The Pipe Line Cases
Lead Opinion
delivered the opinion of • the; court.
By the act of Congress of June 29, 1906, c. 3591, 34 Stat. 584, the Act to Regulate Commerce was amended so that the first section reads in part as follows: “That the provisions of this Act shall apply to any corporation or any person or persons engaged fin the transportation-of
The circumstances in which the amendment was passed are known to every one. The Standard Oil Company, a New Jersey corporation, owned the stock of the New York Transit Company, a pipe line made a common carrier by the laws of New York, and of the National Transit Cpmpany, a Pennsylvania corporation of like character, and by these it connected the Appalachian oil field with its refineries ip the east. It owned nearly all the stock of the Ohio Oil Company, which connected the Lima-Indiana field with its system; and the National Transit Company, controlled by it, owned nearly all the stock of the Prairie Oil and Gas Company, which ran from the Mid-Continent field in Oklahoma and Kansas and the Caddo field in Louisiana to Indiana and connected with the previously mentioned lines. It also was largely interested in the. Tide Water Pipe Company, Limited, which connected with the Appalachian and other fields and pursued the methods of the Standard Oil Company about to be described. By the before mentioned and subordinate
Availing itself of its monopoly of the means of transportation the Standard Oil Cómpany refused through its subordinates to carry any oil unless the same was sold to it or to them and through them to it on terms more or less dictated by itself. In this way it made itself master of the fields without the necessity of owning them and carried across, half the continent a great subject of international commerce coming from many owners but, by the duress of which the Standard Oil Company was master, carrying it all as its own. The main question is whether the act does and constitutionally can apply to the several. constituents that then had been united into a single fine.
Taking up first the construction of the statute, we think it plain that it was intended to reach the combination of pipe lines that we have described. The provisions of the act are to apply to any person engaged in the transportation of oil by means of pipe lines. The words ‘who shall be considered and held to be common carriers within the meaning and purpose of this act’ obviously are not in
The only matter requiring much consideration is the constitutionality of the act. That the transportation is commerce among the States wé think dear. That conception cannot be made wholly dependent upon technical questions of title, and the fact that the oils transported belonged to the owner of the pipe line is not conclusive against the transportation being such commerce., Rearick v. Pennsylvania,
The control of Congress ever commerce among the
These considerations seem to us sufficient to dispose of the cases of the Standard Oil Company, the Ohio Oil Company, the Prairie Oil and Gas Company and the Tide Water Pipe Company, Limited. The Standard Oil Company of Louisiana was incorporated since the passage of the amendment, and before the'beginning of this suit to break up the monopoly of the New Jersey Standard Oil Company. It buys a large part of its oil from the Prairie Oil and Gas Company which buys it at the wells in the Mid-Continent field and transfers the title to the Louisiana Company in that State. Its case also is covered by what we have said.
There remains to be considered only the Uncle Sam Oil
No. 507, Decree affirmed.
Nos. 481, 482, 483, 506 and 508, Decrees reversed.
Concurrence Opinion
concurring.
Agreeing in every particular with the conclusions of the court and with its reasoning except as to one special sub- ■ ject, my concurrence as to that matter because of its importance is separately stated. The matter to which I refer is the exclusion of the Uncle Sam Oil Company from the operation of the act. The view which leads the court • to exclude it is that the company was not engaged in transportation under the statute, a conclusion to which I do not assent. The facts are these: That company owns wells in one State from which it has pipe lines to its refinery in another State, and pumps its own oil through such pipe lines to its refinery and the product of course when reduced at the refinery passes into the markets of consumption. It seems to me that the business thus carried on is transportation in interstate commerce within the statute. But despite this I think the company is not
Of course this view has no application to the other companies which the court holds are subject to the act because as pointed out the principal ones were chartered as common carriers and they all either directly or as a necessary result of their association were engaged in buying oil and shipping it through their pipes; in other words, were doing in reality a common carrier business, disguised, it may be, in form, but not changed in substance. Under these conditions I do not see how it would be possible to avoid the conclusion which the court has reached without declaring that the shadow and not the substance was the criterion to be resorted to for the purpose of determining the validity of the exercise of legislative power.
Dissenting Opinion
dissenting.
I am unable to concur in the judgment of the court or in the reasoning upon which it is based. I pass by the construction of the amendment of June 29, 1906 (c. 3591, 34 Stat. 584), set out in the opinion, although its application to the business of appellee companies is in controversy. I shall assume its application, therefore, and pass to the. other and more serious questions. Extended discussion
The outside principle of the decision is the power of Congress to regulate interstate commerce, but to assert that power solves none of the difficulties of the questions. in the case. I need not pause to demonstrate that the exercise of that power is subject to other provisions of the Constitution, and one of those provisions is invoked by the appellees. It is contended that the act offends the Fifth Amendment in that it takes their property without due process of law. But what is due process of law, and wherein does its requirement limit the power of Congress? Neither question can be answered in a word, and the usual consideration^ are encountered when the courts are called upon to investigate tlie limits of legislative power, Autocracy is free from such perplexities. When authority can say, “The State — it is I!” it meets ho impediments to its- exercise. But that extreme illustration is not necessary. Even a government under a constitution, if it be unwritten, may have a power that leaves nothing for the courts to do other than to enforce the fiats of legislative authority. Under a written constitution, however, there is a sovereignty superior to the legislature, that of the people expressed in the Constitution. How to reconcile legislation with the limitations of the Constitution and leave government practical in its exercise is a problem which comes to this court often. It is the problem in the case at bar. It is to be regretted that there is no indisputable standard for its solution — no indisputable test of
In the cases cited, therefore, there was a regulation of uses which were extended voluntarily to others. I recall no case where the use was compelled and by the use so compelled regulation was justified. The case at bar has no fellow in our jurisprudence.
These considerations are not touched upon in the opinion of the court, and how far they affect the decision can only be conjectured. It may be not at all. At any rate, other considerations are given explicit prominence. The impulse of the amendment is said to be the control which the Standard Oil Company had acquired over the pipe-line transportation of oil. It is further said that it availed “itself of its monopoly of the means of transportation” by refusing to carry “through its subordinates any oil unless the same was sold to them and through them to it on terms more or less dictated by itself, and thereby became master of the fields without owning them.” It is not very clear whether this is intended as a statement merely of the motive of the amendment or of its legal justification. If stated as the motive of the amendment I have no concern with it; as a justification of the amendment its foundation must be considered
The facts of the cases the opinion of the court does not give. They are, however, quite necessary to a discussion of the questions which they present. I quote the summary of the Commerce Court (p. 802):
“The Uncle Sam Oil Company is a corporation organized in 1905 under the laws of the State (then Territory) of Arizona. It owns and operates a pipe line from its wells in the State of Oklahoma to its refinery at Cherry-vale, Kans. The extent to which this company purchases oil from other producers, if it engages in that business at all, does not appear from the record.
“Robert D. Benson et al. are the members of a partnership, organized in 1878 for the term of 20 years and reorganized in 1898 for a further term of 20 years, in compliance with the laws of the State of Pennsylvania, and doing business under the name of the Tide-Water Pipe Co. (Ltd.). This company transports oil from the Appalachian field in the western part of Pennsylvania, and also oil received through connecting lines from other fields, to the Tide-Water Oil Co. refinery at Bayonne, in the State of New Jersey. It also owns and operates branch lines in New York and Pennsylvania, and a line extending
“The Ohio Oil Co. is a corporation organized in 1887 under the laws of the State of Ohio. It owns and operates pipe lines in the States of Ohio, Indiana, and Illinois and also leases and operates a line from Negley, Ohio, to Centerbridge, in the State of Pennsylvania. It is an extensive purchaser of crude oil from other producers.
“Standard Oil Company, designated, for convenience, ‘Standard Oil Company of New Jersey/ is a corporation organized in 1882 under the laws of the State of New Jersey, and its principal pipe lines are the following: (a) A line extending from Unionville, in the State of New York, near the boundary line of New Jersey, through the latter State to its refineries at Bayonne; (6) a line from Centerbridge, in the State of Pennsylvania, near the boundary of New Jersey, through the latter State to its refineries at Bayonne and Bay way; and (c) a line from Fawn Grove, in the State of Pennsylvania, near the boundary of Maryland, through the latter State to its refinery at Baltimore. The record indicates that much the greáter part of the oil transported through these lines, and perhaps all of it, is oil which this company has purchased.
“The Standard Oil Company of Louisiana is a corporation organized in 1909 under the laws of that State. It owns and operates a refinery at Baton Rouge and a trunk line extending thereto from the town of Ida, near the northern line of Louisiana, and also gathering lines in the Caddo field, in the States of Louisiana and Texas. It purchases a considerable part of the crude oil which its lines transport.
“None of the petitioning corporations is organized or
The companies do not possess the right of eminent domain, and their lines are laid over private rights of way, except some of them for short distances 'have laid their lines along the rights of way of certain railroads under some contract arrangement with the railroads, one of them for a distance of about 300 miles. They, however, have in many instances also laid their lines across or along public streets and highways by permission or consent of the local authorities. None of them has ever held itself out as a common carrier or in fact ever carried oil for others, but they have carried only such oil as they produced from their own wells or purchased from othei producers and which they owned when the transportation took place.
Concluding its recitation of facts, the Commerce Court said (p. 803): “In short, so far as their legal status is fixed by the laws of the States of their creation, and so far as their acts and attitude could make them such, all the petitioners [appellee companies] carry on a private business, at least in the sense that they transport only their own oil and have always refused to transport for others; and all of them have evidently sought and claimed to so conduct their operations as to avoid any public activity which might subject them to public regulation.”
These being the facts, it is yet insisted that the appellee companies are common carriers “in substance” and Congress by its action has only made them so “in form,” and that this is unquestionably within the power of Congress. But there is something more to be considered than an antithesis of words. There is an antithesis of
But let me get away from any appearance of considering words or forms of expression to an estimation of the facts. The Standard Oil Company of New Jersey is made prominent, and the exemplar of all of the other companies, and its stock ownership in some of them is assumed to destroy their individuality and unite them all in operation, character and effect. Indeed, it is represented as the single controlling force and master of the transportation of oil “between the oil fields east of California and the Atlantic ocean.” Under its sway are pictured all the other companies except the Standard Oil of Louisiana, the latter company, however, having a baneful potency of dictation to the other owners in the oil fields, as has its -exemplar, the Standard Oil of New Jersey. In other words it is argued the companies have made themselves masters of their respective fields by the constraint of the sale of the oil of other owners to them upon terms more or less dictated by them by availing themselves of their “monopoly of the means of transportation.” This is the charge. The facts of the case do not sustain it except as they exhibit the advantages of the possession of property which others do not possess. Must it be shared by those others for that reason? The conception of property is exclusiveness, the rights of exclusive possession, enjoyment and disposition. Take away these rights and you take all that there is of property. Take away any of them, force a participation in any of them and you take property to that extent. These are commonplaces, but at times — -it may be always — commonplaces are our best guides when rights are concerned. They are pertinent to this case. The employment of one’s wealth to construct or purchase facilities for one’s business greater than others possess constitutes no monopoly that does not appertain to all property. Such'facilities may give
Let us not exaggerate the conditions or by form of statement put out of view essential elements. What duress is employed that is not employed when terms are exacted as a condition of the use of property? Or, rather,
There is quite a body of opinion which considers the individual ownership of property economically and politically wrong and insists upon a community of all that is profit-bearing. This opinion has its cause, among other canses, in the power — may I say the duress? — of wealth. If it accumulates 51% of political power, may it put its conviction into law and justify the law by the advancement of the public welfare by destroying the monopoly and mastery of individual ownership?
I submit, with deference, that it is misleading to say that the use of the lines by other oil owners was permitted only on terms dictated by the companies, and that through such dictation they “became masters of the fields without owning them.” And I take it if the companies had not made purchases of oil or refused offers of oil, they would not be held subject to the act. Such is the situation of the Uncle Sam Company and the ground of decision in regard to that company. It is not held to be within the act. It seems to be minimized and considered not big enough for the application of the law, and yet it owns and operates a pipe line from the oil fields of Oklahoma to its refineries in Kansas. The extent to which it purchases oil from producers, if it does so at all, does not appear from the record. It may be supposed that if it venture to make purchases of oil it will lose its immunity. But why its exemption? Why is the fact of purchases of oil important? Is it not the concern of the small oil owners to get to market? Indeed, is not that the advantage they get
United States v. Delaware & Hudson Co.,
I have extended this discussion beyond what I had intended. Much more, however, could be said and decisions adduced on the various elements of the case. Prophecies of the result of the principles of the decision could be made which I am afraid could not be pronounced fanciful, and projects whose shadows may even now be discerned
As I have not the power of decision, I do not enter into a discussion of the facts which distinguish the cases. It may be that the judgment of the Commerce Court as to the Standard Oil Company should be reversed because the lines of the Company were common carriers before their acquisition, and it may be that the Prairie Oil & Gas Company was made a common carrier by the law which created it. This, however, is in controversy.
I concur in the judgment as to the Uncle Sam Oil Company. From the judgments as to the other companies, I dissent.