Source: https://www.legalcrystal.com/case/103585/phillips-petroleum-co-vs-texaco-inc
Timestamp: 2017-04-23 12:35:52
Document Index: 631261709

Matched Legal Cases: ['§ 1331', '§ 1331', '§ 1331', '§ 11', '§ 167', '§ 11', '§ 11', '§ 1331']

Phillips Petroleum Co Vs Texaco Inc - Citation 103585 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Phillips Petroleum Co. Vs. Texaco Inc. - Court Judgment	LegalCrystal Citationlegalcrystal.com/103585CourtUS Supreme CourtDecided OnFeb-19-1974Case Number415 U.S. 125AppellantPhillips Petroleum Co.RespondentTexaco Inc.Excerpt:.....jurisdiction on 28 u.s.c. § 1331(a), brought this action in district court for the reasonable value of helium beyond what petitioner had already paid respondent for natural gas under the sales contract. the district court granted petitioner's motion to dismiss for lack of federal jurisdiction. the court of appeals reversed on the basis of its decision in
northern natural gas co. v. grounds,
441 f.2d 704, a federal interpleader action, in which the court found that the statutory provisions in the helium act amendments of 1960 and the natural cas act do not apply to a sale of commingled helium as a component of the natural gas stream, and that natural gas rates authorized by the federal power commission would thus not bar the seller from recovering the reasonable value of the..... Judgment:
Phillips Petroleum Co. v. Texaco Inc. - 415 U.S. 125 (1974)
Respondent, relying for federal jurisdiction on 28 U.S.C. § 1331(a), brought this action in District Court for the reasonable value of helium beyond what petitioner had already paid respondent for natural gas under the sales contract. The District Court granted petitioner's motion to dismiss for lack of federal jurisdiction. The Court of Appeals reversed on the basis of its decision in
441 F.2d 704, a federal interpleader action, in which the court found that the statutory provisions in the Helium Act Amendments of 1960 and the Natural Cas Act do not apply to a sale of commingled helium as a component of the natural gas stream, and that natural gas rates authorized by the Federal Power Commission would thus not bar the seller from recovering the reasonable value of the helium constituent.
Respondent's suit is, in effect, an action in quantum meruit, whose source is state, and not federal, law. Under the
Grounds decision, supra,
those federal statutory provisions do not create a federal right of recovery, but only preclude interposition of a plea of payment to defeat a
-contractual suit for the helium constituent, which is insufficient to support federal jurisdiction under 28 U.S.C. § 1331(a).
The substantive claim in this case is an outgrowth of an earlier decision of the Tenth Circuit,
441 F.2d 704 (1971). That was a federal interpleader action in which the Court of Appeals held that lessee-producers of natural gas could recover the reasonable value of helium contained in the gas that they produced and sold to pipeline companies, which later extracted and marketed the helium. The essence of the
decision was its rejection of the buyers' contention that the contract price paid for the natural gas was compensation for "the gas stream in its entirety and, absent an express reservation, [that] the buyer gets the whole stream for such purposes as it may determine." [
at 720. The Court of Appeals reasoned that, as a result of the Helium Act Amendments of 1960, 74 Stat. 922, which added § 11 (50 U.S.C. § 167i) to the Helium Conservation Act, 43 Stat. 1110,
"the reconciliation of the Natural Gas Act and of the 1960 amendments to the Helium Act . . . requires the conclusion that the FPC service rates
do not apply to deny recovery
for the contained helium"
in the natural gas stream sold by the lessee-producers.
at 723. (Emphasis added.) The court went on to hold that the lessee-producers could therefore recover "the reasonable value of the helium content of the processed gas."
Because of the presence of federal interpleader jurisdiction, the court in
did not consider whether there existed an independent basis for the exercise of federal jurisdiction. Texaco contends that the Court of Appeals in
read the Natural Gas Act and § 11 of the Helium Conservation Act together to imply a federal cause of action for the recovery of the reasonable value of the helium constituent in natural gas. On the other hand, Phillips' position is that
held only that the effect of these federal statutory provisions is to preclude the defense of payment to a
-contractual action brought for the recovery of the reasonable value of the helium. Hence, Phillips argues that the federal questions raised in the complaint are not part of Texaco's claim, but are merely asserted in anticipation of a probable defense by Phillips.
This Court has repeatedly held that, in order for a claim to arise "under the Constitution, laws, or treaties of the United States," "a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action."
(1936). The federal questions "must be disclosed upon the face of the complaint, unaided by
Gully, supra,
case cannot properly be read as creating a federal cause of action, deriving from the Natural Gas Act and § 11 of the Helium Conservation Act, for the recovery of the reasonable value of helium contained in natural gas sold at rates sanctioned by the Federal Power Commission. Indeed, in commenting on its earlier
decision, the Court of Appeals in the present case concluded that
"satisfactory utility regulation
a utility rate to be used to obtain a commodity which is not within the contemplation of that rate."
481 F.2d 70, 73. (Emphasis added.) In other words, the
case simply held that payment for natural gas at rates established or permitted by the Commission under the authority of the Natural Gas Act will not be regarded as payment for the helium constituent, and cannot be asserted as a defense to a suit for the recovery of the value of that helium. In short, the federal statutory provisions do not, under
create a federal right of recovery, but only preclude the interposition of a plea of payment to defeat a
-contractual suit for the value of the helium. [
Texaco's suit for the reasonable value of the helium is, in effect, an action in
whose source is state law and not federal law.
Cf. Oneida Indian Nation v. County of Oneida,
(194). To the extent that the Natural Gas Act and the 1960 Helium Act Amendments may bear on this action for the recovery of the reasonable value of constituent helium in natural gas, it is clear that their effect is no more than to overcome a potential defense to the action. Under the settled precedent of our past decisions noted above, it thus cannot be said that this suit "arises under the Constitution, laws, or treaties of the United States." Accordingly, there is no federal jurisdiction under 28 U.S.C. § 1331(a).