Earl Warren: -- Corporation, Petitioner, versus Superior Court of the State of Delaware in and for New Castle County, and Number 81, Texaco, Incorporated, versus Superior Court of the State of Delaware in and for the New Castle County. Mr. Wheeler, you may continue your argument.
Charles V.Wheeler: Mr. Chief Justice, may it please the Court. I'm concerned that at the close of yesterday's argument, I've left the impression that we conceive that there was filed an eleven-cent rate or that the Commission accepted an eleven-cent rate. We do not conceive either of those and that would be the second point of my argument. That argument will involve three considerations. What could be done under the law? We will show that the Natural Gas Act and Order 174, which was promulgated pursuant to the Natural Gas Act, did not permit the filing of the rate in effect, but required the filing of the contract and the supplements are -- I mean that's there, too. It requires a consideration of what the petitioners did do. And we will examine their tender great schedule filings and show that those filings show on their face that they reflected the price situation exactly as it was, that is the contract price amended by the Kansas minimum-price order, of course, if, but only if, that order was valid.
William J. Brennan, Jr.: Now, excuse me. Do you say that compliance with 174 required the filing of the contract?
Charles V.Wheeler: Yes.
William J. Brennan, Jr.: If by the terms of 174 so provides that?
Charles V.Wheeler: It is in terms of 174. The pertinent provisions are printed in the appendix to Pan American's brief, at page 66 and 67, 154.92.
Charles E. Whittaker: Was it (Inaudible)
Charles V.Wheeler: No, a copy of the letter was not filed in Pan American's instance. Their letter of transmittal made it clear that their sole claim to the price was the eleven-cent ordered price and of course that meant that it depended upon its validity. 154.92, which appears on page 66, says that a rate schedule shall be filed.
William J. Brennan, Jr.: Page 66 of what?
Charles V.Wheeler: I beg your pardon. Pan American's main brief -- brief for petitioner Pan American. It's in the appendix. And the definition of the rate schedule is contained on the next page, under Section 154.93, which -- at page 67. The third consideration, of course, will be what the Commission did and what -- in light of what the Commission could do. And in discussing the Commission's acts, we will make it perfectly clear that the Commission accepted the price situation as it was, that is, the contract price modified by the Kansas minimum-price order, if the order was valid. But returning to what seems to us to be the critical issue in this case, which is whether or not the Superior Court of New Castle County has jurisdiction. That turns, in our view, upon the interpretation of Section 22 of the Natural Gas Act. Section 22 confers upon the federal courts exclusive jurisdiction in that limited class of cases, which, in the language of the statute, are, “Brought to enforce any liability or duty created by or to enjoin any violation of this chapter or any rule, regulation or order thereunder.” Of course, the jurisdictional provision must be within the limits of federal court jurisdiction prescribed by Article 3 Section 2 of the Constitution, which defines the limits of federal court jurisdiction to cases arising under the Constitution and the laws of the United States and so forth. In both the House Committee Report and the Senate Committee Report on the Natural Gas Act, the Committees described the intent and purpose of Section 22 in identical language using the traditional cases arising under language of the Constitution. The language reads, “This Section imposes appropriate jurisdiction upon the courts of the United States over cases arising under the Act.” This language is not only contained in the Constitution, but it is contained in the older jurisdictional statutes with which we're familiar, particularly 12 or 28 U.S.C., which deals with federal question jurisdiction and 28 U.S.C.1338, which deals with exclusive federal court jurisdiction in patent and copyright cases. This language has been repeatedly construed by this Court, the lower federal courts and the state courts. I don't believe that it's an overstatement to say that at least since the decision of this Court in Gully, all courts have, without exception, construed this language to mean that the single test of the trial court's jurisdiction is a statement of the plaintiff's claim in his complaint, unaided by any defenses which maybe raised by the defendant or even by any allegation which the plaintiff makes in anticipation of some defense, which the defendant may plead. No matter how carefully it's disguised, the petitioners' position here with respect to jurisdiction must be to urge this Court to depart from this traditional test and adopt a new test, reconstruing the cases arising under language of the Constitution. For they urge to adopt the rule under which the trial court's jurisdiction is determined from an examination of the subject matter of the action, irrespective of whether the filed rate comes into the case as a part of the plaintiff's claim or is merely injected into it as a matter of good faith. The single excuse which is offered by petitioners for this radical departure is a claim that it would aid the uniform construction of their filed rate schedules. They rely upon cases which deal with the Labor Management Relations Act and the National Labor Relations Act. These labor relations cases, it seemed to us, make it perfectly clear that neither the Congress nor this Court has ever regarded exclusive federal court jurisdiction as an aid or a device to promote uniformity, in Garner versus Teamsters, Chauffeurs and Helpers, which we discussed at page 34 of our brief. This Court pointed out that when the objective is uniformity of decision, the very same considerations which would oust state courts of jurisdiction, oust federal court jurisdiction. And again, a year later in Amalgamated Clothing Workers of America versus Richman Brothers, another labor relations case, which we discussed at page 34 of our brief, this Court reviewed the history of our dual system of state and federal court jurisdiction. And there, it was pointed out that the courts -- that the state courts have always been regarded as perfectly adequate tribunals for the resolution of federal questions which are injected in the cases as a matter of defense. Even in those instances in which the conflict is between regulatory agency jurisdiction on the one hand and court jurisdiction on the other, either state or federal, this Court pointed out that uniformity of decision is provided for by the review in this Court. That's the doctrine announced in Great Northern Railway Company versus Merchants Elevator Company, which we discussed at page 35 of our brief.
Felix Frankfurter: Mr. Wheeler, you are not suggesting or are you, that Congress that -- there wasn't any constitutional limitation upon the withdrawal by the Congress of cases that raise the federal questions by way of defense? In other words, that Congress by appropriate language that you say is not found here though events imply. Congress could say that if an issue is -- is raised by the defendant in answer to a complaint, which brings into issue of federal statute or a federal right, such a controversy is -- is not be entertainable on the state court, that must itself, be initiated in the federal courts. You don't think there's any constitutional difficulty here?
Charles V.Wheeler: Well, I think it would require a reconstruction of language of cases arising under, which is used --
Felix Frankfurter: But there's another occasion --
Charles V.Wheeler: -- in the Constitution.
Felix Frankfurter: -- go unconstitutional (Voice Overlap) --
Charles V.Wheeler: No, it did not. They construed the same language.
Felix Frankfurter: Yes.
Charles V.Wheeler: I think it is possible of course that the constitutional language could be construed differently from the statutory language.
Felix Frankfurter: Well, if -- if there is an issue in a controversy, if an issue is created by pleading involving a federal question, Congress could say that such litigations cannot be entertained by a state court, couldn't it?
Charles V.Wheeler: If -- my view is, if that came within the limits of the Constitution as a case arising under.
Felix Frankfurter: (Voice Overlap) --
Charles V.Wheeler: Yes, sir, that's correct.
Felix Frankfurter: In other words, the Gully -- the Gully case brings the issue whether in that case involving a National Banking Act, whether that was the question that arose under an act of Congress and it's found that it didn't arise for the reason it has exposed. Although, the defense that was tendered if it prevailed upon the merits, the defendant had prevailed what involved a federal claim, wouldn't it?
Charles V.Wheeler: That's correct. Yes.
Felix Frankfurter: So, the issue where he is whether under the statute, this case arose in the light of the Gully doctrine.
Charles V.Wheeler: I -- I think that is substantially it.
Felix Frankfurter: That's narrow -- not -- not narrow, but that's the defined principle.
Charles V.Wheeler: I think that's correct. Yes, sir. In the final analysis, it seems to us that petitioners' argument is not so much that the state court has no jurisdiction as it is that plaintiff's common-law claims which have been asserted in the state court are without merits on account of the intervention of the Natural Gas Act in the filed rate schedule. I mentioned yesterday that our cases were patterned after the decisions of the Fifth Circuit Court in Natural Gas Pipeline Company of America versus Harrington and the District Court's opinion which preceded it. That case was on all force with the case at bar, it involved the Oklahoma order, which this Court held to be invalid in 1956 and therefore, preceded our cases by some two years. I call the Court's attention particularly to the opinion of the Fifth Circuit, for there, it seems to us that they deal with the precise contention which is made here by the petitioners and that is that these common-law rights did not survive the Natural Gas Act, the Phillips' decision and Order 174. And there, the Fifth Circuit, relying upon this Court's decision in Mobil, held squarely that the presence of regulation of producers' process by the Natural Gas Act did not defeat the pipeline company's common-law rights and common-law causes of action. It seems to us that the doctrines laid down in Mobil and in Memphis in which this Court held about the Natural Gas Act, did not abrogate contract rights, stands squarely for the proposition that these claims are meritorious, if they can be established upon their facts. I also call the Court's attention to the Sunray Mid-Continent case, Sunray Mid-Continent Oil Company versus FPC and Texas Gas Transmission Corporation versus Shell Oil Company, both of which are discussed at page 13 of the amicus brief of Colorado Interstate. I think that those will be helpful in pointing up these -- this Court's view as to the interrelation between common-law and contract rights and rights which arise out of the Natural Gas Act. I have mentioned these cses particularly because its petitioners' suggestion that Cities' common-law claims are fictitious claims and therefore, they seek to apply the rule of this Court in the Lambert case. The Court will perhaps recall that in Lambert, a shipper sued a railroad to enjoin the operation of certain shipping rules as I recall 8, 9 and 10 and making the allegation that those rules were the rules of the railroad and conflicted with Rule 12 of the Interstate Commerce Commission. Now, the fact was that Rules 8, 9 and 10 were not the railroad company's rules at all, but were the rules of the Interstate Commerce Commission. And this Court held that by simply alleging that those were the railroad company's rules, it could not oust the federal courts of jurisdiction. The significant point is that the Section 22 of the Natural Gas Act has no application to these cases because these cases were not brought to enforce liabilities created by the Act. That the State Court of Delaware has jurisdiction over these cases because they were brought to enforce liabilities over which the state court has jurisdiction, contract liabilities arising out of state law and common-law -- and common-law doctrines of restitution and unjust enrichment.
William J. Brennan, Jr.: Where was that (Inaudible)
Charles V.Wheeler: It's Natural Gas Pipeline Company of America versus Harrington. It is cited at page -- at pages 33 and 54 of our brief. Turning now to our second point, we will answer petitioners' claim that their filed rate defense is -- will be a meritorious defense when these cases are tried below, on their merits. As I pointed out, we do not view this as being an issue before this Court, but we do think that it is appropriate, since this seems to us, to be the whole point of petitioners' argument to discuss the matter and to show that petitioners' filed rate was the contract rate modified by the Kansas minimum-price order if that order was valid. We rely principally upon the two decisions of the Circuit Courts who have examined rate schedule such as these in which there was filed the basic gas purchase contract and the copy of the Kansas minimum-price order or -- those cases are Cities Service Gas Company versus FPC, to which we referred as Magnolia, since Magnolia Petroleum Corporation was the intervenor and it was its rate schedule, as cited and discussed at page 36 of our brief. And the Third Circuit's opinion in Natural Gas Pipeline Company of America versus FPC, Dorchester Corporation, intervenor, which we describe as the -- referred to as the Dorchester case. In each of those cases, the Circuit Courts held that in view of the decisions of this Court, holding that the Oklahoma price order in the Dorchester case was void. And the Kansas price order in the Magnolia Case was void. That in view of that decision, these rate schedules fixed the legally effective rate at the contract rate unmodified by the void order. It simply -- those courts simply held that the void order could not amend or modify a contract. Let us examine in detail, what could be done under the Natural Gas Act and Order 174. As we understand the petitioners' position, they conceive that their initial rate filings initiated a rate-making or a rate-changing procedure, under which the Federal Power Commission set aside the contract and contractualobligations which ran between us and made new obligations for us without a hearing, without the parties being present and solely on the basis of an ex parte fact. In the Mobil case, this Court reviewed it later the powers of the Federal Power Commission as defined in Sections 5 (a) and 4 (e) of the Act. This Court said that Section 5 (a) prescribed the basic power of the Federal Power Commission with respect to rates. Giving it the power to conduct hearings and make determination after hearings with respect to a contract which had been filed with it and upon the finding that the rates fixed in the contract were unjust and unreasonable, then to remedy that, by setting aside and -- or modifying those contract rates. This Court said, “This is neither a rate-making nor a rate-changing procedure. It is simply the power to review the rates and contracts made in the first instance by natural gas companies and if they are to be -- determined to be unlawful, to remedy them.” The Commission's Order 174, under which these filings were made, were limited to procedural matters only and were not intended to affect substantive rights after hearings and after two amendments to the order. The Commission entered its Order 174-B and with it, it filed an opinion in which it expressed this view of what it was doing in Order 174. It said, and I quote, “Substantive rules, however, do not appear desirable in connection with the filings with which these rules are concerned, and it is the intention of the Commission to relate these rules strictly to procedural matters.” Order 174 did not permit the filing of the rate in effect on June 7, 1954. I asked the Court to turn its attention to the provisions of Order 174. It is found in the brief for the petitioner Pan American Petroleum Corporation. It's a white-back brief for petitioner Pan American Petroleum Corporation.
Hugo L. Black: What page?
Charles V.Wheeler: At pages 66 and 67. 154.92, which appears at the top of page 66, 154.92 (a) requires the filing. It says that "Every independent producer shall file." And I skip down to the fifth line, “With the Commission rate schedules as defined in Section 154.93 hereof," setting forth the terms and conditions of service and so on. Of -- that was the filing which was required to be made in turning our attention now to 154.93 which appears on page 67. The definition is given how the rate schedule for the purpose of Sections 154.92 through 154.101 hereof, “Rate schedule shall mean the basic contract and all supplements and agreements are mandatory thereof, effective and applicable on and after June 7, 1954,” and so forth. I think it would be helpful to explain that the schedules which were filed were not simply a schedule of rates in the railroad tariff, the sense of the term, but were copies of all of the documents which comprise the basic contract, the amendments and the supplements thereto. Pan American's entire rate schedule is printed in this record. It consists of the basic gas purchase contract and 78 supplementary agreements and amendments thereto. It occupies 274 pages of the printed record. There was no requirement for the statement of any rate of it than that it did require that there be filed also, but not as a part of the rate schedule, a billing state that is found in the last sentence of 154.92. Having said what the rate schedule was, the -- they then -- the rule then said that to each rate schedule, there shall be attached the statement showing the actual billing.
Hugo L. Black: Where is that?
Charles V.Wheeler: That's in the last sentence of 154.92 at page 66 of Pan American's. 92 (a).
Hugo L. Black: Paragraph (a) of the (Voice Overlap) --
Charles V.Wheeler: Yes, I beg your pardon, sir. Three Circuit or the Tenth Circuit Court in three different cases, which we cite at page 39 of our brief, has held squarely that this billing statement is not a part of the rate schedule, but is simply a statement as to -- which does not affect the level of the rate at all. And if the billing and as pointed out in those three cases, the two cases involving -- involving Phillips Petroleum Company in one case following -- involving Kerr-McGee. If the -- the billing statement does not affect the rate at all, the rate is made by the basic gas purchase contract and the amendments and supplements thereto. I think it is significant that Order 174 did not require that the Federal Power Commission give the purchaser any notice of this fact. It did not contemplate that there be conducted in hearing on the filings, did not contemplate that there be -- that the Commission make any findings or draw any conclusions. And I think from the examination of the Commission's acts and it will be perfectly apparent that the Commission gave no notice that they did not docket these filings for hearing, that they conducted no hearing, that they made no findings and that they drew no conclusions.
Speaker: Were you actually given notice?
Charles V.Wheeler: We did receive a copy of each one.
Speaker: That's from your -- from the sellers?
Charles V.Wheeler: Yes, from the sellers, that's correct. It's our view that the absence of these minimum essentials of due process is prove positive that the Commission did not and could not have affected -- could have affected substantive rights of the parties, but they were bound to preserve the status quo as it was on the critical date, June 7, 1954.
Charles E. Whittaker: Once the rate is approved to contracts by the Commission, then is not that the sole and only lawful rate from that time?
Charles V.Wheeler: I think that's correct. Yes, sir.
Charles E. Whittaker: Now, then, may there be a side agreement continuing private character between this producer and the pipeline for something more?
Charles V.Wheeler: Which picks the rate?
Earl Warren: Yes.
Charles V.Wheeler: No, sir.
Charles E. Whittaker: Well, then, did your contract, when approved by the Commission, become the whole law of the subject of rates?
Charles V.Wheeler: I do not think so. No, sir. I think that it fixed the rate, but I do not think that it had anything to do with the common-law. I did no -- I do not think that it abrogated the common-law rights upon which we rely. May I give this example, for -- suppose we -- our check which we had given to Pan American for one of these gas payments had been dishonored, I think they could've sued us to collect on the check.
Charles E. Whittaker: I understood you to say that's why I was in this Fifth Circuit case that they had expressively held that the private rights continued on the contract, notwithstanding the filing of it with the Commission, did I misunderstood you?
Charles V.Wheeler: I believe, effects what I said, I overstated it. I --
Charles E. Whittaker: I probably misunderstood you.
Charles V.Wheeler: In Natural Gas Pipe versus Harrington, the defense was made that on account of -- the intervention of the Phillips case and the regulation of independent producers because the plaintiff did not rely upon the filed rate and because, in fact, Harrington had not made a file, there could be no recovery of any kind, and the Circuit Court relying upon this Court's decision in Mobil said that Phillips and Order 174 fixed the rate at the contract rate and that it was not significant, either that they did or did not have a filing. It seems to me that that is a decision which touches very closely upon the contention that the Natural Gas Act occupies the whole field.
Speaker: From the -- from the period of the filing in 1954 to the Panoma case decision, you were paying at eleven-cent rate, were you not?
Charles V.Wheeler: The same as we had the product.
Speaker: As you'd --
Charles V.Wheeler: That's correct.
Speaker: -- and subject to the same reservations?
Charles V.Wheeler: Yes, each check board docketed --
Speaker: Now --
Charles V.Wheeler: -- exactly the same legend.
Speaker: Now, following the Panoma case, will the Commission have had any power or jurisdiction to require the reimbursement to you of the overpayments, the difference between eleven cents and the 8.4 cents or whatever it was? Could you have brought a suit in the Commission or a proceeding before the Commission, assuming that Pan American had not been willing to reimburse, could you have brought a proceeding in the Commission to require that reimbursement?
Charles V.Wheeler: I am doubtful that we could. I do not think that there is any --
Speaker: I never understood this Commission had any past reparation power at all.
Charles V.Wheeler: I don't -- I don't conceive they do have.
Speaker: They can fix a rate only for the future.
Charles V.Wheeler: That is correct. Yes, sir.
Charles E. Whittaker: Now, as -- may I ask you this. Assume for the sake of argument that primary jurisdiction would require action initially before the Commission? Yet, if, as you argue here, no question of fact is involved, no discretion is to be exercised by the Commission, would it be more than a useless act to send the case there when the question is one of law or not?
Charles V.Wheeler: Oh, I think that it would be. And I understand -- and I understand that that's the principle in Great Northern, that when it involves pure questions of law as this does that there would be no occasion for the Commission to pass upon.
Charles E. Whittaker: Now, could a state court as well as federal court have power to decide that issue?
Charles V.Wheeler: That's my view of the matter, under the announcement that particularly those in the labor relation cases to which I have referred and of course, the traditional cases which hold that a state court is a perfectly adequate tribunal to pass on these federal questions that it turns upon whether it's the plaintiff who bases his claim on it or it's the defendant relying upon. The second consideration is what is the filed rate? What rates the petitioners' file, and I think in examination of their letter or particularly a Pan American's letter of transmittal, will disclose clearly that they said to the Commission, “Our filed rate is the contract rate.” However, there is now in existence the Kansas minimum price-order. It has been a -- a state regulation of price has been held to be valid and of course, if this is valid, then the price is amended by that minimum-price order.
Speaker: Can you pinpoint that in the record?
Charles V.Wheeler: The letter of transmittal appears at page 593 of the record. If I may move on, I think also that an examination of these tabulation in which the eleven-cent price, which was called to your attention by Mr. Gray yesterday, is footnoted "Kansas minimum-price order" and this tabulation is at page 638, shows clearly that at all times everyone recognized that the sole claim to the eleven-cent price was the Kansas minimum-price order and therefore was wholly dependent upon its validity. If what we are looking for is something definitive which the Commission did, which indicated its view, seems to me, that the only definitive thing which they ever did was to cover the matter in Cities' rate settlement order. Immediately after the decision or the promulgation of the Kansas order in May 1954, Cities sought an increase in its own rates, before the Federal Power Commission relying largely upon the increase cost to it of purchase gas, occasioned by the minimum price order. In that order, in settling that case, the Commission granted as to increased rates based upon with the increased cost, occasioned by the Kansas price order. But they made the requirement that if the Kansas order was determined to be invalid and if Cities received refunds on account of litigation such as this, then those refund should be passed back to our customers in the proportions in which they had borne the increased cost. Sure, if, when petitioners filed these rates cases, their rates became fixed at the eleven-cent price, there would've been no occasion for the Commission to have made a provision for refunds, when and if the price order was held to be invalid and we received those refunds.
Hugo L. Black: Can I ask you just one question --
Charles V.Wheeler: Yes.
Hugo L. Black: -- of your time. Suppose you win here and in the state court, the rate is seven cents, who gets the money?
Charles V.Wheeler: Our customers get the money to the extent that they have borne them. In other words, all of the money which they have paid on account of increased cost is returned to them. Now, you understand of course --
Hugo L. Black: Where is that provided?
Charles V.Wheeler: I beg your pardon?
Hugo L. Black: Where is that?
Charles V.Wheeler: That is in the order in Docket G2410. It's in the record. I beg your pardon. 556 in the record, at 556 to 586. The citations are on page 57 of our brief. Thank you.
Earl Warren: Mr. Gray, you may --
Byron M.Gray: May the Court --
Earl Warren: -- proceed.
Byron M.Gray: -- please. The first question which I would like to address myself is the Gully case. And I want to demonstrate that the Gully case simply has no application here. Under the rules of the Delaware courts, they follow very much the same procedure. The fact as I check it is exactly the same procedure as the federal -- several rules prove several practices. And after Cities had filed their complaint, after they had filed their complaint, they then and before anyone had answered, filed a motion for summary judgment and attached thereto affidavits and certain certified copies of various documents including the entire rate filing made before the Federal Power Commission and that was before anyone had answered. And then they moved, as I say, for a summary judgment on the basis of the rate filings made by Pan American before the Federal Power Commission. A -- they demand and they attached thereto, a true and correct copy, a certified copy of all these documents I'm telling you about including the letter of the Federal Power Commission accepting the rate of Pan American. And now, they say it wasn't an eleven-cent rate, although they paid it for three years. So, that is on page 278 of this record, is their motion of the plaintiff.
Speaker: But they continued to pay under protest, doesn't it?
Byron M.Gray: For summary judgment, I say their protest ran to the payment of the eleven cents by virtue of the Kansas order. But after that rate was filed and accepted and was the rate on file with the Federal Power Commission, they were paying it by virtue of the fact, it was the filed rate. But I attract your attention to the fact that they first brought on to this record, the entire rate filing including the letter of acceptance by the Federal Power Commission. They did it in a motion for a summary judgment.
Earl Warren: And then you continued to accept those checks with that notation on them?
Byron M.Gray: Yes, the notation was there. That --
Earl Warren: Yes.
Byron M.Gray: -- is correct.
Earl Warren: You didn't object to it?
Byron M.Gray: No. No, that -- that's correct. If common-law doctrine were to apply, that would certainly have a bearing. But I -- I want to show you that these -- that Cities are the persons who first brought the federal question in and first shown that -- that this action is an action that is, in effect, an action based upon a law of the United States because a rate properly on file with a federal agency has the effect of law. Now, what argument did they make? In their brief in support of their motion and this -- this -- for their motion for summary judgment, based on these documents under the heading and this, I'm reading from 767 of the record, “(g) The law permits no deviation from the defendants' filed rate of 8.4 cents per Mcf.” And Now I'm reading from their brief in the trial court before there was any answer. They say “We have shown that defendants' filed rate schedule fixes the price for this gas at the contract rate, 8.4 cents. Defendant cannot claim any other price.” This is their brief before any answer. “The rate fixed by defendant's rate schedule is binding upon plaintiff and defendant and upon this Court with the force and effect of federal statute.” That is the words of Cities in the trial court, in their brief.
Felix Frankfurter: But where are you reading from, Mr. Gray?
Byron M.Gray: I am reading from page 767 of the record.
Felix Frankfurter: 767, I beg your pardon.
Byron M.Gray: Yes.
Felix Frankfurter: All right.
Byron M.Gray: Thank you very much. Now, they say themselves it has the force and effect of a federal statute. That's a very --
Felix Frankfurter: Mr. Gray, is all this in the brief?
Byron M.Gray: Yes.
Felix Frankfurter: This is a brief.
Byron M.Gray: In the brief that they filed in support of their motion for summary judgment.
Felix Frankfurter: Now, did any of the pleading set this forth?
Byron M.Gray: Any of the pleadings?
Felix Frankfurter: Did -- did -- what you read -- what you have just read -- what you're referring to as contained in the brief put anything like that set any pleading by the complainant -- by plaintiffs below.
Byron M.Gray: In their motion for summary judgment, yes. That is only -- their motion for summary judgment sets all of that out and then --
Felix Frankfurter: Where is that?(Voice Overlap) --
Byron M.Gray: Yes, their motion for summary judgment starts on page 7 -- no, 278 of the record.
Felix Frankfurter: Well --
Byron M.Gray: And then it continues --
Felix Frankfurter: What page?
Byron M.Gray: 278 --
Felix Frankfurter: 278.
Byron M.Gray: -- of the record and one of the bases of their motion is the fact that they attached Exhibit 3, which is a true and correct copy of Pan American Petroleum's file etcetera, etcetera.
Speaker: What do you say to Mr. Wheeler's argument that all this, which followed Panoma was simply to show to the state court that his rights, asserted rights under his contract, Cities rights under his contract was not inconsistent with anything that the Power Commission would be interested in?
Byron M.Gray: Well --
Speaker: That his -- that his answer (Voice Overlap)
Byron M.Gray: I'm attempting to show that the Gully doctrine does not apply and that's my purpose here. And it just seems to me -- I can't to follow someone who says they have jurisdiction because it isn't inconsistent for me to have. It either have jurisdiction and it don't have, in my judgment. But I -- I have --
Felix Frankfurter: All depends what the -- what the governing documents are for ascertaining jurisdiction.
Byron M.Gray: Yes, I --
Felix Frankfurter: The --
Byron M.Gray: -- quite agree with that.
Felix Frankfurter: governing document is the complaint. That's one thing.
Byron M.Gray: The complaint and as you know the federal rules and the rules in Delaware make this motion for summary judgment as much as the pleadings as their complaint, just as Rule --
Felix Frankfurter: Prevent them from --
Byron M.Gray: -- 15 (b) of -- of our federal rules make it and I say that that's a governing document and they first brought it under this record.
Felix Frankfurter: Maybe a governing document, is it, the governing document?
Byron M.Gray: Well, it -- it must surely be a part of it and I think I -- if I can get to it, then I'll show you how it works right in the governing.
Felix Frankfurter: I'm not going to stop you.
Byron M.Gray: Thank you. I don't mind -- I don't mind at all of course, but the trial court now, what did the trial court do? The trial court said, “Thus, it became apparent.” How did the trial court treat that document? It became apparent that a major issue in this case is the determination on what rates was the filed rate and then it came on over and it said as follows, “The question then becomes what rate was legally filed.” Now, that's the issue the trial court said it was deciding and that's the issue I say they couldn't have decided and then it gets to the Supreme Court and the Supreme Court says, “Being void because a Kansas order was void, they're going back in doing what you'd have to do under Section 19, the review statute. Being void, the unilateral filing of the order as part of the rate scheduled for the nullities." And that was what was done in Dorchester and in both of the cases that -- in Mobil, they followed Section 19, but now, I want to move to Gully and here's what the doctrine of Gully is if I understand it correctly. “A suit to enforce a right which takes its origin in the laws of the United States is not necessarily or for that reason alone, one arising under those laws for a suit does not so arise, unless it really and substantially involves a dispute or controversy respecting the validity, construction or effect of such a law upon the determination of which the result depends.” And I say now that once a rate becomes the legally filed rate with a federal agency, it becomes a part of the body of the federal law. And this Court has said that time and again. For example, in Crancer versus Lowden, 315 U.S., I think, this may not be in our brief. That -- this Court said, “Until changed, tariffs bind both carriers and shippers with the force of law.” Now, it seems to me that when the Court says that it must decide what was the filed rate that that's the issue in the trial court and when the Supreme Court supports them in that, it seems to me that certainly, they've met the test of the Gully case, that they are construing and that the determination of the case depends upon the interpretation of federal law.
Potter Stewart: Well, now, Mr. Gray, the Gully case, as I understand it, had to do -- the question there was whether something was properly in the -- permissibly in the state court or whether it should have been exclusively in the Federal District Court.
Byron M.Gray: Was the removal --
Potter Stewart: In this case -- in this case, you don't make that claim at all. You don't say that these people could properly be in the District Court. You say they can't be in any court at all that they have nowhere where they can assert their right (Voice Overlap) --
Byron M.Gray: Oh, no. No, they have the case, this same case involving the same $10,300,000. It's filed in the Federal Court at Delaware and as far as jurisdiction goes, if they can get jurisdiction of the persons, it would be a Section 22 case filed as a Section 22 case. It is there and of course, will have to be tried on the question of what is the filed rate. But what I do say is this that Section 19 also involved here. What they're trying to do is to accomplish what they should've accomplished if it could be accomplished under Section 19 and they cite the Magnolia and the Dorchester cases to you. And in those cases, the filings under 174 were appealed from through Section 19 and they went up to the Circuit Court. They're asking a state court to do and the state court in fact is doing what a Circuit Court of Appeals would've had to do. That is under Section 19. And Magnolia, all those cases went up under Section 19. But the Harrington case that they cite to you was before the Order Number 174, all the chip, all of the sales made in the Harrington. All of the price is paid. That was all before there was any filed rate. And I think Harrington was wrong in principle, itself. I think it conflicts with your decision in Panoma and the Kansas case because I think you held there in effect that the Natural Gas Act simply preempted the field and didn't leave any place for anything but federal regulation and the jurisdiction arising out of the Natural Gas Act. That's the way I -- it seems to me that -- impossible to -- to think otherwise. Now, there's one thing I -- in their brief --
Felix Frankfurter: May I -- may I ask you --
Byron M.Gray: Yes, sir.
Felix Frankfurter: -- one more thing about the Gully case? Suppose there's been a motion for summary judgment in the Gully case on the basis of the complaint, the answer and the petition for removal, according to your view -- according to your view, the state court would then have been ousted?
Byron M.Gray: Had there been a removal petition?
Felix Frankfurter: If the answer and a -- a petition for removal had set forth that the ultimate reliance was the National Banking Act which allowed the state to tax national bank shares.
Byron M.Gray: Oh, yes.
Felix Frankfurter: You say that according to the rules, a motion for summary judgment sweeps everything that received it into the complaint. I'm asking you --
Byron M.Gray: Oh, no. No, I -- I wasn't meaning to say that. If I said it, I -- I didn't mean that.
Felix Frankfurter: Well, but you --
Byron M.Gray: I think that 15 (b) of the federal rules has the effect of putting everything in the complaint that is essential to that complaint and it does it automatically, at least that's where I read the rules.
Felix Frankfurter: Well, but a pleader can choose what he puts in his complaint.
Byron M.Gray: He can choose what he puts in his complaint.
Felix Frankfurter: And he isn't determined and he doesn't absorb or incorporate by a necessity, what the answer sets forth. And so, I'm asking you whether if Gully -- in Gully there'd been a motion in arrest of judgment on the basis of the answer which did disclose that the right to tax derived from the federal statute Rule 5209, I believe, would be a result in Gully have been different, according to your views.
Byron M.Gray: Well, I think it -- I have to weigh the side of the fact, if my recollection is correct that you have to file your removal petition within 20 days --
Felix Frankfurter: Well, that's --
Byron M.Gray: -- before a certain time. But --
Felix Frankfurter: Forget about the --
Byron M.Gray: Yes --
Felix Frankfurter: --removal. The answer --
Byron M.Gray: -- waiving --
Felix Frankfurter: -- suppose the answer, as it did in this -- in the Gully case, disclosed that what complaint is really after is to -- to avail itself, what the complaint had been -- Gully was after, was to avail itself of the federal act which authorizes a state under defined conditions to levy a tax on national bank shares.
Byron M.Gray: As I read the Gully case, I had the feeling that the answer to you would be that you'd have the same result in Gully.
Felix Frankfurter: In other words, that is the Court is, if I may use a -- the phrase from a different area of color blind as to what exists outside of the complaint.
Byron M.Gray: Well, I -- I rather read Gully to -- to say it wasn't closely enough related to the federal law and that they couldn't be having cases removed from the state courts that just might touch upon federal law. That's the way I read Gully.
Felix Frankfurter: Related -- it would be more. The only basis on which up to time that Congress passed that Act, a state could not tax national bank shares, could it?
Byron M.Gray: That's correct.
Felix Frankfurter: And therefore, the right certainty, if any right ever derived from federal authority, it was the right of states to tax national bank shares given to them by the Act whenever it was, in 60 something, rather 60, 70.
Byron M.Gray: That was Gully only.
Charles E. Whittaker: And I do not understand you to contend or do you contend that the affidavits and the exhibits on file, used in support of the motion for summary judgment, constitute a part of the pleadings, do you?
Byron M.Gray: I say that as of that time, it became apparent that their action was not at all an action at common-law to enforce contract, but it became apparent that the right of action sprung from the Natural Gas Act, if they had any.
Charles E. Whittaker: Well, does the jurisdiction depend though upon the affirmance of the bill?
Byron M.Gray: Not jurisdiction of the subject matter and I say that at anytime, and I think this is a law and we have endless cases on it and some in our brief, that when it appears that the subject matter is not within the jurisdiction of the court however it appears and that -- that court looses jurisdiction and that's what happened. It's bound to have happened --
Felix Frankfurter: Would you mind repeating what you just said, when does the court lose jurisdiction?
Byron M.Gray: Whenever it appears that the Court has no jurisdiction of the subject matter of the action. And I say that that appeared when they showed that these movements were movements of -- of gas for resale in interstate commerce and that was the subject matter of their action and when that appeared regardless of how it appeared that court lost jurisdiction of the subject matter.
Felix Frankfurter: Will you make a distinction between a state court losing jurisdiction and a federal court not being able to acquire it?
Byron M.Gray: Yes, I have --
Felix Frankfurter: What was that?
Byron M.Gray: Well --
Felix Frankfurter: Because -- because if there was a federal right, then there was right to removal in Gully.
Byron M.Gray: Yes. It --
Felix Frankfurter: And the Court denied that right because it said a federal right wasn't revealed by the complaint and it didn't go beyond that. Although, although on the merits, although on the merits, it became perfectly clear that the right did derive from a federal act.
Byron M.Gray: And that was after it had been removed, but I do make that distinction and then I think it is clearly the law and that's on our brief.
Felix Frankfurter: But it's the same -- Mr. Gray, it's the same statutory provision of jurisdiction, namely, a right arising under a federal act of the Constitution. It can't be a -- arising under the federal act, not arising under the -- under the removal statute but arising under the state jury -- under the exclusive statute. I don't understand that.
Byron M.Gray: Well, as I -- as I would see it, the statute -- the federal statute excludes the State's jurisdiction and I think it has a right to do it.
Felix Frankfurter: It excludes --
Byron M.Gray: And whenever it appeared that that was a subject matter, your exclusionary statute, 22 came into effect. That's my thought.
Felix Frankfurter: Well, not whenever it appears. Whenever it appears under the conditions under which appearance is legally revealed.
Byron M.Gray: Well, I -- I really think whenever it appears.
Felix Frankfurter: All right.