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346 U.S. 464 74 S.Ct. 172 98 L.Ed. 195 NATIONAL LABOR RELATIONS BOARDv. LOCAL UNION NO. 1229, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS. No. 15. Argued Oct. 12, 1953. Decided Dec. 7, 1953. Mr. Dominic L. Manoli, Washington, D.C., for petitioner. Mr. Louis Sherman, Washington, D.C., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 The issue before us is whether the discharge of certain employees by their employer constituted an unfair labor practice, within the meaning of §§ 8(a)(1) and 7 of the Taft-Hartley Act,1 justifying their reinstatement by the National Labor Relations Board. For the reason that their discharge was 'for cause' within the meaning of § 10(c) of that Act,2 we sustain the Board in not requiring their reinstatement. 2 In 1949, the Jefferson Standard Broadcasting Company (here called the company) was a North Carolina corporation engaged in interstate commerce. Under a license from the Federal Communications Commission, it operated, at Charlotte, North Carolina, a 50,000-watt radio station, with call letters WBT. It broadcast 10 to 12 hours daily by radio and television. The television service, which it started July 14, 1949, representing an investment of about $500,000, was the only such service in the area. Less than 50% of the station's programs originated in Charlotte. The others were piped in over leased wires, generally from New York, California or Illinois from several different networks. Its annual gross revenue from broadcasting operations exceeded $100,000 but its television enterprise caused it a monthly loss of about $10,000 during the first four months of that operation, including the period here involved. Its rates for television advertising were geared to the number of receiving sets in the area. Local dealers had large inventories of such sets ready to meet anticipated demands. 3 The company employed 22 technicians. In December 1948, negotiations to settle the terms of their employment after January 31, 1949, were begun between representatives of the company and of the respondent Local Union No. 1229, International Brotherhood of Electrical Workers, American Federation of Labor (here called the union). The negotiations reached an impasse in January 1949, and the existing contract of employment expired January 31. The technicians, nevertheless, continued to work for the company and their collective-bargaining negotiations were resumed in July,3 only to break down again July 8. The main point of disagreement arose from the union's demand for the renewal of a provision that all discharges from employment be subject to arbitration and the company's counter-proposal that such arbitration be limited to the facts material to each discharge, leaving it to the company to determine whether those facts gave adequate cause for discharge. 4 July 9, 1949, the union began daily peaceful picketing of the company's station. Placards and handbills on the picket line charged the company with unfairness to its technicians and emphasized the company's refusal to renew the provision for arbitration of discharges. The placards and handbills named the union as the representative of the WBT technicians. The employees did not strike. They confined their respective tours of picketing to their off-duty hours and continued to draw full pay. There was no violence or threat of violence and no one has taken exception to any of the above conduct. 5 But on August 24, 1949, a new procedure made its appearance. Without warning, several of its technicians launched a vitriolic attack on the quality of the company's television broadcasts. Five thousand handbills were printed over the designation 'WBT Technicians.' These were distributed on the picket line, on the public square two or three blocks from the company's premises, in barber shops, restaurants and busses. Some were mailed to local businessmen. The handbills made no reference to the union, to a labor controversy or to collective bargaining. They read: 6 'Is Charlotte A Second-Class City? 7 'You might think so from the kind of Television programs being presented by the Jefferson Standard Broadcasting Co. over WBTV. Have you seen one of their television programs lately? Did you know that all the programs presented over WBTV are on film and may be from one day to five years old. There are no local programs presented by WBTV. You cannot receive the local baseball games, football games or other local events because WBTV does not have the proper equipment to make these pickups. Cities like New York, Boston, Philadelphia, Washington receive such programs nightly. Why doesn't the Jefferson Standard Broadcasting Company purchase the needed equipment to bring you the same type of programs enjoyed by other leading American cities? Could it be that they consider Charlotte a second-class community and only entitled to the pictures now being presented to them? 8 'WBT Technicians' 9 This attack continued until September 3, 1949, when the company discharged ten of its technicians, whom it charged with sponsoring or distributing these handbills. The company's letter discharging them tells its side of the story.4 10 September 4, the union's picketing resumed its original tenor and, September 13, the union filed with the Board a charge that the company, by discharging the above-mentioned ten technicians, had engaged in an unfair labor practice. The General Counsel for the Board filed a complaint based on those charges and, after hearing, a trial examiner made detailed findings and a recommendation that all of those discharged be reinstated with back pay.5 94 N.L.R.B. 1507, 1527. The Board found that one of the discharged men had neither sponsored nor distributed the 'Second-Class City' handbill and ordered his reinstatement with back pay. It then found that the other nine had sponsored or distributed the handbill and held that the company, by discharging them for such conduct, had not engaged in an unfair labor practice. The Board, accordingly, did not order their reinstatement. One member dissented. Id., at 1507 et seq. Under § 10(f) of the Taft-Hartley Act,6 the union petitioned the Court of Appeals for the District of Colubmia Circuit for a review of the Board's order and for such a modification of it as would reinstate all ten of the discharged technicians with back pay. That court remanded the cause to the Board for further consideration and for a finding as to the 'unlawfulness' of the conduct of the employees which had led to their discharge. 91 U.S.App.D.C. 333, 202 F.2d 186.7 We granted certiorari because of the importance of the case in the administration of the Taft-Hartley Act. 345 U.S. 947, 73 S.Ct. 865. 11 In its essence, the issue is simple. It is whether these employees, whose contracts of employment had expired, were discharged 'for cause.' They were discharged solely because, at a critical time in the initiation of the company's television service, they sponsored or distributed 5,000 handbills making a sharp, public, disparaging attack upon the quality of the company's product and its business policies, in a manner reasonably calculated to harm the company's reputation and reduce its income. The attack was made by them expressly as 'WBT Technicians.' It continued ten days without indication of abatement. The Board found that— 12 'It (the handbill) occasioned widespread comment in the community, and caused Respondent to apprehend a loss of advertising revenue due to dissatisfaction with its television broadcasting service. 13 'In short, the employees in this case deliberately undertook to alienate their employer's customers by impugning the technical quality of his product. As the Trial Examiner found, they did not misrepresent, at least wilfully, the facts they cited to support their disparaging report. And their ultimate purpose—to extract a concession from the employer with respect to the terms of their employment—was lawful. That purpose, however, was undisclosed; the employees purported to speak as experts, in the interest of consumers and the public at large. They did not indicate that they sought to secure any benefit for themselves, as employees, by casting discredit upon their employer.' 94 N.L.R.B., at 1511. 14 The company's letter shows that it interpreted the handbill as a demonstration of such detrimental disloyalty as to provide 'cause' for its refusal to continue in its employ the perpetrators of the attack. We agree. 15 Section 10(c) of the Taft-Hartley Act expressly provides that 'No order of the Board shall require the reinstatement of any individual as an employee who has been suspended or discharged, or the payment to him of any back pay, if such individual was suspended or discharged for cause.'8 There is no more elemental cause for discharge of an employee than disloyalty to his employer. It is equally elemental that the Taft-Hartley Act seeks to strengthen, rather than to weaken, that cooperation, continuity of service and cordial contractual relation between employer and employee that is born of loyalty to their common enterprise.9 16 Congress, while safeguarding, in § 7, the right of employees to engage in 'concerted activities for the purpose of collective bargaining or other mutual aid or protection,'10 did not weaken the underlying contractual bonds and loyalties of employer and employee. The conference report that led to the enactment of the law said: 17 '(T)he courts have firmly established the rule that under the existing provisions of section 7 of the National Labor Relations Act, employees are not given any right to engage in unlawful or other improper conduct. 18 '* * * Furthermore, in section 10(c) of the amended act, as proposed in the conference agreement, it is specifically provided that no order of the Board shall require the reinstatement of any individual or the payment to him of any back pay if such individual was suspended or discharged for cause, and this, of course, applies with equal force whether or not the acts constituting the cause for discharge were committed in connection with a concerted activity.' H.R.Rep.No. 510, 80th Cong., 1st Sess. 38—39. 19 This has been clear since the early days of the Wagner Act.11 In 1937, Chief Justice Hughes, writing for the Court, said: 20 'The act does not interfere with the normal exercise of the right of the employer to select its employees or to discharge them. The employer may not, under cover of that right, intimidate or coerce its employees with respect to their self-or-ganization and representation, and, on the other hand, the Board is not entitled to make its authority a pretext for interference with the right of discharge when that right is exercised for other reasons than such intimidation and coercion.' National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45—46, 57 S.Ct. 615, 628, 81 L.Ed. 893. See also, National Labor Relations Board v. Fansteel Metallurgical Corp., 306 U.S. 240, 252—258, 59 S.Ct. 490, 494—497, 83 L.Ed. 627; International Union, U.A.W., A.F. of L., Local 232 v. Wisconsin Employment Relations Board, 336 U.S. 245, 260—263, 69 S.Ct. 516, 524 526, 93 L.Ed. 651. 21 Many cases reaching their final disposition in the Courts of Appeals furnish examples emphasizing the importance of enforcing industrial plant discipline and of maintaining loyalty as well as the rights of concerted activities. The courts have refused to reinstate employees discharged for 'cause' consisting of insubordination, disobedience or disloyalty. In such cases, it often has been necessary to identify individual employees, somewhat comparable to the nine discharged in this case, and to recognize that their discharges were for causes which were separable from the concerted activities of others whose acts might come within the protection of § 7. It has been equally important to identify employees, comparable to the tenth man in the instant case, who participated in simultaneous concerted activities for the purpose of collective bargaining or other mutual aid or protection but who refrained from joining the others in separable acts of insubordination, disobedience or disloyalty. In the latter instances, this sometimes led to a further inquiry to determine whether their concerted activities were carried on in such a manner as to come within the protection of § 7. See, e.g., Hoover Co. v. National Labor Relations Board, 6 Cir., 191 F.2d 380; Maryland Drydock Co. v. National Labor Relations Board, 4 Cir., 183 F.2d 538; Albrecht v. National Labor Relations Board, 7 Cir., 181 F.2d 652; National Labor Relations Board v. Kelco Corp., 4 Cir., 178 F.2d 578; Joanna Cotton Mills Co. v. National Labor Relations Board, 4 Cir., 176 F.2d 749; National Labor Relations Board v. Reynolds Pen Co., 7 Cir., 162 F.2d 679, 680; Home Beneficial Life Ins. Co. v. National Labor Relations Board, 4 Cir., 159 F.2d 280; National Labor Relations Board v. Montgomery Ward & Co., 8 Cir., 157 F.2d 486; National Labor Relations Board v. Draper Corp., 4 Cir., 145 F.2d 199, 156 A.L.R. 989; National Labor Relations Board v. Aintree Corp., 7 Cir., 135 F.2d 395; United Biscuit Co. v. National Labor Relations Board, 7 Cir., 128 F.2d 771; National Labor Relations Board v. Condenser Corp., 3 Cir., 128 F.2d 67; Hazel-Atlas Glass Co. v. National Labor Relations Board, 4 Cir., 127 F.2d 109; Conn, Ltd., v. National Labor Relations Board, 7 Cir., 108 F.2d 390 22 The above cases illustrate the responsibility that falls upon the Board to find the facts material to such decisions. The legal principle that insubordination, disobedience or disloyalty is adequate cause for discharge is plain enough. The difficulty arises in determining whether, in fact, the discharges are made because of such a separable cause or because of some other concerted activities engaged in for the purpose of collective bargaining or other mutual aid or protection which may not be adequate cause for discharge. Cf. National Labor Relations Board v. Peter Cailler Kohler Swiss Chocolates Co., 2 Cir., 130 F.2d 503. 23 In the instant case the Board found that the company's discharge of the nine offenders resulted from their sponsoring and distributing the 'Second-Class City' handbills of August 24—September 3, issued in their name as the 'WBT Technicians.' Assuming that there had been no pending labor controversy, the conduct of the 'WBT Technicians' from August 24 through September 3 unquestionably would have provided adequate cause for their disciplinary discharge within the meaning of § 10(c). Their attack related itself to no labor practice of the company. It made no reference to wages, hours or working conditions. The policies attacked were those of finance and public relations for which management, not technicians, must be responsible. The attack asked for no public sympathy or support. It was a continuing attack, initiated while off duty, upon the very interests which the attackers were being paid to conserve and develop. Nothing could be further from the purpose of the Act than to require an employer to finance such activities. Nothing would contribute less to the Act's declared purpose of promoting industrial peace and stability.12 24 The fortuity of the coexistence of a labor dispute affords these technicians no substantial defense. While they were also union men and leaders in the labor controversy, they took pains to separate those categories. In contrast to their claims on the picket line as to the labor controversy, their handbill of August 24 omitted all reference to it. The handbill diverted attention from the labor controversy. It attacked public policies of the company which had no discernible relation to that controversy. The only connection between the handbill and the labor controversy was an ultimate and undisclosed purpose or motive on the part of some of the sponsors that, by the hoped-for financial pressure, the attack might extract from the company some future concession. A disclosure of that motive might have lost more public support for the employees than it would have gained, for it would have given the handbill more the character of coercion than of collective bargaining. Referring to the attack, the Board said 'In our judgment, these tactics, in the circumstances of this case, were hardly less 'indefensible' than acts of physical sabotage.' 94 N.L.R.B., at 1511. In any event, the findings of the Board effectively separate the attack from the labor controversy and treat it solely as one made by the company's technical experts upon the quality of the company's product. As such, it was as adequate a cause for the discharge of its sponsors as if the labor controversy had not been pending. The technicians, themselves, so handled their attack as thus to bring their discharge under § 10(c). 25 The Board stated 'We * * * do not decide whether the disparagement of product involved here would have justified the employer in discharging the employees responsible for it, had it been uttered in the context of a conventional appeal for support of the union in the labor dispute.' Id., at 1512, n. 18. This underscored the Board's factual conclusion that the attack of August 24 was not part of an appeal for support in the pending dispute. It was a concerted separable attack purporting to be made in the interest of the public rather than in that of the employees. 26 We find no occasion to remand this cause to the Board for further specificity of findings. Even if the attack were to be treated, as the Board has not treated it, as a concerted activity wholly or partly within the scope of those mentioned in § 7, the means used by the technicians in conducting the attack have deprived the attackers of the protection of that section, when read in the light and context of the purpose of the Act.13 27 Accordingly, the order of the Court of Appeals remanding the cause to the National Labor Relations Board is set aside, and the cause is remanded to the Court of Appeals with instructions to dismiss respondent's petition to modify the order of the Board. It is so ordered. 28 Order set aside and cause remanded with instructions. 29 Mr. Justice FRANKFURTER, whom Mr. Justice BLACK and Mr. Justice DOUGLAS join, dissenting. 30 The issue before us is not whether this Court would have sustained the Board's order in this case had we been charged by Congress, as we could not have been, 'with the normal and primary responsibility for granting or denying enforcement of Labor Board orders.' National Labor Relations Board v. Pittsburgh S.S. Co., 340 U.S. 498, 502, 71 S.Ct. 453, 456, 95 L.Ed. 479. The issue is whether we should reverse the Court of Appeals, which is so charged, because that court withheld immediate decision on the Board's order and asked the Board for further light. That court found that the Board employed an improper standard as the basis for its decision. The Board judged the conduct in controversy by finding it 'indefensible.' The Court of Appeals held that by 'giving 'indefensible' a vague content different from 'unlawful,' the Board misconceived the scope of the established rule.' 91 U.S.App.D.C. 333, 202 F.2d 186, 188. Within 'unlawful' that court included activities which 'contravene * * * basis policies of the Act'. The Court of Appeals remanded the case for the Board's judgment whether the conduct of the employees was protected by § 7 under what it deemed 'the established rule.' 31 On this central issue—whether the Court of Appeals rightly or wrongly found that the Board applied an improper criterion—this Court is silent. It does not support the Board in using 'indefensible' as the legal litmus nor does it reject the Court of Appeals' rejection of that test. This Court presumably does not disagree with the assumption of the Court of Appeals that conduct may be 'indefensible' in the colloquial meaning of that loose adjective, and yet be within the protection of § 7. 32 Instead, the Court, relying on § 10(c) which permits discharges 'for cause,' points to the 'disloyalty' of the employees and finds sufficient 'cause' regardless of whether the handbill was a 'concerted activity' within § 7. Section 10(c) does not speak of discharge 'for disloyalty.' If Congress had so written that section, it would have overturned much of the law that had been developed by the Board and the courts in the twelve years preceding the Taft-Hartley Act. The legislative history makes clear that Congress had no such purpose but was rather expressing approval of the construction of 'concerted activities' adopted by the Board and the courts.1 Many of the legally recognized tactics and weapons of labor would readily be condemned for 'disloyalty' were they employed between man and man in friendly personal relations. In this connection it is significant that the ground now taken by the Court, insofar as it is derived from the provision of § 10(c) relating to discharge 'for cause,' was not invoked by the Board in justification of its order. 33 To suggest that all actions which in the absence of a labor controversy might be 'cause'—or, to use the words commonly found in labor agreements, 'just cause'—for discharge should be unprotected, even when such actions were undertaken as 'concerted activities for the purpose of collective bargaining', is to misconstrue legislation designed to put labor on a fair footing with management. Furthermore, it would disregard the rough and tumble of strikes, in the course of which loose and even reckless language is properly discounted. 34 'Concerted activities' by employees and dismissal 'for cause' by employers are not dissociated legal criteria under the Act. They are like the two halves of a pair of shears. Of course, as the Conference Report on the Taft-Hartley Act said, men on strike may be guilty of conduct 'in connection with a concerted activity' which properly constitutes 'cause' for dismissal and bars reinstatement.2 But § 10(c) does not obviate the necessity for a determination whether the distribution of the handbill here was a legitimate tool in a labor dispute or was so 'improper,' as the Conference Report put it, as to be denied the protection of § 7 and to constitute a discharge 'for cause.' It is for the Board, in the first instance, to make these evaluations, and a court of appeals does not travel beyond its proper bounds in asking the Board for greater explicitness in light of the correct legal standards for judgment. 35 The Board and the courts of appeals will hardly find guidance for future cases from this Court's reversal of the Court of Appeals, beyond that which the specific facts of this case may afford. More than that, to float such imprecise notions as 'discipline' and 'loyalty' in the context of labor controversies, as the basis of the right to discharge, is to open the door wide to individual judgment by Board members and judges. One may anticipate that the Court's opinion will needlessly stimulate litigation. 36 Section 7 of course only protects 'concerted activities' in the course of promoting legitimate interests of labor. But to treat the offensive handbills here as though they were circulated by the technicians as interloping outsiders to the sustained dispute between them and their employer is a very unreal way of looking at the circumstances of a labor controversy. Certainly there is nothing in the language of the Act or in the legislative history to indicate that only conventional placards and handbills, headed by a trite phrase such as 'Unfair To Labor,' are protected. In any event, on a remand the Board could properly be asked to leave no doubt whether the technicians, in distributing the handbills, were, so far as the public could tell, on a frolic of their own or whether this tactic, however unorthodox, was no more unlawful than other union behavior previously found to be entitled to protection. 37 It follows that the Court of Appeals should not be reversed. 1 'Sec. 7. Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 8(a)(3). 'Sec. 8. (a) It shall be an unfair labor practice for an employer— '(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7 * * *.' National Labor Relations Act, as amended by the Labor Management Relations Act, 1947, 61 Stat. 140, 29 U.S.C.(Supp. V) §§ 157, 158(a)(1), 29 U.S.C.A. §§ 157, 158(a)(1). 2 'Sec. 10. * * * '(c) * * * If upon the preponderance of the testimony taken the Board shall be of the opinion that any person named in the complaint has engaged in or is engaging in any such unfair labor practice, then the Board shall state its findings of fact and shall issue and cause to be served on such person an order requiring such person to cease and desist from such unfair labor practice, and to take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of this Act: Provided, That where an order directs reinstatement of an employee, back pay may be required of the employer or labor organization, as the case may be, responsible for the discrimination suffered by him: * * *. If upon the preponderance of the testimony taken the Board shall not be of the opinion that the person named in the complaint has engaged in or is engaging in any such unfair labor practice, then the Board shall state its findings of fact and shall issue an order dismissing the said complaint. No order of the Board shall require the reinstatement of any individual as an employee who has been suspended or discharged, or the payment to him of any back pay, if such individual was suspended or discharged for cause. * * *' (Emphasis supplied in last sentence.) 61 Stat. 146, 147, 29 U.S.C. (Supp. V) § 160(c), 29 U.S.C.A. § 160(c). 3 Pursuant to proceedings begun in October 1948, and to an election in May 1949, under the supervision of the Board, the union (by a vote of 12 to 2 of the 14 technicians participating) was chosen as the exclusive collective-bargaining representative of the company's technicians. May 9, 1949, the union was so certified by the Board. 94 N.L.R.B. 1507, 1529. 4 'Dear Mr. * * *, 'When you and some of our other technicians commenced early in July to picket against this Company, we felt that your action was very ill-considered. We were paying you a salary of * * * per week, to say nothing of other benefits which you receive as an employee of our Company, such as time-and-a-half pay for all work beyond eight hours in any one day, three weeks vacation each year with full pay, unlimited sick leave with full pay, liberal life insurance and hospitalization, for you and your family, and retirement and pension benefits unexcelled anywhere. Yet when we were unable to agree upon the terms of a contract with your Union, you began to denounce us publicly as 'unfair.' 'And ever since early July while you have been walking up and down the street with placards and literature attacking us, you have continued to hold your job and receive your pay and all the other benefits referred to above. 'Even when you began to put out propaganda which contained many untruths about our Company and great deal of personal abuse and slander, we still continued to treat you exactly as before. For it has been our understanding that under our labor laws, you have a very great latitude in trying to make the public believe that your employer is unfair to you. 'Now, however, you have turned from trying to persuade the public that we are unfair to you and are trying to persuade the public that we give inferior service to them. While we are struggling to expand into and develop a new field, and incidentally losing large sums of money in the process, you are busy trying to turn customers and thepublic against us in every possible way, even handing out leaflets on the public streets advertising that our operations are 'second-class,' and endeavoring in various ways to hamper and totally destroy our business. Certainly we are not required by law or common sense to keep you in our employment and pay you a substantial salary while you thus do your best to tear down and bankrupt our business. 'You are hereby discharged from our employment. Although there is nothing requiring us to do so, and the circumstances certainly do not call for our doing so, we are enclosing a check payable to your order for two weeks' advance or severance pay. 'Very truly yours, 'Jefferson Standard Broadcasting Company 'By: Charles H. Crutchfield 'Vice President 'Enclosure' 5 Allegations based on the same facts and charging violations of § 8(a)(3) and (5) of the Taft-Hartley Act do not require discussion here. 6 61 Stat. 148—149, 29 U.S.C. (Supp. V) § 160(f), 29 U.S.C.A. § 160(f). 7 The Court of Appeals said: 'Protection under § 7 of the Act * * * is withdrawn only from those concerted activities which contravene either (a) specific provisions or basic policies of the Act or of related federal statutes, or (b) specific rules of other federal or local law that is not incompatible with the Board's governing statute. * * * 'We think the Board failed to make the finding essential to its conclusion that the concerted activity was unprotected. Sound practice in judicial review of administrative orders precludes this court from determining 'unlawfulness' without a prior consideration and finding by the Board.' 91 U.S.App.D.C., at pages 335, 336, 202 F.2d at pages 188, 189. 8 See note 2, supra. 9 The Act's declaration of the policy says: 'Section 1. * * * '(b) Industrial strife which interferes with the normal flow of commerce and with the full production of articles and commodities for commerce, can be avoided or substantially minimized if employers, employees, and labor organizations each recognize under law one another's legitimate rights in their relations with each other, and above all recognize under law that neither party has any right in its relations with any other to engage in acts or practices which jeopardize the public health, safety, or interest. 'It is the purpose and policy of this Act, in order to promote the full flow of commerce, to prescribe the legitimate rights of both employees and employees in their relations affecting commerce, to provide orderly and peaceful procedures for preventing the interference by either with the legitimate rights of the other, to protect the rights of individual employees in their relations with labor organizations whose activities affect commerce, to define and proscribe practices on the part of labor and management which affect commerce and are inimical to the general welfare, and to protect the rights of the public in connection with labor disputes affecting commerce.' 61 Stat. 136, 29 U.S.C. (Supp. V) § 141(b), 29 U.S.C.A. § 141(b). 10 See note 1, supra. 11 National Labor Relations Act of July 5, 1935, 49 Stat. 449, 29 U.S.C. § 151 et seq., 29 U.S.C.A. § 151 et seq. 12 '* * * An employee can not work and strike at the same time. He can not continue in his employment and openly or secretly refuse to do his work. He can not collect wages for his employment, and, at the same time, engage in activities to injure or destroy his employer's business.' Hoover Co. v. National Labor Relations Board, 6 Cir., 191 F.2d 380, 389, and see National Labor Relations Board v. Montgomery Ward & Co., 8 Cir., 157 F.2d 486, 496; United Biscuit Co. of America v. National Labor Relations Board, 7 Cir., 128 F.2d 771. 13 See National Labor Relations Board v. Rockaway News Supply Co., 345 U.S. 71, 73 S.Ct. 519, 31 A.L.R.2d 511 (discharge, for violation of an obligation to make deliveries, even though crossing a picket line, sustained); International Union, U.A.W., A.F. of L., Local 232 v. Wisconsin Employment Relations Board, 336 U.S. 245, 255—263, 69 S.Ct. 516, 522—526, 93 L.Ed. 651 (arbitrary unannounced interruptions of work, not protected by § 7); Southern S.S. Co. v. National Labor Relations Board, 316 U.S. 31, 62 S.Ct. 886, 86 L.Ed. 1246 (discharge of seamen, for disobedience on shipboard while away from home port, sustained); Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 62 S.Ct. 820, 86 L.Ed. 1154 (mass picketing, unprotected); Hotel and Restaurant Employees' International Alliance, Local No. 122 v. Wisconsin Employment Relations Board, 315 U.S. 437, 62 S.Ct. 706, 86 L.Ed. 946 (violence, while picketing, unprotected); National Labor Relations Board v. Sands Manufacturing Co., 306 U.S. 332, 59 S.Ct. 508, 83 L.Ed. 682 (discharge, for repudiation of employee's agreement, sustained); National Labor Relations Board v. Fansteel Metallurgical Corp., 306 U.S. 240, 59 S.Ct. 490, 83 L.Ed. 627 (discharge, for tortious conduct, violence or sit-down strike, sustained); and see Associated Press v. National Labor Relations Board, 301 U.S. 103, 132, 57 S.Ct. 650, 655, 81 L.Ed. 953; National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45—46, 57 S.Ct. 615, 628, 81 L.Ed. 893. See also, Cox, The Right to Engage in Concerted Activities, 26 Ind.L.J. 319 (1951); Recent Cases, 66 Harv.L.Rev. 1321 (1953). 1 H.R.Rep.No.245, 80th Cong., 1st Sess. 27—28; H.R.Rep.No.510, 80th Cong., 1st Sess. 38—39. 2 H.R.Rep.No.510, 80th Cong., 1st Sess. 39.

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346 U.S. 482 74 S.Ct. 214 98 L.Ed. 215 HOWELL CHEVROLET CO.v.NATIONAL LABOR RELATIONS BOARD. No. 34. Argued Nov. 12, 1953. Decided Dec. 14, 1953. Mr. Erwin Lerten, Los Angeles, Cal., for petitioner. Mr. Marvin E. Frankel, Washington, D.C., for respondent. Opinion of the Court by Mr. Justice BLACK, announced by Mr. Justice REED. 1 The petitioner Howell Chevrolet Company retails Chevrolet automobiles and parts in Glendale, California. After hearings, the National Labor Relations Board found Howell guilty of unfair labor practices in refusing to bargain with its employees and intimidating them in various ways in violation of the National Labor Relations Act as amended.1 An appropriate order was issued. 95 N.L.R.B. 410. The Court of Appeals for the Ninth Circuit enforced the Board's order, 204 F.2d 79, rejecting the contention that the Act could not be applied to Howell. On similar facts the Sixth Circuit held that the Labor Board had no jurisdiction over a local Ford automobile dealer. National Labor Relations Board v. Bill Daniels, Inc., 202 F.2d 579. We granted certiorari to consider the single question presented by petitioner—whether the Act is applicable to retail automobile dealers like Howell. 345 U.S. 955, 73 S.Ct. 940. 2 Sections 10(a) and 2(7) of the Labor Act empower the Board to prevent 'any person' from adversely 'affecting commerce' by unfair labor practices 'tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce.' The Board found that Howell's unfair labor practices tended to do this. Among others, the following facts underlie that finding: 3 Howell bought its new Chevrolets from a General Motors assembly plant located in California and its spare parts and accessories were delivered to it from General Motors warehouses in California. Forty-three percent of all this merchandise was manufactured in other states and shipped into California for assembly or distribution. During 1949 Howell's purchases from General Motors exceeded $1,000,000. 4 Howell's local retail establishment was closely supervised by General Motors. Sweeping control of the business was reserved by General Motors in a 'Direct Dealer Selling Agreement.' Howell had to sign this agreement to get his 'non-exclusive privilege of selling new Chevrolet motor vehicles and chassis' and 'parts and accessories.' The agreement required Howell to make varied and detailed reports about his business affairs, to devote full time to Chevrolet sales, to keep his sales facilities at a location and conduct the business in a manner that satisfied General Motors, to permit General Motors to inspect Howell's books, accounts, facilities, stocks and accessories and to keep such uniform accounting system as General Motors might prescribe. Many other terms of the agency agreement also emphasized the interdependence of Howell's local and General Motors' national activities. 5 All this evidence caused the Board to conclude that Howell was 'an integral part' of General Motors' national system of distribution. Under these circumstances the Board was justified in finding that Howell's repeated unfair labor practices tended to lead to disputes burdening or obstructing commerce among the states. It follows that the Board had jurisdiction to act under the facts it found. 6 Affirmed. 7 Mr. Justice DOUGLAS dissents. 1 61 Stat. 136, 29 U.S.C.(Supp. V) § 151 et seq., 29 U.S.C.A. § 151 et seq.

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346 U.S. 485 74 S.Ct. 161 98 L.Ed. 228 GARNER et al.v.TEAMSTERS, CHAUFFEURS AND HELPERS LOCAL UNION NO. 776 (A.F.L.), et al. No. 56. Argued Oct. 20, 21, 1953. Decided Dec. 14, 1953. Mr. James H. Booser, Harrisburg, Pa., for petitioners. Mr. Sidney G. Handler, Harrisburg, Pa., for respondents. Mr. Justice JACKSON delivered the opinion of the Court. 1 A decision of the Supreme Court of Pennsylvania has deprived petitioners of as injunction which a lower equity court of the State had granted to prohibit certain picketing by respondent labor union.1 The court below reviewed the national Labor Management Relations Act, 29 U.S.C.A. § 141 et seq., and our applicable decisions, and concluded: 'In our opinion such provisions for a comprehensive remedy precluded any State action by way of a different or additional remedy for the correction of the identical grievance.' The correctness of this ruling is the sole issue here. We granted certiorari.2 2 Petitioners were engaged in the trucking business and had twenty-four employees, four of whom were members of respondent union. The trucking operations formed a link to an interstate railroad. No controversy, labor dispute or strike was in progress, and at no time had petitioners objected to their employees joining the union. Respondents, however, placed rotating pickets, two at a time, at petitioners' loading platform. None were employees of petitioners. They carried signs reading 'Local 776 Teamsters Union (A.F. of L.) wants Employees of Central Storage & Transfer Co. to join them to gain union wages, hours and working conditions.' Picketing was orderly and paceful, but drivers for other carriers refused to cross this picket line and, as most of petitioners' interchange of freight was with unionized concerns, their business fell of as much as 95%. The courts below found that respondents' purpose in picketing was to coerce petitioners into compelling or influencing their employees to join the union. 3 The equity court held that respondents' conduct violated the Pennsylvania Labor Relations Act.3 The Supreme Court of the Commonwealth held, quite correctly, we think, that petitioners' grievance fell within the jurisdiction of the National Labor Relations Board to prevent unfair labor practices. It therefore inferred that state remedies were precluded. The dissenting judge thought the federal remedy inadequate, as a practical matter, because the slow administrative processes of the National Labor Relations Board could not prevent imminent and irreparable damage to petitioners. Since our decisions have not specifically denied the power of state courts to enjoin such injury, he thought the injunction should be sustained. 4 The national Labor Management Relations Act, as we have before pointed out,4 leaves much to the states, though Congress has refrained from telling us how much. We must spell out from conflicting indications of congressional will the area in which state action is still permissible. 5 This is not an instance of injurious conduct which the National Labor Relations Board is without express power to prevent and which therefore either is 'governable by the state or it is entirely ungoverned.' In such cases we have declined to find an implied exclusion of state powers. International Union, U.A.W., A.F. of L., Local 232 v. Wisconsin Employment Relations Board, 336 U.S. 245, 254, 69 S.Ct. 516, 521, 93 L.Ed. 651. Nor is this a case of mass picketing, threatening of employees, obstructing streets and highways, or picketing homes. We have held that the state still may exercise 'its historic powers over such traditionally local matters as public safety and order and the use of streets and highways.' Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 749, 62 S.Ct. 820, 825, 86 L.Ed. 1154. Nothing suggests that the activity enjoined threatened a probable breach of the state's peace or would call for extraordinary police measures by state or city authority. Nor is there any suggestion that respondents' plea of federal jurisdiction and pre-emption was frivolous and dilatory, or that the federal Board would decline to exercise its powers once its jurisdiction was invoked. 6 Congress has taken in hand this particular type of controversy where it affects interstate commerce. In language almost identical to parts of the Pennsylvania statute, it has forbidden labor unions to exert certain types of coercion on employees through the medium of the employer.5 It is not necessary or appropriate for us to surmise how the National Labor Relations Board might have decided this controversy had petitioners presented it to that body. The power and duty of primary decision lies with the Board, not with us. But it is clear that the Board ws vested with power to entertain petitioners' grievance, to issue its own complaint against respondents and, pending final hearing, to seek from the United States District Court an injunction to prevent irreparable injury to petitioners while their case was being considered.6 The question then is whether the State, through its courts, may adjudge the same controversy and extend its own form of relief. 7 Congress did not merely lay down a substantive rule of law to be enforced by any tribunal competent to apply law generally to the parties. It went on to confide primary interpretation and application of its rules to a specific and specially constituted tribunal and prescribed a particular procedure for investigation, complaint and notice, and hearing and decision, including judicial relief pending a final administrative order. Congress evidently considered that centralized administration of specially designed procedures was necessary to obtain uniform application of its substantive rules and to avoid these diversities and conflicts likely to result from a variety of local procedures and attitudes toward labor controversies. Indeed, Pennsylvania passed a statute the same year as its labor relations Act reciting abuses of the injunction in labor litigations attributable more to procedure and usage than to substantive rules.7 Amultiplicity of tribunals and a diversity of procedures are quite as apt to produce incompatible or conflicting adjudications as are different rules of substantive law. The same reasoning which prohibits federal courts from intervening in such cases, except by way of review or on application of the federal Board, precludes state courts from doing so. Cf. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638; Amalgamated Utility Workers v. Consolidated Edison Co. of New York, 309 U.S. 261, 60 S.Ct. 561, 84 L.Ed. 738. And the reasons for excluding state administrative bodies from assuming control of matters expressly placed within the competence of the federal Board also exclude state courts from like action. Cf. Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234. 8 This case would warrant little further discussion except for a persuasively presented argument that the National Labor Relations Board enforces only a public right on behalf of the public interest, while state equity powers are invoked by a private party to protect a private right. The public right, it is said, is so distinct and dissimilar from the private right that federal occupancy of one field does not debar a state from continuing to exercise its conventional equity powers over the other. Support for this view is accumulated from the Act itself, its legislative history, some judicial expression, and professional commentary.8 9 It is true that the Act's preamble emphasizes the predominance of a public interest over private rights of either party to industrial strife, and declares its purpose to prescribe practices on the part of labor and management which are inimical to the general welfare, and to protect the rights of the public in connection with labor disputes affecting commerce.9 And some language of the Act seems to contemplate a remedy to supplement, rather than to substitute for, existing ones.10 10 Also, the Senate Committee, reporting the bill, said: 11 'After a careful consideration of the evidence and proposals before us, the committee has concluded that five specific practices by labor organizations and their agents, affecting commerce, should be defined as unfair labor practices. Because of the nature of certain of these practices, especially jurisdictional disputes, and secondary boycotts and strikes for specifically defined objectives, the committee is convinced that additional procedures must be made available under the National Labor Relations Act in order adequately to protect the public welfare which is inextricably involved in labor disputes. 12 '* * * Hence we have provided that the Board, acting in the public interest and not in vindication of purely private rights, may seek injunctive relief in the case of all types of unfair labor practices and that it shall also seek such relief in the case of strikes and boycotts defined as unfair labor practices * * *'11 13 We are also reminded that this Court, in Amalgamated Utility Workers v. Consolidated Edison Co. of New York, supra, 309 U.S. at 265, 60 S.Ct. at page 563, recognized this distinction by saying, 'The Board as a public agency acting in the public interest, not any private person or group, not any employee or group of employees, is chosen as the instrument to assure protection from the described unfair conduct in order to remove obstructions to interstate commerce.'12 Various statements may also be cited in which the Board would appear to have recognized a distinction between public and private rights or interest in labor controversies.13 14 It often is convenient to describe particular claims as invoking public or private rights, and this handy classification is doubtless valid for some purposes. But usually the real significance and legal consequence of each term will depend upon its context and the nature of the interests it is invoked to distinguish. 15 Statutes may be called public because the rights conferred are of general application, while laws known as private affect few or selected individuals or localities.14 Or public rights may mean those asserted by the state as a party either in criminal or civil proceedings.15 Again, the body of learning we call conflict of laws elsewhere is called private international law because it is applied to adjustment of private interests, while public international law is applicable to the relations between states.16 At other times, rights will be characterized by the body of law from which they are derived; but such distinction between public and private law is less sharp and significant in this country, where one system of law courts applies both, than in the Continental practice which administers public law through a system of courts separate from that which deals with private law questions.17 Perhaps in this country the most usual differentiation is between the legal rights or duties enforced through the administrative process and those left to enforcement on private initiative in the law courts.18 16 Federal law has largely developed and expanded as public law in this latter sense. It consists of substituting federal statute law applied by administrative procedures in the public interest in the place of individual suits in courts to enforce common-law doctrines of private right. This evolution, sharply contested, and presenting many problems, has taken place in many other fields as well as in labor law. For example, the common law recognized a shipper's right to have a common carrier transport his goods for reasonable rates, and the right was enforceable in the courts.19 But this private right proved too costly and sporadic to be effective as transport became a vast enterprise. As to interstate commerce, this right was superseded by the Interstate Commerce Act, which, in the public interest, authorized a public tribunal to prescribe reasonable rates and to award reparations for excessive ones.20 Of course, this put an end to private litigation in state and federal courts to determine, in the first instance, what rate for carriage is reasonable, although that Act did not expressly abolish the pre-existing private rights.21 17 Even if we were to accept as significant the distinction between public and private rights and regard the national Labor Management Relations Act as enforcing only public rights, the same reasoning would prevent us from assuming that the Pennsylvania labor statute declares rights of any different category. It is true that petitioners sought an injunction to restrain damage to their own business. But the injunction appears to have been granted because the picketing violated the state statute, and neither the statutory language nor the opinion of the Pennsylvania Supreme Court warrants a conclusion that the statute protects private rights, as most authorities would define the term. Passed in 1937, the statute recites that the growing inequality of bargaining power between employers and employees 'substantially and adversely affects the general welfare of the State' and that certain practices tend to create 'industrial strife and unrest, which are inimical to the public safety and welfare, and frequently endanger the public health.' Encouragement of collective bargaining is declared 'the public policy of the State.' And one subsection reads: 'This act shall be deemed an exercise of the police power of the Commonwealth of Pennsylvania for the protection of the public welfare, prosperity, health, and peace of the people of the Commonwealth.'22 18 This language is comparable, on the state level, to the language in the federal Act. If Congress was protecting a public, as opposed to a purely private, interest, the same could be said of the Pennsylvania Legislature. The State Supreme Court has not said otherwise.23 The court opinion, of course, did not analyze in detail the state law basis for injunction in this case because it found lack of state jurisdiction, and the dissenting opinion discussed the jurisdictional aspect of the case and did not reach the merits. But we find no basis at all for petitioners' argument that the equity courts, which in Pennsylvania enforce the labor relations statute, would enforce rights of any different category, or of any less public or more private character, than those enforced by the National Labor Relations Board. 19 Further, even if we were to assume, with petitioners, that distinctly private rights were enforced by the state authorities, it does not follow that the state and federal authorities may supplement each other in cases of this type. The conflict lies in remedies, not rights. The same picketing may injure both public and private rights. But when two separate remedies are brought to bear on the same activity, a conflict is imminent. It must be remembered that petitioners' state remedy was a suit for an injunction prohibiting the picketing. The federal Board, if it should find a violation of the national Labor Management Relations Act, would issue a cease-and-desist order and perhaps obtain a temporary injunction to preserve the status quo. Or if it found no violation, it would dismiss the complaint, thereby sanctioning the picketing. To avoid facting a conflict between the state and federal remedies, we would have to assume either that both authorities will always agree as to whether the picketing should continue, or that the State's temporary injunction will be dissolved as soon as the federal Board acts.24 But experience gives no assurance of either alternative, and there is no indication that the statute left it open for such conflicts to arise. 20 The detailed prescription of a procedure for restraint of specified types of picketing would seem to imply that other picketing is to be free of other methods and sources of restraint. For the policy of the national Labor Management Relations Act is not to condemn all picketing but only that ascertained by its prescribed processes to fall within its prohibitions. Otherwise, it is implicit in the Act that the public interest is served by freedom of labor to use the weapon of picketing. For a state to impinge on the area of labor combat designed to be free is quite as much an obstruction of federal policy as if the state were to declare picketing free for purposes or by methods which the federal Act prohibits. 21 Whatever purpose a classification of rights as public or private may serve, it is too unsettled and ambiguous to introduce into constitutional law as a dividing line between federal and state power or jurisdiction. Perhaps the clearest thing to emerge from the best-considered literature on this subject is that the two terms are not mutually exclusive, that the two classifications overlap,25 and that they are of little help in cases such as we have here. In those cases where this Court has employed the term, it has been chiefly as an aid in statutory construction. Cf. Federal Trade Commission v. Klesner, 280 U.S. 19, 50 S.Ct. 1, 74 L.Ed. 138. 22 Our decisions dealing with injunctions have been much concerned with the existence and nature of private property rights, but no case is cited or recalled in which this Court has recognized the distinction between private and public rights to reach such consequences as are urged here. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638; Frost v. Corporation Commission of State of Oklahoma, 278 U.S. 515, 49 S.Ct. 235, 73 L.Ed. 483; Cavanaugh v. Looney, 248 U.S. 453, 39 S.Ct. 142, 63 L.Ed. 354; International News Service v .Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211; In re Debs, 158 U.S. 564, 15 S.Ct. 900, 39 L.Ed. 1092; In re Sawyer, 124 U.S. 200, 8 S.Ct. 482, 31 L.Ed. 402. 23 We conclude that when federal power constitutionally is exerted for the protection of public or private interests, or both, it becomes the supreme law of the land and cannot be curtailed, circumvented or extended by a state procedure merely because it will apply some doctrine of private right. To the extent that the private right may conflict with the public one, the former is superseded. To the extent that public interest is found to require official enforcement instead of private initiative, the latter will ordinarily be excluded. Of course, Congress, in enacting such legislation as we have here, can save alternative or supplemental state remedies by express terms, or by some clear implication, if it sees fit. 24 On the basis of the allegations, the petitioners could have presented this grievance to the National Labor Relations Board. The respondents were subject to being summoned before that body to justify their conduct. We think the grievance was not subject to litigation in the tribunals of the State. 25 Judgment affirmed. 1 373 Pa. 19, 94 A.2d 893, 898. The equity court's opinion is reported at 62 Dauph. 339. 2 345 U.S. 991, 73 S.Ct. 1136. 3 The Pennsylvania statute does not specifically prohibit the type of union conduct charged in the complaint. However, the court reasoned that the union was attempting to force petitioners to violate § 6(1)(c) of the statute, which provides that 'It shall be an unfair labor practice for an employer * * *. (c) 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 * * *.' Pa.Laws 1937, 1172, Purdon's Pa.Stat.Ann., 1952, Tit. 43, § 211.6. 4 E.g., Algoma Ploywood & Veneer Co. v. Wisconsin Employment Relations Board, 336 U.S. 301, 313, 69 S.Ct. 584, 590, 93 L.Ed. 691; Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 773, 67 S.Ct. 1026, 1029, 1030, 91 L.Ed. 1234; Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 539, 65 S.Ct. 1373, 1374, 89 L.Ed. 1782 (and see concurring and dissenting opinions, pp. 544, 547, and 1376, 1377 respectively); Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 748—751, 62 S.Ct. 820, 825—826, 86 L.Ed. 1154. 5 'It shall be an unfair labor practice for a labor organization or its agents—* * * (2) to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a)(3) or to discriminate against an employee with respect to whom membership in such organization has been denied or terminated on some ground other than his failure to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining membership * * *.' § 8(b), 61 Stat. 141, 29 U.S.C. (Supp. III) § 158(b), 29 U.S.C.A. § 158(b). Subsection (a)(3) reads in part: '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 * * *.' 61 Stat. 140, 29 U.S.C. (Supp. III) § 158(a), 29 U.S.C.A. § 158(a). 6 'The Board shall have power, upon issuance of a complaint as provided in subsection (b) * * * charging that any person has engaged in or is engaging in an unfair labor practice, to petition any district court of the United States (including the District Court of the United States for the District of Columbia), within any district wherein the unfair labor practice in question is alleged to have occurred or wherein such person resides or transacts business, for appropriate temporary relief or restraining order. Upon the filing of any such petition the court shall cause notice thereof to be served upon such person, and thereupon shall have jurisdiction to grant to the Board such temporary relief or restraining order as it deems just and proper.' § 10(j), 61 Stat. 149, 29 U.S.C. (Supp. III) § 160(j), 29 U.S.C.A. § 160(j). Temporary injunc- tions have been granted by the district courts upon application by the Board following issuance of complaints charging violations of § 8(b)(2), Brown v. National Union of Marine Cooks and Stewards, D.C., 104 F.Supp. 685; Douds v. Anheuser-Busch, Inc., D.C., 99 F.Supp. 474; Jaffee v. Newspaper & Mail Deliverers' Union of New York & Vicinity, D.C., 97 F.Supp. 443; Penello v. International Union, United Mine Workers of America, D.C., 88 F.Supp. 935, and of other sections of the Act. Curry, for and on Behalf of National Labor Relations Board v. Union de Trabajadores de la Industria, Del Cemento Ponce, D.C., 86 F.Supp. 707; Madden v. International Union, United Mine Workers of America, D.C., 79 F.Supp. 616; Douds v. Local 294, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, A.F. of L., D.C., 75 F.Supp. 414. See National Labor Relations Board v. Denver Building & Construction Trades Council, 341 U.S. 675, 682, 71 S.Ct. 943, 948, 95 L.Ed. 1284; Herzog v. Parsons, 86 U.S.App.D.C. 198, 203, 181 F.2d 781, 786. See also 61 Stat. 155, 29 U.S.C. (Supp. V) § 178, 29 U.S.C.A. § 178, granting similar initiative powers to the Attorney General when strikes or lockouts imperil the national health or safety. 7 '(a) Under prevailing economic conditions developed with the aid of governmental authority for owners of property to organize in the corporate and other forms of ownership association, the individual unorganized worker is commonly helpless to exercise actual liberty of contract and to protect his freedom of labor, and thereby to obtain acceptable terms and conditions of employment, wherefore, though he should be free to decline to associate with his fellows, it is necessary that he have full freedom of association, self-organization, and desig- nation of representatives of his own choosing to negotiate the terms and conditions of his employment, and that he shall be free from the interference, restraint or coercion of employers of labor or their agents in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. '(b) Equity procedure that permits a complaining party to obtain sweeping injunctive relief that is not preceded by or conditioned upon notice to and hearing of the responding party or parties or that permits sweeping injunctions to issue after hearing based upon written affidavits along and not wholly or in part upon examination, confrontation and cross-examination of witnesses in open court is peculiarly subject to abuse in labor litigation for the reasons that— '(1) The status quo cannot be maintained, but is necessarily altered by the injunction. '(2) Determination of issues of veracity and of probability of fact from affidavits of the opposing parties that are contradictory and under the circumstances untrustworthy rather than from oral examination in open court is subject to grave error. '(3) Error is issuing the injunctive relief is usually irreparable to the opposing party; and '(4) Delay incident to the normal course of appellate practice frequently makes ultimate correction of error in law or in fact unavailing in the particular case.' Pa.Laws 1937, 1198, Purdon's Pa.Stat.Ann.1952, Tit. 43, § 206b. 8 Rose, The Labor Management Relations Act and the State's Power to Grant Relief, 39 Va.L.Rev. 765 (1953); Hall, The Taft-Hartley Act v. State Regulation, 1 Journal of Public Law 97 (1952). 9 'Industrial strife which interferes with the normal flow of commerce and with the full production of articles and commodities for commerce, can be avoided or substantially minimized if employers, employees, and labor organizations each recognize under law one another's legitimate rights in their relations with each other, and above all recognize under law that neither party has any right in its relations with any other to engage in acts or practices which jeopardize the public health, safety, or interest. 'It is the purpose and policy of this Act, in order to promote the full flow of commerce, to prescribe the legitimate rights of both employees and employers in their relations affecting commerce, to provide orderly and peaceful procedures for preventing the interference by either with the legitimate rights of the other, to protect the rights of individual employees in their relations with labor organizations whose activities affect commerce, to define and proscribe practices on the part of labor and management which effect commerce and are inimical to the general welfare, and to protect the rights of the public in connection with labor disputes affecting commerce.' § 1(b), 61 Stat. 136, 29 U.S.C.(Supp. III) § 141(b), 29 U.S.C.A. § 141(b). 10 '* * * 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 * * *.' § 10(a), 61 Stat. 146, 29 U.S.C.(Supp. III) § 160(a), 29 U.S.C.A. § 160(a). 11 S.Rep.No.105, 80th Cong., 1st Sess. 8. 12 Cf. Republic Steel Corp. v. National Labor Relations Board, 311 U.S. 7, 10, 61 S.Ct. 77, 79, 85 L.Ed. 6: 'The act does not prescribe penalties or fines in vindication of public rights or provide indemnity against community losses as distinguished from the protection and compensation of employees.' 13 See, e.g., Brief for the Board, pp. 14, 43, Montgomery Building & Construction Trades Council v. Ledbetter Erection Co., 344 U.S. 178, 73 S.Ct. 196. 14 See Unity v. Burrage, 103 U.S. 447, 26 L.Ed. 405. Blackstone noted that 'the courts of law are bound to take notice judicially and ex officio' of public laws, as contrasted with private laws. 1 Commentaries (15th ed. 1809), 85. The Acts of Congress are classified in publication according to their public or private nature. Some state constitutions make special provisions for private or local bills. See Cloe v. Marcus, Special and Local Legislation, 24 Ky.L.J. 351 (1936), for a tabulation of these provisions. The difference in classification is particularly striking in the field of divorce, which was formerly beset by private and local bills. See Maynard v. Hill, 125 U.S. 190, 8 S.Ct. 723, 31 L.Ed. 654. Many state constitutions now specifically prohibit private laws in the field of divorce. E.g., Ala.Const., Art. 4, § 104(1); Wyo.Const.Art. 3, § 27. 15 Holland, Elements of Jurisprudence (6th ed. 1893), 112, declares this to be '* * * the radical distinction between Rights, and consequently between the departments of Law.' 16 Goodrich, Conflict of Laws (3d ed. 1949), §§ 1, 5; Cheshire, Private International Law (4th ed. 1952), 16. 17 'Since the work of Dicey, the contrast between Continental systems, which distinguish between administrative law and private law and have a separate system of law Courts for each, and the Anglo-American system, which only knows one law and one system of law, is familiar to Anglo-American lawyers. No doubt at one time this gave expression to a profound diversity in the attitude taken by the two groups of legal systems towards the relations between authority and individual. * * * But it is commonplace today that this difference, so eloquently stated by Dicey, is in substance essentially a matter of the past, and that even in his own time it was only partly true. * * * There is today a vast body of administrative law both in Britain and the United States, but it has not yet been given a definite place in the legal system as has been done with administrative law in many Continental countries. * * * Such bodies as the British Broadcasting Corporation, the Agricultural Marketing Boards or, in the United States, the Interstate Commerce Commission, the National Labour Relations Board, the Federal Power Commission and hundreds of others are, in fact, bodies whose status is governed by public law and which would on the Continent come under administrative jurisdiction. * * *' Friedmann, Legal Theory (2d ed. 1949), 345. 18 Pollock, A First Book of Jurisprudence (6th ed. 1929), 95 98, gives an illuminating discussion. He states in part: 'Rules of private law may be said to have remained in a stage where all rules of law probably were in remote times: that is to say, the State provides judgment and justice, but only on the request and action of the individual citizens: those who desire judgment must come and ask for it. Accordingly the special field of such rules is that part of human affairs in which individual interests predominate, and are likely to be asserted on the whole with sufficient vigour, and moreover no public harm is an obvious or necessary consequence of parties not caring to assert their rights in particular cases. * * * There fall more specially under rules of public law the duties and powers of different authorities in the State, making up what is usually known as the law of the Constitution; also the special bodies of law governing the armed forces of the State, and the Administration of its other departments; law regulating particular trades and undertakings in the interest of public health or safety; and in short all State enterprise and all active interference of the State with the enterprises of private men. * * *' Pp. 96—97. 19 2 Kent, Commentaries (14th ed. 1896), *598—599; Story, Commentaries on the Law on Bailments (3d ed. 1843), §§ 508, 549; Lough v. Outerbridge, 143 N.Y. 271, 38 N.E. 292, 25 L.R.A. 674; Chicago, B. & Q.R. Co. v. Jones, 149 Ill. 361, 374, 37 N.E. 247, 250, 24 L.R.A. 141; see Munn v. State of Illinois, 94 U.S. 113, 133—134, 24 L.Ed. 77. 20 §§ 11, 15, 16, 24 Stat. 383, 384; § 216, 49 Stat. 558, as amended, 49 U.S.C. §§ 11, 15, 16, 316, 49 U.S.C.A. §§ 11, 15, 16, 316. 21 Texas & P.R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 443—444, 27 S.Ct. 350, 356—357, 51 L.Ed. 553; Lewis-Sim-as-Jones Co. v. Southern Pacific Co., 283 U.S. 654, 661, 51 S.Ct. 592, 595, 75 L.Ed. 1333. 22 § 2(a), (c), (e), Pa.Laws 1937, 1169, 1170, Purdon's Pa.Stat.Ann., 1952, Tit. 43, § 211.2(a), (c), (e). 23 The same court has said of the Act in a different factual context: 'It is inimical to the public interests, as declared in the preamble to our act, that those deprived of a particular employment, where such status is due to what is determined to be unlawful conduct on the part of the employer, should be deprived of compensation or wages when the employee by a reasonable effort could have secured employment which he was physically and mentally fitted to perform. If this rule is not followed the purposes of the act will not be fulfilled and the community will suffer.' W. T. Grant Co. v. United Retail Employees of America, Local No. 134, 347 Pa. 224, 226, 31 A.2d 900, 901. 24 International Union of Operating Engineers, Locals No. 542, 542—a, 542—b v. William D. Baker Co., D.C., 100 F.Supp. 773, illustrates the potentialities of conflict. A disagreement arose between a union and several contracting associations over a collective bargaining agreement. The agreement contained a no-strike provision. The union, contending that the agreement had come to an end, threatened to strike. The association obtained an injunction in the Pennsylvania courts restraining the members of the union from striking. The union prayed for an injunction in federal district court to prevent the associations from enforcing their state decree. The federal court held that, even if exclusive jurisdiction over the subject matter was in the federal courts, it had no power to enjoin enforcement of the state injunction. Whether this conclusion be correct or not (for a critical comment see Note, 48 Northwestern U.L.Rev. 383 (1953), the case exemplifies the type of difficulty inherent in recognizing state supplemental relief in an otherwise exclusive federal field. 25 Pollock, supra, n. 18, supra at 99, says, 'It will be seen, therefore, that the topics of public and private law are by no means mutually exclusive. On the contrary their application overlaps with regard to a large proportion of the whole mass of acts and events capable of having legal consequences.'

910

346 U.S. 521 74 S.Ct. 261 98 L.Ed. 261 GENERAL PROTECTIVE COMMITTEE FOR HOLDERS OF OPTION WARRANTS OF UNITED CORP.v.SECURITIES & EXCHANGE COMMISSION et al. No. 184. Argued Dec. 2, 1953. Decided Jan. 4, 1954. Rehearing Denied Feb. 8, 1954. See 347 U.S. 911, 74 S.Ct. 474. Mr. John Mulford, Philadelphis, Pa., for petitioner. Messrs. William H. Timbers, Richard Joyce Smith, New York City, Randolph Phillips, for respondents. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 The United Corporation is a holding company registered under the Public Utility Holding Company Act of 1935, 49 Stat. 803, 15 U.S.C. § 79 et seq., 15 U.S.C.A. § 79 et seq. Section 11(b) of that Act requires each holding company, with exceptions not material here, to limit the operations of the holding company system of which it is a part to a single integrated public utility system and to businesses reasonably incidental or economically necessary or appropriate to that system. Section 11(e) allows a registered holding company to submit a plan to the Commission which will enable it to comply with § 11(b). 2 United controlled, directly or indirectly, various gas and electric utility companies in the east. It submitted a plan to the Commission which, it claimed, would complete its compliance with § 11(b). The Commission rejected United's plan. 13 S.E.C. 854, 898 899. The Commission, however, withheld issuance of a dissolution order so as to afford United an opportunity to comply with the Act by divesting itself of control over its subsidiaries and by transforming itself into an investment company. Id., p. 899. The Commission accordingly directed that United cease to be a holding company and limit its corporate structure to a single class of stock, namely, common stock.1 3 No review of that order was sought. Thereafter United retired its preference stock by exchanging it for underlying portfolio securities and for cash. Other portfolio securities were disposed of through market sales and dividend distributions. 4 As of December 31, 1950, United had outstanding 14,529,491.5 shares of common stock, and option warrants entitling the holders to purchase 3,732,059 shares of common stock at any time at a price of $27.50 per share. As of December 31, 1950, United's assets consisted approximately of $57,000,000 of securities and $2,000,000 in cash and government bonds, which was equivalent to $4.12 per share of common stock. The securities, which consisted of common stocks of utility operating and holding companies, included 11.9 percent of the voting stock of Niagara Mohawk Power Corp., 28.3 percent of South Jersey Gas Co., 5.8 percent of The United Gas Improvement Co., 5.5 percent of The Columbia Gas System, Inc., and voting stocks of other companies in amounts less than 5 percent of the total outstanding. 5 United submitted a further plan which provided in essential part as follows: 6 First. The sale by United of all of its South Jersey common stock and of sufficient amounts of its stockholdings in the other utility companies so that within one year its resultant holdings would not exceed 4.9 percent of the voting stock of any of those companies. 7 Second. An offer to United's stockholders who wanted to withdraw from the company. Holders of 100 or more shares of United's common stock were offered common stock of Niagara Mohawk that United had in its portfolio; holders of smaller blocks of United's common stock were offered cash. These offers were on a voluntary basis. 8 Third. Cancellation of the option warrants without any compensation to the holders. 9 Fourth. Amendments to the charter and by-laws of United (without a vote of stockholders) to provide for cumulative voting in the election of directors and a 50 percent quorum at stockholders meetings. 10 The Commission approved the plan with modifications not material to the issues presented in this case. Holding Company Act Releases Nos. 10614, 10643. 11 First. The method of transforming United from a holding company into an investment company was approved. 12 Second. Offers to those stockholders who wanted to withdraw from the enterprise were held to be fair both to them and to those who chose to remain as investors in United. 13 Third. The holders of the option warrants were denied any participation in the reorganization on the ground that there was no reasonable expectation that the market price of the common stock would increase to the extent needed to give the warrants a recognizable value and that continuance of the warrants would be inherently deceptive to investors and perpetuate useless and unnecessary complexities in the corporate structure. 14 Fourth. The changes as respects cumulative voting and quorum requirements were approved. 15 The Commission in its order of approval stated that the provisions of the plan relating to the cancellation of the warrants and the amendment of the charter and bylaws would not be operative 'until an appropriate United States District Court shall, upon application thereto, enter an order enforcing said provisions.' Holding Company Act Release No. 10643, p. 3. No such provision was made as respects the other provisions of the plan. 16 Some of the common stockholders thereupon filed a petition for review in the Court of Appeals for the District of Columbia under § 24(a) of the Act.2 They challenged the First and Second provisions of the plan, which we have described above. They also asked that the Third and Fourth provisions, the ones which were made subject to approval by the District Court, be approved by the Court of Appeals. The petitioner in this Court is a protective committee representing holders of the option warrants. It moved to intervene in the review proceedings in the Court of Appeals, claiming that forfeiture of the warrants was not justified. The Commission and United opposed the intervention on the ground that by reason of the Commission's order and § 11(e) of the Act3 only the District Court had jurisdiction to review the provisions of the plan respecting the elimination of the warrants and the amendments to the charter and bylaws. 17 The Court of Appeals allowed petitioner to intervene. It held that so long as the Commission had not applied to a district court under § 11(e) to enforce a plan, the Court of Appeals had exclusive jurisdiction on petition of an aggrieved person under § 24(a) to review the entire plan, including those provisions which the Commission made enforceable by the District Court. The Court of Appeals further held that if it affirmed or modified an order of the Commission approving a plan and the Commission thereafter applied to the District Court to obtain enforcement, the District Court would have no function except to enforce, since the ruling by the Court of Appeals on the fairness of the plan would be binding on the District Court. Accordingly the Court of Appeals reviewed the entire plan, found it fair and equitable in all respects, and affirmed the Commission's order. 92 U.S.App.D.C. 172, 203 F.2d 611. The case is here on certiorari limited to the question of jurisdiction. 346 U.S. 810, 74 S.Ct. 42. 18 The question is not whether there is judicial review of orders of the Commission. The question is which orders are reviewable in the District Court, which in the Court of Appeals. The first reading of the Act may leave the impression that there is conflict between § 24(a) and § 11(e). Section 24(a) gives review in the Court of Appeals of 'an order' of the Commission and grants the Court of Appeals 'exclusive jurisdiction to affirm, modify, or set aside such order, in whole or in part.' This is clearly broad enough to include an order of the Commission under § 11 respecting a plan of a holding company seeking compliance with § 11(b). Section 11(e), however, provides in some instances for review of such plans on application by the Commission to the District Court. Moreover, the Commission by virtue of § 18(f)4 may apply to the District Court for enforcement of any of its orders where it appears that someone is about to commit a violation. We are tendered several alternatives: 19 1. That the Court of Appeals having first acquired jurisdiction can and should review the entire plan. 20 2. That the District Court can and should review all phases of the plan in an enforcement proceeding and, pending application for enforcement, no review of any phase of the plan should be entertained by the Court of Appeals. 21 3. That a so-called split review is permissible where as here the Commission has reserved for enforcement proceedings in the District Court only certain provisions of the plan, the Court of Appeals being restricted under § 24(a) to those not so reserved. 22 We have concluded that the so-called split review is permissible under the circumstances here present and that the Court of Appeals had jurisdiction under § 24(a) to review all questions tendered it, except those pertaining to the elimination of the option warrants and the amendments to the charter and bylaws. In result we affirm in part and reverse in part the Court of Appeals on the jurisdictional question to which we restricted the grant of the petition for certiorari. 23 It should be noted to begin with that the Act marks out two paths to compliance by a registered holding company with the requirements of the Act. One is the procedure under § 11(b) whereby the Commission by order may require that designated steps be taken by the holding company. Failing that, the Commission may apply to a District Court for enforcement of its orders under § 11(d). See Commonwealth & Southern Corp. v. Securities & Exchange Commission, 3 Cir., 134 F.2d 747. We are not concerned here with that method of bringing holding companies into compliance with the Act. We deal here with the second method of compliance—the voluntary reorganization which the company itself submits under the broad discretion Congress left to management to determine how to bring their systems into compliance with the Act. Our problem starts under § 11(e) with the provision that a holding company 'may * * * submit a plan to the Commission for the divestment of control, securities, or other assets, or for other action * * * enabling such company * * * to comply with the provisions of subsection (b).' 24 We turn then to problems involved in the efforts of registered holding companies voluntarily to meet the requirements of the Act. 25 The Congress contemplated that under this Act some holding companies might satisfy the requirements of § 11 by divesting themselves of control and converting themselves into investment companies. See S.Rep.No. 621, 74th Cong., 1st Sess., p. 13. If in anticipation of that step a holding company desired to give its security holders an opportunity to withdraw from the enterprise and with the approval of the Commission made them an offer to exchange their securities for securities in its portfolio, there would be no doubt that the fairness of that offer would be reviewable by the Court of Appeals under § 24(a) on petition of a security holder. Two cases drawn from United's program of compliance with the Act are illustrative. 26 After the Commission ordered United to simplify its capital structure and cease to be a holding company, United proposed a plan for eliminating its preference stock by making an offer to exchange on a voluntary basis securities of subsidiaries and cash for the preference stock. The Commission approved; and review of that plan was had in the Court of Appeals under the procedure of § 24(a) of the Act. Phillips v. Securities & Exchange Commission, 2 Cir., 153 F.2d 27. Later United proposed the pro rata distribution of shares of a subsidiary to holders of its common stock. The Commission approved; and review of that plan was had under § 24(a) in the Court of Appeals. Phillips v. Securities & Exchange Commission, 87 U.S.App.D.C. 380, 185 F.2d 746. 27 If, therefore, United had offered its common stockholders cash or portfolio securities for their common stock and had put the offer in a separate plan, not making it physically a part of a more comprehensive plan, and the Commission had approved the exchange, there can be no doubt that that plan could have been reviewed by the Court of Appeals under § 24(a). We are unable to see why the mere fact that the offer is not in isolation but one of several proposals joined together for presentation to the Commission and approved by the Commission at the time it approves the other proposals should make a difference for purposes of judicial review. 28 Mr. Justice Rutledge writing for the Court in Securities & Exchange Commission v. Central-Illinois Securities Corp., 338 U.S. 96, 69 S.Ct. 1377, 93 L.Ed. 1836, pointed out that the difference between § 11(e) and § 24(a) is not essentially in the scope of judicial review. Rather, it is in the function which the two systems of review perform. As he said, § 11(e) serves 'to mobilize the judicial authority in carrying out the policies of the Act.' Id., 338 U.S. at page 125, 69 S.Ct. at page 1392. The full import of that statement can be understood only if § 11(e) and the functions it performs are appreciated. Section 11(e) applies to a plan which a holding company submits to the Commission for purposes of complying with the Act. In other words, it applies to what traditionally has been known in the field of business and finance as voluntary reorganizations, that is to say, reorganizations designed by the management, not those imposed on a company from without. The holding company proposes the voluntary reorganization; the Commission, after hearing, approves, if it finds the plan 'necessary to effectuate the provisions of subsection (b) and fair and equitable to the persons affected by such plan'. If § 11(e) ended there, it would be plain that judicial review would be had either under § 24(a) on a petition by an 'aggrieved' person or under § 18(f) if and when the Commission brought an action to enforce compliance with its order approving a plan. Section 11(e), however, has its own enforcement procedure, somewhat peculiarly worded. It gives a registered holding company the standing to ask that the enforcement machinery of the Act be placed behind its voluntary plan of reorganization.5 Section 11(e) provides, '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.' (Italics added.) 29 The Commission may or may not accede to the company's suggestion. Section 11(e) does not make it mandatory for the Commission to do so. It only says that the Commission 'may' do so. That implies the exercise of discretion. The company might request, as here, that only some of the terms and provisions of a plan be submitted to the enforcement proceedings of the Act; or it might ask that each and every proposal be so treated. The Commission might refuse the request or it might grant it in whole or in part. The considerations governing the exercise of the Commission's discretion would embrace a variety of factors. 30 It may be necessary to eliminate one class of stock; an exchange on a voluntary basis may not be possible because some security holders object. Therefore a compulsory retirement of the stock may be necessary. One step in United's program of compliance involved that procedure, as is shown by In re United Corp., D.C., 82 F.Supp. 196. United proposed a plan for the compulsory retirement of preference stock; the Commission approved and applied to the District Court for enforcement. 31 An enforcement decree on one phase of a voluntary plan of reorganization may be an appropriate and convenient means (if not a necessary one) to modify a certificate of incorporation. Thus in Delaware the corporation statute directs the Secretary of State to accept a decree of a federal court enforcing a provision of a plan which modifies, alters, or repeals the bylaws of a Delaware corporation or amends its certificate of incorporation. 8 Del.Code Ann. 1953, § 245. 32 Illustrations could be multiplied. But those we have given indicate that a holding company may not be able to carry through without some degree of compulsion all phases of the voluntary plan it submits, that it may need the force of a judicial decree behind the Commission's order in order to put through its reorganization. 33 On the other hand, the holding company might conclude that market conditions were so favorable, its own financial situation so strong, the terms of the voluntary reorganization so attractive that it would need no help from any source to effectuate the plan, once the Commission approved. 34 That is the reason Congress left the choice—the right to ask for enforcement help—to the holding company. 35 Conceivably the Commission might refuse to give the help requested unless other phases of the plan were also put through enforcement proceedings. That conclusion might be reached where the several aspects of the plan were so closely and intimately related one to the other that the fairness of one turned on the fairness of the other. No such issue arises here, for the question whether the common stockholders who want to withdraw from United have been offered enough Niagara Mohawk stock or enough cash has nothing to do either with the elimination of the option warrants or the changes in the charter and bylaws to govern stockholders who do not withdraw from the enterprise. 36 We have said enough to indicate some of the considerations confronting the Commission when it decides, in connection with a voluntary reorganization plan under § 11(e), whether it will 'mobilize the judicial authority in carrying out the policies of the Act', to use the words of Mr. Justice Retledge in the Central-Illinois Securities Corp. case, supra. The Commission may send only one provision of a plan of voluntary reorganization into enforcement proceedings and let all others go the route of § 24(a) should an aggrieved person desire to take them there. Here as in other fields (Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 194, 61 S.Ct. 845, 852, 85 L.Ed. 1271) the relation of remedy to policy is peculiarly for the administrative agency. See American Power & Light Co. v. Securities & Exchange Commission, 329 U.S. 90, 112, 67 S.Ct. 133, 145, 91 L.Ed. 103. We cannot say that the Commission abused its discretion in the present case, for, as we have already observed, the amendments of the charter and bylaws and the fairness of the elimination of the option warrants have no apparent relevancy to the manner in which the common stockholders, who sought review in the Circuit Court under § 24(a), say they have been treated. 37 It may be, as some argue, that it would be a better scheme to have all or none of a plan go into enforcement proceedings under § 11(e). If the entire plan were presented in the enforcement proceedings, all parties would be notified and heard at one time. But Congress in its wisdom has provided differently. The problem relates, as we have said, only to voluntary reorganizations, that is to plans submitted by the companies themselves to bring their operations into compliance with the Act. The history of voluntary recapitalizations, readjustments, and reorganizations may well have suggested that the litigious issues would not be numerous, that overall judicial review of the total plan need not be made mandatory, that only select phases and aspects of voluntary reorganization need be put through enforcement proceedings. Certainly one who has an isolated point of objection, whose protest relates only to a single phase of a plan has an advantage in the review accorded him by § 24(a). He can bring suit in the Court of Appeals in the circuit where he resides or has his principal place of business, or in the District of Columbia. He can sue at once in his own bailiwick and not have to await institution of an enforcement proceeding perhaps in some faraway place. He can have a hearing on his own personal grievance without running the risk that his case may be lost in the large shuffle of an enforcement proceeding where many parties and many interests are involved. 38 There is nothing strange or irrational in routing the common stockholders in this case to the Court of Appeals and the option warrant holders to the District Court. Each will have his day in court. Nothing that one court does will impinge on the other. Each court will be performing a different function. Whether a better procedure could be devised is not for us to determine. It is sufficient that the procedure indicated is permissible under the Act, and that the Commission in selection certain phases of a plan for submission to enforcement proceedings did not, to borrow a phrase from the Court of Appeals for the Third Circuit, lose 'sight of the law.'6 39 We accordingly affirm the Court of Appeals in taking jurisdiction over the controversy insofar as it related (1) to the sale by United of its holdings and (2) to the offers it made to its stockholders who wanted to withdraw. We reverse the Court of Appeals in taking jurisdiction over the provisions of the voluntary plan of reorganization which the Commission in its order made operative on enforcement by the District Court. 40 So ordered. 41 Affirmed in part and reversed in part. 1 Section 11(b) places on the Commission the duty to require registered holding companies and their subsidiaries not only to limit, with specified exceptions, their operations to a single integrated public utility system but also to simplify their capital structures. 2 Section 24(a) provides: '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 side, 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 §§ 239 and 240 of the Judicial Code, as amended (U.S.C., Title 28, §§ 346 and 347).' 3 Section 11(e) provides: 'In accordance with such rules and regulations or order as the Commission may deem necessary or appropriate in the public interest or for the protection of investors or consumers, any registered holding company or any subsidiary company of a registered holding company may, at any time after January 1, 1936, submit a plan to the Commission for the divestment of control, securities, or other assets, or for other action by such company or any subsidiary company thereof for the purpose of enabling such company or any subsidiary company thereof to comply with the provisions of subsection (b). If, after 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 8, 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.' 4 Section 18(f) provides: '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 title, 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 title or any rule, regulation, or order thereunder, and upon a proper showing a permanent or temporary injunction or decree or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General, who, in his discretion, may institute the appropriate criminal proceedings under this title.' 15 U.S.C.A. § 79r(f). 5 In speaking of plans of voluntary reorganization under § 11(e) the Court in Commonwealth & Southern Corp. v. Securities & Exchange Commission, 3 Cir., 134 F.2d 747, 751, said: 'If the plan is one which can be carried out by the sole action of the parties thereto no further proceedings are needed. If not, the subsection authorizes the Commission, at the request of the company proposing the plan, to make application to a district court to enforce and carry out the plan. In this proceeding the court, if it finds the plan fair, equitable and appropriate, may direct it to be carried out, taking possession of the company and its assets if necessary to that end. * * * 'It will thus be seen that the congressional purpose is to leave open to the holding companies a broad area of discretion in determining just how they are to bring their systems into compliance with the required standards. * * * 'It is obvious that in many cases the desired result may be reached in more than one way. Congress evidently intended to permit the Commission to leave to the company involved the initiative in suggesting from among the available alternative methods that one which it deems most appropriate. This seems clear in the light of the fact that under section 11(e) the company is not restricted to proposing a plan of compliance which it is in a position to carry out itself but it may also propose a plan affecting the rights of third persons which it may, through the Commission, request a court to enforce against the opposition of those third persons. It is only if the company does not propose a plan which the Commission and the court approve that the Commission under section 11(d) itself may propose and seek enforcement of a plan against the apposition of the company.' 6 See In re Standard Gas & Electric Co., 151 F.2d 326, 331.

78

346 U.S. 502 74 S.Ct. 247 98 L.Ed. 248 UNITED STATEv.MORGAN. No. 31. Argued Oct. 19, 1953. Decided Jan. 4, 1954. Miss Beatrice Rosenberg, Washington, D.C., for petitioner. Mr. Jacob Abrams, Brooklyn N.Y., pro hac vice for respondent by special leave of Court. Mr. Justice REED delivered the opinion of the Court. 1 This review on certiorari requires us to decide whether a United States District Court has power to vacate its judgment of conviction and sentence after the expiration of the full term of service. 2 On December 18, 1939, respondent pleaded guilty on a federal charge, in the Northern District of New York, and was given a four-year sentence which he served. Thereafter, in 1950, he was convicted by a New York court on a state charge, sentenced to a longer term as a second offender because of the prior federal conviction,1 and is now incarcerated in a state prison. 3 As courts of New York State will not review the judgments of other jurisdictions on habeas corpus or coram nobis, People v. McCullough, 300 N.Y. 107, 110, 89 N.E.2d 335, respondent filed an application for a writ of error coram nobis and gave notice of a motion for the writ in the United States District Court where his first sentence was received. Both sought an order voiding the judgment of conviction. The ground was violation of his constitutional rights through failure, without his competent waiver, to furnish him counsel. Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461. The District Court in an unreported decision treated the proceeding as a motion under 28 U.S.C. § 2255, 28 U.S.C.A. § 2255,2 and refused relief because it had no jurisdiction as the applicant was no longer in custody under its sentence, citing United States v. Lavelle, 2 Cir., 194 F.2d 202, a controlling authority on that point. On appeal, the Court of Appeals reversed. It held that 28 U.S.C. § 2255, 28 U.S.C.A. § 2255 did not supersede 'all other remedies which could be invoked in the nature of the common law writ of error coram nobis.' As it considered that the remedy sought was of that kind and the application justified a hearing because the error alleged was 'of fundamental character,' the Court of Appeals reversed and, without passing upon the sufficiency of the allegations, directed remand for further proceedings. United States v. Morgan, 2 Cir., 202 F.2d 67, 68. Deeming the decision to conflict with United States v. Kerschman, 7 Cir., 201 F.2d 682, we granted certiorari. 345 U.S. 974, 73 S.Ct. 1122. 4 The foregoing summary of steps discloses respondent's uncertainty in respect to choice of remedy. The papers are labeled as though they sought a common law writ of error coram nobis but the notice of the motion indicates that an order voiding the judgment is sought. In behalf of the unfortunates, federal courts should act in doing justice if the record makes plain a right to relief.3 We think a belated effort to set aside the conviction and sentence in the federal criminal case is shown. We therefore treat the record as adequately presenting a motion in the nature of a writ of error coram nobis enabling the trial court to properly exercise its jurisdiction. Adams v. U.S. ex rel. McCann, 317 U.S. 269, 272, 63 S.Ct. 236, 238, 87 L.Ed. 268.4 So treating the motion, Rule 35, Fed.Rules Crim.Proc., 18 U.S.C.A., allowing the correction of 'an illegal sentence at any time' is inapplicable. Sentences subject to correction under that rule are those that the judgment of conviction did not authorize.5 5 Since this motion in the nature of the ancient writ of coram nobis is not specifically authorized by any statute enacted by Congress, the power to grant such relief, if it exists, must come from the all-writs section of the Judicial Code.6 This section originated in the Judiciary Act of 17897 and its substance persisted through the Revised Statutes, § 716, and the Judicial Code, § 262, to its present form upholding the judicial power to attain justice for suitors through procedural forms 'agreeable to the usages and principles of law.'8 If there is power granted to issue writs of coram nobis by the all-writs section, we hold it would comprehend the power for the District Court to take cognizance of this motion in the nature of a coram nobis. See, note 4, supra. To move by motion instead of by writ is purely procedural. The question then is whether the all-writs section gives federal courts power to employ coram nobis. 6 The writ of coram nobis was available at common law to correct errors of fact.9 It was allowed without limitation of time for facts that affect the 'validity and regularity' of the judgment,10 and was used in both civil and cirminal cases.11 While the occasions for its use were infrequent, no one doubts its availability at common law.12 Coram nobis has had a continuous although limited use also in our states.13 Although the scope of the remedy at common law is often described by references to the instances specified by Tidd's Practice, see note 9, supra, its use has been by no means so limited. The House of Lords in 1844 took cognizance of an objection through the writ based on a failure properly to swear witnesses. See the O'Connell case, note 11, supra. It has been used, in the United States, with and without statutory authority but always with reference to its common law scope—for example, to inquire as to the imprisonment of a slave not subject to imprisonment, insanity of a defendant, a conviction on a guilty plea through the coercion of fear of mob violence, failure to advise of right to counsel.14 An interesting instance of the use of coram nobis by the Court of Errors of New York is found in Davis v. Packard, 8 Pet. 312, 8 L.Ed. 957. It was used by the Court of Errors, and approved by this Court, of correct an error 'of fact not apparent on the face of the record' in the trial court, to wit, the fact that Mr. Davis was consul-general of the King of Saxony and therefore exempt from suit in the state court. 7 This Court discussed the applicability of a motion in federal courts in the nature of coram nobis in United States v. Mayer, 235 U.S. 55, 67, 35 S.Ct. 16, 18, 59 L.Ed. 129. There a convicted defendant alleged he discovered through no fault of his, only after the end of the term in which he was convicted, misconduct of an assistant United States attorney and concealed bias of a juror against him, the defendant. This Court refused to direct consideration of the motion after the term expired because the remedy, if any, was by writ of error or motion for new trial. As it was not applicable in the circumstances of the Mayer case, this Court refused to say whether a motion coram nobis would ever lie in federal courts.15 This Court has approved correction of clerical errors after the term. Wetmore v. Karrick, 205 U.S. 141, 154, 27 S.Ct. 434, 438, 51 L.Ed. 745. However, we have not held that the writ of coram nobis or a motion of that nature was available in the federal courts. 8 In other federal courts than ours, there has been a difference of opinion as to the availability of the remedy. Chief Justice Marshall in Strode v. Stafford Justices, 23 Fed.Cas.No.13,537, p. 236, 1 Brock. 162, overruled an objection to a writ of error coram nobis to set aside a fourteen-year-old judgment because of the death of one party prior to its rendition. In explication, the Chief Justice pointed out that the Judiciary Act of 1789, 1 Stat. 84, § 22, limited to five years the bringing of any writ of error and forbade it 'for any error in fact.' In allowing the coram nobis, he held that the section showed the writ of error referred to was a writ on appeal and therefore the error in fact could not be examined except by coram nobis. The Courts of Appeals for the Sixth and Ninth Circuits have held that motion available for claims of insanity.16 The Third and Fourth Circuits have made similar rulings in cases similar to this.17 The Fifth Circuit remanded for inquiry into a movant's allegation upon a similar motion that witnesses against him had been coerced by officers to commit perjury in testifying against him.18 In many other cases federal courts have taken cognizance of motions in the nature of coram nobis but denied them because the circumstances did not make coram nobis available.19 There are few cases where the power to consider a motion for coram nobis relief has been denied.20 9 The contention is made that § 2255 of Title 28, U.S.C., 28 U.S.C.A. § 2255, providing that a prisoner 'in custody' may at any time move the court which imposed the sentence to vacate it, if 'in violation of the Constitution or laws of the United States,' should be construed to cover the entire field of remedies in the nature of coram nobis in federal courts. We see no compelling reason to reach that conclusion. In United States v. Hayman, 342 U.S. 205, 219, 72 S.Ct. 263, 272, we stated the purpose of § 2255 was 'to meet practical difficulties' in the administration of federal habeas corpus jurisdiction. We added: 'Nowhere in the history of Section 2255 do we find any purpose to impinge upon prisoners' rights of collateral attack upon their convictions.' We know of nothing in the legislative history that indicates a different conclusion. We do not think that the enactment of § 2255 is a bar to this motion, and we hold that the District Court has power to grant such a motion. 10 Continuation of litigation after final judgment and exhaustion or waiver of any statutory right of review should be allowed through this extraordinary remedy only under circumstances compelling such action to achieve justice. There are suggestions in the Government's brief that the facts that justify coram nobis procedure must have been unknown to the judge. Since respondent's youth and lack of counsel were so known, it is argued, the remedy of coram nobis is unavailable. One finds similar statements as to the knowledge of the judge occasionally in the literature and cases of coram nobis.21 Such an attitude may reflect the rule that deliberate failure to use a known remedy at the time of trial may be a bar to subsequent reliance on the defaulted right.22 The trial record apparently shows Morgan was without counsel. United States v. Morgan, 2 Cir., 202 F.2d 67, 69. He alleges he was nineteen, without knowledge of law and not advised as to his rights. The record is barren of the reasons that brought about a trial without legal representation for the accused.23 As the plea was 'guilty' no details of the hearing appear. Cf. DeMeerleer v. Michigan, 329 U.S. 663, 67 S.Ct. 596, 91 L.Ed. 584. In this state of the record we cannot know the facts and thus we must rely on respondent's allegations. 11 In the Mayer case this Court said that coram nobis included errors 'of the most fundamental character'.24 Under the rule of Johnson v. Zerbst, 304 U.S. 458, 468, 58 S.Ct. 1019, 1024, 82 L.Ed. 1461, decided prior to respondent's conviction, a federal trial without competent and intelligent waiver of counsel bars a conviction of the accused.25 Where it cannot be deduced from the record whether counsel was properly waived, we think, no other remedy being then available and sound reasons existing for failure to seek appropriate earlier relief, this motion in the nature of the extraordinary writ of coram nobis must be heard by the federal trial court.26 Otherwise a wrong may stand uncorrected which the available remedy would right. Of course, the absence of a showing of waiver from the record does not of itself invalidate the judgment. It is presumed the proceedings were correct and the burden rests on the accused to show otherwise. Johnson v. Zerbst, supra, 304 U.S. at page 468, 58 S.Ct. 1024; Adams v. U.S. ex rel. McCann, supra, 317 U.S. at page 281, 63 S.Ct. 242; cf. Darr v. Burford, 339 U.S. 200, 218, 70 S.Ct. 587, 597. 12 Although the term has been served, the results of the conviction may persist. Subsequent convictions may carry heavier penalties, civil rights may be affected.27 As the power to remedy an invalid sentence exists, we think, respondent is entitled to an opportunity to attempt to show that this conviction was invalid. 13 Affirmed. 14 Mr. Justice MINTON, with whom The CHIEF JUSTICE, Mr. Justice JACKSON and Mr. Justice CLARK join, dissenting. 15 I am unable to agree with the decision of the Court resurrecting the ancient writ of error coram nobis from the limbo to which it presumably had been relegated by Rule 60(b), F.R.Civ.P. and 28 U.S.C. § 2255, 28 U.S.C.A. § 2255, assuming that the writ has ever been available in the federal courts to review criminal proceedings. A brief reference to the record will emphasize my reasons for doubting the wisdom of this action. 16 On December 18, 1939, respondent, upon a plea of guilty, was sentenced in a Federal District Court to four years' imprisonment on each of eight counts charging divers violations of 18 U.S.C. § 317 (now 18 U.S.C. §§ 1702, 1708, 18 U.S.C.A. §§ 1702, 1708) and 18 U.S.C. § 347 (now 18 U.S.C. § 500, 18 U.S.C.A. § 500). The sentences ran concurrently and were fully served by respondent, during which time he never questioned their validity. In 1950, respondent was convicted of a state crime, apparently attempted burglary in the third degree, by a New York court and sentenced under that State's multiple Offenders Law.1 The 1939 federal conviction was relied upon to bring respondent within the multiple offenders statute, making possible an increased sentence for the state offense. Respondent is now imprisoned by New York pursuant to that sentence. 17 Approximately fourteen months after the New York conviction, more than twelve years after being sentenced on the federal conviction, and more than eight years after the federal sentence was completed, respondent filed this 'Application for a Writ of Error Coram Nobis' in the Federal District Court in which he had been convicted. He requested that the federal judgment of conviction 'be set aside, vacated, and be declared null and void' since at the time of the conviction, he neither had the assistance of counsel nor was informed of his constitutional right to counsel, and at the time was only nineteen years of age and without knowledge of the law. Respondent did not allege his innocence of the federal charges or set forth any facts from which innocence could be inferred. And respondent has attempted no explanation of his prolonged delay in seeking to remedy the asserted violation of his constitutional rights, nor intimated that he is now suffering some federal disability as a result of the conviction. 18 The Court now holds that the validity of a conviction by a federal court for a federal offense may be inquired into, long after the punishment imposed for such offense has been satisfied, by a 'motion in the nature of a writ of error coram nobis' whenever the federal conviction is taken into account by a state court in imposing sentence for a state crime. The basis for this highly unusual procedure is said to be the all-writs section of the Judicial Code, 28 U.S.C. § 1651(a), 28 U.S.C.A. § 1651(a), which provides that: 19 'The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.'2 20 I agree with the majority for the reasons given that procedures other than under the all-writs section are not open to respondent under the circumstances of this case. But I am also convinced that the all-writs section does not countenance the relief sought. Two essential prerequisites to the issuance of a writ pursuant to that statute are lacking: (1) the writ here authorized is not in aid of the jurisdiction of the District Court, and (2) the writ is not 'agreeable to the usages and principles' of present-day law. 21 That the writ does not issue in aid of the jurisdiction of the District Court appears obvious. Respondent has received a final judgment of conviction, has satisfied the sentence imposed thereunder, and is no longer subject to punishment or control by the court because of the conviction. Therefore, I believe that the jurisdiction of the District Court has been exhausted, the judgment is functus officio, and we should hold that it is no longer subject to collateral attack, just as the courts generally have held that an appeal will not lie from a judgment of conviction when the judgment has been satisfied. Gillen v. United States, 9 Cir., 199 F.2d 454; Bergdoll v. United States, 3 Cir., 279 F. 404.3 Insofar as is shown here, all federal consequences of the proceedings have ended and hence the jurisdiction of the District Court should be held to have ended also. Cf. Ex parte Lange, 18 Wall. 163, 85 U.S. 163, 21 L.Ed. 872; United States v. Plumer, 27 Fed.Cas. No. 16,056, pp. 561, 573—574. See Tinkoff v. United States, 7 Cir., 129 F.2d 21, 23. Writs may be issued under the all-writs section in aid of a jurisdiction that already exists, not to regain a jurisdiction that has been exhausted. Cf. Adams v. United States ex rel. McCann, 317 U.S. 269, 63 S.Ct. 236, 87 L.Ed. 268; Whitney v. Dick, 202 U.S. 132, 26 S.Ct. 584, 50 L.Ed. 963; M'Clung v. Silliman, 6 Wheat. 598, 5 L.Ed. 340. If anything, the purpose of this writ would appear to be to aid the jurisdiction of the New York courts because of their professed inability to inquire into the validity of a federal conviction serving as a basis for an increased sentence under the multiple offenders laws.4 22 As to the second prerequisite—that the writ be agreeable to the usages and principles of law—I am of the view that resort to the common law writ of coram nobis has been precluded, if it was ever available in the federal courts to reach matters such as are involved here. See United States v. Smith, 331 U.S. 469, 475, note 4, 67 S.Ct. 1330, 1333, 91 L.Ed. 1610; United States v. Mayer, 235 U.S. 55, 35 S.Ct. 16, 59 L.Ed. 129; United States v. Port Washington Brewing Co., D.C., 277 F. 306. The writ issued at common law to correct errors of fact unknown to the court at the time of the judgment, without fault of the defendant, which, if known, would probably have prevented the judgment.5 The probability of a different result if the facts had been know is a prime requisite to the success of the writ. The sentencing court here must have known that respondent did not have an attorney and was not advised of his right to counsel, if such are the facts. What then was it that the court didn't know which if it had known would probably have produced a different result? The respondent doesn't say, nor does he suggest how a lawyer might have helped him unless he picked the lock on the jail house door.6 23 Proceedings to obtain the writ are generally considered to be civil in nature,7 just as habeas corpus is a civil proceeding although most often used to obtain relief from criminal judgments.8 Rule 60(b) of the Civil Rules expressly abolishes writs of error coram nobis and prescribes that civil proceedings for attacking a final judgment shall be by motion as provided in the Rules or by an independent action. Six grounds for such relief are set forth in Rule 60(b),9 which also requires that a motion thereunder shall be made within a year after the judgment if based on mistake, newly-discovered evidence, or fraud, and 'within a reasonable time' if bottomed on other grounds. 24 Leaving open the question of whether respondent has advanced sufficient reasons for relief pursuant to Rule 60(b) if the proceedings had been timely commenced, he has not established that these proceedings were instituted within a reasonable time after entry of the judgment of conviction, even if the one-year period of limitation is not applicable. Respondent has not sought to explain his long delay in seeking to set aside the federal judgment, and twelve years' delay would appear to be unreasonable on its face, absent unusual circumstances which are not shown to be present here. United States v. Moore, 7 Cir., 166 F.2d 102, 105; Farnsworth v. United States, 91 U.S.App.D.C. 121, 198 F.2d 600; United States v. Bice, D,.c., 84 F.Supp. 290, affirmed, 4 Cir., 177 F.2d 843. 25 Apparently, having once abolished the common law writ of coram nobis, the Court now undertakes to reestablish it under the name of 'a motion in the nature of coram nobis' in order to escape the limitations laid down in Rule 60(b). Rule 60(b) is said to be inapplicable because coram nobis may be sought by a motion in the criminal case rather than in a separate, independent proceeding. There is no indication that this 'application' was intended as a motion in the case rather than as an independent proceeding to set aside the prior judgment, and several courts have stated that coram nobis proceedings retain their civil character under the modern practice.10 26 But assuming the Civil Rules to be inapposite, I believe that Congress superseded the common law writ of coram nobis in enacting 28 U.S.C. § 2255, 28 U.S.C.A. § 2255.11 As the Reviser's Note makes clear, that section 'restates, clarifies and simplifies the procedure in the nature of the ancient writ of error coram nobis.'12 H.R.Rep. No. 308, 80th Cong., 1st Sess. A 180. See United States v. Hayman, 342 U.S. 205, 214—219, 72 S.Ct. 263, 269—272. In enacting this comprehensive procedure for collateral attacks on federal criminal judgments, Congress has supplied the remedy to which resort must be had. Since Congress did not see fit in § 2255 to extend the remedy there provided to persons not in federal custody under the judgment attacked, I do not feel free to do so. 27 It may be said that the federal conviction is still being used against respondent and, therefore, some relief ought to be available. Of course the record of a conviction for a serious crime is often a lifelong handicap. There are a dozen ways in which even a person who has reformed, never offended again, and constantly endeavored to lead an upright life may be prejudiced thereby. The stain on his reputation may at any time threaten his social standing or affect his job opportunities, for example. Is coram nobis also to be available in such cases? The relief being devised here is either wide open to every ex-convict as long as he lives or else it is limited to those who have returned to crime and want the record expunged to lessen a subsequent sentence. Either alternative seems unwarranted to me. 28 The important principle that means for redressing deprivations of constitutional rights should be available often clashes with the also important principle that at some point a judgment should become final—that litigation must eventually come to an end. These conflicting principles have traditionally been accommodated in federal criminal cases by permitting collateral attack on a judgment only during the time that punishment under the judgment is being imposed, and Congress has so limited the use of proceedings by motion under 28 U.S.C. § 2255, 28 U.S.C.A. § 2255. If that is to be changed, Congress should do it. 1 New York Penal Law, McK.Consol.Laws, c. 40, § 1941. 2 28 U.S.C. § 2255, 28 U.S.C.A. § 2255: 'A prisoner in custody under sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack, may move the court which imposed the sentence to vacate, set aside or correct the sentence.' 3 Darr v. Burford, 339 U.S. 200, 203—204, 70 S.Ct. 587, 589, 590, 94 L.Ed. 761: 'The writ of habeas corpus commands general recognition as the essential remedy to safeguard a citizen against imprisonment by State or Nation in violation of his constitutional rights. To make this protection effective for unlettered prisoners without friends or funds, federal courts have long disregarded legalistic requirements in examining applications for the writ and judged the papers by the simple statutory test of whether facts are alleged that entitle the applicant to relief.' 4 Such a motion is a step in the criminal case and not, like habeas corpus where relief is sought in a separate case and record, the beginning of a separate civil Proceeding. Kurtz v. Moffitt, 115 U.S. 487, 494, 6 S.Ct. 148, 149, 29 L.Ed. 458. While at common law the writ of error coram nobis was issued out of chancery like other writs, Stephens, Principles of Pleading, 3d Amer. ed., 142, the procedure by motion in the case is now the accepted American practice. Pickett's Heirs v. Legerwood, 7 Pet. 144, 147, 8 L.Ed. 638; Wetmore v. Karrick, 205 U.S. 141, 151, 27 S.Ct. 434, 436, 51 L.Ed. 745; United States v. Mayer, 235 U.S. 55, 67, 35 S.Ct. 16, 18, 59 L.Ed. 129. As it is such a step, we do not think that Rule 60(b), Fed.Rules Civ.Proc., 28 U.S.C.A., expressly abolishing the writ of error coram nobis in civil cases, applies. This motion is of the same general character as one under 28 U.S.C. § 2255, 28 U.S.C.A. § 2255. See Reviser's Note. Cf. United States v. Kerschman, 7 Cir., 201 F.2d 682, 684. And see contra to the above note, People v. Kemnetz, 296 Ill.App. 119, 15 N.E.2d 883. 5 United States v. Bradford, 2 Cir., 194 F.2d 197, 201; see also Tinder v. United States, 345 U.S. 565, 73 S.Ct. 911. 6 28 U.S.C. § 1651(a), 28 U.S.C.A. § 1651(a): 'The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions agreeable to the usages and principles of law.' Reviser's Note: 'The revised section extends the power to issue writs in aid of jurisdiction, to all courts established by Act of Congress, thus making explicit the right to exercise powers implied from the creation of such courts.' 7 1 Stat. 81—82: 'That all the before-mentioned courts of the United States, shall have power to issue writs of scire facias, habeas corpus, and all other writs not specially provided for by statute, which may be necessary for the exercise of their respective jurisdictions, and agreeable to the principles and usages of law. * * *' 8 See United States Alkali Export Ass'n v. United States, 325 U.S. 196, 201, 65 S.Ct. 1120, 1124, 89 L.Ed. 1554; cf. United States v. Beatty, 232 U.S. 463, 467, 34 S.Ct. 392, 394, 58 L.Ed. 686. 9 2 Tidd's Practice (4th Amer. ed.) 1136—1137: 'if a judgment in the King's Bench be erroneous in matter of fact only, and not in point of law, it may be reversed in the same court, by writ of error coram nobis, or quae coram nobis resident; so called, from its being founded on the record and process, which are stated in the writ to remain in the court of the lord the king, before the king himself; as where the defendant, being under age, appeared by attorney, or the plaintiff or defendant was a married woman at the time of commencing the suit, or died before verdict, or interlocutory judgment: for error in fact is not the error of the judges and reversing it is not reversing their own judgment. So, upon a judgment in the King's Bench, if there be error in the process, or through the default of the clerks, it may be reversed in the same court, by writ of error coram nobis: * * *.' 10 Stephens, Principles of Pleading (3d Amer. ed.), 143; 2, Bishop, New Criminal Procedure (2d ed.) 1181. 11 See citations in n. 10, and United States v. Plumer, 27 Fed.Cas.No.16,056, pp. 561, 572, Mr. Justice Clifford; O'Connell v. The Queen, 2 Cl. & Fin. (House of Lords Reps.) 155, 233, 252. 12 Archbold (7th ed., Chitty, 1840) 350, 389; 1 Holdsworth, History of English Law (1903) 224. 13 A collection of these cases appears in an article by Abraham L. Freedman, Esq., 3 Temple L.Q. 365, 372. See Bronson v. Schulten, 104 U.S. 410, 416, 26 L.Ed. 797. 14 Ex parte Toney, 11 Mo. 661; Adler v. State, 35 Ark. 517; Sanders v. State, 85 Ind. 318; Hogan v. Court, 296 N.Y. 1, 9, 68 N.E.2d 849. See also a discussion of the New York cases by Judge Stanley H. Fuld, The Writ of Error Coram Nobis, New York L.J. issues of June 5, 6, 7, 1947; note, 34 Cornell L.Q. 596. Spence v. Dowd, 7 Cir., 145 F.2d 451; cf. Hysler v. Florida, 315 U.S. 411, 316 U.S. 642, 62 S.Ct. 688, 86 L.Ed. 932; Taylor v. Alabama, 335 U.S. 252, 68 S.Ct. 1415, 92 L.Ed. 1935; People ex rel. v. Green 355 Ill. 468, 189 N.E. 500. 15 '* * * and even if it be assumed that in the case of errors in certain matters of fact, the district courts may exercise in criminal cases—as an incident to their powers expressly granted—a correctional jurisdiction at subsequent terms analogous to that exercised at common law on writs of error coram nobis (See Bishop, New Crim.Proc., 2d ed., § 1369), as to which we express no opinion, that authority would not reach the present case. This jurisdiction was of limited scope; the power of the court thus to vacate its judgments for errors of fact existed, as already stated, in those cases where the errors were of the most fundamental character; that is, such as rendered the proceeding itself irregular and invalid.' 235 U.S. at page 69, 35 S.Ct. at page 19. See also Bronson v. Schulten, 104 U.S. 410, 416, 26 L.Ed. 797; Phillips v. Negley, 117 U.S. 665, 673, 6 S.Ct. 901, 904, 29 L.Ed. 1013. In United States v. Smith, 331 U.S. 469, 475, note 4, 67 S.Ct. 1330, 1333, 91 L.Ed. 1610, we referred to the slight need for a remedy like coram nobis in view of the modern substitutes. 16 Allen v. United States, 162 F.2d 193; Robinson v. Johnston, 118 F.2d 998, 1001, vacated and remanded for further proceedings 316 U.S. 649, 62 S.Ct. 1301, 86 L.Ed. 1732. 17 Roberts v. United States, 4 Cir., 158 F.2d 150; United States v. Steese, 3 Cir., 144 F.2d 439. See also United States v. Monjar, D.C., 64 F.Supp. 746. 18 Garrison v. United States, 154 F.2d 106, 107; cf. Pierce v. United States, 154 F.2d 848. 19 Tinkoff v. United States, 7 Cir., 129 F.2d 21; Barber v. United States, 4 Cir., 142 F.2d 805; Spaulding v. United States, 6 Cir., 155 F.2d 919; United States v. Moore, 7 Cir., 166 F.2d 102; Crowe v. United States, 4 Cir., 169 F.2d 1022; Bice v. United States, 4 Cir., 177 F.2d 843; United States v. Rockower, 2 Cir., 171 F.2d 423; Farnsworth v. United States, 91 U.S.App.D.C. 121, 198 F.2d 600. Cf. Strang v. United States, 5 Cir., 53 F.2d 820, 821. 20 United States v. Kerschman, 7 Cir., 201 F.2d 682; Gilmore v. United States, 10 Cir., 129 F.2d 199. 21 56 Yale L.J. 197, 233; 34 Cornell L.Q. 598; Robinson v. Johnston, 118 F.2d 998, 1001, vacated and remanded for further proceedings 316 U.S. 649, 62 S.Ct. 1301, 86 L.Ed. 1732. 22 Brown v. Allen, 344 U.S. 443, 486, 73 S.Ct. 397, 422; see Gayes v. New York, 332 U.S. 145, 149, note 3, 67 S.Ct. 1711, 1713, 91 L.Ed. 1962; note, 58 A.L.R. 1286. 23 Until Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, there was no uniform practice in the federal courts to have the orders show the judges' conclusion that there had been a competent waiver of counsel. Cf. United States v. Steese, 3 Cir., 144 F.2d 439, 443. 24 See note 15, supra. Barber v. United States, 4 Cir., 142 F.2d 805, 807; Bronson v. Schulten, 104 U.S. 410, 416, 26 L.Ed. 797; Powell, Appellate Proceedings (1872) 108; Black, Judgments (2d ed.) 460. 25 See also Walker v. Johnston, 312 U.S. 275, 61 S.Ct. 574, 85 L.Ed. 830; Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680; Fed.Rule Crim.Proc. rule 44. 26 Cf. Brown v. Allen, supra, 344 U.S. at pages 485—486, 73 S.Ct. 421—422. 27 Fiswich v. United States, 329 U.S. 211, 67 S.Ct. 224, 91 L.Ed. 196; note, 59 Yale L.J. 786. 1 New York Penal Law, § 1941. 2 Emphasis added. 3 Decisions of state courts on the point are collected in 24 C.J.S., Criminal Law § 1668; 17 C.J., Criminal Law §§ 3326, 3327. 4 We do not know, moreover, that New York will modify its second offencer sentence, imposed at a time when the federal conviction had not been questioned, even if the federal conviction is later vacated. 5 United States v. Mayer, 235 U.S. 55, 67—69, 35 S.Ct. 16, 18—19; Robinson v. Johnston, 9 Cir., 118 F.2d 998, 1001, vacated, 316 U.S. 649, 62 S.Ct. 1301, 86 L.Ed. 1732, reversed on other grounds, 9 Cir., 130 F.2d 202; Freedman, The Writ of Error Coram Nobis, 3 Temp.L.Q. 365. The scope of the writ has been expanded by some States to provide a vehicle for collateral redress of denials of constitutional rights, usually because the traditional procedures for affording such relief are for some reason inadequate. Hysler v. Florida, 315 U.S. 411, 415, 316 U.S. 642, 62 S.Ct. 688, 690, 86 L.Ed. 932; Fuld, The Writ of Error Coram Nobis, 117 N.Y.L.J. 2212, 2230, 2248; Note, 26 Ind.L.J. 529; Note, 39 Ky.L.J. 440. 6 See United States v. Moore, 7 Cir., 166 F.2d 102. 7 People v. Kemnetz, 296 Ill.App. 119, 15 N.E.2d 883; State ex rel. Meyer v. Youngblood, 221 Ind. 408, 48 N.E.2d 55; State ex rel. Cutsinger v. Spencer, 219 Ind. 148, 41 N.E.2d 601; State v. Ray, 111 Kan. 350, 207 P. 192; Elliott v. Commonwealth, 292 Ky. 614, 167 S.W.2d 703; cf. United States v. Kerschman, 7 Cir., 201 F.2d 682. See also cases collected in 24 C.J.S., Criminal Law § 1606(a). 8 Ex parte Tom Tong, 108 U.S. 556, 2 S.Ct. 871, 27 L.Ed. 826. 9 'Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, etc. On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.' 10 See cases cited in note 7, supra. 11 'A prisoner in custody under sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack, may move the court which imposed the sentence to vacate, set aside or correct the sentence.' 12 Emphasis added.

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346 U.S. 537 74 S.Ct. 257 98 L.Ed. 273 THEATRE ENTERPRISES, Inc.v.PARAMOUNT FILM DISTRIBUTING CORP. et al. No. 19. Argues Nov. 30 and Dec. 1, 1953. Decided Jan. 4, 1954. Messrs. Philip B. Perlman, Holmes Baldridge, Washington, D.C., for petitioner. Messrs. Bruce Bromley, Ferdinand Pecora, New York City, for respondents. Mr. Justice CLARK delivered the opinion of the Court. 1 Petitioner brought this suit for treble damages and an injunction under §§ 4 and 16 of the Clayton Act,1 alleging that respondent motion picture producers and distributors2 had violated the antitrust laws3 by conspiring to restrict 'first-run'4 pictures to downtown Baltimore theatres, thus confining its suburban theatre to subsequent runs and unreasonable 'clearances.'5 After hearing the evidence a jury returned a general verdict for respondents. The Court of Appeals for the Fourth Circuit affirmed the judgment based on the verdict. 201 F.2d 306. We granted certiorari. 345 U.S. 963, 73 S.Ct. 948. 2 Petitioner now urges, as it did in the Court of Appeals, that the trial judge should have directed a verdict in its favor and submitted to the jury only the question of the amount of damages. Alternatively, petitioner claims that the trial judge erred by inadequately instructing the jury as to the scope and effect of the decrees in United States v. Paramount Pictures, Inc., the Government's prior equity suit against respondents.6 We think both contentions are untenable. 3 The opinion of the Court of Appeals contains a complete summary of the evidence presented to the jury. We need not recite that evidence again. It is sufficient to note that petitioner owns and operates the Crest Theatre, located in a neighborhood shopping district some six miles from the downtown shopping center in Baltimore, Maryland. The Crest, possessing the most modern improvements and appointments, opened on February 26, 1949. Before and after the opening, petitioner, through its president, respeatedly sought to obtain first-run features for the theatre. Petitioner approached each respondent separately, initially requesting exclusive first-runs, later asking for first-runs on a 'day and date' basis.7 But respondents uniformly rebuffed petitioner's efforts and adhered to an established policy of restricting first-runs in Baltimore to the eight downtown theatres. Admittedly there is no direct evidence of illegal agreement between the respondents and no conspiracy is charged as to the independent exhibitors in Baltimore, who account for 63% of first-run exhibitions. The various respondents advanced much the same reasons for denying petitioner's offers. Among other reasons they asserted that day and date first-runs are normally granted only to noncompeting theatres. Since the Crest is in 'substantial competition' with the downtown theatres, a day and date arrangment would be economically unfeasible. And even if respondents wished to grant petitioner such a license, no downtown exhibitor would waive his clearance rights over the Crest and agree to a simultaneous showing. As a result, if petitioner were to receive first-runs, the license would have to be an exclusive one. However, an exclusive license would be economically unsound because the Crest is a suburban theatre, located in a small shopping center, and served by limited public transportation facilities; and, with a drawing area of less than one-tenth that of a downtown theatre, it cannot compare with those easily accessible theatres in the power to draw patrons. Hence the downtown theatres offer far greater opportunities for the widespread advertisement and exploitation of newly released features, which is thought necessary to maximize the overall return from subsequent runs as well as first-runs. The respondents, in the light of these conditions, attacked the guaranteed offers of petitioner, one of which occurred during the trial, as not being made in good faith. Respondents Loew's and Warner refused petitioner an exclusive license because they owned the three downtown theatres receiving their first-run product. 4 The crucial question is whether respondents' conduct toward petitioner stemmed from independent decision or from an agreement, tacit or express. To be sure, business behavior is admissible circumstantial evidence from which the fact finder may infer agreement. Interstate Circuit, Inc. v. United States, 1939, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610; United States v. Masonite Corp., 1942, 316 U.S. 265, 62 S.Ct. 1070, 86 L.Ed. 1461; United States v. Bausch & Lomb Optical Co., 1944, 321 U.S. 707, 64 S.Ct. 805, 88 L.Ed. 1024; American Tobacco Co. v. United States, 1946, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575; United States v. Paramount Pictures, Inc., 1948, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260. But this Court has never held that proof of parallel business behavior conclusively establishes agreement or, phrased differently, that such behavior itself constitutes a Sherman Act offense. Circumstantial evidence of consciously parallel behavior may have made beavy inroads into the traditional judicial attitude toward conspiracy;8 but 'conscious parallelism' has not yet read conspiracy out of the Sherman Act entirely. Realizing this, petitioner attempts to bolster its argument for a directed verdict by urging that the conscious unanimity of action by respondents should be 'measured against the background and findings in the Paramount case.' In other words, since the same respondents had conspired in the Paramount case to impose a uniform system of runs and clearances without adequate explanation to sustain them as reasonable restraints of trade, use of the same device in the present case should be legally equated to conspiracy. But the Paramount decrees, even if admissible, were only prima facie evidence of a conspiracy covering the area and existing during the period there involved. Alone or in conjunction with the other proof of the petitioner, they would form no basis for a directed verdict. Here each of the respondents had denied the existence of any collaboration and in addition had introduced evidence of the local conditions surrounding the Crest operation which, they contended, precluded it from being a successful first-run house. They also attacked the good faith of the guaranteed offers of the petitioner for first-run pictures and attributed uniform action to individual business judgment motivated by the desire for maximum revenue. This evidence, together with other testimony of an explanatory nature, raised fact issues requiring the trial judge to submit the issue of conspiracy to the jury. 5 Petitioner next contends that the trial judge, when instructing the jury, failed to give sufficient weight to the Paramount decrees. The decrees were admitted in evidence pursuant to § 5 of the Clayton Act,9 which provides that a final judgment or decree rendered against a defendant in an equity suit brought by the United States under the antitrust laws 'shall be prima facie evidence against such defendant in any suit or proceeding brought by any other party against such defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto * * *.' Exercising his discretion to choose the precise manner of explaining a decree to the jury,10 the trial judge instructed that: 6 '* * * (T)hese same defendants had, at a time previous to the opening of the Crest Theatre, conspired together in restraint of trade in violation of these same Anti-Trust laws, in restricting to themselves first run and in establishing certain clearances in numerous places throughout the United States. Thus, these proven facts, I instruct you, become prima facie evidence in the present case, which the plaintiff may use in support of its claim that what the defendants have done since those decrees, in the present case in Baltimore, is within the prohibition of those earlier decrees. However, this is only prima facie evidence. There was not before the Court in the prior case the present factual situation which is before you now with respect to Baltimore theatres. Therefore, it is still necessary in the present case, in order for the plaintiff to recover, for it to prove to your satisfaction, by the weight of the credibel evidence, that these defendants, or some of them, have conspired in an unreasonable manner to keep first run exhibitions from the plaintiff, or have conspired to restrict plaintiff to clearances which are unreasonable. 7 These instructions, petitioner argues, were 'so superficial and so limited as to deprive petitioner of any of the benefits conferred upon it' by § 5. 8 We cannot agree. The trial judge instructed, in effect, that the Paramount decrees alone could not support a recovery by petitioner; additional evidence was required to relate the presumed Paramount conspiracy to Baltimore and to the claimed damage period. The reasons for this are clear. The Paramount decrees did not rest on findings, nor were the findings based on evidence, of a particular conspiracy concerning restrictions on runs and clearances in Baltimore theatres; yet such a conspiracy is the nub of plaintiff's claim. The Paramount case involved a conspiracy found to exist as of 195, which was enjoined no later than June 25, 1948;11 but the conspiracy alleged here involves a claimed damage period running from February 1949 to March 1950. Indeed, the relevancy of Paramount to the instant case is slight. We need not pass on respondents' contention that petitioner was entitled to no benefit at all from the earlier decrees. We merely hold that petitioner was entitled to no greater benefit than the trial judge gave it. 9 Affirmed. 10 Mr. Justice BLACK would reverse, being of opinion that the trial judge's charge to the jury as to the burden of proof resting on petitioner deprived it of a large part of the benefits intended to be afforded by the prima facie evidence provision of § 5 of the Clayton Act. 11 Mr. Justice DOUGLAS withdrew from the case after its submission and took no part in this decision. 1 38 Stat. 731, 737, 15 U.S.C. §§ 15, 26, 15 U.S.C.A. §§ 15, 26. 2 Respondents are: Paramount Film Distributing Corp., Loew's Inc., RKO Radio Pictures, Inc., Twentieth Century-Fox Film Corp., Universal Film Exchanges, Inc., United Artists Corp., Warner Bros. Pictures Distributing Corp., Warner Bros. Circuit Management Corp., Columbia Pictures Corp. 3 Sections 1 and 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2, and § 2 of the Clayton Act, 38 Stat. 730, as amended, 15 U.S.C. §§ 13, 15 U.S.C.A. § 13. Petitioner has dropped the allegation of a Clayton Act violation. 4 'Runs are successive exhibitions of a feature in a given area, first-run being the first exhibition in that arear, second-run being the next subsequent, and so on * * *.' United States v. Paramount Pictures, Inc., 1948, 334 U.S. 131, 144—145, note 6, 68 S.Ct. 915, 923, 92 L.Ed. 1260. 5 'A clearance is the period of time, usually stipulated in license contracts, which must elapse between runs of the same feature within a particular area or in specified theatres.' United States v. Paramount Pictures, Inc., 1948, 334 U.S. 131, 144, note 6, 68 S.Ct. 915, 923, 92 L.Ed. 1260. 6 D.C.1946, 66 F.Supp. 323; Ic., D.C.1946, 70 F.Supp. 53, reversed and remanded in part, 1948, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260; Id., D.C.1949, 85 F.Supp. 881, affirmed Twentieth Century-Fox Fox Film Corp. v. United States, 1950, 339 U.S. 974, 70 S.Ct. 1032, 94 L.Ed. 1380. 7 A first-run 'day-and-date' means that two theatres exhibit a first-run at the same time. Had petitioner's request for a day and date first-run been granted, the Crest and a downtown theatre would have exhibited the same features simultaneously. 8 Rahl, Conspiracy and the Anti-Trust Laws, 44 Ill.L.Rev. 743 (1950). 9 38 Stat. 731, 15 U.S.C. § 16, 15 U.S.C.A. § 16; Note, 65 Harv.L.Rev. 1400 (1952). 10 Emich Motors Corp. v. General Motors Corp., 1951, 340 U.S. 558, 71 S.Ct. 408, 95 L.Ed. 534; 61 Yale L.J. 417 (1952). 11 The 1946 decree of the three-judge District Court enjoined the defendants, inter alia, from conspiring with respect to runs and clearances. The decree was stayed by Mr. Justice Reed pending the appeal to this Court. The stay expired, by its own terms, when the Court rendered its decision on May 3, 1948. But this decision, remanding the case to the District Court for further consideration, in no way altered the lower court's findings as to runs and clearances. 334 U.S. 131, 144—148, 68 S.Ct. 915, 92 L.Ed. 1260; 85 F.Supp. 881, 885, 897. Hence, the injunctive provisions of the 1946 decree concerning runs and clearances were left intact. Following this Court's decision, the order on mandate was entered in the District Court on June 25, 1948.

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346 U.S. 545 74 S.Ct. 280 98 L.Ed. 281 SALSBURGv.STATE OF MARYLAND. No. 38. Argued Oct. 20, 1953. Decided Jan. 11, 1954. Mr. Herbert Myerberg, Baltimore, Md., for appellant. Mr. Ambrose T. Hartman, Baltimore, Md., for appellee, pro hac vice, by special leave of Court. Mr. Justice BURTON delivered the opinion of the Court. 1 The ultimate issue here is whether Maryland has violated the Equal Protection Clause of the Fourteenth Amendment by authorizing its courts, in prosecutions in Anne Arundel County for certain gambling misdemeanors, to admit evidence procured by illegal search or seizure. The violation is charged because Maryland, at the same time, prohibits the admission of such evidence in like prosecutions in other counties, and, even in Anne Arundel County, prohibits its admission in prosecutions for many other misdemeanors. For the reasons hereafter stated, we hold that Maryland's action is valid. 2 In 1952, police officers of Anne Arundel County arrested the appellant, Salsburg, and two other men, in a two-room building in the rear of a garage on the Governor Ritchie Highway in that County. The officers had no warrant but, when they received no answer to their knock on the locked door of the rear room, they broke it open with an ax. Upon entering, they found appellant and two companions, apparently engaged in operating a betting pool on horse races, and arrested them. The officers seized three telephones, two adding machines, several racing forms and much paraphernalia commonly used in operating such a betting pool. The State concedes that the entry, search and seizure were illegal. 3 Salsburg and his companions were brought to trial in the Circuit Court of Anne Arundel County charged with making or selling a book or pool on the result of a running race of horses in violation of Flack's Md.Ann.Code 1951, Art. 27, § 306.1 Before trial each of the accused moved to quash the warrant, suppress and return the seized evidence, and dismiss the proceeding against him, all on the ground that the proceeding depended upon illegally seized evidence. Each claimed that the admission of such evidence was prohibited by a Maryland statute, known as the Bouse Act, and that a 1951 amendment to that Act which purported to allow the admission of such evidence, in such a prosecution in Anne Arundel County, was invalid because in violation of the Fourteenth Amendment.2 The trial court admitted the evidence. Each of the accused was convicted and sentenced to serve six months in the Maryland House of Correction as well as to pay $1,000 plus costs. The Court of Appeals of Maryland affirmed the convictions of Salsburg's companions on the ground that neither of them could complain of the illegality of the search or seizure because they had no title to or interest in the premises searched. Rizzo v. State of Maryland, Md., 93 A.2d 280. As to Salsburg, the tenant of the premises, the Court of Appeals heard further argument on the constitutionality of the 1951 amendment and then affirmed the trial court. Md., 94 A.2d 280. His case is here on appeal. 28 U.S.C. (Supp. V) § 1257(2), 28 U.S.C.A. § 1257(2). 4 The history of the Bouse Act is enlightening. Originally Maryland courts followed the common-law practice of admitting evidence in criminal prosecutions without regard to the legality of its obtention. Lawrence v. State of Maryland, 103 Md. 17, 32 37, 63 A. 96, 102—104. In 1914, the decision in Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652, announced a contrary rule of practice in the federal courts. It held that evidence illegally seized by federal officers is not admissible in federal prosecutions. In 1928, the Court of Appeals of Maryland declined to adopt that practice and reaffirmed the Maryland common-law practice. Meisinger v. State of Maryland, 155 Md. 195, 141 A. 536; 142 A. 190. In 1929, the General Assembly of Maryland passed the Bouse Act substantially adopting the federal practice for prosecutions of misdemeanors in the state courts.3 5 This left the common-law practice in effect in felony cases. Marshall v. State of Maryland, 182 Md. 379, 384, 35 A.2d 115, 118; Delnegro v. State of Maryland, 198 Md. 80, 86, 81 A.2d 241, 244. 6 In 1935, prosecutions under the 'Health-Narcotic Drugs' subtitle of the general title 'Crimes and Punishments' were exempted from the Bouse Act.4 In 1947, a proviso was added exempting, in Baltimore County, prosecutions for unlawfully carrying a concealed weapon. Md.Laws 1947, c. 752. In 1951, that proviso was extended to Baltimore City and 13 counties, including Anne Arundel. Md.Laws 1951, c. 145. In the same year the amendment now before us exempted prosecutions in Anne Arundel County 'for a violation of the gambling laws as contained in Sections 288 to 307, inclusive, of Article 27 of the Annotated Code of Maryland (1939 Edition) (now §§ 303—329 of the 1951 edition), sub-title 'Gaming,' or in any laws amending or supplementing said subtitle.' Id., c. 704. Also in 1951 this exemption was extended to Wicomico and Prince George's Counties. Id., c. 710.5 7 Appellant concedes that the State has the legislative 'power' to choose either the rule which excludes or that which admits illegally seized evidence. He does not attack the validity of the application of one to felonies and of the other to misdemeanors. He contends, however, that the Equal Protection Clause of the Fourteenth Amendment is violated when Maryland admits the illegally seized evidence in prosecutions for certain misdemeanors in certain counties, but excludes it in prosecutions for the same type of misdemeanors in other counties and for somewhat comparable misdemeanors in the same and other counties. He sees no rational basis for the classifications made in the 1951 amendment. 8 Whatever may be our view as to the desirability of the classifications, we conclude that the 1951 amendment is within the liberal legislative license allowed a state in prescribing rules of practice. A state has especially wide discretion in prescribing practice relating to its police power, as is the case here. 9 The 1951 amendment establishes no additional or different offenses in Anne Arundel County. It deals only with the admissibility of evidence in the prosecution of certain misdemeanors otherwise established by law. Rules of evidence, being procedural in their nature, are peculiarly discretionary with the law-making authority, one of whose primary responsibilities is to prescribe procedures for enforcing its laws. Several states have followed diametrically opposite policies as to the admission of illegally seized evidence. See Appendix, Wolf v. People of State of Colorado, 338 U.S. 25, 33—39, 69 S.Ct. 1359, 1364—1367, 93 L.Ed. 1782. See also, Adams v. People of State of New York, 192 U.S. 585, 594—596, 24 S.Ct. 372, 373—374, 48 L.Ed. 575. Maryland seeks to derive some benefit from each of the policies. 10 Appellant complains further that prosecutions for lottery misdemeanors are subject to the rule of exclusion of the Bouse Act, while those for operating gambling pools are exempt. He complains also that prosecutions for violations of county gambling restrictions are subject to the Act, while violations of comparable state gambling restrictions are not. In our opinion such differences are not fatal to the legislative scheme. We do not sit as a superlegislature or a censor. 'To be able to find fault with a law is not to demonstrate its invalidity. It may seem unjust and oppressive, yet be free from judicial interference. The problems of government are practical ones and may justify, if they do not require, rough accommodations,—illogical, it may be, and unscientific.' Metropolis Theater Co. v. City of Chicago, 228 U.S. 61, 69—70, 33 S.Ct. 441, 443, 57 L.Ed. 730. See also, Dominion Hotel v. State of Arizona, 249 U.S. 265, 268, 39 S.Ct. 273, 274, 63 L.Ed. 597. Cf. Johnson v. State of Maryland, 193 Md. 136, 66 A.2d 504. 11 We find little substance to appellant's claim that distinctions based on county areas are necessarily so unreasonable as to deprive him of the equal protection of the laws guaranteed by the Federal Constitution. The Equal Protection Clause relates to equality between persons as such rather than between areas. This was established long ago in a decision which upheld a statute of Missouri requiring that, in the City of St. Louis and four counties, appeals be made to the St. Louis Court of Appeals, whereas appeals made elsewhere in that State must be directed to the Supreme Court of Missouri. Speaking for the Court, Justice Bradley said: 12 '(T)here is nothing in the Constitution to prevent any State from adopting any system of laws or judicature it sees fit for all or any part of its territory. If the State of New York, for example, should see fit to adopt the civil law and its method of procedure for New York City and the surrounding counties, and the common law and its method of procedure for the rest of the State, there is nothing in the Constitution of the United States to prevent its doing so. This would not, of itself, within the meaning of the Fourteenth Amendment, be a denial to any person of the equal protection of the laws. * * * It means that no person or class of persons shall be denied the same protection of the laws which is enjoyed by other persons or other classes in the same place and under like circumstances.' State of Missouri v. Lewis, 101 U.S. 22, 31, 25 L.Ed. 989.6 13 There seems to be no doubt that Maryland could validly grant home rule to each of its 23 counties and to the City of Baltimore to determine this rule of evidence by local option.7 It is equally clear, although less usual, that a state legislature may itself determine such an issue for each of its local subdivisions, having in mind the needs and desires of each. Territorial uniformity is not a constitutional requisite. Ocampo v. United States, 234 U.S. 91, 98—99, 34 S.Ct. 712, 714—715, 58 L.Ed. 1231. 14 Maryland has followed a policy of thus legislating, through its General Assembly, upon many matters of local concern, including the prescription of different substantive offenses in different counties.8 The cumbersomeness of such centrally enacted legislation as compared with the variations which may result from home rule is a matter for legislative discretion, not judicial supervision, except where there is a clear conflict with constitutional limitations. We find no such conflict here. 15 The presumption of reasonableness is with the State.9 While the burden of establishing the reasonableness of the legislation was not on him, the Attorney General of Maryland has suggested here several considerations bearing appropriately upon the action of the General Assembly. Maryland lies largely between the metropolitan centers of Baltimore, in Maryland, and of Washington, in the District of Columbia. Between them are Anne Arundel County, adjoining Baltimore, and Prince George's County, adjoining Washington. In Anne Arundel lies Annapolis, the capital of the State, and considerable rural territory. Those locations suggest that, in matters related to concentrations of population, the state government might well find reason to prescribe, at least on an experimental basis, substantive restrictions and variations in procedure that would differ from those elsewhere in the State. Criminal law provides a long-established field for such legislative discretion.10 In this connection, the Attorney General referred specifically to an increase in gambling activity in Anne Arundel County which he attributed in part to a policy adopted by the Criminal Court of Baltimore in imposing maximum prison sentences for gambling offenses, thus tending to drive gambling operations into adjoining areas. He suggested, as a justification for a legislative distinction between prosecutions for violations of state lottery laws and of the gambling laws here specified, that the former were of a more readily detected and easily proved character than the latter. 16 We find no merit in the suggestion of appellant that the 1951 amendment to the Bouse Act affirmatively sanctions illegal searches and seizures in violation of the Due Process Clause of the Fourteenth Amendment. If the statute were so interpreted such a question might arise.11 However, the Court of Appeals of Maryland has not so interpreted it and nothing in its text suggests approval of illegal searches and seizures. The Act offers to offending searches and seizers no protection or immunity from anything—be it civil liability, criminal liability or disciplinary action. 17 We sustain the validity of the 1951 amendment to the Bouse Act and the judgment of the Court of Appeals of Maryland, accordingly, is affirmed. 18 Affirmed. 19 Mr. Justice REED took no part in the consideration or decision of this case. 20 Mr. Justice DOUGLAS, dissenting. 21 I am still of the view, expressed on other occasions (see Wolf v. People of State of Colorado, 338 U.S. 25, 40, 41, 69 S.Ct. 1359, 1367, 1368, 93 L.Ed. 1782; Schwartz v. State of Texas, 344 U.S. 199, 205, 73 S.Ct. 232, 236) that the Fourteenth and the Fourth Amendments preclude the use in any criminal prosecution of evidence obtained by the lawless action of police officers who, in disregard of constitutional safeguards, ransack houses or places of business without search warrants issued under the strict surveillance which the Constitution commands. 1 In the warrant which started this proceeding before a Justice of the Peace, the section was identified as Art. 27, § 291, Flack's Md.Ann.Code 1939. 2 At the time of the trial, the Bouse Act, including amendments, appeared as follows in Art. 35, § 5, Flack's Md.Ann.Code 1951: 'No evidence in the trial of misdemeanors shall be deemed admissible where the same shall have been procured by, through, or in consequence of any illegal search or seizure or of any search and seizure prohibited by the Declaration of Rights of this State; nor shall any evidence in such cases be admissible if procured by, through or in consequence of a search and seizure, the effect of the admission of which would be to compel one to give evidence against himself in a criminal case; provided, however, that nothing in this section shall prohibit the use of such evidence in Baltimore County, Baltimore City, Anne Arundel, Caroline, Carroll, Cecil, Frederick, Harford, Kent, Prince George's, Queen Anne's, Talbot, Washington, Wicomico and Worcester Counties, in the prosecution of any person for unlawfully carrying a concealed weapon. Provided, further, that nothing in this section shall prohibit the use of such evidence in Anne Arundel, Wicomico and Prince George's Counties in the prosecution of any person for a violation of the gambling laws as contained in Sections 303—329, inclusive, of Article 27, sub-title 'Gaming', or in any laws amending or supplementing said sub-title.' (Emphasis supplied.) 3 The original Bouse Act, Md.Laws 1929, c. 194, consisted of only that part of the first sentence which precedes the first proviso in Art. 35, § 5, Flack's Md.Ann.Code 1951. See note 2, supra. 4 Md.Laws 1935, c. 59, now Art. 27, § 368, of Flack's Md.Ann.Code 1951. 5 This trend has continued. In 1952, the exemption as to prosecutions for unlawfully carrying a concealed weapon was made state wide. Md.Laws 1952, c. 59. In 1953, the exemption as to prosecutions under the above-specified gambling laws has been extended to Worcester, Howard and Cecil Counties. Md.Laws 1953, cc. 84, 419. Finally, prosecutions in Wicomico County, under certain alcoholic beverage laws, have been exempted. Id., c. 581. 6 'The Fourteenth Amendment does not profess to secure to all persons in the United States the benefit of the same laws and the same remedies. Great diversities in these respects may exist in two States separated only by an imaginary line. On one side of this line there may be a right of trial by jury, and on the other side no such right. Each State prescribes its own modes of judicial proceeding. If diversities of laws and judicial proceedings may exist in the several States without violating the equality clause in the Fourteenth Amendment, there is no solid reason why there may not be such diversities in different parts of the same State.' Id., 101 U.S. at page 31. See also, Mallett v. State of North Carolina, 181 U.S. 589, 597—599, 21 S.Ct. 730, 733 734, 45 L.Ed. 1015; Hayes v. State of Missouri, 120 U.S. 68, 72, 7 S.Ct. 350, 352, 30 L.Ed. 578. 7 E.g., as to local option in relation to intoxicating liquor, see Lloyd v. Dollison, 194 U.S. 445, 24 S.Ct. 703, 48 L.Ed. 1062; Rippey v. State of Texas, 193 U.S. 504, 24 S.Ct. 516, 48 L.Ed. 767; and see Fort Smith Light & Traction Co. v. Board of Improvement, 274 U.S. 387, 391, 47 S.Ct. 595, 597, 71 L.Ed. 1112. 8 Without appraising their validity, but as illustrating Maryland practice, we find Flack's Md.Ann.Code 1951, full of such examples. Art. 2B—differing requirements as to sales of alcoholic beverages in various counties and cities; Art. 27, § 136—one county is exempted from a general prohibition against interference with water supply; § 146—deals with the effect of disorderly conduct in three counties; § 545—exempts two counties from certain provisions against placing tacks, broken glass, etc., on highways; § 566—makes special provisions as to junk yards in five counties; §§ 578—610b—prescribe a variety of Sabbath-breaking provisions for several counties and municipalities; Art. 51, § 7—grants a right of jury service to women, except in ten counties; § 9—provides varying methods of selecting jury panels in several counties. 'It has long been the practice of the Maryland Legislature either to enact local laws or to exempt particular counties from the operation of general laws.' Neuenschwander v. Washington Suburban Sanitary Commission, 187 Md. 67, 80, 48 A.2d 593, 600; Stevens v. State of Maryland, 89 Md. 669, 674, 43 A. 929, 931. Cf. Maryland Coal & Realty Co. v. Bureau of Mines, 193 Md. 627, 69 A.2d 471. 9 '* * * It is * * * a maxim of constitutional law that a legislature is presumed to have acted within constitutional limits, upon full knowledge of the facts, and with the purpose of promoting the interests of the people as a whole, and courts will not lightly hold that an act duly passed by the legislature was one in the enactment of which it has transcended its power.' Atchison, T. & S.F.R.Co. v. Matthews, 174 U.S. 96, 104, 19 S.Ct. 609, 612, 43 L.Ed. 909. 'A statutory discrimination will not be set aside as the denial of equal protection of the laws if any state of facts reasonably may be conceived to justify it.' Metropolitan Casualty Ins. Co. v. Brownell, 294 U.S. 580, 584, 55 S.Ct. 538, 540, 79 L.Ed. 1070. See also, Middleton v. Texas Power & Light Co., 249 U.S. 152, 157—158, 39 S.Ct. 227, 228—229, 63 L.Ed. 527; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78 79, 31 S.Ct. 337, 340—341, 55 L.Ed. 369. 10 Metropolitan Casualty Ins. Co. v. Brownell, supra. The State is not bound 'to strike at all evils at the same time or in the same way.' Semler v. Oregon State Board of Dental Examiners, 294 U.S. 608, 610, 55 S.Ct. 570, 571, 79 L.Ed. 1086. 11 '* * * 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.' Wolf v. People of State of Colorado, 338 U.S. 25, 28, 69 S.Ct. 1359, 1361, 93 L.Ed. 1782.

01

346 U.S. 556 74 S.Ct. 298 98 L.Ed. 290 MADRUGAv.SUPERIOR COURT OF STATE OF CALIFORNIA IN AND FOR SAN DIEGO COUNTY. No. 35. Argued Oct. 19, 20, 1953. Decided Jan. 18, 1954. Mr. Eli H. Levenson, San Diego, Cal., for petitioner. Mr. Northcutt Ely, Washington, D.C., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 This case for sale of a vessel and partition of the proceeds pursuant to a California statute began in the Superior Court of San Diego, the home port of the vessel. The plaintiffs were eight individuals including Edward, Anthony, and Joseph Madruga. The defendant was Manuel Madruga on whom personal service was had by summons. The defendant owned a 15% interest and the eight plaintiffs owned undivided interests aggregating 85% in a ship certificated under the maritime laws of the United States. The defendant 15% owner challenged the jurisdiction of the San Diego court on the ground that only the United States district court sitting in admiralty could take jurisdiction to consider such a case. The San Diego court decided it had jurisdiction and was upheld by the State Supreme Court which declined to issue a writ of prohibition.1 40 Cal.2d 65, 251 P.2d 1. Certiorari was granted to consider the state court's jurisdiction. 345 U.S. 963, 73 S.Ct. 950. 2 First. Article III, § 2, of the Constitution extends the judicial power to 'all Cases of admiralty and maritime Jurisdiction * * *.' And since the first Judiciary Act, United States district courts have had jurisdiction of all civil cases of 'admiralty or maritime jurisdiction * * *.' 28 U.S.C. § 1333, 28 U.S.C.A. § 1333. Whether this grants United States district courts power to sell ships for partition of the proceeds has never been squarely decided by this Court. The partition power of admiralty was discussed but left in doubt by Mr. Justice Story in The Steamboat Orleans v. Phoebus, 1837, 11 Pet. 175, 183, 9 L.Ed. 677.2 Some cases in lower federal courts appear to support the jurisdiction of district admiralty courts to order sales for partition, at least where there is a dispute as to use of the ship between part owners having equal interests and shares.3 Other cases indicate that admiralty should not exercise jurisdiction to order partition of ships at the instance either of minority or majority interests.4 The reasoning in all the cases appears to have been that majority control of the ship's operations was in the public interest and admiralty should interfere only to protect minority interests by such special indemnities or bonds as the Court might require of the controlling majority. Other cases have indicated that either a majority or a minority could obtain partition from admiralty on a proper showing.5 Some state courts have sold ships for partition,6 and even at the behest of minority interests;7 others have refused to do so.8 However the diverse holdings in the cases may be viewed,9 there can be no doubt today that United States district courts have broad power over ships that ply navigable waters and are required to be registered or enrolled under a series of Acts of Congress that have been in effect since the first one was passed September 1, 1789,10 1 Stat. 55. This Court has said that admiralty's broad power can under some circumstances be extended to protect the rights and title of persons dealing in such ships. White's Bank of Buffalo v. Smith, 7 Wall. 646, 656, 19 L.Ed. 211. On the other hand, the Court has held that admiralty cannot exercise jurisdiction over a variety of actions which may change or otherwise affect possession of or title to vessels. The Steamer Eclipse, 135 U.S. 599, 608, 10 S.Ct. 873, 875, 34 L.Ed. 269.11 We think, however, that the power of admiralty, as Congress and the courts have developed it over the years, is broad enough for United States district courts to order vessels sold for partition. This brings us to the contention that this federal admiralty power is exclusive. 3 Second. Had Congress simply granted district courts 'admiralty or maritime jurisdiction exclusive of the states' California might not have power to order partition of a ship. But Congress did not stop there. It went on in the first Judiciary Act to say 'saving to suitors, in all cases, the right of a common law remedy, where the common law is competent to give it'. 1 Stat. 73, 77.12 Viewed superficially the clause giving United States district courts exclusive admiralty or maritime jurisdiction appears inconsistent with the clause which permits persons to sue on maritime claims in common law courts. But former decisions of this Court have clarified this seeming conflict. Admiralty's jurisdiction is 'exclusive' only as to those maritime causes of action begun and carried on as proceedings in rem, that is, where a vessel or thing is itself treated as the offender and made the defendant by name or description in order to enforce a lien. See, e.g., The Moses Taylor, 4 Wall. 411, 427, 18 L.Ed. 397; The Resolute, 168 U.S. 437, 440—441, 18 S.Ct. 112, 113, 42 L.Ed. 533. It is this kind of in rem proceeding which state courts cannot entertain. But the jurisdictional act does leave state courts 'competent' to adjudicate maritime causes of action in proceedings 'in personam,' that is, where the defendant is a person, not a ship or some other instrument of navigation. Rounds v. Cloverport Foundry & Machine Co., 237 U.S. 303, 306—309, 35 S.Ct. 596, 597—598, 59 L.Ed. 966. Aside from its inability to provide a remedy in rem for a maritime cause of action, this Court has said that a state, 'having concurrent jurisdiction, is free to adopt such remedies, and to attach to them such incidents, as it sees fit' so long as it does not attempt to make changes in the 'substantive maritime law.' Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 124, 44 S.Ct. 274, 277, 68 L.Ed. 582. 4 The proceedings in this California partition case were not in rem in the admiralty sense. The plaintiffs' quarrel was with their co-owner, not with the ship. Manuel Madruga, not the ship, was made defendant. Thus the state court in this proceeding acts only upon the interests of the parties over whom it has jurisdiction in personam, and it does not affect the interests of others in the world at large, as it would if this were a proceeding in rem to enforce a lien. The California court is 'competent' to give this partition remedy and it therefore has jurisdiction of the cause of action. 5 Third. Petitioner contends that for the California court to entertain this partition suit at the instance of the majority shipowners would run counter to an admiralty rule which is said to permit sales for partition only as between equal interests. Such a national admiralty rule would bind the California court here, even though it has concurrent jurisdiction to grant partition. See Garrett v. Moore-McCormack Co., 317 U.S. 239, 63 S.Ct. 246, 87 L.Ed. 239; Butler v. Boston & S.S.S. Co., 130 U.S. 527, 557—558, 9 S.Ct. 612, 619, 32 L.Ed. 1017. Congress has passed detailed laws regulating the shipping industry with respect to ownership, sales, mortgages and transfers of vessels.13 It has even prescribed special rules for ship registration after their judicial sale.14 But Congress has never seen fit to bar states from making such sales, or to adopt a national partition rule.15 Nor has any such rule been established by decisions of this Court. And as pointed out above, decisions of lower federal courts and of state courts show varying ideas as to what kind of partition rule should be adopted if any. We do not think the circumstances call on us to add to congressional regulation by attempting establishment of a national judicial rule controlling partition of ships. See Kelly v. State of Washington ex rel. Foss Co., 302 U.S. 1, 9—14, 58 S.Ct. 87, 91—94, 82 L.Ed. 3. Cf. Cooley v. Board of Wardens of Port of Philadelphia, 12 How. 299, 13 L.Ed. 996. 6 The scarcity of reported cases involving such partition since the Constitution was adopted indicates that establishment of a national partition rule is not of major importance to the shipping world. We can foresee at this time no possible injury to commerce or navigation if states continue to be free to follow their own customary partition procedures. Easily accessible local courts are well equipped to handle these essentially local disputes. Ordering the sale of property for partition is part of their everyday work. Long experience has enabled states to develop simple legislative and judicial partition procedures with which local judges and counsel are familiar. Federal courts have rarely been called on to try such disputes and have established no settled rules for partition. In some parts of the country the inaccessibility of federal courts as compared with state courts would cause needless expense and inconvenience to parties. We have no reason to believe federal procedure if applied to partition cases would be simpler, speedier, less expensive or fairer than the procedures of state courts. Nor are we convinced that any theoretical benefits to shipping would justify us in restricting the partition jurisdiction of state courts by fashioning an exclusive national rule to govern quarreling shipowners. Cf. Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 285—287, 72 S.Ct. 277, 279—280, 96 L.Ed. 318. State laws making partition easily available, like state pilotage laws, see Cooley v. Board of Wardens of Port of Philadelphia, 12 How. 299, 13 L.Ed. 996, may well help fill the needs of a vigorous commerce and navigation.16 Since the absence of such a national rule has produced few difficulties over the years, it appears to us that it would be better to let well enough alone. 7 Affirmed. 8 Mr. Justice REED concurs in the judgment of the Court. 9 Mr. Justice FRANKFURTER, whom Mr. Justice JACKSON joins, dissenting. 10 For one reason or another, eight co-owners having eighty-five percent interest in a vessel wished to terminate the enterprise but found the present petitioner, owner of the remaining fifteen percent, opposed to sale. Accordingly they asked a California State court for judicial sale of the vessel and appropriate distribution of the proceeds among all the owners. This is the only claim the plaintiffs made. There was no claim to enforce a personal right against the petitioner; no claim of any sort for which the levy on the ship as security was sought for some personal obligation owing from the petitioner. The jurisdiction of the State court was invoked exclusively for the sale of vessel. 11 If this is not an action against the thing, in the sense in which that has meaning in the law, then the concepts of a res and an in rem proceeding have an esoteric meaning which I do not understand. From the terms of the complaint for partition through the opinion of this Court authorizing the State court to grant it, there is not the remotest suggestion that we are dealing with a remedy to enforce a separate underlying personal claim. Here the ship's the thing—not a claim outside the ship for which an ancillary remedy against the ship is sought. Cf. Knapp, Stout & Co. v. McCaffrey, 177 U.S. 638, 20 S.Ct. 824, 44 L.Ed. 921. Is it to be doubted that if California procedure required the proceeding to be brought by name against the Oil Screw Vessel Liberty, Official No. 256332, or if the action had in fact been so entitled, it would inescapably be deemed an action in rem? To make the existence of State power depend on such tenuous formalities is to make questions of jurisdiction in matters maritime, as between federal and State courts, turn on distinctions much too frail. 12 Of course State courts are free to give the relief here sought, if admiralty has not jurisdiction of a libel for partition. State law would then not be encroaching upon the admiralty jurisdiction of the federal courts. Whether admiralty has such jurisdiction, except when the contest over the use of the vessel is between owners whose interest is equally divided, has not been adjudicated by this Court and the learning on the subject is not compelling. The problem has received its fullest consideration in Fischer v. Carey, 1916, 173 Cal. 185, 159 P. 577, L.R.A.1917A, 1100, and substantially on the basis of arguments there elaborated, I conclude that admiralty does have jurisdiction in the circumstances of this case. The nub of the holding of that case is that 'the jurisdiction of the courts of the United States in admiralty is full and complete touching the matter of sale under the circumstances here indicated, that is to say, where dissentient owners are at strife over the use to be made of the ship, for it must, from the nature of admiralty jurisdiction, be a fundamental part of that jurisdiction to exercise control over the rem—the ship itself.' 173 Cal. at page 198, 159 P. at page 582.1 13 The Supreme Court of California in sustaining the State's power which it had denied in Fischer v. Carey did not overrule that case. It reached the result it did, because it found that the 'saving clause,' descended from the First Judiciary Act, 1 Stat. 73, 77, had been drastically modified by the 1948 revision of the Judicial Code. 28 U.S.C. § 1333, 28 U.S.C.A. § 1333.2 The Reviser's notes completely refute this view. And since this Court does not adopt the construction given § 1333 by the California Supreme Court, the argument against it need not be elaborated. 14 Once it is established that the federal courts have jurisdiction and that the remedy here sought in a State court has 'all the essential features of an admiralty proceeding in rem,' The Hine v. Trevor, 4 Wall. 555, 571, 18 L.Ed. 451, the disposition of this case is clearly controlled by decisions of this Court. They were thus summarized in an opinion for the Court by Mr. Justice Brandeis, than whom no member of this Court gave wider scope to concurrent State jurisdiction in maritime matters: 'A state may not provide a remedy in rem for any cause of action within the admiralty jurisdiction.' Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 124, 44 S.Ct. 274, 277, 68 L.Ed. 582. 15 From the admiralty clause of the Constitution, this Court has drawn probably greater substantive law-making powers than it exercises in any other area of the law. See, e.g., The Osceola, 189 U.S. 158, 23 S.Ct. 483, 47 L.Ed. 760. Broad as are the implications of this clause, it does not authorize this Court to decide as a matter of policy, wholly untrammeled by the historic roots of admiralty, what relief may be sought exclusively in the federal admiralty courts and what may be concurrently given by the State courts. It is significant that the need for a body of maritime law, applicable throughout the nation and not left to the diversity of the several States, was the one basis for the creation of a system of inferior federal courts, authorized by the Constitution, which was recognized by every shade of opinion at the Philadelphia Convention. 16 Were Congress to authorize the States to exercise jurisdiction for the partition of vessels, we would of course have a very different question than the one now before us, the more so because one may assume that such a statute would differentiate between small craft plying within a limited area and ocean-going vessels. This Court cannot on its own initiative make such differentiations, regarding the power of State courts, as between small vessels and large. Whatever power may be exercised by Congress in ceding national maritime jurisdiction to the States, it is not for this Court to allow State courts to have concurrent jurisdiction in rem solely because the 'establishment of a national partition rule is not of major importance to the shipping world.' 1 The State Supreme Court's judgment finally disposing of the writ of prohibition is a final judgment reviewable here under 28 U.S.C. § 1257, 28 U.S.C.A. § 1257. 2 'The jurisdiction of courts of admiralty in cases of part owners, having unequal interests and shares, is not, and never has been applied to direct a sale, upon any dispute between them as to the trade and navigation of a ship engaged in maritime voyages, properly so called. The majority of the owners have a right to employ the ship in such voyages as they may please; giving a stipulation to the dissenting owners for the safe return of the ship; if the latter, upon a proper libel filed in the admiralty, require it. And the minority of the owners may employ the ship in the like manner, if the majority decline to employ her at all. So the law is laid down in Lord Tenterden's excellent Treatise on Shipping. Abbot on Ship. part 1, chap. 3, sec. 4 to sec. 7. If, therefore, this were a vessel engaged in maritime navigation, the libel for a sale could not be maintained.' Some have thought that Mr. Justice Story here rejected the idea of admiralty jurisdiction to sell ships for partition. But, however that may be, he made it clear in his book on partnership that he believed admiralty courts did have such jurisdiction. Story, Partnership (1st ed. 1841), § 439, n. 1. 3 E.g., The Seneca, C.C.E.D.Pa.1829, Fed.Cas.No.12,670; The Emma B., D.C.D.N.J.1906, 140 F. 771. Compare discussion in Davis v. The Seneca, D.C.E.D.Pa.1828, Fed.Cas.No.3,650, reversed The Seneca, supra. 4 E.g., Lewis v. Kinney, C.C.E.D.Mo.1879, Fed.Cas.No.8,325; The Red Wing, D.C.S.D.Cal.1925, 10 F.2d 389; See Coyne v. Caples, D.C.D.Ore.1881, 8 F. 638, 639—640; Fischer v. Carey, 1916, 173 Cal. 185, 189—192, 159 P. 577, 578—579, L.R.A.1917A, 1100. 5 Tunno v. The Betsina, D.C.D.S.C.1857, Fed.Cas.No.14,236. 6 E.g., Andrews v. Betts, 1876, 8 Hun, N.Y., 322; Francis v. Lavine, 1874, 26 La.Ann. 311. 7 Swain v. Knapp, 1884, 32 Minn. 429, 21 N.W. 414; Reynolds v. Nielson, 1903, 116 Wis. 483, 93 N.W. 455. 8 E.g., Fischer v. Carey, 1916, 173 Cal. 185, 159 P. 577, L.R.A.1917A, 1100; Cline v. Price, 1951, 39 Wash.2d 816, 239 P.2d 322. 9 Citations to cases with these varied holdings are collected in Note 302, 28 U.S.C.A. § 1333; 90 Am.St.Rep. 378—380 and in L.R.A.1917A, 1114—1116. 10 In England Kings Bench prohibited Admiralty's exercise of partition jurisdiction in Ouston v. Hebden, 1745, 1 Wils.K.B. 101, 95 Eng.Rep. 515. However, jurisdiction, which extended even to minority share owners, was later given to admiralty by statute. The Admiralty Court Act, 1861, 24 Vic. c. 10, § 8. 11 For applications of this decision, see, e.g., The Guayaquil, D.C.E.D.N.Y.1939, 29 F.Supp. 578; Hirsch v. The San Pablo, D.C.S.D.Fla.1948, 81 F.Supp. 292. 12 The 1948 and 1949 revisions of 28 U.S.C. § 1333, 28 U.S.C.A. § 1333, amended the above clause. It now reads: '* * * saving to suitors in all cases all other remedies to which they are otherwise entitled.' We take it that this change in no way narrowed the jurisdiction of the state courts under the original 1789 Act. 13 Title 46 U.S.C., 46 U.S.C.A. In particular see: § 11, limiting United States ship registration to ships owned by United States citizens or United States corporations having only citizens as officers (from Act of Dec. 31, 1792, c. 1, § 2, 1 Stat. 288); § 25, prescribing a form for registration which requires detailed information as to the ship's description, its builders, and the identity and proportion of ownership of all its owners (from Act of Dec. 31, 1792, c. 1, § 9, 1 Stat. 291); § 39, requiring new registration upon any sale or alteration of a ship (from Act of Dec. 31, 1792, c. 1, § 14, 1 Stat. 294); § 808, placing restrictions on the sale to aliens of vessels owned by a United States citizen or corporation (from Act of Sept. 7, 1916, c. 451, § 9, 39 Stat. 730, as amended by Act of July 15, 1918, c. 152, § 3, 40 Stat. 900); § 921, providing that no sale, conveyance or mortgage of a vessel of the United States shall be valid against one other than the grantor or mortgagor, his heirs or persons with notice, until record (from Act of June 5, 1920, c. 250, § 30, 41 Stat. 1000). 14 46 U.S.C. § 34, 46 U.S.C.A. § 34, provides for registration of vessels sold under process of law where the former owner retains the ship's registration, upon the new owner's meeting the legal requirements for registry (from Act of Mar. 2, 1797, c. 7, 1 Stat. 498). 15 It is noteworthy that Congress has explicitly placed partition actions under federal jurisdiction only where the United States is a tenant, 28 U.S.C. §§ 1347, 2409, 28 U.S.C.A. §§ 1347, 2409. Partition of real estate belonging to Oklahoma Indians has been made subject to state laws, 25 U.S.C. § 355, 25 U.S.C.A. § 355. 16 'The rule of the civil as of the common law, that no one should be compelled to hold property in common with another, grew out of a purpose to prevent strife and disagreement. 1 Story, Eq.Jur. § 648. And additional reasons are found in the more modern policy of facilitating the transmission of titles, and in the inconvenience of joint holding.' Caldwell v. Snyder, 178 Pa. 420, 422, 35 A. 996, 35 L.R.A. 198. '* * * (P)artition is a right much favored, upon the ground that it not only secures peace, but promotes industry and enterprise; that each should have his own.' Cannon v. Lomax, 29 S.C. 369, 371, 7 S.E. 529, 530, 1 L.R.A. 637. 1 Fischer v. Carey was recently followed in Cline v. Price, 1951, 39 Wash.2d 816, 239 P.2d 322. 2 The original 'saving clause' read: 'saving to suitors, in all cases, the right of a common law remedy, where the common law is competent to give it'. 28 U.S.C. § 1333, 28 U.S.C.A. § 1333, now reads: 'saving to suitors in all cases all other remedies to which they are otherwise entitled.'

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346 U.S. 574 74 S.Ct. 290 98 L.Ed. 317 CHICAGO, R.I. & P.R. CO.v.STUDE et al. No. 209. Decided Jan. 18, 1954. Argued Dec. 2, 3, 1953. Rehearing Denied March 8, 1954. See 347 U.S. 924, 74 S.Ct. 512. Messrs. Alden B. Howland, B. A. Webster, Jr., Des Moines, Iowa, for petitioner. Messrs. Raymond A. Smith, Council Bluffs, Iowa, Harold W. Kauffman, Omaha, Neb., for respondents. Mr. Justice MINTON delivered the opinion of the Court. 1 The petitioner, a Delaware corporation, owns and operates its railroad through Pottawattamie County, Iowa. It was authorized by the Interstate Commerce Commission to improve its line of railway in that county and by the Iowa State Commerce Commission to acquire by condemnation any land necessary for the improvement. 2 On January 18, 1952, pursuant to the Iowa Code,1 the petitioner filed with the sheriff of the county its application to condemn certain lands in the county owned by respondent Stude. The sheriff appointed a commission of six resident freeholders to assess damages. Notice was given by the sheriff to the respondent owner and others interested in the land, and an award of damages in the sum of $23,888.60 was allowed to the owner and $1,000 to the tenant. The amount of the assessment was paid by the petitioner to the sheriff and the petitioner took possession of the land.2 Such appraisal became final unless appealed from. 3 On March 6, 1952, the petitioner filed with the sheriff of the county a notice of appeal from the commission's award. The Iowa Code provides for appeal as follows: 4 '472.18 Appeal. Any party interested may, within thirty days after the assessment is made, appeal therefrom to the district court, by giving the adverse party, his agent or attorney, and the sheriff, written notice that such appeal has been taken. 5 '472.21 Appeals—how docketed and tried. The appeal shall be docketed in the name of the owner of the land, or of the party otherwise interested and appealing, as plaintiff, and in the name of the applicant for condemnation as defendant, and be tried as in an action by ordinary proceedings.' Code of Iowa 1950, I.C.A. 6 The petitioner then filed a complaint in the United States District Court for the Southern District of Iowa against the respondents in which it alleged diversity of citizenship, jurisdictional amount, authority to make improvements and to condemn therefor, together with a description of the land and that respondent Stude was the owner, and that the assessment proceedings had been instituted in the sheriff's office, resulting in the assessment of damages of $23,888.60, which was alleged to be excessive, and that appeal was taken by notice duly given. This notice was referred to as Exhibit A to the complaint, which exhibit recited that the appeal was taken to the Federal District Court for the Southern District of Iowa, and a transcript of the sheriff's proceeding was filed in that court. The prayer was that the damages for the taking of the land be fixed at not more than $10,000. On this complaint, a summons was issued and served upon the respondents. 7 The petitioner also filed an appeal from this assessment in the state court, the District Court for Pottawattamie County. The case was docketed there with the landowner as the plaintiff and the petitioner-condemnor as defendant, as required by the Iowa Code. Thereafter, a petition to remove the cause to the federal court was filed by the petitioner. The respondents filed in the Federal District Court a motion to dismiss the complaint filed therein and a motion to remand the case removed from the state court. 8 The federal court granted the motion to dismiss and dismissed the complaint but denied the motion to remand. Chicago, R.I. & P.R. Co. v. Kay, D.C., 107 F.Supp. 895. The petitioner appealed from the judgment dismissing its complaint. The respondents gave notice of appeal from the order of the District Court denying the motion to remand. The Court of Appeals affirmed the District Court's judgment dismissing the complaint and reversed the District Court's denial of the motion to remand, and ordered the cause remanded to the state court. 204 F.2d 116; 204 F.2d 954. We granted certiorari, 346 U.S. 810, 74 S.Ct. 46. 9 The Order Denying the Motion to Remand. Obviously, such an order is not final and appealable if standing alone. Reed v. Lehman, 2 Cir., 91 F.2d 919; Miller v. Pyrites Co., 4 Cir., 71 F.2d 804. While these two cases were separate actions pending on the docket of the Federal District Court, they both involve the same subject and they were treated by the parties, the District Court and the Court of Appeals as if the dismissal appealed from and the order in the removal case were made in one case. Treating them as one case, the cross-error, challenging the order denying the motion to remand, may be considered as assigned in a case involving an appealable order, the order dismissing the complaint and the action. This is true despite the fact that the order denying the motion to remand standing alone would not be appealable. Deckert v. Independent Shares Corp., 311 U.S. 282, 287, 61 S.Ct. 229, 232, 85 L.Ed. 189. 10 We come therefore to the merits of the motion to remand. The question on this motion is whether the petitioner was a defendant nonresident of Iowa and therefore authorized to remove to the Federal District Court as provided by statute, 28 U.S.C. § 1441(a), 28 U.S.C.A. § 1441(a). 11 The proceeding before the sheriff is administrative until the appeal has been taken to the district court of the county. Then the proceeding becomes a civil action pending before 'those exercising judicial functions' for the purpose of reviewing the question of damages. Myers v. Chicago & N.W.R. Co., 118 Iowa 312, 315—316, 91 N.W. 1076, 1078. When the proceeding has reached the stage of a perfected appeal and the jurisdiction of the state district court is invoked, it then becomes in its nature a civil action and subject to removal by the defendant to the United States District Court. Mississippi & Rum River Boom Co. v. Patterson, 98 U.S. 403, 407, 25 L.Ed. 206.3 12 Is the petitioner such a defendant? The petitioner contends it is because the Code of Iowa, § 472.21, I.C.A., provides that on appeal, the case shall be docketed in the district court with the landowner as the plaintiff and the condemnor as the defendant and thereafter tried as in an original proceeding. The Supreme Court of Iowa has construed this statute to mean that in such proceedings on appeal, the condemnor is the defendant. Myers v. Chicago & N.W.R. Co., supra, 118 Iowa at page 324, 91 N.W. at page 1081. This Court was urged in Mason City and Fort Dodge Railroad Company v. Boynton, 204 U.S. 570, 27 S.Ct. 321, 51 L.Ed. 629, to follow that construction put upon this identical provision of the Iowa statute by the Supreme Court of Iowa. This Court declined to do so, saying: 13 'It is said that this court is bound by the construction given to the state law by the state court. Indeed, the above § 2009 does not need construction; it enacts, in terms, that the landowner shall be plaintiff. As the right to remove a suit is given only to the defendants therein, being nonresidents of the state, it is argued that the state decision ends the case. 14 'But this court must construe the act of Congress regarding removal. And it is obvious that the word 'defendant' as there used is directed toward more important matters than the burden of proof or the right to open and close. It is quite conceivable that a state enactment might reverse the names which, for the purposes of removal, this court might think the proper ones to be applied. In condemnation proceedings the words 'plaintiff' and 'defendant' can be used only in an uncommon and liberal sense. The plaintiff complains of nothing. The defendant denies no past or threatened wrong. Both parties are actors: one to acquire title, the other to get as large pay as he can. It is not necessary, in order to decide that the present removal was right, to say that the state decision was wrong. We leave the latter question where we find it. * * * 15 '* * * Therefore, in a broad sense, the railroad is the plaintiff, as the institution and continuance of the proceedings depend upon its will. * * *' 204 U.S. 570, at pages 579—580, 27 S.Ct. at page 323. 16 For the purpose of removal, the federal law determines who is plaintiff and who is defendant. It is a question of the construction of the federal statute on removal, and not the state statute. The latter's procedural provisions cannot control the privilege or removal granted by the federal statute. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 104, 61 S.Ct. 868, 870, 85 L.Ed. 1214. Here the railroad is the plaintiff under 28 U.S.C. § 1441(a), 28 U.S.C.A. § 1441(a), and cannot remove. The remand was proper. 17 The Motion to Dismiss. We think it was properly granted, and the original complaint in the Federal District Court correctly dismissed. The steps taken by the petitioner were those to perfect an appeal to the Federal District Court. The notice said it was the intention of the petitioner to docket the appeal in the federal court. The transcript on appeal was filed in the federal court, and the complaint filed sought a review of the commission's assessment of damages. The proceeding makes no sense on any other basis, for the action is brought not by the person injured, namely, the landowner, but by the railroad that inflicted the damage. It will be noticed further that there is no prayer for damages but only for a review of the assessment, in keeping with the Iowa Code, § 472.23, I.C.A., which provides 'no judgment shall be rendered except for costs * * *.' In short, it was an attempt of the petitioner to review the state proceedings on appeal to the Federal District Court. 18 The petitioner, after giving notice of appeal by filing notice with the sheriff, etc., could not perfect that appeal to any court but the court which the statute of Iowa directed, which was the District Court of that State for the County of Pottawattamie. The United States District Court for the Southern District of Iowa does not sit to review on appeal action taken administratively or judicially in a state proceeding. A state 'legislature may not make a federal district court, a court of original jurisdiction, into an appellate tribunal or otherwise expand its jurisdiction * * *.' Burford v. Sun Oil Co., 319 U.S. 315, 317, 63 S.Ct. 1098, 1099, 87 L.Ed. 1424. The Iowa Code does not purport to authorize such an appeal, Congress has provided none by statute, and the Federal Rules of Civil Procedure, 28 U.S.C.A., make no such provision. 19 We cannot ignore this plain attempt to appeal and treat the complaint as initiating an original action, as if the parties had agreed that the petitioner could take the land, leaving only a controversy as to the amount of compensation. In that instance, there would be an implied agreement that the petitioner would pay the landowner the fair value of the land. Either party might in that posture of the case ask for a declaration as to the amount of compensation owing. The claim for damages would arise in that case from the substantive rights given by the implied contract, and the suit would be one to enforce that contract. We have no such case here. The right to take the land and the ensuing right to damages here spring from the exercise of the power of eminent domain. The petitioner here seems to ignore the means by which it obtained the land and seeks to review only the question of damages. It may not separate the question of damages and try it apart from the substantive right from which the claim for damages arose. Nor can it be said that petitioner has fully exercised its power of eminent domain, leaving nothing to be determined but the question of damages. Petitioner has possession but not title to the land. The land does not belong to the petitioner until the damages are paid. The sheriff, or the clerk of the state district court in case of appeal, must file in the county recorder's office all the papers filed in the proceeding. Code of Iowa 1950, §§ 472.35, 472.36, I.C.A. The Iowa Code, § 472.41, I.C.A., makes this record presumptive evidence of title in the condemnor. Petitioner is still in the process of trying to get the land by virtue of its power of eminent domain. But obviously the complaint here was not filed to invoke the jurisdiction of the federal court in an eminent domain proceeding. 20 The Federal Rules of Civil Procedure do have elaborate provisions for procedure in the federal court in condemnation proceedings. It is obvious that the petitioner was not proceeding under these Rules. Whether it could so proceed as an original action in the United States District Court for the Southern District of Iowa is not before us. 21 The judgment is affirmed. 22 Affirmed. 23 Mr. Justice JACKSON concurs in the result. 24 Mr. Justice BLACK, dissenting. 25 I think the railroad has a right to have its case tried in the United States District Court. Congress has given such courts power to try any case that is (1) a 'civil' action, (2) between 'Citizens of different States', (3) a 'controversy,' and (4) involves a matter which 'exceeds the sum or value of $3,000 exclusive of interest and costs'. 28 U.S.C. § 1332, 28 U.S.C.A. § 1332. If a complaint alleges these four things a district court has jurisdiction. Here the railroad's complaint shows all four. The case is plainly a 'civil' action, not a criminal one. The railroad is a 'citizen' of Delaware and the other parties are 'citizens' of Iowa. There is a 'controversy' about transferring title to property and how much the railroad must pay for it. And the dispute concerns more than $3,000—the owners want $23,888.60, the railroad is willing to pay only $10,000. The foregoing allegations were sufficient to establish and did establish district court jurisdiction. Other facts were also alleged. If these facts were relevant to nonjurisdictional issues they were properly alleged; if immaterial they could have been stricken. In any event, a court cannot lose its power to act merely because of unnecessary words. A point is made of the railroad's reference to certain prior state proceedings as though it had a right to 'appeal' to the federal court from these proceedings. But assuming that the railroad confidently believed it had a right to appeal from the state commission, and therefore put a wrong label on its civil action, the District Court was still under a duty to try the case. After all, the railroad simply asked the court to fix damages for the property taken at 'not to exceed $10,000,' and for 'such further relief as may be just and proper under the circumstances.' And the pendency of a similar condemnation proceeding in the state court certainly did not destroy the federal court's jurisdiction. Nor did the District Court lose its jurisdiction because the railroad failed to invoke Rule 71A or to observe its procedure. In trying the case, the court should of course require observance of the Rule, if applicable, but failure of the railroad to comply with it is no sufficient reason for the court's refusal to settle the controversy. All of the alleged procedural mistakes attributed to the railroad could easily have been cured; none could possibly justify a final, unconditional dismissal of its cause of action. See Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939; Brown v. Western Ry. of Alabama, 338 U.S. 294, 298 299, 303, 70 S.Ct. 105, 107—108, 110, 94 L.Ed. 100. 26 Mr. Justice FRANKFURTER, dissenting. 27 Stripped of irrelevant and beclouding elements, this is a suit brought in a federal court for the ascertainment of the value of land, acquired by eminent domain under the prescribed Iowa procedure. 28 If the Rock Island had decided to initiate this suit in the United States District Court for the Southern District of Iowa, as it was unquestionably entitled to do since there was diversity of citizenship, Madisonville Traction Co. v. St. Bernard Mining Co., 196 U.S. 239, 25 S.Ct. 251, 49 L.Ed. 462, the procedure defined by the Iowa Code would, under Rule 71A(k) of the Rules of Civil Procedure, have had to be followed. For that Rule provides that in an eminent domain proceeding the state procedure for determination of the value of the condemned land by a jury or commission, or both, must be followed.1 The sole difference, therefore, between the initiation of such an original condemnation proceeding in the federal court, regarding which no jurisdictional question could have been raised, and what was done here is that the railroad went directly to the sheriff's commissioners instead of having the District Court send it there, or itself employ the same kind of fact-finding procedure. 29 Once the sheriff's commissioners had found the value of the land, there came into operation the Iowa law authorizing reconsideration of the amount by a court. This marks the beginning of the judicial phase of the proceedings, 'appeal' though it loosely be called.2 One is entitled to ask what considerations bar access at this point to the Federal District Court in Iowa 'sitting * * * (as) a court of that state', Madisonville Traction Co. v. St. Bernard Mining Co., supra, 196 U.S. at page 255, 25 S.Ct. at page 257, when all the statutory requirements for diversity jurisdiction are present. Can it be that there is something inexorable about the Iowa eminent domain procedure whereby it must run its full course in the Iowa courts, thus preventing the railroad from pursuing its first judicial remedy in the federal court of the State? But there is nothing in the Iowa Code or in the United States Judicial Code which ousts the federal court of its statutory jurisdiction simply because the Rock Island complied literally with the Iowa condemnation procedure. 30 Looked at from another aspect, this case may be seen simply as a suit for a declaration of money owed, satisfying the requirements of diversity jurisdiction. 'The point in issue,' in the language of Mississippi & Rum River Boom Co. v. Patterson, 98 U.S. 403, 407, 25 L.Ed. 206, is 'the compensation to be made to the owner of the land; in other words, the value of the property taken. No other question was open to contestation in the District Court.' As is spelled out in Mr. Justice BLACKS'S opinion, with which I substantially agree, this case presents a dispute over some $13,000—only that and nothing more—and as such is within the scope of 28 U.S.C. § 1332, 28 U.S.C.A. § 1332. 31 I am not astute to find grounds for sustaining diversity jurisdiction. But while exercises in procedural dialectics so rampant in the early nineteenth century still hold for me intellectual interest, I do not think they should determine litigation in the middle of the twentieth, even when based merely on diversity of citizenship. I had supposed that the Rules of Civil Procedure for the district courts were to a considerable degree designed as a liberation from these wasteful and fettering niceties. The history of this litigation and its disposition will hardly be cited as an illustration of the fulfillment of the hope with which Congress allowed these Rules to take effect: 'It is confidently expected that the adoption of the new rules will materially reduce the uncertainty, delay, expense, and the likelihood that cases may be decided on technical points of procedure which had no relation to the just determination of the controversy on its merits.' H.R.Rep. No. 2743, 75th Cong., 3d Sess. 3. 1 '471.6 Railways. Any railway, incorporated under the laws of the United States or of any state thereof, may acquire by condemnation or otherwise so much real estate as may be necessary for the location, construction, and convenient use of its railway. * * * '472.3 Application for condemnation. Such proceedings shall be instituted by a written application filed with the sheriff of the county in which the land sought to be condemned is located. * * * '472.4 Commission to assess damages. The sheriff shall thereupon, except as otherwise provided, appoint six resident freeholders of his county, none of whom shall be interested in the same or a like question, who shall constitute a commission to assess the damages to all real estate desired by the applicant and located in the county.' Code of Iowa, 1950, I.C.A. 2 '472.25 Right to take possession of lands. Upon the filing of the commissioners' report with the sheriff, the applicant may deposit with the sheriff the amount assessed in favor of a claimant, and thereupon the applicant shall, except as otherwise provided, have the right to take possession of the land condemned and proceed with the improvement. No appeal from said assessment shall affect such right, except as otherwise provided.' Code of Iowa 1950, I.C.A. 3 In that case, the power of eminent domain was relied upon from beginning to the end. 1 '(k) Condemnation Under a State's Power of Eminent Domain. The practice as herein prescribed governs in actions involving the exercise of the power of eminent domain under the law of a state, provided that if the state law makes provision for trial of any issue by jury, or for trial of the issue of compensation by jury or commission or both, that provision shall be followed.' 2 As Chief Judge Gardner, dissenting on the rehearing below, pointed out, the fact that the Rock Island filed a 'notice of appeal' as required by the Iowa Code does not affect this case. 'The mere fact that the attempted appeal from the commissioners' award was not warranted and did not in itself confer jurisdiction, did not preclude the Rock Island from invoking the original jurisdiction of the Federal Court on the grounds set out in its original complaint.' 204 F.2d 954, 955, 956.

910

346 U.S. 568 74 S.Ct. 287 98 L.Ed. 300 UNITED STATESv.LINDSAY et al. No. 94. Supreme Court of the United States Argued Dec. 1, 2, 1953. January 18, 1954 Mr. Paul A. Sweeney, Washington, D.C., for petitioner. Mr. Edward C. Park, Boston, Mass., for respondents. Mr. Justice BLACK delivered the opinion of the Court. 1 On February 29, 1952, the United States filed the complaint in this case against Lindsay and the other respondents alleging that on February 26, 1945, Lindsay had delivered damaged wool to the Government in violation of an agreement with the Commodity Credit Corporation, a wholly owned corporate agency of the United States. The defendants moved to dismiss on the ground that the Government's seven year old claim was barred by the six year time limit in § 4(c) of a 1948 Act as amended.1 That section provides that 'No suit by or against the Corporation shall be allowed unless * * * it shall have been brought within six years after the right accrued on which suit is brought * * *.' Holding that the 1952 suit was barred because the right to sue had 'accrued' in 1945 when the damaged wool was delivered, the District Court dismissed the case. 105 F.Supp. 467. The Court of Appeals for the First Circuit affirmed on the same ground. 202 F.2d 239. However, the Court of Appeals for the Sixth Circuit has held that a Government claim arising prior to the 1948 Act 'accrued' not when the suit arose but when the Act became effective. Field Packing Co. v. United States, 197 F.2d 329. This conflict among the circuits as to the statutory meaning of 'accrued' led us to grant certiorari. 346 U.S. 810, 74 S.Ct. 28. The question here is whether Government claims growing out of the Corporation's transactions prior to the Act 'accrued' on the date a right to sue came into existence or on the date the Act became effective. 2 In common parlance a right accrues when it comes into existence as the Government's claim against Lindsay did in 1945. Giving 'accrued' its normal meaning would therefore bar all claims not sued on within six years from the date they arose whether they came into existence before or after passage of the Act. The Government admits that the normal meaning of 'accrued' controls when the 1948 Act is applied prospectively, that is, to claims arising after the Act's effective date. But construing the Act in a way that requires its six year limitation period to begin before 1948 gives the law a retroactive effect, shortening the time for suit on some prior claims and summarily cutting off others. To prevent retroactivity we are urged to depart from the normal meaning of 'accrued' when § 4(c) is applied to pre-existing claims. This suggested departure is no minor one. We are asked to read the words 'six years after the right accrued' as though Congress intended to say 'six years after the effective date of the Act when it is applied to pre-existing causes of action.' Precedents are cited in which, to avoid retroactive barring of suits, courts have refused to give 'accrued' its normal meaning and have instead given it a special meaning—the date a new statute of limitations becomes effective. In effect, it is argued that these court decisions have made 'accrued' a word of art when used in such statutes. Therefore, we are asked to hold that Congress used 'accrued' in § 4(c) with this special meaning. 3 It is true that courts have sometimes given 'accrued' the meaning the Government here suggests, but we are unable to agree that the word has thereby taken on an established technical meaning which Congress must have had in mind when it used 'accrued' in this Act. The legislative history fails to show that such a meaning was suggested to Congress before the Act was passed. Moreover, many of the decisions that gave 'accrued' this special meaning did so to avoid possible constitutional questions should the statutes be interpreted in a way that would destroy private rights. See, e.g., Sohn v. Waterson, 17 Wall. 596, 21 L.Ed. 737. But no constitutional question is raised by applying this six year time limit to pre-existing claims of the Government. Congress has unquestioned power to bar recovery on Government claims if it sees fit. And we agree with the court below that we need not now decide whether § 4(c) can be applied to pre-existing claims brought by private persons against the Government. But see Lynch v. United States, 292 U.S. 571, 581, 54 S.Ct. 840, 844, 78 L.Ed. 1434; Cummings v. Deutsche Bank Und Discontogesellschaft, 300 U.S. 115, 119, 57 S.Ct. 359, 361, 81 L.Ed. 545; Addison v. Huron Stevedoring Corp., 2 Cir., 204 F.2d 88, 91—92. 4 The Government also urges that quite apart from constitutional considerations there are strong reasons why courts should, whenever possible, construe statutes so as to avoid retroactivity. Cases are cited in which particular provisions have been deemed so inequitable and unfair when applied retrospectively that this Court has refused to impute to law-making bodies a purpose to bring about such results.2 But we cannot say that any consequences of retroactive application of the time limit here call on us to hold that Congress did not intend this statute to take effect according to the natural meaning of its words. The Government has used the Commodity Credit Corporation in business transactions since 1933. Probably many claims have accrued in the intervening years. Maybe others, like this one, are for comparatively small amounts. All, whether large or small, could have been sued on as they arose. We think that Congress might well have believed it wise to bar all stale claims by the Government against its agents and others who dealt with it in the past. For and against such a view arguments can be made that are based on common notions of fairness and justice. In this situation it seems better to leave this statutory problem with Congress rather than for us to stretch the word 'accrued' beyond its ordinary meaning. Cf. Chase Securities Corp. v. Donaldson, 325 U.S. 304, 316, 65 S.Ct. 1137, 1143, 89 L.Ed. 1628. 5 Affirmed. 6 Mr. Justice REED, dissenting. 7 An emphasis by dissent upon the Court's departure from precedents of statutory construction will not be useless if it arouses the attention of statutory draftsmen to the necessity of more explicit language to protect government claims. 8 Prior to the passage of the Act in question, a Delaware corporation of the same name as the federal agency created by the Commodity Credit Corporation Charter Act of 1948 existed and operated. 15 U.S.C. (Supp. III) § 713, 15 U.S.C.A. § 713. It had claims and obligations which were unaffected by their transfer to the present corporation by the Charter Act. The earlier Delaware corporation was a wholly owned agency of the United States without statutory limitation, state or federal, on its right to sue upon its claims. United States v. Summerlin, 310 U.S. 414, 60 S.Ct. 1019, 84 L.Ed. 1283, and cases cited. Therefore, up to the time of the enactment of § 4(c), 15 U.S.C. (Supp. III) § 714b(c), 15 U.S.C.A. § 714b(c), there was no compelling reason, beyond the desire for prompt and proper administration, for the United States to file its suits. 9 As the corporation had played a major part since its organization in 1933 in the purchase, storage and financing of American agricultural products, large claims had accumulated in its favor and against it over the years. S.Rep. No. 1022, 80th Cong., 2d Sess. If the problem here presented was res integra, the existence of old claims, not then barred by limitation, would lead me to interpret the words, 'brought within six years after the right accrued',* as prospective only to avoid imputing to Congress unreasonable and arbitrary destruction of valid claims for and against the corporation. This conclusion would follow from the principle that statutes of limitation 'must receive a strict construction in favor of the government.' E. I. Du Pont de Nemours & Co. v. Davis, 264 U.S. 456, 462, 44 S.Ct. 364, 366, 68 L.Ed. 788; Independent Coal & Coke Co. v. United States, 274 U.S. 640, 650, 47 S.Ct. 714, 718, 71 L.Ed. 1270. 10 Other principles, it seems to me, necessitate this conclusion. Senator Aiken, Chairman of the subcommittee in charge of the bill, its floor manager and the senior Senate conferee, recorded his view in a statement published after the Congress adjourned. 11 'With respect to claims by the Corporation, the 4-year period of limitations will not begin to run on claims of the Delaware Corporation transferred to the Federal Corporation until June 30, 1948, the effective date of the new charter.' 94 Cong.Rec. A4409. 12 The precedents in this Court on the interpretation of statutes establishing limitations by the definition of 'accrued' without exception give the word prospective meaning. See, e.g., United States v. St. Louis, S.F. & T.R. Co., 270 U.S. 1, 46 S.Ct. 182, 70 L.Ed. 435; Fullerton-Krueger Lumber Co. v. Northern Pacific R. Co., 266 U.S. 435, 45 S.Ct. 143, 69 L.Ed. 367; Sohn v. Waterson, 17 Wall. 596, 21 L.Ed. 737; Lewis, for Use of Longworth v. Lewis, 7 How. 776, 12 L.Ed. 909. 13 In the light of these purposes and precedents, viewed in the setting of damage to and pilferage of stored crops, the judgment of the Court of Appeals should be reversed. 1 62 Stat. 1070, as amended, 63 Stat. 154, 156; 15 U.S.C. (Supp. V) § 714b(c), 15 U.S.C.A. § 714b(c). 2 United States v. Heth, 3 Cranch 399, 2 L.Ed. 479; Claridge Apartments Co. v. Commissioner of Internal Revenue, 323 U.S. 141, 65 S.Ct. 172, 89 L.Ed. 139; Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858; Brewster v. Gage, 280 U.S. 327, 50 S.Ct. 115, 74 L.Ed. 457; United States v. Magnolia Petroleum Co., 276 U.S. 160, 48 S.Ct. 236, 72 L.Ed. 509; United States v. St. Louis, S.F. & T.R. Co., 270 U.S. 1, 46 S.Ct. 182, 70 L.Ed. 435; Shwab v. Doyle, 258 U.S. 529, 42 S.Ct. 391, 66 L.Ed. 747; Union Pacific R. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 34 S.Ct. 101, 58 L.Ed. 179; United States Fidelity & Guaranty Co. v. United States for Use and Benefit of Struthers Wells Co., 209 U.S. 306, 28 S.Ct. 537, 52 L.Ed. 804; Lewis, for Use of Longworth v. Lewis, 7 How. 776, 12 L.Ed. 909. * It was four years in the 1948 Act, 62 Stat. 1070.

78

346 U.S. 587 74 S.Ct. 286 98 L.Ed. 329 SUPERIOR FILMS, Inc., Appellant,v.DEPARTMENT OF EDUCATION OF STATE OF OHIO, DIVISION OF FILM CENSORSHIP, Clyde Hissong, Supt. COMMERCIAL PICTURES CORPORATION, Appellant, v. REGENTS OF UNIVERSITY OF STATE OF NEW YORK. Nos. 217, 274. Supreme Court of the United States January 18, 1954 PER CURIAM. 1 The judgments are reversed. Joseph Burstyn, Inc. v. Wilson, 343 U.S. 495, 72 S.Ct. 777, 96 L.Ed. 1098. 2 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK agrees, concurring. 3 The argument of Ohio and New York that the government may establish censorship over moving pictures is one I cannot accept. In 1925 Minnesota passed a law aimed at suppressing before publication any 'malicious, scandalous and defamatory newspaper'.1 The Court, speaking through Chief Justice Hughes, struck down that law as violating the Fourteenth Amendment, which has made the First Amendment applicable to the States. Near v. State of Minnesota, 283 U.S. 697, 51 S.Ct. 625, 626, 75 L.Ed. 1357. The 'chief purpose' of the constitutional guaranty of liberty of the press, said the Court, was 'to prevent previous restraints upon publication.' 283 US. at page 713, 51 S.Ct. at page 630. 4 The history of censorship is so well known it need not be summarized here. Certainly a system, still in force in some nations, which required a newspaper to submit to a board its news items, editorials, and cartoons before it published them could not be sustained. Nor could book publishers be required to submit their novels, poems, and tracts to censors for clearance before publication. Any such scheme of censorship would be in irreconciable conflict with the language and purpose of the First Amendment. 5 Nor is it conceivable to me that producers of plays for the legitimate theatre or for television could be required to submit their manuscripts to censors on pain of penalty for producing them without approval. Certainly the spoken word is as freely protected against prior restraints as that which is written. Such indeed is the force of our decision in Thomas v. Collins, 323 U.S. 516, 540, 65 S.Ct. 315, 327, 89 L.Ed. 430. The freedom of the platform which it espouses carries with it freedom of the stage. 6 The same result in the case of motion pictures necessarily follows as a consequence of our holding in Joseph Burstyn, Inc. v. Wilson, 343 U.S. 495, 502, 72 S.Ct. 777, 780, 781, 96 L.Ed. 1098, that motion pictures are 'within the free speech and free press guaranty of the First and Fourteenth Amendments.' 7 Motion pictures are of course a different medium of expression than the public speech, the radio, the stage, the novel, or the magazine. But the First Amendment draws no distinction between the various methods of communicating ideas. On occasion one may be more powerful or effective than another. The movie, like the public speech, radio, or television is transitory here now and gone in an instant. The novel, the short story, the poem in printed form are permanently at hand to reenact the drama or to retell the story over and again. Which medium will give the most excitement and have the most enduring effect will vary with the theme and the actors. It is not for the censor to determine in any case. The First and the Fourteenth Amendments say that Congress and the States shall make 'no law' which abridges freedom of speech or of the press. In order to sanction a system of censorship I would have to say that 'no law' does not mean what it says, that 'no law' is qualified to mean 'some' laws. I cannot take that step. 8 In this Nation every writer, actor, or producer, no matter what medium of expression he may use, should be freed from the censor. 1 Laws 1925 Minn. c. 285, § 1(b).

23

347 U.S. 62 74 S.Ct. 354 98 L.Ed. 503 WALDERv.UNITED STATES. No. 121. Argued Nov. 30, 1953. Decided Feb. 1, 1954. Mr. Paul A. Porter, Washington, D.C., for petitioner. Mr. Robert S. Erdahl, for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 In May 1950, petitioner was indicted in the United States District Court for the Western District of Missouri for purchasing and possessing one grain of heroin. Claiming that the heroin capsule had been obtained through an unlawful search and seizure, petitioner moved to suppress it. The motion was granted, and shortly thereafter, on the Government's motion, the case against petitioner was dismissed. 2 In January of 1952, petitioner was again indicted, this time for four other illicit transactions in narcotics. The Government's case consisted principally of the testimony of two drug addicts who claimed to have procured the illicit stuff from petitioner under the direction of federal agents. The only witness for the defense was the defendant himself, petitioner here. He denied any narcotics dealings with the two Government informers and attributed the testimony against him to personal hostility. 3 Early on his direct examination petitioner testified as follows: 4 'Q. Now, first, Mr. Walder, before we go further in your testimony, I want to you (sic) tell the Court and jury whether, not referring to these informers in this case, but whether you have ever sold any narcotics to anyone. A. I have never sold any narcotics to anyone in my life. 5 'Q. Have you ever had any narcotics in your possession, other than what may have been given to you by a physician for an ailment? A. No. 6 'Q. Now, I will ask you one more thing. Have you ever handed or given any narcotics to anyone as a gift or in any other manner without the receipt of any money or any other compensation? A. I have not. 7 'Q. Have you ever even acted as, say, have you acted as a conduit for the purpose of handling what you knew to be a narcotic from one person to another? A. No, Sir.' On cross-examination, in response to a question by Government counsel making reference to this direct testimony, petitioner reiterated his assertion that he had never purchased, sold or possessed any narcotics. Over the defendant's objection, the Government then questioned him about the heroin capsule unlawfully seized from his home in his presence back in February 1950. The defendant stoutly denied that any narcotics were taken from him at that time.1 The Government then put on the stand one of the officers who had participated in the unlawful search and seizure and also the chemist who had analyzed the heroin capsule there seized. The trial judge admitted this evidence, but carefully charged the jury that it was not to be used to determine whether the defendant had committed the crimes here charged, but solely for the purpose of impeaching the defendant's credibility. The defendant was convicted and the Court of Appeals for the Eighth Circuit affirmed, one judge dissenting. 201 F.2d 715. The question which divided that court, and the sole issue here, is whether the defendant's assertion on direct examination that he had never possessed any narcotics opened the door, solely for the purpose of attacking the defendant's credibility, to evidence of the heroin unlawfully seized in connection with the earlier proceeding. Because this question presents a novel aspect of the scope of the doctrine of Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652, we granted certiorari. 345 U.S. 992, 73 S.Ct. 1144. 8 The Government cannot violate the Fourth Amendment2—in the only way in which the Government can do anything, namely through its agents—and use the fruits of such unlawful conduct to secure a conviction. Weeks v. United States, supra. Nor can the Government make indirect use of such evidence for its case, Silverthorne Lumber Co. v. United States, 251 U.S. 385, 40 S.Ct. 182, 64 L.Ed. 319, or support a conviction on evidence obtained through leads from the unlawfully obtained evidence, cf. Nardone v. United States, 308 U.S. 338, 60 S.Ct. 266, 84 L.Ed. 307. All these methods are outlawed, and convictions obtained by means of them are invalidated, because they encourage the kind of society that is obnoxious to free men. 9 It is one thing to say that the Government cannot make an affirmative use of evidence unlawfully obtained. It is quite another to say that the defendant can turn the illegal method by which evidence in the Government's possession was obtained to his own advantage, and provide himself with a shield against contradiction of his untruths. Such an extension of the Weeks doctrine would be a perversion of the Fourth Amendment. 10 Take the present situation. Of his own accord, the defendant went beyond a mere denial of complicity in the crimes of which he was charged and made the sweeping claim that he had never dealt in or possessed any narcotics. Of course, the Constitution guarantees a defendant the fullest opportunity to meet the accusation against him. He must be free to deny all the elements of the case against him without thereby giving leave to the Government to introduce by way of rebuttal evidence illegally secured by it, and therefore not available for its case in chief. Beyond that, however, there is hardly justification for letting the defendant affirmatively resort to perjurious testimony in reliance on the Government's disability to challenge his credibility.3 11 The situation here involved is to be sharply contrasted with that presented by Agnello v. United States, 269 U.S. 20, 46 S.Ct. 4, 70 L.Ed. 145. There the Government, after having failed in its efforts to introduce the tainted evidence in its case in chief, tried to smuggle it in on cross-examinaton by asking the accused the broad question 'Did you ever see narcotics before?'4 After eliciting the expected denial, it sought to introduce evidence of narcotics located in the defendant's home by means of an unlawful search and seizure, in order to discredit the defendant. In holding that the Government could no more work in this evidence on cross-examination than it could in its case in chief, the Court foreshadowed, perhaps unwittingly, the result we reach today: 12 'And the contention that the evidence of the search and seizure was admissible in rebuttal is without merit. In his direct examination, Agnello was not asked and did not testify concerning the can of cocaine. In cross-examination, in answer to a question permitted over his objection, he said he had never seen it. He did nothing to waive his constitutional protection or to justify cross-examination in respect of the evidence claimed to have been obtained by the search. * * *' 269 U.S. at page 35, 46 S.Ct. at page 7. 13 The judgment is affirmed. 14 Affirmed. 15 Mr. Justice BLACK and Mr. Justice DOUGLAS dissent. 1 This denial squarely contradicted the affidavit filed by the defendant in the earlier proceeding, in connection with his motion under Fed.Rules Crim.Proc. rule 41(e), 18 U.S.C.A. to suppress the evidence unlawfully seized. 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 * * *.' 3 Cf. Michelson v. United States, 335 U.S. 469, 479, 69 S.Ct. 213, 220, 93 L.Ed. 168: 'The price a defendant must pay for attempting to prove his good name is to throw open the entire subject which the law has kept closed for his benefit and to make himself vulnerable where the law otherwise shields him.' The underlying rationale of the Michelson case also disposes of the evidentiary question raised by petitioner, to wit, 'whether defendant's actual guilt under a former indictment which was dismissed may be proved by extrinsic evidence introduced to impeach him in a prosecution for a subsequent offense.' 4 Transcript of Record, p. 476, Agnello v. United States, 269 U.S. 20, 46 S.Ct. 4, 70 L.Ed. 145.

01

347 U.S. 1 74 S.Ct. 358 98 L.Ed. 435 PEREIRA et al.v.UNITED STATES. No. 50. Argued Oct. 20, 1953. Decided Feb. 1, 1954. [Syllabus from pages 1-2 intentionally omitted] Mr. Charles L. Sylvester, New York City, for petitioners. Mr. John R. Wilkins, Washington, D.C., for respondent. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 The petitioners, Pereira and Brading, were convicted in the District Court for the Western District of Texas under three counts of an indictment charging violation of the mail fraud statute, 18 U.S.C. (Supp. V) § 1341, 18 U.S.C.A. § 1341, violation of the National Stolen Property Act, 18 U.S.C. (Supp. V) § 2314, 18 U.S.C.A. § 2314, and a conspiracy to commit the aforesaid substantive offenses, 18 U.S.C. (Supp. V) § 371, 18 U.S.C.A. § 371. The Court of Appeals for the Fifth Circuit affirmed. 202 F.2d 830. This Court granted certiorari to consider questions which are important to the proper administration of criminal justice in the federal courts. 345 U.S. 990, 73 S.Ct. 1134, 97 L.Ed. 1399. 2 On April 19, 1951, Mrs. Gertrude Joyce, a wealthy widow, fifty-six years old, and her younger half-sister, Miss Katherine Joyner, were accosted by the petitioner Brading as they were about to enter a hotel in El Paso, Texas. Mrs. Joyce and her sister had just arrived from their home in Roswell, New Mexico, and were preparing to register at the hotel. Brading identified himself, assisted them in parking their car, and invited them into the hotel bar to meet a friend of his. They accepted. The friend was petitioner Pereira, thirty-three years of age. After a few drinks, the men suggested that they all go to Juarez for dinner. The women accepted, and after dinner visited some night clubs with the petitioners. Pereira devoted himself to Mrs. Joyce, telling her that their meeting was an 'epoch' in his life. He mentioned that he was getting a divorce. This same performance was repeated the following night. When Pereira said that he would like to return to Roswell with the women, Mrs. Joyce invited the two men to be her house guests, and they accepted. Pereira commenced to make love to Mrs. Joyce, and she responded to his attentions. On May 3, Pereira exhibited a telegram to Mrs. Joyce, in the presence of Brading and Miss Joyner, stating that his divorce would be granted on May 27, but that he would not receive his share of the property settlement, some $48,000, for a month. 3 Brading represented himself as a prosperous oil man, dealing in leases, and Pereira as the owner and operator of several profitable hotels. Brading then told Mrs. Joyce that Pereira was about to lose an opportunity to share in the profits of some excellent oil leases because of the delay in the divorce property settlement, and persuaded her to lend Pereira $5,000. 4 Pereira suggested that he and Mrs. Joyce take a trip together to 'become better acquainted.' He borrowed $1,000 from her to finance the trip. Brading joined them at Wichita Falls, and the three of them continued the trip together as far as Dallas. Pereira discussed his purported hotel business in Denver during this part of the trip. He stated that he was giving two hotels to his divorced wife, but intended to reenter the hotel business in the fall. In the meantime, he was going to 'play a little oil' with Brading. In Hot Springs, Arkansas, Pereira proposed marriage and was accepted. Brading reappeared on the scene, expressing great joy at the impending marriage. Pereira then told Brading, in the presence of Mrs. Joyce, that he would have to withdraw from further oil deals and get a hotel to assure himself of a steady income. 5 Pereira and Mrs. Joyce were married May 25, 1951, in Kansas City, Missouri. While there, Pereira persuaded Mrs. Joyce to procure funds to enable him to complete an arrangement to purchase a Cadillac through a friend. She secured a check for $6,956.55 from her Los Angeles broker, and drawn on a California bank, which she endorsed over to Pereira. The price of the car was $4,750, and she instructed Pereira to return the balance of the proceeds of the check to her. He kept the change. 6 From that time on, Pereira and Brading, in the presence of Mrs. Joyce, discussed a hotel which by words and conduct they represented that Pereira was to buy in Greenville, Texas. They took Mrs. Joyce—by this time Mrs. Pereira—to see it, and exhibited an option for its purchase for $78,000 through a supposed broker, 'E. J. Wilson.' Pereira asked his then wife if she would join him in the hotel venture and advance $35,000 toward the purchase price of $78,000. She agreed. It was then agreed, between her and Pereira, that she would sell some securities that she possessed in Los Angeles, and bank the money in a bank of his choosing in El Paso. On June 15, she received the check for $35,000 on the Citizens National Bank of Los Angeles from her brokers in Los Angeles, and gave it to Pereira, who endorsed it for collection to the State National Bank of El Paso. The check cleared, and on June 18, a cashier's check for $35,000 was drawn in favor of Pereira. 7 At five o'clock in the morning of June 19, Pereira and Brading, after telling their victim that they were driving the Cadillac to a neighboring town to sign some oil leases, left her at home in Roswell, New Mexico, promising to return by noon. Instead Pereira picked up the check for $35,000 at the El Paso Bank, cashed it there, and with Brading left with the money and the Cadillac. 8 That was the last Mrs. Joyce saw of either petitioner, or of her money, until the trial some seven months later. She divorced Pereira on November 16, 1951. 9 The record clearly shows that Brading was not an oil man; that Pereira was not a hotel owner; that there was no divorce or property settlement pending in Denver; that Pereira arranged to have the telegram concerning the divorce sent to him by a friend in Denver; that there were no oil leases; that the hotel deal was wholly fictitious; and that 'E. J. Wilson' was the petitioner Brading. The only true statements which the petitioners made concerned the purchase of the Cadillac, and they took that with them. Pereira and Brading contrived all of the papers used to lend an air of authenticity to their deals. In short, their activities followed the familiar pattern of the 'confidence game.' 10 The petitioners challenge the admissibility of Mrs. Joyce's testimony as being based on confidential communications between Mrs. Joyce and Pereira during the marriage. Petitioners do not now contend that Mrs. Joyce was not a competent witness against her ex-husband. They concede that the divorce removed any bar of incompetency. That is the generally accepted rule. Wigmore, Evidence, § 2237; 58 Am.Jur., Witnesses, § 204. Petitioners rely on the proposition that while divorce removes the bar of incompetency, it does not terminate the privilege for confidential marital communications. Wigmore, Evidence, § 2341(2); 58 Am.Jur., Witnesses, § 379. This is a correct statement of the rule, but it is inapplicable to bar the communications involved in this case, since under the facts of the case, it cannot be said that these communications were confidential. Although marital communications are presumed to be confidential, that presumption may be overcome by proof of facts showing that they were not intended to be private. Blau v. United States, 340 U.S. 332, 71 S.Ct. 301, 95 L.Ed. 306; Wolfle v. United States, 291 U.S. 7, 54 S.Ct. 279, 78 L.Ed. 617. The presence of a third party negatives the presumption of privacy. Wigmore, Evidence, § 2336. So too, the intention that the information conveyed be transmitted to a third person. Id., § 2336. The privilege, generally, extends only to utterances, and not to acts. Id., § 2337. A review of Mrs. Joyce's testimony reveals that it involved primarily statements made in the presence of Brading or Miss Joyner, or both, acts of Pereira which did not amount to communications, trips taken with third parties, and her own acts. Much of her testimony related to matters occurring prior to the marriage. Any residuum which may have been intended to be confidential was so slight as to be immaterial. Cf. United States v. Mitchell, 2 Cir., 137 F.2d 1006, 1009. 11 The court below was not in error in admitting Mrs. Joyce's testimony. 12 The petitioners challenge their conviction on the substantive counts on the ground that there was no evidence of any mailing or of transporting stolen property interstate, the gist of the respective offenses. These contentions are without merit. The mail fraud statute provides: 13 's 1341. Frauds and swindles 14 'Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Post Office Department, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both.' 18 U.S.C. (Supp. V) § 1341, 18 U.S.C.A. § 1341. The National Stolen Property Act provides: 15 's 2314. Transportation of stolen goods, securities, monies, or articles used in counterfeiting 16 'Whoever transports in interstate or foreign commerce any goods, wares, merchandise, securities or money, of the value of $5,000 or more, knowing the same to have been stolen, converted or taken by fraud * * *. 17 'Shall be fined not more than $10,000 or imprisoned not more than ten years, or both. * * *' 18 U.S.C. (Supp. V) § 2314, 18 U.S.C.A. § 2314. 18 To constitute a violation of these provisions, it is not necessary to show that petitioners actually mailed or transported anything themselves; it is sufficient if they caused it to be done. 18 U.S.C. (Supp. V) § 2(b), 18 U.S.C.A. § 2(b). 19 Petitioners do not deny that the proof offered establishes that they planned to defraud Mrs. Joyce. Collecting the proceeds of the check was an essential part of that scheme. For this purpose, Pereira delivered the check drawn on a Los Angeles bank to the El Paso bank There was substantial evidence to show that the check was mailed from Texas to California, in the ordinary course of business. 20 The elements of the effense of mail fraud under 18 U.S.C. (Supp. V) § 1341, 18 U.S.C.A. § 1341, are (1) a scheme to defraud, and (2) the mailing of a letter, etc., for the purpose of executing the scheme. It is not necessary that the scheme contemplate the use of the mails as an essential element. United States v. Young, 232 U.S. 155, 34 S.Ct. 303, 58 L.Ed. 548. Here, the scheme to defraud is established, and the mailing of the check by the bank, incident to an essential part of the scheme, is established. There remains only the question whether Pereira 'caused' the mailing. That question is easily answered. Where one does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended, then he 'causes' the mails to be used. United States v. Kenofskey, 243 U.S. 440, 37 S.Ct. 438, 61 L.Ed. 836. The conclusion that Pereira's conviction under this count was proper follows naturally from these factors. 21 As to the charge of causing stolen property to be transported in interstate commerce, the validity of Pereira's conviction is even more apparent. Sections 1341 and 2314 of Title 18 constitute two separate offenses, and a defendant may be convicted of both even though the charges arise from a single act or series of acts, so long as each requires the proof of a fact not essential to the other. Gavieres v. United States, 220 U.S. 338, 31 S.Ct. 421, 55 L.Ed. 489; Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306. 18 U.S.C. (Supp. V) § 2314, 18 U.S.C.A. § 2314 requires (1) knowledge that certain property has been stolen or obtained by fraud, and (2) transporting it, or causing it to be transported in interstate commerce. It is obvious that the mail fraud offense requires different proof. The transporting charge does not require proof that any specific means of transporting were used, or that the acts were done pursuant to a scheme to defraud, as is required for the mail fraud charge. United States v. Sheridan, 329 U.S. 379, 67 S.Ct. 332, 91 L.Ed. 359. When Pereira delivered the check, drawn on an out-of-state bank, to the El Paso bank for collection, he 'caused' it to be transported in interstate commerce. It is common knowledge that such checks must be sent to the drawee bank for collection, and it follows that Pereira intended the El Paso bank to send this check across state lines. United States v. Sheridan, supra, 329 U.S. at page 391, 67 S.Ct. at page 338. The trial court charged the jury that one who 'aids, abets, counsels, commands, induces, or procures' the commission of an act is as responsible for that act as if he had directly committed the act himself. See 18 U.S.C. (Supp. V) § 2(a), 18 U.S.C.A. § 2(a). Nye & Nissen v. United States, 336 U.S. 613, 69 S.Ct. 766, 93 L.Ed. 919. The jury found Brading guilty in the light of this instruction. The Court of Appeals, 9 Cir., 168 F.2d 846, affirmed on the ground that the evidence supported conviction under this charge.* 22 The evidence is clear and convincing that Brading was a participant in the fraud from beginning to end. Brading made the initial contact with the victim. He persuaded her to part with $5,000, as a loan to Pereira for investment in some nonexistent oil leases. He was present and participated in conversations about buying the hotel lease. He engaged a telephone answering service under the name of 'E. J. Wilson,' the name of Pereira's purported broker. The evidence established that he sent a telegram to Pereira authorizing an extension of the supposed option to purchase the hotel, signing it 'E. J. Wilson.' He supplied the false excuse for Pereira's departure from the victim, and went with Pereira to collect the proceeds of the check. He and Pereira fled together with the money. 23 The 'aiding and abetting' instruction entitled the jury to draw inferences supplying any lack of evidence directly connecting the petitioner Brading with the specific acts charged in the indictment from the abundant circumstantial evidence offered. The jury was properly charged on this theory. There is ample evidence of the petitioners' collaboration and close cooperation in the fraud from which the jury could conclude that Brading aided, abetted, or counseled Pereira in the commission of the specific acts charged. See Nye & Nissen v. United States, supra, 336 U.S. at page 619, 69 S.Ct. at page 769. The Court of Appeals has passed on the sufficiency of the evidence to sustain Brading's conviction on this theory. We see no reason to upset the findings of the courts below. 24 The petitioners allege that their conviction on both the substantive counts and a conspiracy to commit the crimes charged in the substantive counts constitutes double jeopardy. It is settled law in this country that the commission of a substantive offense and a conspiracy to commit it are separate and distinct crimes, and a plea of double jeopardy is no defense to a conviction for both. See Pinkerton v. United States, 328 U.S. 640, 643—644, 66 S.Ct. 1180, 1181-1182, 90 L.Ed. 1489, and cases cited therein. Only if the substantive offense and the conspiracy are identical does a conviction for both constitute double jeopardy. Cf. Gavieres v. United States, 220 U.S. 338, 31 S.Ct. 421, 55 L.Ed. 489. The substantive offenses with which petitioners were charged do not require more than one person for their commission; either could be accomplished by a single individual. The essence of the conspiracy charge is an agreement to use the mails to defraud and/or to transport in interstate commerce property known to have been obtained by fraud. Pereira's conviction on the substantive counts does not depend on any agreement, he being the principal actor. Similarly, Brading's conviction does not turn on the agreement. Aiding, abetting, and counseling are not terms which presuppose the existence of an agreement. Those terms have a broader application, making the defendant a principal when he consciously shares in a criminal act, regardless of the existence of a conspiracy. Nye & Nissen v. United States, supra, 336 U.S. at page 620, 69 S.Ct. at page 770. Thus, the charge of conspiracy requires proof not essential to the convictions on the substantive offenses—proof of an agreement to commit an offense against the United States—and it cannot be said that the substantive offenses and the conspiracy are identical, any more than that the two substantive offenses are identical. 25 Petitioners further contend that there was no evidence that they agreed to use the mails in furtherance of the scheme to defraud Mrs. Joyce or that they agreed to transport stolen property in interstate commerce. It is not necessary that an agreement to use the mails or transport stolen property exist from the inception of the scheme to defraud. If there was such an agreement at any time, it is sufficient. The existence of a conspiracy to defraud Mrs. Joyce is not denied. Pereira obtained a check from the victim for the purchase of an automobile. That check was drawn on a Los Angeles bank by Mrs. Joyce's brokers. When the subject of purchasing the hotel was broached, Mrs. Joyce told Pereira that she would have to have her California broker sell some stocks to obtain the funds for the purchase. When there was a delay in contacting the broker, Brading, as 'E. J. Wilson,' sent a telegram extending the spurious option for the purchase of the hotel. There is no doubt about Pereira's knowledge that a check on an out-of-state bank would be involved. From what we have said with regard to the substantive offenses, it is also clear that an intent to collect on the check would include an intent to use the mails or to transport the check in interstate commerce. It was certainly not improper to allow the jury to determine from the circumstances whether Brading shared Pereira's knowledge and agreed with him as to the use of the only appropriate means of collecting the money. It would be unreasonable to suppose that Brading would be so closely associated with Pereira in the scheme to defraud without knowing the details related to the realization of their common goal. There is no reason for this Court to upset the jury's finding of conspiracy. 26 For the foregoing reasons, the judgment below is affirmed. 27 Affirmed. 28 Mr. Justice REED took no part in the consideration or decision of this case. 29 Mr. Justice MINTON, with whom Mr. Justice BLACK and Mr. Justice DOUGLAS join, concurring in part and dissenting in part. 30 That a monumental fraud was perpetrated by the petitioners on Mrs. Joyce in the true fashion of a confidence game cannot be disputed. Such fraud could be punished by the States. For the United States to take cognizance of the offenses, the mails had to be used to carry out the fraud or the check fraudulently obtained must have been carried across state lines. That is what the Government charged. Count one charged that they caused a letter to be mailed from El Paso, Texas, to Los Angeles, California, on June 15, 1951. Count ten charged that on or about the same date they caused the check, in the amount of $35,286.78, to be transported in interstate commerce from El Paso to Los Angeles, knowing it was obtained by fraud. Count 11 charged a conspiracy to commit the substantive offenses. 31 I would affirm the convictions except as to Brading on the substantive counts. To convict on the substantive counts, the petitioners must have actually used the mails to transport the check from El Paso to Los Angeles. The use may be proved by direct or circumstantial evidence, but it must be proved. Brading must have used, or must have known or from the facts and circumstances be reasonably expected to have known, that Pereira actually would use the mails. United States v. Peoni, 2 Cir., 100 F.2d, 401, 402. To be guilty of the conspiracy, Brading had only to reasonably anticipate that Pereira might use the mails, and if he did subsequently use them, then Brading is bound. 32 The elements of the offense under the Mail Fraud statute are (1) a scheme to defraud which (2) reasonably contemplates the use of the mails, and (3) use of the mails in furtherance of the plan. The National Stolen Property Act is violated if (1) one transports securities or money of the value of $5,000 or more in interstate commerce and (2) does so knowing they have been taken by fraud. 33 Concededly, Brading did not participate directly in the use of the mails to transport the thirty-five thousand dollar check from El Paso to Los Angeles. He can be convicted, if at all, only as an aider and abettor. Nye & Nissen v. United States, 336 U.S. 613, 618, 69 S.Ct. 766, 769, 93 L.Ed. 919. There is no evidence to establish that he could reasonably have expected that the mails would be used in carrying out the scheme. 34 Three financial transactions are mentioned by the Court in its opinion. First, the $5,000 transaction. That all took place in Roswell, New Mexico, where Mrs. Joyce cashed a check on a Roswell bank and gave the proceeds to Pereira. No federal offense there. The Cadillac transaction was liquidated by a check received from Los Angeles by Mrs. Joyce and turned over to Pereira, who cashed it in Kansas City, Missouri. Brading was not shown to have known where this money came from, and, more important, it was not proved that that check was mailed, as was done in the case of the third check, for $35,286.78. 35 Mrs. Joyce arranged for this check, the only transaction upon which the convictions are based, by selling securities in Los Angeles. She received the check and turned it over to Pereira in Roswell, New Mexico, from whence he took it to El Paso, and there, on June 15, 1951, after securing Mrs. Joyce's endorsement, caused it to be sent through the mails for collection. The evidence does not show where Brading was at the time these events occurred. He next appeared at Mrs. Joyce's home in Roswell after the completion of the acts constituting the federal crimes, and on June 19, 1951, left with Pereira, ostensibly to see about some oil leases in Texas. The same day Pereira collected the money at the El Paso bank. There is no direct evidence that Brading actually knew or had reason to believe that a check would be received or that the check would be drawn on an out-of-town bank, necessitating its being placed in the mails for collection. 36 Lacking such proof, an important element of each crime charged, namely, that Brading had reason to foresee the use of the mails or interstate commerce, has not been established. It is true that the use of the mails need not have been originally intended as a part of the plan, but its use must have been a natural, reasonably foreseeable means of executing the plan. Brading might well have assumed that cash would be given to Pereira, or, if a check, one drawn on a local bank. 37 It may well be reasonable to infer that one receiving a check drawn on an out-of-town bank would know that it would be mailed in the process of collection, but to that inference must be added the inference that Brading had reason to know that a check would be received and also that the check would be on an out-of-town bank. This is piling inference upon inference, in the absence of direct proof. In short, this is simply guessing Brading into the federal penitentiary. It may be good guessing, but it is not proof. 38 Brading is clearly an aider and abettor of the scheme to defraud, which a State may punish, but is he an aider and abettor of the federal offenses of using the mails to defraud and causing the fraudulent check to be carried across state lines? I think not, unless we are willing to say that aiding and abetting the scheme to defraud is aiding and abetting any means used for the consummation of the fraud. Brading must aid and abet the federal crimes, not just the fraudulent scheme. There is not a scintilla of evidence that Brading aided and abetted anything more than the scheme to get the money from Mrs. Joyce. 39 In Bollenbach v. United States, 326 U.S. 607, 66 S.Ct. 402, 90 L.Ed. 350, the defendant was charged with transporting securities in interstate commerce knowing them to have been stolen, and with conspiracy to commit the offense. He was convicted of conspiracy. The court had instructed the jury that possession of the securities by the defendant in New York soon after their theft in Minnesota was sufficient to warrant the jury in finding that the defendant knew the securities had been stolen, and this would support the further 'presumption' that the defendant was the thief and transported the securities in interstate commerce. This Court set the conviction aside. The latter inference was said to be untenable. 40 In this case, I think it untenable to infer that Brading had reason to know that Pereira would get a foreign check that must be sent through the mails and in its handling must be carried across state lines, thereby making out the federal crimes. It is untenable because it is unreasonable to infer one or more facts from the inference of another fact. Looney v. Metropolitan R. Co., 200 U.S. 480, 488, 26 S.Ct. 303, 306, 50 L.Ed. 564; United States v. Ross, 92 U.S. 281, 23 L.Ed. 707. * The Government argues that Brading's conviction on the substantive offenses can be affirmed on the basis of Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489, since the record demonstrates that he conspired to defraud Mrs. Joyce and the acts charged in the substantive offenses were acts in furtherance of that design. The Pinkerton case, however, is inapplicable here since the jury was not instructed in terms of that theory. Nye & Nissen v. United States, 336 U.S. 613, 69 S.Ct. 766, 93 L.Ed. 919.

01

347 U.S. 67 74 S.Ct. 347 98 L.Ed. 508 WESTERN AIR LINES, Inc.v.CIVIL AERONAUTICS BOARD et al. CIVIL AERONAUTICS BOARD v. SUMMERFIELD, Postmaster General et al. Nos. 224, 225. Argued Dec. 9, 10, 1953. Decided Feb. 1, 1954. Rehearing Denied March 8, 1954. See 347 U.S. 924, 74 S.Ct. 512. Mr. Emory T. Nunneley, Jr., Washington, D.C., for C.A.B. Mr. L. Welch Pogue, Washington, D.C., for Delta Air Lines. Mr. Hugh W. Darling, Los Angeles, Cal., for Western Air Lines. Mr. Daniel Friedman, for Summerfield et al. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 These cases, here on writs of certiorari to the Court of Appeals for the District of Columbia, present an important question in the construction of § 406(b) of the Civil Aeronautics Act of 1938, 52 Stat. 973, as amended, 49 U.S.C. § 401 et seq., 49 U.S.C.A. § 401 et seq. Section 406(a) authorizes the Civil Aeronautics Board to fix 'fair and reasonable rates of compensation for the transportation of mail by aircraft'.1 Section 406(b) requires the Board to take into consideration, inter alia, '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.'2 The controversy in the present cases turns on the meaning of the words 'the need of each such air carrier' and 'all other revenue of the air carrier'. 2 Western Air Lines filed a petition for a rate order April 26, 1944. In 1951 the Board finally determined the rate applicable between May 1, 1944, and December 31, 1948. During this open-rate period Western realized some $88,000 in profits from the operation of restaurants and other concessions at airport terminals. The Board determined that this income was 'other revenue' available to reduce mail pay. During the open-rate period Western with approval of the Board3 sold to United Air Lines its certificate and properties for air operations (Route 68) between Los Angeles and Denver, at a profit in excess of $1,000,000. The Board treated the profit derived from the sale of the tangible assets (approximately $650,000) as 'other revenue' and reduced the mail compensation by that amount. But it declined to reduce the mail pay allowance by the profit realized from the sale of the intangible value' of the route. The Board concluded that that amount should not be used in offset because it wanted 'to encourage improvement of the air route pattern through voluntary route transfers by other air carriers.' 14 C.A.B. 246. 3 On review Western challenged the inclusion in 'other revenue' of the amounts received from the concessions and the profit from the sale of the tangible assets. The Postmaster General4 challenged the exclusion from the offsets of the profit Western made on the sale of the intangibles. The Court of Appeals sustained the Board in Western's petition and reversed it in the other petition and remanded the case to the Board for the fixing of a new rate after deducting the entire profit from the sale of Western's Route 68. 92 U.S.App.D.C. 248, 207 F.2d 200. 4 Some air mail rates are service rates, based on mail-miles flown;5 others are subsidy rates based on 'need.' We are here concerned with a subsidy rate which in Western's case was fixed so as to produce a 7 percent return on investment after taxes for the period in question. In other words, the end problem concerns not the amount of money provided for operation and development but the amount of profit over and above all such sums. 5 We read the Act as meaning that 'the need' of the carrier which Congress has directed the Board to consider in fixing a subsidy rate is 'the need' of the carrier as a whole. The need specified in § 406(b) is measured by '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' it to develop air transportation, etc. The 'compensation for the transportation of mail' is flight income. It seems too clear for argument that 'all other revenue' would include nonflight income from incidental air carrier activities. We have found nothing persuasive as indicating that 'all other revenue' means transportation revenue. The inclusive nature of the category precludes a narrow reading. If the carrier's treasury is lush, 'the need' for subsidy decreases whether the opulence is due to transportation activities or to activities incidental thereto. 6 By the same reasoning the profit made by Western on the sale of Route 68 is also 'other revenue' within the meaning of § 406(b). The Board agrees; but it goes on to say that that is not the end of the matter, since the reduction of the subsidy by the entire amount of the profit is not mandatory. The Act, it is true, merely says that the Board in determining the rate 'shall take into consideration' various factors, including 'the need' of the carrier, § 406(b); and the 'need,' as we have noted, is not merely for compensation to insure the transportation of mail but compensation for 'the development of air transportation' under the prescribed standards. By that standard the 'need' in a given case may be so great that profits from other transactions should be allowed in addition to the normal rate. Or, on the other hand, the total revenues of the carrier as against its operating costs and developmental program may be so great that 'the need' for subsidy disappears and the carrier is trnsferred to the service rate for mail pay. The difficulty here is that the Board, in concluding that a part of the profits from the sale to United should not be used as an offset, forsook the standard of 'need' and adopted a different one. The Board wanted 'to safeguard the incentive for voluntary route transfers.' It thought it could not keep this incentive alive in the industry unless the profit were allowed in addition to the subsidy. The Board thought it important to keep that incentive alive in order to promote route transfers and mergers which the Board could not compel. The Board therefore argues that allowance of the profit over and above a subsidy enables Western 'to maintain and continue the development of air transportation' within the meaning of § 406(b), since the sale of Route 68 was consistent with the development program which the Board deemed desirable. 7 The Act, however, speaks of 'the need' of the carrier for the subsidy, not the effect of a policy on carriers in general. This is not a case of recapture of earnings. Western keeps the entire amount of the profit. The issue is how much additional money Western is to receive in the form of a subsidy. Western's 'need' is the measure of the amount authorized by Congress. No finding was made that there was 'need' for the additional subsidy, in the sense that otherwise Western would not have been willing or able to make the transfer of Route 68 in accordance with the development program which the Board deems advisable. Whether such a finding would have satisfied the statutory requirement is a question we do not reach, since the opinion of the Board makes plain that other considerations were controlling: 8 '* * * our decision not to include the net profit from the sale of intangibles was reached solely because we are thus seeking to encourage improvement of the air route pattern through voluntary route transfers by other air carriers.' 14 C.A.B. 246. 9 The standard prescribed by Congress, however, is 'the need' of the air carrier whose subsidy rates are being fixed. 10 Affirmed. 1 'The Board 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 faxed and determined shall be paid by the Postmaster General from appropriations for the transportation of mail by aircraft.' 2 'In fixing and determining fair and reasonable rates of compensation under this section, the Board, 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 Board 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 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.' 3 United-Western, Acquisition of Air Carrier Property, 1947, 8 C.A.B. 298. 4 The Postmaster General has not only the duty to pay the mail rates from appropriations for the transportation of mail by aircraft but also is given standing by § 406(a) to petition the Board to fix and determine the rates. A change in the function of the Postmaster General was made by Reorganization Plan No. 10 of 1953, effective October 1, 1953, 67 Stat. 644, 49 U.S.C.A. § 486 note. 5 See, for example, Eastern Air Lines, Mail Rates, 1942, 3 C.A.B. 733.

78

347 U.S. 81 74 S.Ct. 367 98 L.Ed. 520 UNITED STATESv.CITY OF NEW BRITAIN, CONN., et al. No. 92. Argued Dec. 1, 1953. Decided Feb. 1, 1954. Mr. Marvin E. Frankel, Washington, D.C., for petitioner. Mr. Frank R. Kennedy, Iowa City, Iowa, for respondent. Mr. Justice MINTON delivered the opinion of the Court. 1 The question presented by this writ involves the relative priority of statutory federal and municipal liens to the proceeds of a mortgage foreclosure sale of the property to which the liens attached. 2 Two mortgages on the real property of a corporation located in the City of New Britain, Connecticut, were foreclosed by judgment sale in the Superior Court of Hartford County, and a gross sum of $28,071.24 was realized. Against this fund, there were claims of some $31,000, including expenses of the sale, the two mortgages, a judgment of record, and various statutory liens asserted by the City and by the United States. The federal liens, securing unpaid withholding and unemployment taxes and insurance contributions totaling $8,475.13, were created by § 3670 of the Internal Revenue Code.1 They arose at the times the assessment lists were received in the office of the Collector of Internal Revenue for Connecticut2 on various dates between April 26, 1948, and September 21, 1950. The City's liens, which attached to the specific real estate sold in the total sum of $3,587.71, are for delinquent real-estate taxes and water rent. The real-estate taxes became due on various dates in 1947 through 1951, the liens attaching in each case as of October 1 or other assessment date of the prior year;3 the water-rent liens arose upon failure to pay4 and date from December 1, 1947, to June 1, 1951. 3 A Connecticut statute provides that real-estate tax liens 'shall take precedence of all transfers and incumbrances' in any manner affecting the property subject to the line.5 Another state law gives the water-rent liens 'precedence over all other liens or incumbrances except taxes' on the property subject to the liens.6 The funds available for distribution being insufficient to pay all claimants in full, the Superior Court directed that the expenses, the City's liens, the mortgages, the judgment lien, and the United States' liens be paid in that order. The United States appealed from the judgment insofar as the statutory liens of the City were given priority over those of the United States. The Supreme Court of Errors of Connecticut affirmed, Brown v. General Laundry Service, 139 Conn. 363, 94 A.2d 10, and we granted certiorari, 346 U.S. 809, 74 S.Ct. 27. 4 We are here dealing with several statutory liens, some owned by the City and some by the Federal Government, on real estate. The Supreme Court of Errors stated that the City's liens were specific and perfected. Such characterization of a lien by the State is not, of course, conclusive against the Federal Government. United States v. Security Trust & Savings Bank, 340 U.S. 47, 49, 71 S.Ct. 111, 112, 95 L.Ed. 53; People of State of Illinois ex rel. Gordon v. Campbell, 329 U.S. 362, 371, 67 S.Ct. 340, 345, 91 L.Ed. 348. However, we accept the holding as to the specificity of the City's liens since they attached to specific pieces of real property for the taxes assessed and water rent due. The liens may also be perfected in the sense that there is nothing more to be done to have a choate lien—when the identity of the lienor, the property subject to the lien, and the amount of the lien are established. The federal tax liens are general and, in the sense above indicated, perfected. But the fact that one group of liens is specific and the other general in and of itself is of no significance in these cases involving statutory liens on real estate only. United States v. City of Greenville, 4 Cir., 118 F.2d 963, 964. A mortgage is a specific lien, yet '(a) statutory lien is as binding as a mortgage, and has the same capacity to hold the land so long as the statute preserves it in force.' Rankin v. Scott, 12 Wheat. 177, 179, 6 L.Ed. 592. 5 Thus, the general statutory liens of the United States are as binding as the specific statutory liens of the City. The City gains no priority by the fact that its liens are specific while the United States' liens are general. Obviously, the State cannot on behalf of the City impair the standing of the federal liens, without the consent of Congress. State of Michigan v. United States, 317 U.S. 338, 340, 63 S.Ct. 302, 303, 87 L.Ed. 312; United States v. State of Oklahoma, 261 U.S. 253, 260, 43 S.Ct. 295, 297, 67 L.Ed. 638; United States v. Snyder, 149 U.S. 210, 214, 13 S.Ct. 846, 847, 37 L.Ed. 705. On the other hand, the federal statutes do not attempt to give priority in all cases to liens created under the paramount authority of the United States. The statute creating the federal liens here involved, I.R.C. § 3670, does not in terms confer priority upon them. 6 When the debtor is insolvent, Congress has expressly given priority to the payment of indebtedness owing the United States, whether secured by liens or otherwise, by § 3466 of the Revised Statutes, 31 U.S.C. (1946 ed.) § 191, 31 U.S.C.A. § 191. In that circumstance, where all the property of the debtor is involved, Congress has protected the federal revenues by imposing an absolute priority.7 Where the debtor is not insolvent, Congress has failed to expressly provide for federal priority, with certain exceptions not relevant here,8 although the United States is free to pursue the whole of the debtor's property wherever situated. The State, having a lien only upon property within its boundaries, may not reach beyond the state line to fasten its lien upon other property. The record does not establish that the taxpayer in this case was insolvent. 7 It does not follow, however, that the City's liens must receive priority as a whole. We believe that priority of these statutory liens is determined by another principle of law, namely, 'the first in time is the first in right.' As stated by Chief Justice Marshall in Rankin v. Scott, supra: 8 'The principle is believed to be universal, that a prior lien gives a prior claim, which is entitled to prior satisfaction out of the subject it binds, unless the lien be intrinsically defective, or be displaced by some act of the party holding it, which shall postpone him in a Court of law or equity to a subsequent claimant.' 12 Wheat. at page 179, 6 L.Ed. 592. 9 This principle is widely accepted and applied, in the absence of legislation to the contrary. 33 Am.Jur., Liens, s 33; 53 C.J.S., Liens, § 10b. We think that Congress had this cardinal rule in mind when it enacted § 3670, a schedule of priority not being set forth therein. Thus, the priority of each statutory lien contested here must depend on the time it attached to the property in question and became choate. 10 The United States in claiming priority for all its liens relies heavily on two recent cases from this Court, United States v. Security Trust & Savings Bank, supra, and United States v. Gilbert Associates, 345 U.S. 361, 73 S.Ct. 701. We do not think they are inconsistent with our decision in this case. 11 The Security Trust case involved an inchoate attachment lien that had not ripened into a judgment at the time the federal tax liens attached. We noted that '(n)umerous contingencies might arise that would present the attachment lien from ever becoming perfected by a judgment awarded and recorded.' 340 U.S. at page 50, 71 S.Ct. at page 113. Thus, the attachment lien was 'merely a lis pendens notice that a right to perfect a lien exists.' Ibid. Such inchoate liens may become certain as to amount, identity of the lienor, or the property subject thereto only at some time subsequent to the date the federal liens attach and cannot then be permitted to displace such federal liens. Otherwise, a State could affect the standing of federal liens, contrary to the established doctrine, simply by causing an inchoate lien to attach at some arbitrary time even before the amount of the tax, assessment, etc., is determined.9 Accordingly, we concluded in Security Trust 'that the tax liens of the United States are superior to the inchoate attachment lien * * *.' Id., 340 U.S. at page 51, 71 S.Ct. at page 114. In the instant case, certain of the City's tax and water-rent liens apparently attached to the specific property and became choate prior to the attachment of the federal tax liens. 12 The State and the United States were both holders of general statutory liens in the Gilbert Associates case. But the question we have here did not arise there because that was a case involving personal property and insolvency of the taxpayer. We said in that case: 13 'Where the lien of the Town and that of the Federal Government are both general, and the taxpayer is insolvent, § 3466 (Revised Statutes) clearly awards priority to the United States.' 345 U.S. at page 366, 73 S.Ct. at page 705. 14 Here the contest is between two groups of statutory liens, one specific and one general, attached to the same real estate, with no question of insolvency involved; therefore, 'the first in time is the first in right.' 15 The State finds the rule of 'first in time, first in right' not applicable because of § 3672 of the Internal Revenue Code,10 which makes the lien of the United States invalid as to the prior recorded mortgages and the judgment in this case. It points out that the mortgagee could have paid the delinquent real-estate taxes and water rent, with the amount so paid becoming part of the mortgage debt covered by the mortgage lien,11 and suggests that the federal tax lien would therefore be invalid as to such amount by virtue of § 3672.12 From this and a belief that Congress did not intend, by giving mortgages and judgments priority over federal tax liens, to supersede state laws making certain interests superior to mortgages and judgments, the Supreme Court of Errors concluded that by enacting § 3672 Congress 'expressed the intention that federal liens should be subordinated to such mortgages and judgment liens as are described therein and, consequently, subordinated to such other incumbrances as have priority over those mortgages and judgment liens.'13 16 We do not agree. The United States is not interested in whether the State receives its taxes and water rents prior to mortgagees and judgment creditors. That is a matter of state law. But as to any funds in excess of the amount necessary to pay the mortgage and judgment creditors, Congress intended to assert the federal lien. There is nothing in the language of § 3672 to show that Congress intended antecedent federal tax liens to rank behind any but the specific categories of interests set out therein, and the legislative history lends support to this impression.14 17 Under the circumstances, we vacate the judgment of the Supreme Court of Errors of Connecticut and remand the case to that court to have determine the order of priority of the various liens asserted, in accordance with this opinion. 18 Judgment vacated. 1 '§ 3670. Property subject to lien 'If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, penalty, additional amount, or addition to such tax, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.' I.R.C. § 3670, 26 U.S.C. (1946 ed.) § 3670, 26 U.S.C.A. § 3670. 2 I.R.C. § 3671, 26 U.S.C. (1946 ed.) § 3671, 26 U.S.C.A. § 3671. 3 Conn.Gen.Stat.1949, c. 88, § 1853. 4 Conn.Gen.Stat.1949, c. 34, § 758. 5 Conn.Gen.Stat.1949, c. 88, § 1853. 6 Conn.Gen.Stat.1949, c. 34, § 758. As construed by the Supreme Court of Errors of Connecticut in this case, the term 'taxes' in § 758 includes 'only those taxes which may be assessed in favor of the state or some subdivision thereof and which, under the law, are secured by specific liens upon real property.' 139 Conn. 363, 367, 94 A.2d 10, 12. 7 United States v. Gilbert Associates, 345 U.S. 361, 73 S.Ct. 701; United States v. Waddill, Holland & Flinn, 323 U.S. 353, 65 S.Ct. 304, 89 L.Ed. 294. 8 E.g., I.R.C. § 2800(e), 26 U.S.C. (1946 ed.) § 2800(e), 26 U.S.C.A. § 2800(e) (distilled spirits tax lien). 9 See Sarner, Correlation of Priority and Lien Rights in the Collection of Federal Taxes, 95 U. of Pa.L.Rev. 739, 755—761. 10 § 3672. Validity against mortgagees, pledgees, purchasers, and judgment creditors '(a) Invalidity of lien without notice. Such lien shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the collector * * *.' I.R.C. § 3672, as amended, 53 Stat. 882, 26 U.S.C. (1946 ed.) § 3672, 26 U.S.C.A. § 3672. 11 Conn.Gen.Stat.1949, c. 361, § 7192. 12 We need not now pass upon the merits of this suggestion since the situation is not presented by the record in this case. 13 139 Conn. 363, 373, 94 A.2d 10, 15. 14 See United States v. Gilbert Associates, 345 U.S. 361, 364, 73 S.Ct. 701, 703; United States v. Security Trust & Savings Bank, 340 U.S. 47, 51, 71 S.Ct. 111, 113, 95 L.Ed. 53 (concurring opinion).

1112

347 U.S. 17 74 S.Ct. 323 98 L.Ed. 455 RADIO OFFICERS' UNION OF COMMERCIAL TELEGRAPHERS UNION, A.F.L.v.NATIONAL LABOR RELATIONS BOARD. NATIONAL LABOR RELATIONS BOARD v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS OF AMERICA et al. GAYNOR NEWS CO., Inc. v. NATIONAL LABOR RELATIONS BOARD. Nos. 5, 6, 7. Reargued Nov. 9, 10, 1953. Decided Feb. 1, 1954. [Syllabus from pages 17-20 intentionally omitted] No. 5: Mr. Emanuel Butter, New York City, for petitioner. Mr. Bernard Dunau, Washington, D.C., for respondent. No. 6: Mr. Bernard Dunau, Washington, D.C., for petitioner. Mr. John J. Manning, Boston, Mass., for respondents. No. 7: Mr. Julius Kass, New York City, for petitioner. Mr. Bernard Dunau, Washington, D.C., for respondent. Mr. Justice REED delivered the opinion of the Court 1 The necessity for resolution of conflicting interpretations by Courts of Appeals of § 8(a)(3) of the National Labor Relations Act, as amended, 61 Stat. 136, 65 Stat. 601, 29 U.S.C. (Supp. V) § 158(a)(3), 29 U.S.C.A. § 158(a)(3), impelled us to grant certiorari in these three cases. That section provides that 'it shall be an unfair labor practice for an employer * * * 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: * * *.'1 The Court of Appeals for the Eighth Circuit in No. 6 (hereinafter referred to as Teamsters),2 following a decision of the Third Circuit,3 held that express proof that employer discrimination had the effect of encouraging or discouraging employees in their attitute toward union membership is an essential element to establish violation of this section. That holding conflicts with the holdings of the Second Circuit in No. 5 (hereinafter referred to as Radio Officers)4 and No. 7 (hereinafter referred to as Gaynor)5 with which decisions of the First6 and Ninth Circuits7 accord, that such employee encouragement or discouragement may be inferred from the nature of the discrimination. (See Part III, 74 S.Ct. 340, infra.) In reaching its decision in Gaynor, the Second Circuit also rejected the contention, which contention is supported by many decisions of the Courts of Appeals,8 that there can be no violation of § 8(a)(3) unless it is shown by specific evidence that the employer intended his discriminatory action to encourage or discourage union membership. The Second Circuit determined that the employer intended the natural result of his discriminatory action. (See Part II, 74 S.Ct. 337, infra.) Moreover, Radio Officers and Teamsters present conflicting views by Courts of Appeals as to the scope of the phrase 'membership in any labor organization' in § 8(a)(3). The Eighth Circuit restricts this phrase to 'adhesion to membership,' i.e., joining or remaining on a union's membership roster; the Second Circuit, on the other hand, interprets it to include obligations of membership, i.e., being a good union member.9 (See Part I, 74 S.Ct. 335, infra.) Radio Officers also raises subsidiary questions regarding the interrelationship of § 8(a)(3) with § 8(b) (2) of the Act which makes it an unfair labor practice for a labor organization or its agents 'to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (8)(a)(3) * * *.'10 (See Part IV, 74 S.Ct. 342, infra.) These cases were argued last term, and, upon our order,11 reargued this term. They reached us in the following manner.12 2 Teamsters. Upon the basis of a charge filed by Frank Boston, a truck driver employed by Byers Transportation Company and a member of Local Union No. 41, International Brotherhood of Teamsters, A.F.L., the General Counsel of the National Labor Relations Board issued a complaint against the union alleging violation of §§ 8(b)(1)(A)13 and 8(b)(2) of the National Labor Relations Act by causing the company to discriminate against Boston by reducing his seniority standing because of Boston's delinquency in paying his union dues. A hearing was had before a trial examiner, whose intermediate report was largely adopted by the Board14 with one member dissenting. 3 The Board found that the union, as exclusive bargaining representative of the teamsters in the company's employ, had in 1949 negotiated a collective-bargaining agreement with the company which governed working conditions on all over-the-road operations of the company.15 This agreement established a seniority system under which the union was to furnish periodically to the company a seniority list and provided that 'any controversy over the seniority standing of any employee on this list shall be referred to the Union for settlement.' Union security provisions of the agreement were not effective due to lack of the authorization then required by § 8(a)(3) of the Act.16 The seniority list therefore included both union members and nonmembers. Each new employee of the company, after a thirty-day trial period, was placed at the bottom of this list, and such employee would gradually advance in position as senior members were either removed from the list or reduced in their position on it. Position upon the seniority list governed the order of truck-driving assignments, the quality of such assignments, and the order of layoff. 4 The bylaws of Teamsters Local Union No. 41 provided that 'any member, under contract, one month in arrears for dues shall forfeit all seniority rights. * * *'17 A member's dues were payable on the first day of each month, and he was deemed 'in arrears' for any month's dues on the second day of the following month. Boston did not pay his dues for June 1950, until July 5, 1950. When the union transmitted a new seniority list to the company on the following July 15, Boston, who had previously been eighteenth on the list, was reduced to fifty-fourth, the bottom position on the list. As a result of such reduction Boston was denied driving assignments he would otherwise have obtained and for which he would have received compensation. 5 Upon these facts a majority of the Board found that the union had violated §§ 8(b)(1)(A) and 8(b)(2) of the Act. As to the former, the Board held that the union's reduction of Boston's seniority restrained and coerced him in the exercise of his right to refrain from assisting a labor organization guaranteed by § 7.18 The Board held that, 'absent a valid contractual union security provision, Boston had the absolute protected right under the Act to determine how he would handle his union affairs without risking any impairment of his employment rights and that the Union had no right at any time whether Boston was a member or not a member to make his employment status to any degree conditional upon the payment of dues. * * *' As to the latter, the Board concluded that the union had caused the company to discriminate against Boston and adopted the Trial Examiner's finding that 'the normal effect of the discrimination against Boston was to encourage nonmembers to join the Union, as well as members to retain their good standing in the Union, a potent organization whose assistance is to be sought and whose opposition is to be avoided. The employer's conduct tended to encourage membership in the Union.19 Its discrimination against Boston had the further effect of enforcing rules prescribed by the Union, thereby strengthening the Union in its control over its members and its dealings with their employers and was thus calculated to encourage all members to retain their membership and good standing either through fear of the consequences of losing membership or seniority privileges or through hope of advantages in staying in. * * *' 6 The Board entered an order requiring the union to cease and desist from the unfair labor practices found and from related conduct; to notify Boston and the company that the union withdraws its request for the reduction of Boston's seniority and that it requests the company to offer to restore Boston to his former status; to make Boston whole for any losses of pay resulting from the discrimination; and to post appropriate notices of compliance. 7 The Court of Appeals for the Eighth Circuit denied the Board's petition to enforce its order.20 The court held that 'the evidence here abundantly supports the finding of the Board that the respondent caused or attempted to cause the employer to discriminate against Boston in regard to 'tenure * * * or condition of employment", but 'discrimination alone is not sufficient' and 'we can find no substantial evidence to support the conclusion that the discrimination * * * did or would encourage or discourage membership in any labor organization'. This conclusion was reached because 'the testimony of Boston * * * shows clearly that this act neither encouraged nor discouraged his adhesion to membership in the respondent union'21 and because, assuming the effect of the discrimination on other employees was relevant, the court found no evidence to support a conclusion that such employees were so encouraged or discouraged. We granted the Board's petition for certiorari.22 8 Radio Officers. Upon the basis of a charge filed by William Christian Fowler, a member of The Radio Officers' Union of the Commercial Telegraphers Union, A.F.L., the General Counsel of the National Labor Relations Board issued a complaint against the union alleging violation of §§ 8(b)(1)(A) and 8(b)(2) of the Act by causing the A. H. Bull Steamship Company to discriminatorily refuse on two occasions to employ Fowler. No complaint was issued against the company because Fowler filed no charge against it. Following the usual proceedings under the Act, a hearing was had before a trial examiner, whose findings, conclusions, and recommendations with certain additions were adopted by the Board.23 9 The Board found that at the time the transactions giving rise to this case occurred the union had a collective-bargaining contract with a number of steamship concerns including the Bull Steamship Company covering the employment of radio officers on ships of the contracting companies. Pertinent provisions in this contract are: 10 'Section 1. The Company agrees when vacancies occur necessitating the employment of Radio Officers, to select such Radio Officers who are members of the Union in good standing, when available, on vessels covered by this Agreement, provided such members are in the opinion of the Company qualified to fill such vacancies. 11 'Section 6. The Company shall have the right of free selection of all its Radio Officers and when members of the Union are transferred, promoted, or hired the Company agrees to take appropriate measures to assure that such members are in good standing, and the Union agrees to grant all members of the Union in good standing the necessary 'clearance' for the position to which the Radio Officer has been assigned. If a member is not in good standing, the Union will so notify the Company in writing.' 12 The union's contention that this contract provided for a hiring hall under which complete control over selection of radio officers to be hired by any company was given to the union was rejected by the Trial Examiner and by a majority of the Board. Such an agreement would have legalized the actions of the union in this case.24 But the Board concluded, primarily from the last sentence of § 6 of the contract, that the contract 'was clear on its face and did not provide for any hiring hall arrangement' and that it therefore was not improper for the Trial Examiner to exclude evidence that general, although not universal, practice had been for radio officers to be assigned to employers by the union. 13 The Board also found that: On February 24, 1948, the company telegraphed an offer of a job as radio officer on the company's ship S. S. Frances to Fowler, who had often previously been employed by the company; Fowler had notified the company that he would accept the job; the company then informed Kozel, the radio officer on the previous voyage of the ship, that he was being replaced by 'a man with senior service in the company'; Fowler reported to the Frances without seeking clearance from the union and Kozel reported such action to the union; the union secretary wired Fowler that he had been suspended from membership for 'bumping' another member and taking a job without clearance and notified the company that Fowler was not in good standing in the union; the union secretary had no authority to effect such a suspension, the suspension was void and Fowler was in good standing in the union at all times material in this case;25 express requests to the union for clearance of Fowler for employment on the Frances by the company and by Fowler were subsequently refused, the union secretary stating that he would never again clear Fowler for a position with that company although Fowler would be cleared for jobs with other employers; unable to obtain clearance for Fowler, the company gave the job to another man supplied by the union, and Fowler returned to his home in Florida; on April 22, 1948, Fowler returned to New York and again advised the company that he was available for work before reporting to the union; the union secretary told Fowler he was being made 'a company stiff' and adhered to his position that he would not clear Fowler for work with that company; clearance sought by the company for Fowler for a job on the S. S. Evelyn was subsequently refused, and another man was dispatched to the job by the union. 14 Upon these facts a majority of the Board found that the union had violated §§ 8(b)(1)(A) and 8(b)(2). The Board rejected the union's defense that the union security provision of the contract, preferential hiring for members in good standing, immunized the union's action. They found that Fowler was in good standing at all times notwithstanding his suspension by the union secretary, and that conformity with the union's hiring-hall rules and procedures was not also required by the contract. Thus the Board concluded that the union, by refusing to clear Fowler in both February and April, restrained and coerced Fowler in his statutory right to refrain from observance of the union's rules, and caused the company to discriminate against Fowler by denying him employment. The Board adopted the Trial Examiner's finding that 'the normal effect of the discrimination against Fowler was to enforce not only his obedience as a member, of such rules as the Respondent might prescribe, but also the obedience of all his fellow members. It thereby strengthened the Respondent both in its control of its members for their general, mutual advantage, and in its dealings with their employers as their representative. It thus encouraged non-members to join it as a strong organization whose favor and help was to be sought and whose opposition was to be avoided. In its effect upon non-members alone, it must therefore be regarded as encouraging membership in the Respondent. * * * Finally, by its demonstration of the Respondent's strength, the discrimination in the present case also had the normal effect of encouraging Fowler and other members to retain their membership in the Respondent either through fear of the consequences of dropping out of membership or through hope of advantage in staying in.' 15 The Board entered an order requiring the union to cease and desist from the unfair labor practices found and from related conduct; to notify Fowler and the company that it withdraws objection to his employment and requests the company to offer him employment as a radio officer; to make Fowler whole for any losses of pay resulting from the discrimination, and to post appropriate notices of compliance. 16 The Court of Appeals for the Second Circuit affirmed the Board's findings and conclusions and granted the Board's petition for enforcement of its order.26 The court agreed that the provisions of the contract 'plainly give the company the right to select the man it desires to hire, and require the union to grant 'clearance' if the man the company wants is a member in good standing', that 'such procedure is not a 'hiring hall' arrangement',27 and that Fowler was in good standing at the time of refusal of clearance. It rejected the union's contention that its refusal to clear was merely a statement of views concerning breach of its rules and as such was within the protection of § 8(c).28 We agree that viewing the record as a whole each of these findings is supported by substantial evidence. International Brotherhood of Electrical Workers v. National Labor Relations Board, 341 U.S. 694, 71 S.Ct. 954, 95 L.Ed. 1299; Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456. As to §§ 8(b)(2) and 8(a)(3), the court held that 'refusal of clearance caused the company to discriminate against Fowler in regard to hire. Without the necessary clearance it could not accept him as an employee. The result was to encourage membership in the union. No threats or promises to the company were necessary. * * * Whether the union's motive was, as it argues, to enforce the contract provisions against discharging satisfactory radio officers such as Kozel, is immaterial * * *. Such conduct displayed to all non-members the union's power and the strong measure it was prepared to take to protect union members. * * *' The court also held that 'a finding that the union has violated § 8(b)(2) can be made without joining the employer and finding a § 8(a)(3) violation', and that it was proper to enter a back-pay order against the union without ordering reinstatement by the employer. We granted the union's petition for certiorari.29 17 Gaynor. Upon the basis of charges filed by Sheldon Loner, a nonunion employee of Gaynor News Company, the General Counsel of the Board issued a complaint against the company alleging inter alia violation of §§ 8(a)(1), (2) and (3)30 of the Act by granting retroactive wage increase and vacation payments to employees who were members of the Newspaper and Mail Deliverers' Union of New York and Vicinity and refusing such benefits to other employees because they were not union members. The Board adopted the findings, conclusions and recommendations of the Trial Examiner with certain additions.31 18 The Board found that in 1946 the company, engaged in the wholesale distribution and delivery of newspapers and periodicals, entered into a collective-bargaining agreement respecting delivery department employees with the union. This agreement provided for specified wages and paid vacations, and also provided for a closed shop, i.e., restricting employment by the company to members of the union. The agreement, however, permitted the employment by the company of nonunion employees pending such time as the union could supply union employees. This provision was necessary because the union was closed, ordinarily admitting to membership only first-born legitimate sons of members. The company at all pertinent times had nonunion as well as union employees in its delivery department. This original agreement was subsequently extended to 1948 and a supplementary agreement was executed by the parties in 1947 providing that in the event the parties negotiated a new contract, the wage rates set therein would be retroactive for three months. In October 1948 the company and the union entered into such a new contract which included an invalid union-security clause32 and provided for increased wage and vacation benefits. In this agreement the company expressly recognized the union as exclusive bargaining agent of all employees in the delivery department. In compliance with the 1947 supplementary agreement the company in November 1948 made lump sum payments to its union employees of the differential between the old and new wage rates for the three months' retroactive period. Further payments were subsequently made to union members to compensate for differences in vacation benefits under the two contracts even though the supplementary agreement made no reference to such benefits. The company refused to make similar payments to any of its nonunion employees on the grounds that it was not contractually bound to do so,33 and, in its business judgment, did not choose to do so. 19 The Board concluded that, since nothing in the supplementary agreement prohibited equal payment to non-union employees, 'the contract affords no defense to the allegation that the Respondent engaged in disparate treatment of employees on the basis of union membership or lack of it * * *,'34 and held that the company had violated the Act as alleged. The company's arguments that its actions had not violated § 8(a)(3) because 'the record is barren of any evidence that the discriminatory treatment of non-union employes encouraged them to join the union' or had such purpose, and that there could be no such evidence because all the nonunion employees had previously sought membership in the union and been denied because of the union's closed policy were rejected. The Board adopted the Trial Examiner's finding that 'it is obvious that the discrimination with respect to retroactive wages and vacation benefits had the natural and probable effect not only of encouraging non-union employees to join the union, but also of encouraging union employees to retain their union membership.' We assume this concedes that the employer acted from self-interest and not to encourage unionism. An order was entered requiring the company to cease and desist from the unfair labor practices found and from related conduct; to make whole Loner and all other nonunion employees similarly situated for any loss of pay they have suffered by reason of the company's discrimination against them; and to post appropriate notices of compliance. 20 The Court of Appeals for the Second Circuit, upon the Board's petition, granted enforcement of all parts of the order pertinent here.35 On the issue of the legality of the discrimination, the court distinguished National Labor Relations Board v. Reliable Newspaper Delivery, 3 Cir., 187 F.2d 547, involving actions closely paralleling the company's here by another company dealing with the same union, stating, 'there discrimination resulted from what the court considered the entirely legal action of the minority union in asking special benefits for its members only. The union made no pretense of representing the majority of the employees or of being the exclusive bargaining agent in the plant. The other non-union employees, reasoned the Court, were quite able to elect their own representative and ask for similar benefits. Not so here. The union here represented the majority of employees and was the exclusive bargaining agent for the plant. Accordingly, it could not betray the trust of non-union members, by bargaining for special benefits to union members only, thus leaving the non-union members with no means of equalizing the situation.' The court continued, in answer to the company's contention that its action 'had neither the purpose nor the effect required by § 8(a)(3)': 'discriminatory conduct, such as that practiced here, is inherently conducive to increased union membership. In this respect, there can be little doubt that it 'encourages' union membership, by increasing the number of workers who would like to join and/or their quantum of desire. It may well be that the union, for reasons of its own, does not want new members at the time of the employer's violations and will reject all applicants. But the fact remains that these rejected applicants have been, and will continue to be, 'encouraged,' by the discriminatory benefits, in their desire for membership. This backlog of desire may well, as the Board argues, result in action by non-members to 'seek to break down membership barriers by any one of a number of steps, ranging from bribery to legal action.' A union's intenal politics are by no means static; changes in union entrance rules may come at any time. If and when the barriers are let down, among the new and now successful applicants will almost surely be large groups of workers previously 'encouraged' by the employer's illegal discrimination. We do not believe that, if the union-encouraging effect of discriminatory treatment is not felt immediately, the employer must be allowed to escape altogether. If there is a reasonable likelihood that the effects may be felt years later, then a reasonable interpretation of the Act demands that the employer be deemed a violator.' We granted the company's petition for certiorari.36 I. Meaning of 'Membership.' 21 The language employed by Congress in enacting the heart of § 8(a)(3) is identical with that of the predecessor section in the Wagner Act, § 8(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 * * *.' These are the first cases to reach us involving application of this section or its predecessor to the problem of encouragement of union membership by employers. We have on many occasions considered aspects of the application of these sections to actions by employers aimed at discouragement of union membership.37 The principles invoked in those cases are, of course, equally applicable to both aspects of employer discrimination, but most of the issues of statutory construction raised here have not previously been considered by this Court. 22 In past cases we have been called upon to clarify the terms 'discrimination' and 'membership in any labor organization'. Discrimination is not contested in these cases: involuntary reduction of seniority, refusal to hire for an available job, and disparate wage treatment are clearly discriminatory. But the scope of the phrase 'membership in a labor organization' is in issue here. Subject to limitations,38 we have held that phrase to include discrimination to discourage participation in union activities as well as to discourage adhesion to union membership.39 23 Similar principles govern the interpretation of union membership where encouragement is alleged. The policy of the Act is to insulate employees' jobs from their organizational rights.40 Thus §§ 8(a)(3) and 8(b)(2) were designed to allow employees to freely exercise their right to join unions, be good, bad, or indifferent members, or abstain from joining any union without imperiling their livelihood. The only limitation Congress has chosen to impose on this right is specified in the proviso to § 8(a)(3) which authorizes employers to enter into certain union security contracts, but prohibits discharge under such contracts if membership 'was not available to the employee on the same terms and conditions generally applicable to other members' or if 'membership was denied or terminated for reasons other than the failure of the employee to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining membership'.41 Lengthy legislative debate preceded the 1947 amendment to the Act which thus limited permissible employer discrimination.42 This legislative history clearly indicates that Congress intended to prevent utilization of union security agreements for any purpose other than to compel payment of union dues and fees. Thus Congress recognized the validity of unions' concern about 'free riders,' i.e., employees who receive the benefits of union representation but are unwilling to contribute their share of financial support to such union, and gave unions the power to contract to meet that problem while withholding from unions the power to cause the discharge of employees for any other reason.43 Thus an employer can discharge an employee for nonmembership in a union if the employer has entered a union security contract valid under the Act with such union, and if the other requirements of the proviso are met. No other discrimination aimed at encouraging employees to join, retain membership, or stay in good standing in a union is condoned.44 24 From the foregoing it is clear that the Eighth Circuit too restrictively interpreted the term 'membership' in Teamsters. Boston was discriminated against by his employer because he was delinquent in a union obligation. Thus he was denied employment to which he was otherwise entitled for no reason other than his tardy payment of union dues. The union caused this discrimination by applying a rule apparently aimed at encouraging prompt payment of dues. The union's action was not sanctioned by a valid union security contract, and, in any event, the union did not choose to terminate Boston's membership for his delinquency. Thus the union by requesting such discrimination, and the employer by submitting to such an illegal request, deprived Boston of the right guaranteed by the Act to join in or abstain from union activities without thereby affecting his job. A fortiori the Second Circuit correctly concluded in Radio Officers that such encouragement to remain in good standing in a union is proscribed. Thus that union in causing the employer to discriminate against Fowler by denying him employment in order to coerce Fowler into following the union's desired hiring practices deprived Fowler of a protected right. 25 II. A.—Necessity for Proving Employer's Motive. 26 The language of § 8(a)(3) is not ambiguous. The unfair labor practice is for an employer to encourage or discourage membership by means of discrimination. Thus this section does not outlaw all encouragement or discouragement of membership in labor organizations; only such as is accomplished by discrimination is prohibited. Nor does this section outlaw discrimination in employment as such; only such discrimination as encourages or discourages membership in a labor organization is proscribed. 27 The relevance of the motivation of the employer in such discrimination has been consistently recognized under both § 8(a)(3) and its predecessor. In the first case to reach the Court under the National Labor Relations Act, National Labor Relations Board v.Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S.Ct. 615, 628, 81 L.Ed. 893, in which we upheld the constitutionality of § 8(3), we said with respect to limitations placed upon employers' right to discharge by that section that 'the (employer's) true purpose is the subject of investigation with full opportunity to show the facts.' In another case the same day we found the employer's 'real motive' to be decisive and stated that 'the act permits a discharge for any reason other than union activity or agitation for collective bargaining with employees.'45 Courts of Appeals have uniformly applied this criteria,46 and writers in the field of labor law emphasize the importance of the employer's motivation to a finding of violation of this section.47 Moreover, the National Labor Relations Board in its annual reports regularly reiterates this requirement in its discussion of § 8(a)(3). For example, a recent report states that 'upon scrutiny of all the facts in a particular case, the Board must determine whether or not the employer's treatment of the employee was motivated by a desire to encourage or discourage union membership or other activities protected by the statute.'48 28 That Congress intended the employer's purpose in discriminating to be controlling is clear. The Senate Report on the Wagner Act said: 'Of course nothing in the bill prevents an employer from discharging a man for incompetence; from advancing him for special aptitude; or from demoting him for failure to perform.'49 Senator Wagner spoke of § 8(3) as reaching 'those cases where the employer is strong enough to impress his will without the aid of law.'50 With this consistent interpretation of that section before it, Congress, as noted above, chose to retain the identical language in its 1947 amendments. No suggestion is found in either the reports or hearings on those amendments that the section had been too narrowly construed, and the House Conference Report states that § 8(a)(3) 'prohibits an employer from discriminating against an employee by reason of his membership or nonmembership in a labor organization, except to the extent he obligates himself to do so under the terms of a permitted union shop or maintenance of membership contract.'51 29 B.—Proof of Motive. 30 But it is also clear that specific evidence of intent to encourage or discourage is not an indispensable element of proof of violation of § 8(a)(3). This fact was recognized in the House Report on the Wagner Act when it was stated that under § 8(3) 'agreements more favorable to the majority than to the minority are impossible. * * *'52 Both the Board and the courts have recognized that proof of certain types of discrimination satisfies the intent requirement.53 This recognition that specific proof of intent is unnecessary where employer conduct inherently encourages or discourages union membership is but an application of the common law rule that a man is held to intend the foreseeable consequences of his conduct. Cramer v. United States, 325 U.S. 1, 31, 65 S.Ct. 918, 933, 89 L.Ed. 1441; Nash v. United States, 229 U.S. 373, 376, 33 S.Ct. 780, 781, 57 L.Ed. 1232; United States v. Patten, 226 U.S. 525, 539, 33 S.Ct. 141, 143, 57 L.Ed. 333; Agnew v. United States, 165 U.S. 36, 50, 17 S.Ct. 235, 240, 41 L.Ed. 624. Thus an employer's protestation that he did not intend to encourage or discourage must be unavailing where a natural consequence of his action was such encouragement or discouragement. Concluding that encouragement or discouragement will result, it is presumed that he intended such consequence. In such circumstances intent to encourage is sufficiently established. Our decision in Republic Aviation Corp. v. National Labor Relations Board, 324 U.S. 793, 65 S.Ct. 982, 984, 89 L.Ed. 1372, relied upon by the Board to support its contention that employers' motives are irrelevant under § 8(a)(3), applied this principle. That decision dealt primarily with the right of the Board to infer discouragement from facts proven for purposes of proof of violation of § 8(3). In holding that discharges and suspensions of employees under company 'no solicitation' rules for soliciting union membership, in the circumstances disclosed, violated § 8(3), we noted that such employer action was not 'motivated by opposition to the particular union, or we deduce, to unionism' and that 'there was no union bias or discrimination by the company in enforcing the rule.' But we affirmed the Board's holding that the rules involved were invalid when applied to union solicitation since they interfered with the employees' right to organize. Since the rules were no defense and the employers intended to discriminate solely on the ground of such protected union activity, it did not matter that they did not intend to discourage membership since such was a foreseeable result. 31 In Gaynor, the Second Circuit also properly applied this principle. The court there held that disparate wage treatment of employees based solely on union membership status is 'inherently conducive to increased union membership.' In holding that a natural consequence of discrimination, based solely on union membership or lack thereof, is discouragement or encouragement of membership in such union, the court merely recognized a fact of common experience—that the desire of employees to unionize is directly proportional to the advantages thought to be obtained from such action. No more striking example of discrimination so foreseeably causing employee response as to obviate he need for any other proof of intent is apparent than the payment of different wages to union employees doing a job than to nonunion employees doing the same job. As noted above, the House Report on § 8(3) of the Wagner Act emphasized that such disparate treatment was impossible under the Act. 32 In Gaynor it was conceded that the sole criterion for extra payments was union membership, and the vacation payments were admittedly gratuitous. The wage differential payments, on the other hand, were based upon the 1947 supplementary agreement which the company below contended was negotiated solely in behalf of union members. However, the court below held that the union was exclusive bargaining agent for both union and nonunion employees. The company has not challenged this holding, asserting only that, even though the union represented all employees, the company's only liability to the nonunion employees can be for breach of contract. 33 The union's representative status obviously does not effect the legality of the gratuitous payment. According to the reasoning of the Second Circuit, however, disparate payments based on contract are illegal only when the union, as bargaining agent for both union and nonunion employees, betrays its trust and obtains special benefits for the union members. That court considered such action unfair because such employees are not in a position to protect their own interests. Thus, it reasoned, if a union bargains only for its own members, it is legal for such union to cause an employer to give, and for such employer to give special benefits to the members of the union for if nonmembers are aggrieved they are free to bargain for similar benefits for themselves. 34 We express no opinion as to the legality of disparate payments where the union is not exclusive bargaining agent since that case is not before us. We do hold that in the circumstances of this case, the union being exclusive bargaining agent for both member and nonmember employees, the employer could not, without violating § 8(a)(3), discriminate in wages solely on the basis of such membership even though it had executed a contract with the union prescribing such action. Statements throughout the legislative history of the National Labor Relations Act emphasize that exclusive bargaining agents are powerless 'to make agreements more favorable to the majority than to the minority.'54 Such discriminatory contracts are illegal and provide no defense to an action under § 8(a)(3). See Steele v. louisville & Nashville R. Co., 323 U.S. 192, 65 S.Ct. 226, 89 L.Ed. 173; Wallace Corp. v. National Labor Relations Board, 323 U.S. 248, 65 S.Ct. 238, 89 L.Ed. 216; J.I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 64 S.Ct. 576, 88 L.Ed. 762; Order of Railroad Telegraphers v. Railway Express Agency, 321 U.S. 342, 64 S.Ct. 582, 88 L.Ed. 788. Cf. Ford Motor Co. v. Huffman, 345 U.S. 330, 73 S.Ct. 681, 97 L.Ed. 1048. III. Power of Board to Draw Inferences. 35 Petitioners in Gaynor and Radio Officers contend that the Board's orders in these cases should not have been enforced by the Second Circuit because the records do not include 'independent proof that encouragement of Union membership actually occurred.' The Eighth Circuit subscribed to this view that such independent proof is required in Teamsters when it denied enforcement of the Board's order in that proceeding on the ground that it was not supported by substantial evidence of encouragement. The Board argues that actual encouragement need not be proved but that a tendency to encourage is sufficient, and 'such tendency is sufficiently established if its existence may reasonably be inferred from the character of the discrimination.' 36 We considered this problem in the Republic Aviation case. To the contention 'that there must be evidence before the Board to show that the rules and orders of the employers interfered with and discouraged union organization in the circumstances and situation of each company' we replied that the statutory plan for an adversary proceeding 'does not go beyond the necessity for the production of evidential facts, however, and compel evidence as to the results which may flow from such facts. * * * An administrative agency with power after hearings to determine on the evidence in adversary proceedings whether violations of statutory commands have occurred may infer within the limits of the inquiry from the proven facts such conclusions as reasonably may be based upon the facts proven. One of the purposes which lead to the creation of such boards is to have decisions based upon evidential facts under the particular statute made by experienced officials with an adequate appreciation of the complexities of the subject which is entrusted to their administration. * * *' See also National Labor Relations Board v. Nevada Consolidated Copper Corp., 316 U.S. 105, 62 S.Ct. 960, 86 L.Ed. 1305; National Labor Relations Board v. Link-belt Co., 311 U.S. 584, 61 S.Ct. 358, 85 L.Ed. 368. In these cases we but restated a rule familiar to the law and followed by all factfinding tribunals—that it is permissible to draw on experience in factual inquiries. 37 It is argued, however, that these cases ceased to be good law under the Taft-Hartley amendments. The House Report on their version of § 10 of the amendments, in discussing 'shocking injustices' resulting from limited court review of Board rulings, stated that 'requiring the Board to rest its rulings upon facts, not interferences (sic), conjectures, background, imponderables, and presumed expertness will correct abuses under the act.'55 We do not read that statement nor statements in the House Conference Report, upon which petitioners rely to support their contention, to hold that the Board may not draw reasonable inferences from proven facts. The House Conference Report stated that under the Wagner Act standard of review courts had 'abdicated' to the Board and 'in many instances deference on the part of the courts to specialized knowledge that is supposed to inhere in administrative agencies has led the courts to acquiesce in decisions of the Board, even where the findings concerned mixed issues of law and fact (citing cases), or when they rested only on inferences that were not, in turn, supported by facts in the record (citing the Republic Aviation case).'56 The report concluded that the amendment to § 10(e), requiring Board findings to be 'supported by substantial evidence on the record considered as a whole,' 'will be adequate to preclude such decisions as those in' inter alia the Nevada Copper Corp. and Republic Aviation cases. 38 In Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 465, 95 L.Ed. 456, we carefully considered this legislative history and interpreted it to express dissatisfaction with too restricted application of the 'substantial evidence' test of the Wagner Act. We noted, however, that sufficiency of evidence to support findings of fact was not involved in the Republic Aviation case, and stated that the amendment was not 'intended to negative the function of the Labor Board as one of those agencies presumably equipped or informed by experience to deal with a specialized field of knowledge, whose findings within that field carry the authority of an expertness which courts do not possess and therefore must respect.' There is nothing in the language of the amendment itself that suggests denial to the Board of power to draw reasonable inferences. It is inconceivable that the authors of the reports intended such a result for a factfinding body must have some power to decide which inferences to draw and which to reject. We therefore conclude that insofar as the power to draw reasonable inferences is concerned, Taft-Hartley did not alter prior law. 39 The Board relies heavily upon the House Report on § 8(3) which stated that the section outlawed discrimination 'which tends to 'encourage or discourage membership in any labor organization"57 for its conclusion that only a tendency to encourage or discourage membership is required by § 8(a)(3). We read this language to mean that subjective evidence of employee response was not contemplated by the drafters, and to accord with our holding that such proof is not required where encouragement or discouragement can be reasonably inferred from the nature of the discrimination. 40 Encouragement and discouragement are 'subtle things' requiring 'a high degree of introspective perception.' Cf. National Labor Relations Board v. Donnelly Garment Co., 330 U.S. 219, 231, 67 S.Ct. 756, 763, 91 L.Ed. 854. But, as noted above, it is common experience that the desire of employees to unionize is raised or lowered by the advantages thought to be attained by such action. Moreover, the Act does not require that the employees discriminated againt be the ones encouraged for purposes of violations of § 8(a)(3). Nor does the Act require that this change in employees' 'quantum of desire' to join a union have immediate manifestations. 41 Obviously, it would be gross inconsistency to hold that an inherent effect of certain discrimination is encouragement of union membership, but that the Board may not reasonably infer such encouragement. We have held that a natural result of the disparate wage treatment in Gaynor was encouragement of union membership; thus it would be unreasonable to draw any inference other than that encouragement would result from such action. The company complains that it could have disproved this natural result if allowed to prove that Loner, the employee who filed the charges against it, had previously applied for and been denied membership in the union. But it is clear that such evidence would not have rebutted the inference: not only would it have failed to disprove an increase in desire on the part of other employees, union members or nonmembers, to join or retain good standing in the union, but it would not have shown lack of encouragement of Loner. In rejecting this argument the Second Circuit noted that union admission policies are not necessarily static and that employees may be encouraged to join when conditions change. This proved to be an accurate prophecy regarding the Newspaper and Mail Deliverers' Union, involved in this case, for in 1952 it altered its admission policy to allow membership of 'all steady situation holders,' thus admitting many employees not previously eligible. 42 The circumstances in Radio Officers and Teamsters are nearly identical. In each case the employer discriminated upon the instigation of the union. The purposes of the unions in causing such discrimination clearly were to encourage members to perform obligations or supposed obligations of membership. Obviously, the unions would not have invoked such a sanction had they not considered it an effective method of coercing compliance with union obligations or practices. Both Boston and Fowler were denied jobs by employers solely because of the unions' actions. Since encouragement of union membership is obviously a natural and foreseeable consequence of any employer discrimination at the request of a union, those employers must be presumed to have intended such encouragement. It follows that it was eminently reasonable for the Board to infer encouragement of union membership, and the Eighth Circuit erred in holding encouragement not proved. 43 IV. Sanction Against Union Under § 8(b)(2). 44 Section 8(b)(2) was added to the National Labor Relations Act by the Taft-Hartley amendments in 1947. It provides that "it shall be an unfair labor practice for a labor organization or its agents * * * to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a)(3) or to discriminate against an employee with respect to whom membership in such organization has been denied or terminated on some ground other than his failure to tender the periodic dues and initiation fees uniformly required as a condition of acquiring or retaining membership'. Petitioner in Radio Officers contends that it was fatal error for the Board to proceed against it, a union, without joining the employer, and that absent a finding of violation of § 8(a)(3) by and a reinstatement order against such employer, the Board could not order the union to pay back pay under § 8(b)(2). 45 We find no support for these arguments in the Act. No such limitation is contained in the language of § 8(b)(2). That section makes it clear that there are circumstances under which charges against a union for violating the section must be brought without joining a charge against the employer under § 8(a)(3) for attempts to cause employers to discriminate are proscribed. Thus a literal reading of the section requires only a showing that the union caused or attempted to cause the employer to engage in conduct which, if committed, would violate § 8(a)(3).58 No charge was filed against the company by Fowler when he filed his charge against the union. The General Counsel is entrusted with 'final authority, on behalf of the Board, in respect of the investigation of charges and issuance of complaints',59 but without a charge he has no authority to issue a complaint.60 Even when a charge is filed many factors must influence exercise by the General Counsel of this discretion relative to prosecution of unfair labor practices. Abuse of discretion has not been shown, and, when a complaint is prosecuted, the Board is empowered by § 10(a) 'to prevent any person from engaging in any unfair labor practice * * *.' It, therefore, had the power to find that the union had violated § 8(b)(2). 46 Nor does the absence of joinder of the employer preclude entry of a backpay order against the union. The union cites in support of its position the language of § 10(c)61 which empowers the Board to issue orders requiring 'such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of this Act: Provided, That where an order directs reinstatement of an employee, back pay may be required of the employer or labor organization, as the case may be, responsible for the discrimination suffered by him: * * *.' In Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 189, 61 S.Ct. 845, 850, 85 L.Ed. 1271, we interpreted the phrase giving the Board power to order 'reinstatement of employees with or without back pay' not to limit, but merely to illustrate the general grant of power to award affirmative relief. Thus we held that the Board could order back pay without ordering reinstatement. The proviso in § 10(c) was added by the 1947 amendments. The purpose of Congress in enacting this provision was not to limit the power of the Board to order back pay without ordering reinstatement but to give the Board power to remedy union unfair labor practices comparable to the power it possessed to remedy unfair labor practices by employers.62 Petitioner argues, however, that it will not 'effectuate the policies of this Act' to require it to reimburse back pay if the employer is not made to share this burden, but, on the contrary, will frustrate the Act's purposes. We do not agree. It does not follow that because one form of remedy is not available or appropriate in a case, as here, that no remedy should be granted. It is clear that petitioner committed an unfair labor practice and the policy of the Act is to make whole employees thus discriminated against. We therefore hold that the Board properly exercised its power in ordering petitioner to pay such back pay to Fowler. From the foregoing it follows that: 47 The Radio Officer's Union v. Labor Board is affirmed. 48 Labor Board v. International Brotherhood of Teamsters is reversed. 49 Gaynor News Co. v. Labor Board is affirmed. 50 No. 5 Affirmed. 51 No. 6 Reversed. 52 No. 7 Affirmed. 53 Mr. Justice FRANKFURTER, concurring. 54 In construing an ambiguous provision of a regulatory measure like the Taft-Hartley Act, a decision can seldom avoid leaving more or less discretion to the agency primarily charged with administering the statute. Since guidance in the exercise of this discretion by the Labor Board, and not merely guidance for litigants, thus becomes a function of the Court's opinion, it is doubly necessary to define the scope of our ruling as explicitly as possible. 55 The lower courts have given conflicting interpretations to the phrase, 'by discrimination * * * to encourage or discourage membership in any labor organization', contained in § 8(a)(3). We should settle this conflict without giving rise to avoidable new controversies. 56 The phrase in its relevant setting is susceptible of alternative constructions of decisively different scope: 57 (a) On the basis of the employer's disparate treatment of his employees standing alone, or as supplemented by evidence of the particular circumstances under which the employer acted, it is open for the Board to conclude that the conduct of the employer tends to encourage or discourage union membership, thereby establishing a violation of the statute. 58 (b) Even though the evidence of disparate treatment is sufficient to warrant the Board's conclusion set forth in (a), there must be a specific finding by the Board in all cases that the actual aim of the employer was to encourage or discourage union membership. 59 I think (a) is the correct interpretation. In many cases a conclusion by the Board that the employer's acts are likely to help or hurt a union will be so compelling that a further and separate finding characterizing the employer's state of mind would be an unnecessary and fictive formality. In such a case the employer may fairly be judged by his acts and the inferences to be drawn from them. 60 Of course, there will be cases in which the circumstances under which the employer acted serve to rebut any inference that might be drawn from his acts of alleged discrimination standing alone. For example, concededly a raise given only to union members is prima facie suspect; but the employer, by introducing other facts, may be able to show that the raise was so patently referable to other considerations, unrelated to his views on unions and within his allowable freedom of action, that the Board could not reasonably have concluded that his conduct would encourage or discourage union membership. 61 In sum, any inference that may be drawn from the employer's alleged discriminatory acts is just one element of evidence which may or may not be sufficient, without more, to show a violation. But that should not obscure the fact that this inference may be bolstered or rebutted by other evidence which may be adduced, and which the Board must take into consideration. The Board's task is to weigh everything before it, including those inferences which, with its specialized experience, it believes can fairly be drawn. On the basis of this process, it must determine whether the alleged discriminatory acts of the employer were such that he should have reasonably anticipated that they would encourage or discourage union membership. 62 Since the issue which the Board thus has to decide involves pre-eminently an exercise of judgment on matters peculiarly within its special competence, little room will be left for judicial review. See Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 488, 74 S.Ct. 456, 464, 95 L.Ed. 456. 63 What I have written and the Court's opinion, as I read it, are not in disagreement. In any event, I concur in its judgment. 64 Mr. Justice BURTON and Mr. Justice MINTON, having joined in the opinion of the Court, also join this opinion. 65 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS joins, dissenting. I. 66 No. 7—The Gaynor Case.—Eighteen years ago the language considered here became a part of what is now known as § 8(a)(3) of the Labor Act. The Court today, gives that language an entirely new interpretation. I dissent. The Section makes it an unfair labor practice for an employer 'by discrimination in regard to * * * any term or condition of employment to encourage or discourage membership in any labor organization * * *.' Unquestionably payment of disparate wages to union and nonunion employees is 'discrimination' as that term is used in § 8(a)(3). But the Section does not forbid all 'discrimination.' It carefully limits the conditions under which 'discrimination' is 'unfair.' The plain and long accepted meaning of § 8(a)(3) is that it forbids an employer to discriminate only when he does so in order to 'encourage or discourage' union membership. National Labor Relations Board v. Waterman S.S. Co., 309 U.S. 206, 219, 60 S.Ct. 493, 500, 84 L.Ed. 704. Recently, however, the Labor Board has adopted the view that the Section outlaws discrimination merely having a 'tendency to encourage * * *' or 'the natural and probable effect' of which would be to encourage union membership. The Court apparently now accepts this interpretation, for here there is no finding that Gaynor acted in order to encourage union membership. Indeed, the Board concedes that Gaynor had no such purpose, and this concession is fully supported by the evidence. Gaynor had no desire to make retroactive payments to any employees. It yielded to the union not because it wanted to but because it was compelled to by a collective bargaining contract. 67 I think the Court's new interpretation of § 8(a)(3) imputes guilt to an employer for conduct which Congress did not wish to outlaw. Behind the Labor Act was a long history of employer hostility to strong unions and affection for weak ones. Power over wages, hours and other working conditions permitted employers to help unions they liked and hurt unions they disliked. To enable workers to join or not join unions without fear of reprisal, Congress passed the Labor Act prohibiting such employer discrimination. But aside from this limitation on the employer's powers, Congress did not mean to invade his normal right to fix different wages, hours and other working conditions for different employees according to his best business judgment.1 Section 8(a)(3) is aptly phrased to accomplish both these purposes. 68 The Board has been careful in § 8(a) (3) cases to make findings that employer discrimination was motivated by hostility or favoritism toward union membership.2 69 Even now trial examiners and the Board continue to make findings as to the employer's purpose.3 The courts have regularly held that § 8(a)(3) requires such findings, and have been called on to determine if they were supported by substantial evidence.4 I think the Section should not at this late date be held to penalize an employer for using his judgment in fixing working conditions unless he discriminates among employees in order to strengthen or weaken a union for his own advantage. For this reason, I would not sustain the Board's holding that Gaynor violated § 8(a)(3). II. 70 Nos. 5 and 6—The Radio Officers and Teamsters Cases.—In these cases the Board found that the Radio Officers and Teamsters unions had violated § 8(b)(2) of the Taft-Hartley Act which makes it an 'unfair labor practice' for a union 'to cause or attempt to cause an employer to discriminate against an employee in violation' of § 8(a)(3). The Board found on sufficient evidence that each of the two unions here 'caused' an employer to treat an employee differently from the way it treated other employees, that is, the employer was caused 'to discriminate' within the meaning of § 8(a)(3). The Board also found that this 'discrimination' had a tendency to encourage union membership. But there was no finding that either employer's discrimination occurred in order to encourage union membership. For the reasons set out in my discussion of § 8(a)(3) in the Gaynor case, I think these findings fall short of showing an employer 'violation of § 8(a)(3).' A union does not violate § 8(b)(2) by causing an employer to discriminate unless that employer discrimination is 'in violation of § 8(a)(3).' For this reason I would reverse No. 5 and affirm No. 6. 1 'Sec. 8. (a) 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 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 section 8(a) of this Act as an unfair labor practice) to require as a condition of employment membership therein on or after the thirtieth day following the beginning of such employment or the effective date of such agreement, whichever is the later, (i) 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 (; and (ii) if, following the most recent election held as provided in section 9(e) the Board shall have certified that at least a majority of the employees eligible to vote in such election have voted to authorize such labor organization to make such an agreement:) and has at the time the agreement was made or within the preceding twelve months received from the Board a notice of compliance with section 9(f), (g), (h) and (ii) unless following an election held as provided in section 9(e) within one year preceding the effective date of such agreement, the Board shall have certified that at least a majority of the employees eligible to vote in such election have voted to rescind the authority of such labor organization to make such an agreement: Provided further, That no employer shall justify any discrimination against an employee for nonmembership in a labor organization (A) if he has reasonable grounds for believing that such membership was not available to the employee on the same terms and conditions generally applicable to other members, or (B) if he has reasonable grounds for believing that membership was denied or terminated for reasons other than the failure of the employee to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining membership; * * *.' Section 8(a)(3) was enacted as part of the Taft-Hartley Act, 61 Stat. 136, in 1947, and amended in 1951, 65 Stat. 601. Provisions added by the 1951 amendment are in italics; provisions eliminated in 1951 are in brackets. This section derived from § 8(3) of the 1935 Wagner Act, 49 Stat. 452, 29 U.S.C. § 158(3), 29 U.S.C.A. § 158(3), with the proviso amended. See note 42, infra. 2 National Labor Relations Board v. International Brotherhood of Teamsters, 196 F.2d 1, certiorari granted 344 U.S. 853, 73 S.Ct. 95, 97 L.Ed. 663. See also National Labor Relations Board v. Del E. Webb Construction Co., 8 Cir., 196 F.2d 702. 3 National Labor Relations Board v. Reliable Newspaper Delivery, Inc., 187 F.2d 547. See also Western Cartridge Co., v. National Labor Relations Board, 7 Cir., 139 F.2d 855. 4 Radio Officers' Union of Commercial Telegraphers Union, A.F.L. v. National Labor Relations Board, 196 F.2d 960, certiorari granted, 344 U.S. 852, 73 S.Ct. 91, 97 L.Ed. 662. 5 National Labor Relations Board v. Gaynor News Co., Inc., 197 F.2d 719, certiorari granted, 345 U.S. 902, 73 S.Ct. 640, 97 L.Ed. 1339. But cf. National Labor Relations Board v. Air Associates, Inc., 2 Cir., 121 F.2d 586. 6 National Labor Relations Board v. Whitin Machine Works, 204 F.2d 883. 7 National Labor Relations Board v. Walt Disney Productions, Inc., 146 F.2d 44. 8 See, e.g., National Labor Relations Board v. Reliable Newspaper Delivery, Inc., 187 F.2d 547; Wells, Inc. v. National Labor Relations Board, 162 F.2d 457; National Labor Relations Board v. Reynold's International Pen Co., 162 F.2d 680; National Labor Relations Board v. Draper Corp., 145 F.2d 199; National Labor Relations Board v. Air Associates, 121 F.2d 586. 9 See also Union Starch & Refining Co. v. National Labor Relations Board, 7 Cir., 186 F.2d 1008; Colonie Fibre Co. v. National Labor Relations Board, 2 Cir., 163 F.2d 65; National Labor Relations Board v. Walt Disney Productions, Inc., 9 Cir., 146 F.2d 44; Sperry Gyroscope Co., Inc. v. National Labor Relations Board, 2 Cir., 129 F.2d 922; Firestone Tire & Rubber Co., 93 N.L.R.B. 981. 10 29 U.S.C. (Supp. V) § 158(b)(2), 29 U.S.C.A. § 158(b)(2): '(b) It shall be an unfair labor practice for a labor organization or its agents— '(2) to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a)(3) or to discriminate against an employee with respect to whom membership in such organization has been denied or terminated on some ground other than his failure to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining membership; * * *.' 11 345 U.S. 962, 73 S.Ct. 947, 97 L.Ed. 1382. 12 Requisite engagement in commerce for purposes of the National Labor Relations Act is admitted in all three cases. 13 29 U.S.C. (Supp. V) § 158(b)(1)(A), 29 U.S.C.A. § 158(b)(1)(A). This section makes it an unfair labor practice for a union 'to restrain or coerce employees in the exercise of the rights guaranteed in section 157 of this title'. Section 157 provides: 'Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3).' 14 94 N.L.R.B. 1494. 15 This agreement, known as the 'Central States Area Over-the-Road Agreement,' has been executed with employers by more than 300 locals of the Teamsters Union in 12 different states. 16 See the bracketed language in note 1, supra 17 'Section 45. Any member, under contract, one month in arrears for dues shall forfeit all seniority rights. '(a) Clarification of the above paragraph: On the second day of the second month a member becomes in arrears with his dues.' 18 See note 13, supra. 19 (Trial Examiner's Footnote.) If, as Respondent appears to suggest, its conduct discouraged membership in a labor organization, it could be argued that from the plain meaning of § 8(a)(3), a union would equally violate the Act by causing an employer to discriminate against an employee in order to rid itself of slowpaying or otherwise recalcitrant members. 20 196 F.2d 1, 3. 21 In this connection, the court pointed out that Boston was a member of the union prior to the discrimination, and retained his status as a member thereafter, and that Boston had testified that the discrimination neither encouraged nor discouraged him to remain in the union. 22 344 U.S. 853, 73 S.Ct. 95, 97 L.Ed. 663. 23 93 N.L.R.B. 1523. 24 Such an agreement was permissible under § 8(3) of the National Labor Relations Act, 49 Stat. 449, 29 U.S.C. § 158 (3), 29 U.S.C.A. § 158(3). The agreement in this case was signed on January 11, 1947, and was extended for a period of one year on August 16, 1947. Under § 102 of the 1947 amendments to the National Labor Relations Act, 61 Stat. 152, 29 U.S.C.A. § 158 note, acts performed under such agreement which would not have been unfair labor practices under § 8(3) were not unfair practices under the amended act. 25 The Board found that the union secretary's 'hasty attempt to suspend' Fowler was 'in disregard of Fowler's rights under the union bylaws and constitution * * * in no event could Howe's authority exceed that of the general chairman, who in all instances was required by specific provisions of the bylaws to advise Fowler of his offense and to afford him an opportunity to conform with union rules before suspending him. It is clear that Fowler was not given such an opportunity; his purported suspension was therefore ineffectual. * * *' The power of the Board to make this finding is not challenged here. 26 196 F.2d 960, 963. 27 Judge Clark dissented as to this interpretation of the contract. 28 Section 8(c) provides: 'The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this subchapter, if such expression contains no threat of reprisal or force or promise of benefit.' 29 U.S.C. (Supp. V) § 158(c), 29 U.S.C.A. § 158(c). 29 344 U.S. 853, 73 S.Ct. 95, 97 L.Ed. 663. 30 Section 8(a)(1) makes it an unfair labor practice for an employer 'to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title' and § 8(a)(2) makes it an unfair practice for an employer 'to dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it * * *.' The original charge filed on February 3, 1949, alleged violation only of §§ 8(a)(1) and (3) by the above action relative to Loner between July and October 1948. This charge was amended on June 13, 1950, to allege violation of §§ 8(a) (1) and (2) by executing the October 1948 contract with the illegal union security clause. The complaint issued by the General Counsel on the same day contained all of these allegations and alleged that the discriminatory treatment extended to all nonunion employees. The company contends that inclusion of such employees who did not file charges is prohibited by the six-month statute of limitations period provided in § 10(b) of the Act. We agree with the Trial Examiner, the Board, and the court below that this charge relates back to the charges timely filed and thus the company was given adequate notice and was not prejudiced by the amendment. National Labor Relations Board v. Kobritz, 1 Cir., 193 F.2d 8, 14; National Labor Relations Board v. Bradley Washfountain Co., 7 Cir., 192 F.2d 144, 149; National Labor Relations Board v. Kingston Cake Co., 3 Cir., 191 F.2d 563, 567; cf. Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 225, 238, 59 S.Ct. 206, 215, 220, 83 L.Ed. 126. 31 93 N.L.R.B. 299. 32 This clause requiring all new employees to become union members within thirty days was not authorized as then required by § 8(a)(3). See the bracketed language of note 1, supra. 33 The 1946 contract stated that the union was contracting 'for and in behalf of the Union and for and in behalf of the members thereof now employed and hereafter to be employed by the employer.' The president of the company testified before the Trial Examiner that he believed the 1946 contract and the supplementary agreement applied to union members only. 34 The Board rejected the company's contention that since the closed shop provision in the 1946 contract was valid under § 8(3), see note 24, supra, and it thus could have legally discharged the nonunion employees during the life of that contract, it could legally retain such employees and contract to discriminate as to their wages. The Board found, however, that the 'evidence indicates that the Respondent had contracted to make retroactive wage payments to the employees covered by the original contract. * * *' The Board also adopted the Trial Examiner's finding that, regardless of the status of the wage payment, the retroactive vacation payments were entirely voluntary. 35 197 F.2d 719, 722. The court modified parts of the order concerning the illegality of the 1948 contract. Judge Chase dissented as to such modification. In its brief the company seeks to raise the issue of the illegality of that contract. This question was not presented in the petition for certiorari and is, therefore, not properly before the Court. General Talking Pictures Corp. v. Western Elec. Co., 304 U.S. 175, 58 S.Ct. 849, 82 L.Ed. 1273. 36 345 U.S. 902, 73 S.Ct. 640, 97 L.Ed. 1339. 37 See, e.g., National Labor Relations Board v. Gullett Gin Co., Inc., 340 U.S. 361, 71 S.Ct. 337, 95 L.Ed. 337; National Labor Relations Board v. Universal Camera Corp., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456; Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S.Ct. 845, 85 L.Ed. 1271; Republic Steel Corp. v. National Labor Relations Board, 311 U.S. 7, 61 S.Ct. 77, 85 L.Ed. 6; National Labor Relations Board v. Sands Mfg. Co., 306 U.S. 332, 59 S.Ct. 508, 83 L.Ed. 682; National Labor Relations Board v. Fansteel Metallurgical Corp., 306 U.S. 240, 59 S.Ct. 490, 83 L.Ed. 627; National Labor Relations Board v. Mackay Radio & Telegraph Co., 304 U.S. 333, 58 S.Ct. 904, 82 L.Ed. 1381; National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893. 38 National Labor Relations Board v. Fansteel Metallurgical Corp., supra; National Labor Relations Board v. Sands Mfg. Co., supra; Southern Steamship Co. v. National Labor Relations Board, 316 U.S. 31, 62 S.Ct. 886, 86 L.Ed. 1246. Cf. National Labor Relations Board v. Local Union No. 1229, 346 U.S. 464, 74 S.Ct. 172. 39 Associated Press v. National Labor Relations Board, 301 U.S. 103, 57 S.Ct. 650, 81 L.Ed. 953. Cf. National Labor Relations Board v. Kennametal, Inc., 3 Cir., 182 F.2d 817, 19 A.L.R.2d 562; National Labor Relations Board v. Peter Cailler Kohler Swiss Chocolate Co., 2 Cir., 130 F.2d 503. 40 See § 7, 29 U.S.C. (Supp. V) § 157, 29 U.S.C.A. § 157, note 13, supra. 41 The full text of the proviso to § 8(a)(3) is set out in note 1, supra. That Congress intended § 8(a)(3) to proscribe all discrimination to encourage union membership not excepted by the proviso see H.Conf.Rep.No.510, 80th Cong., 1st Sess. 44, where it is stated that § 8(a)(3) 'prohibits an employer from discriminating against an employee by reason of his membership or nonmembership in a labor organization, except to the extent he obligates himself to do so under the terms of a permitted union shop or maintenance of membership contract.' 42 Under the Wagner Act the proviso read: 'Provided, That nothing in sections 151—166 of this title 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 said sections 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 159(a) of this title, in the appropriate collective-bargaining unit covered by such agreement when made'. 29 U.S.C. § 158(3), 29 U.S.C.A. § 158(3). See Colgate-Palmolive-Peet Co. v. National Labor Relations Board, 338 U.S. 355, 70 S.Ct. 166, 94 L.Ed. 161. 43 For example, Senator Taft said: 'It is contended that the employer should be obliged to discharge the man because the union does not like him. That is what we are trying to prevent. I do not see why a union should have such power over a man in that situation.' 93 Cong.Rec. 4191. In H.R.Rep.No.245, 80th Cong., 1st Sess., p. 33, it was stated that 'The bill prohibits what is commonly known as the closed shop, or any form of compulsory unionism that requires a person to be a member of a union in good standing when the employer hires him.' See also 93 Cong.Rec. 4135, 4193, 4272, 4275, 4432; S.Rep.No.105, 80th Cong., 1st Sess. 6 et seq.; H.R. 3020, 80th Cong., 1st Sess. 27—28; H.Conf.Rep.No.510, 80th Cong., 1st Sess. 41. 44 See National Labor Relations Board v. Eclipse Lumber Co., 9 Cir., 199 F.2d 684; Union Starch & Refining Co. v. National Labor Relations Board, 7 Cir., 186 F.2d 1008, 27 A.L.R.2d 629. 45 Associated Press v. National Labor Relations Board, 301 U.S. 103, 57 S.Ct. 650, 655, 81 L.Ed. 953. 46 See cases cited, note 8, supra. 47 E.g., Manoff, Labor Relations Law, 82; CCH, Guidebook to Labor Relations Law, 142; Wollett, Labor Relations and Federal Law, 62; Millis & Brown, From the Wagner Act to Taft-Hartley, 428; Cox, Some Aspects of the Labor Management Relations Act, 1947, 61 Harv.L.Rev. 1, 20; Ward, 'Discrimination' Under the National Labor Relations Act, 48 Yale L.J. 1152, 1158. 48 N.L.R.B., 10th Annual Report 162. 49 S.Rep.No. 573, 74th Cong., 1st Sess. 11. 50 Hearings on S. 195, 74th Cong., 1st Sess. 38. 51 H.Conf.Rep.No. 510, 80th Cong., 1st Sess. 44. 52 H.R.Rep.No.1147, 74th Cong., 1st Sess. 21; see also Ward, note 47, supra, at 1166. 53 See, e.g., National Labor Relations Board v. Industrial Cotton Mills, 4 Cir., 208 F.2d 87; Cusano v. National Labor Relations Board, 3 Cir., 190 F.2d 898; Allis-Chalmers Mfg. Co., 70 N.L.R.B. 48, enforced, 7 Cir., 162 F.2d 435; National Labor Relations Board v. Gluek Brewing Co., 8 Cir., 144 F.2d 847. 54 S.Rep.No.573, 74th Cong., 1st Sess. 13. During a debate on the Act Senator Wagner stated: 'Under this proposed legislation, assuming an agreement has been consummated by the agency elected by the majority of the employees, there will be no advantage which a majority can have under an agreement to which the minority is not also entitled, and in order to have that advantage the minority need not join the organization. It can join or not join, either way. It cannot be discriminated against under any other provision of the law.' 79 Cong.Rec. 7673. See also note 52, supra. 55 H.R.Rep.No.245, 80th Cong., 1st Sess. 41. 56 H.R.Rep.No.510, 80th Cong., 1st Sess. 55. See Cox, op cit. supra, note 46, at 39 et seq. 57 H.R.Rep.No.1147, 74th Cong., 1st Sess. 21. 58 See National Labor Relations Board v. Newspaper & Mail Deliverers' Union, 2 Cir., 192 F.2d 654. Cf. Katz v. National Labor Relations Board, 9 Cir., 196 F.2d 411. 59 29 U.S.C. (Supp. V) § 153(d), 29 U.S.C.A. § 153(d). 60 Id., § 160(b). But see National Labor Relations Board v. Indiana & Michigan Electric Co., 318 U.S. 9, 17, 63 S.Ct. 394, 399, 87 L.Ed. 579. 61 29 U.S.C. (Supp. V) § 160(c), 29 U.S.C.A. § 160(c). 62 See National Labor Relations Board v. J.I. Case Co., 8 Cir., 198 F.2d 919, 924; H.N. Newman, 85 N.L.R.B. 725, enforced, 2 Cir., 187 F.2d 488; Union Starch & Refining Co. v. National Labor Relations Board, 7 Cir., 186 F.2d 1008, 1014. 1 National Labor Relations Board v. Jones & Laughlin Steel Corp., 1937, 301 U.S. 1, 45—46, 57 S.Ct. 615, 628, 81 L.Ed. 893; Phelps Dodge Corp. v. National Labor Relations Board, 1941, 313 U.S. 177, 182—183, 61 S.Ct. 845, 846, 847, 85 L.Ed. 1271. 2 See, e.g., Fruehauf Trailer Co., 1 N.L.R.B. 68, 74—77 (1935), sustained, 1937, 301 U.S. 49, 55—57, 57 S.Ct. 642, 643, 644, 81 L.Ed. 918; Union Pacific Stages, Inc., 2 N.L.R.B. 471, 486 (1936), enforced as modified, 9 Cir., 1938, 99 F.2d 153, 168, 176 177; Kansas City Power & Light Co., 12 N.L.R.B. 1414, 1436—1453 (1939), enforced as modified, 8 Cir., 1940, 111 F.2d 340, 349—351; Martel Mills Corporation, 20 N.L.R.B. 712, 721, 724, 733 (1940), enforcement denied, 4 Cir., 1940, 114 F.2d 624, 630—633; Air Associates, Inc., 20 N.L.R.B. 356 (1940), enforced as modified, 2 Cir., 1941, 121 F.2d 586, 591—592; Stonewall Cotton Mills, 36 N.L.R.B. 240 (1941), enforced as modified, 5 Cir., 1942, 129 F.2d 629, 632—633; Western Cartridge Co., 48 N.L.R.B. 434 (1943), enforced as modified, 7 Cir., 1943, 139 F.2d 855, 858—860; Robbins Tire and Rubber, Co., 69 N.L.R.B. 440, 441, (1946), enforced, 5 Cir., 1947, 161 F.2d 798, 801; Wells, Inc., 68 N.L.R.B. 545, 546 547 (1946), enforced as modified, 9 Cir., 1947, 162 F.2d 457, 459 460; Victor Mfg. & Gasket Co., 79 N.L.R.B. 234, 235 (1948), enforced, 7 Cir., 1949, 174 F.2d 867, 868; B & Z Hosiery Products Co., 85 N.L.R.B. 633 (1949), enforced, Bochner v. National Labor Relations Board, 3 Cir., 1950, 180 F.2d 1021. To support its position here that an employer's purpose is irrelevant under § 8(a)(3) the Board relies on its decisions in General Motors Corp., 59 N.L.R.B. 1143, 1145 (1944), enforced as modified, 3 cir., 1945, 150 F.2d 201; Allis-Chalmers Mfg. Co., 70 N.L.R.B. 348, 349—350 (1946), Enforced, 7 Cir., 1947, 162 F.2d 435; and Reliable Newspaper Delivery, Inc., 88 N.L.R.B. 659, 669—670 (1950), enforcement denied, 3 Cir., 1951, 187 F.2d 547. In the first two decisions specific findings of employer purpose were made, and in the latter the facts are substantially identical to the case here. 3 E.g., in Marathon Electric Mfg. Co., 106 N.L.R.B. No. 199 (September 29, 1953), the trial examiner found that numerous acts of an employer violated § 8(a)(3) because the employer 'discriminated * * * to discourage membership in UE. * * *' In sustaining the examiner as to some of the acts and overruling him as to others the Board's decision rested on such findings as: 'the discharges were not only calculated to discourage concerted activities * * * but also to deter * * * from joining, or giving support in the future to; UE or any other labor organization'; the record did not show 'that the failure to recall them (certain employees) was because of their actual or supposed connection with UE'; and there was 'no evidence in the record to rebut the Respondent's (employer's) contention that its only reason for not recalling these employees was the cancellation of the contract.' See also New Mexico Transportation Co., 107 N.L.R.B. No. 8 (November 13, 1953); Terri Lee, Inc., 107 N.L.R.B. No. 141 (December 28, 1953). 4 See court decisions cited in note 2, supra. See also National Labor Relations Board v. Waterman S.S. Co., 1940, 309 U.S. 206, 218, 220—226, 60 S.Ct. 493, 500, 501, 503, 84 L.Ed. 704, where this Court reviewed the record and held that a finding of discrimination by an employer 'because of' union membership was sustained by substantial evidence. Republic Aviation Corp. v. National Labor Relations Board, 1945, 324 U.S. 793, 65 S.Ct. 982, 89 L.Ed. 1372, indicated no intent to repudiate the interpretation of § 8(a)(3) accepted in the Waterman case, supra. The Board also relies on such cases as: National Labor Relations Board v. Hudson Motor Car Co., 6 Cir., 1942, 128 F.2d 528, 532—533, enforcing 34 N.L.R.B. 815, 826—827 (1941); National Labor Relations Board v. Gluek Brewing Co., 8 Cir., 1944, 144 F.2d 847, 853, modifying and enforcing 47 N.L.R.B. 1079, 1095 (1943); and National Labor Relations Board v. Industrial Cotton Mills, 4 Cir., 1953, 208 F.2d 87, modifying and enforcing 102 N.L.R.B. 1265 (1953). However, none of these cases is in point here, since in each the Board made findings of the employer's purpose.

67

347 U.S. 74 74 S.Ct. 350 98 L.Ed. 513 DELTA AIR LINES, Inc.v.SUMMERFIELD, Postmaster General et al. CIVIL AERONAUTICS BOARD v. SUMMERFIELD, Postmaster General et al. Nos. 222, 223. Argued Dec. 9, 10, 1953. Decided Feb. 1, 1954. Mr. Emory T. Nunneley, Jr., Washington, D.C., for C.A.B. Mr. L. Welch Pogue, Washington, D.C., for Delta Air Lines. Mr. Hugh W. Darling, Los Angeles, Cal., for Western Air Lines. Mr. Daniel Friedman, for Summerfield et al. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Delta Air Lines, petitioner in No. 223, is the successor by merger to Chicago and Southern Air Lines (C & S). C & § was an air carrier which conducted both domestic and foreign operations prior to the merger. The present case involves subsidy mail pay for its foreign operations from 1946 through 1950. 2 In 1948 the Board, on applications made by C & § in 1944 and 1945, fixed a prospective annual subsidy for its domestic operations beginning January 1, 1948, which the Board Estimated would yield a net return after taxes of 7.4 percent on that part of its investment allocable to those operations. 9 C.A.B. 786. The following three years—1948, 1949, and 1950—the rates in operation produced a subsidy of more than $654,000 in excess of a 7.4 percent return. 3 In 1946 C & § applied for subsidy mail pay on its Latin American routes. On October 18, 1951, the Board issued its opinion and order. Rates were fixed retroactively from November 1, 1946, to December 15, 1950, and prospectively from December 16, 1950. The subsidy awarded was designed to give the carrier a 7 percent return, on the property. allocable to foreign operations, after taxes for the past period, and 10 percent for the future. 14 C.A.B. 681. 4 In fixing the subsidy for the past period the Board refused to offset against the carrier's need for foreign operations the excess earnings on its domestic flights. It gave two 'considerations of economic policy' for that position.1 First, the Board said it would put an 'unjustifiable strain' on domestic operations if the latter were required to carry the international operations. Second, it concluded that regulatory ends would be better served by maintaining 'the comparative status between those domestic operators which have foreign routes as against those which do not have foreign routes.' 5 On the Postmaster General's petition for review the Court of Appeals reversed the Board. 92 U.S.App.D.C. 256, 207 F.2d 207. The cases are here on certiorari and were argued with 347 U.S. 67, 74 S.Ct. 347. 6 As we have already noted in the companion cases, § 406(a) of the Civil Aeronautics Act, 52 Stat. 998, 49 U.S.C. § 486(a), 49 U.S.C.A. § 486(a), directs the Board to fix 'fair and reasonable rates of compensation for the transportation of mail by aircraft'. Section 406(b) provides that the Board in determining those rates 7 'shall take into consideration, among other factors, * * * 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.' 8 The mandate is that the Board 'shall take into consideration' what 'the need' of the carrier is. The Act thus poses as the initial question for the Board whether the financial condition of the carrier is such that it needs a subsidy or has no need for one. The Board did not find that Delta had a 'need' for an additional $654,000. It merely concluded that those exces domestic profits should not 'as a matter of economic policy' be taken into account in computing a subsidy for international operations. In that posture the decision of the Board seems not in conformity with the law. 9 The Board answers to the effect that under § 406(b) it 'may fix different rates for different air carriers or classes of air carriers, and different classes of service.' It may, therefore, fix a rate for international service. Since it may do that, it may, consistently with rate-making decisions (see, e.g., American Toll Bridge Co. v. Railroad Commission, 307 U.S. 486, 494, 59 S.Ct. 948, 953, 83 L.Ed. 1414) fix the rate at a level which will sustain the particular unit. Therefore the Board need do no more under § 406(b) when it fixes a rate for international service than offset revenue attributable to the class of service for which the rate is made. That is the argument. 10 There are aspects of traditional rate-making that are carried over into the Act. Thus we held in Transcontinental & Western Air v. Civil Aeronautics Board, 336 U.S. 601, 69 S.Ct. 756, 93 L.Ed. 911, that rates under the Act are made retroactive only to the date of the application. We also noted in that case that the 'need' clause in § 406(b) is not wholly at war with traditional rate-making functions. Id., 336 U.S. at page 604, 69 S.Ct. at pages 757, 758. But the application of the 'need' clause which the Board has made in this case is at war with the language of § 406(b). The standard is 'the need of each such air carrier.' The 'need' of the carrier is measured by the entirety of its operations, not by the losses of one division or department. The measure of 'the need' is an amount of compensation necessary to carry the mail and 'together with all other revenue of the air carrier' adequate for maintenance and development. And the Act defines 'air carrier' as 'any citizen of the United States who undertakes * * * to engage in air transportation * * *.' § 1(2). Thus the wording of the Act precludes measuring 'the need' of the carrier by any other unit than the carrier as an entity. 11 As we read the Act, Congress has established a special formula for the fixing of a subsidy rate. While the rate may be for a class of service, the return in form of a subsidy must be computed with reference to the entire operations of the carrier. The requirement is that the Board offset all of a carrier's revenues in determining the subsidy; there is no discretion in the Board to disregard any portion of the revenue because of economic or other policy considerations. In other words, an air carrier's subsidy need is an amount which, 'together with all other revenue' of the carrier, will enable it to meet and maintain the objectives of the Act. The carrier's 'need' is therefore a limiting factor in the sense that the subsidy may not exceed it. Since the Board did not construe and apply the Act in that manner, the Court of Appeals was correct in reversing the rate order. 12 The Board makes an extended argument of policy against that position in elaboration of the reasons it advanced for not offsetting the excess earnings from domestic operations against the international subsidy rate.2 It maintains that maximum operating efficiency on the part of air carriers and the development of air transportation—prominent objectives of the Act3—will be better served by setting subsidy rates on a divisional rather than on a system basis. This may be so. But that is a matter of policy for Congress to decide. As we read § 406(b) Congress adopted in the present Act a rate formula based on 'the need' of the carrier as measured by its entire operations, even when a rate was being fixed for a class of service. 13 Affirmed. 1 The Board said: 'If an offset policy were adopted, the almost invariable result would be that, as in the instant case, the profits from a carrier's domestic operation would be used to sustain any international operations it might have. Recognizing this likelihood, we hesitate to burden the more robust segment of the industry with the obligations of the economically weaker part. For if the domestic air transport system can be kept financially sound, the public must ultimately benefit, putting aside any consideration of the obvious advantage of reduced rates of mail compensation. Thus, we anticipate that if the carriers' earning position continues strong, reductions in the domestic fare level will be possible, thereby giving impetus to the further development of the industry. In addition, with improved earnings, the domestic operators should be able to benefit the public and themselves with more modern aircraft, and with improved methods affording safer and more efficient operations. We cannot escape the thought that if we allow international operations to be carried on the back of domestic operations, we shall be subjecting the latter to an unjustifiable strain. Many of the domestic operators are well along the road to self-sufficiency. It is our duty to speed them on their way, not thwart them. 'It also appears desirable to maintain the comparative status between those domestic operators which have foreign routes as against those which do not have foreign routes. Since carriers fall into fairly well-defined classes, the Board is enabled to fix uniform domestic mail rates for groups of carriers provided, of course, that their comparative status is preserved by excluding consideration of any international operations. A carrier operating under a class rate has every incentive to operate efficiently because it may retain any profits it earns inexcess of the estimated return to be afforded by the uniform rate. It is also administratively desirable to preserve a comparative status between carriers because the Board has been able to analyze the operations of each carrier within a class in the light of the results achieved by others within the same class. The comparison technique of rate-making has proved to be the most satisfactory and practicable available to the Board. If we were required to fix rates for both domestic and international operations at the same time, it would be difficult, if not impossible, to find a suitable basis for a comparison technique of analysis. 'In view of the foregoing, we find that the earnings from C & S' domestic routes should not be used to offset the 'need' resulting from the carrier's international routes. This conclusion stems from considerations of economic policy; we are not deciding the question of our legal power to make such an offset.' 14 C.A.B. 683. 2 See note 1, supra. 3 Section 2 of the Act 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— '(a) The encouragement and development of an air-transportation system properly adapted to the present and future needs of the foreign and domestic commerce of the United States, of the Postal Service, and of the national defense; '(b) The regulation of air transportation in such manner as to recognize and preserve the inherent advantages of, assure the highest degree of safety in, and foster sound economic conditions in, such transportation, and to improve the relations between, and coordinate transportation by, air carriers; '(c) The promotion of adequate, economical, and efficient service by air carriers at reasonable charges, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; '(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; '(e) The regulation of air commerce in such manner as to best promote its development and safety; and '(f) The encouragement and development of civil aeronautics.'

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347 U.S. 110 74 S.Ct. 403 98 L.Ed. 546 KERN-LIMERICK Inc., et al.v.SCURLOCK, Com'r of Revenues for State of Arkansas. No. 115. Argued Jan. 4, 1954. Decided Feb. 8, 1954. Mr. Cleveland Holland, Asst. Atty. Gen., for appellants. Mr. O. T. Ward, Little Rock, Ark., for appellee. Mr. Justice REED delivered the opinion of the Court. 1 This appeal brings here the legality of the application of the Arkansas Gross Receipts Tax Law of 1941, Ark.Stat. 1947, § 84 1901 et seq., to a transaction by which certain private contractors engaged in a joint venture, abbreviated WHMS, procured in Arkansas two diesel tractors costing $17,146, for use in the construction there for the United States of a naval ammunition depot estimated to cost over thirty million dollars. The tractors were procured from Kern-Limerick, Inc., a local dealer. The circumstances of the transaction would concededly make Kern-Limerick liable for the tax if the real purchaser were not the United States. 2 The applicable sections of the Gross Receipts Tax Law levy an 'excise tax of two (2%) per centum upon the gross proceeds or gross receipts derived from all sales to any person'. § 84—1903. This is a sales tax, not a use tax.1 It is to be paid to the Tax Commissioner by the seller, § 84—1908. He is the taxpayer, § 84 1902(e), and 'shall collect the tax levied hereby from the purchaser.' s 84—1908. Gross receipts derived from sales to the United States Government are exempt. § 84—1904. 3 The construction contract had, so far as pertinent here, the provisions as to 'Materials-Purchases' which are set out in the margin.2 It was entered into by the Department of the Navy 'under the authority of Sections 2(c)(10) and 4(b)' of the Armed Services Procurement Act of 1947. 62 Stat. 21, 41 U.S.C. (Supp. V) § 151 et seq., 41 U.S.C.A. § 151 et seq. These sections authorized this cost-plus-a-fixed-fee contract by negotiation without advertising.3 4 Kern-Limerick, Inc., the seller, upon demand by the Commissioner paid under protest the amount of the sales tax and brought this action for a refund in accordance with state law. The United States intervened as under the contract any state taxes the contractor was required to pay were reimbursable to it by the Government. The Supreme Court of Arkansas held WHMS was the purchaser and the claimed tax payable by Kern-Limerick as the 'seller.' It denied the contention of the United States that the Government was the purchaser. It held that the Armed Services Procurement Act authorized the Navy Department 'to purchase supplies or services for its own use,' but did not authorize the Department 'to buy nails, lumber, cement, tractors, etc., which were not to be used by the Navy but by WHMS (in this instance) to construct, as independent contractors, the Ammunition Dump.' The state court further held that, even if the Department had the authority to buy the tractors, it could not, under the Procurement Act of 1947, delegate this power to WHMS. Parker v. Kern-Limerick, Inc., Ark., 254 S.W.2d 454. 5 Appellants seek reversal of the decision on the grounds that the Procurement Act authorizes this contract and that the Arkansas tax cannot by statute or constitutionally be applied to a purchase by the United States. 6 The state court's interpretation of the Procurement Act to deny the Navy authority to buy supplies or equipment for the construction of an ammunition dump is, we think, too restrictive. The Act gives broad powers to the Armed Services for obtaining as cheaply and promptly as possible 'purchases and contracts for supplies or services * * * for the use of any such agency or otherwise,' § 2(a), and provides: 7 Sec. 9. '(b) The term 'supplies' shall mean all property except land, and shall include, by way of description and without limitation, public works, buildings, facilities, ships, floating equipment, and vessels of every character, type and description, aircraft, parts, accessories, equipment, machine tools and alteration or installation thereof.'4 8 We hold that the Act allows the purchase of this machinery. 9 It seems to us, also, that under the Procurement Act the Armed Services may use agents, other than its own official personnel, to handle for it the detail of purchase. The contention of Arkansas which was accepted by its Supreme Court is, as we understand it, that the Procurement Act does not permit a delegation to private contractors of any authority to purchase for or pledge the credit of the United States even though these contractors have contracts for construction or supplies on a cost-plus basis. Further, it follows from the Arkansas contention, that without such statutory authority the purchase by the contractor was not for the United States but for itself. This contention is based on the language of the Procurement Act, §§ 7(a) and (b).5 Pursuant to § 7(a), the Secretary of the Navy, somewhat obscurely, appears to have delegated his authority to determine the necessity for a negotiated contract to a Navy Contracting Officer asserted in the contract, without exception, to be the Chief of the Bureau of Yards and Docks. See 32 CFR §§ 400.201—5 and 402.101. That official negotiated the contract, as it stated and as is admitted by stipulation, under the authority of § 2(c)(10) of the Procurement Act—'for supplies or services for which it is impracticable to secure competition'. 10 Arkansas calls attention to the restrictions on delegation in § 7(b) upon which the state court commented. But the provisions of § 7(b), as the words show, do not cover actions under § 2(c)(10), and the section's prohibition of delegation in certain instances is inapplicable. We find nothing in the Procurement Act that bars a contract for purchase for the United States of supplies or services by private persons. 11 The Government asserts that §§ 4(a) and (b) authorize this contract. Under them, negotiated contracts such as this 'may be of any type which * * * will promote the best interests of the Government.' Under such a provision, it seems that the determination to use purchasing agents is permissible. Where there is no prohibition of a particular type of contract and no direction to use a particular type, the contracting officers are free to follow business practices.6 We conclude that the Navy Department has power to negotiate contracts which provide for private purchasing agents for supplies and materials. 12 With this determination that the provisions of the contract are within the authority of the Procurement Act, we turn to examine the validity of the argument that the naming of the Government as purchaser was only colorable and left the contractor the real purchaser and the transaction subject to the Arkansas tax. State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3, is relied upon primarily. We consider this argument under the assumption, made by the Supreme Court of Arkansas, that the contract was designed to avoid the necessity in this cost-plus contract of the ultimate payment of a state tax by the United States. 13 We are mindful, too, of the careful attention Congress has given in recent years to a proper adjustment of tax liabilities between the federal and the state sovereignties. Congress has been solicitous to see that states and their subdivisions are not unduly burdened by federal acquisition of property taxable by the states when otherwise held. It understands the burdens on local public agencies from the new federal installations and their accompanying personnel. Provisions deemed suitable have been made.7 These include recent legislation designed to make independent contractors carrying on activities of the Atomic Energy Commission subject to state sales taxes.8 But in recommending the legislation the Joint Committee on Atomic Energy, while providing for voluntary contributions, did not propose to subject Government property and purchases to state taxes. The enactment left them free.9 This recognition of the constitutional immunity of the Federal Government from state exactions rests, of course, upon unquestioned authority. From McCulloch v. State of Maryland, 4 Wheat. 316, 4 L.Ed. 579, through Gillespie v. State of Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338, and People of State of New York ex rel. Rogers v. Graves, 299 U.S. 401, 57 S.Ct. 269, 81 L.Ed. 306, a host of cases upheld freedom from state taxation not only for Government activities but also for the agencies and salaries of persons that carried on the work. James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155, reviewed this judicial history, adopted for federal contractors and state taxation the reasoning that subjected a state contractor's earnings to federal income tax and upheld the state's gross receipts tax upon a federal contractor's earnings on the ground that it did not interfere 'in any substantial way with the performance of federal functions'. Id., 302 U.S. at page 161, 58 S.Ct. at page 221. The question of the immunity of Government in relation to its purchases of commodities was left open. Id., 302 U.S. at page 153, 58 S.Ct. at page 218. Graves v. People of State of New York ex rel. O'Keefe, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927, overruled People of State of New York ex rel. Rogers v. Graves, supra, and Gillespie, supra, fell in Oklahoma Tax Comm. v. Texas Co., 336 U.S. 342, 365, 69 S.Ct. 561, 573, 93 L.Ed. 721. 14 A phase of the question reserved in the Dravo case came up in State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3. We declared that federal sovereignty '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.' Id., 314 U.S. at page 9, 62 S.Ct. at page 45. That case involved the usual type sales tax on the seller, collectible by him from the buyer. There was there, too, a cost-plus-a-fixed-fee contract with the United States. We held the state tax collectible from the sellers, notwithstanding the Government bore the economic burden. A few excerpts will make clear the purport of the ruling. 15 'As the sale of the lumber by King and Boozer was not for cash, the precise question is whether the Government became obligated to pay for the lumber and so was the purchaser whom the statute taxes, but for the claimed immunity. * * * The contract provided that the title to all materials and supplies for which the contractors were 'entitled to be reimbursed' should vest in the Government 'upon delivery at the site of the work or at an approved storage site and upon inspection and acceptance in writing by the Contracting Officer'.' Id., 314 U.S. at page 10, 62 S.Ct. at page 46. 16 '* * * we think all the provisions which we have mentioned, read together, plainly contemplate that the contractors were to purchase in their own names and on their own credit all the materials required, unless the Government should elect to furnish them; that the Government was not to be bound by their purchase contracts, but was obligated only to reimburse the contractors when the materials purchased should be delivered, inspected and accepted at the site.' Id., 314 U.S. at page 11, 62 S.Ct. at page 46. 17 'But however extensively the Government may have reserved the right to restrict or control the action of the contractors in other respects, neither the reservation nor the exercise of that power gave to the contractors the status of agents of the Government to enter into contracts or to pledge its credit.' Id., 314 U.S. at page 13, 62 S.Ct. at page 47. 18 The contract here in issue differs in form but not in economic effect on the United States. The Nation bears the burden of the Arkansas tax as it did that of Alabama. The significant difference lies in this. Both the request for bids and the purchase order, in accordance with the contract arrangements making the contractors purchasing agents for the Government, note 2, supra, contain this identical, specific provision: 19 '3. This purchase is made by the Government. The Government shall be obligated to the Vendor for the purchase price, but the Contractor shall handle all payments hereunder on behalf of the Government. The vendor agrees to make demand or claim for payment of the purchase price from the Government by submitting an invoice to the Contractor. Title to all materials and supplies purchased hereunder shall vest in the Government directly from the Vendor. The Contractor shall not acquire title to any thereof.' 20 The purchase order is headed Navy Department Bureau of Yards and Docks, is signed by the contractor as purchasing agent, and requires the seller to make this certification on the claim for payment: 21 "I certify that the above bill is correct and just; that payment therefor has not been received; that all statutory requirements as to American production and labor standards, and all conditions of purchase applicable to the transactions have been complied with; and that the State or local sales taxes are not included in the amounts billed.' 22 'In the event the Contractor is required to pay and does pay State or local sales taxes, the words 'and that State or local sales taxes are not included in the amounts billed' should be struck from the certification and the following additional certification added: 23 "The amount of State or local sales, use, occupational, gross receipts, or other similar taxes or license fees imposed on the Vendor or Vendee by reason of this transaction is _ _. The Vendor, or Vendee, as the case may be, agrees upon direction of the United States to make appropriate claim for refund and in the event of any refund, to pay the amount thereof to the United States." 24 The stipulation of facts shows in detail the course of business under this contract in the purchase of supplies and the form of this purchase. Both conform to the language of the contract in requiring specific Government approval to the purchasing agent for each request for bid and each purchase. Under these circumstances, it is clear that the Government is the disclosed purchaser and that no liability of the purchasing agent to the seller arises from the transaction.10 25 A comment should be made about another excerpt from King & Boozer. It was referred to in the Arkansas opinion as though it were effective for the determination of this case. The quotation is this: 26 'The soundness of this conclusion turns on the terms of the contract and the rights and obligations of the parties under it. The taxing statute, as the Alabama courts have held, makes the 'purchaser' liable for the tax to the seller who is required 'to add to the sales price' and amount of the tax and collect it when the sales price is collected, whether the sale is for cash or on credit. Who, in any particular transaction like the present, is a 'purchaser' within the meaning of the statute, is a question of state law on which only the Supreme Court of Alabama can speak with final authority.' Id., 314 U.S. at pages 9—10, 62 S.Ct. at page 45. 27 Read literally, one might conclude this Court was saying that a state court might interpret its tax statute so as to throw tax liability where it chose, even though it arbitrarily eliminated an exempt sovereign. Such a conclusion as to the meaning of the quoted words would deny the long course of judicial construction which establishes as a principle that the duty rests on this Court to decide for itself facts or constructions upon which federal constitutional issues rest.11 The quotation refers, we think, only to the owner of the state court to determine who is responsible under its law for payment to the state of the exaction. The formulation of the 'precise question' at the first of the quotation from King & Boozer, supra, 314 U.S. at page 8, 62 S.Ct. at page 45, indicates this. 28 We find that the purchaser under this contract was the United States. Thus, King & Boozer is not controlling for, though the Government also bore the economic burden of the state tax in that case, the legal incidence of that tax was held to fall on the independent contractor and not upon the United States.12 The doctrine of sovereign immunity is so embedded in constitutional history and practice that this Court cannot subject the Government or its official agencies to state taxation without a clear congressional mandate. No instance of such submission is shown. 29 Nor do we think that the drafting of the contract by the Navy Department to conserve Government funds, if that was the purpose, changes the character of the transaction. As we have indicated, the intergovernmental submission to taxation is primarily a problem of finance and legislation. But since purchases by independent contractors of supplies for Government construction or other activities do not have federal immunity from taxation, the form of contracts, when governmental immunity is not waived by Congress, may determine the effect of state taxation on federal agencies,13 for decisions consistently prohibit taxes levied on the property or purchases of the Government itself.14 30 Reversed. 31 Mr. Justice BLACK, with whom THE CHIEF JUSTICE and Mr. Justice DOUGLAS concur, dissenting. 32 The Court holds that Government purchasing agents can delegate to their subordinates authority to delegate to private persons power to buy goods for the Government and pledge its credit to pay for them. State of Alabama v. King & Boozer, 314 U.S. 1, 13, 62 S.Ct. 43, 47, 86 L.Ed. 3, rejected a similar contention. The Court points to no statute which either expressly or by fair implication grants any such broad delegation authority to Government agents. 33 Experiences through the years have caused Congress to hedge in Government purchases by many detailed safeguards such as competitive bidding after public advertising.* Due to a supposed necessity for haste, chosen Government officials have sometimes been granted temporary powers to buy supplies at their discretion. But these occasions, perhaps fortunately, have been rare, and have usually been limited to items costing little. The Court here, however, without any clear statutory authority, makes a tremendous break with long established buying practices which embodied safeguards wisely adopted to prevent needless waste of Government money. Maybe Congress has power, though I am not sure it has, to delegate Government spending to private contractors. Even so, a purpose to have Government business handled in such a loose manner should not be attributed to Congress in the absence of much more explicit statutory language than the Court is able to cite here. 34 I think the Supreme Court of Arkansas was right in sustaining the State's tax on authority of State of Alabama v. King & Boozer, supra. The Court in effect overrules that case. In doing so it moves back in the direction of discredited tax immunities like that sustained in the case of Gillespie v. State of Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338, later disapproved. I would not do that, but would sustain application of this Arkansas tax to purchases of the cost-plus-a-fixed-fee contractor and affirm the State Supreme Court's judgment. 35 Mr. Justice DOUGLAS, with whom THE CHIEF JUSTICE and Mr. Justice BLACK join, dissenting. 36 The Arkansas Gross Receipts Tax is laid, as the majority opinion points out, on the gross receipts from all sales to any person. Ark.Stat.1947, § 84—1903. The Act, however, spells out the incidence of the tax in detail. 'Sales of service and tangible personal property including materials, supplies and equipment made to contractors who use same in the performance of any contract are hereby declared to be sales to consumers or users and not sales for resale.' § 84—1903(e). 'The term 'consumer' or 'user' means the person to whom the taxable sale is made * * *. All contractors are deemed to be consumers or users of all tangible personal property including materials, supplies and equipment used or consumed by them in performing any contract and the sales of all such property to contractors are taxable sales within the meaning of this act.' § 84—1902(i). 37 On the basis of this statutory language the Supreme Court of Arkansas held that the contractor was the 'purchaser' of the tractors and that the sale involved was taxable. It seems clear that, as a matter of state law, the contractor was the 'consumer' and 'user' of these tractors, whether or not the contractor would have been a purchaser in the common-law view. Of course Arkansas could not impose its tax on the contractor in such a way as to discriminate against the United States. But that has not been attempted here. 38 What Arkansas has done is to define an independent contractor as the 'consumer' or 'purchaser' of tractors which the contractor uses. Obviously the contractor could be made liable for the tax, if its contract were with a private corporation rather than with the Federal Government. Arkansas has not tried to collect the tax from the United States, and it clearly could not do so. See Mayo v. United States, 319 U.S. 441, 63 S.Ct. 1137, 87 L.Ed. 1504. Arkansas has collected the tax from the 'purchaser' as that word is denied by the taxing statute. That is where the legal incidence of the tax falls. If the economic burden of the tax falls on the Federal Government, it falls there because the Government assumed it by contract, not because Arkansas placed it there. See Curry v. United States, 314 U.S. 14, 18, 62 S.Ct. 48, 49, 86 L.Ed. 9. 39 The constitutional problem, of course, is to determine whether the legal incidence of a tax will be disregarded because the economic burden of the tax is on the United States. When Congress has not spoken, that determination must be made by the Court. 40 In State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3, we allowed a sales tax to be exacted from an independent contractor acting for the Government on a cost-plus-a-fixed-fee basis. That tax was measured by the value of lumber used by the contractor in performing its contract. The Government exercised much the same sort of detailed control over that transaction as it did over the present one. The Court was careful to point out, in rejecting the claim of immunity, that 'Who, in any particular transaction like the present, is a 'purchaser' within the meaning of the statute, is a question of state law on which only the Supreme Court of (the State) can speak with final authority.' 314 U.S. at pages 9—10, 62 S.Ct. at page 46. 41 In that case, however, the Supreme Court of Alabama had held the transaction immune from the tax. There was no authoritative state determination of the legal incidence of the tax. The Court therefore assumed, 314 U.S., at page 10, 62 S.Ct. at page 46, that the tax fell on the 'purchaser' of the lumber in the common-law sense. The Court then went on to show, in answer to the same arguments which the Government has made in this case, that the United States was not a purchaser of the lumber even under common-law rules. It is this segment of the opinion which the Court now uses practically to overrule the decision itself. No doubt the United States was, under some of the language used in King & Boozer, the 'purchaser' of these two tractors. But the United States is not the 'purchaser' under the language used in the Arkansas statute, and it is the Arkansas statute that controls this case. What was important in King & Boozer was the substance of the transaction and the nature of the economic burden on the United States. On these two paramount issues it is impossible to distinguish the present case. 42 The concepts 'title,' 'agency,' and 'obligation to pay' are no basis for this constitutional adjudication. Today they are used to permit any government functionary to draw the constitutional line by changing a few words in a contract. When the Congress deliberates over this problem, as it often has,1 it does not worry about the passing of title or other legal technicalities. The Congress debates whether as a matter of policy, including the need of the States for revenue, the holder of a cost-plus government contract should be immune from state taxation. 43 State of Alabama v. King & Boozer and the cases it followed2 were a long step forward from the time when a State's power to tax was nullified whenever the federal treasury was even remotely affected. We should not take this equally long step backwards. We should hold that, until the Congress says differently, the States are free to tax all sales to cost-plus government contractors. We should dispense with fruitless talk of agency, titles, and obligations to pay. The legal incidence of a tax is a matter for the States to determine. We should decide today, as we did more than a decade ago, that a tax on a contractor for goods he uses is constitutional, even though the economic burden falls on the Federal Government. 1 Cook v. Southeast Arkansas Transportation Co., 211 Ark. 831, 202 S.W.2d 772. 2 'Materials—Purchases. Article 8—(a) Except where provision is otherwise made by the Officer-in-Charge, all materials, articles, supplies, and equipment required for the accomplishment of the work under this contract shall be furnished by the Contractor. The Contractor shall act as the purchasing agent of the Government in effecting such procurement and the Government shall be directly liable to the vendors for the purchase price. The exercise of this agency is subject to the obtaining of approval in the instances and in the manner required by subparagraph (c) of this article. The Contractor shall negotiate and administer all such purchases and shall advance all payments therefor unless the Officer-in-Charge shall otherwise direct. '(b) Title to all such materials, articles, supplies and equipment, the cost of which is reimbursable to the Contractor hereunder, shall pass directly from the vendor to the Government without vesting in the Contractor, and such title (except as to property to which the Government has obtained title at an earlier date) shall vest in the Government at the time payment is made therefor by the Government or the Contractor, whichever of said events shall first occur. This provision for passage of title shall not relieve the Contractor of any of its duties or obligations under this contract or constitute any waiver of the Government's right to absolute fulfillment of all of the terms hereof. '(c) No purchase in excess of $500 shall be made hereunder without the prior written approval of the Officer-in-Charge, except that the Officer-in-Charge may, in his discretion, either reduce the limitation on the amount of any purchase which may be made without such prior approval or authorize the Contractor to make purchases in amounts not in excess of $2,500 for any one purchase without obtaining such prior approval.' These provisions were also applicable to subcontractors. 3 Section 2(c)(10) provides: 'All purchases and contracts for supplies and services shall be made by advertising, as provided in section 3, except that such purchases and contracts may be negotiated by the agency head without advertising if— '(10) for supplies or services for which it is impracticable to secure competition; * * *.' Section 4(b) prohibits use of cost-plus-a-percentage-of-cost contracts and prescribes other operative limitations not pertinent here. All provisions required by those sections were included in the contract. 4 S.Rep.No. 571, 80th Cong., 1st Sess., p. 21, had this to say of this language: 'To make it clear that the bill relates to all procurement by the services, except purchases with nonappropriated funds, subsection (b) of this section defines 'supplies' to include all property except land, and shall include, but without limitation, public works, buildings, facilities, ships, floating equipment, and vessels of every character, type and description, aircraft, parts, accessories, equipment, machine tools, and alteration or installation thereof. These are really examples and this section is to be construed in the broadest manner possible.' The corresponding House Report, No. 109, p. 23, omitted only the last sentence. 5 'Sec. 7 (a) * * * Except as provided in subsection (b) of this section, the agency head is authorized to delegate his powers provided by this Act, including the making of such determinations and decisions, in his discretion and subject to his direction, to any other officer or officers or officials of the agency. '(b) The power of the agency head to make the determinations or decisions specified in paragraphs (12), (13), (14), (15), and (16) of section 2(c) and in section 5(a) shall not be delegable, and the power to make the determinations or decisions specified in paragraph (11) of section 2(c) shall be delegable only to a chief officer responsible for procurement and only with respect to contracts which will not require the expenditure of more than $25,000.' Appellee also refers to § 10. As that provides only for interservice procurement, we do not think it pertinent. 6 United States v. Linn, 15 Pet. 209, 316, 10 L.Ed. 742; Muschany v. United States, 324 U.S. 49, 63, 65 S.Ct. 442, 449, 89 L.Ed. 744. 7 E.g., T.V.A., 16 U.S.C. § 831l, 16 U.S.C.A. § 831l; R.F.C., 15 U.S.C. § 607, 15 U.S.C.A. § 607; Cf. Dameron v. Brodhead, 345 U.S. 322, 73 S.Ct. 721, 97 L.Ed. 1041. 8 67 Stat. 575. See S.Rep.No.694, 83d Cong., 1st Sess. 9 Section 9 of the Atomic Energy Act of 1946, 60 Stat. 765, 42 U.S.C. § 1809(b) as amended, 42 U.S.C.A. § 1809(b), provides: 'In order to render financial assistance to those States and localities in which the activities of the Commission are carried on and in which the Commission has acquired property previously subject to State and local taxation, the Commission is authorized to make payments to State and local governments in lieu of property taxes. Such payments may be in the amounts, at the times, and upon the terms the Commission deems appropriate, but the Commission shall be guided by the policy of not making payments in excess of the taxes which would have been payable for such property in the condition in which it was acquired, except in cases where special burdens have been cast upon the State or local government by activities of the Commission, the Manhattan Engineer District or their agents. In any such case, any benefit accruing to the State or local government by reason of such activities shall be considered in determining the amount of the payment.' 10 See Hodgson v. Dexter, 1 Cranch 345, 362, 2 L.Ed. 130; Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 703, 69 S.Ct. 1457, 1468, 93 L.Ed. 1628; Restatement, Agency, § 320; Williston, Contracts, § 281. Cf. United States Shipping Board Merchants Fleet Corp. v. Harwood, 281 U.S. 519, 525, 50 S.Ct. 372, 373, 74 L.Ed. 1011. 11 New Jersey Realty Title Ins. Co. v. Division of Tax Appeals in Department of Taxation and Finance of New Jersey, 338 U.S. 665, 674, 70 S.Ct. 413, 418, 94 L.Ed. 439; Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, 83, 67 S.Ct. 156, 163, 91 L.Ed. 80; United States v. Allegheny County, 322 U.S. 174, 182, 64 S.Ct. 908, 913, 88 L.Ed. 1209; Union Pacific R. Co. v. Public Service Comm. of Missouri, 248 U.S. 67, 69, 39 S.Ct. 24, 25, 63 L.Ed. 131; Cf. State ex rel. Dyer v. Sims, 341 U.S. 22, 29, 71 S.Ct. 557, 561, 95 L.Ed. 713. This principle covers the question of who is the 'purchaser.' S.R.A., Inc., v. State of Minnesota, 327 U.S. 558, 564, 66 S.Ct. 749, 753, 90 L.Ed. 851; National Metropolitan Bank v. United States, 323 U.S. 454, 456, 65 S.Ct. 354, 355, 89 L.Ed. 383; Standard Oil Co. of California v. Johnson, 316 U.S. 481, 483, 62 S.Ct. 1168, 1169, 86 L.Ed. 1611. 12 See Oklahoma Tax Comm. v. Texas Co., 336 U.S. 342, 365, 69 S.Ct. 561, 573, 93 L.Ed. 721: '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.' 13 State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3; Carson v. Roane-Anderson Co., 324 U.S. 232, 72 S.Ct. 257, 96 L.Ed. 257; Esso Standard Oil Co. v. Evans, 345 U.S. 495, 73 S.Ct. 800, 97 L.Ed. 1174. 14 United States v. Allegheny County, 322 U.S. 174, 64 S.Ct. 908, 88 L.Ed. 1209; Mayo v. United States, 319 U.S. 441, 63 S.Ct. 1137, 87 L.Ed. 1504; Pittman v. Home Owners' Loan Corp. of Washington, D.C., 308 U.S. 21, 31, 60 S.Ct. 15, 17, 84 L.Ed. 11. * For illustrations of experience with abuse of wartime Government contracting and purchasing, see Hearings Before House Committee on Military Affairs, 74th Cong., 1st Sess., on H.R. 3 and H.R. 5293, pp. 590—616, discussing profiteering during the Revolution, the Civil War, the War with Spain, and World War I. The hearings were held on a bill to end profiteering in wartime. 1 See, for example, 86 Cong.Rec. 7528, 7532—7535; 88 Cong.Rec. 2835, 3464—3466, 4814; Hearings Before House Committee on Ways and Means on H.R. 6617, 77th Cong., 2d Sess. (1942). 2 James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155; Graves v. People of State of New York ex rel. O'Keefe, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927.

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347 U.S. 128 74 S.Ct. 381 98 L.Ed. 561 IRVINEv.PEOPLE OF STATE OF CALIFORNIA. No. 12. Argued Nov. 30, 1953. Decided Feb. 8, 1954. Rehearing Denied March 15, 1954. See 347 U.S. 931, 74 S.Ct. 527. Mr. Morris Lavine, Los Angeles, Cal., for petitioner. Miss Elizabeth Miller, Los Angeles, Cal., Mr. Clarence A. Linn, San Francisco, Cal., for respondent. Mr. Justice JACKSON announced the judgment of the Court and an opinion in which The CHIEF JUSTICE, Mr. Justice REED and Mr. Justice MINTON join. 1 This case involves constitutional questions growing out of methods employed to convict petitioner on charges of horserace bookmaking and related offenses1 against the antigambling laws of California.2 Petitioner exhausted all avenues to relief under state procedures and then sought review here of duly raised federal issues. 2 We granted certiorari3 on a petition which tendered four questions. However, petitioner's counsel has now presented two additional questions, one concerning the application of an immunity statute of California and another attacking certain instructions given to the jury by the trial court. Neither of these was mentioned in the petition. We disapprove the practice of smuggling additional questions into a case after we grant certiorari. The issues here are fixed by the petition unless we limit the grant, as frequently we do to avoid settled, frivolous or state law questions. We do not take up the questions numbered 3 and 6 of petitioner's brief because they are improperly presented. 3 Upon his arrest, petitioner had on his person a federal wagering tax stamp bearing his name, home address and the date, November 5, 1951. Against objection, it and other documentary evidence from the office of the United States Collector of Internal Revenue was received to show petitioner's application for the wagering tax stamp and his return to the Collector under the federal law. These documents were made pursuant to the Federal Act imposing wagering taxes, 65 Stat. 529, 26 U.S.C. (Supp. V) § 3285 et seq., 26 U.S.C.A. § 3285 et seq., held constitutional by this Court in United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754. The claim is made that it was error as a matter of federal law to admit this evidence and also that payment of the federal tax resulted in a federal license to conduct the wagering business. This statute does not make such records or stamps confidential or privileged but, on the contrary, expressly requires the name and place of business of each such taxpayer to be made public. 53 Stat. 395, 26 U.S.C. § 3275, 26 U.S.C.A. § 3275. Petitioner's contentions are without substance or merit in view of the express provision of the statute that payment of the tax does not exempt any person from penalty or punishment by state law and does not authorize commencement or continuance of such business. 53 Stat. 395, 26 U.S.C. § 3276, 26 U.S.C.A. § 3276; 65 Stat. 531, 26 U.S.C. (Supp. V) § 3292, 26 U.S.C.A. § 3292.4 4 But the questions raised by the officers' conduct while investigating this case are serious. The police strongly suspected petitioner of illegal bookmaking but were without proof of it. On December 1, 1951, while Irvine and his wife were absent from their home, an officer arranged to have a locksmith go there and make a door key. Two days later, again in the absence of occupants, officers and a technician made entry into the home by the use of this key and installed a concealed microphone in the hall. A hole was bored in the roof of the house and wires were strung to transmit to a neighboring garage whatever sounds the microphone might pick up. Officers were posted in the garage to listen. On December 8, police again made surreptitious entry and moved the microphone, this time hiding it in the bedroom. Twenty days later they again entered and placed the microphone in a closed, where the device remained until its purpose of enabling the officers to overhear incriminating statements was accomplished. 5 We should note that this is not a conventional instance of 'wire tapping.' Here the apparatus of the officers was not in any way connected with the telephone facilities, there was no interference with the communications system, there was no interception of any message. All that was heard through the microphone was what an eavesdropper, hidden in the hall, the bedroom, or the closet, might have heard. We do not suppose it is illegal to testify to what another person is heard to say merely because he is saying it into a telephone. We cannot sustain the contention that the conduct or reception of the evidence violated the Federal Communications Act. 48 Stat. 1103, 47 U.S.C. § 605, 47 U.S.C.A. § 605. Cf. Nardone v. United States, 308 U.S. 338, 60 S.Ct. 266, 84 L.Ed. 307; Goldman v. United States, 316 U.S. 129, 62 S.Ct. 993, 86 L.Ed. 1322; Schwartz v. State of Texas, 344 U.S. 199, 73 S.Ct. 232, 97 L.Ed. 231. 6 At the trial, officers were allowed to testify to conversations heard through their listening installations. The snatches of conversation which the prosecution thought useful were received in evidence. They were in the lingo of the race track and need not be recited, but the jury might well have regarded them as incriminating. The testimony was received under objection, properly raising the question that it was constitutionally inadmissible since obtained by methods which violate the Fourteenth Amendment. 7 Each of these repeated entries of petitioner's home without a search warrant or other process was a trespass, and probably a burglary, for which any unofficial person should be, and probably would be, severely punished. Science has perfected amplifying and recording devices to become frightening instruments of surveillance and invasion of privacy, whether by the policeman, the blackmailer, or the busy-body. That officers of the law would break and enter a home, secrete such a device, even in a bedroom, and listen to the conversation of the occupants for over a month would be almost incredible if it were not admitted. Few police measures have come to our attention that more flagrantly, deliberately, and persistently violated the fundamental principle declared by the Fourth Amendment as a restriction on the Federal Government that '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.' The decision in Wolf v. People of State of Colorado, 338 U.S. 25, 27, 69 S.Ct. 1359, 1361, 93 L.Ed. 1782, for the first time established that '(t)he security of one's privacy against arbitrary intrusion by the police' is embodied in the concept of due process found in the Fourteenth Amendment. 8 But Wolf, for reasons set forth therein, declined to make the subsidiary procedural and evidentiary doctrines developed by the federal courts limitations on the states. On the contrary, it declared, '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.' 338 U.S. 25, 33, 69 S.Ct. 1359, 1364. See Stefanelli v. Minard, 342 U.S. 117, 119, 122, 72 S.Ct. 118, 119—121, 96 L.Ed. 138. That holding would seem to control here. 9 An effort is made, however, to bring this case under the sway of Rochin v. People of California, 342 U.S. 165, 72 S.Ct. 205, 96 L.Ed. 183. That case involved, among other things, an illegal search of the defendant's person. But it also presented an element totally lacking here—coercion (as the Court noted, 342 U.S. at page 173, 72 S.Ct. at page 210), applied by a physical assault upon his person to compel submission to the use of a stomach pump. This was the feature which led to a result in Rochin contrary to that in Wolf. Although Rochin raised the search-and-seizure question, this Court studiously avoided it and never once mentioned the Wolf case. Obviously, it thought that illegal search and seizure alone did not call for reversal. However obnoxious are the facts in the case before us, they do not involve coercion, violence or brutality to the person, but rather a trespass to property, plus eavesdropping. 10 It is suggested, however, that although we affirmed the conviction in Wolf, we should reverse here because this invasion of privacy is more shocking, more offensive, than the one involved there. The opinions in Wolf were written entirely in the abstract and did not disclose the details of the constitutional violation. Actually, the search was offensive to the law in the same respect, if not the same degree, as here. A deputy sheriff and others went to a doctor's office without a warrant and seized his appointment book, searched through it to learn the names of all his patients, looked up and interrogated certain of them, and filed an information against the doctor on the information that the District Attorney had obtained from the books. The books also were introduced in evidence against the doctor at his trial. 11 We are urged to make inroads upon Wolf by holding that it applies only to searches and seizures which produce on our minds a mild shock, while if the shock is more serious, the states must exclude the evidence or we will reverse the conviction. We think that the Wolf decision should not be overruled, for the reasons so persuasively stated therein. We think, too, that a distinction of the kind urged would leave the rule so indefinite that no state court could know what it should rule in order to keep its processes on solid constitutional ground. 12 Even as to the substantive rule governing federal searches in violation of the Fourth Amendment, both the Court and individual Justices have wavered considerably. Compare Harris v. United States, 331 U.S. 145, 67 S.Ct. 1098, 91 L.Ed. 1399; Trupiano v. United States, 334 U.S. 699, 68 S.Ct. 1229, 92 L.Ed. 1663; United States v. Rabinowitz, 339 U.S. 56, 70 S.Ct. 430, 94 L.Ed. 653; Brinegar v. United States, 338 U.S. 160, 69 S.Ct. 1302, 93 L.Ed. 1879; Goldman v. United States, 316 U.S. 129, 62 S.Ct. 993, 86 L.Ed. 1322; On Lee v. United States, 343 U.S. 747, 72 S.Ct. 967, 96 L.Ed. 1270. Never until June of 1949 did this Court hold the basic search-and-seizure prohibition in any way applicable to the states under the Fourteenth Amendment. At that time, as we pointed out, thirty-one states were not following the federal rule excluding illegally obtained evidence, while sixteen were in agreement with it. Now that the Wolf doctrine is known to them, state courts may wish further to reconsider their evidentiary rules. But to upset state convictions even before the states have had adequate opportunity to adopt or reject the rule would be an unwarranted use of federal power. The chief burden of administering criminal justice rests upon state courts. To impose upon them the hazard of federal reversal for noncompliance with standards as to which this Court and its members have been so inconstant and inconsistent would not be justified. We adhere to Wolf as stating the law of search-and-seizure cases and decline to introduce vague and subjective distinctions. 13 Whether to exclude illegally obtained evidence in federal trials is left largely to our discretion, for admissibility of evidence is governed 'by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience.' Fed.Rules Crim.Proc. rule 26, 18 U.S.C.A. As we have pointed out, reason has led state courts to differing conclusions, but about two-thirds of them to acceptance of the illegally obtained evidence. What actual experience teaches we really do not know. Our cases evidence the fact that the federal rule of exclusion and our reversal of conviction for its violation are not sanctions which put an end to illegal search and seizure by federal officers. The rule was announced in 1914 in Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652. The extent to which the practice was curtailed, if at all, is doubtful. The lower federal courts, and even this Court,5 have repeatedly been constrained to enforce the rule after its violation. There is no reliable evidence known to us that inhabitants of those states which exclude the evidence suffer less from lawless searches and seizures than those of states that admit it. Even this Court has not seen fit to exclude illegally seized evidence in federal cases unless a federal officer perpetrated the wrong. Private detectives may use methods to obtain evidence not open to officers of the law. Burdeau v. McDowell, 256 U.S. 465, 41 S.Ct. 574, 65 L.Ed. 1048; see McGuire v. United States, 273 U.S. 95, 99, 47 S.Ct. 259, 260, 71 L.Ed. 556; cf. Feldman v. United States, 322 U.S. 487, 64 S.Ct. 1082, 88 L.Ed. 1408; Lustig v. United States, 338 U.S. 74, 69 S.Ct. 1372, 93 L.Ed. 1819. And the lower federal courts, treating the Fourth Amendment right as personal to the one asserting it, have held that he who objects must claim some proprietary or possessory interest in that which was unlawfully searched or seized. E.g., Connolly v. Medalie, 2 Cir., 58 F.2d 629; Steeber v. United States, 10 Cir., 198 F.2d 615, 617. See Goldstein v. United States, 316 U.S. 114, 121, 62 S.Ct. 1000, 1004, 86 L.Ed. 1312; Wolf v. Colorado, supra, 338 U.S. at pages 30—31, 69 S.Ct. at pages 1362. Cf. United States v. Jeffers, 342 U.S. 48, 72 S.Ct. 93, 96 L.Ed. 59. 14 It must be remembered that petitioner is not invoking the Constitution to prevent or punish a violation of his federal right recognized in Wolf or to recover reparations for the violation. He is invoking it only to set aside his own conviction of crime. That the rule of exclusion and reversal results in the escape of guilty persons is more capable of demonstration than that it deters invasions of right by the police. The case is made, so far as the police are concerned, when they announce that they have arrested their man. Rejection of the evidence does nothing to punish the wrong-doing official, while it may, and likely will, release the wrong-doing defendant. It deprives society of its remedy against one lawbreaker because he has been pursued by another. It protects one against whom incriminating evidence is discovered, but does nothing to protect innocent persons who are the victims of illegal but fruitless searches. The disciplinary or educational effect of the court's releasing the defendant for police misbehavior is so indirect as to be no more than a mild deterrent at best. Some discretion is still left to the states in criminal cases, for which they are largely responsible, and we think it is for them to determine which rule best serves them. 15 But admission of the evidence does not exonerate the officers and their aides if they have violated defendant's constitutional rights. It was pointed out in Wolf v. Colorado, supra, that other remedies are available for official lawlessness, although too often those remedies are of no practical avail. The difficulty with them is in part due to the failure of interested parties to inform of the offense. No matter what an illegal raid turns up, police are unlikely to inform on themselves or each other. If it turns up nothing incriminating, the innocent victim usually does not care to take steps which will air the fact that he has been under suspicion. And the prospect that the guilty may capitalize on the official wrongdoing in his defense, or to obtain reversal from a higher court, removes any motive he might have to inform. 16 It appears to the writer, in which view he is supported by THE CHIEF JUSTICE, that there is no lack of remedy if an unconstitutional wrong has been done in this instance without upsetting a justifiable conviction of this common gambler. If the officials have willfully deprived a citizen of the United States of a right or privilege secured to him by the Fourteenth Amendment, that being the right to be secure in his home against unreasonable searches, as defined in Wolf v. Colorado, supra, their conduct may constitute a federal crime under 62 Stat. 696, 18 U.S.C. (Supp. III) § 242. This section provides that whoever, under color of any law, statute, ordinance, regulation or custom, willfully subjects any inhabitant of any state to the deprivation of any rights, privileges or immunities secured or protected by the Constitution of the United States shall be fined or imprisoned. See Williams v. United States, 341 U.S. 97, 71 S.Ct. 576, 95 L.Ed. 774; Screws v. United States, 325 U.S. 91, 65 S.Ct. 1031, 89 L.Ed. 1495. It does not appear that the statute of limitations yet bars prosecutions. 45 Stat. 51, 18 U.S.C. § 582.* We believe the Clerk of this Court should be directed to forward a copy of the record in this case, together with a copy of this opinion, for attention of the Attorney General of the United States. However, Mr. Justice REED and Mr. Justice MINTON do not join in this paragraph. 17 Judgment affirmed. 18 Mr. Justice CLARK, concurring. 19 Had I been here in 1949 when Wolf was decided I would have applied the doctrine of Weeks v. United States, 1914, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652, to the states. But the Court refused to do so then, and it still refuses today. Thus Wolf remains the law and, as such, is entitled to the respect of this Court's membership. 20 Of course, we could sterilize the rule announced in Wolf by adopting a case-by-case approach to due process in which inchoate notions of propriety concerning local police conduct guide our decisions. But this makes for such uncertainty and unpredictability that it would be impossible to foretell—other than by guess-work—just how brazen the invasion of the intimate privacies of one's home must be in order to shock itself into the protective arms of the Constitution. In truth, the practical result of this ad hoc approach is simply that when five Justices are sufficiently revolted by local police action a conviction is overturned and a guilty man may go free. Rochin bears witness to this. We may thus vindicate the abstract principle of due process, but we do not shape the conduct of local police one whit; unpredictable reversals on dissimilar fact situations are not likely to curb the zeal of those police and prosecutors who may be intent on racking up a high percentage of successful prosecutions. I do not believe that the extension of such a vacillating course beyond the clear cases of physical coercion and brutality, such as Rochin, would serve a useful purpose. 21 In light of the 'incredible' activity of the police here it is with great reluctance that I follow Wolf. Perhaps strict adherence to the tenor of that decision may produce needed converts for its extinction. Thus I merely concur in the judgment of affirmance. 22 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS concurs, dissenting. 23 I would reverse this conviction because the petitioner Irvine was found guilty of a crime and sentenced to prison on evidence extorted from him by the Federal Government in violation of the Fifth Amendment. 24 Federal law makes it a crime punishable by fine, imprisonment, or both, for a person to run a gambling business without making a report to the Government and buying a federal wagering tax stamp, both of which reveal his gambling operations.1 Petitioner made the necessary report of his gambling activities in California and bought the required tax stamp. The information he gave and the stamp he bought were used in this case to convict and sentence him to prison for violating California's antigambling law. For reasons given in my dissent in United States v. Kahriger, 345 U.S. 22, 36, 73 S.Ct. 510, 517, 97 L.Ed. 754, I believe the federal law that extracted the disclosures and required the tax stamp violates the Fifth Amendment's command that a person shall not be compelled to be a witness against himself. But even though the law is valid, as the Court held, use of such forced confessions to convict the confessors still amounts to compelling a person to testify against himself in violation of the Fifth Amendment. 25 I cannot agree that the Amendment's guarantee against self-incrimination testimony can be spirited away by the ingenious contrivance of using federally extorted confessions to convict of state crimes and vice versa.2 Licensing such easy evasion of the Amendment has proven a heavy drain on its vitality although no such debilitating interpretation was given the Amendment by this Court until it decided United States v. Murdock in 1931, one hundred and forty years after the Bill of Rights was adopted.3 That construction was rested on the premise that a state and the United States are so separate and foreign to one another that neither of them need protect witnesses against being forced to admit offenses against the laws of the other.4 This treatment of the states and the Federal Government as though they were entirely foreign to each other is wholly conceptualistic and cannot justify such a narrow interpretation of the Fifth Amendment's language and the resulting frustration of its purpose. 26 I think the Fifth Amendment of itself forbids all federal agents, legislative, executive and judicial, to force a person to confess a crime; forbids the use of such a federally coerced confession in any court, state or federal; and forbids all federal courts to use a confession which a person has been compelled to make against his will. 27 The Fifth Amendment forbids the Federal Government and the agents through which it acts—courts, grand juries, prosecutors, marshals or other officers—to use physical torture, psychological pressure, threats of fines, imprisonment or prosecution, or other governmental pressure to force a person to testify against himself. And if the Federal Government does extract incriminating testimony, as the Court has held it may in compelling gamblers to confess, the immunity provided by the Amendment should at the very least prevent the use of such testimony in any court, federal or state.5 The use of such testimony is barred, even though the Fifth Amendment may not of itself prohibit the states or their agents from extorting incriminating testimony.6 The Amendment does plainly prohibit all federal agencies from using their power to force self-incriminatory statements. Consequently, since the Amendment is the supreme law of the land and is binding on all American judges, the use of federally coerced testimony to convict a person of crime in any court, state or federal, is forbidden. 28 The Fifth Amendment not only forbids agents of the Federal Government to compel a person to be a witness against himself; it forbids federal courts to convict persons on their own forced testimony, whatever 'sovereign'—federal or state—may have compelled it. Otherwise, the constitutional mandate against self-incrimination is an illusory safeguard that collapses whenever a confession is extorted by anyone other than the Federal Government. 29 Though not essential to disposition of this case, it seems appropriate to add that I think the Fourteenth Amendment makes the Fifth Amendment applicable to states and that state courts like federal courts are therefore barred from convicting a person for crime on testimony which either state or federal officers have compelled him to give against himself.7 The construction I give to the Fifth and Fourteenth Amendments makes it possible for me to adhere to what we said in Ashcraft v. State of Tennessee, 322 U.S. 143, 155, 64 S.Ct. 921, 927, 88 L.Ed. 1192, that 'The Constitution of the United States stands as a bar against the conviction of any individual in an American court by means of a coerced confession.' 30 So far as this case is concerned it is enough for me that Irvine was convicted in a state court on a confession coerced by the Federal Government. I believe this frustrates a basic purpose of the Fifth Amendment—to free Americans from fear that federal power could be used to compel them to confess conduct or beliefs in order to take away their life, liberty or property. For this reason I would reverse Irvine's conviction. 31 It has been suggested that the Court should call on the Attorney General to investigate this record in order to start criminal prosecutions against certain California officers. I would strongly object to any such action by this Court. It is inconsistent with my own view of the judicial function in our government. Prosecution, or anything approaching it, should, I think, be left to government officers whose duty that is. 32 Mr. Justice FRANKFURTER, whom Mr. Justice BURTON joins, dissenting. 33 Mere failure to have an appropriate warrant for arrest or search, without aggravating circumstances of misconduct in obtaining evidence, invalidates a federal conviction helped by such an unreasonable search and seizure. Such was the construction placed upon the Fourth Amendment by Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652. But Wolf v. People of State of Colorado, 338 U.S. 25, 69 S.Ct. 1359, 93 L.Ed. 1782, held that the rule of the Weeks case was not to be deemed part of the Due Process Clause of the Fourteenth Amendment and hence was not binding upon the States. Still more recently, however, in Rochin v. People of California, 342 U.S. 165, 72 S.Ct. 205, 96 L.Ed. 183, the Court held that 'stomach pumping' to obtain morphine capsules, later used as evidence in a trial, was offensive to prevailing notions of fairness in the conduct of a prosecution and therefore invalidated a resulting conviction as contrary to the Due Process Clause. 34 The comprehending principle of these two cases is at the heart of 'due process.' The judicial enforcement of the Due Process Clause is the very antithesis of a Procrustean rule. In its first full-dress discussion of the Due Process Clause of the Fourteenth Amendment, the Court defined the nature of the problem as a 'gradual process of judicial inclusion and exclusion, as the cases presented for decision shall require, with the reasoning on which such decisions may be founded.' Davidson v. New Orleans, 96 U.S. 97, 104, 24 L.Ed. 616. The series of cases whereby, in the light of this attitude, the scope of the Due Process Clause has been unfolded is the most striking, because the liveliest, manifestation of the wide and deep areas of law in which adjudication 'depends upon differences of degree. The whole law does so as soon as it is civilized.' Holmes, J., concurring in LeRoy Fibre Co. v. Chicago, M. & St. P.R. Co., 232 U.S. 340, 354, 34 S.Ct. 415, 418, 58 L.Ed. 631. It is especially true of the concept of due process that between the differences of degree which that inherently undefinable concept entails 'and the simple universality of the rules in the Twelve Tables, or the Leges Barbarorum, there lies the culture of two thousand years.' Ibid. 35 In the Wolf case, the Court rejected one absolute. In Rochin, it rejected another. 36 In holding that not all conduct which by federal law is an unreasonable search and seizure vitiates a conviction in connection with which it transpires, Wolf did not and could not decide that as long as relevant evidence adequately supports a conviction, it is immaterial how such evidence was acquired. For the exact holding of that case is defined by the question to which the opinion addressed itself: '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 inadmissible 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?' (338 U.S. 25, 69 S.Ct. 1360.) Thus, Wolf did not change prior applications of the requirements of due process, whereby this Court considered the whole course of events by which a conviction was obtained and was not restricted to consideration of the trustworthiness of the evidence. 37 Rochin decided that the Due Process Clause of the Fourteenth Amendment does not leave States free in their prosecutions for crime. The Clause puts limits on the wide discretion of a State in the process of enforcing its criminal law. The holding of the case is that a State cannot resort to methods that offend civilized standards of decency and fairness. The conviction in the Rochin case was found to offend due process not because evidence had been obtained through an unauthorized search and seizure or was the fruit of compulsory self-incrimination. Neither of these concepts, relevant to federal prosecutions, was invoked by the Court in Rochin, so of course the Wolf case was not mentioned. While there is in the case before us, as there was in Rochin, an element of unreasonable search and seizure, what is decisive here, as in Rochin, is additional aggravating conduct which the Court finds repulsive. 38 Thus, the basis on which this case should be adjudicated is laid down in Rochin: 'Regard for the requirements of the Due Process Clause 'inescapably imposes upon this Court an exercise of judgment upon the whole course of the proceedings (resulting in a conviction) in order to ascertain whether they offend those canons of decency and fairness which express the notions of justice of English-speaking peoples even toward those charged with the most heinous offenses." 342 U.S., at page 169, 72 S.Ct. at page 208, quoting from Malinski v. People of State of New York, 324 U.S. 401, at pages 416—417, 65 S.Ct. 781, at pages 788—789, 89 L.Ed. 1029. 39 This brings us to the specific circumstances of this case. This is a summary of the conduct of the police: 40 (1) They secretly made a key to the Irvines' front door. 41 (2) By boring a hole in the roof of the house and using the key they had made to enter, they installed a secret microphone in the Irvine house with a listening post in a neighboring garage where officers listened in relays. 42 (3) Using their key, they entered the house twice again to move the microphone in order to cut out interference from a fluorescent lamp. The first time they moved in into Mr. and Mrs. Irvine's bedroom, and later into their bedroom closet. 43 (4) Using their key, they entered the house on the night of the arrest and in the course of the arrest made a search for which they had no warrant. 44 There was lacking here physical violence, even to the restricted extent employed in Rochin. We have here, however, a more powerful and offensive control over the Irvines' life than a single, limited physical trespass. Certainly the conduct of the police here went far beyond a bare search and seizure. The police devised means to hear every word that was said in the Irvine household for more than a month. Those affirming the conviction find that this conduct, in its entirety, is 'almost incredible if it were not admitted.' Surely the Court does not propose to announce a new absolute, namely, that even the most reprehensible means for securing a conviction will not taint a verdict so long as the body of the accused was not touched by State officials. Considering the progress that scientific devices are making in extracting evidence without violence or bodily harm, satisfaction of due process would depend on the astuteness and subtlety with which the police engage in offensive practices and drastically invade privacy without authority of law. In words that seem too prophetic of this case, it has been said that '(d)iscovery and invention have made it possible for the government, by means far more effective than stretching upon the rack, to obtain disclosure in court of what is whispered in the closet.' Brandeis, J., dissenting in Olmstead v. United States, 277 U.S. 438, 473, 48 S.Ct. 564, 570, 72 L.Ed. 944. 45 The underlying reasoning of Rochin rejected the notion that States may secure a conviction by any form of skulduggery so long as it does not involve physical violence. The cases in which coercive or physical infringements of the dignity and privacy of the individual were involved were not deemed 'sports in our constitutional law but applications of a general principle. They are only instances of the general requirement that States in their prosecutions respect certain decencies of civilized conduct. Due process of law, as a historic and generative principle, precludes defining, and thereby confining, these standards of conduct more precisely than to say that convictions cannot be brought about by methods that offend 'a sense of justice." 342 U.S., at page 173, 72 S.Ct. at page 210. 46 Since due process is not a mechanical yardstick, it does not afford mechanical answers. In applying the Due Process Clause judicial judgment is involved in an empiric process in the sense that results are not predetermined or mechanically ascertainable. But that is a very different thing from conceiving the results as ad hoc decisions in the opprobrious sense of ad hoc. Empiricism implies judgment upon variant situations by the wisdom of experience. Ad hocness in adjudication means treating a particular case by itself and not in relation to the meaning of a course of decisions and the guides they serve for the future. There is all the difference in the world between disposing of a case as though it were a discrete instance and recognizing it as part of the process of judgment, taking its place in relation to what went before and further cutting a channel for what is to come. 47 The effort to imprison due process within tidy categories misconceives its nature and is a futile endeavor to save the judicial function from the pains of judicial judgment. It is pertinent to recall how the Court dealt with this craving for unattainable certainty in the Rochin case: 48 'The vague contours of the Due Process Clause do not leave judges at large. We may not draw on our merely personal and private notions and disregard the limits that bind judges in their judicial function. Even though the concept of due process of law is not final and fixed, these limits are derived from considerations that are fused in the whole nature of our judicial process. See Cardozo, The Nature of the Judicial Process; The Growth of the Law; The Paradoxes of Legal Science. These are considerations deeply rooted in reason and in the compelling traditions of the legal profession. The Due Process Clause places upon this Court the duty of exercising a judgment, within the narrow confines of judicial power in reviewing State convictions, upon interests of society pushing in opposite directions.' 342 U.S., at pages 170—171, 72 S.Ct. at page 208. 49 Nor can we dispose of this case by satisfying ourselves that the defendant's guilt was proven by trustworthy evidence and then finding, or devising, other means whereby the police may be discouraged from using illegal methods to acquire such evidence. 50 This Court has rejected the notion that because a conviction is established on incontestable proof of guilt it may stand, no matter how the proof was secured. Observance of due process has to do not with questions of guilt or innocence but the mode by which guilt is ascertained. Mere errors of law in the conduct of State trials afford no basis for relief under the Fourteenth Amendment, and a wide swath of discretion must be left to the State Courts in such matters. But when a conviction is secured by methods which offend elementary standards of justice, the victim of such methods may invoke the protection of the Fourteenth Amendment because that Amendment guarantees him a trial fundamentally fair in the sense in which that idea is incorporated in due process. If, as in Rochin, '(o)n the facts of this case the conviction of the petitioner has been obtained by methods that offend the Due Process Clause', 342 U.S., at page 174, 72 S.Ct. at page 210, it is no answer to say that the offending policemen and prosecutors who utilize outrageous methods should be punished for their misconduct.1 51 Of course it is a loss to the community when a conviction is overturned because the indefensible means by which it was obtained cannot be squared with the commands of due process. A new trial is necessitated, and by reason of the exclusion of evidence derived from the unfair aspects of the prior prosecution a guilty defendant may escape. But the people can avoid such miscarriages of justice. A sturdy, self-respecting democratic community should not put up with lawless police and prosecutors. 'Our people may tolerate many mistakes of both intent and performance, but, with unerring instinct, they know that when any person is intentionally deprived of his constitutional rights those responsible have committed no ordinary offense. A crime of this nature, if subtly encouraged by failure to condemn and punish, certainly leads down the road to totalitarianism.'2 52 Mr. Justice DOUGLAS, dissenting. 53 The search and seizure conducted in this case smack of the police state, not the free America the Bill of Rights envisaged. 54 The police and their agents first made a key to the home of a suspect. Then they bored a hole in the roof of his house. Using the key they entered the house, installed a microphone, and attached it to a wire which ran through the hole in the roof to a nearby garage where officers listened in relays. Twice more they used the key to enter the house in order to adjust the microphone. First they moved it into the bedroom where the suspect and his wife slept. Next, they put the microphone into the bedroom closet. Then they used the key to enter the house to arrest the suspect. They had no search warrant; but they ransacked the house. Moreover, they examined the suspect's hands under an ultraviolet lamp to see if he had handled betting slips which they had earlier impregnated with fluorescent powder. 55 The evidence so obtained was used by California to send the suspect, petitioner here, to prison. 56 What transpired here was as revolting as the abuses arising out of the writs of assistance against which James Otis complained. Otis in his speech against the writs3 had this to say: 57 'Now one of the most essential branches of English liberty is the freedom of one's house. A man's house is his castle; and whilst he is quiet, he is as well guarded as a prince in his castle. This writ, if it should be declared legal, would totally annihilate this privilege. Custom-house officers may enter our houses when they please; we are commanded to permit their entry. Their menial servants may enter, may break locks, bars, and every thing in their way: and whether they break through malice or revenge, no man, no court, can inquire. Bare suspicion without oath is sufficient.' 58 In those days courts put their sanction behind the unlawful invasion of privacy by issuing the general warrant that permitted unlimited searches. There is no essential difference between that and the action we take today. Today we throw the weight of the Government on the side of the lawless search by affirming a conviction based on evidence obtained by it. Today we compound the grievance against which Otis complained. Not only is privacy invaded. The lawless invasion is officially approved as the means of sending a man to prison. 59 I protest against this use of unconstitutional evidence. It is no answer that the man is doubtless guilty. The Bill of Rights was designed to protect every accused against practices of the police which history showed were oppressive of liberty. The guarantee against unreasonable searches and seizures contained in the Fourth Amendment was one of those safeguards. In 1914 a unanimous Court decided that officers who obtained evidence in violation of that guarantee could not use it in prosecutions in the federal courts. Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652. Lawless action of the federal police, it said, 'should find no sanction in the judgments of the courts * * *.' Id., 232 U.S. at page 392, 34 S.Ct. at page 344. 60 The departure from that principle which the Court made in 1949 in Wolf v. People of State of Colorado, 338 U.S. 25, 69 S.Ct. 1359, 93 L.Ed. 1782, is part of the deterioration which civil liberties have suffered in recent years. In that case the Court held that evidence obtained in violation of the Fourth Amendment, though inadmissible in federal prosecutions, could be used in prosecutions in the state courts. Mr. Justice Murphy, dissenting, pointed out the peril of that step, Id., 338 U.S. at page 44, 69 S.Ct. at page 1370, 61 '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.' 62 Exclusion of evidence is indeed the only effective sanction. If the evidence can be used, no matter how lawless the search, the protection of the Fourth Amendment, to use the words of the Court in the Weeks case, 'might as well be stricken from the Constitution.' 232 U.S., at page 393, 34 S.Ct. at page 344. 63 The suggestion that the remedy for lawless conduct by the local police is through federal prosecution under the civil rights laws relegates constitutional rights under the Fourth Amendment to a lowly status. An already overburdened Department of Justice, busily engaged in law enforcement, cannot be expected to devote its energies to supervising local police activities and prosecuting police officers, except in rare and occasional instances.4 And the hostility which such prosecutions have received here (see Screws v. United States, 325 U.S. 91, especially pages 138 et seq., 65 S.Ct. 1031, 1053, 89 L.Ed. 1495) hardly encourages putting the federal prosecutor on the track of state officials who take unconstitutional short cuts in enforcing state laws.5 64 If unreasonable searches and seizures that violate the privacy which the Fourth Amendment protects are to be outlawed, this is the time and the occasion to do it. If police officers know that evidence obtained by their unlawful acts cannot be used in the courts, they will clean their own houses and put an end to this kind of action. But as long as courts will receive the evidence, the police will act lawlessly and the rights of the individual will suffer. We should throw our weight on the side of the citizen and against the lawless police. We should be alert to see that no unconstitutional evidence is used to convict any person in America. Appendix. 65 Mr. Justice Murphy, when Attorney General, was responsible for the creation of the Civil Rights Section in the Department of Justice. That was on February 3, 1939. In 1947 Mr. Justice Clark, then Attorney General, reported that the Section had in the eight years of its existence investigated nearly 850 complaints, instituted prosecutions in 178 cases, and obtained the conviction of more than 130 defendants. Clark, A Federal Prosecutor Looks at the Civil Rights Statutes, 47 Col.L.Rev. 175, 181. See also Report of the President's Committee on Civil Rights: To Secure These Rights (1947), pp. 114 et seq. 66 A more recent account of the work of the Civil Rights Section will be found in Putzel, Federal Civil Rights Enforcement: A Current Appraisal, 99 U. of Pa.L.Rev. 439 (1951). It is there stated that on the average 20 civil rights cases are prosecuted a year, acquittals and convictions being about equally divided. Id., p. 449, n. 43. These figures are confirmed by the Administrative Office of the United States Courts. Records available in that office show the following number of civil rights prosecutions filed in the district courts in the years since 1947: 67 Fiscal year.1947 1948 1949 1950 1951 1952 1953 Total cases. 10 13 22 18 16 15 29 Total defendants 26 53 66 72 69 49 92 68 More detailed figures are available for the past three fiscal years. The following table shows the number of defendants who actually went to trial, the disposition of their cases, and the sentences imposed on those who were convicted: Fiscal year........ 1951. 1952 1953 Total defendants.....22.50.54 Not convicted: Total.11.20.45 Dismissed.............4.2.18 Acquitted by court.. ----. ---- 1 Acquitted by jury.....7.18.26 Convicted: Total.....11.30.9 Pleas of guilty or nolo contendere 3 21 1 Convicted by court.. ----.5 Convicted by jury.....8.4.8 Type of sentence: Imprisonment total 7 4 8 1-6 months.......... ----. ---- 1 6 months to 1 year, 1 day. 7 ---- 7 More than 1 year, 1 day. ---- 4 Type of sentence: Probation and suspended 69 sentence.............2.20 Type of sentence: Fine only.2 6 1 70 Average sentence of imprisonment (months) 10.9 16.5 9.4 71 Note: These figures from the Administrative Office include all prosecutions filed and conducted under all of the Sections of the Criminal Code which are usually called Civil Rights Sections, that is, 18 U.S.C. §§ 241—244, 18 U.S.C.A. §§ 241—244. Use of §§ 243 and 244, however, has been very rare, so that most of the figures quoted involve prosecutions under either § 241 or § 242. The figures set out in the second table do not take into account such appellate reversals as may have been entered, and they include only those post-judgment motions in the district court which were disposed of before the end of the fiscal year in question. 72 The Code provisions in question read as follows: 73 's 241. Conspiracy against rights of citizens 74 'If two or more persons conspire to injure, oppress, threaten, or intimidate any citizen in the free exercise or enjoyment of any right or privilege secured to him by the Constitution or laws of the United States, or because of his having so exercised the same; or 75 'If two or more persons go in disguise on the highway, or on the premises of another, with intent to prevent or hinder his free exercise or enjoyment of any right or privilege so secured— 76 'They shall be fined not more than $5,000 or imprisoned not more than ten years, or both. 77 's 242. Deprivation of rights under color of law 78 'Whoever, under color of any law, statute, ordinance, regulation, or custom, willfully subjects any inhabitant of any State, Territory, or District to the deprivation of any rights, privileges, or immunities secured or protected by the Constitution or laws of the United States, or to different punishments, pains, or penalties, on account of such inhabitant being an alien, or by reason of his color, or race, than are prescribed for the punishment of citizens, shall be fined not more than $1,000 or imprisoned not more than one year, or both. 79 's 243. Exclusion of jurors on account of race or color 80 'No citizen possessing all other qualifications which are or may be prescribed by law shall be disqualified for service as grand or petit juror in any court of the United States, or of any State on account of race, color, or previous condition of servitude; and whoever, being an officer or other person charged with any duty in the selection or summoning of jurors, excludes or fails to summon any citizen for such cause, shall be fined not more than $5,000. 81 's 244. Discrimination against person wearing uniform of armed forces 82 'Whoever, being a proprietor, manager, or employee of a theater or other public place of entertainment or amusement in the District of Columbia, or in any Territory, or Possession of the United States, causes any person wearing the uniform of any of the armed forces of the United States to be discriminated against because of that uniform, shall be fined not more than $500.' 1 Keeping premises with paraphernalia for the purpose of recording and registering bets on horse racing; receiving money and the equivalent thereof which had been or was to be wagered on horse races, and recording and registering bets on horse races. 2 Deering's Cal.Penal Code Ann.1949, § 337a(1), (2), (3), and (4). 3 345 U.S. 903, 73 S.Ct. 646. 4 Petitioner's question number 2, which challenges the State's use of 'compelled evidence' obtained under the federal wagering statute, is answered in United States v. Kahriger, supra, 345 U.S. at page 32, 73 S.Ct. at page 515. 5 E.g., Silverthorne Lumber Co. v. United States, 251 U.S. 385, 40 S.Ct. 182, 64 L.Ed. 319; Gouled v. United States, 255 U.S. 298, 41 S.Ct. 261, 65 L.Ed. 647; Amos v. United States, 255 U.S. 313, 41 S.Ct. 266, 65 L.Ed. 654; Agnello v. United States, 269 U.S. 20, 46 S.Ct. 4, 70 L.Ed. 145; Byars v. United States, 273 U.S. 28, 47 S.Ct. 248, 71 L.Ed. 520; Gambino v. United States, 275 U.S. 310, 48 S.Ct. 137, 72 L.Ed. 293; Go-Bart Importing Co. v. United States, 282 U.S. 344, 51 S.Ct. 153, 75 L.Ed. 374; United States v. Lefkowitz, 285 U.S. 452, 52 S.Ct. 420, 76 L.Ed. 877; Taylor v. United States, 286 U.S. 1, 52 S.Ct. 466, 76 L.Ed. 951; Grau v. United States, 287 U.S. 124, 53 S.Ct. 38, 77 L.Ed. 212; Nathanson v. United States, 290 U.S. 41, 54 S.Ct. 11, 78 L.Ed. 159; United States v. Di Re, 332 U.S. 581, 68 S.Ct. 222, 92 L.Ed. 210; Johnson v. United States, 333 U.S. 10, 18 S.Ct. 367, 92 L.Ed. 436; Trupiano v. United States, 334 U.S. 699, 68 S.Ct. 1229, 92 L.Ed. 1663; McDonald v. United States, 335 U.S. 451, 69 S.Ct. 191, 93 L.Ed. 153; Lustig v. United States, 338 U.S. 74, 69 S.Ct. 1372, 93 L.Ed. 1819; United States v. Jeffers, 342 U.S. 48, 72 S.Ct. 93, 96 L.Ed. 59. The Court has also cited the doctrine with approval in many related cases. E.g., Perlman v. United States, 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950; Burdeau v. McDowell, 256 U.S. 465, 41 S.Ct. 574, 65 L.Ed. 1048; Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543; McGuire v. United States, 273 U.S. 95, 47 S.Ct. 259, 71 L.Ed. 556; Marron v. United States, 275 U.S. 192, 48 S.Ct. 74, 72 L.Ed. 231; Olmstead v. United States, 277 U.S. 438, 48 S.Ct. 564, 72 L.Ed. 944; Palko v. Connecticut, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288; Goldstein v. United States, 316 U.S. 114, 62 S.Ct. 1000, 86 L.Ed. 1312; McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819; Feldman v. United States, 322 U.S. 487, 64 S.Ct. 1082, 88 L.Ed. 1408; Davis v. United States, 328 U.S. 582, 66 S.Ct. 1256, 90 L.Ed. 1453; Zap v. United States, 328 U.S. 624, 66 S.Ct. 1277, 90 L.Ed. 1477; Harris v. United States, 331 U.S. 145, 67 S.Ct. 1098, 91 L.Ed. 1399; United States v. Wallace & Tiernan Co., 336 U.S. 793, 69 S.Ct. 824, 93 L.Ed. 1042; United States v. Rabinowitz, 339 U.S. 56, 70 S.Ct. 430, 94 L.Ed. 653; On Lee v. United States, 343 U.S. 747, 72 S.Ct. 967, 96 L.Ed. 1270. See Appendix to dissenting opinion of Mr. Justice Frankfurter in Harris v. United States, supra, 331 U.S. at page 175, 67 S.Ct. at page 1121. * Now 18 U.S.C.A. § 3282. 1 65 Stat. 529. 26 U.S.C.(Supp. V) §§ 3285, 3287, 26 U.S.C.A. §§ 3285, 3287. 2 See my dissent in Feldman v. United States, 322 U.S. 487, 494, 64 S.Ct. 1082, 1085, 88 L.Ed. 1408. 3 284 U.S. 141, 52 S.Ct. 63, 76 L.Ed. 210, and see United States v. Saline Bank of Virginia, 1 Pet. 100, 7 L.Ed. 69; Brown v. Walker, 161 U.S. 591, 606, 608, 16 S.Ct. 644, 650, 651, 40 L.Ed. 819; Ballmann v. Fagin, 200 U.S. 186, 26 S.Ct. 212, 50 L.Ed. 433; Vajtauer v. Commissioner of Immigration, 273 U.S. 103, 47 S.Ct. 302, 71 L.Ed. 560; United States v. Murdock, 290 U.S. 389, 396, 54 S.Ct. 223, 226, 78 L.Ed. 381. 4 Reliance for this view was placed mainly on two English cases, King of the Two Sicilies v. Willcox, 7 State Trials (N.S.) 1050, and Queen v. Boyes, 1 B. & S. 311. 284 U.S., at page 149, 52 S.Ct. at page 64. See discussion of these two cases as related to the Fifth Amendment privilege against self-incrimination in Grant, Immunity from Compulsory Self-Incrimination, 9 Temp.L.Q. 57—70 and 194—212, particularly 59—62 and 196—204. 5 Counselman v. Hitchcock, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110. 6 See Barron, for Use of Tiernan v. Mayor and City Council of City of Baltimore, 7 Pet. 243, 8 L.Ed. 672. 7 Adamson v. People of State of California, 332 U.S. 46, 68, 67 S.Ct. 1672, 1684, 91 L.Ed. 1903 (dissenting opinion); Rochin v. People of California, 342 U.S. 165, 174, 72 S.Ct. 205, 210, 96 L.Ed. 183 (concurring opinion). 1 That the prosecution in this case, with the sanction of the courts, flouted a legislatively declared philosophy against such miscreant conduct and made it a policy merely on paper, does not make the conduct any the less a disregard of due process. Cf. Rochin v. People of California, supra, 342 U.S. at page 167, 72 S.Ct. at page 207. 2 Statement by Director J. Edgar Hoover of the Federal Bureau of Investigation in FBI Law Enforcement Bulletin, September 1952, p. 1. 3 Tudor, Life of James Otis (1823), pp. 66—67. 4 For an analysis of the civil rights suits instituted by the Department of Justice see the Appendix to this opinion. 5 The current hostility towards federal actions—both criminal and civil—under the civil rights laws is further evidenced by United States v. Williams, 341 U.S. 70, 71 S.Ct. 581, 95 L.Ed. 758; Tenney v. Brandhove, 341 U.S. 367, 71 S.Ct. 783, 95 L.Ed. 1019; Collins v. Hardyman, 341 U.S. 651, 71 S.Ct. 937, 95 L.Ed. 1253; Whittington v. Johnston, 5 Cir., 201 F.2d 810, certiorari denied, 346 U.S. 867, 74 S.Ct. 103; Francis v. Crafts, 1 Cir., 203 F.2d 809, certiorari denied, 346 U.S. 835, 74 S.Ct. 43.

01

347 U.S. 157 74 S.Ct. 396 98 L.Ed. 583 MICHIGAN-WISCONSIN PIPE LINE CO.v.CALVERT et al. (two cases). PANHANDLE EASTERN PIPE LINE CO. v. CALVERT et al. (two cases). Nos. 198, 199, 200 and 201. Argued Jan. 5, 6, 1954. Decided Feb. 8, 1954. Rehearing Denied March 15, 1954. See 347 U.S. 931, 74 S.Ct. 528. [Syllabus from pages 157-158 intentionally omitted] Messrs. D. H. Culton, Amarillo, Tex., Samuel A. L. Morgan, Houston, Tex., for appellants. Messrs. W. V. Geppert, John Ben Shepperd, Austin, Tex., for appellees. Mr. Justice CLARK delivered the opinion of the Court. 1 The appellants, two natural gas pipeline companies, brought separate suits against Texas State officials, appellees here, in a state district court, seeking a determination that a Texas tax statute as applied to appellants violates the Commerce Clause of the Constitution of the United States, and seeking recovery of money paid under protest in compliance with the statute. The District Court sustained appellants' contentions and entered judgment in their favor. The Court of Civil Appeals reversed, holding that the tax statute as applied is constitutional. 255 S.W.2d 535. The Supreme Court of Texas 'refused' appellants' applications for writs of error. 2 By state statute and procedural rule, the docket notation 'refused' in denying application for writ of error signifies that the State Supreme Court deems the judgment of the Court of Civil Appeals a correct one and the principles of law declared in the opinion correctly determined. Appellants were uncertain whether appeal to this Court was properly from the Court of Civil Appeals or the Supreme Court of Texas, as 'the highest court of a State in which a decision could be had' within the meaning of 28 U.S.C. § 1257, 28 U.S.C.A. § 1257. Hence each appellant appealed from each of the courts.1 We postponed to the hearing of the cases on the merits a determination of the jurisdictional question. 346 U.S. 805, 74 S.Ct. 44. 3 We think that appeals in these cases were properly from the Court of Civil Appeals. In American Ry. Exp. Co. v. Levee, 1923, 263 U.S. 19, 44 S.Ct. 11, 12, 68 L.Ed. 140, the Supreme Court of Louisiana had refused a writ of certiorari to the State Court of Appeal "for the reason that the judgment is correct." Mr. Justice Holmes, speaking for a unanimous Court, said: 4 '* * * (U)nder the Constitution of the State the jurisdiction of the Supreme Court is discretionary * * * and although it was necessary for the petitioner to invoke that jurisdiction in order to make it certain that the case could go no farther, * * * when the jurisdiction was declined the Court of Appeal was shown to be the highest Court of the State in which a decision could be had. Another section of the article cited required the Supreme Court to give its reasons for refusing the writ, and therefore the fact that the reason happened to be an opinion upon the merits rather than some more technical consideration, did not take from the refusal its ostensible character of declining jurisdiction. Western Union Telegraph Co. v. Crovo, 220 U.S. 364, 366, 31 S.Ct. 399 (400), 55 L.Ed. 498; Norfolk & Suburban Turnpike Co. v. Commonwealth of Virginia, 225 U.S. 264, 269, 32 S.Ct. 828 (830), 56 L.Ed. 1082. Of course the limit of time for applying to this Court was from the date when the writ of certiorari was refused.' 263 U.S. at pages 20—21, 44 S.Ct. at page 12. 5 In Lone Star Gas Co. v. State of Texas, 1938, 304 U.S. 224, 551, 58 S.Ct. 883, 82 L.Ed. 1304, with the present Texas procedural provisions in effect, this Court's mandate issued to the Court of Civil Appeals in a case where the State Supreme Court had 'refused' writ of error. See also United Gas Public Service Co. v. State of Texas, 1937, 301 U.S. 667, 57 S.Ct. 921, 81 L.Ed. 1332. 6 Accordingly the appeals in Nos. 199 and 201, from the Supreme Court of Texas, are dismissed. We proceed to consider Nos. 198 and 200. 7 The question presented is whether the Commerce Clause is infringed by a Texas tax on the occupation of 'gathering gas,' measured by the entire volume of gas 'taken,' as applied to an interstate natural gas pipeline company, where the taxable incidence is the taking of gas from the outlet of an independent gasoline plant within the State for the purpose of immediate interstate transmission. In relevant part the tax statute2 provides that 'In addition to all other licenses and taxes levied and assessed in the State of Texas, there is hereby levied upon every person engaged in gathering gas produced in this State, an occupation tax for the privilege of engaging in such business, at the rate of 9/20 of one cent per thousand (1,000) cubic feet of gas gathered.' Using a beggared definition of the term 'gathering gas,' the Act further provides that 'In the case of gas containing gasoline or liquid hydrocarbons that are removed or extracted at a plant within the State by scrubbing, absorption, compression or any other process, the term 'gathering gas' means the first taking or the first retaining of possession of such gas for other processing or transmission whether through a pipeline, either common carrier or private, or otherwise after such gas has passed through the outlet of such plant.' It also prohibits the 'gatherer' as therein defined from shifting the burden of the tax to the producer of the gas, and provides that the tax shall not be levied as to gas gathered for local consumption if declared unconstitutional as to that gathered for interstate transmission. 8 Michigan-Wisconsin Pipe Line Company and Panhandle Eastern Pipe Line Company, appellants, are Delaware corporations and are natural gas companies holding certificates of convenience and necessity under the Natural Gas Act of 1938, 15 U.S.C. § 717 et seq., 15 U.S.C.A. § 717 et seq., for the transportation and sale in interstate commerce of natural gas. The nature of their activities has been stipulated. 9 Michigan-Wisconsin has constructed a pipeline extending from Texas to Michigan and Wisconsin. At points in these two States and in Missouri and Iowa it sells gas to distribution companies which serve markets in those areas.3 It sells no gas in Texas. The company produces no gas; it purchases its supply from Phillips Petroleum Company in Texas, under a long-term contract. Phillips collects the gas from the wells and pipes it to a gasoline plant, where certain liquefiable hydrocarbons, oxygen, sulphur, hydrogen sulphide, dust and foreign substances are removed preparatory to the transmission of the residue. As this residue gas leaves the absorbers it flows through pipes owned by Phillips for a distance of 300 yards to the outlet of its gasoline plant, at the boundary between property of Phillips and property of Michigan-Wisconsin. Phillips has installed gas meters in its pipes at this point. The gas emerging from the outlet flows directly into two 26-inch pipelines of Michigan-Wisconsin. It is this 'taking' that is made the taxable incidence of the statute. After the gas has been taken into the Michigan-Wisconsin pipes it flows a distance of approximately 1,215 feet to a compressor station owned and operated by Michigan-Wisconsin at which station the pressure of the gas is raised from about 200 pounds to some 975 pounds to facilitate movement to distant markets. In the course of its flow through this station the gas is compressed, cooled, scrubbed and dehydrated and then passes into a 24-inch pipeline which carries it 1.74 miles to the Oklahoma border and thence to markets outside Texas. Additional motive power is furnished by 15 other compressor stations in other states through which the gas is transported. 10 The entire movement of the gas, from producing wells through the Phillips gasoline plant and into the Michigan-Wisconsin pipeline to consumers outside Texas, is a steady and continuous flow. All of Michigan-Wisconsin's gas is purchased from Phillips for transportation to points outside Texas, and is in fact so transported. 11 Exclusive of the tax in question, Michigan-Wisconsin pays an ad valorem tax on the value of all its facilities and leases within the State. The State also levies on producers a tax of 5.72% of the value at the well of all gas produced in the State and a special tax to cover expenses in enforcing the conservation and proration laws. 12 The appellees place much emphasis upon the fact that Texas through these conservation and proration measures has afforded great benefits and protection to pipeline companies. It is beyond question that the enforcement of these laws has been not only in the public interest but to the commercial advantage of the industry. But, though this be an appealing truth, these benefits are relevant here only to show that essential requirements of due process have been met sufficiently to justify the imposition of any tax on the interstate activity. No challenge is made of the validity of the tax under the Due Process Clause, the appellants basing their objections only on the Commerce Clause, and when we proceed to examine the tax under the latter its validity 'depends upon other considerations of constitutional policy having reference to the substantial effects, actual or potential, of the particular tax in suppressing or burdening unduly the commerce.' Nippert v. City of Richmond, 1946, 327 U.S. 416, 424, 66 S.Ct. 586, 590, 90 L.Ed. 760. We proceed, therefore, to discuss only those relevant factors involved in the testing of the tax under the Commerce Clause. 13 The tax here assailed applies equally to gas moving in intrastate and interstate commerce. It is levied in addition to all other licenses and taxes and is denominated an occupation tax for the privilege of engaging in the 'gathering of gas.' Obviously appellants are not engaged in 'gathering gas' within the meaning of that term in its ordinary usage; but the tax statute gives the term a transcendent scope; as to appellants' operations it is defined as 'the first taking * * * of possession of such gas for other processing or transmission * * * after such gas has passed through the outlet' of a gasoline plant. The State Appellate Court realistically found 'the taxable event described by the statute' to be 'the taking or retaining of the gas at the gasoline plant outlet * * *.' It thought that since this local activity was not subject to repetition elsewhere, 'the sole question is whether such local activities are so closely related to and such an integral part of the interstate business of (appellants) who transport gas in interstate commerce as to be within the scope of the Commerce Clause of the Constitution.' The court concluded that such taking 'is just as local in nature as the production itself is local,' and held the tax valid principally on the authority of Utah Power & Light Co. v. Pfost, 1932, 286 U.S. 165, 52 S.Ct. 548, 76 L.Ed. 1038, and Hope Natural Gas Co. v. Hall, 1927, 274 U.S. 284, 47 S.Ct. 639, 71 L.Ed. 1049.4 14 We accept the State court's determination of the operating incidence of the tax, and we think the court has correctly stated the essential question presented. But we are unable to agree with its answer thereto or with its conclusion of constitutionality. 15 Appellants' business is the interstate transportation and sale of natural gas. Under the Commerce Clause interstate commerce and its instrumentalities are not totally immune from state taxation, absent action by Congress. Frequently it has been said that interstate business must pay its way, Postal Telegraph-Cable Co. v. City of Richmond, 1919, 249 U.S. 252, 259, 39 S.Ct. 265, 266, 63 L.Ed. 590; Western Live Stock v. Bureau of Revenue, 1938, 303 U.S. 250, 254, 58 S.Ct. 546, 548, 82 L.Ed. 823; and the Court has done more than pay lip service to this idea. Numerous cases have upheld state levies where it is thought that the tax does not operate to discriminate against commerce or unduly burden it either directly or by the possibility of multiple taxation resulting from other taxes of the same sort being imposed by other states. The recurring problem is to resolve a conflict between the Constitution's mandate that trade between the states be permitted to flow freely without unnecessary obstruction from any source, and the state's rightful desire to require that interstate business bear its proper share of the costs of local government in return for benefits received. Some have thought that the wisest course would be for this Court to uphold all state taxes not patently discriminatory, and wait for Congress to adjust conflicts when and as it wished. But this view has not prevailed, and the Court has therefore been forced to decide in many varied factual situations whether the application of a given state tax to a given aspect of interstate activity violates the Commerce Clause. It is now well settled that a tax imposed on a local activity related to interstate commerce is valid if, and only if, the local activity is not such an integral part of the interstate process, the flow of commerce, that it cannot realistically be separated from it. Memphis Natural Gas Co. v. Stone, 1948, 335 U.S. 80, 87, 68 S.Ct. 1475, 1478, 92 L.Ed. 1832; Western Live Stock v. Bureau of Revenue, supra, 303 U.S. at page 258, 58 S.Ct. at page 550. And if a genuine separation of the taxed local activity from the interstate process is impossible, it is more likely that other states through which the commerce passes or into which it flows can with equal right impose a similar levy on the goods, with the net effect of prejudicing or unduly burdening commerce. 16 The problem in this case is not whether the State could tax the actual gathering of all gas whether transmitted in interstate commerce or not, cf. Hope Natural Gas Co. v. Hall, supra, but whether here the State has delayed the incidence of the tax beyond the step where production and processing have ceased and transmission in interstate commerce has begun. Cf. Utah Power & Light Co. v. Pfost, supra. The incidence of the tax here at issue, as stated by the Texas appellate court, is appellants' 'taking' of gas from Phillips' gasoline plant. This event, as stipulated, occurs after the gas has been produced, gathered and processed by others than appellants. The 'taking' into appellants' pipelines is solely for interstate transmission and the gas at that time is not only actually committed to but is moving in interstate commerce. What Texas seeks to tax is, therefore, more than merely the loading of an interstate carrier which was condemned in Joseph v. Carter & Weekes Stevedoring Co., 1947, 330 U.S. 422, 427, 67 S.Ct. 815, 818, 91 L.Ed. 993, for the gas here simultaneously enters the pipeline carrier and moves on continuously to its outside market. 'There is no break, no period of deliberation, but a steady flow ending as contemplated from the beginning beyond the state line.' United Fuel Gas Co. v. Hallanan, 1921, 257 U.S. 277, 281, 42 S.Ct. 105, 106, 66 L.Ed. 234. As early as Gloucester Ferry Co. v. Commonwealth of Pennsylvania, 1885, 114 U.S. 196, 213, 5 S.Ct. 826, 833, 29 L.Ed. 158, this Court said, 'Receiving and landing passengers and freight is incident to their transportation.' But receipt of the gas in the pipeline is more than its 'taking'; from a practical standpoint it is its 'taking off' in appellants' carrier into commerce; in reality the tax is, therefore, on the exit of the gas from the State. This economic process is inherently unsusceptible of division into a distinct local activity capable of forming the basis for the tax here imposed, on the one hand, and a separate movement in commerce, on the other. It is difficult to conceive of a factual situation where the incidence of taking or loading for transmission is more closely related to the transmission itself. This Court has held that much less integrated activity is 'so closely related to interstate transportation as to be practically a part of it'.5 We are therefore of the opinion that the taking of the gas here is essentially a part of interstate commerce itself. 17 The Court of Civil Appeals, as we have stated, relied largely on Utah Power & Light Co. v. Pfost, supra (286 U.S. 165, 52 S.Ct. 551). But that case involved a license tax on the generation of electricity produced in a hydraulic power plant within the State of Idaho and transmitted to Utah. The question the Court was called upon to solve was whether 'the generation of electrical energy, like manufacture or production generally, (is) a process essentially local in character and complete in itself; or is it so linked with the transmission as to make it an inseparable part of a transaction in interstate commerce'. The Court thought it inaccurate to say that the entire system was purely a transferring device. 'On the contrary,' it said, 'the generator and the transmission lines perform different functions, with a result comparable, so far as the question here under consideration is concerned, to the manufacture of physical articles of trade and their subsequent shipment and transportation in commerce.'6 Cited to support this principle was Oliver Iron Mining Co. v. Lord, 1923, 262 U.S. 172, 43 S.Ct. 526, 67 L.Ed. 929, where a state tax levied on all 'engaged in the business of mining or producing iron ore or other ores' was upheld since the 'ore does not enter interstate commerce until after the mining is done, and the tax is imposed only in respect of the mining', 262 U.S. at page 179, 43 S.Ct. at page 528; and Hope Natural Gas Co. v. Hall, supra (274 U.S. 284, 47 S.Ct. 640), which upheld a tax on 'producers of natural gas reckoned according to the value of that commodity at the well.' But the tax here is not levied on the capture or production of the gas, but rather on its taking into interstate commerce after production, gathering and processing. 18 The State Appellate Court recognized that nothing was done to the gas at the point of 'taking'; its form was not changed in any way; it merely continued its journey. However, the court thought that it would be unfair to base a decision on the fluid nature of natural gas, and that there was in fact a two-step process, taking and transmission, with interference in between found in title passing and processing. But the processing, on which this tax is not imposed, was done by Phillips and took place prior to the taxable event of 'taking.' As for the interference of title passing, appellees readily admit this levy was designed to avoid taxing the sale; and we think that, as a basis for finding a separate local activity, the incidence must be a more substantial economic factor than the movement of the gas from a local outlet of one owner into the connecting interstate pipeline of another. Such an aspect of interstate transportation cannot be 'carve(d) out from what is an entire or integral economic process', Nippert v. City of Richmond, supra, 327 U.S. at page 423, 66 S.Ct. at page 589, by legislative whimsy and segregated as a basis for the tax. The separation must be realistic.7 19 Here it is perhaps sufficient that the privilege taxed, namely the taking of the gas, is not so separate and distinct from interstate transportation as to support the tax. But additional objection is present if the tax be upheld. It would 'permit a multiple burden upon that commerce', Joseph v. Carter & Weekes Stevedoring Co., supra, 330 U.S. at page 429, 67 S.Ct. at page 819, for if Texas may impose this 'first taking' tax measured by the total volume of gas so taken, then Michigan and the other recipient states have at least equal right to tax the first taking or 'unloading' from the pipeline of the same gas when it arrives for distribution. Oklahoma might then seek to tax the first taking of the gas as it crossed into that State. The net effect would be substantially to resurrect the customs barriers which the Commerce Clause was designed to eliminate. 'The very purpose of the Commerce Clause was to create an area of free trade among the several States. That clause vested the power of taxing a transaction forming an unbroken process of interstate commerce in the Congress, not in the States.' McLeod v. J. E. Dilworth Co., 1944, 322 U.S. 327, 330—331, 64 S.Ct. 1023, 1026, 88 L.Ed. 1304. 20 Reversed. 1 Cf. Western Union Tel. Co. v. Priester, 1928, 276 U.S. 252, 48 S.Ct. 234, 72 L.Ed. 555. 2 Tex.Laws 1951, c. 402, § XXIII. Vernon's Ann.Civ.St. art. 7057f. 3 The two appellants, through the distribution companies, supply gas for consumer markets with a population of about 12,000,000 people. As noted by the court below, '(E)xcept for minor variations Panhandle conducts its activities in the same manner as Michigan-Wisconsin. Panhandle loads its interstate pipeline with gas from the outlets of three gasoline plants, rather than with gas from only one plant; it produces a portion of the gas which it takes at the outlet of one of such plants; and it makes sales in Texas to three small customers, rather than sending all of its gas outside the State.' We agree with that court that for purposes of this decision Panhandle's operations are not significantly different from those of Michigan-Wisconsin. Only the interstate aspects of the enterprise are in question. The operations of Michigan-Wisconsin, which transmits all of its gas out of Texas, most clearly present the question to be decided and will be the basis of our discussion. This approach was utilized by the State court; and appellees do not suggest that the situations of the two appellants are different for purposes of decision here. 4 Appellees challenge at the outset of their argument this Court's jurisdiction to consider these appeals, on the ground that appellants present no question, federal or otherwise, for the Court's determination. The argument is in substance that appellants' grounds of protest in the State courts set forth a number of alleged operating incidences of the tax, none of which coincided with the operating incidence found by the Court of Civil Appeals; that the State court's finding on this subject is conclusive and binding on this Court; that appellants, in urging that the tax is a burden on and discriminatory against interstate commerce, are advancing new grounds not considered by the State courts and hence waived under the Texas protest statute; in short, that the issue of the validity of the tax was not properly raised. We think there is no substance to this contention. In their complaints and continuously thereafter appellants specifically challenged the validity of the tax statute under the Commerce Clause. The trial court held the tax invalid as violating the Commerce Clause. The Court of Civil Appeals expressly stated that the question for its decision was whether the statute as applied to appellants 'violates the commerce clause of the Constitution of the United States. If so it is void, if not it is valid.' Since the State courts have clearly treated the single issue here presented as properly raised and preserved, and since appellees first suggested the contrary in their brief on argument in this Court, we think the objections to jurisdiction are not well taken. 5 Baltimore & O.S.W.R. Co. v. Burtch, 1924, 263 U.S. 540, 544, 44 S.Ct. 165, 166, 68 L.Ed. 433 ('loading or unloading of a shipment'); also see Telegraph Co. v. Texas, 1881, 105 U.S. 460, 466, 26 L.Ed. 1067 (tax on 'sending' of messages outside state is a regulation of interstate commerce); Puget Sound Stevedoring Co. v. Tax Commission of State of Wash., 1937, 302 U.S. 90, 92, 58 S.Ct. 72, 73, 82 L.Ed. 68 ('loading and discharge of cargoes' is interstate operation); Richfield Oil Corp. v. State Board, 1946, 329 U.S. 69, 83, 67 S.Ct. 156, 164, 91 L.Ed. 80 (commerce begins 'no later than the delivery of the oil into the vessel'). 6 286 U.S. at pages 180—181, 52 S.Ct. at page 552. The Court found that in the operation there involved it was necessary to convert the mechanical energy into electrical energy before it could be transmitted and that this transformation was completed at the generator where the interstate movement began. This is analogous to the situation here where the gas is prepared by Phillips for transmission and is then fed into appellants' lines. 7 Appellees also rely on Memphis Natural Gas Co. v. Stone, supra; Western Live Stock v. Bureau of Revenue, supra; Edelman v. Boeing Air Transport, 1933, 289 U.S. 249, 53 S.Ct. 591, 77 L.Ed. 1155; Chassaniol v. City of Greenwood, 1934, 291 U.S. 584, 54 S.Ct. 541, 78 L.Ed. 1004; Coverdale v. Arkansas-Louisiana Pipe Line Co., 1938, 303 U.S. 604, 58 S.Ct. 736, 82 L.Ed. 1043. We think these cases are distinguishable from the present one in that in each of them the tax was imposed on a less integral part of the commerce process involved. Also distinguishable is McGoldrick v. Berwind-White Coal Mining Co., 1940, 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, involving a tax on the sale of goods for consumption, imposed by the city in which the goods had come to rest. The Court there found that commerce, as to the goods, had ended prior to the taxable event, and likened the tax to an ad valorem one on property.

78

347 U.S. 89 74 S.Ct. 414 98 L.Ed. 532 PARTMAR CORP. et al.v.PARAMOUNT PICTURES THEATRES CORP. et al. No. 17. Argued Oct. 13, 1953. Decided Feb. 8, 1954. Rehearing Denied March 15, 1954. See 347 U.S. 931, 74 S.Ct. 527. [The balance of this page left blank] Mr. Russell Hardy, Washington, D.C., for petitioners. Mr. Jackson W. Chance, Los Angeles, Cal., for respondents. Mr. Justice REED delivered the opinion of the Court. 1 This case presents a matter of federal practice involving inconsistent positions by litigants in court proceedings. We have often held that under the doctrine of res judicata a judgment entered in an action conclusively settles that action as to all matters that were or might have been litigated or adjudged therein.1 But a prior judgment between the parties has been held to operate as an estoppel in a suit on a cause of action different from that forming the basis for the original suit 'only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.'2 This latter aspect of res judicata is the doctrine of collateral estoppel by judgment, established as a procedure for carrying out the public policy of avoiding repetitious litigation. 2 Petitioners entered counterclaims in a suit against them by respondent. These counterclaims were dismissed by the trial court upon determination of the original suit for petitioners and against respondents. The cause of action stated in petitioners' counterclaims is based upon a controverted personal right that had not been adjudged and therefore res judicata is no bar to the claimed right of recovery. Respondent, however, in its original suit had raised an issue, determinative of its cause of action, which had been therein successfully controverted by petitioners to final judgment on the merits. Collateral estoppel stands as a bar to further litigation by the parties of this issue, and this issue was held by the trial court to be determinative of petitioners' counterclaims. Petitioners' argument that the dismissal denied a hearing of issues that might have been but were not determined by the judgment on the merits of the original action moved us to grant certiorari, limited to the issue of the counterclaims. 345 U.S. 963, 73 S.Ct. 948, 97 L.Ed. 1382. 3 Although federal jurisdiction was sought only on the ground of diversity, the complaint relied upon a breach of the Sherman Act, and the counterclaims were similarly bottomed on that federal law. Therefore our conclusion is reached on a consideration of federal law and procedure. It will depend upon whether or not any issue of fact or law remained for decision after the primary action was decided.3 The issue reaches us under the following circumstances. 4 Paramount Pictures Theatres Corp., a subsidiary of Paramount Productions, Inc., and successor to Paramount Pictures, Inc., is a New York corporation engaged in the business of operating motion picture theatres throughout the United States. These three corporations will hereinafter be referred to jointly as 'Paramount.' On August 31, 1939, Paramount leased the Paramount Downtown Theatre in Los Angeles, California, for ten years to Partmar Corp., a California corporation, petitioner here, wholly owned by Fanchon & Marco, Inc. This lease was subsequently amended in 1942 and extended to March 18, 1952. A 'film franchise agreement' was executed in conjunction with, and for the same period as, the lease. It licensed Partmar to exhibit Paramount pictures at the theatre as first 'runs' of the films, required Partmar to exhibit such pictures not less than forty-six weeks each year, and set a scale of license fees. The lease expressly provided that it was terminable at the option of Paramount if the franchise agreement 'be cancelled or terminated for any reason whatsoever.' Other provisions of the lease and agreement are not germane to the issue before this Court. 5 On December 31, 1946, a decree was entered in the District Court for the Southern District of New York in an equity action brought by the United States against Paramount and other major companies of the motion picture industry alleging a conspiracy to violate the Sherman Act, 26 Stat. 209, 15 U.S.C. §§ 1—2, 15 U.S.C.A. §§ 1—2. United States v. Paramount Pictures, Inc., D.C., 70 F.Supp. 53. One provision of that decree defined a 'franchise' to be a licensing agreement 'in effect for more than one motion picture season and covering the exhibition of pictures released by one distributor during the entire period of agreement' and enjoined each of the defendants in that action 'from further performing any existing franchise to which it is a party and from making any franchises in the future.' 70 F.Supp. at page 73, Decree, § II, 5. 6 On March 26, 1947, Paramount notified Partmar that it was cancelling and terminating the franchise agreement because of the injunction, and on April 2, 1947, notified Partmar that it was terminating the lease by reason of the termination of the franchise agreement. Partmar refused to vacate the theatre upon demand, and Paramount instituted this action on May 1, 1947, in the District Court for the Southern District of California, alleging diversity and unlawful detainer of the theatre. The complaint sought, so far as is material here, restitution of possession based on illegality of the franchise under the Sherman Act as construed in the decree in the Southern District of New York, supra, and a declaratory judgment that the lease had been properly terminated. 7 Partmar and Fanchon & Marco, Inc., answered setting up various defenses and filed three counterclaims seeking treble damages under 38 Stat. 731, 15 U.S.C. § 15, 15 U.S.C.A. § 15, resulting from a conspiracy between Paramount and other motion picture companies in violation of the Sherman Act. The conspiracy was alleged to have resulted in the imposition of excessive terms and conditions on Partmar by the lease and franchise agreement.4 8 By order dated April 26, 1948, the District Court, upon Paramount's motion, ordered Paramount's causes of action for unlawful detainer and declaratory judgment tried separately from Partmar's counterclaims. Prior to trial on May 3, 1948, we handed down our decision on Paramount's and the other defendants' appeals from the decree of the Southern District of New York. United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260. We held inter alia that 'we cannot say on this record that franchises are illegal per se when extended to any theatre or circuit no matter how small' and set aside the District Court's findings relative to such franchises. 334 U.S. at page 156, 68 S.Ct. at page 928, 92 L.Ed. 1260. Relying on that decision Partmar and Fanchon & Marco, Inc., moved in the Southern District of California for dismissal of Paramount's action against them. Their motion was denied and the case went to trial without amendment of the pleadings in November 1950, on two issues: whether Paramount was justified in terminating the franchise agreement because of the decree in the New York Paramount case, supra; whether the lease and contract were illegal contracts under the federal antitrust statutes justifying repossession of the theatre by Paramount under California law. See, e.g., Glos v. McBride, 47 Cal.App. 688, 191 P. 67. Thus issue was joined as to the legality of the actions of Paramount and its alleged co-conspirators relative to the lease and franchise agreement, wholly apart from the New York injunction, and Paramount was in the anomalous position of attempting to prove that its agreements with Partmar violated the antitrust laws. Paramount did not limit its contention of illegality of the agreement to nonconspiratorial aspects of the antitrust laws, but argued that if the agreements were illegal in any way it had the right to possession. That Partmar recognized this position is clearly shown by its statement in its brief to the trial court that 'after the reversal of that judgment (in the New York case), the plaintiff (Paramount) took the position that the question presented was whether the franchise was violative of the Sherman Act, wholly apart from any judgment or the decisions of the District or Supreme Courts.' Partmar vigorously contended in brief and in argument that the lease of the theatre and the franchise for 'first-run' exhibitions did not in any way violate the Sherman Act. It clearly recognized that one way the franchise might be illegal would be if it were the result of a conspiracy for it argued in its brief that: 9 'There was no allegation or proof of conspiracy. There being no showing of interstate commerce, it is immaterial whether there was conspiracy, unreasonable clearance, fixed admission prices, block booking, or unreasonable restraint. In the absence of interstate commerce, all else was entirely beyond the purview of the Sherman Act. But, assuming that there had been no failure to prove interstate commerce, the absence of conspiracy is equally fatal. Probably the only evidence relative to conspiracy was the statement of Y. Frank Freeman, a witness for Paramount, that there were no conspiratorial arrangements between Paramount and Fox West Coast. * * * Even in a setting of conspiracy, it is doubtful that the franchise would be unlawful. * * * On the evidence in this case the Partmar franchise is neither one of a system, or made by one holding a dominant position, or pursuant to a conspiracy * * *.' 10 It thus insisted that the remunerative lease and franchise agreements were still valid and subsisting, and that Paramount had no right to possession. 11 After eighteen days of trial the District Judge on May 2, 1951, filed a memorandum opinion, D.C., 97 F.Supp. 552, 555, in which he concluded that the termination 'for any reason' clause in the lease meant for any 'legal or substantial reason,' and that the 1946 decree of the Southern District of New York 'was not a legal cause or reason for terminating the franchise agreement.' He continued, 'there is no evidence to indicate that any third party conspired with either Paramount or Partmar to bring into existence the franchise agreement', that 'a single contract between one film company and one exhibitor is not violative of the Sherman Act', and that, since the franchise agreement was 'not in itself an illegal agreement', Paramount 'had no right to cancel or terminate it because of illegality.' The court went on to hold that 'as we find no substantial evidence of a conspiracy in this case on the part of Partmar or Paramount, we are of the opinion that the counter-claimant cannot recover' on the counts seeking treble damages on the basis of an alleged conspiracy. The opinion directed Partmar to submit proposed findings of fact, both parties submitted such findings and proposed conclusions, and a hearing, upon notice, was held on June 18, 1951. Paramount thereupon submitted Finding No. 20 and conclusion No. 11, infra, thus formalizing its contention that the judgment denying plaintiff's petition estopped defendant from recovering on its counterclaims for violation of the Sherman Act. At this hearing Partmar appeared and expressly objected to the adoption of the proposed finding and conclusion which required the dismissal of its treble damage counterclaims. Argument was heard on Partmar's objection, but the court adhered to its position and adopted among its findings No. 20 which provides: 12 'Paramount, not in conjunction with any other major studio, entered into the franchise agreement which gave to Partmar the right to exhibit the first-run feature pictures of Paramount in the City of Los Angeles. Neither said franchise agreement, nor said lease, nor any amendment to either of them constituted any part of, nor were they or any of them entered into as a result of any agreement, combination or conspiracy of any kind whatsoever between Paramount and any other person or persons, nor between Partmar and any other person or persons.' And conclusion No. 11 which provides: 13 'Inasmuch as the said lease and said franchise agreement and all amendments to each of them were in all respects lawful and were not entered into nor performed as a result of any combination or conspiracy of any kind whatsoever on the part of either plaintiffs, defendants, third party plaintiff or third party defendants, with any person or persons; inasmuch as said lease, said agreement and amendments thereto have neither the purpose or effect of restraining or monopolizing trade or commerce among the several states in the production, distribution, transportation, sale or exhibition of motion pictures; and inasmuch as each was an agreement solely between plaintiff and defendants, or defendants and third party plaintiffs and third party defendants dealing solely with the Paramount Theatre Los Angeles alone and the exhibition thereat; third party plaintiffs, and each of them, cannot recover upon the first, second and fourth counterclaim, or any of them.'5 14 The court simultaneously entered an order giving judgment for Partmar on Paramount's two counts of unlawful detainer, declaring the rights and duties of the parties under the franchise and the lease, and dismissing with prejudice Partmar's three treble damage counterclaims. 15 Partmar, apparently not wishing to jeopardize its valuable lease and franchise, took no appeal from parts of the District Court's judgment declaring the lease and franchise to be valid and subsisting and the theatre not to be unlawfully detained.6 Therefore those parts of the judgment must be accepted as valid and binding on the parties. Partmar did, however, serve timely notice of appeal to the Court of Appeals for the Ninth Circuit from so much of the District Court judgment as dismissed with prejudice the treble damage counterclaims. The Court of Appeals for the Ninth Circuit, in a per curiam opinion on December 16, 1952, 200 F.2d 561, noted agreement with the opinion of the District Court and affirmed the District Court judgment. As heretofore indicated, our consideration is 'limited to the issue of the counterclaims.' 16 Partmar contends that the District Court erred in dismissing its counterclaims with prejudice without a separate trial as to their merits, which the trial court had previously ordered, and that such dismissal deprived it of due process of law. In particular, it argues that it was denied the valuable property right of having admitted in evidence during a trial the judgment in the case of United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260, which, it argues, would provide, under § 5 of the Clayton Act, 38 Stat. 731, 15 U.S.C. § 16, 15 U.S.C.A. § 16, prima facie evidence of the conspiracy on which the counterclaims were based. We think these contentions are without merit. The power remained in the trial court until the entry of his final judgment to set aside, for appropriate reasons, the former order for separate trial of the counterclaims. 17 Each of Partmar's counterclaims for treble damages was predicated upon allegations that Paramount and its alleged co-conspirators engaged in a conspiracy in restraint of trade and commerce, and that the allegedly 'excessive terms, conditions and charges for the photo-plays made and released by them' and the exaction of fifty percent of the net receipts, imposed by the lease and franchise agreement, were part of such conspiracy. The District Court found in the principal action, which decision was not appealed and is not before us, that neither the lease nor the franchise was the result 'of any agreement, combination or conspiracy of any kind whatsoever.' Of course, if this finding were not material to the principal action the doctrine of collateral estoppel would not apply. But this finding was obviously necessary to the court's judgment that the agreements were not illegal. Partmar had ample opportunity upon trial to present evidence and to contest the conspiracy finding, and argument was heard prior to adoption of the findings. This finding, binding all of the parties, determined the key ingredient of Partmar's counterclaims contrary to its allegations and thus precluded recovery upon such claims. A separate trial on the counterclaims would have been improper procedure as the judgment entered on the complaint was a final disposition of the determinative issue on the counterclaims—whether or not the terms of the lease were a product of an illegal conspiracy.7 18 The allegations of the counterclaim charge that as a result of 'the same conspiracy stated in the complaint' in United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260, Partmar was damaged in the terms of its lease from Paramount. Yet this very lease was sustained by the judgment in this case on the ground that it was not violative of the Sherman Act. Partmar moved to dismiss the complaint in this case after this Court's decision in the Paramount Pictures case on the ground that it 'had become moot by the demonstrated non-existence of the basic fact,' i.e., the illegality of the lease. In its brief in the trial court, petitioner stated its position clearly. 19 'The effect of the opinion seems to be that franchises are not unlawful per se, that is, apart from conspiracy, and that on the record in that case they were not shown to have been parts of the conspiracy. 20 'The Supreme Court seems at least to have clearly indicated that a franchise with one exhibitor for one theatre, like that with Partmar, was not involved in the case. It said in effect that only franchises with defendants and franchises for theatres in a circuit were involved.' 21 Nor would unlimited admission in evidence of the final decree in United States v. Paramount Pictures Inc., supra, have aided Partmar. We had reversed the only finding in that case pertaining to the illegality under the Sherman Act of franchise agreements between exhibitors and producers, and the final consent decree as to Paramount entered on March 4, 1949, contains no findings on such subject. Cf. United States v. Paramount Pictures, D.C., 85 F.Supp. 881, 897. Since final judgments or decrees in Government antitrust actions are admissible under § 5 of the Clayton Act as prima facie evidence only of issues actually determined in the prior adjudication,8 the Government judgments provide no proof of the indispensable element to Partmar's counterclaims, that the lease and franchise were part of or the result of a conspiracy. From the decree there would have been prima facie evidence of a conspiracy but no evidence that the Partmar lease was a result of that conspiracy so as to overturn the trial court's finding in this very proceeding that no illegality tainted the lease. Partmar, therefore, was not prejudiced by the fact that the District Court did not consider either the judgment or the decree as evidence of the conspiracy alleged in the counterclaims. As we have pointed out, the conclusion of the trial court went beyond the lawfulness of the 'franchise,' as distinguished from the lease of which it was a part and held that the lease was not secured by conspiracy. See 74 S.Ct. 419, supra. This was res judicata of that fact, if it be considered a fact and nonetheless res judicata if it is a decision on the law, binding in another cause of action arising from the same controversy or claim.9 22 Affirmed. 23 Mr. Justice JACKSON and Mr. Justice CLARK took no part in the consideration or decision of this case. 24 Mr. Chief Justice WARREN, whom Mr. Justice BLACK joins, dissenting. 25 I cannot join in the Court's decision. Relying on the doctrine of collateral estoppel, it affirms the trial judge's dismissal of petitioner's treble damage counterclaims without a trial. The doctrine, I believe, is inapplicable to the facts of this case. 26 The Court correctly states the wellsettled rule that a prior judgment on a different cause of action is not conclusive as to questions which might have been but were not actually litigated in the original action.1 The inquiry, therefore, must be whether the conspiracy issue was actually litigated in the eviction suit; if it was not so litigated, the District Court's finding as to the absence of evidence of conspiracy cannot preclude petitioner on its counterclaims. The Court rests its decision on the assumptions (1) that the conspiracy issue was litigated in the eviction suit and (2) that in any event petitioner had a full opportunity to litigate the issue. Neither assumption, it seems to me, is warranted by the facts. To those facts I now turn. 27 The respondent, Paramount, sought to take advantage of its own violation of the federal antitrust laws by bringing an eviction suit to cancel a valuable lease held by its tenant, the petitioner, on a Los Angeles theatre. The lease provided that it was terminable if, 'for any reason whatsoever,' petitioner's franchise for the showing of Paramount's pictures should be 'cancelled or terminated.' Paramount, in its complaint charging unlawful detainer, did not allege in any respect that the franchise was invalid because part of a conspiracy; rather, the crux of the complaint was that the franchise had been terminated by the District Court decree in the Government antitrust action against Paramount and others. United States v. Paramount Pictures, Inc., D.C., 66 F.Supp. 323, D.C., 70 F.Supp. 53. After the eviction complaint had been filed, the decree in the Government action was reviewed here; the Court sustained the decree as to the existence of a nationwide conspiracy among the defendants, but reversed that portion of the decree which held that franchises were illegal per se. 334 U.S. 131, 155—156, 68 S.Ct. 915, 928, 92 L.Ed. 1260. Petitioner moved to dismiss, contending that the basis of the eviction complaint had been swept away by this Court's decision. In opposing the motion to dismiss, Paramount made an about-face and urged the illegality of the franchise on other grounds: its minimum price requirements, block booking, and restrictions on runs and clearances. Paramount alleged that these provisions of the franchise agreement, apart from any conspiracy and independent of the decree in the Government action, rendered the agreement an illegal 'contract * * * in restraint of trade' under the Sherman Act. This new theory of the case was accepted by the trial court without any change in the pleadings, and the motion was denied. 28 In its answer, petitioner set up as a defense that Paramount was seeking to evict petitioner in pursuance of the conspiracy enjoined in United States v. Paramount Pictures, Inc., supra, and that the effect of an eviction would be to drive petitioner out of business and thus enable Paramount to extend an unlawful monopoly over motion picture theatres. On Paramount's motion, the defense was stricken as an improper collateral attack on the right of the lessor to recover possession of the theatre. 29 The answer also contained petitioner's counterclaims, alleging that Paramount and others named as cross-defendants had engaged in the conspiracy enjoined in United States v. Paramount Pictures, Inc., supra, and that by reason of this market control Paramount had been able to exact from petitioner monopoly profits in the form of overcharges for theatre and film rentals. Treble damages and injunctive relief were sought. On Paramount's motion to dismiss the counterclaims, they were sustained as valid actions under the antitrust laws.2 30 Both actions—the eviction suit and the counterclaims—were then ready for trial. Paramount moved that the two actions be tried separately. Petitioner consented and the court so ordered, the eviction suit to be tried first. 31 Throughout the lengthy trial of the eviction suit, the trial judge repeatedly complained of the total absence of any evidence showing that the franchise was part of a conspiracy. His complaint went unheeded. Paramount, which had the burden of proof in the eviction suit, not only failed to introduce such evidence but never even alleged such a conspiracy. Petitioner, on the other hand, never denied the existence of the conspiracy, but argued that the franchise in itself was not invalid.3 And both times that petitioner sought to inject the conspiracy issue into the case, it was prevented from doing so. As I have already noted, petitioner's answer alleged that the eviction suit was brought in pursuance of the conspiracy; on Paramount's motion, the defense was stricken. Later when Paramount offered into evidence the decree in the Government action for the limited purpose of showing Paramount as being subject to the injunctive features of the decree, petitioner objected on the ground that the decree 'should go in as a document in toto—no part of it but the whole thing.' In support of the objection, petitioner argued that § 5 of the Clayton Act4 made the decree prima facie evidence of the conspiracy established in the Government action. Again petitioner was overruled. 32 At the conclusion of the eviction trial, the court gave judgment for petitioner because of Paramount's failure to show the illegality of the franchise by evidence of conspiracy. As to the counterclaims, the court stated:5 33 'At the time of trial it was agreed that action on the counter-claims should be postponed until after the trial of the main issue involved and no evidence was offered by either plaintiff or defendant on the counter-claims.' 34 Nevertheless, the court dismissed the counterclaims without trial on the ground that there was '* * * no substantial evidence of a conspiracy in this case on the part of Partmar or Paramount * * *.'6 The court thus disposed of both the eviction suit and the counterclaims on the same ground—the absence of any evidence of conspiracy. 35 I submit that on these facts the Court's two assumptions are unwarranted. The issue of conspiracy was not litigated; nor did petitioner have a fair opportunity to litigate the issue. Indeed, whether petitioner had an opportunity to do so is immaterial under the doctrine of collateral estoppel. If the counterclaims had been based on the same cause of action as the eviction suit, such an opportunity might have barred petitioner under the more sweeping doctrine of res judicata. But here, where the second suit is based on a different cause of action, a neglected opportunity in the first action to litigate an issue is without legal significance.7 36 Under these circumstances, should the doctrine of collateral estoppel be invoked against petitioner to bar a trial on its counterclaims? I believe not. The doctrine presupposes, and the Constitution requires, that the party who is estopped had his day in court in a prior action and that he then had a fair hearing in which to prove his point but failed. Surely the doctrine was never intended to estop a party who in the prior action was denied such a hearing. 37 That, as I see it, is precisely the situation here. The eviction suit and counterclaims had been severed for trial purposes. During the trial of the eviction suit, Paramount was the only party with any reason or justification for proving that the franchise was part of a conspiracy. Because of Paramount's failure to present such proof, the court held the lease to be valid, but at the same time gave judgment against petitioner on its counterclaims because of the same shortcoming of Paramount's proof. This Court now affirms. The anomalous result is to penalize petitioner for refusing to help Paramount win the eviction suit. 38 I believe that petitioner has been denied its day in court, and that the case should be reversed with instructions to the trial court to hear the counterclaims.8 1 Cromwell v. Sac County, 94 U.S. 351, 352, 24 L.Ed. 195; Fayerweather v. Ritch, 195 U.S. 276, 300, 308, 25 S.Ct. 58, 64, 68, 49 L.Ed. 193; Gunter v. Atlantic Coast Line R. Co., 200 U.S. 273, 290, 26 S.Ct. 252, 258, 50 L.Ed. 477; Stoll v. Gottlieb, 305 U.S. 165, 59 S.Ct. 134, 83 L.Ed. 104. 2 Cromwell v. County of Sac, supra, 94 U.S. at page 353, 24 L.Ed. 195; United States v. Moser, 266 U.S. 236, 241, 45 S.Ct. 66, 67, 69 L.Ed. 262; Treinies v. Sunshine Mining Co., 308 U.S. 66, 74, 60 S.Ct. 44, 48, 84 L.Ed. 85; Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 597—601, 68 S.Ct. 715, 719, 721, 92 L.Ed. 898. Cf. Federal Trade Commission v. Cement Institute, 333 U.S. 683, 706, 68 S.Ct. 793, 806, 92 L.Ed. 1009, where the rule is recognized but its application denied because the issues differed. 3 See Scott, Collateral Estoppel by Judgment, 56 Harv.L.Rev. 1; Note Collateral Estoppel by Judgment, 52 Col.L.Rev. 647. 4 Petitioner's first counterclaim alleged: 'Paramount Pictures Theatres Corporation, Paramount Pictures, Inc., Paramount Film Distributing Corporation, * * * and the defendants in United States of America v. Paramount Pictures, Inc., Equity No. 87—273, in the United States District Court for the Southern District of New York, and other persons to the defendants unknown, were, at the time of the acts and transactions stated in the complaint herein, and they now are, engaged in a conspiracy in restraint of trade and commerce among the States, in the distribution and exhibition of motion pictures, in violation of the Act of July 2, 1890, that is to say, the same conspiracy stated in the complaint in that case. '32. This action has been brought by the plaintiff in pursuance of the aforesaid conspiracy, arrangements and agreements, and to evade and defeat the purpose to end the aforesaid conspiracy and restraint of trade for which United States of America v. Paramount Pictures, Inc., Equity No. 87—273, was instituted. '33. As part of the aforesaid conspiracy, the plaintiff and the third-party defendants arranged and agreed among themselves, to require Partmar Corporation to license for exhibition at the Paramount Theatre for 46 weeks of each year, only photoplays made and released by Paramount Pictures, Inc., and, for any failure upon the part of Partmar Corporation to obey that requirement, to evict it from Paramount Theatre. The plaintiff, and the third-party defendants have been able to impose, and they have in fact imposed, upon Partmar Corporation, excessive terms, conditions and charges for the photoplays made and released by them and exhibited at the Paramount Theatre, from March 2, 1933, to the present time.' In the second counterclaim, the third party plaintiffs (petitioners) reiterated their allegations of conspiracy and based their claim for damages on an addition to the lease that required Partmar 'to pay an additional sum; that is to say, fifty per cent of the net receipts of Partmar Corporation at the Paramount Theatre.' The other counterclaim is not in the record but the briefs indicate that it contained substantially the same allegation as numbers one and two. 5 Partmar had brought in other parties as third party defendants under Fed.Rules Civ.Proc. 14, 28 U.S.C.A. Their presence is not important in this phase of the controversy. 6 While Partmar did not appeal, it might have. The finding and conclusion of law just quoted were essential to the determination of Paramount's claim for possession of the theatre. Paramount's position after this Court's reversal of the franchise portion of the New York decree, was that the agreements were invalid under the federal antitrust statutes as the product of an illegal conspiracy. It is only when a finding of law or fact is not necessary for a decree that the prevailing party may not appeal and the finding does not form the basis for collateral estoppel. This is shown by the case cited to support the statement as to appeal in Lindheimer v. Illinois Bell Telephone Co., 292 U.S. 151, 176, 54 S.Ct. 658, 668, 78 L.Ed. 1182. See New York Telephone Co. v. Maltbie, 291 U.S. 645, 54 S.Ct. 443, 78 L.Ed. 1041, and cases cited. Electrical Fittings Corp. v. Thomas & Betts Co., 307 U.S. 241, 59 S.Ct. 860, 83 L.Ed. 1263, stated the practice negatively. 'A party may not appeal * * * findings * * * not necessary to support the decree.' Professor Scott, supra, note 3, at page 12, concurs in this view. Restatement, Judgments, § 68, reads: '(1) Where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between the parties in a subsequent action on a different cause of action, except as stated in §§ 69, 71 and 72.' Section 69(2) ('Where a party to a judgment cannot obtain the decision of an appellate court because the matter determined against him is immaterial or moot, the judgment is not conclusive against him in a subsequent action on a different cause of action.') is immaterial because the conspiracy determination was essential for Partmar's defense to Paramount's claim. See Galloway v. General Motors Acceptance Corp., 4 Cir., 106 F.2d 466. The paucity of cases in this field is explainable by the infrequent happening of a need of a prevailing party to set aside a determination necessary to a judgment in his favor. 7 Southern Pacific R. Co. v. United States, 168 U.S. 1, 48 49, 18 S.Ct. 18, 27, 42 L.Ed. 355: 'The general principle announced in numerous cases is that a right, question, or fact distinctly put in issue, and directly determined by a court of competent jurisdiction, as a ground of recovery, cannot be disputed in a subsequent suit between the same parties or their privies; and, even if the second suit is for a different cause of action, the right, question, or fact once so determined must, as between the same parties or their privies, be taken as conclusively established, so long as the judgment in the first suit remains unmodified.' 8 Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 568—569, 71 S.Ct. 408, 413—414, 95 L.Ed. 534: 'We think that Congress intended to confer, subject only to a defendant's enjoyment of its day in court against a new party, as large an advantage as the estoppel doctrine would afford had the Government brought suit. 'The evidentiary use which may be made under § 5 of the prior conviction of respondents is thus to be determined by reference to the general doctrine of estoppel. * * * Accordingly, we think plaintiffs are entitled to introduce the prior judgment to establish prima facie all matters of fact and law necessarily decided by the conviction and the verdict on which it was based.' See Theatre Enterprises v. Paramount, 346 U.S. 537, 74 S.Ct. 257; Monticello Tobacco Co., Inc. v. American Tobacco Co., 2 Cir., 197 F.2d 629. 9 United States v. Moser, 266 U.S. 236, 242, 45 S.Ct. 66, 67, 69 L.Ed. 262: 'The contention of the government seems to be that the doctrine of res judicata does not apply to questions of law; and, in a sense, that is true. It does not apply to unmixed questions of law. Where, for example, a court in deciding a case has enunciated a rule of law, the parties in a subsequent action upon a different demand are not estopped from insisting that the law is otherwise, merely because the parties are the same in both cases. But a fact, question or right distinctly adjudged in the original action cannot be disputed in a subsequent action, even though the determination was reached upon an erroneous view or by an erroneous application of the law.' Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 569, 71 S.Ct. 408, 414, 95 L.Ed. 534; Cf. United States v. Stone & Downer Co., 274 U.S. 225, 230, 47 S.Ct. 616, 71 L.Ed. 1013. 1 Cromwell v. Sac County, 94 U.S. 351, 353, 24 L.Ed. 195. See also Restatement, Judgments, § 68; Scott, Collateral Estoppel by Judgment, 56 Harv.L.Rev. 1, 2—3, 5—6; Note, Collateral Estoppel, 52 Col.L.Rev. 647, 652—657; Developments in the Law, Res Judicata, 65 Harv.L.Rev. 818, 840—841; Von Moschzisker, Res Judicata, 38 Yale L.J. 299, 311—312; Cleary, Res Judicata Re-examined, 57 Yale L.J. 339, 342—343; Freeman, Judgments (5th ed.) §§ 674—676. 2 38 Stat. 731, 15 U.S.C. § 15, 15 U.S.C.A. § 15. 3 The Court's opinion, apparently for the purpose of showing that the conspiracy issue was actually litigated, points to statements in petitioner's trial brief to the effect that Paramount had failed to establish a conspiracy in restraint of interstate commerce. It is difficult to understand how petitioner's argument at the trial that the conspiracy issue was not litigated can now be converted into proof that the issue was litigated. Petitioner's statements in its brief amounted to nothing more than a wholly justifiable contention that Paramount had failed in its burden of proof in the eviction suit; the statements merely pointed out that the franchise was valid in the absence of evidence of conspiracy and that Paramount had not even alleged a conspiracy—by pleadings, evidence, or oral argument. 4 38 Stat. 731, 15 U.S.C. § 16, 15 U.S.C.A. § 16. 5 D.C., 97 F.Supp. 552, 561. 6 Ibid. 7 See note 1, supra. 8 There is yet an additional reason for not applying the doctrine of collateral estoppel here. Petitioner, as the successful party in the eviction suit, could not appeal the District Court's finding that there was no evidence of conspiracy. Lindheimer v. Illinois Bell Telephone Co., 292 U.S. 151, 176, 54 S.Ct. 658, 668, 78 L.Ed. 1182; New York Telephone Co. v. Maltbie, 291 U.S. 645, 54 S.Ct. 443, 78 L.Ed. 1041. The adverse finding was not included in the Court's decree, as in Electrical Fittings Corp. v. Thomas & Betts Co., 307 U.S. 241, 59 S.Ct. 860, 83 L.Ed. 1263. Because of this inability to appeal, the finding cannot bind petitioner in a subsequent action between the parties based upon a different cause of action. See Restatement, Judgments, § 69(2); Scott, Collateral Estoppel by Judgment, 56 Harv.L.Rev. 1, 15—18. The Court's opinion (footnote 6) concedes that inability to appeal precludes a subsequent application of collateral estoppel, but contends that petitioner could have appealed here because the trial court's finding in the eviction suit (as to the absence of proof of conspiracy) was material to the decree in the eviction suit. The Court's opinion cites no case, in this Court or any other, holding that a successful party can appeal findings which are not inserted as part of the decree. Indeed, the opinion overlooks the very holdings of this Court on which it relies for support. In both Lindheimer v. Illinois Bell Telephone Co., supra, and New York Telephone Co. v. Maltbie, supra, the findings which the public utility sought to appeal related to the value of its property for rate-making purposes; in each case, the trial court had held that the rates fixed by a state commission were confiscatory on the basis of those findings. Yet this Court held that the public utility, as the successful party, could not appeal those findings. Surely in this case the trial judge's finding as to conspiracy was no more 'material' than the findings which this Court refused to review in Lindheimer and Maltbie.

78

347 U.S. 201 74 S.Ct. 460 98 L.Ed. 630 MAZER et al.v.STEIN et al. No. 228. Argued Dec. 3, 1953. March 8, 1954. Rehearing Denied April 12, 1954. See 347 U.S. 949, 74 S.Ct. 637. Messrs. Max R. Kraus and Robert L. Kahn, Chicago, Ill., for petitioners. Mr. George E. Frost, Chicago, Ill. (Messrs. William Freeman, Chicago, Ill. and Charles F. Barber, Washington, D.C., on the brief), for respondents. Mr. Benjamin Forman, New York City, for the Register of Copyrights. Amicus curiae by special leave of Court. Mr. Justice REED delivered the opinion of the Court. 1 This case involves the validity of copyrights obtained by respondents for statuettes of male and female dancing figures made of semivitreous china. The controversy centers around the fact that although copyrighted as 'works of art,' the statuettes were intended for use and used as bases for table lamps, with electric wiring, sockets and lamp shades attached. 2 Respondents are partners in the manufacture and sale of electric lamps. One of the respondents created original works of sculpture in the form of human figures by traditional clay-model technique. From this model, a production mold for casting copies was made. The resulting statuettes, without any lamp components added, were submitted by the respondents to the Copyright Office for registration as 'works of art' or reproductions thereof under § 5(g) or § 5(h) of the copyright law,1 and certificates of registration issued. Sales (publication in accordance with the statute) as fully equipped lamps preceded the applications for copyright registration of the statuettes. 17 U.S.C. (Supp. V, 1952) §§ 10, 11, 13, 209, 17 U.S.C.A. §§ 10, 11, 13, 209; Rules and Regulations, 37 CFR, 1949, §§ 202.8 and 202.9. Thereafter, the statuettes were sold in quantity throughout the country both as lamp bases and as statuettes. The sales in lamp form accounted for all but an insignificant portion of respondents' sales. 3 Petitioners are partners and, like repondents, make and sell lamps. Without authorization, they copied the statuettes, embodied them in lamps and sold them. 4 The instant case is one in a series of reported suits brought by respondents against various alleged infringers of the copyrights, all presenting the same or a similar question.2 Because of conflicting decisions,3 we granted certiorari. 346 U.S. 811, 74 S.Ct. 49. In the present case respondents sued petitioners for infringement in Maryland. Stein v. Mazer, D.C., 111 F.Supp. 359. Following the Expert decision and rejecting the reasoning of the District Court in the Rosenthal opinion, both referred to in the preceding note, the District Court dismissed the complaint. The Court of Appeals reversed and held the copyrights valid. Stein v. Mazer, 4 Cir., 204 F.2d 472.4 It said: 'A subsequent utilization of a work of art in an article of manufacture in no way affects the right of the copyright owner to be protected against infringement of the work of art itself.' 204 F.2d at page 477. 5 Petitioners, charged by the present complaint with infringement of respondents' copyrights of reproductions of their works of art, seek here a reversal of the Court of Appeals decree upholding the copyrights. Petitioners in their petition for certiorari present a single question: 6 'Can statuettes be protected in the United States by copyright when the copyright applicant intended primarily to use the statuettes in the form of lamp bases to be made and sold in quantity and carried the intentions into effect? 7 'Stripped down to its essentials, the question presented is: Can a lamp manufacturer copyright his lamp bases?' 8 The first paragraph accurately summarizes the issue. The last gives it a quirk that unjustifiably, we think, broadens the controversy. The case requires an answer, not as to a manufacturer's right to register a lamp base but as to an artist's right to copyright a work of art intended to be reproduced for lamp bases. As petitioners say in their brief, their contention 'questions the validity of the copyright based upon the actions of respondents.' Petitioners question the validity of a copyright of a work of art for 'mass' production. 'Reproduction of a work of art' does not mean to them unlimited reproduction. Their position is that a copyright does not cover industrial reproduction of the protected article. Thus their reply brief states: 9 'When an artist becomes a manufacturer or a designer for a manufacturer he is subject to the limitations of design patents and deserves no more consideration than any other manufacturer or designer.' 10 It is not the right to copyright an article that could have utility under § 5(g) and (h), note 1, supra, that petitioners oppose. Their brief accepts the copyright-ability of the great carved golden saltcellar of Cellini but adds: 11 'If, however, Cellini designed and manufactured this item in quantity so that the general public could have salt cellars, then an entirely different conclusion would be reached. In such case, the salt cellar becomes an article of manufacture having utility in addition to its ornamental value and would therefore have to be protected by design patent.' It is publication as a lamp and registration as a statue to gain a monopoly in manufacture that they assert is such a misuse of copyright as to make the registration invalid. 12 No unfair competition question is presented. The constitutional power of Congress to confer copyright protection on works of art or their reproductions is not questioned.5 Petitioners assume, as Congress has in its enactments and as do we, that the constitutional clause empowering legislation 'To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries', Art. I, § 8, cl. 8, includes within the term 'Authors' the creator of a picture or a statue. The Court's consideration will be limited to the question presented by the petition for the writ of certiorari.6 In recent years the question as to utilitarian use of copyrighted articles has been much discussed.7 13 In answering that issue, a review of the development of copyright coverage will make clear the purpose of the Congress in its copyright legislation. In 1790 the First Congress conferred a copyright on 'authors of any map, chart, book or books already printed'.8 Later, designing, engraving and etching were included;9 in 1831 musical composition;10 dramatic compositions in 1856;11 and photographs and negatives thereof in 1865.12 14 The Act of 1870 defined copyrightable subject matter as: 15 '* * * any book, map, chart, dramatic or musical composition, engraving, cut, print, or photograph or negative thereof, or of a painting, drawing, chromo, statute, statuary, and of models or designs intended to be perfected as works of the fine arts'. (Emphasis supplied.)13 16 The italicized part added three-dimensional work of art to what had been protected previously.14 In 1909 Congress again enlarged the scope of the copyright statute.15 The new Act provided in § 4: 17 'That the works for which copyright may be secured under this Act shall include all the writings of an author.'16 18 Some writers interpret this section as being coextensive with the constitutional grant,17 but the House Report, while inconclusive, indicates that it was 'declaratory of existing law' only.18 Section 5 relating to classes of writings in 1909 read as shown in the margin with subsequent additions not material to this decision.19 Significant for our purposes was the deletion of the fine-arts clause of the 1870 Act.20 Verbal distinctions between purely aesthetic articles and useful works of art ended insofar as the statutory copyright language is concerned.21 19 The practice of the Copyright Office, under the 1870 and 1874 Acts and before the 1909 Act, was to allow registration 'as works of the fine arts' of articles of the same character as those of respondents now under challenge. Seven examples appear in the Government's brief amicus curiae.22 In 1910, interpreting the 1909 Act, the pertinent Copyright Regulations read as shown in the margin.23 Because, as explained by the Government, this regulation 'made no reference to articles which might fairly be considered works of art although they might also serve a useful purpose,' it was reworded in 1917 as shown below.24 The amicus brief gives sixty examples selected at five-year intervals, 1912—1952, said to be typical of registrations of works of art possessing utilitarian aspects.25 The current pertinent regulation, published in 37 CFR, 1949, § 202.8, reads thus: 20 'Works of art (Class G)—(a)—In General. This class includes works of artistic craftsmanship, in so far as their form but not their mechanical or utilitarian aspects are concerned, such as artistic jewelry, enamels, glassware, and tapestries, as well as all works belonging to the fine arts, such as paintings, drawings and sculpture. * * *' 21 So we have a contemporaneous and longcontinued construction of the statutes by the agency charged to administer them that would allow the registration of such a statuette as is in question here.26 22 This Court once essayed to fix the limits of the fine arts.27 That effort need not be appraised in relation to this copyright issue. It is clear Congress intended the scope of the copyright statute to include more than the traditional fine arts. Herbert Putnam, Esq., then Librarian of Congress and active in the movement to amend the copyright laws, told the joint meeting of the House and Senate Committees: 23 'The term 'works of art' is deliberately intended as a broader specification than 'works of the fine arts' in the present statute with the idea that there is subject-matter (for instance, of applied design, not yet within the province of design patents), which may properly be entitled to protection under the copyright law.'28 24 The successive acts, the legislative history of the 1909 Act and the practice of the Copyright Office unite to show that 'works of art' and 'reproductions of works of art' are terms that were intended by Congress to include the authority to copyright these statuettes. Individual perception of the beautiful is too varied a power to permit a narrow or rigid concept of art. As a standard we can hardly do better than the words of the present Regulation, § 202.8, supra, naming the things that appertain to the arts. They must be original, that is, the author's tangible expression of his ideas. Compare Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 59—60, 4 S.Ct. 279, 281 282, 28 L.Ed. 349. Such expression, whether meticulously delineating the model or mental image or conveying the meaning by modernistic form or color, is copyrightable.29 What cases there are confirm this coverage of the statute.30 25 The conclusion that the statues here in issue may be copyrighted goes far to solve the question whether their intended reproduction as lamp stands bars or invalidates their registration. This depends solely on statutory interpretation. Congress may after publication protect by copyright any writing of an author. Its statute creates the copyright.31 It did not exist at common law even though he had a property right in his unpublished work.32 26 But petitioners assert that congressional enactment of the design patent laws should be interpreted as denying protection to artistic articles embodied or reproduced in manufactured articles.33 They say: 27 'Fundamentally and historically, the Copyright Office is the repository of what each claimant considers to be a cultural treasure, whereas the Patent Office is the repository of what each applicant considers to be evidence of the advance in industrial and technological fields.' 28 Their argument is that design patents require the critical examination given patents to protect the public against monopoly. Attention is called to Gorham Mfg. Co. v. White, 14 Wall. 511, 20 L.Ed. 731, interpreting the design patent law of 1842, 5 Stat. 544, granting a patent to anyone who by 'their own industry, genius, efforts, and expense, may have invented or produced any new and original design for a manufacture * * *.' A pattern for flat silver was there upheld.34 The intermediate and present law differs little. 'Whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefor, * * *' subject generally to the provisions concerning patents for invention. § 171, 66 Stat. 805, 35 U.S.C.A. § 171. As petitioner sees the effect of the design patent law: 29 'If an industrial designer can not satisfy the novelty requirements of the design patent laws, then his design as used on articles of manufacture can be copied by anyone.' 30 Petitioner has furnished the Court a booklet of numerous design patents for statuettes, bases for table lamps and similar articles for manufacture, quite indistinguishable in type from the copyrighted statuettes here in issue.35 Petitioner urges that overlapping of patent and copyright legislation so as to give an author or inventor a choice between patents and copyrights should not be permitted. We assume petitioner takes the position that protection for a statuette for industrial use can only be obtained by patent, if any protection can be given.36 31 As we have held the statuettes here involved copyrightable, we need not decide the question of their patentability. Though other courts have passed upon the issue as to whether allowance by the election of the author or patentee of one bars a grant of the other, we do not.37 We do hold that the patentability of the statuettes, fitted as lamps or unfitted, does not bar copyright as works of art. Neither the Copyright Statute nor any other says that because a thing is patentable it may not be copyrighted. We should not so hold.38 32 Unlike a patent, a copyright gives no exclusive right to the art disclosed; protection is given only to the expression of the idea—not the idea itself.39 Thus, in Baker v. Selden, 101 U.S. 99, 25 L.Ed. 841, the Court held that a copyrighted book on a peculiar system of bookkeeping was not infringed by a similar book using a similar plan which achieved similar results where the alleged infringer made a different arrangement of the columns and used different headings. The distinction is illustrated in Fred Fisher, Inc. v. Dillingham, D.C., 298 F. 145, 151, when the court speaks of two men, each a perfectionist, independently making maps of the same territory. Though the maps are identical each may obtain the exclusive right to make copies of his own particular map, and yet neither will infringe the other's copyright. Likewise a copyrighted directory is not infringed by a similar directory which is the product of independent work.40 The copyright protects originality rather than novelty or invention—conferring only 'the sole right of multiplying copies.'41 Absent copying there can be no infringement of copyright.42 Thus, respondents may not exclude others from using statuettes of human figures in table lamps; they may only prevent use of copies of their statuettes as such or as incorporated in some other article. Regulation § 202.8, supra, makes clear that artistic articles are protected in 'form but not their mechanical or utilitarian aspects.' See Stein v. Rosenthal, D.C., 103 F.Supp. 227, 231. The dichotomy of protection for the aesthetic is not beauty and utility but art for the copyright and the invention of original and ornamental design for design patents. We find nothing in the copyright statute to support the argument that the intended use or use in industry of an article eligible for copyright bars or invalidates its registration. We do not read such a limitation into the copyright law. 33 Nor do we think the subsequent registration of a work of art published as an element in a manufactured article, is a misuse of the copyright. This is not different from the registration of a statuette and its later embodiment in an industrial article. 34 'The copyright law, like the patent statutes, makes reward to the owner a secondary consideration.' United States v. Paramount Pictures, 334 U.S. 131, 158, 68 S.Ct. 915, 929, 92 L.Ed. 1260. However, it is 'intended definitely to grant valuable, enforceable rights to authors, publishers, etc., without burdensome requirements; 'to afford greater encouragement to the production of literary (or artistic) works of lasting benefit to the world." Washingtonian Pub. Co. v. Pearson, 306 U.S. 30, 36, 59 S.Ct. 397, 400, 83 L.Ed. 470. 35 The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in 'Science and useful Arts.' Sacrificial days devoted to such creative activities deserve rewards commensurate with the services rendered. 36 Affirmed. 37 Opinion of Mr. Justice DOUGLAS, in which Mr. Justice BLACK concurs. 38 An important constitutional question underlies this case—a question which was stirred on oral argument but not treated in the briefs. It is whether these statuettes of dancing figures may be copyrighted. Congress has provided that 'works of art', 'models or designs for works of art', and 'reproductions of a work of art' may be copyrighted, 17 U.S.C § 5, 17 U.S.C.A. § 5; and the Court holds that these statuettes are included in the words 'works of art'. But may statuettes be granted the monopoly of the copyright? 39 Article I, § 8 of the Constitution grants Congress the power 'To promote the Progress of Science and useful Arts, by securing for limited Times to Authors * * * the exclusive Right to their respective Writings * * *.' The power is thus circumscribed: it allows a monopoly to be granted only to 'authors' for their 'writings.' Is a sculptor an 'author' and is his statute a 'writing' within the meaning of the Constitution? We have never decided the question. 40 Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 4 S.Ct. 279, 28 L.Ed. 349, held that a photograph could be copyrighted. 41 Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 23 S.Ct. 298, 47 L.Ed. 460, held that chromolithographs to be used as advertisements for a circus were 'pictorial illustrations' within the meaning of the copyright laws. Broad language was used in the latter case, '* * * a very modest grade of art has in it something irreducible, which is one man's alone. That something he may copyright unless there is a restriction in the words of the act.' 188 U.S., at page 250, 23 S.Ct. at page 300. But the constitutional range of the meaning of 'writings' in the field of art was not in issue either in the Bleistein case nor in F. W. Woolworth Co. v. Contemporary Arts, 344 U.S. 228, 73 S.Ct. 222, 97 L.Ed. 276, recently here on a writ for certiorari limited to a question of damages. 42 At times the Court has on its own initiative considered and decided constitutional issues not raised, argued, or briefed by the parties. Such, for example, was the case of Continental Illinois Nat. Bank & Trust Co. v. Chicago, Rock Island R. Co., 294 U.S. 648, 667, 55 S.Ct. 595, 601, 79 L.Ed. 1110, in which the Court decided the constitutionality of § 77 of the Bankruptcy Act, 11 U.S.C.A. § 205, though the question was not noticed by any party. We could do the same here and decide the question here and now. This case, however, is not a pressing one, there being no urgency for a decision. Moreover, the constitutional materials are quite meager (see Fenning, The Origin of the Patent and Copyright Clause of the Constitution, 17 Geo.L.J. 109 (1929)); and much research is needed. 43 The interests involved in the category of 'works of art,' as used in the copyright law, are considerable. The Copyright Office has supplied us with a long list of such articles which have been copyrighted—statuettes, book ends, clocks, lamps, door knockers, candlesticks, inkstands, chandeliers, piggy banks, sundials, salt and pepper shakers, fish bowls, casseroles, and ash trays. Perhaps these are all 'writings' in the constitutional sense. But to me, at least, they are not obviously so. It is time that we came to the problem full face. I would accordingly put the case down for reargument. 1 17 U.S.C. (Supp. V, 1952) § 4, 17 U.S.C.A. § 4: 'The works for which copyright may be secured under this title shall include all the writings of an author.' Id., § 5: 'The application for registration shall specify to which of the following classes the work in which copyright is claimed belongs: '(g) Works of art; models or designs for works of art. '(h) Reproductions of a work of art.' Errors of classification are immaterial. See Note 19, infra. 2 An unreported action, Stein v. Zuckerman and DuBeshter, was pending in the Eastern District of New York. Note, 66 Harv.L.Rev. 877, 878, n. 8. We are advised that it was dismissed by consent February 24, 1953. 3 Stein v. Expert Lamp Co., 7 Cir., 188 F.2d 611, Stein v. Expert Lamp Co., D.C., 96 F.Supp. 97 was the first action brought. Through an accident in presentation, the trial court determined the case as though the copyright was on a statuette with lamp attachments. It held the statuettes not copyrightable because this 'was evidence of the practical use' intended. 96 F.Supp. at page 98. On petition for reconsideration, it held the presence or absence of the attachments immaterial. Stein v. Mazer, D.C., 111 F.Supp. 359, 361; Rosenthal v. Stein, 9 Cir., 205 F.2d 633, 634. The Court of Appeals for the Seventh Circuit affirmed on the ground that the Copyright Act 'does not refer to articles of manufacture having a utilitarian purpose nor does it provide for a previous examination by a proper tribunal as to the originality of the matter offered for copyright * * *.' Stein v. Expert Lamp Co., 188 F.2d 611, 613. Stein v. Rosenthal, D.C., 103 F.Supp. 227, was a second infringement case. It was there held 'Protection is not dissipated by taking an unadulterated object of art as copyrighted and integrating it into commercially valuable merchandise.' 103 F.Supp. at page 230. On appeal, the Court of Appeals for the Ninth Circuit affirmed, saying 'The theory that the use of a copyrighted work of art loses its status as a work of art if and when it is put to a functional use has no basis in the wording of the copyright laws and there is nothing in the design-patent laws which excludes a work of art from the operation of the copyright laws.' Rosenthal v. Stein, 9 Cir., 205 F.2d 633, 635. In Stein v. Benaderet, 109 F.Supp. 364, 365, a district court of Michigan held that it is the 'intent and purpose' of the designer which determines whether an object is copyrightable as a work of art. The court said plaintiffs should have applied for a design patent and held for defendants. An appeal is pending now in the Court of Appeals for the Sixth Circuit. The opinions in the above cases and those of the District Court and the Court of Appeals in the present litigation deserve careful reading. 4 In this case the Register of Copyrights participated as amicus curiae and supported respondents. Through the Solicitor General he has also filed a brief in this Court, and participated in the oral argument. 346 U.S. 882, 74 S.Ct. 143. 5 We do not reach for constitutional questions not raised by the parties. Chicago & G.T.R. Co. v. Wellman, 143 U.S. 339, 345, 12 S.Ct. 400, 402, 36 L.Ed. 176; People of the State of New York ex rel. Rosevale Realty Co. v. Kleinert, 268 U.S. 646, 651, 45 S.Ct. 618, 619, 69 L.Ed. 1135; C.I.O. v. McAdory, 325 U.S. 472, 475, 65 S.Ct. 1395, 1397, 89 L.Ed. 1741. The fact that the issue was mentioned in argument does not bring the question properly before us. Herbring v. Lee, 280 U.S. 111, 117, 50 S.Ct. 49, 51, 74 L.Ed. 217. No question of our jurisdiction emerges. Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329. Compare Kalb v. Feuerstein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370, and Continental Illinois Nat. Bank & Trust Co. v. Chicago, R.I. & P.R. Co., 294 U.S. 648, 667, 55 S.Ct. 595, 601, 79 L.Ed. 1110. Compare on the constitutional question the following: Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 4 S.Ct. 279, 28 L.Ed. 349, upheld the copyright of a photograph unanimously. It was said: 'By writings in that clause is meant the literary productions of those authors, and congress very properly has declared these to include all forms of writing, printing, engravings, etchings, etc., by which the ideas in the mind of the author are given visible expression.' 111 U.S. at page 58, 4 S.Ct. at page 281. 'These findings, we think, show this photograph to be an original work of art, the product of plaintiff's intellectual invention, of which plaintiff is the author, and of a class of inventions for which the constitution intended that congress should secure to him the exclusive right to use, publish, and sell, as it has done by section 4952 of the Revised Statutes.' 111 U.S. at page 60, 4 S.Ct. at page 282. Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 249 250, 23 S.Ct. 298, 299—300, 47 L.Ed. 460, upheld a copyright on circus posters. The Court said: 'We shall do no more than mention the suggestion that painting and engraving, unless for a mechanical end, are not among the useful arts, the progress of which Congress is empowered by the Constitution to promote. The Constitution does not limit the useful to that which satisfies immediate bodily needs. * * * Personality always contains something unique. It expresses its singularity even in handwriting, and a very modest grade of art has in it something irreducible, which is one man's alone. That something he may copyright unless there is a restriction in the words of the act.' Kalem Co. v. Harper Bros., 222 U.S. 55, 63, 32 S.Ct. 20, 22, 56 L.Ed. 92, involved pirating by motion pictures of the copyrighted dramatic rights of a book. This Court said: 'It is argued that the law, construed as we have construed it, goes beyond the power conferred upon congress by the Constitution, to secure to authors for a limited time the exclusive right to their writings. Art. I, § 8, cl. 8. It is suggested that to extend the copyright to a case like this is to extend it to the ideas, as distinguished from the words in which those ideas are clothed. But there is no attempt to make a monopoly of the ideas expressed. The law confines itself to a particular, cognate, and well-known form of reproduction. If to that extent a grant of monopoly is thought a proper way to secure the right to the writings, this court cannot say that Congress was wrong.' See also Schreiber v. Thornton, D.C., 17 F. 603, reversed on other grounds, Thornton v. Schreiber, 124 U.S. 612, 613, 8 S.Ct. 618, 31 L.Ed. 577. See Fenning, The Origin of the Patent and Copyright Clause of the Constitution, 17 Geo.L.J. 109; 2 Story, Constitution 5th ed.), c. XIX. Trade-Mark Cases, 100 U.S. 82, 94, 25 L.Ed. 550. Congress had passed a trade-mark act under the Patent and Copyright Clause. A unanimous Court held this effort to protect trade-marks was unconstitutional. 'The ordinary trade-mark has no necessary relation to invention or discovery. * * * If we should endeavor to classify it under the head of writings of authors, the objections are equally strong. In this, as in regard to inventions, originality is required. And while the word writings may be liberally construed, as it has been, to include original designs for engraving, prints, &c., it is only such as are original, and are founded in the creative powers of the mind. The writings which are to be protected are the fruits of intellectual labor, embodied in the form of books, prints, engravings, and the like.' The trade-mark does not 'depend upon novelty, invention, discovery, or any work of the brain. It requires no fancy or imagination, no genius, no laborious thought. It is simply founded on priority of appropriation.' See as to commerce, 100 U.S. at pages 95—98; Robert, Commentary on the Lanham Trade-Mark Act, 15 U.S.C.A. (§§ 81—1113, 1948) p. 265. 6 National Licorice Co. v. National Laber Relations Board, 309 U.S. 350, 357, note 2, 60 S.Ct. 569, 574, 84 L.Ed. 799; General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175, 546, 58 S.Ct. 849, 82 L.Ed. 1273; Crown C. & S. Co. v. Ferdinand Gutmann Co., 304 U.S. 159, 58 S.Ct. 842, 82 L.Ed. 1265, and cases cited; Gunning v. Cooley, 281 U.S. 90, 50 S.Ct. 231, 74 L.Ed. 720. The policy is incorporated in Rule 38(2), Revised Rules of the Supreme Court of the United States, 28 U.S.C.A., and the practice of bringing 'additional questions into a case' has been condemned recently in Irvine v. California, 347 U.S. 128, 129, 74 S.Ct. 381. 7 Ball, Law of Copyright and Literary Property (1944), 390; Howell, Copyright Law (1952), 130; 1 Ladas, The International Protection of Literary and Artistic Property (1938), 247; Weil, Copyright Law (1917), 227; Derenberg, Copyright No-Man's Land: Fringe Rights in Literary and Artistic Property, 1953 Copyright Problems Analyzed (CCH) 215; Pogue, Borderland—Where Copyright and Design Patent Meet, 52 Mich.L.Rev. 33; Notes, 21 Geo.Wash.L.Rev. 353; 66 Harv.L.Rev. 877; 27 Ind.L.J. 130. See Report of the Copyright Committee, Board of Trade, October 1952, Artistic Copyright and Industrial Designs, pp. 82 et seq. 8 1 Stat. 124. 9 2 Stat. 171. 10 4 Stat. 436. 11 11 Stat. 139. 12 13 Stat. 540. Between 1789 and 1904, there were in all some twenty-five laws dealing with copyrights. Salberg, Copyright in Congress (1905), 89—93. 13 § 86, 16 Stat. 212. This Act also vested control of records relating to copyrights in the Librarian of Congress and provided he should administer the law. Id., § 85. 14 In connection with the phrase in the 1870 Act 'intended to be perfected as works of the fine arts,' see the 1874 amendatory Act, 18 Stat. 78, and Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 23 S.Ct. 298, 47 L.Ed. 460. Section 3 contained the following provision: 'That in the construction of this act, the words 'Engraving,' 'cut' and 'print' shall be applied only to pictorial illustrations or works connected with the fine arts, and no prints or labels designed to be used for any other articles of manufacture shall be entered under the copyright law, but may be registered in the Patent Office.' This was repealed in 1939 and the following enacted: 'SEC. 2. Section 5(k) of the Act entitled 'An Act to amend and consolidate the Acts respecting copyright' approved March 4, 1909, is hereby amended to read: '(k) Prints and pictorial illustrations including prints or labels used for articles of merchandise." 53 Stat. 1142. This was an amendment to § 5(k) of the Act of 1909, 35 Stat. 1077. It is to be noted, however, that the 1909 Act did not conform to the 1874 language, but the present Act, 17 U.S.C.(Supp. V, 1952) § 5(k), 17 U.S.C.A. § 5(k), does contain the amendatory language of the 1939 Act. 15 S.Rep.No.6187, 59th Cong., 2d Sess., p. 4: 'The existing statutes attempt specifications which are unfortunate because necessarily imperfect and requiring frequent additions to cover new forms or new processes. The bill in its general definition substitutes a general term, 'all the works of an author.' The term used in the constitution is 'writings.' But Congress has always construed this term broadly, and in doing so has been uniformly supported by judicial decision. It has, for instance, interpreted it as authorizing subject-matter so remote from its popular significance as photographs, paintings, statuary, and dramas, even if unwritten. 'As thus interpreted, the word 'writings would to-day in popular parlance be more nearly represented by the word 'works'; and this the bill adopts; referring back, however, to the word 'writings' by way of safe anchorage, but regarding this as including 'all forms of record in which the thought of an author may be recorded and from which it may be read or reproduced." Burrow-Giles Lithographic Co. v. Sarony, 1884, 111 U.S. 53, 4 S.Ct. 279, 28 L.Ed. 349, has held that photographs were copyrightable in spite of the argument that the Constitution only specified protection for 'writings' of an 'author.' This decision made clear that 'writings' was not limited to chirography and typography. 16 35 Stat. 1076. 17 Weil, Copyright Law (1917), 214; Howell, The Copyright Law (3d ed. 1952), 8. 18 H.R.Rep.No.2222, 60th Cong., 2d Sess. 10. The report is not very clear on the point, however. 19 'The application for registration shall specify to which of the following classes the work in which copyright is claimed belongs: '(a) Books, including composite and cyclopaedic works, directories, gazetteers, and other compilations; '(b) Periodicals, including newspapers; '(c) Lectures, sermons, addresses, prepared for oral delivery; '(d) Dramatic or dramatico-musical compositions; '(e) Musical compositions; '(f) Maps; '(g) Works of art; models or designs for works of art; '(h) Reproductions of a work of art; '(i) Drawings or plastic works of a scientific or technical character; '(j) Photographs; '(k) Prints and pictorial illustrations: 'Provided, nevertheless, That the above specifications shall not be held to limit the subject-matter of copyright as defined in section four of this Act, nor shall any error in classification invalidate or impair the copyright protection secured under this Act.' 35 Stat. 1076. Subsection (k) was amended by the addition of the words 'including prints or labels used for articles of merchandise' in 1939. 53 Stat. 1142. See note 14, supra. Two more classes '(l) Motion-picture photoplays' and '(m) Motion pictures other than photoplays' were added in 1912. 37 Stat. 488. 20 See note 14, supra, for repeal of clause defining engraving cuts and prints in terms of 'fine art.' 21 Title 17 of the United States Code entitled 'Copyrights' was codified into positive law in 1947 without change in the pertinent provisions. 61 Stat. 652, 17 U.S.C.(Supp. V., 1952) §§ 4, 5, 17 U.S.C.A. §§ 4, 5. 22 E.g., 'A female figure bearing an urn in front partly supported by drapery around the head. The figure nude from the waist up and below this the form concealed by conventionalized skirt draperies which flow down and forward forming a tray at the base. Sides and back of skirt in fluted form. The whole being designed as a candlestick with match tray. The figure standing and bent forward from hips and waist.' 23 'Works of art.—This term includes all works belonging fairly to the so-called fine arts. (Paintings, drawings, and sculpture.) 'Productions of the industrial arts utilitarian in purpose and character are not subject to copyright registration, even if artistically made or ornamented.' Rules and Regulations for the Registration of Claims to Copyright, Bulletin No. 15 (1910), 8. 24 'Works of art and models or designs for works of art. This term includes all works belonging fairly to the so-called fine arts. (Paintings, drawings, and sculpture.) 'The protection of productions of the industrial arts, utilitarian in purpose and character, even if artistically made or ornamented depends upon action under the patent law; but registration in the Copyright Office has been made to protect artistic drawings notwithstanding they may afterwards be utilized for articles of manufacture.' 37 CFR, 1939, § 201.4(7). 25 E.g., 'Lighting fixture design. By F. E. Guitini. (Bowl-shaped bracket embellished with figure of half-nude woman standing in bunch of flowers.) Copyright December 28, 1912. Registration number G 42645. Copyright claimant: Kathodion Bronze Works, New York.' 26 Great Northern R. Co. v. United States, 315 U.S. 262, 275, 62 S.Ct. 529, 534, 86 L.Ed. 836. 27 United States v. Perry, 146 U.S. 71, 74, 13 S.Ct. 26, 27, 36 L.Ed. 890. 28 Arguments before the Committees on Patents of the Senate and House of Representatives, conjointly, on S. 6330 and H.R. 19853, To Amend and Consolidate the Acts Respecting Copyright, 59th Cong., 1st Sess., June 6—9, 1906, p. 11. The statement is applicable to the 1909 Act since §§ 5(g) and (h) of the 1909 Act are identical with the same sections of S. 6330 and H.R. 19853. Although there were other hearings and reports (see 51 House Committee Hearings before Committee on Patents (1906—1912), on Consolidating and Revising the Copyright Laws; H.R.Rep.No.2222, 60th Cong., 2d Sess. 3), this statement of Mr. Putnam is the only explanation of the change in statutory language, though S.Rep.No. 6187, 59th Cong., 2d Sess., p. 11, refers to 'works of art' as a new designation and mentioned the deletion of 'fine' from the category. 29 Cf. H. C. White Co. v. Morton E. Converse & Son Co., 2 Cir., 20 F.2d 311. 30 Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 60, 4 S.Ct. 279, 282, 28 L.Ed. 349; Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 250, 23 S.Ct. 298, 300, 47 L.Ed. 460; Louis De Jonge & Co. v. Breuker & Kessler Co., C.C., 182 F. 150, 152; F. W. Woolworth Co. v. Contemporary Arts, 1 Cir., 193 F.2d 162, 164; see same case, 344 U.S. 228, 73 S.Ct. 222, 97 L.Ed. 276; Yuengling v. Schile, C.C., 12 F. 97, 100; Schumacher v. Schwencke, C.C., 25 F. 466; Pellegrini v. Allegrini, D.C., 2 F.2d 610. 31 Wheaton and Donaldson v. Peters and Grigg, 8 Pet. 591, 661, 8 L.Ed. 1055; Fox Film Corp. v. Doyal, 286 U.S. 123, 127, 52 S.Ct. 546, 76 L.Ed. 1010. 32 Lord Brougham and Lord St. Leonards in Jefferys v. Boosey, IV H.L.C. 815, 968, 979, 10 Eng.Rep. 681, 741, 745. 33 Two cases are relied upon to support the position of the petitioners. Taylor Instrument Companies v. Fawley-Brost Co., 7 Cir., 139 F.2d 98, and Brown Instrument Co. v. Warner, 82 U.S.App.D.C. 232, 161 F.2d 910. These cases hold that the Mechanical Patent Law and Copyright Laws are mutually exclusive. As to overlapping of Design Patent and Copyright Laws, however, a different answer has been given by the courts. Louis De Jonge & Co. v. Breuker & Kessler Co., C.C., 182 F. 150, affirmed on other grounds in 3 Cir., 191 F. 35, and 235 U.S. 33, 35 S.Ct. 6, 59 L.Ed. 113; see also cases cited in note 37, infra. 34 This Court said, 14 Wall. at page 525: 'It is a new and original design for a manufacture, whether of metal or other material; * * * to be either worked into, or on, any article of manufacture; or a new and original shape or configuration of any article of manufacture—it is one or all of these that the law has in view. And the thing invented or produced, for which a patent is given, is that which gives a peculiar or distinctive appearance to the manufacture, or article to which it may be applied, or to which it gives form. * * * It therefore proposes to secure for a limited time to the ingenious producer of those appearances the advantages flowing from them. * * * It is the appearance itself, therefore, no matter by what agency caused, that constitutes mainly, if not entirely, the contribution to the public which the law deems worthy of recompense.' 35 E.g., Design Patent 170.445 Base for table lamps, a fanciful statuette of a girl standing in front of a high rock in bathing costume. 36 The English Copyright Act, 1911, § 22, 4 Halsbury's Statutes of England (2d ed.) p. 800, does not protect designs registrable under the Patents and Designs Act (now the Registered Designs Act, 1949, 17 Halsbury's Statutes of England (2d ed.), unless such designs are not used or intended to be used as models or patterns to be multiplied by any industrial process. The Board of Trade has ruled that a design shall be deemed to be used as a model or pattern to be multiplied by industrial process within the meaning of § 22 when the design is reproduced or intended to be reproduced in more than fifty single articles. The Copyright (Industrial Designs) Rules, 1949, No. 2367, 1 Statutory Instruments 1949, p. 1453. 37 See Rosenthal v. Stein, note 3, supra; In re Blood, 57 App.D.C. 351, 23 F.2d 772; Korzybski v. Underwood & Underwood, Inc., 2 Cir., 36 F.2d 727; William A. Meier Glass Co. v. Anchor Hocking Glass Corp., D.C., 95 F.Supp. 264, 267; Jones Bros. Co. v. Underkoffler, D.C., 16 F.Supp. 729; Louis De Jonge & Co. v. Breuker & Kessler Co., C.C., 182 F. 150; 66 Harv.L.Rev. 884; 52 Mich.L.Rev. 33; cf. Taylor Instrument Companies v. Fawley-Brost Co., 7 Cir., 139 F.2d 98. 38 See, Pogue, Borderland—Where Copyright and Design Patent Meet, 52 Mich.L.Rev. 33, 58. 39 F. W. Woolworth Co. v. Contemporary Arts, 1 Cir., 193 F.2d 162; Ansehl v. Puritan Pharmaceutical Co., 8 Cir., 61 F.2d 131; Fulmer v. United States, 103 F.Supp. 1021, 122 Ct.Cl. 195; Muller v. Triborough Bridge Authority, D.C., 43 F.Supp. 298. 40 Sampson & Murdock Co. v. Seaver-Radford Co., 1 Cir., 140 F. 539. See, Annotation 26 A.L.R. 585. 41 Jewelers Circular Pub. Co. v. Keystone Publishing, 2 Cir., 281 F. 83, 94, 26 A.L.R. 571. 42 White-Smith Music Pub. Co. v. Apollo Co., 209 U.S. 1, 28 S.Ct. 319, 52 L.Ed. 655; Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 249, 23 S.Ct. 298, 299, 47 L.Ed. 460; Arnstein v. Porter, 2 Cir., 154 F.2d 464, 468—469; Alfred Bell & Co., Ltd. v. Catalda Fine Arts, Inc., 2 Cir., 191 F.2d 99, 103; Ansehl v. Puritan Pharmaceutical Co., supra; Christie v. Cohan, 2 Cir., 154 F.2d 827.

78

347 U.S. 227 74 S.Ct. 450 98 L.Ed. 654 REMMERv.UNITED STATES. No. 304. Argued Feb. 1, 2, 1954. Decided March 8, 1954. Mr. J. Louis Monarch, Washington, D.C., for petitioner. Mr. Philip Elman, Washington, D.C., for respondent. Mr. Justice MINTON delivered the opinion of the Court. 1 The petitioner was convicted by a jury on several counts charging willful evasion of the payment of federal income taxes. A matter admitted by the Government to have been handled by the trial court in a manner that may have been prejudicial to the petitioner, and therefore confessed as error, is presented at the threshold and must be disposed of first. 2 After the jury had returned its verdict, the petitioner learned for the first time that during the trial a person unnamed had communicated with a certain juror, who afterwards became the jury foreman, and remarked to him that he could profit by bringing in a verdict favorable to the petitioner. The juror reported the incident to the judge, who informed the prosecuting attorneys and advised with them. As a result, the Federal Bureau of Investigation was requested to make an investigation and report, which was accordingly done. The F.B.I. report was considered by the judge and prosecutors alone, and they apparently concluded that the statement to the juror was made in jest, and nothing further was done or said about the matter. Neither the judge nor the prosecutors informed the petitioner of the incident, and he and his counsel first learned of the matter by reading of it in the newspapers after the verdict. 3 The above-stated facts were alleged in a motion for a new trial, together with an allegation that the petitioner was substantially prejudiced, thereby depriving him of a fair trial, and a request for a hearing to determine the circumstances surrounding the incident and its effect on the jury.* A supporting affidavit of the petitioner's attorneys recited the alleged occurrences and stated that if they had known of the incident they would have moved for a mistrial and requested that the juror in question be replaced by an alternate juror. Two newspaper articles reporting the incident were attached to the affidavit. The Government did not file answering affidavits. The District Court, without holding the requested hearing, denied the motion for a new trial. The Court of Appeals held that the District Court had not abused its discretion, since the petitioner had shown no prejudice to him. 9 Cir., 205 F.2d 277, 291. The case is here on writ of certiorari. 346 U.S. 884, 74 S.Ct. 144. 4 In a criminal case, any private communication, contact, or tampering directly or indirectly, with a juror during a trial about the matter pending before the jury is, for obvious reasons, deemed presumptively prejudicial, if not made in pursuance of known rules of the court and the instructions and directions of the court made during the trial, with full knowledge of the parties. The presumption is not conclusive, but the burden rests heavily upon the Government to establish, after notice to and hearing of the defendant, that such contact with the juror was harmless to the defendant. Mattox v. United States, 146 U.S. 140, 148—150, 13 S.Ct. 50, 52—53, 36 L.Ed. 917; Wheaton v. United States, 8 Cir., 133 F.2d 522, 527. 5 We do not know from this record, nor does the petitioner know, what actually transpired, or whether the incidents that may have occurred were harmful or harmless. The sending of an F.B.I. agent in the midst of a trial to investigate a juror as to his conduct is bound to impress the juror and is very apt to do so unduly. A juror must feel free to exercise his functions without the F.B.I. or anyone else looking over his shoulder. The integrity of jury proceedings must not be jeopardized by unauthorized invasions. The trial court should not decide and take final action ex parte on information such as was received in this case, but should determine the circumstances, the impact thereof upon the juror, and whether or not it was prejudicial, in a hearing with all interested parties permitted to participate. 6 We therefore vacate the judgment of the Court of Appeals and remand the case to the District Court with directions to hold a hearing to determine whether the incident complained of was harmful to the petitioner, and if after hearing it is found to have been harmful, to grant a new trial. 7 Judgment vacated. 8 The CHIEF JUSTICE took no part in the consideration or decision of this case. * The motion for a new trial was also grounded on many other contentions, several of which have also been presented to this Court. Because of our disposition of the case on the issue treated herein, we do not pass upon these additional questions.

01

347 U.S. 186 74 S.Ct. 452 98 L.Ed. 618 UNITED STATESv.EMPLOYING PLASTERERS' ASS'N OF CHICAGO et al. No. 440. Argued Feb. 3, 1954. Decided March 8, 1954. Mr. Charles H. Weston, Washington, D.C., for appellant. Mr. Thomas M. Thomas, Chicago, Ill., for appellee Employing Plasterers Ass'n. Mr. Daniel D. Carmell, Chicago, Ill., for appellees Journeymen Plasterers' etc., et al. Mr. Justice BLACK delivered the opinion of the Court. 1 The United States brought this civil action in a Federal District Court charging the defendants (appellees here) with having violated § 1 of the Sherman Act which forbids combinations or conspiracies in restraint of interstate trade or commerce.* Holding that the complaint failed to state a cause of action on which relief could be granted under the Act, the District Court dismissed. The case is before us on direct appeal, 15 U.S.C. § 29, 15 U.S.C.A. § 29, and the only question we must decide is whether the District Court's dismissal was error. We hold it was. 2 In summary the Government's complaint alleges: 3 Defendants are (1) a Chicago trade association of plastering contractors; (2) a local labor union of plasterers and their apprentices; (3) the union's president. These contractors and union members employed by them do approximately 60% of the plastering contracting business in the Chicago area of Illinois. Materials used in the plastering, such as gypsum, lath, cement, lime, etc., are furnished by the contractors. Substantial quantities of this material are produced in other states, bought by Illinois building materials dealers and shipped into Illinois, sometimes going directly to the place of business of the dealers and sometimes directly to job sites for use by the plastering contractors under arrangements with the dealers. The practical effect of all this is a continuous and almost uninterrupted flow of plastering materials from out-of-state origins to Illinois job sites for use these by plastering contractors. Restraint or disruption of plastering work in the Chicago area thus necessarily affects this interstate flow of plastering materials adversely. Since 1938 the Chicago defendants have acted in concert to suppress competition among local plastering contractors, to prevent out-of-state contractors from doing any business in the Chicago area and to bar entry of new local contractors without approval by a private examining board set up by the union. The effect of all this has been an unlawful and unreasonable restraint of the flow in interstate commerce of materials used in the Chicago plastering industry. 4 The District Court did not question that the foregoing and other factual allegations showed a combination to restrain competition among Chicago plastering contractors. But the court considered these allegations to be 'wholly a charge of local restraint and monopoly,' not reached by the Sherman Act. And the court held that there was no allegation of fact which showed that these powerful local restraints had a sufficiently adverse effect on the flow of plastering materials into Illinois. At this point we disagree. The complaint plainly charged several times that the effect of all these local restraints was to restrain interstate commerce. Whether these charges be called 'allegations of fact' or 'mere conclusions of the pleader,' we hold that they must be taken into account in deciding whether the Government is entitled to have its case tried. 5 We are not impressed by the argument that the Sherman Act could not possibly apply here because the interstate buying, selling and movement of plastering materials had ended before the local restraints became effective. Where interstate commerce ends and local commerce begins is not always easy to decide and is not decisive in Sherman Act cases. See Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 232, 68 S.Ct. 996, 1004, 92 L.Ed. 1328. However this may be, the complaint alleged that continuously since 1938 a local group of people were to a large extent able to dictate who could and who could not buy plastering materials that had to reach Illinois through interstate trade if they reached there at all. Under such circumstances it goes too far to say that the Government could not possibly produce enough evidence to show that these local restraints caused unreasonable burdens on the free and uninterrupted flow of plastering materials into Illinois. That wholly local business restraints can produce the effects condemned by the Sherman Act is no longer open to question. See, e.g., United States v. Women's Sportswear Manufacturers Ass'n, 336 U.S. 460, 464, 69 S.Ct. 714, 93 L.Ed. 805. 6 The Government's complaint may be too long and too detailed in view of the modern practice looking to simplicity and reasonable brevity in pleading. It does not charge too little. It includes every essential to show a violation of the Sherman Act. And where a bona fide complaint is filed that charges every element necessary to recover, summary dismissal of a civil case for failure to set out evidential facts can seldom be justified. If a party needs more facts, it has a right to call for them under Rule 12(e) of the Federal Rules of Civil Procedure, 28 U.S.C.A. And any time a claim is frivolous an expensive full dress trial can be avoided by invoking the summary judgment procedure under Rule 56. 7 We hold it was error to dismiss the Government's complaint for failure to state a cause of action. 8 This leaves the separate contention of the union that it is immune from prosecution for violation of the Sherman Act because of § 20 of the Clayton Act, 29 U.S.C.A. § 52. This contention has no merit under the allegations of the complaint here because they show, if true, that the union and its president have combined with business contractors to suppress competition among them. Allen Bradley Co. v. Local Union No. 3, 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939. 9 Reversed. 10 Mr. Justice MINTON, with whom Mr. Justice DOUGLAS joins, dissenting. 11 That, accepting the pleadings as true, there are and were conspiracies to restrain is not open to question. The question is whether the Sherman Act, 15 U.S.C.A. §§ 1—7, 15 note, applies, and that depends upon whether the conspiracies are to restrain interstate commerce. In my opinion, the activities here complained of are wholly intrastate, and the restraint upon interstate commerce, if any, is so indirect, remote and inconsequential as to be without effect and wholly foreign to an intent or purpose to conspire to restrain interstate commerce. 12 There is no interference with interstate commerce. That commerce ends when the plaster and lath reach the building site, whether they come first to material suppliers and at rest in their warehouses and afterwards on order delivered to the contractors on the job, as most of the transactions are alleged to be handled, or are delivered directly to the job. The construction of a building and the incorporation therein of plaster and lath are purely local transactions. 13 'Nor is building commerce, and the fact that the materials to be used are shipped in from other states does not make building a part of such interstate commerce.' Anderson v. Shipowners' Ass'n, 272 U.S. 359, 364, 47 S.Ct. 125, 126, 71 L.Ed. 298. 14 The Government does not and could not contend that building is commerce. It contends that the appellees' acts after commerce, relying upon such cases as National Labor Relations Board v. Denver Building & Const. Trades Council, 341 U.S. 675, 71 S.Ct. 943, 95 L.Ed. 1284, and Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460. But those cases arose under different statutes, the sweep of which is broader than that of § 1 of the Sherman Act, which declares illegal only those contracts, combinations and conspiracies 'in restraint of trade or commerce among the several States.' The Denver Council case arose under the Labor Management Relations Act, 29 U.S.C.A. § 151 et seq., which provides: 15 '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. * * *' 61 Stat. 146, 29 U.S.C. § 160(a), 29 U.S.C.A. § 160(a). 16 Section 2 of that Act defines 'affecting commerce' as follows: 17 '(7) The term 'affecting commerce' means in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce.' 61 Stat. 138, 29 U.S.C. § 152(7), 29 U.S.C.A. § 152(7). 18 The Jacksonville Paper case arose under the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., which is applicable to 'employees who (are) engaged in commerce or in the production of goods for commerce * * *.' 52 Stat. 1062, 29 U.S.C. § 206, 29 U.S.C.A. § 206. Furthermore, that case dealt with transactions that took place in the stream of commerce. Compare Higgins v. Carr Bros. Co., 317 U.S. 572, 63 S.Ct. 337, 87 L.Ed. 468. In the instant cases, the stream of commerce stops at the building site. 19 Insofar as the factual allegations in these complaints are concerned, the appellees are essentially charged with conspiring to divide the plastering and lathing business in the Chicago area among themselves, limiting the number and classes of persons who may become contractors or union members and reducing competition among the contractors, primarily by means of union control over those who may engage in the business either as contractors or as union members. The acts of the appellees here complained of thus are all related to local building construction and those permitted to engage in such construction. The allegations do not establish any interference with the flow of commerce, at its beginning or end or in the course of its flow, or that anything is done to influence the place from whence or to which the materials come or go, or their price. To be sure, the complaints contain bald statements to the effect that the alleged conspiracies are in restraint of interstate commerce. However, these conclusional allegations add nothing and do not conceal the failure to set forth facts showing any direct or substantial restraint on interstate commerce or a purpose or intent to do so. What is charged in these cases may constitute a restraint under state jurisdiction and may remotely or indirectly affect interstate commerce. But that has been consistently held to be no violation of the Sherman Act. Apex Hosiery Co. v. Leader, 310 U.S. 469, 495, 60 S.Ct. 982, 993, 84 L.Ed. 1311; Levering & Garrigues Co. v. Morrin, 289 U.S. 103, 107, 53 S.Ct. 549, 551, 77 L.Ed. 1062. 20 Industrial Ass'n of San Francisco v. United States, 268 U.S. 64, 45 S.Ct. 403, 69 L.Ed. 849, was a case involving far more offensive action than the instant cases. In that case, contractors and suppliers, in order to force an 'open shop,' required builders to secure permits for certain materials from a builders' exchange, refusing such permits to those who did not maintain an open shop. Some of the materials came from other States, and the permits were so handled as to control materials, such as plumbers' supplies, that came altogether from out-of-state sources. This Court, commenting on the 'established general facts' of the plan, said: 21 'Interference with interstate trade was neither desired nor intended. On the contrary, the desire and intention was to avoid any such interference, and, to this end, the selection of materials subject to the permit system was substantially confined to California productions. The thing aimed at and sought to be attained was not restraint of the interstate sale or shipment of commodities, but was a purely local matter, namely, regulation of building operations within a limited local area, so as to prevent their domination by the labor unions. Interstate commerce—indeed commerce of any description—was not the object of attack, 'for the sake of which the several specific acts and courses of conduct were done and adopted.' Swift & Co. v. United States, 196 U.S. 375, 397, 25 S.Ct. 276, 279, 49 L.Ed. 518. The facts and circumstances which led to and accompanied the creation of the combination and the concert of action complained of, which we have briefly set forth, apart from other and more direct evidence, are 'ample to supply a full local motive for the conspiracy.' United Mine Workers v. Coronado Coal Co., 259 U.S. 344, 411, 42 S.Ct. 570, 583, 66 L.Ed. 975.' Supra, 268 U.S. at page 77, 45 S.Ct. at page 406. 22 In language prophetic, this Court further said: 23 'But here the delivery of the plaster to the local representative or dealer was the closing incident of the interstate movement, and ended the authority of the federal government under the commerce clause of the Constitution. What next was done with it was the result of new and independent arrangements.' Supra, 268 U.S. at page 79, 45 S.Ct. at page 407. 24 Although the permits were used so as to interfere with the free movement of materials and supplies from other States, this Court said: 25 'It was, however, an interference not within the design of the appellants, but purely incidental to the accomplishment of a different purpose. The court below laid especial stress upon the point that plumbers' supplies, which for the most part were manufactured outside the state, though not included under the permit system, were prevented from entering the state by the process of refusing a permit to purchase other materials, which were under the system, to any one who employed a plumber who was not observing the 'American plan.' This is to say, in effect, that the building contractor, being unable to purchase the permit materials, and consequently unable to go on with the job, would have no need for plumbing supplies, with the result that the trade in them, to that extent, would be diminished. But this ignores the all-important fact that there was no interference with the freedom of the outside manufacturer to sell and ship or of the local contractor to buy. The process went no further than to take away the latter's opportunity to use, and, therefore, his incentive to purchase. * * * 26 'The alleged conspiracy and the acts here complained of, spent their intended and direct force upon a local situation for building is as essentially local as mining, manufacturing or growing crops—and if, by a resulting diminution of the commercial demand, interstate trade was curtailed either generally or in specific instances that was a fortuitous consequence so remote and indirect as plainly to cause it to fall outside the reach of the Sherman Act.' Supra, 268 U.S. at page 80, 82, 45 S.Ct. at page 407, 408. 27 As I see it, that is all that happens here. Interstate commerce has ended. There is no intent or purpose to restrain interstate commerce. The effect upon commerce is incidental, remote and indirect. It is a restraint that spends itself on a purely local incident. If contractors of materials and supplies may combine to compel an open shop by far more drastic measures, as in the Industrial Association case, then surely the workers and contractors may combine to promote a closed system by an agreement local in its nature. 28 The case of Levering & Garrigues Co. v. Morrin, 289 U.S. 103, 53 S.Ct. 549, which followed the Industrial Association case, is in point here. In that case, the companies, engaged in the building of steel bridges, operated open shops. The unions by strike and other techniques sought to force closed shops. The companies sought an injunction under the Sherman Act. The complaint was dismissed for failure to state a cause of action. This Court said: 29 'Accepting the allegations of the bill at their full value, it results that the sole aim of the conspiracy was to halt or suppress local building operations as a means of compelling the employment of union labor, not for the purpose of affecting the sale or transit of materials in interstate commerce. Use of the materials was purely a local matter, and the suppression thereof the result of the pursuit of a purely local aim. Restraint of interstate commerce was not an object of the conspiracy. Prevention of the local use was in no sense a means adopted to effect such a restraint. It is this exclusively local aim, and not the fortuitous and incidental effect upon interstate commerce, which gives character to the conspiracy. * * * If thereby the shipment of steel in interstate commerce was curtailed, that result was incidental, indirect, and remote, and, therefore, not within the anti-trust acts, as this court, prior to the filing of the present bill, had already held. * * *' Supra, 289 U.S. at page 107, 53 S.Ct. at page 551. 30 If a union may strike and obtain its objective of a closed shop without interfering with interstate commerce, as in the Levering case, the unions in the instant cases could certainly bargain and agree with the employers to reach the same result. See also United Leather Workers' International Union v. Herkert & Meisel Trunk Co., 265 U.S. 457, 44 S.Ct. 623, 68 L.Ed. 1104, and see United States v. Frankfort Distilleries, 324 U.S. 293, 297, 65 S.Ct. 661, 663, 664, 89 L.Ed. 951, where the cases discussed above are distinguished. 31 The Government has relied heavily upon Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 68 S.Ct. 996, 92 L.Ed. 1328. But that decision, as did the Frankfort Distilleries case, recognized the distinct line of cases I rely upon here as distinguishable from the holding therein. 334 U.S. at page 234, 68 S.Ct. at page 1005. 32 In No. 440, it is alleged that the appellees have prevented and discouraged out-of-state plastering contractors from doing business in the Chicago area by slowdowns, fines on union labor, intimidation, and other means. Assume that such tactics are effective to keep outstate contractors from seeking contracts in the Chicago area. Contracting to plaster a building in Chicago by an outstate contractor is not commerce, even if the contractor did intend to bring his men from outstate, any more than bringing men from one State into another to play baseball is commerce. Toolson v. New York Yankees, 346 U.S. 356, 74 S.Ct. 78; Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 208, 42 S.Ct. 465, 66 L.Ed. 898. The materials to plaster the building flow without interruption to the building site. There a local labor situation arises that has nothing to do with commerce or any conspiracy to restrain it. That is all that is involved here, and therefore commerce in the sense of that term as used in the Sherman Act is not involved. 33 I would affirm. * 26 Stat. 209, as amended by 50 Stat. 693, 15 U.S.C. § 1, 15 U.S.C.A. § 1, so far as here relevant reads: '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 declared to be illegal * * *.' The complaint here also charged a violation of § 2 of the Sherman act, 15 U.S.C.A. § 2, but the Government has not pressed that claim here. Cf. Standard Oil Co. of California v. United States, 337 U.S. 293, 314, 60 S.Ct. 1051, 1062, 93 L.Ed. 1371.

67

347 U.S. 222 74 S.Ct. 447 98 L.Ed. 650 INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION, LOCAL 37, et al.v.BOYD, District Director, Immigration and Naturalization Service. No. 195. Argued Jan. 6, 1954. Decided March 8, 1954. Mr. A. L. Wirin, Los Angeles, Cal., for appellants. Mr. Charles Gordon, Department of Justice, Washington, D.C., for appellee. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 This is an action by Local 37 of the International Longshoremen's and Warehousemen's Union and several of its alien members to enjoin the District Director of Immigration and Naturalization at Seattle from so construing § 212(d)(7) of the Immigration and Nationality Act of 1952* as to treat aliens domiciled in the continental United States returning from temporary work in Alaska as if they were aliens entering the United States for the first time. Declaratory relief to the same effect is also sought. Since petitioners asserted in the alternative that such a construction of the challenged statute would be unconstitutional, a three-judge district court was convened. The case came before it on stipulated facts and issues of law, from which it appeared that the union has over three thousand members who work every summer in the herring an salmon canneries of Alaska, that some of these are aliens, and that if alien workers going to Alaska for the 1953 canning season were excluded on their return, their 'contract and property rights (would) be jeopardized and forfeited.' The District Court entertained the suit but dismissed it on the merits. 111 F.Supp. 802. In our order of October 12, 1953, we postponed the question of jurisdiction to the hearing on the merits. 346 U.S. 804, 74 S.Ct. 43. 2 On this appeal, appellee contends that the District Court should not have reached the statutory and constitutional questions that it should have dismissed the suit for want of a 'case or controversy,' for lack of standing on the union's part to bring this action, because the Attorney General was an indispensable party, and because habeas corpus is the exclusive method for judicial inquiry in deportation cases. Since the first objection is conclusive, there is an end of the matter. 3 Appellants in effect asked the District Court to rule that a statute the sanctions of which had not been set in motion against individuals on whose behalf relief was sought, because an occasion for doing so had not arisen, would not be applied to them if in the future such a contingency should arise. That is not a lawsuit to enforce a right; it is an endeavor to obtain a court's assurance that a statute does not govern hypothetical situations that may or may not make the challenged statute applicable. Determination of the scope and constitutionality of legislation in advance of its immediate adverse effect in the context of a concrete case involves too remote and abstract an inquiry for the proper exercise of the judicial function. United Public Workers v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754; see Muskrat v. United States, 219 U.S. 346, 31 S.Ct. 250, 55 L.Ed. 246, and Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 65 S.Ct. 1384, 89 L.Ed. 1725. Since we do not have on the record before us a controversy appropriate for adjudication, the judgment of the District Court must be vacated, with directions to dismiss the complaint. It is so ordered. 4 Judgment vacated with directions to dismiss the complaint. 5 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS concurs, dissenting. 6 This looks to me like the very kind of 'case or controversy' courts should decide. With the abstract principles of law relied on by the majority for dismissing the case, I am not in disagreement. Of course federal courts do not pass on the meaning or constitutionality of statutes as they might be thought to govern mere 'hypothetical situations. * * *' Nor should courts entertain such statutory challenges on behalf of persons upon whom adverse statutory effects are 'too remote and abstract an inquiry for the proper exercise of the judicial function.' But as I read the record it shows that judicial action is absolutely essential to save a large group of wage earners on whose behalf this action is brought from irreparable harm due to alleged lawless enforcement of a federal statute. My view makes it necessary for me to set out the facts with a little more detail than they appear in the Court's opinion. 7 Every summer members of the appellant union go from the west coast of continental United States to Alaska to work in salmon and herring canneries under collective-bargaining agreements. As the 1953 canning season approached the union and its members looked forward to this Alaska employment. A troublesome question arose, however, on account of the Immigration and Nationality Act of 1952, 66 Stat. 182. Section 212(d)(7) of this new Act has language that given one construction provides that all aliens seeking admission to continental United States from Alaska, even those previously accepted as permanent United States residents, shall be examined as if entering from a foreign country with a view to excluding them on any of the many grounds applicable to aliens generally. This new law created an acute problem for the union and its numerous members who were lawful alien residents, since aliens generally can be excluded from this country for many reasons which would not justify deporting aliens lawfully residing here. The union and its members insisted on another construction. They denied that Congress intended to require alien workers to forfeit their right to live in this country for no reason at all except that they went to Alaska, territory of the United States, to engage in lawful work under a lawfully authorized collective-bargaining contract. The defendant immigration officer announced that the union's interpretation was wrong and that workers going to Alaska would be subject to examination and exclusion. This is the controversy. 8 It was to test the right of the immigration officer to apply § 212(d)(7) to make these workers subject to exclusion that this suit was filed by the union and two of its officers on behalf of themselves and all union members who are aliens and permanent residents. True, the action was begun before the union members went to Alaska for the 1953 canning season. But it is not only admitted that the Immigration official intended to enforce § 212(d)(7) as the union and these workers feared. It is admitted here that he has since done precisely that. All 1953 alien cannery workers have actually been subjected to the wearisome routine of immigration procedure as though they had never lived here. And some of the union members are evidently about to be denied the right ever to return to their homes on grounds that could not have been legally applied to them had they stayed in California or Washington instead of going to Alaska to work for an important American industry. 9 Thus the threatened injury which the Court dismisses as 'remote' and 'hypothetical' has come about. For going to Alaska to engage in honest employment many of these workers may lose the home this country once afforded them. This is a strange penalty to put on productive work. Maybe this is what Congress meant by passing § 212(d)(7). And maybe in these times such a law would be held constitutional. But even so, can it be that a challenge to this law on behalf of those whom it hits the hardest is so frivolous that it should be dismissed for want of a controversy that courts should decide? Workers threatened with irreparable damages, like others, should have their cases tried. * This section states that the exclusionary provisions of § 212(a) shall, with exceptions not here relevant, 'be applicable to any alien who shall leave Hawaii, Alaska, Guam, Puerto Rico, or the Virgin Islands of the United States, and who seeks to enter the continental United States * * *.' 8 U.S.C. § 1182(d) (7), 8 U.S.C.A. § 1182(d)(7).

12

347 U.S. 179 74 S.Ct. 442 98 L.Ed. 608 ADAMSv.STATE OF MARYLAND. No. 271. Argued Jan. 7, 1954. Decided March 8, 1954. Messrs. J. Francis Ford, Baltimore, Md., George E. C. Hayes, Washington, d.C., for petitioner. Mr. W. Giles Parker, Baltimore, Md., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 In response to a summons the petitioner Adams appeared to testify before a Senate Committee investigating crime. Answering questions he confessed to having run a gambling business in Maryland. That confession has been used in this case to convict Adams of conspiring to violate Maryland's antilottery laws. The trial court sentenced Adams to pay a fine of $2,000 and serve seven years in the state penitentiary. The Court of Appeals of Maryland affirmed, rejecting Adams' contention that use of the committee testimony against him was forbidden by a provision in a federal statute. Md., 97 A.2d 281. That provision, now 18 U.S.C. § 3486, 18 U.S.C.A. § 3486, set out in full below, provides that no testimony given by a witness in congressional inquiries 'shall be used as evidence in any criminal proceeding against him in any court * * *.'1 The Maryland Court of Appeals held that Adams had testified before the Committee 'voluntarily' and was therefore not protected by § 3486. We granted certiorari because a proper understanding of the scope of this Section is of importance to the national government, to the states and to witnesses summoned before congressional committees. 346 U.S. 864, 74 S.Ct. 104. In this Court Maryland contends that the Section does not bar use of Adams' testimony because: (1) He waived the statutory 'privilege' by testifying 'voluntarily,' meaning that Adams failed to object to each committee question on the ground of its tendency to incriminate him; (2) the Section should be construed so as to apply to United States courts only. If these two statutory contentions are rejected, we are urged to hold that Congress is without constitutional power to bar the use of congressional committee testimony in state courts. 2 (1) Circumstances may be conceivable under which statements made in the presence of a congressional committee might not be protected by § 3486. For example, a person might voluntarily appear and obtain permission to make a statement in a committee's presence, wholly for his own advantage, and without ever being questioned by the committee at all. But Adams did not testify before the Senate Committee under any such circumstances. He was not a volunteer. He was summoned. Had he not appeared he could have been fined and sent to jail. 2 U.S.C. § 192, 2 U.S.C.A. § 192. Nor does the record show any spontaneous outpouring of testimony from him. The testimony Maryland used to convict him was brought out by repeated committee questions. It is true that Adams did not attempt to escape answering these questions by claiming a constitutional privilege to refuse to incriminate himself. But no language of the Act requires such a claim in order for a witness to feel secure that his testimony will not be used to convict him of crime. Indeed, a witness does not need any statute to protect him from the use of self-incriminating testimony he is compelled to give over his objection. The Fifth Amendment takes care of that without a statute. Consequently, the construction of § 3486 here urged would limit its protection to that already afforded by the Fifth Amendment, leaving the Section with no effect whatever. We reject the contention that Adams' failure to claim a constitutional privilege deprived him of the statutory protection of § 3486. 3 (2) Nor can we hold that the Act bars use of committee testimony in United States courts but not in state courts. The Act forbids use of such evidence 'in any criminal proceeding * * * in any court'. Language could be no plainer. Even if there could be legislative history sufficiently strong to make 'any court' mean United States courts only, there is no such history. The few scraps of legislative history pointed out tend to indicate that Congress was well aware that an ordinary person would read the phrase 'in any court' to include state courts. To construe this phrase as having any other meaning would make the Act a trap for the unwary. 4 It is suggested, however, that regardless of the plain meaning of § 3486 as originally passed an event since its passage should cause us to give it an entirely different meaning. The Section stems from an 1857 Act of Congress designed to grant committee witnesses immunity from prosecution in order to compel them to give self-incriminating testimony despite the Fifth Amendment.2 Thirty-five years later in Counselman v. Hitchcock, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110, this Court held that an act not providing 'complete' immunity from prosecution was not broad enough to permit a federal grand jury to compel witnesses to give incriminating testimony. Section 3486 does not provide 'complete' immunity. The original purpose of Congress to compel incriminating testimony has thus been frustrated.3 It is argued that Congress could not have intended to afford any immunity to criminals unless it was thereby enabled to compel them to testify about their crimes. Therefore, it is said, § 3486 should now be given the narrowest possible construction—made effective only when the Fifth Amendment privilege is claimed, and held applicable only to United States courts. Because Congress did not get all it hoped, we are urged to deny witnesses the protection the statute promises. But a court decision subsequent to an act's passage does not usually alter its original meaning. And we reject the implication that a general act of Congress is like a private contract which courts should nullify upon a showing of partial or total failure of consideration. Moreover, Congress has kept the statute in force more than sixty years since the Counselman decision. And in 1938 Congress reenacted the statute making changes deemed desirable to insure its continued usefulness. 52 Stat. 943. Our holding is that Counselman v. Hitchcock in no way impairs the protection afforded congressional witnesses by § 3486. 5 (3) Little need be said about the contention that Congress lacks power to bar state courts from convicting a person for crime on the basis of evidence he has given to help the national legislative bodies carry on their governmental functions. Congress has power to summon witnesses before either House or before their committees. McGrain v. Daugherty, 273 U.S. 135, 47 S.Ct. 319, 71 L.Ed. 580. Article I of the Constitution permits Congress to pass laws 'necessary and proper' to carry into effect its power to get testimony. § 8. We are unable to say that the means Congress has here adopted to induce witnesses to testify is not 'appropriate' and 'plainly adapted to that end.' McCulloch v. State of Maryland, 4 Wheat. 316, 421, 4 L.Ed. 579. And, since Congress in the legitimate exercise of its powers enacts 'the supreme Law of the Land,' state courts are bound by § 3486, even though it affects their rules of practice. Brown v. Walker, 161 U.S. 591, 606—608, 16 S.Ct. 644, 650—651, 40 L.Ed. 819. Cf. Testa v. Katt, 330 U.S. 386, 67 S.Ct. 810, 91 L.Ed. 967. 6 The judgment of the Maryland Court of Appeals affirming this conviction is reversed and the cause is remanded for further proceedings not inconsistent with this opinion. 7 It is so ordered. 8 Reversed and remanded with directions. 9 Mr. Justice FRANKFURTER concurs in the result. 10 Mr. Justice JACKSON, concurring. 11 I am in substantial agreement with the Court's opinion but differ in emphasis. 12 The only controlling fact for me is that this Act is on the federal statute books. What someone intended almost a century ago when it was passed, or in the 1890's when Counselman v. Hitchcock, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110, was decided, I do not know. Since the last event, some thirty Congresses have come and gone, something near 15,000 Congressmen have been elected, not allowing for re-election. How many of them knew of Counselman v. Hitchcock, how many felt frustrated by it, and how many would have vented their frustration by repeal, I do not know or care. Congress left the Act on the books, and it was there when this petitioner testified. The only question is what it would mean to a reasonably well-informed lawyer reading it. 13 I do not think it important whether petitioner was a 'voluntary' or 'involuntary' witness before the congressional Committee or whether he raised the question of his immunity under the Fifth Amendment. No such qualification appears in the Act. The whole object and usefulness of the statute is to relieve the witness of the risks which might induce him to withhold testimony from Congress. It is very customary for one who is asked for information to appear before a committee without requiring the formality of a subpoena. The Act does not strip one of its protection because he may be a cooperative, or even interested, witness; indeed, its purpose is to protect and thereby encourage cooperation instead of hesitation or resistance. 14 The statute seems as unambiguous as language can be. If words mean anything, the statute extends its protection to all witnesses, to all testimony, and in all courts. It is easy to see, as this case illustrates, the hazard a witness would run otherwise. A lawyer would be warranted from the face of this Act in advising the witness that he had nothing to fear from frank and complete disclosure to Congress. Thus the Act wold have accomplished its obvious purpose of facilitating disclosure. 15 I cannot see the slightest doubt that Congress has power to enact the statute for that purpose. It does not take anything from Maryland. It does not say Maryland cannot prosecute petitioner; it just says she shall not put him to disadvantage on the trial by reason of his cooperation with Congress. It leaves Maryland with complete freedom to prosecute she just has to work up her own evidence and cannot use that worked up by Congress. The protection to the witness does not extend beyond the testimony actually received. In this case, petitioner was convicted by the State on the admissions he made before the Senate Committee. Section 3486 was thereby violated, and the conviction should be reversed. 1 'No testimony given by a witness before either House, or before any committee of either House, or before any joint committee established by a joint or concurrent resolution of the two Houses of Congress, shall be used as evidence in any criminal proceeding against him in any court, except in a prosecution for perjury committed in giving such testimony. But an official paper or record produced by him is not within the said privilege.' 11 Stat. 156, 12 Stat. 333, 52 Stat. 943, 62 Stat. 833, 18 U.S.C. § 3486, 18 U.S.C.A. § 3486. 2 Act of Jan. 24, 1857, 11 Stat. 156. 3 See United States v. Bryan, 339 U.S. 323, 335—337, 70 S.Ct. 724, 732—733, 94 L.Ed. 884.

01

347 U.S. 198 74 S.Ct. 455 98 L.Ed. 627 UNITED STATESv.EMPLOYING LATHERS ASS'N OF CHICAGO AND VICINITY et al. No. 439. Argued Feb. 3, 1954. Decided March 8, 1954. Mr. Charles H. Weston, Washington, D.C., for appellant. Mr. Leo F. Tierney, Chicago, Ill., for appellees Employing Lathers Ass'n et al. Messrs. Lester Asher, Nathan M. Cohen and Robert S. Fiffer, Chicago, Ill., for appellee Local No. 74, etc. Mr. Justice BLACK delivered the opinion of the Court. 1 This civil action was brought by the Government in a Federal District Court of Illinois against appellees, a trade association of Chicago lathing contractors, two of its member contractors, and a local labor union composed of lathers. The complaint charged a violation of § 1 of the Sherman Act which forbids combinations or conspiracies in restraint of trade or commerce among the states. 15 U.S.C. § 1, 15 U.S.C.A. § 1.* The District Court dismissed the complaint on the ground that it failed to state a cause of action on which relief could be granted. At the same time and for the same reason it dismissed a similar complaint charging a Chicago plasterers' association and a local plasterers' union with violating § 1 of the Sherman Act. Both cases were brought here on direct appeal by the Government under authority of 15 U.S.C. § 29, 15 U.S.C.A. § 29. We have just reversed the District Court's dismissal of the complaint against the plastering group, United States v. Employing Plasterers' Ass'n of Chicago, 347 U.S. 186, 74 S.Ct. 452. Despite some differences in the two complaints, the reasons for reversing the plasterers' case are equally applicable here. This complaint shows: 2 A substantial quantity of lathing material used in Chicago jobs is produced in states other than Illinois, sold by the producers to Chicago building material dealers, shipped interstate either to the Chicago dealers or to their plastering contractor customers, and finally delivered by the plastering contractor to his lathing contractor for use on local building jobs. The alleged conspiracy here is among these lathing contractors and the union whose members do the actual lathing. This combination, according to the complaint, has achieved almost complete mastery over the lathing business in the Chicago area. It limits the number of lathing contractors, prescribes their qualifications, decides who meets the standards prescribed, excludes persons from the business on varied grounds, including arbitrary racial standards, and assigns plastering contractors to each lathing contractor. All of these allegations and more show a substantial suppression of competition in the lathing business. 3 The complaint charges that an effect of the alleged combination and conspiracy has been that '(i)nterstate trade and commerce in lathing and related building materials has been unlawfully restrained.' Other allegations emphasize this charge by asserting that any restraint upon lathing work in Chicago 'necessarily and directly restrains and affects the interstate flow of lathing materials, and * * * building materials * * *.' 4 The complaint does state a cause of action on which relief can be granted on proper proof. 5 Reversed. 6 Mr. Justice MINTON and Mr. Justice DOUGLAS dissenting, see 347 U.S. 186, 74 S.Ct. 456. * The Government complaint also charged a violation of § 2 of the Sherman Act, 15 U.S.C.A. § 2, but that claim is not pressed here.

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347 U.S. 171 74 S.Ct. 438 98 L.Ed. 594 UNITED STATESv.BINGHAMTON CONST. CO., Inc. No. 65. Argued Dec. 1, 1953. Decided March 8, 1954. Rehearing Denied April 5, 1954. See 347 U.S. 940, 74 S.Ct. 625. Mr. Warren E. Burger, Asst. Atty. Gen., for petitioner. Mr. Jerome Beaudrias, Yonkers, N.Y., for respondent. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 This case is before us on writ of certiorari to the Court of Claims. The question presented is whether the schedule of minimum wage rates included in a Government construction contract, as required by the Davis-Bacon Act,1 is a representation or warranty as to the prevailing wage rates in the contract area. We hold that it is not. 2 The Davis-Bacon Act requires that the wages of workmen on a Government construction project shall be 'not less' than the 'minimum wages' specified in a schedule furnished by the Secretary of Labor. The schedule 'shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing' for corresponding work on similar projects in the area.2 The Act also provides for penalties, including termination of the contract, if it is found that the contractor is paying less than the schedule rate.3 3 The respondent, a construction company, was the successful bidder for a Government flood control project on the Chemung River at Elmira, New York. On January 31, 1941, at the request of the Corps of Engineers, the Secretary of Labor submitted a schedule of minimum wages for the project. This schedule set the minimum hourly wage rate at $1.00 for carpenters and $.50 for laborers. On March 29, 1941, the Corps of Engineers issued an invitation for bids.4 Pursuant to the Davis-Bacon Act, supra, the Secretary's wage schedule was included in the contract specifications furnished to respondent, prior to the computation of its bid.5 On May 14, 1941, respondent's bid of $232,669.30 was accepted and a written contract was executed, incorporating the specifications and subject only to formal approval by the Government. The contract provided that respondent was to pay wages 'not less than those stated in the specifications * * *'; for breach of this provision, the Government was authorized to terminate the contract.6 On June 3, 1941, the contract was formally approved; and on June 5, 1941, respondent received notice to proceed with the work. 4 On October 22, 1940, the local carpenters' union had notified the contracting officer that the hourly wage scale for carpenters would be increased from $1.00 to $1.125 as of January 1, 1941. On March 4, 1941, some three weeks prior to the invitation for bids on the project involved here, the Secretary of Labor had furnished another Government agency, the Federal Works Agency, a schedule of minimum wages for inclusion in the specifications for a federal housing project in Elmira. This schedule set the minimum hourly wage rate at $1.125 for carpenters and $.55 for laborers. On April 1, 1941, the union hourly rate for laborers was increased from $.55 to $.625. 5 In the performance of the contract, respondent paid the union rates then in effect—$1.125 for carpenters and $.625 for laborers. On June 16, 1941, respondent protested to the contracting officer that it was unable to obtain workmen at the rates specified in the contract schedule and demanded an adjustment of compensation, on the theory that the schedule was an affirmative representation as to the prevailing wage rates in the area and that respondent was entitled to rely on this representation in the computation of its bid. The contracting officer denied relief and the Chief of Engineers dismissed respondent's appeal.7 6 Respondent thereupon brought this action in the Court of Claims, seeking damages for the alleged misrepresentation as well as other relief. The court specifically found that an investigation by respondent would have revealed that the prevailing rates were higher than the rates specified in the schedule.8 Nevertheless, it allowed respondent a recovery of $7,363.22, consisting of the difference between the rates specified in the contract schedule ($1.00 for carpenters and $.50 for laborers) and the rates specified in the Secretary of Labor's determination for the Federal Works Agency ($1.125 for carpenters and $.55 for laborers).9 The court held that the contract schedule misrepresented—although inadvertently—the prevailing wage rate in the Elmira area, since, prior to the invitation to bid, the Secretary of Labor had made a higher determination and the contracting officer could have ascertained that fact. Respondent, the court held, was entitled to rely on the schedule 'as the Secretary's latest determination—as a representation of the wages it would have to pay when the work was to be done.'10 We granted review11 because of the obvious importance of the decision in the administration of the Davis-Bacon Act. 7 The Act itself confers no litigable rights on a bidder for a Government construction contract.12 The language of the Act and its legislative history plainly show that it was not enacted to benefit contractors, but rather to protect their employees from substandard earnings by fixing a floor under wages on Government projects.13 Congress sought to accomplish this result by directing the Secretary of Labor to determine, on the basis of prevailing rates in the locality, the appropriate minimum wages for each project. The correctness of the Secretary's determination is not open to attack on judicial review.14 8 The Court of Claims nevertheless awarded respondent damages on the ground that the Government, through the Corps of Engineers, had falsely represented the prevailing rates in the Elmira area. The short answer to this is that the Government made no such representation. Neither the contract nor the specifications refers to 'prevailing' rates. The contract speaks only of 'wage rates not less than those stated in the specifications.'15 The specifications in turn speak only of 'minimum wage rates applicable in the locality.'16 The only reference to 'prevailing' rates appears in the statute itself, which provides that the minimum wage rates are to be 'based upon the wages * * * determined by the Secretary of Labor to be prevailing.' But this provision in the Act cannot convert the contractor's obligation to pay not less than the minimum into a Government representation that the contractor will not have to pay more. On its face, the Act is a minimum wage law designed for the benefit of construction workers. The Act does not authorize or contemplate any assurance to a successful bidder that the specified minima will in fact be the prevailing rates. Indeed, its requirement that the contractor pay 'not less' than the specified minima presupposes the possibility that the contractor may have to pay higher rates. Under these circumstances, even assuming a representation by the Government as to the prevailing rate, respondent's reliance on the representation in computing its bid cannot be said to have been justified. 9 The Government further contends that the Secretary of Labor was justified in fixing different minimum rates for the housing and flood control projects according to the degree of skill required by each project, and that respondent is estopped to claim misrepresentation because of its failure to make an investigation of labor costs before submitting its bid. Because of our disposition of the case, we find it unnecessary to reach these issues. The portion of the judgment on which the Government sought review is reversed. 10 Reversed. 1 Act of March 3, 1931, c. 411, § 1 et seq., 46 Stat. 1494, as amended by the Act of August 30, 1935, c. 825, 49 Stat. 1011, 40 U.S.C. §§ 276a—276a—5, 40 U.S.C.A. §§ 276a—276a—5. 2 49 Stat. 1011, 40 U.S.C. § 276a, 40 U.S.C.A. § 276a: '* * * That the advertised specifications for every contract in excess of $2,000, to which the United States or the District of Columbia is a party, for construction, * * * of public buildings or public works of the United States * * * which requires or involves the employment of mechanics and/or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State * * * in which the work is to be performed * * *; and every contract based upon these specifications shall contain a stipulation that the contractor or his subcontractor shall pay all mechanics and laborers employed directly upon the site of the work * * * the full amounts accrued at time of payment, computed at wage rates not less than those stated in the advertised specifications * * *.' 3 49 Stat. 1011, 40 U.S.C. § 276a—1, 40 U.S.C.A. § 276a—1. 4 The invitation provided in part: 'Investigation of Conditions.—Bidders are expected to visit the locality of the work and to make their own estimates of the facilities needed, the difficulties attending the execution of the proposed contract, including local conditions, availability of labor, uncertainties of weather, and other contingencies. In no case will the Government assume any responsibility whatever for any interpretation, deduction, or conclusion drawn from the examination of the site. * * * Failure to acquaint himself with all available information concerning these conditions will not relieve the successful bidder of responsibility for estimating the difficulties and costs of successfully performing the complete work.' 5 The specifications contained the following provision: '1—31. Wage and Labor Provisions. (a) The Secretary of Labor has determined the minimum wage rates applicable in the locality for the labor classifications anticipated to be used on the work. In accordance with Article 17 of the contract, employees at the site shall be paid not less than these wages as listed below: "Designation Wage rate--hourly Carpenters, journeymen........ $1.00 * * * * * * Laborers, unskilled............ 0.50 Laborers, concrete puddlers... 0.50" 6 Article 17 of the contract reads as follows: '(a) The contractor or his subcontractor shall pay all mechanics and laborers employed directly upon the site of the work * * * the full amounts accrued at time of payment, computed at wage rates not less than those stated in the specifications. * * * '(b) In the event it is found by the contracting officer that any laborer or mechanic employed by the contractor or any subcontractor directly on the site of the work covered by the contract has been or is being paid a rate of wages less than the rate of wages required by the contract to be paid as aforesaid, the Government may, by written notice to the contractor, terminate his right to proceed with the work or such part of the work as to which there has been a failure to pay said required wages and prosecute the work to completion by contract or otherwise, and the contractor and his sureties shall be liable to the Government for any excess costs occasioned the Government thereby.' 7 The Chief of Engineers advised respondent: 'There is no authority in law for this office to question the correctness of any determination made by the Secretary of Labor pursuant to the provisions of the above cited act (the Davis-Bacon Act).' Later, in refusing to reconsider respondent's appeal, the Chief of Engineers stated' '* * * The contract by Article 17 and by paragraph 1—31 of the specifications provides that wages not less than those specified shall be paid. The contract makes no representation as to the availability of labor nor as to the actual wage scales that would be in effect. The alleged increased costs did not result from your contract obligation but from economic conditions which are ordinary contingencies contemplated under the terms of the contract.' 8 107 F.Supp. 712, 716, 123 Ct.Cl. 804, 810—811: 'If plaintiff's president had investigated wage rates, he could have ascertained that the prevailing rate for carpenters was $1.125 per hour, and that the prevailing rate for unskilled labor was $.55 per hour, with an advance to $.625 per hour, effective as of April 1, 1941. Also, before inviting bids on this project, the District Engineer could have ascertained that the Secretary of Labor had made a new determination of the prevailing wage rates for Elmira on March 4, 1941.' 9 On all other claims of respondent, the Court of Claims denied recovery. That part of the court's judgment is the subject of respondent's petition for writ of certiorari in No. 78, this Term (Certiorari denied 347 U.S. 926, 74 S.Ct. 528.) 10 107 F.Supp. 712, 731, 123 Ct.Cl. 804, 836—837, relying on Albert & Harrison, Inc. v. United States, 68 F.Supp. 732, 107 Ct.Cl. 292, 308—309, certiorari denied 331 U.S. 810, 67 S.Ct. 1199, 91 L.Ed. 1830. 11 346 U.S. 809, 74 S.Ct. 23. 12 Compare 49 Stat. 1011, 40 U.S.C. § 276a—2(b), 40 U.S.C.A. § 276a—2(b), conferring a right of action on employees to recover from the contractor the amount due the employees under the minimum wage schedule. 13 United States ex rel. Johnson v. Morley Const. Co., 2 Cir., 98 F.2d 781, 788, certiorari denied Maryland Casualty Co. v. U.S., for Use and Benefit of Harrington, 305 U.S. 651, 59 S.Ct. 244, 83 L.Ed. 421; Gillioz v. Webb, 5 Cir., 99 F.2d 585; Winn-Senter Const. Co. v. United States, 75 F.Supp. 255, 110 Ct.Cl. 34, 61; cf. Perkins v. Lukens Steel Co., 310 U.S. 113, 128, 60 S.Ct. 869, 877, 84 L.Ed. 1108; Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 507, 63 S.Ct. 339, 342, 87 L.Ed. 424. See also H.R.Rep. No. 1756, 74th Cong., 1st Sess.; S.Rep.No. 1155, 74th Cong., 1st Sess.; S.Rep.No. 1445, 71st Cong., 3d Sess. 14 Alliance Const. Co. v. United States, 79 Ct.Cl. 730. Cf., concerning the related Walsh-Healey Public Contracts Act, 41 U.S.C.A. § 35 et seq., Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108, and Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 63 S.Ct. 339, 87 L.Ed. 424. 15 See note 6, supra. 16 See note 5, supra.

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347 U.S. 239 74 S.Ct. 487 98 L.Ed. 666 FEDERAL POWER COMMISSIONv.NIAGARA MOHAWK POWER CORP. No. 28. Argued Oct. 15 and 16, 1953. Decided March 15, 1954. Mr. [Syllabus from pages 239-240 intentionally omitted] Willard W. Gatchell, Washington, D.C., for petitioner. Mr. John W. Davis, New York City, for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 The most significant issue raised by this case is whether the Federal Water Power Act of 19201 has abolished private proprietary rights, existing under state law, to use waters of a navigable stream for power purposes. We agree with the Court of Appeals that it has not. We agree also that in computing a federal licensee's amortization reserve, required by § 10(d) of that Act, as amended,2 the Federal Power Commission was not justified in disallowing the expenses paid or incurred by the licensee in this case for the use of such rights. 2 March 2, 1921, Niagara Falls Power Company, a New York corporation, predecessor in interest of Niagara Mohawk Power Corporation, a New York corporation, respondent herein, secured from the Federal Power Commission the federal license with which we are concerned. It was the first such license issued under the Federal Water Power Act of 1920. Its term was 50 years. It authorized the diversion of water for power purposes from the Niagara River, above the Falls, and the return of it below the Falls, all in New York. The daily diversion, in the aggregate, could not exceed 19,500 cubic feet per second (c.f.s.).3 3 Section 10(d) of the Act requires each licensee, after 20 years of operation under such a license, to establish and maintain amortization reserves out of any surplus thereafter earned and accumulated in excess of a reasonable return upon the licensee's net investment. Section 14 makes such net investment, plus severance damages, a principal measure of the price the Government is to pay when and if it takes over all or part of the property.4 In 1942, the Commission expressly held that § 14 applied to this licensee.5 4 In 1947, Article 11 of the license was amended so as to specify a 6% rate of return and to require 50% of the licensee's surplus earnings to be paid into its amortization reserves. As so amended, the article read: 5 'After the first twenty (20) years of operation of the project under this license, namely after March 1, 1941, six (6) per cent per annum shall be the specified rate of return on the net investment in the project for determining surplus earnings in accordance with the provisions of Section 10(d) of the Act for the establishment and maintenance of amortization reserves to be held until termination of the license, or in the discretion of the Commission, to be applied from time to time in reduction of the net investment in the project, and one-half of all surplus earnings in excess of six (6) per cent per annum received in any calendar year shall be paid into and held in such amortization reserves.'6 6 In 1948, the Commission began this proceeding to determine the licensee's amortization reserve liability. It was the Commission's first such effort under § 10(d). In 1949, pursuant to a revised staff report, the Commission directed the holder of this license to show cause why one-half of its surplus earnings from March 2, 1941, through December 31, 1946, in the amount of $994,521.33, should not be set aside in an amortization reserve, and why a like proportion of its subsequent surplus earnings should not be set aside annually upon a comparable basis. In 1950, the Commission's presiding examiner recommended that the licensee's initial reserve be $914,432.04, and the Commission approved that figure in preference to $515,432.04 proposed by the licensee. One Commissioner filed a concurring statement and one dissented. 9 F.P.C. 228. However, the Court of Appeals for the District of Columbia Circuit, one judge dissenting, upheld the licensee and remanded the case to the Commission with instructions to modify its order accordingly. 91 U.S.App.D.C. 395, 202 F.2d 190.7 The decision turned primarily upon the court's conclusion that neither the Federal Water Power Act nor the issuance of a license thereunder had abolished the licensee's private proprietary rights to use the waters of Niagara River for power purposes. That issue was inescapable because the Commission, in computing the licensee's required amortization reserve, had found that certain annual payments and discounts made by the license for its use of private water rights, existing under state law, along the Niagara River, were not allowable expenses for the reason that the Commission considered those rights no longer existent. The Court of Appeals held precisely the contrary and we granted certiorari because of the important bearing of the decision upon the Federal Water Power Act. 345 U.S. 955, 73 S.Ct. 939, 97 L.Ed. 1376. 7 The immediate issue thus presented is whether the licensee's amortization reserve under § 10(d), for the period from March 2, 1941, through December 31, 1946, should be $914,432.04 or $515,432.04.8 That difference of $399,000 is one-half of the $798,000 which the Commission believes should be included in the surplus earnings of the licensee for the period. It consists of— 8 1. $577,500 paid by the licensee, at the rate of $99,000 a year, for its use, for power purposes, of 730 c.f.s. of the 'International Paper water rights,' and 9 2. $220,500 allowed by the licensee as a discount, at the rate of $37,800 a year, on certain sales of electric power in consideration of permission to use, for power purposes, 262.6 c.f.s. of the 'Pettebone-Cataract water rights.' 10 The Court of Appeals held that although respondent's predecessor, in 1921, had received a federal license for this project, it nevertheless was justified in continuing to meet the financial obligations which it had assumed in return for permission to use water rights originally granted and still existing under the law of New York. That court, accordingly, approved each of the foregoing items of expense and fixed the licensee's initial amortization reserve at $515,432.04. 11 It was not questioned in the Court of Appeals or here that the licensee originally had acquired, in return for the above-stated payments and discounts, some kind or degree of private proprietary rights under the law of New York to use water from the Niagara River for power purposes. Accordingly, we do not consider it necessary to review here the intricate transactions which resulted in the above-described payments and discounts. We accept the conclusion of the Court of Appeals 'that the International Paper and Pettebone-Cataract water rights are valid under the law of New York.' 202 F.2d at page 202.9 For further recognition of these water rights under state law, see Water Power & Control Commission v. Niagara Falls Power Co., 262 App.Div. 460, 30 N.Y.S.2d 371, affirmed, 289 N.Y. 353, 45 N.E.2d 907; Niagara Falls Power Co. v. Duryea, 185 Misc. 696, 57 N.Y.S.2d 777. 12 Neither is it necessary for us to discuss the licensee's expenses in 1947 or thereafter. They must be treated in the same way as those above mentioned, except to note that the discounts allowed in return for the Pettebone-Cataract water rights ceased with the licensee's purchase of those rights in 1947. See 202 F.2d at page 196. 13 We are not required to determine the nature of the rights claimed by respondent except to recognize that they are usufructuary rights to use the water for the generation of power, as distinguished from claims to the legal ownership of the running water itself. They are rights to use the force of the fall of the water, coupled with an obligation to return the water to the river under specified conditions.10 The rights under consideration originally were attached to riparian lands above and below the Falls. However, they long have been separated from such lands and, thus separated, they have been transferred or leased to respondent. Under the law of New York, they constitute a form of real estate known as corporated hereditaments.11 The Commission does not how contest the purchase prices which have been paid for any of these rights. The Commission's present objection is limited to respondent's deduction, in the computation of its amortization reserves, of the annual payments and discounts it has made and which it proposes to make for the use of such rights. The Commission contends (1) that Congress not only may constitutionally abolish such local water rights without compensation but that it already has done so, and (2) that, although the licensee's contested expenditures may be lawful, or even obligatory, between the parties, they must be disallowed in computing the licensee's amortization reserve under § 10(d). 14 We conclude, as did the Court of Appeals, that, even though respondent's water rights are of a kind that is within the scope of the Government's dominant servitude, the Government has not exercised its power to abolish them.12 15 While we recognize the dominant servitude, in favor of the United States, under which private persons hold physical properties obstructing navigable waters of the United States and all rights to use the waters of those streams,13 we recognize also that the exercise of that servitude, without making allowances for preexisting rights under state law, requires clear authorization. A classic example of such a clear authorization appears in United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 33 S.Ct. 667, 669, 57 L.Ed. 1063. The Act of March 3, 1909, there authorized the exercise of the dominant right of the United States to take all of a navigable river's flow for purposes of interstate commerce. It did so in explicit terms. It said: 16 'Sec. 11. * * * the ownership in fee simple absolute by the United States of all lands and property of every kind and description north of the present Saint Marys Falls Ship Canal throughout its entire length and lying between said ship canal and the international boundary line at Sault Sainte Marie, in the State of Michigan, is necessary for the purposes of navigation of said waters and the waters connected therewith. 17 'The Secretary of War is hereby directed to take proceedings immediately for the acquisition by condemnation or otherwise of all of said lands and property of every kind and description, in fee simple absolute. * * * 18 'Every permit, license, or authority of every kind, nature, and description heretofore issued or granted by the United States, or any official thereof, to the Chandler-Dunbar Water Power Company * * * shall cease and determine and become null and void on January first, nineteen hundred and eleven * * *.' 35 Stat. 820, 821. 19 In that case the Government took the entire flow of the stream exclusively for purposes of interstate commerce. The Court accordingly recognized the Government's absolute right, within the bed of the stream, to use all of the waters flowing in the stream, for purposes of interstate commerce, without compensating anyone for the use of those waters.14 20 That decision is not applicable here. The issue here is whether the much more general and regulatory language of the Federal Water Power Act shall be given the same drastic effect as was required there by the language of the Act of March 3, 1909. We find nothing in the Federal Water Power Act justifying such an interpretation. Neither it, nor the license issued under it, expressly abolishes any existing proprietary rights to use waters of the Niagara River. Unlike the statute in the Chandler-Dunbar case, the Federal Water Power Act mentions no specific properties. It makes no express assertion of the paramount right of the Government to use the flow of the Niagara or of any other navigable stream to the exclusion of existing users. On the contrary, the plan of the Act is one of reasonable regulation of the use of navigable waters, coupled with encouragement of their development as power projects by private parties.15 21 The Act— 22 'discloses both a vigorous determination of Congress to make progress with the development of the long idle water power resources of the nation and a determination to avoid unconstitutional invasion of the jurisdiction of the states. * * * 23 'The Act leaves to the states their traditional jurisdiction subject to the admittedly superior right of the Federal Government, through Congress, to regulate interstate and foreign commerce * * *.' First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 328 U.S. 152, 171, 66 S.Ct. 906, 915, 90 L.Ed. 1143. 24 The Act treats usufructuary water rights like other property rights. While leaving the way open for the exercise of the federal servitude and of federal rights of purchase or condemnation, there is no purpose expressed to seize, abolish or eliminate water rights without compensation merely by force of the Act itself.16 25 The references in the Act to preexisting water rights carry a natural implication that those rights are to survive, at least until taken over by purchase or otherwise.17 Riparian water rights, like other real property rights, are determined by state law. Title to them is acquired in conformity with that law. The Federal Water Power Act merely imposes upon their owners the additional obligation of using them in compliance with that Act. 26 The legislative history of the Act discloses no substantial support for the drastic policy which the Commission seeks to read into it. To convert this Act from a regulatory Act to one automatically abolishing preexisting water rights on a nationwide scale calls for a convincing explanation of that purpose. We find none. In fact, the legislative history points the other way. Representative William L. La Follette, of Washington, a member of the House Special Committee on Water Power which reported substantially the same bill as that which in 1920 became the Federal Water Power Act, said of it in 1918: 27 'This bill is not based on either the Government's ownership or its sovereign authority, but on the hypothesis that we as representatives of the States have authority to act for the States in matters of this character and pass laws for the general good, by the establishment of a limited trusteeship or commission composed of officials of the Government, to carry out and administer this law in such a way as not to infringe any of the rights of the States nor to impede or restrict navigation, but rather to benefit it. * * * Under this bill we only allow the commission a supervisory power over those functions entirely within the State's jurisdiction for the period covered by any license, the State having exercised its rights in advance of issue.' 56 Cong.Rec. 9110. Shortly thereafter he added: 28 'If we put in this language (of § 9(b)), which is practically taken from that Supreme Court decision (United States v. Cress, 243 U.S. 316, 37 S.Ct. 380, 61 L.Ed. 746), as to the property rights of the States as to the bed and the banks and to the diversion of the water, then it is sure that we have not infringed any of the rights of the States in that respect, or any of their rules of property. * * * We are earnestly trying not to infringe the rights of the States.' Id., at 9810.18 29 In 1930, this Court passed upon the basic question now before us when it came here in a different connection. In Henry Ford & Son v. Little Falls Fibre Co., 280 U.S. 369, 50 S.Ct. 140, 74 L.Ed. 483, Mr. Justice Stone, writing for a unanimous Court, held that a riparian owner of a right to use water for power purposes in the navigable Mohawk River, in New York State, was entitled to an injunction against the uncompensated destruction of that right by a subsequent licensee under the Federal Water Power Act. The New York Supreme Court had granted such an injunction and awarded damages. This Court affirmed that decision, although the federal license then before the Court had authorized the licensee to raise the navigable waters of the Hudson River to such an extent that they would destroy the value of the riparian owner's right, under state law, to use the fall of tributary waters of the Mohawk for power purposes. It was thus held that the Federal Water Power Act had not abolished the complainant's private proprietary water rights, existing under New York law, to use navigable waters for power purposes.19 30 '(E)ven though the rights which the respondents (the riparian owners) here assert be deemed subordinate to the power of the national government to control navigation, the present legislation does not purport to authorize a licensee of the Commission to impair such rights recognized by state law without compensation.' Id., 280 U.S. at page 377, 50 S.Ct. at page 141. 31 After quoting from §§ 10(c) (liability for damages caused by the licensed project), 27 (saving clause as to proprietary rights under state law), 21 (condemnation rights) and 6 (licensee's acceptance of the conditions of the Act), the Court added: 32 'While these sections are consistent with the recognition that state laws affecting the distribution or use of water in navigable waters and the rights derived from those laws may be subordinate to the power of the national government to regulate commerce upon them, they nevertheless so restrict the operation of the entire act that the powers conferred by it on the Commission do not extend to the impairment of the operation of those laws or to the extinguishment of rights acquired under them without remuneration. We think the interest here asserted by the respondents, so far as the laws of the state are concerned, is a vested right acquired under those laws, and so is one expressly saved by section 27 from destruction or appropriation by licensees without compensation, and that it is one which petitioner (the licensee), by acceptance of the license under the provisions of section 6, must be deemed to have agreed to recognize and protect.' Id., 280 U.S. at pages 378—379, 50 S.Ct. at page 142. 33 Parallel reasoning has been applied in a case involving a conflict between a licensee and the holder of state-recognized rights to use water from a navigable stream for irrigation purposes. United States v. Gerlach Live Stock Co., 339 U.S. 725, 734, 70 S.Ct. 955, 960, 94 L.Ed. 1231. See also, as to state-created water rights for power purposes, Grand River Dam Authority v. Grand-Hydro, 335 U.S. 359, 372, 69 S.Ct. 114, 120, 93 L.Ed. 64; Pike Rapids Power Co. v. Minneapolis, St. P. & S.S.M.R. Co., 8 Cir., 99 F.2d 902; United States v. Central Stockholders' Corp., 9 Cir., 52 F.2d 322; Rank v. Krug, D.C., 90 F.Supp. 773, 793; Great Northern R. Co. v. Washington Electric Co., 197 Wash. 627, 86 P.2d 208. 34 In First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 328 U.S. 152, at pages 175—176, 66 S.Ct. 906, at pages 916—917, 90 L.Ed. 1143, § 27 of the Act was discussed in relation to conditions controlling the approval of projects. The language there used is applicable to proprietary water rights for power purposes as well as those for other proprietary uses. To any extent that statements in Alabama Power Co. v. Gulf Power Co., D.C., 283 F. 606, cited in the First Iowa case, indicate a different interpretation, they are not controlling. 35 Respondent's private property rights are rooted in state law, subject to the paramount rights of the State and Nation. In the instant case, both the State and the Nation have made limited assertions of their superior rights. New York has done so through its rental charges and the Nation through its license. Neither, however, has laid claim to such an exclusive right to the waters as eliminates the limited use which respondent here seeks to make of them. 36 The findings of the Commission and the action of the Court of Appeals disclose no sufficient additional circumstances demonstrating the unreasonableness of the expenses in question.20 37 The judgment of the Court of Appeals, accordingly, is affirmed. 38 Affirmed. 39 Mr. Justice REED withdrew from the consideration and decision of this case. 40 Mr. Justice JACKSON took no part in the consideration or decision of this case. 41 Appendix.—The Commission's computation, 9 F.P.C., at 258, is reached as follows: 42 "Period Base Earnings Specified Surplus Amortization Return earnings reserve 43 (6 percent) credits Mar. 2, 1941 to 44 Dec. 31, 1941. $36,101.556.74 $2,480,131.61 $1,805,077.84 $675,053.77. $337,526.88 45 Year 1942. 35,817,450.85 2,600,032.64 2,149,047.05 450,985.59. 225,492.80 46 Year 1943. 35,464,320.95 2,298,684.44 2,127,859.26 170,825.18. 85,412.59 47 Year 1944. 34,925,610.46 1,952,641.25 2,095,536.63 (142,895.38) 48 Year 1945. 34,076,789.61 2,027,324.21 2,044,607.38 (17,283.17) 49 Year 1946. 33,286,819.28 2,689,387.25 1,997,209.16 692,178.09 . 265,999.77 Mar. 2, 1941 to 50 Dec. 31, 1946.. 14,048,210.40 12,219,337.32 1,828,864.08 914,432.04" 51 The above computation offsets the deficits of 1944 and 1945 against the surplus earnings of 1946 and reduces the total amortization reserve from the $994,521.33, recommended in the revised staff report, to the $914,432.04 approved by the presiding examiner and Commission. See id., at 248-250. 52 Respondent's computation, approved by the Court of Appeals, is reached as follows: 53 "Period Base Earnings Specified return Surplus earnings Amortization reserve 54 (6 percent) credits Mar. 2, 1941 to 55 Dec. 31, 1941. $36,101,556.74 $2,366,131.61 $1,805,077.84 $561,053.77. $280,526.89 56 Year 1942. 35,817,450.85 2,463,232.64 2,149,047.05 314,185.59. 157,092.79 57 Year 1943. 35,464,320.95 2,161,884.44 2,127,859.26 34,025.18 17,012.59 58 Year 1944. 34,925,610.46 1,815,841.25 2,095,536.63 (279,695.38) 59 Year 1945. 34,076,789.61 1,890,524.21 2,044,607.38 (154,083.17) 60 Year 1946.33,286,819.28 2,552,587.25 1,997,209.16 555,378.09 60,799.77 Mar. 2, 1941 to 61 Dec. 31, 1946. -------- $13,250,201.40 $12,219,337.32 $1,030,864.08 62 This reduces the earnings by deducting from them the payments and discounts here in controversy. See 202 F.2d at page 193. 63 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK and Mr. Justice MINTON concur, dissenting. 64 Section 10(d) of the Federal Power Act, 41 Stat. 1069, as amended, 16 U.S.C. § 803(d), 16 U.S.C.A. § 803(d), requires licensees to set up amortization reserves out of their surplus earnings. The Commission enforced this requirement by ordering Niagara to make a book transfer of surplus earnings to an amortization reserve account. In determining the amount of earnings available for amortization the Commission refused to allow certain water-right payments as expenses. The only question before the Court is whether the Commission could lawfully disregard these expenses in computing Niagara's earnings for § 10(d) purposes. 65 The amortization reserve required by § 10(d) serves the function of reducing Niagara's net investment. § 3(13). Niagara's net investment is the measure of the amount of the United States must pay if it decides to recapture Niagara's plant under § 14 of the Act.1 By allowing these water-right payments as expenses for this purpose the Court increases the ultimate obligation of the United States. 66 It may be that Niagara is under a legal duty to pay for its water rights under state law. And I agree that the Federal Power Act was not intended to interfere with water rights created by state law. But it is not true that the United States can be made to pay, directly or indirectly, for the use of the waters of a navigable stream. That has been settled at least since United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 33 S.Ct. 667, 57 L.Ed. 1063.2 'Ownership of a private stream wholly upon the lands of an individual is conceivable; but that the running water in a great navigable stream is capable of private ownership is inconceivable.' Id., 229 U.S. at page 69, 33 S.Ct. at page 674. If Niagara must pay for its water rights without being reimbursed by the United States, that is the price Niagara must pay for its federal license. See United States v. Appalachian Electric Power Co., 311 U.S. 377, 61 S.Ct. 291, 85 L.Ed. 243; cf. Regents of University System of Georgia v. Carroll, 338 U.S. 586, 70 S.Ct. 370, 94 L.Ed. 363. The Federal Power Act should not be construed as requiring the United States to pay for something it already owns.3 But that is precisely what the Court does today. 1 The Federal Water Power Act of 1920, 41 Stat. 1063, as amended, is now Part I of the Federal Power Act, 49 Stat. 838, 16 U.S.C. §§ 791a—825r, 16 U.S.C.A. §§ 791a—825r. 2 'Sec. 10. All licenses issued under this Part shall be on the following conditions: '(d) That after the first twenty years of operation, out of surplus earned thereafter, if any, accumulated in excess of a specified reasonable rate of return upon the net investment of a licensee in any project or projects under license, the licensee shall establish and maintain amortization reserves, which reserves shall, in the discretion of the Commission, be held until the termination of the license or be applied from time to time in reduction of the net investment. Such specified rate of return and the proportion of such surplus earnings to be paid into and held in such reserves shall be set forth in the license. * * *' 49 Stat. 842, 843, 16 U.S.C. § 803(d), 16 U.S.C.A. § 803(d). 3 This limit soon was increased to 19,725 c.f.s., 6 F.P.C. 184, 185, and later to 20,000 c.f.s., see 9 F.P.C. 228, 244, n. 28. The Treaty between the United States and Great Britain relating to boundary waters between the United States and Canada, proclaimed, May 13, 1910, limited the diversion from the United States side to 20,000 and on the Canadian side to 36,000 c.f.s. 36 Stat. 2448, 2450. As to additional emergency and temporary diversions, see 55 Stat. 1276, 1380; 1 U.S. Treaties and Other International Agreements 694. 4 49 Stat. 844—845, 16 U.S.C. § 807, 16 U.S.C.A. § 807. See also, § 16 as to compensation to be paid for temporary use of the property by the Government, 41 Stat. 1072, 16 U.S.C. § 809, 16 U.S.C.A. § 809; § 20 as to rate fixing, 41 Stat. 1073—1074, 16 U.S.C. § 813, 16 U.S.C.A. § 813; and § 26 as to a purchase by the Government at a judicial sale, 41 Stat. 1076, 16 U.S.C. § 820, 16 U.S.C.A. § 820. 'Net investment' is defined in § 3 as follows: '(13) 'net investment' in a project means the actual legitimate original cost thereof as defined and interpreted in the 'classification of investment in road and equipment of steam roads, issue of 1914, Interstate Commerce Commission', plus similar costs of additions thereto and betterments thereof, minus the sum of the following items property allocated thereto, if and to the extent that such items have been accumulated during the period of the license from earnings in excess of a fair return on such investment: (a) Unappropriated surplus, (b) aggregate credit balances of current depreciation accounts, and (c) aggregate appropriations of surplus or income held in amortization, sinking fund, or similar reserves, or expended for additions or betterments or used for the purposes for which such reserves were created. * * *' 49 Stat. 839, 16 U.S.C. § 796(13), 16 U.S.C.A. § 796(13). In the instant case the Commission explains that— 'Section 10(d) is part of a larger pattern of fairness set up by the act to induce water-power development. Licensees are assured a 'fair return,' but the public is safeguarded against profiteering by a licensee through profits beyond a fair return. At the end of the license period and upon 'recapture' by the Federal Government, earnings throughout the license period are to be tested against a fair return standard set up in section 3(13).' 9 F.P.C., at 248. 5 This resulted from the decision that the 'fair value' provisions of § 23(a), 49 Stat. 846, 16 U.S.C. § 816, 16 U.S.C.A. § 816, applied to licenses to use water rights previously held under permits from the Federal Government, whereas this licensee's prior water rights, if any, arise under the law of New York. In re Niagara Falls Power Co., 3 F.P.C. 206, affirmed by the Court of Appeals for the Second Circuit in Niagara Falls Power Co. v. Federal Power Commission, 137 F.2d 787. 6 A proceeding seeking the Commission's approval of a further amendment to Article 11 was consolidated with the show-cause proceedings in the instant case. In response, the Commission, in 1950, ordered that article amended to read: 'After the first 20 years of operation of the project under this license, 6 percent per annum shall be the specified rate of return on the net investment in the project for determining surplus earnings and for the establishment and maintenance of amortization reserves, pursuant to section 10(d) of the act; one-half of all earnings in excess of 6 percent per annum shall be paid into such amortization reserves and such amortization reserves shall be established, maintained and disposed of in accordance with the terms of the act and such rules, regulations and orders of the Commission as may be adopted pursuant thereto.' 9 F.P.C., at 259. Under the above amendment, the method of setting aside the amortization reserves may be prescribed by the Commission. 9 F.P.C., at 232—233, 239. 7 Per curiam. Kimbrough Stone, Circuit Judge, retired, from the Eighth Circuit, sitting by designation; Wilbur K. Miller, Circuit Judge. Dissenting, Bazelon, Circuit Judge. 8 For computations, see Appendix, infra, p. 497. 9 Respondent's corporate history and the devolution of the title to the International Paper and the Pettebone-Cataract water rights are described by the Court of Appeals in 202 F.2d 191, at pages 194—197, 198—202. See also, Niagara Falls Power Co. v. Federal Power Commission, 2 Cir., 137 F.2d 787. For a detailed examination of the facts and issues of the instant case, see Schwartz, Niagara Mohawk v. FPC: Have Private Water Rights Been Destroyed by the Federal Power Act?, 102 U. of Pa.L.Rev. 31. 10 '* * * While the right of its use, as it flows along in a body, may become a property right, yet the water itself, the corpus of the stream, never becomes or, in the nature of things, can become, the subject of fixed appropriation or exclusive dominion, in the sense that property in the water itself can be acquired or become the subject of transmission from one to another. Neither sovereign nor subject can acquire anything more than a mere usufructuary right therein, and in this case the state never acquired, or could acquire, the ownership of the aggregated drops that composed the mass of flowing water in the lake and outlet, though it could and did acquire the right to its use.' Sweet v. City of Syracuse, 129 N.Y. 316, 335, 27 N.E. 1081, 1084, 29 N.E. 289. 11 A riparian owner in New York has a right to use the waters of an abutting stream as part of his estate. United Paper Board Co. v. Iroquois Pulp & Paper Co., 226 N.Y. 38, 123 N.E. 200; Waterford Electric Light, Heat & Power Co. v. State of New York, 208 App.Div. 273, 203 N.Y.S. 858, affirmed, 239 N.Y. 629, 147 N.E. 225. Recovery by the International Paper Company for the deprivation of its use of the instant water rights in 1917 was authorized by this Court in 1931. Referring to the 730 c.f.s. now before us, Mr. Justice Holmes said for the Court: 'From this canal the petitioner, the International Paper Company, was entitled, by conveyance and lease, to draw and was drawing 730 cubic feet per second,—a right that by the law of New York was a corporeal hereditament and real estate.' International Paper Co. v. United States, 282 U.S. 399, 405, 51 S.Ct. 176, 75 L.Ed. 410. The Government was obliged to pay for taking those diversionary rights by condemnation and they are the ones for which respondent is now paying an annual rental of $99,000. The deprivation, therefore, was not an exercise of the Government's dominant servitude, but was a compensable taking by condemnation of the paper company's recognized right to use the water. '(T)he Government took the property that the petitioner owned as fully as the Power Company owned the residue of the water power in the canal.' Id., 282 U.S. at page 408, 51 S.Ct. at page 178. See also, Van Etten v. City of New York, 226 N.Y. 483, 124 N.E. 201, and People ex rel. Niagara Falls Hydraulic Power & Mfg. Co. v. Smith, 70 App.Div. 543, 546, 75 N.Y.S. 1100, 1101, affirmed without opinion, 175 N.Y. 469, 67 N.E. 1088. 12 The existence of the Pettebone-Cataract water rights, under the law of New York prior to the Federal Water Power Act, is recognized by the courts of that state. Hydraulic Power Co. of Niagara Falls v. Pettibone Cataract Paper Co., 112 Misc. 528, 183 N.Y.S. 373, affirmed, 198 App.Div. 644, 191 N.Y.S. 12. Furthermore, Article 13 of the license recognizes at least the possibility of the survival of these rights after the issuance of the license. It provides that in the event the United States or a new licensee shall take over the project 'Such taking over of the project shall also be subject to the rights, if any, of Pettebone-Cataract Paper Company and Cataract City Milling Company to withdraw water at a rate not exceeding 265 cubic feet per second from the Hydraulic Canal or Basin of Licensee, and to the rights, if any, of International Paper Company.' 6 F.P.C. 184, 185. In 1947, the licensee secured the approval of the New York Public Service Commission, and of the Securities & Exchange Commission (under § 12(d) of the Public Utility Holding Company Act of 1935, 49 Stat. 824, 15 U.S.C. § 79l(d), 15 U.S.C.A. § 79l(d)) of its purchase of the Pettebone-Cataract rights from the licensee's parent corporation for $728,415.48. Having thus completed their purchase, the licensee petitioned the Commission to amend Article 13 by striking from it the above italicized reference to these rights. The Commission declined and, accordingly, the original reference to the Pettebone-Cataract rights, as well as that to the rights of the International Paper Company, remains in the license. The Commission's denial of the requested amendment was on the ground that its consent to the omission of the original equivocal reference to the rights 'might be construed as recognizing other alleged water rights claimed by another company.' 6 F.P.C., at 188. The Commission took the position that the rights in question had no existence after the enactment of the Federal Water Power Act and it now regards itself as controlled by that reasoning. 9 F.P.C., at 252, 258—259. Its action, however, was not considered by the Court of Appeals to be dispositive of the issue and it is not binding upon us. 13 United States v. Willow River Power Co., 324 U.S. 499, 65 S.Ct. 761, 89 L.Ed. 1101; United States v. Chicago, M., St. P. & P.R. Co., 312 U.S. 592, 313 U.S. 543, 61 S.Ct. 772, 85 L.Ed. 1064; United States v. Appalachian Electric Power Co., 311 U.S. 377, 61 S.Ct. 291, 85 L.Ed. 243. See also, United States v. Kansas City Life Ins. Co., 339 U.S. 799, 70 S.Ct. 885, 94 L.Ed. 1277. 14 It was in this connection that the Court pointed out the inconceivability of private ownership in the running water of navigable streams as distinguished from private proprietary rights to the use of such water for power and other purposes. United States v. Chandler-Dunbar Water Power Co., 229 U.S., at pages 69 70, 33 S.Ct. at pages 674—675, 57 L.Ed. 1063. 15 United States ex rel. Chapman v. Federal Power Commission, 345 U.S. 153, 167—168, 73 S.Ct. 609, 617—618, 97 L.Ed. 918; First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 328 U.S. 152, 180—181, 66 S.Ct. 906, 919—920, 90 L.Ed. 1143. The Act was dedicated to 'encouraging private enterprise and the investment of private capital' in power projects on a basis consistent with the public interest. H.R.Rep.No.61, 66th Cong., 1st Sess. 3. The bill was to provide 'a method by which the water powers of the country, wherever located, can be developed by public or private agencies under conditions which will give the necessary security to the capital invested and at the same time protect and preserve every legitimate public interest.' Statement of David F. Houston, Secretary of Agriculture. Id., at 5. 16 Section 14 even provides: 'nor shall the values allowed for water rights, rights-of-way, lands, or interest in lands (used in computing a licensee's net investment) be in excess of the actual reasonable cost thereof at the time of acquisition by the licensee: * * *.' (Emphasis supplied.) 49 Stat. 844—845, 16 U.S.C. § 807, 16 U.S.C.A. § 807. 17 In § 3(11) 'project' is said to include 'all water-rights * * * necessary or appropriate in the maintenance and operation of such unit', 49 Stat. 838, 839; § 4(b) empowers the Commission, in determining the original cost of a project and the net investment in it, to require licensees to show 'the price paid for water rights' as well as for lands, 49 Stat. 839; § 9(b) requires an applicant for a license to submit evidence of whatever compliance he has made with the requirements of state law with respect to 'the appropriation, diversion, and use of water for power purposes', 41 Stat. 1068; § 14 requires, when taking over a licensed project, that the 'values allowed for water rights' shall not be 'in excess of the actual reasonable cost thereof at the time of acquisition by the licensee' (Commissioner Smith emphasized the significance of this clause, 9 F.P.C., at 261), 49 Stat. 844—845; § 23(b) recognizes the application of state laws to projects where interstate or foreign commerce, public lands and reservations are not affected, 49 Stat. 846; § 27 provides that 'nothing herein contained shall be construed as affecting or intending to affect or in any way to interfere with the laws of the respective States relating to the control, appropriation, use, or distribution of water used in irrigation or for municipal or other uses, or any vested right acquired therein', 41 Stat. 1077. See 16 U.S.C. §§ 796—821, 16 U.S.C.A. §§ 796—821. 18 In 1917, the Senate Committee on Commerce said: '(T)he bill is so framed as to protect and maintain the constitutional power and control of the Federal Government over navigable streams, as well as the sovereignty of the States and the rights of riparian proprietors over and in the beds and waters of those streams, and allow the full exercise and enjoyment of the latter, subject to the paramount authority of Congress to regulate the same for navigation purposes.' S.Rep.No.179, 65th Cong., 2d Sess. 4, as to S. 1419. For a history of the congressional debates and hearings, see Kerwin, Federal Water-Power Legislation (1926). 19 The Court refrained from determining whether § 21 of the Act, as to eminent domain, gave the licensee a further right to condemn and thus pay for the preexisting rights. Id., 280 U.S. at page 379, 50 S.Ct. at page 142. 20 Claims of the State of New York, in its own favor, suggested in its brief or oral argument as amicus curiae, are not before us. 1 The same is true in case the United States moves to acquire the properties under § 26 by judicial sale. 2 See also United States v. Chicago, M., St. P. & P.R. Co., 312 U.S. 592, 313 U.S. 543, 61 S.Ct. 772, 85 L.Ed. 1064; United States v. Commodore Park, Inc., 324 U.S. 386, 65 S.Ct. 803, 89 L.Ed. 1017; United States v. Willow River Power Co., 324 U.S. 499, 65 S.Ct. 761, 89 L.Ed. 1101. 3 The command of § 14 is otherwise. It excludes from the 'net investment,' which must be paid if the federal government decides to ercapture the project, 'the value of any lands, rights-of-way, or other property of the United States licensed by the Commission under this Act'.

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347 U.S. 260 74 S.Ct. 499 98 L.Ed. 681 UNITED STATES ex rel. ACCARDIv.SHAUGHNESSY. No. 366. Argued Feb. 2, 1954. Decided March 15, 1954. Mr. Jack Wasserman, Washington, D.C., for petitioner. Mr. Marvin E. Frankel, Washington, D.C., for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 This is a habeas corpus action in which the petitioner attacks the validity of the denial of his application for suspension of deportation under the provisions of § 19(c) of the Immigration Act of 1917.1 Admittedly deportable, the petitioner alleged, among other things, that the denial of his application by the Board of Immigration Appeals was prejudged through the issuance by the Attorney General in 1952, prior to the Board's decision, of a confidential list of 'unsavory characters' including petitioner's name, which made it impossible for him 'to secure fair consideration of this case.' The District Judge refused the offer of proof, denying the writ on the allegations of the petitioner without written opinion. A divided panel of the Court of Appeals for the Second Circuit affirmed. 206 F.2d 897. We granted certiorari. 346 U.S. 884, 74 S.Ct. 138. 2 The Justice Department's immigration file on petitioner reveals the following relevant facts. He was born in Italy of Italian parents in 1909 and entered the United States by train from Canada in 1932 without immigration inspection and without an immigration visa. This entry clearly falls under § 14 of the Immigration Act of 19242 and is the uncontested ground for deportation. The deportation proceedings against him began in 1947. In 1948 he applied for suspension of deportation pursuant to § 19(c) of the Immigration Act of 1917. This section as amended in 1948 provides, in pertinent part, that: 3 'In the case of any alien (other than one to whom subsection (d) of this section is applicable) who is deportable under any law of the United States and who has proved good moral character for the preceding five years, the Attorney General may * * * suspend deportation of such alien if he is not ineligible for naturalization or if ineligible, such ineligibility is solely by reason of his race, if he finds (a) that such deportation would result in serious economic detriment to a citizen or legally resident alien who is the spouse, parent, or minor child of such deportable alien; or (b) that such alien has resided continuously in the United States for seven years or more and is residing in the United States upon July 1, 1948.' 4 Hearings on the deportation charge and the application for suspension of deportation were held before officers of the Immigration and Naturalization Service at various times from 1948 to 1952. A hearing officer ultimately found petitioner deportable and recommended a denial of discretionary relief. On July 7, 1952, the Acting Commissioner of Immigration adopted the officer's findings and recommendation. Almost nine months later, on April 3, 1953, the Board of Immigration Appeals affirmed the decision of the hearing officer. A warrant of deportation was issued the same day and arrangements were made for actual deportation to take place on April 24, 1953. 5 The scene of action then shifted to the United States District Court for the Southern District of New York. One day before his scheduled deportation petitioner sued out a writ of habeas corpus. District Judge Noonan dismissed the writ on April 30 and his order, formally entered on May 5, was never appealed. Arrangements were then made for petitioner to depart on May 19.3 However, on May 15, his wife commenced this action by filing a petition for a second writ of habeas corpus.4 New grounds were alleged, on information and belief, for attacking the administrative refusal to suspend deportation.5 The principal ground is that on October 2, 1952—after the Acting Commissioner's decision in the case but before the decision of the Board of Immigration Appeals—the Attorney General announced at a press conference that he planned to deport certain 'unsavory characters'; on or about that date the Attorney General prepared a confidential list of one hundred individuals, including petitioner, whose deportation he wished; the list was circulated by the Department of Justice among all employees in the Immigration Service and on the Board of Immigration Appeals; and that issuance of the list and related publicity amounted to public prejudgment by the Attorney General so that fair consideration of petitioner's case by the Board of Immigration Appeals was made impossible. Although an opposing affidavit submitted by government counsel denied 'that the decision was based on information outside of the record' and contended that the allegation of prejudgment was 'frivolous,' the same counsel repeated in a colloquy with the court a statement he had made at the first habeas corpus hearing 'that this man was on the Attorney General's proscribed list of alien deportees.' 6 District Judge Clancy did not order a hearing on the allegations and summarily refused to issue a writ of habeas corpus. An appeal was taken to the Court of Appeals for the Second Circuit with the contention that the allegations required a hearing in the District Court and that the writ should have been issued if the allegations were proved. A majority of the Court of Appeals' panel thought the administrative record amply supported a refusal to suspend deportation; found nothing in the record to indicate that the administrative officials considered anything but that record in arriving at a decision in the case; and ruled that the assertion of mere 'suspicion and belief' that extraneous matters were considered does not require a hearing. Judge Frank dissented. 7 The same questions presented to the Court of Appeals were raised in the petition for certiorari and are thus properly before us. The crucial question is whether the alleged conduct of the Attorney General deprived petitioner of any of the rights guaranteed him by the statute or by the regulations issued pursuant thereto. 8 Regulations6 with the force and effect of law7 supplement the bare bones of § 19(c). The regulations prescribe the procedure to be followed in processing an alien's application for suspension of deportation. Until the 1952 revision of the regulations, the procedure called for decisions at three separate administrative levels below the AttorneyGeneral—hearing officer, Commissioner, and the Board of Immigration Appeals. The Board is appointed by the Attorney General, serves at his pleasure, and operates under regulations providing that: 'in considering and determining * * * appeals, the Board of Immigration Appeals shall exercise such discretion and power conferred upon the Attorney General by law as is appropriate and necessary for the disposition of the case. The decision of the Board * * * shall be final except in those cases reviewed by the Attorney General. * * *' 8 CFR § 90.3(c) (1949). See 8 CFR § 6.1(d)(1) (Rev. 1952). And the Board was required to refer to the Attorney General for review all cases which: 9 '(a) The Attorney General directs the Board to refer to him. 10 '(b) The chairman or a majority of the Board believes should be referred to the Attorney General for review of its decision. 11 '(c) The Commissioner requests be referred to the Attorney General by the Board and it agrees.' 8 CFR § 90.12 (1949). See 8 CFR § 6.1(h)(1) (Rev. 1952). 12 The regulations just quoted pinpoint the decisive fact in this case: the Board was required, as it still is, to exercise its own judgment when considering appeals. The clear import of broad provisions for a final review by the Attorney General himself would be meaningless if the Board were not expected to render a decision in accord with its own collective belief. In unequivocal terms the regulations delegate to the Board discretionary authority as broad as the statute confers on the Attorney General; the scope of the Attorney General's discretion became the yardstick of the Board's. And if the word 'discretion' means anything in a statutory or administrative grant of power, it means that the recipient must exercise his authority according to his own understanding and conscience. This applies with equal force to the Board and the Attorney General. In short, as long as the regulations remain operative, the Attorney General denies himself the right to sidestep the Board or dictate its decision in any manner. 13 We think the petition for habeas corpus charges the Attorney General with precisely what the regulations forbid him to do: dictating the Board's decision. The petition alleges that the Attorney General included the name of petitioner in a confidential list of 'unsavory characters' whom he wanted deported; public announcements clearly reveal that the Attorney General did not regard the listing as a mere preliminary to investigation and deportation; to the contrary, those listed were persons whom the Attorney General 'planned to deport.' And, it is alleged, this intention was made quite clear to the Board when the list was circulated among its members. In fact, the Assistant District Attorney characterized it as the 'Attorney General's proscribed list of alien deportees.' To be sure, the petition does not allege that the 'Attorney General ordered the Board to deny discretionary relief to the listed aliens.' It would be naive to expect such a heavy handed way of doing things. However, proof was offered and refused that the Commissioner of Immigration told previous counsel of petitioner, 'We can't do a thing in your case because the Attorney General has his (petitioner's) name on that list of a hundred.' We believe the allegations are quite sufficient where the body charged with the exercise of discretion is a nonstatutory board composed of subordinates within a department headed by the individual who formulated, announced, and circulated such views of the pending proceeding. 14 It is important to emphasize that we are not here reviewing and reversing the manner in which discretion was exercised. If such were the case we would be discussing the evidence in the record supporting or undermining the alien's claim to discretionary relief. Rather, we object to the Board's alleged failure to exercise its own discretion, contrary to existing valid regulations. 15 If petitioner can prove the allegation he should receive a new hearing before the Board without the burden of previous proscription by the list. After the recall or cancellation of the list the Board must rule out any consideration thereof and in arriving at its decision exercise its own independent discretion, after a fair hearing, which is nothing more than what the regulations accord petitioner as a right.8 Of course, he may be unable to prove his allegation before the District Court; but he is entitled to the opportunity to try. If successful, he may still fail to convince the Board or the Attorney General, in the exercise of their discretion, that he is entitled to suspension, but at least he will have been afforded that due process required by the regulations in such proceedings. 16 Reversed. 17 Mr. Justice JACKSON, whom Mr. Justice REED, Mr. Justice BURTON, and Mr. Justice MINTON join, dissenting. 18 We feel constrained to dissent from the legal doctrine being announced. The doctrine seems proof of the adage that hard cases make bad law. 19 Peculiarities which distinguish this administrative decision from others we have held judicially reviewable must be borne in mind. The hearings questioned here as to their fairness were not hearings on which an order of deportation was based and which, under some limitations, may be tested by habeas corpus. Nishimura Ekiu v. United States, 142 U.S. 651, 12 S.Ct. 336, 35 L.Ed. 1146. Neither is this a case involving questioned personal status, as whether one is eligible for citizenship, which we have held reviewable under procedures for declaratory judgment and injunction. McGrath v. Kristensen, 340 U.S. 162, 71 S.Ct. 224, 95 L.Ed. 173. Petitioner admittedly is in this country illegally and does not question his deportability or the validity of the order to deport him. The hearings in question relate only to whether carrying out an entirely legal deportation order is to be suspended. 20 Congress vested in the Attorney General, and in him alone, discretion as to whether to suspend deportation under certain circumstances. We think a refusal to exercise that discretion is not reviewable on habeas corpus, first, because the nature of the power and discretion vested in the Attorney General is analogous to the power of pardon or commutation of a sentence, which we trust no one thinks is subject to judicial control; and second, because no legal right exists in petitioner by virtue of constitution, statute or common law to have a lawful order of deportation suspended. Even if petitioner proves himself eligible for suspension, that gives him no right to it as a matter of law but merely establishes a condition precedent to exercise of discretion by the Attorney General. Habeas corpus is to enforce legal rights, not to transfer to the courts control of executive discretion. 21 The ground for judicial interference here seems to be that the Board of Immigration Appeals did find, or may have found, against suspension on instructions from the Attorney General. Even so, this Board is neither a judicial body nor an independent agency. It is created by the Attorney General as part of his office, he names its members, and they are responsible only to him. It operates under his supervision and direction, and its every decision is subject to his unlimited review and revision. The refusal to suspend deportation, no matter which subordinate officer actually makes it, is in law the Attorney General's decision. We do not think its validity can be impeached by showing that he overinfluenced members of his own staff whose opinion in any event would be only advisory. 22 The Court appears to be of the belief that habeas corpus will issue to review a decision by the Board. It is treating the Attorney General's regulations as if they vested in the Board final authority to exercise his discretion. But, in our view, the statute neither contemplates nor tolerates a redelegation of his discretion by the Attorney General so as to make the decision of the Board, even if left standing by him, final in the sense of being subject to judicial review as the Board's own decision. Even the Attorney General was not entrusted with this discretion free of all congressional control, for Congress specifically reserved to itself power to overrule his acts of grace. 54 Stat. 672, 8 U.S.C. (1946) § 155(c), as amended, 8 U.S.C. (Supp. V) § 155(c). It overtaxes our nai vete about politics to believe Congress would entrust the power to a board which is not the creature of Congress and whose members are not subject to Senate confirmation. 23 Cases challenging deportation orders, such as Bridges v. Wixon, 326 U.S. 135, 65 S.Ct. 1443, 89 L.Ed. 2103, whatever their merits or demerits, have no application here. In cases where the question is the validity of a deportation order, habeas corpus will issue at least to review jurisdictional questions. In those cases, also, the petitioner has a legal right to assert, viz., a private right not to be deported except upon grounds prescribed by Congress. Neither the validity of deportation nor a private right is involved here. 24 Of course, it may be thought that it would be better government if even executive acts of grace were subject to judicial review. But the process of the Court seems adapted only to the determination of legal rights, and here the decision is thrusting upon the courts the task of reviewing a discretionary and purely executive function. Habeas corpus, like the currency, can be debased by over-issue quite as certainly as by too niggardly use. We would affirm and leave the responsibility for suspension or execution of this deportation squarely on the Attorney General, where Congress has put it. 1 39 Stat. 889, as amended, 8 U.S.C. § 155(c) (1946 ed., Supp. V). Section 405 is the savings clause of the Immigration and Nationality Act of 1952, 8 U.S.C.A. § 1101 et seq., and its subsection (a) provides that: 'Nothing contained in this Act, unless otherwise specifically provided therein, shall be construed to affect the validity of any * * * proceeding which shall be valid at the time this Act shall take effect; or to affect any * * * proceedings * * * brought * * * at the time this Act shall take effect; but as to all such * * * proceedings, * * * the statutes or parts of statutes repealed by this Act are, unless otherwise specifically provided therein, hereby continued in force and effect. * * * An application for suspension of deportation under section 19 of the Immigration Act of 1917, as amended, * * * which is pending on the date of enactment of this Act (June 27, 1952), shall be regarded as a proceeding within the meaning of this subsection.' 66 Stat. 280, 8 U.S.C. p. 734 (1952), 8 U.S.C.A. § 1101 note. Since Accardi's application for suspension of deportation was made in 1948, § 19(c) of the 1917 Act continues to govern this proceeding rather than its more stringent equivalent in the 1952 Act, § 244, 66 Stat. 214, 8 U.S.C. § 1254 (1952), 8 U.S.C.A. § 1254. 2 'Any alien who at any time after entering the United States is found to have been at the time of entry not entitled under this Act to enter the United States * * * shall be taken into custody and deported in the same manner as provided for in sections 19 and 20 of the Immigration Act of 1917. * * *' 43 Stat. 162, 8 U.S.C. § 214 (1946). This ground for deportation is perpetuated by § 241(a)(1) and (2) of the Immigration and Nationality Act of 1952. 66 Stat. 204, 8 U.S.C. § 1251(a)(1) and (2) (1952), 8 U.S.C.A. § 1251(a)(1, 2). 3 Meanwhile, Accardi moved the Board of Immigration Appeals to reconsider his case. The motion was denied on May 8. 4 Res judicata does not apply to proceedings for habeas corpus. Salinger v. Loisel, 1924, 265 U.S. 224, 44 S.Ct. 519, 68 L.Ed. 989; Wong Doo v. United States, 1924, 265 U.S. 239, 44 S.Ct. 524, 68 L.Ed. 999. 5 The first ground was that 'in all similar cases the Board of Immigration Appeals has exercised favorable discretion and its refusal to do so herein constitutes an abuse of discretion.' This is a wholly frivolous contention, adequately disposed of by the Court of Appeals. 2 Cir., 206 F.2d 897, 901. Another allegation charged 'that the Department of Justice maintains a confidential file with respect to (Joseph Accardi).' But at no place does the petition elaborate on this charge, nor does the petition allege that discretionary relief was denied because of information contained in a confidential file. Although the petition does allege that 'because of consideration of matters outside the record of his immigration hearing, discretionary relief has been denied,' this allegation seems to refer to the 'confidential list' discussed in the body of the opinion. Hence we assume that the charge of reliance on confidential information merely repeats the principal allegation that the Attorney General's prejudgment of Accardi's case by issuance of the 'confidential list' caused the Board to deny discretionary relief. 6 The applicable regulations in effect during most of this proceeding appear at 8 CFR, 1949, Pts. 150 and 90 and 8 CFR, 1951 Pocket Supp., Pts. 150, 151 and 90. The corresponding sections in the 1952 revision of the regulations, promulgated pursuant to the Immigration and Nationality Act of 1952, may be found at 8 CFR, Rev.1952, Pts. 242—244 and 6; 19 Fed.Reg. 930. 7 See Boske v. Comingore, 1900, 177 U.S. 459, 20 S.Ct. 701, 44 L.Ed. 846; United States ex rel. Bilokumsky v. Tod, 1923, 263 U.S. 149, 155, 44 S.Ct. 54, 56, 68 L.Ed. 221; Bridges v. Wixon, 1945, 326 U.S. 135, 150—156, 65 S.Ct. 1443, 1450, 1453, 89 L.Ed. 2103. 8 See the Bilokumsky and Bridges cases cited in note 7, supra.

12

347 U.S. 272 74 S.Ct. 481 98 L.Ed. 689 STATE OF ALABAMAv.STATE OF TEXAS et al. STATE OF RHODE ISLAND et al. v. STATE OF LOUISIANA et al.Nos. —-, Original. Argued Feb. 3 and 4, 1954. Decided March 15, 1954. Rehearing Denied April 26, 1954. See 347 U.S. 950, 74 S.Ct. 674. Messrs. William E. Powers, Providence, R.I., Ben Cohen, Washington, D.C., Si Garrett, Montgomery, Ala., and Marx Leva, Washington, D.C., for complainants. Messrs. Edmund G. Brown, San Francisco, John L. Madden, Monroe, La., Jesse P. Luton, Jr., Austin, Tex., and Oscar H. Davis, Washington, D.C., for defendants. PER CURIAM. 1 The motions for leave to file these complaints are denied. Article IV, § 3, Cl. 2, United States Constitution. United States v. Gratiot, 14 Pet. 526, 537, 10 L.Ed. 573: The power of Congress to dispose of any kind of property belonging to the United States 'is vested in Congress without limitation.' United States v. Midwest Oil Co., 236 U.S. 459, 474, 35 S.Ct. 309, 313, 59 L.Ed. 673: "For it must be borne in mind that Congress not only has a legislative power over the public domain, but it also exercises the powers of the proprietor therein. Congress 'may deal with such lands precisely as an ordinary individual may deal with farming property. It may sell or withhold them from sale.' Camfield v. United States, 167 U.S. (518,) 524, 17 S.Ct. 864, 42 L.Ed. 260; Light v. United States, 220 U.S. 523, 536, 31 S.Ct. 485, 55 L.Ed. (570) 574.' United States v. City and County of San Francisco, 310 U.S. 16, 29—30, 60 S.Ct. 749, 756, 84 L.Ed. 1050: 'Article 4, Section 3, Cl. 2 of the Constitution provides that 'The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States.' The power over the public land thus entrusted to Congress is without limitations. 'And it is not for the courts to say how that trust shall be administered. That is for Congress to determine." United States v. California, 332 U.S. 19, 27, 67 S.Ct. 1658, 1663, 91 L.Ed. 1889: 'We have said that the constitutional power of Congress (under Article IV, § 3, Cl. 2) is without limitation. United States v. City and County of San Francisco, 310 U.S. 16, 29, 30, 60 S.Ct. 749, 756, 757, 84 L.Ed. 1050.' 2 THE CHIEF JUSTICE took no part in the consideration or decision of these cases. 3 Mr. Justice REED, concurring. 4 The per curiam opinion in these cases bases its conclusion that the Submerged Lands Act of 1953, 67 Stat. 29, 43 U.S.C.A. § 1301 et seq., is constitutional on the language in Art. IV, § 3, of the Constitution: 'The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; * * *.' I agree with that result. Neither Alabama nor Rhode Island has questioned or would question that power, if the applicability of that clause were accepted. 5 Those states, however, do not accept the applicability of the quoted clause. It is their position that the resources under the marginal sea do not, under United States v. State of Texas, 339 U.S. 707, 70 S.Ct. 918, 94 L.Ed. 1221; United States v. State of Louisiana, 339 U.S. 699, 70 S.Ct. 914, 94 L.Ed. 1216, and United States v. State of California, 332 U.S. 19, 67 S.Ct. 1658, 91 L.Ed. 1889, constitute property either of the United States or of any state. The complainant states assert those cases held that the 'paramount rights' in the United States decreed by this Court arose from the sovereignty of the United States and the duty to provide for the common defense. Further, they urge that the rights are held in trust for all the states as a federal responsibility and to cede them to individual states would take away the 'equal footing' among states by extending state power into the domain of national responsibility. See United States v. State of Texas, supra, 339 U.S. at page 719, 70 S.Ct. at page 924, and Coyle v. Secretary of State of Oklahoma, 221 U.S. 559, 31 S.Ct. 688, 55 L.Ed. 853. 6 This Court is the only court for the trial and discussion of the points upon which Alabama and Rhode Island rely. We have heard complainants on all these points and I desire to state why I think the arguments extracted by the states from this Court's ruling authorities on these same rights do not justify a hearing. 7 The fact that Alabama and the defendant states were admitted into the Union 'on an equal footing with the original states, in all respects whatever,' 2 Stat. 701, 3 Stat. 489, 5 Stat. 742, 797, 9 Stat. 452, does not affect Congress' power to dispose of federal property. The requirement of equal footing does not demand that courts wipe out diversities 'in the economic aspects of the several States', but calls for 'parity as respects political standing and sovereignty.' United States v. State of Texas, supra, 339 U.S. at page 716, 70 S.Ct. at page 922. The power of Congress to cede property to one state without corresponding cession to all states has been consistently recognized. See, e.g., United States v. State of Wyoming, 335 U.S. 895, 69 S.Ct. 297, 93 L.Ed. 431, and cases cited by the Court. 8 While this Court did not hold in express terms in the Texas, Louisiana and California cases that the area in question belonged to the United States as proprietor, it did hold that 'the Federal Government rather than the state has paramount rights in and power over that belt, an incident to which is full dominion over the resources of the soil under that water area, including oil.' 332 U.S. at pages 38—39, 67 S.Ct. at page 1668. This incident is a property right and Congress had unlimited power to dispose of it. 9 If the marginal lands were thus declared by the California and following cases to belong to the United States, they were ceded to the states through the subsequent Submerged Lands Act of 1953 by the clause: '(T)itle to and ownership of the lands beneath navigable waters within the boundaries of the respective States, and the natural resources within such lands and waters * * * are hereby * * * recognized, confirmed, established, and vested in and assigned to the respective States * * *.' s 3(a), 43 U.S.C.A. § 1311(a). If, on the other hand, the marginal lands were not declared by those cases to belong to the United States, title to them remained in the respective states. Either by original ownership or by the cession of the Act, the lands are now the property of the respective states. The use or control of the undersea area and its resources by the respective states cannot, therefore, now be challenged by any other state on the ground of lack of sovereignty in the challenged state. 10 The cession challenged here does not affect the power and responsibility of the United States as sovereign to foster and protect against foreign and domestic enemies that area or resources ceded to the proprietorship of the respective states. The Federal Government, of course, owes the same duty to the undersea area that it does to the uplands, the tidelands or the beds of the inland waters. Moreover, the Submerged Lands Act purports to convey to the states only 'the lands beneath navigable waters' and 'the natural resources within such lands and waters' and expressly provides that '(t)he United States retains all its navigational servitude and rights in and powers of regulation and control of said lands and navigable waters for the constitutional purposes of commerce, navigation, national defense, and international affairs, all of which shall be paramount to, but shall not be deemed to include, proprietary rights of ownership, or the rights of management, administration, leasing, use, and development of the lands and natural resources which are specifically recognized, confirmed, established, and vested in and assigned to the respective States and others by section 3 of this Act.' § 6(a), 43 U.S.C.A. § 1314(a). Surely this provision negatives any contention that the Act empowers individual states to alter the historic relationship of the states respecting navigation of the ocean. See Kelly v. State of Washington, 302 U.S. 1, 58 S.Ct. 87, 82 L.Ed. 3; cf. Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156, 92 L.Ed. 1460. 11 The United States holds resources and territory in trust for its citizens in one sense, but not in the sense that a private trustee holds for a cestui que trust. The responsibility of Congress is to utilize the assets that come into its hands as sovereign in the way that it decides is best for the future of the Nation. That is what it has done here. Such congressional determination as the legislation here in question is not subject to judicial review. 12 Mr. Justice BLACK, dissenting. 13 Alabama and Rhode Island asked leave to file complaints to challenge an Act of Congress which purports to convey to some of the states an indefeasible title to and ownership of soil under the Gulf of Mexico and the Atlantic and Pacific Oceans. The Act includes a similar gift of all the 'natural resources within such lands and waters.' Some states are given a three-mile strip of ocean; some states are given about ten miles; most states are given no ocean at all. Some states that are thus receiving gifts claim even more. Louisiana by law makes claims extending 30 miles into the Gulf of Mexico. Texas, it is said, claims that at some points its state borders project as far as 150 miles into the Gulf. If Congress can cede three miles of ocean I see no reason why it could not later cede 150 miles or more. 14 Alabama and Rhode Island deny that Congress has any power to dispose of the national interest in the ocean or its uncaptured resources. These States assert that whatever power the United States has over the ocean is an inseparable part of national sovereignty which cannot be irrevocably parcelled out or delegated to states, individuals or private business groups. Admitting the power of Congress to control and regulate the use of the ocean and the capturing of its assets, Alabama and Rhode Island deny that any part of this sovereign national control can be vested in any state. Such an unauthorized abdication of essential national sovereignty, so the two States urge, is precisely the effect of the challenged Act. If true, this subjection of Alabama and Rhode Island to regulation by other states deprives them of that 'equal footing' as States which is theirs by right. United States v. State of Texas, 339 U.S. 707, 719, 70 S.Ct. 918, 924, 94 L.Ed. 1221. The Court, however, summarily denies Alabama and Rhode Island a right even to file their complaint. This I assume must be done on the ground that the claims they present are so clearly without merit as to be frivolous. I am unable to agree to this and would grant leave to file in order that the case might be considered in the usual manner. My reasons can be briefly stated. 15 Ocean waters are the highways of the world. They are no less such because they happen to lap the shores of different nations that border them. Freedom of the seas everywhere is essential to trade, commerce, travel and communication among the nations. These farflung international activities have frequently led to conflict and war. The War of 1812 bears witness to this. In ocean waters bordering our country, if nowhere else, day-to-day national power complete, undivided, flexible, and immediately available—is an essential attribute of federal sovereignty. The present Act might be construed in such way that this power would not be substantially impaired, weakened or made less easily available at all times. But the Court is not construing it that way. 16 The Act's language purports to convey 'all right, title and interest of the United States' to immense ocean areas as though the ocean could be divided up and sold like town lots. If valid, the Act grants to states all 'proprietary rights of ownership, or the rights of management, administration, leasing, use, and development of the lands and natural resources' of the ocean. The result is that some favored states can say how, when, for what purposes and to what extent other states and their citizens can use the ocean or its resources. This raises serious and difficult questions with respect to the authority of Congress to relinquish elements of national sovereignty over the oceans. 17 Once private property rights in ocean waters are recognized, I am uncertain where lines can be drawn. The Court's decision today in Federal Power Commission v. Niagara Mohawk Power Corp., 347 U.S. 239, 74 S.Ct. 487, goes a long way toward partitioning up the running rivers of America into conceptualistic segments.1 Under that case the Government is likely to have to pay large sums if it wishes to use its rivers. Mr. Justice DOUGLAS' dissent in the Niagara Mohawk case should warn us to beware of extending the concept of state ownership of land under inland streams to the vast ocean areas of the world.2 The results in that case are in my view bad enough. But it could be far worse to permit agencies other than the United States to clutter up the ocean with multitudinous wells and derricks and deeds and leases and timeconsuming lawsuits. All of these things suggest some of the dangers of depriving the United States of complete, unhampered control of the ocean bordering our Nation. We should not forget that the ocean 'belongs to no one nation, but is the common property of all.' Lord v. Steamship Co., 102 U.S. 541, 544, 26 L.Ed. 224.3 18 The Constitution does give Congress power to dispose of and regulate 'Territory or other Property belonging to the United States'. This power, where it applies, has been declared to be unlimited. Congress, the Court has said, 'may deal with such lands precisely as a private individual may deal with his farming property.' Camfield v. United States, 167 U.S. 518, 524, 17 S.Ct. 864, 866, 42 L.Ed. 260. Of course, this authorizes Congress at will to sell or dispose of property it owns as property. It could produce oil from the ocean and sell that property. It could have that oil produced by its agents. But I have difficulty in believing that any state can be granted power under our Constitution to exact tribute from any other state that wants to take oil or fish from the ocean which is the common 'property' of all. And I have trouble also in thinking Congress could sell or give away the Atlantic or Pacific oceans. If it can treat those oceans as 'Territory' within the Constitution's meaning, why could it not deed away thousands of miles of the Atlantic or Pacific at will? I suppose no one would say that the Constitution permits Congress to create new states, at least in part out of submerged lands with state power to govern and rule over the 'Territory' so disposed of. Would this Court sustain the power of Congress to sell the Mississippi or any of the other great navigable rivers of this country? The Court's decisions here and in the Niagara Mohawk case leave me in doubt. 19 The issues presented are too grave and too doubtful for me to assent to closing the doors of this Court to these States without a more careful consideration of the question than the Court has afforded. For there is a great deal more involved than who gets what oil. Congress has here transferred to the states substantial power over the ocean. This necessarily makes less readily available the Nation's power to protect the freedom of the seas—a power essential to keep peace and friendship among the nations of the world. I cannot agree to deny these States a full opportunity to challenge the Act. 20 Mr. Justice DOUGLAS, dissenting. 21 California lost her claim to the sea beyond the low water mark by a six to two decision. United States v. State of California, 332 U.S. 19, 67 S.Ct. 1658, 91 L.Ed. 1889. Then came a change in the Court's membership; and Texas lost her claim to the marginal sea by a four to three decision. United States v. State of Texas, 339 U.S. 707, 70 S.Ct. 918, 94 L.Ed. 1221. Only three of the majority that decided those cases survive. It would therefore be quite understandable if a majority of the present Court were to take the position of the earlier minority and overrule those decisions. But if those decisions are to stand, it is inconceivable to me that we can deny leave to file the complaints in the present cases. To deny these motions we must hold that the issues tendered are frivolous and insubstantial. But if the earlier decisions are to stand, certainly that cannot be said. 22 If the issue before us were only the power of Congress to dispose of public lands, the claims of Alabama and Rhode Island would be foreclosed by Art. IV, § 3 of the Constitution. But the entire point of the earlier litigation in the California and Texas cases was that more than property rights was involved. As we said in United States v. State of Texas, supra, 339 U.S. at page 719, 70 S.Ct. at page 924, 'once low-water mark is passed the international domain is reached. Property rights must then be so subordinated to political rights as in substance to coalesce and unite in the national sovereign.' Any 'property interests' which the States may earlier have held in the bed of the marginal sea were 'so subordinated to the rights of sovereignty as to follow sovereignty.' 70 S.Ct. at page 924. 23 Thus we are dealing here with incidents of national sovereignty. The marginal sea is not an oil well; it is more than a mass of water; it is a protective belt for the entire Nation over which the United States must exercise exclusive and paramount authority. The authority over it can no more be abdicated than any of the other great powers of the Federal Government. It is to be exercised for the benefit of the whole. As Mr. Justice BLACK aptly states in his dissent in these cases, 'In ocean waters bordering our country, if nowhere else, day-to-day national power—complete, undivided, flexible, and immediately available—is an essential attribute of federal sovereignty.' 24 Could Congress cede the great Columbia River or the mighty Mississippi to a State or a power company? I should think not. For they are arteries of commerce that attach to the national sovereignty and remain there until and unless the Constitution is changed. What is true of a great river would seem to be even more obviously true of the marginal sea. For it is not only an artery of commerce among the States but the vast buffer standing between us and the world. It therefore would seem that unless we are to change our form of government, that domain must by its very nature attach to the national government and the authority over it remain nondelegable. 25 It is said, however, that the interests in the marginal sea may be chopped up, the States being granted the economic ones and the federal government keeping the political ones. We rejected, however, that precise claim in the earlier cases. We said, for example, that the 'equal footing' clause in the Joint Resolution admitting Texas to the Union precluded the argument that Texas surrendered only political rights over the marginal sea and retained all property rights in it. 339 U.S. at pages 716—720, 70 S.Ct. at pages 924—925. 26 If it were necessary for Texas to surrender all her property and political rights in the marginal sea in order to enter the Union on an 'equal footing' with the other States, pray how can she get back some of those rights and still remain on an 'equal footing' with the other States? That is the unresolved question in these cases. That is the question which points up the grievances of Alabama and Rhode Island. For what Texas (and a few other States) obtain by the present Act of Congress is what we held the 'equal footing' clause forbade them to retain. The 'equal footing' clause, in other words, prevents one State from laying claim to a part of the national domain from which the other States are excluded. 339 U.S. at pages 719—720, 70 S.Ct. at pages 924—925. Today we permit that precise 'inequality among the States' which we earlier said was precluded by the 'equal footing' clause. 27 Alabama and Rhode Island can justly complain. So can the other States. Our Union is one of equal sovereigns, none entitled to preferment denied the others. That is what the 'equal footing' standard means or it means nothing. Today powerful political forces are marshalled to wipe out our prior decisions for the benefit of a favored few. But those decisions were sound in constitutional theory and they should stand. If they presented a question suitable for judicial review, so does the present controversy. 1 This Court has referred to ownership of submerged lands under navigable streams as 'theoretical ownership and dominion', 'a qualified title,' and 'a bare technical title'. Scranton v. Wheeler, 179 U.S. 141, 160, 163, 21 S.Ct. 48, 56, 57, 45 L.Ed. 126. See also United States v. Commodore Park, 324 U.S. 386, 390, 65 S.Ct. 803, 805, 89 L.Ed. 1017. 2 See United States v. State of California, 332 U.S. 19, 36, 67 S.Ct. 1658, 1667, 91 L.Ed. 1889. 3 It is true that the Act does purport to reserve for the United States 'all its navigational servitude and rights in and powers of regulation and control * * * for the constitutional purposes of commerce, navigation, national defense, and international affairs. * * *' But surely this reserves nothing that Congress could give away. Any attempt to relinquish the national government's power over the oceans to that extent would ignore the fact that 'Navigation on the high seas is necessarily national in its character. Such navigation is clearly a matter of 'external concern,' affecting the nation as a nation in its external affairs. It must, therefore, be subject to the national government.' Lord v. Steamship Co., 102 U.S. 541, 544.

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347 U.S. 231 74 S.Ct. 505 98 L.Ed. 660 WALTERS et al.v.CITY OF ST. LOUIS, MO., et al. No. 389. Argued Feb. 2 and 3, 1954. Decided March 15, 1954. Mr. Stanley M. Rosenblum, St. Louis, Mo., for appellants. Mr. Samuel H. Liberman, St. Louis, Mo., for appellees. Mr. Justice JACKSON delivered the opinion of the Court. 1 This appeal challenges a municipal income tax ordinance which excises gross salary and wages of the employed but only net profits of the self-employed, of corporations and of business enterprises. Appellants, who are wage earners, sued in the state courts for a declaratory judgment and injunction to prevent their employer from withholding the tax and the City from collecting it. 259 S.W.2d 377. Their contention is that the discrimination between wages and profits which results from allowing certain deductions only to profits violates the Due Process and Equal Protection Clauses of the Fourteenth Amendment. It has been overruled by the state courts and is brought here for determination. 2 The power or jurisdiction of the City to tax these appellants on their earnings is not open to question on federal grounds. There is no issue as to extraterritorial application of the tax or as to burden upon interstate commerce. The taxpayers, the withholding employer, the taxable income earned, were all clearly within the territorial jurisdiction and power of the State and of the municipality to which its taxing authority was delegated. The sole question here is whether in levying a tax on those whom it has plenary power to tax, the City has introduced classification and discriminations so unreasonable as to deny to appellants due process or equal protection of the law. 3 A weakness of the appellants' case is that its anticipatory character precludes consideration of any contentions insofar as they depend upon actual application of the tax or the regulations promulgated for its administration. This action was commenced almost immediately after the Act became effective. A portion of appellants' wages has been withheld by their employer, but the City has not yet collected the tax. There is no evidence as to how the amount withheld from appellants compares with taxes collected from self-employed persons or businesses. The complaint attacks only the state legislative Act delegating power to the City of St. Louis and the taxing ordinance enacted by that City. 4 In the courts below the appellants also attempted to rely upon claims of discrimination resulting from regulations adopted by the municipal taxing authorities. But the Supreme Court of Missouri held the regulations were not before the court, declined to consider them to be a part of the ordinance, and intimated that the regulations might be held void hereafter without invalidating the ordinance. Missouri authorizes a petition for amendment or repeal of regulations promulgated by an administrative officer and grants a full judicial review of his final decision thereon or any other order that affects private rights.1 Appellants have taken no steps to procure such relief. We are uninformed either as to what the administrative practice actually is or whether it conforms with Missouri law. Of course, we will not undertake to review what the court below did not decide. The state court has not passed on any question of discrimination arising from the regulations or any question as to the interpretation or validity thereof. We have here only the very limited issue—does the statute or the ordinance on its face violate the Fourteenth Amendment? The Act of the Missouri Legislature is simply a general enabling Act, so far as relevant, authorizing the City to levy 'an earnings tax on the salaries, wages, commissions and other compensation earned by its residents; * * * on the net profits of associations, businesses or other activities conducted by residents; * * * and on the net profits earned by all corporations as the result of work done or services performed or rendered and business or other activities conducted in the city.'2 However, it authorizes the municipality to provide 'for deductions and exemptions from salaries, wages and commissions of employees * * *.'3 It directs that net profits shall be ascertained 'by deducting the necessary expenses of operation from the gross profits or earnings.'4 It does not limit deductions allowable to wage earners or define the necessary expenses allowable in arriving at net profits. 5 As to the matters complained of, the ordinance is almost as general. It imposes the same rate of tax on salaries, wages, commissions and other earned compensation of individuals as it does on the net profits of the self-employed, corporations, associations and businesses.5 But it does not make any express provision for deductions from earned income by wage earners such as appellants. As to those in business, it provides generally for deducting 'the necessary expenses of operation from the gross profits or earnings.'6 It does not define necessary expenses, but it authorizes the City Collector to promulgate appropriate rules and regulations.7 6 Appellants claim that the ordinance will allow self-employed persons and businesses to deduct such items as taxes (which appellants claim will include federal income taxes) and charitable contributions not in excess of five percent of net income, which deductions are not allowed to those who earn wages or salaries. This may be true if the ordinance is applied as they expect. Whether this will be the application of the tax we cannot tell, for the record before us does not show its actual impact on classes of taxpayers or its methods of administration. Therefore, appellants' basic position must be that any legislative classification which distinguishes on its face between wage earners and the self-employed is constitutionally prohibited. 7 On its face, the ordinance classifies incomes for taxation according to their sources, one category consisting of salary and wage income and the other of profits from self-employment or business enterprise. Classification of earned income as against profits is not uncommon, sometimes to the advantage of the wage earner and sometimes to his disadvantage. It is a classification employed extensively in federal taxation, which under appropriate circumstances allows deductions to the selfemployed not allowed to employees,8 discriminates sharply between earned income and capital gains,9 and sets apart certain types of wage earning for social security tax and for benefits.10 We cannot say that a difference in treatment of the taxpayers deriving income from these different sources is per se a prohibited discrimination. There is not so much similarity between them that they must be placed in precisely the same classification for tax purposes. 8 The assertion is made that wage earners and self-employed persons are in competition on the same level of endeavor, and reliance is placed on such cases as Quaker City Cab Co. v. Commonwealth of Pennsylvania, 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927. There the Court found discrimination between identical sources of revenue depending only on the incorporated or unincorporated character of the taxpayer. But here, varying taxes are not laid upon taxpayers engaged in precisely the same form of activity. Instead, this is a broad tax on income, and the income springs from many activities carried on by many types of business entities. Here the classification rests on the State's view that wage or salary income is relatively fixed, predictable and certain, while profits of business are fluctuating and unstable. In view of widespread taxing practices, we cannot say that this difference is insignificant or fanciful. 9 The power of the State to classify according to occupation for the purposes of taxation is broad. Equal protection does not require identity of treatment. It only requires that classification rest on real and not feigned differences, that the distinction have some relevance to the purpose for which the classification is made, and that the different treatments be not so disparate, relative to the difference in classification, as to be wholly arbitrary. Cf. Dominion Hotel, Inc. v. State of Arizona, 249 U.S. 265, 39 S.Ct. 273, 63 L.Ed. 597; Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 57 S.Ct. 772, 81 L.Ed. 1193; New York Rapid Transit Corp. v. City of New York, 303 U.S. 573, 58 S.Ct. 721, 82 L.Ed. 1024; Skinner v. State of Oklahoma ex rel. Williamson, 316 U.S. 535, 62 S.Ct. 1110, 86 L.Ed. 1655. 'In its discretion it may tax all, or it may tax one or some, taking care to accord to all in the same class equality of rights.' Southwestern Oil Co. v. State of Texas, 217 U.S. 114, 121, 30 S.Ct. 496, 498, 54 L.Ed. 688. It may even tax wholesalers of specified articles on account of their occupation without exacting a similar tax on the occupations of wholesale dealers in other articles. Our disapproval of the wisdom or fairness of so doing is not a ground for interference. Ibid. 'When a state Legislature acts within the scope of its authority it is responsible to the people, and their right to change the agents to whom they have intrusted the power is ordinarily deemed a sufficient check upon its abuse. When the constituted authority of the state undertakes to exert the taxing power, and the question of the validity of its action is brought before this court, every presumption in its favor is indulged, and only clear and demonstrated usurpation of power will authorize judicial interference with legislative action.' Green v. Frazier, 253 U.S. 233, 239, 40 S.Ct. 499, 501, 64 L.Ed. 878. 10 Judgment affirmed. 11 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK joins, concurring in the result. 12 I am less confident than my Brethren that the Supreme Court of Missouri did not pass on the regulations as well as the ordinance. But I bow to their reading of the record, saving for a future day the serious and substantial question under the Equal Protection Clause raised by the regulations which grant employers deductions for taxes paid the federal government, yet do not allow employees a deduction for the same tax. 1 Mo.Const., Art. 5, § 22, V.A.M.S., provides: 'All final decisions, findings, rules and orders of any administrative officer or body existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights, shall be subject to direct review by the courts as provided by law; and such review shall include the determination whether the same are authorized by law, and in cases in which a hearing is required by law, whether the same are supported by competent and substantial evidence upon the whole record.' This provision is supplemented by Mo.Rev.Stat.1949, §§ 536.010—536.140, V.A.M.S. 2 'Any constitutional charter city in this state which now has or may hereafter acquire a population in excess of seven hundred thousand inhabitants, according to the last federal decennial census, is hereby authorized to levy and collect, by ordinance for general revenue purposes, an earnings tax on the salaries, wages, commissions and other compensation earned by its residents; on the salaries, wages, commissions and other compensation earned by nonresidents of the city for work done or services performed or rendered in the city; on the net profits of associations, businesses or other activities conducted by residents; on the net profits of associations, businesses or other activities conducted in the city by non-residents; and on the net profits earned by all corporations as the result of work done or services performed or rendered and business or other activities conducted in the city.' Mo.Rev.Stat. (1953 Supp.), § 92.110, V.A.M.S. 3 'The municipal assembly of any such city may provide for deductions and exemptions from salaries, wages and commissions of employees and may provide for exemptions on account of the wives, husbands and dependents of such employees.' Mo.Rev.Stat. (1953 Supp.), § 92.140, V.A.M.S. 4 'The net profits or earnings of associations, businesses or other activities, and corporations shall be ascertained and determined by deducting the necessary expenses of operation from the gross profits of earnings.' Mo.Rev.Stat. (1953 Supp.), § 92.150, V.A.M.S. 5 The pertinent part of the ordinance is as follows: 'A tax for general revenue purposes of one-half of one per centum is hereby imposed on (a) salaries, wages, commissions and other compensation earned after August 31, 1952, by resident individuals of the City, including the entire distributive share of any member of a partnership or association, less the amount thereof, if any, which may be shown to have been taxed under the provisions hereof to said association or partnership; and on (b) salaries, wages, commissions and other compensation earned after August 31, 1952, by nonresident individuals of the City, for work done or services performed or rendered in the City; and on (c) the net profits earned after August 31, 1952, of associations, businesses, or other activities conducted by a resident or residents, and on (d) the net profits earned after August 31, 1952, of associations, businesses, or other activities conducted in the City by a non-resident or non-residents; and (e) on the net profits earned after August 31, 1952, by all corporations as a result of work done or services performed or rendered, and business or other activities conducted in the City.' City of St. Louis Ordinance 46222, § 2. 6 Section 1 of the ordinance defines 'net profits' as used in § 2 as 'The net income of any association, business or corporation remaining after deducting the necessary expenses of operation from the gross profits or earnings.' 7 Section 9 of the ordinance. 8 E.g., I.R.C., §§ 22(n), 23(aa), 26 U.S.C.A. §§ 22(n), 23(aa). 9 Compare I.R.C., § 22(a), with I.R.C., § 117(b), (c), 26 U.S.C.A. §§ 22(a), 117(b, c). 10 E.g., I.R.C., §§ 1400, 1426, 26 U.S.C.A. §§ 1400, 1426.

78

347 U.S. 298 74 S.Ct. 574 98 L.Ed. 710 ST. JOE PAPER CO. et al.v.ATLANTIC COAST LINE R. CO. LYNCH et al. v. ATLANTIC COAST LINE R. CO. AIRD et al. v. ATLANTIC COAST LINE R. CO. WELBON et al. v. ATLANTIC COAST LINE R. CO. Nos. 24, 33, 36, 37. Argued Oct. 15, 1953. Decided April 5, 1954. Mr. William D. Mitchell, New York City, for petitioners. Mr. Edward W. Bourne, New York City, for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 The sole question for decision in this case is whether the Interstate Commerce Commission has the power under § 77 of the Bankruptcy Act to submit a plan of reorganization to a district court whereby a debtor railroad would be compelled to merge with another railroad having no prior connection with the debtor. Answer to this problem depends on understanding of a long legislative history. First, however, it is necessary to put the problem into its relevant context. 2 In August of 1931, the Florida East Coast Railway was thrown into equity receivership. It operated in this manner until January of 1941, when a committee representing the owners of a substantial portion of the debtor's principal bond issue filed a petition for reorganization under § 77 of the Bankruptcy Act in the United States District Court for the Southern District of Florida. The petition was approved by the court, and, as provided in the statute, proceedings were initiated before the Interstate Commerce Commission for hearings on a plan of reorganization formulated by the bondholders' committee. In re Florida East Coast Ry. Co., D.C., 103 F.Supp. 825. 3 In the course of the next ten years, many proposals have been considered by the Commission. Most of them were rejected for one reason or another, but three have in turn been certified by it to the District Court. None has as yet been confirmed by that court. The initial plan provided for a simple internal reorganization. It was rejected by the court, and the case was remanded to the Commission with directions to take account of an intervening improvement in the debtor's cash position. D.C., 52 F.Supp. 420. Atlantic Coast Line Railroad, the present respondent, first appeared on the scene in November 1944 when, after the Commission's hearings for the purpose of devising a second plan had been closed, one Lynch, joined by other bondholders of the debtor, sought to reopen the proceedings for the purpose of proposing a new plan whereby each recipient of stock in the reorganized debtor would be required to sell 60% of his interest at par to Atlantic, a connecting carrier, thereby giving that railroad operating control of the debtor. On November 30, 1944, Atlantic was allowed to intervene before the Commission in support of the Lynch proposal. The St. Joe Paper Co., on the other hand, which had by that time acquired a majority interest in the debtor's principal bond issue, opposed the Lynch plan. The Commission rejected the Lynch proposal, indicating that, in view of Atlantic's operating deficits over the past years, combining the two railroads would not be in the public interest at that time. 261 I.C.C. 151, 187. 4 The subsequent struggle for control of the debtor has been largely between these two interests—the St. Joe Paper Co., owner of the major interest in the debtor, and Atlantic, a connecting carrier anxious to acquire the debtor's coveted Florida east coast traffic from Jacksonville to Miami. Shortly after the Commission's rejection of the Lynch plan, Atlantic proposed its own plan providing for the merger of the debtor into Atlantic in return for the distribution of cash and various types of Atlantic's securities to the debtor's bondholders. St. Joe again opposed, as did various other bondholders, two competitors of Atlantic, an association representing the debtor's employees, and other interested parties. The matter was referred to an Examiner who, after a lengthy investigation, found that such a merger would not be in the public interest, and that the Atlantic plan would not constitute 'fair and equitable' treatment for all the unwilling bondholders who were in substance the owners of the debtor railroad.1 The Commission, however, by a sharply divided decision overruled the Examiner and sanctioned a 'forced merger.'2 267 I.C.C. 295.3 Circuit Judge Sibley, sitting in the District Court, set the plan aside on the ground that the Commission had no power under the statute to force a merger; in addition, he held the plan not 'fair and equitable'. 81 F.Supp. 926, 933. On appeal to the Court of Appeals for the Fifth Circuit, two judges sustained the Commission's authority to propose such a plan while the third agreed with Judge Sibley; but a majority agreed with the District Court that the plan was not 'fair and equitable'. 179 F.2d 538, 541. 5 The Commission then formulated another plan, which likewise provided for a forced merger of the debtor and Atlantic, 282 I.C.C. 81, and Circuit Judge Strum, sitting in the District Court, while bound on the question of the Commission's power by the prior Court of Appeals decision, again set the plan aside as unfair and inequitable. 103 F.Supp. 825. The Court of Appeals was now convened en banc. Three of its judges, without further consideration of the Commission's power, reversed the District Court and found the plan fair and equitable. The other two judges dissented and adopted the reasoning of Judge Sibley in the earlier case, i.e., that the Commission had no power under the statute to propose such a compelled merger plan.4 201 F.2d 325. Because of the importance of this question in the administration of § 77 of the Bankruptcy Act, we granted certiorari. 345 U.S. 948, 73 S.Ct. 866, 97 L.Ed. 1372. 6 The procedure by which the Commission is authorized to consider and approve a plan of reorganization and then submit it to the interested parties for acceptance, as well as the courts for judicial confirmation, is governed by an elaborate statutory scheme. See § 77 of the Bankruptcy Act, 47 Stat. 1474, as amended, 11 U.S.C. § 205, 11 U.S.C.A. § 205. Any question such as the one now here must be resolved by reference to this governing law and its underlying purpose, imbedded as that is not merely in the formal words of the statute but in the history which gives them meaning. If ever a long course of legislation is to br treated as an organic whole, whose parts are not disjecta membra, this is true of § 77. 7 The respondent relies on subsection b(5) to sustain the Commission's power to submit a forced merger plan of the type here involved.5 This was subsection (b)(3) of the original § 77 of the Bankruptcy Act as enacted in 1933, 47 Stat. 1474, 1475. It then read, insofar as here material, 8 '(b) A plan of reorganization within the meaning of this section * * * (3) shall provide adequate means for the execution of the plan, which may, so far as may be consistent with the provisions of sections 1 and 5 of the Interstate Commerce Act as amended, include * * * the merger of the debtor with any other railroad corporation * * *.' 9 The permissive merger provision in plans of reorganization was thus made expressly conditional on compliance with the requirements of §§ 1 and 5 of the Interstate Commerce Act, 49 U.S.C.A. §§ 1, 5. The reason for this proviso, commonly referred to as the 'consistency clause,' was stated as follows by Commissioner Joseph Eastman, Chairman of the Legislative Committee of the Interstate Commerce Commission and one of the weightiest voices before Congress on railroad matters:6 10 'Explanation.—This act ought not to authorize railroad mergers * * * which are inconsistent with the applicable provisions of the Interstate Commerce Act, particularly the consolidation-plan provisions. These amendments are intended to avoid that possibility.' 11 In the ensuing floor debates it was further made clear that the purpose of the consistency clause was to subject mergers under § 77 to whatever restrictions obtained for mergers under the Interstate Commerce Act. Representative Hatton Summers, Chairman of the Judiciary Committee which had reported out the bill and floor manager of the bill, gave this assurance: 12 'Mr. Horr. May I inquire whether or not, where the word 'reorganization' is used, the gentleman is of the opinion that this would encourage consolidations of railroads? 13 'Mr. Sumners of Texas. They could not be consolidated in violation of the interstate commerce act. 14 'Mr. Horr. They would first have to go through that? 15 'Mr. Sumners. They would first have to go through that.' 76 Cong.Rec. 2909. 16 And Congressman Rayburn, Chairman of the Committee on Interstate and Foreign Commerce, put it thus: 17 'Fear has been expressed that with the enactment of this bill the powers of the Interstate Commerce Commission and the courts over consolidations and mergers would be expanded. It is my firm conviction that this proposal in specific provisions safeguards the present consolidation and merger provisions of the interstate commerce act and gives no additional authority to the commission or the courts in these matters.' 76 Cong.Rec. 2917—2918. 18 In view of this deliberate and explicit incorporation of the restrictions attending mergers under the Interstate Commerce Act into § 77 of the Bankruptcy Act, it is necessary to give some consideration to the merger and consolidation provisions of the former, 49 U.S.C. § 5, 49 U.S.C.A. § 5. The history of these provisions is long and tortuous; its detailed summary is relegated to an appendix. Suffice it to say here that one clear thread which runs through a course of legislation extending over a period of twenty years, as well as through the various commentaries upon it, is that only mergers voluntarily initiated by the participating carriers are encompassed by that statute and sanctioned by it. From the initial enactment in the Transportation Act of 1920, 41 Stat. 456, 480, to the most recent comprehensive re-examination of these provisions in the Transportation Act of 1940, 54 Stat. 898, 905, Congress has consistently and insistently denied the Interstate Commerce Commission the power to take the initiative in getting one railroad to turn over its properties to another railroad in return for assorted securities of the latter. The role of the Commission in this regard has traditionally been confined to approving or disapproving mergers proposed by the railroads to be merged. And this adamant position taken by Congress has not been for want of attempts to secure relaxation. Advocacy of giving the Commission power to propose and enforce mergers has been steady and, at times, strong, but it has consistently failed in Congress. 19 The reasons for this hostility to mergers imposed by the Commission derive largely from the disadvantages attributed by Congress to such fair-reaching corporate revampings. Employees of the constituent railroads would, it has been feared, almost certainly be adversely affected. Shippers and communities adequately served by railroad A may suddenly find themselves unfavorably dependent upon railroad B. Investors in one railroad would, contrary to their expectations, find their holdings transmuted into securities of a different railroad. As the Commission in its 1938 Annual Report said of consolidation: 20 'Projects of this character cannot be crammed down the throats of those who must carry them out or conform to them. Legal compulsion can be used with advantage to bring recalcitrants and stragglers into line, but not to drive hostile majorities into action.' (P. 23.)7 21 We therefore conclude that the Commission does not have under § 77 of the Bankruptcy Act a power which Congress has repeatedly denied it under the Interstate Commerce Act, namely to initiate the merger or consolidation of two railroads. In light of the continuously and vehemently reiterated policy against endowing the ICC with such a power under § 5 of the Interstate Commerce Act, it is inconceivable, wholly apart from the consistency clause, that such was the sub silentio effect of § 77, an emergency statute hurriedly enacted with scarcely any debate. The consistency clause serves but to strengthen this natural presumption against such a tacit grant. It would require unambiguous language indeed to accomplish a contrary result; yet nowhere in the committee reports and the debates on the original § 77, nor in any of the legislative materials relating to the thorough re-examination of that statute in 1935,8can we find so much as one word which conveys the impression that as to mergers under the Bankruptcy Act, Congress stealthily designed to jettison its longstanding and oft-reiterated policy against compulsory mergers. On the contrary, after the enactment of § 77 in 1933, the Commission in its annual reports, and the Federal Coordinator of Transportation in his several reports, had frequent occasion to discuss § 77 of the Bankruptcy Act and § 5 of the Interstate Commerce Act. It would indeed be strange for these railroad authorities to bemoan the Commission's inability to initiate mergers and consolidations9 if it had been a fact that as to the substantial portion of the Nation's railroad mileage then in receivership or § 77 proceedings10 the Commission clearly had this very power. Had it been the declared intention of the drafters of § 77 to confer such a power, it is fair to assume that, in view of the persistent opposition of organized labor and other groups to such attempts under the Commerce Act,11 the statute would not have passed. 22 All this of course is not to say that mergers cannot be carried out in the course of a § 77 reorganization. It merely means that if they are, they must be consummated in accordance with all the requirements and restrictions applicable to mergers under the Act primarily concerned with railroad amalgamations, the Interstate Commerce Act. So far as here relevant, that means that the merger must be worked out and put before the Commission by the merging carriers.12 It also means that one carrier cannot be railroaded by the Commission into an undesired merger with another carrier. 23 In short, the consistency clause of § 77 incorporates by reference § 5 of the Interstate Commerce Act, as amended. And the very heart of § 5 is that a merger of two carriers may be approved by the Interstate Commerce Commission only if it originates as a voluntary proposal by the merging carriers. This essential prerequisite for a merger between Florida East Coast and Atlantic Coast Line—two existing corporate entities—must be complied with, for by virtue of the consistency clause the command of Congress applies even if one of these carriers is in § 77 proceedings just as must as it would if neither of the carriers were in receivership or trusteeship. The legislative incorporation of § 5 into § 77 should not result in its judicial mutilation. 24 The most recent occasion on which the Senate Committee on Interstate Commerce comprehensively re-examined the subject of railroad reorganization was the report submitted in 1946 by Chairman Wheeler, the guiding spirit of most of the legislation here under consideration.13 Much of what the Committee says there under the heading of 'Avoidance of consolidation statute' is highly relevant here: 25 'In view of (the) many interests, immediately and directly affected by any proposed consolidation, Congress has provided a series of safeguards and procedural steps, in section 5 of the Interstate Commerce Act. * * * 26 'This statute and its statutory procedure, statutory safeguards, and statutory rights have been set to one side in the proceedings under section 77 of the Bankruptcy Act. The institutional and other groups, and the Commission, have assumed that they could effect consolidations, not under the Interstate Commerce Act, but under the Bankruptcy Act; not under a statute dealing with transportation, but under a statute dealing with financial reorganization; not under a section which considers and specifies one single financial question, the effect of consolidation on fixed charges, but under a section which deals with all sorts of financial problems, most of them not related to consolidation. They have assumed to effect consolidations, not under legislation which deals primarily with the rights and interests of States, local communities, and employees, but under a bankruptcy law which deals primarily with the interests of securityholders. 27 'Those who are trying to bypass this statute and to consolidate railroads as part of a financial reorganization proceeding bring consolidation into the proceeding as something subsidiary, a mere tail to the main kite. When governors of States and representatives of communities and employees' organizations are invited to the proceedings by the Commission, they find the issue which primarily concerns them enveloped in all sorts of other questions of a financial and technical nature. If they should want to appeal to a court from a consolidation decision in this grab bag of proceedings, their task would be far more complicated and far more difficult than Congress intended when it passed section 5 of the Interstate Commerce Act. There is always the available cry—the courts should not disapprove any part of the reorganization plan, even though it be a consolidation matter, lest all the time and labor and expense which has gone into the reorganization proceeding be lost. 28 'The Commission justifies its course of action by citing two subsections of section 77 of the Bankruptcy Act. Subsection b lists a number of the substantive changes which can be made through a plan of reorganization under section 77. Then it lists a number of 'means for the execution of the plan,' * * *. Among these 'means for the execution of the plan's is included 'the merger or consolidation of the debtor with another corporation or corporations.' Subsection f authorizes the Commission, after the court confirms the plan, 'without further proceedings' to authorize the issuance of securities, transfer of property, sale, 'consolidation or merger of the debtor's property, or pooling of traffic, to the extent contemplated by the plan and not inconsistent with the provisions and purposes of the Interstate Commerce Act as now or hereafter amended.' 29 'Note should be taken of the Commission's position. It could, under its construction of the statute, authorize not only mergers, but also pooling of traffic, without complying with the requirements laid down by Congress in section 5 of the Interstate Commerce Act. Consolidations, mergers, and pooling of traffic have long been regarded as dangerous, if not carefully regulated and supervised; Congress has long had those evils in mind and sought to prevent excesses, while saving what is good in such transactions; to this end Congress carefully elaborated a considerable number of safeguards in section 5 of that act. None of those safeguards is elaborated in section 77 of the Bankruptcy Act. 30 'It may not be assumed that Congress intended, in section 77, to permit it to bypass the section 5 procedure and proceedings. Section 77 was hurriedly passed by Congress. It was not considered by either a subcommittee or full committee of the Senate, before being taken up on the floor. It was pushed through in the final days of the Seventy-second Congress on the plea that it would prevent receiverships. Congress would not, in such a manner, legislate out of existence, for companies requiring reorganizations, its carefully elaborated safeguards with respect to consolidations or traffic pools. If the Commission's construction of section 77 is sound, that it can avoid the necessity of considering consolidations under section 5 of the Interstate Commerce Act, it is obvious that the legislation enacted as section 77 of the Bankruptcy Act contained a 'joker' of serious and dangerous proportions. 31 'The most that the Commission may claim under section 77 is that, if it has approved a consolidation by an order under section 5 of the Transportation Act, it may perhaps be able to give effect to that action in the course of reorganization proceedings. 32 'This is of importance in administering both statutes. The procedure and safeguards of the Transportation Act must be preserved as a matter of law and of right; * * *.' (Emphasis added.) 33 The crucial question, therefore, is whether this merger plan meets the statutory requirements. Since it does not, as we have found, because it is sought to be imposed by Commission fiat rather than proposed by the merging carriers, it matters not that the security holders might ultimately accept it if it were put to them for a formal vote. The kind of Hobson's choice, more or less, to which security holders are put when voting on a merger plan is not to be put to them on a plan initiated by the Commission rather than by their own corporation. And so, if a plan does not satisfy the basic conditions which circumscribe the Commission's power, it has a congenital defect, and any interested party can object to its attempted effectuation. 34 Likewise, the so-called 'cramdown' clause, much relied on by respondent, has no bearing on this case. That provision was added to § 77 of the Bankruptcy Act in 1935, 49 Stat. 911, 919, 11 U.S.C. § 205, sub. e, 11 U.S.C.A. § 205, sub. e, because under the prior law a plan had to be accepted by at least two-thirds (in amount) of each class of creditors and stockholders affected by the plan. This enabled a small dissentient minority to block any plan of reorganization, no matter how 'fair and equitable,' in order to exact inequitable adjustments as the price of its acquiescence. Under the 'cramdown' provision the district court may, under the appropriate circumstances and after making certain required findings, confirm a plan despite the disapproval of more than one-third of each class affected. From the existence of this general power in the district court to confirm a plan despite the opposition of dissentient elements, the conclusion is sought to be drawn that the Commission must therefore have initial power to submit a compulsory merger plan to the court. Obviously this does not follow. Since the vast majority of § 77 proceedings involve internal reorganizations, the 'cramdown' provision has a purpose and scope of application wholly independent of mergers, and it therefore has no bearing one way or the other on the question at issue in this case.14 It is true that in view of our holding here that merger plans cannot be proposed by the Commission under the Bankruptcy Act, the 'cramdown' provision can never be applied to such involuntary plans. But there is nothing particularly startling about this. Once its terms are found to be valid, a plan may be imposed on recalcitrant dissenters. But the validity of a plan cannot be derived from the existence of such 'cramdown' power. It is still true that a horse-chestnut is not a chestnut horse. 35 The judgment is reversed and the case is remanded to the District Court for further proceedings in accordance with this opinion. 36 Reversed and remanded. 37 Mr. Justice BLACK and Mr. Justice CLARK took no part in the consideration or decision of these cases. 38 For dissenting opinion, see 74 S.Ct. p. 587. 39 Appendix. 40 A brief outline of the history of the consolidation provisions of theInterstate Commerce Act. 41 Prior to 1920, competition was the desideratum of our railroad economy. Section 5 of the original Interstate Commerce Act of 1887 forbade any agreements for the pooling of freights or revenues,1 and the policy of the antitrust legislation was also applied to the railroads.2 42 In 1919, when the Government was planning to return the railroads to private ownership, many of the smaller railroads were in very weak condition and their continued survival was in jeopardy.3 Hence, for the first time, governmental encouragement of railroad consolidation was discussed. It was agreed that the Interstate Commerce Commission should be directed to prepare a plan for the consolidation of the railroads of the country into a limited number of systems. But there was sharp disagreement over ways and means for carrying out this program. The House Committee opposed grant of power to the Commission to compel consolidations.4 The Senate Committee, however, under the leadership of Senator Cummins, an ardent advocate of compulsory consolidation, recommended a bill providing for voluntary consolidation in accordance with a master plan for a period of seven years, but authorizing compulsory consolidations thereafter.5 Although many groups, including virtually all the railroads, opposed the compulsory provisions,6 the Senate passed the bill, 59 Cong.Rec. 952. But in conference, '(t)he Senate receded from the provisions for compulsory consolidation' and the House version was adopted.7 43 In 1921, the Commission promulgated a tentative consolidation plan.8 Strong opposition immediately developed and long hearings before the Commission ensued. The upshot was that in 1925, the Commission, recognizing the unfeasibility of working out a national plan of consolidation, asked Congress to be relieved of this burden.9 This request was left unheeded until 1940, and in 1929 the Commission adopted its final plan of consolidation.10 44 Meanwhile Senator Cummins renewed his efforts to give the Interstate Commerce Commission power to compel consolidations if after a certain number of years the voluntary program had made no progress.11 This bill again met with strong opposition,12 but prior to his defeat in 1926, Senator Cummins made two further attempts to endow the Commission with power to force consolidations.13 All these legislative efforts failed. 45 In February of 1933, the drive for compulsory consolidation gained new impetus when the National Transportation Committee, headed by ex-President Coolidge, issued a report recommending legislation along these lines.14 Again the opposition was so vigorous15 that the Emergency Railroad Transportation Act of 1933, passed some months later, contained no such provision; on the contrary it had a special section designed to protect labor against further cutbacks in employment.16 46 The 1933 Act also established the office of a Federal Coordinator of Transportation to investigate the entire transportation problem and make appropriate recommendations. In his first Report, the Coordinator, Commissioner Joseph Eastman, reviewed the subject of railroad consolidations and concluded that the sweeping proposal of his legal adviser, Mr. Leslie Craven, for compulsory consolidation should not be followed, but that the remedy lay along lines of greater coordination and pooling, with some forced mergers on a 'trial' basis.17 The third and fourth Reports reiterated the Commission's inability to compel mergers.18 Again no legislative action resulted.19 47 In 1938, President Roosevelt appointed Commissioners Eastman, Splawn, and Mahaffie of the Interstate Commerce Commission to make another comprehensive study of the railroad problem. This 'Committee of Three,' after pointing out that 'voluntary consolidation of railroad companies may now be accomplished, subject to certain limitations, with the approval of the Commission,' recommended new legislation, giving the Commission 'authority * * * to require a unification, where it is sought by at least one carrier.'20 Subsequently the President also appointed another Committee consisting of three railroad executives and three representatives of railway labor, known as the 'Committee of Six.' This Committee's recommendations were vastly different:21 48 'We do not think the country is ready for any compulsory system of consolidations. Whether ultimate resort must be had to the principle of compulsion is a question which we think it better to defer until after there has been an opportunity to see what can be accomplished if the railroads are relieved from these limitations and restrictions (of the consolidation plan). In our opinion the best results will be achieved by leaving all initiative in the matter to the railroads themselves, * * *.' 49 The Transportation Act of 1940—Congress' last word on the subject of consolidation—essentially rejected the recommendations of the Committee of Three and adopted those of the Committee of Six. The Commission was finally relieved of its duty to promulgate a national consolidation plan, and the power to initiate mergers and consolidations was left completely in the hands of the carriers.22 50 Perhaps the best insight into the prevailing attitude towards compulsory mergers can be obtained from the following statements of Chairman Wheeler of the Senate Committee on Interstate Commerce during the hearings on S. 2009, which ultimately became the Transportation Act of 1940. In response to some fear expressed by the General Counsel of the Brotherhood of Railroad Trainmen that the pending bill would encourage consolidations, Senator Wheeler said:23 51 'Of course, as you well know, some people maintain that we ought to give the Interstate Commerce Commission the power to force consolidations. 52 'There is a very strong sentiment on the part of a great many people that consolidation should be compelled. They say that nothing will be done until such time as that happens. 53 'The railroad executives do not want forced consolidation; they are opposed to it. The railroad men are opposed to it, generally speaking. 54 'After all, when you speak of that (encouraging consolidations), the Interstate Commerce Commission has studied it for years, and no consolidation can take place under this bill until such time as it is a voluntary consolidation. * * * 55 'I cannot understand why you are talking about consolidations before this committee, because there is nothing in this bill to indicate that we have taken the position that we are in favor of forced consolidations. There is nothing in the bill that will change the situation at all. 56 'As a matter of fact, much of the objection to this bill on the part of a number of people has been that it has not got some provision in it making it easier for consolidations; as a matter of fact, forcing consolidations and coordinations, or at least setting up in the Interstate Commerce Commission a committee that will go ahead and suggest how consolidations ought to be made. 57 'We have taken that out, and I have refused to adhere to that or to listen to agruments (sic) about it, buy you are coming in here and telling us that there is something in here about consolidations that you do not want. 58 'I have repeatedly said that you could not get a bill to force consolidations, or to have in here a provision that the Commission should have an opportunity of carrying on investigations of the subject to try to force consolidations, and so forth. So, as far as this committee is concerned, with reference to this bill, you are just wasting our time in talking about consolidations, because that subject is out the window.' 59 Thus, hostility to the consolidation of railroads except by the voluntary action of the merging roads has been the undeviating policy of Congress since 1920. In assessing the failure of the consolidation program initiated by the Transportation Act of 1920, most students of transportation problems agree that one difficulty was this persistent refusal on the part of Congress to give the Commission power to take the initiative in proposing and enforcing particular mergers.24 Yet that is the policy deliberately and explicitly followed by Congress each time it considered this problem. 60 Mr. Justice DOUGLAS, with whom Mr. Justice BURTON and Mr. Justice MINTON concur, dissenting. 61 The Court misstates the issue in these cases. The sole question, the Court says, is whether the Interstate Commerce Commission has the statutory power to submit a plan of reorganization under § 77 of the Bankruptcy Act 'whereby a debtor railroad would be compelled to merge with another railroad'. That is not the issue. Neither the Interstate Commerce Commission nor the reorganization court has attempted to force a merger of these railroads. If at some future time any such attempt is made, it will be time enough to deal with it. Hence it is misleading for the Court to say that the issue is whether a merger may be 'foisted upon one of the parties by the Commission.' The one and only issue before us at the present time is whether the Commission may include in a plan of reorganization a provision that the debtor or bankrupt railroad should be merged with another road and submit that plan for approval or disapproval to the security holders who are entitled to vote on a plan. To understand the issue in these cases it is necessary to have an understanding of the respective functions of the Commission and the reorganization court under § 77. 62 First. Under § 77 the Commission is the chief architect of any plan of reorganization. The plan must originate with the Commission. § 77, sub. d. Second. Once a plan is certified by the Commission it goes to the Court for a hearing. § 77, sub. e. Third. After that hearing the judge either approves or disapproves the plan. § 77, sub. e. Fourth. If the judge disapproves the plan, he either dismisses the proceedings or refers the matter back to the Commission. § 77, sub. e. Fifth. If the judge approves the plan, he sends a certified copy of his opinion and order to the Commission. § 77, sub. e. Sixth. In that case the Commission submits the plan to the security holders for a vote. § 77, sub. e. Seventh. The Commission certifies the results of the submission to the court. § 77, sub. e. Eighth. The judge then confirms the plan, if the creditors and stockholders of each class entitled to vote and holding 'more than two-thirds' of the claims in each class have accepted the plan. § 77, sub. e. Ninth. If that percentage of creditors and stockholders does not approve the plan the judge, by terms of § 77, sub. e, may nevertheless approve the plan. This is the so-called 'cram down' provision and it reads as follows: 63 'if the plan has not been so accepted by the creditors and stockholders, the judge may nevertheless confirm the plan if he is satisfied and finds, after hearing, that it makes adequate provision for fair and equitable treatment for the interests or claims of those rejecting it; that such rejection is not reasonably justified in the light of the respective rights and interests of those rejecting it and all the relevant facts; and that the plan conforms to the requirements of clauses (1) to (3), inclusive, of the frist paragraph of this subsection (e)'.1 64 The case has been discussed as if we are at the Ninth stage of the reorganization. Rather, only the Fifth stage has been completed and the Sixth stage is about to start. 65 The case has been discussed as if the creditors will vote the plan down and the judge, in the face of that, will force the plan on the creditors through the 'cram down' provision. 66 But as yet no vote has been taken. Perhaps the powerful interests represented by the petitioners will vote solidly and overwhelmingly against the plan. Perhaps not. Election campaigns sometimes change votes. Perhaps the creditors will eventually approve the plan. 67 Our present problem must be weighed in light of both of those contingencies. 68 If the creditors approve the plan by 'more than two-thirds' vote but less than 100 percent, would it be lawful to confirm it? I think it plainly would be for the following reasons: 69 Section 77 contemplates the use of reorganizations to consummate mergers. Section 77, sub. b 5 says that a plan 'may include the transfer of any interest in or control of all or any part of the property of the debtor to another corporation or corporations, the merger or consolidation of the debtor with another corporation or corporations,' etc. (Italics supplied.) So it is clear that Congress contemplated that mergers of railroads could be effected by a § 77 plan of reorganization.2 Since mergers could be accomplished that way, Congress felt—as the legislative history abundantly shows—that the Commission must apply in this class of mergers the same standards it must apply in other mergers. Accordingly Congress wrote into § 77, sub. f the 'consistency clause'—that on confirmation of a plan the Commission shall grant authority for the 'transfer of any property, sale, consolidation or merger of the debtor's property * * * to the extent contemplated by the plan and not inconsistent with the provisions and purposes' of the Interstate Commerce Act. (Italics supplied.) Section 5 of the Interstate Commerce Act prescribes both a procedure for the Commission to follow in those cases and the standards which the Commission must apply. 70 The procedure includes among other things (a) notification to the Governors of each State in which the properties of the carriers are situated; and (b) a reasonable opportunity for the 'interested parties' to be heard. No objection is made in these cases (and no showing is attempted) that that procedure was not followed. 71 The standards for the Commission's action on mergers are different from those prescribed in case of reorganizations. In reorganizations the Commission is concerned with matters of valuation, the amount of fixed charges, the ratio of bonds to stock, and like financial problems. See Ecker v. Western Pacific R. Corp., 318 U.S. 448, 63 S.Ct. 692, 87 L.Ed. 892. Congress by § 5 of the Interstate Commerce Act has prescribed special standards for mergers. Section 5(2)(c) states: 72 'In passing upon any proposed transaction under the provisions of this paragraph (2), the Commission shall give weight to the following considerations, among others: (1) The effect of the proposed transaction upon adequate transportation service to the public; (2) the effect upon the public interest of the inclusion, or failure to include, other railroads in the territory involved in the proposed transaction; (3) the total fixed charges resulting from the proposed transaction; and (4) the interest of the carrier employees affected.' 73 There is no objection made nor showing attempted that in these cases the Commission failed to make findings on those issues nor that the findings as made were inadequate. The Commission indeed was most explicit. It said that control of Florida East Coast by the petitioner in No. 24, St. Joe Paper Co., would be 'contrary to the public interest' since that company, 'particularly because of its large banking interests,' would be in a position to influence the routing of shipments. 282 I.C.C., p. 187. It found that the merger of the Florida East Coast with Atlantic Coast Line 74 —would be in the public interest.3 Id., pp. 187, 188. 75 —would adequately protect the interests of employees.4 Id., p. 187. 76 —would result in savings as a result of unification.5 Id., p. 187. 77 — would result in a betterment of service to the public.6 Id., p. 187. 78 —would not adversely affect the citizens and communities of the east coast of Florida.7 Id., pp. 187—188. 79 —would give the debtor greater financial stability.8 Id., p. 188. 80 —would give a better service than service under an operation by St. Joe Paper Co.,9 petitioner in No. 24. Id., p. 188. 81 We are not asked to set aside those findings. They are indeed not challenged. On their face they plainly meet the standards of § 5 of the Interstate Commerce Act. We cannot say on this record that they are not consistent with § 5 within the meaning of the consistency clause of § 77, sub. f. So far as this record shows, the Commission has faithfully, painstakingly, and conscientiously performed the obligations which § 5 of the Interstate Commerce Act imposes on it. It would seem obvious, therefore, that the Commission should be allowed to submit the plan, including the provision for a merger, to the security holders for their approval or disapproval. 82 The Court, however, disallows the submission and rests its action on a curious reason. It says that consent of the railroads has not been obtained and without that consent no merger can be consummated in § 77 proceedings. But that reason is wholly at war with the statutory scheme of railroad reorganizations. 83 Once a petition for reorganization is approved, the court appoints trustees who have full management of the business under the court's supervision. § 77, sub. c. The trustees take over the functions of the officers and board of directors. But apparently the Court, when it refers to 'the debtor,' does not mean the trustees, for it speaks of 'those who in the absence of § 77 would wield the corporate merger powers'. That must mean either the old management or the stockholders. Yet such a reading cannot square with § 77. One can look through § 77 in vain for any status granted the old management to approve or disapprove a plan. 'The debtor' commonly is identified with the stockholders, i.e., the equitable owners of the road. But the method of getting their consent to any plan of reorganization is prescribed in § 77. They may or may not be entitled to vote, depending on whether their stock represents a value in the railroad. If the stock has no value, they are not entitled to vote. If it has value, they are entitled to vote. § 77, sub. e. If the security holders who have a vote approve the plan, the consent necessary to effect both the recapitalization and the merger has been given. To allow the old management or the stockholders a veto power where Congress has provided they shall not vote is to indulge in as bold a piece of judicial legislation as one can find in the books. 84 It is said that the consistency clause of § 77 incorporates by reference § 5 of the Interstate Commerce Act. And so it does. But that does not mean that because the initiation of merger plans rested with the management prior to bankruptcy, it rests with the old management after bankruptcy. The conclusion that it does reveals a basic misunderstanding of the system of bankruptcy reorganization contained in § 77. When Congress designed that legislation, it prescribed precisely how the consent necessary for each step in the reorganization should be obtained. Section 77 gives the old management no vote on any measure. If the equity votes, the stockholders cast the ballot. And a procedure is designed to deprive them of a vote if their securities no longer represent any value, as is the case here. 85 No comfort can be found in § 77, sub. d, which gives the debtor, i.e., the old management, standing to propose a plan of reorganization. Plans of reorganization may be proposed by the debtor, by the trustees, by 10 percent of any class of creditors or of stockholders 'or with the consent of the Commission by any party in interest.' § 77, sub. d. The proposal of a plan expresses merely the wish. In logic and in history there is no reason why a plan containing a merger may not be proposed by the new management as well as the old, by creditors as well as stockholders. Standing to present a plan has no relevancy to the fairness or feasibility of the plan presented. To say that only 'the debtor' may submit a plan that contains provisions for a merger is to give a whiphand to people who do not even have enough of an interest to vote on a plan. The debtor commonly represents the equity; and when, as here, the equity is so far under that it can have no possible interest in the reorganization (except possibly a nuisance value created by long-drawnout litigation), it violates all sense of fairness and disregards the mandate of Congress to let the equity have the preferred position the Court now creates. Congress has set the standards for the protection of the 'equitable owners.' Where, as here, they have no value in the enterprise, Congress said they should be disregarded. 86 Much emphasis is placed by the Court on S.Rep. No. 1170, 79th Cong., 2d Sess. 80—85, a report by the Senate Committee on Interstate Commerce headed by Chairman Wheeler. There are two reasons why that Reprot is irrelevant to the present issue. First, that Report condemned the use of § 77 'to bypass' § 5 of the Interstate Commerce Act. As I have shown, § 5 was not 'bypassed' in the present case. The procedures, safeguards, and standards it prescribes were fully satisfied by the Commission. Second, that Report covered a bill which endeavored to make changes in the existing law and practices. But that bill never was enacted. It is, however, now used as an authoritative interpretation of a law which it sought to change. 87 An unjaundiced reading of § 5 of the Interstate Commerce Act and of § 77 of the Bankruptcy Act results, I submit, in the following conclusions: 88 Any person with standing to submit a plan of reorganization may include in it provisions for a merger. 89 Section 5 of the Interstate Commerce Act provides the standards for the Commission to apply in passing on such a plan and those standards have been wholly satisfied here. 90 Section 77 prescribes the procedure for getting the consent to a plan, including a plan that provides for a merger. 91 What reason then can there be for not letting the security holders vote to adopt or reject this plan? 92 It is said that if the security holders reject the plan, the reorganization court may nonetheless force it on them. There are several answers to that, as I have already suggested: 93 (1) The security holders may not reject the plan. 94 (2) Even if they do reject the plan, the reorganization court may decide not to force the plan on them. To force it on them the court must have a hearing and find, among other things, that the rejection 'is not reasonably justified in the light of the respective rights and interests of those rejecting it and all the relevant facts * * *.' § 77, sub. e. 95 (3) Even if the reorganization court undertook to force any plan on the security holders, we might well overrule that order. In the only case of the 'cram down' provision on which we have passed, Reconstruction Finance Corp. v. Denver & R.G.W.R. Co., 328 U.S. 495, 66 S.Ct. 1282, 1384, 90 L.Ed. 1400—one involving issues different from those now tendered10—we reserved decision on the power of the reorganization court. We said, 328 U.S. at page 535, 66 S.Ct. at page 1303: 96 'this does not mean that if a plan is approved as fair and equitable by the Commission and court, there cannot be a reasonable justification for its rejection by a class of claimants on submission. Reasons to make their rejection reasonable may arise * * *.' 97 I say we might well stop any attempt of the court to invoke the 'cram down' provision because we cannot tell in advance what a particular situation might disclose. Under § 77, sub. e, it will be remembered, 'more than two-thirds' of each class entitled to vote can vote for a plan and force it on the minority. Unanimuos consent is not necessary. 98 (1) Suppose the election returns bring approval by a bare two-thirds. Suppose the judge is satisfied that one block of securities voting against the plan has a special ax to grind, as the Commission suggests is true in this case of the St. Joe Paper Co., petitioner in No. 24. Would it be unlawful for the court to invoke the 'cram down' provision in that case? 'Consent' has not been obtained since Congress provided that 'more than two-thirds' should approve a plan. But the public interest might well justify use of the 'cram down' provision in that case as the only effective method for dealing with a recalcitrant (or even black-mailing) minority. In light of what we said in the Denver & Rio Grande case (328 U.S. at page 535, 66 S.Ct. at page 1303) such rejection by the one-third minority might well be deemed to have no 'reasonable justification' in light of all the facts and circumstances. 99 (2) Suppose the election returns bring approval from only 1 per cent of the security holders. Could the 'cram down' provision properly be invoked in that case? It is difficult even to imagine a case where it would be proper to do so. The 'cram down' is a harsh remedy, the use of which would require special reasons. 100 But the fact that the occasions for its use should be closely guarded should not mean that it can never be used in connection with a § 77 plan of reorganization involving a merger, unless 'the debtor' (here representing security holders not even entitled to vote on a plan) proposes the merger. Under § 77 and § 5 of the Interstate Commerce Act, read together, it is plain that Congress subjected plans containing mergers to the same 'consent' requirements as plans not containing mergers. There is not a word in the statute or in the legislative history to indicate that the old management or stockholders not entitled to vote on a plan nevertheless have a veto over it. 101 The question of the application of the 'cram down' provision of § 77 to plans involving mergers has never been presented to us.11 That question is premature here, for it may never be reached. It is a large question of great importance and one that should be decided, not in the abstract, but only on the specific facts of specific cases. In these cases we should specifically reserve decision on it until it is presented. We should affirm the judgment in these cases, allowing the plan to be submitted for approval or rejection, explicitly saving the rights of all parties in case the 'cram down' provision is used against them. 1 Examiner Jewell stated that under the plan previously approved by the Commission 'control would vest in the St. Joe Company by reason of its ownership of a majority in amount of the debtor's outstanding first and refunding mortgage bonds, these bonds being the only securities of the debtor exchangeable under the plan for the new securities of the reorganized debtor.' R., VI, p. 736. The only other outstanding bond issue of the debtor was, under that plan, to be paid off out of available cash. Previously the Commission had decided that the claims of unsecured creditors and the equity of the stockholders could not be recognized, and that these parties would therefore be denied participation in the reorganization. 252 I.C.C. 423, 465. 2 By 'forced merger' plan, or 'compulsory merger' plan, is meant a merger plan foisted upon one of the parties by the Commission, as distinguished from a merger voluntarily initiated by the participating carriers. 3 Under the Commission's statutory power to revise an approved plan upon objections received within sixty days of its promulgation, 11 U.S.C. § 205, sub. d, 11 U.S.C.A. § 205, sub. b, this decision was shortly thereafter reaffirmed by another close vote of the full Commission membership. 267 I.C.C. 729. 4 The Circuit Judges of the Fifth Circuit who have at some stage in these proceedings passed on this question of the Commission's power have thus divided evenly on the issue. Judges Hutcheson, Holmes and Rives concluded that the Commission had such power; Judges Sibley, Borah, and Russell concluded that it did not. 5 'A plan of reorganization * * * (5) shall provide adequate means for the execution of the plan, which may include * * * the merger or consolidation of the debtor with another corporation or corporations * * *.' 6 Letter from Chairman Eastman to Senator Hastings, the sponsor of § 77, dated Jan. 31, 1933, reproduced in Hearings before the Senate Committee on Interstate Commerce on S.1869, 76th Cong., 1st Sess. 288, 300. As to Eastman's authority in the field of railroad regulation, see Fuess, Joseph B. Eastman—Servant of the People. 7 See also the remarks of Senator Couzens, Chairman of the Committee on Interstate Commerce, at 74 Cong.Rec. 6041 et seq. 8 In the course of the 1935 revision of § 77, the consistency clause was taken out of sub. b (3), combined with a similar clause in subsection e, and, as thus combined, placed in subsection f of the statute, 49 Stat. 911, 920. Judge Sibley indicated that he thought the consistency clause 'became accidentally misplaced in redrafting the Act.' D.C., 81 F.Supp. at page 932. However that may be, it seems quite clear that Congress did not intend to alter the deliberately established relationship between § 5 of the Commerce Act and § 77, sub. b (3) of the Bankruptcy Act merely by a change in the position of the consistency clause, unaccompanied by any explanatory comment. It would be a gross disregard of the meaning of legislation to be controlled by the bare words of the present merger provision detached from, and in defiance of, the whole history of the section. In this connection it is interesting to note that in the course of a proposed comprehensive revision of § 77 in 1939, the question here in issue would have been made absolutely clear by the addition of the following proviso to the merger subsection: 'Provided, That nothing in this section shall authorize compulsory merger or consolidation * * *.' S.1869, 76th Cong., 1st Sess., March 20, 1939, p. 19. After extensive hearings before the Senate Committee on Interstate Commerce, the bill was reported out and subsequently passed by the Senate, 84 Cong.Rec. 6257. Even more extensive hearings were then held by the House Committee, but the bill was never reported out, probably because of the controversial provision in the bill establishing a special reorganization court for § 77 cases. In the course of the House hearings, the Commission was requested to submit its views on the bill. After commenting in detail on various sections of the bill, not including the proviso above referred to, the Commission simply added that it deemed it 'unnecessary' to comment on the other 'minor amendments' included in the bill. Hearings before Special Subcommittee on Bankruptcy and Reorganization of the House Committee on the Judiciary on S. 1869, 76th Cong., 1st Sess., Serial No. 11, pt. 1, p. 571. Cassius M. Clay, Assistant General Counsel of the RFC and intimately acquainted with problems of railroad reorganization, questioned the need for the proviso on the ground that the consistency clause in subsection (f) already covered the matter and that the proviso might be construed to prevent the merger of a parent and its subsidiaries. Hearings before Senate Committee on Interstate Commerce on S. 1869, 76th Cong., 1st Sess. 329. 9 See, e.g., Report of the Federal Coordinator of Transportation, H.R.Doc.No. 89, 74th Cong., 1st Sess. 41 (1935); 52 I.C.C.Ann.Rep. 22 (1938). 10 During the years 1933—1940 the percentage of railroad mileage representing roads in § 77 proceedings or receivership was as follows: Year Percent Year Percent 1933......... 16. 1937 28 1934......... 16. 1938 31 1935......... 27. 1939 31 1936......... 28. 1940 31 (Figures computed from Table 1 of the ICC's Annual Reports on the Statistics of Railways in the United States for 1933-1940, and the cumulative Table 151 in the 1940 volume.) 11 See Appendix. 12 We are not aware of any case other than the present where this requirement was not observed. In all the reported cases of reorganizations involving mergers, the merger was either proposed by the debtor in conjunction with the other party, or the merger involved a parent and its subsidiaries, and was treated essentially as an internal reorganization. In any event, we are not now called upon to pass on the validity of the latter type of merger. In this connection it is important to remember that a railroad in § 77 proceedings is not a defunct organism but remains a live and going concern. See the references throughout § 77 to 'the debtor' as an active entity; also Van Schaick v. McCarthy, 10 Cir., 116 F.2d 987, 992—993. During the entire period that the Florida East Coast has been in receivership or trusteeship there have been annual stockholders' meetings at which a Board of Directors was elected. See the Florida East Coast's Annual Reports on file with the Interstate Commerce Commission. Indeed the desire to provide a ready remedy for the overhauling of a railroad's financial structure without impairing its primary responsibilities as a regularly functioning carrier was one of the principal reasons for the enactment of § 77. See 5 Collier, Bankruptcy, § 77.02. Thus it follows from the consistency clause, when viewed in the light of this corporate continuity of a railroad in reorganization, that those who in the absence of § 77 would wield the corporate merger powers must initiate and work out the merger now. Cf. § 77, sub. d, which not only permits but requires the debtor railroad itself to file a plan of reorganization ('the debtor * * * shall file a plan'; certain other interested parties 'may' also file a plan). 13 S.Rep.No. 1170, 79th Cong., 2d Sess. 80-85. 14 There is nothing in the legislative history of this provision to indicate that it was intended to have any effect on the law governing mergers in reorganization plans. 1 24 Stat. 379, 380. 2 26 Stat. 209, United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 17 S.Ct. 540, 41 L.Ed. 1007; United States v. Joint Traffic Ass'n, 171 U.S. 505, 19 S.Ct. 25, 43 L.Ed. 259; 38 Stat. 730. 3 See S.Rep.No.1182, pt. 2, 76th Cong., 3d Sess. 518—520; also Van Metre, Transportation in the United States, 80. 4 H.R.Rep.No.456, 66th Cong., 1st Sess. 6: 'In our opinion, the interests of the public will be better served where the consolidations are voluntarily entered into, upon approval by the Interstate Commerce Commission, and where such consolidation or merger is in the interest of better service to the public, or economy in operation, or otherwise of advantage to the convenience or commerce of the people.' 5 S.Rep.No.304, 66th Cong., 1st Sess. 15. 6 See statement of Senator Cummins at 59 Cong.Rec. 226; see also Leonard, Railroad Consolidation Under the Transportation Act of 1920, 50, 61. 7 H.R.Rep.No.650, 66th Cong., 2d Sess. 64; see also S.Rep.No.1182, pt. 2, 76th Cong., 3d Sess. 524: 'It will be noted that the whole rpogram of consolidation * * * was voluntary. Although the Commission could promulgate a plan, it was given no affirmative power to put the plan into effect. It was entitled merely to insist that any consolidations submitted to it for approval should conform to the plan. Thus the whole problem of initiating and developing actual consolidations was left in the hands of the carriers themselves * * *.' 8 63 I.C.C. 455. 9 For the Commission's letter to the Chairman of the Committee on Interstate Commerce, see Exhibit C—1814, S.Rep. No. 1182, pt. 3, 76th Cong., 3d Sess. 1578; see also 39 I.C.C.Ann.Rep. 13 (1925). 10 159 I.C.C. 522. 11 S. 2224, 68th Cong., 1st Sess. 12 See Leonard, supra, note 6, at 135, 175—179. 13 S.1870, 69th Cong., 1st Sess.; S.3840, 69th Cong., 1st Sess. 14 Report of the National Transportation Committee, February 13, 1933, p. 11. 15 See, e.g., 77 Cong.Rec. 4873 et seq.; Leonard, Railroad Consolidation under the Transportation Act of 1920, 221—222. 16 48 Stat. 211, 214. 17 S.Doc.No.119, 73d Cong., 2d Sess. 30—33, 36—37, 86—88. 18 H.R.Doc.No.89, 74th Cong., 1st Sess. 41; H.R.Doc.No.394, 74th Cong., 2d Sess. 45—47. 19 Shortly before the termination of his office in 1936, the Federal Coordinator, disturbed by the lack of initiative among the carriers, attempted to order the unification of 11 terminal properties. The orders met with considerable objection from railway labor and were ignored by the carriers. See Leonard, supra, note 15, at 233. 20 H.R.Doc.No.583, 75th Cong., 3d Sess. 36, 39. For the adverse reaction of the Railroad Brotherhoods to these proposals, see id., at 67, 70. 21 Report of Committee appointed Sept. 20, 1938, by the President of the United States to Submit Recommendations upon the General Transportation Situation, Dec. 23, 1938, p. 31. 22 54 Stat. 898, 905. 23 Hearings before the Senate Committee on Interstate Commerce on S.1310, S.2016, S.1869 and S.2009, 76th Cong., 1st Sess. 391—395. 24 Leonard, Railroad Consolidation Under the Transportation Act of 1920, 267—269; Van Metre, Transportation in the United States, 86; Moulton, The American Transportation Problem, 857—858; Dearing and Owen, National Transportation Policy, 322, 342—343, 376. 1 Clauses (1) and (2) referred to read as follows: 'the judge shall approve the plan if satisfied that: (1) It complies with the provisions of subsection (b) of this section, is fair and equitable, affords due recognition to the rights of each class of creditors and stockholders, does not discriminate unfairly in favor of any class of creditors or stockholders, and will conform to the requirements of the law of the land regarding the participation of the various classes of creditors and stockholders; (2) the approximate amounts to be paid by the debtor, or by any corporation or corporations acquiring the debtor's assets, for expenses and fees incident to the reorganization, have been fully disclosed so far as they can be ascertained at the date of such hearing, are reasonable, are within such maximum limits as are fixed by the Commission, and are within such maximum limits to be subject to the approval of the judge; * * *.' 2 The Commission has repeatedly proposed and approved reorganization plans requiring consolidations or mergers. See, e.g., Alton R. Co. Reorganization, 261 I.C.C. 343; New York, N.H. & H.R. Co. Reorganization, 254 I.C.C. 63, 405; Missouri Pac. R. Co. Reorganization, 239 I.C.C. 7; Denver & R.G.W.R. Co. Reorganization, 233 I.C.C. 515, 239 I.C.C. 583, 254 I.C.C. 349. As a result of some of these proceedings the Commission has been criticized for misapplying or disregarding the standards set up for mergers by § 5 of the Interstate Commerce Act. S.Rep.No.1170, 79th Cong., 2d Sess. 80—85. In the present case, however, no argument is made that the proper standards have not been applied. Indeed that question is not before us. Moreover, not even the Senate Report, supra, suggests that the Commission cannot ever approve reorganization mergers. That Report says only that the 'procedure and safeguards of the Transportation Act must be preserved. * * *' And, as we shall see, the standards prescribed in § 5 have been satisfied here, so far as this record reveals. 3 'The public interest in its broader concept will be better served by integration of the debtor into a large railroad system than by its continued operation as an independent railroad. 'The effect of a merger upon the Southern Railway system and Seaboard Air Line Railroad Company, if any, will not adversely affect the public interest. 'The record is sufficient in all respects for a determination of the issue of the public interests involved in an acquisition of the debtor's properties by the Coast Line. 'It will be compatible with the public interest for the Coast Line to control the debtor's property. 'While the plan proposed by the Coast Line is inequitable in that it does not provide for the full equitable equivalent of the rights to be surrendered by the debtor's creditors, the plan as hereinabove modified will comply with such requirements, will be fair and equitable, and otherwise in the public interest.' 4 'The interests of the railroad employees affected by the merger will be adequately protected.' 5 'There should eventually result savings through a unification of the two carriers of between $850,000 and $1,000,000 per annum, through (a) eventual unification of the executive and supervisory forces of the two carriers; (b) consolidation of interchange yards and shop facilities at Jacksonville; (c) unification of operations of the freight stations of the two carriers at Jacksonville; and (d) coordination and consolidation of off-line traffic offices of the two carriers.' 6 'There would be betterment of service to the public resulting from a unification of the debtor's line with that of the Coast Line.' 7 'The apprehensions of the citizens and communities of the east coast of Florida that a merger would adversely affect their interests are not justified since (a) it would be to the inerest of the Coast Line to serve all its territory impartially, (b) existing through routes via Jacksonville will be maintained and (c) while the Coast Line would attempt to retain its long haul, its appeal to the public would be based primarily on the quality of its service, and the traffic relationships between trunk-line carriers would prevent any abuse of power such as would be possible under control of the debtor's line by the St. Joe Company.' 8 'The merger of the debtor with the Coast Line will be of appreciable benefit in assuring greater financial stability for the debtor.' 9 'In general, there is a substantial preponderance of evidence that a merger will insure a more adequate, economical, and efficient transportation service than will operation of the debtor by the St. Joe Company.' 10 See note 11, infra. 11 We have considered the 'cram down' provision of § 77, sub. e only once. See Reconstruction Finance Corp. v. Denver & R.G.W.R. Co., 328 U.S. 495, 531, 66 S.Ct. 1282, 1301, 1384, 90 L.Ed. 1400. A merger was involved in that reorganization but it was not at issue before this Court. The complaint there was by junior creditors on matters that were purely financial: that the valuation and allocation of securities proposed had left them too small a participation. We decided that the 'cram down' provision could be and was in that case constitutionally and properly applied. On the facts we held that the objecting class was without 'reasonable justification,' since it complained only of financial aspects of the plan which were fair and equitable. We made no decision regarding mergers and laid down no rule of law. We left the reorganization courts free to confirm or reject future plans as the facts, the equities, and the votes required.

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347 U.S. 340 74 S.Ct. 535 98 L.Ed. 744 MILLER BROS. CO.v.STATE OF MARYLAND. No. 160. Argued Jan. 5, 1954. Decided April 5, 1954. Rehearing Denied May 3, 1954. See 347 U.S. 964, 74 S.Ct. 708. Mr. William L. Marbury, Baltimore, Md., for appellant. Mr. Francis D. Murnaghan, Jr., Baltimore, Md., for appellee. Opinion of the Court by Mr. Justice JACKSON, announced by Mr. Justice REED.* 1 Appellant is a Delaware merchandising corporation which only sells directly to customers at its store in Wilmington, Delaware. It does not take orders by mail or telephone. Residents of nearby Maryland come to its store and make purchases, some of which they carry away, some are delivered to them in Maryland by common carrier, and others by appellant's own truck. Maryland lays upon its residents an excise tax on 'the use, storage or consumption' in the State of such articles,1 and it requires every vendor to collect and remit the tax to the State.2 This the appellant did not do. Finding appellant's truck in Maryland, the State seized it, and the State's highest court has held it liable for the use tax on all goods sold in the Delaware store to Maryland residents, however delivered.3 This was against appellant's timely contention that the Maryland taxing act, so construed, conflicts with the federal commerce power and attempts to extend the power of the State beyond its borders in violation of the Due Process Clause of the Fourteenth Amendment. The parties have stipulated facts in detail, and, so far as they seem important, we set them forth in the Appendix.4 2 The grounds advanced by Maryland for holding the Delaware vendor liable come to this: (1) the vendor's advertising with Delaware papers and radio stations, though not especially directed to Maryland inhabitants, reached, and was known to reach, their notice; (2) its occasional sales circulars mailed to all former customers included customers in Maryland; (3) it delivered some purchases to common carriers consigned to Maryland addresses; (4) it delivered other purchases by its own vehicles to Maryland locations. The question is whether these factors, separately or in the aggregate, in each or all of the above types of sales, establish a state's power to impose a duty upon such an out-of-state merchant to collect and remit a purchaser's use tax. 3 It is a venerable if trite observation that seizure of property by the State under pretext of taxation when there is no jurisdiction or power to tax is simple confiscation and a denial of due process of law. 'No principle is better settled than that the power of a state, even its power of taxation, in respect to property, is limited to such as is within its jurisdiction.' New York, L.E. & W.R. Co. v. Com. of Pennsylvania, 153 U.S. 628, 646, 14 S.Ct. 952, 958, 38 L.Ed. 846. 'Where there is jurisdiction neither as to person nor property, the imposition of a tax would be ultra vires and void. If the legislature of a State should enact that the citizens or property of another State or country should be taxed in the same manner as the persons and property within its own limits and subject to its authority, or in any other manner whatsoever, such a law would be as much a nullity as if in conflict with the most explicit constitutional inhibition. Jurisdiction is as necessary to valid legislative as to valid judicial action.' City of St. Louis v. Wiggins Ferry Co., 11 Wall. 423, 430, 20 L.Ed. 192. 4 But visible territorial boundaries do not always establish the limits of a state's taxing power or jurisdiction. In the last twenty years, revenue needs have come to exceed the demands that legislatures feel it expedient to make upon accumulated wealth or property with fixed location within the state. The states therefore have turned to taxing activities connected with the movement of commerce, such as exchange and consumption. If there is some jurisdictional fact or event to serve as a conductor, the reach of the state's taxing power may be carried to objects of taxation beyond its borders. When it has the taxpayer within its power or jurisdiction, it may sometimes, through him, reach his extraterritorial income or transactions. On the other hand, if it has jurisdiction of his taxable property or transactions, it may sometimes, through these, reach the nonresident. Whether this is one of these cases we must inquire. 5 We are dealing with a relatively new and experimental form of taxation.5 Taxation of sales or purchases and taxation of use or possession of purchases are complementary and related but serve very different purposes. The former, a fiscal measure of considerable importance, has the effect of increasing the cost to the consumer of acquiring supplies in the taxing state. The use tax, not in itself a relatively significant revenue producer,6 usually appears as a support to the sales tax in two respects. One is protection of the state's revenues by taking away from inhabitants the advantages of resort to untaxed out-of-state purchases. The other is protection of local merchants against out-of-state competition from those who may be enabled by lower tax burdens to offer lower prices. In this respect, the use tax has the same effect as a protective tariff becoming due not on purchase of the goods but at the moment of bringing them into the taxing states.7 The collection of the use tax from inhabitants is a difficult administrative problem, and if out-of-state vendors can be compelled to collect it and remit it to the taxing state, it simplifies administration. But this raises questions of great importance to particular taxpayers, to the course of commercial dealing among the states and as to appropriation by other states of tax resources properly belonging to the state where the event occurs. 6 The practical and legal effect of the Maryland statute as it has been applied to this Delaware vendor is to make the vendor liable for a use tax due from the purchaser. In economic consequence, it is identical with making him pay a sales tax. The liability arises only because of a Delaware sale and is measured by its proceeds. But at the time of the sale, no one is liable for a Maryland use tax. That liability arises only upon importation of the merchandise to the taxing state, an event which occurs after the sale is complete and one as to which the vendor may have no control or even knowledge, at least as to merchandise carried away by the buyer. The consequence is that liability against the Delaware vendor is predicated upon use of the goods in another state and by another person. We do not understand the State to contend that it could lay a use tax upon mere possession of goods in transit by a carrier or vendor upon entering the State, nor do we see how such a tax could be consistent with the Commerce Clause. 7 The question here is whether this vendor, by its acts or course of dealing, has subjected itself to the taxing power of Maryland or whether it has afforded that State a jurisdiction or power to create this collector's liability. Despite the increasing frequency with which the question arises, little constructive discussion can be found in responsible commentary as to the grounds on which to rest a state's power to reach extraterritorial transactions or nonresidents with tax liabilities. Our decisions are not always clear as to the grounds on which a tax is supported, especially where more than one exists; nor are all of our pronouncements during the experimental period of this type of taxation consistent or reconcilable. A few have been specifically overruled, while others no longer fully represent the present state of the law. But the course of decisions does reflect at least consistent adherence to one time-honored concept: that due process requires some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax. 8 Thus, the Court has frequently held that domicile or residence, more substantial than mere presence in transit or sojourn, is an adequate basis for taxation, including income,8 property,9 and death10 taxes. Since the Fourteenth Amendment makes one a citizen of the state wherein he resides, the fact of residence creates universally reciprocal duties of protection by the state and of allegiance and support by the citizen. The latter obviously includes a duty to pay taxes, and their nature and measure is largely a political matter. Of course, the situs of property may tax it regardless of the citizenship, domicile or residence of the owner, the most obvious illustration being a tax on realty laid by the state in which the realty is located.11 Also, the keeping of tangible12 or intangible13 personalty within a state may give it a similar taxable situs there (sometimes called a business or commercial situs or domicile). Certain activities or transactions carried on within a state, such as the use14 and sale15 of property may give jurisdiction to tax whomsoever engages therein, and the use of highways may subject the use to certain types of taxation.16 These cases overlap with those in which incorporation by a state17 or permission to do business there18 forms the basis for proportionate taxation of a company, including its franchise, capital, income and property. Recent cases in which a taxable sale does not clearly take place within the taxing state, elements of the transaction occurring in different states, have presented peculiar difficulties,19 as have those where the party liable for a use tax does not use the product within the taxing state.20 9 We are unable to find in any of our cases a precedent for sustaining the liability asserted by Maryland here. In accordance with the principles of earlier cases, it was recently settled that Maryland could not have reached this Delaware vendor with a sales tax on these sales. McLeod v. J. E. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304. Can she then make the same Delaware sales a basis for imposing on the vendor liability for use taxes due from her own inhabitants? It would be a strange law that would make appellant more vulnerable to liability for another's tax than to a tax on itself. 10 The decisions relied upon by Maryland do not, in our view, support her. This is not the case of a merchant entering a state to maintain a branch and engaging in admittedly taxable retail business but trying to allocate some part of his total sales to nontaxable interstate commerce. Under these circumstances, the State has jurisdiction to tax the taxpayer, and all that he can question on Due Process or Commerce Clause grounds is the validity of the allocation. Cf. Nelson v. Montgomery Ward & Co., 312 U.S. 373, 61 S.Ct. 593, 85 L.Ed. 897; Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. 888; Norton Co. v. Department of Revenue, 340 U.S. 534, 71 S.Ct. 377, 95 L.Ed. 517. 11 The nearest support for Maryland's position is General Trading Co. v. State Tax Comm., 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309. The writer of this opinion dissented in that case and, whether or not in so doing he made a correct application of principles of jurisdiction to the particular facts, it is clear that circumstances absent here were there present to justify the Court's approval of liability for collecting the tax. That was the case of an out-of-state merchant entering the taxing state through traveling sales agents to conduct continuous local solicitation followed by delivery of ordered goods to the customers, the only nonlocal phase of the total sale being acceptance of the order. Probably, except for credit reasons, acceptance was a mere formality, since one hardly incurs the cost of soliciting orders to reject. The Court could properly approve the State's decision to regard such a rivalry with its local merchants as equivalent to being a local merchant. But there is a wide gulf between this type of active and aggressive operation within a taxing state and the occasional delivery of goods sold at an out-of-state store with no solicitation other than the incidental effects of general advertising. Here was no invasion or exploitation of the consumer market in Maryland. On the contrary, these sales resulted from purchasers traveling from Maryland to Delaware to exploit its less tax-burdened selling market. That these inhabitants incurred a liability for the use tax when they used, stored or consumed the goods in Maryland, no one doubts. But the burden of collecting or paying their tax cannot be shifted to a foreign merchant in the absence of some jurisdictional basis not present here. 12 In this view of the case, we need not consider whether the statute imposes an unjustifiable burden upon interstate commerce. 13 The judgment appealed from is reversed and the case remanded for further proceedings not inconsistent herewith. 14 Reversed and remanded. consumption becomes taxable hereunder, shall collect the tax imposed by this sub-title from the purchaser.' Flack's Md.Ann.Code, 1951, Art. 81, § 371. 15 'As used in this sub-title, the following terms shall mean or include: 16 '(k) 'Engaged in business in this State' means the selling or delivering in this State, or any activity in this State in connection with the selling or delivering in this State, of tangible personal property for use, storage or consumption within this State. This term shall include, but shall not be limited to the following acts or methods of transacting business. 17 '(1) The maintaining, occupying or using, permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, of any office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business. 18 '(2) The having of any representative, agent, salesman, canvasser, or solicitor operating in this State for the purpose of selling, delivering, or the taking of orders for any tangible personal property.' Flack's Md.Ann.Code, Art. 81, § 368. 19 'Every vendor required or permitted to collect the tax shall collect the tax imposed by the provision of this sub-title, notwithstanding the following: 20 '(a) That the purchaser's order or the contract of sale is delivered, mailed, or otherwise transmitted by the purchaser to the vendor at a point outside of this State as a result of solicitation by the vendor through the medium of a catalog or other written advertisement; or 21 '(b) That the purchaser's order or contract of sale made or closed by acceptance or approval outside of this State or before said tangible personal property enters this State; or 22 '(c) That the purchaser's order or contract of sale provides that said property shall be, or it is in fact, procured or manufactured at a point outside of this State and shipped directly to the purchaser from the point of origin; or 23 '(d) That said property is mailed to the purchaser in this State from a point outside this State or delivered to a carrier at a point outside this State, F.O.B., or otherwise, and directed to the vendor in this State, regardless of whether the cost of transportation is paid by the vendor or by the purchaser; or 24 '(e) That said property is delivered directly to the purchaser at a point outside this State, if it is intended to be brought to this State for use, storage or consumption in this State.' Flack's Md.Ann.Code, Art. 81, § 373. 25 'The vendor and any other officer of any corporate vendor required or permitted to collect the tax imposed by this sub-title shall be personally liable for the tax collected, and such vendor shall have the same right in respect to collecting the tax from the purchaser, or in respect to non-payment of the tax by the purchaser, as if the tax were a part of the purchase price of the property and payable at the time of the sale. Any vendor who fails to collect the tax pursuant to this subtitle and the regulations prescribed hereunder shall, in addition to all other penalties, be personally liable to the State for the amount uncollected.' Flack's Md.Ann.Code, 1951, Art. 81, § 375. 3 Miller Brothers Co. v. Maryland, 201 Md. 535, 95 A.2d 286. 4 'It is hereby stipulated and agreed by and between the attorneys for the above named parties and on their behalf that: 26 '1. Defendant, Miller Brothers Company, is a corporation organized and existing under the laws of the State of Delaware with its principal place of business at Ninth and King Streets, Wilmington, Delaware. It has no resident agent in Maryland. 27 '2. Defendant is and for all times material to this suit has been engaged in the retail household furniture business by selling its merchandise from its only retail store located in Wilmington, Delaware. 28 '3. The only methods of advertising used by the Defendant are the following: 29 '(a) Radio and Television. The Defendant has engaged in no radio or television advertising of any sort, anywhere, since January 1, 1951. Prior to that date, the Defendant had limited radio advertising over the Wilmington, Delaware, stations. In the fall of 1950, for a period of about six weeks, the Defendant had a small amount of television advertising over Station WDEL-TV in connection with the broadcasting of football scores. The facilities of those stations are located in Delaware entirely. In the radio and television advertising the Defendant has never had any script or copy which made an appeal for out-of-state business or in any way was designed directly or indirectly to appeal particularly to Maryland residents. The radio slogan adopted by the Defendant was 'Furniture Fashion Makers for Delaware'. 30 '(b) Newspapers. The Defendant advertises regularly in the Wilmington Morning News and the Wilmington Journal every evening. It also advertises occasionally in the Wilmington Sunday Star. All of these newspapers are published in Wilmington and undoubtedly have some circulation in some portions of Maryland. The volume of such circulation is unknown to either the Plaintiff or the Defendant. In its newspaper advertising the Defendant has never used advertising copy which mentions Maryland customers or is prepared for the purpose of directly or indirectly making any special appeal to the Maryland customers. No advertising has ever been done by the Defendant in any newspapers published in Maryland. 31 '(c) Use of the Mails. The Defendant uses an automatic card mailing system and with this system distributes about four pieces a year. These mailing pieces go out to everyone who has purchased from the Defendant and whose name and address is on the Defendant's records. This means that Maryland residents do receive these mailing pieces, but no specific advertising copy has ever been sent through the mails for the specific purpose of attracting Maryland buyers. No advertising copy has been sent to Maryland buyers alone and the only advertising copy which these Maryland buyers receive is that which is sent to all customers whose names and addresses are on the records. 32 '4. Defendant has made and does make certain sales of tangible personal property, some of which sales being the subject matter of this action, to residents of the State of Maryland, who have used, consumed or stored or will use, consume or store the purchased personal property in the State of Maryland. 33 '5. The transactions between the Defendant and the said Maryland purchasers are and have been as follows: 34 '(a) It is the Defendant's policy never to accept telephone orders. Most of the merchandise sold by the Defendant requires personal inspection and selection, and it is for this reason that telephone orders are refused. The Defendant maintains no mail-order business and does not make use of coupons in connection with its newspaper advertising. 35 '(b) The purchaser appears at Defendant's retail store, located in Wilmington, Delaware. In about thirty per cent (30%) of the sales the exact item selected by the customer is tagged in the store and that same item is delivered to the customer from the store, in Wilmington, Delaware. In the remainder of the sales, an item identical to that selected by the customer is delivered from the Defendant's storeroom or warehouse in Wilmington, Delaware. 36 '(c) Delivery is made in one of three ways and no other: 37 '(1) The article is taken away by the purchaser. Within the taxable period of July 1, 1947, through December 31, 1951, tangible personal property sold for at least $2,500 was delivered in this manner. 38 '(2) The article is delivered in Maryland to the purchaser in a motor vehicle owned and operated by Defendant, directly from Defendant's store in Wilmington, Delaware, to the residence of the Maryland purchaser. The cost of the delivery in such a case is borne by Defendant and no charge therefor is made to the purchaser. Within the taxable period July 1, 1947, through December 31, 1951, tangible personal property sold for at least $8,000 was delivered in this manner. 39 '(3) The article is delivered in Maryland to the purchaser by common carrier to which delivery is made by Defendant in Wilmington, Delaware. Such common carrier is usually an independent trucking line authorized to do business as a commercial carrier by the Interstate Commerce Commission. The cost of the delivery in such a case is borne by the Defendant and no charge therefor is made to the purchaser. Within the taxable period July 1, 1947, through December 31, 1951, tangible personal property sold for at least $1,500 was delivered in this manner. 40 '6. (a) Payment for some purchases is completed at the time the purchaser appears at the Defendant's retail store and prior to the delivery. 41 '(b) The Defendant does make sales to some Maryland residents on credit in exactly the same way as it sells to Delaware residents on credit. In the case of most of such credit sales to Maryland customers, the Defendant enters into conditional sales contracts with its Maryland customers in the same way that it enters into conditional sales contracts with its Delaware customers. In many other instances, the Defendant notes the terms of the credit transaction on the sales slip without requiring a conditional sales agreement, and this method of business is used without any distinction between Maryland and Delaware customers. This method is frequently designated as a 60 or 90-day charge account. At no time within the past eight years has the Defendant ever recorded its conditional sales contracts in Maryland. 42 '(c) The Defendant has never repossessed by legal process any furniture or other merchandise for any customers in Maryland or elsewhere within the last fifteen years. The Defendant has on occasion accepted back merchandise which has not been satisfactory to the customer. In the even of delinquency in payments, the Defendant uses collection letters, which are sent through the mails. During the past ten years the Defendant has never instituted legal action through a Magistrate's or other Court in Maryland, nor has it in that period used a collection agent in Maryland. The Defendant employs no collectors. The Maryland customers make payments to the Defendant personally at the store in Wilmington, Delaware, or by check, cash or money order sent through the mails. 43 '(d) No C.O.C. deliveries are made. 44 '7. Except to the extent, if any, disclosed above, Defendant does not maintain, occupy or use, nor has it ever in the past maintained, occupied or used, permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, any office, branch, place of distribution, sales or sample rooms or place, warehouse or storage place, or other place of business in the State of Maryland. 45 '8. Except to the extent, if any, disclosed above, defendant does not have, nor has it ever had, any representative, agent, salesman, canvasser or solicitor operating in the State of Maryland for the purpose of selling or taking any orders for tangible personal property, or delivering the same. 46 '9. Defendant is not, nor has it ever been, qualified or registered to do business in the State of Maryland. 47 '10. On or about March 10, 1952, the Comptroller of the State of Maryland assessed a deficiency in Use Tax against the Defendant in the amount of $356.40, $240.00 thereof representing the use tax claimed to be due, $32.40 thereof as interest claimed to be due and $84.00 thereof as a penalty claimed to be due for the tax period from July 1, 1947, through December 31, 1951, based upon all the sales referred to in paragraph 5 above. 48 '11. Defendant has not applied for a permit nor been authorized by the Comptroller to collect any use tax under Section 312 of Article 81 of the Annotated Code of Maryland (1947 Supp.). 49 '12. Defendant has not applied for, nor paid the license fee required to obtain, nor has been issued, a license pursuant to Sections 331—333 of Article 81 of the Annotated Code of Maryland (1947 Supp.). 50 '13. Except as indicated above, Defendant does not engage and has not engaged in any activities in the State of Maryland.' 5 Criz, The Use Tax, 1 (Public Administration Service No. 78, 1941); Hellerstein, State and Local Taxation, 4—12, 338; Haig and Shoup, The Sales Tax in the American States, 83 (1934). 6 Criz, supra, at 3—4, 36—39. For an example of the revenue features in a particular state, see McLees, The Use Tax After One Year, 4 Ark.L.Rev. 337, 339 (1950). 7 Criz, supra, at 1—2; Hellerstein, supra, at 116, 408—409, 418; Jacoby, Retail Sales Taxation, c. VI (1938). 8 Maguire v. Trefry, 253 U.S. 12, 40 S.Ct. 417, 64 L.Ed. 739; Lawrence v. State Tax Comm., 286 U.S. 276, 52 S.Ct. 556, 76 L.Ed. 1102; People of State of New York ex rel. Cohn v. Graves, 300 U.S. 308, 57 S.Ct. 466, 81 L.Ed. 666; Guaranty Trust Co. v. Virginia, 305 U.S. 19, 59 S.Ct. 1, 83 L.Ed. 16. The collection of cases in footnotes 8 through 20 is not intended as a guide to their holdings but only as an illustration of the types of jurisdictional standards sanctioned at one time or another by the Court. 9 Most of these cases deal with intangible property and apply the maxim mobilia sequuntur personam. Kirtland v. Hotchkiss, 100 U.S. 491, 25 L.Ed. 558; Darnell v. Indiana, 226 U.S. 390, 33 S.Ct. 120, 57 L.Ed. 267; Hawley v. City of Malden, 232 U.S. 1, 34 S.Ct. 201, 58 L.Ed. 477; Fidelity & Columbia Trust Co. v. Louisville, 245 U.S. 54, 38 S.Ct. 40, 62 L.Ed. 145; Citizens National Bank v. Durr, 257 U.S. 99, 42 S.Ct. 15, 66 L.Ed. 149; Klein v. Board of Tax Supervisors, 282 U.S. 19, 24, 51 S.Ct. 15, 16, 75 L.Ed. 140; Greenough v. Tax Assessors of Newport, 331 U.S. 486, 67 S.Ct. 1400, 91 L.Ed. 1621. See Nevada Bank v. Sedgwick, 104 U.S. 111, 26 L.Ed. 703; Bonaparte v. Tax Court, 104 U.S. 592, 595, 26 L.Ed. 845; Sturges v. Carter, 114 U.S. 511, 521, 5 S.Ct. 1014, 1019, 29 L.Ed. 240; Dewey v. Des Moines, 173 U.S. 193, 19 S.Ct. 379, 43 L.Ed. 665; Kidd v. Alabama, 188 U.S. 730, 731, 23 S.Ct. 401, 47 L.Ed. 669. 10 Blackstone v. Miller, 188 U.S. 189, 23 S.Ct. 277, 47 L.Ed. 439; Bullen v. Wisconsin, 240 U.S. 625, 36 S.Ct. 473, 60 L.Ed. 830; Blodgett v. Silberman, 277 U.S. 1, 48 S.Ct. 410, 72 L.Ed. 749; Farmers Loan & Trust Co. v. Minnesota, 280 U.S. 204, 50 S.Ct. 98, 74 L.Ed. 371; Baldwin v. Missouri, 281 U.S. 586, 50 S.Ct. 436, 74 L.Ed. 1056; Beidler v. South Carolina Tax Comm., 282 U.S. 1, 51 S.Ct. 54, 75 L.Ed. 131; First National Bank of Boston v. Maine, 284 U.S. 312, 52 S.Ct. 174, 76 L.Ed. 313; Curry v. McCanless, 307 U.S. 357, 59 S.Ct. 900, 83 L.Ed. 1339; Graves v. Elliott, 307 U.S. 383, 59 S.Ct. 913, 83 L.Ed. 1356; Graves v. Schmidlapp, 315 U.S. 657, 62 S.Ct. 870, 86 L.Ed. 1097; Central Hanover Bank & Trust Co. v. Kelly, 319 U.S. 94, 63 S.Ct. 945, 87 L.Ed. 1282. See Carpenter v. Pennsylvania, 17 How. 456, 15 L.Ed. 127; Wachovia Bank & Trust Co. v. Doughton, 272 U.S. 567, 47 S.Ct. 202, 71 L.Ed. 413; Burnet v. Brooks, 288 U.S. 378, 400—405, 53 S.Ct. 457, 463—465, 77 L.Ed. 844; Cf. Worcester County Trust Co. v. Riley, 302 U.S. 292, 58 S.Ct. 185, 82 L.Ed. 268; Pearson v. McGraw, 308 U.S. 313, 60 S.Ct. 211, 84 L.Ed. 293. See also Keeney v. Comptroller of New York, 222 U.S. 525, 537, 32 S.Ct. 105, 108, 56 L.Ed. 299, which involved an excise tax on an inter vivos transfer of stocks and bonds. 11 The Court has never had a case in which a state attempted a direct tax on land located in another state. See Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194, 204, 26 S.Ct. 36, 37, 50 L.Ed. 150. Instead, the cases in point speak of the problem by way of dicta or deal with interests attached to the realty, such as incorporeal hereditaments. See Witherspoon v. Duncan, 4 Wall. 210, 18 L.Ed. 339; In re State Tax on Foreign-Held Bonds, 15 Wall. 300, 319, 21 L.Ed. 179; Savings & Loan Society v. Multnomah County, 169 U.S. 421, 18 S.Ct. 392, 42 L.Ed. 803; Paddell v. City of New York, 211 U.S. 446, 29 S.Ct. 139, 53 L.Ed. 275; First National Bank v. Maine, 284 U.S. 312, 326, 52 S.Ct. 174, 176, 76 L.Ed. 313; Senior v. Branden, 295 U.S. 422, 55 S.Ct. 800, 79 L.Ed. 1520. Cf. Louisville & Jeffersonville Ferry Co. v. Kentucky, 188 U.S. 385, 23 S.Ct. 463, 47 L.Ed. 513; Central R. Co. v. Jersey City, 209 U.S. 473, 28 S.Ct. 592, 52 L.Ed. 896. 12 Coe v. Errol, 116 U.S. 517, 524, 6 S.Ct. 475, 476, 29 L.Ed. 715; Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, 226—227, 17 S.Ct. 305, 311, 41 L.Ed. 683; American Refrigerator Transit Co. v. Hall, 174 U.S. 70, 19 S.Ct. 599, 43 L.Ed. 899; Union Refrigerator Transit Co. v. Lynch, 177 U.S. 149, 20 S.Ct. 631, 44 L.Ed. 708; Carstairs v. Cochran, 193 U.S. 10, 24 S.Ct. 318, 48 L.Ed. 596; Old Dominion S.S. Co. v. Virginia, 198 U.S. 299, 25 S.Ct. 686, 49 L.Ed. 1059; Hannis Distilling Co. v. Mayor and City Council, 216 U.S. 285, 30 S.Ct. 326, 54 L.Ed. 482; Johnson Oil Refining Co. v. Oklahoma ex rel. Mitchell, 290 U.S. 158, 54 S.Ct. 152, 78 L.Ed. 238; City Bank Farmers Trust Co. v. Schnader, 293 U.S. 112, 55 S.Ct. 29, 79 L.Ed. 228; Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169, 69 S.Ct. 432, 93 L.Ed. 585. See Hays v. Pacific Mail S.S. Co., 17 How. 596, 15 L.Ed. 254; City of St. Louis v. Wiggins Ferry Co., 11 Wall. 423, 20 L.Ed. 192; Morgan v. Parham, 16 Wall. 471, 21 L.Ed. 302; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 210—211, 5 S.Ct. 826, 831, 832, 29 L.Ed. 158; Marye v. Baltimore & O.R. Co., 127 U.S. 117, 123, 8 S.Ct. 1037, 1039, 32 L.Ed. 94; Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18, 22, 11 S.Ct. 876, 877, 35 L.Ed. 613; Pittsburgh, C., C. & St. L.R. Co. v. Backus, 154 U.S. 421, 427—428, 14 S.Ct. 1114, 1117, 38 L.Ed. 1031; Henderson Bridge Co. v. Henderson City, 173 U.S. 592, 609, 613, 622, 19 S.Ct. 553, 559, 561, 564, 43 L.Ed. 823 (bridge); Diamond Match Co. v. Ontonagon, 188 U.S. 82, 23 S.Ct. 266, 47 L.Ed. 394; Fargo v. Hart, 193 U.S. 490, 24 S.Ct. 498, 48 L.Ed. 761; Delaware, L. & W.R. Co. v. Pennsylvania, 198 U.S. 341, 25 S.Ct. 669, 49 L.Ed. 1077; Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194, 26 S.Ct. 36, 50 L.Ed. 150; Thompson v. Kentucky, 209 U.S. 340, 347, 28 S.Ct. 533, 536, 52 L.Ed. 822; Gromer v. Standard Dredging Co., 224 U.S. 362, 371—372, 32 S.Ct. 499, 502, 503, 56 L.Ed. 801; Wells, Fargo & Co. v. Nevada, 248 U.S. 165, 167, 37 S.Ct. 62, 63, 63 L.Ed. 190; Union Tank Line Co. v. Wright, 249 U.S. 275, 39 S.Ct. 276, 63 L.Ed. 602; Frick v. Pennsylvania, 268 U.S. 473, 45 S.Ct. 603, 69 L.Ed. 1058; Treichler v. Wisconsin, 338 U.S. 251, 70 S.Ct. 1, 94 L.Ed. 37; Standard Oil Co. v. Peck, 342 U.S. 382, 72 S.Ct. 309, 96 L.Ed. 427. Whether the property is sufficiently situated in the state to become part of the general mass of taxable property or whether it is merely in transit is frequently treated as an interstate commerce question rather than a jurisdictional one. E.g., Brown v. Houston, 114 U.S. 622, 632 633, 5 S.Ct. 1091, 1096, 29 L.Ed. 257; Pittsburg & Southern Coal Co. v. Bates, 156 U.S. 577, 588—589, 15 S.Ct. 415, 419, 39 L.Ed. 538; Kelley v. Rhoads, 188 U.S. 1, 23 S.Ct. 259, 47 L.Ed. 359; General Oil Co. v. Crain, 209 U.S. 211, 28 S.Ct. 475, 52 L.Ed. 754; Champlain Realty Co. v. Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309. As to the situs of personalty within various counties of a single state, see Columbus Southern R. Co. v. Wright, 151 U.S. 470, 14 S.Ct. 396, 38 L.Ed. 238. 13 Tappan v. Merchants' National Bank, 19 Wall. 490, 499 500, 22 L.Ed. 189; Adams Express Co. v. Ohio State Auditor, 166 U.S. 185, 17 S.Ct. 604, 41 L.Ed. 965; City of New Orleans v. Stempel, 175 U.S. 309, 20 S.Ct. 110, 44 L.Ed. 174; Bristol v. Washington County, 177 U.S. 133, 20 S.Ct. 585, 44 L.Ed. 701; State Board of Assessors v. Comptoir National D'Escompte, 191 U.S. 388, 24 S.Ct. 109, 48 L.Ed. 232; Metropolitan Life Ins. Co. v. New Orleans, 205 U.S. 395, 27 S.Ct. 499, 51 L.Ed. 853; Liverpool & London & Globe Ins. Co. v. Board of Assessors, 221 U.S. 346, 31 S.Ct. 550, 55 L.Ed. 762; Orient Ins. Co. v. Board of Assessors, 221 U.S. 358, 31 S.Ct. 554, 55 L.Ed. 769; Wheeler v. Sohmer, 233 U.S. 434, 34 S.Ct. 607, 58 L.Ed. 1030; Rogers v. Hennepin County, 240 U.S. 184, 36 S.Ct. 265, 60 L.Ed. 594; State of Iowa v. Slimmer, 248 U.S. 115, 39 S.Ct. 33, 63 L.Ed. 158; Safe Deposit & Trust Co. v. Virginia, 280 U.S. 83, 50 S.Ct. 59, 74 L.Ed. 180; Com. of Virginia v. Imperial Coal Sales Co., 293 U.S. 15, 55 S.Ct. 12, 79 L.Ed. 171; Wheeling Steel Corp. v. Fox, 298 U.S. 193, 56 S.Ct. 773, 80 L.Ed. 1143; New York ex rel. Whitney v. Graves, 299 U.S. 366, 57 S.Ct. 237, 81 L.Ed. 285; First Bank Stock Corp. v. Minnesota, 301 U.S. 234, 57 S.Ct. 677, 81 L.Ed. 1061. See Northern Cent. Railroad Co. v. Jackson, 7 Wall. 262, 19 L.Ed. 88; Adams Express Co. v. Kentucky, 166 U.S. 171, 17 S.Ct. 527, 41 L.Ed. 960; Scottish Union & National Ins. Co. v. Bowland, 196 U.S. 611, 619 620, 25 S.Ct. 345, 347, 49 L.Ed. 619; Buck v. Beach, 206 U.S. 392, 27 S.Ct. 712, 51 L.Ed. 1106; Selliger v. Kentucky, 213 U.S. 200, 29 S.Ct. 449, 53 L.Ed. 761; Brooke v. City of Norfolk, 277 U.S. 27, 48 S.Ct. 422, 72 L.Ed. 767. Cf. Board of Assessors v. New York Life Ins. Co., 216 U.S. 517, 523, 30 S.Ct. 385, 386, 54 L.Ed. 597. In some of these cases, the property would appear to be tangible as well as intangible in nature. 14 This is generally discussed as in interstate commerce question. E.g., Bowman v. Continental Oil Co., 256 U.S. 642, 41 S.Ct. 606, 65 L.Ed. 1139; Eastern Air Transport, Inc., v. South Carolina Tax Comm., 285 U.S. 147, 52 S.Ct. 340, 76 L.Ed. 673; Gregg Dyeing Co. v. Query, 286 U.S. 472, 52 S.Ct. 631, 76 L.Ed. 1232; Nashville, C. & St. L.R. Co. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730; Edelman v. Boeing Air Transport, Inc., 289 U.S. 249, 53 S.Ct. 591, 77 L.Ed. 1155; Monamotor Oil Co. v. Johnson, 292 U.S. 86, 54 S.Ct. 575, 78 L.Ed. 1141; Henneford v. Silas Mason Co., 300 U.S. 577, 57 S.Ct. 524, 81 L.Ed. 814. See also footnote 20. 15 People of State of New York ex rel. Hatch v. Reardon, 204 U.S. 152, 158—159, 27 S.Ct. 188, 189—190, 51 L.Ed. 415. See Department of Treasury v. Wood Preserving Corp., 313 U.S. 62, 61 S.Ct. 885, 85 L.Ed. 1188; McLeod v. J. E. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304; Cf. Sonneborn Bros. v. Cureton, 262 U.S. 506, 43 S.Ct. 643, 67 L.Ed. 1095; Graniteville Mfg. Co. v. Query, 283 U.S. 376, 51 S.Ct. 515, 76 L.Ed. 1126 (creation of promissory notes). See also footnote 19. 16 Kane v. New Jersey, 242 U.S. 160, 37 S.Ct. 30, 61 L.Ed. 222; Interstate Busses Corp. v. Blodgett, 276 U.S. 245, 48 S.Ct. 230, 72 L.Ed. 551; Continental Baking Co. v. Woodring, 286 U.S. 352, 52 S.Ct. 595, 76 L.Ed. 1155; Hicklin v. Coney, 290 U.S. 169, 54 S.Ct. 142, 78 L.Ed. 247. See Hendrick v. Maryland, 235 U.S. 610, 35 S.Ct. 140, 59 L.Ed. 385; Clark v. Poor, 274 U.S. 554, 47 S.Ct. 702, 71 L.Ed. 1199; Cf. Sprout v. South Bend, 277 U.S. 163, 48 S.Ct. 502, 72 L.Ed. 833; Interstate Transit, Inc., v. Lindsey, 283 U.S. 183, 51 S.Ct. 380, 75 L.Ed. 953; Clark v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83 L.Ed. 1001; Bode v. Barrett, 344 U.S. 583, 73 S.Ct. 468, 97 L.Ed. 567. 17 Society for Savings v. Coite, 6 Wall. 594, 607, 18 L.Ed. 897; In re Delaware Railroad Tax, 18 Wall. 206, 231, 21 L.Ed. 888; Henderson Bridge Co. v. Kentucky, 166 U.S. 150, 17 S.Ct. 532, 41 L.Ed. 953; Corry v. Mayor and Council of Baltimore, 196 U.S. 466, 25 S.Ct. 297, 49 L.Ed. 556; Ayer & Lord Tie Co. v. Kentucky, 202 U.S. 409, 26 S.Ct. 679, 50 L.Ed. 1082; People of State of New York ex rel. New York C. & H.R.R. Co. v. Miller, 202 U.S. 584, 26 S.Ct. 714, 50 L.Ed. 1155; Southern Pacific Co. v. Kentucky, 222 U.S. 63, 32 S.Ct. 13, 56 L.Ed. 96; Kansas City Ft. S. & M.R. Co. v. Botkin, 240 U.S. 227, 232, 235, 36 S.Ct. 261, 262, 263, 60 L.Ed. 617; Kansas City, M. & B.R. Co. v. Stiles, 242 U.S. 111, 118—119, 37 S.Ct. 58, 60—61, 61 L.Ed. 176; Cream of Wheat Co. v. County of Grand Forks, 253 U.S. 325, 40 S.Ct. 558, 64 L.Ed. 931; Schwab v. Richardson, 263 U.S. 88, 44 S.Ct. 60, 68 L.Ed. 183; Matson Navigation Co. v. State Board of Equalization, 297 U.S. 441, 56 S.Ct. 553, 80 L.Ed. 791; Schuylkill Trust Co. v. Pennsylvania, 302 U.S. 506, 514—516, 58 S.Ct. 295, 299, 82 L.Ed. 392; Newark Fire Ins. Co. v. State Board of Tax Appeals, 307 U.S. 313, 59 S.Ct. 918, 83 L.Ed. 1312; Northwest Airlines, Inc. v. Minnesota, 322 U.S. 292, 64 S.Ct. 950, 88 L.Ed. 1283. See Baker v. Baker, Eccles & Co., 242 U.S. 394, 400 401, 37 S.Ct. 152, 154, 61 L.Ed. 386; Maxwell v. Bugbee, 250 U.S. 525, 539—540, 40 S.Ct. 2, 6, 63 L.Ed. 1124; State Tax Comm. v. Aldrich, 316 U.S. 174, 62 S.Ct. 1008, 86 L.Ed. 1358. In many of these cases the company was also doing business in the state of incorporation. 18 State Railroad Tax Cases (Taylor v. Secor), 92 U.S. 575, 603, 23 L.Ed. 663; Horn Silver Mining Co. v. New York, 143 U.S. 305, 12 S.Ct. 403, 36 L.Ed. 164; Baltic Mining Co. v. Massachusetts, 231 U.S. 68, 34 S.Ct. 15, 58 L.Ed. 127; St. Louis Southwestern R. Co. v. Arkansas, 235 U.S. 350, 364, 35 S.Ct. 99, 103, 59 L.Ed. 265; Equitable Life Assurance Society v. Pennsylvania, 238 U.S. 143, 35 S.Ct. 829, 59 L.Ed. 1239; Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113, 41 S.Ct. 45, 65 L.Ed. 165; Pullman Co. v. Richardson, 261 U.S. 330, 43 S.Ct. 366, 67 L.Ed. 682; Bass, Ratcliff & Gretton, Ltd. v. State Tax Comm., 266 U.S. 271, 45 S.Ct. 82, 69 L.Ed. 282; Great Northern R. Co. v. Minnesota, 278 U.S. 503, 49 S.Ct. 191, 73 L.Ed. 477; Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 424—427, 57 S.Ct. 772, 776—778, 81 L.Ed. 1193; Atlantic Refining Co. v. Virginia, 302 U.S. 22, 29—31, 58 S.Ct. 75, 78—79, 82 L.Ed. 24; Illinois Central R. Co. v. Minnesota, 309 U.S. 157, 60 S.Ct. 419, 84 L.Ed. 670; State of Wisconsin v. J. C. Penney Co., 311 U.S. 435, 61 S.Ct. 246, 85 L.Ed. 267; International Harvester Co. v. Wisconsin Department of Taxation, 322 U.S. 435, 64 S.Ct. 1060, 88 L.Ed. 1373; International Harvester Co. v. Evatt, 329 U.S. 416, 420—421, 67 S.Ct. 444, 446, 91 L.Ed. 390; Interstate Oil Pipe Line Co. v. Stone, 337 U.S. 662, 667—668, 69 S.Ct. 1264, 1266, 1267, 93 L.Ed. 1613. See Erie R. Co. v. Pennsylvania, 21 Wall. 492, 22 L.Ed. 595; Western Union Telegraph Co. v. Attorney General, 125 U.S. 530, 548, 8 S.Ct. 961, 963, 31 L.Ed. 790; State of Maine v. Grand Trunk R. Co., 142 U.S. 217, 227—228, 12 S.Ct. 121, 122, 35 L.Ed. 994; Central Pacific R. Co. v. California, 162 U.S. 91, 126, 16 S.Ct. 766, 779, 40 L.Ed. 903; Western Union Telegraph Co. v. Missouri ex rel. Gottlieb, 190 U.S. 412, 23 S.Ct. 730, 47 L.Ed. 1116; Western Union Telegraph Co. v. State of Kansas ex rel. Coleman, 216 U.S. 1, 30, 38, 30 S.Ct. 190, 198, 202, 54 L.Ed. 355; Pullman Co. v. State of Kansas ex rel. Coleman, 216 U.S. 56, 61 63, 30 S.Ct. 232, 234—235, 54 L.Ed. 378; Ludwig v. Western Union Telegraph Co., 216 U.S. 146, 162—163, 30 S.Ct. 280, 285, 54 L.Ed. 423; Atchison, T. & S.F.R. Co. v. O'Connor, 223 U.S. 280, 285, 32 S.Ct. 216, 217, 56 L.Ed. 436; Provident Savings Life Assurance Society v. Kentucky, 239 U.S. 103, 36 S.Ct. 34, 60 L.Ed. 167; Looney v. Crane Co., 245 U.S. 178, 187—188, 38 S.Ct. 85, 86, 87, 62 L.Ed. 230; International Paper Co. v. Massachusetts, 246 U.S. 135, 38 S.Ct. 292, 62 L.Ed. 624; Wallace v. Hines, 253 U.S. 66, 40 S.Ct. 435, 64 L.Ed. 782; Southern R. Co. v. Watts, 260 U.S. 519, 527, 43 S.Ct. 192, 195, 67 L.Ed. 375; Baker v. Druesedow, 263 U.S. 137, 44 S.Ct. 40, 68 L.Ed. 212; Air-Way Electric Appliance Corp. v. Day, 266 U.S. 71, 81—82, 45 S.Ct. 12, 14, 69 L.Ed. 169; Alpha Portland Cement Co. v. Massachusetts, 268 U.S. 203, 217—218, 45 S.Ct. 477, 480, 481, 69 L.Ed. 916; Rhode Island Hospital Trust Co. v. Doughton, 270 U.S. 69, 46 S.Ct. 256, 70 L.Ed. 475; Hans Ress' Sons, Inc., v. North Carolina ex rel. Maxwell, 283 U.S. 123, 51 S.Ct. 385, 75 L.Ed. 879; Connecticut General Life Ins. Co. v. Johnson, 303 U.S. 77, 58 S.Ct. 436, 82 L.Ed. 673; Wisconsin Gas & Electric Co. v. United States, 322 U.S. 526, 530—531, 64 S.Ct. 1106, 1108, 1109, 88 L.Ed. 1434. Cf. Armour & Co. v. Com. of Virginia, 246 U.S. 1, 38 S.Ct. 267, 62 L.Ed. 547; St. Louis & E. St. L.E.R. Co. v. Missouri, 256 U.S. 314, 318, 41 S.Ct. 488, 489, 65 L.Ed. 946; Rowley v. Chicago & Northwestern R. Co., 293 U.S. 102, 55 S.Ct. 55, 79 L.Ed. 222; James v. Dravo Contracting Co., 302 U.S. 134, 138—140, 58 S.Ct. 208, 211, 212, 82 L.Ed. 155; Nippert v. Richmond, 327 U.S. 416, 423—424, 66 S.Ct. 586, 589, 590, 90 L.Ed. 760. The same principle applies to individuals engaged in business within the state. Ficklen v. Taxing Dist. of Shelby County Taxing District, 145 U.S. 1, 12 S.Ct. 810, 36 L.Ed. 601; Shaffer v. Carter, 252 U.S. 37, 40 S.Ct. 221, 64 L.Ed. 445; Travis v. Yale & Towne Mfg. Co., 252 U.S. 60, 40 S.Ct. 228, 64 L.Ed. 460. See also Haavik v. Alaska Packers Ass'n, 263 U.S. 510, 44 S.Ct. 177, 68 L.Ed. 414, where license and poll taxes were imposed on an individual who was working in Alaska but was not a resident or domiciliary there. 19 Compare Norton Co. v. Department of Revenue, 340 U.S. 534, 71 S.Ct. 377, 95 L.Ed. 517, with International Harvester Co. v. Department of Treasury, 322 U.S. 340, 64 S.Ct. 1030, 88 L.Ed. 1313; McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565; and McGoldrick v. Felt & Tarrant Mfg. Co., 309 U.S. 70, 60 S.Ct. 404, 84 L.Ed. 584. 20 Compare Southern Pacific Co. v. Gallagher, 306 U.S. 167, 180—181, 59 S.Ct. 389, 395, 83 L.Ed. 586, with General Trading Co. v. State Tax Comm., 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309; Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. 888; Nelson v. Montgomery Ward & Co., 312 U.S. 373, 61 S.Ct. 593, 85 L.Ed. 897, and Felt & Tarrant Mfg. Co. v. Gallagher, 306 U.S. 62, 59 S.Ct. 376, 83 L.Ed. 488. 51 Mr. Justice DOUGLAS, with whom THE CHIEF JUSTICE, Mr. Justice BLACK and Mr. Justice CLARK, concur, dissenting. 52 The States have been increasingly turning to sales and use taxes to raise the revenues they need to educate, protect, and serve their growing number of citizens. Unless the States can collect a sales or use tax upon goods being purchased out-of-state, there is a fertile opportunity for the citizen who wants state benefits without paying taxes to buy out-of-state. And there are just-across-the-state-line merchants who capitalize upon this opportunity. After today's decision there will be more. 53 I see no constitutional difficulty in making appellant a tax collector for Maryland under the general principles announced in General Trading Co. v. Tax Commission, 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309. When appellant's sales clerks make out the sales slips and arrange for the shipment of the purchased goods, they surely will know which are destined for Maryland, which for some other State. Hence to make appellant add the Maryland use tax to the bill when the purchaser requests that the goods be shipped to Maryland is only a minimal burden. Appellant will be paid for its trouble.1 If liability were sought to be imposed under circumstances indicating that appellant had been taken by surprise or treated unfairly, different considerations would come into play. But appellant in this case pleads immunity, not ignorance of the Maryland law nor harshness in its application. 54 This is not a case of a minimal contact between a vendor and the collecting State. Appellant did not sell cash-and-carry without knowledge of the destination of the goods; and its delivery truck was not in Maryland upon a casual, non-recurring visit. Rather there has been a course of conduct in which the appellant has regularly injected advertising into media reaching Maryland consumers and regularly effected deliveries within Maryland by its own delivery trucks and by common carriers.2 55 Jurisdiction over appellant in this suit was obtained when its motor vehicle was attached while it was being used in Maryland. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565; Ownbey v. Morgan, 256 U.S. 94, 41 S.Ct. 433, 65 L.Ed. 837. If appellant chooses to keep out of Maryland entirely, then the Maryland courts will of course have no jurisdiction over it. But as long as appellant chooses to do some business there, I see nothing in the Due Process Clause which would prevent Maryland from making it a collector for taxes on sales which appellant knows are destined for Maryland homes. * All footnotes to this opinion are carried in an Appendix. [Page 347]. APPENDIX TO OPINION OF THE COURT 1 The statute reads: 'An excise tax is hereby levied and imposed on the use, storage or consumption in this State of tangible personal property purchased from a vendor within or without this State on or after the effective date of this Act, for use, storage or consumption within this State. The tax imposed by this section shall be paid by the purchaser and shall be computed as follows: * * *.' Flack's Md.Ann.Code, 1951, Art. 81, § 369. 2 'Every vendor engaging in business in this State and making sales of tangible personal property for use, storage or consumption in this State which are taxable under the provisions of this sub-title, at the time of making such sales, or if the use, storage or consumption is not then taxable hereunder, at the time when such use, storage or 1 The Maryland statute provides that the vendor-collector may retain 3 percent of the gross tax as compensation for collection and remittance expenses. Flack's Md.Ann.Code, 1951, Art. 81, § 384. 2 The parties stipulated that appellant advertises in Maryland, both by Delaware newspapers which circulate across the state line and by direct mail to Maryland customers. It was also stipulated that, over a four-and-a-half year period, at least $12,000 worth of merchandise was sold by appellant to Maryland purchasers for Maryland use. Approximately two-thirds of this merchandise was delivered by appellant to its Maryland customers in a motor vehicle owned and operated by appellant.

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347 U.S. 284 74 S.Ct. 593 98 L.Ed. 699 FEDERAL COMMUNICATIONS COMMISSIONv.AMERICAN BROADCASTING CO., Inc. FEDERAL COMMUNICATIONS COMMISSION v. NATIONAL BROADCASTING CO., Inc. FEDERAL COMMUNICATIONS COMMISSION v. COLUMBIA BROADCASTING SYSTEM, Inc. Nos. 117, 118 and 119. Argued Feb. 1, 1954. Decided April 5, 1954. The Federal Communications Commission, concurrently with the Department of Justice, has power to enforce the statute prohibiting the broadcasting of any lottery or similar scheme offering prizes dependent upon lot or chance, but its power in such respect is limited by the scope of the statute. 18 U.S.C.A. § 1304. Mr. J. Roger Wollenberg, Washington, D.C., for appellant. Mr. Alfred McCormack, New York City, for appellee in No. 117. Mr. Paul W. Williams, New York City, for appellee in No. 118. Mr. Max Freund, New York City, for appellee in No. 119. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 These cases are before us on direct appeal from the decision of a three-judge District Court in the Southern District of New York, enjoining the Federal Communications Commission from enforcing certain provisions in its rules relating to the broadcasting of so-called 'give-away' programs. The question presented is whether the enjoined provisions correctly interpret § 1304 of the United States Criminal Code, formerly § 316 of the Communications Act of 1934. This statute prohibits the broadcasting of '* * * any lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance * * *.'1 2 The appellees are national radio and television broadcasting companies. They are, in addition, the operators of radio and television stations licensed by the Commission. Each of the appellees broadcasts, over its own and affiliated stations, certain programs popularly known as 'give-away' programs. Generally characteristic of this type of program is the distribution of prizes to home listeners, selected wholly or in part on the basis of chance, as an award for correctly solving a given problem or answering a question.2 3 The rules challenged in this proceeding, §§ 3.192, 3.292, and 3.656 of the Commission's Rules and Regulations, were designed to prevent the broadcast of such programs.3 The rules are identically worded and apply, respectively, to standard radio broadcasting (AM), FM radio broadcasting, and television broadcasting. Paragraph (a) of each rule provides that 'An application for construction permit, license, renewal of license, or any other authorization for the peration of a broadcast station, will not be granted where the applicant proposes to follow or continue to follow a policy or practice of broadcasting * * *,' programs of a sort forbidden by § 1304. Paragraph (b) provides that a program will fall within the ban 4 '* * * if in connection with such program a prize consisting of money or thing of value is awarded to any person whose selection is dependent in whole or in part upon lot or chance, if as a condition of winning or competing for such prize: 5 '(1) Such winner or winners are required to furnish any money or thing of value or are required to have in their possession any product sold, manufactured, furnished or distributed by a sponsor of a program broadcast on the station in question; or 6 '(2) Such winner or winners are required to be listening to or viewing the program in question on a radio or television receiver; or 7 '(3) Such winner or winners are required to answer correctly a question, the answer to which is given on a program broadcast over the station in question or where aid to answering the question correctly is given on a program broadcast over the station in question. For the purposes of this provision the broadcasting of the question to be answered over the radio station on a previous program will be considered as an aid in answering the question correctly; or 8 '(4) Such winner or winners are required to answer the phone in a prescribed manner or with a prescribed phrase, or are required to write a letter in a prescribed manner or containing a prescribed phrase, if the prescribed manner of answering the phone or writing the letter or the prescribed phrase to be used over the phone or in the letter (or an aid in ascertaining the prescribed phrase or the prescribed manner of answering the phone or writing the letter) is, or has been, broadcast over the station in question.' 9 After promulgation of the rules, the present actions were brought by the appellees.4 The District Court sustained the Commission's general authority to adopt such rules, and sustained subdivision (1) of paragraph (b) as a correct interpretation of § 1304. But, with one dissent, the court held that subdivisions (2), (3), and (4) were beyond the scope of § 1304 and hence invalid. The court was of the view that § 1304 applied only to contest programs requiring contestants to contribute a 'price' or 'thing of value'.5 We noted probable jurisdiction and consolidated the cases for argument.6 10 Like the court below, we have no doubt that the Commission, concurrently with the Department of Justice, has power to enforce § 1304. Indeed, the Commission would be remiss in its duties if it failed, in the exercise of its licensing authority, to aid in implementing the statute, either by general rule or by individual decisions.7 But the Commission's power in this respect is limited by the scope of the statute. Unless the 'give-away' programs involved here are illegal under § 1304, the Commission cannot employ the statute to make them so by agency action. Thus, reduced to its simplest terms, the issue before us is whether this type of program constitutes a 'lottery, gift enterprise, or similar scheme' proscribed by § 1304. 11 All the parties agree that there are three essential elements of a 'lottery, gift enterprise, or similar scheme': (1) the distribution of prizes; (2) according to chance; (3) for a consideration.8 They also agree that prizes on the programs under review are distributed according to chance, but they fall out on the question of whether the home contestant furnishes the necessary consideration. 12 The Commission contends that there is such consideration; in its brief, it urges that these programs 13 '* * * are nothing but age old lotteries in a slightly new from. The new form results from the fact that the schemes here are illicit appendages to legitimate advertising. The classic lottery looked to advance cash payments by the participants as the source of profit; the radio give-away looks to the equally material benefits to stations and advertisers from an increased radio audience to be exposed to advertising.' 14 It contends that consideration in the form of money or a thing of value is not essential, and that a commercial benefit to the promoter satisfies the consideration requirement: 15 '* * * Where a scheme of chance is successfully designed to reap profits for its promoter, there will ultimately be consideration flowing from the participants, and it is of no consequence whether such consideration be direct or indirect. In either event, the gambling spirit—the lure of obtaining something for nothing or almost nothing—is exploited for the benefit of the promoter of the scheme.' 16 As against this claim the appellees insist that something more is required than just a benefit to the promoter; that the participation of the home audience by merely listening to a broadcast does not constitute the necessary consideration. 17 Section 1304 itself does not define the type of consideration needed for a 'lottery, gift enterprise, or similar scheme'. Nor do the postal lottery statutes from which this language was taken.9 The legislative history of § 1304 and the postal statutes is similarly unilluminating.10 For guidance, therefore, we must look primarily to American decisions, both judicial and administrative, construing comparable antilottery legislation. 18 Enforcing such legislation has long been a difficult task. Law enforcement officers, federal and state, have been plagued with as many types of lotteries as the seemingly inexhaustible ingenuity of their promoters could devise in their efforts to circumvent the law. When their schemes reached the courts, the decision, of necessity, usually turned on whether the scheme, on its own peculiar facts, constituted a lottery. So varied have been the techniques used by promoters to conceal the joint factors of prize, chance, and consideration, and so clever have they been in applying these techniques to feigned as well as legitimate business activities, that it has often been difficult to apply the decision of one case to the facts of another. 19 And so it is here. We find no decisions precisely in point on the facts of the cases before us. The courts have defined consideration in various ways, but so far as we are aware none has ever held that a contestant's listening at home to a radio or television program satisfies the consideration requirement.11 Some courts—with vigorous protest from others—have held that the requirement is satisfied by a 'raffle' scheme giving free chances to persons who go to a store to register in order to participate in the drawing of a prize,12 and similarly by a 'bank night' scheme giving free chances to persons who gather in front of a motion picture theatre in order to participate in a drawing held for the primary benefit of the paid patrons of the theatre.13 But such cases differ substantially from the cases before us. To be eligible for a prize on the 'give-away' programs involved here, not a single home contestant is required to purchase anything or pay an admission price or leave his home to visit the promoter's place of business; the only effort required for participation is listening.14 20 We believe that it would be stretching the statute to the breaking point to give it an interpretation that would make such programs a crime. Particularly is this true when through the years the Post Office Department and the Department of Justice have consistently given the words 'lottery, gift enterprise, or similar scheme' a contrary administrative interpretation. Thus the Solicitor of the Post Office Department has repeatedly ruled that the postal lottery laws do not preclude the mailing of circulars advertising the type of 'give-away' program here under attack.15 Similarly, the Attorney General— charged directly with the enforcement of federal criminal laws—has refused to bring criminal action against broadcasters of such programs.16 And in this very action, it is noteworthy that the Department of Justice has not joined the Commission in appealing the decision below. 21 It is true, as contended by the Commission, that these are not criminal cases, but it is a criminal statute that we must interpret. There cannot be one construction for the Federal Communications Commission and another for the Department of Justice. If we should give § 1304 the broad construction urged by the Commission, the same construction would likewise apply in criminal cases. We do not believe this construction can be sustained. Not only does it lack support in the decided cases, judicial and administrative, but also it would do violence to the well-established principle that penal statutes are to be construed strictly. 22 It is apparent that these so-called 'give-away' programs have long been a matter of concern to the Federal Communications Commission; that it believes these programs to be the old lottery evil under a new guise, and that they should be struck down as illegal devices appealing to cupidity and the gambling spirit. It unsuccessfully sought to have the Department of Justice take criminal action against them.17 Likewise, without success, it urged Congress to amend the law to specifically prohibit them.18 The Commission now seeks to accomplish the same result through agency regulations. In doing so, the Commission has over-stepped the boundaries of interpretation and hence has exceeded its rule-making power. Regardless of the doubts held by the Commission and others as to the social value of the programs here under consideration, such administrative expansion of § 1304 does not provide the remedy.19 The judgments are 23 Affirmed. 24 Mr. Justice DOUGLAS took no part in the decision of these cases. 1 18 U.S.C. § 1304, 18 U.S.C.A. § 1304 (derived from former § 316 of the Communications Act of 1934, 48 Stat. 1088—1089, repealed by 62 Stat. 862, 866): 'Whoever broadcasts by means of any radio station for which a license is required by any law of the United States, or whoever, operating any such station, knowingly permits the broadcasting of, any advertisement of or information concerning any lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance, or any list of the prizes drawn or awarded by means of any such lottery, gift enterprise, or scheme, whether said list contains any part or all of such prizes, shall be fined not more than $1,000 or imprisoned not more than one year, or both. 'Each day's broadcasting shall constitute a separate offense.' 2 Examples of the 'give-away' programs involved here are 'Stop the Music' (American Broadcasting Company), 'What's My Name' (National Broadcasting Company), and 'Sing It Again' (Columbia Broadcasting System). 'Stop the Music' is described in American's complaint in No. 117 as follows: The home contestants are called on the telephone during the program. On the radio version, home contestants are selected at random from telephone directories. On the television version, home contestants are selected by lot from among those listeners who express in advance, through postcards sent to the network, their desire to participate. On both the radio and television versions, however, the home contestant is not required to be listening to the broadcast at the time he is called in order to participate. When called, the home contestant is asked to give the title of a musical selection that has just been played. In the event he was not listening, or for some other reason desires to have the tune repeated, the master of ceremonies hums or sings it to him over the telephone. If he answers correctly, he receives a merchandise prize; if not, he gets a less valuable 'consolation' prize and a member of the studio audience is then given an opportunity to win the merchandise prize by identifying the same tune. If the home contestant answers correctly, he receives, in addition to the merchandise prize, an opportunity to identify another tune, called the 'Mystery Melody.' If he identifies this tune, he wins the 'jackpot' prize, usually valued at several thousand dollars. Should he fail to identify the 'Mystery Melody,' another home contestant is called and the process is repeated. Addi- tions to the 'jackpot' prize are made each week so long as the 'Mystery Melody' remains unidentified. 'What's My Name' is described in National's complaint in No. 118 as follows: Prizes are awarded to contestants for correctly identifying famous persons on the basis of clues given by the master of ceremonies and in a short skit performed by professional actors. All but one of the contestants on the program are chosen from members of the studio audience. The remaining contestant is chosen at random from postcards sent in by listeners, and is called on the telephone during the program. For answering the telephone, he is awarded a watchband manufactured by the sponsor of the program and is also given the opportunity to win a valuable 'jackpot' prize in Government bonds by identifying the famous person described in the 'jackpot' clues. If the home contestant fails to make a correct identification, the amount of the 'jackpot' is added to the 'jackpot' for the following week's program. The subject of the 'jackpot' clues, however, is changed every week. 'Sing It Again' is described in Columbia's complaint in No. 119 as follows: Performers sing a popular song and then repeat it but this time with parody lyrics describing some person, place, or event. Contestants, selected at random from telephone directories, are called by long distance telephone during the program. If the contestant correctly identifies the subject described by the parody lyrics, he wins a merchandise prize and an opportunity to win a 'jackpot' prize by identifying the 'Phantom Voice,' the voice of a famous but unrevealed person. Clues as to the identity of the 'Phantom Voice' are given on the program and on other programs broadcast over the same network. The 'jackpot' is increased week by week until the correct identification is made. If the home contestant fails to identify the subject of the parody lyrics, he receives a 'consolation prize,' and a member of the studio audience is given the opportunity to answer and win the merchandise prize. 3 47 CFR, 1952 Cum.Supp., §§ 3.192, 3.292, 3.656. The language of the rules is broad enough to cover contest programs drawing contestants solely from members of the studio audience. In the court below, however, the Commission took the position that such coverage was not intended, and the controversy was delimited to programs involving the distribution of prizes to contestants participating from their homes. 110 F.Supp. 374, 381. 4 The actions were brought under § 402(a) of the Communications Act of 1934, 48 Stat. 1093, 47 U.S.C. § 402(a), 47 U.S.C.A. § 402(a); 28 U.S.C. §§ 1336, 1398, 2284, 2321—2325, 28 U.S.C.A. §§ 1336, 1398, 2284, 2321—2325; and § 10 of the Administrative Procedure Act, 60 Stat. 243, 5 U.S.C. § 1009, 5 U.S.C.A. § 1009. Pub.L.No.901, 81st Cong., 2d Sess., 64 Stat. 1129, 5 U.S.C. § 1031, 5 U.S.C.A. § 1031, has since changed the procedure under § 402(a), but is inapplicable to actions commenced prior to its enactment. 5 110 F.Supp. 374, 383. 6 346 U.S. 808, 74 S.Ct. 31. 7 The Commission is authorized by § 4(i) of the Communications Act to 'make such rules and regulations, and issue such orders, * * * as may be necessary in the execution of its functions'; by § 303(r) to 'Make such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry out the provisions of this chapter'; by § 307(a) and § 309(a) to grant station licenses and license renewals 'if public convenience, interest, or necessity' would thereby be served; by § 312(a) to revoke a license for a violation of any regulation authorized by the Act. 48 Stat. 1068, 47 U.S.C. § 154(i), 47 U.S.C.A. § 154(i); 50 Stat. 191, 47 U.S.C. § 303(r), 47 U.S.C.A. § 303(r); 48 Stat. 1083, 47 U.S.C. § 307(a), 47 U.S.C.A. § 307(a); 48 Stat. 1085, 47 U.S.C. § 309(a), 47 U.S.C.A. § 309(a); 48 Stat. 1086—1087, 47 U.S.C. § 312(a), 47 U.S.C.A. § 312(a). The 'public interest, convenience, or necessity' standard for the issuance of licenses would seem to imply a requirement that the applicant be lawabiding. In any event, the standard is sufficiently broad to permit the Commission to consider the applicant's past or proposed violation of a federal criminal statute especially designed to bar certain conduct by operators of radio and television stations. And if this consideration is a proper one in individual cases, there is no reason why it may not be stated in advance by the Commission in interpretative regulations defining the prohibited conduct with greater clarity. See National Broadcasting Co. v. United States, 319 U.S. 190, 222—224, 63 S.Ct. 997, 1011—1013, 87 L.Ed. 1344; cf. Southern Steamship Co. v. National Labor Relations Board, 316 U.S. 31, 46—47, 62 S.Ct. 886, 894—895, 86 L.Ed. 1246. 8 A typical 'lottery' is a scheme in which tickets are sold and prizes are awarded among the ticketholders by lot. See Stone v. State of Mississippi, 101 U.S. 814, 25 L.Ed. 1079. A typical 'gift enterprise' differs from this in that it involves the purchase of merchandise or other property; the purchaser receives, in addition to the merchandise or other property, a 'free' chance in a drawing. See Horner v. United States, 147 U.S. 449, 13 S.Ct. 409, 37 L.Ed. 237. But whatever may be the factual differences between a 'lottery,' a 'gift enterprise,' and a 'similar scheme,' the traditional tests of chance, prize, and consideration are applicable to each. We are aware of no decision, federal or state, which has distinguished among them on the basis of their legal elements. 9 Section 1304 is one of five sections—s 1301 through § 1305 which constitute 'Chapter 61—Lotteries' of Title 18. Section 1305, added in 1950, exempts certain 'fishing contests' from the operation of the other four sections. Section 1301 prohibits the importing or transporting of lottery tickets; § 1302, the mailing of lottery tickets and related matter; § 1303, the participation in lottery schemes by postmasters and postal employees; and § 1304, the broadcasting of lottery information. These four sections use the same terminology—'any lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance'. This language first appeared in the 1909 amendments to the federal lottery laws. 35 Stat. 1129, 1130, 1136. It was adopted verbatim in § 316 of the Communications Act of 1934, which was the first federal statute to ban the broadcasting of lotteries. With only slight modifications not material here, § 316 became § 1304 of the Criminal Code in the 1948 revision of Title 18. For the early history of lotteries in this country, see Spofford, Lotteries in American History, at p. 171 of 1892 Report of American Historical Association, S. Misc. Doc. No. 57, 52d Cong., 2d. Sess. 10 See S.Rep.No.1620, 80th Cong., 2d Sess. (1948); H.R.Rep.No. 304, 80th Cong., 1st Sess., p. A99 (1947); S.Rep.No.781, 73d Cong., 2d Sess., p. 8 (1934); H.R.Rep.No.1850, 73d Cong., 2d Sess. (1934); H.R.Rep.No.1918, 73d Cong., 2d Sess., p. 49 (1934); S.Rep.No.564, 72d Cong., 1st Sess., p. 10 (1932); H.R.Rep.No.221, 72d Cong., 1st Sess., p. 8 (1932); S.Rep.No.10, Part 1, 60th Cong., 1st Sess., p. 23 (1909); H.R.Rep.No.2, Part 1, 60th Cong., 1st Sess., p. 22 (1909). 11 In the only previous decision on the legality of a 'give-away' program of the type involved here, a state trial court held that the program did not constitute a lottery because the consideration element was lacking. Clef, Inc. v. Peoria Broadcasting Co., Equity No. 21368, Circuit Court of Peoria County, Illinois (1939). Similarly, cases under the postal lottery laws (see note 9, supra) appear to be uniform in requiring a valuable' consideration for a 'lottery, gift enterprise, or similar scheme'. See Garden City Chamber of Commerce, Inc., v. Wagner, D.C.E.D.N.Y., 100 F.Supp. 769, stay denied, 2 Cir., 192 F.2d 240; Post Publishing Co. v. Murray, 1 Cir., 230 F. 773, certiorari denied 241 U.S. 675, 36 S.Ct. 725, 60 L.Ed. 1232. But cf. dictum in Brooklyn Daily Eagle v. Voorhies, C.C.E.D.N.Y., 181 F. 579, 581—582. 12 A leading case is Maughs v. Porter, 157 Va. 415, 161 S.E. 242; see also State ex rel. Regez v. Blumer, 236 Wis. 129, 294 N.W. 491. Contra, Cross v. People, 18 Colo. 321, 32 P. 821; cf. Garden City Chamber of Commerce, Inc., v. Wagner, D.C.E.D.N.Y., 100 F.Supp. 769, stay denied, 2 Cir., 192 F.2d 240. For critical com- mentary on the Maughs decision, supra, see Notes, 18 Va.L.Rev. 465 and 80 U. of Pa.L.Rev. 744; Pickett, Contests and the Lottery Laws, 45 Harv.L.Rev. 1196, 1206. 13 E.g., Affiliated Enterprises, Inc., v. Waller, 1 Terry 28, 40 Del. 28, 5 A.2d 257; Affiliated Enterprises, Inc., v. Gantz, 10 Cir., 86 F.2d 597. Contra, e.g., Darlington Theatres v. Coker, 190 S.C. 282, 2 S.E.2d 782; Affiliated Enterprises, Inc. v. Rock-Ola Mfg. Corp., D.C.N.D.Ill., 23 F.Supp. 3. 14 Some of the programs involved here (e.g., 'Stop the Music,' described in note 2, supra) do not even make this requirement. As a practical matter, however, few home contestants on a 'give-away' program would be in a position to answer correctly the questions asked of them unless they listened to the program. 15 In 1949 the Solicitor ruled that material relating to 'Stop the Music' (described in note 2, supra) would be mailable. In 1950 he ruled that material relating to a comparable contest conducted on the program 'Truth or Consequences' would be mailable. While earlier rulings on a 'give-away' program called had been to the contrary, the Solicitor in 1949 informally advised that the material relating to the program would be mailable. These unreported rulings were made part of the record below. In accord with these rulings, the Solicitor in 1947 had instructed local postmasters that at least 'an expenditure of substantial effort or time' was required in order to find an enterprise to be a 'lottery, gift enterprise, or similar scheme.' The instructions provided: 'In order for a prize scheme to be held in violation of this section, it is necessary to show (in addition to the fact that the prizes are awarded by means of lot or chance) that the 'consideration' involves, for example, the payment of money for the purchases of merchandise, chance or admission ticket, or as payment on an account, or requires an expenditure of substantial effort or time. On the other hand, if it is required merely that one's name be registered at a store in order to be eligible for the prize, consideration is not deemed to be present.' (Italics added.) Postal Bulletin, Feb. 13, 1947. The italicized language, supra, was judicially confirmed in Garden City Chamber of Commerce, Inc., v. Wagner, D.C.E.D.N.Y., 100 F.Supp. 769, stay denied, 2 Cir., 192 F.2d 240. In 1953, on the basis of the Garden City case and the District Court decision in this case, the Solicitor issued new instructions further narrowing the meaning of 'an expenditure of substantial effort or time.' Postal Bulletin, June 4, 1953. 16 Apparently no prosecutions have ever been instituted under either the former § 316 of the Communications Act or the present § 1304 of the Criminal Code. In a series of letters made part of the record below, the Chairman of the Commission in 1940 urged the Attorney General to institute criminal proceedings against a number of stations because of their broadcasting of 'give-away' programs similar to those involved here. In response to each letter, the Attorney General advised that 'careful consideration has been given to this matter and it has been concluded that no action is warranted by this Department.' 17 See note 16, supra. 18 In a letter made part of the record below, the Chairman of the Commission in 1943 urged the Senate Interstate Commerce Committee to approve a proposed amendment to § 316 of the Communications Act, later to become § 1304 of the Criminal Code. The proposed amendment would have retained the existing language as to 'any lottery, gift enterprise, or similar scheme,' but would have extended the prohibition to 'any program which offers money, prizes, or other gifts to members of the radio audience (as distinguished from the studio audience) selected in whole or in part by lot or chance.' No action was ever taken on the proposal. 19 Cf. United States v. Halseth, 342 U.S. 277, 280—281, 72 S.Ct. 275, 276—277, 96 L.Ed. 308.

78

347 U.S. 381 74 S.Ct. 566 98 L.Ed. 785 UNITED STATESv.DIXON. No. 500. Argued March 12, 1954. Decided April 5, 1954. Mr. Philip Elman, Washington, D.C., for appellant. No appearance for appellee. Mr. Justice CLARK delivered the opinion of the Court. 1 The sole question here is whether §§ 3116 and 3115 of the Internal Revenue Code, 26 U.S.C.A., make it a criminal offense to possess property intended for use in producing nontax-paid distilled spirits in violation of the Code. Appellee was indicted under these sections for wilfully and knowingly possessing 800 pounds of sugar and parts of a still for the proscribed purpose. On motion the District Court, relying on dictum in a court of appeals decision,1 dismissed the indictment on the ground that § 3116 is 'preventative and remedial rather than criminal, and that it does not define a criminal offense.' The Government appealed directly to this Court under the Criminal Appeals Act, 18 U.S.C. § 3731, 18 U.S.C.A. § 3731. 346 U.S. 930, 74 S.Ct. 320. 2 Section 3116 of the Internal Revenue Code is captioned 'Forfeitures and seizures', and provides in pertinent part: 'It shall be unlawful to have or possess any liquor or property intended for use in violating the provisions of this part, or the internal-revenue laws * * * and no property rights shall exist in any such liquor or property. * * * Nothing in this section shall in any manner limit or affect any criminal or forfeiture provision of the internal-revenue laws, or of any other law. * * *' The section also provides for search warrants and for procedure in seizure and forfeiture. Section 3115 bears the caption 'Penalties' and provides that anyone violating any of the provisions of 'this part' for which offense a special penalty is not prescribed 'shall be liable, for the first offense, to a penalty of not exceeding $1,000, or imprisonment not exceeding thirty days, or both * * *.' The two sections are included within the same 'part' of the Code.2 3 The appellant's position is that § 3115 makes violation of any of the provisions of 'this part' a criminal offense punishable by fine and imprisonment; § 3116 contains a provision making it unlawful to possess property intended for use in violating the provisions of that part or the internal revenue laws; hence the indictment alleging a violation of §§ 3116 and 3115 by such possession charges a crime. We agree and so hold. We think the plain language of the two sections read together can lead only to the conclusion that the acts proscribed in § 3116 not only may result in forfeiture but likewise are made criminal and punishable under the general penalty provisions of § 3115. 4 The sections here involved were borrowed, with changes insignificant for present purposes, from the National Prohibition Act of 1919, 41 Stat. 305 et seq. There the sections appeared as §§ 25 (compare § 3116) and 29 (compare § 3115) of Title II, and presented a statutory pattern virtually identical to the present one. It is most persuasive that the courts consistently upheld criminal prosecutions brought under these sections for the analogous act of possessing property designed for the manufacture of liquor intended for use in violation of Title II of the Prohibition Act.3 5 This consistency of interpretation, followed by Congress' utilization in the Code of the same provisions, is also helpful in dealing with the limitation in § 3115 which makes the penalties of that section applicable only where no 'special penalty' is provided for the offense. As a de novo proposition it might be argued that in § 3116 a special penalty, forfeiture, is provided. But this argument was available with equal force under the Prohibition Act and appears to have barred no prosecution. Moreover, § 3116 contains a provision that 'Nothing in this section shall in any manner limit or affect any criminal * * * provision of the internal-revenue laws'. This would seem to settle the point. 6 Clearly Congress may impose both a criminal and a civil sanction in respect to the same act; this is neither unusual nor constitutionally objectionable. See Helvering v. Mitchell, 1938, 303 U.S. 391, 399—400, 58 S.Ct. 630, 633, 82 L.Ed. 917. Likewise it is common in drafting legislation to declare certain acts unlawful in one section and set forth penalties for their commission in another.4 7 The only suggestion on the face of the statute that § 3116 was meant to be remedial and nothing more comes from its caption, 'Forfeitures and seizures', supplied by the codifiers in 1939. But in enacting the Code Congress provided that 'The arrangement and classification of the several provisions of the Internal Revenue Title have been made for the purpose of a more convenient and orderly arrangement of the same, and, therefore, no inference, implication or presumption of legislative construction shall be drawn or made by reason of the location or grouping of any particular section or provision or portion thereof, nor shall any outline, analysis, cross reference, or descriptive matter relating to the contents of said Title be given any legal effect.' 53 Stat. 1a. To accomplish its primary purpose of bringing together all operative revenue laws and making them more comprehensible, the Code made 'liberal use of catchwords.'5 Typically, § 3116 is included in a subchapter entitled 'Industrial Alcohol' and in a part entitled 'Industrial Alcohol Plants'; yet even under a most narrow interpretation of its terms the section is in no sense limited to industrial alcohol. 8 So far as light is to be had from legislative history, it is meager and inconclusive, in no way militating against the meaning we attribute to the statute. 9 Reversed. 10 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS, Mr., Justice JACKSON and Mr. Justice MINTON concur, dissenting. 11 Respondent was indicted for violating §§ 3116 and 3115 of the Internal Revenue Code by having in his possession sugar, wooden barrels, a metal cap, a heater box and mash pipe, all 'intended for use' in unlawfully evading liquor taxes. The District Court dismissed the indictment for failure to charge a crime. I agree. The indictment did clearly charge a violation of § 3116 which makes it 'unlawful' to hold property for such an intended use. But § 3116 does not make 'unlawful' possession a crime; the only sanction it contains is forfeiture. This Court nevertheless holds that possession for such an 'unlawful' purpose is made a crime by § 3115(b). That section does not of itself define a crime; it merely authorizes fine or imprisonment for violations of other provisions of the Act which do not themselves prescribe a 'special penalty.' Hence the general penalties of § 3115 cannot apply to violations of § 3116, because this latter section prescribes its own 'special penalty'—seizure and forfeiture of property. This forfeiture is plainly a penalty since there is no practical difference between taking a man's property by forfeiture and taking his money by a fine. And where Congress has specifically provided a property penalty I cannot agree to add a money penalty by dubious implication. 12 The accepted practice of construing criminal statutes narrowly should be especially appropriate here because of the unusual nature of the 'crime' involved. The Court's interpretation of § 3115 makes possession of innocent property, such as an automobile, a crime if the possessor intends to use it illegally, even if he has not done so. Guilt is made to depend wholly on what is within the defendant's mind. Congress may well have been unwilling to apply sanctions other than forfeiture to an unexpressed intention to do something that has not even been attempted. 1 Kent v. United States, 5 Cir., 1946, 157 F.2d 1. See also United States v. Windle, 8 Cir., 1946, 158 F.2d 196. In those cases the Government had invoked only the forfeiture provisions of the section; as applied to such a civil proceeding, characterization of the section as preventative and remedial was obviously accurate. The two reported cases which previously have faced squarely the present question have upheld the indictments. United States v. Blair, D.C.1951, 97 F.Supp. 718; United States v. Harvin, D.C.1950, 91 F.Supp. 249. See also Godette v. United States, 4 Cir., 1952, 199 F.2d 331, in which the present issue apparently was not raised. 2 Part II ('Industrial Alcohol Plants') of Subchapter C ('Industrial Alcohol') of Chapter 26 ('Liquor'). The full text of the two sections is as follows: § 3115. Penalties '(a) Violations as to operation of plants or unlawful withdrawal of taxable alcohol. Whoever operates an industrial alcohol plant or a denaturing plant without complying with the provisions of this part and lawful regulations made thereunder, or whoever withdraws or attempts to withdraw or secure tax free any alcohol subject to tax, or whoever otherwise violates any of the provisions of this part or of regulations lawfully made thereunder shall be liable, for the first offense, to a penalty of not exceeding $1,000, or imprisonment not exceeding thirty days, or both, and for a second or cognate offense to a penalty of not less than $100 nor more than $10,000, and to imprisonment of not less than thirty days nor more than one year. It shall be lawful for the Commissioner in all cases of second or cognate offense to refuse to issue for a period of one year a permit for the manufacture or use of alcohol upon the premises of any person responsible in any degree for the violation. '(b) Violations in general. Any person violating the provisions of this part or of any regulations issued thereunder, for which offense a special penalty is not prescribed, shall be liable to the penalty or penalties prescribed in subsection (a). It shall be the duty of the prosecuting officer to ascertain, in the case of every violation of this part or the regulations made thereunder, for which offense a special penalty is not prescribed, whether the defendant has been previously convicted and to plead the prior conviction in the affidavit, information, or indictment. '(c) Previous conviction. If any act or offense is a violation of this part, and also of any other law in regard to the manufacture or taxation of, or traffic in, intoxicating liquor, a conviction for such act or offense under the one shall be a bar to prosecution therefor under the other. § 3116. Forfeitures and seizures 'It shall be unlawful to have or possess any liquor or property intended for use in violating the provisions of this part, or the internal-revenue laws, or regulations prescribed under such part or laws, or which has been so used, and no property rights shall exist in any such liquor or property. A search warrant may issue as provided in title XI of the act of June 15, 1917, 40 Stat. 228, for the seizure of such liquor or property. Nothing in this section shall in any manner limit or affect any criminal or forfeiture provision of the internal-revenue laws, or of any other law. The seizure and forfeiture of any liquor or property under the provisions of this part, and the disposition of such liquor or property subsequent to seizure and forfeiture, or the disposition of the proceeds from the sale of such liquor or property, shall be in accordance with existing laws or those hereafter in existence relating to seizures, forfeitures, and disposition of property or proceeds, for violation of the internal-revenue laws.' 3 E.g., Reynolds v. United States, 6 Cir., 1922, 280 F. 1; Adamson v. United States, 5 Cir., 1924, 296 F. 110; Staker v. United States, 6 Cir., 1925, 5 F.2d 312; Patrilo v. United States, 8 Cir., 1925, 7 F.2d 804, 805. Compare Page v. United States, 9 Cir., 1922, 278 F. 41. 4 E.g., Fair Labor Standards Act, 29 U.S.C. §§ 215, 216, 29 U.S.C.A. §§ 215, 216; Internal Revenue Code (narcotics), 26 U.S.C. §§ 2553, 2554, 2557, 26 U.S.C.A. §§ 2553, 2554, 2557. 5 H.R.Rep. No. 6, 76th Cong., 1st Sess. 3; S.Rep. No. 20, 76th Cong., 1st Sess. 3.

01

347 U.S. 403 74 S.Ct. 548 98 L.Ed. 803 Herbert BROWNELL, Jr., Atty. Gen. of the United States, as Successor to the Alien Property Custodian, Petitioner,v.Eugene T. SINGER. The SUPERINTENDENT OF BANKS OF the STATE OF NEW YORK, as Liquidator of the Business and Property in the State of New York of Yokohama Specie Bank, Ltd., Petitioner, v. Eugene T. SINGER. Nos. 401 and 402. Supreme Court of the United States Argued and Submitted March 8, 1954. April 5, 1954 Rehearing Denied May 17, 1954. See 347 U.S. 970, 74 S.Ct. 774. Mr. James D. Hill, Washington, D.C., for petitioner in No. 401. Mr. Albert R. Connelly, New York City, for respondent. Messrs. Edward Feldman and Daniel Gersen, New York City, for petitioner in No. 402. PER CURIAM. 1 Reversed. Zittman v. McGrath, 341 U.S. 471, 71 S.Ct. 846, 95 L.Ed. 1112. 2 The chief Justice did not participate in the consideration or decision of this case. 3 Mr. Justice JACKSON, with whom Mr. Justice FRANKFURTER and Mr. Justice DOUGLAS join, dissenting. 4 The Court's one-word decision reverses concurring judgments of three highly respected courts—the Court of Appeals of New York, the Appellate Division of the Supreme Court, First Department, and the Supreme Court, Special Term, New York County. It cites a single case, the implication being that the cited authority settled the question so fully and plainly that a contrary result could have been reached by the three lower courts only by failure to read or heed it. I think this Court owes those courts and the legal profession something more than a reference to an inapplicable decision. The facts of this case present novel questions that this Court should face and on which it should render a reasoned decision. 5 The Yokohama Specie Bank established its New York agency, pursuant to the State's permission, under a statute which provided that the bank's assets in the State should be subject to the claims of creditors arising out of transactions with the New York agency in preference to other claims. On December 8, 1941, when war was declared with Japan, this agency was in the possession of the United States Treasury, which was supervising freezing controls over Japanese nationals. The agency was immediately surrendered to the New York Superintendent of Banks for liquidation under state law. This respondent's claim was established thereafter as entitled to the preferences of the New York law but was payable only after a federal license therefor, and that position was confirmed by this Court. Lyon v. Singer, 339 U.S. 841, 70 S.Ct. 903, 94 L.Ed. 1323. 6 In 1942, the President, pursuant to statutory authority, created the Office of Alien Property Custodian. As to property in the process of administration under judicial supervision, the Custodian was authorized to seize only that 'which is payable or deliverable, to, or claimed by, a designated enemy country or national thereof.' This fund, earmarked for payment to an American creditor, is not within that description. No other authority for demanding its turnover can be found. 7 In September of 1942, the Custodian asserted power of supervision over the liquidation of the New York agency but advised the Superintendent of Banks to continue his liquidation of the business and property in New York. He requested the Superintendent to advise him of all claims which he intended to accept and to notify him when he had liquidated assets sufficient to pay and had paid all accepted and established claims and expenses of liquidation in order that the Custodian might take such action 'at that time with respect to the assets remaining in your hands' as he might deem necessary. Thereafter, as various claims were allowed payable to preferred creditors who were enemy nationals, the Custodian issued vesting orders seizing such funds as were set aside for their payment. Of course, he cannot seize this claim on such a basis, for the claimant is not an enemy alien. 8 On February 15, 1943, the Custodian issued vesting order No. 915. By it, he only purported to vest in himself the excess proceeds of the liquidation remaining after the payment of creditors having claims accepted or established in accordance with the Banking Law of New York, McK.Consol.Laws, c. 2, § 1 et seq. Since such excess funds, under that law, were payable to the Japanese bank, this was obviously a proper vesting. But the limitation of the vesting order to such excess was no accident or oversight. In annual reports to the President and Congress, the Custodian repeatedly stated, in substance, that rights of creditors preferred by state laws would be respected, and only the excess vested. 9 The turnover order now sustained by the Court is quite contrary to this policy and was not issued until September 5, 1950, over five years after the cessation of hostilities with Japan and over eight years after the task of administration was left to the Superintendent of Banks. 10 The fund of over a half-million dollars which the Attorney General as successor to the Alien Property Custodian now demands be paid over to him is a fund specifically held and earmarked by the Superintendent of Banks for the payment of the claim which we have previously upheld as entitled to a preference under New York law. Lyon v. Singer, supra. 11 All funds in the hands of the Supertendent in excess of allowed or established claims have been demanded by the Custodian, and the New York Supreme Court has authorized their payment, as under New York law such excess is payable to the Japanese bank. The New York courts, however, have refused to allow the Superintendent to turn over the funds allocated to the satisfaction of the judgment in favor of respondent and affirmed by us, to be paid if and when licensed by the Attorney General. 12 Zittman v. McGrath, 341 U.S. 471, 71 S.Ct. 846, 95 L.Ed. 1112, cannot serve as a supporting authority for this decision. In Zittman the Custodian demanded transfer of a credit from a debtor bank which had no interest in the credit except that of a stake holder. Here the Custodian would seize a fund from an officer of the State of New York who is administering it pursuant to his statutory duty and under the supervision of the Supreme Court of that State. In Zittman the claims adverse to the Custodian rested on an assertion of private rights and in no other way involving the public interest. Here there is a clash between two public interests. New York, through its Superintendent of Banks, took possession of the Yokohama Bank assets for administration pursuant to its own public policy of protecting creditors of institutions allowed to do business in the State of New York. After a lapse of many years, the Attorney General now would seize it from him to apply a different public policy—that of the Federal Government. 13 Moreover, in Zittman the vesting order specifically vested debts owed to a foreign national by a New York debtor bank and debts evidenced by instruments endorsed by the foreign national and held by a Federal Reserve Bank. Those debts constituted the precise funds sought by the litigant. In this case, the vesting order purported to vest only such excess proceeds as remained after payment of established claims, and respondent shows that his is such a claim. His position, that the funds he seeks were never vested by the Custodian, is not analogous to that of the petitioner in Zittman. 14 Some effort was made on argument to reconsider whether this claim is entitled to a preference under the Banking Law of New York. The claim arose out of a foreign exchange transaction. Prior to the war, the Standard Vacuum Oil Company was delivering oil to Japanese purchasers who paid in yen. It is not questioned that such sales were in accordance with the national policy of the United States at that time. Standard entered into an agreement with the Yokohama Bank under which it sold the yen to the bank in Japan and was to receive credit in dollars in New York. This manner of remitting funds was conventional and was the function which the New York branch of a foreign bank would be expected to facilitate. The New York courts held that creditors created by such a foreign exchange transaction, including respondent, were among those whom the New York statutes sought to protect out of the New York assets. In the Singer case, supra, we approved that holding. Unless every principle of res judicata is to be disregarded by this Court, it is bound by its holding that this is a preferred claim under the New York Banking Law. 15 It was intimated in argument that the purpose of seizure of this fund is to defeat the preference for this claim in the interest of other creditors outside of New York who will not be paid in full. This would mean a distribution of the New York assets at odds with the New York Banking Law. But it is apparent that a large number of New York creditors have been paid in full from the New York assets, and just why this creditor, who stands on an equality with them, should be deprived of his claim of preference while the others retain theirs is hard to understand. 16 This Court has been rather insistent that state courts disclose the reasoning behind their judgments.1 I think the Court should reciprocate when faced with issues as serious and as doubtful as those raised in this case. 1 E.g., Minnesota v. National Tea Co., 309 U.S. 551, 60 S.Ct. 676, 84 L.Ed. 920; Loftus v. People of State of Illinois, 334 U.S. 804, 68 S.Ct. 1212, 92 L.Ed. 1737; Chicago v. Willett Co., 341 U.S. 913, 71 S.Ct. 734, 95 L.Ed. 1349.

1112

347 U.S. 359 74 S.Ct. 558 98 L.Ed. 757 RAILWAY EXPRESS AGENCY, Inc.v.COMMONWEALTH OF VIRGINIA. No. 163. Argued Jan. 5, 1954. Decided April 5, 1954. Mr. Thomas B. Gay, Richmond, Va., for appellant. Mr. Frederick T. Gray, Richmond, Va., for appellee. Opinion of the Court by Mr. Justice JACKSON, announced by Mr. Justice REED. 1 This appeal from the Supreme Court of Appeals of Virginia presents another variation in the seemingly endless problems raised by efforts of the several states to tax commerce as it moves among them. 2 In the 1920's the railroads of the country took over the express business theretofore separately handled. Their instrumentality was this appellant, a Delaware corporation, chartered for interstate and intrastate operation throughout the Union and actually so operating in every state except Virginia. It sought to do a general express business there, but that State has a constitutional provision which forbids a foreign corporation to exercise any public service powers or functions therein.1 This prohibition was invoked by the State Corporation Commission2 to deny appellant authority to do any intrastate business. This exclusion was sustained by Virginia's highest court3 and by this Court.4 3 As a consequence of the State's own policy, this appellant does no business in Virginia which the State has power to prohibit but does only such as it can conduct under protection of the Commerce Clause of the Federal Constitution. To handle such intrastate express as falls within the power of the State to control, a separate Virginia subsidiary necessarily was organized. That local company annually has been assessed and has paid the type of tax here in controversy, based upon its total gross receipts. Those payments are not before us. 4 Virginia provides by statute5 a separate and detailed system of taxation for express companies. It allocates to state taxation, free of all local levies, two kinds of property, viz., intangible personal property and money. It sets off real estate and tangible personal property for local levies at the same rates as other similar properties. These, taxable at different rates, are all included in the statute under the rubric 'Taxes on property of express companies.' Then follows a section headed 'Annual license tax' providing that 'for the privilege of doing business in this State' express companies shall pay 'in addition to * * * the property tax as herein provided' an 'annual license tax' upon gross receipts earned in the State 'on business passing through, into or out of this State.' 5 Appellant has protested the gross receipts tax, and for some years the protesting company and the state authorities appear to have come together on a compromise formula, as to the portion of receipts attributable to Virginia, the details of which need not concern us, since it does not affect the issue of power now adequately raised, passed upon by the State Corporation Commission and the Supreme Court of Appeals and duly brought before us. 6 Since admittedly the State did not grant any privilege but on the contrary denied every privilege in its power to withhold, and since it concedes that appellant does nothing within the State except interstate commerce, appellant contends that the assessment is invalid for contravention of the Commerce Clause of the Federal Constitution. 7 The State counters with the contention that we should regard this, not as a privilege tax, even though it was labeled as such by the statute imposing it, but, instead, as a property tax measured by gross income and laid on the intangible value of good-will or going-concern status. The Corporation Commission said that the physical properties were assessed at dead value or bare-bones value for local taxation, while here the 'live or going concern value' is being separately taxed by the State 'for the protection and services rendered by it.'6 The State's highest court approved. While great respect is due these conclusions, it has long been held that in a case involving the line between permissible state taxation of property at its full value, including going-concern value, and prohibited taxation of gross receipts from interstate commerce, 'neither the state courts nor the legislatures, by giving the tax a particular name or by the use of some form of words, can take away our duty to consider its nature and effect', Galveston, H. & S.A.R. Co. v. State of Texas, 210 U.S. 217, 227, 28 S.Ct. 638, 640, 52 L.Ed. 1031, in which inquiry 'we are concerned only with its practical operation'. Lawrence v. State Tax Com., 286 U.S. 276, 280, 52 S.Ct. 556, 557, 76 L.Ed. 1102. See Wisconsin v. J. C. Penney Co., 311 U.S. 435, 443—444, 61 S.Ct. 246, 249—250, 85 L.Ed. 267. 8 We start with the taxing statute, in which the Legislature gave a trinity of characterizations to the tax. It was declared to be in addition to the 'property tax,' not an additional property tax; it was named 'an annual license tax', and it was laid 'for the privilege of doing business in this State'. It is not an easy conclusion that the Legislature did not know the actual character of the tax it was laying or that it misconceived what it was taxing. If the tax was in purpose and effect one on property, tangible or intangible, no reason is apparent for casting it in the mold of a privilege tax. Indeed, as the Corporation Commission finally said, the opposite is true, and some other basis for the tax must be found if it is to be saved as valid. This both the Commission and the court below sought to do. 9 The Virginia court, in this and earlier cases, considered that gross earnings measure the value of a good-will or going-concern element which is a separate intangible property of the company. 10 Of course, we have held, and it is but common sense to hold, that a physical asset may fluctuate in value according to the income it can be made to produce. A live horse is worth more than a dead one, though the physical object may be the same, and a smoothgoing automobile is worth more than an unassembled collection of all its parts. The physical facilities used in carrying on a prosperous business are worth more than the same assets in bankruptcy liquidation or on sale by the sheriff. No one denies the right of the State, when assessing tangible property, to use any fair formula which will give effect to the intangible factors which influence real values. Adams Express Co. v. Ohio State Auditor, 166 U.S. 185, 17 S.Ct. 604, 41 L.Ed. 965. But Virginia has not done this. 11 Instead, the practical effect of the tax conforms to its statutory description as one whose impact is squarely upon gross receipts without consideration of their effect on the value of any of the classes of property recognized elsewhere in the statute. A summary of appellant's total taxation for 1951 will illustrate this point.7 It reported money on deposit in Virginia of $109,906.38, on which it paid a tax of $219.81 at the rate of twenty cents per $100. We may drop this item from consideration of additional going-concern value, for money is money and is a medium of exchange which does not deflate or inflate according to the owner's use of it. A dollar to an express company is worth as much and no more than a dollar to one of its employees. But this company had real property and tangible personal property, items no doubt possessing a going-concern as well as an intrinsic value. These properties were assessed at $129,279, on which it paid taxes of $3,389.65 at local rates, probably varied but averaging 2.6 per centum. 12 Appellant's tax, under the questioned portion of the statute, amounted to $66,454.71, so that its tax on a gross-receipts basis was over fifty percent of the total value of its real and tangible personal property. It is this tax which Virginia says is really a tax on the intangible value of this tangible property. 13 Neither the state court nor the Commission has seen fit to state any amount which it considers to be the going-concern valuation. We know the amount of the tax, and we know the rates of taxation, and from that can compute a possible valuation base. If this goingconcern value be treated as separable 'intangible property,' the statutory rate is fifty cents per $100, at which rate tangible property worth only $129,279 must be deemed to have an intangible going-concern value of $13,290,942. In other words, every dollar invested in the tangible property of an express business is deemed worth over $100 for tax purposes. This may not overtax the express company, but it does overtax our credulity, and neither the court nor the Commission, while treating this as an intangible, expressly treated it as entitled to the intangible property rate or classification. 14 But the $66,454.71 of tax and the statutory gross-earnings tax rate of 2 3/20 per centum produce a base of $3,090,916.55, which is exactly the amount of gross revenues reported by appellant. To ascribe a going-concern value of over three million dollars to tangible property of $129.279 is on its face an extreme attribution. To base the value on appellant's gross revenues is to assume that every dollar of annual intake adds a dollar of intangible value to the company's assets regardless of how much it cost in labor, interest and other expense, including other taxes, to produce it. On the other hand, as a forthright tax on gross receipts, the tax involves no irrational or impractical assumption. 15 We have sustained and would now sustain the power of a state to tax, without discrimination, all property within its jurisdiction and to include in its assessment, or to assess separately, the value added by the property's assemblage into a going business, even if that business be solely interstate commerce. Cf. Meyer v. Wells Fargo & Co., 223 U.S. 298, 32 S.Ct. 218, 56 L.Ed. 445; Baker v. Druesedow, 263 U.S. 137, 44 S.Ct. 40, 68 L.Ed. 212; Adams Express Co. v. Ohio State Auditor, 166 U.S. 185, 17 S.Ct. 604, 41 L.Ed. 965. The impact of the tax is thus upon the proportionate total worth of the property. But the tax in dispute here does not depend on owning any physical property, nor upon the value thereof, but would be levied on gross revenues even if the company found some way to dispense with all local, physical property. The fact that its measure is gross revenue is consistent with a tax on the privilege of doing a volume of business which would yield that revenue, just as the Legislature indicated. But we have declined to regard mere gross receipts as a sound measure of going-concern value in a practical world of commerce, where values depend on profitableness of a business, not merely its volume. Cf. United States Glue Co. v. Town of Oak Creek, 247 U.S. 321, 328—329, 38 S.Ct. 499, 501, 62 L.Ed. 1135. 16 Here the State excises every receipt from movement of express in interstate commerce. It takes a portion of gross revenue from 'all receipts earned in this State on business passing through, into or out of this State'. It interstate commerce is validated by state intereste commerce is validated by state protection of a localized incident in the course of the business. The three incidents are originating the interstate movement, which requires local pickup of the parcels; terminating the movement, which requires delivery, and movement through the State. If each of these incidents is sufficient warrant for taxing gross revenues from wholly interstate commerce, a concern doing a nation-wide business is vulnerable to a gross revenue tax in every one of the forty-eight states. But it is argued that this is permissible, provided the states formulate their burden so as each to burden it proportionately, not encroaching on the other's right to burden. It is enough to say that we recently have ruled that local incidents such as gathering up or putting down interstate commodities as an integral part of their interstate movement are not adequate grounds for a state license, privilege or occupation tax. Spector Motor Service, Inc. v. O'Connor, 340 U.S. 602, 71 S.Ct. 508, 95 L.Ed. 573; Memphis Steam Laundry Cleaner, Inc. v. Stone, 342 U.S. 389, 72 S.Ct. 424, 96 L.Ed. 436; Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U.S. 157, 74 S.Ct. 396; New Jersey Bell Telephone Co. v. State Board, 280 U.S. 338, 50 S.Ct. 111, 74 L.Ed. 463. 17 The Supreme Court of Appeals placed reliance upon our dismissal of the appeals in Baltimore Steam Packet Co. v. Commonwealth of Virginia, 343 U.S. 923, 72 S.Ct. 763, 96 L.Ed. 1335, and Norfolk, Baltimore & Carolina Line, Inc. v. Commonwealth of Virginia, 343 U.S. 923, 72 S.Ct. 764, 96 L.Ed. 1335, and may well have been misled, since we assigned no reasons and cited no authority. In those cases, the Virginia court held an almost identical tax to be a property tax. Commonwealth of Virginia v. Baltimore Steam Packet Co., 193 Va. 55, 68 S.E.2d 137.8 But a vital distinction, so far as our jurisdiction is concerned, will account for dismissal of the appeals. One of those appellants was a Virginia corporation and derived its privilege to exist from that State. Both were engaged in intrastate as well as interstate commerce and were therefore subject to some privilege tax from the State. For our purposes, it mattered not whether the right to tax was based on those companies' privileges or on their property, since they were taxable on either basis. This fact distinguishes those dismissed cases from the one at bar and from Spector Motor Service, Inc. v. O'Connor, supra. Those appeals did not question the fairness of apportionment of revenues between the interstate and intrastate business so as to require such consideration as we gave in Central Greyhound Lines v. Mealey, 334 U.S. 653, 68 S.Ct. 1260, 92 L.Ed. 1633. It was therefore a mistake to assume that this Court, by dismissal of the appeals, approved the holding of the Virginia court that this statute imposes what in reality is a property tax though otherwise named and shaped. 18 We think we can only regard this tax as being in fact and effect just what the Legislature said it was—a privilege tax, and one that cannot be applied to an exclusively interstate business. 19 The judgment is reversed and the cause remanded for any further proceeding not inconsistent herewith. 20 Reversed and remanded. 21 Mr. Justice CLARK, whom THE CHIEF JUSTICE, Mr. Justice BLACK and Mr. Justice DOUGLAS join, dissenting. 22 The tax in question is nondiscriminatory, fairly apportioned, and not excessive. That much is conceded by appellant. Whatever the Court's mathematics may prove, it does not establish that the tax is unfair in any respect. In Spector Motor Service, Inc. v. O'Connor, 1951, 340 U.S. 602, 610—615, 71 S.Ct. 508, 512—515, 95 L.Ed. 573, I reasoned that a state tax with such attributes may properly be levied against a corporation which obviously could not engage in interstate commerce in the state without using the facilities and services of the state. I would uphold the tax here on the same grounds. But even accepting the Court's approach in Spector, the instant tax is valid. 23 Spector held that a state tax imposed on a foreign corporation engaged solely in interstate commerce for "the privilege of carrying on or doing business in the state" (340 U.S. 602, 71 S.Ct. 510) violates the Commerce Clause of the United States Constitution. The 'operating incidence' of the tax—"the privilege of carrying on or doing business in the state"—was determined by the state court and not questioned by this Court. That label formed the nub of the Court's rationale in striking down the tax. That decision did not purport to cover a tax bearing a different name. In fact, the Court there specifically noted that the tax was not 'collected in lieu of an ad valorem property tax'; presumably had such been the case the tax would have been upheld. Id., 340 U.S. at page 607, 71 S.Ct. at page 511. 24 The Supreme Court of Appeals of Virginia has held that the instant tax is an ad valorem tax on intangible property; the 'operating incidence' of the tax has been labeled the 'going concern' value of appellant's physical assets in Virginia. The state court specifically held that the tax 'is not a tax upon the privilege of carrying on a business exclusively interstate in character. * * *' 194 Va. 757, 760—761, 75 S.E.2d 61, 63. Hence, if we accept the determination of the state court, there is little question but that the tax is valid even under Spector. 25 This Court, however, refuses to accept the Virginia court's determination and assigns to the Virginia tax the same 'privilege' label that condemned the tax in Spector. Although the Court refused to pierce the label in Spector, I do not dispute its right to reexamine a label affixed by a state court. In some cases the label may be wholly inconsistent with the state's taxing scheme; or it may be true—though I doubt it—that a state court might deliberately misbrand a tax to avoid decisions of this Court. But neither fact justifies the Court's refusal to accept the determination of the state court in this case. The name given the tax by the Virginia court meshes with the state's taxing scheme. And I do not believe that the Virginia court deliberately mislabeled the tax. Indeed, the holding of the state court is perfectly consistent with its earlier expressions on the subject and those of the State Corporation Commission, some antedating Spector. Commonwealth v. Baltimore Steam Packet Co., 1951, 193 Va. 55, 68 S.E.2d 137, appeal dismissed, 1952, 343 U.S. 923, 72 S.Ct. 763, 96 L.Ed. 1335; City of Richmond v. Commonwealth, 1948, 188 Va. 600, 50 S.E.2d 654. Moreover, this Court does not question the existence of a going concern value aside from the value of a business unit's physical assets. Nor does appellant; in its brief appellant 'freely admits that a going business, if operated at a profit or if there is a reasonable expectation of earning a profit on future operations, may have a going concern or what is sometimes called an 'organization' value.' Since appellant does not contend that it is not operating at a profit or that it has no reasonable expectation of earning a profit in the future, even it would be forced to admit, as must the majority of this Court, that a substantial element of property values is being immunized from the reach of Virginia's current taxes which are neither excessive nor unfair. 26 From 1942 until Spector, appellant had recognized the validity of the tax and paid it. As a result of the immunity given by today's decision, appellant and others similarly situated receive a windfall in the form of a valid claim for tax refunds extending back as far as limitations will permit. This is the result of today's twist to the Spector doctrine. If the label makes the tax invalid, the label is accepted; if the label validates the tax, the Court will pierce the label. This approach is rather hard on the states and creates additional obstacles for them in their continuing effort to make purely interstate business units pay a fair share of the cost of state facilities and services essential to the functioning of these enterprises. 27 In sum, Virginia's tax should not be held unconstitutional merely because of the name the state's legislature gave it. Since no one asserts that the amount of the tax is unfair or discriminatory, presumably the same tax assessed under a different name by the use of different words would be upheld. The constitutionality of a state's tax laws should not depend on the ability of state legislatures to foresee what tax language would most likely meet this Court's approval. 1 Va.Const., Art. XII, § 163. 2 Case No. 3900, Virginia Corporation Commission Report (1929), p. 252. 3 Railway Express Agency, Inc. v. Commonwealth ex rel. State Corporation Comm., 153 Va. 498, 150 S.E. 419. 4 282 U.S. 440, 51 S.Ct. 201, 75 L.Ed. 450. 5 The tax in question is laid under Va. Code, 1950, § 58 547. This section and the section immediately preceding it read as follows: § 58—546. Taxes on property of express companies.—Each and every one of the express companies doing business in this State shall, on or before the first day of October of each and every year, pay to the State and to the several counties, cities and towns of the State wherein they may have taxable properties located, the taxes levied on such property as follows: '(1) The State tax on the intangible personal property (other than shares of stock, and bonds issued by counties, cities and towns or other political subdivisions of this State) owned by every such company shall be at the rate of fifty cents on every one hundred dollars of the assessed value thereof; '(2) The State tax on the money of every such company shall be twenty cents on every one hundred dollars of the assessed value thereof; '(3) There shall be no local levies assessed on such intangible personal property or money; '(4) On the real estate and tangible personal property of every such company there shall be local levies at the same rate or rates as are assessed upon other real estate and tangible personal property located in such localities, the proceeds of which local levies shall be applied as is provided by law. 'The provisions of this section shall apply to the assessment for the tax year nineteen hundred forty-nine and annually thereafter, unless otherwise provided by law. § 58—547. Annual license tax.—Every such company, for the privilege of doing business in this State, in addition to the annual registration fee and the property tax as herein provided, shall pay an annual license tax as follows: 'The tax shall be equal to two and three-twentieths per centum upon the gross receipts from operations of such companies and each of them within this State. When such companies are operating partly within and party without this State, the gross receipts within this State shall be deemed to be all receipts on business beginning and ending within this State and all receipts earned in this State on business passing through, into or out of this State; provided, unless otherwise clearly shown, such last-mentioned receipts shall be deemed to be that portion of the total receipts from such business which the entire mileage over which such business is done bears to the mileage operated within this State. 'The provisions of this section shall apply to the assessment for the tax year nineteen hundred forty-nine and annually thereafter, unless otherwise provided by law.' 6 Cases Nos. 10,629 and 10,767, Virginia Corporation Commission Report (1952). The Commission was quoting from the opinion of the Supreme Court of Appeals in Commonwealth v. Baltimore Steam Packet Co., 193 Va. 55, 70, 68 S.E.2d 137, 147. 7 The figures discussed in the text are summarized in the following chart for the year 1951. Types of Property Statutory Tax Assessed Value of Taxes Paid by Taxed Rate Appellant's Property Appellant 1. Intangible 50¢ on Unknown Unknown personal every $100 ($13,290,942.00 ($66,454.71 property. if disputed if disputed tax is intangible tax is property tax) intangible property tax). 2. Money ------ 20¢ on every $100 $109,906.38 $219.81. 3. Real estate and Local levies $129,279.00 $3,389.65. tangible (average of personal 2.6 per centum) property. 4. Gross receipts 2 3/20 per centum $3,090,916.55 $66,454.71. 8 The Corporation Commission commented on the Baltimore Steam Packet case in this manner: 'So, when the Virginia Supreme Court of Appeals held that the license taxes on steamship and express companies were property taxes, all danger of an adverse decision in the Supreme Court of the United States was averted, and that court dismissed the appeal without comment, presumably on the ground that no federal question worth discussing was involved.' Cases Nos. 10,629 and 10,767, Virginia Corporation Commission Report (1952).

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347 U.S. 334 74 S.Ct. 555 98 L.Ed. 733 THOMPSONv.LAWSON, Deputy Commissioner of United States Bureau of Employees Compensation, etc., et al. No. 352. Argued March 9, 1954. Decided April 5, 1954. Mr. David Carliner, Washington, D.C., for petitioner. 1 Mr. George W. Ericksen, Tampa, Fla., for respondent Gulf Florida Terminal Co., et al. 2 Mr. Lester S. Jayson, New York City, for respondent Deputy Comm. 3 FRANKFURTER, Justice. 4 On June 15, 1951, Otis Thompson died from injuries suffered while loading a ship for his employer. Two women sought a death benefit under the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. § 901 et seq., each claiming to be his 'widow.' The Deputy Commissioner denied both claims, that of one woman on the ground that she was not the lawful wife of the decedent, and that of the other because at the time of Otis' death she was living apart from him not 'by reason of his desertion', 33 U.S.C. § 902(16), 33 U.S.C.A. § 902(16). On a review of the latter dismissal, the District Court sustained the Deputy Commissioner's order, and the Court of Appeals for the Fifth Circuit affirmed. 205 F.2d 527. In doing so, that court rejected contrary decisions of the Courts of Appeals for the Second and Ninth Circuits, Associated Operating Co. v. Lowe, 138 F.2d 916, Moore Dry Dock Co. v. Pillsbury, 169 F.2d 988. We granted certiorari to resolve this conflict. 346 U.S. 921, 74 S.Ct. 306. 5 The Deputy Commissioner made these findings. Otis and Julia Thompson were married in 1921, and lived together as husband and wife until November 1925, when Otis deserted her. They never lived together again, and he never contributed anything to the support of Julia or their two children, nor did she ever endeavor to secure such support. Meanwhile Otis had taken up with one Sallie Williams, and they went through a marriage ceremony in 1929. Julia, in turn, found another mate, one Jimmy Fuller, whom she 'married' in 1940. Thereafter she was known as Julia Fuller. She was formally divorced from Fuller in 1949. Shortly before Otis' death, he asked Julia to 'take him back,' but she refused, having no intention of ever again living with him and resuming the relationship of husband and wife. 6 The single, unentangled question before us is whether, on these unchallenged facts, Julia was at the time of Otis' death in 1951, his statutory 'widow,' as that term is described by Congress in the Longshoremen's Act: 'The term 'widow' includes only the decedent's wife living with or dependent for support upon him at the time of his death; or living apart for justifiable cause or by reason of his desertion at such time', 33 U.S.C. § 902(16), 33 U.S.C.A. § 902(16). We agree with the court below that since she was not at the time of her husband's death living apart from him 'by reason of his desertion', she was not a 'widow' within the scope of this provision.* Whatever may have been the situation prior to her 'marriage' to Jimmy Fuller in 1940, it is clear that after that date she lived as the wife of Jimmy Fuller, held herself out as his wife, and had severed all meaningful relationship with the decedent. 7 We do not reach this conclusion by assessing the marital conduct of the parties. That is an inquiry which may be relevant to legal issues arising under State domestic relations law. Our concern is with the proper interpretation of the Federal Longshoremen's Act. Congress might have provided in that Act that a woman is entitled to compensation so long as she is still deemed to be the lawful wife of the decedent under State law, as, for example, where a foreign divorce obtained by her is without constitutional validity in the forum State. But Congress did not do so. It defined the requirements which every claimant for compensation must meet. Considering the purpose of this federal legislation and the manner in which Congress has expressed that purpose, the essential requirement is a conjugal nexus between the claimant and the decedent subsisting at the time of the latter's death, which, for present purposes, means that she must continue to live as the deserted wife of the latter. That nexus is wholly absent here. Julia herself, by her purported remarriage, severed the bond which was the basis of her right to claim a death benefit as Otis' statutory dependent. The very practical considerations of this Compensation Act should not be subordinated to the empty abstraction that once a wife has been deserted, she always remains a deserted wife, no matter what—the nomatter what in this case being the wife's conscious choice to terminate her prior conjugal relationship by embarking upon another permanent relationship. 8 The judgment is affirmed. 9 Affirmed. 10 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS and Mr. Justice MINTON concur, dissenting. 11 Petitioner's husband, a longshoreman, was killed in 1951 on a job governed by the Longshoremen's and Harbor Workers' Compensation Act. Petitioner was not then living with her husband and had not done so since he deserted her and their two children in 1925. Petitioner went through a marriage ceremony with another man in 1940 living with him as his wife until 1949 when they were divorced. Of course this marriage was invalid and petitioner remained the wife of her husband until he was killed. The Court now holds as a matter of law that petitioner's second 'marriage' amounts to a forfeiture of her right to recover compensation under the Act as a widow. In so holding, the Court follows decisions of the Court of Appeals for the Fifth Circuit.1 The Courts of Appeals for the Second and Ninth Circuits have held to the contrary.2 I agree with the Second and Ninth Circuits. 12 Not a word in the Compensation Act suggests that the deserted widow of a deceased longshoreman automatically forfeits all right to statutory compensation because she has lived with a man other than her husband. What the Act actually does is to entitle a vidow to compensation if at the time of her husband's death she is either: (1) living with him; (2) dependent upon him for support; (3) living apart from him for justifiable cause; (4) living apart from him by reason of his desertion. Obviously these issues cannot be decided without hearing evidence and determining facts. The Act vests deputy commissioners, not courts, with power 'to hear and determine all questions in respect of such claim.' 33 U.S.C. § 919(a), 33 U.S.C.A. § 919(a). And their findings of fact when supported by substantial evidence are conclusive on courts.3 13 Here there were only two factual issues presented to the Deputy Commissioner. Was the wife living apart from her husband for 'justifiable cause'? Was she living apart from him because of his 'desertion'? I think there was evidence before the Deputy Commissioner on which he could have fairly decided these questions of fact either way. He made findings and entered an order against the petitioner, but it is admitted that he did so because he felt bound by prior holdings of the Fifth Circuit that an attempted marriage by a wife barred her recovery of compensation as a matter of law. The Court now affirms the judgment although the Deputy Commissioner has never passed on the factual issues of whether the wife's living apart from her husband was either 'justifiable' or by reason of his 'desertion.' That the Court treats its holding as one of statutory construction cannot obscure the actual effect of what it is doing. The Court is taking from the deputy commissioners their congressionally granted power to determine from all the facts and circumstances whether a widow is entitled to compensation. 14 I would reverse with directions to remand the cause to the Deputy Commissioner to determine, free from judicial compulsion, whether, as a fact, petitioner's living apart was for 'justifiable cause' or on account of her husband's 'desertion.' If either of these issues should be decided in favor of the petitioner, she is entitled to compensation. * It was not contended before us that in the circumstances of this case the phrase 'for justifiable cause' has a different reach than the phrase 'by reason of his desertion.' 1 Ryan Stevedoring Co. v. Henderson, 138 F.2d 348; American Mutual Liability Ins. Co. v. Henderson, 141 F.2d 813. 2 Associated Operating Co. v. Lowe, 138 F.2d 916, affirming, D.C., 52 F.Supp. 550; Moore Dry Dock Co. v. Pillsbury, 169 F.2d 988. 3 Voehl v. Indemnity Ins. Co., 288 U.S. 162, 166, 53 S.Ct. 380, 381, 77 L.Ed. 676; Parker v. Motor Boat Sales, Inc., 314 U.S. 244, 246, 62 S.Ct. 221, 223, 86 L.Ed. 184; O'Leary v. Brown-Pacific-Maxon, Inc., 340 U.S. 504, 507—508, 71 S.Ct. 470, 471—472, 95 L.Ed. 483.

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347 U.S. 388 74 S.Ct. 569 98 L.Ed. 790 SACHERv.ASSOCIATION OF THE BAR OF CITY OF NEW YORK et al. No. 307. Argued March 11, 1954. Decided April 5, 1954. Mr. Telford Taylor, Washington, D.C., for petitioner. Mr. Eli Whitney Debevoise, New York City, for respondents. PER CURIAM. 1 This is a proceeding brought by respondent bar associations in the United States District Court for the Southern District of New York for the disbarment of petitioner from practice in that court. Petitioner had previously been convicted of contempt in the same court. See Sacher v. United States, 343 U.S. 1, 72 S.Ct. 451, 96 L.Ed. 717. 2 The District Court, after disallowing eight of the specifications in the petition for disbarment, found as to the others that there was no conspiracy as charged therein and no moral turpitude involved, and that the proven contumacious conduct of petitioner stemmed from an excess of zeal for his clients that obscured his recognition of responsibility as an officer of the court. All of the conduct complained of occurred in one protracted trial involving many defendants and counsel. See Dennis v. United States, 341 U.S. 494, 71 S.Ct. 857, 95 L.Ed. 1137. There was no allegation or proof of prior misconduct in petitioner's twenty-four years of practice. The Court of Appeals divided upon the propriety of permanent disbarment, but unanimously questioned the importance of one of the two specifications principally relied on by the trial court. 3 At the time the District Court made its decision in this case, the contempt judgment was under review on appeal, and it did not know and could not know that petitioner would be obliged to serve, as he did, a six months' sentence for the same conduct for which it disbarred him. 4 In view of this entire record and of the findings of the courts below, we are of the opinion that permanent disbarment in this case is unnecessarily servere. The judgment is reversed and the case remanded to the District Court for further consideration and appropriate action not inconsistent with this opinion. 5 Judgment reversed and case remanded with directions. 6 Mr. Justice BURTON would affirm the judgment of the Court of Appeals. 7 Mr. Justice CLARK took no part in the consideration or decision of this case. 8 Mr. Justice REED, dissenting. 9 The conclusion of the Court that the conduct of Mr. Sacher in the trial of Dennis v. United States, 341 U.S. 494, 71 S.Ct. 857, 95 L.Ed. 1137, did not justify the order of disbarment entered against him by the United States District Court for the Southern District of New York seems so inimical to the orderly administration of justice as to justify this expression of dissent. We trust that the purpose of the dissent will not be misinterpreted as an implied criticism of those members of the bar who undertake the task of the representation of unpopular clients. Those who provide such counsel in the spirit of justice and in accordance with the dignity of the courts are to be commended. They enhance the tradition of American lawyers of seeing that all defendants have proper representation before the courts. The purpose of this dissent is to show that in reversing the disbarment of Mr. Sacher this Court departs from its previous practice of leaving exclusions from their bars to the district courts except when there has been an abuse of discretion. 10 If no protest against such action were made here, we think the danger of the adoption of tactics akin to those of Mr. Sacher by other lawyers in other cases of intense partisanship or involving deep feeling would be materially enlarged. The contagiousness of unethical practices is shown by the conduct in the Dennis case by another member of the bar that resulted in his conviction of contempt, 343 U.S. 1, 72 S.Ct. 451, 96 L.Ed. 717, and in his suspension from membership in the District Court bar for two years.1 The New Jersey Supreme Court disbarred this other lawyer from the practice of law in that state on the basis of such contempt conviction. In re Isserman, 9 N.J. 269, 87 A.2d 903; Id., 9 N.J. 316, 88 A.2d 199. That action resulted in his disbarment from our bar. 345 U.S. 286, 73 S.Ct. 676, 97 L.Ed. 1013. 11 The misconduct charged against Mr. Sacher occurred in a long drawn-out trial lasting from January 17, 1949, with occasional intermissions until a verdict of guilty, subsequently affirmed here, was reached on October 21, 1949. The charges and findings as to improper conduct do not refer to an isolated instance but to a course of reprehensible conduct throughout the trial. The charges were filed by the Association of the Bar of the City of New York and the New York County Lawyers Association after the verdict in the Dennis case. At that time the trial judge in the Dennis case had imposed on Mr. Sacher as punishment for his contemptuous conduct a sentence of six months.2 This was upheld by this Court after the order of disbarment and has been served. The sentence was a punishment for Mr. Sacher's contempt of court. Disbarment not punishment for contempt but a cleansing of the bar by ousting.3 Punishment for contempt should not be considered as a prohibition of or in mitigation of discipline in disbarment proceedings. In fact, a prior conviction adds force to the need to disbar. The Court's per curiam opinion in this case seems to incline to the contrary view. Apparently it looks upon the affirmance of the contempt conviction as something that must soften the attitude toward disbarment. 12 Coming to the merits of this disbarment, we limited consideration on certiorari to the following question: 13 'Accepting the facts as found in the memorandum decision of Chief Judge Hincks, does permanent disbarment exceed the bounds of fair discretion, particularly in view of the punishment of petitioner's individual misconduct as a contempt and the finding that the proof does not establish that he so behaved pursuant to a conspiracy or a deliberate and concerted effort?'4 14 That limitation accepted the following findings made by Chief Judge Hincks as a valid and unassailable foundation for decision: 15 'As to Mr. Sacher, I find as charged in Par. 14, 16 '(1) that with intent to delay and obstruct the trial, he disregarded numerous warnings of the court concerning wilful, delaying tactics and persisted in making long and repetitious arguments and protests, * * * and made needless reiterations of objections of others, * * *. 17 '(2) that for the purpose of bringing the court into general discredit and disrepute, (a) he insinuated that various findings made by the court were made for purposes of newspaper headlines, * * * (b) he accused the court of prejudice and partiality, * * * and (c) made disrespectful, insolent and sarcastic comments and remarks to the court, many of which were with intent to provoke the court into intemperate action which might be availed of as ground for mistrial or later as error on appeal, * * *. 18 'Mr. Sacher's proved misconduct, as charged in this paragraph * * * in my judgment requires disbarment.' 19 (Record references omitted.) 20 '3. By Paragraph 16 it is also charged that Mr. Sacher 'made insolent, sarcastic, impertinent and disrespectful remarks to the Court and conducted' himself 'in a provocative manner.' This charge also I find abundantly proved by the cited references to the record.' It would take voluminous quotations from the huge record to document Chief Judge Hincks' conclusions. Our order on certiorari accepts their truth. The trial court commented: 21 'That such conduct was unprofessional needs no exegesis: I so hold. Even more closely than that dealt with in the preceding Section it touches the vitals of the judicial process: even greater is its tendency to obstruct the attainment of personal justice. And the proven volume of this misconduct also was such as to constitute a serious obstruction to the proper conduct of the trial. Overpersistence in argument, as observed above, tends to breed confusion. Provocative conduct tends to breed turbulence. Insolent and disrespectful remarks to the Court tend to undermine the judicial authority indispensable to the power effectively to cope with such intrusions which by their very nature obstruct the development of the real merits of the case. 22 'For proved misconduct falling within this branch of the charge, I conclude that an order of disbarment is required.' 23 The Court, as it must by its grant of certiorari, bases its action on the facts of disrespect to the trial court, wilful delay, and a purpose to discredit the administration of justice. It differs from the trial court only as to the measure of discipline required.5 By reversing the judgment below, without discussion of the accepted rule in federal courts that the exercise of judicial discretion in disbarment will not be overturned on review unless there is a clear abuse of discretion,6 this Court now summaryily places itself in the position of a trial court. It acts, not upon an abuse of discretion by the trial court, but upon a record to determine for itself the proper extent of punishment. Certainly this Court does not mean to rule that conduct such as the accepted facts disclose does not support the discretion of the trial judge in disbarring Mr. Sacher.7 24 Such a change of the course of decision is a disservice to the orderly progress of trials. It stimulates rather than deters the adoption of the strategy of the Dennis case. It intrudes unnecessarily this Court's views of the proprieties into the discipline of bars of regions and communities whose attitude toward courtroom behavior diverges from our own. It is enough if we stand ready to say that an abuse of discretion by a trial court will not be allowed to stand. We should not substitute our discretion for that of the trial judge. Calm and reasoned presentation of facts and law are not only more effective but are essential if administration of justice by the courts is not to be disrupted by such courtroom tactics as were used in the Dennis trial. We demand tolerance for those who differ. Conformity is not expected or desired. There is room for every shade of opinion and expression short of incitement to crime. But there is not room for violence, offensive expletives or interference with orderly procedure in a courtroom, and such an attitude is not to exalt order over liberty but to exalt reason over force. An atmosphere filled with unproven personal charges or innuendoes of wrongful action is not conducive to dispassionate appraisal of the truth of matters under judicial investigation. I would uphold the discipline administered by the bar and trial judge by affirming this judgment. 1 The trial judge compared the conduct of this lawyer and Mr. Sacher (see note 5, infra) thus: 'I feel that (the other lawyer's conduct at the trial) is such as to require firm disciplinary action. However, his attitude as disclosed on the record and on his brief herein leaves room for reasonable expectation that the experience of discipline may have such restraining effect on his courtroom behavior that in the future he may be safely expected to exercise without abuse the privilege of membership in this bar.' 2 The sentence was later affirmed in the Court of Appeals, United States v. Sacher, 2 Cir., 182 F.2d 416, and we denied certiorari, 341 U.S. 952, 71 S.Ct. 1010, 95 L.Ed. 1374. Later certiorari was granted, 342 U.S. 858, 72 S.Ct. 84, 96 L.Ed. 646. Disbarment followed. Thereafter we affirmed the sentence of contempt, 343 U.S. 1, 72 S.Ct. 451, 96 L.Ed. 717. The disbarment was subsequently affirmed, 206 F.2d 358. 3 Ex parte Wall, 107 U.S. 265, 273, 2 S.Ct. 569, 576, 27 L.Ed. 552: "The question is,' said Lord Mansfield, 'whether, after the conduct of this man, it is proper that he should continue a member of a profession which should stand free from all suspicion. * * * It is not by way of punishment; but the court in such cases exercise their discretion, whether a man whom they have formerly admitted is a proper person to be continued on the roll or not." See In re Isserman, 345 U.S. 286, 289, 73 S.Ct. 676, 677, 97 L.Ed. 1013. 4 346 U.S. 894, 74 S.Ct. 218. 5 The Court refers to the language of the order, 'permanently disbarred.' This, of course, should be read as a disbarment subject to reinstatement. See Drinker, Legal Ethics 49, and the cases collected in 7 C.J.S., Attorney and Client, § 41, page 814; 5 Am.Jour. 443; 6 Fed.Dig. 355; In re O'Connell, 199 Cal. 538, 250 P. 390, 48 A.L.R. 1236. Reinstatement may follow 'a sincere and timely change of attitude.' Such an attitude on the part of Mr. Sacher, Chief Judge Hincks says in his decision, did not exist even at the time of the hearing of the charges. 6 The rule as to review of disbarment of Ex parte Burr, 9 Wheat. 529, 6 L.Ed. 152, announced by Chief Justice Marshall, has been the guide for United States Courts: 'There is, then, no irregularity in the mode of proceeding which would justify the interposition of this Court. It could only interpose, on the ground that the Circuit Court had clearly exceeded its powers, or had decided erroneously on the testimony. The power is one which ought to be exercised with great caution, but which is, we think, incidental to all Courts, and is necessary for the preservation of decorum, and for the respectability of the profession. Upon the testimony, this Court would not be willing to interpose where any doubt existed.' Id., 9 Wheat. at page 531, 6 L.Ed. 152. Ex parte Secombe, 19 How. 9, 15 L.Ed. 565; Ex parte Bradley, 7 Wall. 364, 19 L.Ed. 214. These early cases were under mandamus practice. We now proceed by appeal and certiorari. See Thatcher v. United States, 6 Cir., 212 F. 801, 804. The principles of the Burr case still govern and the weight accorded the conclusion of the trial court remains unchanged. In re Sacher, 2 Cir., 206 F.2d 358, 361; In re Chopak, 2 Cir., 160 F.2d 886, 887; In re Schachne, 2 Cir., 87 F.2d 887, 888; In re Spicer, 6 Cir., 126 F.2d 288, 289, 292; In re Patterson, 9 Cir., 176 F.2d 966, note 1. 7 Burns v. United States, 287 U.S. 216, 222—223, 53 S.Ct. 154, 156, 77 L.Ed. 266: 'The question is simply whether there has been an abuse of discretion and is to be determined in accordance with familiar principles governing the exercise of judicial discretion. That exercise implies conscientious judgment, not arbitrary action. * * * It takes account of the law and the particular circumstances of the case and is 'directed by the reason and conscience of the judge to a just result.' * * * While probation is a matter of grace, the probationer is entitled to fair tratment, and is not to be made the victim of whim or caprice.' See United States v. McWilliams, 82 U.S.App.D.C. 259, 163 F.2d 695, 697, and cases cited.

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347 U.S. 396 74 S.Ct. 601 98 L.Ed. 798 ALASKA STEAMSHIP COMPANY, Inc., Petitioner,v.John O. PETTERSON. No. 287. Argued March 8, 9, 1954. Decided April 5, 1954. Rehearing Denied June 1, 1954. See 347 U.S. 994, 74 S.Ct. 848. Mr. Robert V. Holland, Seattle, Wash., for petitioner. Mr. John Geisness, Seattle, Wash., for respondent. PER CURIAM. 1 The judgment is affirmed. Seas Shipping Co. v. Sieracki, 328 U.S. 85, 100, 66 S.Ct. 872, 90 L.Ed. 1099; Pope & Talbot v. Hawn, 346 U.S. 406, 74 S.Ct. 202. 2 Mr. Justice BURTON, with whom Mr. Justice FRANKFURTER and Mr. Justice JACKSON join, dissenting. 3 The Sieracki1 and Pope & Talbot2 cases cited as the basis for the Court's decision do not justify the result announced. They evidence this Court's latest and broadest statement of a shipowner's liability for the unseaworthiness of his ship and its equipment, but they do not reach the instant case. They assert the liability of a shipowner to stevedores and carpenters who, in consequence of the unseaworthiness of his ship or its equipment, are injured on board in navigable waters while engaged in work connected with loading or unloading the ship. Those cases establish that such liability for unseaworthiness exists although the injured maritime workers are not employees of the shipowner but are employees of a third party who is under contract to supply stevedoring services. 4 The question presented by the instant case goes further. It asks whether a shipowner is liable for injuries suffered on his ship by a stevedore, even when those injuries result from unseaworthiness of equipment that does not belong to the shipowner and is not part of the ship's equipment, but belongs to the stevedore's independent employer, is part of that employer's loading equipment, and is brought on board by such employer. There is no suggestion in the cited cases that the shipowner's responsibility extends beyond the seaworthiness of his ship and its equipment, and I see no adequate reason for judicially extending it beyond that limit. 5 As the instant case offers a new precedent, it is important to recite its facts so that its effect may be accurately measured and limited in the absence of a supporting opinion. 6 The Court of Appeals stated the question which it decided as follows: 7 'The question presented is whether a vessel's owner is liable for injuries received by an employee of a stevedoring company (an independent contractor) on board ship while engaged in the loading of the ship where the injuries are caused by a breaking block brought on board by the stevedoring company.' Petterson v. Alaska S.S. Co., 9 Cir., 205 F.2d 478. 8 Respondent Petterson was an able bodied stevedore, 73 years old, employed as a longshore foreman by the Alaska Terminal and Stevedoring Company. That company was engaged by petitioner Alaska Steamship Company, Inc., to load the latter's vessel, the S. S. Susitna. In May 1950 respondent thus became engaged in loading that vessel while it was docked in what is assumed to be navigable water in the State of Washington. Petterson's employer, the stevedoring company, was authorized by the shipowner to use, in the loading operation, the contractor's own gear or the gear of the ship, at the contractor's option. Respondent and his fellow employees rigged a snatch block which had been standing or lying unused upon the deck of the vessel. It was of a type often found as part of a ship's gear aboard such vessels and also as part of a stevedoring company's gear. The block was treated by each court below as having been brought on board by the stevedoring company and as belonging to that company.3 9 While being put to a proper use in a proper manner, the block broke, thus causing some of the loading gear to fall and crush respondent's leg as he was engaged in supervising the work of longshoremen aboard the ship. 10 Petterson filed a libel in personam in the United States District Court for the Western District of Washington against the shipowner claiming $35,000 damages resulting from the unseaworthiness of the block. After trial, the libel was dismissed without a reported opinion. The Court of Appeals for the Ninth Circuit reversed the decree and remanded the cause for determination of damages. 205 F.2d 478. Because of an alleged conflict with Lopez v. American-Hawaiian S.S. Co., 3 Cir., 201 F.2d 418, and the importance of the decision in relation to a shipowner's liability for unseaworthiness, we granted certiorari. 346 U.S. 914, 74 S.Ct. 272. 11 The doctrine of seaworthiness was stated as a settled proposition in The Osceola, 189 U.S. 158, 175, 23 S.Ct. 483, 487, 47 L.Ed. 760, as follows: 12 'That the vessl and her owner are, both by English and American law, liable to an indemnity for injuries received by seamen in consequence of the unseaworthiness of the ship, or a failure to supply and keep in order the proper appliances appurtenant to the ship.' 13 That doctrine was a natural outgrowth of the dependence of a ship's crew upon the seaworthiness of the ship and its equipment. Services of a crew must be rendered with whatever equipment the shipowner supplies. Such seamen are not expected to supply maritime or loading equipment and it is only fair for the law to subject shipowners to an absolute liability to them for the unseaworthiness of the shipowner's ship or equipment. 14 In the Sieracki case, this Court extended the shipowner's traditional obligation so as to bring within its protection stevedores while engaged in loading or unloading the ship. This was largely on the premise that the stevedores were then rendering services usually and formerly performed by the crew. The decision assumed that the stevedores, like their predecessors, used the ship's equipment. 'For these purposes he (the stevedore) is, in short, a seaman because he is doing a seaman's work and incurring a seaman's hazards.' 328 U.S., at page 99, 66 S.Ct. at page 880.4 The historical analogy disappears in the instant case. The modern stevedores, who supply substantial loading equipment, are a far cry from the traditional wards of the admiralty around whome the Court threw its protection in The Osceola case.5 15 While the doctrine of absolute liability for unseaworthiness, expounded in Mahnich v. Southern S.S. Co., 321 U.S. 96, 64 S.Ct. 455, 88 L.Ed. 561, is reasonable enough when applied to a shipowner in relation to his own ship and to its equipment, there is no comparable justification for applying it to equipment owned by others and brought on board by them. Thus to extend such absolute liability would make the shipowner responsible for the result of latent dangers he cannot prevent. The burden should be upon those best able to eliminate the hazard—in this case, the stevedoring contractor.6 16 Petitioner also has emphasized the fact that Petterson was injured while working in a part of the ship that was under the control of the stevedoring contractor rather than of the shipowner. This distinction, in favor of the shipowner, was relied upon in Lopez v. American-Hawaiian S.S. Co., supra, and has been considered decisive in other cases. However, if the unseaworthy equipment in the instant case had been a part of the ship's equipment, the principles underlying the Sieracki and Pope & Talbot decisions, supra, might justify the shipowner's liability, regardless of who was in control of the part of the ship where that equipment caused the injury.7 It is precisely because the equipment in the instant case was not the ship's equipment that the general principles underlying those cases do not reach the issue before us. 17 Finally, the extension of a shipowner's absolute liability so as to include the unseaworthiness of equipment owned and brought on board by a stevedoring contractor makes such a marked change in the traditional responsibility of a shipowner as to call for legislative authorization rather than mere judicial recognition. 'The legislative process is peculiarly adapted to determine which of the many possible solutions to this problem would be most beneficial in the long run.' Halcyon Lines v. Haenn Ship Corp., 342 U.S. 282, 286, 72 S.Ct. 277, 280, 96 L.Ed. 318. That statement was made when this Court declined to recognize judicially the doctrine of contribution between joint tort feasors as a shipowner's remedy against a stevedoring contractor. The statement is equally appropriate here. In fact, Congress already has demonstrated its interest here through the Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, 33 U.S.C. § 901 et seq., 33 U.S.C.A. § 901 et seq. That Act insures compensation to stevedores in comparable cases without proof of negligence. It specifically excludes from its operation members of the ship's crew and persons employed by the master to load, unload or repair 'any small vessel under eighteen tons net'.8 It was thus tailored, in 1927, to provide precisely the kind of relief that Congress preferred in lieu of that provided by this Court, in 1926, through International Stevedoring Co. v. Haverty, 272 U.S. 50, 47 S.Ct. 19, 71 L.Ed. 157. 18 For the foregoing reasons, the judgment should be reversed and the extension of liability which it introduced should be left to legislative initiative. In any event, the effect of it should be restricted to its facts. 1 Seas Shipping Co. v. Sieracki, 328 U.S. 85, 66 S.Ct. 872. 2 Pope & Talbot v. Hawn, 346 U.S. 406, 74 S.Ct. 202. 3 The record shows that the trial court found 'There was no proof as to the ownership of said block.' The trial court also said that—'the snatch block in question, at the time of the accident, was not under the control or supervision of the respondent (shipowner) but was under the exclusive control and supervision of the libelant (Petterson), his employer and his employer's agents. 'The Libelant has filed to establish, through the evidence introduced, that the snatch block involved, which apparently caused the accident and injury to the Libelant, belonged to or was part of the ship gear of the Respondent (shipowner). 'Such finding was conceded, in effect, by Counsel for Libelant in his argument. 'Proceeding on that assumption, Counsel for Libelant argued that the logic or reasoning of the case of Seas Shipping Co. v. Sieracki, 328 U.S. 85, 66 S.Ct. 872, would impose the obligation of seaworthiness of the vessel upon Respondent (shipowner) as to gear—in this case a snatch block—not belonging to Respondent but being used by the stevedore in loading the ship. 'The Court can not agree that the Supreme Court ruling in that case would justify such a conclusion.' The Court of Appeals said: 'It is not clear whether the block belonged to the ship or the Stevedoring Co., it being the type of equipment commonly found as part of the gear of both ships and stevedoring firms. For the purposes of this appeal, it will be assumed that it was brought on board by Stevedoring Co. * * * 'The court below granted a decree for the Owner on the ground that it was not shown that the block belonged to or was a part of the gear of the Susitna. Petterson's argument that liability should be imposed even if the gear belonged to the Stevedoring Co. was rejected by the court on the ground that Seas Shipping Co. v. Sieracki, 328 U.S. 85, 66 S.Ct. 872, 90 L.Ed. 1099, did not go so far.' 205 F.2d at page 479. 4 In discussing the stevedore's relation to his immediate employer, the independent stevedoring contractor, the Court assumed that in the usual case such a contractor likewise supplied no equipment. It said: 'The latter (contractor) ordinarily has neither right nor opportunity to discover or remove the cause of the peril and it is doubtful, therefore, that he owes to his employees, with respect to these hazards, the employer's ordinary duty to furnish a safe place to work, unless perhaps in cases where the perils are obvious or his own action creates them.' 328 U.S., at page 95, 66 S.Ct. at page 878. The instant case is an example of the latter classification where the contractor supplied the defective block and it was taken on board by his employees. The implication is that, under such circumstances, the liability should rest on the contractor rather than upon the shipowner. The injury would then be covered by the stevedore's absolute right to compensation provided by Congress in the Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, 33 U.S.C. § 901 et seq., 33 U.S.C.A. § 901 et seq. 5 For a statement of the contrast between the traditional wards of the admiralty and modern longshoremen, see dissent in Pope & Talbot v. Hawn, 346 U.S. 406, 423—426, 74 S.Ct. 202, 212 213; Isbrandsten Co. v. Johnson, 343 U.S. 779, 782—789, 72 S.Ct. 1011, 1014—1017, 96 L.Ed. 1294; Norris, The Seaman as Ward of the Admiralty, 52 Mich.L.Rev. 479. For a condensed review of the development of the law in this general field, see Howe, Rights of Maritime Workers, 5 NACCA L.J. 146, and 6 NACCA L.J. 131. 6 See Rogers v. United States Lines, 3 Cir., 205 F.2d 57, pending here on petition for certiorari; 2 Norris, The Law of Seaman (1952), 251—253; Robinson on Admiralty (1930) 303—307; Recent Cases, 102 U. of Pa.L.Rev. 402—404. 7 See Strika v. Netherlands Ministry of Traffic, 2 Cir., 185 F.2d 555, allowing recovery from a shipowner for an injury suffered by a longshoreman while on shore, but caused by the ship's unseaworthy tackle. 8 44 Stat. 1426, 33 U.S.C. § 903, 33 U.S.C.A. § 903.

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347 U.S. 373 74 S.Ct. 550 98 L.Ed. 767 FRANKLIN NAT. BANK OF FRANKLIN SQUAREv.PEOPLE OF STATE OF NEW YORK. No. 427. Argued March 9, 10, 1954. Decided April 5, 1954. Mr. Samuel O. Clark, Jr., Washington, D.C., for appellant. Mr. Daniel M. Cohen, New York City, for appellee. Simon E. Sobeloff, Solicitor General, Washington, D.C., for the United States amicus curiae, by special leave of Court. Opinion of the Court by Mr. Justice JACKSON, announced by Mr. Justice FRANKFURTER. 1 This appeal from the Court of Appeals of New York presents the narrow question whether federal statutes which authorize national banks to receive savings deposits conflict with New York legislation which prohibits them from using the word 'saving' or 'savings' in their advertising or business. We think the federal and state statutes are incompatible, and in such circumstances the policy of the State must yield. 2 It is the policy of New York to charter and foster the mutual savings bank, a nonprofit institution whose earnings inure to the benefit of depositors rather than to stockholders. These institutions have a long history as relatively stable and safe depositaries for the accumulations of thrifty New Yorkers and as a source of credit for limited uses. They have grown to be an important part of New York's banking and economic structure. That State also charters the savings and loan association, an institution of a different type, intended to serve somewhat similar ends. The Legislature was concerned lest commercial banks, in seeking to induce deposits of the same character, so use the word 'savings' as to lead uninformed and indiscriminating persons to believe that they were dealing with the chartered savings institutions. Hence, by its Banking Law, New York has forbidden use of the word 'savings,' or its variants, by any banks other than its own chartered savings banks and savings and loan associations.1 3 However, the Federal Government is a rival chartering authority for banks. Since McCulloch v. State of Maryland, 4 Wheat. 316, 4 L.Ed. 579, it has not been open to question that the Federal Government may constitutionally create and govern such institutions within the states. The United States has set up a system of national banks as federal instrumentalities to perform various functions such as providing circulating medium and government credit, as well as financing commerce and acting as private depositaries. Some of their functions, especially as a source for federal credit, depend upon their success in attracting private deposits. That these federal institutions may be at no disadvantage in competition with state-created institutions, the Federal Government has frequently expanded their functions and authority. Of such nature are the measures now before us. 4 The Federal Reserve Act provides that a national bank 'may continue hereafter as heretofore to receive time and savings deposits and to pay interest on the same, but the rate of interest which such association may pay upon such time deposits or upon savings or other deposits shall not exceed the maximum rate authorized by law to be paid upon such deposits by State banks or trust companies organized under the laws of the State in which such association is located.'2 The Act authorizes the Board of Governors of the Federal Reserve System to make necessary rules and regulations,3 which the Board has done by defining such terms as 'time deposits' and 'savings deposits.'4 The National Bank Act authorizes national banks to receive deposits without qualification or limitation, and it provides that they shall possess 'all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin, and bullion; by loaning money on personal security; and by obtaining, issuing, and circulating notes according to the provisions of this chapter.'5 5 Appellant, believing it was authorized by the Federal Government to do so, used the word 'saving' and savings' in advertising, in signs displayed in the bank, on its deposit and withdrawal slips, and in its annual reports. It is beyond question that appellant violated the State's prohibition if it is a valid one. 6 The Attorney General of the State initiated this case by a complaint alleging such violations, seeking a broad injunction. The trial accumulated a large record devoted mainly to the merits and demerits of the New York legislation and its consequences upon banks and depositors. The trial court found no purposeful deception of the public. It held that the advertising and other use of the forbidden terms were in pursuit of implied and incidental powers conferred upon national banks by the Acts of Congress and that the New York statute in conflict with them must yield. The Appellate Division disagreed and directed a permanent injunction prohibiting the use of the term. The Court of Appeals affirmed, and we noted probable jurisdiction of an appeal.6 7 We are unable to support the contention that the authorization for national banks to receive savings deposits is limited or qualified because of the expression that they may 'continue hereafter as heretofore' to do so. It appears that previous to the enactment, acceptance of such accounts by national banks had been usual but was not expressly authorized. We do not think the Federal Reserve Act should be construed to freeze individual banks or those located within any state to the customs and practices preceding the statute. We read the Act as declaratory of the right of a national bank to enter into or remain in that type of business. That has been the administrative construction, and we think it is correct. 8 Nor can we construe the two Federal Acts as permitting only a passive acceptance of deposits thrust upon them. Modern competition for business finds advertising one of the most usual and useful of weapons. We cannot believe that the incidental powers granted to national banks should be construed so narrowly as to preclude the use of advertising in any branch of their authorized business. It would require some affirmative indication to justify an interpretation that would permit a national bank to engage in a business but gave no right to let the public know about it. 9 Appellee does not object to national banks taking savings deposits or even to their advertising that fact so long as they do not use the word 'savings.' It takes the position that this word is a misnomer in New York because depositors there, as a result of the State statute, have come to think of savings accounts as something entirely different from those to which the Federal Act is referring. Regardless of whether New Yorkers are really misled by the description, the fact is that Congress has given a particular label to this type of account. Whatever peculiar meaning the word may have in New York, it is a word which aptly describes, in a national sense, the type of business carried on by these national banks. They do accept and pay interest on time deposits of people's savings, and they must be deemed to have the right to advertise that fact by using the commonly understood description which Congress has specifically selected. We find no indication that Congress intended to make this phase of national banking subject to local restrictions, as it has done by express language in several other instances.7 10 There appears to be a clear conflict between the law of New York and the law of the Federal Government. We cannot resolve conflicts of authority by our judgment as to the wisdom or need of either conflicting policy. The compact between the states creating the Federal Government resolves them as a matter of supremacy.8 However wise or needful New York's policy, a matter as to which we express no judgment, it must give way to the contrary federal policy. 11 The judgment of the New York Court of Appeals is reversed and the case is remanded for further proceedings not inconsistent with this opinion. 12 Reversed and remanded. 13 Mr. Justice REED, dissenting. 14 I dissent. It should be noted that the New York statute, note 1 of the Court's opinion, limits the use of the words 'saving' or 'savings' in relation to their banking business to certain types of New York financial institutions. These are those that are mutual in character as distinguished from stockholder-owned. Such mutual institutions can and do pay larger returns on deposits in New York than the commercial stock-type banks, state or national, both of which are barred by the New York statute from using the word 'savings' 'in relation to banking or financial business.' The mutual banks have been successful in attracting a large proportion of savings deposits for over a century. They have a remarkable record for soundness in finance and profitable operation for the benefit of the depositors. The purpose of the New York law is to reserve the use of the word 'savings' to identify the mutual type of bank operation for the public, just as the federal banking laws reserve the name 'national' for a certain type of bank organized under federal law. 15 The Court's opinion permits the national banks to trade upon the good name of the savings banks to secure deposits of that type. Now they may advertise 'A Savings Bank' under their corporate name; their deposit slips may say 'Savings Account.' As no federal statute expressly authorizes the national banks to use the words 'saving' or 'savings' in their advertisements, I think they must conform to the New York law for the protection of the public from misunderstanding. I would not imply a federal privilege to use 'savings' in advertising from the fact that national banks may accept savings deposits. The cases cited by the Court in note 7 sustain that view. I know of no precedents that approve such a limitation on state power as the Court now announces. 1 McKinney's N.Y. Laws, Banking Law, Consol.Laws, c. 2, § 258, subd. 1, reads: 'No bank trust company, national bank, individual, partnership, unincorporated association or corporation other than a savings bank or a savings and loan association shall make use of the word 'saving' or 'savings' or their equivalent in its banking or financial business, or use any advertisement containing the word 'saving' or 'savings', or their equivalent in relation to its banking or financial business, nor shall any individual or corporation other than a savings bank in any way solicit or receive deposits as a savings bank; but nothing herein shall be construed to prohibit the use of the word 'savings' in the name of the Savings and Loan Bank of the State of New York or in the name of a trust company all of the stock of which is owned by not less than twenty savings banks. Any bank, trust company, national bank, individual, partnership, unincorporated association or corporation violating this provision shall forfeit to the people of the state for every offense the sum of one hundred dollars for every day such offense shall be continued.' 2 38 Stat. 273, 44 Stat. 1232, as amended, 12 U.S.C. (1952 ed.) § 371, 12 U.S.C.A. § 371. 3 38 Stat. 262, 12 U.S.C. (1952 ed.) § 248(i), 12 U.S.C.A. § 248(i). See also 49 Stat. 714, 12 U.S.C. (1952 ed.) § 461, 12 U.S.C.A. § 461. 4 12 CFR §§ 204.1, 217.1. 5 R.S. § 5136, 12 U.S.C. (1952 ed.) § 24 (seventh), 12 U.S.C.A. § 24 (seventh). 6 200 Misc. 557, 105 N.Y.S.2d 81, reversed, 281 App.Div. 757, 118 N.Y.S.2d 210, affirmed, 305 N.Y. 453, 113 N.E.2d 796, probable jurisdiction noted, 346 U.S. 908, 74 S.Ct. 240. Appellee included in its complaint a charge that appellant solicited business as a savings bank. However, the New York Court of Appeals held that there was no evidence of such practice. Therefore, the sole question before this Court relates to appellant's other use of the prohibited words in its advertising or business. 7 E.g., R.S. § 5155, 12 U.S.C. (1952 ed.) § 36(c), 12 U.S.C.A. § 36(c) (establishment of branch banks); R.S. § 5136, 12 U.S.C. (1952 ed.) § 24 (eighth), 12 U.S.C.A. § 24 (eighth) (contributions to charitable instrumentalities); R.S. § 5153, 12 U.S.C. (1952 ed.) § 90, 12 U.S.C.A. § 90 (security for the deposit of state funds); R.S. § 5197, 12 U.S.C. (1952 ed.) § 85, 12 U.S.C.A. § 85, and part of the section involved in this case, 38 Stat. 273, 44 Stat. 1232, as amended, 12 U.S.C. (1952 ed.) § 371, 12 U.S.C.A. § 371 (interest rates). Even in the absence of such express language, national banks may be subject to some state laws in the normal course of business if there is no conflict with federal law. Cf. Anderson National Bank v. Luckett, 321 U.S. 233, 64 S.Ct. 599, 88 L.Ed. 692; McClellan v. Chipman, 164 U.S. 347, 17 S.Ct. 85, 41 L.Ed. 461. 8 Easton v. State of Iowa, 188 U.S. 220, 229—230, 23 S.Ct. 288, 290, 47 L.Ed. 452; Davis v. Elmira Savings Bank, 161 U.S. 275, 283, 16 S.Ct. 502, 503, 40 L.Ed. 700.

910

347 U.S. 439 74 S.Ct. 623 98 L.Ed. 826 LINEHAN et al.v.WATERFRONT COMMISSION OF NEW YORK HARBOR et al. STATEN ISLAND LOADERS, Inc. et al. v. WATERFRONT COMMISSION OF NEW YORK HARBOR et al. Nos. 557 & 558. Supreme Court of the United States April 12, 1954 Rehearing Denied June 1, 1954. See 347 U.S. 994, 74 S.Ct. 849. PER CURIAM. 1 The motions to affirm are granted and the judgments, 116 F.Supp. 683, 117 F.Supp. 308 are affirmed. 2 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting. 3 The case illustrates what I fear is a growing practice of the Court of diluting the Act of Congress which gives us jurisdiction of appeals. 28 U.S.C. § 1253 et seq., 28 U.S.C.A. § 1253 et seq. The Congress carved out a group of cases, of which this is one, that comes here as of right and is not dependent, as are petitions for certiorari, on a vote of four Justices out of nine for an adjudication by the Court on the merits of the controversy. In recent years the Court has more and more dismissed or affirmed appeals, with no opportunity of counsel to make oral argument and without any opinion by the Court. 4 These appeals should not be added to that growing list. 5 New York and New Jersey made a Compact, approved by Congress, for the regulation of employment on the waterfront of New York.1 The agency through which the plan is effected is the Waterfront Commission, composed of one representative of New York and one of New Jersey. It has charge of the employment of all longshoremen. A longshoremen's register is established; and no one can be employed unless he is on the register. The Commission 'may in its discretion' deny an applicant the right to register. 6 —if he has been convicted of treason, murder, manslaughter, illegal possession of firearms, possessing burglar's instruments, receiving stolen property, unlawful entry of a building, aiding an escape from prison, unlawfully possessing or distributing habit-forming drugs, or 7 —if he is a Communist or teaches the Communist creed, or 8 —if in the judgment of the Commission, his presence on the waterfront would constitute 'a danger to the public peace or safety.' 9 Two main questions are at once suggested. 10 First, are the standards by which men are deprived of the right to work constitutional? This is a new question on which the Court has never ruled. May a state prescribe standards for employment that have no relevancy to the competency of the men to perform the work? Under this Compact a man who, in a reckless moment runs over a person in his car and kills him and is convicted of manslaughter, apparently stands disqualified for employment. So does a Communist, whether he be of the cloak and dagger variety or a paler type. Are those criteria constitutional? An individual who is deprived of employment for such a reason could raise the question. But if the standard itself has no relevancy to the competency of men to do the work, why may not the Compact be tested at the very threshold? 11 This is a substantial question which our cases do not answer. We write here on a slate that is fairly clean, except for remote analogies. 12 Second, are these provisions of the Compact which disqualify men from employment unconstitutional as a bill of attainder? A few years ago Congress struck certain federal employees from the payroll because Congress thought they were 'subversives.' We held that that disqualification for employment without a judicial trial was a bill of attainder and therefore unconstitutional. United States v. Lovett, 328 U.S. 303, 66 S.Ct. 1073, 90 L.Ed. 1252. Here the State legislatures, with the approval of Congress, have not done precisely that. But they have come close to it by defining a proscribed class and barring them from employment—again without a judicial trial. Cf. Garner v. Board of Public Works of City of Los Angeles, 341 U.S. 716, 71 S.Ct. 909, 95 L.Ed. 1317. 13 Perhaps a way could be found to sustain all the challenged provisions of the Compact. Perhaps they could be so construed as to save any and all individual rights. But the motion to dismiss or affirm (26 pages long) and the reply to it (51 pages long) in No. 557 only stir these profound questions and do not put them at rest. 14 The right to work—which goes to the very heart of our way of life—is at stake in these appeals. If we conclude that the Compact is constitutional, we should give our reasons so that all interests will be protected. Congress expected as much in all but frivolous cases coming here by appeal. 1 See McKinney's N.Y.Unconsolidated Laws, § 6700—aa et seq.; N.J.Stat.Ann. § 32:23—1 et seq.; Act Aug. 12, 1953, 67 Stat. 541, U.S.Code Cong. and Adm.News 1953, p. 605.

23

347 U.S. 409 74 S.Ct. 608 98 L.Ed. 806 MARYLAND CAS. CO. et al.v.CUSHING et al. No. 11. Reargued Nov. 10, 12, 1953. Decided April 12, 1954. Mr. Eberhard P. Deutsch, New Orleans, La., for petitioners. Mr. James J. Morrison, New Orleans, La., for respondents. Mr. Justice FRANKFURTER announced the judgment of the Court and an opinion in which Mr. Justice REED, Mr. Justice JACKSON and Mr. Justice BURTON join. 1 On the evening of May 19, 1950, the towboat Jane Smith in attempting to pass under a bridge over the Atchafalaya River in Louisiana collided with a concrete pier and capsized. The owner and charterer of the Jane Smith filed consolidated petitioners in admiralty in the United States District Court in Louisiana to limit their liability under the provisions of 46 U.S.C. §§ 183 and 186, 46 U.S.C.A. §§ 183, 186.1 The owner and charterer having complied with the procedural requirements of the Limitation Act, the District Court issued an injunction prohibiting suit against them elsewhere than in the limitation proceeding. 2 Subsequently, in the same District Court, the plaintiffs below, as representatives of five seamen who had been drowned, brought this consolidated action against the owner of the bridge and the liability underwriters of the owner and charterer of the ship.2 Jurisdiction was based on diversity of citizenship and the Jones Act, 46 U.S.C. § 688, 46 U.S.C.A. § 688. For their right to proceed against the insurance companies, the plaintiffs relied on § 655 of the Louisiana Insurance Code, LSA—R.S. 22:655, which authorizes direct suit 'against the insurer within the terms and limits of the policy'. 3 The two policies sued upon are (1) a workmen's compensation and employer's liability policy, in the amount of $10,000, issued by the Maryland Casualty Co. in which the charterer alone is named as the insured and which contains a special endorsement making its terms applicable to maritime employment; and (2) a 'protection and indemnity' policy in the amount of $170,000 issued by the Home Insurance Company of New York, in which both the owner and the charterer are named. Both policies by their terms preclude payment to anyone until the insured shall have been held liable to pay damages.3 4 The District Court granted a motion for summary judgment dismissing the consolidated suit against the insurers on the grounds that the Louisiana statute was, by its own terms, inapplicable to policies of marine insurance, and that in any case application of the statute here would 'not only work material prejudice to the characteristic features of the general maritime law but would also contravene the essential purpose expressed by an Act of Congress in a field already covered by that Act. Title 46, § 183, U.S.C.A.' Cushing v. Texas & P. Ry. Co., 99 F.Supp. 681, 684. 5 The Court of Appeals, relying solely on diversity jurisdiction, reversed, holding that as a matter of local law the District Court had read the Louisiana statute too restrictively, a question not open here, and that the statute was nothing more than a permissible regulation of insurance authorized by the McCarran Act, 15 U.S.C. § 1012, 15 U.S.C.A. § 1012, and not in 'conflict with any feature of substantive admiralty law, nor with any remedy peculiar to admiralty jurisdiction.' 198 F.2d 536, 539. Deeming this ruling important to the proper enforcement of the Limitation Act, we granted certiorari. 345 U.S. 902, 73 S.Ct. 642, 97 L.Ed. 1339. 6 The only question presented in the petition for certiorari is whether the application of the Louisiana statute in this case would violate 'the Jones Act, the Limited Liability Act and the constitutional grant to the federal government of exclusive jurisdiction in maritime matters.' We agree with the Court of Appeals that since diversity supports federal jurisdiction, the Jones Act need not be drawn upon for jurisdiction. Nor need we be detained by petitioners' contention that as applied to claims against petitioners as underwriters of the charterer who employed the decedents, the State statute here conflicts with the Jones Act in that it would provide an alternative remedy where Congress has prescribed the means of recovery. Since that Act itself makes its remedy available to a seaman 'at his election,' we perceive no conflict between the Jones Act and the Louisiana direct action statute. 7 Respondents, on the other hand, seek to derive support for reliance on the Louisiana statute from the McCarran Act which provides 'No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating th business of insurance * * * unless such Act specifically relates to the business of insurance * * *.' 15 U.S.C. § 1012, 15 U.S.C.A. § 1012. Suffice it to say that even the most cursory reading of the legislative history of this enactment makes it clear that its exclusive purpose was to counteract any adverse effect that this Court's decision in United States v. South-Eastern Underwriters Association, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440, might be found to have on State regulation of insurance. The House Report on the Bill as enacted is decisive: 8 'It is not the intention of Congress in the enactment of this legislation to clothe the States with any power to regulate or tax the business of insurance beyond that which they had been held to possess prior to the decision of the United States Supreme Court in the Southeastern Underwriters Association case.' H.R.Rep. No. 143, 79th Cong., 1st Sess. 3. 9 The question whether application of the direct action statute conflicts with federal maritime law is not touched by the South-Eastern Underwriters case. In the face of this unequivocal expression of congressional meaning, the statute cannot be read as doing something that Congress has told us it was not intended to do. The McCarran Act is not relevant here. 10 This brings us to the governing issue: does the Louisiana statute enter an area of maritime jurisdiction withdrawn from the States? Since Congress has provided a comprehensive legislative system for adjudicating maritime claims, we pass directly to considering whether the operation of the Louisiana statute conflicts with that system, putting to one side the question whether it encroaches upon the general body of nonstatutory maritime law. Cf. Red. Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 44 S.Ct. 274, 68 L.Ed. 582; Just v. Chambers, 312 U.S. 383, 668, 61 S.Ct. 687, 85 L.Ed. 903. 11 Legislation limiting shipowners' liability was first eancted in 1851 to provide assistance to American shipowners and thereby place them in a favorable position in the competition for world trade. 9 Stat. 635. It provides that in event of a collision or other maritime mishap, occurring 'without the privity or knowledge' of the owner (including therein a charterer), liability will be limited to the value of the ship and freight pending.4 The Act also permits the shipowner by instituting limitation proceedings to have all claims against him brought into concourse in an admiralty tribunal. 12 The legislation was designed to induce the heavy financial commitments the shipping industry requires by mitigating the threat of a multitude of suits and the hazards of vast, unlimited liability as a result of a maritime disaster. This Court has been faithful to this ultimate purpose and has read the statute's words 'in a broad and popular sense in order not to defeat the manifest intent.' Flink v. Paladini, 279 U.S. 59, 63, 49 S.Ct. 255, 73 L.Ed. 613. Particularly in view of the fact that Congress subjected the whole limitation scheme to scrutiny in 1935 and 1936 as a result of its application to personal injury and death claims resulting from the sinking of the Morro Castle, and did not alter those provisions of the legislation involved here, we must read the statute in the light of its expressed purposes. It is not for us to sit in judgment on the policy of Congress in having all claims disposed of in one proceeding or in apportioning maritime losses. The direct action statute clashes with the federal system for marshalling all claims arising from certain maritime causes of action. See the detailed provisions in Admiralty Rules 51—54, 334 U.S. 864, 28 U.S.C.A. The heart of this system is a concursus of all claims to ensure the prompt and economical disposition of controversies in which there are often a multitude of claimants. The benefits a concursus bestows on the shipping industry were thus described in the hearings on the 1936 amendments to the Limitation Act: 13 'Under the limitation statutes, as we have had them since 1851, they had two different purposes to serve; one was to limit the liability of the owner and the other was to draw into one court, in the case of a large accident, all of the claims, in order that they might be heard by one judge on one state of facts, in one trial, and intelligently disposed of. Suppose a big sea comes aboard a passenger liner and 15 or 20 people on that deck are washed up against the stanchions or something else, and the claim is that the ship ought to have slowed down, ought to have known by radio. Those passengers may live anywhere from Maine to Texas, and if you have 20 separate laws in 20 different jurisdictions, you just cannot handle an accident of that kind in any possibly intelligent way. One court will say the line was not negligent; another court will say it was negligent; a third court will say you are entitled to $1,500; the next one may say you are entitled to $45,000; and nobody knows where he is. 14 'So one of the most useful purposes of the limitation statute was that in a case like that you could file a petition bringing into one court all of the claimants and have one trial. Otherwise you would have to keep the crew off of the ship traveling around the country for 2 or 3 years.' Statement by Mr. Charles S. Haight, representing the French Line, Hearings before House Committee on Merchant Marine and Fisheries on H.R. 9969, Part 4, 74th Cong., 2d Sess. 69—70. 15 And commenting on the limitation of liability sections of the Admiralty Rules of this Court, Mr. Justice Bradley thus described their purpose: 16 'In promulgating the rules referred to, this court expressed its deliberate judgment as to the proper mode of proceeding on the part of shipowners for the purpose of having their rights under the act declared and settled by the definitive decree of a competent court, which should be binding on all parties interested, and protect the ship-owners from being harassed by litigation in other tribunals. * * * The questions to be settled by the statutory proceedings being First, whether the ship or its owners are liable * * * and, secondly, if liable, whether the owners are entitled to a limitation of liability—must necessarily be decided by the district court having jurisdiction of the case; and to render its decision conclusive, it must have entire control of the subject to the exclusion of other courts and jurisdictions. If another court may investigate the same questions at the same time, it may come to a conclusion contrary to that of the district court; and if it does (as happened in this case,) the proceedings in the district court will be thwarted and rendered ineffective to secure the ship-owners the benefit of the statute.' Providence & New York S.S. Co. v. Hill Mfg. Co., 109 U.S. 578, 594—595, 3 S.Ct. 379, 389—390, 617, 27 L.Ed. 1038. 17 Direct actions against the liability underwriter of the shipowner or charterer would detract from the benefit of a concursus and undermine the operation of the congressional scheme for the 'complete and just disposition of a manycorned controversy'. Hartford Accident & Indemnity Co. of Hartford v. Southern Pacific Co., 273 U.S. 207, 216, 47 S.Ct. 357, 359, 71 L.Ed. 612. The ship's company would be subject to call as witnesses in more than one proceeding, perhaps in diverse forums. Conflicting judgments might result. Ultimate recoveries might vary from the proportions contemplated by the statute. Moreover it is important to bear in mind that the concursus is not solely for the benefit of the shipowner. The elaborate notice provisions of the Admiralty Rules are designed to protect injured claimants. They ensure that all claimants, not just a favored few, will come in on an equal footing to obtain a pro rata share of their damages. To permit direct actions to drain away part or all of the insurance proceeds prejudices the rights of those victims who rely, and have every reason to rely, on the limitation proceeding to present their claims.5 18 Furthermore, insurers, unable to rely on the limitation of liability of their insured and denied the benefits of the concursus, would in all likelihood reflect the increased costs in their premiums, thus passing on to the very class sought to be benefited by the federal legislation the short-circuiting effects of the State statute.6 19 In addition to encroachment upon the federal statutory system for bringing all claims into concourse, the direct action statute is in conflict with the congressional policy of limited liability. The complaints in those two of the five consolidated suits which are by agreement part of the record here total $600,000 in alleged damages. Thus we are certainly on notice that the total damages of the respondents may exceed the $180,000 sum which the policies would cover. If the present actions were to result in judgments equaling the face amount of the policies, the insurers would be exonerated of any further obligation to indemnify the owner and charterer under the policies. The shipowner and charterer would then have to face whatever claims may be presented stripped of their insurance protection. How this may come about is easily seen if we assume that the salvaged ship will finally be valued at $25,000—the amount for which we are advised a stipulation has been filed in the limitation proceeding. If the five claimants were to succeed in obtaining judgments of $180,000 without exhausting all claims, there would be no bar to an additional $25,000 recovery from the shipowner and the charterer in the limitation proceeding by other claimants, or perhaps even by some of the respondents here. Yet in the absence of the direct action statute, the liability policies would be more than sufficient to cover any judgment that might be rendered in the limitation action. Under these circumstances, the extent to which the insured lose the benefits which Congress intended them to have is measured by the protective value of their insurance.7 Without having bought any policies they could only have been held for $25,000. If they buy the policies and the Louisiana statute is applied to permit these suits, their liability is still $25,000. 20 Thus, to permit direct actions under the State statute would require that shipowners become self-insurers for liability risks in order to be sure of getting the full protection of the limitation legislation. In view of the fact that 'substantially all maritime risks are insured,' Keen v. Overseas Tankship Corp., 2 Cir., 194 F.2d 515, 518 (L. Hand, J.), this sort of qualification would be completely inconsistent with the Limitation Act. 21 In 1886 the Court was called upon to decide whether the proceeds from a hull insurance policy are part of an owner's 'interest' in a ship and as such must be turned into the limitation proceeding. In The City of Norwich, 118 U.S. 468, 6 S.Ct. 1150, 30 L.Ed. 134, the Court held that insurance proceeds need not be turned in. In part, the decision was based on a narrow interpretation of 'interest.' But Mr. Justice Bradley, who had a commanding role in applying the Limitation Act, reviewed the history and policy of limited liability, and the language of that opinion is an illuminating guide here: 22 'Now, to construe the law in such a manner as to prevent the merchant from contracting with an insurance company for indemnity against the loss of his investment, is contrary to the spirit of commercial jurisprudence. Why should he not be allowed to purchase such an indemnity? Is it against public policy? That cannot be, for public policy would equally condemn all insurance by which a man provides indemnity for himself against the risks of fire, losses at sea, and other casualties. To hold that this cannot be done tends to discourage those who might otherwise be willing to invest their money in the shipping business.' 118 U.S. at pages 504 505, 6 S.Ct. at page 1163. 23 And the Court, in The City of Norwich, foreshadowed the consequences of permitting direct actions against liability insurers of shipowners: 'No form of agreement could be framed by which (shipowners) could protect themselves. This is a result entirely foreign to the spirit of our legislation.' 118 U.S., at page 505, 6 S.Ct. at page 1163. 24 Of course, wholly apart from the respect to be accorded State legislation, this Court should be slow to find that even where Congress has exercised its legislative power it has not left room for State action. Kelly v. State of Washington ex rel. Foss Co., 302 U.S. 1, 58 S.Ct. 87, 82 L.Ed. 3. But where, as in this case, the evident design of Congress can only be carried out by barring State action, it must be barred. 25 It is true that the record before us does not establish with certainty that the present suits would in fact operate to leave the shipowner and charterer to face liability in the limitation action without indemnification. Judgments in the present actions against the insurers might satisfy all claims or leave enough insurance money to indemnify the shipowner and charterer for liability in the limitation action. The salvaged vessel may finally be valued as worthless, exonerating the shipowner and charterer from any liability in the limitation action. Or the right of the shipowner and charterer to limit their liability might be successfully challenged on the grounds that the mishap did not happen without their 'privity or knowledge'.8 26 These elements of uncertainty provide a temptation to let the present actions proceed. Further support for this view may reasonably be found in the fact that it is the insurers rather than the shipowner and charterer who are here seeking to rely on the Limitation Act as a defense. But the crucial fact which requires that the conflict between State and federal law be faced now is that the present actions are brought completely independently of the limitation proceeding. If the Court keeps hands off the direct actions, the draining away of the insurance proceeds cannot be challenged at any time by anyone. 27 This is not a case where some future action remains to be taken by one of the parties to a suit before the critical issue is presented to the Court as clearly as may be. See United Public Workers of America (C.I.O.) v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754. Nor is this a case where we can postpone our review until a State court gives meaning to a challenged State statute. Albertson v. Millard, 345 U.S. 242, 73 S.Ct. 600, 97 L.Ed. 983. In the suits before us, the Court is at the point of no return. Once the respondents have recovered from the insurers the face amount of the insurance policies in the present actions, and they or other claimants are going after the shipowner and charterer in the limitation action, it will be too late to rely on the Limitation Act to preserve the insurance proceeds. 28 Thus, it is clear that if the present direct actions are permitted, they involve substantial hazard to rights granted by an Act of Congress, leaving no way for such impairment to be challenged. Respect for the Act precludes allowance of litigation, based on a State statute, which carries the potentiality of irreparable infringement upon federal law. The point of inadmissible conflict between State and federal legislation is reached as soon as suit is brought against the liability underwriters to get at proceeds of the policies. And if the federal legislation bars such a suit, it would be anomalous to say that the underwriters may not here contest the direct actions. 29 Of course, liability underwriters are not entitled to 'limitation of liability' as that phrase is used as a term of art in admiralty. To state the issue in these terms is to misconceive it. The question is whether the Court is to disregard the effect of a direct action on the federal proceedings. The Louisiana statute, as applied to authorize suits against the insurers of shipowners and charterers who have instituted limitation proceedings, is a disturbing intrusion by a State on the harmony and uniformity of one aspect of maritime law. It is accentuated by the fact that the federal law involved is not a more or less ill-defined area of maritime common law, incursion upon which need not be here considered, but an Act of Congress, well-defined and consciously designed, with detailed rules for its execution established by this Court. 30 'If the courts having the execution of (the Limitation Act) administer it in a spirit of fairness, with the view of giving to ship-owners the full benefit of the immunities intended to be secured by it, the encouragement it will afford to commercial operations (as before stated) will be of the last importance; but if it is administered with a tight and grudging hand, construing every clause most unfavorably against the ship-owner, and allowing as little as possible to operate in his favor, the law will hardly be worth the trouble of its enactment. Its value and efficiency will also be greatly diminished, if not entirely destroyed, by allowing its administration to be hampered and interfered with by various and conflicting jurisdictions.' Providence & New York S.S. Co. v. Hill Mfg. Co., 109 U.S. 578, 588—589, 3 S.Ct. 379, 385—386, 617, 27 L.Ed. 1038. 31 Accordingly, Mr. Justice REED, Mr. Justice JACKSON, Mr. Justice BURTON and I would reverse the judgment of the Court of Appeals and reinstate that of the District Court dismissing the complaints. For the reasons stated in his opinion, Mr. Justice CLARK agrees that the direct action suits should not be permitted to impair the shipowner's and charterer's right to indemnification, but he would allow the District Court to adjudicate the liability of the petitioners to the respondents after the limitation proceeding has run its course. 32 In order to break the deadlock resulting from the differences of opinion within the Court and to enable a majority to dispose of this litigation, we vacate the judgment of the Court of Appeals and order the case to be remanded to the District Court to be continued until after the completion of the limitation proceeding. 33 It is so ordered. 34 Judgment of Court of Appeals vacated and case remanded to District Court. 35 Mr. Justice CLARK, concurring. 36 I see no necessity for invalidating Louisiana's law by dismissing these direct actions. In administering the Limited Liability Act the Court can easily avoid a clear conflict between it and the direct action statute. 37 The Limited Liability Act admittedly was not designed for the benefit of insurance companies; nor does it deal with their liability. The purpose of the Congress in passing the Act in 1851 was to encourage investment in American ships by placing a limitation upon the personal liability of the ship owner in the event of an accident where there is no 'privity or knowledge'. Thereafter this Court in The City of Norwich, 1886, 118 U.S. 468, 6 S.Ct. 1150, 30 L.Ed. 134, recognized the right of a ship owner to buy insurance coverage for damage to his hull in order to protect against the loss of his investment. The proceeds of such 'hull insurance' were held, for purposes of a limitation proceeding, not a part of 'the interest' of the owner in the vessel. The basis of the decision was that Congress intended the Act to protect the investment of ship owners, and if the latter were prevented from indemnifying themselves from loss of their investment in the ship it would be contrary to the purpose of Congress as well as to the spirit of commercial jurisprudence. Here, the damage claims which may be sustained in the limitation proceeding will be chargeable against the Jane Smith and the owner may lose the damaged hull or its value unless he can recoup through the insurance which is involved in these direct actions and which he purchased for his protection. If the insurance proceeds are exhausted in the direct actions, the owner's recoupment will be impossible. Though the holding in The City of Norwich does not control, I think that the reasoning of that case is pertinent; in other words, the owner of the ship has the same right to protect his investment in the ship by insurance against damage claims arising in its operation and which are chargeable to it1 as he has to protect his investment from damage to the ship itself. Unless the owner is afforded an opportunity to provide for such protection, the purpose of Congress to encourage investment in American ships will be just as much thwarted as it would have been had the owner's right to buy insurance protection in The City of Norwich not been recognized. 38 To say that this view benefits the shipowner 'at the expense of the families of the deceased seamen' is to ignore the realities of the case. Had the owner not purchased liability insurance the claimants could not, under any condition, recover more than the value of the damaged hull if there is no 'privity or knowledge'. The owner's liability insurance is the sole source of the claimants' hope for a recovery beyond the value of the damaged hull. The owner's motive in purchasing insurance certainly was not to protect his seamen or the public, but to protect himself against damage claims. And in so doing he has aided the widows and orphans of the deceased seamen by creating the possibility of an additional recovery against the insurance companies. Nor can the owner 'profit' from the accident. The amount he may recover from the insurers under the liability policies could never exceed the amount he is obligated to pay to the claimants in the limitation proceedings. He 'profits' only in the sense that he is permitted to receive the protection for which he paid. 39 This is not to say that the insurance companies in a direct action are liable to damage claimants. That would be a question of Louisiana law. Our only interest is to make certain that such actions do not interfere with the Federal Limitation proceeding. To do this we need only require that the limitation proceeding be concluded first and the owner's liability settled under it. The petitioners could then discharge this liability, to the extent their policies covered it, by paying into the limitation proceeding the proper sum.2 The door would then be left open for prosecution of the direct actions against the insurance companies on the remaining coverage of the policies. Thus, whatever the insurers' liability may be under Louisiana law in the subsequent direct actions, the owner's purse cannot be touched. 40 Mr. Justice FRANKFURTER'S opinion states that the cases might be held for the limitation proceeding were it not that Congress intended that proceeding to be, in addition to a concursus of all claims against the owner and charterer, the exclusive forum for litigating all liability resulting from the accident. This is certainly not an unreasonable position. To be sure, some of the arguments for a concursus of claims against the owner or charterer would be applicable to claims against the insurer. But I do not think the arguments for such a holding are so persuasive, and the case for an opposite conclusion so feeble, that we should proceed at this juncture to invalidate a state law. It is also reasonable to read the Limited Liability Act as aimed at protecting only owners and charterers. The statute does not speak of suits against insurers. And when the Admiralty Rules were adopted we were concerned solely with the problems of the owner and charterer. For example, the limitation court is empowered to enjoin suits in other courts arising out of the accident only if the suits are against the owner, charterer or vessel; no mention was made of enjoining suits against any other party, e.g., insurance companies. See Rule 51. In sum, we must read between the lines in interpreting the Act regardless of how we hold. When the issue is so close, I would resolve it in favor of upholding rather than invalidating a state statute. We are not here confronted with a picture of law suits in twenty odd states under twenty different state laws; if this be a valid argument against upholding the statute in another situation, it has no application in this case. The towboat Jane Smith, owned by a Louisiana resident, plied only Louisiana waters of the Atchafalaya River; the accident which befell the vessel occurred in Louisiana; all the parties save one resided in the state and both the limitation proceeding and the damage suits are pending in the same court before the same judge. Moreover, the damage claimants, perhaps secondary beneficiaries of the Limited Liability Act, are also the beneficiaries of a holding that the Limited Liability Act does not foreclose the possibility of direct actions by them subsequent to the limitation proceeding. 41 For these reasons, I would direct the District Court to first conclude the limitation proceeding, after which the liability, if any, of the petitioners on their policies in the direct actions could be determined. 42 Mr. Justice BLACK, with whom THE CHIEF JUSTICE, Mr. Justice DOUGLAS and Mr. Justice MINTON concur, dissenting. 43 The towboat Jane Smith hit a railroad bridge and sank in Louisiana waters of the Atchafalaya River. Five crew members were drowned. Petitioners, Maryland Casualty Company and Home Insurance Company, had previously sold insurance policies to the boat's owner and its charterer agreeing to repay them for any money they had to pay on account of injury or death caused by the boat. These policies were issued and delivered in Louisiana. A Louisiana statute authorizes injured persons or their heirs to sue insurance companies directly on such policies. Under this law the widows of the drowned crewmen brought these diversity actions in federal court against petitioners. A majority of the Court hold that permitting these suits to go forward to judgments against the insurance companies prior to completion of limitation of liability proceedings under an 1851 Act of Congress would bring this state statute into conflict with that Act. But the 1851 Act was passed to help shipowners by limiting the damages they must pay on account of wrongs inflicted by their agents. I see no possible reason for making insurance companies the beneficiaries of this shipowners' relief act. Neither can I understand why this Court should feel called on to relieve shipowners from even the light financial burden that the 1851 Act left them to bear. Nor do I think the Louisiana Act is subject to any of the constitutional objections the insurance companies urge against it. I agree with the Court of Appeals for the Fifth Circuit that the insurance companies' contentions 'over-inflate a relatively simple proposition with apparent, but unreal, technical problems.' 198 F.2d 536, 539. For that reason without more I would affirm this judgment. But because of the confused state in which this case goes back to the District Court I think it desirable that all questions be discussed. I shall first take up the constitutional objections. I. 44 (a) The insurance companies argue that the Louisiana law impairs the obligation of 'maritime contracts.' The implication is that maritime contracts have more constitutional protection than other kinds of contracts. But Art. I, § 10 of the United States Constitution, which forbids states to impair the obligations of contracts, draws no such distinction. And while in general this provision protects valid contracts from impairment by subsequent legislation of states, it does not forbid states to pass laws regulating contracts thereafter to be made. Munday v. Wisconsin Trust Co., 252 U.S. 499, 503, 40 S.Ct. 365, 366, 64 L.Ed. 684. Cf. Home Building & Loan Ass'n v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413. Hence the Louisiana law, passed before these insurance policies were issued, does not violate the impairment of contract clause and, unless invalid for some other reason, the state's 'direct action' statute became a part of the contract when it was made just as though written into each policy by the companies. New York Life Ins. Co. v. Cravens, 178 U.S. 389, 395 400, 20 S.Ct. 962, 965—967, 44 L.Ed. 1116. Cf. Farmers' and Merchants' Bank of Monroe, N.C. v. Federal Reserve Bank, 262 U.S. 649, 660, 43 S.Ct. 651, 655, 67 L.Ed. 1157. 45 (b) Article III, § 2 of the Constitution provides that 'The judicial Power shall extend * * * to all Cases of admiralty and maritime Jurisdiction * * *.' It is contended that this provision not only gives the Federal Government supreme power over maritime affairs but that it also denies any power in states to legislate in this field. This complete denial of state power is said to have been established by Southern Pacific Co. v. Jensen, 244 U.S. 205, 37 S.Ct. 524, 61 L.Ed. 1086; and Knickerbocker Ice Co. v. Stewart, 253 U.S. 149, 40 S.Ct. 438, 64 L.Ed. 834. The opinions in those cases did lend some support to a constitutional doctrine that the Admiralty Clause requires rigid national uniformity in maritime legislation. But this Court rejected that doctrine in Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 44 S.Ct. 274, 68 L.Ed. 582. Mr. Justice Brandeis speaking for the Court in that case made it absolutely clear that the Admiralty Clause does not deprive states of power to make different regulations in regard to maritime affairs unless a state attempts to modify or displace essential features of the substantive maritime law or to modify the remedial law of admiralty courts. See also Standard Dredging Corp. v. Murphy, 319 U.S. 306, 63 S.Ct. 1067, 87 L.Ed. 1416. These cases but reaffirmed a power that states have always exercised. When the Constitution was adopted the Government found state regulatory systems governing local maritime affairs throughout the country. Gibbons v. Ogden, 9 Wheat. 1, 207, 6 L.Ed. 23. Congress has never attempted to supplant all local maritime regulations but has left many in effect as useful aids in carrying out national maritime policies. See Cooley v. Board of Wardens, 12 How. 299, 13 L.Ed. 996; The Hamilton, 207 U.S. 398, 28 S.Ct. 133, 52 L.Ed. 264; Kelly v. State of Washington, ex rel. Foss, 302 U.S. 1, 14—16, 58 S.Ct. 87, 94, 82 L.Ed. 3. For example, states can even create liens on vessels which may be enforced either in state courts or in courts of admiralty, despite the lack of uniformity brought about by 'intricate and conflicting State laws creating such liens * * *.' The Lottawanna, 21 Wall. 558, 581, 22 L.Ed. 654. In declining to invalidate these state lien laws this Court there pointed out that Congress could terminate the effectiveness of such state legislation at any time it desired to assume control. 46 The uniformity which the Admiralty Clause of the Constitution requires is limited to one indefinitely defined area—that involving 'the essential features of an exclusive federal jurisdiction.' Just v. Chambers, 312 U.S. 383, 391, 668, 61 S.Ct. 687, 693, 85 L.Ed. 903. Except in instances falling clearly within this area states are free to make laws relating to maritime affairs. Thus, in Just v. Chambers, Florida was permitted to provide a remedy for death due to maritime torts in Florida waters, even though such a remedy was not permissible under maritime law and not available in other states. Here Louisiana has provided a remedy for death due to maritime torts in Louisiana waters and it is therefore difficult for me to see how the present case can be distinguished from Just v. Chambers. Neither Congress nor this Court has provided or forbidden suits against insurance companies in cases like these, or attempted to establish uniform rules for the regulation of maritime insurance to the exclusion of the states. Indeed, it was not until 1870 that this Court finally decided that the regulation of marine insurance was within the jurisdiction of admiralty at all. Insurance Co. v. Dunham, 11 Wall. 1, 2 0 L.Ed. 90. Prior to that time, there was strong support for the belief that the states alone could regulate marine insurance. No act of Congress and nothing this Court has said since the Dunham decision in 1871 has taken away the concurrent jurisdiction of states over maritime insurance policies.1 No reason has been advanced why marine insurance, long the province of the states, so imperatively requires uniformity that we should now hold that Congress alone can regulate it.2 Consequently, to enforce the Louisiana law would not impair the uniformity of maritime law, but would once again 'illustrate the alacrity with which admiralty courts adopt statutes granting the right to relief where otherwise it could not be administered by a maritime court * * *.' Workman v. City of New York City, 179 U.S. 552, 563, 21 S.Ct. 212, 216, 45 L.Ed. 314. See also The Hamilton, 207 U.S. 398, 28 S.Ct. 133, 52 L.Ed. 264. 47 Louisiana's statute, as sought to be applied here, would further the equitable aims of admiralty by providing relief not otherwise available for maritime wrongs. For behind this 'direct action' statute lies a long history of state attempts to protect the public interest by ensuring that liability policies furnish adequate protection to persons injured. At one time insurance companies were commonly able to avoid payment of a single dollar on their policies whenever the insured was insolvent and therefore judgment-proof. The insurance, although bought and paid for, would remain untouched while valid claims went entirely unsatisfied. To prevent this injustice many states passed laws of one kind or another which required insurance companies to pay injured persons even though the insured had paid out no money. The Massachusetts Supreme Judicial Court took the lead in sustaining a law of this type, Chief Justice Rugg suggesting its need to prevent liability insurance from becoming a 'snare to the insured and a barren hope to the injured.' Lorando v. Gethro, 228 Mass. 181, 189, 117 N.E. 185, 189, 1 A.L.R. 1374. And, despite the fact that these state statutes wrote compulsory terms and obligations into all insurance contracts, this Court sustained such a statute applying to automobile insurance. Chief Justice Taft said that '* * * it would seem to be a reasonable provision by the state in the interest of the public, whose lives and limbs are exposed, to require that the owner in the contract indemnifying him against any recovery from him should stipulate with the insurance company that the indemnity by which he saves himself should certainly inure to the benefit of the person who thereafter is injured.' Merchants' Mutual Automobile Liability Ins. Co. v. Smart, 267 U.S. 126, 129—130, 45 S.Ct. 320, 321, 69 L.Ed. 538. The Louisiana statute is an application of this same principle. It expresses the public policy of Louisiana that liability insurance exists for the protection and benefit of the injured as well as the insured. Davies v. Consolidated Underwriters, 199 La. 459, 475—476, 6 So.2d 351, 357. Under Louisiana's law an individual purchases liability insurance not for himself alone but also for those whom he may injure. This bargain is advantageous to the purchaser because claims against him can be satisfied in suits against the insurer. 48 There can be no constitutional barrier to this Louisiana law passed to protect persons injured within its borders. Consequently, unless Congress has specifically forbidden states to protect seamen this way, Louisiana's statute is valid and should be enforced. II. 49 The majority hold that the Limited Liability Act of 1851, as amended, bestows on the shipowner a right to collect all or part of the insurance money for his profit despite Louisiana's statute requiring insurance companies to make their payments directly to the families of persons injured or killed. I think this construction gives shipowners far more than Congress intended. The Limited Liability Act provides that 'The liability of the owner of any vessel * * * 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.'3 (Emphasis supplied.) This Act relieves shipowners from a large part of the liability normally imposed on employers for torts of their employees. Under the Act, a shipowner need pay nothing to tort claimants if the ship is a total loss. If it is not wholly destroyed, the shipowner can simply turn a fund equal to the value of his interest in the damaged ship over to a court in a limitation proceeding. All claims against the shipowner must then be satisfied out of that fund, no matter how large the claims or how small the fund. The purpose of Congress in limiting the liability of shipowners was to encourage investment in American ships. But neither the Act nor its history indicates a purpose to encourage investment in insurance companies by limiting their liabilities. The insurance companies contend, however, that requiring them to pay their policy obligations to these claimants will somehow compel shipowners to pay out money in excess of the liability provided by the Act. For the reasons that follow I think this contention is without merit. 50 (a) The majority appear to hold that if the insurance companies pay out the full amount of their policies in these actions and some recovery is also had against the shipowner in limitation proceedings the shipowner will be unable to get reimbursement for that recovery from the insurers and to that extent will be 'deprived of his insurance.' It was conceded at the bar, however, that the ship here is without value—a total loss. If this is true, there would be no fund in the limitation proceedings and no possibility of any recovery at all against the shipowner. Under these circumstances, the shipowner does not stand to lose a dime if the insurance companies are held liable for the full amount of their policies, and there is no reason for deferring trial of these lawsuits. 51 (b) Even if the ship has some value and there should be recoveries from the limitation fund, Louisiana's statute would not deprive the shipowner of any right given by the Limited Liability Act. That Act was passed to help shipowners by permitting them to escape full liability for wrongs of their agents. But not a word in it suggests that Congress also intended to give shipowners additional special privileges with respect to liability insurance or to interfere with state regulation of any type of insurance. Nor was any such expanded construction of the Act made by this Court in The City of Norwich, 118 U.S. 468, 6 S.Ct. 1150, 30 L.Ed. 134. That case rested entirely on a holding that money from hull insurance was no part of an owner's 'interest' in his ship which the Limited Liability Act required him to turn over to damage claimants. The Court was concerned only with what made up the limitation fund. The claimants here make no contention that liability insurance is part of the limitation fund. They concede that the shipowner can be made to pay out only the value of his 'interest' in the damaged ship. But they insist that the shipowner should not be allowed to escape loss from even the limited liability which Congress put on him, if the result is to deprive injured persons of insurance bought to protect them. There is a vital difference between liability insurance and hull insurance with which The City of Norwich dealt. The latter provides recovery for loss of the shipowner's property. But liability insurance is not bought to guarantee reimbursement for loss of a shipowner's property. Its purpose is to pay for damage done to others by the shipowner or his agents. The shipowner has an insurable 'interest' in his ship; if it is lost or damaged any insurance money collected is his own. I cannot believe he has an insurable 'interest' in his seamen which could possibly entitle him to reduce the already limited financial obligations the Act imposes by taking for himself insurance money which otherwise would go to compensate seamen or their families for injuries he inflicts. The result of holding that the Act gives the shipowner this insurance benefit is, at least in some circumstances, to leave him with more money after a wreck if he injures people than if he does not. It is a far cry from the decision in The City of Norwich that a shipowner is entitled to keep the insurance collected for loss of his own ship to today's holding that states cannot assure seamen that they instead of the shipowner can get the full benefit of liability policies bought in order to pay their just claims for injuries caused by the ship. 52 (c) It is said, however, that other shipowners might have to pay higher premiums and also buy more insurance if recoveries are allowed here, and that this would discourage investment in ships. How the Limited Liability Act may be read to impose a ceiling on premiums, over which the states normally have full power, is difficult for me to understand. I have searched the Act's history in vain for any support for this interpretation. Yet 103 years after the Act's passage it is discovered that Congress intended to help shipowners by preventing states from making regulations that might raise the cost of marine insurance. But Congress decided to help shipowners by reducing their obligations due to wrecks, not by reducing the prices they had to pay for carrying on their business either before or after a wreck. Construing the Act to protect shipowners from having to pay higher prices for oil or coal would be no less far-fetched than construing it to keep down insurance premiums. This Court often protests its desire to indulge every presumption in favor of the validity of state legislation. It is hard to reconcile this commendable judicial philosophy with use of attenuated inferences about increased premiums as an excuse for impairing this Louisiana law. 53 (d) Despite the insistence of petitioner insurance companies that these suits must be wholly barred to save shipowners from injury, it seems plain that the only real beneficiaries of such a holding would be the companies themselves. They, rather than the shipowner, would enjoy the protection sought to be written into the Limited Liability Act. But even the most generous reading of the Act gives no ground for believing that it was intended to help insurance companies, directly or indirectly. And nothing in the records of the congressional debates or reports supports such a strained interpretation. Shipowners, not insurance companies, were the group Congress wanted to help. 54 (e) For the above reasons I think the Limited Liability Act does not require deferring the present suits so that the shipowner can be the direct beneficiary of these insurance policies at the expense of the families of the deceased seamen. But quite apart from these reasons, the same conclusion is required by specific instructions from Congress. The McCarran Act provides that 'No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance * * * unless such Act specifically relates to the business of insurance * * *.' 15 U.S.C. § 1012(b) 15 U.S.C.A. § 1012(b). It is unquestionably true that the McCarran Act was passed in response to this Court's decision that insurance was subject to the federal commerce power.4 But that is no reason for giving the law an unnaturally narrow construction squarely in the teeth of the plain, normal, everyday meaning of the language used. The Act rather shows the strong purpose of Congress to permit states to continue regulating insurance as they always had. Courts are pointedly told to leave states free to regulate 'the business of insurance' in the absence of some congressional act that 'specifically relates' to the same subject. The 'business of insurance' includes marine insurance and by no stretch of imagination can it be said that the 1851 Act 'specifically relates' to insurance. Thus the unambiguous language of the McCarran Act forbids courts to construe federal statutes such as the Limited Liability Act so as to impair a state law like Louisiana's. No legislative history can justify judicial emasculation of this language. I would not disregard its mandate. III. 55 Judicial expansion of the Limited Liability Act at this date seems especially inappropriate. Many of the conditions in the shipping industry which induced the 1851 Congress to pass the Act no longer prevail. And later Congresses, when they wished to aid shipping, provided subsidies paid out of the public treasury rather than subsidies paid by injured persons.5 If shipowners really need an additional subsidy, Congress can give it to them without making injured seamen bear the cost. It is significant that no shipowner has argued here against direct recoveries from the insurance companies. 56 Today's decision creates unnecessary delay and doubt as to recovery by the families of the Jane Smith's victims. The loss of their breadwinners is not to be shared by the shipping industry the seamen served. It was such results that led to efforts to spread the cost of industrial accidents and disasters through insurance and workmen's compensation laws. Acting consistently with this broad trend in the law, Louisiana has tried to make certain that all liability insurance will get to those for whose protection it was purchased. And application of Louisiana's statute under the circumstances here is also in harmony with the humane policy of the maritime law. Seamen have traditionally been the wards of admiralty, and admiralty has been increasingly solicitous to provide compensation for accidents occurring in their dangerous work. Thus both the general trend of the law and the specific bent of admiralty support the policy of the people of Louisiana which permits recovery here. No language in the Limited Liability Act forbids it; the language of the McCarran Act should compel it. 1 46 U.S.C. § 183, 46 U.S.C.A. § 183: '(a) The liability of the owner of any vessel, whether American or foreign * * * 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.' § 186: 'The charterer of any vessel, in case he shall man, victual, and navigate such vessel at his own expense, or by his own procurement, shall be deemed the owner of such vessel within the meaning of the provisions of this chapter relating to the limitation of the liability of the owners of vessels; * * *.' 2 Prior to instituting this action, all five plaintiffs had filed in the limitation proceeding pleadings challenging the shipowner's and charterer's right to limit their liability and asserting claims for damages. 3 The Protection and Indemnity policy issued by the Home Insurance Company contained the following clauses. 'It is agreed that if the Assured, as shipowners, shall have become liable to pay, and shall have in fact paid, any sum or sums in respect of any responsibility, claim, demand, damages and/or expenses, or shall become liable for and shall pay any other loss arising from or occasioned by any of the following matters or things. * * *' There follows the types of injury and loss for which the Company is liable. A subsequent proviso reads 'Liability hereunder shall in no event exceed that which would be imposed on the Assured by law in the absence of Contract.' Condition G of the policy issued by Maryland Casualty Provides: 'No action shall lie against the Company to recover upon any claim or for any loss under Paragraph I(b) foregoing unless brought after the amount of such claim or loss shall have been fixed and rendered certain either by final judgment against this Employer after trial of the issue or by agreement between the parties with the written consent of the Company, nor in any event unless brought within two years thereafter.' 4 This Court has interpreted this as meaning the value after the accident. Norwich & N.Y. Transp. Co. v. Wright, 13 Wall. 104, 20 L.Ed. 585. After the Morro Castle disaster, in which 135 lives were lost and the owners sought to limit their liability to $20,000, Congress changed the statute to provide that if the value of the vessel and freight pending is not enough to cover all claims, that portion of the total recovery applicable to personal injury or death claims shall be at least $60 per ton. 49 Stat. 960, 1479. 46 U.S.C. § 183(b)—(e), 46 U.S.C.A. § 183(b—e). This provision is applicable, however, only to 'seagoing vessels,' defined as excluding towboats which is the type of vessel involved here. 46 U.S.C. § 183(f), 46 U.S.C.A. § 183(f). 5 For example, in this case the representatives of a sixth victim may be relying on the limitation action to prove 'privity or knowledge' and thus seek a judgment substantially in excess of the ship's value. They will be penalized for relying on the federal legislation and the Rules if the direct actions drain away the insurance proceeds and the shipowner and charterer are unable to meet additional judgments. 6 That the cost and indeed the availability of insurance depends on limited liability was brought to the attention of Congress in the hearings on the 1936 amendments to the Limitation Act. See Hearings before House Committee on Merchant Marine and Fisheries on H.R. 9969, Part 4, 74th Cong., 2d Sess. 66—67, 129. 7 This is equally true whatever the vessel is valued at. Of course, we do not know now that the vessel will finally be valued at $25,000. The final valuation may be more or less. Certainly, on the record before us we cannot assume that the ship is valueless, and it may be that shipowner and charterer will need the full $180,000 face value of the policy to indemnify them for a judgment in the limitation action. The very reason that the present suit should not be allowed to proceed is that it is for the limitation proceeding to determine value. 8 The allegation of 'privity' and 'knowledge' is not an assumption on the basis of which this case could be disposed of. The shipowner's and charterer's right to limitation must be determined, as provided by the Act and Rules of this Court, in the limitation proceeding itself, not in the present suits to which they are not parties. 1 The business practice of purchasing marine protection and indemnity insurance, the type primarily involved here, to protect the shipowner against this contingency has long been recognized. See testimony of Ira A. Campbell for American Steamship Owners' Association, at Hearings before House Committee on Merchant Marine and Fisheries on H.R. 4550, 74th Cong., 1st Sess. 91, 125, 131. 2 Of course, if the ship is a total loss, and assuming no privity or knowledge, the owner's liability would be nothing under the federal Act. All the insurance would then be available to claimants in the direct actions, if liability is present under Louisiana law. 1 In the Merchant Marine Act of 1920 Congress recognized that 'marine insurance companies' were operating under state laws. Section 29 of the Act defines that term to include companies 'authorized to write marine insurance or reinsurance under the laws of the United States or of a State * * *.' 41 Stat. 988, 1000, 46 U.S.C. § 885(a)(2), 46 U.S.C.A. § 885(a)(2). 2 In 1935 when Congress was considering amendments to the Limited Liability Act, counsel for the American Steamship Owners' Association strongly contended for continued regulation of marine insurance by the states and against a federal regulation system that would have been uniform in all the states. Hearings before House Committee on Merchant Marine and Fisheries on H.R. 4550, 74th Cong., 1st Sess. 91, 124. 3 R.S. § 4283, as amended, 49 Stat. 960, 1479, 46 U.S.C. § 183(a), 46 U.S.C.A. § 183(a). 4 United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440. 5 See Springer, Amendments to the Federal Law Limiting the Liability of Shipowners, 11 St. John's L.Rev. 14; Note, 35 Col.L.Rev. 246.

78

347 U.S. 442 74 S.Ct. 650 98 L.Ed. 829 BARSKYv.BOARD OF REGENTS OF UNIVERSITY OF STATE OF NEW YORK. No. 69. Argued Jan. 4, 1954. Decided April 26, 1954. Mr. Abraham Fishbein, New York City, for appellant. Mr. Henry S. Manley, Albany, N.Y., for appellee. Mr. Justice BURTON delivered the opinion of the Court. 1 The principal question here presented is whether the New York State Education Law,1 on its face or as here construed and applied, violates the Constitution of the United States by authorizing the suspension from practice, for six months, of a physician because he has been convicted, in the United States District Court for the District of Columbia, of failing to produce, before a Committee of the United States House of Representatives, certain papers subpoenaed by that committee.2 For the reasons hereafter stated, we hold that it does not. 2 In 1945, the Committee of the United States House of Representatives, known as the Committee on Un-American Activities, was authorized to make investigations of 'the extent, character, and objects of un-American propaganda activities in the United States.'3 In 1946, in the course of that investigation, the committee subpoenaed Dr. Edward K. Barsky, appellant herein, who was then the national chairman and a member of the executive board of the Joint Anti-Fascist Refugee Committee, to produce "all books, ledgers, records and papers relating to the receipt and disbursement of money by or on account of the Joint Anti-Fascist Refugee Committee or any subsidiary or any subcommittee thereof, together with all correspondence and memoranda of communications by any means whatsoever with persons in foreign countries for the period from January 1, 1945, to March 29, 1946."4 Similar subpoenas were served on the executive secretary and the other members of the executive board of the Refugee Committee. Appellant appeared before the Congressional Committee but, pursuant to advice of counsel and the action of his executive board, he and the other officers of the Refugee Committee failed and refused to produce the subpoenaed papers. 3 In 1947, appellant, the executive secretary and several members of the executive board of the Refugee Committee were convicted by a jury, in the United States District Court for the District of Columbia, of violating R.S. § 102, as amended, 2 U.S.C. § 192, 2 U.S.C.A. § 192, by failing to produce the subpoenaed papers. Appellant was sentenced to serve six months in jail and pay $500. See United States v. Bryan, 72 F.Supp. 58; United States v. Barsky, 72 F.Supp. 165. In 1948, this judgment was affirmed by the Court of Appeals, Barsky v. United States, 83 U.S.App.D.C. 127, 167 F.2d 241, and certiorari was denied, 334 U.S. 843, 68 S.Ct. 1511, 92 L.Ed. 1767. In 1950, a rehearing was denied. Two Justices noted their dissents, and two did not participate. 339 U.S. 971, 70 S.Ct. 1001, 94 L.Ed. 1379. Appellant served his sentence, being actually confined five months.5 4 Appellant was a physician who practiced his profession in New York under a license issued in 1919. However, in 1948, following the affirmance of his above-mentioned conviction, charges were filed against him with the Department of Education of the State of New York by an inspector of that department. This was done under § 6515 of the Education Law, seeking disciplinary action pursuant to subdivision 2(b) of § 6514 of that law: 5 '2. The license or registration of a practitioner of medicine, osteopathy or physiotherapy may be revoked, suspended or annulled or such practitioner reprimanded or disciplined in accordance with the provisions and procedure of this article upon decision after due hearing in any of the following cases: '(b) That a physician, osteopath or physiotherapist has been convicted in a court of competent jurisdiction, either within or without this state, of a crime; or * * *.' 6 In 1951, after filing an amended answer, appellant was given an extended hearing before a subcommittee of the Department's Medical Committee on Grievances. The three doctors constituting the subcommittee made a written report of their findings, determination and recommendation, expressly taking into consideration the five months during which appellant had been separated from his practice while confined in jail, and also the testimony and letters submitted in support of his charcter. They recommended finding him guilty as charged and suspending him from practice for three months. The ten doctors constituting the full Grievance Committee unanimously found appellant guilty as charged. They also adopted the findings, determination and recommendation of their subcommittee, except that, by a vote of six to four, they fixed appellant's suspension at six months. Promptly thereafter, the Committee on Discipline of the Board of Regents of the University of the State of New York held a further hearing at which appellant appeared in person and by counsel. This committee consisted of two lawyers and one doctor. After reviewing the facts and issues, it filed a detailed report recommending that, while appellant was guilty as charged, his license be not suspended and that he merely be censured and reprimanded.6 The Board of Regents, however, returned to and sustained the determination of the Medical Committee on Grievances, and suspended appellant's license for six months.7 7 Appellant sought a review of this determination, under § 6515 of the Education Law, supra, and Article 78 of the New York Civil Practice Act, Gilbert-Bliss' N.Y.Civ.Prac., Vol. 6B, 1944, §§ 1283 1306. The proceeding was instituted in the Supreme Court for the County of Albany and transferred to the Appellate Division, Third Department. That court confirmed the order of the Board of Regents. In re Barsky, 279 App.Div. 1117, 112 N.Y.S.2d 778, and see Miller v. Board of Regents of University of State of N.Y., 279 App.Div. 447, 111 N.Y.S.2d 393, and Auslander v. Board of Regents of University of N.Y., 279 App.Div. 1101, 112 N.Y.S.2d 780, 781. The Court of Appeals, with one judge dissenting, affirmed. 305 N.Y. 89, 111 N.E.2d 222. That court allowed an appeal to this Court and amended its remittitur by adding the following: 8 'Upon the appeals herein there were presented and necessarily passed upon questions under the Federal Constitution, viz., whether sections 6514 and 6515 of the Education Law, * * * as construed and applied here, are violative of the due process clause of the Fourteenth Amendment. (The Court of Appeals) held that the rights of the petitioners under the Fourteenth Amendment of the Constitution of the United States had not been violated or denied.' 305 N.Y. 691, 112 N.E.2d 773. 9 We noted probable jurisdiction, the Chief Justice not participating at that time. 346 U.S. 807, 74 S.Ct. 23. 10 That appellant was convicted of a violation of R.S. § 102, as amended, 2 U.S.C. § 192, 2 U.S.C.A. § 192, in a court of competent jurisdiction is settled. In the New York courts, appellant argued that a violation of that section of the federal statutes was not a crime under the law of New York and that, accordingly, it was not a 'crime' within the meaning of § 6514, subd. 2(b) of the New York Education Law. He argued that his conviction, therefore, did not afford the New York Board of Regents the required basis for suspending his license. That issue was settled adversely to him by the Court of Appeals of New York and that court's interpretation of the state statute is conclusive here. 11 He argues that § 6514, subd. 2(b) is unconstitutionally vague. As interpreted by the New York courts, the provision is extremely broad in that it includes convictions for any crime in any court of competent jurisdiction within or without New York State. This may be stringent and harsh but it is not vague. The professional standard is clear. The discretion left to enforcing officers is not one of defining the offense. It is merely that of matching the measure of the discipline to the specific case. 12 A violation of R.S. § 102, as amended, 2 U.S.C. § 192, 2 U.S.C.A. § 192, is expressly declared by Congress to be a misdemeanor. It is punishable by a fine of not more than $1,000 nor less than $100 and imprisonment for not less than one month nor more than twelve months. See note 2, supra. For its violation appellant received a sentence of one-half the maximum and served five months in jail. There can be no doubt that appellant was convicted in a court of competent jurisdiction of a crime within the meaning of the New York statute.8 13 It is elemental that a state has broad power to establish and enforce standards of conduct within its borders relative to the health of everyone there. It is a vital part of a state's police power. The state's discretion in that field extends naturally to the regulation of all professions concerned with health. In Title VIII of its Education Law, the State of New York regulates many fields of professional practice, including medicine, osteopathy, physiotherapy, dentistry, veterinary medicine, pharmacy, nursing, podiatry and optometry. New York has had long experience with the supervision of standards of medical practice by representatives of that profession exercising wide discretion as to the discipline to be applied. It has established detailed procedures for investigations, hearings and reviews with ample opportunity for the accused practitioner to have his case thoroughly considered and reviewed. 14 Section 6514, as a whole,9 demonstrates the broad field of professional conduct supervised by the Medical Committee on Grievances of the Department of Education and the Board of Regents of the University of the State of New York. In the present instance, the violation of § 6514, subd. 2(b) is obvious. The real problem for the state agencies is that of the appropriate disciplinary action to be applied. 15 The practice of medicine in New York is lawfully prohibited by the State except upon the conditions it imposes. Such practice is a privilege granted by the State under its substantially plenary power to fix the terms of admission. The issue is not before us but it has not been questioned that the State could make it a condition of admission to practice that applicants shall not have been convicted of a crime in a court of competent jurisdiction either within or without the State of New York. It could at least require a disclosure of such convictions as a condition of admission and leave it to a competent board to determine, after opportunity for a fair hearing, whether the convictions, if any, were of such a date and nature as to justify denial of admission to practice in the light of all material circumstances before the board. 16 It is equally clear that a state's legitimate concern for maintaining high standards of professional conduct extends beyond initial licensing. Without continuing supervision, initial examinations afford little protection. Appellant contends, however, that the standard which New York has adopted exceeds reasonable supervision and deprives him of property rights in his license and his established practice, without due process of law in violation of the Fourteenth Amendment. 17 He argues that New York's suspension of his license because of his conviction in a foreign jurisdiction, for an offense not involving moral turpitude10 and not criminal under the law of New York, so far transcends that State's legitimate concern in professional standards as to violate the Fourteenth Amendment. We disagree and hold that New York's governmental discretion is not so restricted. 18 This statute is readily distinguishable from one which would require the automatic termination of a professional license because of some criminal conviction of its holder.11 Realizing the importance of high standards of character and law observance on the part of practicing physicians, the State has adopted a flexible procedure to protect the public against the practice of medicine by those convicted of many more kinds and degrees of crime than it can well list specifically. It accordingly has sought to attain its justifiable end by making the conviction of any crime a violation of its professional medical standards, and then leaving it to a qualified board of doctors to determine initially the measure of discipline to be applied to the offending practitioner. 19 Section 6515 of the New York Education Law thus meets the charge of unreasonableness. All charges are passed upon by a Committee on Grievances of the department. That committee consists of ten licensed physicians, appointed by the Board of Regents. The term of each member is five years. They serve without compensation. Three are 'members of conspicuous professional standing' appointed upon the board's own nomination. § 6515, subd. 2. The others are appointed from lists of nominees submitted respectively by the New York State Medical, homeopathic and Osteopathic Societies. Charges must be filed in writing and a subcommittee of three or more members hears and reports on them. At least ten days' notice of a hearing is required and opportunity is afforded the accused to appear personally, or by counsel, with the right to produce witnesses and evidence on his own programs in which the committee participated examine evidence produced against him and to have subpoenas issued by the committee. The subcommittee transmits its report, findings and recommendation, together with a transcript of evidence, to the Committee on Grievances. That committee may take further testimony. It determines the merit of the charges and, if the practitioner is found guilty by a unanimous verdict, the record, together with the findings and determination of the committee, is transmitted to the Board of Regents. That board, 'after due hearing,' may accept or modify the committee's recommendation, or find the practitioner not guilty and dismiss the charges. § 6515, subd. 7. 'The committee on grievances shall not be bound by the laws of evidence in the conduct of its proceedings, but the determination shall be founded upon sufficient legal evidence to sustain the same.' § 6515, subd. 5. If the accused is found guilty, he may institute proceedings for review under Article 78 of the Civil Practice Act, returnable before the Appellate Division of the Third Judicial Department. 20 The above provisions, on their face, are well within the degree of reasonableness required to constitute due process of law in a field so permeated with public responsibility as that of health. 21 The statutory procedure as above outlined has been meticulously followed in this case and no objection is made on that score. Appellant, nevertheless, complains that, as construed and applied by the Medical Committee on Grievances and its subcommittee, his hearing violated the due process of law required by the Fourteenth Amendment. He contends that evidence was introduced which was immaterial and prejudicial and that the committee based its determination upon that evidence. He contends, in effect, that the committee reached its determination without 'sufficient legal evidence to sustain the same', thus exceeding its statutory authority. He claims further that the committee acted capriciously and arbitrarily upon immaterial and prejudicial evidence, thus not only exceeding its statutory authority but depriving him of his property without due process of law. 22 The state courts have determined that the hearing did not violate the statute and, accordingly, we are concerned only with the constitutional question. The claim is that immaterial and prejudicial evidence of the alleged subversive activities of the Refugee Committee was introduced and relied upon. Emphasis is given to evidence that the Refugee Committee had been placed on the Attorney General's list of subversive or Communistic organizations. To emphasize the prejudicial character of this testimony, appellant refers to the fact that, at the time of the subcommittee hearing, litigation involving such list was pending in the courts and had resulted in a decision adverse to appellant, whereas that decision subsequently was set aside by this Court.12 The State's answer to these claims is that such testimony was invited by appellant's own testimony as to the activities of the Refugee Committee.13 The State shows also that while such evidence was not necessary to establish appellant's violation of the federal statute as to the subpoenaed papers, it was material and admissible to assist the Committee on Grievances and the other agencies in determining the appropriate disciplinary measures to be applied to appellant under the state law. Appellant recognized this materiality by endeavoring to use evidence as to the Refugee Committee's charitable activities to justify and excuse his failure to produce the subpoenaed papers. 23 We find nothing sufficient to sustain a conclusion that the Board of Regents or the recommending committees made an arbitrary or capricious decision or relied upon irrelevant evidence. The report made by the original subcommittee of three that heard the evidence indicates that it was not influenced by the character of the Refugee Committee. It said: 24 'We do not feel that we are now concerned, nor would we be able to determine, whether the books and records of that Committee would disclose whether the Committee was completely philanthropic in character, or whether it was engaged in subversive activities.' 25 The painstaking complete review of the evidence and the issues by the Committee on Discipline of the Board of Regents demonstrates a high degree of unbiased objectivity. Before the final action of the Board of Regents, the Committee on Discipline in its report to that board noted that— 26 'After the hearing below and the determination of the Medical Committee on Grievances, the Supreme Court of the United States reversed an order of the District Court dismissing a complaint by the Refugee Committee in an action by it for declaratory and injunctive relief, Joint Anti-Fascist Refugee Committee v. McGrath, Attorney General, 341 U.S. 123, 71 S.Ct. 624, some of the majority justices going on the ground that a determination of this kind could not constitutionally be made without a hearing and opportunity to offer proof and disproof. In view of this decision, no evidentiary weight can be given in the present proceeding to the listing by the Attorney General.' 27 That committee thus recognized the existence of a valid basis for disciplinary action but found 'no valid basis for discipline beyond the statutory minimum of censure and reprimand.' With this recommendation before the Board of Regents, we see no reason to conclude that the board disregarded it or acted arbitrarily, capriciously or through prejudice and deprived appellant of due process of law. The board made no specific findings. It accepted and sustained the unanimous determination of the Medical Committee on Grievances, which was that appellant was guilty. Then, in compliance with the recommendation of that committee, it fixed the measure of discipline at a six months' suspension of appellant's registration as a physician. 28 The Court has considered the other points raised by appellant but finds no substantial federal constitutional objection in them, even assuming that they are before us as having been considered by the Court of Appeals, although not mentioned in its opinion or the amendment to its remittitur. 29 The judgment of the Court of Appeals of the State of New York, accordingly, is affirmed. 30 Affirmed. 31 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS concurs, dissenting. 32 Dr. Barsky has been a practicing physician and surgeon since his graduation from the medical college of Columbia University in 1919, except for time spent doing postgraduate work in Europe. Beginning with his internship he has been almost continuously on the staff of Beth Israel Hospital in New York, the city of his birth. During the Spanish Civil War Dr. Barsky and others became actively concerned with the medical needs of Loyalist soldiers. The doctor went over to Spain to head an American hospital for the Loyalist wounded. Following his return to practice in New York, Dr. Barsky became chairman of the Joint Anti-Fascist Refugee Committee, an organization founded in 1942 to help with problems of Spanish refugees from the Franco government. In 1945 the House Committee on Un-American Activities began an investigation of the Refugee Committee to see if it was spreading political propaganda. Dr. Barsky and other members of the organization's executive board were summoned before the congressional Committee and asked to produce the records of contributions and disbursements of the Refugee Committee. Dr. Barsky and the others refused, explaining that many contributors had relatives in Spain whose lives might be endangered if the contributors' names were given out publicly. Instead, the organization was willing to give the required information to the President's War Relief Control Board. In making his refusal, Dr. Barsky had the advice of attorneys that his action was justified because the congressional Committee's subpoena transcended its constitutional powers. Concededly this advice was reasonable and in accord with the legal opinion of many lawyers and jurists throughout the country.1 Moreover, the Refugee Committee was advised that the only way to raise its constitutional claim and test the subpoena's validity was for its executives to risk jail by refusing to produce the requested papers. Dr. Barsky was sentenced to six months in jail as punishment for his disobedience of the order to produce, and the Court of Appeals affirmed his sentence, overruling his constitutional arguments. This Court denied certiorari without approving or disapproving the constitutional contentions. 334 U.S. 843, 68 S.Ct. 1511, 92 L.Ed. 1767. 33 When Dr. Barsky was released from jail and ready to resume his practice, an agent of the Board of Regents of the University of the State of New York2 served him with a complaint demanding that his license to practice medicine be revoked. This action was not based on any alleged failing of Dr. Barsky in his abilities or conduct as a physician or surgeon. The sole allegation was that he had been convicted of a crime—refusal to produce papers before Congress. New York law authorizes revocation or suspension of a physician's license if he is convicted of a crime. Hearings were held before a Grievance Committee of physicians appointed by the Regents, and there was much testimony to the effect that Dr. Barsky was both a skillful surgeon and a good citizen. No witness testified to any conduct of Dr. Barsky which in any way reflected on his personal or professional character. Nothing was proven against him except that he had refused to produce papers. In reviewing the findings of fact, pursuant to § 211 of the State's Education Law, the Regents' Discipline Committee reported that Dr. Barsky's refusal to produce the Refugee Committee's papers was shown to be due to a desire to preserve the constitutional rights of his organization, that his offense involved no moral turpitude whatever,3 and that he had already been punished. The right to test the constitutional power of a Committee is itself a constitutionally protected right in this country.4 But despite all these things the Regents suspended Dr. Barsky's medical license for six months, giving no reason for their action. 34 I have no doubt that New York has broad power to regulate the practice of medicine. But the right to practice is, as MR. JUSTICE DOUGLAS shows, a very precious part of the liberty of an individual physician or surgeon. It may mean more than any property. Such a right is protected from arbitrary infringement by our Constitution, which forbids any state to deprive a person of liberty or property without due process of law. Accordingly, we brought this case here to determine if New York's action against Dr. Barsky violates the requirements of the Federal constitution. 35 This record reveals, in my opinion, that New York has contravened the Constitution in at least one, and possibly two respects. First, it has used in place of probative evidence against Dr. Barsky an attainder published by the Attorney General of the United States in violation of the Constitution. Second, it has permitted Dr. Barsky to be tried by an agency vested with intermingled legislative-executive-judicial powers so broad and so devoid of legislative standards or guides that it is in effect not a tribunal operating within the ordinary safeguards of law but an agency with arbitrary power to decide, conceivably on the basis of suspicion, whim or caprice, whether or not physicians shall lose their licenses. 36 First. At the hearing before a subcommittee of the Medical Grievance Committee, appointed by the Regents, the lawyer for the Regents introduced evidence that the Refugee Committee headed by Dr. Barsky had been listed by the Attorney General of the United States as subversive. Pages and pages of the record are devoted to this listing, to arguments about its meaning and to other innuendoes of suspected communistic associations of Dr. Barsky without a single word of legal or credible proof. Excerpts from the record are printed in the Appendix to this opinion. The Grievance Committee made a formal finding of fact that the Refugee Committee had been listed as subversive. This Court, however, has held that the Attorney General's list was unlawful, Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 71 S.Ct. 624. My view was and is that the list was the equivalent of a bill of attainder which the Constitution expressly forbids. The Regents' own reviewing Committee on Discipline recognized the illegality of the list and advised the Regents that no weight should be given to it. This reviewing committee also recommended that the Regents not accept the Grievance Committee's recommendation of a six months' suspension but instead give no suspension at all. The Regents, however, accepted and sustained the determination of the Grievance Committee. Dr. Barsky sought review in the Court of Appeals, but New York's highest court said it was without power to review the use of the Attorney General's list. Our responsibility is, however, broader. We must protect those who come before us from unconstitutional deprivation of their rights, whether the state court is empowered to do so or not. The record shows that the Grievance Committee made a finding of fact that 'Ever since 1947, the (Refugee) Committee has been listed as subversive by the Attorney General of the United States.' It seems perfectly natural for the Grievance Committee to rely on this list, for the Regents are charged with the duty of making up their own list of 'subversive' organizations for the purpose of dismissing teachers, and New York law authorizes the Regents to make use of the Attorney General's list.5 Dr. Barsky had a constitutional right to be free of any imputations on account of this illegal list. That reason alone should in my judgment require reversal of this case. 37 Second. Even if the evidence considered by the Regents and the Grievance Committee had been proper, I would still have grave doubts that Dr. Barsky was tried by procedures meeting constitutional requirements. The Regents who tried and suspended him exercise executive, legislative and judicial powers.6 The Regents have broad supervisory and disciplinary controls over schools, school boards and teachers. They also have powers over libraries and library books, and they censor movies.7 Doctors, dentists, veterinarians, accountants, surveyors, and other occupational groups are also subject to discipline by the Regents and must obey their rules.8 For example the Department of Education, headed by the Regents, has its own investigators, detectives and lawyers to get evidence and develop cases against doctors.9 Persons appointed by the Department prefer charges and testify against an accused before a committee of doctors appointed by the Regents. This committee after hearing evidence presented by departmental prosecutors makes findings and recommendations which are reviewed by another Regents' committee with power to make its own findings and recommendations. Then the Regents themselves, apparently bound in no way by the recommendations of either of their committees, make the final decision as to doctors' professional fate. 38 A doctor is subject to discipline by the Regents whenever he is convicted of a 'crime' within or without the State. Whether his 'crime' is the most debasing or the most trivial, the Regents have complete discretion to impose any measure of discipline from mere reprimand to full revocation of the doctor's license.10 No legislative standards fetter the Regents in this respect. And no court in New York can review the exercise of their 'discretion,' if it is shown that the Regents had authority to impose any discipline at all.11 Should they see fit to let a doctor repeatedly guilty of selling narcotics to his patients continue to practice, they could do so and at the same time bar for life a doctor guilty of a single minor infraction having no bearing whatever on his moral or professional character. They need give no reasons. Indeed the Regents might discipline a doctor for wholly indefensible reasons, such as his race, religion or suspected political beliefs, without any effective checks on their decisions. 39 In this case one can only guess why the Regents overruled their Discipline Committee and suspended Dr. Barsky. Of course it may be possible that the Regents thought that every doctor who refuses to testify before a congressional committee should be suspended from practice.12 But so far as we know the suspension may rest on the Board's unproven suspicions that Dr. Barsky had associated with Communists. This latter ground, if the basis of the Regents' action, would indicate that in New York a doctor's right to practice rests on no more than the will of the Regents. This Court, however, said many years ago that 'the nature and the theory of our institutions of government * * * do not mean to leave room for the play and action of purely personal and arbitrary power. * * * For the very idea that one man may be compelled to hold his life, or the means of living, or any material right essential to the enjoyment of life, at the mere will of another, seems to be intolerable in any country where freedom prevails * * *.' Yick Wo v. Hopkins, 118 U.S. 356, 369 370,13 6 S.Ct. 1064, 1071, 30 L.Ed. 220. 40 At the hearing before the Subcommittee of the Medical Grievance Committee there was a great deal of testimony as to the nature and purposes of the Joint Anti-Fascist Refugee Committee. Mr. Tartikoff, assistant attorney general of New York, representing the Department of Education, repeatedly attempted to show that the Committee had engaged in 'subversive' or 'Un-American' activities. However, he presented no probative evidence tending to prove this allegation. Finally, Mr. Tartikoff sought to bring out that the Committee had been listed by the Attorney General of the United States as 'subversive.' Excerpts from the record of his questioning of Dr. Barsky on this point are quoted below. 41 'Mr. Tartikoff: resuming— 42 'Q. Doctor, is it not a fact that on or about November 24, 1947, the Attorney General of the United States, in pursuance of a directive contained in an executive order of the President of the United States listed and published a classification of organizations deemed to be subversive and Un-American, and that included amongst those organizations at that time by the Attorney General deemed to be subversive and Un-American was the Joint Anti-Fascist Refugee Committee?' 43 At this point Mr. Fishbein, Dr. Barsky's attorney, objected to the question. After a brief colloquy between counsel the record continues: 44 'Mr. Tartikoff: I think this committee is entitled to know whether this organization is listed by the Attorney General of the United States as being subversive and Un-American, particularly in light of Dr. Barsky's testimony that the activity of the organization since its inception in 1942 down to and including all through 1950 has been substantially the same during that period of time.' After further discussion: 45 'Mr. Tartikoff: You have introduced document after document to show this is one of the finest organizations in the world. I think I am entitled to counter that with evidence that the Attorney General of the United States reviewed the activities of this organization in whatever fashion he is supposed to review it and has come to an opposite conclusion.' 46 Shortly after, Dr. Shearer, the subcommittee chairman, overruled Mr. Fishbein's objection, and the hearing proceeded as follows: 47 'Mr. Tartikoff: resuming— 48 'Q. Was it so listed, Dr. Barsky? A. Mr. Tartikoff, the attorney— 49 'Q. Question: Was it so listed? That can take a 'yes' or 'no' answer. A. I just would like to bring up— 50 'Mr. Tartikoff: 51 'I ask the committee to direct him to answer that question 'yes' or 'no.' 52 'Chairman Shearer: 'Yes' or 'no,' Doctor Barsky. A. If I may for a moment,—off the record— 53 'Q. Doctor, will you please answer the question? A. The answer to the question is 'yes.' 54 'Q. And was it not again so listed by the Attorney General of the United States in a release made on May 27, 1948? A. The answer is I really don't know. You have the statement. 55 'Q. If I tell you that the statement so indicates, would you dispute it? A. I certainly would not, Mr. Tartikoff. 56 'Q. And isn't it a fact that it was again so listed on April 21, 1949, July 20, 1949, September 26, 1949, August 24, 1950, and September 5, 1950? A. I think you brought out the same list, Mr. Tartikoff. 57 'Q. Well, there may have been additional ones added, for your information. A. I really don't remember. 58 'Q. And doctor, didn't you as chairman of the Joint Anti-Fascist Refugee bring a proceeding against the Attorney General in the United States courts? A. Yes, sir. 59 'Q. To restrain him from listing your organization as subversive? A. Yes, sir. 60 'Q. And isn't it a fact that the Circuit Court ruled against you on that on August 11, 1949? A. Yes, sir.' 61 Later, after Dr. Barsky had asked the subcommittee not to 'lay too much stress on the fact that this list was made,' Mr. Tartikoff asked him these questions: 62 'Q. Wasn't there also an investigation in California by a Committee on Un-American Activities? A. The House Committee? 63 'Q. The Legislative Committee in California. A Legislative Committee of the State of California, and didn't they likewise list your organization as Communistic? A. What do you mean? 64 'Q. The California Committee on Un-American Activities, that's the Tenney Committee, did they list your organization as Communistic? A. I really don't know. If you have the record—' 65 Mr. Justice FRANKFURTER (dissenting). 66 While in substantial agreement with what is said in the Court's opinion, I am constrained to dissent because of what is left unsaid. 67 Appellant's suspension from the practice of medicine grew out of his conviction for refusing to turn over to the House Un-American Activities Committee documents of the Joint Anti-Fascist Refugee Committee, an organization of which appellant was Chairman. The Medical Subcommittee on Grievances of the New York Board of Regents, which held the original hearing in the disciplinary proceeding now before us, allowed counsel for the Regents to introduce evidence that this Joint Anti-Fascist Refugee Committee was in 1947 listed by the Attorney General of the United States as a subversive organization, and the Subcommittee accordingly made a specific finding to this effect in its report. This evidence was obviously irrelevant to the issue before the Committee—whether appellant had been convicted of a crime—and was also obviously extremely prejudicial to appellant. The Regents Committee on Discipline, reviewing the Grievance Committee, commented as follows on this matter: 68 'There is, it should be noted, evidence in the record, and reliance on that evidence in the findings of the Medical Committee on Grievances, that the Refugee Committee had been listed as Communist in the list furnished by the Attorney General of the United States. . . . In view of (the decision in Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 71 S.Ct. 624), no evidentiary weight can be given in the present proceeding to the listing by the Attorney General.' 69 The Committee on Discipline concluded that appellant should not be suspended for six months, as the Grievance Committee had recommended, but should only be reprimanded. In face of this recommendation, the Board of Regents, without stating any reasons, accepted the decision of the Grievance Committee and ordered appellant suspended for a period of six months from his right to practice medicine. 70 When this question came before the New York Court of Appeals, that Court disposed of the issue as follows: 71 'As to the assertions, by appellants * * * that the Regents, in deciding on punishment, ignored weighty considerations and acted on matters not proper for consideration, it is enough to say that we are wholly without jurisdiction to review such questions. * * *' 305 N.Y. 89, 99, 111 N.E.2d 222, 226. 72 Thus he highest court of the State of New York tells us, in effect, 'Yes, it may be that the Regents arbitrarily deprived a doctor of his license to practice medicine, but the courts of New York can do nothing about it.' Such a rule of law, by denying all relief from arbitrary action, implicitly sanctions it; and deprivation of interests that are part of a man's liberty and property, when based on such arbitrary grounds, contravenes the Due Process Clause of the Fourteenth Amendment. 73 Of course a State must have the widest leeway in dealing with an interest so basic to its well-being as the health of its people. This includes the setting of standards, no matter how high, for medical practitioners, and the laying down of procedures for enforcement, no matter how strict. The granting of licenses to practice medicine and the curtailment or revocation of such licenses may naturally be entrusted to the sound discretion of an administrative agency. And while ordinary considerations of fairness and good sense may make it desirable for a State to require that the revocation or temporary suspension of a medical license be justified by stated reasons, the Due Process Clause of the Fourteenth Amendment does not lay upon the States the duty of explaining presumably conscientious action by appropriate State authorities. Douglas v. Noble, 261 U.S. 165, 169—170, 43 S.Ct. 303, 305, 67 L.Ed. 590. Reliance on the good faith of a state agency entrusted with the enforcement of appropriate standards for the practice of medicine is not in itself an investiture of arbitrary power offensive to due process. Likewise there is nothing in the United States Constitution which requires a State to provide for judicial review of the action of such agencies. Finally, when a State does establish some sort of judicial review, it can certainly provide that there be no review of an agency's discretion, so long as that discretion was exercised within the gamut of choices, however extensive, relevant to the purpose of the power given the administrative agency. So far as concerns the power to grant or revoke a medical license, that means that the exercise of the authority must have some rational relation to the qualifications required of a practitioner in that profession. 74 It is one thing thus to recognize the freedom which the Constitution wisely leaves to the States in regulating the professions. It is quite another thing, however, to sanction a State's deprivation or partial destruction of a man's professional life on grounds having no possible relation to fitness, intellectual or moral, to pursue his profession. Implicit in the grant of discretion to a State's medical board is the qualification that it must not exercise its supervisory powers on arbitrary, whimsical or irrational considerations. A license cannot be revoked because a man is red-headed or because he was divorced, except for a calling, if such there be, for which red-headedness or an unbroken marriage may have some rational bearing. If a State licensing agency lays bare its arbitrary action, or if the State law explicitly allows it to act arbitrarily, that is precisely the kind of State action which the Due Process Clause forbids. See Perkins v. Elg, 307 U.S. 325, 349—350, 59 S.Ct. 884, 896, 83 L.Ed. 1320; also Rex v. Northumberland Compensation Appeal Tribunal, (1951) 1 K.B. 711. The limitation against arbitrary action restricts the power of a State 'no matter by what organ it acts.' State of Missouri v. Dockery, 191 U.S. 165, 171, 24 S.Ct. 53, 54, 48 L.Ed. 133. 75 If the Regents had explicitly stated that they suspended appellant's license or lengthened the time of the suspension because he was a member of an organization on the so-called Attorney General's list, and the New York Court of Appeals had declared that New York law allows such action, it is not too much to believe that this Court would have felt compelled to hold that the Due Process Clause disallows it. See Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 71 S.Ct. 624; Id., D.C., 104 F.Supp. 567. Yet that is precisely what we may have here. It bears repeating that the Court of Appeals, the ultimate voice of New York law, found itself impotent to give relief on appellant's claim that the Regents 'in deciding on punishment, ignored weighty considerations and acted on matters not proper for consideration'. 305 N.Y. 89, 99, 111 N.E.2d 222, 226. At the very least, for all that appears, the Court of Appeals assumed that the Regents relied 'on matters not proper for consideration'. Thus the appellant may have been deprived of the liberty to practice his profession and of his property interests in his profession in contravention of due process. This is not a merely abstract possibility. The 'punishment'—the Court of Appeals so characterized it—recommended by the Grievance Committee rested certainly in part on arbitrary considerations, and the Board of Regents appears to have adopted this tainted 'determination.' Since the decision below may rest on a constitutionally inadmissible ground, the judgment should not stand. Stromberg v. People of State of California, 283 U.S. 359, 368, 51 S.Ct. 532, 535, 75 L.Ed. 1117; Williams v. State of North Carolina, 317 U.S. 287, 292, 63 S.Ct. 207, 210, 87 L.Ed. 279. 76 I would return this case to the New York authorities for reconsideration in light of the views here expressed. 77 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting. 78 Mr. Justice Holmes, while a member of the Supreme Judicial Court of Massachusetts, coined a dictum that has pernicious implications. 'The petitioner may have a constitutional right to talk politics,' he said, 'but he has no constitutional right to be a policeman.' See McAuliffe v. City of New Bedford, 155 Mass. 216, 220, 29 N.E. 517. By the same reasoning a man has no constitutional right to teach, to work in a filling station, to be a grocery clerk, to mine coal, to tend a furnace, or to be on the assembly line. By that reasoning a man has no constitutional right to work. 79 The right to work, I had assumed, was the most precious liberty that man possesses. Man has indeed as much right to work as he has to live, to be free, to own property. The American ideal was stated by Emerson in his essay on Politics, 'A man has a right to be employed, to be trusted, to be loved, to be reversed.' It does many men little good to stay alive and free and propertied, if they cannot work. To work means to eat. It also means to live. For many it would be better to work in jail, than to sit idle on the curb. The great values of freedom are in the opportunities afforded man to press to new horizons, to pit his strength against the forces of nature, to match skills with his fellow man. 80 The dictum of Holmes gives a distortion to the Bill of Rights. It is not an instrument of dispensation but one of deterrents. Certainly a man has no affirmative right to any particular job or skill or occupation. The Bill of Rights does not say who shall be doctors or lawyers or policemen. But it does say that certain rights are protected, that certain things shall not be done. And so the question here is not what government must give, but rather what it may not take away. 81 The Bill of Rights prevents a person from being denied employment as a teacher who though a member of a 'subversive' organization is wholly innocent of any unlawful purpose or activity. Wieman v. Updegraff, 344 U.S. 183, 73 S.Ct. 215, 97 L.Ed. 216. It prevents a teacher from being put in a lower salary scale than white teachers solely because he is a Negro. Alston v. School Board, 4 Cir., 112 F.2d 992. Those cases illustrate the real significance of our Bill of Rights.1 82 So far as we can tell on the present record, Dr. Barsky's license to practice medicine has been suspended, not because he was a criminal, not because he was a Communist, not because he was a 'subversive,' but because he had certain unpopular ideas and belonged to and was an officer of the Joint Anti-Fascist Refugee Committee, which was included in the Attorney General's 'list.' If, for the same reason, New York had attempted to put Dr. Barsky to death or to put him in jail or to take his property, there would be a flagrant violation of due process. I do not understand the reasoning which holds that the State may not do these things, but may nevertheless suspend Dr. Barsky's power to practice his profession. I repeat, it does a man little good to stay alive and free and propertied, if he cannot work. 83 The distinction between the State's power to license doctors and to license street vendors is one of degree. The fact that a doctor needs a good knowledge of biology is no excuse for suspending his license because he has little or no knowledge of constitutional law. In this case it is admitted that Dr. Barsky's 'crime' consisted of no more than a justifiable mistake concerning his constitutional rights.2 Such conduct is no constitutional ground for taking away a man's right to work. The error is compounded where, as here, the suspension of the right to practice has been based on Dr. Barsky's unpopular beliefs and associations. As Judge Fuld, dissenting in the New York Court of Appeals, makes clear, this record is 'barren of evidence reflecting upon appellant as a man or a citizen, much less upon his professional capacity or his past or anticipated conduct towards his patients.' (305 N.Y. 89, 111 N.E.2d 228.) 84 Neither the security of the State nor the well-being of her citizens justifies this infringement of fundamental rights. So far as I know, nothing in a man's political beliefs disables him from setting broken bones or removing ruptured appendixes, safely and efficiently. A practicing surgeon is unlikely to uncover many state secrets in the course of his professional activities. When a doctor cannot save lives in America because he is opposed to Franco in Spain, it is time to call a halt and look critically at the neurosis that has possessed us. 1 McKinney's N.Y.Consol.Laws, c. 16, Education Law, §§ 6514, 6515. 2 The conviction was for violating R.S. § 102, as amended, 52 Stat. 942, 2 U.S.C. § 192, 2 U.S.C.A. § 192: 'Sec. 102. Every person who having been summoned as a witness by the authority of either House of Congress to give testimony or to produce papers upon any matter under inquiry before either House, or any joint committee established by a joint or concurrent resolution of the two Houses of Congress, or any committee of either House of Congress, willfully makes default, or who, having appeared, refuses to answer any question pertinent to the question under inquiry, shall be deemed guilty of a misdemeanor, punishable by a fine of not more than $1,000 nor less than $100 and imprisonment in a common jail for not less than one month nor more than twelve months.' 3 'The Committee on Un-American Activities, as a whole or by subcommittee, is authorized to make from time to time investigations of (1) the extent, character, and objects of un-American propaganda activities in the United States, (2) the diffusion within the United States of subversive and un-American propaganda that is instigated from foreign countries or of a domestic orgin and attacks the principle of the form of government as guaranteed by our Constitution, and (3) all other questions in relation thereto that would aid Congress in any necessary remedial legislation.' 91 Cong.Rec. 10, 15. This was carried into the Rules of the House as Rule XI (q)(2), 60 Stat. 823, 828. 4 United States v. Bryan, D.C., 72 F.Supp. 58, 60. 5 For related litigation, see United States v. Bryan, 339 U.S. 323, 70 S.Ct. 724, 94 L.Ed. 884; United States v. Fleischman, 339 U.S. 349, 70 S.Ct. 739, 94 L.Ed. 906; Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 71 S.Ct. 624, 95 L.Ed. 817. 6 The committee said: 'Since violation of the Federal statute which Respondent has been convicted of violating involves inherently no moral turpitude, and since there has been no impeachment by evidence of Respondent's explanation (sufficient if unimpeached) of his failure to produce the subpoenaed documents, we find in the record no valid basis for discipline beyond the statutory minimum of censure and reprimand; and we therefore recommend that Respondent's license be not suspended, as the Medical Committee on Grievances has recommended, but that he be censured and reprimanded.' 7 The order suspending appellant's license was issued by the Commissioner of Education in 1951, but its effect was stayed by the New York Court of Appeals, pending an appeal to this Court. 305 N.Y. 691, 112 N.E.2d 773. At about the same time, the board fixed at three months the suspension of the license of another doctor who was a member of the executive board of the Refugee Committee and who had been convicted with appellant. It also directed that a third doctor, who was a member of the same board, be censured and reprimanded. Each such determination was confirmed by the New York courts simultaneously with the confirmations relating to appellant. See 279 App.Div. 447, 111 N.Y.S.2d 393; 279 App.Div. 1101, 112 N.Y.S.2d 780, 781; 279 App.Div. 1117, 112 N.Y.S.2d 778; and 305 N.Y. 89, 111 N.E.2d 222. 8 The subsequent designation of certain other contempts of Congress as federal 'crimes' 18 U.S.C. § 402, 18 U.S.C.A. § 402, does not prevent this misdemeanor from being a crime within the meaning of the New York statute. 9 '§ 6514. Revocation of certificates; annulment of registrations '1. Whenever any practitioner of medicine, osteopathy or physiotherapy shall be convicted of a felony, as defined in section sixty-five hundred two of this article, the registration of the person so convicted may be annulled and his license revoked by the department. It shall be the duty of the clerk of the court wherein such conviction takes place to transmit a certificate of such conviction to the department. Upon reversal of such judgment by a court having jurisdic- tion, the department, upon receipt of a certified copy of such judgment or order of reversal, shall vacate its order of revocation or annulment. '2. The license or registration of a practitioner of medicine, osteopathy or physiotherapy may be revoked, suspended or annulled or such practitioner reprimanded or disciplined in accordance with the provisions and procedure of this article upon decision after due hearing in any of the following cases: '(a) That a physician, osteopath or physiotherapist is guilty of fraud or deceit in the practice of medicine, osteopathy or physiotherapy or in his admission to the practice of medicine, osteopathy or physiotherapy; or '(b) That a physician, osteopath or physiotherapist has been convicted in a court of competent jurisdiction, either within or without this state, of a crime; or '(c) That a physician, osteopath or physiotherapist is an habitual drunkard, or is or has been addicted to the use of morphine, cocaine or other drugs having similar effect, or has become insane; or '(d) That a physician, osteopath or physiotherapist offered, undertook or agreed to cure or treat disease by a secret method, procedure, treatment or medicine or that he can treat, operate and prescribe for any human condition by a method, means or procedure which he refuses to divulge upon demand to the committee on grievances; or that he has advertised for patronage by means of handbills, posters, circulars, letters, stereopticon slides, motion pictures, radio, or magazines; or '(e) That a physician, osteopath or physiotherapist did undertake or engage in any manner or by any ways or means whatsoever to perform any criminal abortion or to procure the performance of the same by another or to violate section eleven hundred forty-two of the penal law, or did give information as to where or by whom such a criminal abortion might be performed or procured. '(f) That a physician, osteopath or physiotherapist has directly or indirectly requested, received or participated in the division, transference, assignment, rebate, splitting or refunding of a fee for, or has directly or indirectly requested, received or profited by means of a credit or other valuable consideration as a commission, discount or gratuity in connection with the furnishing of medical, surgical or dental care, diagnosis or treatment or service, including x-ray examination and treatment, or for or in connection with the sale, rental, supplying or furnishing of clinical laboratory services or supplies, x-ray laboratory services or supplies, inhalation therapy service or equipment, ambulance service, hospital or medical supplies, physiotherapy or other therapeutic service or equipment, artificial limbs, teeth or eyes, orthopedic or surgical appliances or supplies, optical appliances, supplies or equipment, devices for aid of hearing, drugs, medication or medical supplies or any other goods, services or supplies prescribed for medical diagnosis, care or treatment under this chapter, except payment, not to exceed thirty-three and one-third per centum of any fee received for x-ray examination, diagnosis or treatment, to any hospital furnishing facilities for such examination, diagnosis or treatment. * * *' 10 See Sinclair v. United States, 279 U.S. 263, 299, 49 S.Ct. 268, 273, 73 L.Ed. 692. 11 A conviction for a crime which, under the law of New York, would amount to a felony has been given such an automatic effect in some instances. See McKinney's N.Y. Laws, Education Law, § 6613, subd. 12, as to dentists and McKinney's N.Y. Laws, Judiciary Law, Consol.Laws, c. 30, § 90, subd. 4, as to attorneys. Cf. § 6514, subd. 1, note 9, supra, as to physicians. See In re Raab, 156 Ohio St. 158, 101 N.E.2d 294. 12 Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 71 S.Ct. 624. 13 The character of the activities of the Joint Anti-Fascist Refugee Committee was placed in issue by appellant's amended answer. He volunteered much testimony as to the benevolent and charitable in which the committee participated and he introduced many exhibits on the same subject. Reference to the Attorney General's list of subversives developed naturally during the resulting cross-examination of appellant. 1 And certainly since our recent holding in United States v. Rumely, 345 U.S. 41, 73 S.Ct. 543, it cannot be said that it is 'fanciful or factitious' to claim that the First Amendment bars congressional committees from seeking the names of contributors to an organization alleged to be engaged in 'political propaganda.' 2 The University of the State of New York is the historic name of the corporate body which the Regents make up. It has no faculty or students of its own. See McKinney's N.Y. Laws, Education Law, § 201 et seq. 3 This Court has authoritatively construed the federal offense of refusing to comply with a congressional subpoena as involving no moral turpitude. Sinclair v. United States, 279 U.S. 263, 299, 49 S.Ct. 268, 273. 4 See Ex parte Young, 209 U.S. 123, 148, 28 S.Ct. 441, 449, 52 L.Ed. 714, and Oklahoma Operating Co. v. Love, 252 U.S. 331, 335—338, 40 S.Ct. 338, 340, 64 L.Ed. 596. 5 Education Law, § 3022. See Adler v. Board of Education of the City of New York, 342 U.S. 485, 72 S.Ct. 380, 96 L.Ed. 517. 6 The New York Constitution, Art. 5, § 4, makes the Regents head of the Department of Education with power to appoint and remove at pleasure a Commissioner of Education who is the Department's chief administrative officer. These nonsalaried Regents are almost entirely independent of the Governor, being elected on joint ballot of the two houses of the Legislature for thirteen-year terms. Education Law, § 202. Executive power over the State's educational system is vested in the Regents by § 101 of the Education Law. Section 207 provides that 'the regents shall exercise legislative functions concerning the educational system of the state, determine its educational policies, and, except, as to the judicial functions of the commissioner of education, establish rules for carrying into effect the laws and policies of the state. * * *.' 7 See Education Law, §§ 120 et seq., 214, 215, 216, 219, 224, 245 et seq., 704, 801 et seq. On motion picture censorship by the Regents see Joseph Burstyn, Inc. v. Wilson, 343 U.S. 495, 72 S.Ct. 777, 96 L.Ed. 1098. 8 Education Law, §§ 211, 6501—7506. The professions of pharmacy, optometry, podiatry, nursing, shorthand reporting, architecture and engineering are also under the Regents' jurisdiction. 9 For examples of entrapment of doctors by the Regents' investigators and the narrowness of judicial review afforded accused doctors see Weinstein v. Board of Regents, 267 App.Div. 4, 44 N.Y.S.2d 917, reversed, 292 N.Y. 682, 56 N.E.2d 104; Application of Epstein, 267 App.Div. 27, 44 N.Y.S.2d 921, reversed, 295 N.Y. 154, 65 N.E.2d 756. 10 Barsky v. Board of Regents, 305 N.Y. 89, 99, 111 N.E.2d 222. 11 The Regents, with their many law-enforcement duties, are plainly not a judicial body in the ordinary sense, yet court review is virtually precluded. Whether due process of law can be satisfied in this type of case by procedures from which effective review by the regular judicial branch of the government is barred is certainly not wholly clear. Compare Ohio Valley Water Co. v. Ben Avon Borough, 253 U.S. 287, 40 S.Ct. 527, 64 L.Ed. 908, Ng Fung Ho v. White, 259 U.S. 276, 42 S.Ct. 492, 66 L.Ed. 938 and St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 56 S.Ct. 720, 80 L.Ed. 1033, with Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834. 12 But see note 7 of the Courts' opinion. 13 See Davis v. Schnell, D.C., 81 F.Supp. 872, 877, where in an opinion by Mullins, D.J., a three-judge district court, following Yick Wo v. Hopkins, struck down a state constitutional provision limiting voters to those who could "understand and explain" the Constitution. County Boards of Registrars were by statute given discretion to determine whether persons seeking to vote had satisfied the constitutional provision. Judge Mullins said: 'The words 'understand and explain' do not provide a reasonable standard. A simple test may be given one applicant; a long, tedious, complex one to another; one applicant may be examined on one article of the Constitution; another may be called upon to 'understand and explain' every word and article and provision of the entire instrument. 'To state it plainly, the sole test is: Has the applicant by oral examination or otherwise understood and explained the Constitution to the satisfaction of the particular board? To state it more plainly, the board has a right to reject one applicant and accept another, depending solely upon whether it likes or dislikes the understanding and explanation offered. To state it even more plainly, the board, by the use of the words 'understand and explain' is given the arbitrary power to accept or reject any prospective elector that may apply * * *. Such arbitrary power amounts to a denial of equal protection of the law within the meaning of the Fourteenth Amendment. * * *' 81 F.Supp., at 878. This Court affirmed without writing an opinion of its own. 336 U.S. 933, 69 S.Ct. 749, 93 L.Ed. 1093. 1 As to the right to work, see also Cummings v. State of Missouri, 4 Wall. 277, 18 L.Ed. 356; Ex parte Garland, 4 Wall. 333, 18 L.Ed. 366; Yick Wo v. Hopkins, 118 U.S. 356, 68 S.Ct. 1064; Truax v. Raich, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131; Takahashi v. Fish and Game Commission, 334 U.S. 410, 68 S.Ct. 1138, 92 L.Ed. 1478. 2 Dr. Barsky was convicted for failure to produce certain documents subpoenaed by a congressional committee. At a hearing before the Regents' Committee on Discipline the Assistant Attorney General representing the State conceded that Dr. Barsky had acted on the advice of counsel. He conceded that 'the advice given to Dr. Barsky by the attorney, Mr. Wolf, was not an opinion which he held alone; nor was it at that time an unreasonable construction of law on his part.' The advice given was that the subpoenas were unconstitutionally issued and that Dr. Barsky was not legally required to respond. The Assistant Attorney General admitted that this opinion was held by many lawyers and by some judges. The Committee on Discipline pointed out that refusal to produce the subpoenaed records was 'the only method by which the legal objections to the Congressional Committee's course could be judicially determined.'

23

347 U.S. 475 74 S.Ct. 667 98 L.Ed. 866 HERNANDEZv.STATE OF TEXAS. No. 406. Argued Jan. 11, 1954. Decided May 3, 1954. Messrs. Carlos C. Cadena, San Antonio, Tex., Gus C. Garcia, for petitioner. Mr. Horace Wimberly, Yoakum, Tex., for respondent. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 The petitioner, Pete Hernandez, was indicted for the murder of one Joe Espinosa by a grand jury in Jackson County, Texas. He was convicted and sentenced to life imprisonment. The Texas Court of Criminal Appeals affirmed the judgment of the trial court. 251 S.W.2d 531. Prior to the trial, the petitioner, by his counsel, offered timely motions to quash the indictment and the jury panel. He alleged that persons of Mexican descent were systematically excluded from service as jury commissioners,1 grand jurors, and petit jurors, although there were such persons fully qualified to serve residing in Jackson County. The petitioner asserted that exclusion of this class deprived him, as a member of the class, of the equal protection of the laws guaranteed by the Fourteenth Amendment of the Constitution. After a hearing, the trial court denied the motions. At the trial, the motions were renewed, further evidence taken, and the motions again denied. An allegation that the trial court erred in denying the motions was the sole basis of petitioner's appeal. In affirming the judgment of the trial court, the Texas Court of Criminal Appeals considered and passed upon the substantial federal question raised by the petitioner. We granted a writ of certiorari to review that decision. 346 U.S. 811, 74 S.Ct. 52. 2 In numerous decisions, this Court has held that it is a denial of the equal protection of the laws to try a defendant of a particular race or color under an indictment issued by a grand jury, or before a petit jury, from which all persons of his race or color have, solely because of that race or color, been excluded by the State, whether acting through its legislature, its courts, or its executive or administrative officers.2 Although the Court has had little occasion to rule on the question directly, it has been recognized since Strauder v. State of West Virginia, 100 U.S. 303, 25 L.Ed. 664, that the exclusion of a class of persons from jury service on grounds other than race or color may also deprive a defendant who is a member of that class of the constitutional guarantee of equal protection of the laws.3 The State of Texas would have us hold that there are only two classes—white and Negro within the contemplation of the Fourteenth Amendment. The decisions of this Court do not support that view.4 And, except where the question presented involves the exclusion of persons of Mexican descent from juries,5 Texas courts have taken a broader view of the scope of the equal protection clause.6 3 Throughout our history differences in race and color have defined easily identifiable groups which have at times required the aid of the courts in securing equal treatment under the laws. But community prejudices are not static, and from time to time other differences from the community norm may define other groups which need the same protection. Whether such a group exists within a community is a question of fact. When the existence of a distinct class is demonstrated, and it is further shown that the laws, as written or as applied, single out that class for different treatment not based on some reasonable classification, the guarantees of the Constitution have been violated. The Fourteenth Amendment is not directed solely against discrimination due to a 'two-class theory'—that is, based upon differences between 'white' and Negro. 4 As the petitioner acknowledges, the Texas system of selecting grand and petit jurors by the use of jury commissions is fair on its face and capable of being utilized without discrimination.7 But as this Court has held, the system is susceptible to abuse and can be employed in a discriminatory manner.8 The exclusion of otherwise eligible persons from jury service solely because of their ancestry or national origin is discrimination prohibited by the Fourteenth Amendment. The Texas statute makes no such discrimination, but the petitioner alleges that those administering the law do. 5 The petitioner's initial burden in substantiating his charge of group discrimination was to prove that persons of Mexican descent constitute a separate class in Jackson County, distinct from 'whites.'9 One method by which this may be demonstrated is by showing the attitude of the community. Here the testimony of responsible officials and citizens contained the admission that residents of the community distinguished between 'white' and 'Mexican.' The participation of persons of Mexican descent in business and community groups was shown to be slight. Until very recent times, children of Mexican descent were required to attend a segregated school for the first four grades.10 At least one restaurant in town prominently displayed a sign announcing 'No Mexicans Served.' On the courthouse grounds at the time of the hearing, there were two men's toilets, one unmarked, and the other marked 'Colored Men' and 'Hombres Aqui' ('Men Here'). No substantial evidence was offered to rebut the logical inference to be drawn from these facts, and it must be concluded that petitioner succeeded in his proof. 6 Having established the existence of a class, petitioner was then charged with the burden of proving discrimination. To do so, he relied on the pattern of proof established by Norris v. State of Alabama, 294 U.S. 587, 55 S.Ct. 579, 584, 79 L.Ed. 1074. In that case, proof that Negroes constituted a substantial segment of the population of the jurisdiction, that some Negroes were qualified to serve as jurors, and that none had been called for jury service over an extended period of time, was held to constitute prima facie proof of the systematic exclusion of Negroes from jury service. This holding, sometimes called the 'rule of exclusion,' has been applied in other cases,11 and it is available in supplying proof of discrimination against any delineated class. 7 The petitioner established that 14% of the population of Jackson County were persons with Mexican or Latin American surnames, and that 11% of the males over 21 bore such names.12 The County Tax Assessor testified that 6 or 7 percent of the freeholders on the tax rolls of the County were persons of Mexican descent. The State of Texas stipulated that 'for the last twenty-five years there is no record of any person with a Mexican or Latin American name having served on a jury commission, grand jury or petit jury in Jackson County.'13 The parties also stipulated that 'there are some male persons of Mexican or Latin American descent in Jackson County who, by virtue of being citizens, freeholders, and having all other legal prerequisites to jury service, are eligible to serve as members of a jury commission, grand jury and/or petit jury.'14 8 The petitioner met the burden of proof imposed in Norris v. Alabama, supra. To rebut the strong prima facie case of the denial of the equal protection of the laws guaranteed by the Constitution thus established, the State offered the testimony of five jury commissioners that they had no discriminated against persons of Mexican or Latin American descent in selecting jurors. They stated that their only objective had been to select those whom they thought were best qualified. This testimony is not enough to overcome the petitioner's case. As the Court said in Norris v. Alabama: 9 'That showing as to the long-continued exclusion of negroes from jury service, and as to the many negroes qualified for that service, could not be met by mere generalities. If, in the presence of such testimony as defendant adduced, the mere general assertions by officials of their performance of duty were to be accepted as an adequate justification for the complete exclusion of negroes from jury service, the constitutional provision * * * would be but a vain and illusory requirement.'15 10 The same reasoning is applicable to these facts. 11 Circumstances or chance may well dictate that no persons in a certain class will serve on a particular jury or during some particular period. But it taxes our credulity to say that mere chance resulted in their being no members of this class among the over six thousand jurors called in the past 25 years. The result bespeaks discrimination, whether or not it was a conscious decision on the part of any individual jury commissioner. The judgment of conviction must be reversed. 12 To say that this decision revives the rejected contention that the Fourteenth Amendment requires proportional representation of all the component ethnic groups of the community on every jury16 ignores the facts. The petitioner did not seek proportional representation, nor did he claim a right to have persons of Mexican descent sit on the particular juries which he faced.17 His only claim is the right to be indicted and tried by juries from which all members of his class are not systematically excluded—juries selected from among all qualified persons regardless of national origin or descent. To this much, he is entitled by the Constitution. 13 Reversed. 1 Texas law provides that at each term of court, the judge shall appoint three to five jury commissioners. The judge instructs these commissioners as to their duties. After taking an oath that they will not knowingly select a grand juror they believe unfit or unqualified, the commissioners retire to a room in the courthouse where they select from the county assessment roll the names of 16 grand jurors from different parts of the county. These names are placed in a sealed envelope and delivered to the clerk. Thirty days before court meets, the clerk delivers a copy of the list to the sheriff who summons the jurors. Vernon's Tex.Code Crim.Proc. arts. 333—350. The general jury panel is also selected by the jury commission. Vernon's Tex.Civ.Stat. art. 2107. In capital cases, a special venire may be selected from the list furnished by the commissioners. Vernon's Tex.Code Crim.Proc. art. 592. 2 See Carter v. State of Texas, 177 U.S. 442, 447, 20 S.Ct. 687, 689, 44 L.Ed. 839. 3 'Nor if a law should be passed excluding all naturalized Celtic Irishmen (from jury service), would there be any doubt of its inconsistency with the spirit of the amendment.' 100 U.S. at page 308, 25 L.Ed. 664. Cf. American Sugar Refining Co. v. State of Louisiana, 179 U.S. 89, 92, 21 S.Ct. 43, 44, 45 L.Ed. 102. 4 See Truax v. Raich, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131; Takahaski v. Fish & Game Commission, 334 U.S. 410, 68 S.Ct. 1138, 92 L.Ed. 1478; Cf. Hirabayashi v. United States, 320 U.S. 81, 100, 63 S.Ct. 1375, 1385, 87 L.Ed. 1774: 'Distinctions between citizens solely because of their ancestry are by their very nature odious to a free people whose institutions are founded upon the doctrine of equality.' 5 Sanchez v. State, 147 Tex.Cr.R. 436, 181 S.W.2d 87; Salazar v. State, 149 Tex.Cr.R. 260, 193 S.W.2d 211; Sanchez v. State, Tex.Cr.App., 243 S.W.2d 700. 6 In Juarez v. State, 102 Tex.Cr.R. 297, 277 S.W. 1091, the Texas court held that the systematic exclusion of Roman Catholics from juries was barred by the Fourteenth Amendment. In Clifton v. Puente, Tex.Civ.App., 218 S.W.2d 272, the Texas court ruled that restrictive covenants prohibiting the sale of land to persons of Mexican descent were unenforceable. 7 Smith v. State of Texas, 311 U.S. 128, 130, 61 S.Ct. 164, 165, 85 L.Ed. 84. 8 Smith v. State of Texas, supra, note 7; Hill v. State of Texas, 316 U.S. 400, 62 S.Ct. 1159, 86 L.Ed. 1559; Cassell v. State of Texas, 339 U.S. 282, 70 S.Ct. 629, 94 L.Ed. 839; Ross v. State of Texas, 341 U.S. 918, 71 S.Ct. 742, 95 L.Ed. 1352. 9 We do not have before us the question whether or not the Court might take judicial notice that persons of Mexican descent are there considered as a separate class. See Marden, Minorities in American Society; McDonagh & Richards, Ethnic Relations in the United States. 10 The reason given by the school superintendent for this segregation was that these children needed special help in learning English. In this special school, however, each teacher taught two grades, while in the regular school each taught only one in most instances. Most of the children of Mexican descent left school by the fifth or sixth grade. 11 See note 8, supra. 12 The 1950 census report shows that of the 12,916 residents of Jackson County, 1,865, or about 14% had Mexican or Latin American surnames. U.S. Census of Population, 1950, Vol. II, pt. 43, p. 180; id., Vol. IV, pt. 3, c. C, p. 45. Of these 1,865, 1,738 were native born American citizens and 65 were naturalized citizens. Id., Vol. IV, pt. 3, c. C, p. 45. Of the 3,754 males over 21 years of age in the County, 408, or about 11% had Spanish surnames. Id., Vol. II, pt. 43, p. 180; id., Vol. IV, pt. 3, c. C, p. 67. The State challenges any reliance on names as showing the descent of persons in the County. However, just as persons of a different race are distinguished by color, these Spanish names provide ready identification of the members of this class. In selecting jurors, the jury commissioners work from a list of names. 13 R. 34. 14 R. 55. The parties also stipulated that there were no persons of Mexican or Latin American descent on the list of talesmen. R. 83. Each item of each stipulation was amply supported by the testimony adduced at the hearing. 15 294 U.S. at page 598, 55 S.Ct. at page 583. 16 See Akins v. State of Texas, 325 U.S. 398, 403, 65 S.Ct. 1276, 1279, 89 L.Ed. 1692; Cassell v. State of Texas, 339 U.S. 282, 286—287, 70 S.Ct. 629, 631, 94 L.Ed. 839. 17 See Akins v. State of Texas, supra, note 16, 325 U.S. at page 403, 65 S.Ct. at page 1279.

12

347 U.S. 514 74 S.Ct. 703 98 L.Ed. 903 UNITED STATESv.BORDEN CO. et al. No. 464. Argued April 27, 1954. Decided May 17, 1954. Mr. Asst. Atty. Gen. Barnes, for appellant. Mr. Stuart S. Ball, Chicago, Ill., for appellees Borden Co. et al. Mr. Leo F. Tierney, Chicago, Ill., for appellee Beloit Dairy Co. Mr. Justice CLARK delivered the opinion of the Court. 1 The United States instituted this civil proceeding against ten Chicago dairies,1 charging conspiracy to restrain and monopolize the sale of fluid milk to wholesale customers and others in the Chicago area, in violation of the Sherman Act, 15 U.S.C.A. §§ 1—7, 15 note, and price discrimination, in violation of the Clayton Act, 15 U.S.C.A. § 12 et seq. Prior to trial a consent decree was entered against five of the smaller defendant companies, enjoining continuation of the conduct charged in the complaint. At the close of the Government's case against the remaining five defendants,2 the District Court dismissed the complaint in its entirety. It held that, as to the alleged violations of §§ 1 and 2 of the Sherman Act, the evidence failed to establish the existence of a conspiracy or combination; and that, though there was proof of price discrimination violative of § 2(a) of the Clayton Act by four of the defendants,3 a prior decree in a private antitrust action brought by a competitor dairy company enjoined the conduct in question and made it 'useless' to award the Government an injunction. The Government then appealed directly to this Court under 15 U.S.C. § 29, 15 U.S.C.A. § 29, and we noted probable jurisdiction, 346 U.S. 914, 74 S.Ct. 276. 2 Three of the four questions presented on this appeal deal with rulings by the district judge that certain evidence was inadmissible.4 The Government does not challenge the court's conclusion that on the record conspiracy was not shown, but it insists that error in these rulings precluded establishment of the conspiracy. After hearing argument and considering as much of the record as is before us, including the Government's offers of proof, we are of the opinion that, even assuming error in each of the challenged rulings, it does not appear that admission of the evidence in question would have been sufficient to change the conclusion that the Government had not established a case under the Sherman Act; hence the rulings cannot be said to have affected substantial rights of the parties within the meaning of 28 U.S.C. § 2111, 28 U.S.C.A. § 2111.5 Since on this basis we affirm the judgment of dismissal as to the Sherman Act allegations, it is unnecessary to discuss the propriety or impropriety of the several rulings. 3 The fourth question challenges the basis of the District Court's refusal to grant the Government injunctive relief against price discrimination by four of the defendants.6 The district judge found that Government evidence tended to prove that these defendant companies have sold at prices which discriminate between purchasers of milk of like grade and quality. This, he said, would give defendants the burden of establishing that the discriminations fall within statutory exceptions, were it not that under a consent decree entered against defendants in a private suit in 1952 by another judge of the same court,7 they already are enjoined from performing all acts specified by the Government in its prayer for relief. In the opinion of the district judge, 4 'A decree of this court entered at the instance of a private litigant is as binding upon a defendant as a decree entered at the instance of the government; and a consent decree, entered by any judge of this court without hearing evidence, is as binding as a decree entered by another judge after a protracted trial. I conclude, therefore, that each of the remaining defendants is now effectively enjoined by this court from performing any of the acts set forth in the government's prayer for injunctive relief, insofar as the Clayton Act is concerned. 5 'As a court of equity, I will not perform a useless task. The violations of the Clayton Act described in the complaint and shown at the trial are, for the most part, old violations. And to this court, the Dean decree assures, as completely as any decree can assure, that there will be no new violations.' (111 F.Supp. 581.) 6 Accordingly the court dismissed that part of the complaint which alleged violations of § 2(a) of the Clayton Act. Thus it appears that the Government was refused an injunction solely because of the existence of the prior decree entered against defendants in the course of a private action. We think that refusal on this basis constituted an abuse of discretion. 7 Section 15 of the Clayton Act, 15 U.S.C. § 25, 15 U.S.C.A. § 25, charges the United States district attorneys, under supervision of the Attorney General, with the duty of instituting equity proceedings to prevent and restrain violation of certain of the antitrust laws, including price discrimination. Under § 16 of the Act, 15 U.S.C. § 26, 15 U.S.C.A. § 26, a private plaintiff may obtain injunctive relief against such violations only on a showing of 'threatened loss or damage'; and this must be of a sort personal to the plaintiff, Beegle v. Thomson, 7 Cir., 1943, 138 F.2d 875, 881. The private-injunction action, like the treble-damage action under § 4 of the Act, supplements Government enforcement of the antitrust laws; but it is the Attorney General and the United States district attorneys who are primarily charged by Congress with the duty of protecting the public interest under these laws. The Government seeks its injunctive remedies on behalf of the general public; the private plaintiff, though his remedy is made available pursuant to public policy as determined by Congress, may be expected to exercise it only when his personal interest will be served. These private and public actions were designed to be cumulative, not mutually exclusive. S. Rep. No. 698, 63d Cong., 2d Sess. 42; cf. Federal Trade Commission v. Cement Institute, 1948, 333 U.S. 683, 694—695, 68 S.Ct. 793, 800, 92 L.Ed. 1009. '* * * (T)he scheme of the statute is sharply to distinguish between Government suits, either criminal or civil, and private suits for injunctive relief or for treble damages. Different policy considerations govern each of these. They may proceed simultaneously or in disregard of each other.' United States v. Bendix Home Appliances, D.C.S.D.N.Y.1949, 10 F.R.D. 73, 77. In short, the Government's right and duty to seek an injunction to protect the public interest exist without regard to any private suit or decree. 8 To hold that a private decree renders unnecessary an injunction to which the Government is otherwise entitled is to ignore the prime object of civil decrees secured by the Government the continuing protection of the public, by means of contempt proceedings, against a recurrence of antitrust violations. Should a private decree by violated, the Government would have no right to bring contempt proceedings to enforce compliance; it might succeed in intervening in the private action but only at the court's discretion. The private plaintiff might find it to his advantage to refrain from seeking enforcement of a violated decree; for example, where the defendant's violation operated primarily against plaintiff's competitors. Or the plaintiff might agree to modification of the decree, again looking only to his own interest. In any of these events it is likely that the public interest would not be adequately protected by the mere existence of the private decree. It is also clear that Congress did not intend that the efforts of a private litigant should supersede the duties of the Department of Justice in policing an industry. Yet the effect of the decision below is to place on a private litigant the burden of policing a major part of the milk industry in Chicago, a task beyond its ability, even assuming it to be consistently so inclined. 9 We agree with appellees that the statute confers on the Government no absolute right to an injunction upon a showing of past violation of the antitrust laws by defendants. As we said in United States v. W. T. Grant Co., 1953, 345 U.S. 629, 633, 73 S.Ct. 894, 898, 97 L.Ed. 1303: 10 '* * * the moving party must satisfy the court that relief is needed. The necessary determination is that there exists some cognizable danger of recurrent violation, something more than the mere possibility which serves to keep the case alive. The chancellor's decision is based on all the circumstances; his discretion is necessarily broad and a strong showing of abuse must be made to reverse it.' 11 The Government contends that it has 'an independent right to relief against violations of the Clayton Act, without regard to whether such violations previously have been enjoined by a decree in a private antitrust suit.' But we cannot say that the existence of the private decree warrants no consideration by the chancellor in assessing the likelihood of recurring illegal activity. We hold only that, in view of the difference in the respective interests sought to be vindicated by the Government and the private litigant, the district judge abused his discretion in refusing the Government an injunction solely because of the existence of the private decree. 12 The judgment of dismissal as to the Sherman Act allegations is affirmed; as to the Clayton Act allegations the case is remanded to the District Court for further consideration, and such further proceedings as may be necessary, in accordance with this opinion. 13 Judgment affirmed in part, and case remanded in part. 14 Mr. Justice BLACK and Mr. Justice JACKSON took no part in the consideration or decision of this case. 1 The Borden Company, Bowman Dairy Company, Belmont Dairy Company, Ridgeview Farms Dairy, Beloit Dairy Company, Capitol Dairy Company, American Precessing and Sales Company, Hunding Dairy Company, Meadowmoor Dairies and Western United Dairy Company. 2 Borden, Bowman, Belmont, Ridgeview and Beloit. 3 Borden, Bowman, Belmont and Ridgeview. 4 The trial court refused to allow the Government to use for impeachment of a hostile witness a deposition taken in another case; to introduce in evidence certain tape recordings made for use in the prior case; and to introduce testimony as to a conversation with a deceased agent of one of the defendants. 5 'On the hearing of any appeal or writ of certiorari in any case, the court shall give judgment after an examination of the record without regard to errors or defects which do not affect the substantial rights of the parties.' Fed.Rules Civ.Proc., rule 61, 28 U.S.C.A.: 'Harmless Error. No error in either the admission or the exclusion of evidence and no error or defect in any ruling or order or in anything done or omitted by the court or by any of the parties is ground for granting a new trial or for setting aside a verdict or for vacating, modifying or otherwise disturbing a judgment or order, unless refusal to take such action appears to the court inconsistent with substantial justice. The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties.' 6 See note 3, supra. Since the Government does not question the correctness of the judgment of dismissal of its claim under § 2(a) of the Clayton Act against Beloit, the fifth defendant, it is not before us. 7 Dean Milk Co. v. American Processing & Sales Co., U.S.D.C.N.D.Ill.E.D., No. 49 C 1159, Dec. 3, 1952.

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347 U.S. 501 74 S.Ct. 699 98 L.Ed. 887 CAPITAL SERVICE, Inc. et al.v.NATIONAL LABOR RELATIONS BOARD. No. 398. Argued April 6, 1954. Decided May 17, 1954. Mr. Carl M. Gould, Los Angeles, Cal., for petitioners. Mr. Philip Elman, Washington, D.C., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Petitioner manufacturers and distributes bakery products in California. A union sought unsuccessfully to organize its employees. Thereupon, the union sought to enlist the aid of purchasers and consumers of petitioner's products. Agents of the union requested retail stores not to handle petitioner's products and stated that if they continued to do so, a picket line would be set up. Some stores acquiesced; others did not. The union placed pickets at the entrances of the latter stores, with the result that many deliveries were interrupted and some employees of other employers refused to cross the picket lines. 2 Petitioner made two counter moves. First, it filed suit for an injunction against the union in the California courts. A few days later it filed a charge of an unfair labor practice against the union with respondent. Each had as a basis the same conduct of the union. 3 On April 7, 1952, the California court issued a preliminary injunction against the union, banning all picketing of retail stores. On May 14, 1952, the Regional Director of respondent concluded, after investigation, that insofar as the conduct of the union involved merely an appeal to customers and to the public in general, it was lawful under the National Labor Relations Act, as amended, 49 Stat. 449, 61 Stat. 136, 29 U.S.C. § 151 et seq., 29 U.S.C.A. § 151 et seq.; but that it was unlawful, insofar as it induced or encouraged employees of employers other than petitioner to refuse to perform services at the picketed places. The Regional Director, acting on behalf of the General Counsel, issued an unfair labor practice complaint against the union on that limited basis. On the same day, he petitioned the Federal District Court for an injunction restraining such conduct of the union, pending final adjudication by the Board, as required by § 10(l) of the Act.1 4 Simultaneously with the filing of the § 10(l) petition against the union, the Board filed suit in the same District Court, asking that petitioner be enjoined from enforcing the state court injunction. The District Court concluded that the conduct of the union, in the respects stated, was subject to the exclusive jurisdiction of the Board and that the action of the state court invaded the exclusive jurisdiction of the Board and the District Court. It accordingly granted the relief prayed for. The Court of Appeals affirmed. 204 F.2d 848. The case is here on a petition for a writ of certiorari limited to the following question: 5 "In view of the fact that exclusive jurisdiction over the subject matter was in the National Labor Relations Board, Garner v. Teamsters, Chauffeurs and Helpers Local Union No. 776 (A.F.L.) (346 U.S. 485), 74 S.Ct. 161, could the Federal District Court, on application of the Board, enjoin Petitioners from enforcing an injunction already obtained from the State court?" 346 U.S. 936, 74 S.Ct. 375. 6 I. The District Court had jurisdiction of the subject matter, because this is a 'civil action or proceeding' arising under an Act of Congress 'regulating commerce.' 28 U.S.C. § 1337, 28 U.S.C.A. § 1337. The National Labor Relations Act is a law 'regulating commerce' (National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893); and here, as in American Federation of Labor v. Watson, 327 U.S. 582, 591, 66 S.Ct. 761, 765, 90 L.Ed. 873, the rights asserted arise under that law. 7 II. In absence of a command of the Congress to the contrary, the power of the District Court to issue the injunction is clear. Federal courts seek to avoid needless conflict with state agencies and withhold relief by way of injunction where state remedies are available and adequate. See Alabama Public Service Commission v. Southern Ry. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002. But where Congress, acting within its constitutional authority, has vested a federal agency with exclusive jurisdiction over a subject matter and the intrusion of a state would result in conflict of functions, the federal court may enjoin the state proceeding in order to preserve the federal right. See Public Utilities Commission of Ohio v. United Fuel Gas Co., 317 U.S. 456, 468—470, 63 S.Ct. 369, 375—376, 87 L.Ed. 396; Bowles v. Willingham, 321 U.S. 503, 510—511, 64 S.Ct. 641, 645, 88 L.Ed. 892. Cf. American Federation of Labor v. Watson, supra, 327 U.S. at pages 593—595, 66 S.Ct. at pages 766—767, 90 L.Ed. 873. Congress, however, has provided that 'A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.' 28 U.S.C. § 2283, 28 U.S.C.A. § 2283. 8 We do not stop to consider the many questions which have been propounded under this newly worded provision of the Code.2 One alone suffices for this case. For we conclude that the injunction issued by the District Court was 'necessary in aid of its jurisdiction' and thus permitted under the exceptions specifically allowed by Congress. 9 The state court injunction restrains conduct which the District Court was asked to enjoin in the § 10(l) proceeding brought in the District Court by the Board's Regional Director against the union. In order to make the § 10(l) power effective the Board must have authority to take all steps necessary to preserve its case. If the state court decree were to stand, the Federal District Court would be limited in the action it might take. If the Federal District Court were to have unfettered power to decide for or against the union, and to write such decree as it deemed necessary in order to effectuate the policies of the Act, it must be freed of all restraints from the other tribunal. To exercise its jurisdiction freely and fully it must first remove the state decree. When it did so, it acted 'where necessary in aid of its jurisdiction'. 10 Affirmed. 11 Mr. Justice BLACK dissents. 12 Mr. Justice JACKSON took no part in the consideration or decision of this case. 1 Section 10(l) reads as follows: 'Whenever it is charged that any person has engaged in an unfair labor practice within the meaning of paragraph (4)(A), (B), of (C) of section 8(b), the preliminary investigation of such charge shall be made forthwith and given priority over all other cases except cases of like character in the office where it is filed or to which it is referred. If, after such investigation, the officer or regional attorney to whom the matter may be referred has reasonable cause to believe such charge is true and that a complaint should issue, he shall, on behalf of the Board, petition any district court of the United States (including the District Court of the United States for the District of Columbia) within any district where the unfair labor practice in question has occurred, is alleged to have occurred, or wherein such person resides or transacts business, for appropriate injunctive relief pending the final adjudication of the Board with respect to such matter. Upon the filing of any such petition the district court shall have jurisdiction to grant such injunctive relief or temporary restraining order as it deems just and proper, notwithstanding any other provision of law: Provided further, That no temporary restraining order shall be issued without notice unless a petition alleges that substantial and irreparable injury to the charging party will be unavoidable and such temporary restraining order shall be effective for no longer than five days and will become void at the expiration of such period. Upon filing of any such petition the courts shall cause notice thereof to be served upon any person involved in the charge and such person, including the charging party, shall be given an opportunity to appear by counsel and present any relevant testimony: Provided further, That for the purposes of this subsection district courts shall be deemed to have jurisdiction of a labor organization (1) in the district in which such organization maintains its principal office, or (2) in any district in which its duly authorized officers or agents are engaged in promoting or protecting the interests of employee members. The service of legal process upon such officer or agent shall constitute service upon the labor organization and make such organization a party to the suit. In situations where such relief is appropriate the procedure specified herein shall apply to charges with respect to section 8(b)(4)(D), 61 Stat. 149, 29 U.S.C. § 160(l), 29 U.S.C.A. § 160(l).' 2 Section 2283 took the place of former § 265 of the Judicial Code which provided: 'The writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a State, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy.' In view of our ruling, we find it unnecessary to consider whether apart from the specific exceptions contained in § 2283, the District Court was justified in enjoining this intrusion on an exclusive federal jurisdiction. Cf. Bowles v. Willingham, 321 U.S. 503, 510—511, 64 S.Ct. 641, 645, 88 L.Ed. 892.

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347 U.S. 497 74 S.Ct. 693 98 L.Ed. 884 BOLLING et al.v.SHARPE et al. No. 8. Reargued Dec. 8, 9, 1953. Decided May 17, 1954. Messrs. George E. C. Hayes, James M. Nabrit, Washington, D.C., for petitioners. Mr. Milton D. Korman, Washington, D.C., for respondents. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 This case challenges the validity of segregation in the public schools of the District of Columbia. The petitioners, minors of the Negro race, allege that such segregation deprives them of due process of law under the Fifth Amendment. They were refused admission to a public school attended by white children solely because of their race. They sought the aid of the District Court for the District of Columbia in obtaining admission. That court dismissed their complaint. The Court granted a writ of certiorari before judgment in the Court of Appeals because of the importance of the constitutional question presented. 344 U.S. 873, 73 S.Ct. 173, 97 L.Ed. 676. 2 We have this day held that the Equal Protection Clause of the Fourteenth Amendment prohibits the states from maintaining racially segregated public schools.1 The legal problem in the District of Columbia is somewhat different, however. The Fifth Amendment, which is applicable in the District of Columbia, does not contain an equal protection clause as does the Fourteenth Amendment which applies only to the states. But the concepts of equal protection and due process, both stemming from our American ideal of fairness, are not mutually exclusive. The 'equal protection of the laws' is a more explicit safeguard of prohibited unfairness than 'due process of law,' and, therefore, we do not imply that the two are always interchangeable phrases. But, as this Court has recognized, discrimination may be so unjustifiable as to be violative of due process.2 3 Classifications based solely upon race must be scrutinized with particular care, since they are contrary to our traditions and hence constitutionally suspect.3 As long ago as 1896, this Court declared the principle 'that the constitution of the United States, in its present form, forbids, so far as civil and political rights are concerned, discrimination by the general government, or by the states, against any citizen because of his race.'4 And in Buchanan v. Warley, 245 U.S. 60, 38 S.Ct. 16, 62 L.Ed. 149, the Court held that a statute which limited the right of a property owner to convey his property to a person of another race was, as an unreasonable discrimination, a denial of due process of law. 4 Although the Court has not assumed to define 'liberty' with any great precision, that term is not confined to mere freedom from bodily restraint. Liberty under law extends to the full range of conduct which the individual is free to pursue, and it cannot be restricted except for a proper governmental objective. Segregation in public education is not reasonably related to any proper governmental objective, and thus it imposes on Negro children of the District of Columbia a burden that constitutes an arbitrary deprivation of their liberty in violation of the Due Process Clause. 5 In view of our decision that the Constitution prohibits the states from maintaining racially segregated public schools, it would be unthinkable that the same Constitution would impose a lesser duty on the Federal Government.5 We hold that racial segregation in the public schools of the District of Columbia is a denial of the due process of law guaranteed by the Fifth Amendment to the Constitution. 6 For the reasons set out in Brown v. Board of Education, this case will be restored to the docket for reargument on Questions 4 and 5 previously propounded by the Court. 345 U.S. 972, 73 S.Ct. 1114, 97 L.Ed. 1388. 7 It is so ordered. 8 Case restored to docket for reargument on question of appropriate decree. 1 Brown v. Board of Education, 347 U.S. 483, 74 S.Ct. 686. 2 Detroit Bank v. United States, 317 U.S. 329, 63 S.Ct. 297, 87 L.Ed. 304; Currin v. Wallace, 306 U.S. 1, 13—14, 59 S.Ct. 379, 386, 83 L.Ed. 441; Steward Machine Co. v. Davis, 301 U.S. 548, 585, 57 S.Ct. 883, 890, 81 L.Ed. 1279. 3 Korematsu v. United States, 323 U.S. 214, 216, 65 S.Ct. 193, 194, 89 L.Ed. 194; Hirabayashi v. United States, 320 U.S. 81, 100, 63 S.Ct. 1375, 1385, 87 L.Ed. 1774. 4 Gibson v. Mississippi, 162 U.S. 565, 591, 16 S.Ct. 904, 910, 40 L.Ed. 1075. Cf. Steele v. Louisville & Nashville R. Co., 323 U.S. 192, 198—199, 65 S.Ct. 226, 230, 89 L.Ed. 173. 5 Cf. Hurd v. Hodge, 334 U.S. 24, 68 S.Ct. 847, 92 L.Ed. 1187.

12

347 U.S. 521 74 S.Ct. 699 98 L.Ed. 910 UNITED SHOE MACHINERY CORP.v.UNITED STATES. No. 394. Argued April 26, 27, 1954. Decided May 17, 1954. Messrs. John L. Hall, Robert Proctor, Claude R. Branch, Boston, Mass., for appellant. Mr. Ralph S. Spritzer, Washington, D.C., for appellee. PER CURIAM. 1 The case having been fully argued and the Court being satisfied that the findings are justified by the evidence and support the decree, the judgment is affirmed. 2 Mr. Justice JACKSON and Mr. Justice CLARK did not participate in the consideration or decision of this case.

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347 U.S. 507 74 S.Ct. 695 98 L.Ed. 898 UNITED STATESv.GILMAN. No. 449. Argued March 10, 11, 1954. Decided May 17, 1954. Mr. Paul A. Sweeney, Washington, D.C., for petitioner. Mr. William C. Wetherbee, Los Angeles, Cal., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 The single question in the case is whether the United States may recover indemnity from one of its employees after it has been held liable under the Federal Tort Claims Act,1 60 Stat. 842, 28 U.S.C. §§ 1346, 2671 et seq., 28 U.S.C.A. §§ 1346, 2671 et seq., for the negligence of the employee. 2 Respondent, an employee of the United States, had a collision with the car of one Darnell, while respondent was driving a government automobile. Darnell sued the United States under the Tort Claims Act. The United States filed a third-party complaint against respondent, asking that if it should be held liable to Darnell, it have indemnity from respondent. The District Court found that Darnell's injuries were caused solely by the negligence of respondent, acting within the scope of his employment. It entered judgment against the United States for $5,500 and judgment over for the United States in the same amount. The Court of Appeals reversed the judgment against respondent by a divided vote. 206 F.2d 846. The case is here on writ of certiorari. 346 U.S. 914, 74 S.Ct. 275. 3 Petitioner's argument is that the right of indemnity, though not expressly granted by the Tort Claims Act, is to be implied. A private employer, it is said, has a common-law right of indemnity against an employee whose negligence has made the employer liable. The Tort Claims Act, by imposing liability on the United States for the negligent acts of its employees, has placed it in the general position of a private employer. Therefore, it should have the comparable right of indemnity against the negligent employee which private employers have. United States v. Yellow Cab Co., 340 U.S. 543, 71 S.Ct. 399, 95 L.Ed. 523, is said to show the way. For there we held that the United States could be sued as a third-party defendant for contributions claimed by a joint tort-feasor, though no specific provision of the Tort Claims Act provided for such suits. 4 In that case, however, we were dealing with an established type of liability, which was within the broad sweep of the claims for which the United States had agreed to stand liable. Since the claim was within the class covered by the waiver of sovereign immunity, the Court refused to restrict its enforcement to separate actions for contribution. 5 The present case is quite different. We deal not with the liability of the United States, but with the liability of its employees. The Tort Claims Act does not touch the liability of the employees except in one respect: by 28 U.S.C. § 2676, 28 U.S.C.A. § 2676, it makes the judgment against the United States 'a complete bar' to any action by the claimant against the employee. And see § 2672. 6 The relations between the United States and its employees have presented a myriad of problems with which the Congress over the years has dealt. Tenure, retirement, discharge, veterans' preferences, the responsibility of the United States to some employees for negligent acts of other employees—these are a few of the aspects of the problem on which Congress has legislative. Government employment gives rise to policy questions of great import, both to the employees and to the Executive and Legislative Branches. On the employee side are questions of considerable import. Discipline of the employee, the exactions which may be made of him, the merits or demerits he may suffer, the rate of his promotion are of great consequence to those who make government service their career. The right of the employer to sue the employee is a form of discipline. Perhaps the suits which would be instituted under the rule which petitioner asks would mostly be brought only when the employee carried insurance. But the decision we could fashion could have no such limitations, since we deal only with a rule of indemnity which is utterly independent of any underwriting of the liability. Moreover, the suits that would be brought would haul the employee to court and require him to find a lawyer, to face his employer's charge, and to submit to the ordeal of a trial. The time out for the trial and its preparation, plus the out-of-pocket expenses, might well impose on the employee a heavier financial burden than the loss of his seniority or a demotion in rank. When the United States sues an employee and takes him to court, it lays the heavy hand of discipline on him, as onerous to the employee perhaps as any measure the employer might take, except discharge itself. 7 On the government side are questions of employee morale and fiscal policy. We have no way of knowing what the impact of the rule of indemnity we are asked to create might be. But we do know the question has serious aspects—considerations that pertain to the financial ability of employees, to their efficiency, to their morale. These are all important to the Executive Branch. The financial burden placed on the United States by the Tort Claims Act also raises important questions of fiscal policy. A part of that fiscal problem is the question of reimbursement of the United States for the losses it suffers as a result of the waiver of its sovereign immunity. Perhaps the losses suffered are so great that government employees should be required to carry part of the burden. Perhaps the cost in the morale and efficiency of employees would be too high a price to pay for the rule of indemnity the petitioner now asks us to write into the Tort Claims Act. 8 We had an analogous problem before us in United States v. Standard Oil Co., 332 U.S. 301, 67 S.Ct. 1604, 91 L.Ed. 2067, where the United States sued the owner and driver of a truck for the negligent injury of a soldier in the Army of the United States, claiming damages for loss of the soldier's service during the period of his disability. We were asked to extend the common-law action of per quod servitium amisit to the government-soldier relation. We declined stating that the problem involved federal fiscal affairs over which Congress, not the Court, should formulate the policy. 9 The reasons for following that course in the present case are even more compelling. Here a complex of relations between federal agencies and their staffs is involved. Moreover, the claim now asserted, though the product of a law Congress passed, is a matter on which Congress has not taken a position. It presents questions of policy on which Congress has not spoken.2 The selection of that policy which is most advantageous to the whole involves a host of considerations that must be weighed and appraised. That function is more appropriately for those who write the laws, rather than for those who interpret them. 10 Affirmed. 1 The Act provides in pertinent part as follows: Sec. 1346. (b) 'Subject to the provisions of chapter 171 of this title, the district courts, together with the District Court for the Territory of Alaska, the United States District Court for the District of the Canal Zone and the District Court of the Virgin Islands, shall have exclusive jurisdiction of civil actions on claims against the United States, for money damages, accruing on and after January 1, 1945, for injury or loss of property, or 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 in accordance with the law of the place where the act or omission occurred.' Sec. 2674. 'The United States shall be liable, respecting the provisions of this title relating to tort claims, in the same manner and to the same extent as a private individual under like circumstances, but shall not be liable for interest prior to judgment or for punitive damages. * * *' Sec. 2676. 'The judgment in an action under section 1346(b) of this title shall constitute a complete bar to any action by the claimant, by reason of the same subject matter, against the employee of the government whose act or omission gave rise to the claim.' 2 Though the legislative history of the Act is not too helpful on this issue, such indications as there are point toward the result we reach. The Court recently made an extensive review of the history of the Tort Claims Act in Dalehite v. United States, 346 U.S. 15, 24—30, 73 S.Ct. 956, 962, 965, 97 L.Ed. 1427. As there explained, much of its relevant history appears in the Seventy-seventh Congress, rather than in the Seventy-ninth Congress, which enacted it. In the Seventy-seventh Congress the bill took substantially the form in which it was finally enacted by the Seventh-ninth Congress. At the hearings before the House Judiciary Committee of the Seventy-seventh Congress, the question of the liability of government employees arose. Mr. Francis M. Shea, then Assistant Attorney General, explained the Government's position. In discussing the provision for administrative settlement of small claims (which is now 28 U.S.C. § 2672, 28 U.S.C.A. § 2672), Mr. Shea was questioned concerning the clause under which acceptance of an award by the claimant constitutes a release of all claims against the employee, as well as against the United States. The present § 2672 has much the same effect as § 2676, which makes a judgment against the United States a bar to action against the employee. See note 1, supra. Mr. Shea's statements concerning the administrative settlement provision therefore have some relevance to the issue in the present case. 'Mr. Springer. I would like to direct your attention, Mr. Shea, to line 19. Why do you provide this acceptance of the award as constituting a bar to the claim against the employee? Is that the intention of the provision, and what is the ultimate purpose of it? 'Mr. Shea. * * * It has been found that the Government, through the Department of Justice, is constantly being called on by the heads of the various agencies to go in and defend, we will say, a person who is driving a mail truck when suit is brought against him for damages or injuries caused while he was operating the truck within the scope of his duties. Allegations of negligence are usually made. It has been found, over long years of experience, that unless the Government is willing to go in and defend such persons the consequence is a very real attack upon the morale of the services. Most of these persons are not in a position to stand or defend large damage suits, and they are of course not generally in a position to secure the kind of insurance which one would if one were driving for himself. 'If the Government has satisfied a claim which is made on account of a collision between a truck carrying mail and a private car, that should, in our judgment, be the end of it. After the claimant has obtained satisfaction of his claim from the Government, either by a judgment or by an administrative award, he should not be able to turn around and sue the driver of the truck. If he could sue the driver of the truck, we would have to go in and defend the driver in the suit brought against him, and there will thus be continued a very substantial burden which the Government has had to bear in conducting the defense of post-office drivers and other Government employees. 'Mr. McLaughlin. Have you considered the practice followed by large corporations and railway companies with respect to defense of employees who are joined as defendants in negligence actions? 'Mr. Shea. I should think that what ordinarily happens in the case of an accident caused by a driver for a big corporation is that suit is brought jointly against the two, and usually it is satisfied by the corporation, and then ordinarily the corporation's remedy against the driver is to fire him if he is negligent too often. Ordinarily the corporations cover such risks by insurance, which is paid for by the employer, I think. 'The Chairman. Mr. Shea, you are discussing and directing your remarks to the matter where, if a person is injured and files a claim against the Government and the Government satisfies that claim, that is the end of the claim against anybody? 'Mr. Shea. That is right. 'The Chairman. What is the arrangement when the Government has an employee who is guilty of gross negligence and injury results? Is there any requirement that that employee should in any way respond to the Government if it has to pay for the injury, in the event of gross negligence? 'Mr. Shea. Not if he is a Government employee. Under those circumstances, the remedy is to fire the employee. 'Mr. McLaughlin. No right of subrogation is set up? 'Mr. Shea. Not against the employee.' See Hearings before the House Committee on the Judiciary on H.R. 5373 and H.R. 6463, 77th Cong., 2d Sess., pp. 9—10. See also S.Rep. No. 1196, 77th Cong., 2d Sess., p. 5.

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347 U.S. 483 74 S.Ct. 686 98 L.Ed. 873 BROWN et al.v.BOARD OF EDUCATION OF TOPEKA, SHAWNEE COUNTY, KAN., et al. BRIGGS et al. v. ELLIOTT et al. DAVIS et al. v. COUNTY SCHOOL BOARD OF PRINCE EDWARD COUNTY, VA., et al. GEBHART et al. v. BELTON et al. Nos. 1, 2, 4, 10. Reargued Dec. 7, 8, 9, 1953. Decided May 17, 1954. [Syllabus from pages 483-484 intentionally omitted] No. 1: Mr. Robert L. Carter, New York City, for appellants Brown and others. Mr. Paul E. Wilson, Topeka, Kan., for appellees Board of Education of Topeka and others. Nos. 2, 4: Messrs. Spottswood Robinson III, Thurgood Marshall, New York City, for appellants Briggs and Davis and others. Messrs. John W. Davis, T. Justin Moore, J. Lindsay Almond, Jr., Richmond, Va., for appellees Elliott and County School Board of Prince Edward County and others. 1 Asst. Atty. Gen. J. Lee Rankin for United States amicus curiae by special leave of Court. No. 10: 2 Mr. H. Albert Young, Wilmington, Del., for petitioners Gebhart et al. 3 Mr. Jack Greenberg, Thurgood Marshall, New York City, for respondents Belton et al. 4 Mr. Chief Justice WARREN delivered the opinion of the Court. 5 These cases come to us from the States of Kansas, South Carolina, Virginia, and Delaware. They are premised on different facts and different local conditions, but a common legal question justifies their consideration together in this consolidated opinion.1 6 In each of the cases, minors of the Negro race, through their legal representatives, seek the aid of the courts in obtaining admission to the public schools of their community on a nonsegregated basis. In each instance, they have been denied admission to schools attended by white children under laws requiring or permitting segregation according to race. This segregation was alleged to deprive the plaintiffs of the equal protection of the laws under the Fourteenth Amendment. In each of the cases other than the Delaware case, a three-judge federal district court denied relief to the plaintiffs on the so-called 'separate but equal' doctrine announced by this Court in Plessy v. Ferguson, 163 U.S. 537, 16 S.Ct. 1138, 41 L.Ed. 256. Under that doctrine, equality of treatment is accorded when the races are provided substantially equal facilities, even though these facilities be separate. In the Delaware case, the Supreme Court of Delaware adhered to that doctrine, but ordered that the plaintiffs be admitted to the white schools because of their superiority to the Negro schools. 7 The plaintiffs contend that segregated public schools are not 'equal' and cannot be made 'equal,' and that hence they are deprived of the equal protection of the laws. Because of the obvious importance of the question presented, the Court took jurisdiction.2 Argument was heard in the 1952 Term, and reargument was heard this Term on certain questions propounded by the Court.3 8 Reargument was largely devoted to the circumstances surrounding the adoption of the Fourteenth Amendment in 1868. It covered exhaustively consideration of the Amendment in Congress, ratification by the states, then existing practices in racial segregation, and the views of proponents and opponents of the Amendment. This discussion and our own investigation convince us that, although these sources cast some light, it is not enough to resolve the problem with which we are faced. At best, they are inconclusive. The most avid proponents of the post-War Amendments undoubtedly intended them to remove all legal distinctions among 'all persons born or naturalized in the United States.' Their opponents, just as certainly, were antagonistic to both the letter and the spirit of the Amendments and wished them to have the most limited effect. What others in Congress and the state legislatures had in mind cannot be determined with any degree of certainty. 9 An additional reason for the inconclusive nature of the Amendment's history, with respect to segregated schools, is the status of public education at that time.4 In the South, the movement toward free common schools, supported by general taxation, had not yet taken hold. Education of white children was largely in the hands of private groups. Education of Negroes was almost nonexistent, and practically all of the race were illiterate. In fact, any education of Negroes was forbidden by law in some states. Today, in contrast, many Negroes have achieved outstanding success in the arts and sciences as well as in the business and professional world. It is true that public school education at the time of the Amendment had advanced further in the North, but the effect of the Amendment on Northern States was generally ignored in the congressional debates. Even in the North, the conditions of public education did not approximate those existing today. The curriculum was usually rudimentary; ungraded schools were common in rural areas; the school term was but three months a year in many states; and compulsory school attendance was virtually unknown. As a consequence, it is not surprising that there should be so little in the history of the Fourteenth Amendment relating to its intended effect on public education. 10 In the first cases in this Court construing the Fourteenth Amendment, decided shortly after its adoption, the Court interpreted it as proscribing all state-imposed discriminations against the Negro race.5 The doctrine of "separate but equal" did not make its appearance in this court until 1896 in the case of Plessy v. Ferguson, supra, involving not education but transportation.6 American courts have since labored with the doctrine for over half a century. In this Court, there have been six cases involving the 'separate but equal' doctrine in the field of public education.7 In Cumming v. Board of Education of Richmond County, 175 U.S. 528, 20 S.Ct. 197, 44 L.Ed. 262, and Gong Lum v. Rice, 275 U.S. 78, 48 S.Ct. 91, 72 L.Ed. 172, the validity of the doctrine itself was not challenged.8 In more recent cases, all on the graduate school level, inequality was found in that specific benefits enjoyed by white students were denied to Negro students of the same educational qualifications. State of Missouri ex rel. Gaines v. Canada, 305 U.S. 337, 59 S.Ct. 232, 83 L.Ed. 208; Sipuel v. Board of Regents of University of Oklahoma, 332 U.S. 631, 68 S.Ct. 299, 92 L.Ed. 247; Sweatt v. Painter, 339 U.S. 629, 70 s.Ct. 848, 94 L.Ed. 1114; McLaurin v. Oklahoma State Regents, 339 U.S. 637, 70 S.Ct. 851, 94 L.Ed. 1149. In none of these cases was it necessary to re-examine the doctrine to grant relief to the Negro plaintiff. And in Sweatt v. Painter, supra, the Court expressly reserved decision on the question whether Plessy v. Ferguson should be held inapplicable to public education. 11 In the instant cases, that question is directly presented. Here, unlike Sweatt v. Painter, there are findings below that the Negro and white schools involved have been equalized, or are being equalized, with respect to buildings, curricula, qualifications and salaries of teachers, and other 'tangible' factors.9 Our decision, therefore, cannot turn on merely a comparison of these tangible factors in the Negro and white schools involved in each of the cases. We must look instead to the effect of segregation itself on public education. 12 In approaching this problem, we cannot turn the clock back to 1868 when the Amendment was adopted, or even to 1896 when Plessy v. Ferguson was written. We must consider public education in the light of its full development and its present place in American life throughout the Nation. Only in this way can it be determined if segregation in public schools deprives these plaintiffs of the equal protection of the laws. 13 Today, education is perhaps the most important function of state and local governments. Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship. Today it is a principal instrument in awakening the child to cultural values, in preparing him for later professional training, and in helping him to adjust normally to his environment. In these days, it is doubtful that any child may reasonably be expected to succeed in life if he is denied the opportunity of an education. Such an opportunity, where the state has undertaken to provide it, is a right which must be made available to all on equal terms. 14 We come then to the question presented: Does segregation of children in public schools solely on the basis of race, even though the physical facilities and other 'tangible' factors may be equal, deprive the children of the minority group of equal educational opportunities? We believe that it does. 15 In Sweatt v. Painter, supra (339 U.S. 629, 70 S.Ct. 850), in finding that a segregated law school for Negroes could not provide them equal educational opportunities, this Court relied in large part on 'those qualities which are incapable of objective measurement but which make for greatness in a law school.' In McLaurin v. Oklahoma State Regents, supra (339 U.S. 637, 70 S.Ct. 853), the Court, in requiring that a Negro admitted to a white graduate school be treated like all other students, again resorted to intangible considerations: '* * * his ability to study, to engage in discussions and exchange views with other students, and, in general, to learn his profession.' Such considerations apply with added force to children in grade and high schools. To separate them from others of similar age and qualifications solely because of their race generates a feeling of inferiority as to their status in the community that may affect their hearts and minds in a way unlikely ever to be undone. The effect of this separation on their educational opportunities was well stated by a finding in the Kansas case by a court which nevertheless felt compelled to rule against the Negro plaintiffs: 16 'Segregation of white and colored children in public schools has a detrimental effect upon the colored children. The impact is greater when it has the sanction of the law; for the policy of separating the races is usually interpreted as denoting the inferiority of the negro group. A sense of inferiority affects the motivation of a child to learn. Segregation with the sanction of law, therefore, has a tendency to (retard) the educational and mental development of Negro children and to deprive them of some of the benefits they would receive in a racial(ly) integrated school system.'10 17 Whatever may have been the extent of psychological knowledge at the time of Plessy v. Ferguson, this finding is amply supported by modern authority.11 Any language in Plessy v. Ferguson contrary to this finding is rejected. 18 We conclude that in the field of public education the doctrine of 'separate but equal' has no place. Separate educational facilities are inherently unequal. Therefore, we hold that the plaintiffs and others similarly situated for whom the actions have been brought are, by reason of the segregation complained of, deprived of the equal protection of the laws guaranteed by the Fourteenth Amendment. This disposition makes unnecessary any discussion whether such segregation also violates the Due Process Clause of the Fourteenth Amendment.12 19 Because these are class actions, because of the wide applicability of this decision, and because of the great variety of local conditions, the formulation of decrees in these cases presents problems of considerable complexity. On reargument, the consideration of appropriate relief was necessarily subordinated to the primary question—the constitutionality of segregation in public education. We have now announced that such segregation is a denial of the equal protection of the laws. In order that we may have the full assistance of the parties in formulating decrees, the cases will be restored to the docket, and the parties are requested to present further argument on Questions 4 and 5 previously propounded by the Court for the reargument this Term.13 The Attorney General of the United States is again invited to participate. The Attorneys General of the states requiring or permitting segregation in public education will also be permitted to appear as amici curiae upon request to do so by September 15, 1954, and submission of briefs by October 1, 1954.14 20 It is so ordered. 21 Cases ordered restored to docket for further argument on question of appropriate decrees. 1 In the Kansas case, Brown v. Board of Education, the plaintiffs are Negro children of elementary school age residing in Topeka. They brought this action in the United States District Court for the District of Kansas to enjoin enforcement of a Kansas statute which permits, but does not require, cities of more than 15,000 population to maintain separate school facilities for Negro and white students. Kan.Gen.Stat.1949, § 72—1724. Pursuant to that authority, the Topeka Board of Education elected to establish segregated elementary schools. Other public schools in the community, however, are operated on a nonsegregated basis. The three-judge District Court, convened under 28 U.S.C. §§ 2281 and 2284, 28 U.S.C.A. §§ 2281, 2284, found that segregation in public education has a detrimental effect upon Negro children, but denied relief on the ground that the Negro and white schools were substantially equal with respect to buildings, transportation, curricula, and educational qualifications of teachers. 98 F.Supp. 797. The case is here on direct appeal under 28 U.S.C. § 1253, 28 U.S.C.A. § 1253. In the South Carolina case, Briggs v. Elliott, the plaintiffs are Negro children of both elementary and high school age residing in Clarendon County. They brought this action in the United States District Court for the Eastern District of South Carolina to enjoin enforcement of provisions in the state constitution and statutory code which require the segregation of Negroes and whites in public schools. S.C.Const. Art. XI, § 7; S.C.Code 1942, § 5377. The three-judge District Court, convened under 28 U.S.C. §§ 2281 and 2284, 28 U.S.C.A. §§ 2281, 2284, denied the requested relief. The court found that the Negro schools were inferior to the white schools and ordered the defendants to begin immediately to equalize the facilities. But the court sustained the validity of the contested provisions and denied the plaintiffs admis- sion to the white schools during the equalization program. 98 F.Supp. 529. This Court vacated the District Court's judgment and remanded the case for the purpose of obtaining the court's views on a report filed by the defendants concerning the progress made in the equalization program. 342 U.S. 350, 72 S.Ct. 327, 96 L.Ed. 392. On remand, the District Court found that substantial equality had been achieved except for buildings and that the defendants were proceeding to rectify this inequality as well. 103 F.Supp. 920. The case is again here on direct appeal under 28 U.S.C. § 1253, 28 U.S.C.A. § 1253. In the Virginia case, Davis v. County School Board, the plaintiffs are Negro children of high school age residing in Prince Edward County. They brought this action in the United States District Court for the Eastern District of Virginia to enjoin enforcement of provisions in the state constitution and statutory code which require the segregation of Negroes and whites in public schools. Va.Const. § 140; Va.Code 1950, § 22—221. The three-judge District Court, convened under 28 U.S.C. §§ 2281 and 2284, 28 U.S.C.A. §§ 2281, 2284, denied the requested relief. The court found the Negro school inferior in physical plant, curricula, and transportation, and ordered the defendants forthwith to provide substantially equal curricula and transportation and to 'proceed with all reasonable diligence and dispatch to remove' the inequality in physical plant. But, as in the South Carolina case, the court sustained the validity of the contested provisions and denied the plaintiffs admission to the white schools during the equalization program. 103 F.Supp. 337. The case is here on direct appeal under 28 U.S.C. § 1253, 28 U.S.C.A. § 1253. In the Delaware case, Gebhart v. Belton, the plaintiffs are Negro children of both elementary and high school age residing in New Castle County. They brought this action in the Delaware Court of Chancery to enjoin enforcement of provisions in the state constitution and statutory code which require the segregation of Negroes and whites in public schools. Del.Const. Art. X, § 2; Del.Rev.Code, 1935, § 2631, 14 Del.C. § 141. The Chancellor gave judgment for the plaintiffs and ordered their immediate admission to schools previously attended only by white children, on the ground that the Negro schools were inferior with respect to teacher training, pupil-teacher ratio, extracurricular activities, physical plant, and time and distance involved in travel. Del.Ch., 87 A.2d 862. The Chancellor also found that segregation itself results in an inferior education for Negro children (see note 10, infra), but did not rest his decision on that ground. 87 A.2d at page 865. The Chancellor's decree was affirmed by the Supreme Court of Delaware, which intimated, however, that the defendants might be able to obtain a modification of the decree after equalization of the Negro and white schools had been accomplished. 91 A.2d 137, 152. The defendants, contending only that the Delaware courts had erred in ordering the immediate admission of the Negro plaintiffs to the white schools, applied to this Court for certiorari. The writ was granted, 344 U.S. 891, 73 S.Ct. 213, 97 L.Ed. 689. The plaintiffs, who were successful below, did not submit a cross-petition. 2 344 U.S. 1, 73 S.Ct. 1, 97 L.Ed. 3, Id., 344 U.S. 141, 73 S.Ct. 124, 97 L.Ed. 152, Gebhart v. Belton, 344 U.S. 891, 73 S.Ct. 213, 97 L.Ed. 689. 3 345 U.S. 972, 73 S.Ct. 1118, 97 L.Ed. 1388. The Attorney General of the United States participated both Terms as amicus curiae. 4 For a general study of the development of public education prior to the Amendment, see Butts and Cremin, A History of Education in American Culture (1953), Pts. I, II: Cubberley, Public Education in the United States (1934 ed.), cc. II—XII. School practices current at the time of the adoption of the Fourteenth Amendment are described in Butts and Cremin, supra, at 269—275; Cubberley, supra, at 288—339, 408—431; Knight, Public Education in the South (1922), cc. VIII, IX. See also H. Ex. Doc. No. 315, 41st Cong., 2d Sess. (1871). Although the demand for free public schools followed substantially the same pattern in both the North and the South, the development in the South did not begin to gain momentum until about 1850, some twenty years after that in the North. The reasons for the somewhat slower development in the South (e.g., the rural character of the South and the different regional attitudes toward state assistance) are well explained in Cubberley, supra, at 408—423. In the country as a whole, but particularly in the South, the War virtually stopped all progress in public education. Id., at 427—428. The low status of Negro education in all sections of the country, both before and immediately after the War, is described in Beale, A History of Freedom of Teaching in American Schools (1941), 112—132, 175—195. Compulsory school attendance laws were not generally adopted until after the ratification of the Fourteenth Amendment, and it was not until 1918 that such laws were in force in all the states. Cubberley, supra, at 563—565. 5 In re Slaughter-House Cases, 1873, 16 Wall. 36, 67—72, 21 L.Ed. 394; Strauder v. West Virginia, 1880, 100 U.S. 303, 307—308, 25 L.Ed. 664. 'It ordains that no State shall deprive any person of life, liberty, or property, without due process of law, or deny to any person within its jurisdiction the equal protection of the laws. What is this but declaring that the law in the States shall be the same for the black as for the white; that all persons, whether colored or white, shall stand equal before the laws of the States, and, in regard to the colored race, for whose protection the amendment was primarily designed, that no discrimination shall be made against them by law because of their color? The words of the amendment, it is true, are prohibitory, but they contain a necessary implication of a positive immunity, or right, most valuable to the colored race,—the right to exemption from unfriendly legislation against them distinctively as colored, exemption from legal discriminations, implying inferiority in civil society, lessening the security of their enjoyment of the rights which others enjoy, and discriminations which are steps towards reducing them to the condition of a subject race.' See also State of Virginia v. Rives, 1879, 100 U.S. 313, 318, 25 L.Ed. 667; Ex parte Virginia, 1879, 100 U.S. 339, 344—345, 25 L.Ed. 676. 6 The doctrine apparently originated in Roberts v. City of Boston, 1850, 5 Cush. 198, 59 Mass. 198, 206, upholding school segregation against attack as being violative of a state constitutional guarantee of equality. Segregation in Boston public schools was eliminated in 1855. Mass. Acts 1855, c. 256. But elsewhere in the North segregation in public education has persisted in some communities until recent years. It is apparent that such segregation has long been a nationwide problem, not merely one of sectional concern. 7 See also Berea College v. Kentucky, 1908, 211 U.S. 45, 29 S.Ct. 33, 53 L.Ed. 81. 8 In the Cumming case, Negro taxpayers sought an injunction requiring the defendant school board to discontinue the operation of a high school for white children until the board resumed operation of a high school for Negro children. Similarly, in the Gong Lum case, the plaintiff, a child of Chinese descent, contended only that state authorities had misapplied the doctrine by classifying him with Negro children and requiring him to attend a Negro school. 9 In the Kansas case, the court below found substantial equality as to all such factors. 98 F.Supp. 797, 798. In the South Carolina case, the court below found that the defendants were proceeding 'promptly and in good faith to comply with the court's decree.' 103 F.Supp. 920, 921. In the Virginia case, the court below noted that the equalization program was already 'afoot and progressing,' 103 F.Supp. 337, 341; since then, we have been advised, in the Virginia Attorney General's brief on reargument, that the program has now been completed. In the Delaware case, the court below similarly noted that the state's equalization program was well under way. 91 A.2d 137, 139. 10 A similar finding was made in the Delaware case: 'I conclude from the testimony that in our Delaware society, State-imposed segregation in education itself results in the Negro children, as a class, receiving educational opportunities which are substantially inferior to those available to white children otherwise similarly situated.' 87 A.2d 862, 865. 11 K. B. Clark, Effect of Prejudice and Discrimination on Personality Development (Midcentury White House Conference on Children and Youth, 1950); Witmer and Kotinsky, Personality in the Making (1952), c. VI; Deutscher and Chein, The Psychological Effects of Enforced Segregation: A Survey of Social Science Opinion, 26 J.Psychol. 259 (1948); Chein, What are the Psychological Effects of Segregation Under Conditions of Equal Facilities?, 3 Int. J. Opinion and Attitude Res. 229 (1949); Brameld, Educational Costs, in Discrimination and National Welfare (MacIver, ed., 1949), 44—48; Frazier, The Negro in the United States (1949), 674—681. And see generally Myrdal, An American Dilemma (1944). 12 See Bolling v. Sharpe, 347 U.S. 497, 74 S.Ct. 693, concerning the Due Process Clause of the Fifth Amendment. 13 '4. Assuming it is decided that segregation in public schools violates the Fourteenth Amendment '(a) would a decree necessarily follow providing that, within the limits set by normal geographic school districting, Negro children should forthwith be admitted to schools of their choice, or '(b) may this Court, in the exercise of its equity powers, permit an effective gradual adjustment to be brought about from existing segregated systems to a system not based on color distinctions? '5. On the assumption on which questions 4(a) and (b) are based, and assuming further that this Court will exercise its equity powers to the end described in question 4(b), '(a) should this Court formulate detailed decrees in these cases; '(b) if so, what specific issues should the decrees reach; '(c) should this Court appoint a special master to hear evidence with a view to recommending specific terms for such decrees; '(d) should this Court remand to the courts of first instance with directions to frame decrees in these cases, and if so what general directions should the decrees of this Court include and what procedures should the courts of first instance follow in arriving at the specific terms of more detailed decrees?' 14 See Rule 42, Revised Rules of this Court, effective July 1, 1954, 28 U.S.C.A.

12

347 U.S. 522 74 S.Ct. 737 98 L.Ed. 911 GALVANv.PRESS. No. 407. Argued Jan. 11, 12, 1954. Decided May 24, 1954. Messrs. Harry Wolpin and A. L. Wirin, Los Angeles, for petitioner. Mr. Oscar H. Davis, Washington, D.C., for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 Petitioner, an alien of Mexican birth, first entered the United States in 1918 and has since resided here with only occasional brief visits to his native country. In the course of two questionings, in March 1948, by the Immigration and Naturalization Service, he indicated that he had been a member of the Communist Party from 1944 to 1946. In March of 1949, the petitioner was served with a deportation warrant, and on the same day a preliminary deportation hearing was held to acquaint him with the charges against him—that after entry he had become a member of an organization which advocated the violent overthrow of the United States Government, and of an organization which distributed material so advocating. In December 1950, petitioner had a de novo hearing at which the transcripts of all earlier proceedings were, by agreement, made part of the record. Shortly after the hearing commenced, the examining officer lodged the additional charge against the petitioner that after entry he had been a member of the Communist Party, membership in which had been made a specific ground for deportation by the Internal Security Act of 1950, 64 Stat. 987, 1006, 1008. 2 At this final hearing the evidence against the petitioner was derived from two principal sources. The first was his own testimony during the two interrogations by immigration authorities in 1948. During those interrogations, he had testified as to the time and place he had joined the Communist Party, talked freely about his membership in the Party, and indicated generally that the distinction between the Party and other groups was clear in his mind; he had explained that the reason he had not applied for naturalization was that he feared his former Party membership might be revealed, and had offered to make amends by rejoining the Party as an undercover agent for the Government. At the hearing in December of 1950, petitioner denied that in his prior hearing he had admitted joining the Party, insisting that at the time he thought the question related to labor union activities. In response to a question whether he had ever attended meetings of the Spanish Speaking Club, an alleged Communist Party unit, he replied: 'The only meetings I attended were relating to the Fair Employment Practices Committee.' 3 The second source of information was the testimony of a Mrs. Meza to the effect that she had been present when petitioner was elected an officer of the Spanish Speaking Club. Petitioner denied the truth of this and other statements of Mrs. Meza calculated to establish his active participation in the Communist Party and said: 'She must have been under great strain to imagine all those things.' 4 The Hearing Officer found that petitioner had been a member of the Communist Party from 1944 to 1946 and ordered him deported on that specific ground. He did not deem it necessary to make findings on the more general charges contained in the original warrant. The Hearing Officer's decision was adopted by the Assistant Commissioner and an appeal was dismissed by the Board of Immigration Appeals. A petition for a writ of habeas corpus was denied by the District Court, and the dismissal was affirmed by the Court of Appeals for the Ninth Circuit. 201 F.2d 302. 5 On certiorari, petitioner challenged the sufficiency of the evidence to sustain deportation under § 22 of the Internal Security Act of 1950 and attacked the validity of the Act as applied to him.1 These are issues that raise the constitutionality and construction of the 1950 Act for the first time and so we granted certiorari. 346 U.S. 812, 74 S.Ct. 53. 6 Petitioner's contention that there was not sufficient evidence to support the deportation order brings into question the scope of the word 'member' as used by Congress in the enactment of 1950, whereby it required deportation of any alien who at the time of entering the United States, or at any time thereafter, was a 'member' of the Communist Party.2 We are urged to construe the Act as providing for the deportation only of those aliens who joined the Communist Party fully conscious of its advocacy of violence, and who, by so joining, thereby committed themselves to this violent purpose. 7 But the Act itself appears to preclude an interpretation which would require proof that an alien had joined the Communist Party with full appreciation of its purposes and program. In the same section under which the petitioner's deportation is sought here as a former Communist Party member, there is another provision, subsection (2)(E),* which requires the exclusion or deportation of aliens who are 'members of or affiliated with' an organization required to register under the Internal Security Act of 1950,3 'unless such aliens establish that they did not know or have reason to believe at the time they became members of or affiliated with such an organization * * * that such organization was a Communist organization.' 64 Stat. 1007. In describing the purpose of this clause, Senator McCarran, the Act's sponsor, said: 'Aliens who were innocent dupes when they joined a Communist Front organization, as distinguished from a Communist political organization (such as the Communist Party), would likewise not ipso facto be excluded or deported.' 96 Cong.Rec. 14180. In view of this specific escape provision for members of other organizations, it seems clear that Congress did not exempt 'innocent' members of the Communist Party. 8 While the legislative history of the 1950 Act is not illuminating on the scope of 'member,' considerable light was shed by authoritative comment in the debates on the statute which Congress enacted in 1951 to correct what it regarded as the unduly expanded interpretation by the Attorney General of 'member' under the 1950 Act. 65 Stat. 28.** The amendatory statute dealt with certain specific situations which had been brought to the attention of Congress and provided that where aliens had joined a proscribed organization (1) when they were children, (2) by operation of law, or (3) to obtain the necessities of life, they were not to be deemed to have been 'members.' In explaining the measure, its sponsor, Senator McCarran, stated repeatedly and emphatically that 'member' was intended to have the same meaning in the 1950 Act as had been given it by the courts and administrative agencies since 1918, 97 Cong.Rec. 2368—2374. See S.Rep. No. 111, 82d Cong., 1st Sess. 2; H.R.Rep. No. 118, 82d Cong., 1st Sess. 2. To illustrate what 'member' did not cover he inserted in the Record a memorandum containing the following language quoted from Colyer v. Skeffington, D.C., 265 F. 17, 72: 'Congress could not have intended to authorize the wholesale deportation of aliens who, accidentally, artificially, or unconsciously in appearance only, are found to be members of or affiliated with an organization of whose platform and purposes they have no real knowledge.' 97 Cong.Rec. 2373. 9 This memorandum, as a weighty gloss on what Congress wrote, indicates that Congress did not provide that the three types of situations it enumerated in the 1951 corrective statute should be the only instances where membership is so nominal as to keep an alien out of the deportable class. For example, the circumstances under which the finding of membership was rejected in Colyer v. Skeffington, supra, would not have been covered by the specific language in the 1951 Act. In that case, the aliens passed 'from one organization into another, supposing the change to be a mere change of name, and that by assenting to membership in the new organization they had not really changed their affiliations or political or economic activities.' 265 F. at 72. 10 On the other hand, the repeated statements that 'member' was to have the same meaning under the 1950 Act as previously, preclude an interpretation limited to those who were fully cognizant of the Party's advocacy of violence. For the judicial and administrative decisions prior to 1950 do not exempt aliens who joined an organization unaware of its program and purposes. See Kjar v. Doak, 7 Cir., 61 F.2d 566; Greco v. Haff, 9 Cir., 63 F.2d 863; In the matter of O.—-, 3. I. & N. Dec. 736. 11 It must be concluded, therefore, that support, or even demonstrated knowledge, of the Communist Party's advocacy of violence was not intended to be a prerequisite to deportation. It is enough that the alien joined the Party, aware that he was joining an organization known as the Communist Party which operates as a distinct and active political organization, and that he did so of his own free will. A fair reading of the legislation requires that this scope be given to what Congress enacted in 1950, however severe the consequences and whatever view one may have of the wisdom of the means which Congress employed to meet its desired end. 12 On this basis, the Hearing Officer's finding that petitioner here was a 'member' of the Communist Party must be sustained. Petitioner does not claim that he joined the Party 'accidentally, artificially, or unconsciously in appearance only,' to use the words in Senator McCarran's memorandum. The two points on which he bases his defense against the deportation order are, first, that he did not join the Party at all, and that if he did join, he was unaware of the Party's true purposes and program. The evidence which must have been believed and relied upon for the Hearing Officer's finding that petitioner was a 'member' is that petitioner was asked to join the Party by a man he assumed to be an organizer, that he attended a number of meetings and that he did not apply for citizenship because he feared his Party membership would become known to the authorities. In addition, on the basis of Mrs. Meza's testimony, the Hearing Officer was entitled to conclude that petitioner had been active in the Spanish Speaking Club, and, indeed, one of its officers. Certainly there was sufficient evidence to support a finding of membership. And even if petitioner was unaware of the Party's advocacy of violence, as he attempted to prove, the record does not show a relationship to the Party so nominal as not to make him a 'member' within the terms of the Act. 13 This brings us to petitioner's constitutional attack on the statute. Harisiades v. Shaughnessy, 342 U.S. 580, 72 S.Ct. 512, 96 L.Ed. 586, sustained the constitutionality of the Alien Registration Act of 1940. 54 Stat. 670. That Act made membership in an organization which advocates the overthrow of the Government of the United States by force or violence a ground for deportation, notwithstanding that membership in such organization had terminated before enactment of the statute. Under the 1940 Act, it was necessary to prove in each case, where membership in the Communist Party was made the basis of deportation, that the Party did, in fact, advocate the violent overthrow of the government. The Internal Security Act of 1950 dispensed with the need for such proof. On the basis of extensive investigation Congress made many findings, including that in § 2(1) of the Act that the 'Communist movement * * * is a worldwide revolutionary movement whose purpose it is, by treachery, deceit, infiltration into other groups (governmental and otherwise), espionage, sabotage, terrorism, and any other means deemed necessary, to establish a Communist totalitarian dictatorship', 50 U.S.C.A. § 781(1) and made present or former membership in the Communist Party, in and of itself, a ground for deportation. Certainly, we cannot say that this classification by Congress is so baseless as to be violative of due process and therefore beyond the power of Congress. 14 In this respect—the dispensation with proof of the character of the Communist Party—the present case goes beyond Harisiades. But insofar as petitioner's constitutional claim is based on his ignorance that the Party was committed to violence, the same issue was before the Court with respect to at least one of the aliens in Harisiades. 15 The power of Congress over the admission of aliens and their right to remain is necessarily very broad, touching as it does basic aspects of national sovereignty, more particularly our foreign relations and the national security. Nevertheless, considering what it means to deport an alien who legally became part of the American community, and the extent to which, since he is a 'person,' an alien has the same protection for his life, liberty and property under the Due Process Clause as is afforded to a citizen, deportation without permitting the alien to prove that he was unaware of the Communist Party's advocacy of violence strikes one with a sense of harsh incongruity. If due process bars Congress from enactments that shock the sense of fair play—which is the essence of due process—one is entitled to ask whether it is not beyond the power of Congress to deport an alien who was duped into joining the Communist Party, particularly when his conduct antedated the enactment of the legislation under which his deportation is sought. And this because deportation may, as this Court has said in Ng Fung Ho v. White, 259 U.S. 276, 284, 42 S.Ct. 492, 495, 66 L.Ed. 938, deprive a man 'of all that makes life worth living'; and, as it has said in Fong Haw Tan v. Phelan, 333 U.S. 6, 10, 68 S.Ct. 374, 376, 92 L.Ed. 433; 'deportation is a drastic measure and at times the equivalent of banishment or exile'. 16 In light of the expansion of the concept of substantive due process as a limitation upon all powers of Congress, even the war power, see Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 155, 40 S.Ct. 106, 107, 64 L.Ed. 194, much could be said for the view, were we writing on a clean slate, that the Due Process Clause qualifies the scope of political discretion heretofore recognized as belonging to Congress in regulating the entry and deportation of aliens. And since the intrinsic consequences of deportation are so close to punishment for crime, it might fairly be said also that the ex post facto Clause, even though applicable only to punitive legislation,4 should be applied to deportation. 17 But the slate is not clean. As to the extent of the power of Congress under review, there is not merely 'a page of history,' New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 507, 65 L.Ed. 963, but a whole volume. Policies pertaining to the entry of aliens and their right to remain here are peculiarly concerned with the political conduct of government. In the enforcement of these policies, the Executive Branch of the Government must respect the procedural safeguards of due process. Kaoru Yamataya v. Fisher (The Japanese Immigrant Case), 189 U.S. 86, 101, 23 S.Ct. 611, 614, 47 L.Ed. 721; Wong Yang Sung v. McGrath, 339 U.S. 33, 49, 70 S.Ct. 445, 453, 94 L.Ed. 616. But that the formulation of these policies is entrusted exclusively to Congress has become about as firmly imbedded in the legislative and judicial tissues of our body politic as any aspect of our government. And whatever might have been said at an earlier date for applying the ex post facto Clause, it has been the unbroken rule of this Court that it has no application to deportation. 18 We are not prepared to deem ourselves wiser or more sensitive to human rights than our predecessors, especially those who have been most zealous in protecting civil liberties under the Constitution, and must therefore under our constitutional system recognize congressional power in dealing with aliens, on the basis of which we are unable to find the Act of 1950 unconstitutional. See Bugajewitz v. Adams, 228 U.S. 585, 33 S.Ct. 607, 57 L.Ed. 978, and Ng Fung Ho v. White, 259 U.S. 276, 280, 42 S.Ct. 492, 493, 66 L.Ed. 938. 19 Judgment affirmed. 20 Mr. Justice REED concurs in the judgment of the Court and in the opinion as written, except as to the deductions drawn from Senator McCarran's citation of Colyer v. Skeffington, D.C., 265 F. 17, 72. 21 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS concurs, dissenting. 22 Petitioner has lived in this country thirty-six years, having come here from Mexico in 1918 when only seven years of age. He has an American wife to whom he has been married for twenty years, four children all born here, and a stepson who served this country as a paratrooper. Since 1940 petitioner has been a laborer at the Van Camp Sea Food Company in San Diego, California. In 1944 petitioner became a member of the Communist Party. Deciding that he no longer wanted to belong to that party, he got out sometime around 1946 or 1947. As pointed out in the Court's opinion, during the period of his membership the Communist Party functioned 'as a distinct and active political organization'. See Communist Party of United States of America v. Peek, 20 Cal.2d 536, 127 P.2d 889. Party candidates appeared on California election ballots, and no federal law then frowned on Communist Party political activities. Now in 1954, however, petitioner is to be deported from this country solely because of his past lawful membership in that party. And this is to be done without proof or finding that petitioner knew that the party had any evil purposes or that he agreed with any such purposes that it might have had. On the contrary, there is strong evidence that he was a good, law-abiding man, a steady worker and a devoted husband and father loyal to this country and its form of government. 23 For joining a lawful political group years ago—an act which he had no possible reason to believe would subject him to the slightest penalty—petitioner now loses his job, his friends, his home, and maybe even his children, who must choose between their father and their native country. Perhaps a legislative act penalizing political activities legal when engaged in is not a bill of attainder. But see United States v. Lovett, 328 U.S. 303, 315—316, 66 S.Ct. 1073, 1078, 1079, 90 L.Ed. 1252. Conceivably an Act prescribing exile for prior innocent conduct does not violate the constitutional prohibition of ex post facto laws. Cf. American Communications Ass'n v. Douds, 339 U.S. 382, 412—415, 70 S.Ct. 674, 690—693, 94 L.Ed. 925. It may be possible that this deportation order for engaging in political activities does not violate the First Amendment's clear ban against abridgment of political speech and assembly. Maybe it is not even a denial of due process and equal protection of the laws. But see dissenting opinions in Carlson v. Landon, 342 U.S. 524, 72 S.Ct. 525, 96 L.Ed. 547, and Harisiades v. Shaughnessy, 342 U.S. 580, 72 S.Ct. 512, 96 L.Ed. 586. I am unwilling to say, however, that despite these constitutional safeguards this man may be driven from our land because he joined a political party that California and the Nation then recognized as perfectly legal. 24 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting. 25 As Mr. Justice BLACK states in his dissent, the only charge against this alien is an act that was lawful when done. I agree that there is, therefore, no constitutional basis for deportation, if aliens, as well as citizens, are to be the beneficiaries of due process of law. 26 The case might, of course, be different if the past affiliation with Communism now seized upon as the basis for deportation had continued down to this date. But so far as this record shows, the alien Galvan quit the Communist Party at least six years ago. There is not a word in the present record to show that he continued his affiliations with it sub rosa or espoused its causes or joined in any of its activities since he ceased to be a member of it. 27 I cannot agree that because a man was once a Communist, he always must carry the curse. Experience teaches otherwise. It is common knowledge that though some of the leading Socialists of Asia once were Communists, they repudiated the Marxist creed when they experienced its ugly operations, and today are the most effective opponents the Communists know. So far as the present record shows, Galvan may be such a man. Or he may be merely one who transgressed and then returned to a more orthodox political faith. The record is wholly silent about Galvan's present political activities. Only one thing is clear: Galvan is not being punished for what he presently is, nor for an unlawful act, nor for espionage or conspiracy or intrigue against this country. He is being punished for what he once was, for a political faith he briefly expressed over six years ago and then rejected. 28 This action is hostile to our constitutional standards, as I pointed out in Harisiades v. Shaughnessy, 342 U.S. 580, 598, 72 S.Ct. 512, 523, 96 L.Ed. 586. Aliens who live here in peace, who do not abuse our hospitality, who are lawabiding members of our communities, have the right to due process of law. They too are 'persons' within the meaning of the Fifth Amendment. They can be molested by the government in times of peace only when their presence here is hostile to the safety or welfare of the Nation. If they are to be deported, it must be for what they are and do, not for what they once believed. 1 In his petition, petitioner also contended that the procedure used against him was unfair because of the new charge lodged by the Examining Officer in the December 1950 hearing. Apart from the fact that this claim was not pressed in the argument or petitioner's brief, it is sufficient to note that there was no element of surprise in the additional charge, since it was simply in more specific terms the same ground for deportation that petitioner already knew he had to defend against, namely, membership in the Communist Party. Furthermore, petitioner declined the Hearing Officer's offer of a continuance to meet the new charge. 2 Section 22 of the Internal Security Act of 1950 provides that the Attorney General shall take into custody and deport any alien 'who was at the time of entering the United States, or has been at any time thereafter, * * * a member of any one of the classes of aliens enumerated in section 1(2) of this Act * * *.' Subparagraph (C) of § 1(2) lists 'Aliens who are members of or affiliated with (i) the Communist Party of the United States * * *.' The substance of this provision was incorporated in the Immigration and Nationality Act of 1952, 66 Stat. 163, 205, 8 U.S.C. § 1251(a)(6)(C), 8 U.S.C.A. § 1251(a)(6)(C). * Now 8 U.S.C.A. § 1182(a)(28)(E). 3 Under § 7 of the Internal Security Act of 1950, 50 U.S.C.A. § 786, 'Communist-action' and 'Communist-front' organizations are required to register as such with the Attorney General. Section 13, 50 U.S.C.A. § 792, provides that where such an organization fails to register the Attorney General may institute proceedings requiring such registration. ** Now 8 U.S.C.A. § 1182(a)(28)(I)(i). 4 First in Ogden v. Saunders, 12 Wheat. 213, 271, 6 L.Ed. 606, and again in Satterlee v. Matthewson, 2 Pet. 380, 686 (appendix), 7 L.Ed. 458, a characteristically persuasive attack was made by Mr. Justice Johnson on the view that the ex post facto Clause applies only to prosecutions for crime. The Court, however, has undeviatingly enforced the contrary position, first expressed in Calder v. Bull, 3 Dall. 386, 1 L.Ed. 648. It would be an unjustifiable reversal to overturn a view of the Constitution so deeply rooted and so consistently adhered to.

12

347 U.S. 535 74 S.Ct. 745 98 L.Ed. 933 ALLEN et al.v.GRAND CENTRAL AIRCRAFT CO. No. 450. Argued May 11, 12, 1954. Decided May 24, 1954. [Syllabus from pages 535-536 intentionally omitted] Mr. Robert L. Stern, Washington, D.C., for appellants. Mr. Richard W. Lund, Beverly Hills, for appellee. Mr. Justice BURTON delivered the opinion of the Court. 1 The principal question for decision is whether the Defense Production Act of 19501 authorized the President to apply administrative action to the enforcement of its wage stabilization provisions. For the reasons hereafter stated, we decide that it did. 2 There is here also the question whether such administrative enforcement may be applied even after the restrictions placed on wages under Title IV of the Act2 have expired, provided the enforcement is limited to violations antedating such expiration. Our answer is in the affirmative. 3 Appellee further claims that the pending administrative proceeding should be enjoined because the mere conduct of that proceeding might cause it irreparable damage. For the reasons given below, we find that argument untenable. 4 Appellee, Grand Central Aircraft Company, is a California corporation which was engaged, in 1951, in the production and repair of aircraft equipment in Glendale, California, and Tucson, Arizona. November 4, 1952, the Wage Stabilization Board3 filed a complaint with the National Enforcement Commission4 alleging in substance that appellee, between January 26, 1951, and January 1, 1952, had paid wage increases in violations of an order freezing wages at the levels of January 25, 1951.5 Those payments consisted of wages totaling about $5,500,000, including about $750,000 alleged to have been in excess of the wage ceilings. January 14, 1953, the National Enforcement Commission appointed Phil C. Neal to hear the evidence as an Enforcement Commissioner and to recommend to the Commission a determination of the issues in the proceeding. He set the case for hearing on February 24 at Los Angeles, California, but further action was enjoined as, stated below, so that the proceeding is still pending at that stage.6 5 February 13, 1953, appellee filed the instant suit in the United States District Court for the Northern District of California, Southern Division. Appellee asked the court to restrain the defendant members of the Wage Stabilization Board, the National Enforcement Commission, officials of the Twelfth Region Wage Stabilization Board, and the Enforcement Commissioner, from proceeding with the administrative hearing. Only the regional officials and the Enforcement Commissioner were served. In its complaint, appellee denied that it had violated the Defense Production Act or any regulation or order under it. Appellee claimed also that the administrative procedure then being followed was unauthorized by the Constitution or any statute and that, even if originally authorized, that authorization had now expired. Finally, appellee claimed the hearing should be enjoined because the mere conduct of the proceeding would inflict irreparable damage upon it. A three-judge District Court, convened under 28 U.S.C. (1952 ed.) § 2282, 28 U.S.C.A. § 2282, granted the restraining order and interlocutory injunction sought by appellee against further conduct of the administrative proceeding. After hearing and trial, the injunction was made permanent. 114 F.Supp. 389. The order was then appealed to this Court under 28 U.S.C. (1952 ed.) § 1253, 28 U.S.C.A § 1253. Stay of the injunction was denied, two Justices dissenting and one not participating. Norback v. Grand Central Aircraft Co., 345 U.S. 988, 73 S.Ct. 1128, 97 L.Ed. 1397. Probable jurisdiction of the appeal was noted. 346 U.S. 920, 74 S.Ct. 309. 6 A somewhat comparable case was decided by a three-judge United States District Court for the Northern District of Texas in favor of an employer June 14, 1953, in Jonco Aircraft Corp. v. Franklin, 114 F.Supp. 392, with Chief Circuit Judge Hutcheson dissenting. That judgment was reversed by this Court, per curiam, for failure of appellee to exhaust its administrative remedy. 346 U.S. 868, 74 S.Ct. 126. I. 7 We consider first the claim to injunctive relief which appellee made on the ground that the conduct of the proposed administrative hearings would cause it irreparable damage by weakening its bank credit and depriving it of essential working capital. On that basis, interlocutory relief was granted pending the court's determination of the ultimate issue of the validity of the administrative procedure. That injunction has been made permanent but the Government, on behalf of appellants, contends that appellee is acting prematurely in seeking such relief before carrying the prescribed administrative procedure at least to the point where it faces some immediate compulsion and greater probability of damage than it has established. 8 The proposed hearings are to be held before an Enforcement Commissioner with authority merely to recommend findings to a Regional Enforcement Commission subject to review by the National Enforcement Commission. Those findings may show no violation of wage ceilings. At most, they will be concerned with appellee's alleged payment of wages in excess of wage ceilings to an extent of about $750,000. If such a violation of the ceilings is found by the National Enforcement Commission, it may then, under § 405(b) of the Defense Production Act of 1950 and the President's delegated authority, certify to governmental agencies, including the Bureau of Internal Revenue for income-tax purposes, the disallowance of all or part of appellee's illegal wage payments. Appellee argues that such proceedings carry the possibility of the disallowance as a business expense, for income-tax purposes, of $750,000, more or less, up to the total wages paid, exceeding $5,500,000. Appellee contends also that the mere threat of such action would jeopardize the bank credit upon which it depends for essential working capital. There is grave doubt of the right of appellee thus to test the validity of administrative procedure before exhausting it or bringing the issues closer to a focus than it has done. However, it is clear that once the right of the Government to hold administrative hearings is established, a litigant cannot enjoin them merely because they might jeopardize his bank credit or otherwise be inconvenient or embarrassing. Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U.S. 752, 777 779, 67 S.Ct. 1493, 91 L.Ed. 1796. '(T)he expense and annoyance of litigation is 'part of the social burden of living under government." Petroleum Exploration, Inc. v. Public Service Commission of Kentucky, 304 U.S. 209, 222, 58 S.Ct. 834, 841, 82 L.Ed. 1294. See also, Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 47, 58 S.Ct. 459, 461, 82 L.Ed. 638; Chicago & Southern Air Lines v. Waterman S.S. Corp., 333 U.S. 103, 112—113, 68 S.Ct. 431, 436—437, 92 L.Ed. 568; Franklin v. Jonco Aircraft Corp., per curiam, 346 U.S. 868, 74 S.Ct. 126. 9 It is appellee's principal claim that there is no properly authorized administrative procedure for it to exhaust and that the administrative authorities who seek to determine its case have no lawful right to do so. We, therefore, go directly to the heart of this controversy, which is the question whether the administrative enforcement of the 1950 wage stabilization program has been validly authorized. II. 10 The procedure in question is prescribed by General Procedural Regulation 1, Revised, issued by the Economic Stabilization Administrator, August 21, 1952, 17 Fed.Reg. 7737. The hearings are to be conducted regionally by an Enforcement Commissioner and provision is made for appeal to the National Enforcement Commission. That Commission (NEC) is authorized to issue a certificate of disallowance prescribing the amount of wages to be disregarded by the executive departments and other governmental agencies in determining the costs and expenses of appellee for the purposes of any other law or regulation. ESA Gen. Order No. 18, July 28, 1952, 17 Fed.Reg. 6925. Standards of action are prescribed by the Economic Stabilization Administrator in his General Order No. 15, April 3, 1952, 17 Fed.Reg. 2994. Appellee does not complain of noncompliance with these regulations. It complains rather that they are not authorized by statute or that, if purporting to be so authorized, the statute violates the Federal Constitution. 11 The Government finds authority for the creation of this administrative machinery in § 405(b) of the Defense Production Act of 1950, when read in connection with the entire Act. That section is derived from § 5(a) of the Stabilization Act of 1942, 56 Stat. 767, 50 U.S.C. Appendix, (1946 ed.) § 965(a), 50 U.S.C.A. Appendix, § 965(a). To read the Defense Production Act of 1950 without reference to this model is to read it out of the context in which Congress enacted it. 12 The Stabilization Act of 1942 was a vital wartime measure, adopted October 2, 1942, directing the President 'on or before November 1, 1942, to issue a general order stabilizing prices, wages, and salaries, affecting the cost of living'.7 In it, Congress relied upon presidential action geared to the critical necessity for speedy compliance. Its purpose was to check inflation. It subordinated individual convenience to nation-wide standards. Its sanctions were entrusted to administrative agencies capable of prompt action. Section 5(a) provided that— 13 'No employer shall pay, and no employee shall receive, wages or salaries in contravention of the regulations promulgated by the President under this Act. The President shall also prescribe the extent to which any wage or salary payment made in contravention of such regulations shall be disregarded by the executive departments and other governmental agencies in determining the costs or expenses of any employer for the purposes of any other law or regulation.' 56 Stat. 767, 50 U.S.C.Appendix (1946 ed.) § 965(a), 50 U.S.C.A.Appendix, § 965(a). 14 The Act granted the President broad powers to promulgate regulations.8 October 3, 1942, he issued Executive Order No. 9250, U.S. Code Cong. Service 1942, p. 1259, 7 Fed.Reg. 7871, 'to control so far as possible the inflationary tendencies and the vast dislocations attendant thereon which threaten our military effort and our domestic economic structure, and for the more effective prosecution of the war'. That order established an Office of Economic Stablization, headed by an Economic Stabilization Director. In Title II it established a national 'Wage and Salary Stabilization Policy'. This placed wage rates under the control of the National War Labor Board and froze them generally at the levels prevailing September 15, 1942. In Title III it authorized the National War Labor Board to issue rules and regulations 'for the speedy determination of the propriety of any wage increases or decreases in accordance with this Order'. It thus established administrative processes for making specific determinations of wages paid in contravention of the Act. The same processes also enabled the Government, through other agencies, to disregard such illegal payments when computing taxes, compensation under cost-plus contracts and other governmental transactions. 15 October 27, 1942, James F. Byrnes, the Economic Stabilization Director, with the personal approval of the President, issued the regulations which later were to serve as the model for the regulations now before us.9 They delegated to the National War Labor Board authority to certify, to all executive departments and other agencies of the Government, disallowances of payments of wages based upon the Board's determination of their violation of the Act.10 16 July 30, 1943, the Board adopted rules to govern its procedures and those of Regional War Labor Boards in dealing with violation of the wage stabilization program. Those regulations likewise are comparable to the ones involved in this case. 9 Fed.Reg. 4681 et seq. 17 Nearly 100,000 proceedings were thus held and disallowances of nearly $30,000,000 were made up to February 24, 1947.11 Those proceedings were matters of general public knowledge and were well known to Congress.12 They support the natural presumption that Congress, in its subsequent actions, accepted them as legitimate interpretations of the Stabilization Act. Shapiro v. United States, 335 U.S. 1, 16, 68 S.Ct. 1375, 1383, 92 L.Ed. 1787; Helvering v. Winmill, 305 U.S. 79, 82—83, 59 S.Ct. 45, 46, 83 L.Ed. 52; Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 310—315, 53 S.Ct. 350, 356—358, 77 L.Ed. 796; Hecht v. Malley, 265 U.S. 144, 153, 44 S.Ct. 462, 465, 68 L.Ed. 949. 18 Under the Act of 1942, the President thus determined, through his administrative agencies, many specific violations of the prescribed wage ceilings. It was the practice of those administrative agencies to certify to other departments and agencies specific disallowances of the wages paid in violation of such ceilings. See Troy Laundry Co. v. Wirtz, 9 Cir., 155 F.2d 53; N. A. Woodworth Co. v. Kavanagh, D.C., 102 F.Supp. 9, affirmed, 6 Cir., 202 F.2d 154. 19 A comparison of the terms of the Act of 1942 with those of the Defense Production Act of September 8, 1950, and a comparison of the regulations and practice under those Acts is impressive. 20 Section 405(b) of the later Act is as follows: 21 'No employer shall pay, and no employee shall receive, any wage, salary, or other compensation in contravention of any regulation or order promulgated by the President under this title. The President shall also prescribe the extent to which any wage, salary, or compensation payment made in contravention of any such regulation or order shall be disregarded by the executive departments and other governmental agencies in determining the costs or expenses of any employer for the purposes of any other law or regulation.' 64 Stat. 807, 50 U.S.C.Appendix (1946 ed., Supp. V) § 2105(b), 50 U.S.C.A.Appendix, § 2105(b). 22 It follows, almost word for word, the language of § 5(a) of the earlier Act, supra, at pp. 6—7. While it substitutes the phrase 'any wage, salary, or other compensation' in place of 'wages or salaries,' and the phrase 'any regulation or order' in place of 'the regulations,' the substance of the two sections is inescapably the same. 23 The Act of 1950 granted the President broad powers to make regulations under it and to delegate the authority conferred upon him by it.13 His orders and regulations follow the pattern of the earlier ones. September 9, 1950, he issued Executive Order No. 10161, 50 U.S.C.A.Appendix, § 2071 note, 15 Fed.Reg. 6105, 6106, Part IV of which created a new agency known as the Economic Stabilization Agency, headed by an Economic Stabilization Administrator. To him the President delegated responsibility for wage stabilization. He established, within such agency, a Wage Stabilization Board with functions to be determined by the Administrator. January 24, 1951, Eric Johnston, then the Administrator, delegated to that Board his functions of wage stabilization. ESA Gen. Order No. 3, 16 Fed.Reg. 739. January 26, he froze wages generally at the levels prevailing January 25. Gen.Wage Stabilization Regulation No. 1, 16 Fed.Reg. 816. 24 Enforcement under the Act of 1950 thus closely resembled enforcement under the Act of 1942. June 13, the Wage Stabilization Board established a National Enforcement Commission and authorized the establishment of Regional Enforcement Commissions. Such Commissions were authorized to make determinations of wage violations and the disallowances of specific wage payments under § 405(b). Those determinations were to be 'conclusive for the purpose therein stated. The executive departments and other agencies of the government which receive certifications of such determinations shall disregard and disallow the amount thus certified.' WSB Enforcement Resolution No. 1, § 1(c), 16 Fed.Reg. 6028, 6029. June 28, this procedure was further described in a resolution of the War Stabilization Board. 16 Fed.Reg. 7284. 25 April 3, 1952, the Economic Stabilization Administrator, in General Order No. 15, 17 Fed.Reg. 2994, prescribed the standards to be followed in making disallowances, including a recognition of extenuating and mitigating circumstances. 26 Effective July 30, 1952, § 403(b) of the Act was amended to establish a new Wage Stabilization Board. 66 Stat. 300—301. Its functions were defined by the Economic Stabilization Administrator in ESA General Order No. 16, 17 Fed.Reg. 6925. On the same day, he issued ESA General Order No. 18, 17 Fed.Reg. 6925, defining the functions of the National Enforcement Commission. The order covered the Commission's authority to determine and certify specific disallowances in accordance with the standards prescribed in General Order No. 15, supra. The language and substance is obviously reminiscent of that under the Act of 1942.14 27 The legislative history confirms the parallel nature of the two programs. The occasion for the Act of 1950 was the recurring need to check inflation. The military demands in Korea and elsewhere in 1950 made it necessary to maintain a large production of military goods while seeking also to meet the long-denied and increasing needs of the Nation's civil economy. The 1950 Act expressly declared its purpose.15 Congress reenacted, on a temporary basis, the emergency powers of the President which had been effective during World War II.16 28 The Senate Report on the 1950 bill expressly said: 29 'This subsection (405(b)) adopts the language of the Stabilization Act of October 2, 1942, respecting the penalties to be applied for violations of the wage and salary stabilization program. The committee finds that the disallowance of illegal wage payments as a cost of doing business, for purposes of computing taxes, Government contract payments, and for purposes of establishing price ceilings, was an effective deterrent.' S.Rep. No. 2250, 81st Cong., 2d Sess. 39. 30 The regulations, procedures and practices comparable to those under the Act of 1942 were fully reported to Congress.17 31 Despite this history of administrative enforcement under the 1942 Act, appellee claims that, under the 1950 Act, the President had no authority to apply administrative action to the enforcement of wage stabilization. Appellee argues that § 706 of the later Act,18 as set forth in the margin, vested enforcement of the Act in the District Courts and thus left to the President only authority to promulgate general regulations. We do not agree. Section 706 appears in Title VII containing the so-called 'general provisions' of the Act. Appellee reads the section as sharply restricting the administrative procedure which we have just described. Such an interpretation, however, cannot be given to it in the face of § 405(b). Instead of sharply restricting the revival of administrative enforcement of wage ceilings under § 405(b), we read § 706 as primarily applicable to other activities under the Act. It applies naturally enough to price controls, credit controls and allocations of material. We hold that the specific language of § 405(b) should receive the same construction now that was placed on similar language in the Act of 1942. The 'general provisions' of § 706 do not restrict the specific provisions of § 405(b) now reenacted.19 32 The correctness of the above interpretation was underscored July 31, 1951, when Congress inserted a new § 405(a).20 In language strikingly similar to § 405(b), that new section introduced administrative enforcement for price controls. Obviously it was not to be substantially eliminated by the existing provisions of § 706. As the specific language of § 405(a) is thus controlling over the general provisions of § 706, so the same specific language in § 405(b) is controlling over those same provisions.21 33 We have noted the other arguments submitted by appellee concerning the interpretation and constitutionality of the statute but it would be premature action on our part to rule upon these until after the required administrative procedures have been exhausted.22 III 34 Finally, appellee contends that, by the termination of the substantive provisions of the Defense Production Act of 1950, all authority has now expired for determining or disallowing past, as well as future, payments made in violation of wage ceilings. 35 As the Act is a temporary statute, the effect of its expiration is governed by the following general savings statute: 36 'The expiration of a temporary statute shall not have the effect to release or extinguish any penalty, forfeiture, or liability incurred under such statute, unless the temporary statute shall so expressly provide, and such statute shall be treated as still remaining in force for the purpose of sustaining any proper action or prosecution for the enforcement of such penalty, forfeiture, or liability.' (Emphasis supplied.) 1 U.S.C. (1952 ed.) § 109, 1 U.S.C.A. § 109. 37 We find no express, or even implied, provision in the Act contrary to the policy of the general savings statute. All of the alleged violations here involved occurred in 1951. The substantive provisions of Title IV relating to wage stabilization and the supporting orders fixing the wage ceilings here at issue did not expire until April 30, 1953. Neither that expiration date nor the six-month extension of it for liquidation purposes restricts the general provision of § 109 as to the survival of enforcement proceedings.23 38 The precise object of the general savings statute is to prevent the expiration of a temporary statute from cutting off appropriate measures to enforce the expired statute in relation to violations of it, or of regulations issued under it, occurring before its expiration. United States v. Allied Oil Corp., 341 U.S. 1, 5, 71 S.Ct. 544, 546, 95 L.Ed. 697; Fleming v. Mohawk Wrecking & Lumber Co., 331 U.S. 111, 67 S.Ct. 1129, 91 L.Ed. 1375. 39 A similar situation followed the expiration, in 1946, of the substantive provisions of the Stabilization Act of 1942,24 and we have seen that the enforcement proceedings continued under it until 1949. See note 11, supra. On that occasion the authority to make disallowances was transferred to the Department of the Treasury. Executive Order No. 9809, 10(b), U.S. Code Cong.Service, p. 1877, 11 Fed.Reg. 14281, 14283. In the present instance, wage stabilization enforcement has been transferred to the Director of the Office of Defense Mobilization. Exec. Order No. 10494, October 14, 1953, 18 Fed.Reg. 6585. The authority of the President to make such a delegation of his powers appears in §§ 703 and 705, and such authority remains effective until June 30, 1955, § 717(a), note 23, supra. 40 The validity of the pending administrative proceeding being thus upheld, the judgment of the District Court enjoining that proceeding is reversed. 41 Reversed. 1 64 Stat. 798, as amended, 65 Stat. 131, 66 Stat. 296, 67 Stat. 129, 50 U.S.C.Appendix (1946 ed., Supp. V) § 2061 et seq., 50 U.S.C.A.Appendix, § 2061 et seq. 2 'Title IV—Price and Wage Stabilization' containing §§ 401 412, 64 Stat. 803-812, 66 Stat. 304, and see 50 U.S.C.Appendix (1946 ed., Supp. V) §§ 2101—2110, 50 U.S.C.A.Appendix, §§ 2101 2110. 3 Created, within the Economic Stabilization Agency, by § 403(b) of the Defense Production Act, June 30, 1952, 66 Stat. 300 301. See also, Exec. Order No. 10377, 50 U.S.C.A.Appendix, § 2071 note, 17 Fed.Reg. 6891; ESA Gen. Order No. 16, 17 Fed.Reg. 6925. 4 ESA Gen. Order No. 18, effective July 30, 1952, 17 Fed.Reg. 6925, as amended at 9977, established NEC within the ESA and defined the functions of NEC. 5 Gen. Wage Stabilization Regulation 1, issued by Economic Stabilization Administrator, January 26, 1951, 16 Fed.Reg. 816. 6 The Government states that Neal, who is one of the appellants, is now on the staff of the Office of Defense Mobilization and is authorized and ready to conduct the hearing if the injunction is lifted. 7 56 Stat. 765, 50 U.S.C.Appendix (1946 ed.) § 961 et seq., 50 U.S.C.A.Appendix, § 961 et seq. The Stabilization Act itself was an amendment to the Emergency Price Control Act of 1942, approved January 30, 1942, 56 Stat. 23, 50 U.S.C.Appendix (1946 ed.) § 901 et seq., 50 U.S.C.A.Appendix, § 901 et seq. For its title, see 58 Stat. 643. It was temporary legislation. Its termination date was June 30, 1944, or 'such earlier date as the Congress by concurrent resolution, or the President by proclamation, may prescribe.' 56 Stat. 767. That date was postponed, one year at a time, to June 30, 1947. 58 Stat. 643, 59 Stat. 306, 60 Stat. 664, 50 U.S.C.Appendix (1946 ed.) § 966, 50 U.S.C.A.Appendix, § 966. 8 'Sec. 2. The President may, from time to time, promulgate such regulations as may be necessary and proper to carry out any of the provisions of this Act; and may exercise any power or authority conferred upon him by this Act through such department, agency, or officer as he shall direct. * * *' 56 Stat. 765, 50 U.S.C.Appendix (1946 ed.) § 962, 50 U.S.C.A.Appendix, § 962. 9 Office of Economic Stabilization—Pt. 4001—Wages and Salaries, 7 Fed.Reg. 8748 et seq. Subsequent amendments did not change the provisions for making tax disallowances based upon specific administrative determinations. 10 '§ 4001.2 Authority of National War Labor Board. The Board shall * * * have authority to determine whether any '(a) Wage payments . . . 'are made in contravention of the Act, or any rulings, orders or regulations promulgated thereunder. Any such determination by the Board, made under rulings and orders issued by it, that a payment is in contravention of the Act, or any rulings, orders, or regulations promulgated thereunder, shall be conclusive upon all Executive Departments and agencies of the Government in determining the costs or expenses of any employer for the purpose of any law or regulation, either heretofore or hereafter enacted or promulgated, including the Emergency Price Control Act of 1942 or any maximum price regulation thereof, or for the purpose of calculating deductions under the revenue laws of the United States, or for the purpose of determining costs or expenses under any contract made by or on behalf of the United States. Any determination of the Board made pursuant to the authority conferred on it shall be final and shall not be subject to review by The Tax Court of the United States or by any court in any civil proceedings.' 7 Fed.Reg. 8749. 11 From October 3, 1942, to December 29, 1945, 68,233 cases, resulting in disallowances of $19,018,820.19, were handled by the National War Labor Board. 1 Termination Report, National War Labor Board, 428—441. From January 1, 1946, to January 30, 1947, 30,071 cases, resulting in disallowances of $11,822,609, were handled by the National Wage Stabilization Board. National Wage Stabilization Board (1946—1947) 223—235. While many cases resulted in findings of no violation or were closed without penalty or disallowance, many others were terminated with disallowances, either by consent or after hearings. There were 282 appeal cases processed by the National Boards, and although the controls were terminated in November 1946 by Executive Order No. 9801, U.S.Code Cong. Service 1946, p. 1865, 11 Fed.Reg. 13435, the enforcement activities, based on earlier violations, were carried on by the Department of the Treasury until 1949. See Ann.Reps. of the Commissioner of Internal Revenue 62—63 (1947); 33—34 (1948); 26—27 (1949). 12 Not only was the life of the Act extended three times (see note 7, supra) but its administration was reviewed during annual appropriation hearings. See Hearings before the House Subcommittee on Appropriations on National War Agencies Appropriation Bills for 1944, Pt. 2, 78th Cong., 1st Sess. 667 668; for 1945, Pt. 1, 78th Cong., 2d Sess. 240—241, 303—304; for 1946, 79th Cong., 1st Sess. 12—13. 13 'Sec. 403. At such time as the President determines that it is necessary to impose price and wage controls generally over a substantial portion of the national economy, he shall administer such controls * * * through a new independent agency created for such purpose: * * *. Such agency may utilize the services, information, and facilities of other agencies and departments of the Government, but such agency shall not delegate enforcement of any of the controls to be administered by it under this section to any other agency or department.' 64 Stat. 807, as amended, 65 Stat. 137, 66 Stat. 300. See 50 U.S.C.Appendix (1946 ed., Supp. V) § 2103, 50 U.S.C.A.Appendix, § 2103. (Delegations as to the enforcement of controls, accordingly, were made only to officials within the new independent agency known as the Economic Stabilization Agency.) 'Sec. 703. (a) Except as otherwise specifically provided, the President may delegate any power or authority conferred upon him by this Act to any officer or agency of the Government, including any new agency or agencies (and the President is hereby authorized to create such new agencies, other than corporate agencies, as he deems necessary), and he may authorize such redelegations by that officer or agency as the President may deem appropriate. * * *' 64 Stat. 816, 50 U.S.C.Appendix (1946 ed., Supp. V) § 2153(a), 50 U.S.C.A.Appendix, § 2153(a). 'Sec. 704. The President may make such rules, regulations, and orders as he deems necessary or appropriate to carry out the provisions of this Act. Any regulation or order under this Act may be established in such form and manner, may contain such classifications and differentiations, and may provide for such adjustments and reasonable exceptions as in the judgment of the President are necessary or proper to effectuate the purposes of this Act, or to prevent circumvention or evasion, or to facilitate enforcement of this Act, or any rule, regulation, or order issued under this Act.' 64 Stat. 816, see 50 U.S.C.Appendix (1946 ed., Supp. V) § 2154, 50 U.S.C.A.Appendix, § 2154. 14 'Sec. 4. Functions of the National Enforcement Commission. (a) The functions of the National Enforcement Commission (hereinafter referred to as the Commission) shall be, with respect to persons within the jurisdiction of the Wage Stabilization Board, the Salary Stabilization Board and the Office of Salary Stabilization, and the Railroad and Airline Wage Board, to determine whether any wage, salary, or other compensation has been paid or accrued, at any time, in violation or contravention of any provision of the Defense Production Act of 1950, as amended, or any regulation or order or directive heretofore or hereafter promulgated under the act. Such determination shall be made by the Commission after any of the foregoing named constituent organizations of this Agency have instituted an enforcement proceeding before it or after any such organization has submitted a settlement proposal to the Commission for its approval. Such determination shall be final within the Economic Stabilization Agency. '(b) The Commission is further authorized to certify and transmit such determinations in accordance with the policy and procedure set forth in Economic Stabilization Agency General Order No. 15, and other orders, directives, general policies or general regulations of the Economic Stabilization Administrator. 'Sec. 5. Redelegation of authority. (a) The authority delegated to the Economic Stabilization Administrator with respect to the imposition of disallowance sanctions under section 405(b) of the Defense Production Act, as amended, for the violation or contravention of any provisions of, or any orders or any regulations issued under said act, as amended, relating to the payment of wages, salaries, or other compensation, is hereby redelegated to the Commission, in accordance with the functions described above.' 17 Fed.Reg., at 6926. 15 'Sec. 2. * * * The United States is determined to develop and maintain whatever military and economic strength is found to be necessary to carry out this purpose. Under present circumstances, this task requires diversion of certain materials and facilities from civilian use to military and related purposes. It requires expansion of productive facilities beyond the levels needed to meet the civilian demand. In order that this diversion and expansion may proceed at once, and that the national economy may be maintained with the maximum effectiveness and the least hardship, normal civilian production and purchases must be curtailed and redirected. 'It is the objective of this Act to provide the President with authority to accomplish these adjustments in the operation of the economy. It is the intention of the Congress that the President shall use the powers conferred by this Act to promote the national defense, by meeting, promptly and effectively, the requirements of military programs in support of our national security and foreign policy objectives, and by preventing undue strains and dislocations upon wages, prices, and production or distribution of materials for civilian use, within the framework, as far as practicable, of the American system of competitive enterprise.' 64 Stat. 798, 799, 50 U.S.C.A.ppendix (1946 ed., Supp. V) § 2062, 50 U.S.C.A.Appendix, § 2062. See S.Rep.No. 2250, 81st Cong., 2d Sess. 4—5, 20—40. 16 The 1950 Act, generally, was to terminate June 30, 1952. Title IV, as to price and wage stabilization, was to expire June 30, 1951. 64 Stat. 822. The latter date was extended to April 30, 1953. 66 Stat. 306, 67 Stat. 131. The survival of enforcement procedure in relation to prior violations is discussed in Section III of this opinion. 17 First Ann.Rep. of the Joint Committee on Defense Production, S.Rep.No. 1040, 82d Cong., 1st Sess. 98—103 (1951); Second Ann.Rep. of the same Committee, S.Rep.No. 3, 83d Cong., 1st Sess. 108—119 (1952). 18 'Sec. 706. (a) Whenever in the judgment of the President any person has engaged or is about to engage in any acts or practices which constitute or will constitute a violation of any provision of this Act, he may make application to the appropriate court for an order enjoining such acts or practices, or for an order enforcing compliance with such provision, and upon a showing by the President that such person has engaged or is about to engage in any such acts or practices a permanent or temporary injunction, restraining order, or other order, with or without such injunction or restraining order, shall be granted without bond. '(b) The district courts of the United States and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have jurisdiction of violations of this Act or any rule, regulation, order, or subpena thereunder, and of all civil actions under this Act to enforce any liability or duty created by, or to enjoin any violation of, this Act or any rule, regulation, order, or subpena thereunder. Any criminal proceeding on account of any such violation may be brought in any district in which any act, failure to act, or transaction constituting the violation occurred. Any such civil action may be brought in any such district or in the district in which the defendant resides or transacts business. Process in such cases, criminal or civil, may be served in any district wherein the defendant resides or transacts business or wherever the defendant may be found; the subpena for witnesses who are required to attend a court in any district in such case may run into any other district. The termination of the authority granted in any title or section of this Act, or of any rule, regulation, or order issued thereunder, shall not operate to defeat any suit, action, or prosecution, whether theretofore or thereafter commenced, with respect to any right, liability, or offense incurred or committed prior to the termination date of such title or of such rule, regulation, or order. No costs shall be assessed against the United States in any proceeding under this Act. All litigation arising under this Act or the regulations promulgated thereunder shall be under the supervision and control of the Attorney General.' 64 Stat. 817 818, as amended, 65 Stat. 139, 50 U.S.C.Appendix (1946 ed., Supp. V) § 2156, 50 U.S.C.A.Appendix, § 2156. 19 That this is a logical interpretation of § 706 is emphasized by the fact that the bills which became the Act of 1950 contained, when introduced, provisions for credit and commodity controls but no provisions for wage stabilization. Thus the section that was to become § 706 originally had no reference to wage stabilization. Title IV, including § 405(b) as to wage stabilization, was inserted in Committee. The separate origins of §§ 405(b) and 706 point to the separate effect which should be given to them. See S.Rep.No. 2250, 81st Cong., 2d Sess. 5. 20 '* * * The President shall also prescribe the extent to which any payment made, either in money or property, by any person in violation of any such regulation, order, or requirement (as to price control) shall be disregarded by the executive departments and other governmental agencies in determining the costs or expenses of any such person for the purposes of any other law or regulation, including bases in determining gain for tax purposes.' 65 Stat. 136, 50 U.S.C.Appendix (1946 ed., Supp. V) § 2105(a), 50 U.S.C.A.Appendix, § 2105(a). 21 This interpretation of § 405(a) and (b) is consistent, likewise, with the interpretation given to § 5 of the Stabilization Act of 1942. The Stabilization Act of 1942 was superimposed on the Emergency Price Control Act of 1942, 56 Stat. 23, which already contained general provisions for judicial enforcement. The solution reached was to apply those general provisions, § 205(a)(b) and (c), without restricting the administrative procedure prescribed in § 5 for wage control. 56 Stat. 33, 50 U.S.C.Appendix (1946 ed.) § 925(a)(b) (c), 50 U.S.C.A.Appendix, § 925(a—c) Finally, the text of § 403 uses the word 'enforcement' in referring to the powers of the administrative agencies in connection with wage controls. In referring to the new agency to be created, it provides that 'such agency shall not delegate enforcement of any of the controls to be administered by it under this section to any other agency or department.' (Emphasis supplied.) 64 Stat. 807, 50 U.S.C.Appendix (1946 ed., Supp. V) § 2103, 50 U.S.C.A.Appendix, § 2103. See also, the Conference Report on the Defense Production Act Amendments of 1952 which said: 'The conference substitute is not intended to preclude the (Wage Stabilization) Board from, as at present, enforcing wage stabilization regulations and policies.' (Emphasis supplied.) H.R.Rep.No. 2352, 82d Cong., 2d Sess. 24. 22 The constitutional objections suggested are that the Act and proceedings which have been taken and are proposed under it violate (1) the Fifth Amendment by depriving appellee of property without due process of law; (2) the Sixth or Seventh Amendment by depriving appellee of the right to a jury trial; (3) the Eighth Amendment in authorizing excessive fines; (4) Article I, § 9, by authorizing an unapportioned direct tax; (5) Article I, § 1, by improper delegation of legislative power to the Executive; and (6) the Tenth Amendment by attempting to legislate on matters reserved to the States. 23 'Sec. 717. (a) Title I (priorities and allocations) * * * title III (expansion of productive capacity and supply), and title VII (general provisions) * * * of this Act, and all authority conferred thereunder, shall terminate at the close of June 30, 1955. * * * Titles IV (price and wage stabilization) and V (settlement of labor disputes) of this Act, and all authority conferred thereunder, shall terminate at the close of April 30, 1953. '(b) Notwithstanding the foregoing— '(3) Any agency created under this Act may be continued in existence for purposes of liquidation for not to exceed six months after the termination of the provision authorizing the creation of such agency.' 64 Stat. 822, as amended, 65 Stat. 144, 66 Stat. 306, 67 Stat. 131, 50 U.S.C.A.Appendix, § 2166. Executive Order No. 10434, February 6, 1953, U.S.Code Cong. and Admin.News, p. 994, 18 Fed.Reg. 809, suspended the wage stabilization program but provided that 'This order shall not opperate to defeat any suit, action, prosecution, or administrative enforcement proceeding, whether heretofore or hereafter commenced, with respect to any right, liability, or offense possessed, incurred, or committed, prior to this date.' See also, Hearings before the House Subcommittees on Appropriations, Pt. 1, 83d Cong., 1st Sess. 439—441, on The Supplemental Appropriation Bill, 1954, introduced in the House as H.R. 6200, and those on the same bill before the Senate Committee on Appropriations, 83d Cong., 1st Sess. 423—431. 24 '* * * Though most of the controls have been lifted, the Act is still in effect. Liabilities incurred prior to the lifting of controls are not thereby washed out. United States v. Hark, 320 U.S. 531, 536, 64 S.Ct. 359, 362, 88 L.Ed. 290; Utah Junk Co. v. Porter, 328 U.S. 39, 44, 66 S.Ct. 889, 892 (90 L.Ed. 1071); Collins v. Porter, 328 U.S. 46, 49, 66 S.Ct. 893, 894 (90 L.Ed. 1075). And Congress has explicitly provided that accrued rights and liabilities under the Emergency Price Control Act are preserved whether or not suit is started prior to the termination date of the Act. If investigation were foreclosed at this stage, such rights as may exist would be defeated, contrary to the policy of the Act.' Fleming v. Mohawk Wrecking & Lumber Co., 331 U.S. 111, 119, 67 S.Ct. 1129, 1133, 91 L.Ed. 1375.

89

347 U.S. 556 74 S.Ct. 716 98 L.Ed. 948 LEYRAv.DENNO. No. 635. Argued April 28, 1954. Decided June 1, 1954. Mr. Osmond K. Fraenkel, New York City, for petitioner. Mr. William I. Siegel, Brooklyn, N.Y., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 Camilo Leyra, age 75, and his wife, age 80, were found dead in their Brooklyn apartment. Several days later petitioner, their son, age 50, was indicted in a state court charged with having murdered them with a hammer. He was convicted and sentenced to death, chiefly on several alleged confessions of guilt. The New York Court of Appeals reversed on the ground that one of the confessions, made to a state-employed psychiatrist, had been extorted from petitioner by coercion and promises of leniency in violation of the Due Process Clause of the Fourteenth Amendment.1 People v. Leyra, 302 N.Y. 353, 98 N.E.2d 553. Petitioner was then tried again. This time the invalidated confession was not used to convict him but several other confessions that followed it the same day were used. Petitioner objected to the admission of these other confessions on the ground that they were also coerced, but the trial court submitted to the jury the question of their 'voluntariness.' The jury convicted and the death sentence now before us was imposed.2 The New York Court of Appeals, holding that there was evidence to support a finding that the confessions used were free from the coercive influences of the one previously given the psychiatrist, affirmed, Judge Fuld and the late Chief Judge Loughran dissenting. People v. Leyra, 304 N.Y. 468, 108 N.E.2d 673. We denied certiorari. 345 U.S. 918, 73 S.Ct. 730, 97 L.Ed. 1351. Petitioner then filed this habeas corpus proceeding in a United States District Court, charging that the confessions used against him had been coerced, depriving him of due process of law. The District Court properly gave consideration to the petition, Brown v. Allen, 344 U.S. 443, 73 S.Ct. 397, 437, 97 L.Ed. 469, but denied it. 113 F.Supp. 556. The Court of Appeals for the Second Circuit affirmed, Judge Frank dissenting. 208 F.2d 605. Petitioner then sought review in this Court, again urging that he was denied due process on the ground that his confessions to a police captain and to two assistant state prosecutors were forced. We granted certiorari because the constitutional question appeared substantial. 347 U.S. 926, 74 S.Ct. 533. 2 The use in a state criminal trial of a defendant's confession obtained by coercion—whether physical or mental—is forbidden by the Fourteenth Amendment.3 The question for our decision is therefore whether the present confessions were so coerced. This question can only be answered by reviewing the circumstances surrounding the confessions. We therefore examine the circumstances as shown by the undisputed facts of this case. 3 When the father failed to appear at his place of business on Tuesday, January 10, 1950, petitioner, his business partner, and others went to the father's apartment about 3 p.m. and found the bodies of the aged parents. Police were called. Although they first suspected a prowling intruder, the presence on the couple's disarranged breakfast table of a third teacup led them to think that the killer was a welcome guest. This and other circumstances drew suspicion toward petitioner. He and others were questioned by the police until about 11 p.m. on the evening of the day the bodies were discovered. On Wednesday, police again questioned petitioner from about 10 in the morning to midnight. Once more, beginning about 9 Thursday morning petitioner was subjected to almost constant police questioning throughout the day and much of the night until about 8:30 Friday morning. At that time petitioner was taken by police to his partents' funeral. While petitioner was at the funeral and until he returned in the late afternoon, Captain Meenahan, his chief police questioner, went home to get some 'rest.' After the funeral petitioner himself was permitted to go to a hotel and sleep an hour and a half. He was returned to the police station about 5 p.m. on this Friday afternoon. During his absence a concealed microphone had been installed with wire connections to another room in which the state prosecutor, the police, and possibly some others were stationed to overhear what petitioner might say. Up to this time he had not confessed to the crime. 4 The petitioner had been suffering from an acutely painful attack of sinus and Captain Meenahan had promised to get a physician to help him. When petitioner returned to the questioning room after the funeral, Captain Meenahan introduced him to 'Dr. Helfand,' supposedly to give petitioner medical relief. Dr. Helfand, however, was not a general practitioner but a psychiatrist with considerable knowledge of hypnosis. Petitioner was left with Dr. Helfand while Captain Meenahan joined the state District Attorney in the nearby listening room. Instead of giving petitioner the medical advice and treatment he expected, the psychiatrist by subtle and suggestive questions simply continued the police effort of the past days and nights to induce petitioner to admit his guilt. For an hour and a half or more the techniques of a highly trained psychiatrist were used to break petitioner's will in order to get him to say he had murdered his parents. Time and time and time again the psychiatrist told petitioner how much he wanted to and could help him, how bad it would be for petitioner if he did not confess, and how much better he would feel, and how much lighter and easier it would be on him if he would just unbosom himself to the doctor. Yet the doctor was at that very time the paid representative of the state whose prosecuting officials were listening in on every threat made and every promise of leniency given. 5 A tape recording of the psychiatric examination was made and a transcription of the tape was read into the record of this case. To show exactly what transpired we attach rather lengthy excerpts from that transcription as an appendix. The petitioner's answers indicate a mind dazed and bewildered. Time after time the petitioner complains about how tired and how sleepy he is and how he cannot think. On occasion after occasion the doctor told petitioner either to open his eyes or to shut his eyes. Apparently many of petitioner's answers were barely audible. On occasions the doctor informed petitioner that his lips were moving but no sound could be heard. Many times petitioner was asked to speak louder. As time went on, the record indicates that petitioner began to accept suggestions of the psychiatrist. For instance, Dr. Helfand suggested that petitioner had hit his parents with a hammer and after some minutes petitioner agreed that must have been the weapon. 6 Finally, after an hour and a half or longer, petitioner, encouraged by the doctor's assurances that he had done no moral wrong and would be let off easily, called for Captain Meenahan. The captain immediately appeared. It was then that the confession was given to him which was admitted against petitioner in this trial. Immediately following this confession to Captain Meenahan, petitioner's business partner was called from an adjoining room. The police had apparently brought the business partner there to have him talk to petitioner at an opportune moment. Petitioner repeated to his partner in a very brief way some of the things he had told the psychiatrist and the captain. Following this, petitioner was questioned by the two assistant state prosecutors. What purports to be his formal confession was taken down by their stenographer, with a notation that it was given at 10 p.m., several hours after the psychiatrist took petitioner in charge. 7 On the first appeal the New York Court of Appeals held that the admissions petitioner made to the psychiatrist were so clearly the product of 'mental coercion' that their use as evidence was inconsistent with due process of law. On the second appeal, however, that court held that the subsequent confessions here challenged were properly admitted. The Court of Appeals for the Second Circuit held the same thing. With this holding we cannot agree. Unlike the circumstances in Lyons v. State of Oklahoma, 322 U.S. 596, 602, 603, 64 S.Ct. 1208, 1212, 88 L.Ed. 1481, the undisputed facts in this case are irreconcilable with petitioner's mental freedom 'to confess to or deny a suspected participation in a crime', and the relation of the confessions made to the psychiatrist, the police captain and the state prosecutors, is 'so close that one must sya the facts of one control the character of the other * * *.' All were simply parts of one continuous process. All were extracted in the same place within a period of about five hours as the climax of days and nights of intermittent, intensive police questioning. First, an already physically and emotionally exhausted suspect's ability to resist interrogation was broken to almost trance-like submission by use of the arts of a highly skilled psychiatrist. Then the confession petitioner began making to the psychiatrist was filled in and perfected by additional statements given in rapid succession to a police officer, a trusted friend, and two state prosecutors. We hold that use of confessions extracted in such a manner from a lone defendant unprotected by counsel is not consistent with due process of law as required by our Constitution. 8 It was error for the court below to affirm the District Court's denial of petitioner's application for habeas corpus. 9 Reversed. 10 Mr. Justice JACKSON took no part in the consideration or decision of this case. Appendix to Opinion of the Court. 11 Excerpts from the transcript of the questioning of petitioner by Dr. Max Helfand, a psychiatrist, at the 88th precinct on January 13, 1950. 12 'Q. What do they call you for short? A. Buddy.' 13 'Q. How old are you about? A. Fifty.' 14 'Q. Are you married? A. Yes, sir.' 15 'Q. Buddy, will you tell me something about yourself. I'll tell you what the purpose of my talk to you is. I want to see if I can help you. A. Yes, Doctor.' 16 'Q. I know you are in a little trouble. We do sometimes things that are not right, but in a fit of temper or anger we sometimes do things that we aren't really responsible for. I want to see whether or not you did something but which you've done in a fit of temper or anger. Do you understand me? A. Yes.' 17 'Q. Will you tell me something about yourself. What kind of a boy are you? Do you have a lot of friends? A. Yes, I have.' 18 'Q. I can't hear you. A. Yes, I have; and I am very tired. I had two hours sleep. Just now they work me up. That's since Tuesday. Well, there were questions, after questions, after questions, by the thousands.' 19 'Q. Aren't you rested now after two hours sleep. You feel pretty good and you look good. A. Well I went to the barber and I feel clean and everything else. The only thing is I am very tired. I didn't feel as tired before I went to bed as I do now. You know—(interruption) 20 'Q. Do you know we sometimes feel tired if we have something on our mind. It's what we call mental tension.' 21 'Q. Do you know we sometimes feel tired if we have something on our mind. It's what we call mental tension. If you talk to me and open up, you're going to feel relieved. Speak up and tell me. Do you have a lot of friends? A. Yes, I have a lot of friends.' 22 'Q. Do you sometimes get into arguments with them? A. No, not as a rule. The first time I was surprised. I always considered myself an even tempered fellow—sociable. It's my sinus. It's bothering me something terrible. It got so in the last year or so. It got worse and worse and worse.' 23 'Q. That made you nervous, didn't it? A. I didn't particularly notice it. For the past two years, my average of work has been about over a hundred hours each week of work for two years. No vacation or anything like that. The first time was anybody noticed it was about—let's see—its about two weeks ago I went to the doctor with my father.' 24 'Q. I see. A. My sinus was bothering me so bad I use to have to stop work during the day.' 25 'Q. What was the matter with your father? A. Dad had a heart attack a couple of years ago, but I went for myself.' 26 'Q. Your father was a nervous man too, wasn't he? A. Yes, but I went for myself. I didn't think I ever was high strung. I thought I was the opposite. I thought I was pretty calm.' 27 'Q. Your father was high strung? A. Yes.' 28 'Q. Fly off the handle quickly? A. Yes. So I went to the doctor and he examined my sinus. He took the blood pressure. So he said to me, 'When did you go to your doctor?' That was—today is Friday—one week back. The Tuesday of that week. It's ten or 11 days.' 29 'Q. You went with your father? A. With my father.' 30 'Q. Did he give you any treatments? A. Yeah, he examined my sinus.' 31 'Q. Did he tell you to come back? A. No, he sent me down to have X-rays taken. When he examined me, he put the lights up here.' 32 'Q. You didn't have any appointment with the doctor after your visit? Did he tell you to come back. A. Oh, yes. He sent me down to have a set of X-rays made. We had the X-rays made. Then I called the doctor and he said it was a very bad case of sinus. It wasn't something new. It was for many years back, and he said there was a lot of scar tissue there, and he asked me could I come right out. That was last Saturday. So Saturday night, I worked. That was my busiest night of the week. So I told him I wouldn't like to come on Saturday, so he said he doesn't have any patients on Sunday, could I come Monday. Monday, unfortunately, I had to work all alone, so I told him I'd make it Tuesday night. So he said, 'You come over Tuesday. I'll be able to do something to stop those pains.' So we made the appointment for Tuesday night at six o'clock.' 33 'Q. For you? A. Yes, and he was going to open those—' 34 'Q. Not for your father? A. No, for myself. My father was with me. He was to go with me on this Tuesday also.' 35 'Q. Why? Did your doctor tell you to bring your father? A. No, he didn't tell me to bring him.' 36 'Q. Why was your father going with you? A. He wanted to go with me. He wanted to see if something couldn't be done to stop those pains. He said, 'Lie down and close my eyes and see if I could stop the beating up there.' 37 'Q. When the pain got so bad, didn't you get nervous?' 'A. Yes, I guess I did. That was the first time anyone ever told me that I was ill. When the doctor took my blood pressure, he said, 'You're very irritable.' And I said, 'I didn't think so.' He told me, he said, 'You're going to have to—you can't work day and night. It's too much.' He said, 'You got to slow down.' 38 'Q. I want you to recollect and tell me everything. I am—' 39 'Q.—(continued)—going to make you remember and recollect back and bring back thoughts—thoughts which you think you might have forgotten. I can make you recollect them. It's entirely to your benefit to recollect them because, you see, you're a nervous boy. You got irritable and you might have got in a fit of temper. Tell me, I am here to help you. A. I wish you could, Doctor.' 40 'Q. I am going to put my hand on your forehead, and as I put my hand on your forehead, you are going to bring back all these thoughts that are coming to your mind. I am going to keep my hand on your forehead and I am going to ask you questions, and now you will be able to tell me. What happened Monday night? Where did you sleep? A. Last Monday night?' 41 'Q. That's right. A. I worked Monday night.' 42 'Q. After you worked, where did you sleep? Where did you go to sleep? A. To the apartment on 10th Street.' 43 'Q. What time did you sleep to, or get up in the morning? A. She got up about 6:30.' 44 'Q. Well, after she left the house, then you couldn't sleep. Then you got dressed? Your thoughts are coming back to you. Answer me. Come on, you can answer me. You couldn't go back to bed. You didn't go back to bed. After she left, you got dressed, didn't you? A. Yes, I got dressed.' 45 'Q. What did you do after you got dressed? Come on, now. Your thoughts are coming back to you. Come on. Come on, answer me. A. I went to Brooklyn.' 46 'Q. You went to Brooklyn. Where did you go to Brooklyn? A. To my mother's house.' 47 'Q. To your mother's house. When you came to your mother—now, all your thoughts are beginning to clear up. Now, everything is clear in your mind. You came to your mother. Who opened the door? A. My mother.' 48 'Q. What did you say? A. I said, 'Hello, Teddy.? 49 'Q. All right. Now, you are in your house. Your thoughts are coming back to you right away. A. Doctor, can I have a drink of water, my mouth is very dry.' 50 'Q. A drink of water? I'll get you a drink of water. A. (Pause).' 51 'Q. All right. O.K. now? A. My mouth is dry. I'm not thirsty. Just my mouth is dry. I'm not thirsty.' 52 'Q. Concentrate and look at me. Now you came home. Your mother met you at the door. You said, 'Hello, Teddy,' right? A. That's right.' 53 'Q. What did she say to you? A. She said take off my coat, it's all wet.' 54 'Q. What did you do? A. I took the coat off.' 55 'Q. Now, you are back in your apartment, see. Your thoughts are clear now. What did you do after you took off your raincoat? A. She told me, 'Come and have some tea.' 56 'Q. She told you what? A. 'Come and have a cup of tea. It will warm you up." 57 'Q. What did you do? A. Dad was having breakfast.' 'Q. Where was Dad sitting? A. At the end of the table.' 58 'Q. Where did you sit down? A. Between them.' 59 'Q. Between whom? A. Mom and Pop.' 60 'Q. Between Mom and Pop? A. That's right.' 61 'Q. Where was Mom sitting? A. Next to the kitchen sink.' 62 'Q. You were sitting between Mom and Pop, right? A. That's right.' 63 'Q. What did you do then? A. I sat down.' 64 'Q. Yeah, what did you do? What did you do when you sat down. Come on, speak up. Don't be afraid now. We're with you. We're going to help you. You're going to feel lots better after you talk to me. A. Gee, I hope so.' 65 'Q. I can't hear you. A. The argument started all over again.' 66 'Q. The argument with your father? A. Yes.' 67 'Q. Did your mother argue with you, too? A. No.' 68 'Q. What was the argument about? A. The business—his business.' 69 'Q. Whose business? A. Our business.' 70 'Q. What did your father tell you—speak up. A. He told me both of us didn't care whether his business was good or bad. I told him our business was getting prosperous.' 71 'Q. What did you say about that? A. He told me it wasn't so.' 72 'Q. Was it a violent argument? Did your father lose his temper? A. Yes, it got more heated.' 73 'Q. As it got more heated, what happened then? Don't be afraid, speak up. Come on, we'll help you. A. He argued more and more.' 74 'Q. You argued more and more. Then what? A. I told him, 'Pop, why don't you stay home? Be satisfied. Our business is getting good. You don't have to work this way." 75 'Q. Yes. A. He says, 'I'm going to work. I'm going to have my own business.' He says, 'I'd rather make a stinking dollar than make it from somebody else.' So my mother started to get into the argument.' 76 'Q. What did she say? A. She told him, 'Why don't you stay home. Why don't you do what your son says." 77 'Q. Go ahead, speak up. A. I'm trying to think, Doctor.' 78 'Q. It's coming all clear to you now. I've got my hand on you. I'll make you think back. All your thoughts are coming back to you. Did your father hit you? A. No.' 79 'Q. What happened next? Speak up. It's coming clear now. You will feel lots better after you tell me. It's all in a fit of argument. Speak up. Speak up. It's coming clear to you. I have my hand on your head. What did you do? Come on. A. I told him that we weren't going to let him work anymore.' 80 'Q. Then? A. That he would be so much better off letting us take care of it. Twenty-five per cent we would give him from our business would be better than his own.' 81 'Q. That's right. Go ahead. Come on, you're going to feel lots better. We're with you one hundred per cent. Then what happened? A. He said he wouldn't take it.' 82 'Q. That's right. A. That we were traitors to him. He said my partner was a louse; that he took his hundred dollars a week and he didn't do anything for it.' 83 'Q. Yes. A. It was like robbing him of a hundred a week.' 84 'Q. That's right, speak up. A. My mother interfered and said, 'Bill was a nice fellow and a hard working fellow.' He said, 'I'm the boss.' He told my mother, 'You shut up.' He told my mother, 'Go sit down.' He pushed her in the chair.' 85 'Q. He pushed her in the chair? A. Yes.' 86 'Q. That's the time you lost your temper? A. No.' 87 'Q. Go ahead, what happened? A. I told him 'Pop, think it over. We're silly to argue. It will do us no good.' He said, 'Finish your damn tea. I'm going out and get my paper." 88 'Q. Yes. A. He says, 'We'll go to the bank,' and he says, 'I'll go to Broadway and pick up the box tops and you'll go back and you'll all get out of this place;' and he says, 'If your mother agrees with you, she can go with you." 89 'Q. Yes. A. So he went out.' 90 'Q. Did he put his coat on? A. Yes.' 91 'Q. He went out? A. Yes.' 92 'Q. So then what happened? A. Mom said, 'Don't get excited." 93 'Q. You were very excited? A. Yes.' 94 'Q. Go ahead. Come on. Tell me what happened then. Come on, now, speak up. You're going to feel lots better. We're with you a hundred per cent. Come on. Come on, we'll help you. A. I can't Doc.' 95 'Q. Yes, you can. All these thoughts are coming back to you. I have my hand on your head. When your father went out, your mother talked to you. Then what happened? What did you do to your mother. Come on. Speak up. Come on. All these thoughts are coming to you now. A. I can't think.' 96 'Q. Sure you can. Look at me. Open your eyes. Now you know what happened. Look at me. I know you know what happened. A. I can't think.' 97 'Q. Sure you can. Come on now. Don't be afraid. Your conscience will be clear. God will be with you, and everybody will help you if you tell the truth. Everybody will help you, but nobody likes a liar, not even God. Come on now Tell the truth. A. I can't think.' 98 'Q. Your father went for the paper; then you hit your mother, didn't you? With what did you hit—with a hammer? Your thoughts are coming back to you. What did you use to hit your mother with? A. I loved my mother.' 99 'Q. I know you did. You lost your temper. Don't be afraid. A lot of people do things that they are not responsible for while in a fit of temper. You see? A. My mother was the only thing in the world.' 100 'Q. That's right. What did you hit her with? Come on, now. Speak up. A. I was so mad.' 101 'Q. You were very mad. A. I said he's not going to treat my mother this way. He killed my brother.' 102 'Q. Yes. He killed—A. My brother would have lived many years. The way my father made him work—' 103 'Q. That's right. A. I said he's not going to kill my mother and he's not going to kill me. The only way we can stop him. He's got to be stopped. He can't be the boss.' 104 'Q. Go ahead. He's got to be stopped, you said. So? A. My mother always said she wanted to be with him.' 105 'Q. Yes. A. Doc, I can't take it.' 106 'Q. Come on, yes, you can. Speak up. So you thought it would be the right thing to do what? Come on. You started—' 107 'Q. (continued) now. Speak up. Everybody will help you. You're a nice fellow. You're a man now. You don't want to be a coward. Everybody will help you. You were excited. You did it in a fit of anger. A. I was never a coward.' 108 'Q. I can't hear you. A. I was never a coward.' 109 'Q. Come on, speak up. Your mother said she wanted to be with your father. So what did you do? A. I can't remember.' 'Q. Sure you can. Speak up now. A. I can't.' 110 'Q. Look at me. Look at me. A. Yes, Doc.' 111 'Q. You thoughts are coming into you. Don't be afraid Buddy. We're all with you one hundred per cent. We'll help you. We'll help you every way possible. I'm your doctor. I'm going to help you. A. I hope you can.' 112 'Q. I know I can. If you will be honest with me, I'll help you. Everybody thinks a lot of you. You're a nice man. A. Doctor, can I have some water, please.' 113 'Q. Sure have some water. A. Yes, sir.' 114 'Q. Come on, take some more water. A. I'm not thirsty. It's just my mouth is dry.' 115 'Q. That's because you're nervous, you see. Your conscience is bothering you. After you tell me and tell me the truth, then you will feel relieved. We're all with you one hundred per cent. Then you will be fine. Now, let me put my hand on your forehead again. A. It hurts so.' 116 'Q. Sure you can think. Only cowards can't think. You aren't a coward. You can speak up. You know—you know what you did. Come on now. Come on. I have my hand on your forehead and your thoughts are coming back to you. Come on now. Now, your thoughts are coming back to you? A. No, Doc, they don't.' 117 'Q. They're coming back to you. Concentrate on what I say. They're coming right in again. Your mother said—you said he had to be stopped. What did you do? A. I don't know, Doc.' 118 'Q. You know you hit your mother first. You hit your mother on the head. Speak up. What did you do? A. I don't know, Doctor.' 119 'Q. Yes, you do. Speak up, now. Speak up. See, I can make you talk very truly. I can give you an injection now. It's much better if you tell it to me this way. Come on, now, speak up. A. I can't think, Doctor.' 120 'Q. Just relax and concentrate and listen to me. Speak up. What did you say? You had his what? You had his what? What about your hand back? A. It's all confused.' 121 'Q. Sure it's confused because you don't want to think. You are fighting. You have a conscience. As soon as you talk to me your conscience will be relieved. See, you show tension now. You're pale; your mouth is dry. You have a conflict. As soon as you talk to me everything will be relieved. You are going to feel lots better. Come on. A. Doc, I'm trying to think.' 122 'Q. I'm trying to help you if you tell me the truth. I am on your side. I am going to help you all I can. Come on, now, Buddy. Be a nice fellow. Put your hand here. All right. Tell me what happened. Come on. Tell me what happened. Your father went away, and you said he had to be stopped. What did you take? What did you take in your hand? Speak up, Buddy. I can't hear you. Don't be afraid now. A. I'm not afraid, Doc.' 123 'Q. Don't be afraid. We're all with you. We want to help you. A. I'm not afraid.' 124 'Q. I can't hear you. Speak up. A. I'm not afraid, Doc. I'm not afraid, Doc. I want you to help me.' 125 'Q. Did you finish your tea? A. I finished the tea.' 126 'Q. You finished the tea. So what happened then? What did you do to yoru mother? Concentrate—just close your eyes and concentrate. A. I can't.' 127 'Q. All right, Buddy, you can think now. Your head is all clear now. Try and get it clear. A. It's not clear.' 128 'Q. Just relax now and everything will come back to you. You know what happened. Everybody—I mean, these people know what happened. It's much better for you to come clean and play ball. Everybody thinks you are trying to hide something. A. I don't want to hide anything.' 129 'Q. Then speak up and tell me. You told me so far—you know you did it—you were in there. Did your mother start a fight with you? A. No.' 130 'Q. Did she continue the argument? A. No, my mother was in agreement with me.' 131 'Q. But you had a little argument about going with your father, is that what you said? A. No.' 132 'Q. What then? A. I said, 'Mom, if he don't stop, I'll kill him.' 133 'Q. I didn't hear that. What did you say? A. I told her, I said, 'Mom, if he don't stop the arguments with me, I'll kill him.' 134 'Q. What did she say? A. So she said, 'Calm down. Here, take a drink of water.' So I said, 'Just wait until he comes back. We'll finish this once and for all.' 135 'Q. So. A. So she said, 'Here, take a drink of water.' 136 'Q. Go ahead. I'm with you. Don't be afraid. So. Speak up. So, what did you do then. Now, you know what you did. You've got a story on your mind. Come on. You can speak now. Come on, Buddy, speak. A. Doc, I'm trying so hard.' 137 'Q. I know you're trying. I'm trying with you because you're a nice fellow. A. I just can't think.' 138 'Q. All right, get to the part where you said, 'I'll kill him.' So then what happened. You waited until he came back. Come on. A. Doc, I can't.' 139 'Q. Speak up, I can't hear you. All right, what did your mother say when you said, 'When he comes back, I'll kill him.' What did your mother say? Did you take a drink of water? I can't hear you. A. I don't remember.' 140 'Q. I see. So what did you do then? A. I don't know.' 'Q. Now, you think. All your thoughts will come back to you. Just think. Just relax. All your thoughts will come back to you. I have my hand on your head. Your thoughts are coming back to you. It's much better for you. You will get along much better and you will feel better. I can't hear you. What did you say? A. Will I ever feel better.' 141 'Q. You will if you tell me the truth. You won't if you don't. You may as well tell us and we'll work with you. We'll play ball with you. We'll help you if we can. It will make you feel better. Come on, now, speak up. You told your mother, 'Wait until he comes back. I'll kill him.' A. She said, 'Here take a drink of water.' Doc, I can't remember.' 142 'Q. Sure you can. Open your eyes. Don't say you can't. Just look at me. A. I just don't remember.' 143 'Q. Sure you can. A. No, I can't think, Doctor.' 144 'Q. Buddy, it doesn't help you if you say you can't think when you know you did it, so you may as well tell us and get our help. If you don't tell us and get our help, I'll wash my hands of you. All right, close your eyes and think hard. Just close your eyes now and your thoughts will come back to you. All your thoughts are coming back to you. You're a nice fellow and you're excited; and in a fit of temper you said you were going to kill him when he comes back. What did your mother do? Did she try to hold you? A. No.' 145 'Q. I can't hear you. Did she hold you? A. No.' 146 'Q. What did she do? A. She wanted to give me a drink of water. She took the cup and started to run the water.' 147 'Q. She started what? A. She started to run the water.' 148 'Q. Yes. She was facing the sink? A. She was facing the sink.' 'Q. I can't hear you? A. She was facing the sink.' 149 'Q. So what did you do. Speak up. I'll positively help you if I can. I'm with you one hundred per cent. I'm going to help you. You're going to feel fine. Your conscience will be clear and everything will be fine. Don't hide anything. You did it in a fit of temper. Your mother went to the sink to give you some water. So you did what? You went up to her? A. I was standing there waiting for him to come back. I picked up the hammer.' 150 'Q. You picked up the hammer? A. Yeah.' 151 'Q. I didn't hear that. What did you say? A. I picked up the hammer.' 152 'Q. Yes * * * say it. Say it. A. I said, 'He killd my brother, he'll kill my mother, and he'll kill me." 153 'Q. Yes. You picked up the hammer. Where was the hammer? A. It was on the dish closet.' 154 'Q. On the dish closet? A. Yeah.' 155 'Q. In what room? A. In the kitchen.' 156 'Q. What kind of hammer was it? A. A big hammer.' 157 'Q. Was it a carpenter's hammer? A. It was a big hammer.' 158 'Q. A big hammer. You picked it up and then what? Don't be afraid. Say it. A. I can't, Doc.' 159 'Q. I know you can't. I know it's hard, but say it. We're working with you. You're pale and dry. You're nervous. Just let me put my hand on your head and your thoughts will come in. You picked up the hammer and your mother was standing near the sink facing the sink—letting the water run; and you picked up the hammer and you said—you said, your father, he killed my son. You said he is going to kill us all. You remember that, don't you? Come on, say it. Speak up, come on. You move your lips. You know you want to say it. Say it a little louder. Come on, Buddy. We'll help you. Don't be afraid now. A. I can't help you.' 'Q. I'll help you, Buddy. I am with you one hundred per cent, but you got to play ball with me. You know she was standing by the sink. You got to tell me the truth. A. No, she wasn't standing.' 160 'Q. What was she doing? A. She was sitting.' 161 'Q. Your mother was sitting at the end of the table; Joe you will have to speak loudly, I can't hear you? A. I got up from the table.' 162 'Q. And you took a drink of water and you held the hammer in your hand. What did you do then? A. I can't think any more what I did.' 163 'Q. It will come back to you? A. Doc. can I see the results?' 164 'Q. I can't tell you how you think you killed her? A. I must have; who else could have.' 165 'Q. I want you to recollect your thoughts; tell me all the details. I can make you talk? A. I tried for two days; this think came last night. Everybody was asking me questions. It didn't do any good to ask me; I couldn't answer them.' 166 'Q. That's right? A. Everybody was nice to me.' 167 'Q. Everybody was nice to you? A. Yes.' 168 'Q. Nobody hurt you, did they? A. No.' 169 'Q. Nobody forced you to answer anything? A. No, I just can't remember.' 170 'Q. Come I am holding my hand on your forehead; I am making your thoughts clear. You know exactly what happened? A. Doc. I can't think. I must have done it but how. 171 'Q. What did you say? A. I said I must have done it but how. 172 'Q. You just told me, you had your hand on your head? A. I don't remember. From then on, I can't think of anything. 173 'Q. Alright relax and think. You stay here until your thoughts come back to you. Did you start any argument with your Mother? When your Father went down for the paper, did you start an argument with your Mother, after she gave you the water? A. No, I always babied my mother. (Noise) 174 'Q. Did you have it in mind that your Mother would die with your Father because you always wanted it? A. She always said that. 175 'Q. She always said what? A. That she wanted to die with him. 176 'Q. You had it on your mind, didn't you? A. I don't know Doc. 177 'Q. Think and tell me; just think and tell me. A. She was just like a baby to me. 178 'Q. Just relax and your thoughts will come back to you because I have my hand on your forehead. Everything will be fine. If you tell us all the details we will know the whole story of what happened. You picked up the hammer and your Mother was sitting on the chair, you said, and you were standing at the sink? A. I was standing by the stove. 179 'Q. You were standing by the stove, excuse me I made a mistake. What did you do with the hammer, you swung it? A. I must have Doc. Nobody else could have done it. 180 'Q. Nobody else could have you say you must have swung it? A. I must have. 181 'Q. And your Mother fell down. How many times did you swing it. You must tell me that. How many times did you swing the hammer? A. I don't know Doctor. 182 'Q. Was it once or twice or three times? A. I don't know. 183 'Q. How many times? A. I was never angry with my mother. 184 'Q. Were you angry with your Father? A. I was very angry with him. 185 'Q. And you felt that your Mother should die at the same time with your Father? A. I don't know. 186 'Q. What did you do then, when your Father came in. You heard him come up. What floor do you live on? A. Street floor; I was in the back. 187 'Q. And your Father opened the door to the apartment, when he came back with the paper? A. I don't know, Doctor. 188 'Q. Think, think. A. I don't know why, I can't think. 189 'Q. I am helping you to think, if you want to you can. There is only a question of wanting. A. I want to so bad. 190 'Q. If you want to you can because you know everything that happened. We know that you are a nice man and I am trying to help you. When your Father came back with the paper; now here you are, you are in the apartment and your Father came back with the paper? A. I can't remember, Doctor. 191 'Q. Sure you can. A. I don't remember, Doctor. 192 'Q. Sure you can; try hard. A. I thought sometimes last night. I told the Captain last night I can't remember. That I would have to remember. 193 'Q. Why do you have to remember? A. Because if I can't remember these things here, my own children may not be safe. I can't remember what happened; I don't know what happened. I can't think. 194 'Q. What do you think will happen to the children? A. I don't know; it worries me. 195 'Q. What do you think might happen to the children? A. I was there with a hammer in my hand I know it. I remember having a hammer in my hand. 196 'Q. Take your time and relax. Now open your eyes and look at me, just open your eyes—look at me your thoughts will come back, look at me and concentrate. You said you were at the stove with the hammer in your right hand. You were very, very angry you said, right? A. I was never angry at my mother but my Father accused me. 197 'Q. Accuses you of what? A. That I was trying to put him out of business. The first day we went into the new business we gave him an equal share with us. (Noise) I knew for years that he killed my brother. My brother did the work of six men; he gave him a measly ten dollars a week. He'd sooner lose his son and stay in business so he could save the money and live with my mother. 198 'Q. Everybody is with you one hundred per cent. You were angry with your Father; you were never so angry like that in all your life? A. I can see what happened Doc but I can't remember. 199 'Q. Just concentrate and your memory will come back to you. You want to say something because I can see your lips moving. You are a nice fellow. Everybody likes you, everybody can make a mistake. Now speak up and tell us what happened. Alright, speak up; you know some things. What happened next? Your Father came back with the paper, what did you do? A. I can't think Doc. It doesn't come to me. (Noise) 200 'Q. I've got my hand on your forehead, your thoughts will come back to you, everything will be clear? A. Hold my temples Doc. 201 'Q. You say you want me to hold your temples. Now your thoughts are coming back, that's right. The pain was only a tension; it's nervousness. I'm trying to make you speak. I want you to speak up and I want you to tell me everything, now speak up. A. Do I have to? 202 'Q. Sure you have to; it will be much better for you, now speak up. A. I don't remember much. I promised the Captain I would speak up. 203 'Q. Was the Captain good to you? He was wonderful. 204 'Q. Was I good to you? A. Everybody was good to me. 205 'Q. We are all trying to help you, we are all trying to help you. Your thoughts are coming into you. Now what happened next. You think and you tell me; where were you standing? 206 'Q. Just close your eyes and it will all come back to you. Just close your eyes and relax. A. I'm trying to Doc. I came back from the cemetery today. All the way down from the cemetery I tried to force myself to remember. I can't. (Noise) I'm trying to remember, how could I do this to my mother. I'm trying to remember. 207 'Q. I can understand that you loved your mother? A. My mother yes. I can't think. It's awful. 208 'Q. I can understand how you feel about your mother. A. They told me to rest. I took a good shower and I slept. I was very tired; I was tired, when I got up. 209 'Q. I can understand how you feel about your Mother. (Noise) You were never so angry in all your life as you were at that time. You told your Mother that you were waiting to kill him. You were waiting for him to come back with the paper. That is what you told me. I can understand that the anger was sufficient to kill your Father? A. Why my mother? 210 'Q. I don't know about your Mother but as far as your Father was concerned your thoughts were pretty clear, right? A. When he came back I said I was going to settle it once and for all. 211 'Q. When he came back you said to him you were going to settle this thing once and for all? A. I said I was going to settle this thing once and for all. I stood there standing with the Hammer waiting for him to come back. 212 'Q. Just take your time now. You were standing there with the hammer. Now your Father came back again? A. I don't remember. 213 'Q. Close your eyes and your thoughts will come back, relax. I am going to make your mind recollect everything. Your mind is getting clearer and clearer; all your thoughts are coming back now. Now they're coming back. Now your Father went for the paper; your Father came back. Now talk to me. Now your mind is clear. (Noise) Speak up and tell me. A. I can't remember him coming back. 214 'Q. Yes you can concentrate, just concentrate and you can see your Father come back now. How long did it take for him to get the paper? A. Oh, just a few minutes. 215 'Q. And in a few minutes, you heard him come in? A. I don't remember him coming in. 216 'Q. What did you do to your mother in the meantime? A. I don't know. If I could only think. 217 'Q. What do you think? Come, think, think. I want to tell you something. You are a smart fellow. I may as well be very frank with you. Everything does not alter the case for you. They are not going to work with you and I am not going to work with you if you don't help yourself. A. I want to help myself. 218 'Q. Now, you see all the details are there. You say yourself, you were the only one there. You say you must have done it? A. We talked this over for twelve hours. 219 'Q. But you didn't remember all the facts that you told me. Now your mind is clear. A. I can't remember how that happened. 220 'Q. The fact that you remember or don't remember don't help you, you know. If you remember and come across like a good man—A. Doc, I want to help myself. I can't remember. 221 'Q. If you tell us the details and come across like a good man, then we can help you. We know that morally you were just in anger. Morally, you are not to be condemned. Right? A. Right. 222 'Q. But you have to tell us the details, then we will know that you are above board and on the level. Otherwise, we just don't do nothing to you and you will get the worst of it. A. I can't remember. I must have done it. I don't deny that I did it. 223 'Q. You don't deny what? A. I don't deny that I did it. I must have done it. 224 'Q. You don't deny that you didn't do it, you mean? A. No, I don't say I didn't do it. I know I did it. 225 'Q. You know you did it? A. Here is the proof of it. 226 'Q. Do you know you did it? A. I can't remember doing it. I know it happened. Look at my mother, the woman that I love most in the world. Look. How did it happen? I can't even remember. I can't remember him. I can't remember him coming back. Doctor, can anybody be this crazy? 227 'Q. That is not crazy, my friend. That is not crazy. When you don't remember anything, that is not crazy. If I forget that I owe somebody ten dollars, that doesn't mean that I am crazy. If you forget the incidents of this thing, that does not mean you are crazy. A. I didn't say it that way. 228 'Q. You said, 'Can anybody be that crazy?' You are not crazy. A. I want to remember this thing. I have got to remember it. 229 'Q. This is what we call amnesia and in other words, a wish to forget because it is not pleasant. It does not mean that you are crazy. A. I didn't say that doctor. You misunderstood me. 230 'Q. I must have misunderstood you. A. I didn't say I was crazy. 231 'Q. You don't think you are crazy, do you? A. No, I hope not. 232 'Q. Do you think you might be crazy? A. No, I don't think so. 233 'Q. Of course not. You are not crazy. You are a nice fellow. I am willing to stay here with you and help you but you have got to help yourself. A. I have tried today for hours to recall from here on, from the time that my mother—I can recall everything. I did it last night. Here, it took hours to piece together things. I sat here. I was so confused that I didn't know whether I owned this suit. I didn't know whether I had a pair of shoes. 234 'Q. Everything is clear up to the point where you held the hammer in your hand? A. That's right but why can't I remember from there on? 235 'Q. If you will just stop for a minute, you will remember. And your thoughts will come into you. A. Doctor, I am exhausted, so please be patient. 236 'Q. I am patient. A. I appreciate that. 237 'Q. I will stay here with you all night, if you want to? A. The Captain and I last night, he was so patient. He waited for hours until these things came home. 238 'Q. For hours? A. I appreciate it. 239 'Q. Do you want me to wait? A. I told him that the last time. It's got to come back. I have been trying to remember all day. 240 'Q. Take your time. Just take your time. A. I am trying to remember. 241 'Q. You got a much better chance to play ball, (Then noice) than if you say you don't remember. 242 'Q. If you tell me that you were in a fit of anger, that you were angry, that you just swung the hammer, but if you tell me that you don't remember, then you will be working against yourself. Where will it get you? A. At that point there, I was so mad. I was like white hot metal. I was so mad. I was never mad at anyone in my life. (Then noise) 243 'Q. Do you feel better? (Then noise) Do you want coffee? A. I drank coffee all night long. (Then noise) 244 'Q. These people are going to throw the book at you unless you can show that in a fit of temper, you got so angry that you did it. Otherwise they toss premeditation in and it's premeditation. See? 245 'Q. Drink your coffee. Take your time. I got time. You got time. Just relax. Want some more coffee? A. I would like some hot coffee, doc. I would like to speak to the Captain. 246 'Q. To whom? A. To Captain Meenahan. 247 'Q. You would like to speak to him? You want me to call him? A. I wish you would. 248 'Q. Do you want me to come back? A. I don't know. He was awful good hunk last night. 249 'Q. Well, we were getting along very nicely. I am trying to straighten him out with his troubles. He seemed a little mixed-up. His mind is clear now. I made him concentrate. His mind is much clearer. You can take my seat, Captain. 250 'Q. Can I speak to the Captain? 251 Mr. Justice MINTON, with whom Mr. Justice REED and Mr. Justice BURTON join, dissenting. 252 This petitioner was charged with murdering his parents by beating the life out of them with a hammer. No one claims that he has a defense to the charge. It is contended, however, that his conviction was not obtained in accordance with due process of law. 253 He has already had two trials. His first conviction was appealed and reversed. The second one was appealed and affirmed, and this Court denied certiorari on a petition that set up the same constitutional questions now raised. Then habeas corpus proceedings were instituted in the United States District Court for the Southern District of New York and relief was denied. That judgment was affirmed by the United States Court of Appeals for the Second Circuit and is the one now here on certiorari. 254 The New York Court of Appeals reversed the first conviction on the ground that a confession introduced in evidence at the trial was the result of mental coercion and hence involuntary. The threats, cajoling, and promises of leniency, utilized by Dr. Helfand, a psychiatrist called in by the District Attorney, to induce petitioner to confess were soundly condemned by that court. The confession thus obtained was held inadmissible for the purpose of proving petitioner's guilt. But petitioner's subsequent confessions to Captain Meenahan of the police, to the two assistant district attorneys, and to his business associate, Herrschaft, were not invalidated as a matter of law. The case was remanded to the trial court with directions to submit to a jury under proper instructions the question whether the subsequent confessions resulted from or were influenced by the mental coercion which produced the Helfand confession. 255 The case was tried a second time, and the question of the voluntariness of the subsequent confessions was submitted to the jury under clear and ample instructions as to which petitioner raises no objection here. The jury returned a verdict of guilty of first degree murder of the father, and a sentence of death was imposed. 256 We are now asked to hold that the later confessions were involuntary as a matter of law and that petitioner was denied due process of law under the Fourteenth Amendment because the jury was allowed to consider the voluntariness of the subsequent confessions. It seems to me the very essence of due process to submit to a jury the question of whether these later confessions were tainted by the prior coercion and promises which led to the Helfand confession. I am familiar with no case in which this Court has ever held that an invalid confession ipso facto invalidates all subsequent confessions as a matter of law. It does not seem to me a denial of due process for the state to allow the jury to say, under all the facts and circumstances in evidence and under proper instructions by the court, whether the subsequent confessions were tainted or were free and voluntary. This is precisely what New York did. In Lyons v. State of Oklahoma, 322 U.S. 596, 603, 64 S.Ct. 1208, 1213, 88 L.Ed. 1481, it was said: 257 'The Fourteenth Amendment does not protect one who has admitted his guilt because of forbidden inducements against the use at trial of his subsequent confessions under all possible circumstances. The admissibility of the later confession depends upon the same test—is it voluntary.' 258 The only question before us is whether the effects of the coercion practiced by Dr. Helfand so clearly continued to influence petitioner's mind as to make unreasonable any conclusion other than that the later confessions were also coerced. If there was evidence to support contrary inferences as to the continuing effect of the coercive practices, the conviction should not be disturbed. It is not our function to set aside state court convictions on the ground that the verdict is against the weight of the evidence. Stein v. People of State of New York, 346 U.S. 156, 180, 73 S.Ct. 1077, 1090. 259 The evidence shows an involuntary confession to Dr. Helfand.1 It was followed a few minutes later by a confession to Captain Meenahan. Some half hour later petitioner confessed to a business associate, Herrschaft, saying, 'Well, you know what it's all about; I did it.' Herrschaft asked, 'Do you mean that you killed your own mother and father?' and petitioner replied, 'I did it.' This confession was admitted in this Court to have been voluntarily made, and no complaint is made of its admission in evidence. Sandwiched in between the Meenahan confession and the confession to the assistant district attorneys some two and one-half hours later, the Herrschaft confession presents enough evidence in itself to go to the jury on whether these three confessions, one admitted to have been valid, were all given by petitioner voluntarily with the considered purpose of making a clean breast of the whole thing. 260 Nor was this the only evidence. Petitioner boldly examined Dr. Helfand, the State's witness, for the purpose, among others, of laying a foundation for the introduction of expert testimony by petitioner's psychiatrist that the effect of the coercion carried over to the later confessions. Petitioner's expert testified as expected. The State then placed on the stand another psychiatrist who gave the opposite opinion, based on evidence that petitioner in his later confessions gave details of the crime known only to him and gave them freely without urging. If this disagreement between experts did not under New York law constitute a conflict in the evidence sufficient standing alone to go to the jury, there was other evidence, such as the Herrschaft confession, to be considered, together with the testimony of the assistant district attorneys that petitioner seemed quite normal and relaxed, and relieved to talk to them. As I said before, it is not our function to weigh the evidence. Whether there was any evidence to go to a jury is the question. In my opinion, there was a question of fact presented by the evidence. 261 This Court concluded its opinion in the Lyons case in these words: 262 'We cannot say that an inference of guilt based in part upon Lyons' (later) McAlester confession is so illogical and unreasonable as to deny the petitioner a fair trial.' Lyons v. State of Oklahoma, supra, 322 U.S. at page 605, 64 S.Ct. at page 1214. 263 I cannot say here that the subsequent confessions as a matter of law were so completely under the influence of the first confession that to let a jury pass upon that influence as it affected the voluntariness of the later confessions amounts to a denial of due process of law. To let the jury pass upon this question is not so unfair to petitioner as to violate the fundamental principles of justice. 264 It is contended that the promises of leniency made by Dr. Helfand stand on a different footing; that once a promise is made, its effect must be presumed to continue until the promise is clearly withdrawn. But such has never been the law. See State v. Willis, 71 Conn. 293, 313, 41 A. 820. As in the case of other forms of coercion and inducement, once a promise of leniency is made a presumption arises that it continues to operate on the mind of the accused. But a showing of a variety of circumstances can overcome that presumption. The length of time elapsing between the promise and the confession, the apparent authority of the person making the promise, whether the confession is made to the same person who offered leniency, and the explicitness and persuasiveness of the inducement are among the many factors to be weighed. 265 There are two parties to this case, the State and the petitioner, and on the State rests the heavy burden of proving guilt. As Mr. Justice Cardozo said in Snyder v. Com. of Massachusetts, 291 U.S. 97, 122, 54 S.Ct. 330, 338, 78 L.Ed. 674: 266 'But justice, though due to the accused, is due to the accuser also. The concept of fairness must not be strained till it is narrowed to a filment. We are to keep the balance true.' 267 New York must be mystified in its efforts to enforce its law against homicide to have us say it may not submit a disputed question of fact to a jury. The Court holds that to do so denies due process. The answer to that question, which did not seem substantial to us when certiorari was sought to review the decision of the New York Court of Appeals, now emerges crystal clear when we are reviewing the decision of a federal court dealing with it in a collateral habeas corpus proceeding. And yet the jury and a majority of the judges of every court, state and federal, that until now have considered the matter have found no such failure to observe constitutional standards. Mr. Justice Cardozo's words in the Snyder case, supra, 291 U.S. at page 122, 54 S.Ct. at page 238, seem especially pertinent here: 268 'There is danger that the criminal law will be brought into contempt—that discredit will even touch the great immunities assured by the Fourteenth Amendment—if gossamer possibilities of prejudice to a defendant are to nullify a sentence pronounced by a court of competent jurisdiction in obedience to local law, and set the guilty free.' 269 The careful, considerate, fair trial accorded petitioner is in keeping with the fundamental essentials of justice which are due process, and I would affirm. 1 The confession was also held to have been in violation of state law and the state's due process clause. 2 The death sentence was imposed under a conviction for first degree murder of the father. As to the death of his mother the jury found petitioner guilty of second degree murder of his mother, which does not carry the death sentence. This second degree conviction is not before us. 3 See, e.g., Brown v. State of Mississippi, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682; Chambers v. State of Florida, 309 U.S. 227, 60 S.Ct. 472, 84 L.Ed. 716; Lisenba v. People of State of California, 314 U.S. 219, 62 S.Ct. 280, 86 L.Ed. 166; Ashcraft v. State of Tennessee, 322 U.S. 143, 64 S.Ct. 921, 88 L.Ed. 1192; Malinski v. People of State of New York, 324 U.S. 401, 65 S.Ct. 781, 89 L.Ed. 1029; Haley v. State of Ohio, 332 U.S. 596, 68 S.Ct. 302, 92 L.Ed. 224; Watts v. State of Indiana, 338 U.S. 49, 69 S.Ct. 1347, 93 L.Ed. 1801; Stroble v. State of California, 343 U.S. 181, 72 S.Ct. 599, 96 L.Ed. 872; Stein v. People of State of New York, 346 U.S. 156, 73 S.Ct. 1077. The above cases illustrate the settled view of this Court that coerced confessions cannot be admitted as evidence in criminal trials. Some members of the Court reach this conclusion because of their belief that the Fourteenth Amendment makes applicable to the states the Fifth Amendment's ban against compulsory self-incrimination. 1 The record discloses that petitioner was questioned by Captain Meenahan on Tuesday, the day of the murder, from about 9 or 10 in the evening until 10:30 or 10:45 at his parents' apartment. On Wednesday at about 10 in the morning, he was met at his place of business by detectives who questioned him off and on until 1:20 p.m., when Captain Meenahan began an interrogation which was concluded at 11:30 or 12 that night. He was then allowed to go home. It was not until Thursday that he was taken in custody. That morning he was taken out by detectives to check his alibi. Questioning by Captain Meenahan began again about 2 that afternoon. He was kept at the station until 8:30 o'clock Friday morning, but there was little questioning after 10 p.m. Thursday evening. On Friday morning, he was taken to his parents' funeral and then permitted to sleep for an hour and a half. He was returned to the police station, and about 5 o'clock Friday afternoon the interview with Dr. Helfand began. The coercion practiced by Dr. Helfand was forcefully condemned by the New York Court of Appeals and caused it to declare the confession to Dr. Helfand invalid as a matter of law. The validity of this confession is not involved.

01

347 U.S. 610 74 S.Ct. 736 98 L.Ed. 987 ALTONv.ALTON. No. 531. Supreme Court of the United States Argued and Submitted April 7, 1954. June 1, 1954 Messrs. George H. T. Dudley, Charlotte Amalie, St. Thomas, V.I., Abe Fortas, Washington, D.C., for petitioner. Mr. Hyman Smollar, Washington, D.C., for respondent. PER CURIAM. 1 Petitioner brought this action for divorce in the Virgin Islands. Following argument and submission of the case in this Court, we were authoritatively advised that a final divorce decree had been entered on April 28, 1954, in the State of Connecticut on application of the respondent. The Superior Court of Connecticut found respondent to be a domiciliary of that State and petitioner here personally appeared in that action. Petitioner does not suggest that she repudiates her appearance in the Connecticut action, that the Connecticut decree is invalid in any way, or, in fact, that there is any colorable basis for challenging it. Nor does petitioner seek any ancillary relief in the instant divorce action that could not be obtained in an independent action in the Virgin Islands. 2 On the premises, this case appears to be moot. The judgment of the Court of Appeals is vacated and the cause is remanded to the District Court with directions to vacate its judgment and to dismiss the proceeding upon the ground that the cause is moot. 3 Mr. Justice BLACK dissents. He is of the opinion that petitioner is entitled to have her divorce case tried in the Virgin Islands since under the holding and opinion in Williams v. State of North Carolina, 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577, the Connecticut divorce decree does not necessarily protect petitioner from conviction for bigamy in the Virgin Islands or anywhere else. 4 Mr. Justice DOUGLAS and Mr. Justice JACKSON took no part in the consideration or decision of this case.

89

347 U.S. 590 74 S.Ct. 757 98 L.Ed. 967 BRANIFF AIRWAYS, Inc.v.NEBRASKA STATE BOARD OF EQUALIZATION AND ASSESSMENT et al. No. 476. Argued March 12, 1954. Decided June 1, 1954. Mr. William J. Hotz, Sr., Omaha, Neb., for appellant. Mr. C. C. Sheldon, Lincoln, Neb., for appellees. Mr. Justice REED delivered the opinion of the Court. 1 The question presented by this appeal from the Supreme Court of Nebraska is whether the Constitution bars the State of Nebraska from levying an apportioned ad valorem tax on the flight equipment of appellant, an interstate air carrier. Appellant is not incorporated in Nebraska and does not have its principal place of business or home port registered under the Civil Aeronautics Act, 52 Stat. 977, 49 U.S.C. §§ 401—705, 49 U.S.C.A. §§ 401—705, in that state. Such flight equipment is employed as a part of a system of interstate air commerce operating over fixed routes and landing on and departing from airports within Nebraska on regular schedules. Appellant does not challenge the reasonableness of the apportionment prescribed by the taxing statute or the application of such apportionment to its property. It contends only that its flight equipment used in interstate commerce is immune from taxation by Nebraska because without situs in that state and because regulation of air navigation by the Federal Government precludes such state taxation. 2 This petition for a declaratory judgment of the invalidity of §§ 77—1244 to 77—1250 of the state tax statute1 and an injunction against the collection of taxes assessed under such provisions for previous years was filed as an original action in the court below by Mid-Continent Airlines, Inc., and tried upon stipulated facts. Subsequent to filing, but before the decision, Mid-Continent and appellant were merged on August 1, 1952, and appellant was substituted as the party plaintiff. Mid-Continent had been incorporated in Delaware with its corporate place of business in Wilmington in that state, and Braniff is incorporated in Oklahoma and has its corporate place of business in Oklahoma City. Pursuant to the merger Mid-Continent's main executive offices were moved from Kansas City, Missouri, and merged with appellant's in Dallas, Texas. The number of regularly scheduled stops in Nebraska, fourteen per day at Omaha and four at Lincoln, was not affected by the merger. 3 The home port registered with the Civil Aeronautics Authority and the overhaul base for the aircraft in question is the Minneapolis-St. Paul Airport, Minnesota. All of the aircraft not undergoing overhaul fly regular schedules upon a circuit ranging from Minot, North Dakota, to New Orleans, Louisiana, with stops in fourteen states including Minnesota, Nebraska and Oklahoma. No stops were made in Delaware. The Nebraska stops are of short duration since utilized only for the discharge and loading of passengers, mail, express, and freight, and sometimes for refueling. Appellant neither owns nor maintains facilities for repairing, reconditioning, or storing its flight equipment in Nebraska, but rents depot space and hires other services as required. The Supreme Court of Nebraska made no distinction as to taxability between those years when no flights were made into the state of domicile (Delaware) and those when flights did enter the state of new domicile (Oklahoma). 4 It is stipulated that the tax in question is assessed only against regularly scheduled air carriers and is not applied to carriers who operate only intermittently in the state. The statute defines 'flight equipment' as 'aircraft fully equipped for flight',2 and provides that 'Any tax upon or measured by the value of flight equipment of air carriers incorporated or doing business in this state shall be assessed and collected by the Tax Commissioner.'3 A formula is prescribed for arriving at the proportion of a carrier's flight equipment to be allocated to the state.4 5 The statute uses the allocation formula of the 'proposed uniform statute to provide for an equitable method of state taxation of air carriers' adopted by the Council of State Governments upon the recommendation of the National Association of Tax Administrators in 1947.5 Use of a uniform allocation formula to apportion air-carrier taxes among the states follows the recommendation of the Civil Aeronautics Board in its report to Congress.6 The Nebraska statute provides for reports, levy, and rate of tax by state average.7 6 Required reports filed by Mid-Continent for 1950 show that about 9% of its revenue and 11 1/2% of the total system tonnage originated in Nebraska and about 9% of its total stops were made in that state. From these figures, using the statutory formula, the Tax Commissioner arrived at a valuation of $118,901 allocable to Nebraska, resulting in a tax of $4,280.44. Since Mid-Continent filed no return for 1951 the same valuation was used and an increased rate resulted in assessment of $4,518.29. The Supreme Court of Nebraska held the statute not violative of the Commerce Clause and dismissed appellant's petition.8 7 Appellant argues that federal statutes governing air commerce enacted under the commerce power preempt the field of regulation of such air commerce and preclude this tax. Congress, by the Civil Aeronautics Act of 1938, 52 Stat. 977, 1028, § 1107(i)(3), 49 U.S.C. § 176(a), 49 U.S.C.A. § 176(a), enacted: 8 'The United States of America is declared to possess and exercise complete and exclusive national sovereignty in the air space above the United States, including the air space above all inland waters and the air space above those portions of the adjacent marginal high seas, bays, and lakes, over which by international law or treaty or convention the United States exercises national jurisdiction.' 9 This provision originated in the Air Commerce Act of 1926, 44 Stat. 568, 572, § 6. The 1938 Act also declares 'a public right of freedom of transit' for air commerce in the navigable air space to exist for any citizen of the United States. 52 Stat. 980, § 3, 49 U.S.C. § 403, 49 U.S.C.A. § 403.9 10 The provision pertinent to sovereignty over the navigable air space in the Air Commerce Act of 1926 was an assertion of exclusive national sovereignty. The convention between the United States and other nations respecting international civil aviation ratified August 6, 1946, 61 Stat. 1180, accords. The Act, however, did not expressly exclude the sovereign powers of the states. H.R.Rep.No. 572, 69th Cong., 1st Sess., p. 10. The Civil Aeronautics Act of 1938 gives no support to a different view.10 After the enactment of the Air Commerce Act, more than twenty states adopted the Uniform Aeronautics Act. It had three provisions indicating that the states did not consider their sovereignty affected by the National Act except to the extent that the states had ceded that sovereignty by constitutional grant.11 The recommendation of the National Conference of Commissioners on Uniform State Laws to the states to enact this Act was withdrawn in 1943.12 Where adopted, however, it continues in effect. See United States v. Praylou, 4 Cir., 208 F.2d 291. Recognizing this 'exclusive national sovereignty' and right of freedom in air transit, this Court in United States v. Causby, 328 U.S. 256, 261, 66 S.Ct. 1062, 1065, 90 L.Ed. 1206, nevertheless held that the owner of land might recover for a taking by national use of navigable air space, resulting in destruction in whole or in part of the usefulness of the land property. 11 These Federal Acts regulating air commerce are bottomed on the commerce power of Congress, not on national ownership of the navigable air space, as distinguished from sovereignty. In reporting the bill which became the Air Commerce Act, it was said: 12 'The declaration of what constitutes navigable air space is an exercise of the same source of power, the interstate commerce clause, as that under which Congress has long declared in many acts what constitutes navigable or non-navigable waters. The public right of flight in the navigable air space owes its source to the same constitutional basis which, under decisions of the Supreme Court, has given rise to a public easement of navigation in the navigable waters of the United States, regardless of the ownership of the adjacent or subjacent soil.' H.R.Rep.No. 572, 69th Cong., 1st Sess., p. 10. 13 The commerce power, since Gibbons v. Ogden, 9 Wheat. 1, 193, 6 L.Ed. 23, has comprehanded navigation of streams. Its breadth covers all commercial intercourse. But the federal commerce power over navigable streams does not prevent state action consistent with that power. Gilman v. City of Philadelphia, 3 Wall. 713, 729, 18 L.Ed. 96. Since, over streams, Congress acts by virtue of the commerce power, the sovereignty of the state is not impaired. State of Oklahoma ex rel. Phillips v. Guy F. Atkinson Co., 313 U.S. 508, 534, 61 S.Ct. 1050, 1063, 85 L.Ed. 1487. The title to the beds and the banks are in the states and the riparian owners, subject to the federal power over navigation.13 Federal regulation of interstate land and water carriers under the commerce power has not been deemed to deny all state power to tax the property of such carriers. We conclude that existent federal air-carrier regulation does not preclude the Nebraska tax challenged here. 14 Nor has appellant demonstrated that the Commerce Clause otherwise bars this tax as a burden on interstate commerce.14 We have frequently reiterated that the Commerce Clause does not immunize interstate instrumentalities from all state taxation, but that such commerce may be required to pay a nondiscriminatory share of the tax burden.15 And appellant does not allege that this Nebraska statute discriminates against it nor, as noted above, does it challenge the reasonableness of the apportionment prescribed by the statute.16 15 The argument upon which appellant depends ultimately, however, is that its aircraft never 'attained a taxable situs within Nebraska' from which it argues that the Nebraska tax imposes a burden on interstate commerce. In relying upon the Commerce Clause on this issue and in not specifically claiming protection under the Due Process Clause of the Fourteenth Amendment, appellant names the wrong constitutional clause to support its position. While the question of whether a commodity en route to market is sufficiently settled in a state for purpose of subjection to a property tax has been determined by this Court as a Commerce Clause question,17 the bare question whether an instrumentality of commerce has tax situs in a state for the purpose of subjection to a property tax is one of due process.18 However, appellant timely raised and preserved its contention that its property was not taxable because such property had attained no taxable situs in Nebraska. Though inexplicit, we consider the due process issue within the clear intendment of such contention and hold such issue sufficiently presented. See People of State of New York ex rel. Bryant v. Zimmerman, 278 U.S. 63, 67, 49 S.Ct. 61, 63, 73 L.Ed. 184, and cases cited; Wolfson and Kurland, Jurisdiction of the Supreme Court of the United States, 149 et seq. 16 Appellant relies upon cases involving ocean-going vessels to support its contention that its aircraft attained no tax situs in Nebraska. See, e.g., Hays v. Pacific Mail S.S. Co., 17 How. 596, 15 L.Ed. 254; Morgan v. Parham, 16 Wall. 471, 21 L.Ed. 302; Southern Pacific Co. v. Commonwealth of Kentucky, 222 U.S. 63, 32 S.Ct. 13, 56 L.Ed. 96. The first two cases were efforts to tax the entire value of the ships as other local property, without apportionment, when they were used to plow the open seas. The last case holds the state of corporate domicile has power to tax vessels that are not taxable elsewhere. A closer analogy exists between planes flying interstate and boats that ply the inland waters. We perceive no logical basis for distinguishing the constitutional power to impose a tax on such aircraft from the power to impose taxes on river boats. Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169, 69 S.Ct. 432, 93 L.Ed. 585; Standard Oil Co. v. Peck, 342 U.S. 382, 72 S.Ct. 309, 96 L.Ed. 427. The limitation imposed by the Due Process Clause upon state power to impose taxes upon such instrumentalities was succinctly stated in the Ott case: 'So far as due process is concerned the only question is whether the tax in practical operation has relation to opportunities, benefits, or protection conferred or afforded by the taxing State.' 336 U.S. at page 174, 69 S.Ct. at page 434. In Curry v. McCanless, 307 U.S. 357, 59 S.Ct. 900, 83 L.Ed. 1339, the evolution of such restriction on state power was reviewed and the rule stated thusly: 17 'When we speak of the jurisdiction to tax land or chattels as being exclusively in the state where they are physically located, we mean no more than that the benefit and protection of laws enabling the owner to enjoy the fruits of his ownership and the power to reach effectively the interests protected, for the purpose of subjecting them to payment of a tax, are so narrowly restricted to the state in whose territory the physical property is located as to set practical limits to taxation by others.' Id., 307 U.S. at page 364, 59 S.Ct. at page 904. 18 Thus the situs issue devolves into the question of whether eighteen stops per day by appellant's aircraft is sufficient contact with Nebraska to sustain that state's power to levy an apportioned ad valorem tax on such aircraft. We think such regular contact is sufficient to establish Nebraska's power to tax even though the same aircraft do not land every day and even though none of the aircraft is continuously within the state. 'The basis of the jurisdiction is the habitual employment of the property within the state.'19 Appellant rents its ground facilities and pays for fuel it purchases in Nebraska. This leaves it in the position of other carriers such as rails, boats and motors that pay for the use of local facilities so as to have the opportunity to exploit the commerce, traffic, and trade that originates in or reaches Nebraska. Approximately one-tenth of appellant's revenue is produced by the pickup and discharge of Nebraska freight and passengers. Nebraska certainly affords protection during such stops and these regular landings are clearly a benefit to appellant. 19 Nor do we think that Nebraska's power to levy this tax was affected by the merger of Mid-Continent with Braniff. Since 'The rule which permits taxation by two or more states on an apportionment basis precludes taxation of all of the property by the state of domicile', Standard Oil Co. v. Peck, supra, 342 U.S. at page 384, 72 S.Ct. at page 310, we deem it immaterial that before the merger Mid-Continent was domiciled in Delaware, a state through which its planes did not fly, and after the merger Braniff is domiciled in Oklahoma, a state through which these aircraft make regular flights. 20 Appellant urges that Northwest Airlines v. State of Minnesota, 322 U.S. 292, 64 S.Ct. 950, 88 L.Ed. 1283, precludes this tax unless that case is to be overruled. In that case Minnesota, as the domicile of the air carrier and its 'home port,' was permitted to tax the entire value of the fleet ad valorem although it ranged by fixed routes through eight states.20 While no one view mustered a majority of this Court, it seems fair to say that without the position stated in the Conclusion and Judgment which announced the decision of this Court, the result would have been the reverse. That position was that it was not shown 'that a defined part of the domiciliary corpus has acquired a permanent location, i.e., a taxing situs, elsewhere.' 322 U.S. at page 295, 64 S.Ct. at page 952. That opinion recognized the 'doctrine of tax apportionment for instrumentalities engaged in interstate commerce', 322 U.S. at page 297, 64 S.Ct. at page 953, but held it inapplicable because no 'property (or a portion of fungible units) is permanently situated in a State other than the domiciliary State.' 322 U.S. at page 298, 64 S.Ct. at page 953. When Standard Oil Co. v. Peck, 342 U.S. 382, 384, 72 S.Ct. 309, 310, 96 L.Ed. 427, was here, the Court interpreted the Northwest Airlines case to permit states other than those of the corporate domicile to tax boats in interstate commerce on the apportionment basis in accordance with their use in the taxing state. We adhere to that interpretation. 21 Affirmed. 22 Mr. Justice BLACK concurs in the result. 23 Mr. Justice JACKSON dissents for the reasons stated in his concurring opinion in Northwest Airlines v. State of Minnesota, 322 U.S. 292, 64 S.Ct. 950, 88 L.Ed. 1283. 24 Mr. Justice DOUGLAS, concurring. 25 Braniff Airways, in challenging the power of Nebraska to lay this ad valorem tax, claims only that its planes have no taxable situs in the State. It does not claim that no fraction of the aircraft, on an apportioned basis, is permanently in the State. Nor does it attack this apportionment formula. 26 My understanding of our decisions is that the power to lay an ad valorem tax turns on the permanency of the property in the State. All the property may be there or only a fraction of it. Property in transit, whether a plane discharging passengers or an automobile refueling, is not subject to an ad valorem tax. Property in transit may move so regularly and so continuously that part of it is always in the State. Then the fraction, but no more, may be taxed ad valorem. 27 I mention these elemental points to reserve explicitly the validity of the apportionment formula that serves as the basis of this ad valorem tax. The formula used presents substantial questions. What might be an adequate formula for a gross receipts tax might be inadequate for an ad valorem tax. Moreover, when we are faced with a due process question, we have a problem we may not delegate to Congress. 28 I do not think the Court takes a position contrary to what I have said. But there are passages in the opinion which blur the constitutional issues as they are blurred and confused in the interesting report of the Civil Aeronautics Board, H.R.Doc.No. 141, 79th Cong., 1st Sess., entitled Multiple Taxation of Air Commerce. Hence I have joined in the judgment of the Court but not in the opinion. 29 Mr. Justice FRANKFURTER, dissenting. 30 One of the most treacherous tendencies in legal reasoning is the transfer of generalizations developed for one set of situations to seemingly analogous, yet essentially very different, situations. The doctrines evolved in adjusting rights as between the States to tax property bearing some relation to a number of States, and the taxing power of the States as against the freedom from State interferences secured by the Commerce Clause, bear, of course, a practical relation to what it is that is taxed. It took a considerable time to make this adjustment in regard to taxation of railroad property and railroad income—to decide when the States are wholly excluded from levying certain taxes, when an ad valorem tax may be levied on railroad property reasonably deemed to be permanently in a given State, and on what basis income from interstate railroad business may fairly be apportioned among different States. Even as to railroads, nice distinctions had to be made and the making of them has not been concluded. 31 It stands to reason that the drastic differences between slow-moving trains and the bird-like flight of airplanes would be reflected in the law's response to the claims of the different States and the limitations of the Commerce Clause upon those claims. The differences in result and the conflict even among those who agreed in result in Northwest Airlines v. State of Minnesota, 322 U.S. 292, 64 S.Ct. 950, 88 L.Ed. 1283, demonstrate not the contrariness or caprice of different minds but the inherent perplexities of the law's adjustment to such novel problems as the exercise of the taxing power over commercial aviation in a federal system. The problems canvassed in that case were unprecedented, and perhaps the most important thing that was there decided was the refusal of the Court to apply to air transportation the doctrines that had been enunciated with regard to land and water transportation. 32 The plain intimation of the case—that these novel problems, affecting the taxing power of the States and the Nation, call for the comprehensive powers of legislation possessed by Congress found response in a resolution of Congress directing the Civil Aeronautics Board to develop the 'means for eliminating and avoiding, as far as practicable, multiple taxation of persons engaged in air commerce * * * which has the effect of unduly burdening or unduly impeding the development of air commerce.' 58 Stat. 723, 49 U.S.C.A. § 425 note. The inquiry thus set afoot produced an illuminating report. See H.R.Doc.No.141, 79th Cong., 1st Sess., which analyzed the difficulties and also made concrete proposals.1 The gist of these proposals was that Congress makd an apportionment of taxes among the States over which air carriers fly, based upon relevant factors and in appropriate ratios. The basis of taxation by Nebraska, here under review, substantially reflects the factors which the Civil Aeronautics Board recommended to the Congress. It is one thing, however, for the individual States to determine what factors should be taken into account and how they should be weighted. It is quite another for Congress to devise, as the Civil Aeronautics Board recommended it should, a scheme of apportionment binding on all the States. Until that time, Nebraska may rely on one scheme of apportionment; other States on other schemes. And each State may, from time to time, modify the relevant factors.2 33 The exercise of the taxing power by one of the States by means of a formula, based on such criteria as tonnage, revenue, and arrivals and departures, may, in isolation, impose no unfair burden on commerce. And the adoption by all the States of such a basis for taxation, which only congressional action could ensure, would not offend the Commerce Clause. It is the diverse and fluctuating exercise of power by the various States, even where based on concededly relevant factors, which imposes an undue burden on interstate commerce.3 34 The complexity of the proposals of the Board's Report—the items to be taken into account, the balance to be struck among them, the problem of giving the States their due without unfairly burdening an industry of vital national import—indicates how ill-adapted the judicial process is, as against the choices open to Congress, for dealing with these problems and how warily this Court should move within the limits of its own inescapable duty to act. The protection of interstate commerce against the burden of multiple taxation ought not to be left to litigation growing out of changes in the methods of taxation. 35 'The immunities implicit in the Commerce Clause and the potential taxing power of a State can hardly be made to depend, in the world of practical affairs, on the shifting incidence of the varying tax laws of the various States at a particular moment. Courts are not possessed of instruments of determination so delicate as to enable them to weigh the various factors in a complicated economic setting which, as to an isolated application of a State tax, might mitigate the obvious burden generally created by a direct tax on commerce.' Freeman v. Hewit, 329 U.S. 249, 256, 67 S.Ct. 274, 278, 91 L.Ed. 265. 36 This would not be the only instance in which a constructive adjustment of competing considerations requires congressional legislation and is beyond the scope of the judicial process. See Davis v. Department of Labor, 317 U.S. 249, 259, 63 S.Ct. 225, 230, 87 L.Ed. 246; Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318; United States v. Stanard Oil Co., 332 U.S. 301, 67 S.Ct. 1604, 91 L.Ed. 2067; United States v. Gilman, 347 U.S. 507, 74 S.Ct. 695. 37 It was not too difficult in Northwest Airlines to allow Minnesota to levy a personal property tax on the entire fleet of airplanes owned by a corporation of its creation, the principal place of business of which was also Minnesota. The State of Minnesota, as we said, was the only State that had such a hold on the planes. In the case before us, Nebraska has no such relation with the airplanes on which it seeks to impose an ad valorem tax. 38 This Court has held that a State may levy an ad valorem tax on the basis of a showing that the total time spent in a State by different units of a carrier's property is such that a certain proportion of that property may be said to have a permanent location in that State. Such a doctrine of apportionment, as the basis of property taxation, was adopted by this Court in Pullman's Palace Car Co. v. Commonwealth of Pennsylvania, 141 U.S. 18, 11 S.Ct. 876, 35 L.Ed. 613, with relation to railroad cars; and in Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169, 69 S.Ct. 432, 93 L.Ed. 585, with relation to barges. But boats and railroad cars which spend hours and days at a time in a State have a closeness and duration of relationship to that State obviously not true of planes which make brief stopovers for a few minutes. 39 The appealing phrase that 'interstate business must pay its way' can be invoked only when we know what the 'way' is for which business commerce must pay. Of course, the appellant must pay for the use of airports and other services it enjoys in Nebraska. It must pay a tax on all its property permanently located in Nebraska. Like everyone else it must pay a gasoline tax. In fact it pays approximately $22,000 a year for the use of the airport, $14,000 a year in gasoline taxes, and appropriate property taxes on office equipment, trucks and other items permanently in Nebraska. 40 But only those who have a sufficiently substantial relation to Nebraska that they may fairly be said to partake of the benefits, though impalpable and unspecific, it gives as an ordered society, may be taxed because they partake of those benefits. And even then, of course, an undue burden must not be cast on commerce. Not unless Nebraska can show that appellant has airplanes that have a substantially permanent presence in Nebraska can Nebraska exert its taxing power on their presence. I do not believe that planes which pause for a few moments can be made the basis for the exercise of such power.4 If Nebraska can tax without such a tie, every other State through which the planes fly or in which they alight for a few minutes can tax. Surely this is an obvious inroad upon the Commerce Clause and as such barred by the Constitution. 41 It cannot be said that for airplanes, flying regularly scheduled flights, to alight, stop over for a short time and then take off is so tenuously related to Nebraska that it would deny due process for that State to seize on these short stopovers as the basis of an ad valorem tax. But the incidence of a tax may offend the Commerce Clause, even though it may satisfy the Due Process Clause. 42 I am not unaware that there is an air of imprecision about what I have written. Such is the intention. Until Congress acts, the vital thing for the Court in this new and subtle field is to focus on the process of interstate commerce and protect it from inroads of taxation by a State beyond 'opportunities which it has given, * * * protection which it has afforded, * * * benefits which it has conferred by the fact of being an orderly, civilized society.' Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444, 61 S.Ct. 246, 250, 85 L.Ed. 267. 1 Neb.Rev.Stat.1943, § 77—1244 et seq. 2 Id., § 77—1244(3). 3 Id., § 77—1245. 4 Ibid. This section provides that 'The proportion of flight equipment allocated to this state for purposes of taxation shall be the arithmetical average of the following three ratios: (1) The ratio which the aircraft arrivals and departures within this state scheduled by such air carrier during the preceding calendar year bears to the total aircraft arrivals and departures within and without this state scheduled by such carrier during the same period; Provided, that in the case of nonscheduled operations all arrivals and departures shall be substituted for scheduled arrivals and departures; (2) the ratio which the revenue tons handled by such air carrier at airports within this state during the preceding calendar year bears to the total revenue tons handled by such carrier at airports within and without this state during the same period; and (3) the ratio which such air carrier's originating revenue within this state for the preceding calendar year bears to the total originating revenue of such carrier within and without this state for the same period.' 5 Resolutions, The Eighth General Assembly of the States, 20 State Government 95. 6 Multiple Taxation of Air Carriers, H.R.Doc.No.141, 79th Cong., 1st Sess. Recommendations by various interested groups as to the proper method of apportionment are included in that report and its appendices. See also Arditto, State and Local Taxation of Scheduled Local Airlines, 16 J. Air L. & Com. 162; Kassell, Interstate Cooperation and Airlines, 25 Taxes 302. Mr. Bulwinkle introduced bills in accordance with the recommendation of the C.A.B. report that the National Government should prescribe the method of state taxation of air carriers. The bills adopted the Council formula utilized by Nebraska. Neither was enacted. H.R. 3446, 79th Cong., 1st Sess.; H.R. 1241, 80th Cong., 1st Sess. 7 Neb.Rev.Stat.1943, §§ 77—1247, 77—1249. 8 Mid-Continent Airlines, Inc. v. Nebraska State Board of Equalization and Assessment, 157 Neb. 425, 59 N.W.2d 746. 9 That space was defined in § 10 of the Air Commerce Act and freedom for its navigation declared. This was continued by the Civil Aeronautics Act, 49 U.S.C. § 180, 49 U.S.C.A. § 180, in 'airspace above the minimum safe altitudes of flight prescribed by the Civil Aeronautics Authority'. 10 S.Rep.No.1661, 75th Cong., 3d Sess.; H.R.Rep.No.2254, 75th Cong., 3d Sess.; H.R.Conf.Rep.No.2635, 75th Cong., 3d Sess. 11 11 Uniform Laws Annotated 159: § 2. Sovereignty in Space.—Sovereignty in the space above the lands and waters of this State is declared to rest in the State, except where granted to and assumed by the United States pursuant to a constitutional grant from the people of this State. § 3. Ownership of Space.—The ownership of the space above the lands and waters of this State is declared to be vested in the several owners of the surface beneath, subject to the right of flight described in Section 4. § 4. Lawfulness of Flight.—Flight in aircraft over the lands and waters of this State is lawful, unless at such a low altitude as to interfere with the then existing use to which the land or water, or the space over the land or water, is put by the owner, or unless so conducted as to be imminently dangerous to persons or property lawfully on the land or water beneath. The landing of an aircraft on the lands or waters of another, without his consent, is unlawful, except in the case of a forced landing. For damages caused by a forced landing, however, the owner or lessee of the aircraft or the aeronaut shall be liable, as provided in Section 5.' 12 See Conference Handbook, 1943, pp. 66—67. Efforts continue to draft an acceptable State Uniform Aeronautical Code. See Conference Handbook, 1948, p. 147. 13 United States v. Chandler Dunbar Water Power Co., 229 U.S. 53, 60, 33 S.Ct. 667, 671, 57 L.Ed. 1063; United States v. Kansas City Life Ins. Co., 339 U.S. 799, 808, 70 S.Ct. 885, 890, 94 L.Ed. 1277; Federal Power Commission v. Niagara Mohawk Power Corp., 347 U.S. 239, 246 et seq., 74 S.Ct. 487, 491. 14 In its original petition appellant also alleged that the Nebraska statute is invalid under § 8, cl. 3, § 9, cl. 6, and § 10, cl. 3 of Art. I of the Constitution. While noting that such contentions were apparently 'abandoned in brief and oral argument,' the court below held such provisions of the Constitution not violated. Since appellant did not preserve such contentions in its Statement as to Jurisdiction, we do not consider such issues. 15 Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 254, 58 S.Ct. 546, 548, 82 L.Ed. 823; Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U.S. 157, 165, 74 S.Ct. 396, 400. 16 See Pullman's Palace-Car Co. v. Commonwealth of Pennsylvania, 141 U.S. 18, 11 S.Ct. 876, 35 L.Ed. 613; Ford Motor Co. v. Beauchamp, 308 U.S. 331, 60 S.Ct. 273, 84 L.Ed. 304; Nashville, C. & St. L. Ry. Co. v. Browning, 310 U.S. 362, 60 S.Ct. 968, 84 L.Ed. 1254; Central Greyhound Lines of New York v. Mealey, 334 U.S. 653, 654, 662, 663, 68 S.Ct. 1260, 1261, 1265, 1266, 92 L.Ed. 1633; Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169, 174, 69 S.Ct. 432, 434, 93 L.Ed. 585; Canton R. Co. v. Rogan, 340 U.S. 511, 514—516, 71 S.Ct. 447, 448—449, 95 L.Ed. 488. Multiple Taxation of Air Commerce, H.R.Doc.No.141, 79th Cong., 1st Sess.; Arditto, State and Local Taxation of Scheduled Local Airlines, 16 Jour. of Air Law & Com. 162; Howard, State Taxation of Airplanes in Interstate Commerce, 10 Mo.L.Rev. 195; Welch, The Taxation of Air Carriers, 11 Law & Contemp.Prob. 584; Green, The War Against the States in Aviation, 31 Va.L.Rev. 835; Sutherland and Vinciguerra, The Octroi and the Airplane, 32 Cornell L.Q. 161; Saxe, Federal Control of State Taxation of Airlines, 31 Cornell L.Q. 228; Ternes, Aviation Taxation, 25 Mich. S.B.J. 23; Note, 57 Harv.L.Rev. 1097. 17 See e.g., Independent Warehouses v. Scheele, 331 U.S. 70, 72, 67 S.Ct. 1062, 1064, 91 L.Ed. 1346; Carson Petroleum Co. v. Vial, 279 U.S. 95, 49 S.Ct. 292, 73 L.Ed. 626; Champlain Realty Co. v. City of Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309; General Oil Co. v. Crain, 209 U.S. 211, 28 S.Ct. 475, 52 L.Ed. 754; Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715; Brown v. Houston, 114 U.S. 622, 5 S.Ct. 1091, 29 L.Ed. 257; Powell, Taxation of Things in Transit, 7 Va.L.Rev. 167, 245, 429, 497. 18 See e.g., Johnson Oil Refining Co. v. State of Oklahoma, 290 U.S. 158, 54 S.Ct. 152, 78 L.Ed. 238; Frick v. Commonwealth of Pennsylvania, 268 U.S. 473, 45 S.Ct. 603, 69 L.Ed. 1058; Union Refrigerator Transit Co. v. Commonwealth of Kentucky, 199 U.S. 194, 26 S.Ct. 36, 50 L.Ed. 150; Delaware, L. & W.R. Co. v. Commonwealth of Pennsylvania, 198 U.S. 341, 25 S.Ct. 669, 49 L.Ed. 1077; Beale, Conflict of Laws, 533 et seq.; Moore, Taxation of Movables and the Fourteenth Amendment, 7 Col.L.Rev. 309; Page, Jurisdiction to Tax Tangible Movables, 1945 Wis.L.Rev. 125. While the common-law concept of situs was recognized by this Court as a limitation on state power to tax tangible personalty prior to invocation of the Fourteenth Amendment as a defense to such taxation, the bases for such decisions varied and no consistent constitutional principle was applied. Compare the following cases: Hays v. Pacific Mail S.S. Co., 17 How. 596, 15 L.Ed. 254; Morgan v. Parham, 16 Wall. 471, 21 L.Ed. 302; City of St. Louis v. Wiggins Ferry Co., 11 Wall. 423, 20 L.Ed. 192; Marye v. Baltimore & O.R. Co., 127 U.S. 117, 8 S.Ct. 1037, 32 L.Ed. 94; Pullman's Palace-Car Co. v. Commonwealth of Pennsylvania, 141 U.S. 18, 11 S.Ct. 876, 35 L.Ed. 613; Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, 17 S.Ct. 305, 41 L.Ed. 683. See also Hartman, State Taxation of Interstate Commerce, 13, 73 et seq. A collection of this Court's decisions dealing with power to tax may be found in an Appendix to Miller Bros. Co. v. State of Maryland, 347 U.S. 340, notes 8—20, 74 S.Ct. 535, 540—546. 19 Johnson Oil Refining Co. v. State of Oklahoma, supra, 290 U.S. at page 162, 54 S.Ct. at page 154, 78 L.Ed. 238. See also Pullman's Palace Car Co. v. Commonwealth of Pennsylvania, supra; Ott v. Mississippi Valley Barge Line Co., supra. 20 Subsequent to the Northwest Airlines case, Minnesota enacted a tax statute incorporating an apportionment formula for allocation of the valuation of property of air carriers to Minnesota. Minn.Stat.1945, §§ 270.071—270.079, as amended, Minn.Laws 1953, c. 672, §§ 2—3, M.S.A. §§ 270.071—270.079. 1 The proposal of this Report—that there be a uniform allocation formula to apportion taxes among the States—was adopted by the Council of State Governments. See 20 State Government 95. However no federal legislation has yet resulted. 2 In addition to the problem of conflict between apportionment schemes of various States, it must be borne in mind that these schemes cannot be regarded as abstract mathematical formulas, and hence they must be closely scrutinized to ensure their fairness as applied to a given situation. See Wallace v. Hines, 253 U.S. 66, 40 S.Ct. 435, 64 L.Ed. 782. 3 Lest it be thought one formula of apportionment is clearly the appropriate one, it should be noted that the Board's Report sets forth three formulas proposed by responsible groups, in addition to that recommended by the Board. And while Nebraska adopted the factors recommended by the Board, it did not give them the same weight which the Board's proposed formula did. See H.R.Doc.No.141, 79th Cong., 1st Sess. 58. 4 With the exception of one plane which remains in Nebraska overnight, all of the Company's planes remain in Nebraska for periods of between five and twenty minutes each day. Considering this brief time spent on the ground by planes which stop in transit, more than a bare assertion that flight equipment is 'permanently' in Nebraska is called for to establish the requisite permanence for taxing purposes.

78

347 U.S. 612 74 S.Ct. 808 98 L.Ed. 989 UNITED STATESv.HARRISS et al. No. 32. Argued Oct. 19, 1953. Decided June 7, 1954. Mr. Oscar H. Davis, Washington, D.C., for appellant. Messrs. Burton K. Wheeler, Washington, D.C., Hugh Howell, Atlanta, Ga., for appellee. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 The appellees were charged by information with violation of the Federal Regulation of Lobbying Act, 60 Stat. 812, 839, 2 U.S.C. §§ 261—270, 2 U.S.C.A. §§ 261—270. Relying on its previous decision in National Association of Manufacturers v. McGrath, D.C., 103 F.Supp. 510, vacated as moot, 344 U.S. 804, 73 S.Ct. 313, 97 L.Ed. 627, the District Court dismissed the information on the ground that the Act is unconstitutional. The case is here on direct appeal under the Criminal Appeals Act, 18 U.S.C. § 3731, 18 U.S.C.A. § 3731. 2 Seven counts of the information are laid under § 305, which requires designated reports to Congress from every person 'receiving any contributions or expending any money' for the purpose of influencing the passage or defeat of any legislation by Congress.1 One such count charges the National Farm Committee, a Texas corporation, with failure to report the solicitation and receipt of contributions to influence the passage of legislation which would cause a rise in the price of agricultural commodities and commodity futures and the defeat of legislation which would cause a decline in those prices. The remaining six counts under § 305 charge defendants Moore and Harriss with failure to report expenditures having the same single purpose. Some of the alleged expenditures consist of the payment of compensation to others to communicate face-to-face with members of Congress, at public functions and committee hearings, concerning legislation affecting agricultural prices; the other alleged expenditures relate largely to the costs of a campaign to induce various interested groups and individuals to communicate by letter with members of Congress on such legislation. 3 The other two counts in the information are laid under § 308, which requires any person 'who shall engage himself for pay or for any consideration for the purpose of attempting to influence the passage or defeat of any legislation' to register with Congress and to make specified disclosures.2 These two counts allege in considerable detail that defendants Moore and Linder were hired to express certain views to Congress as to agricultural prices or to cause others to do so, for the purpose of attempting to influence the passage of legislation which would cause a rise in the price of agricultural commodities and commodity futures and a defeat of legislation which would cause a decline in such prices; and that pursuant to this undertaking, without having registered as required by s 308, they arranged to have members of Congress contacted on behalf of these views, either directly by their own emissaries or through an artificially stimulated letter campaign.3 4 We are not concerned here with the sufficiency of the information as a criminal pleading. Our review under the Criminal Appeals Act is limited to a decision on the alleged 'invalidity' of the statute on which the information is based.4 In making this decision, we judge the statute on its face. See United States v. Petrillo, 332 U.S. 1, 6, 12, 67 S.Ct. 1538, 1541, 1544, 91 L.Ed. 1877. The 'invalidity' of the Lobbying Act is asserted on three grounds: (1) that §§ 305, 307, and 308 are too vague and indefinite to meet the requirements of due process; (2) that §§ 305 and 308 violate the First Amendment guarantees of freedom of speech, freedom of the press, and the right to petition the Government; (3) that the penalty provision of § 310(b) violates the right of the people under the First Amendment to petition the Government. I. 5 The constitutional requirement of definiteness is violated by a criminal statute that fails to give a person of ordinary intelligence fair notice that his contemplated conduct is forbidden by the statute. The underlying principle is that no man shall be held criminally responsible for conduct which he could not reasonably understand to be proscribed.5 6 On the other hand, if the general class of offenses to which the statute is directed is plainly within its terms, the statute will not be struck down as vague even though marginal cases could be put where doubts might arise. United States v. Petrillo, 332 U.S. 1, 7, 67 S.Ct. 1538, 1541. Cf. Jordan v. De George, 341 U.S. 223, 231, 71 S.Ct. 703, 707, 95 L.Ed. 886. And if this general class of offenses can be made constitutionally definite by a reasonable construction of the statute, this Court is under a duty to give the statute that construction. This was the course adopted in Screws v. United States, 325 U.S. 91, 65 S.Ct. 1031, 89 L.Ed. 1495, upholding the definiteness of the Civil Rights Act.6 7 The same course is appropriate here. The key section of the Lobbying Act is § 307, entitled 'Persons to Whom Applicable'. Section 307 provides: 8 'The provisions of this title shall apply to any person (except a political committee as defined in the Federal Corrupt Practices Act, and duly organized State or local committees of a political party), who by himself, or through any agent or employee or other persons in any manner whatsoever, directly or indirectly, solicits, collects, or receives money or any other thing of value to be used principally to aid, or the principal purpose of which person is to aid, in the accomplishment of any of the following purposes: 9 '(a) The passage or defeat of any legislation by the Congress of the United States. 10 '(b) To influence, directly or indirectly, the passage or defeat of any legislation by the Congress of the United States.' 11 This section modifies the substantive provisions of the Act, including § 305 and § 308. In other words, unless a 'person' falls within the category established by § 307, the disclosure requirements of § 305 and § 308 are inapplicable.7 Thus coverage under the Act is limited to those persons (except for the specified political committees) who solicit, collect, or receive contributions of money or other thing of value, and then only if the principal purpose of either the persons or the contributions is to aid in the accomplishment of the aims set forth in § 307(a) and (b). In any event, the solicitation, collection, or receipt of money or other thing of value is a prerequisite to coverage under the Act. 12 The Government urges a much broader construction—namely, that under § 305 a person must report his expenditures to influence legislation even though he does not solicit, collect, or receive contributions as provided in § 307.8 Such a construction, we believe, would do violence to the title and language of § 307 as well as its legislative history.9 If the construction urged by the Government is to become law, that is for Congress to accomplish by further legislation. 13 We now turn to the alleged vagueness of the purposes set forth in § 307(a) and (b). As in United States v. Rumely, 345 U.S. 41, 47, 73 S.Ct. 543, 546, 97 L.Ed. 770, which involved the interpretation of similar language, we believe this language should be construed to refer only to "lobbying in its commonly accepted sense"—to direct communication with members of Congress on pending or proposed federal legislation. The legislative history of the Act makes clear that, at the very least, Congress sought disclosure of such direct pressures, exerted by the lobbyist themselves or through their hirelings or through an artificially stimulated letter campaign.10 It is likewise clear that Congress would have intended the Act to operate on this narrower basis, even if a broader application to organizations seeking to propagandize the general public were not permissible.11 14 There remains for our consideration the meaning of 'the principal purpose' and 'to be used principally to aid.' The legislative history of the Act indicates that the term 'principal' was adopted merely to exclude from the scope of § 307 those contributions and persons having only an 'incidental' purpose of influencing legislation.12 Conversely, the 'principal purpose' requirement does not exclude a contribution which in substantial part is to be used to influence legislation through direct communication with Congress or a person whose activities in substantial part are directed to influencing legislation through direct communication with Congress.13 If it were otherwise—if an organization, for example, were exempted because lobbying was only one of its main activities—the Act would in large measure be reduced to a mere exhortation against abuse of the legislative process. In construing the Act narrowly to avoid constitutional doubts, we must also avoid a construction that would seriously impair the effectiveness of the Act in coping with the problem it was designed to alleviate. 15 To summarize, therefore, there are three prerequisites to coverage under § 307: (1) the 'person' must have solicited, collected, or received contributions; (2) one of the main purposes of such 'person,' or one of the main purposes of such contributions, must have been to influence the passage or defeat of legislation by Congress; (3) the intended method of accomplishing this purpose must have been through direct communication with members of Congress. And since § 307 modifies the substantive provisions of the Act, our construction of § 307 will of necessity also narrow the scope of § 305 and § 308, the substantive provisions underlying the information in this case. Thus § 305 is limited to those persons who are covered by § 307; and when so covered, they must report all contributions and expenditures having the purpose of attempting to influence legislation through direct communication with Congress. Similarly, § 308 is limited to those persons (with the stated exceptions14) who are covered by § 307 and who, in addition, engage themselves for pay or for any other valuable consideration for the purpose of attempting to influence legislation through direct communication with Congress. Construed in this way, the Lobbying Act meets the constitutional requirement of definiteness.15 II. 16 Thus construed, §§ 305 and 308 also do not violate the freedoms guaranteed by the First Amendment—freedom to speak, publish, and petition the Government. 17 Present-day legislative complexities are such that individual members of Congress cannot be expected to explore the myriad pressures to which they are regularly subjected. Yet full realization of the American ideal of government by elected representatives depends to no small extent on their ability to properly evaluate such pressures. Otherwise the voice of the people may all too easily be drowned out by the voice of special interest groups seeking favored treatment while masquerading as proponents of the public weal. This is the evil which the Lobbying Act was designed to help prevent.16 18 Toward that end, Congress has not sought to prohibit these pressures. It has merely provided for a modicum of information from those who for hire attempt to influence legislation or who collect or spend funds for that purpose. It wants only to know who is being hired, who is putting up the money, and how much. It acted in the same spirit and for a similar purpose in passing the Federal Corrupt Practices Act—to maintain the integrity of a basic governmental process. See Burroughs v. United States, 290 U.S. 534, 545, 54 S.Ct. 287, 290, 78 L.Ed. 484. 19 Under these circumstances, we believe that Congress, at least within the bounds of the Act as we have construed it, is not constitutionally forbidden to require the disclosure of lobbying activities. To do so would be to deny Congress in large measure the power of self-protection. And here Congress has used that power in a manner restricted to its appropriate end. We conclude that §§ 305 and 308, as applied to persons defined in § 307, do not offend the First Amendment. 20 It is suggested, however, that the Lobbying Act, with respect to persons other than those defined in § 307, may as a practical matter act as a deterrent to their exercise of First Amendment rights. Hypothetical borderline situations are conjured up in which such persons choose to remain silent because of fear of possible prosecution for failure to comply with the Act. Our narrow construction of the Act, precluding as it does reasonable fears, is calculated to avoid such restraint. But, even assuming some such deterrent effect, the restraint is at most an indirect one resulting from self-censorship, comparable in many ways to the restraint resulting from criminal libel laws.17 The hazard of such restraint is too remote to require striking down a statute which on its face is otherwise plainly within the area of congressional power and is designed to safeguard a vital national interest. III. 21 The appellees further attack the statute on the ground that the penalty provided in § 310(b) is unconstitutional. That section provides: 22 '(b) In addition to the penalties provided for in subsection (a), any person convicted of the misdemeanor specified therein is prohibited, for a period of three years from the date of such conviction, from attempting to influence, directly or indirectly, the passage or defeat of any proposed legislation or from appearing before a committee of the Congress in support of or opposition to proposed legislation; and any person who violates any provision of this subsection shall, upon conviction thereof, be guilty of a felony, and shall be punished by a fine of not more than $10,000, or imprisonment for not more than five years, or by both such fine and imprisonment.' 23 This section, the appellees argue, is a patent violation of the First Amendment guarantees of freedom of speech and the right to petition the Government. 24 We find it unnecessary to pass on this contention. Unlike §§ 305, 307, and 308 which we have judged on their face, § 310(b) has not yet been applied to the appellees, and it will never be so applied if the appellees are found innocent of the charges against them. See United States v. Wurzbach, 280 U.S. 396, 399, 50 S.Ct. 167, 168, 74 L.Ed. 508; United States v. Petrillo, 332 U.S. 1, 9 12, 67 S.Ct. 1538, 1542, 1544, 91 L.Ed. 1877. 25 Moreover, the Act provides for the separability of any provision found invalid.18 If § 310(b) should ultimately be declared unconstitutional, its elimination would still leave a statute defining specific duties and providing a specific penalty for violation of any such duty. The prohibition of § 310(b) is expressly stated to be 'In addition to the penalties provided for in subsection (a) * * *'; subsection (a) makes a violation of § 305 or § 308 a misdemeanor, punishable by fine or imprisonment or both. Consequently, there would seem to be no obstacle to giving effect to the separability clause as to § 310(b), if this should ever prove necessary. Compare Electric Bond & Share Co. v. Securities & Exchange Commission, 303 U.S. 419, 433—437, 58 S.Ct. 678, 682—684, 82 L.Ed. 936. 26 The judgment below is reversed and the cause is remanded to the District Court for further proceedings not inconsistent with this opinion. 27 Reversed. 28 Mr. Justice CLARK took no part in the consideration or decision of this case. 29 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting. 30 I am in sympathy with the effort of the Court to save this statute from the charge that it is so vague and indefinite as to be unconstitutional. My inclinations were that way at the end of the oral argument. But further study changed my mind. I am now convinced that the formula adopted to save this Act is too dangerous for use. It can easily ensnare people who have done no more than exercise their constitutional rights of speech, assembly, and press. 31 We deal here with the validity of a criminal statute. To use the test of Connally v. General construction Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322, the question is whether this statute 'either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application'. If it is so vague, as I think this one is, then it fails to meet the standards required by due process of law. See United States v. Petrillo, 332 U.S. 1, 67 S.Ct. 1538, 91 L.Ed. 1877. In determining that question we consider the statute on its face. As stated in Lanzetta v. New Jersey, 306 U.S. 451, 453, 59 S.Ct. 618, 619, 83 L.Ed. 888. 32 'If on its face the challenged provision is repugnant to the due process clause, specification of details of the offense intended to be charged would not serve to validate it. * * * It is the statute, not the accusation under it, that prescribes the rule to govern conduct and warns against transgresson. * * * No one may be required at peril of life, liberty or property to speculate as to the meaning of penal statutes. All are entitled to be informed as to what the State commands or forbids.' 33 And see Winters v. New York, 333 U.S. 507, 515, 68 S.Ct. 665, 670, 92 L.Ed. 840. 34 The question therefore is not what the information charges nor what the proof might be. It is whether the statute itself is sufficiently narrow and precise as to give fair warning. 35 It is contended that the Act plainly applies 36 —to persons who pay others to present views to Congress either in committee hearings or by letters or other communications to Congress or Congressmen and 37 —to persons who spend money to induce others to communicate with Congress. 38 The Court adopts that view, with one minor limitation which the Court places on the Act—that only persons who solicit, collect, or receive money are included. 39 The difficulty is that the Act has to be rewritten and words actually added and subtracted to produce that result. 40 Section 307 makes the Act applicable to anyone who 'directly or indirectly' solicits, collects, or receives contributions 'to be used principally to aid, or the principal purpose of which person is to aid' in either 41 —the 'passage or defeat of any legislation' by Congress, or 42 —'To influence, directly or indirectly, the passage or defeat of any legislation' by Congress. 43 We start with an all-inclusive definition of 'legislation' contained in § 302(e). It means, 'bills, resolutions, amendments, nominations, and other matters pending or proposed in either House of Congress, and includes any other matter which may be the subject of action by either House.' What is the scope of 'any other matter which may be the subject of action' by Congress? It would seem to include not only pending or proposed legislation but any matter within the legitimate domain of Congress. 44 What contributions might be used 'principally to aid' in influencing 'directly or indirectly, the passage or defeat' of any such measure by Congress? When is one retained for the purpose of influencing the 'passage or defeat of any legislation'? 45 (1) One who addresses a trade union for repeal of a labor law certainly hopes to influence legislation. 46 (2) So does a manufacturers' association which runs ads in newspapers for a sales tax. 47 (3) So does a farm group which undertakes to raise money for an educational program to be conducted in newspapers, magazines, and on radio and television, showing the need for revision of our attitude on world trade. 48 (4) So does a group of oil companies which puts agents in the Nation's capital to sound the alarm at hostile legislation, to exert influence on Congressmen to defeat it, to work on the Hill for the passage of laws favorable to the oil interests. 49 (5) So does a business, labor, farm, religious, social, racial, or other group which raises money to contact people with the request that they write their Congressman to get a law repealed or modified, to get a proposed law passed, or themselves to propose a law. 50 Are all of these activities covered by the Act? If one is included why are not the others? The Court apparently excludes the kind of activities listed in categories (1), (2), and (3) and includes part of the activities in (4) and (5)—those which entail contacts with the Congress. 51 There is, however, difficulty in that course, a difficulty which seems to me to be insuperable. I find no warrant in the Act for drawing the line, as the Court does, between 'direct communication with Congress' and other pressures on Congress. The Act is as much concerned with one, as with the other. 52 The words 'direct communication with Congress' are not in the Act. Congress was concerned with the raising of money to aid in the passage or defeat of legislation, whatever tactics were used. But the Court not only strikes out one whole group of activities to influence 'indirectly'—but substitutes a new concept for the remaining group—to influence 'directly.' To influence 'directly' the passage or defeat of legislation includes any number of methods—for example, nationwide radio, television or advertising programs promoting a particular measure, as well as the 'button holing' of Congressmen. To include the latter while excluding the former is to rewrite the Act. 53 This is not a case where one or more distinct types of 'lobbying' are specifically proscribed and another and different group defined in such loose, broad terms as to make its definition vague and uncertain. Here if we give the words of the Act their ordinary meaning, we do not know what the terminal points are. Judging from the words Congress used, one type of activity which I have enumerated is as much proscribed as another. 54 The importance of the problem is emphasized by reason of the fact that this legislation is in the domain of the First Amendment. That Amendment provides that 'Congress shall make no law * * * abridging the freedom of speech, or of the press; or the right of the people * * * to petition the Government for a redress of grievances.' 55 Can Congress require one to register before he writes an article, makes a speech, files an advertisement, appears on radio or television, or writes a letter seeking to influence existing, pending, or proposed legislation? That would pose a considerable question under the First Amendment, as Thomas v. Collins, 323 U.S. 516, 65 S.Ct. 315, 89 L.Ed. 430, indicates. I do not mean to intimate that Congress is without power to require disclosure of the real principals behind those who come to Congress (or get others to do so) and speak as though they represent the public interest, when in fact they are undisclosed agents of special groups. I mention the First Amendment to emphasize why statutes touching this field should be 'narrowly drawn to prevent the supposed evil,' see Cantwell v. Connecticut, 310 U.S. 296, 307, 60 S.Ct. 900, 905, 84 L.Ed. 1213, and not be cast in such vague and indefinite terms as to cast a cloud on the exercise of constitutional rights. Cf. Stromberg v. California, 283 U.S. 359, 369, 51 S.Ct. 532, 535, 75 L.Ed. 1117; Thornhill v. Alabama, 310 U.S. 88, 97—98, 60 S.Ct. 736, 741—742, 84 L.Ed. 1093; Winters v. New York, 333 U.S. 507, 509, 68 S.Ct. 665, 667, 92 L.Ed. 840; Joseph Burstyn, Inc., v. Wilson, 343 U.S. 495, 504—505, 72 S.Ct. 777, 781—782, 96 L.Ed. 1098. 56 If that rule were relaxed, if Congress could impose registration requirements on the exercise of First Amendment rights, saving to the courts the salvage of the good from the bad, and meanwhile causing all who might possibly be covered to act at their peril, the law would in practical effect be a deterrent to the exercise of First Amendment rights. The Court seeks to avoid that consequence by construing the law narrowly as applying only to those who are paid to 'button hole' Congressman or who collect and expend moneys to get others to do so. It may be appropriate in some cases to read a statute with the gloss a court has placed on it in order to save it from the charge of vagueness. See Fox v. Washington, 236 U.S. 273, 277, 35 S.Ct. 383, 384, 59 L.Ed. 573. But I do not think that course is appropriate here. 57 The language of the Act is so broad that one who writes a letter or makes a speech or publishes an article or distributes literature or does many of the other things with which appellees are charged has no fair notice when he is close to the prohibited line. No construction we give it today will make clear retroactively the vague standards that confronted appellees when they did the acts now charged against them as criminal. Cf. Pierce v. United States, 314 U.S. 306, 311, 62 S.Ct. 237, 239, 86 L.Ed. 226. Since the Act touches on the exercise of First Amendment rights, and is not narrowly drawn to meet precise evils, its vagueness has some of the evils of a continuous and effective restraint. 58 Mr. Justice JACKSON, dissenting. 59 Several reasons lead me to withhold my assent from this decision. 60 The clearest feature of this case is that it begins with an Act so mischievously vague that the Government charged with its enforcement does not understand it, for some of its important assumptions are rejected by the Court's interpretation. The clearest feature of the Court's decision is that it leaves the country under an Act which is not much like any Act passed by Congress. Of course, when such a question is before us, it is easy to differ as to whether it is more appropriate to strike out or to strike down. But I recall few cases in which the Court has gone so far in rewriting an Act. 61 The Act passed by Congress would appear to apply to all persons who (1) solicit or receive funds for the purpose of lobbying, (2) receive and expend funds for the purpose of lobbying, or (3) merely expend funds for the purpose of lobbying. The Court at least eliminates this last category from coverage of the Act, though I should suppose that more serious evils affecting the public interest are to be found in the way lobbyists spend their money than in the ways they obtain it. In the present indictments, six counts relate exclusively to failures to report expenditures while only one appears to rest exclusively on failure to report receipts. 62 Also, Congress enacted a statute to reach the raising and spending of funds for the purpose of influencing congressional action directly or indirectly. The Court entirely deletes 'indirectly' and narrows 'directly' to mean 'direct communication with members of Congress.' These two constructions leave the Act touching only a part of the practices Congress deemed sinister. 63 Finally, as if to compensate for its deletions from the Act, the Court expands the phrase 'the principal purpose' so that it now refers to any contribution which 'in substantial part' is used to influence legislation. 64 I agree, of course, that we should make liberal interpretations to save legislative Acts, including penal statutes which punish conduct traditionally recognized as morally 'wrong.' Whoever kidnaps, steals, kills, or commits similar acts of violence upon another is bound to know that he is inviting retribution by society, and many of the statutes which define these long-established crimes are traditionally and perhaps necessarily vague. But we are dealing with a novel offense that has no established bounds and no such normal basis. The criminality of the conduct dealt with here depends entirely upon a purpose to influence legislation. Though there may be many abuses in pursuit of this purpose, this Act does not deal with corruption. These defendants, for example, are indicted for failing to report their activities in raising and spending money to influence legislation in support of farm prices, with no charge of corruption, bribery, deception, or other improper action. This may be a selfish business and against the best interests of the nation as a whole, but it is in an area where legal penalties should be applied only by formulae as precise and clear as our language will permit. 65 The First Amendment forbids Congress to abridge the right of the people 'to petition the Government for a redress of grievances.' If this right is to have an interpretation consistent with that given to other First Amendment rights, it confers a large immunity upon activities of persons, organizations, groups and classes to obtain what they think is due them from government. Of course, their conflicting claims and propaganda are confusing, annoying and at times, no doubt, deceiving and corrupting. But we may not forget that our constitutional system is to allow the greatest freedom of access to Congress, so that the people may press for their selfish interests, with Congress acting as arbiter of their demands and conflicts. 66 In matters of this nature, it does not seem wise to leave the scope of a criminal Act, close to impinging on the right of petition, dependent upon judicial construction for its limitations. Judicial construction, constitutional or statutory, always is subject to hazards of judicial reconstruction. One may rely on today's narrow interpretation only at his peril, for some later Court may expand the Act to include, in accordance with its terms, what today the Court excludes. This recently happened with the anti-trust laws, which the Court cites as being similarly vague. This Court, in a criminal case, sustained an indictment by admittedly changing repeated and long-established constitutional and statutory interpretations. United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440. The ex post facto provision of our Constitution has not been held to protect the citizen against a retroactive change in decisional law, but it does against such a prejudicial change in legislation. As long as this statute stands on the books, its vagueness will be a contingent threat to activities which the Court today rules out, the contingency being a change of views by the Court as hereafter constituted. 67 The Court's opinion presupposes, and I do not disagree, that Congress has power to regulate lobbying for hire as a business or profession and to require such agents to disclose their principals, their activities, and their receipts. However, to reach the real evils of lobbying without cutting into the constitutional right of petition is a difficult and delicate task for which the Court's action today gives little guidance. I am in doubt whether the Act as construed does not permit applications which would abridge the right of petition, for which clear, safe and workable channels must be maintained. I think we should point out the defects and limitations which condemn this Act so clearly that the Court cannot sustain it as written, and leave its rewriting to Congress. After all, it is Congress that should know from experience both the good in the right of petition and the evils of professional lobbying. 1 Section 305 provides: '(a) Every person receiving any contributions or expending any money for the purposes designated in subparagraph (a) or (b) of section 307 shall file with the Clerk between the first and tenth day of each calendar quarter, a statement containing complete as of the day next preceding the date of filing— '(1) the name and address of each person who has made a contribution of $500 or more not mentioned in the preceding report; except that the first report filed pursuant to this title shall contain the name and address of each person who has made any contribution of $500 or more to such person since the effective date of this title; '(2) the total sum of the contributions made to or for such person during the calendar year and not stated under paragraph (1); '(3) the total sum of all contributions made to or for such person during the calendar year; '(4) the name and address of each person to whom an expenditure in one or more items of the aggregate amount or value, within the calendar year, of $10 or more has been made by or on behalf of such person, and the amount, date, and purpose of such expenditure; '(5) the total sum of all expenditures made by or on behalf of such person during the calendar year and not stated under paragraph (4); '(6) the total sum of expenditures made by or on behalf of such person during the calendar year. '(b) The statements required to be filed by subsection (a) shall be commulative during the calendar year to which they relate, but where there has been no change in an item reported in a previous statement only the amount need be carried forward.' The following are 'the purposes designated in subparagraph (a) or (b) of section 307': '(a) The passage or defeat of any legislation by the Congress of the United States. '(b) To influence, directly or indirectly, the passage or defeat of any legislation by the Congress of the United States.' 2 Section 308 provides: '(a) Any person who shall engage himself for pay or for any consideration for the purpose of attempting to influence the passage or defeat of any legislation by the Congress of the United States shall, before doing anything in furtherance of such object, register with the Clerk of the House of Representatives and the Secretary of the Senate and shall give to those officers in writing and under oath, his name and business address, the name and address of the person by whom he is employed, and in whose interest he appears or works, the duration of such employment, how much he is paid and is to receive, by whom he is paid or is to be paid, how much he is to be paid for expenses, and what expenses are to be included. Each such person so registering shall, between the first and tenth day of each calendar quarter, so long as his activity continues, file with the Clerk and Secretary a detailed report under oath of all money received and expended by him during the preceding calendar quarter in carrying on his work; to whom paid; for what purposes; and the names of any papers, periodicals, magazines, or other publications in which he has caused to be published any articles or editoriasl; and the proposed legislation he is employed to support or oppose. The provisions of this section shall not apply to any person who merely appears before a committee of the Congress of the United States in support of or opposition to legislation; nor to any public official acting in his official capacity; nor in the case of any newspaper or other regularly published periodical (including any individual who owns, publishes, or is employed by any such newspaper or periodical) which in the ordinary course of business publishes news items, editorials, or other comments, or paid advertisements, which directly or indirectly urge the passage or defeat of legislation, if such newspaper, periodical, or individual, engages in no further or other activities in connection with the passage or defeat of such legislation, other than to appear before a committee of the Congress of the United States in support of or in opposition to such legislation. '(b) All information required to be filed under the provisions of this section with the Clerk of the House of Representatives and the Secretary of the Senate shall be compiled by said Clerk and Secretary, acting jointly, as soon as practicable after the close of the calendar quarter with respect to which such information is filed and shall be printed in the Congressional Record.' 3 A third count under § 308 was abated on the death of the defendant against whom the charge was made. 4 18 U.S.C. § 3731, 18 U.S.C.A. § 3731. See United States v. Petrillo, 332 U.S. 1, 5, 67 S.Ct. 1538, 1540, 91 L.Ed. 1877. For 'The Government's appeal does not open the whole case.' United States v. Borden Co., 308 U.S. 188, 193, 60 S.Ct. 182, 186, 84 L.Ed. 181. 5 See Jordan v. De George, 341 U.S. 223, 230—232, 71 S.Ct. 703, 707—708, 95 L.Ed. 886; Quarles, Some Statutory Construction Problems and Approaches in Criminal Law, 3 Vand.L.Rev. 531, 539 543; Note, 62 Harv.L.Rev. 77. 6 Cf. Fox v. Washington, 236 U.S. 273, 35 S.Ct. 383, 59 L.Ed. 573; Musser v. Utah, 333 U.S. 95, 68 S.Ct. 397, 92 L.Ed. 562; Winters v. New York, 333 U.S. 507, 510, 68 S.Ct. 665, 667, 92 L.Ed. 840. This rule as to statutes charged with vagueness is but one aspect of the broader principle that this Court, if fairly possible, must construe congressional enactments so as to avoid a danger of unconstitutionality. United States v. Delaware & Hudson Co., 213 U.S. 366, 407—408, 29 S.Ct. 527, 535, 53 L.Ed. 836; United States v. Congress of Industrial Organizations, 335 U.S. 106, 120—121, 68 S.Ct. 1349, 1356, 92 L.Ed. 1849; United States v. Rumely, 345 U.S. 41, 47, 73 S.Ct. 543, 546, 97 L.Ed. 770. Thus, in the C.I.O. case, supra, this Court held that expenditures by a labor organization for the publication of a weekly periodical urging support for a certain candidate in a forthcoming congressional election were not forbidden by the Federal Corrupt Practices Act, which makes it unlawful for "* * * any labor organization to make a contribution or expenditure in connection with any (congressional) election * * *'.' (335 U.S. 106, 68 S.Ct. 1350.) Similarly, in the Rumely case, supra (345 U.S. 41, 73 S.Ct. 547), this Court construed a House Resolution authorizing investigation of "all lobbying activities intended to influence, encourage, promote, or retard legislation" to cover only " lobbying in its commonly accepted sense,' that is, 'representations made directly to the Congress, its members, or its committees". 7 Section 302(c) defines the term 'person' as including 'an individual, partnership, committee, association, corporation, and any other organization or group of persons.' 8 The Government's view is based on a variance between the language of § 307 and the language of § 305. Section 307 refers to any person who 'solicits, collects, or receives' contributions; § 305, however, refers not only to 'receiving any contributions' but also to 'expending any money'. It is apparently the Government's contention that § 307—since it makes no reference to expenditures is inapplicable to the expenditure provisions of § 305. Section 307, however, limits the application of § 305 as a whole, not merely a part of it. 9 Both the Senate and House reports on the bill state that 'This section (§ 307) defines the application of the title. * * *' S.Rep.No.1400, 79th Cong., 2d Sess., p. 28; Committee Print of H. Rep. on Legislative Reorganization Act of 1946, 79th Cong., 2d Sess., p. 34. See also the remarks of Representative Dirksen in presenting the bill to the House: 'The gist of the antilobbying provision is contained in section 307.' 92 Cong.Rec. 10088. 10 The Lobbying Act was enacted as Title III of the Legislative Reorganization Act of 1946, which was reported to Congress by the Joint Committee on the Organization of Congress. The Senate and House reports accompanying the bill were identical with respect to Title III. Both declared that the Lobbying Act applies 'chiefly to three distinct classes of so-called lobbyists: 'First. Those who do not visit the Capitol but initiate propaganda from all over the country, in the form of letters and telegrams, many of which have been based entirely upon misinformation as to facts. This class of persons and organizations will be required under the title, not to cease or curtail their activities in any respect, but merely to disclose the sources of their collections and the methods in which they are disbursed. 'Second. The second class of lobbyists are those who are employed to come to the Capitol under the false impression that they exert some powerful influence over Members of Congress. These individuals spend their time in Washington presumably exerting some mysterious influence with respect to the legislation in which their employers are interested, but carefully conceal from Members of Congress whom they happen to contact the purpose of their presence. The title in no wise prohibits or curtails their activities. It merely requires that they shall register and disclose the sources and purposes of their employment and the amount of their compensation. 'Third. There is a third class of entirely honest and respectable representatives of business, professional, and philanthropic organizations who come to Washington openly and frankly to express their views for or against legislation, many of whom serve a useful and perfectly legitimate purpose in expressing the views and interpretations of their employers with respect to legislation which concerns them. They will likewise be required to register and state their compensation and the sources of their employment.' S.Rep.No.1400, 79th Cong., 2d Sess., p. 27; Committee Print of H. Rep. on Legislative Reorganization Act of 1946, 79th Cong., 2d Sess., pp. 32—33. See also the statement in the Senate by Senator La Follette, who was Chairman of the Joint Committee, at 92 Cong.Rec. 6367—6368. 11 See the Act's separability clause, note 18, infra, providing that the invalidity of any application of the Act should not affect the validity of its application 'to other persons and circumstances.' 12 Both the Senate and House reports accompanying the bill state that the Act '* * * does not apply to organizations formed for other purposes whose efforts to influence legislation are merely incidental to the purposes for which formed.' S.Rep.No.1400, 79th Cong., 2d Sess., p. 27; Committee Print of H. Rep. on Legislative Reorganization Act of 1946, 79th Cong., 2d Sess., p. 32. In the Senate discussion preceding enactment, Senator Hawkes asked Senator La Follette, Chairman of the Joint Committee in charge of the bill, for an explanation of the 'principal purpose' requirement. In particular, Senator Hawkes sought assurance that multi-purposed organizations like the United States Chamber of Commerce would not be subject to the Act. Senator La Follette refused to give such assurance, stating: 'So far as any organizations or individuals are concerned, I will say to the Senator from New Jersey, it will depend on the type and character of activity which they undertake. * * * I cannot tell the Senator whether they will come under the act. It will depend on the type of activity in which they engage, so far as legislation is concerned. * * * It (the Act) affects all individuals and organizations alike if they engage in a covered activity.' (Italics added.) 92 Cong.Rec. 10151—10152. See also Representative Dirksen's remarks in the House, 92 Cong.Rec. 10088. 13 Such a criterion is not novel in federal law. See Int.Rev.Code § 23(o) (2) (income tax), § 812(d) (estate tax), and § 1004(a)(2)(B) (gift tax), 26 U.S.C.A. §§ 23(o)(2), 812(d), 1004(a)(2)(B), providing tax exemption for contributions to charitable and educational organizations 'no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation.' For illustrative cases applying this criterion, see Sharpe's Estate v. Commissioner, 3 Cir., 148 F.2d 179; Marshall v. Commissioner, 2 Cir., 147 F.2d 75; Faulkner v. Commissioner, 1 Cir., 112 F.2d 987; Huntington National Bank, 13 T.C. 760, 769. Cf. Girard Trust v. Commissioner, 3 Cir., 122 F.2d 108; Leubuscher v. Commissioner, 2 Cir., 54 F.2d 998; Weyl v. Commissioner, 2 Cir., 48 F.2d 811; Slee v. Commissioner, 2 Cir., 42 F.2d 184. See also Annotation, 138 A.L.R. 456. 14 For the three exceptions, see note 2, supra. 15 Under this construction, the Act is at least as definite as many other criminal statutes which this Court has upheld against a charge of vagueness. E.g., Boyce Motor Lines v. United States, 342 U.S. 337, 72 S.Ct. 329, 330, 96 L.Ed. 367 (regulation providing that drivers of motor vehicles carrying explosives "shall avoid, so far as practicable, and, where feasible, by prearrangement of routes, driving into or through congested thoroughfares, places where crowds are assembled, street car tracks, tunnels, viaducts, and dangerous crossings"); Dennis v. United States, 341 U.S. 494, 71 S.Ct. 857, 860, 95 L.Ed. 1137 (Smith Act, 18 U.S.C.A. § 2385, making it unlawful for any person to conspire "to knowingly or willfully advocate, abet, advise, or teach the duty, necessity, desirability, or propriety of overthrowing or destroying any government in the United States by force or violence * * *"); United States v. Petrillo, 332 U.S. 1, 67 S.Ct. 1538, 1540, 91 L.Ed. 1877 (statute forbidding coercion of radio stations to employ persons "in excess of the number of employees needed * * * to perform actual services"); Screws v. United States, 325 U.S. 91, 65 S.Ct. 1031, 89 L.Ed. 1495, and Williams v. United States, 341 U.S. 97, 71 S.Ct. 576, 578, 95 L.Ed. 774 (statute forbidding acts which would deprive a person of "any rights, privileges, or immunities secured or protected by the Constitution and laws of the United States"); United States v. Wurzbach, 280 U.S. 396, 50 S.Ct. 167, 168, 74, L.Ed. 508 (statute forbidding any candidate for Congress or any officer or employee of the United States to solicit or receive a "contribution for any political purpose whatever" from any other such officer or employee); Omaechevarria v. Idaho, 246 U.S. 343, 38 S.Ct. 323, 324, 62 L.Ed. 763 (statute forbidding pasturing of sheep "on any cattle range previously occupied by cattle, or upon any range usually occupied by any cattle grower"); Fox v. Washington, 236 U.S. 273, 35 S.Ct. 383, 384, 59 L.Ed. 573 (state statute imposing criminal sanctions on "Every person who shall wilfully print, publish, edit, issue, or knowingly circulate, sell, distribute or display any book, paper, document, or written or printed matter, in any form, advocating, encouraging or inciting, or having a tendency to encourage or incite the commission of any crime, breach of the peace, or act of violence, or which shall tend to encourage or advocate disrespect for law or for any court or courts of justice * * *"); Nash v. United States, 229 U.S. 373, 33 S.Ct. 780, 57 L.Ed. 1232 (Sherman Act, 15 U.S.C.A. § 1, forbidding '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'). Cf. Jordan v. De George, 341 U.S. 223, 71 S.Ct. 703, 95 L.Ed. 886 (statute providing for deportation of persons who have committed crimes involving 'moral turpitude'). 16 Similar legislation has been enacted in over twenty states. See Notes, 56 Yale L.J. 304, 313—316, and 47 Col.L.Rev. 98, 99—103. 17 Similarly, the Hatch Act probably deters some federal employees from political activity permitted by that statute, but yet was sustained because of the national interest in a nonpolitical civil service. United Public Workers v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754. 18 60 Stat. 812, 814: 'If any provision of this Act or the application thereof to any person or circumstances is held invalid, the validity of the remainder of the Act and of the application of such provision to other persons and circumstances shall not be affected thereby.'

23

347 U.S. 645 74 S.Ct. 826 98 L.Ed. 1015 SECRETARY OF AGRICULTURE OF UNITED STATESv.UNITED STATES et al. FLORIDA CITRUS COMMISSION et al. v. UNITED STATES et al. Nos. 480, 481. Argued April 27, 28, 1954. Decided June 7, 1954. Mr. Maxwell W. Wells, Orlando, Fla., for appellants Florida Citrus Commission et al. Mr. Neil Brooks, Washington, D.C., for appellant Secretary of Agriculture. Mr. Edward M. Reidy, Washington, D.C., for appellee I.C.C. Mr. Hugh B. Cox, Washington, D.C., for appellees Baltimore & O.R. Co., et al. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 Five railroads which transport fruits and vegetables into New York and Philadelphia filed with the Interstate Commerce Commission schedules of charges for unloading services performed by them at these points. Various shippers and shipper organizations, State Commissions, and other interested parties, protested the proposed charges. The Secretary of Agriculture, acting on behalf of the affected agricultural interests, intervened.1 The Commission in due course approved the charges, 272 I.C.C. 648. On further consideration, the approved charges were cut roughly in half, 286 I.C.C. 119. Complaints against even these reduced charges were then filed with the Commission, but these were dismissed by it on the basis of its prior decision, and this litigation to enjoin and set aside the Commission's order followed. 28 U.S.C. §§ 1336, 2325, 28 U.S.C.A. §§ 1336, 2325. Numerous parties again intervened the shipper and consumer interests on the side of the protestants, and the carriers involved on the side of the Commission. The three-judge district court, with Judge De Vane dissenting, upheld the Commission, 114 F.Supp. 420. Direct appeals under 28 U.S.C. § 1253, 28 U.S.C.A. § 1253, brought the cases here. 347 U.S. 902, 74 S.Ct. 427. 2 The general rule is that it is the responsibility of the carrier, as part of the transportation service covered by the line-haul rate, to 'deliver' the goods by placing them in such a position as to make them accessible to the consignee. Normally unloading is not a part of the delivery and is performed by the consignee. In accordance with these principles, the railroad spots the car on the team track in its yards in the destination city, and the consignee is given appropriate free time in which to unload. In the case of private sidings, the railroad's job ends when it has placed the car on the consignee's siding. 3 These are not inflexible rules. The law recognizes and reflects the practicalities of transportation by rail and the diversities to which they give rise. Prior to 1925, the railroads, in order to meet the demands of competitive transportation industries, performed the unloading without additional charge at specified points. In the case of Loading and Unloading Carload Freight, 101 I.C.C. 394, the Commission approved tariffs by the railroads abolishing free unloading at most of these points, and authorized the carriers to make an additional charge thereafter for performing the unloading at the consignee's request. By the time the present proceeding was instituted, Philadelphia and New York were the only points where the carriers were still performing unloading without any charge in addition to the line-haul rate. 4 The exception of these two cities was no aberration. It is the result of special conditions which exist in New York and Philadelphia. The significance of these special conditions is at the heart of this controversy. 5 No railroads, carrying fruits or vegetables into New York, except the New York Central, has a direct line into Manhattan. The roads transporting the bulk of the produce into New York, the Pennsylvania and Erie Railroads, terminate their lines on the Jersey side of the Hudson River. There, the cars are put on barges and floated across the river, either to be switched onto the carriers' Manhattan team tracks or to be unloaded directly at the Duane Street piers.2 These pier terminals are leased by the City of New York to the various carriers and are strategically located adjacent to Washington Market, New York's largest fruit and vegetable market. At the team tracks, according to the usual practice, the consignees do their own unloading. However, because of the inadequacy of these facilities and because of the more advantageous location of the pier terminals, approximately 75% of the fruits and vegetables coming into New York are directed to the pier stations. 6 The procedure at the pier stations is as follows. When the floats are docked at the appropriate pier—this usually happens at night—work crews of the railroad begin to unload the cars and place the contents on the pier floor.3 The consignees are notified in advance of the arrival of their goods, and at specified times their trucks can come onto the pier floor to pick up their merchandise. Sales and auction facilities are also provided by the railroads, and some of the produce is immediately disposed of in this manner. In no event are the consignees allowed to unload the cars themselves; indeed the Commission has found that this would be 'impracticable.'4 7 At Philadelphia, the situation is somewhat different. Here there is no problem of water transportation, and the team track facilities where consignees can do their own unloading are not shown to be inadequate. However, in 1927, the Pennsylvania and the Baltimore & Ohio built competitive produce terminals,5 and, because of the special facilities available there, 95% of the fruits and vegetables consigned to Philadelphia are now received at these stations. Each of these terminals has two platforms, one for produce intended for private sale, one for produce intended for auction sale. The unloading operations here are considerably simpler and cheaper than at the New York piers; but, as in New York, all the unloading here is performed by the carriers.6 8 It was in the light of this background that the carriers, faced by the sharply rising costs of the unloading operation, sought the Commission's approval for special unloading charges at these two cities. Such charges, the carriers urged, would serve to bring New York and Philadelphia into line with the generally prevailing practice—that consignees must either do their own unloading or, if they want the carrier to do it for them, they must be prepared to pay for it. 9 The protestants, appellants here, do not challenge these general principles. It is their contention rather that at these particular points the unloading is an essential part of delivery in that without it the goods are not accessible to the consignees; that therefore the line-haul rate encompasses the unloading; and, finally, that a service covered by the line-haul rate cannot be separately compensated unless the carriers show that the line-haul rate is inadequate to cover it. 10 These are claims that must be met, and the real question before us is whether the Commission has met them with an adequacy that satisfies the requirements of judicial review, limited though its scope may be. With respect to New York, the Commission's findings clearly show that since the consignees were not permitted to do their own unloading, the goods were not accessible to them until unloaded by the carriers.7 Cf. United States v. United States Smelting, Refining & Mining Co., 339 U.S. 186, 70 S.Ct. 537, 94 L.Ed. 750. Moreover, prior cases of the Commission dealing with the New York terminal have indicated that the unloading cost there is an integral part of the through rate. See Fruits and Vegetables to Duane St., N.Y., 66 I.C.C. 135, 139; Erie R. Co. v. Alabama & V.R.Co., 98 I.C.C. 268, 272, 280—281. Yet the court below attributed to the Commission findings that 'the line haul service terminated when the cars reached the pier station,' and that 'unloading is an additional service, wholly distinct from delivery'. 114 F.Supp., at page 424. But the findings of the Commission, taken as a whole, do not support these statements. 11 Prior cases where the Commission had sustained the imposition of unloading charges do not serve as useful precedents here. E.g., Loading and Unloading Carload Freight, supra. In those cases, there was an absence of circumstances to justify deviation from the normal rule that unloading is not part of delivery, and therefore the Commission was warranted in concluding that the carrier might impose a separate charge for the unloading where the consignee requested it. Here, however, because of the peculiar conditions prevailing at the New York piers, the unloading is an essential part of the delivery and hence is necessarily encompassed in the line haul. Instead of treating this situation on its own merits, the Commission appears to have relied too much on prior decisions dealing with the problem of unloading charges in different contexts. 12 While the normal course for the Commission in dealing with a situation like the present would have been to re-examine the sufficiency of the line-haul rate, or to initiate a new division of the existing line-haul rate,8 the Commission was not precluded from following a procedure fairly adapted to the unique circumstances of this case. The Commission may not unnaturally have felt that it would be undesirable to revise the line-haul rate with its inevitable effect on the entire tariff structure, in order to deal appropriately with the special, localized situation presented at the New York piers. Or the Commission might well have thought that a redivision of the line-haul rate would not be appropriate for the substantial additional cost here involved. 13 It is not necessary now to consider the Commission's power, under appropriate findings, to approve such unloading charges without pursuing one of these courses. In dealing with technical and complex matters like these, the Commission must necessarily have wide discretion in formulating appropriate solutions. But we do say that while the Commission has adumbrated the reasons that commended these charges to its approval,9 the Commission has not adequately explained its departure from prior norms and has not sufficiently spelled out the legal basis of its decision. We do not know whether the Commission has disregarded its own findings that the unloading here is a prerequisite to delivery of the goods; or whether, in order to meet an unusual situation, the Commission has modified the normal doctrine that delivery is the responsibility of the carrier, see New England Coal & Coke Co. v. Norfolk & W.R. Co., 33 I.C.C. 276; or whether the Commission, for a reason not made explicit, has here deemed irrelevant the prevailing rule of its prior cases that a service necessarily encompassed by the line-haul rate cannot be separately restated with examining the sufficiency of the line-haul rate to cover it. See, e.g., Terminal Charges at Pacific Coast Ports, 255 I.C.C. 673; Unloading Lumber to New York Harbor, 256 I.C.C. 463. In short, the Commission has not explained its decision 'with the simplicity and clearness through which a halting impression ripens into reasonable certitude. In the end we are left to spell out, to argue, to choose between conflicting inferences. Something more precise is requisite in the quasi-jurisdictional findings of an administrative agency. Beaumont, S.L. & W. Ry. Co. v. United States, 282 U.S. 74, 86, 51 S.Ct. 1(5), 75 L.Ed. 221; State of Florida v. United States, 282 U.S. 194, 215, 51 S.Ct. 119 (125), 75 L.Ed. 291. We must know what a decision means before the duty becomes ours to say whether it is right or wrong.' United States v. Chicago, M., St. P. & P.R. Co., 294 U.S. 499, 510—511, 55 S.Ct. 462, 467, 79 L.Ed. 1023. 14 Appellants also contend that to permit separate charges to be imposed for the unloading of fruits and vegetables, while not imposing similar charges on other commodities unloaded at these points, violates §§ 2 and 3 of the Interstate Commerce Act.10 Since we have already concluded that the case should be remanded to the Commission, the Commission on remand should also make more explicit findings as to the differences and similarities in the treatment accorded other commodities unloaded at these same points. If such commodities are unloaded 'under substantially similar circumstances,' the Act requires that the charges imposed be the same. If, on the other hand, there are important differences in treatment justifying the imposition of different unloading charges or of no unloading charges at all, the Commission ought to find no difficulty in defining the differences.11 15 Similarly, we deed it desirable that upon reconsideration of this controversy, the Commission should also be more explicit in stating the reasons that led it to assimilate, so far as these unloading charges are concerned, the situation at Philadelphia to that at New York. 16 The judgment is vacated, and the cases are ordered to be remanded to the Commission for further proceedings not inconsistent with this opinion. It is so ordered. 17 Judgment vacated and cases remanded with directions. 18 The CHIEF JUSTICE, Mr. Justice BLACK, and Mr. Justice DOUGLAS would hold the Commission's order invalid and enjoin its enforcement on the ground that the Commission failed to determine the reasonableness of the railroads' line-haul rates on the basis of increased unloading rates allowed by the Commission. 19 Mr. Justice JACKSON too no part in the consideration or decision of these cases. 1 Under 7 U.S.C. § 1291, 7 U.S.C.A. § 1291, the Secretary of Agriculture is authorized to make complaint to the Commission as well as to intervene before the Commission and resort to original and appellate judicial remedies in cases affecting the transportation of farm products. 2 The New York Central and the Baltimore & Ohio Railroads also perform such floatage. 3 The unloading practices vary somewhat from carrier to carrier. For example, the Erie has a special contractor do its unloading; the Pennsylvania used automatic equipment instead of manual labor. 4 272 I.C.C., at 655. In its later report, the Commission also made the somewhat inconsistent finding that 'at the original hearing the railroads offered to permit consignees to unload their freight from the car float.' 286 I.C.C., at 125. But when the California Fruit Growers Exchange, after the Commission's initial decision, requested the railroads to 'permit the consignees, as a whole, to perform the unloading at the piers' the railroads refused. 5 The B. & O. terminal is used jointly by it and the Reading Railroad. 6 At Philadelphia, too, the consignees requested the carriers to be permitted to do their own unloading, or to let the auction company which was selling the fruit on their account do the unloading. The Pennsylvania refused, on the ground that the 'terminal was a public facility and that the granting of such permission might give rise to a dual method of unloading, one to be conducted by the fruit and vegetable trade, and the other by the railroad for the general public.' 286 I.C.C., at 137. In this connection, it should be noted that the Commission made no findings that it would be 'impracticable' for the consignees to do the unloading at the Philadelphia produce terminals. 7 272 I.C.C. 648, 654—655: 'Delivery to the consignee is not effected until after the cars are unloaded and the lading placed at a convenient location on the pier floor.' 286 I.C.C. 119, 125: 'The pier floor is the first place where, after the freight has been unloaded, delivery can be taken.' 286 I.C.C. 119, 127: 'After the vegetables are placed on the pier platform they are accessible to the consignee. * * *' 286 I.C.C. 119, 129: The proposed charge, in addition to the line-haul rate, is 'for making delivery at New York piers.' The relation between the unloading charges and the line haul was also adverted to in the Commission's earlier report, 272 I.C.C., at 662, but not with sufficient clarity. 8 Under 49 U.S.C. § 15(6), 49 U.S.C.A. § 15(6), the Commission may authorize a new division of the rate among the participating carriers if it finds the present division 'unjust, unreasonable, (or) inequitable'. In such a proceeding special terminal costs can be taken into account prior to allocating the rate among the line-haul carriers. See Erie R. Co. v. Alabama & V.R. Co., 98 I.C.C. 268, 280; Atlantic Coast Line R. Co. v. Arcade & A.R. Co., 194 I.C.C. 729, 745—747; Official-Southern Divisions, 287 I.C.C. 497, 538—543. Official-Southwestern Divisions, 287 I.C.C. 553, 584—593. 9 As the Commission stated: 'An unusual situation, arising primarily from the topography of the area, exists on lower Manhattan as a result of which the present method of handling shipments through the pier stations is of benefit to both shippers (including consignees) and carriers. It is also helpful in the avoidance of traffic congestion. The acquisition of land in that area for additional track facilities would be impracticable if not impossible. * * * Physical conditions in and around New York which limit available space for the establishment and operation of railroad terminal facilities is a general community problem and obviously there should be some sharing between the carriers and their patrons of the burden of overcoming the existing difficulties if this congested area is to be served by railroad transportation.' 286 I.C.C. 139—140. The Commission also made reference to figures introduced by the carriers showing the considerable disparity between the cost per car of making team track delivery and cost per car of making terminal delivery, including unloading (286 I.C.C., at 131): New York Manhattan Pier Team Tracks Terminals Erie................ 45.44. 83.87 Pennsylvania........ 73.57. 122.73 B. & O.............. 70.46. 119.86 Philadelphia Produce Team Tracks Terminals Pennsylvania........ 39.64. 109.36 B. & O.............. 27.66. 75.94 10 49 U.S.C. § 2, 49 U.S.C.A. § 2, prohibits a carrier from charging or receiving 'a greater or less compensation for any service rendered * * * than it charges * * * any other person * * * (for) a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances * * *.' Section 3(1) makes it unlawful for any carrier to subject 'any particular description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever * * *.' 11 In its latest report, the Commission stated that 'as regards the movement of freight, other than fruits and vegetables * * * the operation is identical with the manner in which fruits and vegetables are carfloated and unloaded.' 286 I.C.C., at 123. Without more, the Commission then concluded that 'the record does not warrant a finding of undue preference and prejudice or unjust discrimination in violation of sections 2 or 3 of the act.' 286 I.C.C., at 142.

78

347 U.S. 637 74 S.Ct. 822 98 L.Ed. 1009 BARBERv.GONZALES. No. 431. Argued March 10, 1954. Decided June 7, 1954. Mr. Robert W. Ginnane, Washington, D.C., for petitioner. Mrs. Blanch Freedman, New York City, for respondent. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 Respondent was born in the Philippine Islands in 1913 and came therefrom to the continental United States in 1930. He has lived here ever since. In 1941, he was convicted in the State of California of assault with a deadly weapon and was sentenced to imprisonment for one year in the Alameda County jail. In 1950, he was convicted in the State of Washington of second degree burglary and was sentenced under the indeterminate sentence law of that State to a minimum term of two years in the state penitentiary. In 1951, after an administrative hearing, he was ordered deported to the Philippine Islands under § 19(a) of the Immigration Act of 1917 as an alien who 'after entry' had been sentenced more than once to imprisonment for terms of one year or more for crimes involving moral turpitude. 39 Stat. 889, as amended, formerly 8 U.S.C. § 155(a), 8 U.S.C.A. § 155(a).* 2 After respondent was taken into custody, he filed a petition for a writ of habeas corpus in the United States District Court for the Northern District of California. The petition attacked the validity of the deportation order on the ground, among others, that he was not subject to deportation under § 19(a) since he had not made an 'entry' within the meaning of that section. The District Court dismissed the petition. On appeal, the Court of Appeals for the Ninth Circuit, with one judge dissenting, reversed the District Court's judgment and remanded the case with directions to order respondent's release from custody. 207 F.2d 398. We granted certiorari. 346 U.S. 914, 74 S.Ct. 274. 3 The sole question presented is whether respondent—who was born a national of the United States in the Philippine Islands, who came to the continental United States as a national prior to the Philippine Independence Act of 1934, and who was sentenced to imprisonment in 1941 and 1950 for crimes involving moral turpitude—may now be deported under § 19(a) of the Immigration Act of 1917. 4 It is conceded that respondent was born a national of the United States; that as such he owed permanent allegiance to the United States, including the obligation of military service; that he retained this status when he came to the continental United States in 1930 and hence was not then subject to the Immigration Act of 1917 or any other federal statute relating to the exclusion or deportation of aliens.1 The Government, however, contends that respondent's status as a national was changed by the Philippine Independence Act of 1934, 48 Stat. 456, which provided for the eventual independence of the Philippines, subsequently achieved in 1946, 60 Stat. 1352. Section 8(a)(1) of the 1934 Act provides: 5 'For the purposes of the Immigration Act of 1917, * * * this section, and all other laws of the United States relating to the immigration, exclusion, or expulsion of aliens, citizens of the Philippine Islands who are not citizens of the United States shall be considered as if they were aliens. For such purposes the Philippine Islands shall be considered as a separate country and shall have for each fiscal year a quota of fifty.' The Government urges that the reference in § 8(a)(1) to 'citizens of the Philippine Islands' includes Filipinos then residing in the United States; that by virtue of this provision the respondent was assimilated to the status of an alien for purposes of 'immigration, exclusion, or expulsion'; and that, having been twice convicted thereafter of crimes involving moral turpitude, he is deportable under § 19(a) of the Immigration Act of 1917. 6 The Government's argument is premised on the assumption that respondent made an 'entry' within the meaning of § 19(a). If he did not make such an 'entry,' then he is not deportable under that section, even assuming that the Government is correct in its broad construction of the 1934 Philippine Independence Act. Section 19(a) provides: 7 '* * * except as hereinafter provided, any alien who is hereafter sentenced to imprisonment for a term of one year or more because of conviction in this country of a crime involving moral turpitude, committed within five years after the entry of the alien to the United States, or who is hereafter sentenced more than once to such a term of imprisonment because of conviction in this country of any crime involving moral turpitude, committed at any time after entry * * * shall, upon the warrant of the Attorney General, be taken into custody and deported * * *.' (Italics added.) 8 The Court of Appeals sustained respondent's contention that he had never made the requisite 'entry.' With this conclusion, we agree. 9 The Government would have us interpret 'entry' in § 19(a) in its 'ordinary, everyday sense' of a 'coming into the United States.' Under this view, respondent's 'coming into the United States' from the Philippine Islands in 1930 would satisfy the 'entry' requirement. While it is true that statutory language should be interpreted whenever possible according to common usage, some terms acquire a special technical meaning by a process of judicial construction. So it is with the word 'entry' in § 19(a). E.g., Delgadillo v. Carmichael, 332 U.S. 388, 68 S.Ct. 10, 92 L.Ed. 17; United States ex rel. Claussen v. Day, 279 U.S. 398, 49 S.Ct. 354, 73 L.Ed. 758; DiPasquale v. Karnuth, 2 Cir., 158 F.2d 878; Del Guercio v. Gabot, 9 Cir., 161 F.2d 559. Cf. United States ex rel. Volpe v. Smith, 289 U.S. 422, 425, 53 S.Ct. 665, 667, 77 L.Ed. 1598.2 In United States ex rel. Claussen v. Day, supra, 279 U.S. at page 401, 49 S.Ct. at page 354, this Court stated the applicable rule: 10 'The word 'entry' (in § 19(a)) by its own force implies a coming from outside. The extent shows that in order that there be an entry within the meaning of the act there must be an arrival from some foreign port or place. There is no such entry where one goes to sea on board an American vessel from a port of the United States and returns to the same or another port of this country without having been in any foreign port or place.' (Italics added.) 11 See also United States ex rel. Stapf v. Corsi, 287 U.S. 129, 132, 53 S.Ct. 40, 41, 77 L.Ed. 215; Carmichael v. Delaney, 9 Cir., 170 F.2d 239, 242—243. This concept of 'entry' was codified by Congress in the Immigration and Nationality Act of 1952.3 12 At the time respondent came to the continental United States, he was not arriving 'from some foreign port or place.' On the contrary, he was a United States national moving from one of our insular possessions to the mainland. It was not until the 1934 Philippine Independence Act that the Philippines could be regarded as 'foreign' for immigration purposes. Having made no 'entry,' respondent is not deportable under § 19(a) as an alien who 'after entry' committed crimes involving moral turpitude. The Government warns that this conclusion is inconsistent with a broad congressional purpose to terminate the United States residence of alien criminals. But we believe a different conclusion would not be permissible in view of the well-settled meaning of 'entry' in § 19(a). Although not penal in character, deportation statutes as a practical matter may inflict 'the equivalent of banishment or exile', Fong Haw Tan v. Phelan, 333 U.S. 6, 10, 68 S.Ct. 374, 376, 92 L.Ed. 433, and should be strictly construed. See Delgadillo v. Carmichael, 332 U.S. 388, 391, 68 S.Ct. 10, 12, 92 L.Ed. 17. In the absence of explicit language showing a contrary congressional intent, we must give technical words in deportation statutes their usual technical meaning.4 13 The judgment of the Court of Appeals is affirmed. 14 Affirmed. 15 Mr. Justice MINTON, with whom Mr. Justice REED and Mr. Justice BURTON join, dissenting. 16 But for this Court's holding that § 19(a) of the Immigration Act of 1917 must be construed strictly and the word 'entry' given a special meaning, I would be content with the excellent dissent of Judge Bone in the court below. 207 F.2d 398, 402. 17 The effect of the Court's opinion is to construe the Act strictly in favor of the convicted criminal sought to be deported for his criminal acts, rather than in favor of the United States in protection of its citizens. I know of no good reason why we should be strained construction of an Act compel the United States to cling onto alien criminals. It is not the public policy of this country to construe its statutes strictly in favor of alien criminals whose convictions have already been established of record. Why should we give a strained construction to the word 'entry' in the instant case? The least we should do is to give the word 'entry' its ordinary meaning. 18 In construing this very statute, this Court said in United States ex rel. Volpe v. Smith, 289 U.S. 422, 425, 53 S.Ct. 665, 667, 77 L.Ed. 1298: 19 'An examination of the Immigration Act of 1917, we think, reveals nothing sufficient to indicate that Congress did not intend the word 'entry' in section 19 should have its ordinary meaning.' 20 Cf. United States ex rel. Eichenlaub v. Shaughnessy, 338 U.S. 521, 70 S.Ct. 329, 94 L.Ed. 307. 21 The case of Delgadillo v. Carmichael, 332 U.S. 338, 68 S.Ct. 10, 92 L.Ed. 17, lends no authority to this case. In that case, the alien had never voluntarily left the United States for foreign land. His ship was torpedoed. He was blown into the sea. He was rescued and taken to Cuba, from whence he came back to the United States by way of Miami, Florida. This Court said: 22 'In this case petitioner, of course, chose to return to this country, knowing he was in a foreign place. But the exigencies of war, not his voluntary act, put him on foreign soil. It would indeed be harsh to read the statute so as to add the peril of deportation to such perils of the sea. We might as well hold that if he had been kidnaped and taken to Cuba, he made a statutory 'entry' on his voluntary return. Respect for law does not thrive on captious interpretations.' 332 U.S. at page 391, 68 S.Ct. at page 12. 23 There is nothing captious or fortuitous about this petitioner's 'entry' into the United States. He came to this country from outside, as all aliens do. No case by this Court supports the special construction given by the Court to the word 'entry.' 24 Because of the Court's strict construction of this statute, which has the effect of putting a liberal construction on the statute in favor of the alien criminal, which I believe to be contrary to the public policy of this country, I dissent. * Now 8 U.S.C.A. § 1251(a)(1—5), (6)(D), (8, 12), (18)(d, e). 1 From the Spanish cession in 1898 until final independence in 1946, the Philippine Islands were American territory subject to the jurisdiction of the United States. See Hooven & Allison Co. v. Evatt, 324 U.S. 652, 674—676, 65 S.Ct. 870, 881—882, 89 L.Ed. 1252. Persons born in the Philippines during this period were American nationals entitled to the protection of the United States and conversely owing permanent allegiance to the United States. They could not be excluded from this country under a general statute relating to the exclusion of 'aliens.' See Gonzales v. Williams, 192 U.S. 1, 12—13, 24 S.Ct. 177, 179, 48 L.Ed. 317; Toyota v. United States, 268 U.S. 402, 411, 45 S.Ct. 563, 565, 69 L.Ed. 1016. But, until 1946, neither could they become United States citizens. See Toyota v. United States, supra; 60 Stat. 416. 2 In the Volpe case, the Court stated: 'We accept the view that the word 'entry' * * * (in § 19(a)) * * * includes any coming of an alien from a foreign country into the United States whether such coming be the first or any subsequent one. And this requires affirmance of the challenged judgment. * * * That the second coming of an alien from a foreign country into the United States is an entry within the usual acceptation of that word is clear enough from Lewis v. Frick, 233 U.S. 291, 34 S.Ct. 488, 58 L.Ed. 967; United States ex rel. Claussen v. Day, 279 U.S. 398, 49 S.Ct. 354, 73 L.Ed. 758. An examination of the Immigration Act of 1917, we think, reveals nothing sufficient to indicate that Congress did not intend the word 'entry' in section 19 should have its ordinary meaning.' (Italics added.) The context of the latter sentence makes it clear that the Court regarded the word's 'ordinary meaning' as being "any coming of an alien from a foreign country". In the Delgadillo case, supra, the Court narrowed this definition even further by holding that a resident alien does not make an 'entry' from a foreign country if his arrival in the foreign country was unintentional. 3 Section 101(a)(13) of the 1952 Act, 66 Stat. 167, 8 U.S.C. § 1101(a)(13), 11 U.S.C.A. § 1101(a)(13), provides in pertinent part: 'The term 'entry' means any coming of an alien into the United States, from a foreign port or place or from an outlying possession * * *.' Section 101(a)(29), 66 Stat. 170, 8 U.S.C. § 1101(a)(29), 8 U.S.C.A. § 1101(a) (29), defines 'outlying possessions' as American Samoa and Swains Island. By a special provision in the 1952 Act, the exclusion process is made applicable to any alien coming to the continental United States from Hawaii, Alaska, Guam, Puerto Rico, or the Virgin Islands. 66 Stat. 188, 8 U.S.C. § 1182(d)(7), 8 U.S.C.A. § 1182(d)(7). 4 The respondent also attacks the validity of the deportation order on the grounds: (1) that he made no 'entry' because he was not an alien when he came to this country; (2) that § 8(a)(1) of the 1934 Philippine Independence Act did not apply to Filipinos already residing here and that hence he was not an alien in 1941 when he was sentenced for one of the two crimes involves in this proceeding; (3) that he is not an alien today because Congress lacked the power to deprive him of his status as a national. Our disposition of the case makes it unnecessary to consider these contentions.

12

347 U.S. 656 74 S.Ct. 833 98 L.Ed. 1025 UNITED CONST. WORKERS, AFFILIATED WITH UNITED MINE WORKERS OF AMERICA et al.v.LABURNUM CONST. CORP. No. 188. Argued April 5, 1954. Decided June 7, 1954. Mr. M. E. Boiarsky, Charleston, W. Va., for petitioners. Messrs. Archibald G. Robertson and George E. Allen, Richmond, Va., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 The question before us is whether the Labor Management Relations Act, 1947,1 has given the National Labor Relations Board such exclusive jurisdiction over the subject matter of a common-law tort action for damages as to preclude an appropriate state court from hearing and determining its issues where such conduct constitutes an unfair labor practice under that Act. For the reasons hereafter stated, we hold that it has not. 2 November 16, 1949, Laburnum Construction Corporation, a Virginia corporation, respondent herein, filed a notice of motion for judgment in the Circuit Court of the City of Richmond, Virginia, against petitioners United Construction Workers, affiliated with United Mine Workers of America; District 50, United Mine Workers of America; and United Nine Workers of America. The proceeding was a common-law tort action for compensatory and punitive damages totaling $500,000. The notice contained substantially the following allegations: While respondent was performing construction work in Breathitt County, Kentucky, under contracts with Pond Creek Pocahontas Company and others, July 26—August 4, 1949, agents of the respective petitioners came there. They demanded that respondent's employees join the United Construction Workers and that respondent recognize that organization as the sole bargaining agent for respondent's employees on the project. They added that, if respondent and its employees did not comply, respondent would not be allowed to continue its work. Upon respondent's refusal and that of many of its employees to yield to such demands, petitioners' agents threatened and intimidated respondent's officers and employees with violence to such a degree that respondent was compelled to abandon and its projects in that area. The notice further alleged that, as the result of this conduct of petitioners' agents, respondent was deprived of substantial profits it otherwise would have earned on those and other projects. After trial, a jury found petitioners jointly and severally liable to respondent for $175,437.19 as compensatory damages, and $100,000 as punitive damages, making a total of $275,437.19. 3 Petitioners moved for a new trial claiming numerous errors of law, and for a dismissal on the ground that the Labor Management Relations Act had deprived the court of its jurisdiction over the subject matter. Both motions were overruled and the Supreme Court of Appeals of Virginia granted a writ of error and supersedeas. After argument, it struck out $146,111.10 of the compensatory damages and affirmed the judgment for the remaining $129,326.09. 194 Va. 872, 75 S.E.2d 694. Because of the importance of the jurisdictional issue to the enforcement of common-law rights and to the administration of the Labor Management Relations Act, we granted certiorari limited to the following question: 4 "In view of the type of conduct found by the Supreme Court of Appeals of Virginia to have been carried out by Petitioners, does the National Labor Relations Board have exclusive jurisdiction over the subject matter so as to preclude the State Court from hearing and determining the issues in a common law tort action based upon this conduct"? 346 U.S. 936, 74 S.Ct. 374.2 5 We are concerned only with the abovestated jurisdictional question. We accept the view of the National Labor Relations Board that respondent's activities affect interstate commerce within the meaning of the Labor ManagementRelations Act.3 The "type of conduct found by the Supreme Court of Appeals of Virginia" is set out in the margin.4 Although the notice for judgment does not mention the Labor Management Relations Act or unfair labor practices as such, we assume the conduct before us also constituted an unfair labor practice within the following provisions of that Act: 6 'Sec. 8. * * * 7 '(b) It shall be an unfair labor practice for a labor organization or its agents— 8 '(1) to restrain or coerce (A) employees in the exercise of the rights guaranteed in section 7: * * *.' 61 Stat. 140, 141, 29 U.S.C. (1952 ed.) § 158(b)(1)(A), 29 U.S.C.A. § 158(b)(1)(A). 9 'Sec. 7. Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities * * *.' 61 Stat. 140, 29 U.S.C. (1952 ed.) § 157, 29 U.S.C.A. § 157. 10 Petitioners contend that the Act of 1947 has occupied that labor relations field so completely that no regulatory agency other than the National Labor Relations Board and no court may assert jurisdiction over unfair labor practices as defined by it, unless expressly authorized by Congress to do so. They claim that state courts accordingly are excluded not only from enjoining future unfair labor practices and thus colliding with the Board, as occurred in Garner v. Teamsters Union, 346 U.S. 485, 74 S.Ct. 161, but that state courts are excluded also from entertaining common-law tort actions for the recovery of damages caused by such conduct. The latter exclusion is the issue here. In the Garner case, Congress had provided a federal administrative remedy, supplemented by judicial procedure for its enforcement, with which the state injunctive procedure conflicted.5 Here Congress has neither provided nor suggested any substitute for the traditional state court procedure for collecting damages for injuries caused by tortious conduct. For us to cut off the injured respondent from this right of recovery will deprive it of its property without recourse or compensation. To do so will, in effect, grant petitioners immunity from liability for their tortious conduct. We see no substantial reason for reaching such a result. The contrary view is consistent with the language of the Act and there is positive support for it in our decisions and in the legislative history of the Act. In the Garner case, we said: 11 'The National Labor Management Relations Act, as we have before pointed out, leaves much to the states, though Congress has refrained from telling us how much. We must spell out from conflicting indications of congressional will the area in which state action is still permissible. 12 'This is not an instance of injurious conduct which the National Labor Relations Board is without express power to prevent and which therefore either is 'governable by the state or it is entirely ungoverned.' In such cases we have declined to find an implied exclusion of state powers. International Union, U.A.W.A.F. of L., Local 232 v. Wisconsin Employment Relations Board, 336 U.S. 245, 254, 69 S.Ct. 516, 521, 93 L.Ed. 651. Nor is this a case of mass picketing, threatening of employees, obstructing streets and highways, or picketing homes. We have held that the state still may exercise 'its historic powers over such traditionally local matters as public safety and order and the use of streets and highways.' Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 749, 62 S.Ct. 820, 825, 86 L.Ed. 1154.' 346 U.S., at page 488, 74 S.Ct., at page 164. 13 To the extent that Congress prescribed preventive procedure against unfair labor practices, that case recognized that the Act excluded conflicting state procedure to the same end. To the extent, however, that Congress has not prescribed procedure for dealing with the consequences of tortious conduct already committed, there is no ground for concluding that existing criminal penalties or liabilities for tortious conduct have been eliminated. The care we took in the Garner case to demonstrate the existing conflict between state and federal administrative remedies in that case was, itself, a recognition that if no conflict had existed, the state procedure would have survived. The primarily private nature of claims for damages under state law also distinguishes them in a measure from the public nature of the regulation of future labor relations under federal law. 14 The Labor Management Relations Act sets up no general compensatory procedure except in such minor supplementary ways as the reinstatement of wrongfully discharged employees with back pay. 61 Stat. 147, 29 U.S.C. (1952 ed.) § 160(c), 29 U.S.C.A. § 160(c). See also, National Labor Relations Board v. Local Union No. 1229, Int. Broth. of Electrical Workers, 346 U.S. 464, 74 S.Ct. 172. 15 One instance in which the Act prescribes judicial procedure for the recovery of damages caused by unfair labor practices is that with reference to the jurisdiction of federal and other courts to adjudicate claims for damages resulting from secondary boycotts. In that instance the Act expressly authorizes a recovery of damages in any Federal District Court and 'in any other court having jurisdiction of the parties'.6 By this provision, the Act assures uniformity, otherwise lacking, in rights of recovery. in the state courts and grants jurisdiction to the federal courts without respect to the amount in controversy. To recover damages under that section is consistent with the existence of jurisdiction in state courts to enforce criminal penalties and common-law liabilities generally. On the other hand, it is not consistent to say that Congress, in that section, authorizes court action for the recovery of damages caused by tortious conduct related to secondary boycotts and yet without express mention of it, Congress abolishes all common-law rights to recover damages caused more directly and flagrantly through such conduct as is before us. 16 Considerable legislative history supports this interpretation. Under the National Labor Relations Act, 1935,7 there were no prohibitions of unfair labor practices on the part of labor organizations. Yet there is no doubt that if agents of such organizations at that time had damaged property through their tortious conduct, the persons responsible would have been liable to a tort action in state courts for the damage done. See Allen-Bradley Local No. 1111, United Electrical Workers of America Employment Relations v. Wisconsin Employment Relations Board, 315 U.S. 740, 62 S.Ct. 820, 86 L.Ed. 1154. 17 The 1947 Act has increased, rather than decreased, the legal responsibilities of labor organizations. Certainly that Act did not expressly relieve labor organizations from liability for unlawful conduct. It sought primarily to empower a federal regulatory body, through administrative procedure, to forestall unfair labor practices by anyone in circumstances affecting interstate commerce. The fact that it prescribed new preventive procedure against unfair labor practices on the part of labor organizations was an additional recognition of congressional disapproval of such practices. Such an express recognition is consistent with an increased insistence upon the liability of such organizations for tortious conduct and inconsistent with their immunization from liability for damages caused by their tortious practices.8 18 The language declaring the congressional policy against such practices is phrased in terms of their prevention: 19 '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: * * *.' 61 Stat. 146, 29 U.S.C. (1952 ed.) § 160(a), 29 U.S.C.A. § 160(a).9 20 Section 10(c) directs the Board to issue a cease-and-desist order after an appropriate finding of fact. There is no declaration that this procedure is to be exclusive. 21 The history of the enactment of § 8(b)(1)(A) lends further support to this interpretation. Senate Report No. 105, 80th Cong., 1st Sess. 50, as to S. 1126, said in part: 22 'Since this bill establishes the principle of unfair labor practices on the part of unions, we can see no reason whatever why they should not be subject to the same rules as the employers. The committee heard many instances of union coercion of employees such as that brought about by threats of reprisal against employees and their families in the course of organizing campaigns; also direct interference by mass picketing and other violence. Some of these acts are illegal under State law, but we see no reason why they should not also constitute unfair labor practices to be investigated by the National Labor Relations Board, and at least deprive the violators of any protection furnished by the Wagner Act.' (Emphasis added.) 23 Senator Taft, one of the sponsors of the bill, added later: 24 'But suppose there is duplication in extreme cases; suppose there is a threat of violence constituting violation of the law of the State. Why should it not be an unfair labor practice? It is on the part of the employer. If an employer proceeds to use violence, as employers once did, if they use the kind of goonsquad tactics labor unions are permitted to use—and they once did—if they threaten men with physical violence if they join a union, they are subject to State law, and they are also subject to be proceeded against for violating the National Labor Relations Act. There is no reason in the world why there should not be two remedies for an act of that kind.' (Emphasis added.) 93 Cong.Rec. 4024.10 25 If Virginia is denied jurisdiction in this case, it will mean that where the federal preventive administrative procedures are impotent or inadequate, the offenders, by coercion of the type found here, may destroy property without liability for the damage done. If petitioners were unorganized private persons, conducting themselves as petitioners did here, Virginia would have had undoubted jurisdiction of this action against them. The fact that petitioners are labor organizations, with no contractual relationship with respondent or its employees, provides no reasonable basis for a different conclusion.11 26 The jurisdiction of the Supreme Court of Appeals of Virginia is, therefore, sustained and its judgment affirmed. 27 Affirmed. 28 Mr. Justice JACKSON took no part in the consideration or decision of this case. 29 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting. 30 If this labor organizer had committed murder on the picket line, he would, of course, be subject to prosecution by Virginia. For the federal Act in no way deals with such conduct and there may be doubt if constitutionally it could do so, at least in such a way as to supersede local law. 31 The present case is different. The labor organizer's conduct that has led to this judgment for damages is conduct with which the federal Act specifically deals. On the facts found by the state court, the labor organizer and the union have committed an unfair labor practice under § 8(b)(1)(A), by using threats and the force of a picket line to make employees join a union, contrary to their desires. A state court or a state labor board could not enjoin that conduct, as Garner v. Teamsters Union, 346 U.S. 485, 74 S.Ct. 161, teaches. And I think like reasons preclude a State from applying other sanctions to it. 32 This conduct is the stuff out of which labor-management strife has been made, ever since trade unionism began its growth. For years the law of the jungle applied, victory going to the strongest. The emergence of more civilized methods of settling these disputes is familiar history. At first, the law was mostly on the side of management. The courts, as well as the legislatures, shaped the rules against the interests of labor. Gradually the human rights in industry were recognized until they finally received more generous recognition under the Wagner Act. 33 That Act subjected these industrial disputes to settlement and adjudication in administrative proceedings. For example, the administrative agency was granted power to forbid employers from interfering with trade-union activities. May a union not only institute proceedings before the National Labor Relations Board but sue the employer as well? Or may it have a choice of remedies? I would think not. But if the union may not sue the employer for the tortious conduct, why may the employer sue the union? I think that for each wrong which the federal Act recognizes the parties have only the remedy supplied by that Act—and for a simple reason. The federal Act was designed to decide labor-management controversies, to bring them to a peaceful, orderly settlement, to put the parties on the basis of equality which the rules designed by Congress envisaged.* If the parties not only have the remedy Congress provided but the right to sue for damages as well, the controversy is not settled by what the federal agency does. It drags on and on in the courts, keeping old wounds open, and robbing the administrative remedy of the healing effects it was intended to have. 1 61 Stat. 136 et seq., 29 U.S.C. (1952 ed.) § 141 et seq., 29 U.S.C.A. § 141 et seq. 2 Our order also stated that— 'The Government is invited to submit a memorandum setting forth the policy of the National Labor Relations Board in regard to: (1) the proviso in § 10(a), 61 Stat. 146, 29 U.S.C. (Supp. III) § 160(a), 29 U.S.C.A. § 160(a), and (2) other cases, apart from those in § 10(a), in which the Board declines to exercise its statutory jurisdiction. The memorandum should indicate by what standards the Board declines to act and whether the standards are applied by rule or regulation or on a case by case method.' The Government filed a memorandum stating that it had found it 'not feasible under the limitations prescribed by the Act to consummate agreements ceding jurisdiction' under the proviso in § 10(a). It stated also that 'Under the standards which the Board is currently continuing to apply, it would assert jurisdiction over an enterprise similar to (that of) respondent company herein.' It found that respondent's enterprises came within at least the following categories of the Board's jurisdictional standards: '4. Enterprises producing or handling goods destined for out-of-State shipment, or performing services outside the State in which the firm is located, valued at $25,000 a year. '5. Enterprises furnishing goods or services of $50,000 a year or more to concerns in categories 1, 2, or 4 (supra).' See also, Mimeograph Release of National Labor Relations Board, dated October 6, 1950, entitled 'N.L.R.B. Clarifies and Defines Areas In Which It Will and Will Not Exercise Jurisdiction'; National Labor Relations Board v. Denver Building Council, 341 U.S. 675, 684—685, 71 S.Ct. 943, 949—950, 95 L.Ed. 1284. 3 See note 2, supra. 4 'During the period from September 6, 1947 to December 1, 1949, the plaintiff performed work in West Virginia and Kentucky for Pond Creek Pacohontas Company, Island Creek Coal Company, and their subsidiary companies, under twelve separate contracts amounting to more than $650,000, from which it derived an annual profit slightly over $25,000. * * * 'In October, 1948, the two coal-producing companies determined to open a mine in Breathitt county, Kentucky, and Bryan (president of respondent) was asked to undertake the building of the preparation plant there. Because of the undeveloped condition of the roads and lack of living accommodations for the laborers, Bryan was told that if Laburnum would undertake the project it would be awarded additional work which would be required for the operation of another mine in Breathitt county, amounting to more than $600,000, on the basis of cost plus a fee of five per cent. 'On October 28, 1948, Pond Creek Pocahontas Company awarded the plaintiff a contract for construction of the preparation plant on the basis of cost plus a fee of five per cent, the total fee not to exceed the sum of $12,000. The estimated cost of the project was $200,000. Work on this project was commenced November 1, 1948, and was approximately ninety-five per cent completed when it was interrupted on July 26, 1949. Pursuant to their agreement the coal companies also awarded Laburnum several projects included in the additional work to which reference has been made. 'Upon commencing the work in Breathitt county, Laburnum, in compliance with its agreement with Richmond Building & Construction Trades Council, procured skilled laborers through the nearest local affiliates of the American Federation of Labor. With the knowledge and consent of these affiliates it employed local unskilled laborers who were not members of any labor organization. 'Laburnum proceeded with its work on these several projects without trouble until July 14, 1949, when William O. Hart, speaking from Pikeville, Kentucky, telephoned Bryan who was in Richmond. According to the testimony of Bryan, which was accepted by the jury, Hart identified himself as a 'field representative of the United Construction Workers and District 50 of the United Mine Workers of America,' working under David Hunter, 'Regional Director of Region 58 of United Construction Workers and District 50,' with head quarters in Pikeville. Hart told Bryan that he was familiar with the work which Laburnum was doing and about to do in Breathitt county, that the plaintiff was 'working in United Mine Workers territory,' and that he (Hart) would close down this work unless the plaintiff recognized the United Construction Workers in the employment of its workers. Bryan told Hart of Laburnum's agreement with the American Federation of Labor affiliate at Richmond, under which it was to employ members of that union, and that consequently it would not be able to comply with Hart's demand and make an agreement with the United Construction Workers. Hart replied that he was going 'to take over' the plaintiff's work, that he intended to 'organize' all of its workers, 'including the carpenters, electricians, pipefitters, ironworkers, millwrights, laborers, and everybody else,' and that if the plaintiff failed to make an agreement 'recognizing the United Construction Workers, he (Hart) would close down' all of the plaintiff's work in Breathitt county, as had been done in other instances within his (Hart's) territory. 'On Monday, July 25, about 7:30 p.m., Delinger (in respondent's employ) telephoned Bryan that he had been informed that on the next day, at noon, the United Construction Workers were coming to the job site with a large group of men, that they would be armed, and would stop the plaintiff's employees from working on the projects. '* * * When he (Bryan) arrived there (July 26) he found that all work on the several projects in which his men were engaged had stopped. It developed that about noon on that day Hart had arrived at the job site accompanied by a crowd variously estimated at from 40 to 150 men. There is evidence that this was 'a very rough, boisterous crowd,' that some of the men used abusive language, that some were drunk, and that some carried guns and knives. 'Hart and his men then went to the coal preparation plant and told the Laburnum workers there that he was taking over the job and that the Laburnum workers would have to 'join up with the United Construction Workers.' He accosted other employees of the plaintiff at another site where he repeated his threats that he would 'take over' the job unless they joined the union which he represented. Some of the plaintiff's employees yielded to these threats and agreed to join Hart's labor organization, while others refused to do so. 'Bryan talked with Hart again at the job site on August 1, and, as he says, Hart 'left no doubt in anybody's mind that he was going to have people to stop any men from working who tried.' 'He continually threatened to bring a large crowd of people there from Beaver Creek and other places to stop us from working if any of our people went to work. He said he would do that unless we signed a paper recognizing his organization as the representative of the laborers.' Bryan replied that he 'wouldn't do it and couldn't do it' because of his prior obligation to another labor organization. Moreover, Hart threatened that if the Laburnum men 'went back to work he was going to close down the mine operations by stopping the United Mine Workers from working for Pond Creek.' '* * * Consequently, on August 4, the coal companies, because of the dispute in which the plaintiff had become involved with representatives of these labor organizations, canceled the construction contracts with Laburnum which were then in progress. 'After the violent events of July, 1949, Pond Creek Pocahontas Company and Island Creek Coal Company abandoned the award of the additional work upon a cost plus five per cent basis which they had promised the Laburnum company. The coal companies invited bids upon this proposed construction, but Laburnum was unsuccessful in all of its bids for such work. The officials of the coal companies expressed their high regard and sympathy for Bryan, but explained that they could not run the risk of having the defendant unions shut down the mining operations because of the unions' differences with Laburnum.' 194 Va. 872, 880—881, 882, 883, 884—885, 75 S.E.2d 694, 700—701, 702, 703. 5 The cases relied upon to exclude state jurisdiction are those where a conflict with federal control has been made clear. '(W)hen Congress does exercise its paramount authority, it is obvious that Congress may determine how far its regulation shall go. There is no constitutional rule which compels Congress to occupy the whole field. Congress may circumscribe its regulation and occupy only a limited field. When it does so, state regulation outside that limited field and otherwise admissible is not forbidden or displaced. The principle is thoroughly established that the exercise by the State of its police power, which would be valid if not superseded by federal action, is superseded only where the repugnance or conflict is so 'direct and positive' that the two acts cannot 'be reconciled or consistently stand together." Kelly v. Washington, 302 U.S. 1, 10, 58 S.Ct. 87, 92, 82 L.Ed. 3. See also, Amalgamated Ass'n of St. Elec. Ry. & Motor Coach Emp. of America, Division 998 v. Wisconsin Employment Relations Board, 340 U.S. 383, 71 S.Ct. 359, 95 L.Ed. 364; International Union of United Automobile, Aircraft and Agr. Implement Workers of America v. O'Brien, 339 U.S. 454, 70 S.Ct. 781, 94 L.Ed. 978; Plankinton Packing Co. v. Wisconsin Employment Relations Board, 338 U.S. 953, 70 S.Ct. 491, 94 L.Ed. 588; La Crosse Telephone Corp. v. Wisconsin Employment Relations Board, 336 U.S. 18, 69 S.Ct. 379, 93 L.Ed. 463; Bethlehem Steel Co. v. New York Board, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234; Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782. 6 'Sec. 303. * * * '(b) Whoever shall be injured in his business or property by reason or (of) any violation of subsection (a) (boycotts and other unlawful combinations) may sue therefor in any district court of the United States subject to the limitations and provisions of section 301 hereof without respect to the amount in controversy, or in any other court having jurisdiction of the parties, and shall recover the damages by him sustained and the cost of the suit.' 61 Stat. 158, 159, 29 U.S.C. (1952 ed.) § 187(b), 29 U.S.C.A. § 187(b). 7 49 Stat. 449 et seq., 29 U.S.C. (1946 ed.) § 151 et seq., 29 U.S.C.A. § 151 et seq. 8 '* * * While the Federal Board is empowered to forbid a strike, when and because its purpose is one that the Federal Act made illegal, it has been given no power to forbid one because its method is illegal—even if the illegality were to consist of actual or threatened violence to persons or destruction of property. Policing of such conduct is left wholly to the states. In this case there was also evidence of considerable injury to property and intimidation of other employees by threats and no one questions the state's power to police coercion by those methods.' International Union, U.A.W.A.F. of L., Local 232 v. Wisconsin Employment Relations Board, 336 U.S. 245, 253, 69 S.Ct. 516, 521, 93 L.Ed. 651. See also, 336 U.S. at pages 255—258, 69 S.Ct. at pages 522—523, distinguishing the conduct there complained of from that protected by § 7 of the Labor Management Relations Act. 9 '* * * By retaining the language which provides the Board's powers under section 10 shall not be affected by other means of adjustment, the conference agreement makes clear that, when two remedies exist, one before the Board and one before the courts, the remedy before the Board shall be in addition to, and not in lieu of, other remedies.' Conference Report on H.R. 3020, H.R.Rep.No.510, 80th Cong., 1st Sess. 52. 10 Similarly, H.R.Rep.No.245, 80th Cong., 1st Sess. 8, said: 'Equal Responsibility Before the Law 'When employers violate rights that the Labor Act gives to employees or to unions, the Board can issue orders against them. When employers violate rights of employees or of unions under other laws, they must answer in court for what they do. Under the bill, when unions and their members violate rights given to employers and to employees, the new Board can issue orders protecting the employers and the employees.' (Emphasis added.) 11 See generally, Note, Labor Law—Federal and State Jurisdiction—Common Law Remedies, 27 N.Y.U.L.Rev. 468; Cox and Seidman, Federalism and Labor Relations, 64 Harv.L.Rev. 211, 236. * Section 1(b) of the Labor Management Relations Act of 1947, 61 Stat. 136, 29 U.S.C. § 141(b), 29 U.S.C.A. § 141(b), provides that: 'It is the purpose and policy of this Act, in order to promote the full flow of commerce, to prescribe the legitimate rights of both employees and employers in their relations affecting commerce, to provide orderly and peaceful procedures for preventing the interference by either with the legitimate rights of the other, to protect the rights of individual employees in their relations with labor organizations whose activities affect commerce, to define and proscribe practices on the part of labor and management which affect commerce and are inimical to the general welfare, and to protect the rights of the public in connection with labor disputes affecting commerce.'

910

347 U.S. 672 74 S.Ct. 794 98 L.Ed. 1035 PHILLIPS PETROLEUM CO.v.STATE OF WISCONSIN et al. STATE OF TEXAS et al. v. STATE OF WISCONSIN et al. FEDERAL POWER COMMISSION v. STATE OF WISCONSIN et al. Nos. 280, 281, 418. Argued April 6, 7, 1954. Decided June 7, 1954. [Syllabus from pages 672-673 intentionally omitted] Mr. Solicitor General Simon E. Sobeloff, Washington, D.C., for petitioner Federal Power Commission. Mr. Hugh B. Cox, Washington, D.C., for petitioner Phillips Petroleum co. Mr. Dan Moody, Austin, Tex., for petitioner State of Texas and others. Messrs. Stewart G. Honeck, Wm. E. Torkelson, Madison, Wis., Charles S. Rhyne, Washington, D.C., James H. Lee, Austin, Tex., Harry G. Slater, Washington, D.C., for respondents. Mr. Justice MINTON delivered the opinion of the Court. 1 These cases present a common question concerning the jurisdiction of the Federal Power Commission over the rates charged by a natural-gas producer and gatherer in the sale in interstate commerce of such gas for resale. All three cases are an outgrowth of the same proceeding before the Power Commission and involve the same facts and issues. 2 The Phillips Petroleum Company1 is a large integrated oil company which also engages in the production, gethering, processing, and sale of natural gas. We are here concerned only with the natural-gas operations. Phillips is known as an 'independent' natural-gas producer in that it does not engage in the interstate transmission of gas from the producing fields to consumer markets and is not affiliated with any interstate natural-gas pipeline company. As revealed by the record before us, however, Phillips does sell natural gas to five interstate pipeline transmission companies which transport and resell the gas to consumers and local distributing companies in fourteen states. 3 Approximately 50% of this gas is produced by Phillips, and the remainder is purchased from other producers. A substantial part is casinghead gas—i.e., produced in connection with the production of oil. The gas flows from the producing wells, in most instances at well pressure, through a network of converging pipelines of progressively larger size to one of twelve processing plants, where extractable products and impurities are removed. Of the nine such networks of pipelines involved in these cases, five are located entirely in Texas, one in Oklahoma, one in New Mexico, and two extend into both Texas and Oklahoma. After processing is completed, the gas flows from the processing plant through an outlet pipe, of varying lengths up to a few hundred feet, to a delivery point where the gas is sold and delivered to an interstate pipeline company. The gas then continues its flow through the interstate pipeline system until delivered in other states. 4 The Federal Power Commission, on October 28, 1948, instituted an investigation to determine whether Phillips is a natural-gas company within the jurisdiction of the Commission, and, if so, whether its natural-gas rates are unjust or unreasonable. In extensive hearings before an examiner, the facts described above were developed, as well as much additional information. An intermediate decision having been dispensed with, the Commission issued an opinion and order in which it held that Phillips is not a 'natural-gas company' within the meaning of that term as used in the Natural Gas Act,2 and therefore is not within the Commission's jurisdiction over rates.3 Consequently, the Commission did not proceed to investigate the reasonableness of the rates charged by Phillips. On appeals, the decision of the Commission was reversed by the Court of Appeals for the District of Columbia, one judge dissenting. 92 U.S.App.D.C. 284, 205 F.2d 706. We granted certiorari. 346 U.S. 934—935, 74 S.Ct. 374—376. 5 The Power Commission is authorized by § 4 of the Natural Gas Act to regulate the 'rates and charges made, demanded, or received by any natural-gas company for or in connection with the transportation or sale of natural gas subject to the jurisdiction of the Commission * * *.' 'Natural-gas company' is defined by § 2(6) of the Act to mean 'a person engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale.' The jurisdiction of the Commission is set forth in § 1(b) as follows: 6 '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.' Petitioners admit that Phillips engages in 'the sale in interstate commerce of natural gas for resale', as, of course, they must. Interstate Natural Gas Co. v. Federal Power Commission, 331 U.S. 682, 687—689, 67 S.Ct. 1482, 1485—1487, 91 L.Ed. 1742; cf. Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U.S. 157, 166 168, 74 S.Ct. 396, 401—403. They contend, however, that the affirmative grant of jurisdiction over such sales in the first clause of § 1(b) is limited by the negative second clause of the section. In particular, the contention is made that the sales by Phillips are a part of the 'production or gathering of natural gas' to which the Commission's jurisdiction expressly does not extend. 7 We do not agree. In our view, the statutory language, the pertinent legislative history, and the past decisions of this Court all support the conclusion of the Court of Appeals that Phillips is a 'natural-gas company' within the meaning of that term as defined in the Natural Gas Act, and that its sales in interstate commerce of natural gas for resale are subject to the jurisdiction of and regulation by the Federal Power Commission. 8 The Commission found that Phillips' sales are part of the production and gathering process, or are 'at least an exempt incident thereof.'4 This determination appears to have been based primarily on the Commission's reading of legislative history and its interpretation of certain decisions of this Court. Also, there is some testimony in the record to the effect that the meaning of 'gathering' commonly accepted in the natural-gas industry comprehends the sales incident to the physical activity of collecting and processing the gas. Petitioners contend that the Commission's finding has a reasonable basis in law and is supported by substantial evidence of record and therefore should be accepted by the courts, particularly since the Commission has 'consistently' interpreted the Act as not conferring jurisdiction over companies such as Phillips.5 See Gray v. Powell, 314 U.S. 402, 62 S.Ct. 326, 86 L.Ed. 301; National Labor Relations Board v. Hearst Publications, Inc., 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170. We are of the opinion, however, that the finding is without adequate basis in law, and that production and gathering, in the sense that those terms are used in § 1(b), end before the sales by Phillips occur. 9 In Federal Power Commission v. Panhandle Eastern Pipe Line Co., 337 U.S. 498, 505, 69 S.Ct. 1251, 1256, 93 L.Ed. 1499, we observed that the 'natural and clear meaning' of the phrase 'production or gathering of natural gas' is that it encompasses 'the producing properties and gathering facilities of a natural-gas company.' Similarly, in Colorado Interstate Gas Co. v. Federal Power Commission, 324 U.S. 581, 598, 65 S.Ct. 829, 837, 89 L.Ed. 1206, we stated that '(t)ransportation and sale do not include production or gathering', and indicated that the 'production or gathering' exemption applies to the physical activities, facilities, and properties used in the production and gathering of natural gas. Id., 324 U.S. at pages 602—603, 65 S.Ct. at page 839. See also Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 612—615, 64 S.Ct. 281, 292—294, 88 L.Ed. 333; Peoples Natural Gas Co. v. Federal Power Commission, 75 U.S.App.D.C. 235, 127 F.2d 153; cf. United States v. Public Utilities Commission, 345 U.S. 295, 307—311, 73 S.Ct. 706, 713 716, 97 L.Ed. 1020.6 10 Even more directly in point is our decision in Interstate Natural Gas Co. v. Federal Power Commission, 331 U.S. 682, 67 S.Ct. 1482, 91 L.Ed. 1742. The Interstate Company produced or purchased natural gas which it in turn sold and delivered to three interstate pipeline companies, all the activities occurring within the same state. We noted that '(e)xceptions to the primary grant of jurisdiction in the section (1(b)) are to be strictly construed',7 id., 331 U.S. at pages 690—691, 67 Stat. at page 1487, and held that § 1(b) conferred jurisdiction over such sales on the Federal Power Commission, stating: 11 'Petitioner asserts * * * that the sales to the three pipe line companies are a part of the gathering process and consequently not within the Commission's power of regulation. This basic contention has given rise to a great many subsidiary questions such as whether the sales were made from petitioner's 'gathering' lines or from petitioner's transmission' lines and whether the gathering process continued to the points of sale or was, as the Commission found, completed at some point prior to surrender of custody and passage of title. We have found it unnecessary to resolve those issues. The gas moved by petitioner to the points of sale consisted of gas produced from petitioner's wells commingled with that produced and gathered by other companies and introduced into petitioner's pipe line system during the course of the movement. By the time the sales are consummated, nothing further in the gathering process remains to be done. We have held that these sales are in interstate commerce. It cannot be doubted that their regulation is predominantly a matter of national, as contrasted to local concern. All the gas sold in these transactions is destined for consumption in States other than Louisiana. Unreasonable charges exacted at this stage of the interstate movement become perpetuated in large part in fixed items of costs which must be covered by rates charged subsequent purchasers of the gas including the ultimate consumer. It was to avoid such situations that the Natural Gas Act was passed.' Id., 331 U.S. at pages 692—693, 67 S.Ct. at page 1488. 12 Petitioners attempt to distinguish the Interstate case on the grounds that the Interstate Company transported the gas in its pipelines after completion of gathering and before sake, and that the Interstate Company was affiliated with an interstate pipeline company and therefore subject to Commission jurisdiction in any event. This Court, however, refused to rely on such refinements8 and instead based its decision in Interstate on the broader ground that sales in interstate commerce for resale by producers to interstate pipeline companies do not come within the 'production or gathering' exemption. 13 The Interstate case is also said to be distinguishable in that it did not involve an asserted conflict with state regulation, and federal control was not opposed by the state authorities, while in the instant cases there are said to be conflicting state regulations, and federal jurisdiction is vigorously opposed by the producing states. The short answer to this contention is that the jurisdiction of the Federal Power Commission was not intended to vary from state to state, depending upon the degree of state regulation and of state opposition to federal control. We expressly rejected any implication to the contrary, in the Interstate case. 331 U.S., at pages 691—692, 67 S.Ct. at pages 1487—1488. See Federal Power Commission v. Hope Natural Gas Co., supra, 320 U.S. at pages 607—615, 64 S.Ct. at pages 290—294. 14 The cases discussed above supply a ready answer to the determination of the Commission and also to petitioners' suggestion that 'production or gathering' should be construed to mean the 'business' of production and gathering, with the sale of the product considered as an integral part of such 'business.' We see no reason to depart from our previous decisions, especially since they are consistent with the language and legislative history of the Natural Gas Act. 15 In general, petitioners contend that Congress intended to regulate only the interstate pipeline companies since certain alleged excesses of those companies were the evil which brought about the legislation. If such were the case, we have difficulty in perceiving why the Commission's jurisdiction over the transportation or sale for resale in interstate commerce of natural gas is granted in the disjunctive. It would have sufficed to give the Commission jurisdiction over only those natural-gas companies that engage in 'transportation' or 'transportation and sale for resale' in interstate commerce, if only interstate pipeline companies were intended to be covered.9 See Federal Power Commission v. East Ohio Gas Co., 338 U.S. 464, 468, 70 S.Ct. 266, 268, 94 L.Ed. 268. 16 Rather, we believe that the legislative history indicates a congressional intent to give the Commission jurisdiction over the rates of all wholesales of natural gas in interstate commerce, whether by a pipeline company or not and whether occurring before, during, or after transmission by an interstate pipeline company.10 There can be no dispute that the overriding congressional purpose was to plug the 'gap' in regulation of natural-gas companies resulting from judicial decisions prohibiting, on federal constitutional grounds, state regulation of many of the interstate commerce aspects of the natural-gas business.11 A significant part of this gap was created by cases12 holding that 'the regulation of wholesale rates of gas and electrical energy moving in interstate commerce is beyond the constitutional powers of the States.' Interstate Natural Gas Co. v. Federal Power Commission, supra, 331 U.S. at page 689, 67 S.Ct. at page 1487. The committee reports on the bill that became the Natural Gas Act specifically referred to two of these cases and to the necessity of federal regulation to occupy the hiatus created by them.13 Thus, we are satisfied that Congress sought to regulate wholesales of natural gas occurring at both ends of the interstate transmission systems. 17 Petitioners cite our recent decisions in Cities Service Gas Co. v. Peerless Oil & Gas Co., 340 U.S. 179, 71 S.Ct. 215, 95 L.Ed. 190, and Phillips Petroleum Co. v. State of Oklahoma, 340 U.S. 190, 71 S.Ct. 221, 95 L.Ed. 204, as authority for the proposition that the states may regulate the sales in question here and, hence, that such sales are not within the gap which the Natural Gas Act was intended to fill. Those cases upheld as constitutional state minimum price orders, justified as conservation measures, applying to sales of natural gas in interstate commerce. But it is well settled that the gap referred to is that thought to exist at the time the Natural Gas Act was passed, and the jurisdiction of the Commission is not affected by subsequent decisions of this Court which have somewhat loosened the constitutional restrictions on state activities affecting interstate commerce, in the absence of conflicting federal regulation. Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U.S. 498, 508, 62 S.Ct. 384, 388, 86 L.Ed. 371; Federal Power Commission v. East Ohio Gas Co., supra, 338 U.S. at page 472. 70 S.Ct. at page 270. The Federal Power Commission did not participate in the Cities Service and Phillips Petroleum cases, the appellants there did not assert a possible conflict with federal authority under the Natural Gas Act, and consequently we expressly refused to consider at that time '(w)hether the Gas Act authorizes the Power Commission to set field prices on sales by independent producers, or leaves that function to the states * * *.' 340 U.S., at pages 188—189, 71 S.Ct. at page 221. 18 Regulation of the sales in interstate commerce for resale made by a so-called independent natural-gas producer is not essentially different from regulation of such sales when made by an affiliate of an interstate pipeline company. In both cases, the rates charged may have a direct and substantial effect on the price paid by the ultimate consumers. Protection of consumers against exploitation at the hands of natural-gas companies was the primary aim of the Natural Gas Act. Federal Power Commission v. Hope Natural Gas Co., supra, 320 U.S. at page 610, 64 S.Ct. at page 291. Attempts to weaken this protection by amendatory legislation exempting independent natural-gas producers from federal regulation have repeatedly failed,14 and we refuse to achieve the same result by a strained interpretation of the existing statutory language. 19 The judgment is affirmed. 20 Affirmed. 21 Mr. Justice JACKSON took no part in the consideration or decision of these cases. 22 Mr. Justice FRANKFURTER, concurring. 23 While I join the opinion of the Court, one consideration leading to the Court's conclusion is for me so decisive that I deem it appropriate to give it emphasis. 24 Section 1(b) is not to be construed on its face. It comes to us with an authoritative gloss. We must construe it as though Congress had, in words, added to the present text of § 1(b) some such language as the following: 25 'However, since sales for resale, or so-called 'wholesale sales,' in interstate commerce are not local in character and are constitutionally not subject to State regulation (see Missouri v. Kansas (Natural) Gas Co., 265 U.S. 298 (44 S.Ct. 544), and Public Utilities Commission v. Attleboro Steam & Electric Co., 273 U.S. 83 (47 S.Ct. 294)) the basic purpose of the legislation is to occupy this field in which the States may not act.' 26 The section must be read with such an interpolation because the committees of Congress which were responsible for the legislation said specifically that the Natural Gas Act was designed to cover the situations which the two cited cases held to be outside the competence of State regulation. H.R.Rep.No. 709, 75th Cong., 1st Sess. 1—2; S.Rep.No. 1162, 75th Cong., 1st Sess. 1 2.* 27 To be sure, the Kansas Gas case excluded the business of piping gas by a supply company in one State to distributing companies in another; and the Attleboro case involved the transmission of electric current by a producing company which took it from one State to the boundary of another State and there sold it to a distributing company for resale in the other State. In this case, the sale by Phillips was made in Texas to interstate pipeline transmission companies which transported the gas for resale to distributing companies and consumers in other States. But this fact—that Phillips itself did not pipe the gas to the State boundary or directly into another State—does not in the slightest alter the constitutional applicability of the Attleboro doctrine to the situation before us. The fact that the continuous transmission is not by facilities of Phillips but by the facilities of Phillips connecting with pipelines transmitting gas into other States does not change the interstate character of the transaction. For that reason, the decision in Attleboro, 273 U.S., at page 86, 47 S.Ct. at page 295, relying on Peoples Natural Gas Co. v. Public Service Commission of Pennsylvania, 270 U.S. 550, 46 S.Ct. 371, 70 L.Ed. 726, barred State regulation. 28 It may well be that if the problem in the Attleboro case came before the Court today, the constitutional doctrine there laid down would not be found compelling. This is immaterial. Congress did not leave it to the determination of this Court whether an Attleboro situation is subject to State regulation. It wrote the doctrine of the Attleboro case into the Natural Gas Act and said in effect that an Attleboro situation was to be taken over by federal regulation and was not to be left to the fluctuation of adjudications under the Commerce Clause. 29 Mr. Justice DOUGLAS, dissenting. 30 The question is whether sales of natural gas by an independent producer at the mouth of an interstate pipeline are subject to regulation by the Federal Power Commission under the Natural Gas Act of 1938. This is a question the Court has never decided. It is indeed one on which we expressly reserved decision in Interstate Natural Gas Co. v. Federal Power Commission, 331 U.S. 682, 690, 67 S.Ct. 1482, 1487, note 18, 91 L.Ed. 1742. 31 There is much to be said from the national point of view for regulating sales at both ends of these interstate pipelines. The power of Congress to do so is unquestioned. Whether it did so by the Natural Gas Act of 1938 is a political and legal controversy that has reged in the Commission and in the Congress for some years. The question is not free from doubts. For while § 1(b) of the Act makes the regulatory provisions applicable 'to the sale in interstate commerce of natural gas for resale for ultimate public consumption', it also makes them inapplicable "to the production or gathering of natural gas." 32 The sale by this independent producer is a 'sale in interstate commerce * * * for resale'. It is also an integral part of "the production or gathering of natural gas", as Mr. Justice Clark makes clear in his opinion, for it is the end phase of the producing and gathering process. So we must make a choice; and the choice is not an easy one. 33 The legislative history is not helpful. Congress was concerned with interstate pipelines, not with independent producers, as the thoughtful Comment in 59 Yale L.J. 1468 points out. If one can judge by the reports of the Federal Trade Commission that preceded the Act (S.Doc.No. 92, Pt. 84—A, 70th Cong., 1st Sess.), and the hearings and debates in Congress on the bills that evolved into the Act, little or no consideration was given to the need of regulating the sales by independent producers to the pipelines. The gap to be filled was that existing before the pipelines were brought under regulation—sales to distributors along the pipelines, as the opinion of Mr. Justice Clark demonstrates. 34 That was the view of the Commission in a decision that followed on the heels of the Act. Columbian Fuel Corp., 2 F.P.C. 200, 207. That decision exempted from regulation an independent producer to whom Phillips is in all material respects comparable. It was a decision made by men intimately familiar with the background and history of the Act—Leland. Olds, Basil Manly, Claude L. Draper, and Clyde L. Seavey. One Commissioner, John W. Scott, dissented. That construction of the Act by the Commission has persisted from that time (see Billings Gas Co., 2 F.P.C. 288; The Fin-Ker Oil & Gas Production Co., 6 F.P.C. 92; Tennessee Gas & Transmission Co., 6 F.P.C. 98) down to its decision in the present case. 10 F.P.C. 246. 35 That construction by the Commission, especially since it was contemporaneous, United States v. American Trucking Ass'ns, 310 U.S. 534, 539, 60 S.Ct. 1059, 1061, 84 L.Ed. 1345 and long continued, Federal Power Commission v. Panhandle Eastern Pipe Line Co., 337 U.S. 498, 513, 69 S.Ct. 1251, 1260, 93 L.Ed. 1499, is entitled to great weight. Other obtuse questions no less legal in character than the terms 'production or gathering' of gas have been entrusted to the administrative agency charged with the regulation. See Shields v. Utah Idaho Central R. Co., 305 U.S. 177, 59 S.Ct. 160, 83 L.Ed. 111; Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 60 S.Ct. 907, 84 L.Ed. 1263; Gray v. Powell, 314 U.S. 402, 62 S.Ct. 326, 86 L.Ed. 301. 36 There are practical considerations which buttress that position that lead me to conclude that we should not reverse the Commission in the present case. If Phillips' sales can be regulated, then the Commission can set a rate base for Phillips. A rate base for Phillips must of necessity include all of Phillips' producing and gathering properties; and supervision over its operating expenses necessarily includes supervision over its producing and gathering expenses. We held in Colorado Interstate Gas Co. v. Federal Power Commission, 324 U.S. 581, 65 S.Ct. 829, 89 L.Ed. 1206, that the Commission's control extended that far in the case of an interstate pipeline company which owned producing and gathering properties. And so it had to be, if regulation of the pipelines that owned their own gas supplies was to be effective. But an understanding of what regulation entails should lead to a different result in this case. The fastening of rate regulation on this independent producer brings 'the production or gathering of natural gas' under effective federal control, in spite of the fact that Congress has made that phase of the natural gas business exempt from regulation. The effect is certain to be profound. The price at which the independent producer can sell his gas determines the price he is able or willing to pay for it (if he buys from other wells). The sales price determines his profits. And his profits and the profits of all the other gatherers, whose gas moves into the interstate pipelines, have profound effects on the rate of production, the methods of production the old wells that are continued in production, the new ones explored, etc. Regulating the price at which the independent producer can sell his gas regulates his business in the most vital way any business can be regulated. That regulation largely nullifies the exemption granted by Congress. 37 There is much to be said in terms of policy for the position of Commissioner Scott, who dissented the first time the Commission ruled it had no jurisdiction over these sales. But the history and language of the Act are against it. If that ground is to be taken, the battle should be won in Congress, not here. Regulation of the business of producing and gathering natural gas involves considerations of which we know little and with which we are not competent to deal. 38 Mr. Justice CLARK, with whom Mr. Justice BURTON concurs, dissenting. 39 Perhaps Congress should have included control over the production and gathering of natural gas among the powers it gave the Federal Power Commission in the Natural Gas Act, but this Congress did not do. On the contrary, Congress provided that the Act 'shall not apply * * * to the production or gathering of natural gas.' Language could not express a clearer command, but the majority renders this language almost entirely nugatory by holding that the rates charged by a wholly independent producer and gatherer may be regulated by the Federal Power Commission. Nor does the Court stop there, for in the sweep of the opinion 'the rates of all wholesales of natural gas in interstate commerce, whether by a pipeline company or not and whether occurring before, during, or after transmission by an interstate pipeline company' are covered under the Act. 347 U.S. 682, 74 S.Ct. 799, supra. (Emphasis supplied.) On its face, this language brings every gas operator, from the smallest producer to the largest pipeline, under federal regulatory control. In so doing, the Court acts contrary to the intention of the Congress, the understanding of the states, and that of the Federal Power Commission itself. The Federal Power Commission is thereby thrust into the regulatory domain traditionally reserved to the states. 40 The natural gas industry, like ancient Gaul, is divided into three parts. These parts are production and gathering, interstate transmission by pipeline, and distribution to consumers by local distribution companies. A business unit may perform more than one of these functions—typically, production and gathering in addition to interstate transmission. But Phillips' natural gas operations are confined exclusively to the first part—production and gathering. It has no interstate transmission or highpressure trunk lines and does not sell to distribution companies; and it does not, of course, distribute to the ultimate consumer. Its nine gathering systems merely bring the gas from its own and other producers' wells to its central plants in the producing fields so it can be rendered usable as fuel. Since there are no facilities for storage, the amount of gas, other than casinghead,** produced and gathered each day depends on the day-to-day demands of the interstate pipelines, which in turn depend on weather and other conditions in consuming areas. Gas wells are cut on and off as the market demand for the gas requires. Gathering takes place by well pressure forcing the gas through numerous small pipes connecting each well with the central gathering plant or processing station. It is there that the gas first comes to a common 'header' and is processed for use as fuel. The processing of the gas at this central gathering plant is necessary to remove hydrocarbons, hydrogen sulphide and other foreign elements in order to permit its use as fuel. The plant operates only while the wells are producing. All of Phillips' operations, including the acreage from which the wells produce the gas, the wells themselves, the lines that connect with each of them and run to the central plant, form a closely knit unit that is entirely local to the field involved. After processing, the gas is immediately delivered to the interstate pipelines under long-term sales contracts. 41 The Commission found that '(t)hough technically consummated in interstate commerce, these sales (by Phillips to the pipelines) are made 'during the course of production and gathering," and that the sales 'are so closely connected with the local incidents of (production and gathering) as to render rate regulation by this Commission inconsistent or a substantial interference with the exercise by the affected States of their regulatory functions.' We believe that this finding is correct and that it should be approved by the Court. 42 If there be any doubt that Congress thought the 'production and gathering' exemption saved Phillips' sales from Federal Power Commission regulation, the Act's legislative history removes it. The Solicitor of the Commission, Mr. Dozier DeVane, at hearings in connection with a predecessor of the bill that finally became the Natural Gas Act, testified that the Federal Power Commission would have no jurisdiction over the rates for natural gas 'that are paid in the gathering field.' Hearings before Subcommittee of Committee on Interstate and Foreign Commerce on H.R. 11662, 74th Cong., 2d Sess., p. 28 (1937). The bill, he said, 'does not attempt to regulate the gathering rates or the gathering business.' Id., 34. See also, id., 42—43. The bill about which Mr. DeVane testified has been described as 'substantially similar to the Natural Gas Act,' and his views have been treated as authoritative by this Court. Federal Power Commission v. Panhandle Eastern Pipe Line Co., 1949, 337 U.S. 498, 505, 69 S.Ct. 1251, 1256, note 7, 93 L.Ed. 1499. See also Federal Power Commission v. East Ohio Gas Co., 1950, 338 U.S. 464, 472, 70 S.Ct. 266, 271, note 12, 94 L.Ed. 268. In the face of this as well as the Federal Power Commission's adherence to the DeVane views ever since its first cases on the subject, Columbian Fuel Corp., 2 F.P.C. 200 (1940), Billings Gas Co., 2 F.P.C. 288 (1940), and in the absence of any specific matter in the Act's legislative history refuting the DeVane views, the Court today erroneously finds that DeVane's 'testimony had little relevance here.' 347 U.S. 682, 74 S.Ct. 799, note 9, supra. 43 There is no dispute that Congress intended the Natural Gas Act to close the 'gap' created by decisions of this Court barring state regulation of certain interstate gas sales. The legislative history of the Act refers to two decisions: State of Missouri ex rel. Barrett v. Kansas Natural Gas Co., 1924, 265 U.S. 298, 44 S.Ct. 544, 68 L.Ed. 1027; Public Utilities Commission v. Attleboro Steam & Electric Co., 1927, 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549. See H.R.Rep.No. 709, 75th Cong., 1st Sess., pp. 1—2 (1937). But these cases had nothing to do with sales to interstate pipelines by wholly independent, unintegrated, and unaffiliated producers and gatherers, such as Phillips. Neither of the companies involved in those cases was engaged exclusively in production and gathering; both were producing and transportation companies, Kansas of natural gas, Attleboro of electricity; both Kansas and Attleboro sold to distributing companies in the course of interstate transmission. Thus, when the House Report, id., 1—2, expressed the Act's alim to regulate wholesales such as 'sales by producing companies to distributing companies,' and immediately thereafter cited the Kansas and Attleboro cases, the Report's unmistakable reference was to sales by an integrated 'producer-pipeline' to the local distributor. It could not refer to an independent producer and gatherer because, first, such an independent never sells to local distributors and, secondly, the two cited cases do not support a reference to such independents. That Congress aimed at abuses resulting in the 'gap' at the end of the transmission process by integrated and unintegrated pipelines and not at abuses prior to transmission is clear from the final report of the Federal Trade Commission to the Senate on malpractices in the natural gas industry. S.Doc. No. 92, 70th Cong., 1st Sess. (1935). This report was the stimulus for federal intervention in the industry. The Federal Trade Commission outlined the abuses in the industry which the 'gap' made the states powerless to prevent; the abuses were by monopolistically situated pipelines which gouged the consumer by charging local distribution companies unreasonable rates. The Federal Trade Commission did not find abusive pricing by independent producers and gatherers; if anything, the independents at the producing end of the pipelines were likewise the victims of monopolistic practices by the pipelines. 44 And our decisions have certainly indicated that the 'gap' was at the distribution end of the transmission process. Thus, in Federal Power Commission v. Hope Natural Gas Co., 1944, 320 U.S. 591, 64 S.Ct. 281, 291, 88 L.Ed. 333, the Court observed that 'the Federal Power Commission was given no authority over the 'production or gathering of natural gas" and that the producing states had the power 'to protect the interests of those who sell their gas to the interstate operator.' Id., 320 U.S. 612—613, 614, 64 S.Ct. 291, 292, 293. (Emphasis supplied.) Five years later, in Federal Power Commission v. Panhandle Eastern Pipe Line Co., supra, the Court said its approval of the Commission's inclusion of the cost of production and gathering facilities of an interstate pipeline in the latter's rate base 'is not a precedent for regulation of any part of production or marketing.' 337 U.S. at page 506, 69 S.Ct. at page 1257. 45 By today's decision, the Court restricts the phrase 'production and gathering' to 'the physical activities, facilities, and properties' used in production and gathering. Such a gloss strips the words of their substance. If the Congress so intended, then it left for state regulation only a mass of empty pipe, vacant processing plants and thousands of hollow wells with scarecrow derricks, monuments to this new extension of federal power. It was not so understood. The states have been for over 35 years and are now enforcing regulatory laws covering production and gathering, including pricing, proration of gas, ratable taking, unitization of fields, processing of casinghead gas including priority over other gases, well spacing, repressuring, abandonment of wells, marginal area development, and other devices. Everyone is fully aware of the direct relationship of price and conservation. Federal Power Commission v. Panhandle Eastern Pipe Line Co., supra, 337 U.S. at page 507, 69 S.Ct. at page 1257. And the power of the states to regulate the producer's and gatherer's prices has been upheld in this Court. Cities Service Gas Co. v. Peerless Oil & Gas Co., 1950, 340 U.S. 179, 71 S.Ct. 215, 95 L.Ed. 190; Phillips Petroleum Co. v. State of Oklahoma, 1950, 340 U.S. 190, 71 S.Ct. 221, 95 L.Ed. 204. There can be no doubt, as the Commission has found, that federal regulation of production and gathering will collide and substantially interfere with and hinder the enforcement of these state regulatory measures. We cannot square this result with the House Report on this Act which states that the subsequently enacted bill 'is so drawn as to complement and in no manner usurp State regulatory authority.' H.R.Rep.No.709, supra, 74 S.Ct. 801. 46 The majority rely heavily on Interstate Natural Gas Co. v. Federal Power Commission, 1947, 331 U.S. 682, 67 S.Ct. 1482, 91 L.Ed. 1742, to support their position. To be sure, there is language in that case which on its face seesm to govern the present case. Id., 331 U.S. 692—693, 67 S.Ct. 1488. But that case involved a materially different fact situation. The Interstate Gas Company was already subject to Federal Power Commission jurisdiction because of its interstate pipeline operations; and the company was affiliated with one of the pipelines to which it sold. In addition, the Court emphasized the fact that in Interstate no claim to state regulatory authority was made. Indeed, the Interstate Company had successfully resisted state attempts to regulate. Hence there was no possibility of conflict in that case; either the Federal Power Commission moved in or Interstate would have remained unregulated. But perhaps a more significant factual distinction in terms of the Court's reasoning in that case rests in the fact that of the total volume of gas Interstate sold, roughly 42% had been purchased from others who had produced and gathered it. This 42% was almost enough to supply all the needs of the three interstate pipelines to which Interstate sold. And the 42%, already gathered and processed, moved into and through Interstate's branch, trunk, and main trunk lines. In short, Interstate was the equivalent of a middleman between gatherers and the pipelines for almost all the gas it sold to the pipelines and performed the function of transporting the gas it purchased from other gatherers through its branch, trunk, and main trunk lines. Phillips performs no such middleman or transmission function. In addition, the late Chief Justice Vinson in that case specifically stated that: 'We express no opinion as to the validity of the jurisdictional tests employed by the Commission in these cases (Columbian and Billings, supra).' 331 U.S., at pages 690—691, 67 S.Ct. 1487, note 18. Since it was in those cases that the Federal Power Commission established the policy of declining jurisdiction over the rates charged by wholly independent producers and gatherers, it is difficult to see how Interstate can control the present case. 47 If we look to Interstate for guidance, we would do better to focus on the following words of the late Chief Justice: 48 'Clearly, among the powers thus reserved to the States is the power to regulate the physical production and gathering of natural gas in the terests of conservation or of any other consideration of legitimate local concern. It was the intention of Congress to give the States full freedom in these matters. Thus, where sales, though technically consummated in interstate commerce, are made during the course of production and gathering and are so closely connected with the local incidents of that process as to render rate regulation by the Federal Power Commission inconsistent or a substantial interference with the exercise by the State of its regulatory functions, the jurisdiction of the Federal Power Commission does not attach.' 331 U.S., at page 690, 67 S.Ct. at page 1487. 49 Even a cursory examination of Phillips' operations reveals how completely local they are and how incidental to them are its sales to the pipelines. Moreover, federal regulation of these sales means an inevitable clash with a complex of state regulatory action, including minimum pricing. These were matters found by the Federal Power Commission in language obviously patterned after the above quotation. The clear import of the cited words is that Federal Power Commission jurisdiction 'does not attach' in such a situation. 50 In the words of Mr. Justice Jackson, we believe 'that observance of good faith with the states requires that we interpret this Act as it was represented at the time they urged its enactment, as its terms read, and as we have, until today, declared it, viz. to supplement but not to supplant state regulation.' Federal Power Commission v. East Ohio Gas Co., supra, 338 U.S. at page 490, 70 S.Ct. at page 280. 1 Hereinafter referred to as Phillips. 2 52 Stat. 821, as amended 15 U.S.C. § 717 et seq., 15 U.S.C.A. § 717 et seq. 3 10 F.P.C. 246. One Commissioner concurred in the decision and one dissented. 4 10 F.P.C. 246, 278. 5 The consistency of the Commission in this regard may be questioned. Compare: Columbian Fuel Corp., 2 F.P.C. 200, with Interstate Natural Gas Co., 3 F.P.C. 416; Brief for Federal Power Commission, Interstate National Gas Co. v. Federal Power Commission, 5 Cir., 156 F.2d 949, with Brief for Federal Power Commission, Interstate Natural Gas Co. v. Federal Power Commission, 331 U.S. 682, 67 S.Ct. 1482, 91 L.Ed. 1742; Federal Power Commission Order No. 139, 12 Fed.Reg. 5585, with Federal Power Commission Order No. 154, 15 Fed.Reg. 4633. See Scanlan, Administrative Abnegation in the Face of Congressional Coercion: The Interstate Natural Gas Company Affair, 23 Notre Dame Law. 173; Note, 59 Yale L.J. 1468, 1479—1484. And, for that matter, even consistent error is still error. 6 Referring to the taking of natural gas by purchasing interstate pipeline companies at the outlet of processing plants, we recently observed that the pipeline companies obviously 'are not engaged in 'gathering gas' within the meaning of that term in its ordinary usage * * *.' Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U.S. 157, 164, 74 S.Ct. 396, 400. 7 The committee reports on the bill enacted as the Natural Gas Act, H.R. 6586, 75th Cong., 1st Sess., reveal that a construction of the 'production or gathering' exemption which would substantially limit the affirmative grant of jurisdiction to the Commission was not contemplated. After quoting the exemptive clause of § 1(b), the House Report states that: '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. 3. The Senate Report adopted and reprinted the House Report on the bill. S.Rep.No.1162, 75th Cong., 1st Sess. 8 Despite the fact that they were urged by the Commission as a basis for decision. Brief for Federal Power Commission, Interstate Natural Gas Co. v. Federal Power Commission, 331 U.S. 682, 67 S.Ct. 1482, 91 L.Ed. 1742. 9 Just such wording was suggested to and rejected by the House Committee considering enactment of the Natural Gas Act, by the Chairman of the State of New York Department of Public Service, Public Service Commission. Hearings before House Committee on Interstate and Foreign Commerce on H.R. 4008, 75th Cong., 1st Sess. 146—147. An earlier bill, H.R. 11662, 74th Cong., 2d Sess., would have limited the jurisdiction of the Power Commission to 'the transportation of natural gas in highpressure mains in interstate commerce and to natural-gas companies engaged in such transportation * * *.' Much of the legislative history advanced in support of petitioners' position was developed in connection with this bill, including the testimony of Dozier A. DeVane, Solicitor of the Federal Power Commission. Because of the much different jurisdictional provision of H.R. 11662, such testimony has little relevance here. 10 The bill on which were held the hearings leading to the passage of the Natural Gas Act, H.R. 4008, 75th Cong., 1st Sess., as introduced provided, in § 1(b), for Commission jurisdiction over the sale of natural gas in interstate commerce 'for resale to the public.' Similarly, 'naturalgas company' was defined, in § 2(5), as including a person engaged in the sale of natural gas in interstate commerce 'for resale to the public.' The General Solicitor of the National Association of Railroad and Utilities Commissioners suggested that the language be changed in a manner almost identical to that contained in the Natural Gas Act. Referring to the proposed changes, he commented that: 'Another is designed to make certain that the bill will apply to all intercompany sales of natural gas at wholesale, even though the sale be from one company to another company which will resell to another corporation before the gas is finally sold to the public.' Hearings before House Committee on Interstate and Foreign Commerce on H.R. 4008, 75th Cong., 1st Sess. 22. See also id., at 141—143. 11 Federal Power Commission v. East Ohio Gas Co., 338 U.S. 464, 472—473, 70 S.Ct. 266, 270—272, 94 L.Ed. 268; Federal Power Commission v. Panhandle Eastern Pipe Line Co., 337 U.S. 498, 502 504, 69 S.Ct. 1251, 1254—1256, 93 L.Ed. 1499; Panhandle Eastern Pipe Line Co. v. Public Service Commission, 332 U.S. 507, 514—521, 68 S.Ct. 190, 193—198, 92 L.Ed. 128; Interstate Natural Gas Co. v. Federal Power Commission, 331 U.S. 682, 689—693, 67 S.Ct. 1482, 1486—1488, 91 L.Ed. 1742; Colorado Interstate Gas Co. v. Federal Power Commission, 324 U.S. 581, 599—600, 65 S.Ct. 829, 837—838, 89 L.Ed. 1206; Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 609—610, 64 S.Ct. 281, 291, 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. 12 State of Missouri ex rel. Barrett v. Kansas Natural Gas Co., 265 U.S. 298, 44 S.Ct. 544, 68 L.Ed. 1027; Public Utilities Commission of Rhode Island v. Attleboro Steam & Electric Co., 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549; State Corporation Commission of Kansas v. Wichita Gas Co., 290 U.S. 561, 54 S.Ct. 321, 78 L.Ed. 500. Cf. Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 42 S.Ct. 106, 66 L.Ed. 239; 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. And see Jersey Central Power & Light Co. v. Federal Power Commission, 319 U.S. 61, 69, 63 S.Ct. 953, 957, 87 L.Ed. 1258. 13 '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. * * * 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 transactions 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 (Natural) Gas Co. (1924), 265 U.S. 298 (44 S.Ct. 544), and Public Utilities Commission v. Attleboro Steam & Electric Co. (1927), 273 U.S. 83 (47 S.Ct. 294).) 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.' H.R.Rep.No.709, 75th Cong., 1st Sess. 1—2; S.Rep.No.1162, 75th Cong., 1st Sess. 1—2. 14 Among the bills introduced in recent Congresses to restrict the existing jurisdiction of the Federal Power Commission over natural-gas producers are: H.R. 4051, 80th Cong., 1st Sess.; H.R. 4099, 80th Cong., 1st Sess.; H.R. 1758, 81st Cong., 1st Sess.; and S. 1498, 81st Cong., 1st Sess. * '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 (Second Dist. of State of New York) (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 transactions 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 (Natural) Gas Co. (1924), 265 U.S. 298 (44 S.Ct. 544), and Public Utilities Commission v. Attleboro Steam & Electric Co. (1927), 273 U.S. 83 (47 S.Ct. 294).) 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.' H.R.Rep.No.709, 75th Cong., 1st Sess. 1—2. ** Casinghead gas is produced with oil and furnishes the pressure under which the latter is brought to the surface. The gas cannot be shut off without closing down the oil production and it therefore is produced, regardless of demand, since the primary recovery is oil. If there are no available purchasers the gas is flared (burned). In some fields as much as one-third of the casinghead gas is still flared since no market is immediately available. Sound conservation practice dictates that, whenever possible, casing-head gas be used to satisfy demand before natural gas wells are turned on.

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348 U.S. 1 75 S.Ct. 6 99 L.Ed. 3 In re Disbarment of Abraham J. ISSERMAN. No. 5, Misc. Decided Oct. 14, 1954. PER CURIAM. 1 April 6, 1953, an order was entered disbarring Isserman from the practice of law in this Court pursuant to Rule 2, par. 5, of this Court's Rules then in effect. See In re Isserman, 345 U.S. 286, 73 S.Ct. 676, 97 L.Ed. 1013. The order of disbarment is now before us on a petition for rehearing. Rule 8 of our present Rules, 28 U.S.C.A., provides that 'no order of disbarment will be entered except with the concurrence of a majority of the justices participating.' The petition for rehearing is granted. A majority of the Justices participating do not find ground for disbarment of Isserman. Accordingly, the former order of disbarment is set aside and the rule against Isserman to show cause is discharged. 2 Mr. Justice BURTON, with whom Mr. Justice REED and Mr. Justice MINTON join, dissents for the reasons stated in the opinion announced by Mr. Chief Justice VINSON, April 6, 1953, in In re Isserman, 345 U.S. 286, 73 S.Ct. 676. 3 Mr. Justice REED also calls attention to his dissent in Sacher v. Association of the Bar, 347 U.S. 388, 390, 74 S.Ct. 569, 571. 4 The CHIEF JUSTICE and Mr. Justice CLARK did not participate in the consideration or decision of this matter.

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348 U.S. 3 75 S.Ct. 1 99 L.Ed. 4 William C. CHANDLER, Petitioner,v.FRETAG, Warden. No. 39. Argued Oct. 18, 1954. Decided Nov. 8, 1954. Mr.Earl E. Leming, Knoxville, Tenn., for petitioner. Mr.Knox Bigham, Nashville, Tenn., for respondent. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 Petitioner is held in the custody of respondent, Warden of the Tennessee State Penitentiary, under a sentence of life imprisonment as an habitual criminal. Challenging the validity of that sentence under the Fourteenth Amendment, he commenced this action in the Tennessee courts to obtain his freedom. We granted certiorari, 347 U.S. 933, 74 S.Ct. 632, because of the substantial question presented by his constitutional claim. 2 The basic facts are undisputed. Petitioner is a middle-aged Negro of little education. He was indicted on March 10, 1949, for the offense of housebreaking and larceny, an offense punishable by a term of three to ten years. The indictment charged him with breaking and entering a business house and stealing therefrom sundry items of the aggregate value of $3. Following his arrest, petitioner was released on bond while awaiting trial set for May 17, 1949. On that day, without an attorney and without notice of any habitual criminal accusation against him, petitioner appeared in court intending to plead guilty to the indictment. He 'felt that an attorney could do him no good on said charge (housebreaking and larceny).' When his case was called for trial, he was orally advised by the trial judge that he would also be tried as an habitual criminal because of three alleged prior felonies.1 He was informed that conviction under the Tennessee Habitual Criminal Act carries a mandatory sentence of life imprisonment with no possibility of parole.2 Petitioner promptly asked for a continuance to enable him to obtain counsel on the habitual criminal accusation. His request was summarily denied, a jury was impaneld, and the case proceeded immediately to trial. Petitioner entered his plea of guilty to the housebreaking and larceny charge, and the prosecution introduced evidence in corroboration of the plea. At the conclusion of the trial, the judge instructed the jury to raise their right hands if they accepted petitioner's guilty plea on the housebreaking and larceny charge and if they approved of a three-year sentence on that charge. The jury responded by raising their right hands. The judge then instructed the jury to raise their right hands a second time if they found petitioner to be an habitual criminal. Once again the jury, without ever having left the jury box, raised their right hands. The entire proceeding—from the impaneling of the jury to the passing of sentence—consumed between five and ten minutes. 3 Three years later, having served his sentence on the housebreaking and larceny charge, petitioner applied to the Circuit Court of Knox County for habeas corpus relief.3 He alleged that his sentence as an habitual criminal was invalid on the ground, among others, that he had been denied an opportunity to obtain counsel in his defense.4 At a hearing on the application, petitioner, his wife, his brother, a juror, and the prosecuting attorney testified as to their recollection of petitioner's trial.5 All five witnesses were in full accord as to the above-stated facts. They differed only on whether petitioner had pleaded guilty to the habitual criminal accusation and whether the prosecution had introduced any evidence concerning petitioner's prior convictions. The prosecuting attorney, the only witness for the state, testified that petitioner had pleaded guilty to the habitual criminal accusation as well as the housebreaking and larceny charge, and that the record of petitioner's prior convictions had been read to the jury; the other four witnesses denied it. In all other respects, the testimony of the prosecuting attorney substantiated the testimony of the other four witnesses. Thus he conceded that petitioner had not been represented by counsel, that petitioner had not been given any pretrial notice of the habitual criminal accusation, that petitioner 'said he wanted the case put off as he was advised by the Court that he was being tried as an habitual criminal in addition to housebreaking and larceny. He asked that the case be put off so he could get a lawyer and (the trial judge) told him he had had since January up to May to get a lawyer.' 4 The Circuit Court, after hearing the case on the merits, accepted—as does the respondent here—petitioner's factual allegations as to the denial of counsel. The Circuit Court nevertheless upheld the validity of petitioner's sentence and the Tennessee Supreme Court affirmed. Both courts emphasized that the Tennessee Habitual Criminal Act, like similar legislation in other states, does not create a separate offense but only enhances a defendant's punishment on being convicted of his fourth felony. Tipton v. State, 160 Tenn. 664, 672—678, 28 S.W.2d 635, 637—639. See also McDonald v. Commonwealth of Massachusetts, 180 U.S. 311, 313, 21 S.Ct. 389, 390, 45 L.Ed. 542; Graham v. State of West Virginia, 224 U.S. 616, 623—624, 32 S.Ct. 583, 585, 56 L.Ed. 917. From that premise, the courts below reasoned that petitioner had waived any right to counsel on the habitual criminal accusation by waiving counsel on the housebreaking and larceny charge. With this conclusion, we cannot agree. 5 Section 1 of the Act defines 'habitual criminal' in considerable detail.6 Section 7 prescribes standards for the admissibility of the record of the prior convictions of a defendant charged with being an habitual criminal.7 This Section, the Tennessee Supreme Court has held, clearly authorizes '(a)n issue of fact as to the verity of such record or as to the identity of the accused with the person named in such record * * *.' Tipton v. State, 160 Tenn. 664, 678, 28 S.W.2d 635, 639. Proof of the defendant's prior convictions is '* * * a condition precedent to the imposition of the increased punishment provided.' Tipton v. State, supra. Section 6 of the Act, moreover, provides that the increased punishment cannot be imposed unless the jury specially finds that the defendant is an habitual criminal as charged.8 'Under section 6 of the Act', according to the Tennessee Supreme Court, 'the question as to whether the defendant is an habitual criminal is one for the jury to decide.' McCommings v. State, 175 Tenn. 309, 311, 134 S.W.2d 151, 152. In short, even though the Act does not create a separate offense, its applicability to any defendant charged with being an habitual criminal must be determined by a jury in a judicial hearing. Compare Williams v. People of State of New York, 337 U.S. 241, 69 S.Ct. 1079, 93 L.Ed. 1337. That hearing and the trial on the felony charge, although they may be conducted in a single proceeding, are essentially independent of each other.9 Thus, for example, it is possible that the jury in the instant case might have found petitioner guilty on the housebreaking and larceny charge and yet found him innocent of being an habitual criminal. Apparently recognizing this possibility, petitioner at the earliest possible moment affirmatively sought an opportunity to obtain counsel on the habitual criminal accusation. Immediately on being informed of the accusation and suddenly finding himself in danger of life imprisonment, he requested a continuance so that he could engage the services of an attorney; but the trial court refused the request and forced him to stand immediate trial. On these undisputed facts, it is clear beyond question that petitioner did not waive counsel on the habitual criminal accusation. See Rice v. Olson, 324 U.S. 786, 788 789, 65 S.Ct. 989, 990—991, 89 L.Ed. 1367. 6 The Tennessee Attorney General denies, however, that petitioner had any federal constitutional right to counsel. He relies on the doctrine enunciated in Betts v. Brady, 316 U.S. 455, 62 S.Ct. 1252, 86 L.Ed. 1595. But that doctrine has no application here. Petitioner did not ask the trial judge to furnish him counsel; rather, he asked for a continuance so that he could obtain his own. The distinction is well established in this Court's decisions. Powell v. State of Alabama, 287 U.S. 45, 71, 53 S.Ct. 55, 65, 77 L.Ed. 158; Betts v. Brady, 316 U.S. 455, 466, 468, 62 S.Ct. 1252, 1258, 1259, 86 L.Ed. 1595; House v. Mayo, 324 U.S. 42, 46, 65 S.Ct. 517, 520, 89 L.Ed. 739. Regardless of whether petitioner would have been entitled to the appointment of counsel, his right to be heard through his own counsel was unqualified.10 See Palko v. State of Connecticut, 302 U.S. 319, 324—325, 58 S.Ct. 149, 151, 82 L.Ed. 288. As this Court stated over 20 years ago in Powell v. State of Alabama, supra, 287 U.S. at pages 68—69, 53 S.Ct. at page 64: 7 'What, then, does a hearing include? Historically and in practice, in our own country at least, it has always included the right to the aid of counsel when desired and provided by the party asserting the right. The right to be heard would be, in many cases, of little avail if it did not comprehend the right to be heard by counsel. Even the intelligent and educated layman has small and sometimes no skill in the science of law. If charged with crime, he is incapable, generally, of determining for himself whether the indictment is good or bad. He is unfamiliar with the rules of evidence. Left without the aid of counsel he may be put on trial without a proper charge, and convicted upon incompetent evidence, or evidence irrelevant to the issue or otherwise inadmissible. He lacks both the skill and knowledge adequately to prepare his defense, even though he have a perfect one. He requires the guiding hand of counsel at every step in the proceedings against him. Without it, though he be not guilty, he faces the danger of conviction because he does not know how to establish his innocence. If that be true of men of intelligence, how much more true is it of the ignorant and illiterate, or those of feeble intellect. If in any case, civil or criminal, a state or federal court were arbitrarily to refuse to hear a party by counsel, employed by and appearing for him, it reasonably may not be doubted that such a refusal would be a denial of a hearing, and, therefore, of due process in the constitutional sense.' (Italics added.) 8 A necessary corollary is that a defendant must be given a reasonable opportunity to employ and consult with counsel; otherwise, the right to be heard by counsel would be of little worth. Avery v. State of Alabama, 308 U.S. 444, 446, 60 S.Ct. 321, 322, 84 L.Ed. 377; House v. Mayo, 324 U.S. 42, 46, 65 S.Ct. 517, 520, 89 L.Ed. 739; White v. Ragen, 324 U.S. 760, 764, 65 S.Ct. 978, 980, 89 L.Ed. 1348; Hawk v. Olson, 326 U.S. 271, 277—278, 66 S.Ct. 116, 119—120, 90 L.Ed. 61. By denying petitioner any opportunity whatever to obtain counsel on the habitual criminal accusation, the trial court deprived him of due process of law as guaranteed by the Fourteenth Amendment. 9 It follows that petitioner is being held by respondent under an invalid sentence. The judgment below, sustaining the denial of habeas corpus relief, is accordingly reversed. 10 Judgment reversed. 1 The Tennessee Habitual Criminal Act, at the time of petitioner's trial, permitted an oral accusation. Williams' Tenn.Code, 1934 (1949 Supp.), § 11863.5. It was subsequently amended to require the inclusion of the accusation in the indictment on the substantive offense. Tenn.Code, 1932 (1950 Supp.), § 11863.5. 2 Williams' Tenn.Code, 1934 (1949 Supp.), § 11863.2. 3 Under Tennessee law, a defendant sentenced on both a felony charge and an habitual criminal accusation must serve his term on the felony charge before he can attack the validity of his habitual criminal sentence in habeas corpus proceedings. See State ex rel. Grandstaff v. Gore, 182 Tenn. 94, 98, 184 S.W.2d 366, 367. 4 Petitioner also alleged, wholly apart from his claim of denial of counsel, that he was deprived of due process by the failure of the trial court to give him any pretrial notice of the habitual criminal accusation. We find it unnecessary to pass on this contention in view of our disposition of the case. We also note that in 1950, subsequent to petitioner's trial, the Tennessee Habitual Criminal Act was amended to require pretrial notice. Tenn.Code, 1932 (1950 Supp.), § 11863.5. 5 The record of petitioner's trial consists only of the indictment and the judgment of conviction. There was no stenographic transcript of the proceedings. The judgment recites that petitioner had 'counsel present,' but it is conceded that the recital is not true. 6 Williams' Tenn.Code, 1934 (1949 Supp.), § 11863.1: 'Any person who has either been three times convicted within this state of felonies, two of which, under section 11762 of the Code of Tennessee, rendered him infamous, or which were had under sections 10777, 10778, 10788, 10790 and 10797 of said Code, or which were for murder in the first degree, rape, kidnapping for ransom, treason or other crime punishable by death under existing laws, but for which the death penalty was not inflicted, or who has been three times convicted under the laws of any other state, government or country of crimes, two of which, if they had been committed in this state, would have rendered him infamous, or would have been punishable under said sections 10777, 10778, 10788, 10790 and 10797 of said Code, or would have been murder in the first degree, rape, kidnapping for ransom, treason or other crime punishable by death under existing laws, but for which the death penalty was not inflicted, shall be considered, for the purposes of this act, and is hereby declared to be an habitual criminal, provided that petit larceny shall not be counted as one of such three convictions, but is expressly excluded, and provided further that each of such three convictions shall be for separate offenses, committed at different times, and on separate occasions.' 7 Williams' Tenn.Code, 1934 (1949 Supp.), § 11863.7. 8 Williams' Tenn.Code, 1934 (1949 Supp.), § 11863.5. 9 Compare, e.g., the West Virginia procedure which provides for a separate hearing on the habitual criminal issue. See Graham v. State of West Virginia, 224 U.S. 616, 32 S.Ct. 583, 56 L.Ed. 917. 10 Tennessee statutes appear to confer both rights on a defendant in a criminal case. Tenn.Code, 1932, §§ 11733, 11734, 11547, 11548. See also Art. 1, § 9, of the Declaration of Rights in the Tennessee Constitution.

01

348 U.S. 19 75 S.Ct. 6 99 L.Ed. 20 Robert A. McALLISTER, Petitioner,v.UNITED STATES of America. No. 23. Argued Oct. 19, 1954. Decided Nov. 8, 1954. MrJacob Rassner, New York City, for petitioner. Mr. Ralph S. Spritzer, Washington, D.C., for respondent. Mr. Justice MINTON delivered the opinion of the Court. 1 The petitioner brought suit against the United States under the Suits in Admiralty Act, 46 U.S.C. § 741 et seq., 46 U.S.C.A. § 741 et seq., to recover damages for negligence in creating conditions aboard ship whereby he contracted polio and for negligence in the treatment thereof. The District Court, sitting without a jury, made findings of fact and stated its conclusions of law thereon (Admiralty Rules, No. 46 1/2, 28 U.S.C.A.) in which it found that respondent not guilty of negligence in the treatment of the petitioner after he became ill, but found it guilty of negligence in permitting conditions to exist on board ship which were conducive to the transmission of polio whereby the petitioner was unduly exposed and thereby contracted the disease. Judgment for damages was entered against respondent, and on appeal the Court of Appeals reversed on the ground that no proximate cause was shown between the negligence and the contraction of polio. We granted certiorari. 347 U.S. 932, 74 S.Ct. 628. 2 The first question presented is whether the Court of Appeals in reviewing the District Court's findings applied proper standards. In reviewing a judgment of a trial court, sitting without a jury in admiralty, the Court of Appeals may not set aside the judgment below unless it is clearly erroneous. No greater scope of review is exercised by the appellate tribunals in admiralty cases than they exercise under Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A. Boston Ins. Co. v. Dehydrating Process Co., 1 Cir., 204 F.2d 441, 444; C. J. Dick Towing Co. v. The Leo, 5 Cir., 202 F.2d 850, 854; Union Carbide & Carbon Corp. v. United States, 2 Cir., 200 F.2d 908, 910; Koehler v. United States, 7 Cir., 187 F.2d 933, 936; Walter G. Hougland, Inc., v. Muscovalley, 6 Cir., 184 F.2d 530, 531, certiorari denied, 340 U.S. 935, 71 S.Ct. 490, 95 L.Ed. 675; Petterson Lighterage & Tow Corp. v. New York Central R. Co., 2 Cir., 126 F.2d 992, 994—995. A finding is clearly erroneous when "although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed." United States v. Oregon State Medical Society, 343 U.S. 326, 339, 72 S.Ct. 690, 698, 96 L.Ed. 978; United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746. We do not find that the Court of Appeals departed from this standard, although we do disagree with the result reached under the application of the standard. In relation to the District Court's findings we stand in review in the same position as the Court of Appeals. The question, therefore, is whether the findings of the District Court are clearly erroneous. 3 The petitioner was second assistant engineer on board the S. S. Edward B. Haines which was in Chinese waters from September 13, 1945, to December 3, 1945. During this time the master of the ship was informed that polio and other contagious diseases were prevalent in Shanghai, and a bulletin was posted on ship warning the crew thereof and directing them while ashore to exercise care in eating and drinking and to avoid association with the inhabitants ashore. So concerned was the master about this condition that he mustered the members of the crew on several occasions and warned them to the same effect. The District Court found that the petitioner obeyed these warnings, and there was no evidence in the record to the contrary. While the ship was in port at Shanghai, November 11, 1945, the record does not show that the petitioner went ashore. The last time he was ashore was November 1. On November 11 a number of Chinese stevedores came aboard to do some work, and there were also taken aboard at that time forty or fifty Chinese soldiers and fifty truck drivers and mechanics to be transported to Tsingtao. These soldiers, truck drivers and mechanics, fresh from Shanghai, the area infested by polio, were permitted wide use of the ship, including toilet facilities and the only drinking fountain, which was located on deck. To supplement the toilet facilities an open wooden trough was laid along the deck and discharged over the side of the ship. A hose was provided for flushing the trough, and on several occasions the petitioner had to go on deck to turn the water on to flush it. There was expert testimony by doctors that polio derives from a virus usually spread by people who are carriers of the disease to healthy persons who are susceptible. The virus is carried by human beings who have the organism in their intestinal tract or in their nose and throat. It enters the respiratory or the intestinal tract of the susceptible person and is carried to the central nervous system where the disease produces injury. 4 The petitioner first reported his symptoms on November 24, 1945. The usual period of incubation for the virus causing polio is believed to be about two weeks, with a maximum of two and one-half weeks. There was expert testimony that the producing cause of polio in the petitioner was contact with the Chinese stevedores, soldiers, truck drivers and mechanics who came aboard the ship. According to the expert testimony, polio usually does not occur unless there have been previous cases of the disease or contact with persons who have it. The petitioner had an uneventful trip of months before reaching the Orient with individuals who had no polio; then suddenly he is thrown in contact with Chinese from the Shanghai area where polio is prevalent, and thereafter, within the normal period of incubation, he comes down with the disease. 5 On evidence showing these facts, including the opinion of the experts, we think there was substantial evidence from which the District Court could and did find that respondent was negligent in permitting these Chinese, from the infested area of Shanghai, to have the run of the ship and use of its facilities, and in furnishing the crude and exposed latrine provided on the deck of the ship, by reason whereof the petitioner contracted polio. 6 Of course no one can say with certainty that the Chinese were the carriers of the polio virus and that they communicated it to the petitioner. But upon balance of the probabilities it seems a reasonable inference for the District Court to make from the facts proved, supported as they were by the best judgment medical experts have upon the subject today, that petitioner was contaminated by the Chinese who came aboard the ship November 11, 1945, at Shanghai. Certainly we cannot say on review that a judgment based upon such evidence is clearly erroneous. Myers v. Reading Co., 331 U.S. 477, 485—486, 67 S.Ct. 1334, 1339, 91 L.Ed. 1615; Tennant v. Peoria & P.U.R. Co., 321 U.S. 29, 64 S.Ct. 409, 88 L.Ed. 520. We think it was an allowable judgment of the District Court, and the judgment of the Court of Appeals is reversed. 7 Reversed. 8 Mr. Justice REED would affirm on the grounds stated by the Court of Appeals. 9 Mr. Justice FRANKFURTER. 10 The petition on the basis of which a writ of certiorari was sought in this case presented two questions of law claimed to have general importance. The course of the argument at the bar left no doubt that these were not the questions which were involved in the decision of the Court of Appeals under review. Neither is the question which this Court is now deciding. Both counsel and this Court have viewed the case as no more than an ordinary action for negligence, giving rise, as is frequently the case, to conflict in evaluation of the evidence. In short, the Court of Appeals read the evidence one way and this Court another. If there is any class of cases which plainly falls outside the professed considerations by which this Court exercises its discretionary jurisdiction, it is cases involving only interpretation of facts bearing on the issue of causation or negligence. The standards of judgment in this type of litigation are well settled. The significance of facts becomes the bone of contention. And the facts stir differences that derive from the very elusiveness of the meaning of the myriad unique sets of circumstances in negligence cases. One's deep sympathy is of course aroused by a victim of the hazards of negligence litigation in situations like the one before us. But the remedy for an obsolete and uncivilized system of compensation for loss of life or limb of crews on ships and trains is not intermittent disregard of the considerations which led Congress to entrust this Court with the discretion of certiorari jurisdiction. The remedy is an adequate and effective system of workmen's compensation. 11 The present case is one of those instances when a full appreciation before the writ was granted of what the argument developed should have led to a denial of the writ. If this Court is to entertain a negligence case solely because we stand in review in the same position as the Court of Appeals with relation to the District Court and disagree with the result which the Court of Appeals reached in the application of the right standards, the opportunity that is afforded in this case for a review of the Court of Appeals is an opportunity that should generally be afforded when the Court of Appeals reverses a District Court. (Incidentally, this Court is not reviewing the District Court. It reviews the Court of Appeals' review of the District Court.*) 12 Again and again and again has it been authoritatively announced that controversies such as this are not for this Court. Nor does it follow that because the case in fact was brought here and has been argued, the merits should be decided. The short answer is that to entertain this kind of a case inevitably will encourage petitions for certiorari in other like cases tendering an issue of more general importance which close examination proves wanting. Thus will again begin demands on the Court which it wisely cannot discharge and for which legislative relief had to come, or a feeling of discrimination will be engendered in taking some cases that ought not to be taken and rejecting others. 13 These controlling considerations were thus put by Mr. Chief Justice Taft on behalf of the entire Court: 14 '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. 15 With due regard to the Court's jurisdiction on writ of certiorari, Revised Rules of the Supreme Court, No. 19, 28 U.S.C.A., and to the effective adjudication of those cases, inevitably abundant, for which the Court sits, the Court has again and again dismissed the writ as improvidently granted after a preliminary and necessarily tentative consideration of the petition. United States v. Rimer, 220 U.S. 547, 31 S.Ct. 596, 55 L.Ed. 578; Furness, Withy & Co. v. Yang-Tsze Ins. Ass'n, 242 U.S. 430, 37 S.Ct. 141, 61 L.Ed. 409; Tyrrell v. District of Columbia, 243 U.S. 1, 37 S.Ct. 361, 61 L.Ed. 557; Layne & Bowler Corp. v. Western Well Works, Inc., 261 U.S. 387, 43 S.Ct. 422, 67 L.Ed. 712; Southern Power Co. v. North Carolina Pub. Serv. Co., 263 U.S. 508, 44 S.Ct. 164, 68 L.Ed. 413; Keller v. Adams-Campbell Co., 264 U.S. 314, 44 S.Ct. 356, 68 L.Ed. 705; Wisconsin Electric Co. v. Dumore Co., 282 U.S. 813, 51 S.Ct. 214, 75 L.Ed. 728; Sanchez v. Borras, 283 U.S. 798, 51 S.Ct. 490, 75 L.Ed. 1421; Franklin-American Trust Co. v. St. Louis Union Trust Co., 286 U.S. 533, 52 S.Ct. 642, 76 L.Ed. 1274; Moor v. Texas & N.O.R. Co., 297 U.S. 101, 56 S.Ct. 372, 80 L.Ed. 509; Texas & New Orleans R. Co. v. Neill, 302 U.S. 645, 58 S.Ct. 118, 82 L.Ed. 501; Goodman v. United States, 305 U.S. 578, 59 S.Ct. 100, 83 L.Ed. 371; Goins v. United States, 306 U.S. 622, 59 S.Ct. 783, 83 L.Ed. 1027; McCullough v. Kammerer Corp., 323 U.S. 327, 65 S.Ct. 297, 89 L.Ed. 273; McCarthy v. Bruner, 323 U.S. 673, 65 S.Ct. 126, 89 L.Ed. 547. 16 I would dismiss the writ as improvidently granted. * See National Labor Relations Board v. Pittsburgh S.S. Co., 340 U.S. 498, 503, 71 S.Ct. 453, 456, 95 L.Ed. 479: 'This is not the place to review a conflict of evidence nor to reverse a Court of Appeals because were we in its place we would find the record tilting one way rather than the other, though fair-minded judges could find it tilting either way.'

78

348 U.S. 11 75 S.Ct. 11 99 L.Ed. 11 Dorsey K. OFFUTT, An Attorney, Petitioner,v.UNITED STATES of America. No. 27. Argued Oct. 22, 1954. Decided Nov. 8, 1954. Mr.Warren E. Magee, Washington, D.C., for petitioner. Mr. Gray Thoron, for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 This case is here on review of a modified affirmance by the Court of Appeals of an order by the District Court summarily committing the petitioner for criminal contempt. 2 The proceeding grew out of the trial of one Peckham for abortion under D.C.Code 1951, § 22—201, 31 Stat. 1322. The petitioner was Peckham's trial counsel. Almost from the outset, a clash between the presiding judge and petitioner became manifest, which, it is fair to say, colored the course of the trial throughout its 14 days, and with increasing personal overtones. The judge again and again admonished petitioner for what he deemed disregard of rulings and other behavior outside the allowable limits of aggressive advocacy, and warned him of the consequences by way of punishment for contempt which such conduct invited. On the other hand, these interchanges between court and counsel were marked by expressions and revealed an attitude which hardly reflected the restraints of conventional judicial demeanor. Such characterization of necessity derives from an abiding impression left from a reading of the entire record. 3 At the close of the trial, after the jury had retired for deliberation, the judge, acting under the procedure prescribed by Rule 42(a) of the Federal Rules of Criminal Procedure1 and invoking the authority of Sacher v. United States, 343 U.S. 1, 72 S.Ct. 451, 96 L.Ed. 717, found the petitioner guilty of criminal contempt on the basis of a certificate filed under the Rule, containing 12 findings of 'contumacious, and unethical conduct in open court during the trial,' and ordered him committed for 10 days to the custody of the United States Marshal for the District of Columbia. 4 The Court of Appeals found that four of the 12 findings amply supported the commitment, but reduced the punishment from 10 days to 48 hours. It concluded that 'the record does not support the penalty imposed. Appellant's conduct cannot fairly be considered apart from that of the trial judge. Each respondent to great provocation from the other. The judge's treatment of appellant, examples of which are included in an appendix to our opinion in Peckham v. United States, (93) U.S.App.D.C. (136, 210 F.2d 693), and which is the chief factor in leading a majority of this court to conclude that Peckham's conviction cannot stand, leads us all to conclude that appellant's sentence should be reduced from 10 days to 48 hours.' 208 F.2d 842, 843—844. As indicated above, the Court of Appeals reversed Peckham's conviction because it found that the judge's behavior barred the court 'from sustaining the judgment as the product of a fair and impartial trial.' Peckham v. United States, 93 U.S.App.D.C. 136, 210 F.2d 693, 702. 5 In view of this Court's 'supervisory authority over the administration of criminal justice in the federal courts,' McNabb v. United States, 318 U.S. 332, 341, 63 S.Ct. 608, 613, 87 L.Ed. 819, and the importance of assuring alert self-restraint in the exercise by district judges of the summary power for punishing contempt, we brought the case here. 347 U.S. 932, 74 S.Ct. 631. 6 We shall not retrace the ground so recently covered in the Sacher case, supra. In enforcing Rule 42(a), the Court in that case emphasized its duty to safeguard two indispensable conditions to the fair administration of criminal justice: (1) counsel must be protected in the right of an accused to 'fearless, vigorous and effective' advocacy, no matter how unpopular the cause in which it is employed; (2) equally so will this Court 'protect the processes of orderly trial, which is the supreme object of the lawyer's calling.' 343 U.S., at pages 13—14, 72 S.Ct. at page 457. Rule 42(a) was not an innovation. It did not confer power upon district judges not possessed prior to March 21, 1946. 327 U.S. 821. 'This rule,' the Advisory Committee on the rules of criminal procedure stated, 'is substantially a restatement of existing law, Ex parte Terry, 128 U.S. 289 (9 S.Ct. 77, 32 L.Ed. 405); Cooke v. United States, 267 U.S. 517, 534 (45 S.Ct. 390, 394, 69 L.Ed. 767).' The pith of this rather extraordinary power to punish without the formalities required by the Bill of Rights for the prosecution of federal crimes generally, is that the necessities of the administration of justice require such summary dealing with obstructions to it. It is a mode of vindicating the majesty of law, in its active manifestation, against obstruction and outrage. The power thus entrusted to a judge is wholly unrelated to his personal sensibilities, be they tender or rugged. But judges also are human, and may, in a human way, quite unwittingly identify offense to self with obstruction to law. Accordingly, this Court has deemed it important that district judges guard against this easy confusion by not sitting themselves in judgment upon misconduct of counsel where the contempt charged is entangled with the judge's personal feeling against the lawyer. 7 Of course personal attacks or innuendoes by a lawyer against a judge, with a view to provoking him, only aggravate what may be an obstruction to the trial. The vital point is that in sitting in judgment on such a misbehaving lawyer the judge should not himself give vent to personal spleen or respond to a personal grievance. These are subtle matters, for they concern the ingredients of what constitutes justice. Therefore, justice must satisfy the appearance of justice. 8 Duly mindful of the fact that the exercise of the power of summary punishment for contempt 'is a delicate one, and care is needed to avoid arbitrary or oppressive conclusions', this Court in Cooke v. United States, supra, without in the slightest condoning contemptuous behavior on the part of a lawyer, deemed it desirable that 'where conditions do not make it impracticable, or where the delay may not injure public or private right, a judge, called upon to act in a case of contempt by personal attack upon him, may, without flinching from his duty, properly ask that one of his fellow judges take his place.' 267 U.S., at page 539, 45 S.Ct. at page 396. 9 The Government has vigorously pressed upon us the leeway that must be allowed to a trial judge in assessing the necessities of such a situation. We do not mean to imprison the discretion of judges within rigid mechanical rules. The nature of the problem precludes it. Nor are we unmindful of the fact that the ultimate finding of reprehensible misconduct by petitioner was sustained by the Court of Appeals. That great weight is to be given to the findings of fact by the two lower courts is a rule of wisdom in the exercise of the reviewing power of this Court. But in the enforcement of the rule it is important to discriminate between more or less subordinate facts leading to a judgment of their legal significance, and a conclusion—though concurred in by two courts—that may in fact imply a standard of law on which judgment on the case in its entirety is based. Baumgartner v. United States, 322 U.S. 665, 670—671, 64 S.Ct. 1240, 1243, 88 L.Ed. 1525; United States v. Appalachian Elec. Power Co., 311 U.S. 377, 403 404, 61 S.Ct. 291, 297, 85 L.Ed. 243. We are not intimating that the Court of Appeals was not justified in finding ample support for its conclusion that the trial judge was warranted in deeming petitioner's conduct as such contemptuous. The real issue is whether under the decision of the Cooke case such a ruling should have been made by the trial judge, or whether for the very purpose of vindicating justice for which the power of summary contempt is available, the determination of petitioner's guilt and the punishment properly to be meted out on a finding of guilt should have been made in the first instance by a judge not involved, as was this trial judge, in the petitioner's misconduct. 10 The fact that the Court of Appeals reduced the sentence from 10 days to 48 hours because the petitioner's conduct 'cannot fairly be considered apart from that of the trial judge,' is compelling proof that the latter failed to represent the impersonal authority of law. Plainly, the Court of Appeals thought that in the trial court's disposition of the misconduct of the petitioner there was an infusion of personal animosity. And indeed that court found that such was the fact on a full consideration of the record in the Peckham case and for that reason reversed Peckham's conviction. That court spoke of 'the excessive injection of the trial judge into the examination of witnesses, his numerous comments to defense counsel, indicating at times hostility, though under provocation,' which it concluded 'demonstrated a bias and lack of impartiality'. Peckham v. United States, supra, 210 F.2d at page 702. 11 It bears repeating that the whole record amply supports this characterization of the trial judge by the Court of Appeals.2 And his feeling toward the lawyer on whom he had to pass sentence is revealed by his statement to the jury in discharging them.3 12 The question with which we are concerned is not the reprehensibility of petitioner's conduct and the consequences which he should suffer. Our concern is with the fair administration of justice. The record discloses not a rare flareup, not a show of evanescent irritation—a modicum of quick temper that must be allowed even judges. The record is persuasive that instead of representing the impersonal authority of law, the trial judge permitted himself to become personally embroiled with the petitioner. There was an intermittently continuous wrangle on an unedifying level between the two. For one reason or another the judge failed to impose his moral authority upon the proceedings. His behavior precluded that atmosphere of austerity which should especially dominate a criminal trial and which is indispensable for an appropriate sense of responsibility on the part of court, counsel and jury. Such an atmosphere will also make for dispatch insofar as is consonant with a fair trial. The manner in which this trial was conducted doubtless contributed to the wastefulness of 14 trial days for a case of such limited scope as was the Peckham prosecution. 13 We conclude that application of the rule pronounced in Cooke v. United States is called for. The fact that the Court of Appeals here reduced the sentence imposed by the trial judge does not take this situation out of the moral and judicial considerations expounded on behalf of the Court by Mr. Chief Justice Taft. To sanction such a course of procedure would give it encouragement. In the language of the Cooke case, with one appropriate change, 'We think, therefore, that when this case again reaches the District Court, to which it must be remanded, the judge who imposed the sentence herein should invite the (Chief) Judge of the (District Court) to assign another judge to sit in the second hearing of the charge against the petitioner.' See 267 U.S., at page 539, 45 S.Ct. at page 396. 14 Reversed. 15 Mr. Justice BLACK and Mr. Justice DOUGLAS join in the opinion of the Court and concur in the reversal and remand of the case for hearing before another judge. They would go further, however, and direct that petitioner be accorded a jury trial, for reasons set out in their dissents in Sacher v. United States, 343 U.S. 1, 14 23, 72 S.Ct. 451, 457—462, 96 L.Ed. 717, and Isserman v. Ethics Committee, 345 U.S. 927, 73 S.Ct. 706, 97 L.Ed. 1357. 16 Mr. Justice REED and Mr. Justice BURTON dissent. They would affirm the judgment of the Court of Appeals on the basis of its opinion. 17 Mr. Justice MINTON, dissenting. 18 This case goes back to the District Court for hearing by another judge on charges as to which, on the record, this Court admits petitioner is guilty. It is only a question of how much punishment he shall receive. Two days, under all the circumstances, did not seem too much to the Court of Appeals that reviewed the conduct of judge and counsel, nor does it to me. I would not, after Sacher, apply the Cooke case to the circumstances of this proceeding. The writ of certiorari should be dismissed as improvidently granted. 1 'Rule 42. Criminal Contempt '(a) Summary Disposition. A criminal contempt may be punished summarily if the judge certifies that he saw or heard the conduct constituting the contempt and that it was committed in the actual presence of the court. The order of contempt shall recite the facts and shall be signed by the judge and entered of record.' 18 U.S.C.A. 2 For our purposes it will be sufficient to quote two specific instances: 'The Court: Motion denied. Proceed. 'Mr. Offutt: I object to Your Honor yelling at me and raising your voice like that. 'The Court: Just a moment. If you say another word I will have the Marshal stick a gag in your mouth.' (R. 215.) 'The Court: Don't argue with the Court. 'Mr. Offutt: I am not arguing with the Court, Your Honor. 'The Court: Don't answer back to the Court, either. 'Mr. Offutt: Oh, I thought Your Honor—I am merely trying to present my point. 'The Court: Proceed with the next question. 'Mr. Offutt: Thank you, Your Honor. 'Your Honor, I object to your raising your voice like that and shouting at me, and I urge Your Honor not to do it. 'The Court: Well, you are misbehaving, Mr. Offutt. 'Mr. Offutt: And I have a right— 'The Court: And it is my function to hold the reins tight and preserve order and decorum in the courtroom. 'Mr. Offutt: But not to yell at me, Your Honor. 'And I submit I am entitled, and my duty is to make objections and to state for the record, and I am putting my objections on the record. 'The Court: You have forfeited your right to be treated with the courtesy that this Court extends to all members of the Bar.' (R. 250.) 3 'I also realize that you had a difficult and a disagreeable task in this case. You have been compelled to sit through a disgraceful and disreputable performance on the part of a lawyer who is unworthy of being a member of the profession; and I, as a member of the legal profession, blush that we should have such a specimen in our midst.' (R. 260.)

01

348 U.S. 37 75 S.Ct. 92 99 L.Ed. 46 NATIONAL UNION OF MARINE COOKS AND STEWARDS, a voluntary association, Petitioner,v.George ARNOLD, et al. No. 19. Argued Oct. 15, 1954. Decided Nov. 22, 1954. It took the following course: 1949—In the Superior Court of the State of Washington for King County, Amend. 14. Mr.Norman Leonard, San Francisco, Cal., for petitioner. Mr. John Geisness, Seattle, Wash., for respondents. Mr. Justice BURTON delivered the opinion of the Court. 1 The question before us is whether a state appellate court violates either the Due Process or the Equal Protection Clause of the Fourteenth Amendment to the Constitution of the United States when it dismisses an appeal from a money judgment as a reasonable measure for safeguarding the collectibility of that judgment. For the reasons hereafter stated, we hold that it does not and that the dismissal of the appeal in the instant case was such a reasonable measure. 2 This litigation resulted from a 'black-listing' letter written by Harris as an agent of petitioner, National Union of Marine Cooks and Stewards, in 1949, to persons able to affect the employment of the 95 respondents whose occupation was that of stewards in the Alaska trade.1 It took the following course: 3 1949—In the Superior Court of the State of Washington for King County, respondents' libel action against petitioner and Harris, seeking $20,000 damages for each respondent, was dismissed on demurrer. 4 June 9, 1950—On appeal to the Supreme Court of Washington, the letter was held libelous per se, the judgment was reversed and the cause remanded for trial. 36 Wash.2d 557, 219 P.2d 121. 5 September 4, 1951—In the Superior Court, a total judgment of $475,000 was rendered against petitioner and Harris, awarding $5,000 to each respondent. 6 September 5, 1951—In the Superior Court, petitioner and Harris filed notices of appeal to the Supreme Court but offered no supersedeas bond and obtained no stay of proceedings.2 7 October 19, 1951—In the Superior Court, in the same case, respondents began a supplemental proceeding to discover petitioner's available assets. 8 February 15, 1952—In the Superior Court supplemental proceeding, the evidence disclosed no substantial assets of petitioner in Washington but showed $298,000 of United States bonds to be in its possession in California. The court ordered petitioner to deliver these bonds to the court's receiver, for safekeeping, pending disposition of petitioner's appeal. 9 April 4, 1952—In the Superior Court supplemental proceeding, upon petitioner's failure to deliver the bonds, the court adjudged it in contempt, stating "that said contemptuous conduct * * * frustrates the enforcement of the judgment herein * * * and frustrates the receivership created herein by order of this Court * * *." 41 Wash.2d 22, 24, 246 P.2d 1107, 1108. 10 May 17, 1952—The Supreme Court struck from its calendar petitioner's appeal on the merits, pending its review of the adjudication of contempt 'unless the said appellant Union sooner purges itself of the contempt * * *.' May 26, 1953—The Supreme Court held that the 11 'adjudication of contempt is affirmed, and the appeal presently pending in the main action shall be dismissed, unless, within fifteen days from the date of the remittitur herein, the appellant union purges itself of the order of contempt, by complying with the trial court's order requiring delivery of the bonds to the receiver.' 42 Wash.2d 648, 654, 257 P.2d 629, 633. 12 May 27, 1953—In the Supreme Court, respondents filed an affidavit showing that petitioner's disbursements, in 1952, had been $633,391.10, as opposed to its receipts of $413.280.90, and that its total cash assets, at the end of that year, had shrunk to $90,389.84. 13 June 12, 1953—In the Supreme Court, respondents renewed their motion to dismiss petitioner's appeal in the main action. They filed a supporting affidavit stating that 'All of * * * (petitioner's) assets of substantial value are in California and two California courts have refused to entertain suit on the Washington judgment while this appeal is pending.' 14 July 3, 1953—The Supreme Court ordered dismissal of petitioner's appeal unless petitioner purged itself of contempt. 15 August 19, 1953—The Supreme Court denied petitioner a rehearing and entered judgment dismissing its appeal in the main action. 16 March 8, 1954—This Court granted certiorari because of the significant relation of the constitutional issue to the enforcement of state judgments. 347 U.S. 916, 74 S.Ct. 516.3 17 There is no question before us as to the power of the state courts of Washington, under its laws, (1) to order petitioner to deliver the specified bonds to the receiver, (2) to adjudicate petitioner in contempt for failure to do so, or (3) to dismiss petitioner's appeal upon failure to purge itself of contempt by delivery of the bonds. Those questions have been settled by the Supreme Court of Washington. The question before us is whether the procedure which has culminated in the dismissal of petitioner's appeal violates either the Due Process or the Equal Protection Clause of the Fourteenth Amendment.4 18 We have no difficulty with the Equal Protection Clause because no showing has been made that anyone comparably situated has been treated differently from petitioner. The significant issue is whether the action of the State violates due process of law. To decide this, we consider first whether, generally, the dismissal of an appeal from a money judgment amounts to due process of law where it constitutes a reasonable means of safeguarding the collectibility of that judgment. If so, we may then consider whether the dismissal in the instant case constituted such a means. 19 The constitutional objection raised by petitioner was long ago considered in Hovey v. Elliott, 167 U.S. 409, 17 S.Ct. 841, 42 L.Ed. 215. In that case, the Supreme Court of the District of Columbia went further and attempted to deprive a defendant of his right to answer the suit brought against him. Having stricken defendant's answer, the court entered judgment against him as a punishment for his refusal to deliver to a court-appointed receiver certain funds which were the subject matter of the litigation. When the State of New York later refused to honor that judgment, this Court, in affirming the action of the Court of Appeals of New York, held that the District of Columbia had deprived defendant of his property without due process of law by denying him his constitutional right to a day in court.5 20 The instant case does not go so far. Here the petitioner has had its day in court. The dismissal has cut off only a statutory right of review after a full trial by judge and jury. In Hovey v. Elliott, supra, this distinction was anticipated and room was left open for a later consideration of cases like the one before us.6 21 While a statutory review is important and must be exercised without discrimination, such a review is not a requirement of due process. District of Columbia v. Clawans, 300 U.S. 617, 627, 57 S.Ct. 660, 663, 81 L.Ed. 843; State of Ohio ex rel. Bryant v. Akron Park District, 281 U.S. 74, 80, 50 S.Ct. 228, 230, 74 L.Ed. 710; Reetz v. People of State of Michigan, 188 U.S. 505, 508, 23 S.Ct. 390, 392, 47 L.Ed. 563; McKane v. Durston, 153 U.S. 684, 687 688, 14 S.Ct. 913, 914—915, 38 L.Ed. 867. 22 While this Court has not, until now, passed upon the constitutionality of a state court's dismissal of an appeal in a case like the present, it has decided somewhat comparable issues. Where the subject matter of litigation has been removed or has removed itself from the jurisdiction of a state court in violation of that court's orders, this Court has upheld a dismissal of the offending litigant's appeal. For example, where a prisoner has escaped from custody while his appeal is pending, this Court has upheld a dismissal of his appeal. Cf. Eisler v. United States, 338 U.S. 189, 69 S.Ct. 1453, 93 L.Ed. 1897, and 338 U.S. 883, 70 S.Ct. 181, 94 L.Ed. 542. Similarly, after a state prisoner's recapture, this Court has sustained a state court's refusal to revive his appeal. Allen v. State of Georgia, 166 U.S. 138, 17 S.Ct. 525, 41 L.Ed. 949. See also, Smith v. United States, 94 U.S. 97, 24 L.Ed. 32; State of Washington v. Handy, 27 Wash. 469, 67 P. 1094; People v. Genet, 59 N.Y. 80; Com. of Massachusetts v. Andrews, 97 Mass. 543.7 23 The circumstances before us are, in some degree, comparable. The order here violated was issued in a supplemental proceeding to discover and safeguard property of petitioner, without which the judgment would have little or no value. Petitioner's failure to deliver the specified out-of-state property to the court's receiver frustrated the state court much as the escape of a prisoner would frustrate it in attempting to review his conviction. Where the effectiveness of a money judgment is jeopardized by the judgment debtor, he has no constitutional right to an appeal extending that frustration. 24 The dismissal here is not regarded by us as a penalty imposed as a punishment for criminal contempt. It is an exercise of a state court's inherent power to use its processes to induce compliance with a supplemental order reasonably issued in aid of execution. Furthermore, the appeal was not summarily dismissed. Petitioner was allowed 15 days, after being adjudged in contempt, within which to purge itself. The propriety of the dismissal and its remedial nature are demonstrated by the situation in California. Two proceedings brought there by respondents to reach petitioner's assets in California evidently were frustrated by the insistence of the California courts that they would not entertain any suit on the Washington judgment while an appeal from that judgment was pending in Washington. 25 The supplemental proceeding indicated that the $298,000 in bonds, to which the court directed its order, constituted the only substantial asset from which payment of respondents' judgment might be realized and that this asset might be dissipated unless placed in protective custody. 26 In appraising the reasonableness of the State's order, it is noteworthy that the court did not seek to apply the bonds to the satisfaction of respondents' judgment. It merely directed petitioner to deliver them to the court's receiver for safekeeping. Petitioner's appeal was not dismissed because of petitioner's failure to satisfy a judgment pending an appeal from it. It was dismissed because of petitioner's failure to comply with the court's order to safeguard petitioner's assets from dissipation pending such appeal. 27 Viewing the dismissal of petitioner's appeal in the light of its reasonableness in sustaining the effectiveness of a state's judicial process, as against the rights of a judgment debtor, without filing a supersedeas bond, to refuse to comply with orders safeguarding the value of that judgment, we find nothing that violates due process of law. 28 The judgment of the Supreme Court of the State of Washington, accordingly, is affirmed. 29 Affirmed. 30 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS concurs, dissenting. 31 In Hovey v. Elliott, 167 U.S. 409, 17 S.Ct. 841, 42 L.Ed. 215, decided in 1897, this Court held that due process of law was denied by a trial court which had refused to permit a defendant to try his case on the merits merely because the defendant had disobeyed the court's order to pay into the court's registry money which was the subject matter of the controversy. This Court said that such a denial of all right to defend would convert the court into an instrument of wrong and oppression. The appeal here was dismissed by the Washington Supreme Court on the single ground that petitioner has disobeyed a court order to turn over certain bonds which were not even the subject matter of this lawsuit. I think the Hovey v. Elliott doctrine applies with equal force to this dismissal. True this Court has said that a state is not constitutionally required to provide a system of appellate court review. But since Washington has done so, proceedings in its supreme court are merely the final step in the judicial process in trying cases and therefore cannot be conducted so as to deny that 'due process' which the Fourteenth Amendment requires. Cole v. State of Arkansas, 333 U.S. 196, 201—202, 68 S.Ct. 514, 517, 92 L.Ed. 644, and cases there cited. And Washington also must abide by the Fourteenth Amendment's equal protection command in deciding who can and who cannot appeal. Cochran v. State of Kansas, 316 U.S. 255, 62 S.Ct. 1068, 86 L.Ed. 1453. 32 State legislatures have broad power to forbid varied types of conduct and to provide for punishment by courts. But the power to punish for violation of admittedly valid statutes is not unlimited. State punishments must not obliterate clearly granted federal rights. See, e.g., Hill v. State of Florida, 325 U.S. 538, 543, 65 S.Ct. 1373, 1375, 89 L.Ed. 1782. I suppose no one would contend that a defendant convicted of such conventional crimes as larceny or embezzlement could be punished by compelling him to give up his religious faith. The right of a person to be heard in his own defense stands on an equally firm constitutional base. In McVeigh v. United States, 11 Wall. 259, 267, 20 L.Ed. 80, this Court said that to deny an 'alien enemy' a right to defend himself 'would be a blot upon our jurisprudence and civilization.' It was there said that a constitutional right to defend is inseparable from a liability of be sued. And I can see no reason why the same principle is not equally applicable in each court where rights are passed upon. The appeal here was but a continuation of petitioner's defense which began in the trial court. But petitioner was denied any opportunity to defend itself in the appellate court because it had disobeyed a court order. By whatever other name it may be called, the dismissal was punishment. I do not think the Washington legislature could provide this kind of punishment for disobedience of a court order or for any other crime, and certainly the state court's power to do so is no greater than that of the state's legislature. Hovey v. Elliott, supra, 167 U.S. at pages 417—418, 17 S.Ct. at page 844, 42 L.Ed. 215. 33 In summary, petitioner having been haled into court as a defendant has been denied an opportunity to defend itself in a court that had power finally to decide whether petitioner should pay money to plaintiffs who sued. The purpose was punishment for an offense having no relation at all to the merits of the plaintiff's claim or to the petitioner's defense. From the beginning, due process and equal protection have meant that every defendant must be permitted to defend himself in any court where his antagonist can appear and prosecute. This right of defense belongs to all—good or bad, one who has violated laws the same as one who has not. I would reverse this case. 1 It stated: "Enclosed is a list of former members of the National Union of Marine Cooks and Stewards, who deserted this union during the 1948 maritime strike and attempted to organize a dual organization under the leadership of the Sailors Union of the Pacific for the purpose of breaking our strike and destroying our union. "While these renegades have been completely discredited and defeated, they may attempt to obtain employment in other sections of the industry, particularly when the fishing season opens. "This information is only for your guidance and formulation to your membership as to the constructive ways and means of carrying on a progressive labor organization." Arnold v. National Union, 36 Wash.2d 557, 559, 219 P.2d 121, 122. 2 To stay proceedings on appeal, a supersedeas bond for double the amount of the damages and costs would have been required. Wash.Rev.Code 1951, § 4.88.060. 3 Two confirmatory rulings had intervened: November 16, 1953—In this Court, petitioner's appeal from the adjudication of contempt in the supplemental proceeding was dismissed for want of a substantial federal question. 346 U.S. 881, 74 S.Ct. 136. February 2, 1954—In the Supreme Court, Harris' separate appeal, raising largely the same issues on the merits as petitioner's appeal, was heard and the judgment against him affirmed. Wash., 265 P.2d 1051. 4 '* * * 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.' U.S.Const. Amend. XIV, § 1. 5 The deprivation of a litigant's right to present a defense has been upheld, not as a punishment for contempt as prohibited in Hovey v. Elliott, supra, but rather as a result of the litigant's failure to produce evidence, his violation of a rule of procedure, or other action justifying a judgment of default against him. Hammond Packing Co. v. State of Arkansas, 212 U.S. 322, 349—354, 29 S.Ct. 370, 379—381, 53 L.Ed. 530; Peitzman v. City of Illmo, 8 Cir., 141 F.2d 956, 960—961. See also, Bennett v. Bennett, 208 U.S. 505, 514, 28 S.Ct. 356, 359, 52 L.Ed. 590; Young & Holland Co. v. Brande Bros., 1 Cir., 162 F. 663; Lawson v. Black Diamond Coal Mining Co., 44 Wash. 26, 86 P. 1120. 6 '* * * The difference between the want of power, on the one hand, to refuse to one in contempt the right to defend in the principal case on the merits, and the existence of the authority, on the other, to refuse to accord a favor to one in contempt, is clearly illustrated by the whole line of adjudicated cases. '* * * In affirming the judgment of the supreme court of Georgia (Allen v. State of Georgia, 166 U.S. 138, 140, 17 S.Ct. 525, 526, 41 L.Ed. 949), the court called attention to the distinction between the inherent right of defense secured by the due process of law clause of the constitution and the mere grace or favor giving authority to review a judgment by way of error or appeal. 'Whether, in the exercise of its power to punish for a contempt, a court would be justified in refusing to permit one in contempt to avail himself of a right granted by statute, where the refusal did not involve the fundamental right of one summoned in a cause to be heard in his defense, and where the one in contempt was an actor invoking the right allowed by statute, is a question not involved in this suit.' 167 U.S. at pages 423—424, 443, 444, 17 S.Ct. at page 847, 42 L.Ed. 215. 7 For a similar rule in custody cases, see Casebolt v. Butler, 175 Ky. 381, 194 S.W. 305; Lindsay v. Lindsay, 255 Ill. 442, 99 N.E. 608; Henderson v. Henderson, 329 Mass. 257, 107 N.E.2d 773. In civil actions, where the presence of a defendant within the jurisdiction of a court is essential to enforcement of its decree and he absents himself from that jurisdiction, dismissal of his appeal has been upheld. Bronk v. Bronk, 46 Fla. 474, 35 So. 870.

01

348 U.S. 26 75 S.Ct. 98 99 L.Ed. 27 Samuel BERMAN and Solomon H. Feldman, Executors of the State of Max R. Morris, Deceased, Appellants,v.Andrew PARKER, John A. Remon, James E. Colliflower, et al. No. 22. Argued Oct. 19, 1954. Decided Nov. 22, 1954. [Syllabus from pages 26-27 intentionally omitted] Messrs.James C. Toomey and Joseph H. Schneider, Washington, D.C., for appellants. Mr. Simon E. Sobeloff, Sol. Gen., Washington, D.C., for appellees. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is an appeal, 28 U.S.C. § 1253, 28 U.S.C.A. § 1253, from the judgment of a three-judge District Court which dismissed a complaint seeking to enjoin the condemnation of appellants' property under the District of Columbia Redevelopment Act of 1945, 60 Stat. 790, D.C.Code 1951, §§ 5—701 to 5—719. The challenge was to the constitutionality of the Act, particularly as applied to the taking of appellants' property. The District Court sustained the constitutionality of the Act. 117 F.Supp. 705. 2 By § 2 of the Act, Congress made a 'legislative determination' that 'owing to technological and sociological changes, obsolete lay-out, and other factors, conditions existing in the District of Columbia with respect to substandard housing and blighted areas, including the use of buildings in alleys as dwellings for human habitation, are injurious to the public health, safety, morals, and welfare, and it is hereby declared to be the policy of the United States to protect and promote the welfare of the inhabitants of the seat of the Government by eliminating all such injurious conditions by employing all means necessary and appropriate for the purpose'.1 3 Section 2 goes on to declare that acquisition of property is necessary to eliminate these housing conditions. 4 Congress further finds in § 2 that these ends cannot be attained 'by the ordinary operations of private enterprise alone without public participation'; that 'the sound replanning and redevelopment of an obsolescent or obsolescing portion' of the District 'cannot be accomplished unless it be done in the light of comprehensive and coordinated planning of the whole of the territory of the District of Columbia and its environs'; and that 'the acquisition and the assembly of real property and the leasing or sale thereof for redevelopment pursuant to a project area redevelopment plan * * * is hereby declared to be a public use.' 5 Section 4 creates the District of Columbia Redevelopment Land Agency (hereinafter called the Agency), composed of five members, which is granted power by § 5(a) to acquire and assemble, by eminent domain and otherwise, real property for 'the redevelopment of blighted territory in the District of Columbia and the prevention, reduction, or elimination of blighting factors or causes of blight'. 6 Section 6(a) of the Act directs the National Capital Planning Commission (hereinafter called the Planning Commission) to make and develop 'a comprehensive or general plan' of the District, including 'a land-use plan' which designates land for use for 'housing, business, industry, recreation, education, public buildings, public reservations, and other general categories of public and private uses of the land.' Section 6(b) authorizes the Planning Commission to adopt redevelopment plans for specific project areas. These plans are subject to the approval of the District Commissioners after a public hearing; and they prescribe the various public and private land uses for the respective areas, the 'standards of population density and building intensity', and 'the amount or character or class of any low-rent housing'. § 6(b). 7 Once the Planning Commission adopts a plan and that plan is approved by the Commissioners, the Planning Commission certifies it to the Agency. § 6(d). At that point, the Agency is authorized to acquire and assemble the real property in the area. Id. 8 After the real estate has been assembled, the Agency is authorized to transfer to public agencies the land to be devoted to such public purposes as streets, utilities, recreational facilities, and schools, § 7(a), and to lease or sell the remainder as an entirety or in parts to a redevelopment company, individual, or partnership. § 7(b), (f). The leases or sales must provide that the lessees or purchasers will carry out the redevelopment plan and that 'no use shall be made of any land or real property included in the lease or sale nor any building or structure erected thereon' which does not conform to the plan. §§ 7(d), 11. Preference is to be given to private enterprise over public agencies in executing the redevelopment plan. § 7(g). 9 The first project undertaken under the Act relates to Project Area B in Southwest Washington, D.C. In 1950 the Planning Commission prepared and published a comprehensive plan for the District. Surveys revealed that in Area B, 64.3% of the dwellings were beyond repair, 18.4% needed major repairs, only 17.3% were satisfactory; 57.8% of the dwellings had outside toilets, 60.3% had no baths, 29.3% lacked electricity, 82.2% had no wash basins or laundry tubs, 83.8% lacked central heating. In the judgment of the District's Director of Health it was necessary to redevelop Area B in the interests of public health. The population of Area B amounted to 5,012 persons, of whom 97.5% were Negroes. 10 The plan for Area B specifies the boundaries and allocates the use of the land for various purposes. It makes detailed provisions for types of dwelling units and provides that at least one-third of them are to be low-rent housing with a maximum rental of $17 per room per month. 11 After a public hearing, the Commissioners approved the plan and the Planning Commission certified it to the Agency for execution. The Agency undertook the preliminary steps for redevelopment of the area when this suit was brought. 12 Appellants own property in Area B at 712 Fourth Street, S.W. It is not used as a dwelling or place of habitation. A department store is located on it. Appellants object to the appropriation of this property for the purposes of the project. They claim that their property may not to taken constitutionally for this project. It is commercial, not residential property; it is not slum housing; it will be put into the project under the management of a private, not a public, agency and redeveloped for private, not public, use. That is the argument; and the contention is that appellants' private property is being taken contrary to two mandates of the Fifth Amendment—(1) 'No person shall * * * be deprived of * * * property, without due process of law'; (2) 'nor shall private property be taken for public use, without just compensation.' To take for the purpose of ridding the area of slums is one thing; it is quite another, the argument goes, to take a man's property merely to develop a better balanced, more attractive community. The District Court, while agreeing in general with that argument, saved the Act by construing it to mean that the Agency could condemn property only for the reasonable necessities of slum clearance and prevention, its concept of 'slum' being the existence of conditions 'injurious to the public health, safety, morals and welfare.' 117 F.Supp. 705, 724—725. 13 The power of Congress over the District of Columbia includes all the legislative powers which a state may exercise over its affairs. See District of Columbia v. John R. Thompson Co., 346 U.S. 100, 108, 73 S.Ct. 1007, 1011, 97 L.Ed. 1480. We deal, in other words, with what traditionally has been known as the police power. An attempt to define its reach or trace its outer limits is fruitless, for each case must turn on its own facts. The definition is essentially the product of legislative determinations addressed to the purposes of government, purposes neither abstractly nor historically capable of complete definition. Subject to specific constitutional limitations, when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive. In such cases the legislature, not the judiciary, is the main guardian of the public needs to be served by social legislation, whether it be Congress legislating concerning the District of Columbia, see Block v. Hirsh, 256 U.S. 135, 41 S.Ct. 458, 65 L.Ed. 865, or the States legislating concerning local affairs. See Olsen v. State of Nebraska, 313 U.S. 236, 61 S.Ct. 862, 85 L.Ed. 1305; Lincoln Federal Labor Union No. 19129, A.F. of L. v. Northwestern Co., 335 U.S. 525, 69 S.Ct. 251, 93 L.Ed. 212; California State Ass'n Inter-Ins. Bureau v. Maloney, 341 U.S. 105, 71 S.Ct. 601, 95 L.Ed. 788. This principle admits of no exception merely because the power of eminent domain is involved. The role of the judiciary in determining whether that power is being exercised for a public purpose is an extremely narrow one. See Old Dominion Land Co. v. United States, 269 U.S. 55, 66, 46 S.Ct. 39, 40, 70 L.Ed. 162; United States ex rel. Tennessee Valley Authority v. Welch, 327 U.S. 546, 552, 66 S.Ct. 715, 718, 90 L.Ed. 843. 14 Public safety, public health, morality, peace and quiet, law and order—these are some of the more conspicuous examples of the traditional application of the police power to municipal affairs. Yet they merely illustrate the scope of the power and do not delimit it. See Noble State Bank v. Haskell, 219 U.S. 104, 111, 31 S.Ct. 186, 188, 55 L.Ed. 112. Miserable and disreputable housing conditions may do more than spread disease and crime and immorality. They may also suffocate the spirit by reducing the people who live there to the status of cattle. They may indeed make living an almost insufferable burden. They may also be an ugly sore, a blight on the community which robs it of charm, which makes it a place from which men turn. The misery of housing may despoil a community as an open sewer may ruin a river. 15 We do not sit to determine whether a particular housing project is or is not desirable. The concept of the public welfare is broad and inclusive. See Day-Brite Lighting, Inc. v. State of Missouri, 342 U.S. 421, 424, 72 S.Ct. 405, 407, 96 L.Ed. 469. The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled. In the present case, the Congress and its authorized agencies have made determinations that take into account a wide variety of values. It is not for us to reappraise them. If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way. 16 Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end. See Luxton v. North River Bridge Co., 153 U.S. 525, 529—530, 14 S.Ct. 891, 892, 38 L.Ed. 808; United States v. Gettysburg Electric R. Co., 160 U.S. 668, 679, 16 S.Ct. 427, 429, 40 L.Ed. 576. Once the object is within the authority of Congress, the means by which it will be attained is also for Congress to determine. Here one of the means chosen is the use of private enterprise for redevelopment of the area. Appellants argue that this makes the project a taking from one businessman for the benefit of another businessman. But the means of executing the project are for Congress and Congress alone to determine, once the public purpose has been established. See Luxton v. North River Bridge Co., supra; cf. Highland v. Russell Car Co., 279 U.S. 253, 49 S.Ct. 314, 73 L.Ed. 688. The public end may be as well or better served through an agency of private enterprise than through a department of government—or so the Congress might conclude. We cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects. What we have said also disposes of any contention concerning the fact that certain property owners in the area may be permitted to repurchase their properties for redevelopment in harmony with the overall plan. That, too, is a legitimate means which Congress and its agencies may adopt, if they choose. 17 In the present case, Congress and its authorized agencies attack the problem of the blighted parts of the community on an area rather than on a structure-by-structure basis. That, too, is opposed by appellants. They maintain that since their building does not imperil health or safety nor contribute to the making of a slum or a blighted area, it cannot be swept into a redevelopment plan by the mere dictum of the Planning Commission or the Commissioners. The particular uses to be made of the land in the project were determined with regard to the needs of the particular community. The experts concluded that if the community were to be healthy, if it were not to revert again to a blighted or slum area, as though possessed of a congenital disease, the area must be planned as a whole. It was not enough, they believed, to remove existing buildings that were insanitary or unsightly. It was important to redesign the whole area so as to eliminate the conditions that cause slums—the overcrowding of dwellings, the lack of parks, the lack of adequate streets and alleys, the absence of recreational areas, the lack of light and air, the presence of outmoded street patterns. It was believed that the piecemeal approach, the removal of individual structures that were offensive, would be only a palliative. The entire area needed redesigning so that a balanced, integrated plan could be developed for the region, including not only new homes but also schools, churches, parks, streets, and shopping centers. In this way it was hoped that the cycle of decay of the area could be controlled and the birth of future slums prevented. Cf. Gohld Realty Co. v. City of Hartford, 141 Conn. 135, 141—144, 104 A.2d 365, 368—370; Hunter v. Norfolk Redevelopment Authority, 195 Va. 326, 338—339, 78 S.E.2d 893, 900—901. Such diversification in future use is plainly relevant to the maintenance of the desired housing standards and therefore within congressional power. 18 The District Court below suggested that, if such a broad scope were intended for the statute, the standards contained in the Act would not be sufficiently definite to sustain the delegation of authority. 117 F.Supp. 705, 721. We do not agree. We think the standards prescribed were adequate for executing the plan to eliminate not only slums as narrowly defined by the District Court but also the blighted areas that tend to produce slums. Property may of course be taken for this redevelopment which, standing by itself, is innocuous and unoffending. But we have said enough to indicate that it is the need of the area as a whole which Congress and its agencies are evaluating. If owner after owner were permitted to resist these redevelopment programs on the ground that his particular property was not being used against the public interest, integrated plans for redevelopment would suffer greatly. The argument pressed on us is, indeed, a plea to substitute the landowner's standard of the public need for the standard prescribed by Congress. But as we have already stated, community redevelopment programs need not, by force of the Constitution, be on a piecemeal basis—lot by lot, building by building. 19 It is not for the courts to oversee the choice of the boundary line nor to sit in review on the size of a particular project area. Once the question of the public purpose has been decided, the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch. See Shoemaker v. United States, 147 U.S. 282, 298, 13 S.Ct. 361, 390, 37 L.Ed. 170; United States ex rel. Tennessee Valley Authority v. Welch, supra, 327 U.S. at page 554, 66 S.Ct. at page 718; United States v. Carmack, 329 U.S. 230, 247, 67 S.Ct. 252, 260, 91 L.Ed. 209. 20 The District Court indicated grave doubts concerning the Agency's right to take full title to the land as distinguished from the objectionable buildings located on it. 117 F.Supp. 705, 715—719. We do not share those doubts. If the Agency considers it necessary in carrying out the redevelopment project to take full title to the real property involved, it may do so. It is not for the courts to determine whether it is necessary for successful consummation of the project that unsafe, unsightly, or insanitary buildings alone be taken or whether title to the land be included, any more than it is the function of the courts to sort and choose among the various parcels selected for condemnation. 21 The rights of these property owners are satisfied when they receive that just compensation which the Fifth Amendment exacts as the price of the taking. 22 The judgment of the District Court, as modified by this opinion, is affirmed. 23 Affirmed. 1 The Act does not define either 'slums' or 'blighted areas.' Section 3(r), however, states: "Substandard housing conditions' means the conditions obtaining in connection with the existence of any dwelling, or dwellings, or housing accommodations for human beings, which because of lack of sanitary facilities, ventilation, or light, or because of dilapidation, overcrowding, faulty interior arrangement, or any combination of these factors, is in the opinion of the Commissioners detrimental to the safety, health, morals, or welfare of the inhabitants of the District of Columbia.'

34

348 U.S. 48 75 S.Ct. 151 99 L.Ed. 59 LUMBERMEN'S MUTUAL CASUALTY COMPANY, Petitioner,v.Florence R. ELBERT. No. 11. Argued Oct. 14, 1954. Decided Dec. 6, 1954. Mr.Charles L. Mayer, Shreveport, La., for petitioner. Messrs. John M. Madison, Whitfield Jack, Shrevoport, La., for respondent. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 This case concerns the Louisiana direct action statute. This Court has today had occasion to test that statute against certain claims of unconstitutionality, Watson v. Employers Liability Assurance Corp., 348 U.S. 66, 75 S.Ct. 166.1 Questions are raised here involving the diversity jurisdiction of the federal courts in cases arising under the statute. 2 Respondent, a citizen of Louisiana, was injured in an automobile accident at Shreveport, Louisiana, allegedly because of the negligence of Mrs. S. W. Bowen, also a Louisiana citizen. Petitioner, an Illinois corporation, had issued a public liability policy to Mr. Bowen insuring him and members of his household against claims arising from their negligent operation of the family car. The policy was applied for, issued, and delivered within the State of Louisiana. Petitioner was certificated to do business in Louisiana and had, as a legal prerequisite thereto, consented in writing to be sued directly for damages sustained in Louisiana accidents involving its policyholders. 3 The pertinent portion of the direct action statute provides: 4 'The injured person or his or her heirs, at their option, shall have a right of direct action against the insurer within the terms and limits of the policy in the parish where the accident or injury occurred or in the parish where the insured has his domicile, and said action may be brought against the insurer alone or against both the insured and the insurer, jointly and in solido.' LSA Rev.Stat., Tit. 22, § 655. (Italics added.) 5 Pursuant to this provision, respondent brought this action against petitioner in the United States District Court for the Western District of Louisiana, alleging diversity of citizenship and damages in excess of $3,000. Mrs. Bowen, the alleged tortfeasor, was not made a codefendant. Petitioner moved to dismiss the complaint for lack of federal jurisdiction; the district judge granted the motion. 107 F.Supp. 299, 108 F.Supp. 157. The Court of Appeals, 201 F.2d 500; 202 F.2d 744, reversed and remanded the case to the District Court for trial, one judge dissenting from the denial of a petition for rehearing. From that decision, this Court granted certiorari, 347 U.S. 965, 74 S.Ct. 773. Thus, the sole question to be decided is whether the United States District Court in Louisiana has jurisdiction over this suit for damages brought under the direct action statute against the wrongdoer's insurer alone, where diversity of citizenship exists between the complainant and the defendant insurer but not between the complainant and the wrongdoer. 6 Section 1332(a) of the Judicial Code, 28 U.S.C. § 1332(a), 28 U.S.C.A. § 1332(a), reads as follows: 7 'The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $3,000 exclusive of interest and costs, and is between: 8 '(1) Citizens of different States * * *.' 9 It is petitioner's contention that the 'matter in controversy' here is the underlying tort liability of the alleged wrongdoer. If this were true, of course, no diversity of citizenship would exist between respondent and Mrs. Bowen, as the real party-defendant in interest. But the Louisiana courts have differentiated between actions brought by an injured party against the insurer alone and those brought against either the tortfeasor alone or together with the insurer. In the former action, the insurer is foreclosed from asserting defenses such as coverture, normally available to the tortfeasor. Edwards v. Royalty Indemnity Co., 182 La. 171, 161 So. 191. Similarly, the insurer is severely restricted in advancing technical defenses based upon the terms of the policy, such as a failure of notice, when the injured party brings a direct action. Jackson v. State Farm Mutual Automobile Ins. Co., 211 La. 19, 29 So.2d 177. While either type of action encompasses proof of the tortfeasor's negligence, in the separate suit against the insurer a plaintiff must also establish liability under the policy. The Louisiana courts have characterized the statute as creating a separate and distinct cause of action against the insurer which an injured party may elect in lieu of his action against the tortfeasor. West v. Monroe Bakery, 217 La. 189, 46 So.2d 122; Jackson v. State Farm Mutual Automobile Ins. Co., supra. 10 Petitioner is therefore not merely a nominal defendant but is the real party in interest here. This conclusion to disregard the tortfeasor's citizenship in the instant case for purposes of federal jurisdiction is fortified by cases honoring the states' characterization of a guardian or other fiduciary as determinative of the real party in interest in federal litigation. New Orleans v. Gaines's Administrator, 138 U.S. 595, 11 S.Ct. 428, 34 L.Ed. 1102; Mexican Central R. Co. v. Eckman, 187 U.S. 429, 23 S.Ct. 211, 47 L.Ed. 245. There is even greater justification for disregarding the tortfeasor's citizenship here than for disregarding the citizenship of a beneficiary since the insurer unlike a fiduciary—has a direct financial interest in the outcome of this litigation. 11 Petitioner next asserts that the tortfeasor is an indispensable party to this litigation, and that failure to join her as a defendant deprives the federal court of jurisdiction. Clearly under the Louisiana statute and practice the argument has no merit.2 And the circumstances which have led the federal courts to findings of indispensability are not present here. In Shields v. Barrow, 17 How. 130, 139, 15 L.Ed. 158, indispensable parties were defined as 'Persons who not only have an interest in the controversy, but 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.'3 The tortfeasor in a Louisiana direct action against the insurer is not such a person. The state has created an optional right to proceed directly against the insurer; by bringing the action against petitioner, respondent has apparently abandoned her action against the tortfeasor.4 See Miller v. Commercial Standard Ins. Co., 199 La. 155, 526, 6 So.2d 646, 649. Thus a complete disposition of the entire claim may be made in this one action, without injustice to any of the participants. 12 Finally, petitioner contends that the federal courts should decline, as a matter of discretion, to exercise their jurisdiction over suits against an insurer alone. This argument is based upon the differing standards of review on appeal of a jury verdict in the Louisiana and federal courts.5 Petitioner relies upon Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424, as authority for the suggested discretionary refusal to exercise jurisdiction.6 But in Burford, jurisdiction was declined to avoid a potential interference with a state's administrative policy-making process, a consideration not present here. Moreover, traditional equitable authority, not available here, was relied upon to justify the holding. 13 The language of the congressional grant of jurisdiction to the lower courts, 28 U.S.C. § 1332(a), 28 U.S.C.A. § 1332(a), is clear, and this case seems to us to fall squarely within the provision. In Louisiana the practice of bringing direct actions in the federal courts has long been recognized. See e.g., New Amsterdam Casualty Co. v. Soileau, 5 Cir., 167 F.2d 767, 6 A.L.R.2d 128, certiorari denied, 335 U.S. 822, 69 S.Ct. 45, 93 L.Ed. 376; Bankers Indemnity Ins. Co. v. Green, 5 Cir., 181 F.2d 1; Belanger v. Great American Indemnity Co., 5 Cir., 188 F.2d 196. Neither federal nor Louisiana law suggests any reason to disturb this practice. The decision of the Court of Appeals is affirmed. 14 Affirmed. 15 Mr. Justice FRANKFURTER, concurring. 16 Not deeming it appropriate now to question Meredith v. City of Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9, I join the Court's opinion. But our holding results in such a glaring perversion of the purpose to which the original grant of diversity jurisdiction was directed that it ought not to go without comment, as further proof of the mounting mischief inflicted on the federal judicial system by the unjustifiable continuance of diversity jurisdiction. 17 The stuff of diversity jurisdiction is state litigation. The availability of federal tribunals for controversies concerning matters which in themselves are outside federal power and exclusively within state authority, is the essence of a jurisdiction solely resting on the fact that a plaintiff and a defendant are citizens of different States. The power of Congress to confer such jurisdiction was based on the desire of the Framers to assure out-of-state litigants courts free from susceptibility to potential local bias. That the supposed justification for this fear was not rooted in weighty experience is attested by the fact that so ardent a nationalist as Marshall gave that proposal of the Philadelphia Convention only tepid support in the Virginia Convention. 3 Elliot's Debates 556 (1891). But in any event, whatever 'fears and apprehensions'* were entertained by the Framers and ratifiers, there was fear that parochial prejudice by the citizens of one State toward those of another, as well as toward aliens, would lead to unjust treatment of citizens of other States and foreign countries. 18 Such was the reason for enabling a citizen of one State to press a claim or stand on a defense, wholly state-created, against a citizen of another in a federal court of the latter's State. The abuses to which this opportunity was put when, more than a hundred years ago, corporations began their transforming influence on American economic and social life are familiar history. Their classic exposition in Gerard C. Henderson's Position of Foreign Corporations in American Constitutional Law has lost neither its vividness nor force during the intervening decades. The short of the matter is that by resorting to the federal courts the out-of-state corporation sought to gain, and much too frequently did, an advantage as against the local citizen. Instead of protecting out-of-state litigants against discrimination by state courts, the effect of diversity jurisdiction was discrimination against citizens of the State in favor of litigants from without the State. 19 Diversity jurisdiction aroused opposition from its very inception, but the modern manifestation of these evils through corporate litigation gathered increasing hostility and led to repeated congressional attempts at restriction and eventually of abolition. The proliferation of the doctrine of Swift v. Tyson, 16 Pet. 1, 10 L.Ed. 865, brought into lurid light the discriminatory distortions to which diversity jurisdiction could be subverted by judicial sanction of professional astuteness. The growing sense of the injustice of these developments and its serious hurt to the prestige of the federal courts in the exercise of their essential jurisdiction, came to a head with the decision in Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab Co., 276 U.S. 518, 48 S.Ct. 404, 72 L.Ed. 681. The federal courts became the target of acrimonious political controversy. In the course of our history this was not the first time that diversity jurisdiction played the federal courts an ill turn. Again and again in the 60's and the 70's and the 80's such a conflict had flared up, but in the earlier periods it was by way of being a conflict between the financial East and the agrarian West. This time President Hoover's Attorney General and Senator George W. Norris of Nebraska united against the disclosed evils of diversity jurisdiction. 20 Attorney General Mitchell urged on Congress a measure whereby a corporation should be deemed, for diversity purposes, a citizen of any State in which it carries on business 'as respect all suits brought within that State between itself and residents thereof and arising out of the business carried on in such State.' Hearings before Subcommittee of Senate Committee on the Judiciary on S. 937, S. 939 and S. 3243, 72d Cong., 1st Sess. 4. At the same time, the Senate Judiciary Committee, under the leadership of Chairman Norris, went further. Twice it reported bills for the abolition of diversity jurisdiction. S. Rep. No. 691, 71st Cong., 2d Sess.; S. Rep. No. 530, 72d Cong., 1st Sess. Legislative attempts at correction have thus far failed. But by overruling the doctrine of Swift v. Tyson, despite its century-old credentials, this Court uprooted the most noxious weeds that had grown around diversity jurisdiction. What with the increasing permeation of national feeling and the mobility of modern life, little excuse is left for diversity jurisdiction, now that Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, has put a stop to the unwarranted freedom of federal courts to fashion rules of local law in defiance of local law. 21 A legal device like that of federal diversity jurisdiction which is inherently, as I believe it to be, not founded in reason, offers constant temptation to new abuses. This case is an instance. Here we have not an out-of-state litigant resorting to a federal court to be sure of obtaining for himself the same treatment which state courts mete out to their own citizens. Here we have a Louisiana citizen resorting to the federal court in Louisiana in order to avoid consequences of the Louisiana law by which every Louisiana citizen is bound when suing another Louisiana citizen. If Florence R. Elbert, the present plaintiff, had to sue the owner of the offending automobile which caused her injury, or if she were suing an insurance company chartered by Louisiana, she would have no choice but to go, like every other Louisiana plaintiff who sues a fellow citizen of Louisiana, to a Louisiana state court and receive the law as administered by the Louisiana courts. But by the fortuitous circumstance that this Louisiana litigant could sue directly an out-of-state insurance company, she can avoid her amenability to Louisiana law. In concrete terms, she can cash in on the law governing jury trials in the federal courts, with its restrictive appellate review of jury verdicts, and escape the rooted jurisprudence of Louisiana law in reviewing jury verdicts. There is, to be sure, a kind of irony for corporate defendants to discover that two can play at the game of working, to use a colloquial term, the perverse potentialities of diversity jurisdiction. But it is not the less unreason and no greater fairness for a citizen of the forum to gain a discriminatory advantage over fellow citizens of his State, than it is for an out-of-state citizen to secure more than the same treatment given local citizens, by going to a federal court for the adjudication of state-created rights. 22 This case, however, stirs anew an issue that cuts deeper than the natural selfishness of litigants to exploit the law's weaknesses. My concern is with the bearing of diversity jurisdiction on the effective functioning of the federal judiciary. Circuit Judge Rives agreed with the district judge that this kind of action has no business in a federal court. In dissenting from denial of the petition for rehearing, he stated with impressive bluntness the effect on the work of the federal and state courts in allowing diversity jurisdiction to be put to such purposes: 23 'On the original hearing, I had strong misgivings which were submitted to my brothers, but I was unable to crystallize my thinking clearly enough to justify a dissent. Continued consideration of the question has convinced me that there is something fundamentally wrong with our legal theories when they permit the great bulk of the casualty damage suit litigation in Louisiana to clog the dockets of the federal courts, while, I understand, some of the state judges actually do not have enough litigation to keep them busy.' Elbert v. Lumbermen's Mutual Casualty Co., 202 F.2d 744. 24 In Louisiana, plaintiffs in negligence suits have suddenly found the federal courts their protectors and insurance companies have discovered the virtues of the state courts. In New York, insurance companies run to cover in the federal courts and plaintiffs feel outraged by the process of attrition in enforcing their claims, due to a delay of from three to four years before a case can come to trial. As to both situations, the vice is the availability of diversity jurisdiction. What is true of New York is true, in varying degrees, of every big center. 25 Diversity cases have long constituted a considerable portion of all civil cases filed in the federal courts. For the last ten years the proportion of diversity cases has greatly increased, so that it is safe to say that diversity cases are now taking at least half of the time that the District Courts are devoting to civil cases. (This is the conclusion of the Division of Procedural Studies and Statistics of the Administrative Office of the United States Courts.) The rise in motor-vehicle registration from 32 million in 1940 to 56 million in 1953 has inevitably been reflected in increasing resort to diversity jurisdiction in ordinary negligence suits. The consequences that this entails for the whole federal judicial system—for increase in the business of the District Courts means increase in the business of the Courts of Appeals and a swelling of the petitions for certiorari here—cannot be met by a steady increase in the number of federal judges. The business of courts, particularly of the federal courts, is drastically unlike the business of factories. The function and role of the federal courts and the nature of their judicial process involve impalpable factors, subtle but far-reaching, which cannot be satisfied by enlarging the judicial plant. A recent report of the House Committee on the Judiciary proposed an increase of the required amount in controversy for jurisdiction of the federal courts from $3,000 to $10,000. Referring to the consequences of 'a tremendous increase in the number of cases filed,' it felt that appointment of additional judges 'has done much to alleviate the problem' but recognized that merely multiplying judges is no solution. See H.R.Rep. No. 1506, 82d Cong., 2d Sess. 1. In the farthest reaches of the problem a steady increase in judges does not alleviate; in my judgment, it is bound to depreciate the quality of the federal judiciary and thereby adversely to affect the whole system. 26 Since diversity jurisdiction is increasingly the biggest source of the civil business of the District Courts, the continuance of that jurisdiction will necessarily involve inflation of the number of the district judges. This in turn will result, by its own Gresham's law, in a depreciation of the judicial currency and the consequent impairment of the prestige and of the efficacy of the federal courts. Madison believed that Congress would return to the state courts judicial power entrusted to the federal courts 'when they find the tribunals of the states established on a good footing.' 3 Elliot's Debates 536 (1891). Can it fairly be said that state tribunals are not now established on a sufficiently 'good footing' to adjudicate state litigation that arises between citizens of different States, including the artificial corporate citizens, when they are the only resort for the much larger volume of the same type of litigation between their own citizens? Can the state tribunals not yet be trusted to mete out justice to nonresident litigants; should resident litigants not be compelled to trust their own state tribunals? In any event, is it sound public policy to withdraw from the incentives and energies for reforming state tribunals, where such reform is needed, the interests of influential groups who through diversity litigation are now enabled to avoid state courts? 1 See also McDowell v. National Surety Corp., La.App., 68 So.2d 189, appeal dismissed, 347 U.S. 995, 74 S.Ct. 867. 2 Two proposals for compulsory joinder of insured and insurer as party-defendants have failed of passage in the Louisiana Legislature within recent years. See La. Senate Bill 73, 1952 Session; La. House Bill 600, 1954 Session. 3 See also 3 Moore's Federal Practice (2d ed. 1948), 19.07 et seq.; Note, Indispensable Parties in the Federal Courts, 65 Harv.L.Rev. 1050 (1952). 4 No case has been cited, although there has been nearly a quarter-century of experience under the direct action statute, where an injured party has attempted to bring suit against the tortfeasor following an unsuccessful suit against the insurer in either state or federal courts. 5 Appellate review in the federal courts is, of course, limited ultimately by the Seventh Amendment. Parsons v. Bedford, Breedlove & Robeson, 3 Pet. 433, 7 L.Ed. 7321. In Louisiana, appellate review in civil cases extends to both matters of law and fact. See La.Const., Art. 7, §§ 10, 29. 6 See also Commonwealth of Pennsylvania v. Williams, 294 U.S. 176, 55 S.Ct. 380, 79 L.Ed. 841; Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407; Alabama Public Service Commission v. Southern R. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002, cited in the dissenting opinion below. See Meredith v. City of Winter Haven, 320 U.S. 228, 234, 236, 237, 64 S.Ct. 7, 10, 11, 12, 88 L.Ed. 9. * 'However true the fact may be, that the tribunals of the states will administer justice as impartially as those of the nation, to parties of every description, it is not less true that the constitution itself either entertains apprehensions on this subject, or views with such indulgence the possible fears and apprehensions of suitors, that it has established national tribunals for the decision of controversies between aliens and a citizen, or between citizens of different states.' Bank of the United States v. Deveaux, 5 Cranch 61, 87, 3 L.Ed. 38.

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348 U.S. 115 75 S.Ct. 148 99 L.Ed. 145 L. L. MOORE, Petitioner,v.MEAD'S FINE BREAD COMPANY, a Corporation. No. 121. Argued Nov. 17, 1954. Decided Dec. 6, 1954. Rehearing Denied Jan. 31, 1955. See 348 U.S. 932, 75 S.Ct. 334. Messrs. Lynell G. Skarda, Dee C. Blythe, Clovis, N.M., for petitioner. Mr. Edward W. Napier, Lubbock, Tex., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is a suit for treble damages, 38 Stat. 731, 15 U.S.C. § 15, 15 U.S.C.A. § 15, brought for violations of § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. § 13(a), 15 U.S.C.A. § 13(a), and of § 3 of the Robinson-Patman Act, 15 U.S.C. § 13a, 15 U.S.C.A. § 13a. The jury found for petitioner; the Court of Appeals reversed, 10 Cir., 208 F.2d 777; and we granted certiorari, 347 U.S. 1012, 74 S.Ct. 877, because of the importance of the question of law presented.1 2 Petitioner was engaged in the bakery business at Santa Rosa, New Mexico, none of his activities being interstate in character. Respondent is a corporation in the baking business at Clovis, New Mexico. It is one of several corporations having interlocking ownership and management, all in the Mead family and associates. These corporations maintain plants at Lubbock and Big Spring, Texas, and at Hobbs, Roswell, and Clovis, New Mexico. They all market their bread under the name 'Mead's Fine Bread' and promote the product through a common advertising program. These corporations purchase their flour and bread wrappers as a unit. Respondent sells bread in Farwell, Texas, a town which it serves with a bread truck operating out of Clovis, New Mexico. 3 For some months, petitioner and respondent were in competition in Santa Rosa. There is evidence that, on the threat of petitioner to move his bakery to another town, the local Santa Rosa merchants agreed to purchase petitioner's products exclusively. Respondent, labeling that action a boycott, cut the wholesale price of bread in Santa Rosa from 14 cents to 7 cents for a pound loaf and from 21 cents to 11 cents for a pound-and-a-half loaf. The Mead companies did not cut the prices of bread in any other town; and respondent did not cut its prices of bread in Farwell, Texas. 4 The price war continued from September 1948 to April 1949, and as a result petitioner was forced to close his business. 5 The Court of Appeals reversed the judgment for petitioner on the ground that the injury resulting from the price cutting was to a purely local competitor whose business was in no way related to interstate commerce. 'If competition was lessened or a monopoly created,' said the Court of Appeals, 'it was purely local in its scope and effect and in no way related to or affected interstate commerce.' 208 F.2d 777, 780. 6 Section 2(a) of the Clayton Act, as amended, 15 U.S.C. § 13(a), 15 U.S.C.A. § 13(a), provides in part: 7 'It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States * * * and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them * * *.' 8 Section 3 of the Robinson-Patman Act, 15 U.S.C. § 13a, 15 U.S.C.A. § 13a, provides in part: 9 'It shall be unlawful for any person engaged in commerce, in the course of such commerce, * * * to sell * * * goods in any part of the United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor in such part of the United States; or, to sell * * * goods at unreasonably low prices for the purpose of destroying competition or eliminating a competitor.' 10 Those sections on their face seem to cover the instant case. Respondent is engaged in commerce, selling bread both locally and interstate. In the course of such business, it made price discriminations, maintaining the price in the interstate transactions and cutting the price in the intrastate sales. The destruction of a competitor was plainly established, as required by the amended § 2(a) of the Clayton Act; and the evidence to support a finding of purpose to eliminate a competitor, as required by § 3 of the Robinson-Patman Act, was ample.2 11 The Court of Appeals read the antitrust laws as reaching local transactions only where: (1) the local restraint has an effect on the free flow of interstate trade or commerce, e.g., Wickard v. Filburn, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122; or (2) the restraint on or the monopoly of local trade is effected through the utilization of interstate mechanisms, e.g., Lorain Journal Co. v. United States, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162; or (3) local prices are fixed by the use of interstate commercial transactions, e.g., United States v. Frankfort Distilleries, 324 U.S. 293, 65 S.Ct. 661, 89 L.Ed. 951; or (4) the discriminatory sales are to purchasers who compete in interstate commerce, e.g., Corn Products Refining Co. v. Federal Trade Commission, 324 U.S. 726, 65 S.Ct. 961, 89 L.Ed. 1320; or (5) interstate commerce is in some other way used to destroy competition or is injured or impaired as a result of unlawful acts. 12 We think that the practices in the present case are also included within the scope of the antitrust laws. We have here an interstate industry increasing its domain through outlawed competitive practices. The victim, to be sure, is only a local merchant; and no interstate transactions are used to destroy him. But the beneficiary is an interstate business; the treasury used to finance the warfare is drawn from interstate, as well as local, sources which include not only respondent but also a group of interlocked companies engaged in the same line of business; and the prices on the interstate sales, both by respondent and by the other Mead companies, are kept high while the local prices are lowered. If this method of competition were approved, the pattern for growth of monopoly would be simple. As long as the price warfare was strictly intrastate, interstate business could grow and expand with impunity at the expense of local merchants. The competitive advantage would then be with the interstate combines, not by reason of their skills or efficiency but because of their strength and ability to wage price wars. The profits made in interstate activities would underwrite the losses of local price-cutting campaigns. No instrumentality of interstate commerce would be used to destroy the local merchant and expand the domain of the combine. But the opportunities afforded by interstate commerce would be employed to injure local trade. Congress, as guardian of the Commerce Clause, certainly has power to say that those advantages shall not attach to the privilege of doing an interstate business. 13 This type of price cutting was held to be 'foreign to any legitimate commercial competition' even prior to the Robinson-Patman Act. See Porto Rican American Tobacco Co. of Porto Rico v. American Tobacco Co., 2 Cir., 30 F.2d 234, 237. It seems plain to us that Congress went at least that far in the Robinson-Patman Act. As we have shown, the facts charged and found read upon the words of the statute. And the history of the Act shows it was designed to have the reach now claimed for it by petitioner. Congressman Utterback, manager of the bill in the House, included this type of case in the price cutting that he claimed was outlawed: 14 'Where, however, a manufacturer sells to customers both within the State and beyond the State, he may not favor either to the disadvantage of the other; he may not use the privilege of interstate commerce to the injury of his local trade, nor may he favor his local trade to the injury of his interstate trade. The Federal power to regulate interstate commerce is the power both to limit its employment to the injury of business within the State, and to protect interstate commerce itself from injury by influences within the State.' 80 Cong.Rec. 9417. 15 It is, we think, clear that Congress by the Clayton Act and Robinson-Patman Act barred the use of interstate business to destroy local business, outlawing the price cutting employed by respondent. 16 Other points are pressed on us by respondent in support of the judgment of the Court of Appeals. But we have examined them and found them not substantial. We therefore reverse the judgment of the Court of Appeals and affirm the judgment of the District Court. 17 So ordered. 18 Judgment of Court of Appeals reversed; judgment of District Court affirmed. 1 The case first reached the Court of Appeals on appeal from a dismissal of the action at the close of plaintiff's case. The Court of Appeals affirmed, holding that the suit was precluded by petitioner's own illegal acts which initiated the alleged price discrimination. 10 Cir., 184 F.2d 338. We granted a petition for certiorari, vacated that judgment, and remanded the case to the Court of Appeals for further consideration in light of Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U.S. 211, 71 S.Ct. 259, 95 L.Ed. 219. See Moore v. Mead Service Co., 340 U.S. 944, 71 S.Ct. 528, 95 L.Ed. 681. On reconsideration, the Court of Appeals receded from its former position, reversed the judgment dismissing the complaint, and remanded the case for trial. 10 Cir., 190 F.2d 540. 2 Respondent contends that the so-called boycott justified its price cutting. In Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U.S. 211, 214, 71 S.Ct. 259, 261, 95 L.Ed. 219, we said, 'If petitioner and others were guilty of infractions of the antitrust laws, they could be held responsible in appropriate proceedings brought against them by the Government or by injured private persons. The alleged illegal conduct of petitioner, however, could not legalize the unlawful combination by respondents nor immunize them against liability to those they injured.' We need not pursue the matter, for respondent obtained a charge on this phase of the case as to which it cannot complain. The District Court charged the jury that respondent would not be liable if the price cutting was 'for the purpose of regaining its own market or of re-establishing competition and not to destroy competition or to eliminate a competitor.'

78

348 U.S. 61 75 S.Ct. 191 99 L.Ed. 68 Latham CASTLE, Attorney General of the State of Illinois, et al., Petitioners,v.HAYES FREIGHT LINES, Inc. No. 44. Argued Nov. 17, 1954. Decided Dec. 6, 1954. Mr.John L. Davidson, Jr., Springfield, Ill., for petitioner. Mr. David Axelrod, Chicago, Ill., for respondent. Mr. Justice BLACK delivered the opinion 1 This case raises important questions concerning the power of states to bar interstate motor carriers from use of state roads as punishment for repeated violations of state highway regulations. The respondent Hayes Freight Lines, Inc. is such a carrier transporting goods to and from many points in Illinois and seven other states.1 This extensive interstate business is done under a certificate of convenience and necessity issued by the Interstate Commerce Commission under authority of the Federal Motor Carrier Act.2 Hayes also does an intrastate carrier business in Illinois under a certificate issued by state authorities. Illinois has a statute which limits the weight of freight that can be carried in commercial trucks over Illinois highways; the same statute also provides for a balanced distribution of freight loads in relation to the truck's axles.3 Repeated violations of these provisions by trucks of a carrier are made punishable by total suspension of the carrier's right to use Illinois state highways for periods of ninety days and one year.4 This action was brought in a state court to restrain Illinois officials from prosecuting Hayes as a repeated violator. The State Supreme Court held that the punishment of suspension provided by the state statute could not be imposed on the interstate operations of the respondent Hayes. Such a state suspension of interstate transportation, it was decided, would conflict with the Federal Motor Carrier Act which is the supreme law of the land.5 We granted the State's petition for certiorari. 347 U.S. 1009, 74 S.Ct. 865. 2 Congress in the Motor Carrier Act adopted a comprehensive plan for regulating the carriage of goods by motor truck in interstate commerce. The federal plan of control was so all-embracing that former power of states over interstate motor carriers was greatly reduced. No power at all was left in states to determine what carriers could or could not operate in interstate commerce. Exclusive power of the Federal Government to make this determination is shown by § 306 of 49 U.S.C., 49 U.S.C.A. § 306 which describes the conditions under which the Interstate Commerce Commission can issue certificates of convenience and necessity. And § 312 of the same title provides that all certificates, permits or licenses issued by the Commission 'shall remain in effect until suspended or terminated as herein provided.' But in order to provide stability for operating rights of carriers, Congress placed within very narrow limits the Commission's power to suspend or revoke an outstanding certificate. No certificate is to be revoked, suspended or changed until after a hearing and a finding that a carrier has willfully failed to comply with the provisions of the Motor Carrier Act or with regulations properly promulgated under it.6 Under these circumstances, it would be odd if a state could take action amounting to a suspension or revocation of an interstate carrier's commission-granted right to operate. Cf. Hill v. State of Florida, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782. It cannot be doubted that suspension of this common carrier's right to use Illinois highways is the equivalent of a partial suspension of its federally granted certificate. The highways of Illinois are not only used by Hayes to transport interstate goods to and from that State but are also used as connecting links to points in other states which the Commission has authorized Hayes to serve. Consequently if the ninety-day or the one-year suspension should become effective, the carriage of interstate goods into Illinois and other states would be seriously disrupted. 3 That Illinois seeks to punish Hayes for violations of its road regulations does not justify this disruption of federally authorized activities. A state's regulation of weight and distribution of loads carried in interstate trucks does not itself conflict with the Federal Act. The reason for this as pointed out in Maurer v. Hamilton, 309 U.S. 598, 60 S.Ct. 726, 84 L.Ed. 969, is that the Federal Act has a provision designed to leave states free to regulate the sizes and weights of motor vehicles. But it would stretch this statutory provision too much to say that it also allowed states to revoke or suspend the right of interstate motor carriers for violation of state highway regulations. 4 It is urged that without power to impose punishment by suspension states will be without appropriate remedies to enforce their laws against recalcitrant motor carriers. We are not persuaded, however, that the conventional forms of punishment are inadequate to protect states from overweighted or improperly loaded motor trucks. Moreover, a Commission regulation requires motor carriers to abide by valid state highway regulations.7 And as previously pointed out, the Commission can revoke in whole or in part certificates of motor carriers which willfully refuse to comply with any lawful regulation of the Commission.8 If, therefore, motor carriers persistently and repeatedly violate the laws of a state, we know of no reason why the Commission may not protect the state's interest, either on the Commission's own initiative or on complaint of the state.9 5 We agree with the Supreme Court of Illinois that the right of this carrier to use Illinois highways for interstate transportation of goods cannot be suspended by Illinois. 6 Affirmed. 1 Indiana, Missouri, Michigan, Pennsylvania, Ohio, Kentucky, and Tennessee. 2 49 Stat. 543. Now Part II of the Interstate Commerce Act, 54 Stat. 919, 49 U.S.C. § 301 et seq., 49 U.S.C.A. § 301 et seq. 3 Ill.Rev.Stat.1953, c. 95 1/2, § 228. 4 Ill.Rev.Stat.1953, c. 95 1/2, § 229b. This section provides for a 90-day suspension upon a finding of 10 or more violations. If thereafter the same carrier is found to have been guilty of 10 or more later violations the suspension is for one year. 5 2 Ill.2d 58, 117 N.E.2d 106. But the State Supreme Court held that Hayes' intrastate operations could be suspended. Hayes appealed to this Court. We dismissed for want of a substantial federal question. 347 U.S. 994, 74 S.Ct. 866. 6 Smith Bros., Revocation of Certificate, 33 M.C.C. 465, 472. See United States v. Seatrain Lines, 329 U.S. 424, 67 S.Ct. 435, 91 L.Ed. 396. 7 49 CFR, 1954 Cum.Supp., § 192.3. 'Every motor vehicle shall be driven in accordance with the laws, ordinances, and regulations of the jurisdiction in which it is being operated, unless such laws, ordinances and regulations are at variance with specific regulations of this Commission which impose a greater affirmative obligation or restraint.' 8 49 Stat. 555, 49 U.S.C. § 312, 49 U.S.C.A. § 312. 9 49 Stat. 555, 49 U.S.C. § 312, 49 U.S.C.A. § 312. For cases in which the Commission has considered violations of state law in passing on the fitness and ability of applicants to operate as carriers in interstate commerce see Southwest Freight Lines, Inc., Extension—Glass Products, 54 M.C.C. 205, 219; Hayes Freight Lines, Inc., Extension—Alternate Routes, 54 M.C.C. 643, 659.

910

348 U.S. 170 75 S.Ct. 182 99 L.Ed. 210 Odom Farrell SULLIVAN, Petitioner,v.UNITED STATES of America. No. 64. Argued Nov. 8, 1954. Decided Dec. 6, 1954. Mr. Llewellyn A. Luce, Washington, D.C., for petitioner. Mr. Charles F. Barber, Washington, D.C., for respondent. Mr. Justice MINTON delivered the opinion of the Court. 1 Upon pleas of nolo contendere, the petitioner was found guilty of violating the income tax laws by making and filing false and fraudulent returns. The District Court sentenced him to three years' imprisonment and fined him $13,000. The Court of Appeals affirmed, 212 F.2d 125, and we granted certiorari, 347 U.S. 1010, 74 S.Ct. 870. 2 On February 28, 1952, a duly constituted grand jury for the District of Kansas indicted the petitioner on four counts for false and fraudulent statements in his individual tax returns and on two counts in another indictment for false and fraudulent returns of the Central Theatre Co., a corporation of which he was president. To these indictments the petitioner entered pleas of not guilty. He later withdrew these pleas, and to two counts of the indictment on his individual returns and to one count on the corporation returns, he entered pleas of nolo contendere. The other counts were dismissed. 3 Before the pleas of nolo contendere were entered, petitioner had filed motions to dismiss the indictments because the evidence upon which they were based was presented to the grand jury by the District Attorney without direction to do so by the Attorney General's office. These motions were overruled after argument and time for briefing. This presents the first question, namely, were the indictments faulty because, without sanction by the Attorney General's office, the District Attorney offered evidence to the grand jury upon which the indictments were returned? It is first contended by petitioner that, pursuant to 26 U.S.C. § 3740, 26 U.S.C.A. § 3740,1 the indictments could not be returned without authorization by that office. We agree with the Court of Appeals that this section applies only to civil suits and not to criminal proceedings. In the absence of words in their context requiring a different conclusion, the phrase 'suits for recovery' ordinarily means civil suits and not criminal prosecutions. Hepner v. United States, 213 U.S. 103, 105—109, 29 S.Ct. 474, 475—477, 53 L.Ed. 720; Stockwell v. United States, 13 Wall. 531, 542—543, 20 L.Ed. 491. One 'recovers' in a civil action but prosecutes and punishes in a criminal proceeding. 4 The further contention is made that § 5 of Executive Order No. 6166,2 and Circular Letter No. 2431 of the Department of Justice,3 required approval from the Attorney General's office before any evidence could be presented to the grand jury and that such direction was not given. It is admitted that no authorization was received from the Attorney General's office to present the evidence to the grand jury in the instant case; nor does the record reveal clearly that an emergency existed. Apparently none was reported to the Department of Justice as required by Circular Letter No. 2431. 5 Prior to Executive Order No. 6166, prosecutions for the violation of internal revenue laws were often referred directly to United States District Attorneys for presentation to grand juries. The purpose of § 5 of Executive Order No. 6166, among other things, was to transfer responsibility for the prosecution of criminal proceedings and suits by or against the United States in civil matters to the Department of Justice. 6 It was not the purpose of the Executive Order to direct how the responsibility should be exercised but to fix it in the Department of Justice. How that responsibility was to be discharged was a matter for the Department. To make the system uniform, Circular Letter No. 2431 was sent to all District Attorneys. It was never promulgated as a regulation of the Department and published in the Federal Register. It was simply a housekeeping provision of the Department and was not intended to curtail or limit the well-recognized power of the grand jury to consider and investigate any alleged crime within its jurisdiction. See United States v. Thompson, 251 U.S. 407, 413 415, 40 S.Ct. 289, 291—292, 64 L.Ed. 333; Blair v. United States, 250 U.S. 273, 282, 39 S.Ct. 468, 471, 63 L.Ed. 979; Hale v. Henkel, 201 U.S. 43, 61—66, 26 S.Ct. 370, 373—376, 50 L.Ed. 652; Frisbie v. United States, 157 U.S. 160, 163, 15 S.Ct. 586, 587, 39 L.Ed. 657. 7 Therefore, it is not contended that, aside from the Executive Order and the departmental letter, a grand jury may not consider evidence of crime known to the grand jurors or revealed by their investigation. It is only urged that the Executive Order and the departmental letter limited the action of the grand jury in respect to cases concerning violations of internal revenue laws. We hold that the Order and the letter had no such restrictive effect, and that the grand jury in this case was free to consider the evidence put before it by Government counsel without authorization from the Attorney General's office in Washington. The evidence was presented by the District Attorney, who was a representative of the Department of Justice, notwithstanding that he failed to comply with the departmental directive. For this he is answerable to the Department, but his action before the grand jury was not subject to attack by one indicted by the grand jury on such evidence. The motions to dismiss were properly overruled. 8 Three days after judgment had been pronounced finding the petitioner guilty under his pleas of nolo contendere and sentences passed, the petitioner filed a motion asking for leave to withdraw his pleas. Later he filed an amended motion to withdraw the pleas and a petition for probation. In his motion to withdraw the pleas, he gave the following reasons, (1) because of manifest injustice, (2) because he had entered his pleas under the mistaken belief, induced by the acts and statements of Government counsel, that he would be placed on probation, and (3) because of misconduct of the District Attorney. The District Court, after hearing argument, denied the motion and the petition for probation and filed its findings of fact, although there apparently was no request for them.4 Under Rule 32(d)5 a defendant may, after sentence, withdraw a plea of nolo contendere to correct manifest injustice. It is this provision that petitioner relies upon. He claims he was somehow misled by Government counsel to believe that if he entered the pleas of nolo contendere he would receive probation. By the court's findings, which, in light of the evidence, raise not a doubt, it is settled that the court in no way misled the petitioner and that Government counsel made no promises of leniency or probation.6 9 Petitioner argues that the United States Attorney misled him because his statement to the court during the hearing for probation was stronger than petitioner and his counsel expected. No exception was taken to anything the District Attorney said, nor was any complaint made about such statement until after sentence was pronounced. We have read this statement and the affidavits of both counsel. The statement was factual, dispassionate and fair. The petitioner has failed to show any 'manifest injustice' as required by Rule 32(d). During all of the proceedings from arraignment to denial of petition for probation, petitioner was represented by able and experienced counsel. In our opinion they were not and could not have been misled by the action and statements of Government counsel. The judgment is affirmed. 10 Affirmed. 1 'No suit for the recovery of taxes, or of any fine, penalty, or forfeiture, shall be commenced unless the Commissioner authorizes or sanctions the proceedings and the Attorney General directs that the suit be commenced.' 2 'The functions of prosecuting in the courts of the United States claims and demands by, and offenses against, the Government of the United States, and of defending claims and demands against the Government, and of supervising the work of United States attorneys, marshals, and clerks in connection therewith, now exercised by any agency or officer, are transferred to the Department of Justice. 'As to any case referred to the Department of Justice for prosecution or defense in the courts, the function of decision whether and in what manner to prosecute, or to defend, or to compromise, or to appeal, or to abandon prosecution or defense, now exercised by any agency or officer, is transferred to the Department of Justice. 'For the exercise of such of his functions as are not transferred to the Department of Justice by the foregoing two paragraphs, the Solicitor of the Treasury is transferred from the Department of Justice to the Treasury Department. 'Nothing in this section shall be construed to affect the function of any agency or officer with respect to cases at any stage prior to reference to the Department of Justice for prosecution or defense.' Promulgated June 10, 1933, 5 U.S.C. §§ 124—132, 5 U.S.C.A. §§ 124—132 note. 3 'In accordance therewith, all United States Attorneys are directed to present evidence to a grand jury concerning violations of revenue laws of the United States only when authorized to do so by this office, unless an emergency calls for immediate action, in which event a full report should promptly be submitted.' August 10, 1933. 4 See Rule 23(c), Fed.Rules Crim.Proc., 18 U.S.C.A. 5 'Withdrawal of Plea of Guilty. A motion to withdraw a plea of guilty or of nolo contendere may be made only before sentence is imposed or imposition of sentence is suspended; but to correct manifest injustice the court after sentence may set aside the judgment of conviction and permit the defendant to withdraw his plea.' Rule 32(d), Fed.Rules Crim.Proc. 6 'At the June 23 hearing, the court specifically inquired of defendant's counsel as to whether any remark or statement made by the court to defendant's counsel had influenced them in advising the defendant to enter the pleas above mentioned. The court was assured by defendant's counsel and now finds that no statement of the court made to defendant's counsel or in the presence of defendant influenced the defendant's entrance of his pleas of nolo contendere. 'The court further finds that no promise of probation or lenience was made, either to the defendant personally or to his counsel by the United States Attorney or his assistant who handled the prosecution for the Government.' Findings 9 and 10, R. 91—92.

01

348 U.S. 121 75 S.Ct. 127 99 L.Ed. 150 Marion L. HOLLAND and Ethel E. Holland, Petitioners,v.UNITED STATES of America. No. 37. Argued Oct. 20, 21, 1954. Decided Dec. 6, 1954. Rehearing Denied Jan. 31, 1955. See 348 U.S. 932, 75 S.Ct. 334. [Syllabus from pages 121-123 intentionally omitted] Messrs.Sumner M. Redstone, Peyton Ford, Washington, D.C., for petitioners. Mr. Marvin E. Frankel, Washington, D.C., for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 Petitioners, husband and wife, stand convicted under § 145 of the Internal Revenue Code1 of an attempt to evade and defeat their income taxes for the year 1948. The prosecution was based on the net worth method of proof, also in issue in three companion cases2 and a number of other decisions here from the Courts of Appeals of nine circuits. During the past two decades this Court has been asked to review an increasing number of criminal cases in which proof of tax evasion rested on this theory. We have denied certiorari because the cases involved only questions of evidence and, in isolation, presented no important questions of law. In 1943 the Court did have occasion to pass upon an application of the net worth theory where the taxpayer had no records. United States v. Johnson, 319 U.S. 503, 63 S.Ct. 1233, 87 L.Ed. 1546. 2 In recent years, however, tax-evasion convictions obtained under the net worth theory have come here with increasing frequency and left impressions beyond those of the previously unrelated petitions. We concluded that the method involved something more than the ordinary use of circumstantial evidence in the usual criminal case. Its bearing, therefore, on the safeguards traditionally provided in the administration of criminal justice called for a consideration of the entire theory. At our last Term a number of cases arising from the Courts of Appeals brought to our attention the serious doubts of those courts regarding the implications of the net worth method. Accordingly, we granted certiorari in these four cases and have held others to await their decision. 3 In a typical net worth prosecution, the Government, having concluded that the taxpayer's records are inadequate as a basis for determining income tax liability, attempts to establish an 'opening net worth' or total net value of the taxpayer's assets at the beginning of a given year. It then proves increases in the taxpayer's net worth for each succeeding year during the period under examination and calculates the difference between the adjusted net values of the taxpayer's assets at the beginning and end of each of the years involved. The taxpayer's nondeductible expenditures, including living expenses, are added to these increases, and if the resulting figure for any year is substantially greater than the taxable income reported by the taxpayer for that year, the Government claims the excess represents unreported taxable income. In addition, it asks the jury to infer willfulness from this understatement, when taken in connection with direct evidence of 'conduct, the likely effect of which would be to mislead or to conceal.' Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418. 4 Before proceeding with a discussion of these cases, we believe it important to outline the general problems implicit in this type of litigation. In this consideration we assume, as we must in view of its widespread use, that the Government deems the net worth method useful in the enforcement of the criminal sanctions of our income tax laws. Nevertheless, careful study indicates that it is so fraught with danger for the innocent that the courts must closely scrutinize its use. 5 One basic assumption in establishing guilt by this method is that most assets derive from a taxable source, and that when this is not true the taxpayer is in a position to explain the discrepancy. The application of such an assumption raises serious legal problems in the administration of the criminal law. Unlike civil actions for the recovery of deficiencies, where the determinations of the Commissioner have prima facie validity, the prosecution must always prove the criminal charge beyond a reasonable doubt. This has led many of our courts to be disturbed by the use of the net worth method, particularly in its scope and the latitude which it allows prosecutors. E.g., Demetree v. United States, 5 Cir., 1953, 207 F.2d 892, 894; United States v. Caserta, 3 Cir., 1952, 199 F.2d 905, 907; United States v. Fenwick, 7 Cir., 177 F.2d 488. 6 But the net worth method has not grown up overnight. It was first utilized in such cases as Capone v. United States, 7 Cir., 1931, 51 F.2d 609 and Guzik v. United States, 7 Cir., 1931, 54 F.2d 618, to corroborate direct proof of specific unreported income. In United States v. Johnson, supra, this Court approved of its use to support the inference that the taxpayer, owner of a vast and elaborately concealed network of gambling houses upon which he declared no income, had indeed received unreported income in a 'substantial amount.' It was a potent weapon in establishing taxable income from undisclosed sources when all other efforts failed. Since the Johnson case, however, its horizons have been widened until now it is used in run-of-the-mine cases, regardless of the amount of tax deficiency involved. In each of the four cases decided today the allegedly unreported income comes from the same disclosed sources as produced the taxpayer's reported income and in none is the tax deficiency anything like the deficiencies in Johnson, Capone or Guzik. The net worth method, it seems, has evolved from the final volley to the first shot in the Government's battle for revenue, and its use in the ordinary income-bracket cases greatly increases the chances for error. This leads us to point out the dangers that must be consciously kept in mind in order to assure adequate appraisal of the specific facts in individual cases. 7 1. Among the defenses often asserted is the taxpayer's claim that the net worth increase shown by the Government's statement is in reality not an increase at all because of the existence of substantial cash on hand at the starting point. This favorite defense asserts that the cache is made up of many years' savings which for various reasons were hidden and not expended until the prosecution period. Obviously, the Government has great difficulty in refuting such a contention. However, taxpayers too encounter many obstacles in convincing the jury of the existence of such hoards. This is particularly so when the emergence of the hidden savings also uncovers a fraud on the taxpayer's creditors. 8 In this connection, the taxpayer frequently gives 'leads' to the Government agents indicating the specific sources from which his cash on hand has come, such as prior earnings, stock transactions, real estate profits, inheritances, gifts, etc. Sometimes these 'leads' point back to old transactions far removed from the prosecution period. Were the Government required to run down all such leads it would face grave investigative difficulties; still its failure to do so might jeopardize the position of the taxpayer. 9 2. As we have said, the method requires assumptions, among which is the equation of unexplained increases in net worth with unreported taxable income. Obviously such an assumption has many weaknesses. It may be that gifts, inheritances, loans and the like account for the newly acquired wealth. There is great danger that the jury may assume that once the Government has established the figures in its net worth computations, the crime of tax evasion automatically follows. The possibility of this increases where the jury, without guarding instructions, is allowed to take into the jury room the various charts summarizing the computations; bare figures have a way of acquiring an existence of their own, independent of the evidence which gave rise to them. 10 3. Although it may sound fair to say that the taxpayer can explain the 'bulge' in his net worth, he may be entirely honest and yet unable to recount his financial history. In addition, such a rule would tend to shift the burden of proof. Were the taxpayer compelled to come forward with evidence, he might risk lending support to the Government's case by showing loose business methods or losing the jury through his apparent evasiveness. Of course, in other criminal prosecutions juries may disbelieve and convict the innocent. But the courts must minimize this danger. 11 4. When there are no books and records, willfulness may be inferred by the jury from that fact coupled with proof of an understatement of income. But when the Government uses the net worth method, and the books and records of the taxpayer appear correct on their face, an inference of willfulness from net worth increases alone might be unjustified, especially where the circumstances surrounding the deficiency are as consistent with innocent mistake as with willful violation. On the other hand, the very failure of the books to disclose a proved deficiency might indicate deliberate falsification. 12 5. In many cases of this type, the prosecution relies on the taxpayer's statements, made to revenue agents in the course of their investigation, to establish vital links in the Government's proof. But when a revenue agent confronts the taxpayer with an apparent deficiency, the latter may be more concerned with a quick settlement than an honest search for the truth. Moreover, the prosecution may pick and choose from the taxpayer's statement, relying on the favorable portion and throwing aside that which does not bolster its position. The problem of corroboration, dealt with in the companion cases of Smith v. United States, 348 U.S. 147, 75 S.Ct. 194, and United States v. Calderon, 348 U.S. 160, 75 S.Ct. 186, therefore becomes crucial. 13 6. The statute defines the offense here involved by individual years. While the Government may be able to prove with reasonable accuracy an increase in net worth over a period of years, it often has great difficulty in relating that income sufficiently to any specific prosecution year. While a steadily increasing net worth may justify an inference of additional earnings, unless that increase can be reasonably allocated to the appropriate tax year the taxpayer may be convicted on counts of which he is innocent. 14 While we cannot say that these pitfalls inherent in the net worth method foreclose its use, they do require the exercise of great care and restraint. The complexity of the problem is such that it cannot be met merely by the application of general rules. Cf. Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 489, 71 S.Ct. 456, 465, 95 L.Ed. 456. Trial courts should approach these cases in the full realization that the taxpayer may be ensnared in a system which, though difficult for the prosecution to utilize, is equally hard for the defendant to refute. Charges should be especially clear, including, in addition to the formal instructions, a summary of the nature of the net worth method, the assumptions on which it rests, and the inferences available both for and against the accused. Appellate courts should review the cases, bearing constantly in mind the difficulties that arise when circumstantial evidence as to guilt is the chief weapon of a method that is itself only an approximation. 15 With these considerations as a guide, we turn to the facts. 16 The indictment returned against the Hollands embraced three counts. The first two charged Marion L. Holland, the husband, with attempted evasion of his income tax for the years 1946 and 1947. He was found not guilty by thejury on both of these counts. The third count charged Holland and his wife with attempted evasion in 1948 of the tax on $19,736.74 not reported by them in their joint return. The jury found both of them guilty. Mrs. Holland was fined $5,000, while her husband was sentenced to two years' imprisonment and fined $10,000. 17 The Government's opening net worth computation shows defendants with a net worth of $19,152.59 at the beginning of the indictment period. Shortly thereafter, defendants purchased a hotel, bar and restaurant, and began operating them as the Holland House. Within three years during which they reported $31,265.92 in taxable income, their apparent net worth increased by $113,185.32.3 The Government's evidence indicated that, during 1948, the year for which defendants were convicted, their net worth increased by some $32,000, while the amount of taxable income reported by them totaled less than one-third that sum. 18 Use of Net Worth Method Where Books Are Apparently Adequate. 19 As we have previously noted, this is not the first net worth case to reach this Court. In United States v. Johnson, supra (319 U.S. 503, 63 S.Ct. 1240), the Court affirmed a tax-evasion conviction on evidence showing that the taxpayer's expenditures had exceeded his 'available declared resources.' Since Johnson and his concealed establishments had destroyed the few records they had, the Government was forced to resort to the net worth method of proof. This Court approved on the ground that 'To require more * * * would be tantamount to holding that skilful concealment is an invincible barrier to proof', 319 U.S. at pages 517—518, 63 S.Ct. at page 1240. Petitioners ask that we restrict the Johnson case to situations where the taxpayer has kept no books. They claim that § 41 of the Internal Revenue Code,4 expressly limiting the authority of the Government to deviate from the taxpayer's method of accounting, confines the net worth method to situations where the taxpayer has no books or where his books are inadequate. Despite some support for this view among the lower courts, see United States v. Riganto, D.C., 121 F.Supp. 158, 161, 162; United States v. Williams, 3 Cir., 208 F.2d 437, 437—438; Remmer v. United States, 9 Cir., 205 F.2d 277, 286, judgment vacated on other grounds, 347 U.S. 227, 74 S.Ct. 450, we conclude that this argument must fail. The provision that the 'net income shall be computed * * * in accordance with the method of accounting regularly employed in keeping the books of such taxpayer', refers to methods such as the cash receipts or the accrual method, which allocate income and expenses between years. United States v. American Can Co., 280 U.S. 412, 419, 50 S.Ct. 177, 179, 74 L.Ed. 518. The net worth technique, as used in this case, is not a method of accounting different from the one employed by defendants. It is not a method of accounting at all, except insofar as it calls upon taxpayers to account for their unexplained income. Petitioners' accounting system was appropriate for their business purposes; and, admittedly, the Government did not detect any specific false entries therein. Nevertheless, if we believe the Government's evidence, as the jury did, we must conclude that the defendants' books were more consistent than truthful, and that many items of income had disappeared before they had even reached the recording stage. Certainly Congress never intended to make § 41 a set of blinders which prevents the Government from looking beyond the self-serving declarations in a taxpayer's books. 'The United States has relied for the collection of its income tax largely upon the taxpayer's own disclosures * * *. This system can function successfully only if those within and near taxable income keep and render true accounts.' Spies v. United States, 317 U.S. 495, 63 S.Ct. 366. To protect the revenue from those who do not 'render true accounts', the Government must be free to use all legal evidence available to it in determining whether the story told by the taxpayer's books accurately reflects his financial history. 20 Establishing a Definite Opening Net Worth. 21 We agree with petitioners that an essential condition in cases of this type is the establishment, with reasonable certainty, of an opening net worth, to serve as a starting point from which to calculate future increases in the taxpayer's assets. The importance of accuracy in this figure is immediately apparent, as the correctness of the result depends entirely upon the inclusion in this sum of all assets on hand at the outset. The Government's net worth statement included as assets at the starting point stock costing $29,650 and $2,153.09 in cash.5 The Hollands claim that the Government failed to include in its opening net worth figure an accumulation of $113, 000 in currency and 'hundreds and possibly thousands of shares of stock' which they owned at the beginning of the prosecution period. They asserted that the cash had been accumulated prior to the opening date, $104,000 of it before 1933, and the balance between 1933 and 1945. They had kept the money, they claimed, mostly in $100 bills and at various times in a canvas bag, a suitcase, and a metal box. They had never dipped into it until 1946, when it became the source of the apparent increase in wealth which the Government later found in the form of a home, a ranch, a hotel and other properties. This was the main issue presented to the jury. The Government did not introduce any direct evidence to dispute this claim. Rather it relied on the inference that anyone who had had $104,000 in cash would not have undergone the hardship and privation endured by the Hollands all during the late 20's and throughout the 30's. During this period they lost their cafe business; accumulated $35,000 in debts which were never paid; lost their household furniture because of an unpaid balance of $92.20; suffered a default judgment for $506.66; and were forced to separate for some eight years because it was to their 'economical advantage.' During the latter part of this period, Mrs. Holland was obliged to support herself and their son by working at a motion picture house in Denver while her husband was in Wyoming. The evidence further indicated that improvements to the hotel, and other assets acquired during the prosecution years, were bought in installments and with bills of small denominations, as if out of earnings rather than from an accumulation of $100 bills. The Government also negatived the possibility of petitioners' accumulating such a sum by checking Mr. Holland's income tax returns as far back as 1913, showing that the income declared in previous years was insufficient to enable defendants to save any appreciable amount of money. The jury resolved this question of the existence of a cache of cash against the Hollands, and we believe the verdict was fully supported. 22 As to the stock, Mr. Holland began dabbling in the stock market in a small way in 1937 and 1938. His purchases appear to have been negligible and on borrowed money. His only reported income from stocks was in his tax returns for 1944 and 1945 when he disclosed dividends of $1,600 and $1,850 respectively. While the record is unclear on this point, it appears that during the period from 1942 to 1945 he pledged considerable stock as collateral for loans. There is no evidence, however, showing what portions of this stock Mr. Holland actually owned at any one time, since he was trading in shares from day to day. And, even if we assume that he owned all the stock, some 4,550 shares, there is evidence that Mr. Holland's stock transactions were usually in 'stock selling for only a few dollars per share.' In this light, the Government's figure of approximately $30,000 is not out of line. In 1946 Holland reported the sale of about $50,000 in stock, but no receipt of dividends; nor were dividends reported in subsequent years. It is reasonable to assume that he sold all of his stock in 1946. In fact, Holland stated to the revenue agents that he had not 'fooled with the stock market' since the beginning of 1946; that he had not owned any stocks for two or three years prior to 1949; that he had saved about $50,000 from 1933 to 1946, and that in 1946 he had $9,000 in cash with the balance of his savings in stocks.6 The Government's evidence, bolstered by the admissions of petitioners, provided convincing proof that they had no stock other than the amount included in the opening net worth statement. By the same token, the petitioners' argument that the Government failed to account for the proceeds of stock sold by them before the starting date must also fail. The Government's evidence fully justified the jury's conclusion that there were no proceeds over and above the amount credited to petitioners. 23 The Government's Investigation of Leads. 24 So overwhelming, indeed, was the Government's proof on the issue of cash on hand that the Government agents did not bother to check petitioners' story that some of the cash represented proceeds from the sales of two cafe § in the 20's; and that in 1933 and additional portion of this $113,000 in currency was obtained by exchanging some $12,000 in gold at a named bank. While sound administration of the criminal law requires that the net worth approach—a powerful method of proving otherwise undetectable offenses—should not be denied the Government, its failure to investigate leads furnished by the taxpayer might result in serious injustice. It is, of course, not for us to prescribe investigative procedures,7 but it is within the province of the courts to pass upon the sufficiency of the evidence to convict. When the Government rests its case solely on the approximations and circumstantial inferences of a net worth computation, the cogency of its proof depends upon its effective negation of reasonable explanations by the taxpayer inconsistent with guilt. Such refutation might fail when the Government does not track down relevant leads furnished by the taxpayer—leads reasonably susceptible of being checked, which, if true, would establish the taxpayer's innocence. When the Government fails to show an investigation into the validity of such leads, the trial judge may consider them as true and the Government's case insufficient to go to the jury. This should aid in forestalling unjust prosecutions, and have the practical advantage of eliminating the dilemma, especially serious in this type of case, of the accused's being forced by the risk of an adverse verdict to come forward to substantiate leads which he had previously furnished the Government. It is a procedure entirely consistent with the position long espoused by the Government, that its duty is not to convict but to see that justice is done. 25 In this case, the Government's detailed investigation was a complete answer to the petitioners' explanations. Admitting that in cases of this kind it 'would be desirable to track to its conclusion every conceivable line of inquiry,' the Government centered its inquiry on the explanations of the Hollands and entered upon a detailed investigation of their lives covering several states and over a score of years. The jury could have believed that Mr. Holland had received moneys from the sale of cafe § in the twenties and that he had turned in gold in 1933 and still it could reasonably have concluded that the Hollands lacked the claimed cache of currency in 1946, the crucial year. Even if these leads were assumed to be true, the Government's evidence was sufficient to convict. The distant incidents relied on by petitioners were so remote in time and in their connection with subsequent events proved by the Government that, whatever petitioner's net worth in 1933, it appears by convincing evidence that on January 1, 1946, they had only such assets as the Government credited to them in its opening net worth statement. 26 Net Worth Increases Must be Attributable to Taxable Income. 27 Also requisite to the use of the net worth method is evidence supporting the inference that the defendant's net worth increases are attributable to currently taxable income. 28 The Government introduced evidence tending to show that although the business of the hotel apparently increased during the years in question, the reported profits fell to approximately one-quarter of the amount declared by the previous management in a comparable period;8 that the cash register tapes, on which the books were based, were destroyed by the petitioners; and that the books did not reflect the receipt of money later withdrawn from the hotel's cash register for the personal living expenses of the petitioners and for payments made for restaurant supplies. The unrecorded items in this latter category totaled over $12,500 for 1948. Thus there was ample evidence that not all the income from the hotel had been included in its books and records. In fact, the net worth increase claimed by the Government for 1948 could have come entirely from the unreported income of the hotel and still the hotel's total earnings for the year would have been only 73% of the sum reported by the previous owner for the comparable period in 1945. 29 But petitioners claim the Government failed to adduce adequate proof because it did not negative all the possible nontaxable sources of the alleged net worth increases—gifts, loans, inheritances, etc. We cannot agree. The Government's proof, in our view, carried with it the negations the petitioners urge. Increases in net worth, standing alone, cannot be assumed to be attributable to currently taxable income. But proof of a likely source, from which the jury could reasonably find that the net worth increases sprang, is sufficient. In the Johnson case, where there was no direct evidence of the source of the taxpayer's income, this Court's conclusion that the taxpayer 'had large, unreported income was reinforced by proof * * * that (for certain years his) private expenditures * * * exceeded his available declared resources.' This was sufficient to support 'the finding that he had some unreported income which was properly attributable to his earnings * * *.' United States v. Johnson, 319 U.S. at page 517, 63 S.Ct. at page 1240. There the taxpayer was the owner of an undisclosed business capable of producing taxable income; here the disclosed business of the petitioners was proven to be capable of producing much more income than was reported and in a quantity sufficient to account for the net worth increases. Any other rule would burden the Government with investigating the many possible nontaxable sources of income, each of which is as unlikely as it is difficult to disprove. This is not to say that the Government may disregard explanations of the defendant reasonably susceptible of being checked. But where relevant leads are not forthcoming, the Government is not required to negate every possible source of nontaxable income, a matter peculiarly within the knowledge of the defendant. See Rossi v. United States, 289 U.S. 89, 91—92, 53 S.Ct. 532, 533, 77 L.Ed. 1051. 30 The Burden of Proof Remains on the Government. 31 Nor does this rule shift the burden of proof. The Government must still prove every element of the offense beyond a reasonable doubt though not to a mathematical certainty. The settled standards of the criminal law are applicable to net worth cases just as to prosecutions for other crimes. Once the Government has established its case, the defendant remains quiet at his peril. Cf. Yee Hem v. United States, 268 U.S. 178, 185, 45 S.Ct. 470, 472, 69 L.Ed. 904. The practical disadvantages to the taxpayer are lessened by the pressures on the Government to check and negate relevant leads. 32 Willfulness Must be Present. 33 A final element necessary for conviction is willfulness. The petitioners contend that willfulness 'involves a specific intent which must be proven by independent evidence and which cannot be inferred from the mere understatement of income.' This is a fair statement of the rule. Here, however, there was evidence of a consistent pattern of underreporting large amounts of income, and of the failure on petitioners' part to include all of their income in their books and records. Since, on proper submission, the jury could have found that these acts supported an inference of willfulness, their verdict must stand. Spies v. United States, supra, 317 U.S. at pages 499—500, 63 S.Ct. 368. 34 The Charge to the Jury. 35 Petitioners press upon us, finally, the contention that the instructions of the trial court were so erroneous and misleading as to constitute grounds for reversal. We have carefully reviewed the instructions and cannot agree. But some require comment. The petitioners assail the refusal of the trial judge to instruct that where the Government's evidence is circumstantial it must be such as to exclude every reasonable hypothesis other than that of guilt. There is some support for this type of instruction in the lower court decisions, Garst v. United States, 4 Cir., 180 F. 339, 343; Anderson v. United States, 5 Cir., 30 F.2d 485—487; Stutz v. United States, 5 Cir., 47 F.2d 1029, 1030; Hanson v. United States, 6 Cir., 208 F.2d 914, 916, but the better rule is that where the jury is properly instructed on the standards for reasonable doubt, such an additional instruction on circumstantial evidence is confusing and incorrect, United States v. Austin-Bagley Corp., 2 Cir., 31 F.2d 229, 234, certiorari denied, 279 U.S. 863, 49 S.Ct. 479, 73 L.Ed. 1002; United States v. Becker, 2 Cir., 62 F.2d 1007, 1010; 1 Wigmore, Evidence (3d ed.), §§ 25—26. 36 Circumstantial evidence in this respect is intrinsically no different from testimonial evidence. Admittedly, circumstantial evidence may in some cases point to a wholly incorrect result. Yet this is equally true of testimonial evidence. In both instances, a jury is asked to weigh the chances that the evidence correctly points to guilt against the possibility of inaccuracy or ambiguous inference. In both, the jury must use its experience with people and events in weighing the probabilities. If the jury is convinced beyond a reasonable doubt, we can require no more. 37 Even more insistent is the petitioners' attack, not made below, on the charge of the trial judge as to reasonable doubt. He defined it as 'the kind of doubt . . . which you folks in the more serious and important affairs of your own lives might be willing to act upon.' We think this section of the charge should have been in terms of the kind of doubt that would make a person hesitate to act, see Bishop v. United States, 71 App.D.C. 132, 107 F.2d 297, 303, rather than the kind on which he would be willing to act. But we believe that the instruction as given was not of the type that could mislead the jury into finding no reasonable doubt when in fact there was some. A definition of a doubt as something the jury would act upon would seem to create confusion rather than misapprehension. 'Attempts to explain the term 'reasonable doubt' do not usually result in making it any clearer to the minds of the jury,' Miles v. United States, 103 U.S. 304, 312, 26 L.Ed. 481, and we feel that, taken as a whole, the instructions correctly conveyed the concept of reasonable doubt to the jury. 38 Petitioners also assign as error the refusal of the trial judge to give instructions on the wording of the criminal statute under which they were indicted, even though the judge fully and correctly instructed the jury on every element of the crime. The impossibility of pointing to any way in which defendants' rights were prejudiced by this, assuming it was error, is enough to indicate that the trial judge was correct, see United States v. Center Veal and Beef Co., 2 Cir., 162 F.2d 766, 771. There is here no question of the jury's duty to apply the law to the facts. That operation implies the application of a general standard to the specific physical facts as found by the jury. The meanings of standards such as willfulness were properly explained by the trial judge in no greater particularity than necessary, and thus the jury's function was not invaded. 39 In the light of these considerations the judgment is affirmed. 40 Affirmed. 1 26 U.S.C. § 145, 26 U.S.C.A. § 145. Penalties. '(b) Failure to collect and pay over tax, or attempt to defeat or evade tax. Any person required under this chapter to collect, account for, and pay over any tax imposed by this chapter, who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony * * *.' 2 Friedberg v. United States, 348 U.S. 142, 75 S.Ct. 138; United States v. Calderon, 348 U.S. 160, 75 S.Ct. 186; Smith v. United States, 348 U.S. 147, 75 S.Ct. 194. Because of the extensive factual backgrounds they require, and the significant differences in the problems they present, the cases are treated in separate opinions. 3 This is a corrected figure takin g into account certain nontaxable income and nondeductible expenses of defendants. 4 26 U.S.C., 26 U.S.C.A. 'Part IV—Accounting Periods and Methods of Accounting. § 41. General rule 'The net income shall be computed upon the basis of the taxpayer's annual accounting period (fiscal year or calendar year, as the case may be) in accordance with the method of accounting regularly employed in keeping the books of such taxpayer; * * *.' 5 As of this time, petitioners' liabilities were listed as $12,650.50. 6 'Q. In other words, to summarize this whole thing: you had a net worth of $157,000 at January 1, 1946, which consisted of $104,000 which you had since December 22, 1933, and the balance of $9,000 in currency, and your investment in securities—or the value of your securities. 'A. Yes.' (R. 303.) 7 This court will formulate rules of evidence and procedure to be applied in federal prosecutions where it appears necessary to maintain 'proper standards for the enforcement of the federal criminal law in the federal courts.' McNabb v. United States, 318 U.S. 332, 341, 63 S.Ct. 608, 613, 87 L.Ed. 819. 8 The record indicates that the income of the hotel as reported for 1946 was approximately 12 1/2% of that reported by the previous owner in 1945; in 1947 the ratio was 12%; and in 1948 it was 26%.

01

348 U.S. 160 75 S.Ct. 186 99 L.Ed. 202 UNITED STATES of America, Petitioner,v.Edward B. CALDERON. No. 25. Argued Oct. 21, 1954. Decided Dec. 6, 1954. Mr. H. BrianHolland, Asst. Atty. Gen., for petitioner. Messrs. Joseph W. Burns, Norman Herring, Tucson, Ariz., for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 The issue in this case is similar to the question presented in Smith v. United States, 348 U.S. 147, 75 S.Ct. 194, on the corroboration of respondent's extrajudicial statements concerning his 'opening net worth'. The admissibility of these statements is not questioned. 2 Respondent, an operator of a legitimate coin-machine business, was tried and convicted on four counts charging him with willful attempts to evade and defeat his own and his wife's income taxes for the years 1946 through 1949. The Government's case rested primarily on a net worth computation, which showed net worth increases and nondeductible expenditures of $62,993.47 for the prosecution period; during these same four years respondent declared only $16,775.14 income. It was stipulated that the computation was correct except as to the items 'cash on hand' and 'cash in bank.' Respondent's bank balances were proved by introducing the bank records, and, with some minor adjustments, the Government's net worth computation was amply verified in this respect. As to 'cash on hand', particularly the amount credited to the taxpayer as of the beginning of the prosecution period, respondent contends that the only evidence tending to substantiate the Government's figures is the uncorroborated admissions of the accused. He argues that lacking independent evidence of the corpus delicti, the conviction cannot stand. The Court of Appeals agreed and reversed the judgment of conviction, observing that, absent a starting item such as cash on hand, 'the remainder of the statement proves nothing.' 9 Cir., 207 F.2d 377. We granted the Government's petition for certiorari. 347 U.S. 1008, 74 S.Ct. 863. 3 The Government credited the respondent with $500 cash on hand at the starting point. One of the Government agents testified that the $500 figure was an approximation based on respondent's oral answer to a request that he estimate his year-end balances of cash on hand. According to the agent's notes, respondent replied that he had 'approximately $500.00 cash in his pocket. He believes that because it is his habit to carry about that much money in his pocket at all times.' It was admitted that the taxpayer might have had more than this amount on hand at certain times, since he had frequently made deposits in his bank accounts in sums of $1,000 and $2,000. It appears that the agent did not inquire into how much money respondent had in his safe or his business, as opposed to the funds in his pocket, maintaining that he was justified in treating the taxpayer's statement regarding the $500 as covering his total cash on hand. Respondent contended that this figure failed to embrace a substantial sum in currency in his safe at the starting date. Both the Government and the respondent adduced a number of circumstances in support of their respective positions, and in interpreting the meaning of respondent's statement the jury could readily have found the Government's circumstantial proof more persuasive. In our view, it could have concluded from the evidence that respondent's statement as to the $500 referred to his total cash on hand at the starting point. 4 Respondent also signed a written statement admitting to the same opening cash on hand. This document contained the over-all net worth computation relied on by the Government at the trial. The Government's evidence tended to show that it had been signed by the respondent after the usual warning and after he and the agents had worked over the statement, item by item, for some eight hours. Though admitting that both he and his accountant had read the statement, the respondent sought to prove that he had not understood the net worth computation as a whole or the individual item of 'cash on hand'; that before signing the statement he had asked his accountant whether it was correct, intending to rely on the latter's judgment; and that the accountant, in giving defendant the go-ahead, had merely approved the method employed in compiling the statement without passing on the accuracy of the particular figures. Again it was for the jury to consider all these circumstances in determining the weight to be given the signed statement; we cannot say that the document should have been rejected as a matter of law. 5 But all these factors are relevant in determining whether the independent evidence provided adequate corroboration. As in Smith v. United States, the circumstances surrounding defendant's admissions cast some doubt on their reliability. The statements were made by a taxpayer anxious to cooperate with the Government in the hope of limiting civil liability and avoiding criminal prosecution. The oral statement, with its 'in the pocket' terminology, is certainly not clear. And the Government's own witness, the respondent's accountant, testified that he had not verified the particular figures in the written statement when it was referred to him by respondent. Under these circumstances, the trial judge and reviewing courts should exercise great care in determining whether the statements of the accused were corroborated. The reviewing courts, however, can seek corroborative evidence in the proof of both parties where, as in this case, the defendant introduces evidence in his own behalf after his motion for acquittal has been overruled. Cf. Bogk v. Gassert, 149 U.S. 17, 13 S.Ct. 738, 37 L.Ed. 631.1 6 Unlike Smith, there is not sufficient evidence here of the taxpayer's financial history to substantiate directly the opening net worth. Proof that the taxpayer was impoverished by the depression, that he was working for his meals and $8 a week in 1935, is too remote, absent proof of the taxpayer's financial circumstances in the intervening years. The respondent entered the coin-machine business in a modest way in 1935; he discontinued his low-paying job in 1939; and, except for a short period during the war, he devoted his entire efforts to his coin-machine business until 1945, when he began to operate a cafe as well. The only evidence of defendant's fortunes between 1935 and 1946, the first prosecution year, consists of his tax returns for 1944 and 1945 and some meager evidence with regard to his tax returns for 1941, 1942 and 1943. The latter apparently was obtained from the respondent, and, standing uncorroborated, cannot serve to corroborate respondent's other admissions. The 1944 and 1945 returns show net taxable income of $4,162 and $7,328 respectively, with gross receipts from the coin machines of $9,266 and $10,302. This sketchy background can hardly give rise to an inference that defendant had no more cash at the starting date than the Government gave him credit for. 7 Accordingly, we must search for independent evidence which will tend to establish the crime directly, without resort to the net worth method. There are several evidentiary strands which merit inspection, the first of which is very similar to one employed in Smith. We held there that an inference of tax evasion could be based on the fact that the taxpayer's visible assets greatly increased at a time when he was receiving unrecorded amounts of taxable income. In Smith v. United States, the taxpayer kept no records. Here the records were shown to be incomplete. Receipts from the coin machines were tabulated from a number of receipt books covering various locations. The receipt books were not numbered; the taxpayer was unsure of how many machines he had in operation; and there was considerable concern about receipt books being lost or misplaced. The loss of one receipt book would make a difference of from $1,000 to $1,500 in income. Eventually, on the advice of his accountant, respondent began to number the books.2 But, even after this safeguard was employed, unnumbered books continued to appear—and then disappear; two were lost, and subsequently recovered, in a period of three or four months. A system of recording receipts which rests on so unfirm a foundation hardly places the respondent in a very different class—for this purpose—than the taxpayer who keeps no books at all. Both are receiving unrecorded amounts of income. 8 The increase in respondent's visible assets is considerably less than the increase presented in the Smith case. There the increment over a four-year period amounted to more than $196,000; the taxpayer's declared income was less than $17,000; and his average personal living expenses were $3,500 a year. In this case, also over a four-year span, the figures are: increase in visible assets (excluding the cash item), $47,594; declared income, $16,775; living expenses, $3,000 yearly (plus some $1,900 in other nondeductible expenditures). The increase, though less than in Smith, is far from insubstantial. While reporting income only $4,775 in excess of his living expenses, the taxpayer increased his bank balances by over $16,000; added $1,000 to his holdings of United States Savings Bonds; increased his investments in land and buildings by over $9,000; and poured some $22,000 net additional capital into his business. These increments, when considered in the light of respondent's receipt of unrecorded amounts of taxable income, are sufficiently at variance with his reported income to support an inference of tax evasion. The inference is buttressed in this case by the peculiar relation between the reported gains from respondent's coin-machine business and his investments in new equipment. In three of the four prosecution years the respondent reported a net loss on his coin-machine operation, and in the fourth a net gain of only $1,330. During the same period he made gross investments in new equipment totaling $37,555. The jury could readily find defendant's investment policy inconsistent with his claimed losses. Furthermore, although respondent contends that the war years marked the peak of his business activity and that his apparent postwar increases came from profits accumulated during that period, it was not until 1947, the middle of the prosecution period, that his business became sufficiently large to require the full time of his accountant. We hold that the financial history of respondent and his business during the prosecution years provides sufficient independent evidence of the crime of tax evasion to corroborate his statements concerning cash on hand. 9 Even more conclusive corroboration, however, is respondent's testimony at the trial that he had $16,000 or $17,000 cash on hand at the starting point. This conflicted with the statements being corroborated ($500) and respondent's testimony at a prior trial ($2,000 to $9,000), but for the purpose of independently establishing the crime charged the jury could accept this testimony. Respondent further testified that he had $3,000 or $4,000 in cash at the end of the prosecution period. Taken together with the remainder of the net worth statement, which was stipulated or independently established, this testimony establishes a deficiency in reported income of more than $30,000.3 There could hardly be more conclusive independent evidence of the crime. 10 But one problem remains. The $17,000 hoard of cash could have absorbed the computed income deficiency for one or more of the prosecution years,4 and respondent was convicted on all four counts. It might be argued that independent evidence showing a $30,000 deficiency is not enough—that there must be evidence that this sum resulted in a deficiency for each of the years here in issue. There is no merit in this contention. In the first place, this evidence is merely corroborating respondent's cash-on-hand admissions and need not comply with the niceties of the annual accounting concept. While the evidence as a whole must show a deficiency for each of the prosecution years, the corroborative evidence suffices if it shows a substantial deficiency for the over-all prosecution period. Independent evidence that respondent understated his income by $30,000 in the same four-year period for which respondent's extrajudicial admissions tended to show a $46,000 deficiency is adequate corroboration. It provides substantial evidence that the crime or crimes of tax evasion have been committed; the corroboration rule requires no more. Second, there is evidence in this case which tends to negate the possibility that the alleged $17,000 hoard could have absorbed the deficiency for any of the prosecution years. This money supposedly went toward the purchase of equipment in 1946 and early 1947. Almost $16,000 in equipment was purchased in 1946; this accounts for nearly all of the cash hoard and still leaves a deficiency in 1946 of over $5,000 in unreported income.5 The funds which remain are insufficient to absorb the income deficiencies of any subsequent prosecution years.6 11 As we said, the circumstances surrounding respondent's admissions create considerable doubt as to their reliability. We have therefore examined the independent evidence with great care to insure that the accused will not be convicted on the basis of a false admission alone. Although the evidence was insufficient to corroborate the opening net worth directly, we find the independent proof of tax evasion entirely adequate. Accordingly, the decision of the Court of Appeals setting aside the conviction is reversed. 12 Reversed. 13 Mr. Justice DOUGLAS dissents. 1 By introducing evidence, the defendant waives his objections to the denial of his motion to acquit. Lii v. United States, 9 Cir., 198 F.2d 109; Leeby v. United States, 8 Cir., 192 F.2d 331; Gaunt v. United States, 1 Cir., 184 F.2d 284; Mosca v. United States, 9 Cir., 174 F.2d 448; Hall v. United States, 83 U.S.App.D.C. 166, 168 F.2d 161, 4 A.L.R.2d 1193. His proof may lay the foundation for otherwise inadmissible evidence in the Government's initial presentation, Ladrey v. United States, 81 U.S.App.D.C. 127, 155 F.2d 417, or provide corroboration for essential elements of the Government's case, United States v. Goldstein, 2 Cir., 168 F.2d 666; Ercoli v. United States, 76 U.S.App.D.C. 360, 131 F.2d 354. 2 It is not clear from the record whether this numbering began during or after the prosecution period. Compare R. 130—131 with R. 177—178. 3 The Government's net worth computation, based on $500 cash on hand at the outset and $1,971.50 on hand at the conclusion of the prosecution period, yields a four-year net worth increase (with expenditures) of $62,993—$46,218 in excess of declared income. Eliminating the cash items from the net worth statement, the deficiency is reduced by $1,471—to $44,747. If the defendant's testimony is accepted, of $17,000 cash on hand at the beginning and $3,000 at the end, the deficiency must be reduced by another $14,000, leaving $30,747. 4 The computed deficiency for 1947 was $7,393, and for 1948, $3,284. 5 The computed deficiency for 1946 was $21,019. 6 See notes 3 and 4. The computed deficiency for 1949 was $14,523.

1112

348 U.S. 142 75 S.Ct. 138 99 L.Ed. 188 Friedbergv.UNITED STATES of America. No. 18. Argued Oct. 20, 1954. Decided Dec. 6, 1954. Rehearing Denied Jan. 31, 1955. See 348 U.S. 932, 75 S.Ct. 334. Mr.Robert N. Gorman, Cincinnati, Ohio, for petitioner. Mr. H. BrianHolland, Asst. Atty. Gen., for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 This is the second in the group of four cases involving income tax prosecutions under the net worth method of proof. In this case petitioner was indicted for the years 1944 through 1947, and convicted on all counts except the first, covering the year 1944. 2 While the discussion in Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, is dispositive of some of the more general problems raised by this type of prosecution, petitioner here directs his fire specifically at the sufficiency of the evidence as to his opening net worth. To highlight his contention that the Government had not properly accounted for an alleged hoard of cash and bonds on hand at the beginning of the indictment period, petitioner has stipulated virtually every other net worth issue out of the case. 3 Although petitioner's testimony as to this cash on hand vacillated,1 we conclude from a careful examination of the testimony that the largest amount claimed at the starting point was 'far in excess' of $60,000. The Government's evidence, as in Holland, did not directly dispute this, but it did painstakingly trace the Friedbergs' finances from 1922 through the prosecution years. It pointed unmistakably to the conclusion that petitioner had no such board of cash at the starting point. 4 This evidence, briefly outlined, was as follows: Petitioner filed no tax return for 1922, paid nominal taxes for 1923, 1924 and 1925, and, except for 1926, 1927, 1930 and 1937, when he filed nontaxable returns, he filed no returns from 1926 through 1937. He borrowed small sums of money on three occasions in 1931. In 1934, when he failed to pay $30 a month on a real estate mortgage, the mortgagee brought a foreclosure suit and petitioner was unable to meet the modest compromise terms offered him by the court. In 1936 and 1940, levies on a judgment for $13.76 were returned nulla bona. A mortgage on his former home was foreclosed in 1937, and a deficiency judgment entered for over $3,500. The writ of execution was returned 'nothing found' in 1939, and petitioner then settled the judgment by paying $100 to the mortgagee in return for release from liability. In 1939, petitioner stated in an application for a loan that his total assets were $9,200, including $150 cash on hand, while his liabilities were $500. The tailoring business in which petitioner had worked since 1922 for an average pay of $50 a week was dissolved in 1941 because it could not meet its bills, and petitioner bought its assets for $650. 5 Yet it was during these years, from the 1920's until 1941, that petitioner claimed to have accumulated 'far in excess' of $60,000. We think the jury could readily have concluded that petitioner had saved no such reserve. 6 Petitioner's other objections can be disposed of quickly. First, he contends it was error for the special agent, a witness for the Government, to give his 'personal opinion' that petitioner had no cash on hand at the starting point. But this distorts what actually happened. The agent was asked on cross-examination to give a 'yes or no' answer to whether in his net worth statement he had credited petitioner with any cash on hand for 1941. The agent said 'there was no evidence available to show there was cash.' After defense counsel's insistence that the witness answer 'did you or didn't you' give credit for any cash, the court allowed the agent to explain his answer. He explained that his investigation disclosed no evidence which would permit him to credit petitioner with cash on hand in 1941 and on redirect examination he elaborated, pointing out the foreclosures and the other evidence which has been detailed above. From this, he said, he 'could see no reason why (he) should * * * include' any cash on hand at the starting point. 7 This was hardly a 'conclusion of the witness', which is an 'ultimate issue to be decided by the jury,' as petitioner claims. The agent, upon petitioner's insistence, was testifying to a negative fact: he had not included cash because he had found no evidence of cash. The evidence which he then summarized on redirect was only that which had already been introduced at the trial. It is difficult to see how he invaded the province of the jury; nor do we see how petitioner's question could have been answered otherwise. 8 Finally, error is asserted in the trial judge's final instruction to the jury, which was given some three to four hours after it had begun its deliberations. Petitioner contends that the instruction called upon the jury to compromise the issues.2 It may be that 'compromise' in its literal sense, if used alone, would leave improper connotations. Though its use here was unfortunate, we do not think it misled the jury. We note that no objection was made to any of the instructions, nor was any of petitioner's oral argument devoted to them a week later on motion for a new trial. In fact, petitioner specifically disclaimed any intent to make the instruction now attacked a ground for a new trial. This is persuasive evidence that he did not originally consider this section of the charge prejudicial; and since the remaining instructions were fair and negatived any inference that a compromise verdict was permissible, we are inclined to agree. In the face of this record, we can hardly conclude that this error is sufficient ground for reversal. 9 Affirmed. 1 Both Friedberg and his wife testified that he had 'far in excess' of $50,000 by 1936; at another point he swore he had between $50,000 and $100,000 by that time; by 1938 he claimed 'far in excess' of $60,000; and finally, he stated that he had 'substantially' $100,000 by 1947. 2 The instruction was: 'The Court will stand in recess until one-thirty. The Court may say to the jury at this time that I want you to make an honest and sincere effort to reach an agreement as to the merits of this case. I do not want you to shirk your duty. I want you to be fair to the Government, the United States, and the defendant. Nevertheless, this case has taken many days to try, and I hope you will make a sincere effort to compromise and adjust your differences and reach a verdict, if possible.'

01

348 U.S. 110 75 S.Ct. 141 99 L.Ed. 139 UNITED STATES of America, Petitioner,v.Peter BROWN. No. 38. Argued Nov. 15, 1954. Decided Dec. 6, 1954. Mr.Samuel D. Slade, Washington, D.C., for petitioner. Mr. Lee S. Kreindler, New York City, for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is a suit under the Federal Tort Claims Act, 28 U.S.C. § 1346(b), 28 U.S.C.A. § 1346(b), brought by respondent, a discharged veteran, for damages for negligence in the treatment of his left knee in a Veterans Administration Hospital. The injury to the knee occurred while respondent was on active duty in the Armed Services. The injury led to his honorable discharge in 1944. In 1950, the Veterans Administration performed an operation on the knee; but the knee continued to dislocate frequently. So another operation was performed by the Veterans Administration in 1951. It was during the latter operation that an allegedly defective tourniquet was used, as a result of which the nerves in respondent's leg were seriously and permanently injured. 2 The Independent Offices Appropriation Act, 1935, 48 Stat. 526, 38 U.S.C. § 501a, 38 U.S.C.A. § 501a, allows compensation both where the veteran suffers injury during hospitalization and where an existing injury is aggravated during the treatment. Each is considered as though it were 'service connected'. Respondent received a compensation award for his knee injury when he was honorably discharged; and that award was increased after the 1951 operation. 3 The District Court agreed with the contention of petitioner that respondent's sole relief was under the Veterans Act and dismissed his complaint under the Tort Claims Act. The Court of Appeals reversed. 2 Cir., 209 F.2d 463. The case is here on a petition for certiorari which we granted 347 U.S. 951, 74 S.Ct. 680 because of doubts as to whether Brooks v. United States, 337 U.S. 49, 69 S.Ct. 918, 93 L.Ed. 1200, or Feres v. United States, 340 U.S. 135, 71 S.Ct. 153, 95 L.Ed. 152, controlled this case. 4 The Brooks case held that servicemen were covered by the Tort Claims Act where the injury was not incident to or caused by their military service. 337 U.S. 49, 52, 69 S.Ct. 918, 920. In that case, servicemen on leave were negligently injured on a public highway by a government employee driving a truck of the United States. The fact that compensation was sought and paid under the Veterans Act* was held not to bar recovery under the Tort Claims Act. We refused to 'pronounce a doctrine of election of remedies, when Congress has not done so.' Id., 337 U.S. at 53, 69 S.Ct. 920. 5 The Feres decision involved three cases, in each of which the injury, for which compensation was sought under the Tort Claims Act, occurred while the serviceman was on active duty and not on furlough; and the negligence alleged in each case was on the part of other members of the Armed Forces. The Feres decision did not disapprove of the Brooks case. It merely distinguished it, holding that the Tort Claims Act does not cover 'injuries to servicemen where the injuries arise out of or are in the course of activity incident to service.' 340 U.S. 135, 146, 71 S.Ct. 153, 159. The peculiar and special relationship of the soldier to his superiors, the effects of the maintenance of such suits on discipline, and the extreme results that might obtain if suits under the Tort Claims Act were allowed for negligent orders given or negligent acts committed in the course of military duty, led the Court to read that Act as excluding claims of that character. Id., 340 U.S. at 141—143, 71 S.Ct. 156—157. 6 The present case is, in our view, governed by Brooks, not by Feres. The injury for which suit was brought was not incurred while respondent was on active duty or subject to military discipline. The injury occurred after his discharge, while he enjoyed a civilian status. The damages resulted from a defective tourniquet applied in a veterans' hospital. Respondent was there, of course, because he had been in the service and because he had received an injury in the service. And the causal relation of the injury of the service was sufficient to bring the claim under the Veterans Act. But, unlike the claims in the Feres case, this one is not foreign to the broad pattern of liability which the United States undertook by the Tort Claims Act. 7 That Act provides that, 'The United States shall be liable * * * in the same manner and to the same extent as a private individual under like circumstances * * *.' 28 U.S.C. § 2674, 28 U.S.C.A. § 2674. The Feres case emphasized how sharp would be the break in tradition if the claims there asserted were allowed against the United States, the Court noting that the effect of the Tort Claims Act is 'to waive immunity from recognized causes of action', 'not to visit the Government with novel and unprecedented liabilities.' 340 U.S. 135, 142, 71 S.Ct. 153, 157. But that cannot be said here. Certainly this claim is one which might be cognizable under local law, if the defendant were a private party. Responsibility of hospitals to patients for negligence may not be as notorious as the liability of the owners of automobiles. But the doctrine is not novel or without support. See, for example, Sheehan v. North Country Community Hosp., 273 N.Y. 163, 7 N.E.2d 28, 109 A.L.R. 1197, and the cases collected in 25 A.L.R.2d 29. 8 Congress could, of course, make the compensation system the exclusive remedy. The Court held in Johansen v. United States, 343 U.S. 427, 72 S.Ct. 849, 96 L.Ed. 1051, that Congress had done so in the case of the Federal Employees' Compensation Act, 5 U.S.C.A. § 751 et seq., with the result that a civilian employee could not sue the United States under the Public Vessels Act, 46 U.S.C.A. § 781 et seq. We noted in the Brooks case, 337 U.S. 49, 53, 69 S.Ct. 918, 920, that the usual workmen's compensation statute was in this respect different from those governing veterans, that Congress had given no indication that it made the right to compensation the veteran's exclusive remedy, that the receipt of disability payments under the Veterans Act was not an election of remedies and did not preclude recovery under the Tort Claims Act but only reduced the amount of any judgment under the latter Act. We adhere to that result. We adhere also to the line drawn in the Feres case between injuries that did and injuries that did not arise out of or in the course of military duty. Since the negligent act giving rise to the injury in the present case was not incident to the military service, the Brooks case governs and the judgment must be affirmed. 9 Affirmed. 10 Mr. Justice BLACK, with whom Mr. Justice REED and Mr. Justice MINTON join, dissenting. 11 In Brooks v. United States, 337 U.S. 49, 69 S.Ct. 918, 93 L.Ed. 1200, we held that actions for damages could be brought against the Government for injuries to one soldier and the death of another due to negligent operation of an army truck. But we pointed out that the accident there had nothing to do with the 'army careers' of the soldiers and was neither caused by nor incident to their military service. When injured the two soldiers were off duty and were riding along a state highway in their own car on their own business which bore no relationship of any kind to any past, present or future connection with the army. Thus, the two soldiers would have been injured had they never worn a uniform at all. In this case, however, the injury is inseparably related to military service and the Brooks case should not be held controlling. But for his army service this veteran could not have been injured in the veterans hospital as he was eligible and admitted for treatment there solely because of war service which gave him veteran status. Moreover, he was actually being treated for an army service injury. 12 For a hospital injury a veteran is entitled to precisely the same disability benefits as if the injury had been inflicted while he was a soldier.* We have previously held, I think correctly, that a soldier injured in a hospital cannot also sue for damages under the Tort Claims Act. Feres v. United States, 340 U.S. 135, 71 S.Ct. 153, 95 L.Ed. 152. But the Court now holds that a veteran can. To permit a veteran to recover damages from the Government in circumstances under which a soldier on active duty cannot recover seems like an unjustifiable discrimination which the Act does not require. * We indicated that recovery under the Tort Claims Act should be reduced by the amounts paid by the United States as disability payments under the Veterans Act. 337 U.S. 52, 53—54, 69 S.Ct. 918, 920—921. See the case on remand, United States v. Brooks, 4 Cir., 176 F.2d 482, 484. * 'Where any veteran suffers * * * an injury, or an aggravation of any existing injury, as the result of * * * hospitalization, or medical or surgical treatment * * * benefits * * shall be awarded in the same manner as if such disability, aggravation, or death were service connected * * *.' 48 Stat. 526, 38 U.S.C. § 501a, 38 U.S.C.A. § 501a.

12

348 U.S. 147 75 S.Ct. 194 99 L.Ed. 192 Daniel SMITH, Petitioner,v.UNITED STATES of America. No. 52. Argued Oct. 21, 22, 1954. Decided Dec. 6, 1954. [Syllabus from 147-148 intentionally omitted] Mr.W. Arthur Garrity, Jr., Boston, Mass., for petitioner. Mr.Marvin E. Frankel, Washington, D.C., for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 This is the third of the net worth cases and the first dealing with the Government's use of extrajudicial statements made by the accused. Petitioner and his wife were jointly tried on five counts charging them with willful attempts to evade and defeat their income taxes for the years 1946 through 1950. A motion for acquittal was granted as to the wife on all five counts, and as to petitioner on the fifth count (for the year 1950). The jury found petitioner guilty on the first four counts, and the conviction was affirmed by the Court of Appeals. 210 F.2d 496. We granted certiorari in order to pass on the issues raised by the prosecution's use of defendant's extrajudicial statements. 347 U.S. 1010, 74 S.Ct. 868. 2 The Government's theory was that the increases in the net worth of petitioner and his wife exceeded their reported income for each of the prosecution years, and that these increments represented taxable income. The evidence tended to show that petitioner and his wife were persons of moderate means prior to 1945, and that toward the end of that year petitioner acquired a racing-news service. In the four succeeding years, the prosecution years here in issue, petitioner and his wife acquired a large amount of visible wealth in the form of bank accounts, real estate, securities, and other assets. The evidence, taken as a whole, tended to prove that petitioner and his wife had understated their income for the four-year period of by over $190,000. 3 The issues in this case stem from a statement signed by the petitioner and delivered to the Government agents along with a check, the latter supposedly representing the amount of tax he thought due and owing.1 The statement, a five-page document, included tables on petitioner's securities, prior tax returns, living expenses, and a listing of petitioner's assets for each of the years 1945 through 1949, showing changes in his net worth over the prosecution period. While each of the pages was headed by the names of petitioner and his wife, the statement was signed only by the petitioner. His signature appeared after a clause describing the listing of assets as 'my true net worth for the period covered herein.' 4 Admissibility of the Statement. 5 Petitioner contends that his net worth statement should not have been admitted in evidence because it was procured pursuant to an understanding between petitioner and a Government agent that the case would be closed and the petitioner granted immunity. See Ziang Sung Wan v. United States, 266 U.S. 1, 14, 45 S.Ct. 1, 3, 69 L.Ed. 131; Bram v. United States, 168 U.S. 532, 542—543, 18 S.Ct. 183, 186—187, 42 L.Ed. 568; Wilson v. United States, 162 U.S. 613, 622—623, 16 S.Ct. 895, 899, 40 L.Ed. 1090; Sparf and Hansen v. United States, 156 U.S. 51, 55, 15 S.Ct. 273, 275, 39 L.Ed. 343. Petitioner's accountant, who carried on negotiations with this Government agent, testified that the agent had promised to close the case if the net worth statement and a check to cover the tax deficiency were forthcoming, and that he, the accountant, would never have submitted the statement had he not believed that the case would be closed on this basis. The Government agent testified that he was aware of no such understanding and that he had made no promises to close the case. After a pretrial hearing on petitioner's motion to suppress evidence, the trial judge refused to suppress the net worth statement. During the course of the trial, he refused to hold a hearing outside the presence of the jury to determine preliminary the statement's admissibility. He submitted the issue to the jury with the instruction that they were to reject the statement, and all evidence obtained through it, if 'trickery, fraud or deceit' were practiced on petitioner or his accountant. 6 The issue of fraud or deceit on the part of the Government agent was properly submitted to the jury, and the jury, in arriving at its general verdict, could have found from the conflicting evidence that no fraudulent inducement had been offered petitioner or his accountant. Petitioner cannot complain that he was denied a voir dire, cf. United States v. Carignan, 342 U.S. 36, 72 S.Ct. 97, 96 L.Ed. 48, since the trial judge had already held a hearing on this issue in passing on the pretrial motion to suppress evidence. Moreover, the only evidence offered by petitioner in seeking this hearing during the trial was the testimony of petitioner's accountant, evidence which had been heard in the pretrial hearing and was narrated again to judge and jury after the voir dire had been denied. Under these circumstances, it cannot be said that the refusal to hold a preliminary hearing deprived petitioner of any substantial right. 7 Corroboration of Petitioner's Statement. 8 Petitioner's second major objection is that his net worth statement, as it related to his opening net worth, was not corroborated—or was insufficiently corroborated—by independent evidence. Petitioner's statement listed his opening net worth as follows: Bank account...........$ 1,079.60 Residence.............. 12,000.00 Automobile........... __2,000.00 Total assets......... $15,079.60 The Government agents credited petitioner with a higher opening net worth: Cash in banks ......... $8,058.58 Drug store partnership.. 5,618.39 Real estate............ 18,600.00 Furniture............... 2,000.00 Automobile.............__2,000.00 Total............... $36,276.97 9 In determining these opening net worth figures, the Government agents relied in part on figures furnished by petitioner in his net worth statement and in other of his extrajudicial admissions—for the autos, the furniture, and one parcel of real estate. Any variation in these figures would not materially affect the result.2 But petitioner further complains that the Government did not corroborate the negative implications of his net worth statement, that he did not have at the end of 1945 any substantial assets—for example, cash on hand—which were not reflected in his or the Government's net worth computation. The question presented, therefore, is whether there is sufficient independent evidence to corroborate petitioner's extrajudicial admission that he did not have sufficient assets at the starting point to account for the increases in net worth attributed to him in the prosecution years. 10 The general rule that an accused may not be convicted on his own uncorroborated confession has previously been recognized by this Court, Warszower v. United States, 312 U.S. 342, 61 S.Ct. 603, 85 L.Ed. 876; Isaacs v. United States, 159 U.S. 487, 16 S.Ct. 51, 40 L.Ed. 229; cf. Miles v. United States, 103 U.S. 304, 311 312, 26 L.Ed. 481, and has been consistently applied in the lower federal courts and in the overwhelming majority of state courts, Forte v. United States, 68 App.D.C. 111, 94 F.2d 236, 127 A.L.R. 1130; 7 Wigmore, Evidence, §§ 2070—2072. Its purpose is to prevent 'errors in convictions based upon untrue confessions alone', Warszower v. United States, supra, 312 U.S. at 347, 61 S.Ct. at page 606; its foundation lies in a long history of judicial experience with confessions and in the realization that sound law enforcement requires police investigations which extend beyond the words of the accused. Confessions may be unreliable because they are coerced or induced, and although separate doctrines exclude involuntary confessions from consideration by the jury, Bram v. United States, supra; Wilson v. United States, supra, further caution is warranted because the accused may be unable to establish the involuntary nature of his statements. Moreover, though a statement may not be 'involuntary' within the meaning of this exclusionary rule, still its reliability may be suspect if it is extracted from one who is under the pressure of a police investigation—whose words may reflect the strain and confusion attending his predicament rather than a clear reflection of his past. Finally, the experience of the courts, the police and the medical profession recounts a number of false confessions voluntarily made, Note, 28 Ind.L.J. 374. These are the considerations which justify a restriction on the power of the jury to convict, for this experience with confessions is not shared by the average juror. Nevertheless, because this rule does infringe on the province of the primary finder of facts, its application should be scrutinized lest the restrictions it imposes surpass the dangers which gave rise to them. 11 The first issue is whether the requirement of corroboration may properly be applied to the crime of tax evasion. The corroboration rule, at its inception, served an extremely limited function. In order to convict of serious crimes of violence, then capital offenses, independent proof was required that someone had indeed inflicted the violence, the so-called corpus delicti. Once the existence of the crime was established, however, the guilt of the accused could be based on his own otherwise uncorroborated confession. But in a crime such as tax evasion there is no tangible injury which can be isolated as a corpus delicti. As to this crime, it cannot be shown that the crime has been committed without identifying the accused. Thus we are faced with the choice either of applying the corroboration rule to this offense and according the accused even greater protection than the rule affords to a defendant in a homicide prosecution, Evans v. United States, 8 Cir., 122 F.2d 461; Murray v. United States, 53 App.D.C. 119, 288 F. 1008, or of finding the rule wholly inapplicable because of the nature of the offense, stripping the accused of this guarantee altogether. We choose to apply the rule, with its broader guarantee, to crimes in which there is no tangible corpus delicti, where the corroborative evidence must implicate the accused in order to show that a crime has been committed. See, e.g., Tabor v. United States, 4 Cir., 152 F.2d 254; United States v. Kertess, 2 Cir., 139 F.2d 923; Ercoli v. United States, 76 U.S.App.D.C. 360, 131 F.2d 354; Pines v. United States, 8 Cir., 123 F.2d 825; Forte v. United States, 68 App.D.C. 111, 94 F.2d 236, 127 A.L.R. 1120; Tingle v. United States, 8 Cir., 38 F.2d 573; Wynkoop v. United States, 9 Cir., 22 F.2d 799; Daeche v. United States, 2 Cir., 250 F. 566. 12 The next problem presented is whether the statement here involved—the opening net worth—must be corroborated. Although this statement was part of a document which may have admitted an understatement of taxable income, one of the elements of the crime of tax evasion, still it is clear that the statement is not a confession admitting to all the elements of the offense. There is some uncertainty in the lower court opinions as to whether the corroboration requirement applies to mere admissions, see United States v. Kertess, supra, 139 F.2d at page 929; Ercoli v. United States, supra, 131 F.2d at page 356. But see Warszower v. United States, supra, 312 U.S. at page 347, 61 S.Ct. at page 606. We hold the rule applicable to such statements, at least where, as in this case, the admission is made after the fact to an official charged with investigating the possibility of wrongdoing, and the statement embraces an element vital to the Government's case.3 Cf. Gulotta v. United States, 8 Cir., 113 F.2d 683, assimilating admissions to confessions but failing to distinguish between admissions before and after the fact as required by the Warszower case. Accord, Duncan v. United States, 9 Cir., 68 F.2d 136; Gordnier v. United States, 9 Cir., 261 F. 910. 13 The negative implications of petitioner's opening net worth admission formed the cornerstone of the Government's theory of guilt. Without proof that assets on hand at the beginning of the prosecution period did not account for the alleged net worth increases, the Government could not succeed. Holland v. United States, 348 U.S. 75, 75 S.Ct. 127. An admission which assumes this importance in the presentation of the prosecution's case should not go uncorroborated, and this is true whether we consider the statement an admission of one of the formal 'elements' of the crime or of a fact subsidiary to the proof of these 'elements.' It is the practical relation of the statement to the Government's case which is crucial, not its theoretical relation to the definition of the offense. 14 Although we are unable to hold on this record that petitioner's statement was inadmissible, the evidence is sufficient to cast doubt on the accuracy of his admissions. The unreliability of the statement is illustrated by the great variance between its net worth calculation and the Government's computation, although petitioner's consistent erring in his own favor made it not unreasonable for the Government to hold him to his word where it was to the Government's advantage. On the whole, the statement is one which should be carefully scrutinized in the light of the available independent evidence. 15 There has been considerable debate concerning the quantum of corroboration necessary to substantiate the existence of the crime charged. It is agreed that the corroborative evidence does not have to prove the offense beyond a reasonable doubt, or even by a preponderance, as long as there is substantial independent evidence that the offense has been committed, and the evidence as a whole proves beyond a reasonable doubt that defendant is guilty. Gregg v. United States, 8 Cir., 113 F.2d 687; Jordan v. United States, 4 Cir., 60 F.2d 4; Forte v. United States, supra; Daeche v. United States, supra. But cf. United States v. Fenwick, 7 Cir., 177 F.2d 488. In addition to differing views on the substantiality of specific independent evidence, the debate has centered largely about two questions: (1) whether corroboration is necessary for all elements of the offense established by admissions alone, compare Ercoli v. United States, supra, and Pines v. United States, supra, with Wynkoop v. United States, supra, and Pearlman v. United States, 9 Cir., 10 F.2d 460, and (2) whether it is sufficient if the corroboration merely fortifies the truth of the confession, without independently establishing the crime charged, compare Pearlman v. United States, supra, and Daeche v. United States, supra, with Pines v. United States, supra, and Forte v. United States, supra. We answer both in the affirmative. All elements of the offense must be established by independent evidence or corroborated admissions, but one available mode of corroboration is for the independent evidence to bolster the confession itself and thereby prove the offense 'through' the statements of the accused. Cf. Parker v. State, 228 Ind. 1, 88 N.E.2d 556, 89 N.E.2d 442. 16 Under the above standard the Government may provide the necessary corroboraton by introducing substantial evidence, apart from petitioner's admissions, tending to show that petitioner willfully understated his taxable income. This may be accomplished by substantiating the opening net worth directly, since that figure, taken together with the remainder of the net worth computation, amply establishes a consistent understatement by petitioner of his taxable income; and from this the jury could infer willfulness. Two significant items of evidence tend to show that petitioner owned no assets at the starting point in excess of those attributed to him in the Government's statement. First, a Government official testified that petitioner had filed no income tax returns in the years 1936 through 1939, nontaxable returns for 1940 and 1942, a nonassessable return for 1943, a refundable return for 1944, and a taxable return for 1941. Second, the testimony of a Government agent, touching upon the economic activities of the petitioner in the years immediately preceding the prosecution period, disclosed that prior to 1941 petitioner had been employed as a manager of a racing-news service; that from 1941 to 1945 he worked in a package store for $40 a week; and that for a short time during this latter period his wife worked as a hairdresser. The agent's testimony, however, was based solely on the extrajudicial statements of the petitioner, and under the standard we have adopted these admissions must be corroborated by substantial independent evidence.4 The tax returns adequately corroborate petitioner's statements as to his financial history, and we hold that the two together corroborate the opening net worth. The jury could find from this evidence that petitioner's resources prior to the prosecution years were such that he could not have amassed a greater store of wealth than the amount credited to him in the Government's net worth statement. This proof is buttressed somewhat by independent evidence that petitioner had bought a modest home in 1943 for $9,600, paying less than one-third in cash and the balance in installments, and by the fact that petitioner's wife, who held the bulk of the family's assets in her name, was a housewife through almost all of the preprosecution years with no significant independent sources of income. 17 But substantiating the opening net worth is just one method of corroborating these extrajudicial statements. Petitioner's admissions may also be corroborated by an entirely different line of proof—by independent evidence concerning petitioner's conduct during the prosecution period, which tends to establish the crime of tax evasion without resort to the net worth computations. The Government's evidence showed that coincident with petitioner's opening of the racing-news service, in which he kept no records, petitioner and his wife opened 9 new bank accounts, making their over-all total 14 accounts in 12 banks; that the money in these accounts, which amounted to only $8,000 at the beginning of the prosecution period, varied between $42,000 and $80,000 during the prosecution years; that brokerage accounts, opened by petitioner and his wife in 1947 and 1948 respectively, were worth $9,000 in 1947 and over $41,000 in 1948 and 1949; that petitioner and his wife made new investments in realty during the prosecution period, about $2,000 in 1946, over $14,000 in 1948, and $35,000 in 1949; that other substantial expenditures were made during the prosecution years, $3,750 in U.S. Savings Bonds in 1946, a total investment of $4,768 in new cars in 1947 and 1948, and a $37,000 annuity payment and $3,750 mink coat in 1949. During these same years petitioner's declared income exceeded his living expenses by less than $3,000. These substantial expenditures, savings and investments might not, of themselves, suffice to support a conviction of tax evasion without evidence of a starting point indicating a lack of funds from which these payments might have come. But this conduct does corroborate the net worth statement by tending to show that the petitioner was understating his income during the prosecution years. We cannot say that there is so little relation between expenditures and income that the Government's proof of expenditures far in excess of reported income, coupled with proof of a business producing unrecorded amounts of income, fails to corroborate the charge that petitioner's earnings during the prosecution years exceeded his declared income. 18 We hold that under either of these two lines of proof sufficient corroboration was shown to permit the case to go to the jury. The circumstances leading up to petitioner's statement, and the failure of the facts shown therein to mesh with the other evidence adduced by the Government, imposed on the trial judge and the reviewing courts a duty of careful scrutiny. Nevertheless, the independent evidence was strong enough, we believe, to overcome these indicia of unreliability, and we accordingly affirm. 19 Affirmed. 1 Although there had previously been discussion of a civil fraud penalty, this check was apparently meant to cover only the tax liability proper. 2 The Government also relied on petitioner's admissions in establishing his living expenses during the prosecution years. But these do not bear on opening net worth and are therefore not fairly within the question presented. Moreover, the variation possible in these figures is too slight to affect the result in any significant respect. 3 Admissions given under special circumstances, providing grounds for a strong inference of reliability, may not have to be corroborated. Cf. Miles v. United States, supra; State v. Saltzman, 241 Iowa 1373, 44 N.W.2d 24. 4 They were made to officials after the offense had been committed. It may be questioned, though, whether these admissions were as basic to the Government's case as the statements concerning opening net worth, and whether they should therefore be exempted from the requirement of corroboration. But where a fact is sufficiently important that the Government adduces extrajudicial statements of the accused bearing on its existence, and then relies on its existence to sustain the defendant's conviction, there is need for corroboration. Cf. United States v. Kertess, supra, 139 F.2d at page 930.

01

348 U.S. 105 75 S.Ct. 145 99 L.Ed. 135 O'Neal MASSEY, Petitioner,v.H. E. MOORE, Warden, Texas State Penitentiary at Huntsville, Texas. No. 119. Argued Nov. 8, 1954. Decided Dec. 6, 1954. Mr.Dean Acheson, Washington, D.C., for petitioner. Mr. James N. Castleberry, Jr., Austin, Tex., for respondent pro hac vice by special leave of Court. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Petitioner, who is in a Texas prison under a life sentence imposed by a Texas court, brought this petition for writ of habeas corpus in the Federal District Court. His claim is that he was denied the due process of law guaranteed by the Fourteenth Amendment because he was tried and convicted of robbery at a time when he was of unsound mind and unassisted by counsel. The District Court denied the petition without a hearing. The Court of Appeals affirmed by a divided vote. 205 F.2d 665. The case is here on certiorari. 347 U.S. 1011, 74 S.Ct. 873. 2 Petitioner's trial on the robbery charge started and ended the same day. He had been confined to the psychopathic hospital of the state prison for several months prior to the trial; and for part of that time he was kept in a cell block reserved for the most violent inmates. He was removed from a strait jacket March 7, 1941, and tried March 11, 1941. He stood trial without benefit of counsel, though the crime with which he was charged carried a mandatory life sentence because petitioner had suffered two prior felony convictions. See Vernon's Ann.Tex.Pen.Code, Art. 63. 3 Petitioner declined to plead guilty; hence a plea of not guilty was entered. So far as we are advised, petitioner took no part in the proceedings and made no attempt to conduct any defense. Petitioner was convicted and immediately sentenced. Shortly thereafter, he tried to commit suicide; and then he was recommitted to the psychopathic ward where he was confined for several months more. While he was so confined, the time for appeal from his judgment of conviction expired. 4 Since his conviction, petitioner has tried repeatedly to obtain relief by way of habeas corpus both in the state and federal courts. He repeatedly claimed that he was tried and convicted without counsel while he was insane and unable to defend himself. Until 1952, he failed,1 because the record of his trial erroneously stated that he was represented by counsel. The error in that record was corrected by affidavits of both the trial judge and the prosecuting attorney. Thereupon petitioner renewed his efforts to get a hearing on his claim. Finally the Texas courts denied him relief because under Texas law the question whether he was insane and thus unable to defend could be raised only on appeal, not collaterally. Ex parte Massey, 157 Tex.Cr.R. 491, 249 S.W.2d 599. Petitioner, having exhausted his state remedies, sought the present relief in the District Court, which ruled against him. The Court of Appeals affirmed on the grounds (1) that petitioner now tenders an issue which could and should have been raised during the trial; (2) that the question of petitioner's insanity was determined against him in 1948 by the District Court; and (3) that the allegations of insanity and lack of counsel do not present a substantial federal question. 5 We disagree with the Court of Appeals and conclude that petitioner is entitled to a hearing on the question whether he was insane at the time of the trial. He has not had such a hearing. In 1948, the District Court, acting on the erroneous assumption that petitioner had counsel, held that he was competent to stand trial. 6 In the present case the District Court merely ruled, 'On this question of whether, since he was not represented by counsel at his trial, he is in custody in violation of the Constitution, etc. of the United States, I have examined again all the proceedings in this Court and in the State Courts and have reached the conclusion that his contention that his trial was not in accordance with the Constitution is without merit.' That may mean that the evidence to support the finding that petitioner was competent to stand trial with a lawyer was also sufficient to sustain the conclusion that he was competent to stand trial without a lawyer. It may mean that in the view of the District Court the two issues are the same. The present record leaves us in doubt. One might not be insane in the sense of being incapable of standing trial and yet lack the capacity to stand trial without benefit of counsel. The difference in those issues and the importance of that difference to the petitioner make manifest that grave injustice might be done, if the finding in the earlier proceedings were allowed to do service here. On this record the question of petitioner's ability to represent himself without counsel remains undetermined. 7 On the present pleadings we must take as true the allegation of mental incapacity at the time of the trial. See Smith v. O'Grady, 312 U.S. 329, 61 S.Ct. 572, 85 L.Ed. 859; White v. Ragen, 324 U.S. 760, 763, 65 S.Ct. 978, 980, 89 L.Ed. 1348. Yet if he were then insane as claimed, he was effectively foreclosed from defending himself. We cannot hold an insane man tried without counsel to the requirement of tendering the issue of his insanity at the trial. If he is insane, his need of a lawyer to tender the defense is too plain for argument. We have not allowed convictions to stand if the accused stood trial without benefit of counsel and yet was so unskilled, so ignorant, or so mentally deficient as not to be able to comprehend the legal issues involved in his defense. See Williams v. Kaiser, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398; Wade v. Mayo, 334 U.S. 672, 68 S.Ct. 1270, 92 L.Ed. 1647; Palmer v. Ashe, 342 U.S. 134, 72 S.Ct. 191, 96 L.Ed. 154. The requirement of the Fourteenth Amendment is for a fair trial. See Betts v. Brady, 316 U.S. 455, 462, 62 S.Ct. 1252, 1256, 86 L.Ed. 1595. No trial can be fair that leaves the defense to a man who is insane, unaided by counsel, and who by reason of his mental condition stands helpless and alone before the court. Even the sane layman may have difficulty discovering in a particular case the defenses which the law allows. See Gibbs v. Burke, 337 U.S. 773, 69 S.Ct. 1247, 93 L.Ed. 1686. Yet problems difficult for him are impossible for the insane. Any defense is hopelessly beyond reach for an accused who is insane. He stands convicted on a charge which he could not contest and yet for which he may well have had a complete defense. 8 For the same reasons, the failure of an insane man to raise the question of his insanity on appeal emphasizes only his need for counsel, not his waiver or loss of his constitutional right. Cf. Smith v. O'Grady, supra. 9 We do not intimate an opinion on the merits, for we do not know what facts the hearing will produce. We only rule that if the allegations charged are proven, petitioner has been deprived of his liberty without due process of law. 10 Reversed. 1 For the chapters, which are reported, in petitioner's unsuccessful attempts to obtain a hearing on the question, see In re Massey, 327 U.S. 770, 66 S.Ct. 954, 90 L.Ed. 1000; Ex parte Massey, 149 Tex.Cr.R. 172, 191 S.W.2d 877; Massey v. Moore, 5 Cir., 173 F.2d 980.

01

348 U.S. 66 75 S.Ct. 166 99 L.Ed. 74 B. Clinton WATSON, et ux., Appellants,v.EMPLOYERS LIABILITY ASSURANCE CORPORATION, Ltd. No. 6. Argued Oct. 14, 1954. Decided Dec. 6, 1954. Rehearing Denied Jan. 10, 1955. See 348 U.S. 921, 75 S.Ct. 289. Messrs.Richard H. Surtzer, Cleve Burton, Shreveport, La., for appellants and petitioners. Mr.Benjamin C. King, Shreveport, La., for appellee and respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 Louisiana has an insurance code which comprehensively regulates the business La., for appellee and respondent. 2 Mr. Justice BLACK delivered the opinion of the Court. 3 Louisiana has an insurance code which comprehensively regulates the business of insurance in all its phases.1 This case brings to us challenges to the constitutionality of certain provisions of that code allowing injured persons to bring direct actions against liability insurance companies that have issued policies contracting to pay liabilities imposed on persons who inflict injury. Cf. Lumbermen's Mutual Casualty Co. v. Elbert, 348 U.S. 48, 75 S.Ct. 151. This is such a direct action brought by the appellants, Mr. and Mrs. Watson, in a Louisiana state court claiming damages against the appellee, Employers Liability Assurance Corporation, Ltd., on account of alleged personal injuries suffered by Mrs. Watson. The complaint charged that the injuries occurred in Louisiana when Mrs. Watson bought and used in that State 'Toni Home Permanent', a hair-waving product alleged to have contained a highly dangerous latent ingredient put there by its manufacturer. The manufacturer is the Toni Company of Illinois, a subsidiary of the Gillette Safety Razor Company which has its headquarters in Massachusetts. 4 The particular problem presented with reference to enforcing the Louisiana statute in this case arises because the insurance policy sued on was negotiated and issued in Massachusetts and delivered in Massachusetts and Illinois.2 This Massachusetts-negotiated contract contains a clause, recognized as binding and enforceable under Massachusetts and Illinois law, which prohibits direct actions against the insurance company until after final determination of the Toni Company's obligation to pay personal injury damages either by judgment or agreement.3 Contrary to this contractual 'no action' clause, the challenged statutory provisions permit injured persons to sue an insurance company before such final determination. As to injuries occurring in Louisiana, one provision of the State's direct action statute makes it applicable, even though, as here, an insurance contract is made in another state and contains a clause forbidding such direct actions.4 Another Louisiana statutory provision, with which Employers long ago complied, compels foreign insurance companies to consent to such direct suits in order to get a certificate to do business in the State.5 The basic issue raised by the attack on both these provisions is whether the Federal Constitution forbids Louisiana to apply its own law and compels it to apply the law of Massachusetts or Illinois. 5 After the case was removed to the United States District Court because of diversity Employers moved to dismiss, contending that the two Louisiana statutory provisions contravened the Equal Protection, Contract, Due Process and Full Faith and Credit Clauses of the Federal Constitution. With emphasis on the due process contention, the District Court dismissed the case, holding both statutory provisions unconstitutional as to policies written and delivered outside the State of Louisiana. 107 F.Supp. 494.6 The Court of Appeals agreed with the District Court and affirmed the dismissal. 202 F.2d 407. Provisions of Louisiana's statutes having been held invalid as repugnant to the Federal Constitution, the case is properly here on appeal.7 6 The denial of equal protection and impairment of contract contentions are wholly void of merit. The State's direct action provisions fall with equal force upon all liability insurance companies, foreign and domestic. Employers points to no other provisions of the Louisiana law or to facts of any nature which give the slightest support to any charge of discriminatory application of the direct action statute. And since the direct action provisions became effective before this insurance contract was made, there is a similar lack of substantiality in the suggestion that Louisiana has violated Art. I, § 10, of the United States Constitution which forbids states to impair the obligation of contracts. Munday v. Wisconsin Trust Co., 252 U.S. 499, 503, 40 S.Ct. 365, 366, 64 L.Ed. 684. 7 Had the policy sued on been issued in Louisiana there would be no arguable due process question. See Merchants Mutual Auto. Liability Ins. Co. v. Smart, 267 U.S. 126, 129—130, 45 S.Ct. 320, 321, 69 L.Ed. 538. But because the policy was bought, issued and delivered outside of Louisiana, Employers invokes the due process principle that a state is without power to exercise 'extra territorial jurisdiction,' that is, to regulate and control activites wholly beyond its boundaries. Such a principle was recognized and applied in Home Ins. Co. v. Dick, 281 U.S. 397, 50 S.Ct. 338, 74 L.Ed. 926, a case strongly relied on by Employers. There Texas was denied power to alter the terms of an insurance contract made in Mexico between persons then in that country, covering a vessel only while in Mexican waters, and containing a provision that the contract was to be governed the laws of Mexico. Thus, the subject matter of the contract related in no manner to anything that had been done or was to be done in Texas. For this reason, Texas was denied power to alter the obligations of the Mexican contract. But this Court carefully pointed out that its decision might have been different had activities relating to the contract taken place in Texas upon which the State could properly lay hold as a basis for regulation. Home Ins. Co. v. Dick, supra, 281 U.S. at page 408, note 5, 50 S.Ct. 341. The extra territorial due process doctrine was again applied in Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U.S. 143, 54 S.Ct. 634, 78 L.Ed. 1178. That case denied the power of Mississippi to alter terms of an insurance contract made in Tennessee. Mississippi activities in connection with the policy were found to be so 'slight' and so 'casual' that Mississippi could not apply its own law in such way as to enlarge the obligations of the Tennessee contract. Again, however, the Court carefully noted that there might be future cases in which the terms of out-of-state contracts would be so repugnant to the vital interests of the forum state as to justify nonenforcement. Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., supra, 292 U.S. at page 150, 54 S.Ct. 636. See also Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481, and cases there cited. 8 Some contracts made locally, affecting nothing but local affairs, may well justify a denial to other states of power to alter those contracts. But, as this case illustrates, a vast part of the business affairs of this Nation does not present such simple local situations. Although this insurance contract was issued in Massachusetts, it was to protect Gillette and its Illinois subsidiary against damages on account of personal injuries that might be suffered by users of Toni Home Permanents anywhere in the United States, its territories, or in Canada. As a consequence of the modern practice of conducting widespread business activities throughout the entire United States, this Court has in a series of cases held that more states than one may seize hold of local activities which are part of multistate transactions and may regulate to protect interests of its own people, even though other phases of the same transactions might justify regulatory legislation in other states. See, e.g., Osborn v. Ozlin, 310 U.S. 53, 60 S.Ct. 758, 84 L.Ed. 1074; Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 63 S.Ct. 602, 87 L.Ed. 777; Alaska Packers Ass'n v. Industrial Accident Commission, 294 U.S. 532, 55 S.Ct. 518, 79 L.Ed. 1044. 9 Louisiana's direct action statute is not a mere intermeddling in affairs beyond her boundaries which are no concern of hers. Persons injured or killed in Louisiana are most likely to be Louisiana residents, and even if not, Louisiana may have to care for them. Serious injuries may require treatment in Louisiana homes or hospitals by Louisiana doctors. The injured may be destitute. They may be compelled to call upon friends, relatives, or the public for help. Louisiana has manifested its natural interest in the injured by providing remedies for recovery of damages. It has a similar interest in policies of insurance which are designed to assure ultimate payment of such damages. Moreover, Louisiana courts in most instances provide the most convenient forum for trial of these cases. But modern transportation and business methods have made it more difficult to serve process on wrongdoers who live or do business in other states. In this case efforts to serve the Gillette Company were answered by a motion to dismiss on the ground that Gillette had no Louisiana agent on whom process could be served. If this motion is granted, Mrs. Watson, but for the direct action law, could not get her case tried without going to Massachusetts or Illinois although she lives in Louisiana and her claim is for injuries from a product bought and used there. What has been said is enough to show Louisiana's legitimate interest in safeguarding the rights of persons injured there. In view of that interest, the direct action provisions here challenged do not violate due process. 10 What we have said above goes far toward answering the Full Faith and Credit Clause contention. That clause does not automatically compel a state to subordinate its own contract laws to the laws of another state in which a contract happens to have been formally executed. Where, as here, a contract affects the people of several states, each may have interests that leave it free to enforce its own contract policies. Alaska Packers Ass'n v. Industrial Accident Commission, 294 U.S. 532, 544—550, 55 S.Ct. 518, 522—525, 79 L.Ed. 1044. See Griffin v. McCoach, 313 U.S. 498, 506—507, 61 S.Ct. 1023, 1027, 85 L.Ed. 1481. We have already pointed to the vital interests of Louisiana in liability insurance that covers injuries to people in that State. Of course Massachusetts also has some interest in the policy sued on in this case. The insurance contract was formally executed in that State and Gillette has an office there. But plainly these interests cannot outweigh the interest of Louisiana in taking care of those injured in Louisiana. Since this is true, the Full Faith and Credit Clause does not compel Louisiana to subordinate its direct action provisions to Massachusetts contract rules. Pacific Employers Ins. Co. v. Industrial Accident Commission, 306 U.S. 493, 503, 59 S.Ct. 629, 633, 83 L.Ed. 940. But cf. John Hancock Mut. Life Ins. Co. v. yates, 299 U.S. 178, 57 S.Ct. 129, 81 L.Ed. 106; Hughes v. Fetter, 341 U.S. 609, 71 S.Ct. 980, 95 L.Ed. 1212. 11 What we have already said disposes of the contention that Louisiana's law compelling foreign insurance companies to consent to direct actions is unconstitutional. That contention is that the Due Process Clause of the Fourteenth Amendment forbids a state to compel a foreign corporation to surrender constitutional rights as a condition of being permitted to do business in the state. See Terral v. Burke Construction Co., 257 U.S. 529, 42 S.Ct. 188, 66 L.Ed. 352. That principle is inapplicable to this case because, as we have just decided, Louisiana has a constitutional right to subject foreign liability insurance companies to the direct action provisions of its laws whether they consent or not. 12 Reversed. 13 Mr. Justice FRANKFURTER, concurring. 14 While I agree with the Court's result, I find the course of reasoning by which it is reached not without serious obstacles. Since the difficulties involve constitutional issues, decision upon them should be avoided if a less doubtful ground is available. In my opinion there is a basis which readily invites today's decision. Whether Louisiana may rewrite a contract, whose obligations are determined by Massachusetts or Illinois, by deleting a substantial feature of that contract and thereby enlarging the obligation of the insurance company, surely raises a serious question affecting the constitutional relationships of the States one to another. Contrariwise, whether Louisiana, free as it was to exclude the insurance company from coming into the State to do business, was empowered to condition the company's entry by an undertaking to observe a public policy binding on all local insurance companies and strictly related to the protection of serious interests of its own citizens, seems to me a question easier of solution. Accordingly I would rest the decision on this ground. 15 This controversy arises out of a contract made between Employers' Liability Assurance Corp., a British corporation, and the Toni Company, a division of the Gillette Safety Razor Co., a Delaware corporation with principal offices in Boston, Massachusetts. The contract contained this provision: 16 'No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company.' 17 It was issued and delivered in Massachusetts to Gillette and copy delivered in Illinois to Toni. Happily, it is not necessary to determine whether the obligations flowing from this contract are determined exclusively by the law of Massachusetts or by the law of Illinois. Concededly, both States recognize the right of an insurance company to safeguard its treasury by making its indirect liability to a third person contingent on a judgment against the insured or compromise settlement participated in by the insurer. Howsoever the fact may be phrased or explained away, to allow suits by a third-party claimant directly against the insurance company prior to a judgment against the insured is to subject the insurance company to an obligation which it had not undertaken and which indeed it had expressly refused to assume. In sanctioning the protection of insurance funds afforded by the 'no-action' clause, Massachusetts and Illinois have expressed state policy of the same constitutional authority as Louisiana asserted in its legislation allowing direct actions. Massachusetts is deeply concerned with the fiscal well-being of insurance companies whose activities center in that State; this is of considerable importance to its citizens. In addition, both Massachusetts and Illinois share concern for the interest of the insured in the scope and nature of the obligations which bind as well as protect him. The premiums payable by the insured under this policy varied directly with the losses paid by the insurer and to that extent the insured had a stake in the 'no-action' clause. To treat that clause as though it were a redundant or an insubstantial part of the agreement is to flout familiar experience of the readiness of juries to amerce insurance companies.1 18 To resolve these conflicting policies solely on the basis of the public policy of Louisiana is to assume that there is only one principle involved in a problem when in fact there are conflicting principles of equal relevance. This Court has not heretofore disregarded the interests of States in the position of Massachusetts and Illinois by exclusive regard for the policy of a State in the position of Louisiana when regard for its interest necessarily tangles with the interests of sister States. To be sure, a State may refuse to give affirmative help in enforcing a contract valid in a sister State where the obligation was incurred, but against its own policy. At least it may do so insofar as the Full Faith and Credit Clause is no barrier. But to deny judicial enforcement of a contract through its courts when such contract sufficiently offends local policy is a very different thing from rewriting a contract and enforcing it in a manner contrary to the undertaking of the makers. 19 That Louisiana's attempt to change the terms of the contract of insurance in this case presents a serious question, apart from the power of Louisiana to exclude a foreign insurance company or admit it on condition, is emphatically shown by Hartford Accident & Indemnity Co. v. Delta & Pine Co., 292 U.S. 143, 54 S.Ct. 634, 78 L.Ed. 1178. In that case an action was brought in Mississippi on a fidelity bond insuring against employee defalcations 'in any position, anywhere.' The bond had been issued while the executive offices of the insured were temporarily in Tennessee, and was issued and delivered in that State. After the insured moved its main offices to Mississippi, the State of its incorporation, suit was brought there for its treasurer's thieving in Mississippi. The policy contained a provision that a claim under the contract must be made within 15 months after the termination of suretyship for the defaulting employee. The claim was not made within that period, but the Mississippi Supreme Court held that this condition was not enforceable because contrary to a Mississippi statute. This Court reversed the Mississippi court, holding that the Mississippi statute could not disregard the limiting provision of the contract. The principle was laid down that a State may not 'in an action based upon such a contract enlarge the obligations of the parties to accord with every local statutory policy solely upon the ground that one of the parties is its own citizen.' 292 U.S. at page 149, 54 S.Ct. at page 636. Joining in this unanimous decision were two members, Mr. Chief Justice Hughes and Mr. Justice Brandeis, who probably had more specialized knowledge to make them aware that 'Government has always had a special relation to insurance', Osborn v. Ozlin, 310 U.S. 53, 65, 60 S.Ct. 758, 763, 84 L.Ed. 1074, than any other Justices ever to sit on this Court. 20 In the Hartford Indemnity case, as here, the policy covered transitory risks, without a defined situs, and the State of the forum had a foreseeable concern with the protection of assets within its jurisdiction at the time the policy was issued, for the policy issued listed 21 employees who were then working in Mississippi. Nevertheless, Mississippi, the State of the forum, was not allowed to enlarge the obligations of a contract elsewhere validly consummated. 21 Our more recent cases have not made inroad on the governing consideration in the Hartford Indemnity case, that the State which fixes the terms of insurance contracts has interests to be protected by the Constitution no less important than has a State which seeks to excise provisions of such a contract. In both the Osborn case, supra, and Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 63 S.Ct. 602, 87 L.Ed. 777, the Court was concerned merely with the validity of legislation of a regulatory nature. In neither was the Court faced with the problem of applying to an existing valid contract made outside the State local law modifying such contract. Realization that the Louisiana statute, in the context of this case, raises the delicate problem of balancing interests—that refractory aspect of due process—admonishes its avoidance when an easier solution lies at hand. 22 These, then, are the formidable constitutional hurdles that would have to be cleared were this an action against an insurance company which, somehow or other, was duly served in Louisiana but which had not exercised the privilege of doing business there subject to the condition of amenability to Louisiana direct action statutes. I have no doubt, however, that Louisiana can exact from Employers, as it did, valid consent to direct action in the case of injuries inflicted in Louisiana upon its citizens by Employers' policyholders. It can do so as part of the fair bargain by which it gave hospitality to Employers for doing business in Louisiana. 23 After the grain is winnowed from the chaff in some hundred opinions dealing with so-called 'unconstitutional conditions,' insofar as they relate to the power of a State to exclude a foreign corporation or condition its entry, the residuum is clear. In an early leading case the State's authority was asserted in absolute terms: 24 'Having no absolute right of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely; they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion.' Paul v. Virginia, 8 Wall. 168, 181, 19 L.Ed. 357.2 25 After a while, some obvious, strictly defined qualifications were made: 26 'The only limitation upon this power of the state to exclude a foreign corporation from doing business within its limits * * * or to exact conditions for allowing the corporation to do business or hire offices there, arises where the corporation is in the employ of the federal government, or where its business is strictly commerce, interstate or foreign. The control of such commerce being in the federal government, is not to be restricted by state authority.' Pembina Consolidated Silver Mining & Milling Co. v. Commonwealth of Pennsylvania, 125 U.S. 181, 190, 8 S.Ct. 737, 741, 31 L.Ed. 650. 27 After considerable further judicial experience, the matter was thus summarized in our own day by Mr. Justice Holmes: 28 '* * * we assume in favor of the defendants that the State has the power and constitutional right arbitrarily to exclude the plaintiff without other reason than that such is its will. But it has been held a great many times that the most absolute seeming rights are qualified, and in some circumstances become wrong. One of the most frequently recurring instances is when the socalled right is used as part of a scheme to accomplish a forbidden result. Frick v. (Commonwealth of) Pennsylvania, 268 U.S. 473, 45 S.Ct. 603, 69 L.Ed. 1058; American Bank & Trust Co. v. Federal Reserve Bank of Atlanta, 256 U.S. 350, 358, 41 S.Ct. 499, 65 L.Ed. 983; Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367, 60 L.Ed. 706; United States v. Reading Co., 226 U.S. 324, 357, 33 S.Ct. 90, 57 L.Ed. 243. Thus the right to exclude a foreign corporation cannot be used to prevent it from resorting to a federal Court, Terral v. Burke Construction Co., 257 U.S. 529, 42 S.Ct. 188, 66 L.Ed. 352; or to tax it upon property that by established principles the State has no power to tax, Western Union Telegraph Co. v. (State of) Kansas, 216 U.S. 1, 30 S.Ct. 190, 54 L.Ed. 355, and other cases in the same volume and later that have followed it; or to interfere with interstate commerce, Sioux Remedy Co. v. Cope, 235 U.S. 197, 203, 35 S.Ct. 57, 59 L.Ed. 193; Looney v. Crane Co., 245 U.S. 178, 188, 38 S.Ct. 85, 62 L.Ed. 230; Western Union Telegraph Co. v. Foster, 247 U.S. 105, 114, 38 S.Ct. 438, 62 L.Ed. 1006. A State cannot regulate the conduct of a foreign railroad corporation in another jurisdiction, even though the company has tracks and does business in the State making the attempt. New York, Lake Erie & Western R.R. Co. v. Commonwealth of Pennsylvania, 153 U.S. 628, 646, 14 S.Ct. 952, 38 L.Ed. 846.' Fidelity & Deposit Co. of Maryland v. Tafoya, 270 U.S. 426, 434—435, 46 S.Ct. 331, 332, 70 L.Ed. 664. 29 This was a particularization of his earlier generalization in Denver v. Denver Union Water Co., 246 U.S. 178, 38 S.Ct. 278, 62 L.Ed. 649: 30 'The ordinance of the city could mean no more than that the Company must accept the city's rates or stop—and as it could be stopped by the city out and out, the general principle is that it could be stopped unless a certain price should be paid. * * * It is true that this principle has not been applied in cases where the condition tended to bring about a state of things that there was a predominant public interest to prevent, but I see no ground for the application here of anything to be deduced from Western Union Telegraph Co. v. (State of) Kansas, 216 U.S. 1, 30 S.Ct. 190, 54 L.Ed. 355; Pullman Co. v. (State of) Kansas, 216 U.S. 56, 30 S.Ct. 232, 54 L.Ed. 378; or Motion Picture Patents Co. v. Universal Film Manufacturing Co., 243 U.S. 502, 37 S.Ct. 416, 61 L.Ed. 871.' Id., 246 U.S. at page 197, 38 S.Ct. at page 285. 31 The upshot of our decisions was most recently thus summarized by Mr. Justice Roberts for the Court: 32 'It has repeatedly been said that qualification of a foreign corporation in accordance with the statutes permitting its entry into the state constitutes an assent on its part to all the reasonable conditions imposed. Lafayette Insurance Co. v. French, supra, page 408 of 18 How. (404), 15 L.Ed. 451; St. Clair v. Cox, supra, page 356 of 106 U.S. (350), 1 S.Ct. 354, 27 L.Ed. 222; Connecticut Mutual Life Insurance Co. v. Spratley, 172 U.S. 602, 614, 19 S.Ct. 308, 43 L.Ed. 569; Old Wayne Mut. Life Ass'n v. McDonough, 204 U.S. 8, 22, 27 S.Ct. 236, 51 L.Ed. 345; Commercial Mutual Accident Co. v. Davis, 213 U.S. 245, 254, 29 S.Ct. 445, 53 L.Ed. 782. It is true that the corporation's entry may not be conditioned upon surrender of constitutional rights, as was attempted in the cases on which the appellant relies. Terral v. Burke Construction Co., 257 U.S. 529, 42 S.Ct. 188, 66 L.Ed. 352; Fidelity & Deposit Co. (of Maryland) v. Tafoya, 270 U.S. 426, 46 S.Ct. 331, 70 L.Ed. 664; Frost Trucking Co. v. Railroad Commission, 271 U.S. 583, 46 S.Ct. 605, 70 L.Ed. 1101; Hanover Fire Insurance Co. v. Harding, 272 U.S. 494, 47 S.Ct. 179, 71 L.Ed. 372. And for this reason a state may not exact arbitrary and unreasonable terms respecting suits against foreign corporations as the price of admission, Power Mfg. Co. v. Saunders, 274 U.S. 490, 47 S.Ct. 678, 71 L.Ed. 1165. * * * 33 'The power of the state altogether to exclude the corporation, and the consequent ability to condition its entrance into the state, distinguishes this case from those involving substituted service upon individuals * * *.' State of Washington ex rel. Bond & Goodwin & Tucker, Inc., v. Superior Court, 289 U.S. 361, 364—365, 53 S.Ct. 624, 626, 77 L.Ed. 1256. 34 The standard of reasonableness, as expressed in the Washington case, imposed on the power of a State to admit a foreign corporation on conditions, embraces all prior instances of denial of state power. It gives a rational basis for the holdings that a State may not restrict federal judicial power or burdensomely regulate or tax interstate commerce, or, without justification of ample interests of its own, project its powers into the domain of another State. 35 What Louisiana has done here falls outside any of the specific instances or the guiding principles recognized by this Court from time to time as limitations upon what still remains the practically arbitrary power of a State in dealing with the desire of a foreign corporation, not privileged to do so by federal authority, to do business within its bounds.3 Here we have no claim of interference with interstate commerce or with the operations of the Federal Government. There is no discrimination between foreign and domestic insurance companies. And there is no denial of due process because the Louisiana condition of admission meets the test of reasonableness, a standard to be applied in diverse contexts in the light of all relevant factors, including here the recognized power to exclude a foreign corporation. It meets the test of reasonableness because the conditions imposed are fairly related to the interests which Louisiana may appropriately protect in surrendering its right to exclude a foreign corporation. The interests of Massachusetts or Illinois do not so obviously subordinate those of Louisiana that the latter must constitutionally yield to the former. 36 Surely it was reasonable for Louisiana to adopt the method it did of meeting some of the difficulties in obtaining jurisdiction over out-of-state tortfeasors, typified in the present case by the dispute over the efficacy of attempted service upon Gillette, the insured. Even where that specific problem is not present, the State may justifiably have felt concern over the delays in satisfaction of judgments for injuries sustaned in Louisiana by Louisiana citizens that are inherent under the traditional system which requires a separate action by the victim of an insured tortfeasor to reach the latter's insurance should he default in payment of a judgment against him. It cannot be said that Louisiana was extorting an unfair or unreasonable advantage for its citizens as the price of its permission to Employers' to tap the Louisiana insurance market.4 Nor can it be said that in thus protecting its own serious interests it was selfishly or ruthlessly seeking to inject itself into matters that were the sole or predominant concern of sister States.5 1 Title 22, LSA—Rev.Stat. 1950. 2 The insurance policy was issued to 'The Toni Company, a Division of the Gillette Safety Razor Company * * *' Gillette is a Delaware Corporation with headquarters in Boston where the contract was negotiated with the Boston office of Employers. The Toni Company manufactures the hair-waving product in Chicago, Illinois. 3 '12. Action Against Company. No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company. 'Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy. Nothing contained in this policy shall give any person or organization any right to join the company as a co-defendant in any action against the insured to determine the insured's liability. 'Bankruptcy or insolvency of the insured or of the insured's estate shall not relieve the company of any of its obligations hereunder.' 4 'The injured person or his or her heirs, at their option, shall have a right of direct action against the insurer within the terms and limits of the policy in the parish where the accident or injury occurred or in the parish where the insured has his domicile, and said action may be brought against the insurer alone or against both the insured and the insurer, jointly and in solido. This right of direct action shall exist whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not and whether or not such policy contains a provision forbidding such direct action, provided the accident or injury occurred within the State of Louisiana. * * * It is the intent of this Section that any action brought hereunder shall be subject to all of the lawful conditions of the policy or contract and the defenses which could be urged by the insurer to a direct action brought by the insured, provided the terms and conditions of such policy or contract are not in violation of the laws of this state.' LSA—Rev.Stat. 1950, § 22:655, as amended by Act 541 of the Louisiana Legislature of 1950. As to the scope of this provision according to Louisiana courts, see Rome v. London & Lancashire Indemnity Co. of America, La.App., 169 So. 132. 5 'No certificate of authority to do business in Louisiana shall be issued to a foreign or alien liability insurer until such insurer shall consent to being sued by the injured person or his or her heirs in a direct action as provided in Section 655 of this Title, whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not, and whether or not such policy contains a provision forbidding such direct action, provided that the accident or injury occurred within the State of Louisiana. The said foreign or alien insurer shall deliver to the Secretary of State as a condition precedent to the issuance of such authority, an instrument evidencing such consent.' LSA Rev.Stat. 1950, § 22:983, as amended by Act 542 of the Louisiana Legislature of 1650. 6 The District Court relied in part on its prior opinions in Mayo v. Zurich General Accident & Liability Ins. Co., D.C., 106 F.Supp. 579; Bayard v. Traders & General Ins. Co., D.C., 99 F.Supp. 343; Bish v. Employers' Liability Assurance Corp., D.C., 102 F.Supp. 343. 7 28 U.S.C. § 1254(2), 28 U.S.C.A. § 1254(2). In addition to noting probable jurisdiction of this cause, we granted certiorari. 347 U.S. 958, 74 S.Ct. 708. Since the case is properly here on appeal, the certiorari is dismissed. 1 Additional protections to both insurer and insured are swept aside under the Louisiana direct action statute. The interest of the insured in the outcome of the litigation decreases, with concomitant reduction in the likelihood of his vigorous cooperation in the insurer's defense. The burden of this same obligation of cooperation becomes increasingly oppressive to a conscientious insured as service on far-flung agents of the insurer leads to remote judicial proceedings. 2 An earlier case expressed, in a jumble of loose generalizations, the assumption that there were some inherent restrictions on a State's power to deal with foreign corporations. Lafayette Insurance Co. v. French, 18 How. 404, 407, 15 L.Ed. 451. Phrases like 'natural justice' or 'natural reason' or 'the principles of the social compact' were in fashion at that time for stating intrinsic limitations on the exercise of all political power. More recently, the power of this Court to strike down legislation has been more acutely analyzed and less loosely expressed. Rhetorical generalizations have not been deemed sufficient justification for invalidating legislation. 3 Whatever the survival value of Frost & Frost Trucking Co. v. Railroad Commission, 271 U.S. 583, 46 S.Ct. 605, 70 L.Ed. 1101, cf. Stephenson v. Binford, 287 U.S. 251, 53 S.Ct. 181, 77 L.Ed. 288, it is significant that, while it was there held that to subject a private carrier to a common carrier's liabilities as a condition of permitting a local trucking company to use the highways was violative of due process, the opinion did not even advert to the earlier case of Pierce Oil Corp. v. Phoenix Refining Co., 259 U.S. 125, 42 S.Ct. 440, 66 L.Ed. 855, in which the imposition of a common carrier's liabilities on a private oil carrier was upheld as a condition on the entry of the foreign corporation. 4 Thus it has been held that a State may, as a condition of admission, require compliance with local antitrust policy, Waters-Pierce Oil Co. v. State of Texas, 177 U.S. 28, 20 S.Ct. 518, 44 L.Ed. 657, even as to the operations of foreign corporations in another State, Hammond Packing Co. v. State of Arkansas, 212 U.S. 322, 29 S.Ct. 370, 53 L.Ed. 530. It may require the assumption by a private carrier of some of the duties of a common carrier, Pierce Oil Corp. v. Phoenix Refining Co., 259 U.S. 125, 42 S.Ct. 440, 66 L.Ed. 855; and it may impose methods of substituted service on foreign corporations which, if applied to individuals, would be violative of due process, State of Washington ex rel. Bond & Goodwin & Tucker, Inc., v. Superior Court, 289 U.S. 361, 53 S.Ct. 624, 77 L.Ed. 1256. 5 Such cases as St. Louis Cotton Compress Co. v. State of Arkansas, 260 U.S. 346, 43 S.Ct. 125, 67 L.Ed. 297, and Fidelity & Deposit Co. of Maryland v. Tafoya, 270 U.S. 426, 46 S.Ct. 331, 70 L.Ed. 664, invalidating state statutes which attempted to prevent or penalize acts outside of the forum State are not pertinent. In these cases a State was seeking to assert its power over the happenings in another State. And so, likewise, a State may not tax property within the taxing jurisdiction of another State.

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348 U.S. 96 75 S.Ct. 176 99 L.Ed. 125 Ray BROOKS, Petitioner,v.NATIONAL LABOR RELATIONS BOARD. No. 21. Argued Oct. 18, 1954. Decided Dec. 6, 1954. Mr.Erwin Lerten, Los Angeles, for petitioner. Mr. David P. Findling, Washington, D.C., for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 The National Labor Relations Board conducted a representation election in petitioner's Chrysler-Plymouth agency on April 12, 1951. District Lodge No. 727, International Association of Machinists, won by a vote of eight to five, and the Labor Board certified it as the exclusive bargaining representative on April 20. A week after the election and the day before the certification, petitioner received a handwritten letter signed by 9 of the 13 employees in the bargaining unit stating: 'We, the undersigned majority of the employees * * * are not in favor of being represented by Union Local No. 727 as a bargaining agent.' 2 Relying on this letter and the decision of the Court of Appeals for the Sixth Circuit in National Labor Relations Board v. Vulcan Forging Co., 188 F.2d 927, petitioner refused to bargain with the union. The Labor Board found, 98 N.L.R.B. 976, that petitioner had thereby committed an unfair labor practice in violation of §§ 8(a)(1) and 8(a)(5) of the amended National Labor Relations Act, 61 Stat. 140—141, 29 U.S.C. §§ 158(a)(1), (a)(5), 29 U.S.C.A. § 158(a)(1, 5), and the Court of Appeals for the Ninth Circuit enforced the Board's order to bargain, 204 F.2d 899. In view of the conflict between the Circuits, we granted certiorari, 347 U.S. 916, 74 S.Ct. 517. 3 The issue before us is the duty of an employer toward a duly certified bargaining agent if, shortly after the election which resulted in the certification, the union has lost, without the employer's fault, a majority of the employees from its membership. 4 Under the original Wagner Act, the Labor Board was given the power to certify a union as the exclusive representative of the employees in a bargaining unit when it had determined by election or 'any other suitable method', that the union commanded majority support. § 9(c), 49 Stat. 453. In exercising this authority the Board evolved a number of working rules, of which the following are relevant to our purpose: 5 (a) A certification, if based on a Board-conducted election, must be honored for a 'reasonable' period, ordinarily 'one year,' in the absence of 'unusual circumstances.'1 6 (b) 'Unusual circumstances' were found in at least three situations:2 (1) the certified union dissolved or became defunct;3 (2) as a result of a schism, substantially all the members of officers of the certified union transferred their affiliation to a new local or international;4 (3) the size of the bargaining unit fluctuated radically within a short time.5 7 (c) Loss of majority support after the 'reasonable' period could be questioned in two ways: (1) employer's refusal to bargain, or (2) petition by a rival union for a new election.6 8 (d) If the initial election resulted in a majority for 'no union,' the election—unlike a certification—did not bar a second election within a year. 9 The Board uniformity found an unfair labor practice where, during the so-called 'certification year,' an employer refused to bargain on the ground that the certified union no longer possessed a majority. While the courts in the main enforced the Board's decisions,7 they did not commit themselves to one year as the determinate content of reasonableness. The Board and the courts proceeded along this line of reasoning: 10 (a) In the political and business spheres, the choice of the voters in an election binds them for a fixed time. This promotes a sense of responsibility in the electorate and needed coherence in administration. These considerations are equally relevant to healthy labor relations. 11 (b) Since an election is a solemn and costly occasion, conducted under safeguards to voluntary choice, revocation of authority should occur by a procedure no less solemn than that of the initial designation. A petition or a public meeting—in which those voting for and against unionism are disclosed to management, and in which the influences of mass psychology are present—is not comparable to the privacy and independence of the voting booth. 12 (c) A union should be given ample time for carrying out its mandate on behalf of its members, and should not be under exigent pressure to produce hot-house results or be turned out. 13 (d) It is scarcely conducive to bargaining in good faith for an employer to know that, if he dillydallies or subtly undermines, union strength may erode and thereby relieve him of his statutory duties at any time, while if he works conscientiously toward agreement, the rank and file may, at the last moment, repudiate their agent. 14 (e) In situation, not wholly rare, where unions are competing, raiding and strife will be minimized if elections are not at the hazard of informal and short-term recall. 15 Certain aspects of the Labor Board's representation procedures came under Taft-Hartley Act in 1947, 61 Stat. 136. Congress was mindful that, once employees had chosen a union, they could not vote to revoke its authority and refrain from union activities, while if they voted against having a union in the first place, the union could begin at once to agitate for a new election.8 The National Labor Relations Act was amended to provide that (a) employees could petition the Board for a decertification election, at which they would have an opportunity to choose no longer to be represented by a union, 61 Stat. 144, 29 U.S.C. § 159(c)(1)(A)(ii), 29 U.S.C.A. § 159(c)(1)(A)(ii); (b) an employer, if in doubt as to the majority claimed by a union without formal election or beset by the conflicting claims of rival unions, could likewise petition the Board for an election, 61 Stat. 144, 29 U.S.C. § 159(c)(1)(B), 29 U.S.C.A. § 159(c)(1)(B); (c) after a valid certification or decertification election had been conducted, the Board could not hold a second election in the same bargaining unit until a year had elapsed, 61 Stat. 144, 29 U.S.C. § 159(c) (3), 29 U.S.C.A. § 159(c)(3); (d) Board certification could only be granted as the result of an election, 61 Stat. 144, 29 U.S.C. § 159(c)(1), 29 U.S.C.A. § 159(c)(1), though an employer would presumably still be under a duty to bargain with an uncertified union that had a clear majority, see National Labor Relations Board v. Kobritz, 1 Cir., 193 F.2d 8. 16 The Board continued to apply its 'one-year certification' rule after the Taft-Hartley Act came into force,9 except that even 'unusual circumstances' no longer left the Board free to order an election where one had taken place within the preceding 12 months.10 Conflicting views became manifest in the Courts of Appeals when the Board sought to enforce orders based on refusal to bargain in violation of its rule. Some Circuits sanctioned the Board's position.11 The Court of Appeals for the Sixth Circuit denied enforcement.12 The Court of Appeals for the Third Circuit held that a 'reasonable' period depended on the facts of the particular case.13 17 The issue is open here. No case touching the problem has directly presented it. In Franks Bros. Co. v. National Labor Relations Board, 321 U.S. 702, 64 S.Ct. 817, 88 L.Ed. 1020, we held that where a union's majority was dissipated after an employer's unfair labor practice in refusing to bargain, the Board could appropriately find that such conduct had undermined that prestige of the union and require the employer to bargain with it for a reasonable period despite the loss of majority. And in National Labor Relations Board v. Mexia Textile Mills, Inc., 339 U.S. 563, 70 S.Ct. 833, 94 L.Ed. 1067, we held that a claim of an intervening loss of majority was no defense to a proceeding for enforcement of an order to cease and desist from certain unfair labor practices. 18 Petitioner contends that whenever an employer is presented with evidence that his employees have deserted their certified union, he may forthwith refuse to bargain. In effect, he seeks to vindicate the rights of his employees to select their bargaining representative. If the employees are dissatisfied with their chosen union, they may submit their own grievance to the Board.14 If an employer has doubts about his duty to continue bargaining, it is his responsibility to petition the Board for relief, while continuing to bargain in good faith at least until the Board has given some indication that his claim has merit.15 Although the Board may, if the facts warrant, revoke a certification or agree not to pursue a charge of an unfair labor practice, these are matters for the Board; they do not justify employer self-help or judicial intervention. The underlying purpose of this statute is industrial peace. To allow employers to rely on employees' rights in refusing to bargain with the formally designated union is not conducive to that end, it is inimical to it. Congress has devised a formal mode for selection and rejection of bargaining agents and has fixed the spacing of elections, with a view of furthering industrial stability and with due regard to administrative prudence. 19 We find wanting the arguments against these controlling considerations. In placing a nonconsenting minority under the bargaining responsibility of an agency selected by a majority of the workers, Congress has discarded common-law doctrines of agency. It is contended that since a bargaining agency may be ascertained by methods less formal than a supervised election, informal repudiation should also be sanctioned where decertification by another election is precluded. This is to make situation that are different appear the same. Finally, it is not within the power of this Court to require the Board, as is suggested, to relieve a small employer, like the one involved in this case, of the duty may be exacted from an enterprise with many employees.16 20 To be sure, what we have said has special pertinence only to the period during which a second election is impossible. But the Board's view that the one-year period should run from the date of certification rather than the date of election seems within the allowable area of the Board's discretion in carrying out congressional policy. See Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 192—197, 61 S.Ct. 845, 85 L.Ed. 1271; National Labor Relations Board v. Seven-Up Bottling Co., 344 U.S. 344, 73 S.Ct. 287, 97 L.Ed. 377. Otherwise, encouragement would be given to management or a rival union to delay certification by spurious objections to the conduct of an election and thereby diminish the duration of the duty to bargain. Furthermore, the Board has ruled that one year after certification the employer can ask for an election17 or, if he has fair doubts about the union's continuing majority, he may refuse to bargain further with it.18 This, too, is a matter appropriately determined by the Board's administrative authority. 21 We conclude that the judgment of the Court of Appeals enforcing the Board's order must be affirmed. 22 Affirmed. 1 E.g., Kimberly-Clark Corp., 61 N.L.R.B. 90. But see Trackson Co., 56 N.L.R.B. 917. 2 The cases in which the Board found the 'unusual circumstances' were all representation cases in which a rival union sought a new election less than a year after certification. 3 Public Service Electric & Gas Co., 59 N.L.R.B. 325; cf. Nashville Bridge Co., 49 N.L.R.B. 629. 4 Brightwater Paper Co., 54 N.L.R.B. 1102; Carson Pirie Scott & Co., 69 N.L.R.B. 935; cf. Great Lakes Carbon Corp., 44 N.L.R.B. 70. 5 See Westinghouse Electric & Mfg. Co., 38 N.L.R.B. 404, 409. 6 In Tabardrey Mfg. Co., 51 N.L.R.B. 246, the Board refused to conduct an election where there was no rival union and the employees were dissatisfied with their certified agent. 7 E.g., National Labor Relations Board v. Century Oxford Mfg. Corp., 2 Cir., 140 F.2d 541 (six weeks); National Labor Relations Board v. Botany Worsted Mills, 3 Cir., 133 F.2d 876 (repudiation one week after election, refusal to bargain three months after certification). Contra: National Labor Relations Board v. Inter-City Advertising Co., 4 Cir., 154 F.2d 244. 8 Committee reports and controlling floor statements show an awareness of the Board's prior practice but afford no guidance for solution of our problem. The Senate Report declared: 'In order to impress upon employees the solemnity of their choice, when the Government goes to the expenses of conducting a secret ballot, the bill also provides that elections in any given unit may not be held more frequently than once a year.' S.Rep.No.105, 80th Cong., 1st Sess. 12. And further, 'At present, if the union loses, it may on presentation of additional membership cards secure another election within a short time, but if it wins its majority cannot be challenged for a year.' Id., at 25. And Senator Taft, the authoritative expounder of his measure, does not give us much more help: 'The bill also provides that elections shall be held only once a year, so that there shall not be a constant stirring up of excitement by continual elections. The men choose a bargaining agent for 1 year. He remains the bargaining agent until the end of that year.' 93 Cong.Rec. 3838. The House decided to reverse the practice under the Wagner Act by inserting a provision which would have limited representation elections to 12-month intervals but permitted decertification elections at any time. It did so as an expression of the prevailing congressional mood to assure to workers freedom from union affiliation as well as the right to join one. This provision was rejected in Conference. 9 E.g., Globe Automatic Sprinkler Co., 95 N.L.R.B. 253; see Celanese Corp. of America, 95 N.L.R.B. 664, 672—674. Both before and after the Taft-Hartley Act, the Board and the courts did not apply the rule to a collective bargaining relationship established other than as the result of a certification election. E.g., Joe Hearin, 66 N.L.R.B. 1276 (card-check); National Labor Relations Board v. Mayer, 5 Cir., 196 F.2d 286 (card-check; Squirrel Brand Co., 104 N.L.R.B. 289 (order to bargain). 10 For example, in Swift & Co., 94 N.L.R.B. 917, the Board, while applying the exception to a schism that occurred within 7 months of certification, did not in fact direct an election until 17 months had passed. See also Feders-Quigan Corp., 88 N.L.R.B. 512. 11 E.g., National Labor Relations Board v. Brooks, 9 Cir., 204 F.2d 899; cf. National Labor Relations Board v. Sanson Hosiery Mills, Inc., 5 Cir., 195 F.2d 350; see National Labor Relations Board v. Geraldine Novelty Co., 2 Cir., 173 F.2d 14, 16—17. 12 National Labor Relations Board v. Vulcan Forging Co., 6 Cir., 188 F.2d 927 (five weeks); Mid-Continent Petroleum Corp. v. National Labor Relations Board, 6 Cir., 204 F.2d 613 (two months). 13 National Labor Relations Board v. Globe Automatic Sprinkler Co., 3 Cir., 199 F.2d 64 (refusal to bargain after 49 weeks not an unfair labor practice). 14 See Hughes Tool Co., 104 N.L.R.B. 318; cf. National Labor Relations Board v. Clarostat Mfg. Co., 1 Cir., 1954, 216 F.2d 525. 15 See Henry Heide, Inc., 107 N.L.R.B., No. 258 (claim of loss of majority but no actual evidence); cf. Borden Co., 108 N.L.R.B., No. 116; Telegraph Publishing Co., 102 N.L.R.B. 1173. 16 In Wilson-Oldsmobile, 110 N.L.R.B., No. 74, the Board has applied new jurisdictional yardsticks which would place this case, if now brought, outside them. 17 See Whitney's, 81 N.L.R.B. 75; cf. Ny-Lint Tool & Mfg Co., 77 N.L.R.B. 642. 18 Celanese Corp. of America, 95 N.L.R.B. 664. The Board has on several occasions intimated that even after the certification year has passed, the better practice is for an employer with doubts to keep bargaining and petition the Board for a new election or other relief. Id., at 674; United States Gypsum Co., 90 N.L.R.B. 964, 966—968; see also J. P. O'Neil Lumber Co., 94 N.L.R.B. 1299.

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348 U.S. 84 75 S.Ct. 158 99 L.Ed. 101 William J. OPPER, Petitioner,v.UNITED STATES of America. No. 49. Argued Oct. 22, 1954. Decided Dec. 6, 1954. Mr.Frederick Bernays Wiener, Washington, D.C., for petitioner. Mr.John F. Davis, Washington, D.C., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 Petitioner seeks review of a conviction under charges that he violated 18 U.S.C. § 281, 18 U.S.C.A. § 281, a section which punishes employees of the United States who receive outside compensation for any services to be rendered in any matter before a federal department or agency in which the United States is a party. Petitioner was not himself an employee but was charged with inducing a federal employee to accept compensation for such services through conspiring with him for that purpose. Such inducement violates 18 U.S.C. §§ 2 an 281, 18 U.S.C.A. §§ 2, 281. The sections are set out in the margin.1 2 Count 1 of the indictment charged, in substance, that on or about October 1, 1950, Hollifield, an employee of the United States, agreed to receive $1,750 from the petitioner for services to be rendered by Hollifield in regard to purchase requests in which the United States had a direct interest. The services consisted of Hollifield's recommending approval and procurement by the Department of the Air Force of certain types of sun goggles and ski goggles which were to be used in Air Force survival kits. Count 4 charged receipt by Hollifield of $200 on or about August 5, 1951. Each of these two counts charged that petitioner aided, abetted, induced and procured Hollifield to unlawfully receive the compensation. 3 The fifth count charged a conspiracy between Hollifield and the petitioner from October 1, 1950, until September 26, 1951, to perform the unlawful acts alleged. Convictions on other counts were reversed. 4 Hollifield and the petitioner were tried jointly after the petitioner's motion for severance was denied. The jury found petitioner guilty on all counts and sentence was duly imposed. On appeal the Court of Appeals for the Sixth Circuit affirmed the conviction as to the above counts now before us. 211 F.2d 719. 5 Certiorari was granted, 347 U.S. 1010, 74 S.Ct. 867, because of asserted variance or conflict between the legal conclusion reached in this case—that an extrajudicial, exculpatory statement of an accused, subsequent to the alleged crime, needs no corroboration—and other cases to the contrary.2 This Court, in granting certiorari, limited review to the three issues raised by the petitioner which were considered important to the administration of criminal law and upon which there appeared to be some divergence of opinion among the Courts of Appeals.3 6 Hollifield was employed by the United States Air Force at the Aero Medical Laboratory at Wright Field, Dayton, Ohio. His job entailed, among other things, preparing the specifications of survival kits and determining whether goods submitted for those kits, including goggles, complied with the specifications. Petitioner resided in Chicago and was a subcontractor on various projects for equipping these kits. The petitioner supplied certain goggles to a prime contractor who submitted them for approval for use in the kits. The goggles were rejected on January 23, 1951, because of 'marked deviations' from applicable specifications. A short time thereafter Hollifield arranged a conference with the project engineer who had made the rejection. At the conference Hollifield, accompanied by the petitioner, strongly urged acceptance of petitioner's goggles. It was concluded that Hollifield should prepare a written memorandum of his reasons for acceptance. A written memorandum dated January 25, 1951, was prepared.4 Thereafter reconsideration was granted and on February 3, 1951, use of petitioner's goggles was recommended. 7 The Government further established by various records that on April 13, 1951, a long-distance call was made from Hollifield's residence in Dayton to petitioner in Chicago; that petitioner on April 16, 1951, cashed a check for $1,000, which check was dated April 13, 1951; and that a round-trip airline ticket was issued in Hollifield's name for April 14, 1951, flights from Dayton to Chicago and return. 8 The evidence of the Government thus far summarized was established by independent proof. The remainder of the Government's case depended upon a written statement submitted by the petitioner to the Federal Bureau of Investigation and various oral statements made by the petitioner to the FBI in several interviews. 9 The substance of these statements was that the petitioner had first met Hollifield in October 1950, and had seen him some fifteen times thereafter at Wright Field and in Chicago and that he had discussed the rejection of the goggles with Hollifield. He further stated that Hollifield, pursuant to an earlier phone call, came to his office in Chicago on Saturday, April 14, 1951, and he had handed Hollifield $1,000 which he had taken from cash he had at home and which cash he had replenished on Monday, April 16, 1951, by cashing a check dated April 13, 1951, in that amount. Petitioner also admitted giving Hollifield another $200 some two weeks later. 10 In both his oral and written statements petitioner insisted that he had never requested anything of Hollifield in regard to the goggles; that the money was strictly a loan to Hollifield based upon Hollifield's request to him that he needed money in regard to a mortgage on his home; that no security was given for the loan; that he had no receipt or agreement for interest; that he had no personal knowledge as to whether Hollifield owned a home or not; and that none of the money had been repaid. Petitioner consistently and specifically denied any guilt of the offense charged. 11 The petitioner makes no claim that any of the extrajudicial statements were anything but voluntary. In fact the record discloses that petitioner was cooperative with the FBI in furnishing information and that petitioner had ample opportunity to consult counsel in reference to the FBI interviews and statements he made. Petitioner's prime contention is that his statements made after the date of the offense charged are so analogous to a confession that the same rules applicable to confessions must be applied and that if such rules are applied the conviction cannot stand. 12 First. It is petitioner's contention that where extrajudicial admissions that point to guilt are made by the accused, after the date of the acts charged as crime, testimony by witnesses other than the accused as to such oral or written admissions cannot be accepted as evidence without corroboration of the facts stated. That conclusion derives from petitioner's position that admissions of essential facts to prove a crime or admissions of some of its elements are so analogous to confessions of guilt that the same rule as to corroboration should be applied. 13 In the United States our concept of justice that finds no man guilty until proven has led our state and federal courts generally to refuse conviction on testimony concerning confessions of the accused not made by him at the trial of his case. Wigmore, Evidence (3d ed.), § 2071. See Warszower v. United States, 312 U.S. 342, 345, note 2, 61 S.Ct. 603. We have gone further in that direction than has the common law of England. There the courts have been hesitant to lay down a rule that an uncorroborated extrajudicial confession may not send an accused to prison or to death.5 In our country the doubt persists that the zeal of the agencies of prosecution to protect the peace, the self-interest of the accomplice, the maliciousness of an enemy or the aberration or weakness of the accused under the strain of suspicion may tinge or warp the facts of the confession. Admissions, retold at a trial, are much like hearsay, that is, statements not made at the pending trial. They had neither the compulsion of the oath nor the test of cross-examination.6 They are competent as an admission against interest. 14 The admissions detailed above establish an acquaintance between petitioner and the employee, and a motive but not a purpose to have the federal employee agree to receive prohibited compensation for the services. More importantly they establish the receipt of money by the employee around the time of the alleged inducement by conspiracy to secure the employee's services before a federal agency concerning a contract in which the United States was interested. While the oral and verbal statements were not confessions of guilt, they were admissions of fact essential to prove the charge against petitioner and indeed of an element of the crime, inducement to receive the prohibited compensation or an illegal acceptance of promise to pay. 15 In Warszower v. United States, 312 U.S. 342, 348, 61 S.Ct. 603, 606, 607, we held that although the only proof of an essential element of making a false statement was admissions to the contrary prior to the crime charged, sufficient to convict if found true, such an admission would take the case to the jury. We said such admissions 'contain none of the inherent weaknesses of confessions or admissions after the fact.' We think that an accused's admissions of essential facts or elements of the crime, subsequent to the crime, are of the same character as confessions and that corroboration should be required. See 1 Greenleaf, Evidence (16th ed.), § 216; Smith v. United States, 348 U.S. 147, 75 S.Ct. 194. 16 The need for corroboration extends beyond complete and conscious admission of guilt—a strict confession.7 Facts admitted that are immaterial as to guilt or innocence need no discussion. But statements of the accused out of court that show essential elements of the crime, here payment of money, necessary to supplement an otherwise inadequate basis for a verdict of conviction, stand differently. Such admissions have the same possibilities for error as confessions. They, too, must be corroborated. See Wilson v. United States, 162 U.S. 613, 621, 16 S.Ct. 895, 899, 40 L.Ed. 1090 17 It is urged by the Government, however, that such requirement should not apply to exculpatory statements, that is, those that explain actions rather than admit guilt. It is thought that exclupatory statements do not have behind them the pressure of coercion or the inducement of escaping the consequences of crime. This accords with Professor Wigmore's view. See note 7, supra. The statements here are exculpatory. See summary, supra. There is no opinion of this Court declaring or declining such an exception.8 We conclude that exculpatory statements, however, may not differ from other admissions of incriminating facts. Given when the accused is under suspicion, they become questionable just as testimony by witnesses to other extrajudicial statements of the accused. They call for corroboration to the same extent as other statements. 18 Second. We next consider the extent of the corroboration of admissions necessary as a matter of law for a judgment of conviction. On this point the cases in the federal courts show divergence. One line of cases follows the rule set out in Daeche v. United States, 2 Cir., 250 F. 566, that the corroborative evidence is sufficient if it touches the corpus delicti 'in the sense of the injury against whose occurrence the law is directed', 250 F. at page 571, and is of a type which goes to fortify the truthfulnes of the confession.9 Some cases would seem only to require the latter half of the Daeche rule; that is, proof of any corroborating circumstances is adequate which goes to fortify the truth of the confession or tends to prove facts embraced in the confession. There is no necessity that such proof touch the corpus delicti at all, though, of course, the facts of the admission plus the corroborating evidence must establish all elements of the crime.10 19 Other decisions tend to follow the rule enunciated in Forte v. United States, 68 App.D.C. 111, 94 F.2d 236, 240, 244, 127 A.L.R. 1120, that the corroboration must consist of substantial evidence, independent of the accused's extrajudicial statements, which tends to establish the whole of the corpus delicti.11 20 Whether the differences in quantum and type of independent proof are in principle or of expression is difficult to determine. Each case has its own facts admitted and its own corroborative evidence, which leads to patent individualization of the opinions. However, we think the better rule to be that the corroborative evidence need not be sufficient, independent of the statements, to establish the corpus delicti. It is necessary, therefore, to require the Government to introduce substantial independent evidence which would tend to establish the trustworthiness of the statement. Thus, the independent evidence serves a dual function. It tends to make the admission reliable, thus corroborating it while also establishing independently the other necessary elements of the offense. Smith v. United States, 348 U.S. 147, 75 S.Ct. 194. It is sufficient if the corroboration supports the essential facts admitted sufficiently to justify a jury inference of their truth. Those facts plus the other evidence besides the admission must, of course, be sufficient to find guilt beyond a reasonable doubt. 21 Turning to the instant case, it is clear that there was substantial independent evidence to establish directly the truthfulness of petitioner's admission that he paid the government employee money.12 But this direct corroborative evidence tending to prove the truthfulness of petitioner's statements would not establish a corpus delicti of the offense charged. Rather it tends to establish only one element of the offense—payment of money. The Government therefore had to prove the other element of the corpus delicti—rendering of services by the government employee—entirely by independent evidence.13 This independent evidence of services and of facts within the admissions seems adequate to constitute corroboration of petitioner's extrajudicial admissions and also establish the corpus delicti. The jury was free therefore to consider the admissions in connection with all the other evidence in the case and to decide whether the guilt of the petitioner had been established beyond a reasonable doubt. They found that it was and we feel that such finding is supported by substantial evidence. 22 Third. Petitioner's final complaint arises out of the fact that the conspirators were tried jointly. The petitioner feels that the jury might have become confused and improperly considered statements of codefendant Hollifield in reaching its verdict as to petitioner. Other than this general possibility of confusion, he points out nothing specifically prejudicial resulting from the joint trial. The fact that the Court of Appeals below reversed on two counts because of lack of evidence independent of statments of Hollifield is emphasized to bolster this claim of error as to the remaining counts. 23 It was within the sound discretion of the trial judge as to whether the defendants should be tried together or severally and there is nothing in the record to indicate an abuse of such discretion when petitioner's motion for severance was overruled. The trial judge here made clear and repeated admonitions to the jury at appropriate times that Hollifield's incriminatory statements were not to be considered in establishing the guilt of the petitioner.14 To say that the jury might have been confused amounts to nothing more than an unfounded speculation that the jurors disregarded clear instructions of the court in arriving at their verdict. Our theory of trial relies upon the ability of a jury to follow instructions. There is nothing in this record to call for reversal because of any confusion or injustice arising from the joint trial. The record contains substantial competent evidence upon which the jury could find petitioner guilty. The judgment is affirmed. 24 Affirmed. 25 Mr. Justice FRANKFURTER concurs in the result. 26 Mr. Justice DOUGLAS, believing that Forte v. United States, 68 App.D.C. 111, 94 F.2d 236, 127 A.L.R. 1120, states the better rule on corroboration, would reverse the judgment below. 1 18 U.S.C. § 281: 'Whoever, being * * * (an) officer or employee of the United States or any department or agency thereof, directly or indirectly receives or agrees to receive, any compensation for any services rendered or to be rendered, either by himself or another, in relation to any proceeding, contract, claim, controversy, charge, accusation, arrest, or other matter in which the United States is a party or directly or indirectly interested, before any department, agency, court martial, officer, or any civil, military, or naval commission, shall be fined not more than $10,000 or imprisoned not more than two years, or both; and shall be incapable of holding any office of honor, trust, or profit under the United States.' Id., § 2: '(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.' 2 Warszower v. United States, 312 U.S. 342, 61 S.Ct. 603, 85 L.Ed. 876; Calderon v. United States, 9 Cir., 207 F.2d 377; Pines v. United States, 8 Cir., 123 F.2d 825; Gulotta v. United States, 8 Cir., 113 F.2d 683. 3 The three questions as set out by the petitioner upon which certiorari was granted are: "3. Whether, where an admission is made to law enforcement officers after the date of the acts charged as crimes, it is to be so far treated as a confession that, in the absence of corroboration, it is inadmissible. "4. Whether a conviction can be sustained where there is, apart from an admission made to law enforcement officers after the date of the acts charged as crimes, no proof of the corpus delicti. "5. Whether, in convicting petitioner the jury, and in sustaining his conviction the court below, in fact admitted, as against him, statements of his co-defendant which, as a matter of law, were not competent evidence against him." 347 U.S. 1010, 74 S.Ct. 867. 4 The memorandum, although signed by another, bore Hollifield's initials and embodied the reasons he had orally urged at the conference. 5 In some cases a person may be convicted on his own confession without any corroborating evidence. 9 Halsbury's Laws of England (2d ed.) § 291, p. 207; § 268, p. 183, note g; I Phillipps and Arnold, Evidence (5th Am. ed.), p. 441. In manslaughter this conclusion is cautiously applied. Regina v. Burton, Dearsly's Crown Cases (1852—1856) 282. Proof of the corpus delicti is required. Halsbury, supra, § 768; R. v. Davidson, 25 Cr.App.R. 21. 6 See American Law Institute Model Code of Evidence, adopted May 15, 1942, Foreword, Professor Edmund M. Morgan, 36, Rule 501; Wigmore, Evidence (3d ed.), § 1048. 7 'A confession is an acknowledgement in express words, by the accused in a criminal case, of the truth of the guilty fact charged or of some essential part of it.' Professor Wigmore excludes from the rule of corroboration exculpatory statements: 'Exculpatory statements, denying guilt, cannot be confessions. This ought to be plain enough, if legal terms are to have any meaning and if the spirit of the general principle is to be obeyed.' Also, 'acknowledgments of subordinate facts colorless with reference to actual guilt.' 'An acknowledgment of a subordinate fact, not directly involving guilt, or, in other words, not essential to the crime charged, is not a confession; because the supposed ground of untrustorthiness of confessions * * * is that a strong motive impels the accused to expose and declare his guilt as the price of purchasing immunity from present pain or subsequent punishment; and thus, by hypothesis, there must be some quality of guilt in the fact acknowledged. Confessions are thus only one species of admissions; and all other admissions than those which directly touch the fact of guilt are without the scope of the peculiar rules affecting the use of confessions.' Wigmore, Evidence (3d ed.), § 821. 8 Bram v. United States, 168 U.S. 532, 18 S.Ct. 183, 42 L.Ed. 568, an important case in the field of admissions, excludes such a statement on the ground of coercion, not exculpation. 168 U.S. at page 562, 18 S.Ct. at page 194. 9 E.g., Jordan v. United States, 4 Cir., 60 F.2d 4; United States v. Kertess, 2 Cir., 139 F.2d 923; Forlini v. United States, 2 Cir., 12 F.2d 631, 634. 10 Accord, United States v. Williams, 28 Fed.Cas. pp. 636, 644, No. 16,707, 1 Cliff. 5; Pearlman v. United States, 9 Cir., 10 F.2d 460; Wynkoop v. United States, 9 Cir., 22 F.2d 799; Bolland v. United States, 4 Cir., 238 F. 529, 530. 11 Ercoli v. United States, 76 U.S.App.D.C. 360, 131 F.2d 354, 355, 356, 357, following and reaffirming Forte, states the rule to be that corroboration which merely tends to support the confession is insufficient, as it must also embrace substantial evidence touching and tending to prove each of the main elements or constituent parts of the corpus delicti. Also following this rule, e.g., Pines v. United States, 8 Cir., 123 F.2d 825; Ryan v. United States, 8 Cir., 99 F.2d 864; United States v. Fenwick, 7 Cir., 177 F.2d 488. 12 (1) The long-distance call from Hollifield's home to petitioner's home on April 13, 1951. (2) Petitioner's $1,000 check dated April 13, 1951. (3) The airline tickets in Hollifield's name for a flight to Chicago on April 14, 1951. 13 This was accomplished by introduction of substantially uncontroverted evidence of Hollifield's efforts in gaining acceptance by the Government of petitioner's previously rejected goggles. 14 Rule 14, Federal Rules of Criminal Procedure, 18 U.S.C. 18 U.S.C.A.; United States v. Ball, 163 U.S. 662, 672, 16 S.Ct. 1192, 1195, 41 L.Ed. 300; Waldeck v. United States, 7 Cir., 2 F.2d 243; Olmstead v. United States, 9 Cir., 19 F.2d 842, 53 A.L.R. 1472; Metcalf v. United States, 6 Cir., 195 F.2d 213, 217.

01

348 U.S. 215 75 S.Ct. 247 99 L.Ed. 268 UNITED STATES of America, Intervenor, Petitioner,v.The LIVERPOOL & LONDON & GLOBE INSURANCE COMPANY, Ltd., and Sunnyland Wholesale Furniture Company. No. 34. Argued and Submitted Nov. 16, 1954. Decided Jan. 10, 1955. Mr. Charles K. Rice, Washington, D.C., for petitioner. Mr. Searcy L. Johnson, Dallas, Tex., for respondent Liverpool Ins. Co. Mr. Arthur S. Goldberg, Dallas, Tex., for respondent Sunnyland Furniture Co. Mr. Justice MINTON delivered the opinion of the Court. 1 This is a case involving priority of federal tax liens and a lien of garnishment. 2 On March 8, 1952, fire destroyed certain property of Adams, engaged in a furniture business in Temple, Bell County, Texas. Respondent insurance company and another were the insurers. The insurance companies agreed on the amount of the loss, and they were to share the payment equally. Before the insurance money was paid, a creditor of Adams, the Sunnyland Wholesale Furniture Company, on April 8, 1952, sued Adams on an open account. At the same time, a writ of garnishment was issued and served upon the Liverpool & London & Globe Insurance Company, attaching the insurance funds due and owing Adams. On April 21, 1952, the assessment lists covering the unpaid federal taxes of Adams and his wife for 1948 and 1950 were received in the office of the Collector of Internal Revenue for Texas. On April 26, 1952, notice of tax liens was filed in the office of the county clerk of Bell County, Texas, in favor of the United States for $10,417.57, with interest. Notice of the tax liens with warrants of distraint and notice of levy were served on the respondent insurance company. On June 20, 1952, judgment was entered against Adams in favor of Sunnyland for $2,516.70, with interest and costs. When the garnishee, the respondent insurance company, answered, it named the United States an additional party defendant and requested a determination of priorities of the garnisher and the United States, and asked for reasonable attorney's fees. The amendment was allowed, and the United States was served with process to appear in the state court. On petition of the United States the interpleader action was removed to the Northern District of Texas, and the United States was dismissed as a party defendant and permitted to file its complaint for foreclosure of its tax liens. The respondent insurance company paid $7,500.39 into the registry of the court and asked for an attorney's fee of $500. The District Court held the lien of the garnisher superior to the liens of the United States for taxes and allowed the garnishee $500 for attorney's fees. 107 F.Supp. 405. The Court of Appeals affirmed, one judge dissenting. 209 F.2d 684. We granted certiorari, 347 U.S. 973, 75 S.Ct. 785. 3 The question of priorities is identical with that of United States v. Acri, 348 U.S. 211, 75 S.Ct. 239, and United States v. Security Trust & Savings Bank, 340 U.S. 47, 71 S.Ct. 111, 95 L.Ed. 53. On the authority of those cases we hold the tax liens of the United States superior to the lien of the garnisher. 4 As to the attorney's fee allowed the garnishee insurance company, Rule 677, Vernon's Texas Rules of Civil Procedure, provides: 5 'Where the garnishee is discharged upon his answer, the costs of the proceeding, including a reasonable compensation to the garnishee, shall be taxed against the plaintiff; where the answer of the garnishee has not been controverted and the garnishee is held thereon, such costs shall be taxed against the defendant and included in the execution provided for in this section; where the answer is contested, the costs shall abide the issue of such contest.' 6 The District Court evidently found there was no contest between the insurance company and the other parties, and that the insurance company should be discharged with costs and allowance of a reasonable attorney's fee of $500. It, therefore, ordered the clerk to issue a check to the insurance company, payable out of the funds paid into the court by it. 7 If the garnishment lien is not prior to the Government liens, and we have held that it is not, certainly fees allowed in that proceeding are not prior to the Government liens, and the authorization of the payment of the attorney's fees prior to the Government liens was error. The costs and fees should be adjudged against the defendant, as provided by Rule 677. 8 The judgment is reversed. 9 Reversed.

1112

348 U.S. 218 75 S.Ct. 244 99 L.Ed. 271 UNITED STATES of America, Petitioner,v.R. P. SCOVIL et al. No. 35. Argued Nov. 16, 1954. Decided Jan. 10, 1955. Mr. John R. Benney, Washington, D.C., for petitioner. Mr. J. D. Todd, Jr., Greenville, S.C., for respondents. Mr. Justice MINTON delivered the opinion of the Court. 1 This case involves the relative priority of a landlord's distress for rent under the laws of South Carolina and a lien for unpaid taxes due the United States. The landlord, herein referred to as respondent, on April 7, 1952, filed in the Court of Common Pleas for Greenville County, South Carolina, an affidavit setting forth that the Dan Tassey, Inc., was indebted to him for rent and requesting a distress warrant which issued. The master's report shows only that the landlord for past due rent 'proceeded on the 7th day of April, 1952 to distress upon the assets of said corporation for said rent in arrears.' The record does not disclose what was actually done in the distress proceedings. South Carolina Code Annotated, 1952, § 41—151, provides when the affidavit of a landlord is filed the magistrate may issue his distress warrant naming the amount due with costs and deliver the warrant to an officer for service. The officer shall forthwith demand payment (§ 41—153), and if not paid, he shall distrain sufficient property on the rented premises to pay the amount, giving a list of property distrained together with a copy of the distress warrant to the tenant. The distress must be reasonable as to amount of property distrained, on penalty of action for damages (§§ 41—158, 41—159). The tenant has five days in which to put up bond and free the property from the lien of distraint (§ 41—160). 2 The next day, April 8, 1952, a receiver was appointed for the corporate taxpayer-tenant as an insolvent. All of the assets of the corporation passed to the receiver, who sold them and realized therefrom the fund over which this contest is waged. 3 For nonpayment of taxes due, the Collector of Internal Revenue received the proper assessment lists in his office on March 19, 1951, May 24, 1951, August 29, 1951, December 3, 1951, February 23, 1952, and February 28, 1952, and notice of these liens thereafter was filed in the proper office in Greenville County, South Carolina, on April 10, 1952. Section 3671 of the Internal Revenue Code, 26 U.S.C.A. § 3671, provides that the lien for such unpaid taxes attaches when the assessment lists are received by the Collector. Therefore, long before the landlord obtained a distress warrant the Government's liens for taxes had attached. 4 The Supreme Court of South Carolina held that, since the distress warrant was perfected before the receiver was appointed, the landlord's distress lien was superior to the United States' priority created by § 3466, Revised Statutes, 31 U.S.C. § 191, 31 U.S.C.A. § 191. 224 S.C. 233, 78 S.E.2d 277. We granted certiorari, 347 U.S. 974, 75 S.Ct. 785. However, we find it unnecessary to pass upon the effect of that section. We hold that the Government must prevail because of its liens under § 3670, Internal Revenue Code, 26 U.S.C.A. § 3670. 5 The landlord had a lien other than a mortgage, pledge, or judgment lien. As to all other liens, such as the distress lien in the instant case, § 3672 of the Internal Revenue Code, 26 U.S.C.A. § 3672, affords no protection. United States v. Security Trust & Sav. Bank of San Diego, 340 U.S. 47, 51, 71 S.Ct. 111, 113, 95 L.Ed. 53 (concurring opinion). Cf. United States v. Gilbert Associates, Inc., 345 U.S. 361, 362—365, 73 S.Ct. 701, 702, 703, 704, 97 L.Ed. 1071. Moreover, the distress lien was not perfected in the federal sense at the time the Government's liens were filed. Such perfection is, of course, a matter of federal law. United States v. Waddill, Holland & Flinn, Inc., 323 U.S. 353, 65 S.Ct. 304, 89 L.Ed. 294; People of State of Illinois ex rel. Gordon v. Campbell, 329 U.S. 362, 371, 67 S.Ct. 340, 91 L.Ed. 348. The five-day period specified by § 41—160 of the South Carolina Code had not elapsed. During this time the tenant-taxpayer could have reacquired any interest the landlord may have had in his property by posting bond as provided by the Code. Therefore, such a lien was only a caveat of a more perfect lien to come, as we have so often held in other cases. United States v. Security Trust Co., supra; United States v. Gilbert Associates, Inc., supra; United States v. Waddill, Holland & Flinn, Inc., supra, 323 U.S. at pages 357—359, 65 S.Ct. 304, 306, 307; People of State of New York v. Maclay, 288 U.S. 290, 53 S.Ct. 323, 77 L.Ed. 754. 6 It was decided in the trial court and argued here that the landlord was a purchaser within the meaning of § 3672 of the Internal Revenue Code and, therefore, that the Government lien was invalid as to him. A purchaser within the meaning of § 3672 usually means one who acquires title for a valuable consideration in the manner of vendor and vendee. Obviously, the landlord was not a purchaser. 7 The judgment is reversed. 8 Reversed.

1112

348 U.S. 207 75 S.Ct. 242 99 L.Ed. 260 Bessie B. COX and John G. Thompson, as Administrators of the Estate of Sid Cox, Deceased, et al., Petitioners,v.Arthur ROTH, as Administrator of the Estate of James Dean, Deceased. No. 40. Argued Nov. 16, 1954. Decided Jan. 10, 1955. Mr. Douglas D. Batchelor, Miami, Fla., for petitioners. Mr. Jacob Rassner, New York City, for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 The main question presented in this case is whether an action under the Jones Act survives the death of the tortfeasor. In Nordquist v. United States Trust Co., 188 F.2d 776, the Court of Appeals for the Second Circuit answered this question in the affirmative. In the instant case the Court of Appeals for the Fifth Circuit answered it in the negative, but allowed recovery on the basis of state law, 210 F.2d 76. We granted certiorari in order to resolve this conflict. 347 U.S. 1009, 74 S.Ct. 864. 2 Jim Dean was employed as a seaman on the M. V. Wingate, owned and operated by Captain H. C. Farrington and Sid Cox, citizens of the United States and residents of Florida. The Wingate sailed on or about December 22, 1949, from Matanzas, Cuba, and while on the high seas foundered and was lost. Captain Farrington's body was washed ashore on the Cuban coast, but no trace was found of Dean or the vessel. Sid Cox died in January 1951 of causes bearing no relation to the disaster. 3 In October 1952, the respondent, as the administrator of the estate of Jim Dean, brought this action against the petitioners in the United States District Court for the Southern District of Florida. The complaint, brought under the Jones Act, 41 Stat. 1007, 46 U.S.C. § 688, 46 U.S.C.A. § 688, alleged that Dean was a member of the crew of the Wingate and had lost his life through the negligence of its owners. The petitioners Cox and Thompson are the administrators of the estate of Sid Cox, while Henrietta and Howard Farrington are the distributees of H. C. Farrington. The estates of Cox and Farrington had been probated and that of Farrington closed before this action was filed. Respondent filed no notice of claim in either estate proceeding within the 8-month period required by § 733.16 of the Florida statutes, F.S.A. 4 The primary difficulty in this case stems from the fact that Congress, in passing the Jones Act, did not specifically enumerate the rights of seamen, but merely extended to them the same rights granted to railway employees by the Federal Employers' Liability Act. While the latter Act contained no clause specifically providing for the survival of actions against deceased tortfeasors, it did provide that the claim of the employee could be prosecuted against 'the receiver or receivers or other persons or corporations charged with the duty of the management and operation of the business of a common carrier.' 35 Stat. 66, 45 U.S.C. § 57, 45 U.S.C.A. § 57. Since railroads are rarely, if ever, owned by individuals, and since they are subject to various regulations which prevent their discontinuing business, a clause permitting suit against the personal representative of the individual owner of a railroad was unnecessary. See 41 Stat. 477, 49 U.S.C. § 1(18), 49 U.S.C.A. § 1(18). Congress fully provided for the corporate analogues of death when it provided that suit might continue against the receiver or successor corporation of the railroad. But where seamen covered by the Jones Act work aboard vessels owned by individuals, literal application of the words of the F.E.L.A. would result in the denial of recovery against the personal representative of the tortfeasor. This, we feel, would frustrate the congressional purpose of 'the benefit and protection of seamen who are peculiarly the wards of admiralty.' The Arizona v. Anelich, 298 U.S. 110, 123, 56 S.Ct. 707, 711, 80 L.Ed. 1075. The Jones Act, in proving that a seaman should have the same right of action as would a railroad employee, does not mean that the very words of the F.E.L.A. must be lifted bodily from their context and applied mechanically to the specific facts of maritime events. Rather, it means that those contingencies against which Congress has provided to ensure recovery to railroad employees should also be met in the admiralty setting. Applying such a rule here, we conclude that Congress, having provided that railroad employees could recover regardless of the 'survival' of the tortfeasor railroad, intended that the death of the tortfeasor should not defeat recovery under the Jones Act. As the Court said in Markham v. Cabell, 326 U.S. 404, 409, 66 S.Ct. 193, 195, 90 L.Ed. 165, 'The policy as well as the letter of the law is a guide to decision. Resort to the policy of a law may be had to ameliorate its seeming harshness or to qualify its apparent absolutes * * *. The process of interpretation also misses its high function if a strict reading of a law results in the emasculation or deletion of a provision which a less literal reading would preserve.' The extreme harshness of the old common-law rule abating actions on the death of the tortfeasor flies in the face of the expressed congressional purpose to provide for 'the welfare of seamen.' The Jones Act 'As welfare legislation * * * is entitled to a liberal construction to accomplish its beneficent purposes.' Cosmopolitan Shipping Co. v. McAllister, 337 U.S. 783, 790, 69 S.Ct. 1317, 1321, 93 L.Ed. 1692. Since the decision here is confined to an interpretation of the Jones Act, there is no need to consider the 'slender basis' for the general admiralty rule against such survivorship of actions. See Just v. Chambers, 312 U.S. 383, 387, note 4, 61 S.Ct. 687, 691, 85 L.Ed. 903. Nevertheless, in considering the harshness of the rule sought to be imposed under the Jones Act, we do note that advancing civilization and social progress have brought 43 of our States to include in their general law the principle of the survival of causes of action against deceased tortfeasors, and that such recovery, rather than being exceptional, has now become the rule in almost every common-law jurisdiction. See the discussion by Roscoe Pound on death statutes as part of the general law, 13 NACCA L.J. 188—189 (May 1954). 5 Petitioners make the further claim that even if the Jones Act is interpreted to allow an action to proceed against the personal representatives of the tortfeasors, this suit must fail because respondent did not comply with the Florida statute governing the distribution of decedents' estates. The short answer to this is that Congress, within its constitutional power, decreed a 3-year statute of limitations uniformly throughout the Nation, Panama R. Co. v. Johnson, 264 U.S. 375, 392, 44 S.Ct. 391, 396, 68 L.Ed. 748, and no state statute can diminish this period. 6 Affirmed.

78

348 U.S. 176 75 S.Ct. 249 99 L.Ed. 233 BALTIMORE CONTRACTORS, Inc., Petitioner,v.Jacob H. BODINGER. No. 31. Argued Nov. 9, 1954. Decided Jan. 10, 1955. Mr. Morris Rosenberg, Baltimore, Md., for petitioner. Mr. Charles Wilson, for respondent. Mr. Justice REED delivered opinion of the Court. 1 The question in this case is whether an appeal may be taken to a court of appeals from a district court order refusing to stay an action for an accounting pending arbitration. 2 This equitable action was brought in a state court for an accounting of the profits of a joint venture in construction under the National Housing Act, 12 U.S.C.A. § 1701 et seq., and was removed to a federal district court on the basis of diversity of citizenship. Under the joint venture agreement, Baltimore Contractors agreed to pay the respondent twenty-five percent of the net profits on its construction contracts. The provision under which arbitration was sought reads as follows: 3 'In the event of any dispute in the calculation of the net profits under this Paragraph, Frenkil shall select either Wooden and Benson or Haskins and Sells or an accountant or auditor named by either of them whose determination of all such disputes shall be final and binding upon all parties to the dispute.' 4 The complaint alleged a number of improper practices on the part of Contractors: the use of 'dummy' corporations to inflate costs; charges for machinery and material purchases without credits for value or surpluses after completion of the job; receipt of undisclosed rebates; excessive charges and rental for equipment; padded insurance costs, etc. 5 The petitioner moved for a stay of the action pursuant to § 3 of the United States Arbitration Act, 9 U.S.C. § 3, 9 U.S.C.A. § 3, which authorizes a stay by a federal court when an issue is 'referable to arbitration under an agreement in writing for such arbitration'. The District Court refused the stay on the ground that the agreement between the parties did not constitute an agreement to arbitrate. The court apparently construed the quoted provision as limited to mathematical disputes. Petitioner appealed to the Court of Appeals for the Second Circuit. 216 F.2d 192. On respondent's motion the Court of Appeals dismissed the appeal, citing City of Morgantown v. Royal Ins. Co., 337 U.S. 254, 69 S.Ct. 1067, 93 L.Ed. 1347. Certiorari was sought on the following question: 6 'Whether in an action for an accounting an interlocutory order denying a stay under Section 3 of the United States Arbitration Act should be regarded as a denial of an injunction from which an appeal lies.' In view of the conflict between the decision below and Hudson Lumber Co. v. United States Plywood Corp., 9 Cir., 181 F.2d 929, we granted the petition, 347 U.S. 942, 74 S.Ct. 640.1 7 Congress has long expressed a policy against piecemeal appeals. The reasons for such a policy were stated as follows: 8 'From the very foundation of our judicial system the object and policy of the acts of congress in relation to appeals and writs of error, (with the single exception of a provision in the act of 1875 in relation to cases of removal, which was repealed by the act of 1887) have been to save the expense and delays of repeated appeals in the same suit, and to have the whole case and every matter in controversy in it decided in a single appeal.' McLish v. Roff, 141 U.S. 661, 665—666, 12 S.Ct. 118, 120, 35 L.Ed. 893.2 9 Section 22 of the Judiciary Act of 1789, 1 Stat. 73, 84, provided that appeals in civil actions could be taken to the circuit courts only from final decrees and judgments.3 10 That requirement of finality has remained a part of our law ever since, and now appears as § 1291 of the Judicial Code.4 11 The trial court's interpretation of the quoted contract clause and its order denying a stay could not be called a final decision under § 1291. It was as surely an interlocutory order as the District Court's order in Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 451, 55 S.Ct. 313, 314, 79 L.Ed. 583.5 The question here presented involves the interpretation of 28 U.S.C. § 1292(1), 28 U.S.C.A. § 1292(1), which makes an exception to the requirement of finality, permitting appeals from 'interlocutory orders * * * granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court'. Appealability here turns on whether the District Court's refusal to stay this trial for arbitration was the refusal of an 'injunction' under § 1292. 12 The provision for interlocutory appeals was first introduced in 1891 when the circuit courts of appeals were established as intermediate appellate courts. 26 Stat. 826. Section 7 of that Act allowed appeals from interlocutory orders in equity 'granting or continuing' injunctions, but from those only. Additions to the class of appealable interlocutory orders were made from time to time until the enactment of § 1292 in its present form.6 No discussion of the underlying reasons for modifying the rule of finality appears in the legislative history, authough the changes seem plainly to spring from a developing need to permit litigants to effectually challenge interlocutory orders of serious, perhaps irreparable consequence.7 When the pressure rises to a point that influences Congress, legislative remedies are enacted. The Congress is in a position to weigh the competing interests of the dockets of the trial and appellate courts, to consider the practicability of savings in time and expense, and to give proper weight to the effect on litigants. When countervailing considerations arise, interested parties and organizations become active in efforts to modify the appellate jurisdiction.8 This Court, however, is not authorized to approve or declare judicial modification. It is the responsibility of all courts to see that no unauthorized extension or reduction of jurisdiction, direct or indirect, occurs in the federal system. Shanferoke Coal & Supply Corp. of Delaware v. Westchester Service Corp., 293 U.S. 449, 451, 55 S.Ct. 313, 79 L.Ed. 583. Any such ad hoc decisions disorganize practice by encouraging attempts to secure or oppose appeals with a consequent waste of time and money. The choices fall in the legislative domain. They are enlargement of the allowable list of appealable interlocutory orders; abandonment of fragmentary appeals; or a general allowance of such appeals in the discretion of the trial judge upon findings of need, with or without the consent or approval of the appellate court. 13 A series of decisions of this Court has developed the rationale for determining the appealability of such an interlocutory order as this under § 1292 and its predecessors. The appealability of routine interlocutory injunctive orders raised few questions. See George v. Victor Talking Machine Co., 293 U.S. 377, 55 S.Ct. 229, 79 L.Ed. 439. There the statute was clear. It was when stays of proceedings, in distinction to injunctions, were appealed that the issue of jurisdiction became sharp. In Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, a case arising when federal courts had actions at law and proceedings in equity, a complaint at common law on a life insurance policy was met by an answer alleging fraud in the policy's procurement with a prayer for its cancellation and a motion to try the equitable issue first. The motion was granted, and jurisdiction on appeal from that order was approved on this reasoning: 14 '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 § 129 (§ 1292). 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, 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.' Per Van Devanter, J., in Griesa v. Mutual Life Ins. Co., (of New York), 8 Cir., 165 F. 48, 50, 51.' 293 U.S. at page 382, 55 S.Ct. at page 311.9 15 After the adoption of the one form of action by the Fed.Rules Civ.Proc., rule 2, we reiterated this ruling in a like case. Ettelson v. Metropolitan Ins. Co., 317 U.S. 188, 63 S.Ct. 163, 164, 87 L.Ed. 176. We said a stay of the complaint until disposition of the fraud issue 'is as effective * * * as an injunction * * *. The statute looks to the substantial effect of the order made.' 16 The point was made in the Enelow case that power to stay mere steps within the framework of the litigation before a court differs as to appealability from an injunction prohibiting proceedings in another court. This distinction was applied in City of Morgantown v. Royal Ins. Co., 337 U.S. 254, 69 S.Ct. 1067, 93 L.Ed. 1347. There the insurance company brought a suit for reformation of the contract. The insured counterclaimed, seeking to enforce the contract as written, and demanded a jury trial; the company moved to strike the demand; the court granted the motion and set the case for trial to the court without a jury. The insured appealed and the Court of Appeals dismissed the appeal. We affirmed, holding that the Enelow rule did not apply; that since this was an equitable proceeding with a counter claim to enforce the policy, the decision to hear the reformation issue first without a jury was only a decision as to how to try the case, and therefore was not an interlocutory order in the nature of an injunction. To the argument that the importance of a jury trial justified treating the order of trial as an interlocutory injunction, we answered: 17 'Many interlocutory orders are equally important, and may determine the outcome of the litigation, but they are not for that reason converted into injunctions.' 337 U.S., at page 258, 69 S.Ct. at page 1069. 18 The Morgantown case controls here.10 Whether the District Court was right or wrong in its ruling that the contract provision did not require arbitration proceedings, it was simply a ruling in the only suit pending, actual or fictional. It was a mere order and not an injunction as that word is understood through the Enelow and the Ettleson cases as a stay through equitable principles of a common-law action. This present case is to be distinguished from the Shanfroke case, supra, note 5, in the same way. There in a common-law action a motion for an interlocutory injunction on an equitable defense was refused. The order was appealable under Judicial Code, § 129. This Court said: 19 'For the reasons stated in Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, an order granting or denying a stay based on an equitable defense or cross-bill interposed in an action at law under § 274b * * * is appealable under § 129.' 293 U.S. at page 452, 55 S.Ct. at page 314. 20 The reliance on the analogy of equity power to enjoin proceedings in other courts has elements of fiction in this day of one form of action. The incongruity of taking jurisdiction from a stay in a law type and denying jurisdiction in an equity type proceeding springs from the persistence of outmoded procedural differentiations. Some simplification would follow from an assumption or denial of jurisdiction in both. The distinction has been applied for years, however, and we conclude that it is better judicial practice to follow the precedents which limit appealability of interlocutory orders, leaving Congress to make such amendments as it may find proper. 21 It is difficult to generalize as to whether interlocutory appeals are or are not advantageous to an efficient administration of justice. A compromise has been worked out by Congress through § 1292. But that compromise does not authorize appeals to simplify litigation. This ruling was a step in controlling the litigation before the trial court, not the refusal of an interlocutory injunction. 22 Affirmed. 23 Mr. Justice BURTON concurs in the judgment of the Court. 24 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS concurs, dissenting. 25 I think the District Court's order denying a stay is appealable because it is (1) 'final' within the meaning of 28 U.S.C. § 1291, 28 U.S.C.A. § 1291, and (2) a refusal to grant an interlocutory injunction within the meaning of § 1292. As the Court admits, a collateral issue may be so severable and unrelated to central trial issues have a judgment on the collateral issue is considered 'final' and appealable under § 1291, even though other important issues are left undecided. Given this common sense meaning § 1291 authorizes the present appeal. For certainly decision of whether a judicial rather than an arbitration tribunal shall hear and determine this accounting controversy is logically and practically severable from the factual and legal issues crucial to determination of the merits of the controversy. And this Court has held that § 1292 makes all stay orders appealable that have the substantial effect of interlocutory injunction orders. Ettelson v. Metropolitan Ins. Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176. The refusal to stay here had that effect. Indeed, the Court seems to admit that this order refusing a stay would be appealable had it been entered by another judge not presiding in this particular case. I agree with the Court that this jurisdictional 'incongruity * * * springs from the persistence of outmoded procedural differentiations' that have 'elements of fiction' in this modern day. I do not agree that the Court's obeisance to these incongruous fictions is required by congressional enactments. 26 The Court relies on a purpose of Congress to avoid a waste of time and money incident to repeated 'piecemeal' appeals in the same suit. But, as pointed out, Congress, in §§ 1291 and 1292, has left the way open for the appeal of many judgments finally deciding collateral and severable issues separately adjudicated in a case. Any rigid rule to the contrary would itself guarantee useless delays and expenses. For two trials, one unnecessary, may take longer and cost more than two appeals where one would do. Take this case for example. It must now go back for a court accounting trial which could be time-consuming and expensive to litigants and to the Government. And should petitioner lose on the merits it could undoubtedly appeal. On that review the first question for the appellate court would be whether the order denying arbitration, which the Court now refuses to consider, was right or wrong. If found wrong, the trial court's judgment on the merits would have to be vacated and the case again sent back for determination on the merits—this time by arbitration. In that event the trial the Court now orders will have been wholly futile not even the litigant who now appears to be successful will have gained anything from it, unless perchance he stands to profit from delay. There is some difficulty, at least, in laying this wasteful procedure at the door of Congress. 1 The Hudson Lumber Co. case was a suit for a declaratory judgment as to the meaning of certain contract provisions with a prayer for incidental injunctive relief. Appeal was allowed by the Court of Appeals from the District Court order staying the trial pending resort to arbitration as required by the contract. 2 See Catlin v. United States, 324 U.S. 229, 233—234, 65 S.Ct. 631, 633, 634, 89 L.Ed. 911; United States v. Bailey, 9 Pet. 238, 273, 9 L.Ed. 113. 3 This enlarged the English rule for there interlocutory appeals were allowed in equity, although not at common law. 1 Holdsworth's History of English Law 214; Crick, The Final Judgment as a Basis for Appeal, 41 Yale L.J. 539, 540—548, 551. Section 22 was rigorously enforced. Rutherford v. Fisher, 4 Dall. 21, 1 L.Ed. 724; Young v. Grundy, 6 Cranch 51, 3 L.Ed. 149. Fragmentary appeals were denounced. Canter v. American Ins. Co., 3 Pet. 307, 318, 7 L.Ed. 688; United States v. Bailey, 9 Pet. 238, 273, 9 L.Ed. 113. 4 28 U.S.C. § 1291, 28 U.S.C.A. § 1291: 'The courts of appeals shall have jurisdiction of appeals from all final decisions of the district courts of the United States, the District Court for the Territory of Alaska, the United States District Court for the District of the Canal Zone, the District Court of Guam, and the District Court of the Virgin Islands, except where a direct review may be had in the Supreme Court.' The statutory limitation of appeals to final decisions, i.e., judgments and decrees, Ex parte Tiffany, 252 U.S. 32, 36, 40 S.Ct. 239, 240, 64 L.Ed. 443, has called for determinations of the characteristics of finality. Stack v. Boyle, 342 U.S. 1, 6, 72 S.Ct. 1, 4, 96 L.Ed. 3; Roberts v. U.S. District Court, 339 U.S. 844, 845, 70 S.Ct. 954, 955, 94 L.Ed. 1326; Swift & Co. Packers v. Compania Colombiana Del Caribe, 339 U.S. 684, 688, 70 S.Ct. 861, 864, 94 L.Ed. 1206; Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528; Cogen v. United States, 278 U.S. 221, 49 S.Ct. 118, 73 L.Ed. 275. Cf. Bandini Petroleum Co. v. Superior Court of State of California in and for Los Angeles County, 284 U.S. 8, 14—15, 52 S.Ct. 103, 105—106, 76 L.Ed. 136; Radio Station WOW v. Johnson, 326 U.S. 120, 124, 65 S.Ct. 1475, 1478, 89 L.Ed. 2092; Montgomery Bldg. & Const. Trades Council v. Ledbetter Erection Co., 344 U.S. 178, 73 S.Ct. 196, 97 L.Ed. 204. See Underwood, Appeals in the Federal Practice From Collateral Orders, 36 Va.L.Rev. 731. The concept of finality does not require a judgment completely disposing of every matter or issue that arises in the litigation. Some collateral issues may become 'so severed * * * as to permit an appeal.' Cobbledick v. United States, 309 U.S. 323, 328, 60 S.Ct. 540, 542, 84 L.Ed. 783. 5 Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583, was a suit at common law to recover damages for breach of a contract containing an arbitration clause. A motion was made to stay the suit until arbitration. The motion was denied because the trial court thought the arbitration clause applicable only to New York litigation. This Court held that the order was interlocutory and was appealable under § 129 of the Judicial Code of 1911, the predecessor of 28 U.S.C. § 1292(1), 28 U.S.C.A. § 1292(1). The ruling followed Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440. Wilko v. Swan, 2 Cir., 201 F.2d 439, reversed on issues not pertinent here, 346 U.S. 427, 74 S.Ct. 182, was a suit for statutory damages. It allowed an appeal under 28 U.S.C. § 1292, 28 U.S.C.A. § 1292, to the Court of Appeals from a District Court interlocutory order refusing a stay sought pursuant to the United States Arbitration Act, 9 U.S.C. § 3, 9 U.S.C.A. § 3. The Shanferoke case was cited. 6 In 1895, § 7 was amended to permit an appeal from interlocutory orders refusing or dissolving injunctions, or refusing to dissolve an injunction. 28 Stat. 666. A further amendment was made in 1900 to include certain orders in receiverships. 31 Stat. 660. This amendment had the effect of repealing the 1895 provision which was restored in § 129 of the Judicial Code of 1911. 36 Stat. 1087, 1134. See Frankfurter and Landis, The Business of the Supreme Court, 124—127. The amendment of 1925, 43 Stat. 937, made two changes: First, it embraced orders modifying or refusing to modify injunctions and expanded the number of orders in receiverships which were appealable. Second, it dropped the words 'in equity' from the phrase 'where, upon a hearing in equity in a district court' which had been employed since the initial enactment of § 7 in 1891. No change was intended by that omission. Schoenamsgruber v. Hamburg American Line, 294 U.S. 454, 457, 55 S.Ct. 475, 477, 79 L.Ed. 989, footnote 3. In 1927, provision was made for interlocutory appeals in patent cases which are final save for an accounting, 44 Stat. 1261. Interlocutory appeals in bankruptcy cases are covered by § 24 of the Bankruptcy Act, 11 U.S.C. § 47, 11 U.S.C.A. § 47. Compare Fed.Rules Civ.Proc., rule 54(b), 28 U.S.C.A., and see Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 70 S.Ct. 322, 94 L.Ed. 299. 7 Statutory provisions for interlocutory appeals have been enacted in Great Britain. See the Judicature Act of 1925, Law Reports 1925(2), 15 and 16 Geo. V, c. 49, § 31; 19 Halsbury's Laws of England (2d ed.) 209. 8 See Hart and Wechsler, The Federal Courts and the Federal System, Note on Rule 54(b) and Review of Interlocutory Orders, 1344; Proposals for Interlocutory Appeals, 58 Yale L.J. 1186. See Report of the Proceedings of the Annual Meeting of the Judicial Conference of the United States for Sept. 24—25, 1953, p. 27, Report of Committee on Enlargement of Scope of Appeals from Interlocutory Orders, with proposed amendment to § 1292. This was transmitted to Congress, 100 Cong.Rec. 1079 and 1168. 9 Cf. Schoenamsgruber v. Hamburg American Line, 294 U.S. 454, 457, 55 S.Ct. 475, 476, 79 L.Ed. 989, where a stay in admiralty for arbitration was held not appealable as an injunction but only an order as to the course of trial. 10 Cf. Moore's Commentary on the U.S. Judicial Code, 492.

89

348 U.S. 211 75 S.Ct. 239 99 L.Ed. 264 UNITED STATES of America, Petitioner,v.Michael P. ACRI, Dollar Savings & Trust Company, the Dollar Savings & Trust Company of Youngstown, Ohio, Guardian of the Estate of Michael P. Acri, and Edward Oravitz, Administrator of the Estate of John Oravec, A.K.A., Oravitz, Deceased. No. 33. Argued Nov. 16, 1954. Decided Jan. 10, 1955. Mr. Charles K. Rice, Washington, D.C., for petitioner. Mr. Francis B. Kavanagh, Cleveland, Ohio, for respondent Edw. Oravitz, Administrator. Mr. Justice MINTON delivered the opinion of the Court. 1 This case involves the relative priority between an attachment lien and the liens of the United States for unpaid taxes. The District Court found the attachment lien prior to the liens of the United States, 109 F.Supp. 943, and the Court of Appeals affirmed without opinion. 6 Cir., 209 F.2d 258. We granted certiorari, 347 U.S. 973, 74 S.Ct. 784. 2 On August 11, 1948, the United States filed suit in the District Court for the Northern District of Ohio to collect unpaid income taxes for the years 1942—1946 against one Acri and his wife. Acri was at the time in the penitentiary for the murder of one Oravec, whose personal representative, Oravitz, had, on August 6, 1947, in Mahoning County, Ohio, filed an action against Acri for wrongful death. On the same date, certain cash and bonds of Acri, which were in his safety deposit box in the Dollar Savings and Trust Company, were attached by Oravitz. The box was not opened until September 11, 1948, after the bank had been made guardian of Acri, at which time an inventory was filed. The personal representative, Oravitz, and the bank, as guardian of Acri, were made parties to the Government's suit. 3 On January 19, 1949, the personal representative of the murdered man recovered judgment against Acri in the sum of $18,500. In the meantime, on November 18, 1947, after the issuance of the writ of attachment, but more than a year before the judgment in the main action for wrongful death, the assessment lists for unpaid income taxes of Acri and his wife for the years 1942—1946 were received in the office of the Collector of Internal Revenue. On November 19, 1947, demand for payment was mailed to Acri. On November 21, 1947, a notice of the tax liens was filed in the office of the Recorder in Mahoning County, Ohio, which is the residence of the defendants and the location of the Acris' property, and the place where the action for wrongful death was begun. Notice and levy of the tax liens were served upon the Dollar Bank. It was stipulated that the only question involved was the relative priority of the attachment lien of the personal representative and the tax liens of the United States. 4 The issue here is identical with that in United States v. Security Trust & Savings Bank of San Diego, 340 U.S. 47, 71 S.Ct. 111, 95 L.Ed. 53. There the question was stated as follows: 5 'The question presented here is whether a tax lien of the United States is prior in right to an attachment lien where the federal tax lien was recorded subsequent to the date of the attachment lien but prior to the date the attaching creditor obtained judgment.' 340 U.S., at 48, 71 S.Ct. 112. 6 Our answer here is the same as in the Security Trust case and for the same reasons. 7 The relative priority of the lien of the United States for unpaid taxes is, as we said in United States v. Waddill, Holland & Flinn, Inc., 323 U.S. 353, 356, 357, 65 S.Ct. 304, 306, 89 L.Ed. 294; People of State of Illinois ex rel. Gordon v. Campbell, 329 U.S. 362, 371, 67 S.Ct. 340, 345, 91 L.Ed. 348; United States v. Security Trust & Savings Bank of San Diego, 340 U.S. 47, 49, 71 S.Ct. 111, 112, 95 L.Ed. 53, always a federal question to be determined finally by the federal courts. The state's characterization of its liens, while good for all state purposes, does not necessarily bind this Court. United States v. Waddill, Holland & Flinn, Inc., 323 U.S. 353, at page 357, 65 S.Ct. 304, at page 306, 89 L.Ed. 294; United States v. Gilbert Associates, Inc., 345 U.S. 361, 73 S.Ct. 701, 97 L.Ed. 1071. Therefore, the fact that the Ohio courts had designated an attachment lien 'an execution in advance,' Rempe & Son v. Ravens, 68 Ohio St. 113, 67 N.E. 282, 286, and treated it as a perfected lien at the time of attachment, does not bind this Court. We must look at the circumstances as we did in the Waddill case, where the Virginia court had held a landlord's lien was fixed, specific, and not inchoate. This Court, after examining the facts, found otherwise. In Gilbert Associates, the New Hampshire court had held that the assessment of a tax was a judgment and the United States' lien for taxes was not valid against the tax assessment made by the town within the meaning of § 3672 of the Internal Revenue Code, 26 U.S.C.A.1 We held that although New Hampshire might treat its tax assessments as judgments for state purposes, the assessment of the tax was not a judgment within the meaning of § 3672. We hold here that the attachment lien in Ohio is for federal tax purposes an inchoate lien because, at the time the attachment issued, the fact and the amount of the lien were contingent upon the outcome of the suit for damages. 8 In argument it was pointed out that the statute of California involved in the Security Trust case was different because California courts had held an attachment lien to be inchoate and a mere notice of a more perfect lien to come, while Ohio courts had held it to be an execution in advance and a lien perfected as of the time of attachment. This distinction is immaterial for purposes of federal law. This case is not to be distinguished from United States v. Security Trust & Savings Bank of San Diego, 340 U.S. 47, 71 S.Ct. 111, 95 L.Ed. 53, and the judgment is reversed. 9 Reversed. 1 'Such lien shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the collector * * *.'

1112

348 U.S. 187 75 S.Ct. 229 99 L.Ed. 246 COMMISSIONER OF INTERNAL REVENUE, Petitioner,v.STATE of Louis STERNBERGER, The Chase National Bank of the City of New York, Executor. No. 24. Argued Oct. 19 and 20, 1954. Decided Jan. 10, 1955. Miss Melva M. Graney, Washington, D.C., for petitioner. Mr. Edward S. Greinbaum, New York City, for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 The issue here is whether, in determining a net estate for federal estate tax purposes, a deduction may be made on account of a charitable bequest that is to take effect only if decedent's childless 27-year-old daughter dies without descendants surviving her and her mother. For the reasons hereafter stated, we hold that it may not. 2 Louis Sternberger died testate June 25, 1947. His federal estate tax return discloses a gross estate of $2,406,541.71 and, for the additional estate tax, a net estate of $2,064.346.55. It includes assets owned by him at his death and others held by the Chase National Bank, respondent herein, under a revocable trust created by him. As the revocable trust makes provisions for charity that are for our purposes identical with those in the will, this opinion applies to both dispositions. 3 The will places the residuary estate in trust during the joint lives of decedent's wife and daughter and for the life of the survivor of them. Upon the death of such survivor, the principal of the trust fund is payable to the then living descendants of the daughter. However, if there are no such descendants, one-half of the residue goes to certain collateral relatives of decedent and the other half to certain charitable corporations. If none of the designated relatives are living, the entire residue goes to the charitable corporations.1 4 At decedent's death, his wife and daughter survived him. His wife was then 62 and his daughter 27. The latter married in 1942, was divorced in 1944, had not remarried and had not had a child. 5 In the estate tax return, decedent's executor, respondent herein, deducted $179,154.19 from the gross estate as the present value of the conditional bequest to charity of one-half of the residue. Respondent claimed no deduction for the more remote charitable bequest of the other half of the residue. The Commissioner of Internal Revenue disallowed the deduction and determined a tax deficiency on that ground. The Tax Court reversed the Commissioner. 18 T.C. 836. The Court of Appeals for the Second Circuit affirmed the Tax Court, 207 F.2d 600, on the authority of Meierhof v. Higgins, 2 Cir., 129 F.2d 1002. To resolve the resulting conflict with the Court of Appeals for the First Circuit in Newton Trust Co. v. Commissioner, 160 F.2d 175, we granted certiorari, 347 U.S. 932, 74 S.Ct. 629. 6 The controlling provisions of the Revenue Code are in substantially the same terms as when they were first enacted in 19192 and are as follows: 7 'Sec. 812. Net Estate 8 'For the purpose of the tax value of the net estate shall be determined, * * * by deducting from the value of the gross estate— 9 '(d) TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES. The amount of all bequests, legacies, devises, or transfers * * * to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes * * *.' I.R.C., 26 U.S.C.A. § 812(d). 10 The Commissioner concedes that the corporations named in the will qualify as charitable corporations under the statute. There is no doubt, therefore, that if the bequest to them had been immediate and unconditional, its value would be deductible. The question before us is what, if any, charitable deduction may be made despite (1) the deferment of the effective date of the charitable bequest until the deaths of both decedent's wife and daughter and (2) the conditioning of the bequest upon a lack of descendants of decedent's daughter surviving at that time. We find the answer in the Treasury Regulations, which are of long standing and strengthened by reenactments of I.R.C., § 812(d), since their promulgation.3 11 In their earliest form, the predecessors of these regulations, in 1919, recognized, in plain language, the propriety of the deduction of the present value of a deferred, but assured, bequest to charity.4 Section 81.44(d) of Treasury Regulations 105 does so with inescapable specificity: 12 's 81.44 Transfers for public, charitable, religious, etc., uses. * * * 13 '(d) If a trust is created for both a charitable and a private purpose, deduction may be taken of the value of the beneficial interest in favor of the former only insofar as such interest is presently ascertainable, and hence severable from the interest in favor of the private use. § 81.10 indicates the principles to be applied in the computation of the present worth of federred uses, but such computation will not be made by the Commissioner on behalf of the executor. Thus, if money or property is placed in trust to pay the income to an individual during his life, or for a term of years, and then to pay or deliver the principal to the charitable corporation, or to apply it to a charitable purpose, the present value of the remainder is deductible. To determine the present value of such remainder, use the appropriate factor in column 3 of Table A or B of § 81.10. If the present worth of a remainder bequeathed for a charitable use is dependent upon the termination of more than one life, or in any other manner rendering inapplicable Table A or B of § 81.10, the claim for the deduction must be supported by a full statement, in duplicate, of the computation of the present worth made, in accordance with the principle set forth in § 81.10, by one skilled in actuarial computations.' (Emphasis supplied.) 26 C.F.R. 14 The very explicitness of the above provisions emphasizes their restriction to 'the computation of the present worth' of assured bequests such as are the subject of each of the illustrations and cross references in the section. The statute restricts charitable deductions to bequests to corporations 'organized and operated exclusively for * * * charitable * * * purposes'.5 (Emphasis supplied.) Likewise, the above section of the regulations requires that the deductible value of 'the beneficial interest in favor of' the designated charitable purpose be 'severable from the interest in favor of the private use.' There is no suggestion in the statute or in § 81.44 of a deduction of funds other than those later to be used exclusively for charitable purposes. 15 Here, also, the regulations in their earliest form, in 1919, were unequivocally restrictive.6 It was only after court decisions had demonstrated the need for doing so7 that the restrictions were restated so as expressly to permit deductions of bequests assured in fact but conditional in form. 16 Section 81.46 now provides expressly that no deduction is allowable for a conditional bequest to charity 'unless the possibility that charity will not take is so remote as to be negligible.' The whole section is significant: 17 's 81.46 Conditional bequests. (a) If as of the date of decedent's death the transfer to charity is dependent upon the performance of some act or the happening of a precedent event in order that it might become effective, no deduction is allowable unless the possibility that charity will not take is so remote as to be negligible. If an estate or interest has passed to or is vested in charity at the time of decedent's death and such right or interest would be defeated by the performance of some act or the happening of some event which appeared to have been highly improbable at the time of decedent's death, the deduction is allowable. 18 '(b) If the legatee, devisee, donee, or trustee is empowered to divert the property or fund, in whole or in part, to a use or purpose which would have rendered it, to the extent that it is subject to such power, not deductible had it been directly so bequeathed, devised, or given by the decedent, deduction will be limited to that portion, if any, of the property or fund which is exempt from an exercise of such power.' (Emphasis supplied.) 26 C.F.R. 19 Sections 81.44 and 81.46 fully implement § 812(d) of the code. In their early forms they were obviously mutually exclusive and easily reconcilable. The predecessor of § 81.46 confined charitable deductions to outright, unconditional bequests to charity. It expressly excluded deductions for charitable bequests that were subject to conditions, either precedent or subsequent. While it encouraged assured bequests to charity, it offered no deductions for bequests that might never reach charity. Subsequent amendments have clarified and not changed that principle. Section 81.46(a) today yields to no condition unless the possibility that charity will not take is 'negligible' or 'highly improbable.' Section 81.46(b) is equally strict. It relates to provisions whereby funds may be diverted in whole or in part to noncharitable uses, and it limits the tax deduction to that portion of each fund that cannot be so diverted. Where the principal of a bequest to charity thus may be invaded for private purposes, it is only the ascertainable and assured balance of the bequest to charity that is recognized for a tax deduction. 20 Respondent concedes that the chance that charity will not take is much more than negligible. Therefore, if § 81.46(a) applies to the instant case, no charitable deduction is permissible. 21 Respondent claims, however, that § 81.44 covers this case. In doing so, it reads §§ 81.44 and 81.46 together and, instead of confining them to their mutually exclusive subjects, makes them overlap. It applies § 81.44 to some deferred conditional bequests. It does so in any case where it can compute, on approved actuarial standards, the degree of possibility that charity will receive the conditional bequest. Respondent then computes the present value of a corresponding percentage of the entire deferred bequest. In short, respondent claims an immediate tax deduction equal to the present value of whatever fraction of the bequest corresponds, actuarially, to the chance that charity may benefit from it. 22 This Court considered a somewhat comparable proposal in 1928. In Humes v. United States, 276 U.S. 487, 48 S.Ct. 347, 72 L.Ed. 667, a taxpayer sought a charitable deduction based on a bequest to charity that was conditional upon the death of decedent's 15-year-old niece, without issue, before reaching the age of 40. To sustain the proposal, the taxpayer sought to establish actuarially a measure of the chance that charity would receive the bequest and to find authority in the Revenue Code for the deduction of the present value of a corresponding percentage of the bequest. Speaking through Mr. Justice Brandeis, this Court found the actuarial computation inadequate. It, however, did not drop the matter there. It made the following statement: 23 'One may guess, or gamble on, or even insure against, any future event. The Solicitor General tells us that Lloyds of London will insure against having twins. But the fundamental question in the case at bar, is not whether this contingent interest can be insured against or its value guessed at, but what construction shall be given to a statute. Did Congress, in providing for the determination of the net estate taxable, intend that a deduction should be made for a contingency the actual value of which cannot be determined from any known data? Neither taxpayer, nor revenue officer—even if equipped with all the aid which the actuarial art can supply—could do more than guess at the value of this contingency. It is clear that Congress did not intend that a deduction should be made for a contingent gift of that character.' (Emphasis supplied.) Id., 276 U.S. at page 494, 48 S.Ct. at page 348. 24 Since the above was written, there have been advances in the actuarial art. Today, actuarial estimates are employed more widely than they were then. The computations now before us illustrate that advance. They do not, however, lessen the necessity for statutory authorization for such a tax deduction. The scope of the authority required by respondent can best be appreciated if examined in the revealing light of the specific circumstances of the present case. 25 The Tax Court and the Court of Appeals have approved respondent's actuarial computations as fairly reflecting the present value of one-half of a two-million-dollar residue, reduced in proportion to the chance that charity will receive it. In making this estimate, respondent has computed the present value of the deferred bequest on the basis of 4% interest compounded annually and has used the following actuarial tables: 26 1. To determine the joint life expectancy of decedent's wife and daughter, the Combined Experience Mortality Table prescribed in § 81.10 of the estate tax regulations. 27 2. To estimate the probability of remarriage of the daughter, the American Remarriage Table, published by the Casualty Actuarial Society. 28 3. To estimate the chance of a first child being born to decedent's daughter, a specially devised table which has been found by the Tax Court to have been prepared in accordance with accepted actuarial principles upon data derived from statistics published by the Bureau of the Census.8 29 On the basis of these tables, the Tax Court finds that the present value of the charitable remainder at the death of decedent is .18384 on the dollar if computed solely on the chances of his daughter's remarriage; .24094 on the dollar if computed on the chance that a legitimate descendant of his daughter will survive her; and .24058 on the dollar if computed on the chance that any legitimate or illegitimate descendant of his daughter will survive her. It is this last estimate that respondent seeks to apply here. 30 If respondent is successful, it means the allowance of an immediate and irrevocable deduction of over $175,000 from the gross estate of decedent, although respondent admits there is a real possibility that charity will receive nothing. The bequest, in fact, offers to the daughter an inducement of about $2,000,000 to remarry and leave a descendant. To the extent that this inducement reduces the actuarially computed average probability that charity will receive this bequest, it further demonstrates the inappropriateness of authorizing charitable tax deductions based upon highly conditional bequests to charity. 31 An even clearer illustration of the effect of respondent's interpretation of the code readily suggests itself. If decedent had here conditioned his bequest to charity solely on the death of his daughter before remarriage, the Remarriage Table would then fix the present value of the charitable remainder at .18384 on the dollar. The taxpayer would at once receive a substantial charitable deduction on that basis. The daughter, however, would have a $2,000,000 inducement to remarry. If she did so, her action would cancel the possibility that charity would receive anything from the bequest, but it would not cancel the tax deduction already allowed to the estate. To whatever extent any person can defeat the fulfillment of any condition upon which a benefit to charity depends, to that extent the actuarial estimate that such benefit will reach charity is less dependable. The allowance of such a tax reduction as is here sought would open a door to easy abuse. The result might well be not so much to encourage gifts inuring to the benefit of charity as to encourage the writing of conditions into bequests which would assure charitable tax deductions without assuring benefits to charity. 32 We find no suggestion of authority for such a deduction in § 812(d). That section remains substantially the same as it was when Humes v. United States, supra, 276 U.S. 487, 48 S.Ct. 347, 72 L.Ed. 667, was decided. We also find no authorization for the deduction either in § 81.46 or § 81.44 of the regulations, as thus far discussed. This relegates respondent to the following words now in § 81.44(d): 33 'If the present worth of a remainder bequeathed for a charitable use is dependent upon the termination of more than one life, or in any other manner rendering inapplicable Table A or B of § 81.10, the claim for the deduction must be supported by a full statement, in duplicate, of the computation of the present worth made, in accordance with the principle set forth in § 81.10, by one skilled in actuarial computations.' (Emphasis supplied.) In view of the statutory emphasis upon outright bequests and the long-standing exclusion of conditional bequests by § 81.46 of the regulations (and its predecessors), we do not regard the above sentence as now invading the domain of § 81.46 by extending the deduction to conditional bequests in a manner readily open to abuse. We regard the sentence as restricted to computations of deferred, but assured, bequests. Section 81.10(i) now deals at length with the valuation of remainders and reversionary interests and gives many examples of such computations. Every example, however, is one of the valuation of an assured bequest. The additional language in § 81.44(d), quoted above, does not authorize the deduction, and § 81.46 prohibits it. Such specific and established administrative interpretation of the statute is valid and 'should not be overruled except for weighty reasons.' Commissioner of Internal Revenue v. South Texas Co., 333 U.S. 496, 501, 68 S.Ct. 695, 698, 92 L.Ed. 831. 34 This Court has not specifically faced the issue now before us since Humes v. United States, supra, but we see no reason to retreat from the views there stated. This Court finds no statutory authority for the deduction from a gross estate of any percentage of a conditional bequest to charity where there is no assurance that charity will receive the bequest or some determinable part of it. Where the amount of a bequest to charity has not been determinable, the deduction properly has been denied. Henslee v. Union Planters Nat. Bank, 335 U.S. 595, 598—600, 69 S.Ct. 290, 291 292, 93 L.Ed. 259; Merchants Nat. Bank of Boston v. Commissioner, 320 U.S. 256, 259—263, 64 S.Ct. 108, 110—112, 88 L.Ed. 35; and see Robinette v. Helvering, 318 U.S. 184, 189, 63 S.Ct. 540, 542, 87 L.Ed. 700. Where the amount has been determinable, the deduction has, with equal propriety, been allowed where the designated charity has been sure to benefit from it. United States v. Provident Trust Co., 291 U.S. 272, 54 S.Ct. 389, 78 L.Ed. 793; Ithaca Trust Co. v. United States, 279 U.S. 151, 49 S.Ct. 291, 73 L.Ed. 647. 35 Some of the lower courts have squarely met the instant problem and denied the deduction. For example, the deduction was denied in the First Circuit where the court found that 'it is not certain that the charity will take 50% of the corpus; only that it has a 50-50 chance of getting all or nothing.' Newton Trust Co. v. Commissioner, 160 F.2d 175, 181. See also, Graff v. Smith, D.C., 100 F.Supp. 42; Hoagland v. Kavanagh, D.C., 36 F.Supp. 875; Wood v. United States, D.C., 20 F.Supp. 197. The administrative practice, as evidenced here by the action of the Commissioner, has been to deny the deduction. See further, Paul, Federal Estate and Gift Taxation (1946 Supp.), 426—427. 36 The judgment of the Court of Appeals, accordingly, is reversed and the cause remanded for action in conformity with this opinion. 37 Reversed. 38 Mr. Justice REED, with whom Mr. Justice DOUGLAS joins, dissenting. 39 The facts are fully and fairly stated in the Court's opinion. Its statement of the legal issues accords with our understanding of the case, to wit: 40 'The question before us is what, if any, charitable deduction may be made despite (1) the deferment of the effective date of the charitable bequest until the deaths of both decedent's wife and daughter and (2) the conditioning of the bequest upon a lack of descendants of decedent's daughter surviving at that time.' 41 The reason for dissenting, at some length, is that the Court's conclusion seems to disregard the words of the statute in question and to subvert the purpose of Congress in its enactment, that purpose admittedly being to encourage testamentary gifts to corporations organized for certain objects considered highly desirable for the good of our people.1 There is a certain hesitation in dissenting from an interpretation of a tax statute remediable by Congress, but as the Court's decision springs, we think, from an overemphasis on regulations, a protest may have usefulness as a counterweight against future extensions of such treatment to statutory language. 42 First. The statute, 26 U.S.C. § 812(d), 26 U.S.C.A. § 812(d), allows as deductions from the gross estate the 'amount of all bequests, legacies, devises, or transfers * * * to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes * * *.' There is no legislative history explanatory of its meaning.2 If we read the quoted portion of § 812 alone, could there be any doubt that the Sternberger bequest is deductible? We think not. It says 'all bequests'—whatever the charity takes under the will. There is not a word that limits the deduction of bequests to what assuredly goes to the institution. It is the 'amount' of the bequest that is deductible—its presently ascertainable value. The statute plainly allows deferred charitable bequests. It does not require assured enjoyment. 43 Under the Court's interpretation, if a child were bequeathed his father's estate for life with remainder in default of issue to the recognized institutions, the full estate tax would have to be paid. On the other hand, if the estate were left simply to the child for life and then to the same institutions, the estate would be free from the tax on the present value of the remainder. Such a differentiation is not found in the statute. The Congress said that charitable bequests should be deductible. The valuation of the charitable interest in one instance would be greater that in the other; the tax less. But in each case the net estate would be reduced only by the present actuarial value of the charitable bequest. While particular estates would securetax advantages under our interpretation, in the aggregate the charitable deductions should substantially equal the amount received by the tax-recognized institutions. This would surely fairly carry out the congressional purpose. To view respondent's contention as urging a possible over-all tax windfall for estates is to deny the mathematical law of averages.3 44 Our interpretation of the statute has support in the language of Treasury Regulation 105, § 81.44. After referring to the valuation of bequests whose value is presently ascertainable, the regulation adds: 45 'If the present worth of a remainder bequeathed for a charitable use is dependent upon the termination of more than one life, or in any other manner rendering inapplicable Table A or B of § 81.10, the claim for the deduction must be supported by a full statement, in duplicate, of the computation of the present worth made, in accordance with the principle set forth in § 81.10, by one skilled in actuarial computations.' 46 The tables refer to a remainder contingent on the termination of one life only. Section 81.44 alone would allow, in the light of the statutory language, a deduction for a contingent bequest, uncertain as to ultimate receipt. See the Court's opinion, 75 S.Ct. 235. The Court does not follow this language of the Regulations because of § 81.46 and because of 'statutory emphasis upon outright bequests.' We find no such emphasis. The purpose of the statute leads us to the contrary result.4 47 The Court agrees, however, with the Government's contention that 'it is immaterial whether the charity's contingent possibility of receipt can be valued as of the decedent's death.' It holds that it is only when ultimate receipt must follow that § 812(d) allows a deduction. Although the Government asserts its conclusion is upheld by our decisions, we do not think they so hold. In this Court five cases have touched upon the problem. Three of them were disposed of because of the failure to introduce, or the impossibility of making, a valuation upon sound actuarial principles.5 None of them held that bequests are not deductible although the ultimate taking by the charitable beneficiary was uncertain. 48 Two—Ithaca Trust Co. v. United States, 279 U.S. 151, 49 S.Ct. 291, 73 L.Ed. 647, and United States v. Provident Trust Co., 291 U.S. 272, 54 S.Ct. 389, 78 L.Ed. 793—allowed a deduction for conditional charitable bequests. The former because a right to invade the corpus was fixed by a standard capable of being stated in money and, as the income of the estate was ample for the needs of the life beneficiary, there was no uncertainty sufficient to justify a refusal of the deduction for the charitable remainder. The latter is, on its face, a decision that would decide the issue, simpliciter, of the deductibility of contingent bequests. Neither is here controlling, however, since in both the charity was held to be assured of taking. The Provident Trust case is worth a moment's examination. Property was left by will in trust for the deceased's daughter for life; upon her death the corpus was to pass to her lawful issue; but should she die without issue, the estate was to be distributed among various charitable organizations. Prior to the death of the testator, an operation had rendered the daughter incapable of childbearing, assuring the vesting of the charitable remainder. This Court did not apply the then existing regulation (the predecessor to § 81.46(d))6 which would have denied a deduction. It ignored the regulation, apparently believing it in conflict with the purpose of the statute, and allowed the deduction, thus requiring the amendment of the regulation to its present form. The Court stated the relevant inquiry to be as follows: 49 'The sole question to be considered is, What is the value of the interest to be saved from the tax? That is a practical question, not concluded by the presumption invoked, but to be determined by ascertaining in terms of money what the property constituting that interest would bring in the market, subject to such uncertainty as ordinarily attaches to such an inquiry. See Ithaca Trust Co. v. United States, supra.' 291 U.S. at page 286, 54 S.Ct. at page 392. 50 Our conclusion is that the purpose of § 812 was to allow a deduction for charitable bequests that are capable of valuation at the time of death, although it is not certain that the gift will ultimately fall to the contingent beneficiary. See in accord Meierhof v. Higgins, 2 Cir., 129 F.2d 1002, a case in conflict with Newton Trust Co. v. Commissioner, 1 Cir., 160 F.2d 175, which ultimately led to the allowance of this certiorari. The purpose of § 812 and its background forbid, we think, a conclusion that Congress intended to exclude a deduction in those cases. 51 Second. The Government asserts and this Court agrees that although it is clear that § 812 allows a deduction for some contingent bequests, § 81.46 of the regulations limits those contingencies to instances where the 'possibility that charity will not take is so remote as to be negligible.' Clearly the possibility here is not 'remote.' The chances are against the charity taking. It is quite true that § 81.46 has survived reenactment of I.R.C., § 812, and that it can be interpreted as a limitation upon the deductibility of contingent remainders. However, we do not think such a ruling would be consistent with the purpose of Congress, manifested by I.R.C., § 812. 52 Whether the Regulations are written into the Estate Tax law by reenactment or are merely indicative of congressional purpose,7 the deduction section and the regulations are to be interpreted in the light of the congressional purpose. Whatever may be the varying views as to the desirability of testamentary gifts of moneys or businesses to public or private charitable foundations, Congress has sanctioned such provisions, vested or with certain degrees of contingency, by the deduction section of the Estate Tax.8 The policy has brought munificent gifts to the chosen institutions. 53 If it were not for the reenactment of § 812 after the promulgation of § 81.46, we would have no hesitation in declaring it in conflict with the statute. Even in interpreting statutes when isolated provisions would produce results 'plainly at variance with the policy of the legislation as a whole,' we follow the purpose rather than the literal words. United States v. American Trucking Ass'ns, 310 U.S. 534, 543, 60 S.Ct. 1059, 1063, 84 L.Ed. 1345. That rule is applicable here. Regulations do not have the safeguards of federal statutory enactments. Interested parties outside the Internal Revenue Service perhaps may not be heard. Reports explaining the action are not available. Public discussion, such as happens in Congress, does not take place. In short, we think that reenactment of a statute after the due adoption of a regulation does not make the regulation a part of the statute. It is only an indication of congressional purpose to be weighed in the context and circumstances of the statutory language. In this instance the congressional purpose to encourage gifts to charity should not be frustrated by the issuance of a regulation. 54 For the foregoing reasons we would affirm the judgment of the Second Circuit. 1 These provisions appear more fully in Estate of Sternberger v. Commissioner, 18 T.C. 836, 837—838. 2 Originally § 403(a)(3) of the Revenue Act of 1918, 40 Stat. 1098. See also, Griswold, Cases and Materials on Federal Taxation (3d ed.), 679 et seq.; 1 Paul, Federal Estate and Gift Taxation, 638 et seq. 3 Its latest reenactment is in § 2055(a) of the Internal Revenue Code of 1954, 68A Stat. 390, 26 U.S.C.A. The purpose of the deduction is to encourage gifts to the named uses. Edwards v. Slocum, 264 U.S. 61, 63, 44 S.Ct. 293, 68 L.Ed. 564; 13 Geo.Wash.L.Rev. 198, 201; 28 Va.L.Rev. 387—388. Like other tax deductions, however, it must rest on more than a doubt or ambiguity. See United States v. Stewart, 311 U.S. 60, 71, 61 S.Ct. 102, 109, 85 L.Ed. 40, and also Commissioner of Internal Revenue v. Jacobson, 336 U.S. 28, 49, 69 S.Ct. 358, 369, 93 L.Ed. 477. Section 408(a) of the Revenue Act of 1942, 56 Stat. 949, added to I.R.C., § 812(d), the so-called 'disclaimer provision,' whereby, under certain conditions, the renunciation of a private bequest which effectuates a gift to charity earns a charitable deduction from the decedent's gross estate. 1. Section 81.44 of Treasury Regulations 105 would permit the deduction of the present value of the bequest if it were an outright bequest, merely deferred until the deaths of decedent's wife and daughter. 4 'Art. 53. Public, charitable, and similar bequests.—* * * It does not prevent deduction * * * that the property placed in trust is also subject to another trust for a private purpose. Thus, where money or property is placed in trust to pay the income to an individual during life, and then to pay or deliver the same to a charitable corporation, or apply the principal to a charitable purpose, the charitable bequest or devise forms the basis for a deduction. The amount of the deduction, in such case, is the value, at the date of the decedent's death, of the remainder interest in the money or property which is devised or bequeathed to charity. For the manner of determining the value of such remainder interest, see Article 20.' 21 T.D. 783—784. Article 20 prescribed methods of determining the present worth of a remainder subject to a single life interest. 5 Congressional insistence upon the actual use of the funds exclusively for charitable purposes appears in the following provisions describing the bequests that are deductible: 'The amount of all bequests * * * to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes * * * no part of the net earnings of which inures to the benefit of any private stockholder or individual * * * or to a trustee or trustees, or a fraternal society, order, or association operating under the lodge system, but only if such contributions or gifts are to be used * * * exclusively for religious, charitable, scientific, literary, or educational purposes * * *.' (Emphasis supplied.) I.R.C., § 812(d). 2. Section 81.46 of Treasury Regulations 105 permits no deduction for a conditional bequest to charity 'unless the possibility that charity will not take is so remote as to be negligible.' 6 'Art. 56. Conditional bequests.—Where the bequest, legacy, devise, or gift is dependent upon the performance of some act, or the happening of some event, in order to become effective it is necessary that the performance of the act or the occurrence of the event shall have taken place before the deduction can be allowed. Where, by the terms of the bequest, devise or gift, it is subject to be defeated by a subsequent act or event, no deduction will be allowed.' 21 T.D. 785. 7 United States v. Provident Trust Co., 291 U.S. 272, 54 S.Ct. 389, 78 L.Ed. 793. See also, Hoagland v. Kavanagh, D.C., 36 F.Supp. 875; Ninth Bank & Trust Co. v. United States, D.C., 15 F.Supp. 951. 8 Despite the conclusions of the Tax Court and the Court of Appeals to the contrary, the Government contends here that the proposed actuarial value of the conditional remainder to charity does not support the deduction. We do not reach that issue, but the facts material to it are as follows: The Remarriage Table is based on a study of American experience conducted by a Committee of the Casualty Actuarial Society, 19 Proceedings of the Casualty Actuarial Society (1933), 279—349. The table is based solely upon the remarriage experience of widows who, through the deaths of their husbands, become beneficiaries under workmen's compensation laws in states where they lose compensation benefits upon remarriage. The reports relied upon cover experience for policy years 1921 to 1929, inclusive. See id., at 286—288, 298. See also, Myers, Further Remarriage Experience, 36 Proceedings of the Casualty Actuarial Society (1949), 73 et seq. The specially devised table as to the probability of issue is based upon statistics, for white women in 47 states and the District of Columbia, indicating the degree of probability that such women, after they are 27 years old, will marry and have first-born children. See the following Bureau of the Census publications for 1940; Vital Statistics of the United States, Pt. II, 89; Nativity and Parentage of the White Population—General Characteristics 110; Types of Families 9. The instant computation assumes that such a child will survive its mother. 18 T.C. 836, 837—838. 1 See note 3 of the Court's opinion. 2 See note 2 of the Court's opinion. 3 As the Court states the actuarial method and assumes by not reaching it, note 8 of the opinion, the correctness of the computation of the value of the conditional remainder to charity, we will merely add that this position accords with the conclusion of the Tax Court, 18 T.C. 836, and the Court of Appeals, 2 Cir., 207 F.2d 600, through its reliance on Meierhof v. Higgins, 2 Cir., 129 F.2d 1002, 1003, a case also involving the multiple decrement theory. See Jordan, Life Contingencies, 251. 4 See Meierhof v. Higgins, 2 Cir., 129 F.2d 1002, holding that the predecessors to §§ 81.44 and 81.46 are to be read together. 5 Humes v. United States, 276 U.S. 487, 48 S.Ct. 347, 72 L.Ed. 667. It was there said: 'The Court of Claims did not find that the present value of the contingent bequests to the charities can be determined by the calculations of actuaries based upon experience tables. * * * 'If all the facts stated had been embodied in findings, no legal basis would be laid for the deduction claimed. The volume and character of the experience upon which the conclusions drawn from these two tables are based differ from the volume and character of the experience embodied in standard mortality tables almost as widely as possibility from certainty.' 276 U.S. at pages 492—493, 48 S.Ct. at page 347. The tables were based on the limited experience of male and female members of the Scotch peerage. Merchants Nat. Bank of Boston v. Commissioner, 320 U.S. 256, 64 S.Ct. 108, 88 L.Ed. 35; Henslee v. Union Planters Nat. Bank, 335 U.S. 595, 69 S.Ct. 290, 93 L.Ed. 259. Compare Robinette v. Helvering, 318 U.S. 184, 63 S.Ct. 540, 87 L.Ed. 700. 6 'Conditional bequests.—Where the bequest, legacy, devise, or gift is dependent upon the performance of some act, or the happening of some event, in order to become effective it is necessary that the performance of the act or the occurrence of the event shall have taken place before the deduction can be allowed. Where, by the terms of the bequest, devise or gift, it is subject to be defeated by a subsequent act or event, no deduction will be allowed.' Treas.Reg. 37, Art. 56. 7 Compare Helvering v. R. J. Reynolds Tobacco Co., 306 U.S. 110, 115, 59 S.Ct. 423, 425, 83 L.Ed. 536; Crane v. Commissioner, 331 U.S. 1, 8, 67 S.Ct. 1047, 1051, 91 L.Ed. 1301, with Helvering v. Wilshire Oil Co., 308 U.S. 90, 60 S.Ct. 18, 84 L.Ed. 101. See 54 Harv.L.Rev. 377, 398, 1311. 8 Griswold, Cases and Materials on Federal Taxation (3d ed.), 679, setting out the legislative history of the section with brief reference to the differing views on the merit of the charitable deduction; Paul, Federal Estate and Gift Taxation, Vol. I, c. 12.

1112

348 U.S. 254 75 S.Ct. 268 99 L.Ed. 302 The UNITED STATES, Petitioner,v.KOPPERS COMPANY, Inc., Successor on Merger to Koppers United Company and Subsidiaries. PREMIER OIL REFINING COMPANY OF TEXAS, Petitioner, v. UNITED STATES of America. Nos. 29, 41. Argued Nov. 10, and 12, 1954. Decided Jan. 31, 1955. Rehearing Denied March 14, 1955. See 348 U.S. 965, 75 S.Ct. 521. Mr.Hilbert P. Zarky, Washington, D.C., for the United States. Mr. Wm. A. Sutherland, Washington, D.C., for petitioner, Premier Oil Refining Co. of Texas. Mr. David W. Richmond, Washington-D.C., for respondent Koppers Company, Inc. Mr. Justice BURTON delivered the opinion of the Court. 1 The issue in these cases is whether, for the years 1940 through 1945, abatements of federal excess profits taxes, through application of I.R.C. § 722,1 are retroactive. For the reasons hereafter stated, we hold that they are not and that they relieve taxpayers from the payment of interest on deficiencies in such taxes from the time of the abatements, rather than from the original due dates of the taxes abated. 2 In No. 29, United States v. Koppers Co., the taxpayer, respondent therein,2 reported and paid excess profits taxes of $6,512.76 for 1940, and $1,781,288.14 for 1941.3 In computing these taxes, it used excess profits credits based upon invested capital.4 In 1943 and 1945, it applied under § 722 for relief from all or part of these taxes, claiming that they were 'excessive and discriminatory'.5 In accordance with the usual administrative practice, the Commissioner determined the amount of the excess profits taxes due without regard to the application for relief under § 722. In doing so, he found it necessary to proceed under I.R.C. § 713, using excess profits credits based upon the taxpayer's income, rather than upon its invested capital. As a result he found that the above taxes, as returned and paid by the taxpayer without reference to § 722, had been understated and that the following deficiencies existed as of their original due dates, March 15, 1941, and 1942: 1940 1941 3 Excess profits tax under §§ 710(a) and 713 $466,921.67 $2,208,019.09 Payments........___6,512.76._1,781,288.14 Deficiencies.... 460,408.91. 426,730.95 4 The Commissioner computed interest at 6%, on the above deficiencies, amounting to $217,376.07 for 1940, and $230,504.86 for 1941.6 5 After extended investigations and negotiations conducted under authority of § 722, the Commissioner and the taxpayer agreed upon a 'constructive average base period net income' which fixed the excess profits credits for the years in question and, as a result, the relief available under § 722. After this agreement was approved by the Excess Profits Tax Council of the Bureau of Internal Revenue, the Commissioner determined that the above-stated deficiencies, with the benefit of § 722, should be reduced to $260,554.39 for 1940, and to $95,749.33 for 1941. The taxpayer consented to the assessment of these deficiencies, with interest as provided by law. Whereupon, the Commissioner issued a formal determination of them and assessed them against the taxpayer. He also assessed the above-stated interest charges, based upon the full amount of the original deficiencies. 6 The taxpayer paid the deficiencies and interest so assessed but claimed refunds of $94,358.71 for 1940, and $178,784.48 for 1941. Those sums represented the interest on the abatements in its excess profits taxes made under § 722. When the Commissioner disallowed the claims, the taxpayers sued in the Court of Claims to recover their amounts. With one judge dissenting, that court deducted a setoff and rendered judgment in favor of the taxpayer for $270,216.34. 126 Ct.Cl. 847, 117 F.Supp. 181. To resolve the resulting conflict with United States v. Premier Oil Refining Co., 5 Cir., 209 F.2d 692, we granted certiorari, 347 U.S. 965, 74 S.Ct. 775, 98 L.Ed. 1122. 7 In No. 41, Premier Oil Co. v. United States, the taxpayer, petitioner therein, paid the excess profits taxes shown on its original returns in the following amounts: for 1943, $564,167.70 (adjusted to $560,484.84); for 1944, $353,292.15 (adjusted to $313,639.13); and for 1945, $45,679.67. Thereafter, several deductions which the taxpayer had made from its income were disallowed, resulting, in 1948, in the following deficiencies in its payment of its excess profits and income taxes as of their original due dates: 8 DEFICIENCIES WITHOUT THE APPLICATION OF § 722. 1943 1944 1945 9 Deficiencies in excess profits tax, 10 under §§ 710(a) and 713. $78,359.80 $55,529.92 $190,785.32 11 Deficiencies in income tax.___9,060.07 __9,178.01 ____(90.00) 12 Total deficiencies. 87,419.87. 64,707.93 190,695.32 13 The Commissioner computed interest, at 6%, on the above excess profits tax deficiencies as follows: 14 For 1943—on $78,359.80, March 15, 1944, to June 23, 1948................ $20,084.79 15 For 1944—on $55,529.92, March 15, 1945, to June 23, 1948................. 10,901.36 16 For 1945—on $190,785.32, March 15, 1946, to June 19, 1948................._25,869.26 Total.......................... 56,855.41 17 In the meantime, the taxpayer had applied for relief under § 722, seeking acceptance of a 'constructive average base period net income' of $357,000 for each of the years at issue. The Excess Profits Tax Council approved that figure as a credit in lieu of $93,150.36 for each of the years 1943 and 1944, and of $116,437.95 for 1945. This credit so far reduced the taxpayer's taxable excess profits as to abate its excess profits tax deficiencies for 1943 and 1944 entirely, and that for 1945 to $366.52.7 Accordingly, the Commissioner's assessment of the remainder of the taxpayer's deficiencies in excess profits taxes was for only $366.52. However, as in the Koppers case, supra, he assessed against the taxpayer the full amount of the interest charges based upon the original deficiencies. 18 The taxpayer paid the deficiency and interest so assessed but claimed refunds totaling $56,855.41. That sum represented the interest on the abatements in its excess profits taxes made under § 722. When the Commissioner disallowed those claims, the taxpayer brought the instant action to recover their amounts, in the United States District Court for the Northern District of Texas, under 28 U.S.C. § 1346(a)(1), 28 U.S.C.A. § 1346(a)(1). That court rendered judgment for the taxpayer.8 107 F.Supp. 837. The Court of Appeals reversed. 5 Cir., 209 F.2d 692. We granted certiorari to resolve the conflict with United States v. Koppers Co., supra. 347 U.S. 987, 74 S.Ct. 851, 98 L.Ed. 1107.9 19 As the underlying issue is the same in each case and for each year, we shall discuss it in relation to the 1940 taxes in the Koppers case. There, the taxpayer, under the usual procedure, computed and paid the excess profits tax of $6,512.76 shown on its return for 1940. In due course the Commissioner, without the application of § 722, determined that the payment should have been $466,921.67, and, therefore, that a deficiency of $460,408.91 was due the United States, with interest from March 15, 1941. I.R.C. §§ 53(a), 56(a). If the taxpayer had made no application for relief under § 722, there is no doubt that such interest would have remained due the United States until paid and that, when paid, it would not have been refundable. The same would have been true if the taxpayer's application for relief under § 722 had been finally denied. The taxpayer contends, however, that, because the Commissioner has abated the taxpayer's deficiency from $460,408.91 to $260,554.39 under § 722, such reduction is necessarily retroactive to March 15, 1941, and that the taxpayer, accordingly, is entitled to a refund of the interest on the sum abated. The Commissioner, on the other hand, contends that the determination under § 722 is not retroactive but is a current abatement effective when made. 20 Congress could have prescribed either treatment but did not expressly specify either. Our answer is determined from our consideration of the statutory scheme as a whole the related provisions of the statute, the legislative history of § 722 and the administrative interpretation that has been given the statute. 21 1. The statutory scheme as a whole. 22 The excess profits tax was a device initiated by Congress, late in 1940, in great part for the quick collection of large sums needed by the Government in a national emergency. Congress sought to obtain those funds from abnormally high corporate profits while such profits were available. To that end, it proscribed computations of unusual profits and required prompt payment of the taxes on them.10 23 From the beginning, the statute also provided, in § 722, a means of subsequent adjustment of the tax in special instances where the normal computation of the tax was found to result in inequity. The adjustment could be made only after administrative action and, pending its consideration, it did not eliminate the tax return or the tax payment otherwise required. Until 1942, it did not permit even the postponement of the payment of any part of the standard tax. Indeed, the full payment of that tax soon was made an express condition of the application for adjustment. I.R.C. § 722(d). In 1943, Congress stated that if overpayments for either of the taxable years 1940 or 1941 were found to be attributable to § 722, no interest on such overpayments was to be paid the taxpayer.11 At least to that extent, Congress expressly recognized that the funds paid as excess profits taxes, when due and without the benefit of § 722, were funds owed to and usable by the Government. 24 The significance of this statutory scheme further appears when it is applied to the instant case. If the instant taxpayer had paid its required tax in 1941, the Government would have received an additional $460,408.91 at that time. Accordingly, it would have had the use of that money, without charge, during the crucial war years. Correspondingly, the taxpayer would have been without that money during the same period. Instead, the taxpayer, in fact, retained the funds for its own use and now contends that it need not compensate the Government for such use of a substantial part of it. 25 While in the instant case the taxpayer did not underpay any amount actually shown on its return, as contemplated by I.R.C. § 294(a), it understated its tax and thus withheld the amount in question. The detriment to the Government and benefit to the taxpayer was the same—the use of $460,408.91 for eight years. The above distinction, emphasized by the taxpayer, may have helped it in initiating its application for relief under § 722(d) because it could establish that, at least, it had paid 'the tax shown on its return'. The distinction, however, supplies no ground for different results once the deficiencies have been determined. We find no implication that a self-serving error in the understatement of its tax on its tax return entitles the taxpayer to a greater ultimate tax advantage than does a self-serving error of the same size in the underpayment of the same tax. A fortiori we find nothing to justify a greater tax advantage to any taxpayer that underpays its correct tax, over one that pays such tax in full when due. 26 2. The interest here in controversy is attributable to I.R.C., § 292(a).12 27 The interest here in controversy was due under § 292(a) from March 15, 1941, until paid. Accordingly, to obtain a refund of it, the taxpayer must sustain the proposition that the tax relief granted under § 722 is necessarily retroactive, extinguishing the deficiency as of the original due date of the tax and thus eliminating the interest charges for the corresponding period. To that end, the taxpayer emphasizes the statement in § 722(a) that, as a condition of securing the application of § 722, a taxpayer must establish that the usual procedure 'results in an excessive and discriminatory tax' and also must establish 'what would be a fair and just amount representing normal earnings to be used as a constructive average base period net income'. Once the taxpayer has done that, 'the tax shall be determined by using such constructive average base period net income in lieu of the average base period net income otherwise determined under this subchapter.' Standing alone, this directive language is elastic. It can be read consistently either with the interpretation that the new computation replaces and abates the old one currently, when the new one is determined and assessed, or that it retroactively replaces the old tax from its original due date. It leaves the issue open for disposition by the effect of other clauses relating more specifically to the issue. For the reasons hereafter stated, we read it as looking forward, rather than backward.13 28 In 1942, Congress added § 710(a)(5), conditionally authorizing partial deferment of the tax in cases where a taxpayer claimed benefits under § 722. The condition was that the taxpayer's 'adjusted excess profits net income (computed without reference to section 722)' must exceed 50% of the taxpayer's normal tax net income for the year. Even then, deferment was limited to 33% of the benefit claimed under § 722. If a taxpayer, without this amendment, could have successfully deferred payment and avoided interest charges by following the course taken in the instant cases, it could, by understatement of its tax, have deferred, without incurring interest charges, the payment of a corresponding part of its tax pending relief. If so, there would have been little need for § 710(a)(5). The 1942 amendment, by its restrictions, fairly meant that, under all other circumstances, the existing taxes were to be paid when due, or be subjected to interest during their delinquency under § 292(a). 4. The denial of interest on refunds is prescribed by I.R.C. § 3771(g).15 29 Although § 3771(g) was not enacted until 1943, it was then made applicable to taxable years before, as well as after, January 1, 1942. It denied all interest on refunds attributable to § 722 where the refunds related to the taxable years 1940 or 1941. It also denied interest on refunds relating to taxable years beginning after January 1, 1942, but limited such denials to the first year after the filing of an application for relief under § 722, or to periods prior to September 16, 1945 (two years after the effective date of the amendment), whichever was the later.16 30 In cases where the Government has authorized refunds of excess profits taxes overpaid to it by reason of the abatement of taxes attributable to § 722, § 3771(g) expressly precludes the payment of interest by the Government upon the amounts abated. This treats the Government as entitled to the use of the abated amounts between the time of their overpayment and that of their abatement. Equity demands a comparable result in the case of underpayments. Where unpaid taxes are abated by reason of § 722, the taxpayer then receives a release from its existing obligation to pay the amount abated. However, the Government having been entitled, up to that time, to collect and use the sum abated, the Government should receive interest, on the abated sum, for the period during which the Government was entitled to have its use. This is the natural counterpart of the Government's freedom from paying interest on refunded overpayments. 31 5. The legislative history of § 722. 32 The excess profits tax was initiated in 1940. 54 Stat. 975 et seq. It provided for prompt payment of large taxes computed on income reflecting unusual profits. Computation of the tax on the basis of the taxpayer's prior income or invested capital was prescribed in §§ 713 and 714. A standardized treatment of abnormalities was provided in § 721. In addition, § 722 authorized the Commissioner 'to make such adjustments as may be necessary to adjust abnormalities affecting income or capital'. 54 Stat. 986. The procedure under § 722 was formalized by the Excess Profits Tax Amendments of 1941, 55 Stat. 23—25, and put in its final form by the Revenue Act of 1942, 56 Stat. 914—917, as amended, 57 Stat. 601—602. The technical and discretionary nature of the adjustment was emphasized by the provision that the determination of most computations under § 722 was reviewable only by a special division of the Tax Court constituted for the occasion and by no other court or agency. 55 Stat. 26, as amended, 56 Stat. 917, 59 Stat. 295, 673, 26 U.S.C. § 732, 26 U.S.C.A. § 732. A taxpayer never was permitted to file a return of its own under § 722. S.Rep. No. 75, 77th Cong., 1st Sess. 13; H.R. Rep. No. 146, 77th Cong., 1st Sess. 13. 33 The statute has been interpreted as authorizing a procedure that is in the nature of a claim for a refund preceded by long investigations of complicated special circumstances, and followed by extended negotiations between the Commissioner and taxpayer to develop a mutually satisfactory 'constructive average base period net income'. This interpretation leaves the usual procedure under § 710 et seq. complete in itself but subject, upon application, to ultimate adjustment in instances accepted by the Commissioner under § 722.17 We find no statement of a purpose that § 722 shall relieve taxpayers from penalties or interest charges due either to their defaults in paying, or their errors in computing, their taxes. On the contrary, it has been suggested that Congress considered relief under § 722 to be in the nature of a favor and as not relieving the taxpayer of its duty to pay the original tax when due.18 34 The regulations do not deal specifically with the issue before us but, from their beginning, in Treasury Regulations 109, they have been consistent with the interpretation given the Act by the Government. See § 30.722—5, as added by T.D. 5264, 1943 Cum.Bull. 761, as amended, T.D. 5393, 1944 Cum.Bull. 415. In addition to the practice of the Commissioner in the instant cases, there is in the record of the Premier Oil Co. case an undisputed affidavit by a Treasury Department reviewer to the effect that the policy followed was the administrative policy of the Bureau: 35 'It is the policy of the Bureau of Internal Revenue in those cases where all or any part of a tax deficiency has been extinguished by application of the relief provisions of Section 722 of the Internal Revenue Code not to assess the extinguished portion of such deficiency. However, interest has been computed and assessed on the extinguished portion of the deficiency from the due date of the return to the thirtieth day after the agreement, Form 874, is filed or date of assessment, whichever is the earlier.' (Emphasis supplied.) 36 While Manning v. Seeley Tube & Box Co., 338 U.S. 561, 70 S.Ct. 386, 94 L.Ed. 346, relates to the carry-back provisions of the Internal Revenue Code, it is thoroughly consistent in principle with the above discussion. There the Court upheld the collection of interest on a deficiency which later was extinguished by carrying back a loss which occurred in a subsequent year. It treated the carry-back as a current adjustment of the tax previously determined, characterizing it as an 'abatement' at 565. It recognized I.R.C. § 3771(e), as a help to the interpretation of the statute, much as we recognize I.R.C. § 3771(g), as a help here. See 567—568. The Court also there announced that 'In the absence of a clear legislative expression to the contrary, the question of who properly should possess the right of use of the money owed the Government for the period it is owed must be answered in favor of the Government.' Id., 338 U.S. at page 566, 70 S.Ct. at page 389.19 37 While the deficiency for 1940 in the amount of $460,408.91 was properly determined without reference to § 722 and treated as a deficiency for that year by the Commissioner, it was not separately assessed as such. This was not necessary because, at the time of its determination and before its assessment, it was abated to $260,554.39. The latter sum, with interest in the amount of $217,376.07 computed on the whole deficiency of $460,408.91, was correctly and adequately assessed and paid.20 38 For the foregoing reasons, we conclude that the Government, in each case, is entitled to retain the interest now in controversy. Therefore, in No. 29, the judgment of the Court of Claims is reversed and, in No. 41, the judgment of the Court of Appeals is affirmed. 39 No. 29—Reversed. 40 No. 41—Affirmed. 41 Mr. Justice REED and Mr. Justice DOUGLAS dissent. 1 'Sec. 722. General Relief—Constructive Average Base Period Net Income. '(a) General Rule. In any case in which the taxpayer establishes that the tax computed under this subchapter (as to excess profits tax, § 710 et seq.) (without the benefit of this section) results in an excessive and dicriminatory tax and establishes what would be a fair and just amount representing normal earnings to be used as a constructive average base period net income for the purposes of an excess profits tax based upon a comparison of normal earnings and earnings during an excess profits tax period, the tax shall be determined by using such constructive average base period net income in lieu of the average base period net income otherwise determined under this subchapter. * * * '(d) Application for relief under this section. The taxpayer shall compute its tax, file its return, and pay the tax shown on its return under this subchapter without the application of this section, except as provided in section 710(a) (5). The benefits of this section shall not be allowed unless the taxpayer within the period of time prescribed by section 322 and subject to the limitation as to amount of credit or refund prescribed in such section makes application therefor in accordance with regulations prescribed by the Commissioner with the approval of the Secretary. If a constructive average base period net income has been determined under the provisions of this section for any taxable year, the Commissioner may, by regulations approved by the Secretary, prescribe the extent to which the limitations prescribed by this subsection may be waived for the purpose of determining the tax under this subchapter for a subsequent taxable year.' (Emphasis supplied.) 56 Stat. 914—915, as amended, 57 Stat. 601—602, 26 U.S.C. § 722(a, d), 26 U.S.C.A. § 722(a, d). The above provisions of § 722(d) apply to taxable years beginning after December 31, 1939. 57 Stat. 602. 2 Koppers Company, Inc., is, in fact, the successor to Koppers United Company and its subsidiaries, which filed consolidated excess profits tax returns for the years in question. For convenience, all of such corporations are referred to as the taxpayer. 3 This tax was computed and paid pursuant to the Excess Profits Tax Act of 1940, 54 Stat. 975, as amended. See I.R.C. § 710 et seq. On November 8, 1945, these provisions became inapplicable to any calendar year beginning after 1945. 59 Stat. 568. 4 Two methods of computation of the excess profits credit were authorized: the invested capital method under I.R.C. § 714, or the base period income method under I.R.C. § 713. 5 By timely consents, the Commissioner and the taxpayer agreed that the amount of any income, excess profits, or war profits tax due for 1940 and 1941 could be assessed at any time on or before June 30, 1951. 6 The interest on the 1940 tax ran from March 15, 1941, to January 28, 1949, which was treated as the date of its payment; that on the 1941 tax ran from March 15, 1942, to March 16, 1951, which was 30 days after the filing of a waiver consenting to the assessment and collection of the deficiencies finally determined. See I.R.C. § 292(a), infra, note 12. 7 ABATEMENT OF EXCESS PROFITS TAX DEFICIENCIES UNDER § 722. Deficiencies without.1943.1944 1945 application of § 722.$ 78,359.80 $ 55,529.92 $190,785,32 (Decrease) under § 722.(175,307.78) (175,174.49) (190,418.80) Resulting (credits) and deficiency........(96,947.98).(119,644.57) 366.52• By reducing that part of the taxpayer's income that was subject to excess profits taxes, this application of § 722 automatically left more of the taxpayer's income subject to the normal tax and surtax. Those increases in the taxpayer's income taxes and their consequences are not before us. 8 The original judgment for $56,855.41 was modified to $52,292.40 to reflect several adjustments, including the deduction of $49.72, representing interest on the unabated deficiency of $366.52 upon which the taxpayer conceded that interest was chargeable. 9 The grant was limited to the following question stated in the petition: "Where a deficiency in excess profits tax, based on the income and credits as shown in the taxpayer's return, would have existed except for the subsequent application of Section 722 of the Internal Revenue Code, 26 U.S.C.A. § 722, is the taxpayer liable for interest on the amount of such deficiency (hereinafter called the 'potential deficiency') which would have existed had it not been extinguished by the application of Section 722?" 347 U.S., at page 988, 74 S.Ct. at page 851. 10 I.R.C. § 713—on the basis of income, or I.R.C. § 714—on the basis of invested capital. I.R.C. § 721, authorized standard allowances for specified abnormalities. No return by the taxpayer under I.R.C. § 722, was permissible. 11 I.R.C. § 3771(g), infra, note 15, discussed at 75 S.Ct. 274, infra. 12 'Sec. 292. Interest On Deficiencies. '(a) General rule. Interest upon the amount determined as a deficiency shall be assessed at the same time as the deficiency, shall be paid upon notice and demand from the collector, and shall be collected as a part of the tax, at the rate of 6 per centum per annum from the date prescribed for the payment of the tax (or, if the tax is paid in installments, from the date prescribed for the payment of the first installment) to the date the deficiency is assessed, or, in the case of a waiver under section 272(d), to the thirtieth day after the filing of such waiver or to the date the deficiency is assessed whichever is the earlier.' 53 Stat. 88, as amended, 57 Stat. 602, 26 U.S.C. § 292(a), 26 U.S.C.A. § 292(a). 14 'Sec. 710. Imposition Of Tax. '(a) * * * '(5) Deferment of payment in case of abnormality. If the adjusted excess proffits net income (computed without reference to section 722) for the taxable year of a taxpayer which claims on its return, in accordance with regulations prescribed by the Commissioner with the approval of the Secretary, the benefits of section 722, is in excess of 50 per centum of its normal tax net income for such year, computed without the credit provided in section 26(e) (relating to adjusted excess profits net income), the amount of tax payable at the time prescribed for payment may be reduced by an amount equal to 33 per centum of the amount of the reduction in the tax so claimed. For the purposes of section 271, if the tax payable is the tax so reduced, the tax so reduced shall be considered the amount shown on the return.' 54 Stat. 975, as amended, 56 Stat. 917, but see also, later amendment indicated by 26 U.S.C. § 710(a)(5), 26 U.S.C.A. § 710(a)(5). The Senate Committee on Finance Report accompanying the Revenue Act of 1942, 56 Stat. 798, stated: 'Although it is believed advisable to require a taxpayer seeking relief under section 722 to compute and pay its tax without the benefit of such section, there are some cases in which it would be inequitable to compel the taxpayer to pay the entire amount of such tax. Section 710(a) is therefore amended to provide * * * (as above quoted).' S.Rep.No.1631, 77th Cong., 2d Sess. 205. 13 Section 722(d) looks forward when it provides that if a constructive base period net income has been determined under § 722 for any taxable year, the Commissioner may, by regulations approved by the Secretary, permit waivers of the section's limitations for the purpose of determining excess profits taxes for a subsequent taxable year. Even this effect is not automatic, whereas it might have been expected to be so if the adjustment were a retroactive correction of the standard excess profits credit. 3. I.R.C., § 710(a)(5), 14 permits a taxpayer, seeking relief under § 722, to defer a part of its existing excess profits taxes where its adjusted excess profits net income exceeds 50% of its normal tax net income. 15 'Sec. 3771. Interest On Overpayments. '(g) Claims based upon relief under section 722. If any part of an overpayment for a taxable year beginning prior to January 1, 1942, is determined by the Commissioner to be attributable to the final determination of an application for relief or benefit under section 722 for any taxable year, no interest shall be allowed or paid with respect to such part of the overpayment. If any part of an overpayment for a taxable year beginning after December 31, 1941, is determined by the Commissioner to be attributable to the final determination of an application for relief or benefit under section 722 for any taxable year, no interest shall be allowed or paid with respect to such part of the overpayment for any period prior to one year after the filing of such application, or September 16, 1945, whichever is the later.' 53 Stat. 465, as amended, 57 Stat. 602, 26 U.S.C. § 3771(g), 26 U.S.C.A. § 3771(g). 16 The same Act added I.R.C. § 292(b), containing comparable provisions prohibiting the assessment of interest upon deficiencies attributable to the final determination of an application for relief under § 722. 53 Stat. 88, as amended, 57 Stat. 602, 26 U.S.C. § 292(b), 26 U.S.C.A. § 292(b). This applied, for example, to deficiencies in the payment of ordinary income taxes resulting from an abatement under § 722 of excess profits taxes. Such an abatement automatically would leave a larger portion of a corporation's taxable income subject to the normal income tax and surtax. This increase, however, was not made retroactive any more than the decrease in the excess profits tax which caused it was made retroactive. Congress thus appropriately charged no interest on the resulting deficiency just as it had allowed none on the belated overpayment. 17 When Congress, in a later Act, authorized deferment of payments of comparable taxes pending determinations of applications for relief, it did so unequivocally. The relief provisions in the Excess Profits Tax Act of 1950, 64 Stat. 1137, adding I.R.C. §§ 430—472, prescribed formulas for determining a substitute average base period net income, §§ 442—446, and permitted the taxpayer to adjust its base period net income at the time the return was filed, § 447(e). See S.Rep. No. 2679, 81st Cong., 2d Sess. 17—21, discussing the general relationship between these provisions and the experience gained under § 722 now before us. 18 See legislative history outlined in American Coast Line v. Commissioner, 2 Cir., 159 F.2d 665, and Pohatcong Hosiery Mills v. Commissioner of Internal Revenue, 3 Cir., 162 F.2d 146. '* * * there is no doubt a difference between a tax, conceded to be due in the corporation's own return, and a tax assessed against it in invitum. This argument might perhaps be persuasive, if the denial of 'benefits' under § 722 were regarded as a constituent factor of the tax itself, as for example are the conditions detailed in § 721. We do not so regard § 722; on the contrary it was a favor; it presupposed that, even after taking into account the ameliatory conditions of § 721, the tax was due unless ex gratia the blow was softened; it was a tempering of the wind to the shorn lamb.' Circuit Judge Learned Hand, for the court, 159 F.2d at page 668. See also, Ideal Packing Co. v. Commissioner, 9 T.C. 346, 349; Uni-Term Stevedoring Co. v. Commissioner, 3 T.C. 917, 918. 'In each instance the section (722) provided that a hypothetical base period earnings credit be 'tailor made' for the particular taxpayer and that certain assumptions be made in connection with the case. Each case was a problem in recase. and the legal or tax result generally was intertwined with complicated accounting and economic problems. Almost every factor which had any influence on the particular business was pertinent to the case and the time and expense involved in reconstructing the average base period earnings credit were tremendous.' S.Rep.No. 2679, 81st Cong., 2d Sess. 17. 19 See also, Standard Roofing & Material Co. v. United States, 10 Cir., 199 F.2d 607; Rodgers v. United States, 123 Ct.Cl. 108 F.Supp. 727; Cumberland Portland Cement Co. v. United States, D.C., 101 F.Supp. 577, affirmed, 6 Cir., 202 F.2d 152. 20 See Rodgers v. United States, supra; Cumberland Portland Cement Co. v. United States, supra.

1112

348 U.S. 236 75 S.Ct. 259 99 L.Ed. 290 UNITED STATES of America, Appellant,v.INTERNATIONAL BOXING CLUB OF NEW YORK, Inc., et al. No. 53. Argued Nov. 10, 1954. Decided Jan. 31, 1955. Mr.Philip Elman, Washington, D.C., for appellant. Messrs. Whitney North Seymour, Charles H. Watson, New York City, for appellees. Mr. Manuel Lee Robbins, New York City, for New York State Athletic Commn. amicus curiae. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 This is a civil antitrust action brought by the Government in the United States District Court for the Southern District of New York. The defendants—three corporations and two individuals—are engaged in the business of promoting professional championship boxing contests.1 The Government's complaint charges that the defendants, in the course of this business, have violated §§ 1 and 2 of the Sherman Act.2 After this Court's decision in Toolson v. New York Yankees, Inc., 346 U.S. 356, 75 S.Ct. 78, 98 L.Ed. 64, the defendants moved to dismiss the complaint. The District Court granted the motion in reliance upon the Toolson decision and Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898.3 The case, together with United States v. Shubert, 75 S.Ct. 277, is here on direct appeal under the Expediting Act, 15 U.S.C. § 29, 15 U.S.C.A. § 29. 2 The Government's complaint alleges that promoters of professional championship boxing contests 3 'make a substantial utilization of the channels of interstate trade and commerce to: 4 '(a) negotiate contracts with boxers, advertising agencies, seconds, referees, judges, announcers, and other personnel living in states other than those in which the promoters reside; 5 '(b) arrange and maintain training quarters in states other than those in which the promoters reside; '(c) lease suitable arenas, and arrange other details for boxing contests, particularly when the contests are held in states other than those in which the promoters reside; 6 '(d) sell tickets to contests across state lines; 7 '(e) negotiate for the sale of and sell rights to make and distribute motion pictures of boxing contests to the 18,000 theatres in the United States; 8 '(f) negotiate for the sale of and sell rights to broadcast and telecast boxing contests to homes through more than 3,000 radio stations and 100 television stations in the United States; and 9 '(g) negotiate for the sale of the sell rights to telecast boxing contests to some 200 motion picture theatres in various states of the United States for display by large-screen television.' 10 The promoter's receipts from the sale of television, radio, and motion picture rights to championship matches, according to the complaint, represent on the average over 25% of the promoter's total revenue and in some instances exceed the revenue derived from the sale of admission tickets.4 The complaint alleges that the defendants have restrained and monopolized this trade and commerce—'the promotion, exhibition, broadcasting, telecasting, and motion picture production and distribution of professional championship boxing contests in the United States'—through a conspiracy to exclude competition in their line of business. The conspiracy, it is claimed, began in 1949 with an agreement among the defendants and Joe Louis, then heavyweight champion of the world, that Louis would resign his title, that he would procure exclusive rights to the services of the four leading title contenders in a series of elimination contests which would result in the recognition of a new heavyweight champion, that he would also obtain exclusive rights to broadcast, televise, and film these contests, and that he would assign all such exclusive rights to the defendants. The defendants have allegedly sought to maintain and effectuate this conspiracy by the following means: by eliminating the 'leading competing promoter' of championship matches; by acquiring the exclusive right to promote professional boxing contests in all the 'principal arenas' where championship matches can be successfully presented; and by requiring each title contender to agree, as a condition of fighting for the championship, that if he wins he would, for a period of three (and sometimes five) years, take part only in title contests promoted by the defendants. As a consequence of these acts, the complaint alleges, the defendants have promoted, or participated in the promotion of, all but two of the 21 championship matches held in the United States between June 1949 and the filing of the complaint in March 1952. 11 These allegations must of course be taken as true at this stage of the proceeding. And the defendants do not deny that the allegations state a cause of action if their business is subject to the Sherman Act. The question thus presented is whether the defendants' business as described in the complaint—the of professional championship boxing contests on a multistate basis, coupled with the sale of rights to televise, broadcast, and film the contests for interstate transmission—constitutes 'trade or commerce among the several States' within the meaning of the Sherman Act. 12 The question is perhaps a novel one in that this Court has never before considered the antitrust status of the boxing business. Yet, if it were not for Federal Baseball and Toolson, we think that it would be too clear for dispute that the Government's allegations bring the defendants within the scope of the Act. A boxing match—like the showing of a motion picture, United States v. Crescent Amusement Co., 323 U.S. 173, 183, 65 S.Ct. 254, 259, 89 L.Ed. 160, or the performance of a vaudeville act, Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, 43 S.Ct. 540, 67 L.Ed. 977, or the performance of a legitimate stage attraction, United States v. Shubert, 348 U.S. 222, 75 S.Ct. 277, 'is of course a local affair.' But that fact alone does not bar application of the Sherman Act to a business based on the promotion of such matches, if the business is itself engaged in interstate commerce or if the business imposes illegal restraints on interstate commerce. Apart from Federal Baseball and Toolson, it would be sufficient, we believe, to rest on the allegation that over 25% of the revenue from championship boxing is derived from interstate operations through the sale of radio, television, and motion picture rights.5 Compare United States v. Yellow Cab Co., 332 U.S. 218, 225—226, 67 S.Ct. 1560, 1564, 91 L.Ed. 2010; Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 602, note 11, 73 S.Ct. 872, 877, 97 L.Ed. 1277; Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 227—235, 68 S.Ct. 996, 1001—1006, 92 L.Ed. 1328; United States v. Frankfort Distilleries, 324 U.S. 293, 297—298, 65 S.Ct. 661, 663—664, 89 L.Ed. 951; United States v. Women's Sports-wear Mfrs. Ass'n, 336 U.S. 460, 464, 69 S.Ct. 714, 716, 93 L.Ed. 805; United States v. Employing Plasterers Ass'n, 347 U.S. 186, 189, 74 S.Ct. 452, 454, 98 L.Ed. 618; and cases collected in the Shubert opinion. See also Currin v. Wallace, 306 U.S. 1, 10, 59 S.Ct. 379, 384, 83 L.Ed. 441; Wickard v. Filburn, 317 U.S. 111, 127—128, 63 S.Ct. 82, 90—91, 87 L.Ed. 122. 13 Notwithstanding these decisions, the defendants contend that they are exempt from the Sherman Act under the rule of stare decisis. They, like the defendants in the Shubert case, base this contention on Federal Baseball and Toolson. But they would be content with a more restrictive interpretation of Federal Baseball and Toolson than the defendants in the Shubert case. The Shubert defendants argue that Federal baseball and Toolson immunized all businesses built around the live presentation of local exhibitions. The defendants in the instant case argue that Federal Baseball and Toolson immunized only such businesses as involve exhibitions of an athletic nature. We cannot accept either argument. 14 For the reasons stated in the Toolson opinion and restated in United States v. Shubert, 348 U.S. 222, 75 S.Ct. 277, Toolson neither overruled Federal Baseball nor necessarily reaffirmed all that was said in Federal Baseball. Instead, '(w)ithout re-examination of the underlying issues,' the Court adhered to Federal Baseball 'so far as that decision determines that Congress had no intention of including the business of baseball within the scope of the federal anti-trust laws.' (346 U.S. 356, 357, 74 S.Ct. 79) We have held today in the Shubert case that Toolson is not authority for exempting other businesses merely because of the circumstance that they are also based on the performance of local exhibitions. That ruling is fully applicable here. 15 Moreover, none of the factors underlying the Toolson decision are present in the instant case. At the time the Government's complaint was filed, no court had ever held that the boxing business was not subject to the antitrust laws.6 Indeed, this Court's decision in the Hart case, less than a year after the Federal Baseball decision, clearly established that Federal Baseball could not be relied upon as a basis of exemption for other segments of the entertainment business, athletic or otherwise. Surely there is nothing in the Holmes opinion in the Hart case to suggest, even remotely, that the Court was drawing a line between athletic and nonathletic entertainment. Nor do we see the relevance of such a distinction for the purpose of determining what constitutes 'trade or commerce among the several States.' The controlling consideration in Federal Baseball and Hart was, instead, a very practical one—the degree of interstate activity involved in the particular business under review. It follows that stare decisis cannot help the defendants here; for, contrary to their argument, Federal Baseball did not hold that all businesses based on professional sports were outside the scope of the antitrust laws. The issue confronting us is, therefore, not whether a previously granted exemption should continue, but whether an exemption should be granted in the first instance. And that issue is for Congress to resolve, not this Court. See United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 561, 64 S.Ct. 1162, 1178, 88 L.Ed. 1440. 16 The issue was, in fact, before Congress only recently. In 1951, four identical bills were introduced in Congress—three in the House and one in the Senate—forbidding the application of the antitrust laws 'to organized professional sports enterprises or to acts in the conduct of such enterprises.'7 Extensive hearings on the three House bills were conducted by the Subcommittee on Study of Monopoly Power of the Committee on the Judiciary; no hearings were held on the Senate bill.8 At the conclusion of its hearings, the House Subcommittee unanimously declared its opposition to the four bills. Its report states:9 17 'The requested exemption would extend to all professional sports enterprises and to all acts in the conduct of such enterprises. The law would no longer require competition in any facet of business activity of any sport enterprise. Thus the sale of radio and television rights, the management of stadia, the purchase and sale of advertising, the concession industry, and many other business activities, as well as the aspects of baseball which are solely related to the promotion of competition on the playing field, would be immune and untouchable. Such a broad exemption could not be granted without substantially repealing the antitrust laws.' (Italics added.) 18 With respect to baseball, the Subcommittee recommended a postponement of any legislation until the status of Federal Baseball was clarified in the courts.10 No further action was taken on any of the bills; Congress thus left intact the then-existing coverage of the antitrust laws. Yet the defendants in the instant case are now asking this Court for precisely the same exemption which enactment of those bills would have afforded. Their remedy, if they are entitled to one, lies in further resort to Congress, as we have already stated. For we agree that 'Such a broad exemption could not be granted without substantially repealing the antitrust laws.' 19 As in the Shubert case, we are concerned here only with the sufficiency of the Government's complaint. We hold that the complaint states a cause of action and that the Government is entitled to an opportunity to prove its allegations. The judgment of the court below is reversed. 20 Reversed. 21 Mr. Justice BURTON, retaining the views expressed in his dissent in the Toolson case, 346 U.S. 356, 357, 74 S.Ct. 78, 79, 98 L.Ed. 64, joins the opinion and judgment of the Court in this case. Mr. Justice REED joins in this concurrence. APPENDIX TO OPINION OF THE COURT. 22 The complaint describes the 'Nature of Trade and Commerce Involved' as follows: 23 10. Boxers usually compete in amateur tournaments as a preliminary to becoming professionals. As amateurs they receive no pay and box under the sponsorship of local independent boxing clubs, associations or other organizations. When they become professionals, they contract to box an opponent on a per bout basis for local promoters and receive a fee. If their skill as professional boxers results in an increasing willingness of the public to pay to view their contests, they can demand higher fees and a greater percentage of receipts from the sale of tickets and other rights. If their skill increases, they engage in preliminary and other bouts throughout the United States and eventually participate in major bouts. The fee for a major bout is usually a sum guaranteed by the promoter or a predetermined percentage of the net receipts from the sale of tickets and motion picture, radio and television rights. 24 11. The most lucrative asset to a professional boxer is recognition and designation by the various state athletic commissions and others as 'world champion' in the division in which he competes. These divisions are: 25 flyweight.......................... 112 lbs. 26 bantamweight....................... 118 " 27 featherweight...................... 126 " 28 lightweight........................ 135 " 29 welterweight....................... 147 " 30 middleweight....................... 160 " 31 light heavyweight.................. 175 " 32 heavyweight........................ All above 175 lbs. 33 A 'world champion' gains his title by defeating the existing champion or by eliminating all contenders, and remains world champion in his division until he is, in turn, defeated by a contender or resigns the title. Such a title affords to its holder financial returns from personal appearances and exhibitions throughout the United States, from endorsements and other activities, as well as a greater percentage of the receipts from his bouts. The promotion of professional championship boxing contests is also more lucrative than the promotion of other boxing contests. 34 12. Of the various 'world championships,' the heavyweight division is the most important to boxers and promoters, as it returns the greatest financial benefits. The flyweight and bantamweight divisions are not of substantial importance in the United States because very few American boxers are of such light weights. No championship contest has been held in the flyweight division in the United States since 1935; none in the bantamweight division since 1947. 35 13. The promotion of professional championship boxing contests, in which the winners achieve 'world champion' titles, includes negotiating and executing contracts with boxers for the main and preliminary bouts, arranging and maintaining training quarters, leasing suitable arenas, such as stadia or ball parks where substantial numbers of the public may be seated to view the contest, negotiating and executing contracts for the employment of matchmakers, advertising agencies, press agents, seconds, referees, judges, announcers and other personnel; organizing, assembling, and arranging other details necessary to the exhibition of the contests; selling tickets and rights to make motion pictures of the contests and to distribute them throughout the United States and in foreign countries; and selling rights to transmit the contests by radio or television throughout the United States and foreign countries. 36 14. Promoters of professional championship boxing contests make a substantial utilization of the channels of interstate trade and commerce to: 37 (a) negotiate contracts with boxers, advertising agencies, seconds, referees, judges, announcers, and other personnel living in states other than those in which the promoters reside; 38 (b) arrange and maintain training quarters in states other than those in which the promoters reside; 39 (c) lease suitable arenas, and arrange other details for boxing contests, particularly when the contests are held in states other than those in which the promoters reside; 40 (d) sell tickets to contests across state lines; 41 (e) negotiate for the sale of and sell rights to make and distribute motion pictures of boxing contests to the 18,000 theatres in the United States; 42 (f) negotiate for the sale of and sell rights to broadcast and telecast boxing contests to homes through more than 3,000 radio stations and 100 television stations in the United States; and 43 (g) negotiate for the sale of and sell rights to telecast boxing contests to some 200 motion picture theatres in various states of the United States for display by large-screen television. 44 15. Motion picture films of professional championship boxing contests are distributed and exhibited in theatres throughout the United States and in foreign countries. Similarly, radio and television broadcasts of such contests are transmitted throughout the United States and radio broadcasts of them are also transmitted to foreign countries. 45 16. The 21 major professional championship boxing contests promoted in the United States since June 1949 have produced a gross income from admissions and the sale of motion picture, radio and television rights of approximately $4,500,000.00. The total such gross income for all professional boxing contests in the United States during this period, including the championship contests, has been approximately $15,000,000.00. 46 16(a). A promoter of a professional championship fight usually derives substantially all of his revenue from two sources: (a) sale of tickets of admission and (b) sale of rights to telecast, broadcast and produce and distribute motion pictures of the fight. In such fights, sale of television, radio and motion picture rights account for a substantial proportion of the promoter's total revenue. Since 1949 sale of these rights has represented, on the average, over 25% of the total revenue derived from championship fights, and has exceeded, in some instances, the revenue received from sale of tickets of admission. With the progressive and continuing expansion of television facilities, the proportion of the promoter's total revenue derived from television, radio and motion pictures, has been on an ascending curve, in relation to revenue derived from sale of tickets of admission. In the Marciano-Walcott heavyweight championship fight of May 15, 1953, at Chicago, Illinois, promoted by defendants IBC (N.Y.), IBC (Ill.), James D. Norris and Arthur M. Wirtz, the promoters' receipts from sale of tickets of admission were, after federal admission taxes, $253,462.37, while their television, radio and motion picture revenue was approximately $300,000. 47 Mr. Justice FRANKFURTER, with whom Mr. Justice MINTON joins, dissenting. 48 It would baffle the subtlest ingenuity to find a single differentiating factor between other sporting exhibitions, whether boxing or football or tennis, and baseball insofar as the conduct of the sport is relevant to the criteria or considerations by which the Sherman Law becomes applicable to a 'trade or commerce.' § 1, 26 Stat. 209, 15 U.S.C. § 1, 15 U.S.C.A. § 1. Indeed, the interstate aspects of baseball and the extent of the exploitation of baseball through mass media are far more extensive than is true of boxing.* If the intrinsic applicability of the Sherman Law were the issue, no attempt would be made to differentiate the two sports. 49 In 1922, the Court found commercialized baseball outside the scope of the Sherman Law. Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898. Last Term the Court refused to re-examine 'the underlying issues' of this adjudication and adhered to it. Toolson v. New York Yankees, Inc., 346 U.S. 356, 74 S.Ct. 78, 98 L.Ed. 64. What were the 'underlying issues'? They were the constituents of baseball in relation to the Sherman Law. By adhering to that decision, the Court refused to depart from a judgment necessarily based on these constituent elements. To my understanding, that is what is meant by '(w) ithout re-examination of the underlying issues.' The Court decided as it did in the Toolson case as an application of the doctrine of stare decisis. That doctrine is not, to be sure, an imprisonment of reason. But neither is it a whimsy. It can hardly be that this Court gave a preferred position to baseball because it is the great American sport. I do not suppose that the Court would treat the national anthem differently from other songs if the nature of a song became relevant to adjudication. If stare decisis be one aspect of law, as it is, to disregard it in identic situations is mere caprice. 50 Congress, on the other hand, may yield to sentiment and be capricious, subject only to due process. As a matter of fact, one of the explicit factors that led to the result in Toolson was the recognition of congressional refusal to upset the Federal Baseball decision. But as the Government with commendable candor recognizes, Congress was not asked to avert the threat of litigation against baseball by providing a specific exemption of that sport from the provisions of the Sherman Law. The sponsors of this relief did not ask immunity for baseball as such. The 'legislation' to which reference was made in the Toolson case consisted of bills which sought exemption for 'organized professional sports enterprises (and) acts in the conduct of such enterprises.' (H.R. 4229, 4230, 4231, and S. 1526, 82d Cong., 1st Sess.) Since, in the light of all the circumstances, Federal Baseball was left undisturbed by Toolson, I cannot bring myself to construe the respect that ws thus accorded to stare decisis to be narrower than that all situations identic with what was passed on in the Federal Baseball case should be covered by it. I cannot translate even the narrowest conception of stare decisis into the equivalent of writing into the Sherman Law an exemption of baseball to the exclusion of every other sport different not one legal jot or tittle from it. 51 Between them, this case and Shubert illustrate that nice but rational distinctions are inevitable in adjudication. I agree with the Court's opinion in Shubert for precisely the reason that constrains me to dissent in this caes. Within a year after Federal Baseball the Court, again unanimously and through the same writer, found that a bill against the show business based on the Sherman Law was not so frivolous as to call for dismissal. Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, 43 S.Ct. 540, 67 L.Ed. 977. For more than 30 years, therefore, these two decisions stood as the law. The Shubert case plainly falls within the adjudication of Hart. By the same process of reasoning, boxing falls within Federal Baseball, which this Court revitalized in Toolson despite all the new factors on which the dissent in Toolson relied. 52 Whatever unsavory elements there be in boxing contests is quite beside the mark. The States to which these exhibitions are distasteful are possessed of the honorable and effective remedy of self-help. They need not sanction pugilistic exhibitions, or may sanction them only under conditions that safeguard their notions of the public welfare. 53 Mr. Justice MINTON, dissenting. 54 To make a case under the Sherman Act, two things among others are essential: (1) there must be trade or commerce; (2) such trade or commerce must be among the States. 55 In the Federal Baseball case, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898, this Court held that baseball was not trade or commerce. It said, 'personal effort, not related to production, is not a subject of commerce', and since the baseball game was an exhibition wholly intrastate, there could be no trade or commerce among the States. 259 U.S. 200, 209, 42 S.Ct. 465, 466. 56 In the Baseball case, this Court held that traveling from State to State to play the game and all the details of arrangements were incident to the exhibition. In Toolson v. New York Yankees, Inc., 346 U.S. 356, 74 S.Ct. 78, 98 L.Ed. 64, we did not overrule the Federal Baseball decision; in fact, we reaffirmed the holding of that case. 57 When boxers travel from State to State, carrying their shorts and fancy dressing robes in a ditty bag in order to participate in a boxing bout, which is wholly intrastate, it is now held by this Court that the boxing bout becomes interstate commerce. What this Court held in the Federal Baseball case to be incident to the exhibition now becomes more important than the exhibition. This is as fine an example of the tail wagging the dog as can be conjured up. 58 We are not dealing here with the question of whether the appellees have restrained trade in or monopolized the radio and television industries. That is a separate consideration. What others do with pictures they are allowed to take of a wholly local spectacle or exhibition by thereafter using the channels of interstate commerce to exhibit them does not make a package deal. The appellees have nothing to do with the transmission of sound or the pictures. Because these incidents are not directly involved, no effort was made to bring the radio and television companies and the sponsors into the case. 59 The Court says: 'The conspiracy, it is claimed, began in 1949 with an agreement among the defendants and Joe Louis, then heavyweight champion of the world, that Louis would resign his title, that he would procure exclusive rights to the services of the four leading title contenders in a series of elimination contests which would result in the recognition of a new heavyweight chamption, that he would also obtain exclusive rights to broadcast, televise, and film these contests, and that he would assign all such exclusive rights to the defendants.' Of course, there was at the time only one champion, Joe Louis. He had a monopoly on that, and while he got it by competition, he did not get it in trade or commerce. I do not suppose that Joe Louis had to go back into the ring and be walloped to a knockout or a decision before he could surrender his championship. And if he arranged with four other fellows to fight it out in elimination contests for the championship and no one else was restrained from doing the same, it is difficult for me to see how there was any conspiracy. If other promoters wanted to start an elimination contest they were free to do so. Whether they received public acceptance depended upon something other than trade or commerce. What does a boxer or athlete have for sale but 'personal efforts, not related to production,' which, as Justice Holmes said, is not commerce? Such services they may contract about free from any control of the Sherman Act. Suppose the appellee did, as the Court states, control what the parties called all but two of twenty-one championship contests, what trade or commerce have they restrained? 60 As I see it, boxing it not trade or commerce. There can be no monopoly or restraint of nonexistent commerce or trade. Whether Congress can control baseball and boxing I need not speculate. What I am saying is that Congress has not attempted to do so. If there is a conspiracy, it is not one to control commerce between the States. 1 The corporate defendants are International Boxing Club of New York, Inc., International Boxing Club, and Madison Square Garden Corporation. The individual defendants are James D. Norris and Arthur M. Wirtz. The individual defendants, together with Madison Square Garden Corporation, own 80% of the stock of International Boxing Club of New York, Inc., and International Boxing Club. The nature of the business involved is described in an appendix to this opinion. 2 15 U.S.C. §§ 1 and 2, 15 U.S.C.A. §§ 1, 2. These sections provide: § 1. * * * Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal * * *. Every person who shall make any contract or engage in any combination or conspiracy declared by sections 1—7 of this title to be illegal shall be deemed guilty of a misdemeanor * * *. § 2. * * * Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor * * *.' Section 4, 15 U.S.C.A. § 4, confers jurisdiction on the district courts 'to prevent and restrain violations of sections 1 7 of this title' in equity proceedings instituted under the direction of the Attorney General. 3 The District Court's opinion was oral and not transcribed. All the parties agree, however, that the dismissal was based on Federal Baseball and Toolson. 4 The complaint further alleges that 'With the progressive and continuing expansion of television facilities, the proportion of the promoter's total revenue derived from television, radio and motion pictures, has been on an ascending curve. * * *' 5 All three media are concededly engaged in interstate commerce. E.g., Federal Radio Comm. v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 279, 53 S.Ct. 627, 633, 77 L.Ed. 1166 (radio); Allen B. Dumont Laboratories, Inc., v. Carroll, 3 Cir., 184 F.2d 153, 154, certiorari denied, 340 U.S. 929, 71 S.Ct. 490, 95 L.Ed. 670 (television); United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260 (motion pictures). 6 Shall v. Henry, 7 Cir., 211 F.2d 226, was decided subsequent to the decision below. So also was Peller v. International Boxing Club, unreported, Civil 52 C 813, April 23, 1954 (D.C.N.D.Ill.). The unreported decision (D.C.N.D.Ill.) which Shall v. Henry affirmed was decided prior to the decision below but after the filing of the Government's complaint. 7 H.R. 4229, 4230, 4231, and S. 1526, 82d Cong., 1st Sess. These bills were introduced 'by friends of baseball because they feared that the continued existence of organized baseball as America's national pastime was in substantial danger by the threat of impending litigation.' H.R.Rep. No. 2002, 82d Cong., 2d Sess., p. 1. 8 The House hearings were stated to be on 'the problem of whether or not organized baseball should be exempted from the operation of the antitrust laws.' Hearings on 'Organized Baseball' before the House Subcommittee on Study of Monopoly Power of the Committee on the Judiciary, 82d Cong., 1st Sess., p. 1. 9 H.R.Rep. No. 2002 (entitled 'Organized Baseball'), 82d Cong., 2d Sess., p. 230. Between the hearings and the report, the Subcommittee on Study of Monopoly Power was reconstituted as the Antitrust Subcommittee. The report was submitted directly to the full House pursuant to H.Res. 95, 82d Cong., 1st Sess. 10 Id., at 134—136, 231—232. * This opinion is concerned only with the sport as such, and not with the arrangements by which mass media show or report bouts. Such arrangements clearly are beyond the scope of the Toolson case, infra.

78

348 U.S. 222 75 S.Ct. 277 99 L.Ed. 279 UNITED STATES of America, Appellant,v.Lee SHUBERT, et al. No. 36. Argued Nov. 9 and 10, 1954. Decided Jan. 31, 1955. Mr. Philip Elman, Washington, D.C., for appellant. Mr. Alfred McCormack, New York City, for appellees. Mr. Chief Justice WARREN delivered the opinion of the Court. 1 This is a civil antitrust action brought by the Government in the United States District Court for the Southern District of New York. Named as defendants are Lee Shubert,1 Jacob J. Shubert, Marcus Heiman, and three corporations controlled by them.2 The defendants are principally engaged in the business of producing legitimate theatrical attractions,3 booking legitimate attractions in theatres throughout the United States,4 and operating approximately 40 theatres in eight states for the presentation of legitimate attractions.5 The Government's complaint charges that the defendants, in the course of this business, have violated §§ 1 and 2 of the Sherman Act.6 On the defendants' motion, after this Court's decision in Toolson v. New York Yankees, 346 U.S. 356, 74 S.Ct. 78, 98 L.Ed. 64; the District Court, 120 F.Supp. 15, dismissed the Government's complaint on the authority of the Toolson decision, and Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898.7 The case is here on direct appeal under the Expediting Act, 15 U.S.C. § 29, 15 U.S.C.A. § 29. 2 The Government's complaint, which is summarized in an appendix to this opinion, describes the interstate phases of the defendants' theatrical business in considerable detail. It concludes that the business of producing, booking, and presenting legitimate attractions requires 3 'a constant, continuous stream of trade and commerce between the States of the United States, consisting of the assemblage of personnel and property for rehearsals, the transportation of said personnel and property to various cities throughout the United States, the making and performing of contracts under which attractions are routed and presented in various States of the United States, and the transmission of applications, letters, memoranda, communications, commitments, contracts, money, checks, drafts and other media of exchange across State lines.' 4 The complaint alleges that the defendants have restrained this trade and commerce, and have monopolized certain phases of it, through a conspiracy (a) to compel other producers to book their legitimate attractions exclusively through the defendants, (b) to exclude others from booking legitimate attractions, (c) to prevent competition in the presentation of legitimate attractions, (d) to discriminate in favor of their own productions with respect to booking and presentation, and (e) to combine their power in booking and presentation in order to maintain and strengthen their domination in each of these fields. The main relief sought by the Government is the divorcement of the booking and presentation branches of the business. 5 The allegations of the complaint, on a motion to dismiss, must of course be taken as true. And the defendants do not deny that the allegations state a cause of action if their business is subject to the Sherman Act. The question presented is thus a narrow one: whether the business of producing, booking, and presenting legitimate attractions on a multistate basis constitutes 'trade or commerce' that is 'among the several States' within the meaning of those terms in the Sherman Act. 6 Both terms have been interpreted broadly in the decisions of this Court. '(T) rade or commerce' has been held to include the production, distribution, and exhibition of motion pictures, United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260; Schine Chain Theatres v. United States, 334 U.S. 110, 68 S.Ct. 947, 92 L.Ed. 1245; United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, 92 L.Ed. 1236; United States v. Crescent Amusement Co., 323 U.S. 173, 65 S.Ct. 254, 89 L.Ed. 160; Interstate Circuit v. United States, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610; Binderup v. Pathe Exchange, 263 U.S. 291, 44 S.Ct. 96, 68 L.Ed. 308; real estate brokerage, United States v. National Association of Real Estate Boards, 339 U.S. 485, 70 S.Ct. 711, 94 L.Ed. 1007; the gathering and distribution of news, Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013; medical services to members of a health cooperative, american Medical Association v. United States, 317 U.S. 519, 63 S.Ct. 326, 87 L.Ed. 434; and insurance underwriting, United States v. South-Eastern Underwriters Association, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440. A similarly liberal construction has been given the requirement of §§ 1 and 2 that the 'trade or commerce' be 'among the several States.' Thus, in the South-Eastern Underwriters case (322 U.S. 533, 64 S.Ct. 1167), the requirement was satisfied by a 'continuous and indivisible stream of intercourse among the states' involving the transmission of large sums of money and communications by mail, telephone, and telegraph. Cf. Electric Bond & Share Co. v. Securities and Exchange Commission, 303 U.S. 419, 432—433, 58 S.Ct. 678, 681—682, 82 L.Ed. 936; North American Co. v. Securities and Exchange Commission, 327 U.S. 686, 694—695, 66 S.Ct. 785, 791, 91 L.Ed. 945. In the Associated Press case, the requirement was satisfied by the interstate dissemination of news. See also Lorain Journal Co. v. United States, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162. And in the motion picture cases, the requirement was satisfied by the interstate transportation of films, Binderup v. Pathe Exchange, supra, even though the actual 'showing of motion pictures is of course a local affair.' United States v. Crescent Amusement Co., supra, 323 U.S. at page 183, 65 S.Ct. at page 259, 89 L.Ed. 160. See also Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271,8 43 S.Ct. 540, 67 L.Ed. 977. 7 These decisions, apart from Federal Base Ball and Toolson, make it clear beyond question that the allegations of the Government's complaint bring the defendants within the scope of the Sherman Act, even though the actual performance of a legitimate stage attraction 'is of course a local affair.' The defendants contend, however, that Federal Base Ball and Toolson have already established their immunity under the Act. While conceding, as they must, that the motion picture industry is subject to the antitrust laws, they insist that all other businesses built around the performance of local exhibitions are exempt.9 We believe that Federal Base Ball and Toolson afford no basis for such a conclusion. 8 In Federal Base Ball, the Court, speaking through Mr. Justice Holmes, was dealing with the business of baseball and nothing else. The Court considered the nature of the game, its history and league organization, the necessity of arranging games between cities in different states, and the resulting travel across state lines. The travel, the Court concluded, was 'a mere incident, not the essential thing.' On that basis, the Court held that 'the restrictions by contract that prevented the plaintiff from getting players to break their bargains and the other conduct charged against the defendants were not an interference with commerce among the States.' (259 U.S. 209, 42 S.Ct. 466.) 9 At the very next Term, in Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, 43 S.Ct. 540, 67 L.Ed. 977, the Court was directly concerned with the effect of the Federal Base Ball decision on the status of the theatrical business under the Sherman Act. The complaint in the Hart case, much like the complaint here under review, alleged a conspiracy to control the booking and presentation of vaudeville acts in theatres throughout the country. The district court, like the district court in the instant case, dismissed the complaint on the authority of Federal Base Ball. This Court, again speaking through Mr. Justice Holmes, unanimously reversed.10 The Court took note of the plaintiff's argument (263 U.S. 271, 43 S.Ct. 541) 'that in the transportation of vaudeville acts the apparatus sometimes is more important than the performers' and concluded that the complaint, at least to that extent, sufficiently alleged a violation of the Act to permit the case to go to trial. The Court distinguished Federal Base Ball on the ground that 'what in general is incidental, in some instances may rise to a magnitude that requires it to be considered independently.' The Court thus established, contrary to the defendants' argument here, that Federal Base Ball did not automatically immunize the theatrical business from the antitrust laws. 10 In Toolson, where the issue was the same as in Federal Base Ball, the Court was confronted with a unique combination of circumstances. For over 30 years there had stood a decision of this Court specifically fixing the status of the baseball business under the antitrust laws and more particularly the validity of the so-called 'reserve clause.' During this period, in reliance on the Federal Base Ball precedent, the baseball business had grown and developed. Compare Helvering v. Hallock, 309 U.S. 106, 110, 60 S.Ct. 444, 446, 84 L.Ed. 604. And Congress, although it had actively considered the ruling, had not seen fit to reject it by amendatory legislation. Against this background, the Court in Toolson was asked to overrule Federal Base Ball on the ground that it was out of step with subsequent decisions reflecting presentday concepts of interstate commerce. The Court, in view of the circumstances of the case, declined to do so. But neither did the Court necessarily reaffirm all that was said in Federal Base Ball. Instead, '(w)ithout re-examination of the underlying issues,' the Court adhered to Federal Base Ball 'so far as that decision determines that Congress had no intention of including the business of baseball within the scope of the federal antitrust laws.' (346 U.S. 356, 74 S.Ct. 79) In short, Toolson was a narrow application of the rule of stare decisis. 11 The defendants would have us convert this narrow application of the rule into a sweeping grant of immunity to every business based on the live presentation of local exhibitions, regardless of how extensive its interstate phases may be. We cannot do so. If the Toolson holding is to be expanded—or contracted—the appropriate remedy lies with Congress. See United States v. South Eastern Underwriters Association, 322 U.S. 533, 561, 64 S.Ct. 1162, 1178, 88 L.Ed. 1440. Moreover, none of the considerations which led to the decision in Toolson are present here. This Court has never held that the theatrical business is not subject to the Sherman Act. On the contrary, less than a year after the Federal Base Ball decision, the Court in the Hart case put the theatrical business on notice that Federal Base Ball could not be relied upon as a basis for exemption from the antitrust laws. The rule of stare decisis undoubtedly embodies a policy of basic importance, but the rule cannot help the defendants here. If it is to be applied, Hart and the motion picture cases—not Federal Base Ball and Toolson—are the controlling decisions. 12 We are not yet called upon to determine whether the defendants have in fact violated the Sherman Act or if they have what relief would be appropriate. We hold only that the allegations of the complaint state a cause of action and that the Government is entitled to an opportunity to prove those allegations. The judgment of the court below is reversed. 13 Reversed. 14 Mr. Justice BURTON, retaining the views expressed in his dissent in the Toolson case, 346 U.S. 356, 357, 74 S.Ct. 78, 98 L.Ed. 64, joins the opinion and judgment of the Court in this case. Mr. Justice REED joins in this concurrence. 15 Mr. Justice MINTON agrees with the judgment in this case because, as it comes here on the pleadings, it is controlled by the Hart case. Whether the Government can prove its case now to the satisfaction of present courts, which the plaintiff could not do in the Hart case, 12 F.2d 341, remains to be seen. APPENDIX TO OPINION OF THE COURT. 16 The defendants state at page 3 of their brief: 'The allegations of the compaint are summarized adequately at pages 5 to 11 of the Government's brief.' That portion of the Government's brief is set out below: 17 Production of a legitimate theatrical attraction involves (1) assembling of its component elements, including a script, financial backing, actors, stage hands, designers, advertising agents, scenery, costumes, lighting, and music; (2) rehearsals to weld the parts into an attraction suitable for presentation; (3) arranging for the booking and presentation of the attraction in a try-out town or towns, in New York City, and in road-show towns; and (4) transporting the entire cast and scenery to try-out towns, to New York City, and to road-show towns throughout the United States to fulfill these bookings and presentation arrangements (par. 24, R. 4). At the present time the cost of producing a play runs from $60,000 to $100,000, and of a musical from $200,000 to $300,000 (par. 25, R. 4). Persons other than the producer usually supply the necessary financing (ibid.). Frequently the production is incorporated and shares of stock are sold to investors, or the producer organizes a limited partnership (ibid.). All the appellees invest in legitimate attractions (pars. 3—7, R. 1—3). 18 After the production has been assembled and rehearsals have been completed, the attraction is presented in one or more 'try-out' towns for the purpose of judging audience reaction and correcting observed deficiencies (pars. 20, 26, R. 4, 5). Audience reaction in try-out towns is important in gauging subsequent financial success in New York City and on the road (par. 26, R. 5). The attraction is then presented in New York City (par. 27, R. 5). If the run there is successful, the attraction is sent on tour to 'roadshow' towns throughout the United States (ibid.). This road-show tour is an 'integral part of the exploitation of the attraction' and is the source of a 'substantial part' of its profits (ibid.). 19 With the exception of a few cities, a legitimate attraction ordinarily cannot profitably play in a road-show town for more than a limited period of time, seldom exceeding two weeks. The producer of a play must therefore obtain playing dates in a number of suitable road-show towns, arranged so as to minimize lay-offs and travel between engagements. Successful operation of a theatre in a road-show town requires scheduling legitimate attractions so as to keep the theatre as continuously occupied as possible during the theatrical season. Playing dates of a road-show town must therefore be arranged so as to meet the needs of both the producer and the theatre operator. (Par. 29, R. 5.) 20 UBO acts as middleman between producers and operators of theatres in tryout and road-show towns, but is regarded as the agent of the theatre operators and usually receives, as compensation for its services, five per cent of the operator's share of the theatre's gross receipts (par. 28, R. 5). Each year UBO enters into or renews agreements with theatre operators to act as their booking agent (par. 30, R. 5). After negotiation with the producer of an attraction, UBO tentatively schedules it at various theatres throughout the United States, and contracts covering presentation at these theatres are subsequently executed (id., R. 5—6). The booking of legitimate attractions involves the cross-country routing of attractions in a constant stream to and from theatres in various cities throughout the United States (par. 28, R. 5). 21 The individual appellees control the booking of legitimate attractions in tryout and road-show towns in the United States (par. 37, R. 7). Apart from Select and a subsidiary thereof, UBO is the only concern in the country which books legitimate attractions throughout the United States (par. 5, R. 2). From 1932 to 1946, UBO followed a policy of entering into franchise agreements with theatre operators making UBO the exclusive booking agent for their theatres (par. 40, R. 8—9). About 1946, UBO discontinued formal franchise agreements and adopted in lieu thereof a system of listings which, as tacitly understood by the parties, continued the previous contract arrangements (id., R. 9). 22 The appellees operate or participate in the operation of approximately forty theatres in eight states (par. 42, R. 9). They operate or control all the theatres in 'virtually all' key try-out towns, and in several important road-show towns (par. 41, R. 9).* Approximately fifty per cent of all the theatres in New York City are owned or operated by the Shubert appellees (pars. 15, 41, R. 3, 9). 23 In producing, booking, and presenting legitimate attractions, there is a constant, continuous stream of trade and commerce between the various states, consisting of assemblage of personnel and property for rehearsals, transportation of such personnel and property to various cities, making and performing contracts under which attractions are routed and presented in various states, and transmission of applications, letters, memoranda, communications, contracts, money, checks, drafts, and other media of exchange across state lines (par. 49, R. 12). 24 The substantial elements of appellees' conspiracy to restrain and monopolize, attempted monopolization, and monopolization have been that the appellees, by concert of action: (a) compel producers to book their legitimate attractions exclusively through appellees; (b) exclude others from booking legitimate attractions; (c) prevent competition in presentation of these attractions; (d) discriminate in favor of their own productions with respect to booking and presentation; and (e) combine their power in booking and presentation in order to maintain and strengthen their domination in each of these fields (par. 51, R. 13). 25 The means which the appellees have used in carrying out the foregoing acts have included the following: 26 (1) Conditioning their investments in ligitimate attractions produced by others, and conditioning the booking of legitimate attractions in try-out towns and in New York City, upon agreement by the producers to book these attractions exclusively through appellees (pars. 52(a), (d), (e), R. 13). 27 (2) Forcing producers to book their legitimate attractions for an entire theatrical season exclusively through appellees; (par. 52(c), R. 13). 28 (3) Coercing producers who had booked through others to pay penalties or to accept discriminatory booking terms, as a condition of obtaining booking through them (par. 52(f), R. 13). 29 (4) Entering into agreements with theatre operators whereby the operators agree to present only attractions booked through appellees, and appellees agree not to book for competing theatre operators (par. 52(g), R. 13). 30 (5) Excluding legitimate attractions booked by others from theatres operated by appellees (par. 52(h), R. 13). 31 (6) Coercing and intimidating independent theatre operators in towns where appellees operate theatres to relinquish control of their theatres by threatening to deprive them, by virtue of appellees' control of booking, of access to legitimate attractions (par. 52(k), R. 14). 32 Some of the effects of appellees' concerted actions have been that producers have been forced to book exclusively with appellees on non-competitive terms; persons have been denied the right to engage in the business of operating a booking office; operators of independent theatres competing with those of appellees have been systematically excluded from obtaining legitimate attractions and, in many cities have been forced out of business; in cities in which the appellees operate theatres, persons have been denied the right to engage in the business of presenting legitimate attractions, and the public has been deprived of access to legitimate attractions and the benefits which flow from open competition; and interstate commerce in production, booking, and presentation has been unreasonably restrained, and in booking and presentation has been monopolized (par. 53, R. 14). 1 Lee Shubert died prior to entry of the District Court's judgment. His executors have not been substituted as parties. 2 The corporations are the United Booking Office, Inc. ('UBO'), Select Theatres Corporation ('Select'), and L.A.B. Amusement Corporation ('L.A.B.'). Since the filing of the complaint, L.A.B. has been dissolved and its assets vested in Marcus Heiman personally. 3 The complaint defines 'legitimate attractions' as 'stage attractions performed in person by professional actors' including 'plays, musicals, and operettas' but not ordinarily including 'stock company attractions, vaudeville, burlesque, bands, individual dancers, dance groups, concerts, and vocal or instrumental presentations.' The complaint alleges that a play costs approximately $60,000 to $100,000 to produce, whereas a musical generally requires from $200,000 to $300,000. As much as one-third of the cost, according to the complaint, may be attributable to expenditures for scenery, props, and related items and services. 4 'Booking' is defined in the complaint as 'the arrangements, generally made through a booking office, between producers and operators for the routing and presentation of legitimate attractions and the fixing of playing dates.' The complaint alleges that UBO, apart from Select and a subsidiary thereof, is the only concern in the country that books legitimate attractions throughout the United States. 5 The complaint defines 'presentation' as 'the operation of a theatre or theatres and the exhibition of legitimate attractions therein.' The defendants, according to the complaint, operate or control all the theatres in virtually all key 'tryout' cities (including Boston, Philadelphia, and Baltimore), all the theatres in several important 'road-show' cities (including Baltimore, Boston, cincinnati, Los Angeles, and Philadelphia), almost all the theatres in other important 'road-show' cities (Chicago and Detroit), and approximately half of the theatres in New York City. 6 15 U.S.C. §§ 1 and 2, 15 U.S.C.A. §§ 1, 2. These sections provide: § 1. * * * Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal * * *. Every person who shall make any contract or engage in any combination or conspiracy declared by sections 1—7 of this title to be illegal shall be deemed guilty of a misdemeanor * * *. § 2. * * * Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor * * *.' Section 4, 15 U.S.C.A. § 4, confers jurisdiction on the district courts 'to prevent and restrain violations of sections 1 7 of this title' in equity proceedings instituted under the direction of the Attorney General. 7 The court issued the following order: 'In principle, I can see no valid distinction between the facts of this case and those which were before the Supreme Court in the Cases of Federal Base Ball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200 (42 S.Ct. 465, 66 L.Ed. 898), and Toolson v. New York Yankees, decided by the Supreme Court on November 9, 1953. 'Upon the authority of these adjudications the complaint in the above entitled action will be dismissed.' 120 F.Supp. 15, 16. 8 Moreover, once interstate commerce is established, the Sherman Act may be applied even to 'local' restraints on that commerce. E.g., Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 68 S.Ct. 996, 92 L.Ed. 1328; United States v. Women's Sportwear Mfg. Ass'n, 336 U.S. 460, 69 S.Ct. 714, 93 L.Ed. 805; United States v. Employing Plasterers' Association, 347 U.S. 186, 74 S.Ct. 452, 98 L.Ed. 618. Cf. Moore v. Mead's Fine Bread Co., 348 U.S. 115, 118—119, 75 S.Ct. 148, 150. 9 The defendants seek to distinguish the motion picture cases on the ground that the product of the motion picture industry is 'an article of trade * * * an inanimate thing—a reel of photographic film in a metal box—which moves into interstate commerce like any other manufactured product'; on the other hand, according to this argument, a legitimate theatrical attraction is 'intangible and evanescent, unique and individual * * * an experience of living people.' Compare United States v. South-Eastern Underwriters Association, 322 U.S. 533, 546, 64 S.Ct. 1162, 1170, 88 L.Ed. 1440: '* * * Congress can regulate traffic though it consist of intangibles.' And see Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, 43 S.Ct. 540, 67 L.Ed. 977. That other segments of the entertainment business, besides the motion picture industry, may constitute interstate commerce is well established. See, e.g., Federal Radio Commission v. Nelson Bros. Co., 289 U.S. 266, 279, 53 S.Ct. 627, 633, 77 L.Ed. 1166 (radio). 10 On remand, the trial court understood the Holmes opinion as authorizing a later dismissal if the plaintiff's evidence failed to establish that the transportation was more than 'incidental.' On that basis, the trial court dismissed the action and the Court of Appeals affirmed. 2 Cir., 12 F.2d 341, 47 A.L.R. 775. This Court denied certiorari. 273 U.S. 703, 47 S.Ct. 97, 71 L.Ed. 849. But, as the defendants admit, a denial of certiorari does not constitute an expression on the merits. Brown v. Allen, 344 U.S. 443, 489—497, 73 S.Ct. 397, 437—441, 97 L.Ed. 469. That rule is particularly appropriate where the decision sought to be reviewed is essentially a factual determination. Compare Graver Tank & Mfg. Co. v. Linde Air Products Co., 336 U.S. 271, 274—275, 69 S.Ct. 535, 537, 93 L.Ed. 672. For lower court decisions holding the theatrical business to be subject to the Sherman Act, see Judge Learned Hand in Marienelli v. United Booking Offices of America, D.C.S.D.N.Y., 227 F. 165, and Judge Charles Clark in Ring v. Spina, 2 Cir., 148 F.2d 647, modified in Ring v. Authors' League, 2 Cir., 186 F.2d 637, certiorari denied 341 U.S. 935, 71 S.Ct. 854, 95 L.Ed. 1363. But cf. San Carlo Opera Co. v. Conley, D.C.S.D.N.Y., 72 F.Supp. 825, affirmed, 2 Cir., 163 F.2d 310, involving a personal employment contract under the Federal Arbitration Act, 9 U.S.C.A. § 1 et seq. * The appellees control or operate the only theatre in Baltimore, the six theatres in Boston, seven of the nine theatres in Chicago, the only theatre in Cincinnati, the only theatre in Los Angeles, and the four theatres in Philadelphia (par. 42, R. 9 10). They have an interest in two of the three theatres in Detroit (par. 42 E, R. 10). The only theatre in New Haven is operated under a five-year agreement with a subsidiary of Select, which provides that the operator will accept only attractions booked through this subsidiary (par. 43, R. 11). UBO has exclusive booking rights for the only theatre in Toledo, Ohio (par. 45, R. 11). The 'key' try-out towns are Boston, Philadelphia, Baltimore, and New Haven (par. 26, R. 4). (Footnote in original.)

78

348 U.S. 272 75 S.Ct. 313 99 L.Ed. 314 The TEE-HIT-TON INDIANS, An Identifiable Group of Alaska Indians, Petitioner,v.The UNITED STATES. No. 43. Argued Nov. 12, 1954. Decided Feb. 7, 1955. Rehearing Denied March 14, 1955. See 348 U.S. 965, 75 S.Ct. 521. Mr.James Craig Peacock, Washington, D.C., for petitioner. Mr. Ralph A. Barney, Washington, D.C., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 This case rests upon a claim under the Fifth Amendment by petitioner, an identifiable group of American Indians of between 60 and 70 individuals residing in Alaska, for compensation for a taking by the United States of certain timber from Alaskan lands allegedly belonging to the group.1 The area claimed is said to contain over 350,000 acres of land and 150 square miles of water. The Tee-Hit-Tons, a clan of the Tlingit Tribe, brought this suit in the Court of Claims under 28 U.S.C. § 1505, 28 U.S.C.A. § 1505. The compensation claimed does not arise from any statutory direction to pay. Payment, if it can be compelled, must be based upon a constitutional right of the Indians to recover. This is not a case that is connected with any phase of the policy of the Congress, continued throughout our history, to extinguish Indian title through negotiation rather than by force, and to grant payments from the public purse to needy descendants of exploited Indians. The legislation in support of that policy has received consistent interpretation from this Court in sympathy with its compassionate purpose.2 2 Upon petitioner's motion, the Court of Claims under its Rule 38(b), 28 U.S.C.A.,3 directed a separate trial with respect to certain specific issues of law and any related issues of fact essential to the proper adjudication of the legal issues.4 Only those pertinent to the nature of the petitioner's interest, if any, in the lands are here for review. Substantial evidence, largely documentary, relevant to these legal issues was introduced by both parties before a Commissioner who thereupon made findings of fact. The Court of Claims adopted these findings and held that petitioner was an identifiable group of American Indians residing in Alaska; that its interest in the lands prior to purchase of Alaska by the United States in 1867 was "original Indian title" or "Indian right of occupancy". Tee-Hit-Ton Indians v. United States, 120 F.Supp. 202, 204, 128 Ct.Cl. 82, 85, 87. It was further held that if such original Indian title survived the Treaty of 1867, 15 Stat. 539, Arts. III and VI, by which Russia conveyed Alaska to the United States, such title was not sufficient basis to maintain this suit as there had been no recognition by Congress of any legal rights in petitioner to the land in question. 120 F.Supp. 202, 128 Ct.Cl. at page 92. The court said that no rights inured to plaintiff by virtue of legislation by Congress. As a result of these conclusions, no answer was necessary to questions 2, 5 and 6. The Tee-Hit-Tons' petition was thereafter dismissed. 3 Because of general agreement as to the importance of the question of compensation for congressionally approved taking of lands occupied in Alaska under aboriginal Indian use and claim of ownership,5 and the conflict concerning the effect of federal legislation protecting Indian occupation between this decision of the Court of Claims, 120 F.Supp. 202, 128 Ct.Cl., at page 90, and the decision of the Court of Appeals for the Ninth Circuit in Miller v. United States, 159 F.2d 997, 1003, we granted certiorari, 347 U.S. 1009, 74 S.Ct. 864, 98 L.Ed. 1133. 4 The Alaskan area in which petitioner claims a compensable interest is located near and within the exterior lines of the Tongass National Forest. By Joint Resolution of August 8, 1947, 61 Stat. 920, the Secretary of Agriculture was authorized to contract for the sale of national forest timber located within this National Forest 'notwithstanding any claim of possessory rights.'6 The Resolution defines 'possessory rights'7 and provides for all receipts from the sale of timber to be maintained in a special account in the Treasury until the timber and land rights are finally determined.8 Section 3(b) of the Resolution provides: 5 'Nothing in this resolution shall be construed as recognizing or denying the validity of any claims of possessory rights to lands or timber within the exterior boundaries of the Tongass National Forest.' 6 The Secretary of Agriculture, on August 20, 1951, pursuant to this authority contracted for sale to a private company of all merchantable timber in the area claimed by petitioner. This is the sale of timber which petitioner alleges constitutes a compensable taking by the United States of a portion of its proprietary interest in the land. 7 The problem presented is the nature of the petitioner's interest in the land, if any. Petitioner claims a 'full proprietary ownership' of the land; or, in the alternative, at least a 'recognized' right to unrestricted possession, occupation and use. Either ownership or recognized possession, petitioner asserts, is compensable. If it has a fee simple interest in the entire tract, it has an interest in the timber and its sale is a partial taking of its right to 'possess, use and dispose of it.' United States v. General Motors, 323 U.S. 373, 378, 65 S.Ct. 357, 359, 89 L.Ed. 311. It is petitioner's contention that its tribal predecessors have continually claimed, occupied and used the land from time immemorial; that when Russia took Alaska, the Tlingits had a well-developed social order which included a concept of property ownership; that Russia while it possessed Alaska in no manner interfered with their claim to the land; that Congress has by subsequent acts confirmed and recognized petitioner's right to occupy the land permanently and therefore the sale of the timber off such lands constitutes a taking pro tanto of its asserted rights in the area. 8 The Government denies that petitioner has any compensable interest. It asserts that the Tee-Hit-Tons' property interest, if any, is merely that of the right to the use of the land at the Government's will; that Congress has never recognized any legal interest of petitioner in the land and therefore without such recognition no compensation is due the petitioner for any taking by the United States. 9 I. Recognition.—The question of recognition may be disposed of shortly. Where the Congress by treaty or other agreement has declared that thereafter Indians were to hold the lands permanently, compensation must be paid for subsequent taking.9 The petitioner contends that Congress has sufficiently 'recognized' its possessory rights in the land in question so as to make its interest compensable. Petitioner points specifically to two statutes to sustain this contention. The first is § 8 of the Organic Act for Alaska of May 17, 1884, 23 Stat. 24.10 The second is § 27 of the Act of June 6, 1900, which was to provide for a civil government for Alaska, 31 Stat. 321, 330.11 The Court of Appeals in the Miller case, supra, felt that these Acts constituted recognition of Indian ownership. 159 F.2d 997, 1002—1003. 10 We have carefully examined these statutes and the pertinent legislative history and find nothing to indicate any intention by Congress to grant to the Indians any permanent rights in the lands of Alaska occupied by them by permission of Congress. Rather, it clearly appears that what was intended was merely to retain the status quo until further congressional or judicial action was taken.12 There is no particular form for congressional recognition of Indian right of permanent occupancy. It may be established in a variety of ways but there must be the definite intention by congressional action or authority to accord legal rights, not merely permissive occupation. Hynes v. Grimes Packing Co., 337 U.S. 86, 101, 69 S.Ct. 968, 978, 93 L.Ed. 1231. 11 This policy of Congress toward the Alaskan Indian lands was maintained and reflected by its expression in the Joint Resolution of 1947 under which the timber contracts were made.13 12 II. Indian Title.—(a) The nature of aboriginal Indian interest in land and the various rights as between the Indians and the United States dependent on such interest are far from novel as concerns our Indian inhabitants. It is well settled that in all the States of the Union the tribes who inhabited the lands of the States held claim to such lands after the coming of the white man, under what is sometimes termed original Indian title or permission from the whites to occupy. That description means mere possession not specifically recognized as ownership by Congress. After conquest they were permitted to occupy portions of territory over which they had previously exercised 'sovereignty,' as we use that term. This is not a property right but amounts to a right of occupancy which the sovereign grants and protects against intrusion by third parties but which right of occupancy may be terminated and such lands fully disposed of by the sovereign itself without any legally enforceable obligation to compensate the Indians. 13 This position of the Indian has long been rationalized by the legal theory that discovery and conquest gave the conquerors sovereignty over and ownership of the lands thus obtained. 1 Wheaton's International Law, c. V. The great case of Johnson v. McIntosh, 8 Wheat. 543, 5 L.Ed. 681, denied the power of an Indian tribe to pass their right of occupancy to another. It confirmed the practice of two hundred years of American history 'that discovery gave an exclusive right to extinguish the Indian title of occupancy, either by purchase or by conquest.' 8 Wheat. at page 587. 14 'We will not enter into the controversy, whether agriculturists, merchants, and manufacturers, have a right, on abstract principles, to expel hunters from the territory they possess, or to contract their limits. Conquest gives a title which the Courts of the conqueror cannot deny, whatever the private and speculative opinions of individuals may be, respecting the original justice of the claim which has been successfully asserted.' 8 Wheat. at page 588. 15 'Frequent and bloody wars, in which the whites were not always the aggressors, unavoidably ensued. European policy, numbers, and skill, prevailed. As the white population advanced, that of the Indians necessarily receded. The country in the immediate neighbourhood of agriculturists became unfit for them. The game fled into thicker and more unbroken forests, and the Indians followed. The soil, to which the crown originally claimed title, being no longer occupied by its ancient inhabitants, was parcelled out according to the will of the sovereign power, and taken possession of by persons who claimed immediately from the crown, or mediately, through its grantees or deputies.' 8 Wheat. at pages 590—591. See Buttz v. Northern Pacific R. Co., 119 U.S. 55, 66, 7 S.Ct. 100, 104, 30 L.Ed. 330; Martin v. Waddell, 16 Pet. 367, 409, 10 L.Ed. 997; Clark v. Smith, 13 Pet. 195, 201, 10 L.Ed. 123. 16 In Beecher v. Wetherby, 95 U.S. 517, 24 L.Ed. 440, a tract of land which Indians were then expressly permitted by the United States to occupy was granted to Wisconsin. In a controversy over timber, this Court held the Wisconsin title good. 17 'The grantee, it is true, would take only the naked fee, and could not disturb the occupancy of the Indians: that occupancy could only be interfered with or determined by the United States. It is to be presumed that in this matter the United States would be governed by such considerations of justice as would control a Christian people in their treatment of an ignorant and dependent race. Be that as it may, the propriety or justice of their action towards the Indians with respect to their lands is a question of governmental policy, and is not a matter open to discussion in a controversy between third parties, neither of whom derives title from the Indians. The right of the United States to dispose of the fee of lands occupied by them has always been recognized by this court from the foundation of the government.' 95 U.S. at page 525. 18 In 1941 a unanimous Court wrote, concerning Indian title, the following: 19 'Extinguishment of Indian title based on aboriginal possession is of course a different matter. The power of Congress in that regard is supreme. The manner, method and time of such extinguishment raise political, not justiciable issues.' United States v. Santa Fe Pacific R. Co., 314 U.S. 339, 347, 62 S.Ct. 248, 252, 86 L.Ed. 260. 20 No case in this Court has ever held that taking of Indian title or use by Congress required compensation. The American people have compassion for the descendants of those Indians who were deprived of their homes and hunting grounds by the drive of civilization. They seek to have the Indians share the benefits of our society as citizens of this Nation. Generous provision has been willingly made to allow tribes to recover for wrongs, as a matter of grace, not because of legal liability. 60 Stat. 1050. 21 (b) There is one opinion in a case decided by this Court that contains language indicating that unrecognized Indian title might be compensable under the Constitution when taken by the United States. United States v. Alcea Band of Tillamooks, 329 U.S. 40, 67 S.Ct. 167, 91 L.Ed. 29. 22 Recovery was allowed under a jurisdictional Act of 1935, 49 Stat. 801, that permitted payments to a few specific Indian tribes for 'legal and equitable claims arising under or growing out of the original Indian title' to land, because of some unratified treaties negotiated with them and other tribes. The other tribes had already been compensated.14 Five years later this Court unanimously held that none of the former opinions in Vol. 329 of the United States Reports expressed the view that recovery was grounded on a taking under the Fifth Amendment. United States v. Tillamooks, 341 U.S. 48, 71 S.Ct. 552, 95 L.Ed. 738. Interest, payable on recovery for a taking under the Fifth Amendment, was denied. 23 Before the second Tillamook case, a decision was made on Alaskan Tlingit lands held by original Indian title. Miller v. United States, 9 Cir., 159 F.2d 997. That opinion holds such a title compensable under the Fifth Amendment on reasoning drawn from the language of this Court's first Tillamook case.15 After the Miller decision, this Court had occasion to consider the holding of that case on Indian title in Hynes v. Grimes Packing Co., 337 U.S. 86, 106, note 28, 69 S.Ct. 968, 979, 981, 93 L.Ed. 1231. We there commented as to the first Tillamook case: 'That opinion does not hold the Indian right of occupancy compensable without specific legislative direction to make payment.' We further declared 'we cannot express agreement with that (compensability of Indian title by the Miller case) conclusion.'16 24 Later the Government used the Hynes v. Grimes Packing Co. note in the second Tillamook case, petition for certiorari, 75 S.Ct. 319, to support its argument that the first Tillamook opinion did not decide that taking of original Indian title was compensable under the Fifth Amendment.17 Thereupon this Court in the second Tillamook case, 341 U.S. 48, 71 S.Ct. 552, 553, held that the first case was not 'grounded on a taking under the Fifth Amendment.' Therefore no interest was due. This later Tillamook decision by a unanimous Court supported the Court of Claims in its view of the law in this present case. See Tee-Hit-Ton Indians v. United States, 120 F.Supp. 202, 128 Ct.Cl. 82, 87. We think it must be concluded that the recovery in the Tillamook case was based upon statutory direction to pay for the aboriginal title in the special jurisdictional act to equalize the Tillamooks with the neighboring tribes, rather than upon a holding that there had been a compensable taking under the Fifth Amendment.18 This leaves unimpaired the rule derived from Johnson v. McIntosh, 8 wheat. 543, 5 L.Ed. 681, that the taking by the United States of unrecognized Indian title is not compensable under the Fifth Amendment. 25 This is true, not because an Indian or an Indian tribe has no standing to sue or because the United States has not consented to be sued for the taking of original Indian title, but because Indian occupation of land without government recognition of ownership creates no rights against taking or extinction by the United States protected by the Fifth Amendment or any other principle of law. 26 (c) What has been heretofore set out deals largely with the Indians of the Plains and east of the Mississippi. The Tee-Hit-Tons urge, however, that their stage of civilization and their concept of ownership of property takes them out of the rule applicable to the Indians of the States. They assert that Russia never took their lands in the sense that European nations seized the rest of America. The Court of Claims, however, saw no distinction between their use of the land and that of the Indians of the Eastern United States. See Tee-Hit-Ton Indians v. United States, 120 F.Supp. 202, 128 Ct.Cl. 82, 87. That court had no evidence that the Russian handling of the Indian land problem differed from ours. The natives were left the use of the great part of their vast hunting and fishing territory but what Russia wanted for its use and that of its licensees, it took. The court's conclusion on this issue was based on strong evidence. 27 In considering the character of the Tee-Hit-Tons' use of the land, the Court of Claims had before it the testimony of a single witness who was offered by plaintiff. He stated that he was the chief of the Tee-Hit-Ton tribe. He qualified as an expert on the Tlingits, a group composed of numerous interconnected tribes including the Tee-Hit-Tons. His testimony showed that the Tee-Hit-Tons had become greatly reduced in numbers. Membership descends only through the female line. At the present time there are only a few women of childbearing age and to total membership of some 65. 28 The witness pointed out that their claim of ownership was based on possession and use. The use that was made of the controverted area was for the location in winter of villages in sheltered spots and in summer along fishing streams and/or bays. The ownership was not individual but tribal. As the witness stated, 'Any member of the tribe may use any portion of the land that he wishes, and as long as he uses it that is his for his own enjoyment, and is not to be trespassed upon by anybody else, but the minute he stops using it then any other member of the tribe can come in and use that area.' 29 When the Russians first came to the Tlingit territory, the most important of the chiefs moved the people to what is now the location of the town of Wrangell. Each tribe took a portion of Wrangell harbor and the chief gave permission to the Russians to build a house on the shore. 30 The witness learned the alleged boundaries of the Tee-Hit-Ton area from hunting and fishing with his uncle after his return from Carlisle Indian School about 1904. From the knowledge so obtained, he outlined in red on the map, which petitioner filed as an exhibit, the territory claimed by the Tee-Hit-Tons. Use by other tribal members is sketchily asserted. This is the same 350,000 acres claimed by the petition. On it he marked six places to show the Indians' use of the land: (1) his great uncle was buried here, (2) a town, (3) his uncle's house, (4) a town, (5) his mother's house, (6) smokehouse. He also pointed out the uses of this tract for fishing salmon and for hunting beaver, deer and mink. 31 The testimony further shows that while membership in the tribe and therefore ownership in the common property descended only through the female line, the various tribes of the Tlingits allowed one another to use their lands. Before power boats, the Indians would put their shelters for hunting and fishing away from villages. With the power boats, they used them as living quarters. 32 In addition to this verbal testimony, exhibits were introduced by both sides as to the land use. These exhibits are secondary authorities but they bear out the general proposition that land claims among the Tlingits, and likewise of their smaller group, the Tee-Hit-Tons, was wholly tribal. It was more a claim of sovereignty than of ownership. The articles presented to the Court of Claims by those who have studied and written of the tribal groups agree with the above testimony. There were scattered shelters and villages moved from place to place as game or fish became scarce. There was recognition of tribal rights to hunt and fish on certain general areas, with claims to that effect carved on totem poles. From all that was presented, the Court of Claims concluded, and we agree, that the Tee-Hit-Tons were in a hunting and fishing stage of civilization, with shelters fitted to their environment, and claims to rights to use identified territory for these activities as well as the gathering of wild products of the earth.19 We think this evidence introduced by both sides confirms the Court of Claims' conclusion that the petitioner's use of its lands was like the use of the nomadic tribes of theStates Indians.20 33 The line of cases adjudicating Indian rights on American soil leads to the conclusion that Indian occupancy, not specifically recognized as ownership by action authorized by Congress, may be extinguished by the Government without compensation.21 Every American schoolboy knows that the savage tribes of this continent were deprived of their ancestral ranges by force and that, even when the Indians ceded millions of acres by treaty in return for blankets, food and trinkets, it was not a sale but the conquerors' will that deprived them of their land. The duty that rests on this Nation was adequately phrased by Mr. Justice Jackson in his concurrence, Mr. Justice Black joining, in Northwestern Bands of Shoshone Indians v. United States, 324 U.S. 335 at page 355, 65 S.Ct. 690, 700, 89 L.Ed. 985, a case that differentiated 'recognized' from 'unrecognized' Indian title, and held the former only compensable. Id., 324 U.S. at pages 339—340, 65 S.Ct. 692, 693. His words will be found at pages 354—358 of 324 U.S., at pages 699—701, of 65 S.Ct. He ends thus: 34 'We agree with Mr. Justice Reed that no legal rights are today to be recognized in the Shoshones by reason of this treaty. We agree with Mr. Justice Douglas and Mr. Justice Murphy as to their moral deserts. We do not mean to leave the impression that the two have any relation to each other. The finding that the treaty creates no legal obligations does not restrict Congress from such appropriations as its judgment dictates 'for the health, education, and industrial advancement of said Indians' which is the position in which Congress would find itself if we found that it did create legal obligations and tried to put a value on them.' Id., 324 U.S. at page 358, 65 S.Ct. at page 701. 35 In the light of the history of Indian relations in this Nation, no other course would meet the problem of the growth of the United States except to make congressional contributions for Indian lands rather than to subject the Government to an obligation to pay the value when taken with interest to the date of payment. Our conclusion does not uphold harshness as against tenderness toward the Indians, but it leaves with Congress, where it belongs, the policy of Indian gratuities for the termination of Indian occupancy of Government-owned land rather than making compensation for its value a rigid constitutional principle. 36 The judgment of the Court of Claims is affirmed. 37 Affirmed. 38 Mr. Justice DOUGLAS, with whom The CHIEF JUSTICE and Mr. Justice FRANKFURTER, concur, dissenting. 39 The first Organic Act for Alaska became a law on May 17, 1884, 23 Stat. 24. It contained a provision in § 8 which reads as follows: 40 '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: And provided further, That parties who have located mines or mineral privileges therein under the laws of the United States applicable to the public domain, or who have occupied and improved or exercised acts of ownership over such claims, shall not be disturbed therein, but shall be allowed to perfect their title to such claims by payment as aforesaid'. 41 Section 12 provided for a 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,' etc. 42 Respondent contends, and the Court apparently agrees, that this provision should be read, not as recognizing Indian title, but as reserving the question whether they have any rights in the land. 43 It is said that since § 8 contemplates the possible future acquisition of 'title,' it expressly negates any idea that the Indians have any 'title.' That is the argument; and that apparently is the conclusion of the Court. 44 There are, it seems to me, two answers to that proposition. 45 First. The first turns on the words of the Act. The general land laws of the United States were not made applicable to Alaska. § 8. No provision was made for opening up the lands to settlement, for clearing titles, for issuing patents, all as explained in Gruening, The State of Alaska (1954), p. 47 et seq. There were, however, at least two classes of claimants to Alaskan lands—one, the Indians; the other, those who had mining claims. Section 8 of the Act did not recognize the 'title' of either. Rather, it provided that one group, the miners, should be allowed to 'perfect their title'; while the others, the Indians, were to acquire 'title' only as provided by future legislation. Obviously the word 'title' was used in the conveyancer's sense; and § 8 did service in opening the door to perfection of 'title' in the case of miners, and in deferring the perfection of 'title' in the case of the Indians. 46 Second. The second proposition turns on the legislative history of § 8. Section 8 of the Act commands that the Indians 'shall not be disturbed in the possession of any lands actually in their use or occupation or now claimed by them'. The words 'or now claimed by them' were added by an amendment offered during the debates by Senator Plumb of Kansas. 15 Cong.Rec. 627—628. Senator Benjamin Harrison, in accepting the amendment, said, '* * * it was the intention of the committee to protect to the fullest extent all the rights of the Indians in Alaska and of any residents who had settled there, but at the same time to allow the development of the mineral resources. * * *' Id. 47 Senator Plumb spoke somewhat humorously about the rights of the Indians: 48 'I do not know by what tenure the Indians are there nor what ordinarily characterizes their claim of title, but it will be observed that the language of the proviso I propose to amend puts them into very small quarters. I think about 2 feet by 6 to each Indian would be the proper construction of the language 'actually in their use or occupation.' Under the general rule of occupation applied to an Indian by a white man, that would be a tolerably limited occupation and might possibly land them in the sea.' Id., at 530. 49 Senator Plumb went on to say, 'I propose that the Indian shall at least have as many rights after the passage of this bill as he had before.' Id., at 531. Senator Harrison replied that it was the intention of the committee 'to save from all possible invasion the rights of the Indian residents of Alaska.' Id., at 531. He gave emphasis to the point by this addition: 50 'It was the object of the committee absolutely to save the rights of all occupying Indians in that Territory until the report which is provided for in another section of the bill could be made, when the Secretary of the Interior could ascertain what their claims were and could definitely define any reservations that were necessary to be set apart for their use. We did not intend to allow any invasion of the Territory by which private rights could be acquired by any person except in so far as it was necessary in order to establish title to mining claims in the Territory. Believing that that would occupy but the smallest portion of the territory here and there, isolated and detached and small quantities of ground, we thought the reservation of lands occupied by the Indians or by anybody else was a sufficient guard against any serious invasion of their rights.' Id., at 531. 51 The conclusion seems clear that Congress in the 1884 Act recognized the claims of these Indians to their Alaskan lands. What those lands were was not known. Where they were located, what were their metes and bounds were also unknown. Senator Plumb thought they probably were small and restricted. But all agreed that the Indians were to keep them, wherever they lay. It must be remembered that the Congress was legislating about a Territory concerning which little was known. No report was available showing the nature and extent of any claims to the land. No Indian was present to point out his tribe's domain. Therefore, Congress did the humane thing of saving to the Indians all rights claimed; it let them keep what they had prior to the new Act. The future course of action was made clear—conflicting claims would be reconciled and the Indian lands would be put into reservations. 52 That purpose is wholly at war with the one now attributed to the Congress of reserving for some future day the question whether the Indians were to have any rights to the land.* 53 There remains the question what kind of 'title' the right of use and occupancy embraces. Some Indian rights concern fishing alone. See Tulee v. State of Washington, 315 U.S. 681, 62 S.Ct. 862, 86 L.Ed. 1115. Others may include only hunting or grazing or other limited uses. Whether the rights recognized in 1884 embraced rights to timber, litigated here, has not been determined by the finders of fact. The case should be remanded for those findings. It is sufficient now only to determine that under the jurisdictional Act the Court of Claims is empowered to entertain the complaint by reason of the recognition afforded the Indian rights by the Act of 1884. 1 A partial taking is compensable. United States v. Kansas City Life Ins. Co., 339 U.S. 799, 809, 70 S.Ct. 885, 890, 94 L.Ed. 1277; United States v. Gerlach Live Stock Co., 339 U.S. 725, 739, 70 S.Ct. 955, 962, 94 L.Ed. 1231; United States v. General Motors Co., 323 U.S. 373, 65 S.Ct. 357, 89 L.Ed. 311; United States v. Shoshone Tribe, 304 U.S. 111, 118, 58 S.Ct. 794, 798, 82 L.Ed. 1213. 2 See Indian Claims Commission Act, 60 Stat. 1049, 25 U.S.C.A. § 70 et seq.; Worcester v. Georgia, 6 Pet. 515, 582, 8 L.Ed. 483; Alaska Pacific Fisheries v. United States, 248 U.S. 78, 87, 89, 39 S.Ct. 40, 41, 63 L.Ed. 138; United States v. Santa Fe Pacific R. Co., 314 U.S. 339, 354, 62 S.Ct. 248, 255, 86 L.Ed. 260. 3 'Separate Trials. The Court in furtherance of convenience or to avoid prejudice may order a separate trial of any claim, counterclaim, or of any separate issues or of any number of claims, counterclaims, or issues; and may enter appropriate orders or judgments with respect to any of such issues, claims, or counterclaims that are tried separately.' 4 "1. Is the plaintiff an 'identifiable group of American Indians residing within the territorial limits of * * * Alaska' within the meaning of 28 U.S.C. § 1505?' "2. What property rights, if any, would plaintiff, after defendant's 1867 acquisition of sovereignty over Alaska, then have had in the area, if any, which from aboriginal times it had through its members, their spouses, in-laws, and permittees used or occupied in their accustomed Indian manner for fishing, hunting, berrying, maintaining permanent or seasonal villages and other structures, or burying the dead?' "3. What such rights, if any, would have inured to it under the Act of May 17, 1884, 23 Stat. 24, in the area, if any, which on that date was either so used or occupied by it or was claimed by it? "4. What such rights, if any, would have inured to it under the Act of June 6, 1900, 31 Stat. 321, 330, in the area, if any, which on that date was so used or occupied by it?' "5. In the event a decision of an affirmative nature on any of issues 2, 3, or 4, is followed by evidence indicating specific property rights on the part of plaintiff at any of those times, then would the testimony of plaintiff's witness Paul as to recent less intensive use of the areas claimed by plaintiff (Tr. 13—14, 29—30, 44—45, 96—97) constitute prima facie evidence of termination or loss of such rights?' "6. If any such property rights are established, and had not meanwhile been terminated or lost, then would the execution of the Timber Sale Agreement of August 20, 1951 (as admitted in paragraph 10 of defendant's Answer), constitute a compensable taking of such rights, or would it give rise to a right to an accounting within the jurisdiction of this Court, or both?" 120 F.Supp. 202, 204, 128 Ct.Cl. 82. 5 See Hearings before House Committee on Agriculture on H.J.Res. 205, 80th Cong., 1st Sess.; Committee Print No. 12, House Committee on Interior and Insular Affairs, 83d Cong., 2d Sess. 6 61 Stat. 921, § 2(a). 7 Id., § 1: 'That 'possessory rights' as used in this resolution shall mean all rights, if any should exist, which are based upon aboriginal occupancy or title, or upon section 8 of the Act of May 17, 1884 (23 Stat. 24), section 14 of the Act of March 3, 1891 (26 Stat. 1095), or section 27 of the Act of June 6, 1900 (31 Stat. 321), whether claimed by native tribes, native villages, native individuals, or other persons, and which have not been confirmed by patent or court decision or included within any reservation.' 8 Id., § 3(a). 9 United States v. Creek Nation, 295 U.S. 103, 109—110, 55 S.Ct. 681, 683—684, 79 L.Ed. 1331; Shoshone Tribe v. United States, 299 U.S. 476, 497, 57 S.Ct. 244, 251, 81 L.Ed. 360; Chippewa Indians v. United States, 301 U.S. 358, 375—376, 57 S.Ct. 826, 833, 81 L.Ed. 1156; United States v. Klamath Indians, 304 U.S. 119, 58 S.Ct. 799, 82 L.Ed. 1219; Sioux Tribe of Indians v. United States, 316 U.S. 317, 326, 62 S.Ct. 1095, 1099, 86 L.Ed. 1501. 10 '* * * 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: * * *.' 11 'The Indians or persons conducting schools or missions in the district shall not be disturbed in the possession of any lands now actually in their use or occupation, * * *.' 12 23 Stat. 24; see 15 Cong.Rec. 530—531; H.R.Rep.No.476, 48th Cong., 1st Sess. 2; 31 Stat. 321; see 33 Cong.Rec. 5966. 13 61 Stat. 921, § 3(b), see p. 4, supra; H.R.Rep.No.873, 80th Cong., 1st Sess. 14 329 U.S., at page 44, 67 S.Ct. 167 at page 169. 15 It relies also, p. 1001, on State of Minnesota v. Hitchcock, 185 U.S. 373, 22 S.Ct. 650, 46 L.Ed. 954, and United States v. Klamath & Moadoc Tribes of Indians, 304 U.S. 119, 58 S.Ct. 799, 82 L.Ed. 1219. These cases, however, concern Government taking of lands held under Indian title recognized by the United States as an Indian reservation. See 185 U.S., at page 390, 22 S.Ct. 650, 304 U.S., at page 121, 58 S.Ct. 799, 16 Stat. 707, United States v. Algoma Lumber Co., 305 U.S. 415, 420, 59 S.Ct. 267, 270, 83 L.Ed. 260, and 329 U.S. 40, 52, note 29, 67 S.Ct. 167, 173. See United States v. 10 Acres of Land, D.C., 75 F.Supp. 841. 16 The statement concerning the Miller case was needed to meet the Grimes Packing Company argument that Congress could not have intended to authorize the Interior Department to include an important and valuable fishing area, see Hynes v. Grimes Packing Co., 337 U.S. 86, note 10, 69 S.Ct. 968, in a permanent reservation for an Indian population of 57 eligible voters. Actual occupation of Alaskan lands by Indians authorized the creation of a reservation. 337 U.S., at page 91, 69 S.Ct. 968. One created by Congress through recognition of a permanent right in the Indians from aboriginal use would require compensation to them for re-opening to the public. Id., 337 U.S. at pages 103—106, 69 S.Ct. 968, 979, 980, 981. It was therefore important to show that there was no right arising from aboriginal occupation. 17 Three million dollars was involved in the Tillamook case as the value of the land, and the interest granted by the Court of Claims was $14,000,000. The Government pointed out that if aboriginal Indian title was compensable without specific legislation to that effect, there were claims with estimated interest already pending under the Indian jurisdictional act aggregating $9,000,000,000. 18 In Carino v. Insular Government of the Philippine Islands, 212 U.S. 449, 29 S.Ct. 334, 53 L.Ed. 594, this Court did uphold as valid a claim of land ownership in which tribal custom and tribal recognition of ownership played a part. Petitioner was an Igorot who asserted the right to register ownership of certain land although he had no document of title from the Spanish government and no recognition of ownership had been extended by Spain or by the United States. The United States Government had taken possession of the land for a public use and disputed the fact that petitioner had any legally recognizable title. The basis of the Court's decision, however, distinguishes it from applicability to the Tee-Hit-Ton claim. The Court relied chiefly upon the purpose of our acquisition of the Philippines as disclosed by the Organic Act of July 1, 1902, which was to administer property and rights 'for the benefit of the inhabitants thereof'. 32 Stat. 695. This purpose in acquisition and its effect on land held by the natives was distinguished from the settlement of the white race in the United States where 'the dominant purpose of the whites in America was to occupy the land.' 212 U.S., at page 458, 29 S.Ct. at page 336. The Court further found that the Spanish law and exercise of Spanish sovereignty over the islands tended to support rather than defeat a prescriptive right. Since this was no communal claim to a vast uncultivated area, it was natural to apply the law of prescription rather than a rule of sovereign ownership or dominium. Carino's claim was to a 370-acre farm which his grandfather had fenced some fifty years before and was used by three generations as a pasture for livestock and some cultivation of vegetables and grain. The case bears closer analogy to the ordinary prescriptive rights situation rather than to a recognition by this Court of any aboriginal use and possession amounting to fee simple ownership. 19 Krause, Die Tlinkit-Indianer (The Tlinkit Indians), pp. 93—115 and 120—122; Oberg, The Social Economy of the Tlingit Indians (a dissertation submitted to the University of Chicago, Dept. of Anthropology for the Degree of Doctor of Philosophy, Dec. 1937); Goldschmidt-Haas Report to Commissioner of Indian Affairs on Possessory Rights of the Natives of Southeastern Alaska, pp. i, ii, iv, 1—25, 31—33, 123—133, related statements numbered 65, 66, 67, 68 and 69, and chart 11; S.Doc.No.152, 81st Cong., 2d Sess. (Russian Administration of Alaska and the Status of the Alaskan Natives); see Johnson v. Pacific Coast S.S. Co., 2 Alaska 224. 20 It is significant that even with the Pueblo Indians of the Mexican Land Sessions, despite their centuries-Old sedentary agricultural and pastoral life, the United States found it proper to confirm to them a title in their lands. The area in which the Pueblos are located came under our sovereignty by the Treaty of Guadalupe Hidalgo, 9 Stat. 922, and the Gadsden Purchase Treaty of December 30, 1853, 10 Stat. 1031. The Treaty of Guadalupe Hidalgo contained a guarantee by the United States to respect the property rights of Mexicans located within the territory acquired. Art. VIII, 9 Stat. 929. This provision was incorporated by reference into the Gadsden Treaty. Art. V, 10 Stat. 1035. The latter treaty also contained a provision that no grants of land within the ceded territory made after a certain date would be recognized or any grants 'made previously (would) be respected or be considered as obligatory which have not been located and duly recorded in the archives of Mexico.' Art. VI, 10 Stat. 1035. This provision was held to bar recognition of fee ownership in the Pueblo of Santa Rosa which claimed such by immemorial use and possession as well as by prescription against Spain and Mexico because they could produce no paper title to the lands. Pueblo of Santa Rosa v. Fall, 56 App.D.C. 259, 262, 12 F.2d 332, 335, reversed on other grounds, 273 U.S. 315, 47 S.Ct. 361, 71 L.Ed. 658. Disputes as to the Indian titles in the Pueblos and their position as wards required congressional action for settlement. See Brayer, Pueblo Indian Land Grants of the 'Rio Abajo', New Mexico; Cohen, Handbook of Federal Indian Law, c. 20. These problems were put in the way of solution only by congressional recognition of the Pueblos' title to their land and the decisions of this Court as to their racial character as Indians, subject to necessary federal tutelage. 10 Stat. 308, Creation of Office of Surveyor-General of New Mexico to report area of bona fide holdings; Report of Secretary of the Interior, covering that of the Surveyor-General of New Mexico, S.Exec.Doc.No.5, 34th Cong., 3d Sess. 174, 411; Confirmation of titles for approved Pueblo Land Claims, 11 Stat. 374; S.Doc.No.1117, 37th Cong., 2d Sess. 581—582, Report of Secretary of Interior showing New Mexico Pueblos with confirmed titles. Representative Sandidge, who reported the first Pueblo Confirmation Act to the House of Representatives, stated that the Pueblo claims, 'although they are valid, are not held to be so by this Government, nor by any of its courts, until the claim shall have been acted on specifically. I will say, furthermore, that the whole land system of the Territory of New Mexico is held in abeyance until these private land claims shall have been acted on by Congress.' Cong.Globe, 35th Cong., 1st Sess. 2090 (1858). The position as Indians of the inhabitants of the Pueblos was considered in United States v. Joseph, 94 U.S. 614, 24 L.Ed. 295, and United States v. Sandoval, 231 U.S. 28, 34 S.Ct. 1, 58 L.Ed. 107. For an interesting sidelight on the difficulties inherent in the problems, see Brayer, supra, p. 14, and United States v. Ritchie, 17 How. 525, 15 L.Ed. 236. Thus it is seen that congressional action was deemed necessary to validate the ownership of the Pueblos whose claim was certainly founded upon stronger legal and historical basis than the Tlingits. 21 The Departments of Interior, Agriculture and Justice agree with this conclusion. See Committee Print No. 12, Supplemental Reports dated January 11, 1954, on H.R. 1921, 83d Cong., 2d Sess. Department of Interior: 'That the Indian right of occupancy is not a property right in the accepted legal sense was clearly indicated when United States v. Alcea Band of Tillamooks, 1951, 341 U.S. 48, 71 S.Ct. 552, 95 L.Ed. 738, was reargued. The Supreme Court stated, in a per curiam decision, that the taking of lands to which Indians had a right of occupancy was not a taking within the meaning of the fifth amendment entitling the dispossessed to just compensation. 'Since possessory rights based solely upon aboriginal occupancy or use are thus of an unusual nature, subject to the whim of the sovereign owner of the land who can give good title to third parties by extinguishing such rights, they cannot be regarded as clouds upon title in the ordinary sense of the word. Therefore, we suggest the deletion, in section 3(c) of the bill, of the words 'upon aboriginal occupancy or title, or." P. 3. Department of Agriculture: 'We also concur in the belief which we understand is being expressed by the Department of the Interior that no rights presently exist on the basis of aboriginal occupancy or title. We believe that this is equally true with respect to lands within the Tongass National Forest just as it is with respect to lands elsewhere in Alaska.' P. 7. Department of Justice: 'Thus, there is no legal or equitable basis for claims or rights allegedly arising from 'aboriginal occupancy or title." P. 11. * The reading which the Court gives the 1884 Act dispels the slight hope which Ernest Gruening, our foremost Alaskan authority, found in its provisions dealing with the Indians. In The State of Alaska (1954) 355—356, Gruening states: 'For the first seventeen years of United States rule over Alaska, the aboriginal inhabitants, who constituted an overwhelming majority of its approximately thirty thousand souls, were as devoid of attention, or even mention, as was the population as a whole. They became, by virtue of the organic act of 1884, in one respect at least, a mildly privileged, or at least a less disadvantaged, group, as compared with subsequently arriving Americans. 'For the act provided 'that the Indians or other persons * * * shall not be disturbed in the possession of any lands actually in their use or occupation or now claimed by them.' The natives' right of occupancy was, in other words, affirmed, while all later arrivals had to await the slow evolution of the land laws for even the assurance of the right to possess land. "The terms under which such persons (the Indians or other persons),' continued the act, 'may acquire title to such lands is reserved for future legislation by Congress.' 'Seventy years of future had passed by 1954 and the legislation by which the titles to Indians' lands could be acquired had not yet been enacted by Congress.'

34

348 U.S. 296 75 S.Ct. 326 99 L.Ed. 329 UNITED STATES of America, Petitioner,v.Guy W. CAPPS, Inc. No. 14. Argued Nov. 15, 1954. Decided Feb. 7, 1955. Sol. Gen. Simon E. Sobeloff, Washington, D.C., for petitioner. Mr. W. R. Ashburn, Norfolk, Va., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 In this case the United States District Court directed a verdict for respondent because petitioner failed to present evidence of either a breach of contract or resulting damages sufficient to sustain a verdict for petitioner. The Court of Appeals, however, affirmed the judgment on the ground that the alleged contract was unenforceable. For the reasons hereafter stated, we agree with the District Court that the evidence was not sufficient to sustain the alleged breach of contract. Accordingly, we do not reach or pass upon the other grounds discussed by the Court of Appeals. 2 In 1948, the crops of Irish potatoes in the United States and Canada were among the largest on record. As a result, the United States, in § 1(b) of the Agricultural Act of 1948, 62 Stat. 1247, 1248, 7 U.S.C.A. § 1282 note, obligated itself to support the sale of such potatoes at 90% of their parity price. This program was carried out through agreements of the Commodity Credit Corporation to purchase, from eligible growers or dealers in the United States, all Irish potatoes harvested before January 1, 1949, provided such potatoes could not be sold commercially at 90% of parity. As the unsupported Canadian prices were lower than the supported prices in the United States, it became profitable to import Canadian potatoes despite the tariff and freight charges. Recognizing that fact, Congress authorized investigations by the Tariff Commission, under the President's direction, which might lead to imposing quantitative limitations on imports or to increasing import fees. 62 Stat. 1248—1250, 7 U.S.C. § 624, 7 U.S.C.A. § 624. 3 However, without resorting to that procedure, the United States acted through diplomatic channels. Its Acting Secretary of State and the Canadian Ambassador exchanged notes on November 23, 1948, purporting to consummate an executive agreement effective at once. For their text see Appendix, infra, 75 S.Ct. 331. Of special significance to this litigation are the undertakings made by Canada, in its note, to place its Irish potatoes under export control, to withhold export permits for the movement of table stock potatoes to the United States, and to issue export permits for the shipment of Canadian certified seed potatoes to the United States only under specified circumstances. Those circumstances were that the shipments be limited to specified States where there was a legitimate demand for certified seed potatoes and to a short period before the normal seeding time. Permits were to be granted only to exporters having firm orders from legitimate United States users of Canadian seed potatoes, and those exporters were 'to have included in any contract into which they might enter with a United States seed potato importer a clause in which the importer would give an assurance that the potatoes would not be diverted or reconsigned for table stock purposes.' Appendix, infra, 75 S.Ct. 331. The agreement terminated June 20, 1949. 4 In December 1948, Guy W. Capps, Inc., a Virginia corporation, respondent herein, bought 48,544 one-hundred-pound bags of Canadian certified Irish seed potatoes from H. B. Willis, Inc., of Charlottetown, Prince Edward Island, a Canadian exporter. Before the exporter's shipment of them on the S.S. Empire Gangway to respondent at Jacksonville, Florida, respondent wired the exporter as follows: 'Certified seed potatoes loaded on S.S. Gangway are for planting in Florida and Georgia.' The shipment arrived at Jacksonville January 9, 1949.1 On January 11, the potatoes were all invoiced by respondent to the Atlantic Commission Company at Jacksonville as '48,544 Sax Canada No. 1 Seed Potatoes @ $3.35 f.o.b.'2 5 In January 1951, the United States filed the instant action against respondent in the United States District Court for the Eastern District of Virginia, claiming that the above circumstances constituted a contract between the exporter and respondent for the benefit of the United States. The complaint alleged further, upon information and belief, that, in January 1949, respondent, in violation of such contract, 'sold the 48,544 sacks of seed potatoes for table stock purposes' to the damage of the United States in the amount of approximately $150,486, 'in that for each quantity of potatoes so imported from Canada and sold for table stock in the United States, a substantially equivalent quantity of potatoes produced in the United States was offered for sale to the Department of Agriculture, and had to be and was purchased by the Department under the Agricultural Act of 1948.' 6 Respondent's motion to dismiss the complaint for failure to state a claim upon which relief could be granted was denied. D.C., 100 F.Supp. 30. However, at the close of petitioner's case and after argument of counsel, the court directed a verdict for respondent. Judgment was entered accordingly. The court's findings of fact and conclusions of law were contained in its oral opinion. That opinion, which has not been published, included the following highly significant statements: 7 'The action here is for breach of contract made between a Canadian exporter and Capps, the American importer, and specifically of a stipulation placed in that contract which the Court has held was for the benefit of the United States. 8 'The expression constituting that stipulation is that certified seed potatoes loaded on the S.S. Gangway are for planting in Florida and Georgia. Now, assuming that the Court is correct in holding that that stipulation is an agreement within the meaning of the Executive Treaty or an assurance, as it is called in the Executive Treaty, to the effect that the potatoes would not be diverted or reconsigned for table stock purposes—I say assuming that the Court is correct in holding that this provision is an assurance, there is no proof here sufficient to go to the jury that there has been such a diversion or reconsignment, or that there has been a lack of diligence or care on the part of this defendant to see to it that its assurance was carried out. 9 'In the first place, the only diversion or reconsignment was from the defendant to the Atlantic Commission Company. Now that was not a diversion or reconsignment for table stock purposes. Nor does it evidence any want of care on the part of the defendant to see that the assurance was kept, because the evidence shows that this defendant had from year to year sold to Atlantic, potatoes exclusively for seed purposes. The evidence does not justify or would not justify the jury in drawing a conclusion that it was a reckless abandonment by the defendant of its obligation to see to the use of these potatoes because the defendant had the right to rely upon its previous experiences. 10 'But going further, and assuming that it was incumbent upon the defendant to follow up and see that this reconsignment did not lead to the use of the potatoes for table purposes, we find that the A & P, to whom Atlantic sold, did sell seed potatoes. It is true that it was not its entire trade in potatoes, but it did sell a large amount, described as its secondary function, for seed purposes, and the other sales by Atlantic to wholesalers or to the trade, as it is spoken of, were to firms which used potatoes for seed purposes or disposed of them for seed purposes, so that the sales by the defendant here were equally consistent with the compliance as with the violation of the assurance.' 11 The Court of Appeals disagreed with the District Court on the above points.3 However, it affirmed the judgment on the ground that the international agreement, which the contract between respondent and the exporter sought to carry out, was void. The court regarded it as not authorized by Congress and as contravening the provision for procedure through the Tariff Commission. The court also held that the suit must fail because no cause of action had been created by Congress for this type of injury. 204 F.2d 655, 658—661. We granted certiorari to determine whether the significant constitutional and statutory questions discussed by the Court of Appeals were necessary for the decision of the case and, if so, to give them consideration. 346 U.S. 884, 74 S.Ct. 135, 98 L.Ed. 389. 12 We have first examined the record in order to pass upon the preliminary questions on which the Court of Appeals disagreed with the trial court. See Walling v. General Industries Co., 330 U.S. 545, 547, 550, 67 S.Ct. 883, 885, 91 L.Ed. 1088; and see also, Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 560, 567—568, 51 S.Ct. 248, 249, 252, 75 L.Ed. 544. 13 Respondent's alleged obligation is stated in its first telegram, which must be read in the light of the above-mentioned correspondence between the United States and Canada. That correspondence recognized that importations of Canadian seed potatoes, as well as of Canadian table stock potatoes, might displace eligible American potatoes in American commercial markets and thus might add to the burden of the American price-support program. The correspondence, nevertheless, did not seek to exclude Canadian seed potatoes. On the contrary, it provided for the continuance of shipments of seed potatoes to specified States in the United States, during a short period immediately prior to the normal seeding time. In addition, Canada agreed to require its exporters to secure assurance from each importer of Canadian seed potatoes that such potatoes would not be diverted or reconsigned for table stock purposes. In effect, this agreement stopped the regular Canadian-American trade in Canadian table stock potatoes, while preserving such trade in Canadian seed potatoes. There was no suggestion that each importer, during the short open season for Canadian seed potatoes, had to take any new or extraordinary affirmative steps to see to it that the ultimate purchasers never ate their seed potatoes, or that each American retailer of Canadian seed potatoes, in its usual course of business, segregated such potatoes from table stock potatoes in any manner not customary in the sale of seed potatoes. 14 The undisputed evidence showed that the entire shipment to Jacksonville was made in containers with markings and tags identifying the potatoes as 'Canadian No. 1 seed potatoes.' There was no showing that this identification was separated from the potatoes at any point short of the ultimate offering of some of the potatoes at retail. There was, in short, no evidence that any of the potatoes were at any time reconsigned or otherwise treated except as had been customary in prior commercial dealings in seed potatoes. 15 At Jacksonville the entire shipment was invoiced by respondent to the Atlantic Commission Company as 'Canada No. 1 Seed Potatoes.' Most of the 10,000 sacks (which, at the time of their delivery to that company in Jacksonville, were resold by it to respondent) were invoiced by respondent to other customers in a like manner.4 The Atlantic Commission Company, in turn, invoiced to its purchasers, in the same manner, the sacks which it received from respondent. Of them, 13,627 sacks were invoiced by the Commission Company to its parent company, the Great Atlantic & Pacific Tea Company, at three points in Florida and one in Georgia, but 1,641 sacks were invoiced to points in Alabama. The Great Atlantic & Pacific Tea Company primarily sold foodstuffs but also dealt in vegetables for planting purposes, such as seed potatoes, onion sets and cabbage sets. It sold seed potatoes not only to home gardeners but to planters of small commercial acreages. The Commission Company invoiced the remaining 24,926 sacks to over 30 separate dealers in Florida and Georgia, but invoiced 2,309 to points in Alabama. All of the consignees were dealers in vegetables and groceries, and the primary volume of their trade was in articles for food. But there was testimony that some of these dealers customarily handled seed potatoes for planting purposes and there was no evidence that any of them did not. Respondent previously had sold seed potatoes to the Atlantic Commission Company and that company had used channels of distribution comparable to those used in this instance. There was no evidence of the reconsignment of any of these seed potatoes for table stock, or of the diversion of any of them from the commercial channels theretofore usually used for sales of seed potatoes in this area during the planting season. Exception has not been taken to the States designated or to the times when the sales were to be made. 16 The evidence also did not support the suggestion that some of these potatoes were unsuitable for planting in the areas designated. It was not enough that one witness said that only 20% of the original shipment consisted of potatoes belonging to the three most popular varieties grown in Florida in that year. 17 There was no evidence of bad faith, neglect or carelessness on the part of respondent in performing its contractual obligations. There was no evidence of any intent of respondent that the potatoes be sold for table use. It freely acknowledged the existence of the international agreement and declared its purpose to cooperate with it. 18 It was conceded that these potatoes were specially suited for use as seed but also that they were of high-grade edible quality. There was, however, no evidence that any substantial part of these potatoes ultimately was eaten. The most that appeared was that ten pounds of the seed potatoes were sold by a grocery in St. Augustine, Florida, to two women who appeared to be housewives buying for home use. There was also evidence that a few potatoes, probably from the shipment, were sold to customers of the same type by a Jacksonville store and by an A & P market in Atlanta, Georgia. 19 In sum, all that respondent did was to sell seed potatoes, labeled as seed potatoes, in seeding time to concerns which normally dealt in seed potatoes. Under these circumstances, the District Court was not clearly in error in making the findings it did or in directing the verdict for respondent on the ground that no breach of contract was shown. Walling v. General Industries Co., 330 U.S. 545, 67 S.Ct. 883, 91 L.Ed. 1088. 20 In view of the foregoing, there is no occasion for us to consider the other questions discussed by the Court of Appeals. The decision in this case does not rest upon them. 21 Affirmed. 22 APPENDIX. 23 Exchange of notes between the Canadian Ambassador to the United States and the Acting Secretary of State of the United States, November 23, 1948: 24 'The Canadian Ambassador to the Secretary of State 25 'CANADIAN EMBASSY 26 'AMBASSADE DU CANADA 27 'WASHINGTON D.C., 28 'November 23rd, 1948. 29 'No. 538 30 'SIR, 31 'I have the honour to refer to the discussions which have taken place between the representatives of the Government of Canada and of the Government of the United States of America regarding the problems which would confront the Government of the United States in the operation of its price support and other programmes for potatoes if the imports of Canadian potatoes, during this current crop year, were to continue to be unrestricted. After careful consideration of the various representations which have been made to the Canadian Government on this subject, the Canadian Government is prepared to: 32 '1. Include Irish potatoes in the list of commodities for which an export permit is required under the provisions of the Export and Import Permits Act. 33 '2. Withhold export permits for the movement of table stock potatoes to the United States proper, excluding Alaska. 34 '3. Issue export permits for the shipment of Canadian certified seed potatoes to the United States, but only under the following circumstances: 35 '(a) Export permits will be issued to Canadian exporters for shipments to specified States in the United States and such permits will only be granted within the structure of a specific schedule. The schedule is designed to direct the shipment of Canadian certified seed potatoes into those States where there is a legitimate demand for certified seed potatoes and only during a short period immediately prior to the normal seeding time. A draft of this schedule is now being jointly prepared by Canadian and United States officials. 36 '(b) Export permits would only be granted to Canadian exporters who could give evidence that they had firm orders from legitimate United States users of Canadian seed potatoes. Canadian exporters would also be required to have included in any contract into which they might enter with a United States seed potato importer a clause in which the importer would give an assurance that the potatoes would not be diverted or reconsigned for table stock purposes. 37 '(c) The Canadian Government would survey the supply of Canadian certified seed potatoes by class and consider the possibility of giving precedence to the export of Foundation and Foundation A classes of certified seed. 38 '(d) The names and addresses of the consignees entered on the export permit would be compiled periodically and this information would be forwarded to the United States Government. 39 'In instituting a system which has the effect of restricting exports of Canadian potatoes to the United States, the Canadian Government recognizes a responsibility to the Canadian commercial grower in certain surplus potato areas and is prepared to guarantee a minimum return on gradable potatoes for which the grower cannot find a sales outlet. Although the details of such a programme have not been finalized, it is anticipated that the Canadian Government will announce, at approximately the same time as potatoes are placed under export control, a floor price will be effective April 1st, 1949 for certain carlot shipping areas in the East. To implement this programme the Canadian Government would inspect the potato holdings of commercial growers in Prince Edward Island, and several counties of New Brunswick, on or after April 1st and would undertake to pay a fixed price for every hundred pounds of Canada No. 1 potatoes found in the bins. It is not anticipated that any actual payment would be made at that time and it would be understood that if any of the potatoes examined were subsequently sold or used for seed purposes the owner would forfeit any claim for assistance on such potatoes. In other words, the Canadian Government would make no payment on potatoes which move into export trade, or which are used for seed purposes. 40 'It should be noted that the Canadian proposals to institute export permit control on Canadian potatoes and to inaugurate a price support programme are contingent upon assurances from the United States Government that: 41 'a) The United States Government will not hereafter impose any quantitative limitations or fees on Canadian potatoes of the 1948 crop exported to the United States under the system of regulating the movement of potatoes from Canada to the United States outlined herein. 42 'b) The Canadian Government proposal, as outlined herein, to guarantee a floor price to certain commercial growers in the Maritime Provinces would not be interpreted by United States authorities as either a direct or indirect subsidy and that in consequence there would be no grounds for the imposition of countervailing duties under Section 303 of the United States Tariff Act of 1930.1 43 'If the United States Government in its replying note accepts the Canadian proposals and gives to the Canadian Government the assurances required, as outlined above, this note and the reply thereto will constitute an agreement on this subject. 44 'Accept, Sir, the renewed assurances of my highest consideration. 45 'H. H. WRONG 46 'THE HONOURABLE GEORGE C. MARSHALL, 47 'Secretary of State of the United States, 48 'Washington, D.C. 49 'The Acting Secretary of State to the Canadian Ambassador 50 'NOVEMBER 23, 1948 51 'EXCELLENCY: 52 'The Government of the United States appreciates the assurance of the Government of Canada contained in your note no. 538 of November 23, 1948, that the Government of Canada is prepared, contingent upon the receipt of certain assurances from the Government of the United States, to establish the controls outlined therein over the exportation of potatoes from Canada to the United States. 53 'In view of the adverse effect which unrestricted imports of Canadian potatoes would have on the potato programs of the United States and the fact that it is anticipated that the Canadian proposal will substantially reduce the quantity of potatoes which would otherwise be imported into the United States, and in the interest of international trade between the United States and Canada and other considerations, the United States Government assures the Canadian Government that it will not hereafter impose any quantitative limitations or fees on Canadian potatoes of the 1948 crop imported into the United States under the system or regulating the movement of potatoes to the United States outlined in the Canadian proposal. 54 'The Government of the United States also wishes to inform the Canadian Government with respect to that Government's proposal to guarantee a floor price to certain commercial growers in the Maritime Provinces, that in the opinion of the Treasury Department, the operation of such a proposal as outlined by the Canadian Government would not be considered as a payment or bestowal, directly or indirectly, of any bounty or grant upon the manufacture, production, or export of the potatoes concerned and no countervailing duty would, therefore, be levied, under the provisions of Section 303, Tariff Act of 1930, as a result of such operation of the proposal on potatoes imported from Canada. 55 'The United States Government agrees that your note under reference, together with this reply, will constitute an agreement on this subject. 56 'Accept, Excellency, the renewed assurances of my highest consideration. 57 'ROBERT A. LOVETT 'Acting Secretary of State of the United States of America 58 'HIS EXCELLENCY 59 'HUME WRONG, 'Ambassador of Canada.' 60 Treaties and Other International Acts Series 1896, Department of State, Publication 3474. 1 January 10, 1949, the Acting Chief of the Potato Division, Fruit and Vegetable Branch of the United States Department of Agriculture, wired respondent: 'Have been informed ACCO (Atlantic Commission Company) representative, Jacksonville, Florida, claiming you have special permission from Department to sell Canadian seed for edible use, if no demand for seed. Please advise basis for claim. Account such disposition is contrary to the intent of U.S. Canadian agreement and to Canadian requirement regarding diversion or reconsignment.' January 11, 1949, respondent wired in reply: 'Have not made such statement. Only put seed (potatoes) Jacksonville for seed purposes' and, later, on the same day: 'I realize fully the agreement with Canada, its intent and want to and expect to cooperate with the program. I am only bringing in seed for seed purposes. Canadian dealers are now quoting seed same territory I am selling. Have had quotations as low as 365 hundredweight delivered Norfolk past week.' 2 'Less 10,000 Sax Canada No. 1 Seed Potatoes @ $3.65 f.o.b.' These 10,000 sacks were immediately resold by the Atlantic Commission Company to respondent. Of them, 8,730 were invoiced by respondent on the same day as 'Canada No. 1 Seed Potatoes' in seven lots to four separate dealers in Florida and Georgia, at prices between $3.75 and $4 per cwt. There was no evidence as to the disposition of the remaining 1,270 sacks. 3 'We have little difficulty in seeing in the evidence breach of contract on the part of defendant and damage resulting to the United States from the breach.' 204 F.2d at page 658. 4 See note 2, supra. 1 '46 Stat. 687, 19 U.S.C.A. § 1303.'

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348 U.S. 336 75 S.Ct. 382 99 L.Ed. 354 Elie J. BOUDOIN, Petitioner,v.LYKES BROTHERS STEAMSHIP CO., Inc. No. 406. Argued Feb. 11, 1955. Decided Feb. 28, 1955. Mr. Raymond H. Kierr, New Orleans, La., for petitioner. Mr. Andrew R. Martinez, New Orleans, La., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is a suit by an American seaman against the owner and operator of an ocean freighter, the Mason Lykes, on which he was formerly employed. He based his claim for recovery both on negligence and on breach of the warranty of seaworthiness. The case was tried by the court upon waiver of jury. The District Court found for the plaintiff, holding that the shipowner breached its warranty of seaworthiness and that its officers were negligent. 112 F.Supp. 177. The Court of Appeals reversed, 211 F.2d 618. We granted certiorari to resolve a seeming conflict between that opinion and Keen v. Overseas Tankship Corp., 194 F.2d 515, decided by the Court of Appeals for the Second Circuit. 348 U.S. 814, 75 S.Ct. 73. 2 Plaintiff was employed in the engine department as an oiler. The ship had a deck maintenance man, named Manuel Gonzales. Plaintiff's injury was inflicted by Gonzales who, during the course of a night's drinking party, went to plaintiff's room and took a bottle of brandy from under plaintiff's bed. Plaintiff awoke, startled; and Gonzales attacked him with the bottle, causing severe injuries. 3 The District Court placed liability for breach of the warranty of seaworthiness on the holding of the Keen case, where Judge Learned Hand wrote: 4 'The warranty of seaworthiness as to hull and gear has never meant that the ship shall withstand every violence of wind and weather; all it means is that she shall be reasonably fit for the voyage in question. Applied to a seaman, such a warranty is, not that the seaman is competent to meet all contingencies; but that he is equal in disposition and seamanship to the ordinary men in the calling.' 194 F.2d 518. 5 The District Court found that Gonzales was not 'equal in disposition and seamanship to the ordinary men in the calling'. (112 F.Supp. 180.) 6 The assault by Gonzales on plaintiff occurred in the early morning of November 25, 1949. This happened during the course of a drinking party on board in which much liquor was consumed, Gonzales drinking nearly a fifth. Gonzales was, indeed, drunk when he assaulted plaintiff. The evidence is disputed; but the District Court found that shortly after Gonzales struck plaintiff with the bottle, he returned with a large knife which he also intended to use on him. When plaintiff was taken to the ship's hospital, Gonzales created a disturbance outside—threatening the mate, trying to enter the sick-bay, and offering to give blood to plaintiff for a transfusion. Those events followed on the heels of the assault. 7 About six hours after the assault, Gonzales was ordered to the master's cabin, where he refused to make any statement about the assault. Later he was ordered to clean the ship's hospital. Instead of doing that, he left the ship against orders. Early in the afternoon Gonzales returned to the ship with bottles of liquor at which time the captain apprehended him, took the bottles away, and placed him in irons—a step which the captain testified he seldom used. 8 The next day, November 26, Gonzales left the vessel without leave and did not return until the morning of November 28, when he was logged for disobedience of orders and fined for being absent without leave. On return of the Mason Lykes to the United States, Gonzales was discharged by the captain, though, since that time, he has served on respondent's vessels. 9 On the basis of these facts, the District Court found that Gonzales was 'a person of dangerous propensities and proclivities' at the time of his assault on plaintiff; that Gonzales was 'a person of violent character, belligerent disposition, excessive drinking habits, disposed to fighting and making threats and assaults.' 10 We think the record does not warrant rejection of the District Court's findings and that the findings warrant recovery for breach of the warranty of seaworthiness. 11 The warranty of seaworthiness is a species of liability without fault. The Osceola, 189 U.S. 158, 23 S.Ct. 483, 47 L.Ed. 760; Seas Shipping Co. v. Sieracki, 328 U.S. 85, 90—94, 66 S.Ct. 872, 875—877, 90 L.Ed. 1099. Yet it does not mean that the shipowner is liable for injuries 'resulting from every sailor's brawl', as Judge Learned Hand put it in Jones v. Lykes Bros. Steamship Co., 2 Cir., 204 F.2d 815, 816. It does not mean that the owner is liable every time a seaman gets drunk and does damage to a member of the crew. It does not mean that the owner is liable for injuries from all the fisticuffs on shipboard. 12 'All men are to some degree irascible; every workman is apt to be angry when a fellow complains of his work to their common superior; and some will harbor their resentment and provoke a quarrel over it even after the lapse of several hours. Sailors lead a rough life and are more apt to use their fists than office employees; what will seem to sedentary and protected persons an insufficient provocation for a personal encounter, is not the measure of the 'disposition' of 'the ordinary men in the calling." Jones v. Lykes Bros. Steamship Co., supra, 204 F.2d 817. 13 The warranty of seaworthiness does not mean that the ship can weather all storms. It merely means that 'the vessel is reasonably fit to carry the cargo'. The Silvia, 171 U.S. 462, 464, 19 S.Ct. 7, 8, 43 L.Ed. 241; The Southwark, 191 U.S. 1, 9, 24 S.Ct. 1, 3, 48 L.Ed. 65. If it is not, the owner is liable, irrespective of any fault on his part. The Osceola, supra; Seas Shipping Co. v. Sieracki, supra. 14 We see no reason to draw a line between the ship and the gear on the one hand and the ship's personnel on the other.1 A seaman with a proclivity for assaulting people may, indeed, be a more deadly risk than a rope with a weak strand or a hull with a latent defect. The problem, as with many aspects of the law, is one of degree. Was the assault within the usual and customary standards of the calling? Or is it a case of a seaman with a wicked disposition, a propensity to evil conduct, a savage and vicious nature? If it is the former, it is one of the risks of the sea that every crew takes. If the seaman has a savage and vicious nature, then the ship becomes a perilous place. A vessel bursting at the seams might well be a safer place than one with a homicidal maniac as a crew member. 15 We do not intimate that Gonzales is a maniac nor that that extreme need be reached before liability for unseaworthiness arises. We do think that there was sufficient evidence to justify the District Court in holding that Gonzales had crossed the line, that he had such savage disposition as to endanger the others who worked on the ship. We think the District Court was justified in concluding that Gonzales was not equal in disposition to the ordinary men of that calling and that the crew with Gonzales as a member was not competent to meet the contingencies of the voyage. We conclude that there was evidence to support the cause of action for breach of the warranty of seaworthiness. Therefore we do not reach the question of negligence. 16 Reversed. 17 Mr. Justice REED concurs in the result on the ground of the negligence of the ship's officers. 1 Situations involving breach of warranty of seaworthiness by reason of the disposition of a crew member have been presented in several recent decisions. Recovery was allowed in Thompson v. Coastal Oil Co., D.C.N.J., 119 F.Supp. 838, reversed on other grounds, 3 Cir., 221 F.2d 559. The court followed the Keen case in holding that a crewman who tried to murder one of his fellows with a meat cleaver was not equal in disposition to those of his calling. In Stankiewicz v. United Fruit S.S. Corp., D.C.S.D.N.Y., 123 F.Supp. 714, the court directed a verdict for defendant on a cause of action for breach of warranty of seaworthiness, on the ground that there was no evidence that the assailant was not equal in disposition to men of his calling. As noted, the same result followed in the Jones case, supra, where the court held the test of unseaworthiness had not been met where a crewman assaulted one of his fellows following an earlier argument. And see Kelcey v. Tankers Co., 2 Cir., 217 F.2d 541.

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348 U.S. 310 75 S.Ct. 368 99 L.Ed. 337 WILBURN BOAT COMPANY, et al., Petitioners,v.FIREMAN'S FUND INSURANCE COMPANY. No. 7. Argued Oct. 14 and 15, 1954. Decided Feb. 28, 1955. Rehearing Denied April 11, 1955. See 349 U.S. 907, 75 S.Ct. 575. Messrs. Theodore G. Schirmeyer, Houston, Tex., Mark Martin, Dallas, Tex., for petitioners. Mr. Edward B. Hayes, Chicago, Ill., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 This case raises questions concerning the power of States to regulate the terms and conditions of marine insurance contracts. 2 Glenn, Frank and Henry Wilburn, merchants in Denison, Texas, bought a small houseboat to use for commercial carriage of passengers on nearby Lake Texoma, an artificial inland lake between Texas and Oklahoma. The respondent Firemen's Fund Insurance Company insured the boat against loss from fire and other perils. While moored on the lake the boat was destroyed by fire. Following respondent's refusal to pay for the loss, this suit was brought in a Texas state court by the Wilburns and by their wholly owned corporation, The Wilburn Boat Company to which the boat's legal title had been transferred. After removal of the case to the United States District Court because of diversity, respondent answered, admitting issuance of the policy, payment of premiums and destruction of the boat. Liability was denied, however, because of alleged breaches of printed policy terms or 'warranties,' providing that, without written consent of the company, the boat could not be sold, transferred, assigned, pledged, hired or chartered, and must be used solely for private pleasure purposes.1 The case was submitted on stipulated facts supplemented by oral testimony. Contending that the evidence showed the policy contract to have been made and delivered in Texas, petitioners urged that all questions concerning alleged policy breaches were controlled by Texas law. If Texas law does govern, the policy provision against pledging may be wholly invalid.2 Furthermore, no breach by the insured of the provisions of a fire insurance policy is a defense to any suit under Texas law unless the breach contributes to the loss.3 Without finding whether the policy had been made and delivered in Texas, the court refused to give that State's law any effect at all, holding that since a marine policy is a maritime contract, federal admiralty law—not state law—governed.4 The court went on to hold that there is an established admiralty rule which requires literal fulfillment of every policy warranty so that any breach bars recovery, even though a loss would have happened had the warranty been carried out to the letter. Finding that the Wilburns had breached policy provisions against transfer, pledge and use of the boat,5 the District Court entered judgment for the insurance company. Approving the District Court's actions in all respects, the Court of Appeals affirmed, saying that 'It is the settled doctrine that a marine contract of insurance is 'derived from', is 'governed by,' and is a 'part of' the general maritime law of the world.' 201 F.2d 833, 837. Importance of the questions involved prompted us to grant certiorari. 347 U.S. 950, 74 S.Ct. 674, 98 L.Ed. 1097.6 3 Since the insurance policy here sued on is a maritime contract the Admiralty Clause of the Constitution brings it within federal jurisdiction. New England Mutual Marine Insurance Co. v. Dunham, 11 Wall. 1, 20 L.Ed. 90. But it does not follow, as the courts below seemed to think, that every term in every maritime contract can only be controlled by some federally defined admiralty rule. In the field of maritime contracts7 as in that of maritime torts,8 the National Government has left much regulatory power in the States. As later discussed in more detail, this state regulatory power, exercised with federal consent or acquiescence, has always been particularly broad in relation to insurance companies and the contracts they make. 4 Congress has not taken over the regulation of marine insurance contracts and has not dealt with the effect of marine insurance warranties at all; hence there is no possible question here of conflict between state law and any federal statute. But this does not answer the questions presented, since in the absence of controlling Acts of Congress this Court has fashioned a large part of the existing rules that govern admiralty. And States can no more override such judicial rules validly fashioned than they can override Acts of Congress. See, e.g., Garrett v. Moore-McCormack Co., 317 U.S. 239, 63 S.Ct. 246, 87 L.Ed. 239. Consequently the crucial questions in this case narrow down to these: (1) Is there a judicially established federal admiralty rule governing these warranties? (2) If not, should we fashion one? 5 The only decision of the Court relied on by the Court of Appeals to support its holding that there is an established admiralty rule requiring strict fulfillment of marine insurance warranties was Imperial Fire Insurance Co. v. Coos County, 151 U.S. 452, 14 S.Ct. 379, 38 L.Ed. 231. There, because of a breach of warranty, an insurance company was relieved of liability for loss of a court-house by fire, and this Court said it was immaterial whether the breach contributed to the loss. But no question of marine insurance was remotely involved nor was there any reliance on a marine insurance rule. Writing its own 'general commercial law,' as was the custom in diversity cases prior to Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, this Court in the Coos County case simply followed a general doctrine commonly applied to warranties in all types of insurance.9 A mere cursory examination of the cases, state and federal, will disclose that through the years this common-law doctrine, when accepted, has been treated not as an admiralty rule but as a general warranty rule applicable to many types of contracts including marine and other insurance.10 There are very few federal cases on marine insurance in which the strict breach of warranty rule has even been considered. And only two circuits appear to have thought of the rule as a part of the general admiralty law.11 On the contrary, other circuit court decisions, including the ones relied on in those few cases holding the rule to be one of federal admiralty, seem to indicate state law was followed in applying the rule12 or that the question was decided as one of 'general commercial law,' a uniform practice during the era of Swift v. Tyson, 16 Pet. 1, 10 L.Ed. 865.13 This Court did say in one marine insurance case that warranties 'must be strictly and literally performed.' Hazard's Administrator v. New England Marine Ins. Co., 8 Pet. 557, 580, 8 L.Ed. 1043. But there is not the slightest indication that this statement referred to a federal admiralty rule and the Court in fact expressly followed and applied Massachusetts law to decide another question in that very case. Whatever the origin of the 'literal performance' rule may be,14 we think it plain that it has not been judicially established as part of the body of federal admiralty law in this country. Therefore, the scope and validity of the policy provisions here involved and the consequences of breaching them can only be determined by state law15 unless we are now prepared to fashion controlling federal rules. 6 The whole judicial and legislative history of insurance regulation in the United States warns us against the judicial creation of admiralty rules to govern marine policy terms and warranties. The control of all types of insurance companies and contracts has been primarily a state function since the States came into being. In 1869, this Court held in Paul v. Virginia, 8 Wall. 168, 19 L.Ed. 357, that States possessed regulatory power over the insurance business and strongly indicated that the National Government did not have that power. Three years later, it was first authoritatively decided in New England Mutual Marine Insurance Co. v. Dunham, supra, that federal courts could exercise 'jurisdiction' over marine insurance contracts. In 1894, years after the Dunham holding, this Court applied the doctrine of Paul v. Virginia and held that States could regulate marine insurance the same as any other insurance. Hooper v. People of State of California, 155 U.S. 648, 15 S.Ct. 207, 39 L.Ed. 297. Later, the power of States to regulate marine insurance was reaffirmed in Nutting v. Commonwealth of Massachusetts, 183 U.S. 553, 22 S.Ct. 238, 46 L.Ed. 324. This constitutional doctrine carrying implications of exclusive state power to regulate all types of insurance contracts remained until 1944 when this Court decided United States v. South eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440. Thus it is clear that at least until 1944 this Court has always treated marine insurance contracts, like all others, as subject to state control.16 The vast amount of insurance litigation in state courts throughout our history also bears witness that until recently state legislatures and state courts have treated marine insurance as controlled by state law to the same extent as all other insurance.17 This is aptly illustrated by a Massachusetts case decided in 1893 which expressly held a generally worded statute of that State relating to warranties to be applicable to marine insurance companies equally with other insurance companies. Durkee v. India Mutual Ins. Co., 159 Mass. 514, 34 N.E. 1133. 7 Not only courts, but Congress, insurance companies, and those insured have all acted on the assumption that States can regulate marine insurance. In the Merchant Marine Act of 1920, Congress recognized that marine insurance companies were operating under state laws.18 Then, following a three-year study of marine insurance, Congress in 1922 passed a law regulating all types of insurance in the District of Columbia.19 This enactment generally referred to as the District of Columbia Model Marine Insurance Act, had the backing of insurance companies generally and was hailed as a model which it was hoped States would copy. Because of a provision in the bill as offered relating to 'policy' forms and conditions,' the bill was first criticized by the national association of shipowners but was later approved after the criticized provision was removed.20 Hearings on the bill make it plain that shipowners and marine insurance companies recognized that marine insurance was then, and would continue to be, regulated by the States. This model bill which it was hoped would serve as a pattern for States to follow was prompted in part by widespread doubt created by Paul v. Virginia and Hooper v. People of State of California that the Federal Government could enter the field at all.21 Again in 1935 marine insurance was discussed in congressional hearings in connection with the Limitation of Liability Act. 49 Stat. 1479, 46 U.S.C. §§ 181—196, 46 U.S.C.A. §§ 181—196. There representatives of shipowners strongly opposed regulation of marine insurance by federal authority, arguing that it was better for the States to retain their regulatory function.22 Finally, in 1944 and 1945, Congress had before it for consideration bills specifically designed to authorize States to continue to regulate the business of insurance. At the very beginning of extensive hearings on these bills the Committee's attention was directed to that part of this Court's opinion in Hooper v. People of State of California deciding that States could regulate the marine insurance business the same as they could regulate other kinds of insurance businesses.23 Again and again the Committee was reminded of the Paul and Hooper cases which together showed that States had previously been regulating marine insurance as well as all other types. Passage of the bill followed United States v. Southeastern Underwriters Ass'n, supra, holding that, despite the constitutional doctrine embodied in the Paul v. Virginia line of cases, Congress had power under the Constitution to regulate interstate insurance transactions. In the Southeastern case, however, all the opinions had emphasized the historical fact that States had always been free to regulate insurance. The measure Congress passed shortly thereafter, known as the McCarran Act, was designed to assure that existing state power to regulate insurance would continue. Accordingly, the Act contains a broad declaration of congressional policy that the continued regulation of insurance by the States is in the public interest, and that silence on the part of Congress should not be construed to impose any barrier to continued regulation of insurance by the States.24 8 The hearings on the McCarran Act reveal the complexities and difficulties of an attempt to unify insurance law on a nationwide basis, even by Congress. Courts would find such a task far more difficult. Congress in passing laws is not limited to the narrow factual situation of a particular controversy as courts are in deciding lawsuits. And Congress could replace the presently functioning State regulations of marine insurance by one comprehensive Act. Courts, however, could only do it piece-meal, on a case-by-case basis. Such a creeping approach would result in leaving marine insurance largely unregulated for years to come.25 9 In this very case, should we attempt to fashion an admiralty rule governing policy provisions, we would at once be faced with the difficulty of determining what should be the consequences of breaches. We could adopt the old common-law doctrine of forfeiting all right of recovery in the absence of strict and literal performance of warranties, but that is a harsh rule.26 Most States, deeming the old rule a breeder of wrong and injustice, have abandoned it in whole or in part. But that has left open the question of what kind of new rule could be substituted that would be fair both to insurance companies and policy holders. Out of their abundant broad experience in regulating the insurance business, some state legislatures have adopted one kind of new rule and some another.27 Some States for example have denied companies the right to forfeit policies in the absence of an insured's bad faith or fraud. Other States have thought this kind of rule inadequate to stamp out forfeiture practices deemed evil. The result, as this Court has pointed out, has been state statutes like that of Texas which 'go to the root of the evil' and forbid forfeiture for an insured's breach of policy terms unless the breach actually contributes to bring about the loss insured against. Northwestern National Life Ins. Co. v. Riggs, 203 U.S. 243, 253—254, 27 S.Ct. 126, 128—129, 51 L.Ed. 168. Thus there are a number of other possible rules from which this Court could fashion one for admiralty. But such a choice involves varied policy considerations and is obviously one which Congress is peculiarly suited to make. And we decline to undertake the task. See Halcyon Lines v. Haenn Ship Corp., 342 U.S. 282, 285, 72 S.Ct. 277, 279, 96 L.Ed. 318. 10 Under our present system of diverse state regulations, which is as old as the Union, the insurance business has become one of the great enterprises of the Nation. Congress has been exceedingly cautious about disturbing this system, even as to marine insurance where congressional power is undoubted.28 We, like Congress, leave the regulation of marine insurance where it has been—with the States.29 11 The judgments of the Court of Appeals and the District Court are reversed and the cause is remanded to the District Court for a trial under appropriate state law. 12 It is so ordered. 13 Judgments reversed and cause remanded to District Court with directions. 14 Mr. Justice FRANKFURTER, concurring in the result. 15 This case concerns a marine insurance policy covering a small houseboat yacht, inappropriately named The Wanderer, plying the waters of Lake Texoma, an artificial inland lake between Texas and Oklahoma. The coverage of the policy was specifically restricted to The Wanderer's trip to and use on that lake 'solely for private pleasure purposes.'* After The Wanderer was destroyed by fire while lying idle on Lake Texoma, it was discovered that certain warranties of the insurance policy had been ignored by petitioner. Under a uniform rule of admiralty law governing breach of such warranties, petitioner probably would be unable to recover on the policy. Texas statute law, however, might excuse the breaches of warranty, although this is by no means clear. Our problem is whether this situation—involving a marine policy such as is the basis of litigation—calls for a uniform rule throughout the country applicable to breaches of warranty of all similar marine insurance contracts. 16 There is no doubt that as to some matters affecting maritime affairs the States are excluded from indulging in variant state policies. E.g., Chelentis v. Luckenbach S.S. Co., 247 U.S. 372, 38 S.Ct. 501, 62 L.Ed. 1171, The Lottawanna, 21 Wall. 558, 22 L.Ed. 654. Equally, there is no doubt that some matters are so predominantly restricted in the range of their significance that a uniform admiralty rule need not be recognized or fashioned. E.g., Madruga v. Superior Court, 346 U.S. 556, 74 S.Ct. 298, 98 L.Ed. 290; C. J. Hendry Co. v. Moore, 318 U.S. 133, 63 S.Ct. 499, 87 L.Ed. 663; The Hamilton, 207 U.S. 398, 28 S.Ct. 133, 52 L.Ed. 264. Therefore the question, and the only question now to be decided, is whether the demands of uniformity relevant to maritime law require that marine insurance on a houseboat yacht brought to Lake Texoma for private recreation should be subject to the same rules of law as marine insurance on a houseboat yacht 'confined,' after arrival, to the waters of Lake Tahoe or Lake Champlain. The provision of the policy whereby the insured warranted 'that the vessel will be confined to Lake Texoma' conveys the emphasis of the situation—the essentially localized incidence of the transaction despite the interstate route followed in reaching the circumscribed radius within which the yacht was to move. It is reasonable to conclude that the interests concerned with shipping in its national and international aspects are substantially unconcerned with the rules of law to be applied to such limited situations. I join in a result restricted within this compass. 17 Unfortunately, for reasons that I do not appreciate, the Court's opinion goes beyond the needs of the problem before it. Unless I wholly misconceive that opinion, its language would be invoked when cases so decisively different in degree as to be different in kind come before this Court. It seems directed with equal force to ocean-going vessels in international maritime trade, as well as coastal, intercoastal and river commerce. Is it to be assumed that were the Queen Mary, on a world pleasure cruise, to touch at New York City, New Orleans and Galveston, a Lloyds policy covering the voyage would be subjected to the varying insurance laws of New York, Louisiana and Texas? Such an assumption, I am confident, would not prevail were decision necessary. The business of marine insurance often may be so related to the success of many manifestations of commercial maritime endeavor as to demand application of a uniform rule of law designed to eliminate the vagaries of state law and to keep harmony with the marine insurance laws of other great maritime powers. See Queen Ins. Co. of America v. Globe & Rutgers Fire Ins. Co., 263 U.S. 487, 493, 44 S.Ct. 175, 176, 68 L.Ed. 402; Calmar Steamship Corp. v. Scott ,345 U.S. 427, 442—443, 73 S.Ct. 739, 747, 97 L.Ed. 1125. It cannot be that by this decision the Court means suddenly to jettison the whole past of the admiralty provision of Article III and to renounce requirements for nationwide maritime uniformity, except insofar as Congress has specifically enacted them, in the field of marine insurance. 18 It is appropriate to recall that the preponderant body of maritime law comes from this Court and not from Congress. Judicial enforcement of nationwide rules regarding marine insurance is, as my brother REED cogently shows, deeply rooted in history. What reason is there for abruptly turning over, pending action by Congress, to the crazy-quilt regulation of the different States what so long has been the business of the courts? 19 As is true of other maritime interests, however, the demand for uniformity is not inflexible and does not preclude the balancing of the competing claims of state, national and international interests. The process and some of the relevant considerations here are not unlike those involved when the question is whether a State, in the absence of congressional action, may regulate some matters even though aspects of interstate commerce are affected. In rejecting abdication of all responsibility by this Court for uniformities in marine insurance and its complete surrender to the States, one is not required to embrace another absolute, complete absorption by this Court of the field of marine insurance and entire exclusion of the States. It is not necessary to assert that uniformity, if it be required in any case, is required in all cases cognizable in admiralty—whether the craft was for business or pleasure, touched in five states, five nations or never left the confines of an inland lake. The deceptive lure of certainty and comprehensive symmetry should not be permitted to canceal the fact that admiralty's expansion beyond 'the ebb and flow of the tides' has been a response to demands more inclusive than those for mechanical uniformity. 20 Under the distribution of power between national authority and local law, admiralty has developed for more than a hundred years by rulings of the Court, but not by absolutes either of abstension or extension. While not able to join the dissenters, I can only hope that what are essentially dicta will not be found controlling when situations which have not called them forth, and to which they are not applicable, come before the Court for adjudication. 21 Mr. Justice REED, with whom Mr. Justice BURTON joins, dissenting. 22 The opinion of the Court states that 'the crucial questions in this case narrow down to these: (1) Is there a judicially established federal admiralty rule governing these warranties? (2) If not, should we fashion one?' By question (1) the Court means, as its opinion shows, a federal admiralty rule that a warranty of an insured is to be strictly enforced with the result that a breach of the warranty relieves the insurer of liability for loss although the breach was not shown to have contributed to the loss. 23 The Court concludes that the literal performance rule has not been established by statute or by judicial decision. It acknowledges that a maritime insurance policy is a maritime contract brought under federal jurisdiction by the Admiralty Clause of the Constitution. New England Mutual Marine Insurance Co. v. Dunham, 11 Wall. 1, 20 L.Ed. 90. And so it recognizes that the power 'to fashion controlling federal rules' rests in the Federal Government—in Congress and the federal courts. However, the Court determines that in the absence of congressional action it will leave the formulation of rules governing marine insurance policies to the States. It applies this conclusion to the effect of a breach of warranty in a maritime insurance policy. 24 I disagree with both conclusions. Our admiralty laws, like our common law, came from England. As a matter of American judicial policy, we tend to keep our marine insurance laws in harmony with those of England. Queen Ins. Co. of America v. Globe & Rutgers Fire Ins. Co., 263 U.S. 487, 493, 44 S.Ct. 175, 176, 68 L.Ed. 402; Calmar Steamship Corp. v. Scott, 345 U.S. 427, 442—443, 73 S.Ct. 739, 747, 97 L.Ed. 1125. Before our Revolution, the rule of strict compliance with maritime insurance warranties had been established as the law of England.1 That rule persists. While no case of this Court has been cited or found that says specifically that the rule of strict compliance is to be applied in admiralty and maritime cases, that presupposition has been consistently adopted as the basis of reasoning from our earliest days.2 Other courts have been more specific.3 No case holds to the contrary. 25 I am inclined to think that Congress or this Court might well consider modifying the strict rule insofar as the breached warranty does not contribute to the loss. But since the Court concludes that it will not undertake the task,4 it is unnecessary for me to go farther than to say that in the absence of federal amelioration I would follow the established rule of holding the insured to his warranty.5 26 This brings me to the crucial phase of the Court's decision which, so the Court says, 'leaves the regulation of maritime insurance where it has been—with the States.' This is the dominant issue here, and the Court's decision strikes deep into the principle of a uniform admiralty law and will have the result of unduly burdening maritime commerce. This is the issue presented by the petition for certiorari and argued in petitioner's brief on the merits. 27 One rule of laws stands unquestioned. That is that all courts, state and federal, which have jurisdiction to enforce maritime or admiralty substantive rights must do so according to federal admiralty law.6 See particularly the excellent discussion of Judge Magruder in Doucette v. Vincent, 1 Cir., 194 F.2d 834, 841 et seq. The issue of an insurer's liability upon an insured's broken warranty is clearly a matter of substantive law. 28 The Court relies upon Paul v. Virginia, 8 Wall. 168, 19 L.Ed. 357; Hooper v. People of State of California, 155 U.S. 648, 15 S.Ct. 207, 39 L.Ed. 297; and Nutting v. Commonwealth of Massachusetts, 183 U.S. 553, 22 S.Ct. 238, 46 L.Ed. 324, as holding that 'States could regulate marine insurance the same as any other insurance.' Those cases only approve provisions of state law that require agents and companies to take out licenses and conform to various conditions preliminary to doing business.7 The Court also relies on congressional action and inaction, but the fact that Congress has regulated the organization, taxing and licensing of fire, casualty and marine insurance companies in the District of Columbia, and has recognized the existence of marine companies under the Merchant Marine Act of 1922, has no relevancy to whether the provisions of state law should control the effect to be given to warranties in marine insurance policies. Nor does the McCarran Act indicate that States may legislate to change fundamentally maritime insurance law.8 It was so decided in Maryland Casualty Co. v. Cushing, 347 U.S. 409, 413, 74 S.Ct. 608, 610, 98 L.Ed. 306. The answer as to whether state or federal law governs marine insurance contracts lies in the nature of the federal admiralty jurisdiction. 29 The Constitution, Art. III, § 2 provides that 'The judicial Power shall extend * * * to all Cases of admiralty and maritime Jurisdiction * * *.' The First Congress enacted that the district courts 'shall also have exclusive original cognizance of all civil causes of admiralty and maritime jurisdiction * * * saving to suitors, in all cases, the right of a common law remedy, where the common law is competent to give it * * *.'9 In this manner national control was asserted over maritime litigation. It was needed because the Republic bordered a great length of the Atlantic littoral and the navigable waters furnished the best avenue of transportation. 30 Although congressional authority over maritime trade was not expressly granted by the Constitution, the grant of admiralty jurisdiction together with the Necessary and Proper Clause has been found adequate to enable Congress to declare the prevailing maritime law for navigable waters throughout the Nation.10 The Commerce Clause aids where interstate commerce is affected, but has not the scope of 'navigable waters.'11 Congressional power to rest exclusive jurisdiction in the federal courts where, as here, the constitutionally delegated judicial authority exists, is established. The Moses Taylor, 4 Wall. 411, 429, 18 L.Ed. 397. The remedy preserved by the savings clause of the Judiciary Act of 1789, 'is not a remedy in the common law courts * * * but a common-law remedy.' Id., 4 Wall. at page 431. The meaning of the quoted clause becomes plainer when read with the state statute which The Moses Taylor held unconstitutional. That statute, authorized a 'proceeding against the vessel,' a strictly in rem proceeding in admiralty, Id., 4 Wall. at pages 412, 413, different from the common-law action in personam. Consequently, when a California resident brought an in rem proceeding in a California court, he was pursuing an admiralty remedy, not a common-law remedy. This Court, therefore, held the case outside the saving clause of the minth section of the Judiciary Act of 1789.12 31 On the other hand, a state court was held to have jurisdiction to sell a vessel to enforce a lien in Knapp, Stout & Co. v. McCaffrey, 177 U.S. 638, 20 S.Ct. 824, 44 L.Ed. 921, where the suit was against the owner, in personam, although in equity for foreclosure of a possessory lien. '(T)he remedy chosen by the plaintiff was the detention of the raft for his towage charges.' Id., 177 U.S. at page 644, 20 S.Ct. at page 827. As this was a state-approved remedy in the common law, the use of state equity procedure to enforce the lien was held to be in accord with the reservation of a common-law remedy from the exclusive jurisdiction of admiralty.13 Thus, by saving a suitor's common-law remedy, Congress has created by § 9 of the Judiciary Act of 1789, now 28 U.S.C. (Supp. V, 1952) § 1333, 28 U.S.C.A. § 1333, only a limited exclusive jurisdiction. The state courts may furnish not only a common-law remedy existing at the time of the adoption of the Constitution, for substantive admiralty rights, but also new judicial remedies created by statute; that is, whatever remedy is not strictly in rem.14 32 State authority, however, although it may provide remedies, does not extend to changing the general substantive admiralty law. That is the maritime law existing as a body of law enforceable in admiralty. The extent of the states' power to grant rights arising from maritime incidents is not subject to definition. It may vary as the course or manner of navigation or commerce changes. It exists in some circumstances, see Just v. Chambers, 312 U.S. 383, 388, 61 S.Ct. 687, 691, 85 L.Ed. 903, and, as indicated both in the majority and minority opinions in the Jensen case, 244 U.S. 205, 37 S.Ct. 524, 61 L.Ed. 1086, must be determined in each situation.15 The principles which control the validity of an assertion of state power in the admiralty sphere are, however, clear. State power may be exercised where it is complementary to the general admiralty law. It may not be exercised where it would have the effect of harming any necessary or desirable uniformity.16 The cases decided by this Court make it plain that state legislation will not be permitted to burden maritime commerce with variable rules of law that destroy that uniformity.17 33 Since Congress has power to make federal jurisdiction and legislation exclusive, the situation in admiralty is somewhat analogous to that governing state action interfering with interstate commerce. In the absence of congressional direction, it is this Court that must bear the heavy responsibility of saying when a state statute has burdened the required federal uniformity.18 It is one thing to allow the States to add a remedy or create a new cause of action for certain incidents arising out of maritime activity. It is quite another thing to relinquish an entire body of substantive law making for a whole phase of maritime activity to the States. Such action does violence to the premise upon which the admiralty jurisdiction was constructed.19 34 It is not only in markings, lights, signals, and navigation that States are barred from legislation interfering with maritime operation. The need for a uniform rule is just as great when dealing with the effect to be given to marine insurance on boats which plough our navigable waters. A vessel moves from State to State along our coasts or rivers. State lines may run with the channel or across it. Under maritime custom an insurance policy usually covers the vessel wherever it may go. If uniformity is needed anywhere, it is needed in marine insurance. It is like the question of seaworthiness which must be controlled by one law. It presents the same problem as a state law controlling the operation of interstate boats. Kelly v. State of Washington, 302 U.S. 1, 15, 58 S.Ct. 87, 94, 82 L.Ed. 3. For a State to require policies to be issued under its authority or to require extra-state policies to be interpreted by its laws burdens maritime operations unduly. Shipmasters must know how to handle their vessels to preserve their insurance. Insurers must know the risks they are assuming when they fix their premiums. What law is to govern—that of the State where the insurance contract was issued, the State of the accident, or the State of the forum? It seems an unreasonable interference with maritime activity to allow the many States to declare the substantive law of marine insurance. 35 The Court refuses to declare the governing maritime law on warranties in this case because it could only be done 'piecemeal on a case-by-case basis.' It would prefer to await congressional enactment of a comprehensive code. But questions of contract interpretation and the effect to be given to contract provisions are questions which the Court is particularly equipped to handle. A broad legislative approach might be desirable; but in its absence we could establish a rule governing the effect to be given to breaches of warranties which would be binding on every court in the land. It is certainly not desirable to defer to the legislature of Texas or any other State which, though it can enact a comprehensive code, can make it binding only in its own State. To do so destroys the essential uniformity of the maritime law. 36 My understanding of the facts and legal issues and the rule to be deduced from the Court's decision forbid my joining the limited concurrence of MR. JUSTICE FRANKFURTER. The policy here is not restricted to the boat's use on Lake Texoma nor to its use in any one State. In addition to its use on the lake, the policy covered a 'cruise from Greenville, Mississippi, via Mississippi and Red Rivers to Denison, Texas' and then to the lake. The waters of five States were navigated before reaching the lake, which is itself an interstate body of water lying between Texas and Oklahoma. The considerations which lead me to favor a uniform rule are not changed simply because a relatively small boat was here involved, or the number of States through which it passed were few, or because its ultimate destination was a small lake. 37 This state rule of law covering the incidents of marine insurance affects not only Texas or Lake Texoma but the longest voyage within the cruising capacity of The Wanderer. As is shown by The Hamilton, 207 U.S. 398, 28 S.Ct. 133, 52 L.Ed. 264, such an exercise of state power permits the States to declare the applicable laws of marine insurance even on the high seas. The event of loss must always be local, but the coverage of the policy is general.20 When state power intrudes upon the uniformity imposed by federal law, its exercise is invalid when applied to maritime litigation whether the application occurs in litigation arising from an incident that happens on a small lake or a mighty river. 38 I would affirm. 1 'It is Also Agreed that this insurance shall be void in case this Policy or the interest insured thereby shall be sold, assigned, transferred or pledged, without previous consent in writing of the assurer.' 'Warranted by the assured that the within named vessel shall be used solely for private pleasure purposes during the currency of this policy and shall not be hired or chartered unless permission is granted by endorsement hereon.' 2 Vernon's Rev.Civ.Stat.1936, Art. 4890: 'Any provision in any policy of insurance issued by any company subject to the provisions of this law to the effect that if said property is encumbered by a lien of any character or shall after the issuance of such policy become encumbered by a lien of any character then such encumbrance shall render such policy void shall be of no force and effect. Any such provision within or placed upon any such policy shall be null and void.' V.A.T.S., Insurance Code, art. 5.37. 3 Vernon's Rev.Civ.Stat.1936, Art. 4930: 'No breach or violation by the insured of any warranty, condition or provision of any fire insurance policy contract of insurance, or application therefor, upon personal property, shall render void the policy or contract, or constitute a defense to a suit for loss thereon, unless such breach or violation contributed to bring about the destruction of the property.' V.A.T.S., Insurance Code, art. 6.14. 4 The District Court said: 'After much consideration of the above matter, I am of the opinion that the policy involved here is a maritime contract and therefore governed by the general admiralty law and not by the law of Texas, since the policy covered the vessel on navigable waters of the United States, without as well as within the State of Texas, and I find that the waters of Lake Texoma are navigable waters of the United States.' 5 There was evidence that prior to the loss the company had notice that the boat was constantly used for commercial purposes. Because of this petitioners urged that the company had waived the policy provision against such use and was also estopped to plead it. Questions involved in these contentions remain wholly open for consideration by the District Court in any new trial that may be had. 6 The Court of Appeals assumed that if any state law applied it was that of Texas. The question of the appropriate state law is not before us, however, and we express no opinion on that aspect of the case. Cf. Watson v. Employers Liability Assur. Corp., 348 U.S. 66, 75 S.Ct. 166. Likewise we are not concerned at this time with whether the District Court's holding that the Wilburns' transactions constituted breaches, and that the breaches had not been waived by the company, would be correct holdings under state law. 7 See, e.g., The Lottawanna, 21 Wall. 558, 22 L.Ed. 654; Madruga v. Superior Court, 346 U.S. 556, 74 S.Ct. 298, 98 L.Ed. 290. But cf. Union Fish Co. v. Erickson, 248 U.S. 308, 39 S.Ct. 112, 63 L.Ed. 261. 8 See, e.g., Just v. Chambers, 312 U.S. 383, 61 S.Ct. 687, 85 L.Ed. 903; The Hamilton, 207 U.S. 398, 28 S.Ct. 133, 52 L.Ed. 264. But cf. Pope & Talbot v. Hawn, 346 U.S. 406, 74 S.Ct. 202, 98 L.Ed. 143; Butler v. Boston & Savannah S.S. Co., 130 U.S. 527, 557 558, 9 S.Ct. 612, 619, 32 L.Ed. 1017. 9 See, e.g., Phoenix Mutual Life Ins. Co. v. Raddin, 120 U.S. 183, 189—190, 7 S.Ct. 500, 502, 30 L.Ed. 644. 10 See, e.g., cases collected in 87 A.L.R. 1074; L.R.A.1918B, 429; 34 L.R.A.,N.S., 563; 11 L.R.A.,N.S., 981; 29 Am.Jur., Insurance, § 529 et seq. 11 Aetna Ins. Co. v. Houston Oil & Transport Co., 5 Cir., 1931, 49 F.2d 121; Home Ins. Co. v. Ciconett, 6 Cir., 1950, 179 F.2d 892. 12 Gelb v. Automobile Ins. Co., 2 Cir., 168 F.2d 774; Levine v. Aetna Ins. Co., 2 Cir., 139 F.2d 217; Shamrock Towing Co. v. American Ins. Co., 2 Cir., 9 F.2d 57. See also United States Gypsum Co. v. Insurance Co. of North America, D.C., 19 F.Supp. 767. See Goulder, Evolution of the Admiralty Law in America, 5 Am. Lawyer 314. 13 E.g., Canton Ins. Office, Ltd. v. Independent Transp. Co., 9 Cir., 217 F. 213, L.R.A.1915C, 408; Whealton Packing Co. v. Aetna Ins. Co., 4 Cir., 185 F. 108, 34 L.R.A.,N.S., 563; Robinson v. Home Ins. Co., 5 Cir., 73 F.2d 3; Fidelity-Phenix Ins. Co. v. Chicago Title & Trust Co., 7 Cir., 12 F.2d 573. 14 See Vance, The History of the Development of the Warranty in Insurance Law, 20 Yale L.J. 523; Patterson, Warranties in Insurance Law, 34 Col.L.Rev. 595. 15 The Hamilton, 207 U.S. 398, 28 S.Ct. 133, 52 L.Ed. 264, and cases there cited. 16 For cases subsequent to 1944 holding that States could regulate insurance, see Robertson v. People of State of California, 328 U.S. 440, 66 S.Ct. 1160, 90 L.Ed. 1366; Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 66 S.Ct. 1142, 90 L.Ed. 1342. 17 See cases collected in 9 L.Ed. 1123; 22 L.Ed. 216; 42 L.Ed. 113; 9 A.L.R.1314; 13 A.L.R. 893; 43 A.L.R. 222; L.R.A.1917C, 730; L.R.A.1916F, 1171; 10 L.R.A.,N.S., 742; 36 Am.St.Rep. 854; 29 Am.Jur., Insurance, §§ 227—237, 758—785, 1032 1051, 1198—1224; note 10, supra. 18 41 Stat. 1000, 46 U.S.C. § 885(a)(2), 46 U.S.C.A. § 885(a)(2). 19 42 Stat. 401, 408, D.C.Code 1951, § 35—1101 et seq. 20 Hearings before Senate Committee on Commerce on S. 210, 67th Cong., 1st Sess. 111, 112, 113. 21 Id., at 20—30. See also S.Rep. No. 228, 67th Cong., 1st Sess.; H.R.Rep. No. 582, 67th Cong., 2d Sess. 22 Hearings before House Committee on Merchant Marine and Fisheries on H.R. 4550, 74th Cong., 1st Sess. 124 et seq. 23 Joint Hearing before the Subcommittees of the Committees on the Judiciary on S. 1362, H.R. 3269, H.R. 3270, 78th Cong., 1st Sess. 7. Attention was also called to New York Life Ins. Co. v. Cravens, 178 U.S. 389, 20 S.Ct. 962, 44 L.Ed. 1116, and other cases which held that States had power to bar policy provisions deemed contrary to the public interest and compel inclusion of provisions deemed to be in the public welfare. 24 59 Stat. 33, 15 U.S.C. § 1011, 15 U.S.C.A. § 1011. 25 For the multitudinous insurance regulations States have found necessary after long experience, see, e.g., McKinney's N.Y.Consol.Laws, c. 28, Insurance Law; La.Stat.Ann.Rev.Stat.1950, Title 22; Vernon's Rev.Civ.Stat.1936, Title 78, V.A.T.S., Insurance Code, art. 1.01 et seq. 26 For criticisms of the rule see note 14, supra. 27 4 Couch, Cyclopedia of Insurance Law, § 819 et seq.; 12 Appleman, Insurance Law and Practice, § 7251 et seq. For instances where state courts have relaxed the rule of their own accord see 4 Appleman, Insurance Law and Practice, § 2695; 12 id., § 7354. 28 Congress has made certain provisions in connection with war risk insurance. 64 Stat. 773, 46 U.S.C. §§ 1281—1294, 46 U.S.C.A. §§ 1281—1294. And to a very limited extent it has authorized governmental agencies to regulate policies and insurance companies which are insuring vessels in which the Government has some interest. 41 Stat. 992, 46 U.S.C. § 868, 46 U.S.C.A. § 868; 52 Stat. 969, 46 U.S.C. §§ 1271—1279, 46 U.S.C.A. §§ 1271—1279; 55 Stat. 243, 50 U.S.C.App. § 1273, 50 U.S.C.A.Appendix, § 1273. 29 It is faintly contended that the Federal Constitution forbids States to regulate marine insurance, even where Congress acquiesces or expressly consents. This contention is so lacking in merit that it need not be discussed. * The yacht had been purchased by the Wilburns while at Greenville, Mississippi. The policy had covered port risks at the Greenville yacht basin, the river voyage to Dennison, Texas, and the overland 'skid' around the dam onto the lake. The policy contemplated that The Wanderer would be 'locked through to Texoma Lake,' but there are no lacks permitting water passage onto the lake. 1 Bean v. Stupart, 1 Doug. 11; DeHahn v. Hartley, 1 T.R. 343 (each reported 99 Eng.Rep., full reprint, 9 and 1130, respectively); 2 Arnould Marine Insurance (14th ed.) c. 20. 2 Hodgson v. Marine Ins. Co. of Alexandria, 5 Cranch 100, 109, 3 L.Ed. 48: 'The insurance in this case being general, as well for the parties named as 'for all and every other person or persons to whom the vessel did or might appertain,' and containing no warranty of neutrality, belligerent as well as American property was covered by it.' Livingston v. Maryland Ins. Co., 6 Cranch 274, 278, 3 L.Ed. 222: 'The warranty, in this case, is in these words; 'warranted, by the assured, to be American property, proof of which to be required in the United States only.' 'The interest insured is admitted to be American property, in the strictest sense of the term; but it is contended, that Baruro, a Spanish subject, had an interest in the cargo, which falsifies the warranty. 'Whether Baruro could be considered as having an interest in the cargo, or not, is a question of some intricacy, which the court has not decided; and which, if determined in the one way or the other, would not affect the warranty; because, the assured are not understood to warrant that the whole cargo is neutral, but that the interest insured is neutral.' Hazard v. New England Mar. Ins. Co., 8 Pet. 557, 570, 8 L.Ed. 1043; Calmar Steamship Corp. v. Scott, 345 U.S. 427, 432—436, 73 S.Ct. 739, 742—744, 97 L.Ed. 1125. 3 Ogden v. Ash, 1 Dall. 162, (Reprint page 174), 1 L.Ed. 82 (Common Pleas of Philadelphia County); Martin v. Delaware Ins. Co., C.C.D.Pa., 16 Fed.Cas. p. 894, No. 9,161; Snyder v. Home Ins. Co., D.C.S.D.N.Y., 133 F. 848; Whealton Packing Co. v. Aetna Ins. Co., 4 Cir., 185 F. 108, 34 L.R.A., N.S., 563; Canton Ins. Office v. Independent Transp. Co., 9 Cir., 217 F. 213, L.R.A.1915C, 408; Shamrock Towing Co. v. American Ins. Co., 2 Cir., 9 F.2d 57, 60; Aetna Ins. Co. v. Houston Oil & Transp. Co., 5 Cir., 49 F.2d 121; Robinson v. Home Ins. Co., 5 Cir., 73 F.2d 3; Levine v. Aetna Ins. Co., 2 Cir., 139 F.2d 217; Home Ins. Co. v. Ciconett, 6 Cir., 179 F.2d 892; Red Top Brewing Co. v. Mazzotti, 2 Cir., 202 F.2d 481; United States Gypsum v. Insurance Co., D.C.S.D.N.Y., 19 F.Supp. 767. 4 Compare Halcyon Lines v. Haenn Ship Corp., 342 U.S. 282, 285, 72 S.Ct. 277, 279, 96 L.Ed. 318. 5 The facts in this case are that the boat was destroyed by fire of unknown origin while moored in Lake Texoma. 'The policy provides that the insurance shall be void in case the interest insured shall be sold, assigned, transferred, or pledged without the previous consent in writing of the assurers, and further that it is warranted by the assured that the vessel shall be used solely for private pleasure purposes and shall not be hired or chartered unless permission is granted by indorsement on the policy.' 201 F.2d at page 834. All these warranties were breached. The insurer might reasonably have required their inclusion before issuing the policy. 6 Watts v. Camors, 115 U.S. 353, 6 S.Ct. 91, 29 L.Ed. 406; Garrett v. Moore-McCormack Co., 317 U.S. 239, 243, 63 S.Ct. 246, 249, 87 L.Ed. 239; 'Even if Hawn were seeking to enforce a state-created remedy for this right, federal maritime law would be controlling. While states may sometimes supplement federal maritime policies, a state may not deprive a person of any substantial admiralty rights as defined in controlling acts of Congress or by interpretative decisions of this Court. These principles have been frequently declared and we adhere to them.' Pope & Talbot, Inc. v. Hawn, 346 U.S. 406, 409—410, 74 S.Ct. 202, 205, 98 L.Ed. 143; Madruga v. Superior Court, 346 U.S. 556, 561, 74 S.Ct. 298, 301, 98 L.Ed. 290; Maryland Casualty Co. v. Cushing, 347 U.S. 409, 413—419, and concurring opinion 423 et seq., 74 S.Ct. 608, 610—613, 615, 98 L.Ed. 306. Cf. The Armar (1954), 2 Lloyd's List Rep. 95, 101 (N.Y.Sup.Ct.). See 9 Benedict, Admiralty, 55, n. 77. 7 In Durkee v. India Mutual Ins. Co., 159 Mass. 514, 34 N.E. 1133, the issue of the power of a State to change the admiralty law was not touched upon. 8 59 Stat. 33, 15 U.S.C. §§ 1011, 1012, 15 U.S.C.A. §§ 1011, 1012. 9 Judiciary Act of 1789, § 9, 1 Stat. 77. There has been no intentional change in meaning by the revision of 1948, 28 U.S.C. (Supp. V, 1952) § 1333, 28 U.S.C.A. § 1333, which reads: '(1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled.' The Reviser's note states: 'The 'saving to suitors' clause in said section 41(3) and 371(3) (of title 28, U.S.C., 1940 ed.) was changed by substituting the words 'any other remedy to which he is otherwise entitled' for the words 'the right of a common-law remedy where the common law is competent to give it.' The substituted language is simpler and more expressive of the original intent of Congress and is in conformity with rule 2 of the Federal Rules of Civil Procedure abolishing the distinction between law and equity.' 10 The Propeller Genesee Chief v. Fitzhugh, 12 How. 443, at pages 459—460, 13 L.Ed. 1058; this includes power to change the admiralty procedure to trial by jury; In re Garnett, 141 U.S. 1, 12, 11 S.Ct. 840, 842, 35 L.Ed. 631; Southern Pacific Co. v. Jensen, 244 U.S. 205, 215, 37 S.Ct. 524, 528, 61 L.Ed. 1086; Panama R. Co. v. Johnson, 264 U.S. 375, 385, 44 S.Ct. 391, 393, 68 L.Ed. 748; Nogueira v. New York, N.H. & H.R. Co., 281 U.S. 128, 138, 50 S.Ct. 303, 306, 74 L.Ed. 754; Garrett v. Moore-McCormack Co., 317 U.S. 239, 244, 63 S.Ct. 246, 250, 87 L.Ed. 239; O'Donnell v. Great Lakes Dredge & Dock Co., 318 U.S. 36, 39, 63 S.Ct. 488, 490, 87 L.Ed. 596; Pennsylvania R. Co. v. O'Rourke, 344 U.S. 334, 337, 73 S.Ct. 302, 304, 97 L.Ed. 367. Compare The City of Norwalk, D.C., 55 F. 98, 105. 11 The Belfast, 7 Wall. 624, 640, 19 L.Ed. 266. Cf. O'Donnell v. Great Lakes Dredge & Dock Co., note 10, supra. 12 The same rule was applied in efforts to enforce state-created liens in state courts by proceedings in rem against the boat in The Robert W. Parsons, 191 U.S. 17, 37, 24 S.Ct. 8, 15, 48 L.Ed. 73, and in The Glibe, 167 U.S. 606, 616—618, 623—624, 17 S.Ct. 930, 933—934, 936, 42 L.Ed. 296. 13 Mr. Justice Brown wrote for the Court: 'The true distinction between such proceedings as are and such as are not invasions of the exclusive admiralty jurisdiction is this: If the cause of action be one cognizable in admiralty, and the suit be in rem against the thing itself, though a monition be also issued to the owner, the proceeding is essentially one in admiralty. If, upon the other hand, the cause of action be not one of which a court of admiralty has jurisdiction, or if the suit be in personam against an individual defendant, with an auxiliary attachment against a particular thing, or against the property of the defendant in general, it is essentially a proceeding according to the course of the common law, and within the saving clause of the statute * * * of a common-law remedy. The suit in this case being one in equity to enforce a common-law remedy, the state courts were correct in assuming jurisdiction.' 177 U.S. at page 648, 20 S.Ct. at page 829. See also Rounds v. Cloverport Foundry and Machine Co., 237 U.S. 303, 308, 35 S.Ct. 596, 598, 59 L.Ed. 966; C. J. Hendry Co. v. Moore, 318 U.S. 133, 137, 63 S.Ct. 499, 501, 87 L.Ed. 663; The Moses Taylor, 4 Wall. 411, 427, 18 L.Ed. 397. 14 Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 123 124, 44 S.Ct. 274, 276—277, 68 L.Ed. 582: 'The 'right of a common-law remedy,' so saved to suitors, does not, as has been held in cases which presently will be mentioned, include attempted changes by the states in the substantive admiralty law (i.e., 264 U.S. at page 124, 44 S.Ct. at page 277, where it was said of state statutes held unconstitutional, they were 'invalid, because their provisions were held to modify or displace essential features of the substantive maritime law'), but it does include all means other than proceedings in admiralty which may be employed to enforce the right or to redress the injury involved. It includes remedies in pais, as well as proceedings in court; judicial remedies conferred by statute, as well as those existing at the common law; remedies in equity, as well as those enforceable in a court of law. Knapp, Stout & Co. v. McCaffrey, 177 U.S. 638, 644 et seq., 20 S.Ct. 824 (827) 44 L.Ed. 921; Rounds v. Cloverport Foundry & Machine Co., 237 U.S. 303, 35 S.Ct. 596, 59 L.Ed. 966. A state may not provide a remedy in rem for any cause of action within the admiralty jurisdiction. The Hine v. Trevor, 4 Wall. 555, 18 L.Ed. 451; The Glide, 167 U.S. 606, 17 S.Ct. 930, 42 L.Ed. 296. But otherwise the state, having concurrent jurisdiction, is free to adopt such remedies, and to attach to them such incidents, as it sees fit. New York, therefore, had the power to confer upon its courts the authority to compel parties within its jurisdiction to specifically perform an agreement for arbitration, which is valid by the general maritime law, as well as by the law of the state, which is contained in a contract made in New York and which, by its terms, is to be performed there.' See American Steamboat Company v. Chase, 16 Wall. 522, 530 et seq., 21 L.Ed. 369; Panama R. Co. v. Vasquez, 271 U.S. 557, 560 561, 46 S.Ct. 596, 597, 70 L.Ed. 1085. 15 Cf. Cooley v. Board of Wardens, 12 How. 299, 316, 13 L.Ed. 996; Standard Dredging Corp. v. Murphy, 319 U.S. 306, 309, 63 S.Ct. 1067, 1068, 87 L.Ed. 1416; Caldarola v. Eckert, 332 U.S. 155, 158, 67 S.Ct. 1569, 1570, 91 L.Ed. 1968; see Pope & Talbot v. Hawn, 346 U.S. 406, 410, 418, 74 S.Ct. 202, 205, 209, 98 L.Ed. 143. 16 Levinson v. Deupree, 345 U.S. 648, 73 S.Ct. 914, 97 L.Ed. 1319. 17 Kelly v. State of Washington, 302 U.S. 1, 15, 58 S.Ct. 87, 94, 82 L.Ed. 3; Panama R. Co. v. Johnson, 264 U.S. 375, 386 387, 44 S.Ct. 391, 393—394, 68 L.Ed. 748; and cases cited; Western Fuel Co. v. Garcia, 257 U.S. 233, 242, 42 S.Ct. 89, 90, 66 L.Ed. 210; Chelentis v. Luckenbach S.S. Co., 247 U.S. 372, 381 et seq., 38 S.Ct. 501, 503, 62 L.Ed. 1171, and cases cited: The City of Norwalk, D.C., 55 F. 98, 106. See Madruga v. Superior Court, 346 U.S. 556, 561, 74 S.Ct. 298, 301, 98 L.Ed. 290. 1 Benedict, Admiralty (6th ed.), p. 53. Cf. Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 399, 33 S.Ct. 729, 739, 57 L.Ed. 1511. 18 Just v. Chambers, 312 U.S. 383, 388, 392, 61 S.Ct. 687, 691, 693, 85 L.Ed. 903; Kelly v. State of Washington, supra, 302 U.S. 14—15, 58 S.Ct. 94. Cf. Southern Pacific Co. v. State of Arizona, 325 U.S. 761, 769, 65 S.Ct. 1515, 1520, 89 L.Ed. 1915. See the statement from the international standpoint in The Lottawanna, 21 Wall. 558, 572, 22 L.Ed. 654. 19 The Uniformity of the Maritime Law, 24 Mich.L.Rev. 544, 556; Erie R. Co. v. Tompkins and the Uniform General Maritime Law, 64 Harv.L.Rev. 246, 269. 20 See The City of Norwalk, D.C., 55 F. 98, 106.

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348 U.S. 341 75 S.Ct. 386 349 U.S. 910 99 L.Ed. 376 99 L.Ed. 1245 SECURITIES AND EXCHANGE COMMISSION, Petitioner,v.DREXEL AND COMPANY. No. 153. Argued Feb. 9, 1955. Decided Feb. 28, 1955. As Amended April 18, 1955. Rehearing Denied April 18, 1955. See 349 U.S. 913, 75 S.Ct. 598. Mr. William H. Timbers, Washington, D.C., for petitioner. Mr. Arthur H. Dean, New York City, for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 The question in the case is whether the Securities and Exchange Commission has jurisdiction to pass on a fee to be paid by Electric Bond & Share Co. to Drexel & Co. in connection with a reorganization plan filed by its subsidiary, Electric Power & Light Corp., under § 11(e) of the Public Utility Holding Company Act of 1935, 49 Stat. 803, 15 U.S.C. § 79 et seq., 15 U.S.C.A. § 79 et seq. We hold that the Commission does have jurisdiction. 2 The problem arises out of the unraveling and reorganization of the vast empire of Bond & Share, pursuant to the command of the Act. The present case is one of several phases of the various reorganization plans adopted to bring the system into compliance.1 The instant phase of this system's reorganization grew out of the filing of a voluntary plan of reorganization under § 11(e) by Electric. 3 Electric owned operating subsidiaries in several States and in Mexico. The plan provided that (1) Electric would transfer to a new holding company, Middle South Utilities, Inc., its holdings in those operating subsidiaries, as well as certain other assets; (2) preferred stocks of Electric would be retired by distributing to those security holders shares of Middle South and shares of another subsidiary of Electric; (3) the remaining shares of Middle South and the other subsidiary would be distributed to the holders of the common stock and of the warrants of Electric; and (4) Bond & Share would pay Electric $2,200,000 in settlement of intrasystem claims. 4 The plan filed by Electric under § 11(e) required Bond & Share to do three things: first, sell or exchange its holdings of Electric stock; second, acquire in exchange the shares of Middle South and the other subsidiary; and third, pay the cash amount in settlement of the intrasystem claims. It was not sufficient for Bond & Share that Electric get approval for its plan under § 11(e). It was also necessary by the terms of the Act that Bond & Share also get the Commission's approval of the steps required of it. 5 Bond & Share's exchange of its securities for the new securities was a 'sale' under the Act, for 'sale' includes 'exchange.' § 2(a)(23). Bond & Share is a registered holding company. No 'sale' of securities can be made by a registered holding company without Commission approval. That is the command of § 12 of the Act.2 That approval is obtained, as § 12 shows,3 by a procedure which submits the fees in connection with the sale to the scrutiny and approval of the Commission. 6 Bond & Share's receipt of the new securities was an 'acquisition' within the meaning of the Act. § 2(a) (22). That 'acquisition' was made subject to the jurisdiction of the Commission by § 9(a).4 That approval could be had only by submitting the 'acquisition' to the Commission's scrutiny pursuant to § 10 of the Act, a scrutiny that includes supervision of the fees paid by the holding company in connection with the 'acquisition.'5 7 Bond & Share's cash payment in settlement of the intrasystem claim was incident to the 'sale' under § 12 and the 'acquisition' under § 10. And, as noted, all three transactions by Bond & Share were parts of the plan filed by Electric under § 11(e). 8 Bond & Share, therefore, filed an application pursuant to §§ 10, 11, and 12 of the Act, asking for the Commission's approval of the transactions which the plan required of it.6 9 The Commission consolidated the proceedings involving Electric's plan and Bond & Share's application and heard them together, and on March 7, 1949, entered one order in the consolidated proceedings, approving both. As respects Bond & Share the order said, 'It is further ordered that the application-declaration of Bond & Share referred to above be and it is hereby granted and permitted to become effective.' As respects the plan of Electric, the Commission in the same order gave its approval, subject to additional terms and conditions, the second of which reads: 10 'That jurisdiction be and hereby is specifically reserved to determine the reasonableness and appropriate allocation of all fees and expenses and other remuneration incurred or to be incurred in connection with the said Plan, as amended, and the transactions incident thereto, other than the fairness and reasonableness of the fees and expenses incident to the stockholders' actions enumerated in Part II of the Plan, as amended.' 11 It is said, however, that that reservation was 'the reservation of the fees in connection with Electric's plan under § 11, and cannot be made to supply the failure to fix or to reserve the matter of fees in the proceedings under §§ 10 and 12 in relation to which they were incurred.' 12 There are two answers to that argument. First, the reservation was made in the § 10 and § 12 proceedings for they were consolidated with the § 11 proceedings and one order entered in all three. Second, the order in the consolidated proceedings reserved jurisdiction over the fees and expenses incurred not only 'in connection with the said Plan' but also in connection with 'the transactions incident thereto.' The latter obviously included the matters under § 10 and § 12, for they were the chief collateral ones before the Commission at the time. The parties so understood it, for Bond & Share and Drexel filed petitions for approval of the Drexel fee, invoking the reserved jurisdiction of the Commission. The Commission held hearings and fixed a fee for Drexel7 which neither Drexel nor Bond & Share thought adequate.8 The Commission applied to the District Court for approval of this and other fee and expense orders. The District Court approved. The Court of Appeals affirmed, except for the order as to Drexel; and as to that it reversed 'for lack of jurisdiction in the Commission'. 210 F.2d 585, 592. 13 We see no such infirmity in the Commission's order. The Commission plainly has power under § 10 and under § 12 to fix the fees payable by Bond & Share. To be sure, the Commission did not fix any fee, when on March 7, 1949, it entered the consolidated order approving the applications under §§ 10, 11, and 12. That order merely reserved jurisdiction to determine the reasonableness of the fees. There is a suggestion that no reservation of jurisdiction over the fees is possible, at least so far as § 10 is concerned, since § 10 directs the Commission to approve the plan unless it finds the fees unreasonable. But the reservation by the Commission of jurisdiction over the fees is merely a means of assuring that they will not be unreasonable. Certainly, the Commission need not hold an entire plan in abeyance until it completes hearings on the fees to be paid in connection with one phase of it. We see no reason why the Commission, in the interest of orderly administration, cannot defer consideration of all the fees, until it has time to view the entire matter in perspective and evaluate the worth of each contribution. We would have to read the Act with an extremely hostile eye to deny the Commission that administrative leeway. 14 The error of the Court of Appeals was in overlooking the essential and critical role that §§ 10 and 12 play in the case and in relying on § 11(e) alone. 15 The contrast between §§ 11(e) and 11(f) is plain, so far as jurisdiction over fees is concerned. Section 11(f) contains an express provision concerning fees. The subsection, applicable to court proceedings where a receiver or trustee has been appointed, makes all fees 'to whomsoever paid' subject to the approval of the Commission. Cf. Leiman v. Guttman, 336 U.S. 1, 69 S.Ct. 371, 93 L.Ed. 453. Section 11(e) contains no such provision. It merely directs the Commission to approve the plan, if it finds the plan 'fair and equitable to the persons affected'. The amount of fees to be paid by Electric plainly would be relevant to the question whether the plan was fair and equitable. See In re Public Service Corp. of New Jersey, 3 Cir., 211 F.2d 231, 232. Payment of excessive fees was one of the historic abuses of the reorganization procedure, whereby utility companies were milked, an abuse the Public Utility Holding Company Act sought to correct. 79 Cong.Rec. 4607; S.Rep. No. 621, 74th Cong., 1st Sess. 33. Questions of fees payable by and to protective committees present special considerations irrelevant here and we put them aside. Cf. Leiman v. Guttman, supra. Different considerations come into play when fees payable by individual security holders to their own counsel are involved. It would seem, for example, that the amount which a stockholder, say, agreed to pay his lawyer for representing him in an § 11(e) proceeding would be no business of the Commission. The amount of that fee would seem to have no direct bearing on the fairness of the plan. 16 But the fees payable by the registered holding company in connection with the reorganization of its subsidiary or affiliate are, or may be, different. At least Congress thought so, for Congress was explicit in making the fees payable by them, in connection with the transactions covered by § 10 and by § 12, subject to Commission approval. Congress had before it the detailed record of holding company activities and knew that many of them had a proclivity for predatory practices. The fees were not only large; they were often loaded on affiliated companies9 and concealed in intrasystem accounts. Congress decided to put an end to the worst of these practices and control the critical ones. When it came to the intricacies of holding company finance, Congress expressed the desire to have the amount of the fees paid brought to light and to have the Commission decide who pays them and what amounts are reasonable. We cannot be faithful to that statutory design without granting the Commission the jurisdiction asserted here. 17 Reversed. 18 Mr. Justice FRANKFURTER, whom Mr. Justice BURTON joins, dissenting. 19 Fully aware of the complicated interrelations of holding-company systems, Congress did not enact a scheme for severance of all intercorporate relations among public utility interests. Instead, specific provisions were devised against specific abuses and the Securities and Exchange Commission was given specific authority to effectuate the defined functions of these different provisions. Enforcement of the Act entailed authorization by the Commission of reorganization to secure simplification of a holding-company system and regulation of transactions involving acquisitions and dispositions. Duly mindful of the abuses of excessive fees in the conduct of inter-company affairs, Congress effectively equipped the Commission with power to regulate fees in the various proceedings which required approval by the Commission. But Congress particularized. It did not vest this fee-fixing authority of the Commission in a comprehensive provision. It dealt with the problem distributively. It was explicit in relating the power to fix fees to the particular proceeding. 20 The matter before us relates to the fixing of fees in a proceeding under § 11 of Public Utility Holding Company Act. That was a proceeding for the reorganization of the Electric, a subsidiary of Bond and Share. That section gave the Commission full power to fix fees to be paid by Electric as a condition to approval for its plan for reorganization. To be sure, Electric's plan involved the parent, Bond and Share, and the confirmation of Electric's plan required approval by the Commission of 'acquisition' by Bond and Share of new securities. That approval under § 10 subjected the fees which Bond and Share could pay Drexel to the scrutiny and approval of the Commission. The consummation of Electric's plan likewise involved a 'sale' by Bond and Share under § 12. Again, that section made Bond and Share's payment of fees to Drexel subject to the Commission's approval. The Commission gave the required approval to the 'acquisition' and 'sale' under §§ 10 and 12, respectively, without passing on the fee payable by Bond and Share or reserving the question of the propriety of such fees. The reservation regarding fees in the proceedings of Electric was applicable to the fees in connection with Electric's plan under § 11, and cannot be made to supply the failure to fix or to reserve the matter of fees in the proceedings under §§ 10 and 12 in relation to which they were incurred. 21 The Public Utility Holding Company Act of 1935 is a reticulated statute, not a hodge-podge. To observe its explicit provisions is to respect the purpose of Congress and the care with which it was formulated. 22 I would affirm the Court of Appeals. 1 For various phases of the reorganization of this holding company system see: (1) Electric Bond & Share Co., 9 S.E.C. 978; id., 12 S.E.C. 392; id., 20 S.E.C. 615; id., 21 S.E.C. 143; id., 22 S.E.C. 866; (2) Electric Bond & Share Co., 11 S.E.C. 1146, aff'd sub. nom. American Power & Light Co. v. Securities and Exchange Commission, 1 Cir., 141 F.2d 606; Id., 329 U.S. 90, 67 S.Ct. 133, 91 L.Ed. 103; American Power & Light Co., 21 S.E.C. 191; (3) United Gas Corp., 16 S.E.C. 531, affirmed sub. nom. In re United Gas Corp., D.C., 58 F.Supp. 501; 3 Cir., 162 F.2d 409; and (4) Electric Bond & Share Co., 20 S.E.C. 786. 2 Section 12(d) provides: 'It shall be unlawful for any registered holding company, by use of the mails or any means or instrumentality of interstate commerce, or otherwise, to sell any security which it owns of any publicutility company, or any utility assets, in contravention of such rules and regulations or orders regarding the consideration to be received for such sale, maintenance of competitive conditions, fees and commissions, accounts, disclosure of interest, and similar matters as the Commission deems necessary or appropriate in the public interest or for the protection of investors or consumers or to prevent the circumvention of the provisions of this title or the rules, regulations, or orders thereunder.' 3 Supra, note 2. 4 Section 9(a) provides in relevant part: 'Unless the acquisition has been approved by the Commission under section 10, it shall be unlawful— '(1) for any registered holding company or any subsidiary company thereof, by use of the mails or any means or instrumentality of interstate commerce, or otherwise, to acquire, directly or indirectly, any securities or utility assets or any other interest in any business'. 5 Section 10(b) provides in relevant part: 'If the requirements of subsection (f) are satisfied, the Commission shall approve the acquisition unless the Commission finds that— '(2) in case of the acquisition of securities or utility assets, the consideration, including all fees, commissions, and other remuneration, to whomsoever paid, to be given, directly or indirectly, in connection with such acquisition is not reasonable or does not bear a fair relation to the sums invested in or the earning capacity of the utility assets to be acquired or the utility assets underlying the securities to be acquired; * * *.' 6 A petition for rehearing states that Electric is not a 'public utility company' within the meaning of the Act and therefore § 12(d) is inapplicable. We do not prejudice that position by this opinion, for whether or not Electric is a 'public utility company,' § 12 of the Act is concededly applicable. Section 12(c) provides: 'It shall be unlawful for any registered holding company or any subsidiary company thereof, by use of the mails or any means or instrumentality of interstate commerce, or otherwise, to declare or pay any dividend on any security of such company or to acquire, retire, or redeem any security of such company, in contravention of such rules and regulations or orders as the Commission deems necessary or appropriate to protect the financial integrity of companies in holding-company systems, to safeguard the working capital of public-utility companies, to prevent the payment of dividends out of capital or unearned surplus, or to prevent the circumvention of the provisions of this title or the rules, regulations, or orders thereunder.' Section 12(f) provides: 'It shall be unlawful for any registered holding company or subsidiary company thereof, by use of the mails or any means or instrumentality of interstate commerce, or otherwise, to negotiate, enter into, or take any step in the performance of any transaction not otherwise unlawful under this title, with any company in the same holding-company system or with any affiliate of a company in such holding-company system in contravention of such rules and regulations or orders regarding reports, accounts, costs, maintenance of competitive conditions, disclosure of interest, duration of contracts, and similar matters as the Commission deems necessary or appropriate in the public interest or for the protection of investors or consumers or to prevent the circumvention of the provisions of this title or the rules and regulations thereunder.' The broad powers granted the Commission under these provisions are plainly adequate to give it the control it reserved in this case over the fees incident to the exchange of the old securities. Mr. Justice HARLAN did not participate. 7 Bond & Share asked that it be reimbursed by Electric for this fee. The Commission denied reimbursement, saying that Bond & Share's services in the proceedings 'were not services merely designated to bring Electric into compliance with the Commission's order but were additionally, if not primarily, steps designed to simplify the Bond and Share system and Bond and Share itself at the apex of that system. '* * * Any plan for the compliance of the subholding companies must necessarily have been as a step toward the ultimate resolution of Bond and Share's overall Section 11 problems which were its primary concern.' Bond & Share took no step to contest that action. 8 Bond & Share asked $100,000 for Drexel. The Commission awarded $50,000. 9 When Bond & Share asked that Electric reimburse it for the fees paid Drexel (see note 6, supra), it was following a traditional holding company practice of using the affiliated companies as convenient pocketbooks of the system.

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348 U.S. 351 75 S.Ct. 419 99 L.Ed. 383 The UNITED STATES of America and the Secretary of Commerce as Successor of the Chairman of the United States Maritime Commission, Petitioners,v.CALIFORNIA EASTERN LINE, Inc. No. 263. Argued Feb. 10, 1955. Decided March 7, 1955. Mr. Oscar H. Davis, Washington, for petitioners. Mr. Harold B. Finn, New York City, for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 The Renegotiation Act of 1942 as amended sets up departmental and Tax Court procedures to save the United States from the burden of 'excessive profits' made by private contractors under war contracts with Government 'Departments.'1 The question in this case is whether an order entered by the Tax Court under that Act is reviewable by the United States Court of Appeals for the District of Columbia Circuit. 2 In 1941 the Maritime Commission, defined as a 'Department' in the Act, was charged with responsibility for aiding the British Government in the transport of war equipment and supplies for use in World War II. Respondent, California Eastern Line, Inc., among others, was asked by the Commission to carry supplies to the Red Sea area for the African campaign. After extensive negotiations respondent agreed with the Commission on detailed contractual terms for the carriage. And it was agreed that respondent would be paid by the Commission out of funds appropriated by Congress under the so-called Lend-Lease Act.2 It was also understood that a written contract embodying only the terms previously agreed on would be executed between the respondent and the British Ministry of Transport. The charter was executed after respondent's boat had already sailed with its war cargo. In accordance with its agreement, the Commission paid the respondent about $351,000 for the carriage. Later the Commission chairman, after conforming with required procedure, determined that respondent should repay $164,000 as 'excessive profits.' Respondent took the matter to the Tax Court under § 403(e)(1) of the Act which authorizes that court 'to finally determine the amount, if any, of excessive profits' and provides that 'such determination shall not be reviewed or redetermined by any court or agency.' But that court made no finding or determination at all about profits. It disposed of the whole case by finding as a fact and holding as a matter of law that the only contract was in the written charter with the British Ministry in which the Commission was not named as a party and that consequently the Commission had made no renegotiable contract within § 403(e)(1) of the Renegotiation Act. 17 T.C. 1325. 3 The United States sought review in the Court of Appeals for the District of Columbia Circuit under the broad grant of jurisdiction in 26 U.S.C. § 1141, 26 U.S.C.A. § 1141, which vests Courts of Appeals with 'exclusive jurisdiction to review the decisions of the Tax Court * * *.'3 The Court of Appeals held that § 1141 does authorize review of Tax Court renegotiation orders with the exception of determinations as to profits which § 403(e)(1) of the Renegotiation Act states shall not be reviewed by any court or agency. Viewing the issue decided by the Tax Court as coming within the nonreviewable category, the Court of Appeals dismissed. 93 U.S.App.D.C. 289, 211 F.2d 635. The Ninth Circuit has construed § 1141 differently, however, holding that it gives Courts of Appeals no power whatever to review Tax Court renegotiation orders. French v. War Contracts Price Adjustment Board, 182 F.2d 560. Never having passed on this jurisdictional question, we granted certiorari to decide it. 348 U.S. 810, 75 S.Ct. 59. 4 The language of § 1141 is broad enough to justify review of Tax Court renegotiation orders. And we cannot say that because the section was originally passed primarily to authorize review of decisions on revenue matters it should be held inapplicable to decisions on other justiciable matters entrusted to the Tax Court by Congress. As long ago as 1946 the Court of Appeals for the District of Columbia interpreted § 1141 as authorizing review of renegotiation orders.4 It has followed that interpretation in a number of later cases, including this one.5 All of these cases, however, have recognized that the scope of § 1141 review over renegotiation orders is narrowed by that part of the Renegotiation Act that makes nonreviewable Tax Court determinations of amounts of excess profits, if any. This reconciliation of § 1141 with the Renegotiation Act has a permissible basis, and accordingly we see no reason to upset the review practice that has grown up under it. Under this practice, the particular order here is reviewable under § 1141 unless it is a determination of 'the amount, if any, of excessive profits' within the meaning of § 403(e)(1) of the Act. The Court of Appeals, relying on Macauley v. Waterman S. S. Corp., 327 U.S. 540, 66 S.Ct. 712, 90 L.Ed. 839, held that it was. On this point we disagree. 5 In making determinations as to excess profits the Tax Court must decide at least two separate but interrelated questions: (1) whether a renegotiable contract is involved and (2) the amount if any of excessive profits. We held in the Waterman case that the Tax Court has primary, exclusive jurisdiction to decide whether a contract is renegotiable. That result was reached because the Act gives the Tax Court exclusive jurisdiction to determine the amount of profits and the existence of a renegotiable contract is essential to such a determination. In Waterman, however, we did not decide any question concerning the reviewability of Tax Court orders entered under the Renegotiation Act. 6 The language and history of the Renegotiation Act make it pretty clear that the Tax Court was selected to handle excess profits cases because of that Court's special familiarity with all kinds of business and accounting practices in regard to profits, losses, etc. Thus it is easy to understand why Congress in § 403(e)(1) spelled out with meticulous clarity that Tax Court determinations of the amount of excessive profits, if any, should be final and nonreviewable. We agree that a § 1141 Court of Appeals review should not upset such determinations. But we do not agree that the Tax Court's determination here is in that category. The question of the amount of profits was not even reached by the Tax Court. It simply held, relying largely on common law principles of contract law, that there was no government contract to renegotiate. The existence or nonexistence of profits was wholly irrelevant to the holding. Consequently this is not the kind of determination that § 403(e)(1) makes final and the Tax Court's decision in this case is therefore subject to the normal type of review authorized by § 1141. 7 Reversed. 8 Mr. Justice DOUGLAS dissents. 1 56 Stat. 245, as amended, 50 U.S.C.App. § 1191, 50 U.S.C.A.Appendix, § 1191. 2 55 Stat. 31, 22 U.S.C. §§ 411-413, 22 U.S.C.A. §§ 411-413. 3 § 1141 of the Internal Revenue Code of 1939. Similar provisions now appear in § 7482 of the Internal Revenue Code of 1954, 26 U.S.C.A. Section 1141 contains exceptions to its general grant of jurisdiction to Courts of Appeals, but they are not relevant here. 4 United States Electrical Motors, Inc., v. Jones, 80 U.S.App.D.C. 329, 153 F.2d 134. 5 Psaty & Fuhrman, Inc., v. Stimson, 87 U.S.App.D.C. 47, 182 F.2d 985; Lowell Wool By-Products Co. v. War Contracts Price Adjustment Board, 89 U.S.AppD.C. 281, 192 F.2d 405; Kun-Vise, Inc., v. War Contracts Price Adjustment Board, 90 U.S.App.D.C. 218, 195 F.2d 198.

89

348 U.S. 356 75 S.Ct. 423 99 L.Ed. 389 The NATIONAL CITY BANK OF NEW YORK, Petitioner,v.The REPUBLIC OF CHINA et al. No. 30. Argued Nov. 9, 1954. Decided March 7, 1955. Rehearing Denied April 18, 1955. See 349 U.S. 913, 75 S.Ct. 598. Mr. William Harvey Reeves, New York City, for petitioner. Mr. Louis J. Gusmano, Woodhaven, N.Y., for respondents. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 The Shanghai-Nanking Railway Administration, an official agency of respondent Republic of China, established a $200,000 deposit account in 1948 with the New York head office of petitioner National City Bank of New York. Subsequently, respondent sought to withdraw the funds, but petitioner refused to pay, and respondent brought suit in Federal District Court under 48 Stat. 184, as amended, 12 U.S.C. § 632, 12 U.S.C.A. § 632. 2 In addition to various defenses, petitioner interposed two counterclaims seeking an affirmative judgment for $1,634,432 on defaulted Treasury Notes of respondent owned by petitioner.1 After a plea of sovereign immunity, the District Court dismissed the counterclaims, 108 F.Supp. 766, and entered judgment on them pursuant to Rule 54(b), Federal Rules of Civil Procedure, 28 U.S.C.A. Petitioner appealed, and while the appeal was pending sought leave from the District Court to amend the counterclaims by denominating them setoffs and including additional data. The District Court denied leave. 14 F.R.D. 186. The Court of Appeals for the Second Circuit affirmed the dismissal and the denial on the ground that the counterclaims were not based on the subject matter of respondent's suit (whether they be treated as requests for affirmative relief or as setoffs) and, therefore, it would be an invasion of respondent's sovereign immunity for our courts to permit them to be pursued. 208 F.2d 627. Because of the importance of the question and its first appearance in this Court, we granted certiorari.2 347 U.S. 951, 74 S.Ct. 676, 98 L.Ed. 1097. 3 The status of the Republic of China in our courts is a matter for determination by the Executive and is outside the competence of this Court. Accordingly, we start with the fact that the Republic and its governmental agencies enjoy a foreign sovereign's immunities to the same extent as any other country duly recognized by the United States. See Guaranty Trust Co. of New York v. United States, 304 U.S. 126, 137—138, 58 S.Ct. 785, 791, 82 L.Ed. 1224. 4 The freedom of a foreign sovereign from being haled into court as a defendant has impressive title-deeds. Very early in our history this immunity was recognized, De Moitez v. The South Carolina, Fed.Cas.No.9,697, 1 Bee 422 (Admiralty Court of Pa., 1781, Francis Hopkinson, J.), and it has since become part of the fabric of our law. It has become such solely through adjudications of this Court. Unlike the special position accorded our States as party defendants by the Eleventh Amendment, the privileged position of a foreign state is not an explicit command of the Constitution. It rests on considerations of policy given legal sanction by this Court. To be sure, the nonsuability of the United States without its consent is likewise derived from considerations of policy. But these are of a different order from those that give a foreign nation such immunity. It is idle to repeat or rehearse the different considerations set forth in Mr. Chief Justice Marshall's classic opinion in the Schooner Exchange v. M'Faddon, 7 Cranch, 116, 3 L.Ed. 287. 5 But even the immunity enjoyed by the United States as territorial sovereign is a legal doctrine which has not been favored by the test of time. It has increasingly been found to be in conflict with the growing subjection of governmental action to the moral judgment. A reflection of this steady shift in attitude toward the American sovereign's immunity is found in such observations in unanimous opinions of this Court as 'Public opinion as to the peculiar rights and preferences due to the sovereign has changed', Davis v. Pringle, 268 U.S. 315, 318, 45 S.Ct. 549, 550, 69 L.Ed. 974; 'There is no doubt an intermittent tendency on the part of governments to be a little less grasping than they have been in the past * * *,' White v. Mechanics' Securities Corp., 269 U.S. 283, 301, 46 S.Ct. 116, 118, 70 L.Ed. 275; '* * * the present climate of opinion * * * has brought governmental immunity from suit into disfavor * * *,' Keifer & Keifer v. Reconstruction Finance Corp., 306 U.S. 381, 391, 59 S.Ct. 516, 519, 83 L.Ed. 784. This chilly feeling against sovereign immunity began to reflect itself in federal legislation in 1797.3 At that early day Congress decided that when the United States sues an individual, the individual can set off all debts properly due him from the sovereign. And because of the objections to ad hoc legislative allowance of private claims, Congress a hundred years ago created the Court of Claims,4 where the United States, like any other obligor, may affirmatively be held to its undertakings. This amenability to suit has become a commonplace in regard to the various agencies which carry out 'the enlarged scope of government in economic affairs', Keifer & Keifer v. Reconstruction Finance Corp., supra, 306 U.S. at page 390, 59 S.Ct. at page 519. The substantive sweep of amenability to judicial process has likewise grown apace.5 6 The outlook and feeling thus reflected are not merely relevant to our problem. They are important. The claims of dominant opinion rooted in sentiments of justice and public morality are among the most powerful shaping-forces in lawmaking by courts. Legislation and adjudication are interacting influences in the development of law. A steady legislative trend, presumably manifesting a strong social policy, properly makes demands on the judicial process. See James M. Landis, Statutes and the Sources of Law, in Harvard Legal Essays (1934), p. 213 et seq.; Harlan F. Stone, The Common Law in the United States, 50 Harv.L.Rev. 4, 13 16. 7 More immediately touching the evolution of legal doctrines regarding a foreign sovereign's immunity is the restrictive policy that our State Department has taken toward the claim of such immunity. As the responsible agency for the conduct of foreign affairs, the State Department is the normal means of suggesting to the courts that a sovereign be granted immunity from a particular suit. Ex parte Republic of Peru, 318 U.S. 578, 581, 63 S.Ct. 793, 795, 87 L.Ed. 1014. Its failure or refusal to suggest such immunity has been accorded significant weight by this Court. See Compania Espanola de Navegacion Maritima, S.A. v. The Navemar, 303 U.S. 68, 58 S.Ct. 432, 82 L.Ed. 667; Republic of Mexico v. Hoffman, 324 U.S. 30, 65 S.Ct. 530, 89 L.Ed. 729. And this for the reason that a major consideration for the rule enunciated in The Schooner Exchange is the embarrassing consequences which judicial rejection of a claim of sovereign immunity may have on diplomatic relations. Recently the State Department has pronounced broadly against recognizing sovereign immunity for the commercial operations of a foreign government, 26 Dept.State Bull. 984 (1952), despite the fact that this Court thirty years earlier rejected the weighty opinion of Judge Mack in The Pesaro, D.C., 277 F. 473 (see, also, his opinion in The Gloria, 286 F. 188), for differentiating between commercial and war vessels of governments. Berizzi Bros. Co. v. Steamship Pesaro, 271 U.S. 562, 46 S.Ct. 611, 70 L.Ed. 1088. 8 And so we come to the immediate situation before us. The short of the matter is that we are not dealing with an attempt to bring a recognized foreign government into one of our courts as a defendant and subject it to the rule of law to which nongovernmental obligors must bow. We have a foreign government invoking our law but resisting a claim against it which fairly would curtail its recovery.6 It wants our law, like any other litigant, but it wants our law free from the claims of justice. It becomes vital, therefore, to examine the extent to which the considerations which led this Court to bar a suit against a sovereign in The Schooner Exchange are applicable here to foreclose a court from determining, according to prevailing law, whether the Republic of China's claim against the National City Bank would be unjustly enforced by disregarding legitimate claims against the Republic of China. As expounded in The Schooner Exchange, the doctrine is one of implied consent by the territorial sovereign to exempt the foreign sovereign from its 'exclusive and absolute' jurisdiction, the implication deriving from standards of public morality, fair dealing, reciprocal self-interest, and respect for the 'power and dignity' of the foreign sovereign.7 9 (a) The Court of Claims is available to foreign nationals (or their governments) on a simple condition: that the foreign national's government can be sued in its courts on claims by our citizens.8 An American or a Chinese9 could sue in the Court of Claims for default on a United States bond, 28 U.S.C. § 1491(4), 28 U.S.C.A. § 1491(4), or could counterclaim—to the extent of the Government's claim—in a suit by the United States in any court, 28 U.S.C. § 2406, 28 U.S.C.A. § 2406; see United States v. Wilkins, 6 Wheat. 135, 5 L.Ed. 225; cf. United States v. Bank of the Metropolis, 15 Pet. 377, 10 L.Ed. 774; United States v. United States F. & G. Co., 309 U.S. 506, 511, 60 S.Ct. 653, 655, 84 L.Ed. 894. Thus it seems only fair to subject a foreign sovereign, coming into our courts by its own choice, to a liability substantially less than our own Government long ago willingly assumed. 10 (b) The Republic of China is apparently suable on contract claims in its onw courts,10 and Americans have the same rights as Chinese in those courts.11 No parochial bias is manifest in our courts which would make it an affront to the 'power and dignity' of the Republic of China for us to subject it to counterclaims in our courts when it entertains affirmative suits in its own. Decisions of the Chinese courts which seem to grant absolute immunity from direct suit to foreign sovereigns12 are inapposite in this context and in light of our State Department's reluctance to raise the defense of sovereign immunity in foreign courts, see 26 Dept.State Bull. 984, 985 (1952); cf. 41 Stat. 527, 46 U.S.C. § 747, 46 U.S.C.A. § 747. 11 (c) Respondent urges that fiscal management falls within the category of immune operations of a foreign government as defined by the State Department's 1952 pronouncement. This is not to be denied, but it is beside the point. A sovereign has freely come as a suitor into our courts; our State Department neither has been asked nor has it given the slightest intimation that in its judgment allowance of counterclaims in such a situation would embarrass friendly relations with the Republic of China. 12 (d) It is recognized that a counterclaim based on the subject matter of a sovereign's suit is allowed to cut into the doctrine of immunity.13 This is proof positive that the doctrine is not absolute, and that considerations of fair play must be taken into account in its application. But the limitation of 'based on the subject matter' is too indeterminate, indeed too capricious, to mark the bounds of the limitations on the doctrine of sovereign immunity. There is great diversity among courts on what is and what is not a claim 'based on the subject matter of the suit' or 'growing out of the same transaction.' See Clark, Code Pleading (2d ed.) 653—660; cf. United States v. National City Bank of New York, 2 Cir., 83 F.2d 236. No doubt the present counterclaims cannot fairly be deemed to be related to the Railway Agency's deposit of funds except insofar as the transactions between the Republic of China and the petitioner may be regarded as aspects of a continuous business relationship. The point is that the ultimate thrust of the consideration of fair dealing which allows a setoff or counterclaim based on the same subject matter reaches the present situation. The considerations found controlling in The SchoonerExchange are not here present, and no consent to immunity can properly be implied. This conclusion was anticipated by Mr. Justice Washington on circuit four years after he had been of the Court which decided The Schooner Exchange.14 13 The judgment of the Court of Appeals must be reversed and the case remanded to the District Court with directions to reinstate the counterclaims and for further proceedings not inconsistent with this opinion. Reversed. 14 Reversed and remanded with directions. 15 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 16 Mr. Justice REED, with whom Mr. Justice BURTON and Mr. Justice CLARK join, dissenting. 17 Some data must be premised if discussion is to be confined to a reasonable space. We start with the postulate that the sovereign is released from the jurisdiction of its own courts except as it may specifically submit itself to their power.1 18 That does not create a situation of irresponsibility. Satisfaction of sovereign liability may be had through the legislative organ which recognizes a moral obligation to pay the creditors of the government and to compensate those injured by it. 19 A sovereign's freedom from judicial control does not arise from or depend upon the will of the courts. As was said in The Schooner Exchange in speaking of the immunity of a foreign government, it depends upon 'the will of the sovereign of the territory.' '* * * all exemptions from territorial jurisdiction, must be derived from the consent of the sovereign. * * *' 7 Cranch 116, 138, 143, 3 L.Ed. 287. The immunity rests on the ground that no enforceable right exists 'against the authority that makes the law on which the right depends.'2 20 The reason for the sovereign's consent to the exclusion of foreign sovereignties from the general jurisdiction of its courts was said by Chief Justice Marshall to rest on this proposition: 21 'The world being composed of distinct sovereignties, possessing equal rights and equal independence, whose mutual benefit is promoted by intercourse with each other, and by an interchange of those good offices which humanity dictates and its wants require, all sovereigns have consented to a relaxation in practice, in cases under certain peculiar circumstances, of that absolute and complete jurisdiction within their respective territories which sovereignty confers. 22 'This consent may, in some instances, be tested by common usage, and by common opinion, growing out of that usage.' 7 Cranch at page 136. 23 It might be summarized by the word 'comity.'3 The local sovereign may, of course, withdraw such consent. 24 'Without doubt, the sovereign of the place is capable of destroying this implication. He may claim and exercise jurisdiction either by employing force, or by subjecting such vessels to the ordinary tribunals. But until such power be exerted in a manner not to be misunderstood, the sovereign cannot be considered as having imparted to the ordinary tribunals a jurisdiction, which it would be a breach of faith to exercise.' Id., at page 146.4 25 An ancillary principle of law is that, in determining whether a defendant is a sovereign, the courts follow the guidance of the political branch.5 In this case the sovereignty of the Republic of China is not questioned. Furthermore, the Chinese Government Treasury Note and its 36th Year Short Term Treasury Notes upon which the City Bank's counterclaims rest are sovereign obligations, jure imperii in form, of the highest public character. Consequently, the attitude of the Department of State as to the desirability of relaxing the strict rule of immunity as to acts of commerce, jure gestionis, is inapplicable. See 26 Dept.State Bull. 984 (1952), referred to in the Court's opinion, 75 S.Ct. 427. 26 If the foregoing statements of law are sound, the Republic of China as a foreign sovereign is free from direct suits in our courts on the notes here in question unless the Congress of the United States has enacted a statute that restricts its immunity. This it has not done. The question in this case thus comes down to whether the Republic of China, by bringing this suit for the recovery of a bank deposit, waived its immunity and subjected itself to a counterclaim under the Fed.Rules Civ.Proc. Rule 13. Under the words of subd. (c) of that Rule, judgment over against the Republic of China would seem to be authorized if the counterclaim were for more than plaintiff's claim. But there would be no jurisdiction to render such judgment in an American court. It would violate the immunity of a foreign sovereign to do so.6 In the present case, the Court evidently feels that, since the counterclaim is limited to the amount of the Republic of China's claim, there is jurisdiction to allow a setoff to that extent. But the mere fact that a judgment over is not sought should not be relied upon to avoid the jurisdictional immunity of a foreign sovereign. I find no justification for the Court's restricting that immunity in the absence of legislative or executive action.7 27 Affirmative legislative action was necessary to allow such a limited setoff against the United States.8 Action of a similar nature should be required to authorize this setoff. The comity that gave the foreign sovereign full immunity from process was, as The Schooner Exchange pointed out, 7 Cranch at page 146, only to be withdrawn 'in a manner not to be misunderstood.' That is by legislation.9 The judicial creation of such jurisdiction over the property of a friendly nation might well merit the stricture of Chief Justice Marshall: 28 'A nation would justly be considered as violating its faith, although that faith might not be expressly plighted, which should suddenly and without previous notice, exercise its territorial powers in a manner not consonant to the usages and received obligations of the citilized world.' 7 Cranch at page 137. 29 International relations are pre-eminently a matter of public policy. Judicial views of supposed public interests are not the touchstone whereby to determine the law.10 The change from a generous to a parsimonious application of the principle of sovereign immunity should come from Congress or the Executive. Our courts possess great powers and have solemn obligations. Our country allots power to the judiciary in the confidence that, in view of the separation of powers, judicial authority will not undertake determinations which are the primary concern of other branches of our Government. Differences of view exist as to the desirable scope of sovereign immunity and the necessity for nonjudicial determinations.11 But surely it is better that the decisions be left to those organs of Government that have the responsibility for determining public policy in carrying out foreign affairs. The establishment of political or economic policies is not for the courts. Such action would be an abuse of judicial power. It is only by a conscious and determined purpose to keep the functions of the various branches of government separate that the courts can most effectively carry out their duties. I would leave this question of the jurisdictional immunity of foreign sovereigns to the other branches. 30 The Court determines, however, that the question of changing the limitation of the immunity of foreign sovereigns pertains to its functions. Even on the assumption that such is a proper matter for judicial concern, I would reach a different conclusion than does the Court. If a direct suit cannot be brought against a foreign sovereign (as is conceded), why should we allow the same claim to be used as an offset to destroy the sovereign's right to recover? Why should the City Bank be able to assert its notes against the Republic of China, even defensively, when other noteholders not obligated to the sovereign are prevented from collecting their notes? Here we have an entirely disconnected claim on overdue national notes brought forward as a defense to an action to recover a bank deposit. The Court recognizes that the counterclaim is not related to China's cause of action against the City Bank. It says: 31 'The point is that the ultimate thrust of the consideration of fair dealing which allows a setoff or counterclaim based on the same subject matter reaches the present situation.' 32 The counterclaim here is of much the same character as a suit against a foreign sovereign. Deposits may be the lifeblood necessary for national existence. It is not wise for us to tell the nations of the world that any assets they may have in the United States, now or in the future, upon which suit must be brought, are subject to every counterclaim their debtors can acquire against them at par or at a discount. It is unfair to our foreign friends and detrimental to our own financial and mercantile interests. For fairness we need not go beyond the allowance of counterclaims arising out of transactions foreign sovereigns seek to enforce in our courts. It seems to me that the Court sanctions a circuitous evasion of the well-established rule prohibiting direct suits against foreign sovereigns. 33 I would affirm. 1 The Treasury Note on which the first counterclaim is based was pledged by the Republic of China in 1920 to secure a loan to the Pacific Development Company by a banking syndicate in which petitioner participated. The loan was not repaid, and during the liquidation of the Development Company the syndicate bought the collateral at a public sale. The Treasury Notes on which the second counterclaim is based were purchased by petitioner's Shanghai branch at the time of issue in 1947—1948. The record allows us to assume that the petitioner gave full value as its share of the loan to the Development Company and bought the notes in the second counterclaim at par. 2 At the outset respondent argues that since petitioner on certiorari has dropped its demand for affirmative relief, the case is not properly before us. It is conceded that dismissal of independent counterclaims would ordinarily contain the requisite finality on which to base our jurisdiction, but respondent contends that when petitioner reduced its counterclaims to mere demands for setoff, the claims became defenses and, as such, nonreviewable until the respondent's suit had been concluded below. We reject this view. A counterclaim does not dwindle to a defense solely because it is confined—as a result of the accepted jurisprudence of sovereign immunity, see United States v. Shaw, 309 U.S. 495, 60 S.Ct. 659, 84 L.Ed. 888—to reducing the sovereign's recovery. The District Court's judgment, as affirmed by the Court of Appeals, terminated a separable and distinct segment of the litigation. 3 Act of Mar. 3, 1797, §§ 3, 4, 1 Stat. 514, 515. The present version appears in 28 U.S.C. § 2406, 28 U.S.C.A. § 2406. 4 Act of Feb. 24, 1855, 10 Stat. 612, as amended, 12 Stat. 765, 14 Stat. 9; see United States v. Jones, 119 U.S. 477, 7 S.Ct. 283, 30 L.Ed. 440. 5 The most recent development is the subjection of the Government to tort liability. Act of Aug. 2, 1946, now 28 U.S.C. § 1346(b), 28 U.S.C.A. § 1346(b). 6 Those cases that have dealt with the problem include: Republic of China v. American Express Co., 2 Cir., 195 F.2d 230; United States v. National City Bank of New York, 2 Cir., 83 F.2d 236; In re Patterson-MacDonald Shipbuilding Co., 9 Cir., 293 F. 192; Kingdon of Roumania v. Guaranty Trust Co., 2 Cir., 250 F. 341; Hungarian People's Republic v. Cecil Associates, Inc., D.C.S.D.N.Y., 118 F.Supp. 954; Republic of China v. Pang-Tsu Mow, D.C.D.C., 105 F.Supp. 411; United States v. National City Bank of New York, D.C.S.D.N.Y., 90 F.Supp. 448; United States v. New York Trust Co., D.C.S.D.N.Y., 75 F.Supp. 583; Kingdom of Norway v. Federal Sugar Refining Co., D.C.S.D.N.Y., 286 F. 188, Mack, J.; French Republic v. Inland Nav. Co., D.C.E.D.Mo., 263 F. 410; Union of Soviet Republics v. Belaiew, 42 T.L.R. 21 (K.B.Div.); South African Republic v. La Compagnie Franco-Belge, (1898) 1 Ch. 190; cf. Guaranty Trust Co. of New York v. United States, 304 U.S. 126, 58 S.Ct. 785, 82 L.Ed. 1224; Dexter & Carpenter, Inc. v. Kunglig Jarnvagsstyrelsen, 2 Cir., 43 F.2d 705; Strousberg v. Republic of Costa Rica, 44 L.T.R.(N.S.) 199 (C.A.); Claim of the Russian Volunteer Fleet against the British Admiralty, Annual Digest of Public International Law Cases 1925—1926, p. 210 (British Admiralty Transport Arbitration Board; affirmed by Court of Appeal). Of the cited American decisions, only two district court cases directly involved the dismissal of counterclaims not based on the subject matter of the sovereign's suit and not seeking affirmative judgment: Republic of China v. Pang-Tsu Mow, supra, and United States v. New York Trust Co., supra. 7 7 Cranch at pages 136—137, 143—144, 3 L.Ed. 287. For a comprehensive critique of the doctrine as it has subsequently been applied, see Lauterpacht, The Problem of Jurisdictional Immunities of Foreign States, 28 Brit.Y.Int'l L. 220. The Privy Council recently rejected the view of Lord Justice Scrutton in The Jupiter, (1924) P. 236 (C.A), that the mere assertion of a claim by a foreign government to property the subject of an action by a private party compels the court to stay the action and decline jurisdiction. Juan Ysmael & Co. v. Republic of Indonesia, (1954) 3 W.L.R. 531. Earl Jowitt reviewed the decisions and indicated some of the subtleties into which the doctrine has led the English courts. Cf. Republic of Mexico v. Hoffman, 324 U.S. 30, 38—42, 65 S.Ct. 530, 534—536, 89 L.Ed. 729 (concurring opinion). 8 28 U.S.C. § 2502, 28 U.S.C.A. § 2502. The earliest version of this statute appears in 15 Stat. 243, Act of July 27, 1868; see United States v. O'Keefe, 11 Wall. 178, 20 L.Ed. 131; cf. 43 Stat. 1113, 46 U.S.C. § 785, 46 U.S.C.A. § 785; Westfal-Larsen & Co. v. United States, D.C.N.D.Cal., 41 F.2d 550. That an American citizen can sue the Chinese Government in Chinese courts, see Judicial Yuan, Interpretation No. 6 (Feb. 16, 1929). 9 See Treaty of Nov. 4, 1946, Art. VI, § 4, 63 Stat. 1305. 10 Judicial Yuan Interpretation No. 373 (Dec. 15, 1930); Supreme Court Uniform Interpretation No. 1933 (Peking, June 22, 1925), 3 China L.Rev., No. 2, p. 84; cf. Judicial Yuan Interpretation No. 6 (Feb. 16, 1929); Constitution of the Republic of China, Art. 24 (1947). 11 Treaty of Nov. 4, 1946, Art. VI, § 4, 63 Stat. 1305. 12 See Rizaeff Fre res v. The Soviet Mercantile Fleet, 3 China L.Rev., No. 6, p. 14 (Provisional Court of Shanghai 1927). 13 E.g., Hungarian People's Republic v. Cecil Associates, Inc., D.C.S.D.N.Y., 118 F.Supp. 954; French Republic v. Inland Nav. Co., D.C.E.D.Mo., 263 F. 410; cf. Republic of China v. American Express Co., 2 Cir., 195 F.2d 230. 14 The case is King of Spain v. Oliver, C.C.D.Pa., 14 Fed.Cas. page 572, No. 7,813, 1 Pet.C.C. 276. The King of Spain had sued two Americans for duties he alleged they owed him on shipments of goods they had made to the Spanish American colonies under royal licenses. The defendants replied that they had obtained the licenses from and paid the duties to Hope & Co., a Dutch concern which had a commercial concession from the King in return for which it had promised, inter alia, to pay duties on shipments to the colonies. Hope had also negotiated a loan for the King in what appears to have been an unrelated transaction, and the King had pledged all his public revenues to repay the loan. Instead of handing over the duties received from defendants to the King, Hope applied them to reduce the debt due from the King on the loan. Mr. Justice Washington directed a verdict for the defendants. First he held that there was no privity of contract between the defendants and the King, so that payment to Hope discharged them. But assuming that there was privity he ruled that the duties had been properly applied by Hope to reduce the King's debt to it. 'Let it be, as was argued, that the consent of the Spanish government, under the administration of Joseph (Bonaparte, who had, while in power, agreed that the duties be applied to reduce the debt), was invalid and of no obligation upon Ferdinand; still, Ferdinand, as the successor of his father (Charles IV, to whom the loan had been made), and the nation, were and are bound to pay the debt due in Holland; and if it has been in part discharged, out of funds charged with the payment of it (because they were public revenues), in the hands of Hope and Co., the payments of the duties, have in effect been made to the plaintiff, because he owes, of the debt due in Holland, less than what was originally due, by the amount of duties which were applied to its discharge by Hope and Co. After such an application, which I repeat it, Hope and Co. were authorised to make, under all the circumstances of the case, this action cannot be supported, to recover the amount of the duties so appropriated.' 14 Fed.Cas. at page 577, 1 Pet.C.C. at pages 289—290. 1 United States v. Clarke, 8 Pet. 436, 444, 8 L.Ed. 1001; State of Kansas v. United States, 204 U.S. 331, 341, 27 S.Ct. 388, 390, 51 L.Ed. 510; Larson v. Domestic & Foreign Com. Corp., 337 U.S. 682, 703, 69 S.Ct. 1457, 1468, 93 L.Ed. 1628. 2 Kawananakoa v. Polyblank, 205 U.S. 349, 353, 27 S.Ct. 526, 527, 51 L.Ed. 834; United States v. Shaw, 309 U.S. 495, 501, 60 S.Ct. 659, 661, 84 L.Ed. 888. Cf. Duff Development Co. v. Government of Kelantan, (1924) A.C. 797. 3 Compania Naviera Vascongado v. S. S. Cristina, (1938) A.C. 485, 498. 4 See Berizzi Bros. Co. v. Steamship Pesaro, 271 U.S. 562, 571 et seq., 46 S.Ct. 611, 70 L.Ed. 1088. 5 Ex parte Republic of Peru, 318 U.S. 578, 588, 63 S.Ct. 793, 799, 87 L.Ed. 1014; Republic of Mexico v. Hoffman, 324 U.S. 30, 35, 65 S.Ct. 530, 532, 89 L.Ed. 729. Cf. Duff Development Co. v. Government of Kelantan, supra, at page 815. 6 Cf. United States v. Shaw, 309 U.S. 495, 502, 60 S.Ct. 659, 662, 84 L.Ed. 888. In South African Republic v. La Compagnie Franco-Belge, (1898) 1 Ch. 190, 198, a foreign sovereign sued to enjoin the use of deposited funds. On a counterclaim not connected with the issue concerning the funds, Mr. Justice North held the foreign government could not be sued, citing Duke of Brunswick v. King of Hanover, 6 Beav. 68, and Strousberg v. Republic of Costa Rica, 29 Weekly Reporter 125, 44 L.T.R.(N.S.) 199. 7 Probably because it is obvious that there is no tenable distinction between the setoff of an unrelated claim, a proceeding for a judgment over on a counterclaim, and a direct suit against a foreign sovereign, few cases have dealt with this phase of the immunity of a foreign sovereign from claims. None that have discussed the issue have reached the result which the Court takes today. In addition to the two cases cited in note 6 of the majority opinion, the same issue here presented was considered and decided in accord with my position in the only foreign case discussing the issue that has come to my attention. In The State of Belgium v. E.A.G. de Badts, Nederlandsche Jurisprudentie, 1923, p. 618, Am.Dig. of Pub. Int'l Law Cases 1919—1922, p. 129, the Belgian Government, a foreign sovereign, brought suit in the Dutch courts for an account of the sale of a certain cargo of wheat. The defendant sought to set off an entirely unrelated claim which he had against the Belgian Government. The court held: 'That the court had no jurisdiction to take cognisance of the counterclaim against the Belgian State. A State which is entitled to claim immunity from foreign jurisdiction does not lose this right by the fact that it submits to that jurisdiction in another suit. The correctness of this statement is not impaired by the circumstance that the two actions are, for the sake of convenience, joined in the same proceedings, since the counter-claim does not lose, in consequence thereof, its independent character. This is so particularly in cases in which the plaintiff Government bases its claim on a private law title, but in counter-claim is sued for acts performed in its sovereign capacity.' Nor can the majority derive much support from King of Spain v. Oliver, Fed.Cas.No.7,813, 1 Pet.C.C. 276, cited on page 429 of 75 S.Ct., note 14, of the Court's opinion. The question of sovereign immunity was not considered or even mentioned in that case, since no setoff or counterclaim was asserted against the foreign sovereign. The court simply held that payment, in the manner and under the circumstances there presented, was a good defense to a suit on a debt. 8 See United States v. Shaw, 309 U.S. 495, 501, 60 S.Ct. 659, 661, 84 L.Ed. 888. 9 See Lauterpacht, The Problem of Jurisdictional Immunities of Foreign States, British Year Book of International Law, 1951, vol. XXVIII, at pp. 239, 269; Republic of Mexico v. Hoffman, 324 U.S. 30, 38, 65 S.Ct. 530, 534, 89 L.Ed. 729; Berizzi Bros. Co. v. Steamship Pesaro, 271 U.S. 562, 573, 576, 46 S.Ct. 611, 612, 613, 70 L.Ed. 1088. 10 Vidal v. Mayor, Alderman and Citizens of Philadelphia, 2 How. 127, 197—198, 11 L.Ed. 205; Muschany v. United States, 324 U.S. 49, 66, 65 S.Ct. 442, 451, 89 L.Ed. 744. 11 Dissents in Great Northern Life Ins. Co. v. Read, 322 U.S. 47, 57, 64 S.Ct. 873, 878, 88 L.Ed. 1121, and Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 723, 69 S.Ct. 1457, 1478, 93 L.Ed. 1628; concurring opinion in Republic of Mexico v. Hoffman, 324 U.S. 30, 40, 65. S.Ct. 530, 535, 89 L.Ed. 729.

89

348 U.S. 373 75 S.Ct. 422 99 L.Ed. 426 Ben SAPIR, Petitioner,v.UNITED STATES of America. No. 534. Decided March 7, 1955. PER CURIAM. 1 The petition for writ of certiorari is granted. 2 We believe that the judgment of the Court of Appeals of October 20, 1954, 216 F.2d 722, reversing and remanding this cause with instructions to dismiss the indictment was correct. It is not necessary for us to pass on the question presented under its subsequent judgment of November 17, 1954, directing a new trial. We vacate the latter judgment, which directed the new trial, and we reinstate the former one which instructed the trial court to dismiss the indictment. 3 Mr. Justice DOUGLAS, concurring. 4 Petitioner was convicted by the jury of a conspiracy to defraud the United States. Petitioner moved for a judgment of acquittal. The District Court denied the motion. On appeal, the Court of Appeals held that that motion should have been granted, as the evidence was insufficient to convict. 216 F.2d 722. It accordingly reversed and remanded the cause with instructions to dismiss the indictment. Later, the Government moved to amend the judgment so as to grant a new trial on the ground of newly discovered evidence. The Court of Appeals granted the motion of the Government. 5 The granting of a new trial after a judgment of acquittal for lack of evidence violates the command of the Fifth Amendment that no person shall 'be subject for the same offence to be twice put in jeopardy of life or limb.' 6 The correct rule was stated in Kepner v. United States, 195 U.S. 100, at page 130, 24 S.Ct. 797, at page 805, 49 L.Ed. 114, 'It is, then, the settled law of this court that former jeopardy includes one who has been acquitted by a verdict duly rendered * * *.' If the jury had acquitted, there plainly would be double jeopardy to give the Government another go at this citizen. If, as in the Kepner case, the trial judge had rendered a verdict of acquittal, the guarantee against double jeopardy would prevent a new trial of the old offense. I see no difference when the appellate court orders a judgment of acquittal for lack of evidence. 7 If petitioner had asked for a new trial, different considerations would come into play, for then the defendant opens the whole record for such disposition as might be just. See Bryan v. United States, 338 U.S. 552, 70 S.Ct. 317, 94 L.Ed. 335. And see Trono v. United States, 199 U.S. 521, 26 S.Ct. 121, 50 L.Ed. 292; Stroud v. United States, 251 U.S. 15, 18, 40 S.Ct. 50, 51, 64 L.Ed. 103; State of Louisiana ex rel. Francis v. Resweber, 329 U.S. 459, 462, 67 S.Ct. 374, 375, 91 L.Ed. 422. Moreover, a reversal by the appellate court on grounds of error that infected the trial would also be different, as Palko v. State of Connecticut, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288, shows. But and acquittal on the basis of lack of evidence concludes the controversy, as the Kepner case holds, and puts it at rest under the protection of the Double Jeopardy Clause, absent a motion by the defendant for a new trial.

01

348 U.S. 407 75 S.Ct. 409 99 L.Ed. 467 Joe Valdez GONZALES, Petitioner,v.UNITED STATES of America. No. 69. Argued Feb. 1, 2, 1955. Decided March 14, 1955. Mr. Hayden C. Covington, Brooklyn, N.Y., for petitioner. Mr.John F. Davis, Washington, D.C., for respondent. Mr. Justice CLARK delivered the opinion of the Court. 1 This is another prosecution under 62 Stat. 622, 50 U.S.C.App. § 462(a), 50 U.S.C.A.Appendix, § 462(a), for refusal to submit to induction into the armed services. The only question necessary to the decision of this case is whether petitioner claiming exemption because of conscientious objections to participation in war, was entitled to receive a copy of the recommendation made by the Department of Justice to the Appeal Board under the provisions of § 6(j) of the Universal Military Training and Service Act, 62 Stat. 612, as amended, 50 U.S.C.App. § 456(j), 50 U.S.C.A.Appendix, § 456(j). The trial judge held that he was not, and that the classification of petitioner as I—A was valid. Petitioner was found guilty as charged, 120 F.Supp. 730, and the Court of Appeals for the Sixth Circuit affirmed, 212 F.2d 71. 2 Petitioner registered under the selective service laws on January 4, 1950. In his classification questionnaire, filed on March 9, 1951, he claimed exemption as a minister and conscientious objector, his claims stemming from his association with the Jehovah's Witnesses. Under the doctrines of this sect, each member is a minister; and their tenets are widely interpreted as banning personal participation in political wars. See Sicurella v. United States, 348 U.S. 385, 75 S.Ct. 403. Only petitioner's conscientious objector claim is now before the Court. 3 Petitioner's secular education consisted of elementary school training and two years of high school. On September 27, 1948, he married a member of the Jehovah's Witnesses. The record indicates that, beginning in November 1949, he received 'private instruction' in the Bible from a member of the sect, and that in December he began 'actively serving' as a Jehovah's Witness. On January 4, 1950, petitioner registered under the selective service laws. The following month he was ordained as a minister of the Witnesses. Petitioner's religious affiliation, at least as late as 1948, had been Catholic, and his parents and family were Catholic. He began work with the Great Lakes Steel Corporation, a steel plant manufacturing articles of war, on August 19, 1950. On October 1, 1950, petitioner was recognized as a 'pioneer' by the Jehovah's Witnesses and embarked on more extensive religious activities.1 4 In his special form for conscientious objectors, filed on April 3, 1951, petitioner claimed exemption from combatant and noncombatant service. He relied on 'the ten commandments of God found in the Bible' to support his claim. He said he would use force '(i)n protection of person and ministerial activities, but at no time in aggression.' Petitioner declined to rely on the official pronouncements of the Jehovah's Witnesses to support his position, stating that 'I am basing myself entirely on my knowledge of the Bible.' He supported his claims, however, with an affidavit signed by 22 persons, attesting to petitioner's activity in the Witnesses for the 18 months preceding April 8, 1951, and with a certificate of 4 persons stating that petitioner was conducting weekly Bible studies with them. Petitioner had not given public expression to his views 'other than' through his general religious activity. 5 After an intervening classification of III—A (dependency deferment), petitioner was classified I—A on January 8, 1952. On February 19, 1952, following a personal appearance, the local Board decided unanimously to continue petitioner in I—A, and petitioner noted an appeal. The Appeal Board made a tentative finding against him and referred the case to the Department of Justice. The FBI then made its investigation and petitioner was given a hearing. The hearing officer, while noting that petitioner 'appeared to be a sincere Jehovah's Witness and as such is conscientiously opposed to war,' recommended denial of the conscientious objector classification. The Department of Justice, in its report to the Appeal Board, made a similar recommendation. In accepting the view expressed by the hearing officer, the Department found support in '(t)he fact that registrant became a member of the Jehovah's Witness sect one month after his Selective Service System registration in January, 1950, despite the fact that his wife had been a member for many years.'2 No copy of this report or other notice of the recommendation was given petitioner prior to the Appeal Board's decision. On December 11, 1952, the Appeal Board unanimously classified petitioner I—A, and upon his refusal to submit to induction this prosecution was brought. 6 Petitioner contends that his classification is invalid because he was not furnished a copy of the Justice Department's recommendation to the Appeal Board and accorded an opportunity to reply thereto. Section 6(j) of the Universal Military Training and Service Act, outlining the procedure in conscientious objector cases, is silent on this question.3 But a similar silence was not held to be a considered rejection of the right of a registrant to be supplied with a fair re sume of adverse evidence in the FBI reports, United States v. Nugent, 1953, 346 U.S. 1, 73 S.Ct. 991, 97 L.Ed. 1417; Simmons v. United States, 348 U.S. 397, 75 S.Ct. 397, and we believe it also to be implicit in the Act and Regulations—viewed against our underlying concepts of procedural regularity and basic fair play—that a copy of the recommendation of the Department be furnished the registrant at the time it is forwarded to the Appeal Board, and that he be afforded an opportunity to reply.4 7 It is true that the recommendation of the Department is advisory. 50 U.S.C.App. § 456(j), 50 U.S.C.A.Appendix, § 456(j). Indeed, this very consideration led us in United States v. Nugent, supra, to allow considerable latitude in the auxiliary hearing which culminated in the Department's report. A natural corollary of this, however, is that a registrant be given an opportunity to rebut this recommendation when it coames to the Appeal Board, the agency with the ultimate responsibility for classification. For in the usual case it is the Appeal Board which renders the selective service determination considered 'final' in the courts, not to be overturned unless there is no basis in fact. Estep v. United States, 327 U.S. 114, 66 S.Ct. 423, 90 L.Ed. 567. 8 It should be emphasized, moreover, that in contrast to the strictly appellate functions it exercises in other cases, the Appeal Board in handling conscientious objector claims is the first selective service board to receive the Department's recommendation, and is usually the only decision-making body to pass on the entire file. An opportunity for the registrant to reply is therefore the only means of insuring that this Board will have all of the relevant data. Furthermore, if the registrant is to present his case effectively to the Appeal Board, he must be cognizant of all the facts before the Board as well as the over-all position of the Department of Justice. See Ohio Bell Telephone Co. v. Public Utilities Comm., 301 U.S. 292, 300—305, 57 S.Ct. 724, 728—730, 81 L.Ed. 1093; United States v. Abilene & So. Ry. Co., 265 U.S. 274, 289, 44 S.Ct. 565, 569, 68 L.Ed. 1016; Interstate Commerce Comm. v. Louisville & N.R. Co., 227 U.S. 88, 93, 33 S.Ct. 185, 187, 57 L.Ed. 431. 9 The facts here underscore this necessity. The Department in its recommendation emphasizes that the petitioner was of a Catholic family and concluded that petitioner's 'affiliation with (Jehovah's Witnesses) has been too recent and too closely related to his draft status to warrant the acceptance of his conscientious objector position as genuine. The fact that registrant became a member of the Jehovah's Witness sect one month after his * * * registration * * * lends weight to this conclusion.' But petitioner contends he was a member of the Witnesses before he registered, and there is testimony that he had not been of the Catholic belief since 1948. Nor was this facet of the case explored at the Department of Justice hearing. If petitioner had been afforded a copy of the recommendation, he might have successfully contradicted the basis of he Department's conclusion or diminished the forcefulness of its thrust. The record also discloses that the local Board apparently placed little emphasis on the lateness of petitioner's conversion, inquiring instead about the tenets of the sect and petitioner's employment in the steel plant. On appeal, it was logical for petitioner to direct his attention to these matters. But the Department of Justice based its rejection of his claim on the proximity of petitioner's conversion to his registration for the draft, a contention of which he had no knowledge and no opportunity to meet. The petitioner was entitled to know the thrust of the Department's recommendation so he could muster his facts and arguments to meet its contentions. See Morgan v. United States, 304 U.S. 1, 18,5 58 S.Ct. 773, 776, 82 L.Ed. 1129. 10 Nor is this requirement inconsistent with the views expressed in United States v. Nugent, supra, (346 U.S. 1, 73 S.Ct. 996), that selective service procedures, 'geared to meet the imperative needs of mobilization and national vigilance', are not to be delayed by 'litigious interruption.' The registrant in that case sought to make the auxiliary procedure of the Department of Justice 'a full-scale trial for each appealing registrant.' We refuse to compel 'an all-out collateral attack at the (Department of Justice) hearing on the testimony obtained in its prehearing investigation.' Here all that is involved is the mailing of a copy of the Department's recommendation to the registrant and permitting a reply to the Appeal Board. The registrant already has the right to file a statement with the Appeal Board.6 Just as the right to a hearing means the right to a meaningful hearing, United States v. Nugent, supra; Simmons v. United States, supra, so the right to file a statement before the Appeal Board includes the right to file a meaningful statement, one based on all the facts in the file and made with awareness of the recommendations and arguments to be countered. 11 A similar problem has arisen once before in the administration of our selective service laws. Under the Selective Training and Service Act of 1940, 50 U.S.C.A.Appendix, § 301 et seq., local Boards referred to panels of clergymen and laymen of a particular faith questions concerning the validity of ministerial and divinity student claims. The panel interviewed the registrant and made a report to the local Board. In sustaining the use of these panels, this Court emphasized the right of the registrant under the regulations to examine the report and 'explain or correct it, or deny it.' Eagles v. United States ex rel. Samuels, 329 U.S. 304, 313, 67 S.Ct. 313, 318, 91 L.Ed. 308. See also Eagles v. United States ex rel. Horowitz, 329 U.S. 317, 323, 67 S.Ct. 320, 324, 91 L.Ed. 318. And, in a case where it was not shown that the registrant had access to the panel's report, Judge Learned Hand said: 12 'As the case comes to us, the board made use of evidence of which (the registrant) may have been unaware, and which he had no chance to answer: a prime requirement of any fair hearing.' United States v. Balogh, 2 Cir., 157 F.2d 939, 943, judgment vacated on other grounds, 329 U.S. 692, 67 S.Ct. 625, 91 L.Ed. 605. 13 See also Brewer v. United States, 4 Cir., 1954, 211 F.2d 864. 14 So basic, indeed, is this 'prime requirement of any fair hearing' that counsel for the Government contended for the first time in oral argument that the rights of the registrant were amply protected by the provision in the regulations for a mode of 'rehearing.' In short, the argument is that after the Appeal Board decides against the registrant and his file is returned to the local Board, he has the right under the selective service regulations to examine all information in his file, including the recommendation of the Department, 32 CFR § 1606.32(a)(1); 32 CFR § 1606.38(c). The registrant would then have a right to request a reopening of his classification, 32 CFR § 1625.1(a); 32 CFR § 1625.2, if he submitted 'proof of error in documents submitted to the appeal board by the Department of Justice.'7 Moreover, he may present his contentions to the Director of Selective Service or the State Director of Selective Service, requesting a reopening of his classification or a reconsideration by the Appeal Board, 32 CFR § 1625.3(a); 32 CFR § 1626.61(a). 15 We believe these remedies to be too little and too late. Too little, because the right to present petitioner's side of the case is broader than the bare right to correct 'errors' made by the Department in its recommendation. Too late, because, except with the permission of the national or state Director, only the local Board may reopen the case; and a certain reluctance is to be expected after the Appeal Board, albeit on incomplete presentation, has rejected the registrant's claim. Moreover, the local Board has discretion to refuse to reopen the case if it 'is of the opinion that the information accompanying such request fails to present any facts in addition to those considered when the registrant was classified or, even if new facts are presented, the local board is of the opinion that such facts, if true, would not justify a change in such registrant's classification. * * *' 32 CFR § 16—25.4. 16 We hold that the over all procedures set up in the statute and regulations, designed to be 'fair and just' in their operation, 62 Stat. 605, 50 U.S.C.App. § 451(c), 50 U.S.C.A.Appendix, § 451(c), require that the registrant receive a copy of the Justice Department's recommendation and be given a reasonable opportunity to file a reply thereto. Accordingly, the decision of the Court of Appeals, upholding petitioner's conviction for refusing to submit to induction, is reversed. 17 Reversed. 18 Mr. Justice REED, with whom Mr. Justice BURTON joins, dissenting. 19 I would affirm. The prescribed procedure, including especially the hearing before a hearing officer, provided adequate protection for petitioner, and I find no express or implied statutory or administrative requirement that the Department of Justice send to petitioner a copy of its advisory report to the Appeal Board. 20 The report of the Department of Justice is advisory only. As the registrant has, under Selective Service Regulations, 32 CFR § 1606.32(a)(1), a right to examine the report, as well as all other information in the file, and under § 1625(1) and (2) reopen the classification on a showing of error, the 'fair and just' requirement for a hearing is satisfied. United States v. Nugent, 346 U.S. 1, 73 S.Ct. 991, 97 L.Ed. 1417. 21 Mr. Justice MINTON, dissenting. 22 Because the regulations of the Board did not require the Department of Justice to send petitioner a copy of its advisory report, and since the petitioner did not request that he be allowed to see the report or a summary thereof, the action of the Board was not arbitrary and capricious. The Board did not lose its jurisdiction or act beyond it. I would affirm. 1 A much more extensive narration of petitioner's background is given in the hearing officer's report. (R. 11a et seq.) The latter document, under applicable regulations, 32 CFR (1954 Supp.) § 1626.25, was not transmitted to the Appeal Board for its consideration in classifying petitioner. 2 The complete text of the report is as follows: 'Registrant was born July 22, 1931, in San Antonio, Texas. He left the Edison High School of that city in June, 1948, after two years of attendance and took employment as a sheet metal worker with a local firm. He married his present wife in September, 1948. In the summer of 1949 he came to Detroit and worked as a laborer for the Adams Lumber Company until July, 1950. From August, 1950 to present he has been employed as a laborer and general maintenance man at the Great Lakes Steel Corporation. Registrant previously was a Catholic and has five sisters and a brother all of whom are Catholics. His parents were Catholics. His mother is dead and his father lives in San Antonio, Texas. Registrant's wife became a Jehovah's Witness in 1941 and registrant was baptized a member in February, 1950. In October, 1950, he became a 'pioneer' and he participates in the usual activities of his sect, attending several weekly meetings including the Theocratic Ministry School. He also does house to house work and sells the publications of the sect. Registrant bases his claim for exemption upon his own personal interpretation of the Bible with the guidance of the Watchtower Bible aids and relies particularly on the Ten Commandments. He believes in the use of force in self defense. 'The investigation reflects that registrant is well regarded in the several communities in which he has lived and that he and his wife are said to be very religious. Neighbors advise that they hold Bible studies in their apartment and appear to devote considerable time to religious work. References and co-religionists state that he is a devoted member of the sect and applies himself earnestly to his religious work. Employment records reveal that registrant was remembered as a good worker and that his record is good and contains no derogatory information. 'After a personal appearance, the Hearing Officer stated that registrant appeared to be a sincere Jehovah's Witness but concluded that his affiliation with that sect has been too recent and too closely related to his draft status to warrant the acceptance of his conscientious objector position as genuine. The fact that registrant became a member of the Jehovah's Witness sect one month after his Selective Service System registration in January, 1950, despite the fact that his wife had been a member for many years, lends weight to this conclusion. 'After consideration of the entire file and record, the Department of Justice finds that the registrant's objections to combatant and noncombatant service are not sustained. It is, therefore, recommended to your Board that registrant's claim for exemption from both combatant and noncombatant training and service be not sustained.' 3 This section does provide that the Department of Justice shall make an 'appropriate inquiry,' and hold a 'hearing' with respect to the claimed conscientious objections. If after such hearing it finds the claims unfounded, 'it shall recommend to the appeal board that such objections be not sustained.' The regulations are of the same tenor, 32 CFR (1954 Supp.) § 1626.25. 4 Inapplicable to the instant question are cases dealing with whether a recommendation or intermediate report is necessary to begin with, National Labor Relations Board v. Mackay Radio & Telegraph Co., 304 U.S. 333, 58 S.Ct. 904, 82 L.Ed. 1381; Public Service Corp. of New Jersey v. S.E.C., 3 Cir., 1942, 129 F.2d 899, whether the recommendation can be subjected to judicial review, Chicago & Southern Air Lines v. Waterman S.S. Corp., 333 U.S. 103, 68 S.Ct. 431, 92 L.Ed. 568, and whether satisfactory procedures were employed in formulating the recommendation, Williams v. People of State of New York, 337 U.S. 241, 69 S.Ct. 1079, 93 L.Ed. 1337; Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 53 S.Ct. 350, 77 L.Ed. 796. The latter three cases are distinguishable, moreover, because they do not involve individualized fact finding and classification, but legislative determinations, political judgments, and the exercise of judicial discretion in the imposition of sentence. See also Mazza v. Cavicchia, 1954, 15 N.J. 498, 105 A.2d 545. 5 'The right to a hearing embraces not only the right to present evidence, but also a reasonable opportunity to know the claims of the opposing party and to meet them. The right to submit argument implies that opportunity; otherwise the right may be but a barren one. Those who are brought into contest with the Government in a quasi-judicial proceeding aimed at the control of their activities are entitled to be fairly advised of what the Government proposes and to be heard upon its proposals before it issues its final command.' 6 See 32 CFR § 1626.12. 'The person appealing may attach to his appeal a statement specifying the matters in which he believes the local board erred, may direct attention to any information in the registrant's file which he believes the local board has failed to consider or to give sufficient weight, and may set out in full any information which was offered to the local board and which the local board failed or refused to include in the registrant's file.' It is true that this section requires that the statements be made at the time the appeal is initiated. And 32 CFR § 1626.24(b) provides that 'the appeal board shall not receive or consider any information which is not contained in the record received from the local board except (1) the advisory recommendation from the Department of Justice under § 1626.25, and (2) general information concerning economic, industrial, and social conditions.' But the broad scope of review provided in § 1626.12 is inconsistent with any implication that registrants in conscientious objector cases are required to file their statements with the initial appeal. Such a requirement, if indeed the section is viewed as an absolute bar to supplemental and amendatory statements, may be proper in the normal case. But where the record is augmented on appeal, the registrant can effectively point out error and failure to consider only after the Department of Justice has acted. 7 See letter of General Hershey, February 4, 1955.

23

348 U.S. 419 75 S.Ct. 415 99 L.Ed. 475 Frank LEWIS, Petitioner,v.UNITED STATES of America. No. 203. Argued Feb. 3, 4, 1955. Decided March 14, 1955. Mr. Walter E. Gallagher, Washington, D.C., for petitioner. Miss Beatrice Rosenberg, Washington, D.C., for respondent. Mr. Justice MINTON delivered the opinion of the Court. 1 An information was filed in the Municipal Court of the District of Columbia charging the petitioner with violation of 26 U.S.C. § 3290, 26 U.S.C.A. § 3290, in that he engaged in the business of accepting wagers without paying the occupational tax imposed by that section. The Municipal Court sustained a motion to dismiss the information. The Municipal Court of Appeals for the District reversed, 100 A.2d 40, and the Circuit Court of Appeals affirmed the Municipal Court of Appeals. 94 U.S.App.D.C. 205, 214 F.2d 853. We granted certiorari. 348 U.S. 810, 75 S.Ct. 60. 2 The questions presented in this case are: Does the Act, as applied to the petitioner in the District of Columbia, constitute a valid exercise of the taxing power or is it a penalty under the guise of a tax? Secondly, does it violate the Fifth Amendment's prohibition as to compulsory self-incrimination? Thirdly, does it contravene the Fourth Amendment's ban against unreasonable search and seizure? The first two questions were categorically answered in the negative, and the validity and constitutionality of the Act upheld by us in United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754; the third question is not substantially different from the second and is also controlled by Kahriger. The only material factual difference between that case and the instant case is that in Kahriger the violation occurred in a State, namely, Pennsylvania, while in the instant case the violation is charged to have taken place in the District of Columbia. 3 The statute, 26 U.S.C. § 3290, 26 U.S.C.A. § 3290, provides: 4 'A special tax of $50 per year shall be paid by each person who is liable for tax under subchapter A or who is engaged in receiving wagers for or on behalf of any person so liable.' 5 Another section, 26 U.S.C. § 3271, 26 U.S.C.A. § 3271, reads: 6 'Payment of tax—(a) Condition precedent to doing business. 7 'No person shall be engaged in or carry on any trade or business mentioned in this chapter until he has paid a special tax therefor in the manner provided in this chapter.' Subchapter A, referred to in § 3290, provides in § 3285: 8 '(a) Wagers. 9 'There shall be imposed on wagers, as defined in subsection (b), an excise tax equal to 10 per centum of the amount thereof.' 10 These provisions must be read together, and when we do, it seems clear that payment of the special $50 tax is to be made prior to engaging in the business of accepting wagers. 11 We held in Kahriger that this statute was a constitutional exercise of the taxing power and was not a penalty under the guise of a tax. 345 U.S. at pages 24—32, 73 S.Ct. at pages 511—515. It is argued that that case involved wagering in a State, where such activity is not a violation of federal law, that the instant case arises in the District of Columbia, where wagering is by federal law a crime, D.C.Code, 1951, § 22—1501 et seq., and that this statute as applied to petitioner in the District of Columbia is a penalty in the guise of a tax. The short answer to this argument is that this Court has long held that the Federal Government may tax what it also forbids. United States v. Stafoff, 260 U.S. 477, 43 S.Ct. 197, 67 L.Ed. 358. 12 Secondly, it is contended by petitioner that the Act in question is unconstitutional because compliance compels self-incrimination in contravention of the Fifth Amendment. The Fifth Amendment provides that one cannot be compelled, in a criminal case, to be a witness against himself. It is a shield that prevents one from being convicted out of his own mouth by anything short of voluntary statements. 13 Petitioner maintains that the taxes imposed are retrospective in application. It is argued that he must be liable for the tax under subchapter A in the sense that he must have already wagered before he is required to take out the occupational tax, and that to require him to do so compels admission that he has gambled. We do not so read the statute. The Act does not mean one must first have made a wager as defined in subchapter A and therefore incurred liability to pay the tax levied therein before liability for the occupational tax attaches. The Act is wholly prospective and by its terms did not become applicable until November 1, 1951, more than ten days after its enactment on October 20, 1951. See compiler's note to 26 U.S.C. § 3285, 26 U.S.C.A. § 3285. The statute simply designates a class that is liable to pay the ten percent tax when a wager or wagers are made. Payment of the $50 tax here under consideration is a registration fee that must be paid before engaging in the business of wagering. 14 We said in Kahriger, supra, 345 U.S. at pages 32—33, 73 S.Ct. at page 515: 'Under the registration provisions of the wagering tax, appellee is not compelled to confess to acts already committed, he is merely informed by the statute that in order to engage in the business of wagering in the future he must fulfill certain conditions.' The condition here important was that petitioner must first pay the $50 tax, but that did not give him any license to engage in an unlawful business. License Tax Cases, 5 Wall. 462, 471, 18 L.Ed. 497. It only warned that if he proposed to carry on this particular business he must pay the tax. 15 If petitioner desires to engage in an unlawful business, he does so only on his own volition. The fact that he may elect to pay the tax and make the prescribed disclosures required by the Act is a matter of his choice. There is nothing compulsory about it, and, consequently, there is nothing violative of the Fifth Amendment. If he does not pay the occupational tax, proceeds to accept wagers, and is prosecuted therefor, as in this case, he cannot be compelled to testify and may claim his privilege. The only compulsion under the Act is that requiring the decision which would-be gamblers must make at the threshold. They may have to give up gambling, but there is no constitutional right to gamble. If they elect to wager, though it be unlawful, they must pay the tax. 16 And, finally, the petitioner argues that to require him to pay the tax and exhibit the stamp in his place of business, as required by 26 U.S.C. § 3293 of the Act, 26 U.S.C.A. § 3293, is to furnish probable cause for the issuance of a search warrant. This is just another facet of the Fifth Amendment argument, but the ready answer is that the petitioner has no stamp. If he does not purchase a stamp even though he wagers, which is this case, it is difficult to see how such failure would give probable cause for the issuance of a search warrant. His complaint is that if he had one he might get in trouble. Since petitioner is without a stamp, he is not in a position to raise the question as to what might happen to him if he had one. 17 The judgment is affirmed. 18 Affirmed. 19 Mr. Justice FRANKFURTER, dissenting. 20 In view of the recentness of the decision in United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754, and my continuing disagreement with the constitutional views which it expressed, I cannot acquiesce in this decision. Indeed, this case only emphasizes the difficulties which I found in Kahriger, for here we are concerned with a spurious use of the taxing power as a means of facilitating prosecution of federal offenses. 21 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS joins, dissenting. 22 United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754, put a most restrictive interpretation on the Fifth Amendment's provision against compelling persons to confess facts which will help government take away their liberty. But this case reduces the Fifth Amendment's protection still more. Kahriger had to confess only to state law violations to save himself from going to jail for violating the federal registration law. This was one of the arguments relied on by the Government to persuade this Court to sustain the federal law as applied to Kahriger.1 But the petitioner here, in order to be permitted to pay the $50 tax, must file a written confession with the District of Columbia Internal Revenue Collector revealing that, in violation of federal law, he is at the moment he registers 'engaged in the business of accepting wagers.'2 He must also tell where he carries on the illegal business, the names and addresses of those who receive wagers for him and of those for whom he receives wagers.3 For engaging in this wagering business, which registration would compel petitioner to confess, he could be convicted of felony, fined $1,000, imprisoned three years, or both.4 And for conspiring with his employers or employees to promote a lottery even in the future, which compulsory registration is designed to reveal, petitioner could be punished by a fine of $10,000, imprisonment for five years, or both.5 Thus in order to pay the tax, petitioner would be compelled to supply evidence useful and maybe sufficient to convict him of felonies for which he could be incarcerated for years. If this would not violate the Fifth Amendment's privilege against self-incrimination, it is hard to think of anything that would. Cf. Blau v. United States, 340 U.S. 159, 71 S.Ct. 223, 95 L.Ed. 170, and cases cited. 23 And yet the Court holds petitioner can be sent to jail for refusal to make a public registration of his guilt of criminal conduct. This result seems to be largely dependent on the statement that petitioner has 'no constitutional right to gamble.' Of course not. But if we remain faithful to the letter and spirit of the Bill of Rights, gamblers, like others, have a right to invoke its safeguards. It should not be forgotten that breaches opened to get lawless gamblers remain to jeopardize the liberty of the law-abiding. 1 The Government there argued: 'Wagering is doubtless unlawful in many states (perhaps in all but Nevada) but it is not forbidden by any federal law. 'Thus the registration statement in which the taxpayer is required to set forth his name, address and places of business, and the names and addresses of his agents or principals does not call for a disclosure of information which will reveal a violation of federal law.' Reply Brief for the United States, p. 3, United States v. Kahriger, 395 U.S. 22, 73 S.Ct. 510. 2 See United States v. Kahriger, 3 Cir., 210 F.2d 565, 570. Paragraph 4 of Instructions on the tax return which petitioner would have been compelled to sign in order to pay the $50 tax provides: 'The information called for on the return must be completely furnished. If not so furnished, the special tax stamp will not be issued.' 3 That petitioner would have been compelled to make such confessions is shown by a copy of the 'Special Tax Return and Application for Registry—Wagering' in effect at the time of petitioner's failure to register. It reads in part: '5. Are you engaged in the business of accepting wagers on your own account? * * * If yes, (give) (a) Name and address where each such business is conducted. * * * (b) Number of employees and/or agents engaged in receiving wagers on your behalf. * * * (c) True name, current address, and special tax stamp number of each such person. * * * 6. Do you receive wagers for or on behalf of some other person or persons? * * * If yes, give true name and address of each such person. * * *' 4 The D.C.Code, 1951, § 22—1501 makes promotion of lotteries a crime. The definition of lotteries here includes the definition of wagers in the registration law. 65 Stat. 529, 26 U.S.C. § 3285, 26 U.S.C.A. § 3285. 5 18 U.S.C. § 371, 18 U.S.C.A. § 371.

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