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Matched Legal Cases: ['§ 189', '§ 189', '§ 29', '§ 6', '§ 32', '§ 4', '§ 18', '§ 3', '§ 25', '§ 7', '§ 38', '§ 17', '§ 32', '§ 50', '§ 3', '§ 49', '§ 4', '§ 5', '§ 25', '§ 7', '§ 29', '§ 29', '§ 29', '§ 6', '§ 6', '§ 29', '§ 29', '§ 29', '§ 6', '§ 29', '§ 6', '§ 29', '§ 8', '§ 293']

Rice v. Santa Fe Elevator Corp. (full text) :: 331 U.S. 218 (1947) :: Justia U.S. Supreme Court Center Log In
› Rice v. Santa Fe Elevator Corp.
Rice v. Santa Fe Elevator Corp. 331 U.S. 218 (1947)
U.S. Supreme CourtRice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947)Rice v. Santa Fe Elevator Corp.No. 470Argued February 13, 14, 1947Decided May 5, 1947*331 U.S. 218CERTIORARI TO THE CIRCUIT COURT OF APPEALS
(5) Sacrificing or rebating storage charges, retaining desirable transit tonnage, utilizing preferred storage space. Pp. 331 U. S. 227, 331 U. S. 236. Page 331 U. S. 219
A district court dismissed suits brought by a warehouseman licensed under the United States Warehouse Act to enjoin further proceedings on a complaint filed by one of his customers with the Illinois Commerce Commission alleging violations of the Illinois Public Utilities Act, Ill.Rev. Stats.1945, ch. 111 2/3, the Illinois Grain Warehouse Act, Ill.Rev. Stats.1945, ch. 114, §§ 189 et seq., and Art. XIII of the Illinois Constitution, and to enjoin the Attorney General of Illinois from instituting proceedings against the warehouseman to enforce any order of the Commission in the matter. The Circuit Court of Appeals reversed, on the ground that the United States Warehouse Act superseded state regulation of warehousemen licensed thereunder as to the matters presented in the complaint. 156 F.2d 33. This Court granted certiorari. 329 U.S. 701. The writs were dismissed as to certain parties, including the Great Lakes Elevator Corporation. 330 U.S. 810. Affirmed in part, reversed in part, and remanded, p. 331 U. S. 238. Page 331 U. S. 220
In 1944, Rice filed a complaint with the Commission, charging respondents [Footnote 1] with maintaining unjust, unreasonable, Page 331 U. S. 221 and excessive rates and charges contrary to the Illinois Public Utilities Act, Ill.Rev. Stats. 1945, ch. 111 2/3. It charged them with discrimination in storage rates in favor of the Federal Government and its agencies and against other customers, contrary to the Public Utilities Act and the Illinois Grain Warehouse Act, Ill.Rev. Stats.1945, ch. 114, § 189 et seq. It alleged that respondents were both warehousemen and dealers in grain, and, by reason of those dual and conflicting positions, had received undue preferences and advantages to the detriment of and in discrimination against petitioners and other customers of respondents, [Footnote 2] all in violation of provisions of the Public Utilities Act, the Grain Warehouse Act, or the Illinois Constitution of 1870, Article XIII. It charged respondents with having failed to provide reasonable, safe, and adequate public grain warehouse service and facilities, with issuing securities, with abandoning service, and with entering into various contracts with Page 331 U. S. 222 their affiliates without prior approval of the Commission; with rendering storage and warehousing services without having filed and published their rates; with operating without a state license, and with mixing public grain with grains of different grades -- all in violation of provisions of the Public Utilities Act or the Grain Warehouse Act. Among the remedies sought were the fixing of just, reasonable, and nondiscriminatory rates, the prohibition of unlawful discriminatory practices, the establishment of reasonable, safe and adequate storage and warehousing service, and the assessment of penalties for violations of Illinois law, including the cancellation of grain warehouse licenses.
The United States Warehouse Act, as originally enacted in 1916 (39 Stat. 486), made federal regulation in this field subservient to state regulation. It provided in § 29 that "nothing in this Act shall be construed to conflict Page 331 U. S. 223 with, or to authorize any conflict with, or in any way to impair or limit the effect or operation of the laws of any State relating to warehouses, warehousemen . . ." And § 6 required an applicant for a federal warehouse license to provide a bond "to secure the faithful performance of his obligations as a warehouseman" under state, as well as under federal, law.
In 1931 Congress amended the Act. 46 Stat. 1463. Section 29 was amended [Footnote 4] to provide that, although the Page 331 U. S. 224 Secretary of Agriculture "is authorized to cooperate with State officials charged with the enforcement of State laws relating to warehouses, warehousemen," and their personnel,
(1) Just and reasonable rates. The complaint charges that respondents' rates are unjust and unreasonable. Under the Illinois statute, public utility rates must be just and reasonable, and the Commission, after a hearing, may fix rates which meet that standard. §§ 32, 36, 41, Public Utilities Act. The Secretary of Agriculture is authorized by the Federal Act to license warehousemen [Footnote 5] on condition that they conform to the requirements of the Act and the rules and regulations prescribed thereunder. [Footnote 6] §§ 4, 9. Every receipt of a licensed warehouse must disclose "the rate of storage charges." § 18(e). Before a license is granted, the applicant must file his proposed rates with the Secretary. Reg. 5, § 3. He must also file Page 331 U. S. 225 any proposed changes in rates before making them effective. Id. Rates which are "unreasonable or exorbitant" are prohibited. Id. And the Secretary may, after hearing, suspend or revoke the license if "unreasonable or exorbitant charges have been made for services rendered." § 25; Reg. 2, § 7.
"in event the relationship existing between the warehouseman and any depositor is not that of strictly disinterested custodianship, a statement setting forth the Page 331 U. S. 226 actual relationship. . . ."
(4) Mixing high quality public grain with inferior grain owned by respondents, delay in loading grain. The complaint charges that these practices [Footnote 7] are part of the abuses flowing from the conflicting positions of respondents as public grain warehousemen and dealers in grain. They are alleged to violate the rule of Hannah v. People, supra, and provisions of the Public Utilities Act which prohibit any preference or advantage to any person and which disallow any act of prejudice or disadvantage to any person. § 38. And see Grain Warehouse Act § 17. Section 13 of the Federal Act, as we have seen, provides that every licensed warehouseman "shall receive for storage" any agricultural product "without making any discrimination between persons desiring to avail themselves of warehouse facilities." Section 15 provides for the inspection and grading of fungible agricultural products by federal inspectors. Section 16 permits licensed warehousemen "if authorized by agreement or by custom" to mingle fungible products with other products "of the same kind and grade." Section 16 likewise prohibits the mixing of fungible products "of different grades." [Footnote 8] Section 30 provides fine and imprisonment for any person who fraudulently Page 331 U. S. 227 classifies, grades, or weighs any agricultural product stored under the provisions of the Act. Section 21 provides that a warehouseman, in absence of some lawful excuse, shall deliver "without unnecessary delay" the stored products on proper demand.
(6) Maintenance of unsafe and inadequate elevators; inadequate and inefficient warehouse service. The complaint alleges that, as a result of these practices, fire insurance premiums have become exorbitant and prohibitive; that owners of grain have suffered damages due to the deterioration of grain. The Illinois Commission is granted broad powers over the maintenance of facilities which are adequate and efficient (§§ 32, 49, Public Utilities Act) including the power to order the making of additions, extensions, Page 331 U. S. 228 repairs, improvements, or changes. Id., § 50. By § 3 of the Federal Act, the Secretary of Agriculture is authorized
(8) Abandonment of warehousing service. The complaint alleges that respondents have abandoned services without consent of the Illinois commission. Approval of the Commission to abandon or discontinue service is required. § 49a, Public Utilities Act. Licenses issued under the Federal Act "shall terminate as therein [§§ 4, 9] Page 331 U. S. 229 provided, or in accordance with the terms of this Act and the regulations thereunder. . . ." § 5. By § 25, the Secretary is authorized to suspend or revoke a license for any violation of the Act or the regulations. Among the grounds for revocation specified in the regulations is ceasing to conduct the licensed warehouse. Reg. 2, § 7.
It is clear that, since warehouses engaged in the storage of grain for interstate or foreign commerce are in the federal domain, United States v. Hastings, 296 U. S. 188, Page 331 U. S. 230 Congress may, if it chooses, take unto itself all regulatory authority over them (see New York Central R. Co. v. New York & Pa. Co., 271 U. S. 124), share the task with the States, or adopt as federal policy the state scheme of regulation. See Prudential Ins. Co. v. Benjamin, 328 U. S. 408, 328 U. S. 430-436. The question in each case is what the purpose of Congress was.
Congress legislated here in a field which the States have traditionally occupied. See Munn v. Illinois, 94 U. S. 113; Davies Warehouse Co. v. Bowles, 321 U. S. 144, 321 U. S. 148-149. So we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress. Napier v. Atlantic Coast Line R. Co., 272 U. S. 605, 272 U. S. 611; Allen-Bradley Local v. Wisconsin Employment Board, 315 U. S. 740, 315 U. S. 749. Such a purpose may be evidenced in several ways. The scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it. Pennsylvania R. Co. v. Public Service Comm'n, 250 U. S. 566, 250 U. S. 569; Cloverleaf Butter Co. v. Patterson, 315 U. S. 148. Or the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject. Hines v. Davidowitz, 312 U. S. 52. Likewise, the object sought to be obtained by the federal law and the character of obligations imposed by it may reveal the same purpose. Southern R. Co. v. Railroad Commission, 236 U. S. 439; Charleston & W. C. R. Co. v. Varnville Co., 237 U. S. 597; New York Central R. Co. v. Winfield, 244 U. S. 147; Napier v. Atlantic Coast Line R. Co., supra. Or the state policy may produce a result inconsistent with the objective of the federal statute. Hill v. Florida, 325 U. S. 538. It is often a perplexing question whether Congress has precluded state action or, by the choice of selective regulatory Page 331 U. S. 231 measures, has left the police power of the States undisturbed except as the state and federal regulations collide. Townsend v. Yeomans, 301 U. S. 441; Kelly v. Washington, 302 U.S. l; South Carolina Highway Dept. v. Barnwell Bros., 303 U. S. 177; Union Brokerage Co. v. Jensen, 322 U. S. 202.
That argument is illustrated in several ways. The Illinois Commission may fix rates; the Secretary of Agriculture cannot. He may, to be sure, suspend or revoke licenses if unreasonable or exorbitant charges are made. If the Commission fixes unreasonable or exorbitant rates, there will be a conflict with the Federal Act, and the state rate order must fall. But until it is known what the Commission will do, no conflict with the Federal Act can be shown. If indeed it reduces rates, as may be presumed, no conflict with the Federal Act will likely exist. Another illustration concerns the dual position of the warehousemen. It is pointed out that all the Federal Act requires is disclosure; that the more basic state policy of uprooting the practice of public warehousemen storing and dealing in their own grain is not inconsistent with the federal policy of disclosure. Another illustration relates to the preferential and discriminatory practices in connection with the rebate of storage charges, retention of desirable Page 331 U. S. 232 transit tonnage, and the utilization of preferred storage space. All the Federal Act requires is that warehousemen receive products for storage without making discriminations between persons. What the Illinois Commission promulgates or requires, if the proceedings before it are allowed to go ahead, might indeed strengthen and bolster the federal regulatory scheme, and in no way dilute, impair or oppose it. Such reasoning could be applied to each of the nine charges which we have summarized, even including, perhaps, the requirements for a state license and the filing and publishing of rate schedules. See Union Brokerage Co. v. Jensen, supra.
But the special and peculiar history of the Warehouse Act indicates to us that such a construction would thwart the federal policy which Congress adopted when it amended the Act in 1931. Prior to that time, as we have pointed out, the Federal Act, by reason of its express terms, had been subservient to state laws relating to warehouses and warehousemen. Congress in 1931 found that condition unfavorable, and undertook to change it. If Congress had done no more than to eliminate from § 29 the language which resulted in the Act's subservience, there would be a strong case for holding that state regulatory systems were not to be affected unless they collided with the Act. That construction would receive reinforcement from the provision in § 29 that the Secretary "is authorized to cooperate with State officials charged with the enforcement of State laws" relating to warehouse and warehousemen. Cf. Union Brokerage Co. v. Jensen, Page 331 U. S. 233 supra, p. 322 U. S. 209. But Congress did not choose that simple expedient. It went further and added to § 29 the mandatory words "the power, jurisdiction, and authority" of the Secretary conferred under the Act "shall be exclusive with respect to all persons" licensed under the Act. And the original provisions of § 6 requiring a bond from licensees securing the faithful performance of their obligations as warehousemen under state law were deleted.
The previous subservience of the Act to state law was said to have militated "against the full value of Federal warehouse receipts for collateral purposes." [Footnote 11] S.Rep. No. 1775, 71st Cong., 3d Sess., p. 2. The amendment to § 6 followed "naturally" the revision of § 29. Id. The amendment to § 29 was designed to make "the Federal act independent of State laws" and to "place the Federal act on its own bottom." Id. While a warehouseman need not operate under the Act, if he chose to be licensed under it, he would then "be authorized to operate without regard to State acts and be solely responsible to the Federal act." Id. Warehousemen, having made their choice Page 331 U. S. 234 to operate under state or federal law, should "then be permitted to operate without interference on the part of any agency." Id., pp. 2-3. Or, as stated by the House Committee, the purpose of the amendment to § 29 was to make the Act "independent of any State legislation on the subject." H.R.Rep. No. 2314, 70th Cong., 2d Sess., p. 4.
That is strong language. It makes unambiguous what was meant by the deletion from § 6 of any requirement that federal licensees comply with state laws regulating warehousemen. It makes clear the significance to be attached to the special wording of § 29. The amendments to § 6 and § 29, read in light of the Committee Reports, say to us in plain terms that a licensee under the Federal Act can do business "without regard to State acts"; that the matters regulated by the Federal Act cannot be regulated by the States; that, on those matters, a federal licensee (so far as his interstate or foreign commerce activities are concerned) is subject to regulation by one agency and by one agency alone. [Footnote 12] That is to say, Congress did more than make the Federal Act paramount over state law in the event of conflict. It remedied the difficulties which had been encountered in the Act's administration by terminating the dual system of regulation. Cf. First Iowa Hydro-Electric Coop. v. Federal Power Commission, 328 U. S. 152. As stated by the Supreme Court of South Dakota, warehousemen electing to come under the Federal Act need serve but one master, and that one the federal agency. In re Farmers Cooperative Assn., 69 S.D. p. 202, 8 N.W.2d p. 562. The cooperation which the Secretary was authorized to undertake with state officials was cooperation in harmonizing the exclusively federal and the exclusively state systems of regulation. Page 331 U. S. 235
In this view of the Act, Congress formulated a policy on numerous phases of the warehouse business. [Footnote 13] The policy on rates was not the fixing of them, but control over them through issuance, suspension, or revocation of licenses. Dual or conflicting positions of warehousemen were regulated by disclosure, by general prohibitions against discrimination between customers, by control over the license. Unsafe and inadequate warehouses were protected by the power of the Secretary to determine whether the warehouses of applicants or licensees were suitable. Mixing of grain was authorized under specified conditions and prohibited under others. On each of the nine matters charged in the complaint and listed above, Congress legislated. And as we read the Act, Congress in effect said that the policy which it adopted in each of the nine was exclusive Page 331 U. S. 236 of all others, and that, if a licensed warehouseman complied with each requirement, he did all that he need do. He could not be required by a State to do more or additional things or conform to added regulations, even though they in no way conflicted with what was demanded of him under the Federal Act. We recently noted that Congress can act so unequivocally as to make clear that it intends no regulation except its own. Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U. S. 767. In these fields Congress has done just that, by the 1931 amendments.
(1) Failure to secure prior approval of the Illinois Commission for management, construction, engineering, supply, financial and other contracts between respondents and affiliates. Such approval is said to be required by § 8(a)(3) of the Public Utilities Act. Page 331 U. S. 237
The United States Warehouse Act contains no provisions relating expressly to these three matters. And we are told that the Secretary of Agriculture has made no attempt to exercise any jurisdiction over them. But possibilities of conflict and repugnancy are conjured up. It is stated, for example, that the Secretary might determine that a warehouseman could not offer suitable warehouse service without an addition to his warehouse, that the financing of an addition might require the warehouseman to issue securities, that state disapproval of the issue might prevent the licensee from making the required additions. But it will be time to consider such asserted conflicts between the State and Federal Acts when and if they arise. Any such objections are, at this stage, premature. Congress has not foreclosed state action by adopting a policy of its own on these matters. Into these fields it has not moved. By nothing that it has done has it preempted those areas. And see Federal Compress Co. v. McLean, supra, p. 291 U. S. 23. In more ambiguous situations than this, we have refused to hold that state regulation was superseded by a federal law. Penn Dairies, Inc. v. Milk Control Commission, 318 U. S. 261. Page 331 U. S. 238
"the power, jurisdiction, and authority conferred upon the Secretary of Agriculture under this Act shall be exclusive with respect to all persons securing a license hereunder so long as said license remains in effect. "Page 331 U. S. 239
The facts of the case are not in dispute. Rice, an owner and shipper of grain, filed with the Illinois Commerce Commission a complaint charging respondent warehouse owners with violations of the Illinois Public Utility Act (Ill.Rev. Stats.1945, c. 111 2/3), the Illinois Grain Warehouse Act (Ill.Rev. Stats.1945, c. 114 §§ 293-326(a)), and Art. XIII of the Illinois Constitution. The violations charged include operation without a State license, exaction of unreasonable rates, failure to publish rates, failure to provide appropriate facilities, improper Page 331 U. S. 240 mixing of grades, discrimination in rates, and conflict of interests as grain dealer and warehouseman. The respondents moved to dismiss the complaint on the ground that federal license placed them under the exclusive jurisdiction of the United States Warehouse Act, and the State's authority was entirely superseded. Upon denial of this motion by the Illinois Commerce Commission, respondents applied to the United States District Court for an injunction against further State proceedings. What is before us is the ruling of the Circuit Court of Appeals that the District Court had erred in not granting the injunction.
On the merits of the controversy, our problem is to determine what freedom to regulate its grain warehouses has been left to Illinois, after Congress exercised its constitutional Page 331 U. S. 241 power over such warehouses by adopting a licensing system to be administered by the Secretary of Agriculture under closely defined authority. Underlying the problem is the important fact that we are concerned with an economic enterprise which, while it has important radiations beyond State bounds, does not thereby lose special relations to the State in which it is conducted. And so we have once more the duty of judicially adjusting the interests of both the Nation and the State, where Congress has not clearly asserted its power of preemption so as to leave no doubt that the separate interests of the States are left wholly to national protection.
"the power, Page 331 U. S. 242 jurisdiction, and authority conferred upon the Secretary of Agriculture . . . exclusive with respect to all persons securing a license,"
By the United States Warehouse Act, Congress did not undertake a general, affirmative regulation of warehouses, Page 331 U. S. 243 even remotely comparable to its regulation of other public utilities. The Act was initiated as warehouse receipts legislation, written with the Uniform Warehouse Receipts Act in mind. Neither the language nor the history of the 1931 Amendment marks a departure from the basic design and policy of the legislation. Congress did not see fit to establish a compulsory, uniform, nationwide system for the regulation of grain warehouses, essential links though they be in the chain of interstate commerce. Nor did Congress authorize the Secretary of Agriculture to formulate and enforce such a system. Even in its limited aspect, the Act. does not apply to all warehouses affecting interstate commerce. Indeed, Congress exercised no compulsion over any warehouse. Congress merely offered to those who desired it the privilege of being a federal licensee. Anyone who wished might continue to operate as a warehouseman without a federal license. As to these, there is no question but that State law controls. And even those who obtain a federal license cannot be compelled to perform any positive duties. Except for certain penalties for fraud, the only sanction for disobedience of the few duties imposed is loss of the license.
Congress was content to allow two warehousemen in similar circumstances to operate under different rules if one chose to seek a federal license and the other did not. It offered perquisites incident to such a license to a warehouseman who wanted them. Such a scheme does not persuasively indicate a purpose to free such a federal licensee from regulations to which others are subject and which are not in practical conflict with the requirements of the federal law. For instance, has Congress really expressed with reasonable clarity its purpose to forbid to the States the fixing of warehouse rates, and thus deprive the States of a longstanding regulatory power which the United States chose not to assume? Is it not more consistent Page 331 U. S. 244 with a proper regard for the interplay of State and national interests to assume that Congress was imposing a minimum of regulation for those who accepted federal licenses, rather than to assume that, by inferential sterilization of State laws Congress meant to make its optional and restricted requirements the maximum? The "power, jurisdiction, and authority" of the Secretary of Agriculture which, after 1931, was to be "exclusive" are given full and fair scope if made to refer only to powers that the Secretary can effectively exercise. There is exclusion of State power as to what the Act, substantively speaking, includes, but not exclusion of a vast potential field of warehouse regulation, not within the active range of federal administration, simply because Congress dealt with a small part of it, and that only conditionally.
That Amendment eliminated the subservience of the federal Act to the laws of the States, for such subservience really nullified the practical purposes at which Congress aimed in 1916 by a voluntary federal licensing system. The purpose was to make "the Federal act independent of State laws," and to "place the Federal act on its own bottom." While such language in a Committee Report, treated merely as words, might be interpreted as an implicit, Page 331 U. S. 245 roughshod decimation of State authority over any aspect of warehousing which the federal licensing system touched, howsoever meagerly and indirectly, it is more consonant with a due regard for federal State relations to find that the dominating object of the legislation controls what was meant by "independent of State laws." For the dominant object was removal of those matters which were entrusted to the Secretary of Agriculture from subordination to State action. By saving the authority which it had given to the Secretary of Agriculture from being rendered futile by State laws, Congress ought not to be held to have nullified State laws whose continuing force would not hamper the Secretary of Agriculture in exercising the powers that Congress gave him. Evidence is lacking that Congress felt that the correction of the inadequacy which had revealed itself regarding the 1916 Act required withdrawal of federal license holders from the requirements of nonconflicting State regulation. So long as full scope can be given to the amendatory legislation without undermining nonconflicting State laws, nothing but the clearest expression should persuade us that the federal Act wiped out State fixation of rates and other State requirements deeply rooted in their laws. When neither the mischief at which the 1931 Amendment was directed nor the policy, terms and structure of warehousing legislation by Congress in its entirety necessitate it, disregard of the delicate balance of Federal-State relations ought not to be attributed to Congress.
If so fundamental a change were designed, it would normally be reflected in the financial provisions made by Congress and in the reports on the administration of the Act. The appropriations for administering the United States Warehouse Act show no substantial increase as a consequence of the 1931 Amendment. For the years preceding Page 331 U. S. 246 and those immediately following the Amendment, the appropriations were:
The history of the federal act shows that at no time has Congress deemed it desirable to introduce compulsory uniformity of warehouse regulation. By freeing federal licensees from overriding State regulation Congress was not by indirection seeking to create such a uniform system. But the effect of the interpretation now given to the 1931 Amendment is the establishment of uniformity of nonregulation, in that it introduces laissez faire outside the very narrow scope of the Secretary's powers. It is easy to exaggerate the danger of undesirable consequences flowing Page 331 U. S. 247 from a rejected construction. But surely one does not draw on idle fears in suggesting that, as a result of today's decision, the gates of escape from deeply rooted State requirements will be open, although Congress itself has not authorized federal authority to take over the regulation of such activities and though their State enforcement does not at all conflict with, but rather promotes, the limited oversight of warehouses thus far assumed by the Federal Government. The Court displaces settled and fruitful State authority, though it cannot replace it with federal authority.