or assignments compelled by law or resulting from the operation of law might not have been within the purview of section 3477. 20 'Now from that time on one exception after another has been carved from section 3477, until now the courts recognize many types of adverse claims as the basis for what in effect are third-party suits against the Government, including suits based upon assignments by operation of law, subrogation, and equitable liens.' 21 Hearings before Subcommittee No. 3 of the House Committee on the Judiciary, on H.R. 6442, 77th Cong., 2d Sess. (1942), at p. 3. 22 It cannot therefore be seriously contended that Congress and the executive departments were not cognizant of the exemption of subrogation claims from R.S. § 3477 when the Tort Claims Act was passed. The broad sweep of its language assuming the liability of a private person, the purpose of Congress to relieve itself of consideration of private claims, and the fact that subrogation claims made up a substantial part of that burden are also persuasive that Congress did not intend that such claims should be barred. 23 If, then, R.S. § 3477 is inapplicable, the Government must defend suits by subrogees as if it were a private person. Rule 17(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A., which were specifically made applicable to Tort Claims litigation,18 provides that 'Every action shall be prosecuted in the name of the real party in interest,' and of course an insurer-subrogee, who has substantive equitable rights, qualifies as such. If the subrogee has paid an entire loss suffered by the insured, it is the only real party in interest and must sue in its own name. 3 Moore, Federal Practice (2d Ed.) p. 1339. If it has paid only part of the loss, both the insured and insurer (and other insurers, if any, who have also paid portions of the loss) have substantive rights against the tortfeasor which qualify them as real parties in interest. 24 In cases of partial subrogation the question arises whether suit may be brought by the insurer alone, whether suit must be brought in the name of the insured for his own use and for the use of the insurance company, or whether all parties in interest must join in the action. Under the common-law practice rights acquired by subrogation could be enforced in an action at law only in the name of the insured to the insurer's use, Hall & Long v. Nashville & C. Railroad Companies, 1871, 13 Wall. 367, 20 L.Ed. 594; United States v. American Tobacco Co., supra, as was also true of suits on assignments, Glenn v. Marbury, 1892, 145 U.S. 499, 12 S.Ct. 914, 36 L.Ed. 790. Mr. Justice Stone characterized this rule as 'a vestige of the common law's reluctance to admit that a chose in action may be assigned, (which) is today but a formality which has been widely abolished by legislation.' Aetna Life Ins. Co. v. Moses, 1933, 287 U.S. 530, 540, 53 S.Ct. 231, 233, 77 L.Ed. 477, 88 A.L.R. 647. Under the Federal Rules, the 'use' practice is obviously unnecessary, as has long been true in equity, Garrison v. Memphis Insurance Co., 1856, 19 How. 312, 15 L.Ed. 656, and admiralty, Liverpool & Great Western Steam Co. v. Phenix Insurance Co., 1889, 129 U.S. 397, 462, 9 S.Ct. 469, 479, 32 L.Ed. 788. Rule 17(a) was taken almost verbatim from Equity Rule 37. No reason appears why such a practice should now be required in cases of partial subrogation, since both insured and insurer 'own' portions of the substantive right and should appear in the litigation in their own names. 25 Although either party may sue, the United States, upon timely motion, may compel their joinder. Delaware County v. Diebold Safe & Lock Co., 1890, 133 U.S. 473, 488, 10 S.Ct. 399, 403, 33 L.Ed. 674, (applying a state code under the Conformity Act). 3 Moore, Federal Practice (2d Ed.) p. 1348. Both are 'necessary' parties. Rule 19(b), Federal rules of Civil Procedure.19 The pleadings should be made to reveal and assert the actual interest of the plaintiff, and to indicate the interests of any others in the claim. Additional parties may be added at any stage of the proceedings, on motion of the United States, upon such terms as may be just. Rule 21. 26 It is true that under this rationale, there will be cases in which all parties cannot be joined because one or more are outside the jurisdiction, and the court may nevertheless proceed in the action under Rule 19(b). In such cases the United States, like other tortfeasors, may have to defend two or more actions on the same tort and may be unable to assert counterclaims and offsets against the original claimant upon unrelated transactions.20 27 If R.S. § 3477 is inapplicable, as we think is clearly the case, these objections have no legal foundation upon which to rest. In argument before a number of District Courts and Courts of Appeals, the Government relied upon the doctrine that statutes waiving sovereign immunity must be strictly construed. We think that the congressional attitude in passing the Tort Claims Act is more accurately reflected by Judge Cardozo's statement in Anderson v. Hayes Construction Co., 243 N.Y. 140, 147, 153 N.E. 28, 29—30: 'The exemption of the sovereign from suit involves hardship enough, where consent has been withheld. We are not to add to its rigor by refinement of construction, where consent has been announced.' 28 The decisions of the Courts of Appeals in each of these cases is affirmed. 29 Affirmed. 30 Mr. Justice BLACK dissents. 31 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 1 60 Stat. 842, formerly codified as 28 U.S.C. § 931 et seq. The new Judicial Code became effective on Sept. 1, 1948, while these actions were pending on appeal, and the provisions formerly embodied in the Tort Claims Act are now distributed through various chapters of the new Code. (See 1948 Judicial Code, 28 U.S.C.A. §§ 1291, 1346, 1402, 1504, 2110, 2401, 2402, 2411, 2412, 2671—2680). 2 10 Stat. 170 as amended, 31 U.S.C. § 203, 31 U.S.C.A. § 203. 3 When this action was brought, § 29 of the New York Workmen's Compensation Act provided that if an injured employee has taken compensation but has failed to commence action against the tortfeasor within one year after the cause of action accrued, 'such failure shall operate as an assignment of the cause of action against such other * * * to the person, association, corporation, or insurance carrier liable for the payment of such compensation.' 4 Courts of Appeals in seven circuits have upheld the right of subrogees to sue under the Tort Claims Act. State Farm Mutual Liability Insurance Co. v. United States, 1 Cir., 172 F.2d 737; Aetna Casualty & Surety Co. v. United States, 2 Cir., 170 F.2d 469; Yorkshire Insurance Co. v. United States, 3 Cir., 171 F.2d 374; United States v. South Carolina State Highway Dept., 4 Cir., 171 F.2d 893; Old Colony Insurance Co. v. United States, 6 Cir., 168 F.2d 931; National American Fire Insurance Co. v. United States, 9 Cir., 171 F.2d 206; United States v. Chicago, R.I. & P.R. Co., 10 Cir., 171 F.2d 377. The Court of Appeals for the Fifth Circuit reached a contrary conclusion, United States v. Hill, 171 F.2d 404, Judge Hutcheson dissenting. Reargument was ordered before the full bench and, upon reconsideration, the original opinion was modified, 5 Cir., 174 F.2d 61, 63, Judge Hutcheson concurring in the result 'as in substantial accordance with the views the dissent expressed.' 5 Formerly 28 U.S.C. § 931. This section is now divided and, with immaterial changes, appears in 28 U.S.C. §§ 1346(b) and 2674, 28 U.S.C.A. §§ 1346(b), 2674. 6 See 28 U.S.C. § 2680, 28 U.S.C.A. § 2680. 7 This contention was also made in reargument of United States v. Hill, before the Court of Appeals for the Fifth Circuit, which took place after certiorari was granted by this Court. See note 4. 8 Petitioner's argument is, in effect, that R.S. § 3477 does not prevent the assignment of substantive rights against the United States but merely controls the method of procedure by which the assignee may recover. This position is in square conflict with Spofford v. Kirk, 97 U.S. 484, 24 L.Ed. 1032, and is not justified by anything said in Martin v. National Surety Co., 300 U.S. 588, 57 S.Ct. 531, 81 L.Ed. 822. Furthermore, it would require that the real party in interest provisions of the Federal Rules of Civil Procedure, rule 17(a), 28 U.S.C.A., be disregarded, despite the fact that they are made specifically applicable to suits under the Tort Claims Act, and that suits against the Government in which a subrogee owns the substantive right be conducted according to the old common-law procedures in effect prior to the promulgation of the Federal Rules. Petitioner admits as much by its reliance upon United States v. American Tobacco Co., 166 U.S. 468, 17 S.Ct. 619, 41 L.Ed. 1081. This is not to say that R.S. § 3477 was 'repealed' by the Federal Rules, but that a new interpretation of the statute which is incompatible with the Rules, as expressly incorporated in the Tort Claims Act, must be clearly justified. 9 10 Stat. 170. 10 Other sections of the Act made it unlawful for officers of the United States or Members of Congress to have any interest in claims against the Government or to act for claimants, penalized bribery or undue influencing of Members of Congress, and prohibited the destruction or withdrawal of public records. 11 See, e.g., St. Paul & Duluth R. Co. v. United States, 112 U.S. 733, 736, 5 S.Ct. 366, 367, 28 L.Ed. 861; Butler v. Goreley, 146 U.S. 303, 311, 13 S.Ct. 84, 87, 36 L.Ed. 981; Hager v. Swayne, 149 U.S. 242, 13 S.Ct. 841, 37 L.Ed. 719; Ball v. Halsell, 161 U.S. 72, 79, 16 S.Ct. 554, 555, 40 L.Ed. 622; Price v. Forrest, 173 U.S. 410, 421, 19 S.Ct. 434, 437, 43 L.Ed. 749; National Bank of Commerce v. Downie, 218 U.S. 345, 356, 31 S.Ct. 89, 92, 54 L.Ed. 1065, 20 Ann.Cas. 1116; Western Pacific R. Co. v. United States, 268 U.S. 271, 275, 45 S.Ct. 503, 504, 69 L.Ed. 951. 12 For example, transfers by will or intestacy, which are not within the prohibition of R.S. § 3477 under the cases, would obviously multiply the persons with whom the United States must deal and might very well embroil it in conflicting claims. 13 42 Stat. 1066, 31 U.S.C. § 215, 31 U.S.C.A. § 215. 14 Reported at 36 Ops.Atty.Gen. 553. See Holtzoff, Tort Claims Against the Federal Government, 9 Law & Contemp.Prob. 311, 318; The Federal Tort Claims Act, 42 Ill.L.Rev. 344, 349. 15 57 Stat. 66, 31 U.S.C. § 224d, 31 U.S.C.A. § 224d. 16 The House Committee Report states that 'Such a provision of law leaves undisturbed, as between the parties, the rights of the insured and of insurance companies and others who have become subrogated to the rights of the owners of the property or of the person who is injured or whose death results, but permits the Government to settle with a single claimant and without the necessity of inquiry into, or determination of, the relative rights of the parties.' H.R.Rep. No. 312, 78th Cong., 1st Sess., p. 2. 17 That members of the House Committee on Claims were aware of the problem of recovery by insurance carrier-subrogees at the time the Tort Claims Act was passed is demonstrated by that Committee's report, submitted less than two weeks prior to passage of the Act, on subrogation claims presented by insurance companies in connection with the crash of an army airplane into the Empire State Building. The War Department had recommended to Congress that Empire State, Inc., and other private claimants be paid their uninsured losses (which was done) but refused to recommend payment of insured losses. H.R. 6683 was introduced 'to appropriate the sum of $143,279.94 to 22 fire-insurance companies in full satisfaction of their subrogation claims against the United States. * * *' The Committee made specific reference to Attorney General Mitchell's opinion, noted that since that time the War Department had paid subrogation claims of less than $1,000 under the Military Claims Act, 31 U.S.C. § 223, 31 U.S.C.A. § 223, and disapproved that department's refusal to certify claims of over $1,000. To the assertion that Congress had consistently refused to recognize subrogation claims as barred by R.S. § 3477, the Committee report contains the flat denial: 'That statement is not in accordance with the fact' and cites a number of subrogation claims favorably acted upon by Congress. The bill was favorably reported, H.R.Rep.No. 2655, 79th Cong., 2d Sess., but nine days later the Tort Claims Act was passed, § 131 (60 Stat. 831) of which provided that no private bill should authorize payment of money for claims for which suit might be brought under that Act, extending retroactively to claims accruing after January 1, 1945. Since the claims involved had accrued subsequent to that date, the insurance company subrogees brought suit in a federal district court, where the Government once more interposed a defense based on R.S. § 3477, despite the Committee's specific approval of payment directly to the subrogees. The defense was rejected. Niagara Fire Ins. Co. v. United States, D.C., 76 F.Supp. 850. 18 Formerly 28 U.S.C. § 932. See note 8, supra. 19 They are clearly not 'indispensable' parties under the familiar test of Shields v. Barrow, 1854, 17 How. 130, 139, 15 L.Ed. 158, that such parties have 'an interest of such a nature that a final decree cannot be made without either affecting that interest, or leaving the controversy in such a condition that its final termination may be wholly inconsistent with equity and good conscience.' See Delaware County v. Diebold Safe & Lock Co., 1890, 133 U.S. 473, 488, 10 S.Ct. 399, 403, 33 L.Ed. 674; Hubbard v. Manhattan Trust Co., 2 Cir., 87 F. 51; Rogers v. Penobscot Mining Co., 8 Cir., 154 F. 606; 3 Moore, Federal Practice (2d ed.) p. 2178. 20 The counterclaim statute, 28 U.S.C. § 1346(c), 28 U.S.C.A. § 1346(c), confers jurisdiction on district courts over any 'counterclaim, or other claim or demand whatever on the part of the United States against any plaintiff commencing an action.' The offset statute, 31 U.S.C. §§ 71, 227, 31 U.S.C.A. §§ 71, 227, directs the deduction from judgments and allowed claims against the United States of debts as to which 'the plaintiff therein shall be indebted to the United States.' (Italics added.) We need not and do not consider what rights of counterclaim and set-off may lie in the United States in suits brought by insurer-subrogees. Cf. United States v. Munsey Trust Co., 1947, 332 U.S. 234, 67 S.Ct. 1599, 91 L.Ed. 2022; Defense Supplies Corp. v. United States Lines Co., 2 Cir., 148 F.2d 311.

78

338 U.S. 411 70 S.Ct. 195 94 L.Ed. 205 WILMETTE PARK DIST.v.CAMPBELL. No. 75. Argued Nov. 15, 16, 1949. Decided Dec. 12, 1949. Mr. Henry J. Brandt, Chicago, Ill., for petitioner. Mr. Lee A. Jackson, Washington, D.C., for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 Section 1700(a)(1) of the Internal Revenue Code, as amended, 26 U.S.C.A. § 1700(a)(1), provides for the imposition, except as to certain classes of persons under circumstances not important here, of 'A tax of 1 cent for each 10 cents or fraction thereof of the amount paid for admission to any place, including admission by season ticket or subscription.'1 Paragraph (2) of the subsection declares that the tax 'shall be paid by the person paying for such admission.' And § 1715 requires that 'Every person receiving any payments for admission * * * subject to the tax imposed by section 1700 * * * shall collect the amount thereof from the person making such payments.' 2 This suit, brought to recover penalties paid by petitioner for noncollection of federal admissions tax, presents two questions for determination: Whether § 1700(a) is applicable to paid admittances to a bathing beach operated without purpose of gain by a local park district of Illinois; and, if the Code provision is to be so interpreted, whether the imposition of admissions tax in connection with such state activity is within the constitutional power of Congress. 3 Petitioner is Wilmette Park District, a body politic and corporate located within the Village of Wilmette, Cook County, Illinois. Organized and administered pursuant to Illinois statutes, the District includes within its jurisdiction four park areas. The largest, Washington Park, extends for approximately three-fourths of a mile along Lake Michigan and was acquired partly by grant from the State of Illinois, partly by purchase, and partly by exercise of the power of eminent domain. At the north end of Washington Park, petitioner has operated a public bathing beach during the summer months for many years, under authority conferred by the Illinois Legislature. The beach has been used primarily by residents of the District, but also has been open to nonresidents. 4 Among the facilities which the District provided at the beach during the period under review were a bath house, automobile parking area, life-saving equipment, flood lighting, drinking fountains, showers, spectator benches, bicycle racks, first aid, and supplies. The operation and maintenance of the area and its various services were solely by the District, which employed the necessary personnel. 5 Petitioner charged all persons for admittance to the beach. Its charges were of two types: a daily fee of fifty cents on weekdays and one dollar on Saturdays, Sundays and holidays, for which no ticket was issued; and a flat rate for a season ticket which could be purchased on an individual or family basis. These charges were made to cover the expense of maintenance and operation of the beach and of some capital improvements. Over the years the charges were intended merely to approximate these costs and not to produce net income or profit to petitioner; during the period 1940—1944 the accounts of the beach, maintained on a cash receipts and disbursements basis, reflected an excess of receipts over expenditures of $42.11. 6 In July 1941 the Collector notified petitioner to collect a tax of 10 per cent on all tickets to the beach sold on or after July 25 of that year. Petitioner had not previously collected such taxes, and it refused to do so after the Collector's notice. Subsequently the Commissioner under § 1718 of the Code assessed over petitioner's protest penalties in the amount of the tax which the Commissioner claimed should have been collected under § 1700(a) from July 25, 1941 through 1945, plus interest and sums due under § 3655(b) of the Code for failure to pay the tax on demand. These penalties amounted to $6,139.93 and were paid out of petitioner's general funds raised by property taxes. 7 Petitioner filed timely claims for refund which were rejected, and in 1946 brought this suit against the Collector. The District Court entered judgment for petitioner. 76 F.Supp. 924.2 The Court of Appeals for the Seventh Circuit reversed. 172 F.2d 885. Because the questions presented have importance in the administration of the admissions tax sections of the Code, we granted certiorari. 337 U.S. 937, 69 S.Ct. 1517. 8 First. The Government raises no issue as to petitioner's standing to sue for refund. As recovery is here sought of penalties paid from petitioner's general revenue fund after its failure to collect the tax, we deem petitioner's financial interest clearly sufficient.3 9 Second. Section 1700(a) is applicable if the charge made by petitioner for admittance to the beach was, within the meaning of the statutory language, an 'amount paid for admission to any place.' 10 The words of the provision when taken in their ordinary and familiar meaning reflect a legislative purpose of comprehensive application. By its terms the section embraces every payment made in order to secure admittance to a specific location. And this purpose of broad application is not less certain because of anything in the legislative history of the initial adoption of that language.4 In this view it is unnecessary to consider whether petitioner's beach area can be distinguished from a 'spectator entertainment,' for we are unable to accept petitioner's argument that Congress intended in § 1700(a) to tax only admissions to such events.5 11 We think it clear that a beach area may be a 'place' in the sense of § 1700(a) (1). Petitioner's beach park, including the adjacent shoal waters, was policed and lighted; the land area was defined, and entrance was through gates. A payment was made by patrons of the beach as the condition of admittance to a specific area with definite physical limits. Thus the fee which petitioner charged was 'paid for admission' to a 'place' as those terms are used in § 1700(a)(1).6 12 We cannot agree with petitioner's suggestion that Congress intended to exempt from tax admissions to any activity not conducted for gain. Section 1701 of the Code did allow certain exemptions prior to their termination on October 1, 1941 pursuant to the Revenue Act of 1941, § 541(b), 55 Stat. 687, 710, 26 U.S.C.A. § 1701 note. In § 1701 Congress exempted admissions to certain classes of events and admissions all the proceeds of which inured exclusively to the benefit of designated classes of persons or organizations. But since Congress did not exempt all activities not for profit as it readily might have done, it appears that admissions to such activities are not for that reason outside the admissions tax scheme. Exmoor Country Club v. United States, 7 Cir., 1941, 119 F.2d 961. 13 Nor is there greater force in petitioner's contention that the admissions tax was not intended to apply in the case of activities conducted by a municipality. In interpreting federal revenue measures expressed in terms of general application, this Court has ordinarily found them operative in the case of state activities even though States were not expressly indicated as subjects of tax. See concurring opinion in State of New York v. United States, 1946, 326 U.S. 572, 584 and n. 3, 66 S.Ct. 310, 312, 315, 90 L.Ed. 326. And in Allen v. Regents of the University System of Georgia, 1938, 304 U.S. 439, 58 S.Ct. 980, 82 L.Ed. 1448, it was decided that the admissions tax law was applicable in connection with activities carried on by an agency of a State, although it does not appear that the issue of legislative purpose was there disputed. However, we are unable to discover that there has been any design to exempt admissions to municipally conducted activities.7 We regard the interpretative issue as controlled by a long continued administrative construction, expressly denying such exemption,8 which has been followed by repeated reenactment of the relevant language without change.9 Cf. Helvering v. Winmill, 1938, 305 U.S. 79, 59 S.Ct. 45, 83 L.Ed. 52. 14 Finally, § 1700(a)(1) is not rendered inapplicable because beach patrons make use of a beach and its facilities, thus affording characterization of the admission fee as a 'use charge.' Few if any admissions taxable under § 1700(a) are not accompanied by a use of the property or equipment to which the admittee's license extends. Although table accommodations for which a charge is made are usually thought of as objects of a patron's use, yet Congress in § 1704 of the Code has declared that for purposes of the admissions tax law a charge for their use must be treated as a charge for admission and not as a rental charge. A similar result must obtain when payment is prerequisite, as it was at petitioner's beach, to both admission to and use of a specific area. Chimney Rock Co. v. United States, 1927, 63 Ct.Cl. 660, certiorari denied 1927, 275 U.S. 552, 48 S.Ct. 115, 72 L.Ed. 421; Twin Falls Natatorium v. United States, D.C.S.D.Idaho 1927, 22 F.2d 308.10 15 The trial court, in allowing judgment for petitioner in view of the use made of the beach, considered the fee a 'use tax.' But if there is no tax exemption for admissions to a municipally conducted activity, then a municipality may not escape tax by claiming that its admission fee is a 'use tax' when a similar private business could not advance such claim. Nor does it matter that petitioner's authority to make any charge to beach patrons is derived from a statute which contemplates a charge for 'use.' Ill.Rev.Stat. c. 105, § 8—7d (1947). The application of the federal admissions tax statute is not controlled by the characterization of petitioner's fee by local law. Cf. Morgan v. Commissioner of Internal Revenue, 1940, 309 U.S. 78, 81, 626, 60 S.Ct. 424, 426, 84 L.Ed. 585. 16 We conclude that § 1700(a) is applicable. 17 Third. The constitutionality of admissions tax levied in connection with an activity of a state instrumentality was before this Court in Allen v. Regents of the University System of Georgia, 1938, 304 U.S. 439, 58 S.Ct. 980, 82 L.Ed. 1448. We there found no constitutional inhibition against a nondiscriminatory imposition of such tax on admissions to an athletic exhibition conducted in connection with a state educational administration and in the performance of a governmental function. 18 The Allen decision followed soon after Helvering v. Gerhardt, 1938, 304 U.S. 405, 58 S.Ct. 969, 82 L.Ed. 1427, which declared two principles limiting state immunity from federal taxation. Id., 304 U.S. at page 419, 58 S.Ct. at pages 974, 975. The first of these, invoked in the Allen decision, was dependent upon the nature of the function being performed by the state agency and excluded from immunity such activities as might be thought not essential for the preservation of state government. We need not consider here the applicability of that doctrine, for the petitioner's assertion of immunity must be rejected on the second restrictive principle reaffirmed in the Gerhardt decision. This 'principle, exemplified by those cases where the tax laid upon individuals affects the state only as the burden is passed on to it by the taxpayer, forbids recognition of the immunity when the burden on the state is so speculative and uncertain that if allowed it would restrict the federal taxing power without affording any corresponding tangible protection to the state government'. 304 U.S. at pages 419—420, 58 S.Ct. at page 975. According to this principle, the state 'is not necessarily protected from a tax which well may be substantially or entirely absorbed by private persons.' Id., 304 U.S. at page 420, 58 S.Ct. at page 975. 19 While the Allen decision assumed that the admissions tax there imposed was a direct burden on the State, that assumption was required only for the purpose of considering the first principle of limitation of immunity as formulated in the Gerhardt case. Such an assumption need not be made here. It is true, of course, that unless there is a shift in demand for admissions to petitioner's beach, imposition of the tax may to an undeterminable extent adversely affect the volume of admissions.11 Insofar as this occurs, the services of the District will be less widely available and its revenues from beach admissions will be reduced. But admissions tax, which is 'paid by the person paying for such admission,' is so imposed as to facilitate absorption by patrons of the beach rather than by the District, and we have no evidence that the District will be forced to absorb the tax in order to maintain the volume of its revenues and the availability of its benefits. Cf. Metcalf & Eddy v. Mitchell, 1926, 269 U.S. 514, 526, 46 S.Ct. 172, 175, 70 L.Ed. 384. 'The mere fact that the economic burden of such taxes may be passed on to a state government and thus increase to some extent, here wholly conjectural, the expense of its operation, infringes no constitutional immunity. Such burdens are but normal incidents of the organization within the same territory of two governments, each possessed of the taxing power.' Helvering v. Gerhardt, supra, 304 U.S. at page 422, 58 S.Ct. at page 976. 20 As it follows that there is no constitutional objection to the tax penalties assessed against petitioner, the decision of the Court of Appeals must be affirmed. 21 Affirmed. 22 Mr. Justice DOUGLAS and Mr. Justice MINTON took no part in the consideration or decision of this case. 1 A war tax rate of 1 cent for each 5 cents or major fraction thereof has been in effect since April 1, 1944, pursuant to Revenue Act of 1943, § 302(a), 58 Stat. 21, 61, Act Feb. 25, 1944, 26 U.S.C.A. § 1650. 2 The District Court allowed recovery only of payments made since January 1, 1945, when respondent took office as Collector. These payments were based on petitioner's operations after October 1, 1941, through 1945. Prior to January 1, 1945, petitioner paid $57.20 on the basis of operations from July 25, 1941, to October 1, 1941. 3 See 42 Ill.L.Rev. 818, 819—820 (1948). 4 The Report of the House Committee on Ways and Means relating to the War Revenue Act of 1917 'recommended that this tax be imposed upon all places to which admission is charged, such as motion-picture shows, theaters, circuses, entertainments, cabarets, ball games, athletic games, etc., but not upon admissions all the proceeds of which will go exclusively to the benefit of religious or charitable institutions or for agricultural purposes.' H.R.Rep.No.45, 65th Cong., 1st Sess. 8 (1917). See 55 Cong.Rec. 2148 (1917). 5 In the admissions tax provisions of the Code, words restricting the imposition of tax to certain classes of places appear only in subsections other than (a) of § 1700. Section 1700(b) imposes a tax of 11 per cent on the permanent use or lease of boxes or seats 'in an opera house or any place of amusement'; such tax is in lieu of that provided for under § 1700(a). Section 1700(c) imposes on the sale outside box offices, of tickets to 'theaters, operas, and other places of amusement' a tax of 11 per cent of the price in excess of the box office price; such tax is in addition to the tax imposed by § 1700(a). Section 1700(d) imposes a tax of 50 per cent on the amount of sales in excess of regular price by the management of 'any opera house, theater, or other place of amusement'. Section 1700(e) imposes a tax of 5 per cent on amounts paid for admission, refreshment, service, or merchandise, 'at any roof garden, cabaret, or other similar place furnishing a public performance for profit'; in such cases no tax may be imposed under § 1700(a). Compare Exmoor Country Club v. United States, 7 Cir., 1941, 119 F.2d 961; Twin Falls Natatorium v. United States, D.C.S.D.Idaho 1927, 22 F.2d 308; United States v. Koller, D.C.W.D.Wash. 1921, 287 F. 418. 6 Accord: Dashow v. Harrison, D.C.N.D.Ill.1946, 87 F.Supp. 553. 7 Although an exemption was allowed by § 1701 of the Internal Revenue Code prior to October 1, 1941, of 'admissions all the proceeds of which inure * * * exclusively to the benefit of * * * societies or organizations conducted for the sole purpose * * * of improving any city, town, village, or other municipality,' we need not determine whether the exemption was properly interpreted as inapplicable to activities conducted by a municipal corporation. See Treas.Reg. 43 (1928 Ed.) art. 22; id. (1932 Ed.) art. 22; id. (1940 Ed.) § 101.25. The provision became inapplicable prior to the period for which petitioner made payments which could be recovered against the present respondent. See note 2, supra. Petitioner has argued that the specific exemption benefiting municipal improvement societies was intended to afford them the same exemption which Congress thought applied to municipal corporations; thus, it is urged, repeal of the societies' exemption still would leave the exemption in the case of municipally conducted activities. If Congress assumed that any such municipal corporation exemption existed by implication, it seems likely that it did so because of constitutional considerations which we notice hereafter and not because of a belief or purpose that the tax was not applicable to activities conducted by any public agency. Thus Congress, in adopting 49 Stat. 1757, 1792, Act June 22, 1936 and 55 Stat. 303, 350, June 28, 1941, apparently assumed that an express exemption was necessary in order to withdraw admissions to National Parks from the tax statute. Cf. 55 Stat. 687, 710, Sept. 20, 1941, 16 U.S.C.A. § 407d note, terminating such exemptions of park admissions. 8 Treas.Reg. 43 (1919 Ed. Part 1) art. 42; id. (1921 Ed. Part 1) art 42; id. (1922 Ed. Part 1) art. 26; id. (1924 Ed. Part 1) art. 26; id. (1926 Ed. Part 1) art. 26; id. (1928 Ed.) art. 24; id. (1932 Ed.) art. 24; id. (1940 Ed.) § 101.27; id. (1941 Ed.) § 101.16. 9 Revenue Act of 1918, § 800, 40 Stat. 1057, 1120; Revenue Act of 1921, § 800, 42 Stat. 227, 289; Revenue Act of 1924, § 500, 43 Stat. 253, 320; Revenue Act of 1926, § 500, 44 Stat. 9, 91; Revenue Act of 1928, § 411, 45 Stat. 791, 863; Revenue Act of 1932, § 711, 47 Stat. 169, 271; Pub.Res.No.36, June 28, 1935, 49 Stat. 431; I.R.C. §§ 1700, 1701 (1939), 26 U.S.C.A. §§ 1700, 1701; Revenue Act of 1941, § 541, 55 Stat. 687, 710. 10 See Huguenot Yacht Club v. United States, D.C.S.D.N.Y.1940, 32 F.Supp. 387, 388; Lent, The Admissions Tax, 1 Nat.Tax J. 31, 35—36 (1948); 61 Harv.L.Rev. 894 (1948). 11 See Lent, note 10, supra, at 40—42.

1112

338 U.S. 396 70 S.Ct. 217 94 L.Ed. 195 UNITED STATESv.TORONTO, HAMILTON & BUFFALO NAVIGATION CO. No. 39. Argued Nov. 9, 1949. Decided Dec. 12, 1949. Reversed and remanded. Mr. Paul A. Sweeney, Washington, D.C., for petitioner. Mr. Gerald E. Dwyer, New York City, for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 We are faced again with elusive questions of property valuation in determining whether the United States awarded 'just compensation' under the Fifth Amendment when it took the respondent's car ferry, the Maitland No. 1, under the authority of § 902 of the Merchant Marine Act of 1936, as amended, 53 Stat. 1254, 1255, 46 U.S.C. § 1242, 46 U.S.C.A. § 1242. The Government requisitioned the vessel in 1942, and determined its fair value as $72,500. In 1943, respondent exercised its option to accept 75 per cent of the award, and in 1945 brought action in the Court of Claims to recover $711,753 as the additional amount necessary for just compensation. The Court, two judge dissenting, held that the fair value of the Maitland was $161,833.72, more than twice the Government's original determination. 81 F.Supp. 237, 112 Ct.Cl. 240. We brought the case here on certiorari, 336 U.S. 965, 69 S.Ct. 938, because it presents problems of difficulty and importance in the practical application of the general standard of just compensation. 2 The facts were found by the Court of Claims. They must be stated in some detail. 3 1. The Maitland No. 1 was a conventional, steel-hull, two-stacker, twin-screw ferry for railroad cars, built in 1916. Until 1932 she plied across Lake Erie between Ashtabula, Ohio, and Port Maitland, Canada. She was respondent's only ship on that route, and her principal cargo was coal for a steel company in Hamilton, Ontario. On the Canadian side, respondent's connecting rail line moved the coal to destination in Hamilton. But a more convenient route on Lake Ontario caused a sharp decline in respondent's traffic beginning in 1928. And when the 'new Welland Canal' between Lake Erie and Lake Ontario was opened in 1932, and larger ships carried the load directly to Hamilton, respondent abandoned the line. From 1932 to 1935 the Maitland was laid up at her dock in Ohio. 4 On November 29, 1935, respondent chartered the ship at an unspecified rate to a company ferrying freight across Lake Michigan, and thereafter, for the convenience of the parties, title was transferred to the Lake Michigan concern. The transfer recited a total consideration of $166,000 and included a 'recapture' clause. On December 15, 1937, this right was exercised and upon payment of $92,894.80 the Maitland was returned to Ashtabula where she lay until requisitioned in August, 1942. 5 2. Cost, book and scrap value, upkeep and earnings of Maitland.—The Maitland was built in 1916 at a cost of $362,800. Respondent, a wholly owned subsidiary of the New York Central and Canadian Pacific Railways, acquired her from respondent's own president in that year, paying $394,560. From 1917 to 1930, respondent spent $38,115.46 for 'additions and betterments to the vessel.' Repairs from 1922 to 1932 amounted to $20,329.11 per annum. Lay-up expenses from 1938 to 1942—there is no evidence for earlier years—averaged $2,700 per year, including repairs. It would have cost the Government some $35,000 to place the ship in operating condition in 1942. 6 Her insured valuation in 1942 was $100,000; her scrap value $13,500. We do not know the reproduction cost at that time. Book value, figured at original cost less depreciation at one per cent for each of the first three years and four per cent per annum for the remaining period was $75,509.51. The earnings varied during the years she was operated by respondent. The average annual net operating income through December 31, 1920, was $17,216.28; both 1921 and 1922 operations found a deficit, while for the next five years net profit was at its highest level, averaging $129,893.92 per annum. 1928 and 1929 were progressively bad years and the next two and one-half years showed losses, averaging $15,417.82 per year. In June 1932 the traffic was so poor that the vessel was docked and her operation never resumed. The Court of Claims found that the average annual net profit for the entire period of operation, ending in 1932, was $42,816.36, amounting to a return of 10.41 per cent per annum on the original investment. 7 3. Sales of other vessels of like class on Great Lakes.—After 1930, ships of the Maitland type were obsolete and not in demand as railroad car ferries on the Great Lakes. Construction of the 'outer belt' railroad around the Chicago yards and abolition of a rate differential made all-rail transportation, or movement on larger and more modern ferries, more practical for shippers. 8 But the Court found that in 1942 'there were a number of secondary uses for the vessel for which a demand did exist at that time' for use on the Great Lakes. Conversion to automobile ferry was relatively simple and economical; and the Court found that three sales of similar vessels had occurred from 1936 to 1940 for that use. The prices ranged from $25,000 to $65,000, but conversion and repair costs were greater because of the age and maintenance record of the vessels. 9 Two other vessels that were built from the same plans as the Maitland were sold for use on the Great Lakes in 1940 and 1942, for conversion as bulk carriers of pulpwood. Sale prices were $24,000 and $37,724.04, respectively. Neither of these vessels, however, was in the state of repair of the Maitland. One had been built in 1903, the other in 1910. 10 4. Sales of vessels of like class for car ferrying on Atlantic Coast.—While there was a finding that in '1942, there was a demand for a vessel such as the Maitland No. 1 for use as a car ferry between Florida and Cuba,' there was no finding that this 'demand' had reflected itself in the Great Lakes market. The Maitland was not equipped to operate in salt water and it would have cost 'not less than' $115,000 so to equip and move her to Florida, not including necessary strengthening for ocean service. There is no finding that respondent would have been able to sell the vessel had it been transported to Florida, nor that successful operation there was possible. 11 The Florida 'demand' seems to have been predicated upon five sales of four vessels between 1941 and 1945. Only one ship, the Grand Haven, was sold while on the Great Lakes, and that was not until after hostilities ended in the last war. She was smaller but faster than the Maitland, and brought a $50,000 price. She was floated down the Mississippi to the Gulf at 'considered expense.' We know neither this amount nor the amount needed for repairs. 12 The other four sales were of vessels very similar to the Maitland, built between 1914 and 1920; but, unlike the Grand Haven and the Maitland, these ferries were operating on the Atlantic coast and were originally constructed for ocean travel. The sale prices were $100,000 and $170,000 for one vessel, the Henry M. Flagler,1 and $332,500 each for the two others.2 The latter two required about $20,000 each for repairs. All three vessels were 'purchased' by the United States after requisition. 13 The Court of Claims (81 F.Supp. 244), finding that 'the property condemned' was 'unique, * * * peculiarly situated' and without relative comparison on the Great Lakes, concluded that the Maitland was worth more than 'the residual value of an obsolete car ferry', thus requiring resort to 'a consideration of the earnings * * *, in conjunction with the contemporaneous transactions in vessels of close similarity in determining a fair value.' It called 'the average mean residual value of an obsolete car ferry' $50,000; 'attributing this value to the Maitland', the capitalized value of an annual income comparable to that of the Maitland for the sixteen years ending in 1932 was the figure of $389,767.15, 'according to actuarial tables in evidence.' The court then deducted the percentage difference between the life expectancy of the vessel in fresh and salt water (20%), the cost of conversion to salt water and sailing it to Florida, and the necessary repairs. Under this formula, $161,833.72 was the fair value 'for its highest available and most profitable use for which it was adaptable at the time of its taking.' 14 Perhaps no warning has been more repeated than that the determination of value cannot be reduced to inexorable rules. Suffice to say that the balance between the public's need and the claimant's loss has been struck, in most cases, by awarding the claimant the monetary 'market value' of the property taken. See United States v. Miller, 1943, 317 U.S. 369, 374, 63 S.Ct. 276, 280, 87 L.Ed. 336, 147 A.L.R. 55. Usually that is a practical standard; usually that approaches the 'just' compensation demanded by the Fifth Amendment. 15 At times, however, peculiar circumstances may make it impossible to determine a 'market value.' There may have been, for example, so few sales of similar property that we cannot predict with any assurance that the prices paid would have been repeated in the sale we postulate of the property taken. We then say that there is 'no market' for the property in question. But that does not put out of hand the bearing which the scattered sales may have on what an ordinary purchaser would have paid for the claimant's property.3 We simply must be wary that we give these sparse sales less weight than we accord 'market' price, and take into consideration those special circumstances in other sales which would not have affected our hypothetical buyer. And it is here that other means of measuring value may have relevance—but only, of course, as bearing on what a prospective purchaser would have paid. 16 We agree with the Court of Claims that in this case there was no Great Lakes 'market' in the sense discussed above. We hardly think that five sales of dissimilar vessels require a finding that any one of the varying prices would have been repeated had the Maitland been offered for sale. And so we are in basic agreement with the court below that other measures of value may be relevant. 17 But there are few of these substitute standards which are in fact of assistance in assessing the value of the Maitland. Original cost is well termed the 'false standard of the past'4 where, as here, present market value in no way reflects that cost. So with reproduction cost, when no one would think of reproducing the property.5 And past earnings are significant only when they tend to reflect future returns.6 We see no relevance in the Maitland's earnings between 1916 and 1932 on the issue of capacity to earn after 1942, on the Great Lakes or elsewhere. On this record they are entirely too remote to bear on the vessel's value when taken. It follows that the Court of Claims' reliance upon earnings was error. 18 We have said that the absence of 'market' price does not, ipso facto, rid isolated contemporaneous sales of all relevance. None of the evidence upon which the findings below were based is before us, but it seems likely that the differences between the Maitland and ships sold on the Great Lakes between 1936 and 1942 may be calculated with some degree of accuracy. And the circumstances may indicate the relevance of the Maitland's insurance valuation. See Rule 3, Advisory Board on Just Compensation, 1943 A.M.C. 1443, 1444. But cf. Westmoreland Chemical & Color Co. v. Public Service Comm., 1928, 293 Pa. 326, 331, 142 A. 867, 869; Report of Proceedings of the Advisory Board, supra, pp. 152—153. 19 We have yet to consider the weight given to what the Court of Claims called Florida 'demand.' The question is whether Florida prices may be considered at all in determining value when the Maitland was taken on the Great Lakes. 20 Two cases in this Court, both involving the requisition of coal, have stated the rule that where 'private property is taken for public use, and there is a market price prevailing at the time and place of the taking, that price is just compensation.' United States v. New River Collieries, 1923, 262 U.S. 341, 344, 43 S.ct. 565, 567, 67 L.Ed. 1014; Davis v. Newton Coal Co., 1925, 267 U.S. 292, 301, 45 S.Ct. 305, 306, 69 L.Ed. 617. (Emphasis supplied.) We have held that in this case there was no 'market' on the Great Lakes; and so the quoted rule is in terms inapplicable. But neither can a Florida market be established on the evidence before us. And we have reminded the court below that it may consider individual sales for use on the Great Lakes for what bearing they may have upon the Maitland's value. 21 We take it that in the valuation of readily salable articles, price at the market nearest the taking is, at least in the ususal case, a practical rule of thumb, and one is most likely to place the claimant in the pecuniary position he occupied before the taking. Such considerations seem to underlie a similar result in the law of sales, and in the general law of damages. Thus, in Grand Tower Co. v. Phillips, 1874, 23 Wall. 471, 23 L.Ed. 71, the plaintiff had planned to sell the defendant's coal at the best available market on the Mississippi between Cairo and New Orleans. Yet the defendant's breach of contract to sell to plaintiff brought a 'more direct' measurement of damages: the nearest available market. See Harris v. Panama R. Co., 1874, 58 N.Y. 660; 3 Williston, Sales, §§ 599, 599e (Rev. ed. 1948), and cases cited. 22 But we do not think a similar rule practical or fair in the requisition of property which most owners would, if possible, sell without geographic restriction. We doubt, for example, that owners of ocean liners would, under ordinary circumstances, fail to negotiate beyond the port in which the vessels lay—whether or not ocean liners are 'goods' and subject to the law of sales.7 Were market conditions normal,8 we could hardly call an award 'just compensation' unless relevant foreign sales, in available markets, were considered. See Supplementary Rules 1 and 3, Advisory Board on Just Compensation, 1945 A.M.C. 1382, 1383; Glaspy v. Cabot, 1883, 135 Mass. 435. 23 The question is of course one of degree, and we do not mean to foreclose the consideration of each case upon its facts. Olson v. United States, 1934, 292 U.S. 246, 255, 54 S.Ct. 704, 708, 78 L.Ed. 1236, relied upon below, makes this clear. This Court there stated that the 'highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future is to be considered, not necessarily, as the measure of value, but to the full extent that the prospect of demand for such use affects the market value while the property is privately held.' Mr. Justice Holmes had earlier warned that the prospective use may be considered 'only so far as the public would have considered it'; the price was not to be 'what a tribunal at a later date may think a purchaser would have been wise to give'. City of New York v. Sage, 1915, 239 U.S. 57, 61, 36 S.Ct. 25, 26, 60 L.Ed. 143. 24 On the record before us, the Court of Claims was in error in according weight to Florida values. Whether the problem is one of more profitable use or simply of a more advantageous price in a distant port, the burden is on the claimant9 to show that it is likely that a prospective Florida buyer would have investigated the Great Lakes market and considered a ship like the Maitland while it was moored to its Ohio dock; or that the ordinary Great Lakes owner would have undergone the trouble and expense necessary to send his ship to Florida for a possible sale; or, finally, that either of these possibilities would have had an effect on price had the Maitland been sold on the Great Lakes. And the question is what the ordinary businessman in the trade would do, not what the owner claims he would do; a contrary rule would invite perjury, and would smack of the kind of special value which would not be considered by the ordinary purchaser. See Grand Tower Co. v. Phillips, supra. 25 A bare record reciting five sales, three to the United States, and but one on the Great Lakes for Florida use—and that after the war's end—does not meet the claimant's burden. But we leave the final question open for further consideration below. We do not mean to foreclose a finding, on substantial evidence not now before us, that there were probabilities of sale in Florida in 1942 sufficient to warrant consideration of demand there in fixing the value of the Maitland. We may add that the Court is clearly not bound to accept any geographic price range at full value. 26 This record, however, justifies neither of the valuation measures adopted below. The judgment is reversed and the cause remanded for further proceedings in the light of this opinion. 27 It is so ordered. 28 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 29 Mr. Justice FRANKFURTER, concurring. 30 Even though I join the Court's opinion in its general direction, the treacherous nature of the subject matter makes appropriate a separate statement of views. 31 Resort to the conventional formulas for ascertaining just compensation for the taking of property rarely bought and sold, and having therefore no recognized market value, does not yield fruitful results. The variables are too many to permit of anything except an informed judgment. Everything, therefore, turns on the process of judgment to the end that judgment be not based on standards too difficult of application or evidence too tenuous for solid inference. 32 It is this Court's duty to lay down standards for application by the lower courts. But since we are concerned with ascertainment of rather elusive values, those whose primary duty it is to make these estimates ought not to be cramped by rules that are too rigid and too artificial. If the questions presented to this Court in a particular case really turn, as they do here, on the relevance of data and the reasonableness of the inferences drawn from them in arriving at just compensation, the training and experience of the fact-finders become important. 33 If a jury is to make the valuation the area within which speculation may in the nature of things roam at large should be as narrowly confined as possible. See Kimball Laundry Co. v. United States, 338 U.S. 1, 20, 69 S.Ct. 1434, 1445. But when the valuer is a court and particularly the tribunal that consists of judges to whom may fairly be attributed the expertness that comes from frequent dealing with the more elusive problems of value, it seems desirable for this Court to allow such tribunal considerable freedom from hard and fast rules in determining what data are relevant and what significance may be drawn from them. Barring obviously wrong criteria, or findings baseless in proof, experience counsels empiricism in dealing with these problems. And empiricism suggests sailing as close to the record of a particular case as possible. Only thus shall we avoid abstract pronouncements bound to distort or to be distorted by the case-by-case adjudicatory process especially appropriate in problems of this nature. Either lip-service will be paid such formulas while decisions are rooted in considerations outside them, or formulas not fitting practical circumstances will achieve impractical results. 34 In the light of this general approach the cae before the Court comes down to this: 35 1. The starting point of the computation by the Court of Claims of the amount to be awarded for the Government's taking of the Maitland was capitalization of its earnings between 1916 and 1932. While we do not have the evidence that was before the court below, its findings disclose no reasonable relation between such earnings and the value of the vessel in 1942, the year of the taking, whether for use on the Great Lakes or in Florida waters. To permit such data to serve as a springboard for judgment is to leave too much temptation for unbridled speculation even by experienced judges. 36 2. In these days of quick mobility both for persons and property it would be an unjustifiably artificial rule to confine the worth of mobile property, as was the Maitland, to place value. Of course if there was an active market for property to be condemned at about the time and place of the taking, evidence of demand for special uses, or at other places, would not be helpful in seeking the general value of the property as against some unusual salability of the property, unusual either by reason of location or as a matter of use. Such evidence of atypical demand should be excluded not because it has no logical relevance but because such practical significance as it has is already reflected in current market prices. But here it was found that there was in fact no market on the Great Lakes for vessels like the Maitland, and, since what the United States got had to be translated into dollars and cents, there is no reason in sense and therefore none in law for excluding from consideration that there was a demand for vessels such as the Maitland for use as a car ferry between Florida and Cuba. 37 3. But such evidence must be critically used. It is one thing to exclude such evidence of demand at a distant place to which the property was transferable and quite another to assume that a finding that in 1942 there was such a demand is proof positive that the Maitland would have found a market in Florida and to base valuation on such assumption. Particularly is this true when the court below found that it would have cost at least $115,000 to transport the Maitland to Florida waters and to outfit it for salt-water use. The amount of this expenditure is more than the arithmetic measure of the difference in value between a vessel located in Florida and one on the Great Lakes. The risk to a profitable venture that the $115,000 expenditure implies casts doubt on the likelihood of the Maitland's use in the Florida trade. For the greater the risk the smaller the impact of the opportunities of the distant market. The short of the matter is that for its difficult task of valuing the Court of Claims should not be confined either to acceptance or rejection of the Florida demand in toto. Like most problems in the law it is a matter of degree. 38 4. This Court should not go beyond indicating the broad lines for adjudication by the Court of Claims, leaving to that court discretion appropriate to its experience in applying the indicated standards to the facts before it. The analysis we have outlined must be fitted to facts not now before us.1 I am not prepared therefore to specify as a matter of law what number of logically relevant sales do or do not meet the claimant's burden. After the Court of Claims has made additional findings in the light of this Court's decision it will be time enough to consider whether the data before it are too tenuous to permit solid inferences from them, as set forth in appropriate findings, regarding the weight which the Court of Claims may accord to the Florida demand. 1 The first sale was in May 1941 to a private party who had thereafter spent $63,820 for necessary repairs. The second sale was on requisition, July 28, 1941, by the War Shipping Administration. 2 These vessels, the Joseph R. Parrott and the Estrada Palma, were requisitioned by the War Shipping Administration in June, 1942. 3 Considerations which might affect our rulings in this case if the cause were tried to a jury need not concern us here. 4 E. Schmalenbach, Finanzierungen, pp. 4—6 (3d ed., Leipzig, 1922), quoted in 1 Bonbright, Valuation of Property 147, n. 9 (1937). 'It is the property and not the cost of it that is protected by the Fifth Amendment.' Brooks-Scanlon Corp. v. United States, 1924, 265 U.S. 106, 123, 44 S.Ct. 471, 474, 68 L.Ed. 934. But see Bonbright, supra, ch. VIII. 5 See 1 Report of Proceedings of the Advisory Board on Just Compensation 170 (United States Maritime Commission, War Shipping Administration, mimeographed, 1943). Cf. Standard Oil Co. of New Jersey v. Southern Pacific Co., 1925, 268 U.S. 146, 45 S.Ct. 465, 69 L.Ed. 890; The Hisko, 2 Cir., 1931, 54 F.2d 540. 6 See Orgel, Valuation Under Eminent Domain, ch. XIV (1936); 2 Nichols, Eminent Domain, § 446 (2d ed. 1917); The I. C. White, 4 Cir., 1924, 295 F. 593, 595, 596. As to the separation which must be made, in any case, between the value of the property and the value of the claimant's own business skill, see Kimball Laundry Co. v. United States, 1949, 338 U.S. 1, 69 S.Ct. 1434. 7 See Rivara v. James Stewart & Co., 1925, 241 N.Y. 259, 264, 149 N.E. 851, 852, per Cardozo, J.; Behnke v. Bede Shipping Co. (1927) 1 K.B. 649. Cf. Meering v. Duke, 6 L.J.(o.s.) 211 (K.B. 1828) (Stamp Act). 8 But see Report of Proceedings of the Advisory Board, note 5, supra, pp. 64—71. 9 United States ex rel. and for Use of T.V.A. v. Powelson, 1943, 319 U.S. 266, 273, 63 S.Ct. 1047, 1051, 87 L.Ed. 1390. 1 The evidence in this case could of course have been included in the record brought here under the Act of May 22, 1939, 53 Stat. 752, amending § 3(b) of the Act of February 13, 1925, 43 Stat. 936, 939. See also Rule 41 of this Court, 28 U.S.C.A.

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