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claim, or which some of them claim, are still in force as against the receiver-the receiver claiming: (1) That these supply contracts were invalid in their inception; (2) that, even if they were valid, yet, nevertheless, by reason of the changed circumstances, and by reason of the provisions in the contracts themselves looking towards a change of circumstances, they are no longer binding upon the original parties to these contracts; (3) that even if the contracts were valid in their inception, and still are existing valid contracts between the original parties, yet they are not at this time binding upon the receiver.

Similar relief is also sought by the Kansas Natural Gas Company and by several of the distributing companies. Several of the distributing companies and some of the cities take the position that these supply contracts are at present valid existing contracts upon the eceiver as well as upon the original parties. Others of the distributing companies take the position that, while the contracts may be valid and existing between the original parties, yet they do not contend that they are binding upon the receiver.

[1] Now, as to the question of interstate commerce, I have gone over the record as well as I could within the time that I have been able to give to it, and in my judgment the facts upon which this issue stands in regard to the Missouri defendants are substantially the same as in the case against the Kansas defendants. The differences in them are not vital, and most of them in my judgment are immaterial. The question of storage has been presented and pressed with great earnestness, as being a very important factor to be taken into consideration in determining, this question of interstate commerce. But to my mind the evidence shows that such storage as exists is merely incidental to the transportation of the gas, and in fact that it is a necessary incident to the proper and efficient transportation of the gas. Hence, this storage being merely incidental, it seems to me that it does not change the character of the business from interstate to intrastate commerce. Kelley v. Rhoads, 188 U. S. 1, 23 Sup. Ct. 259, 47 L. Ed. 359; Swift & Co. v. United States, 196 U. S. 375, 25 Sup. Ct. 276, 49 L Ed. 518; Western Oil Co v. Lipscomb (June 4, 1917) 244 U. S. 346, 37 Sup. Ct. 623, 61 L. Ed. 1181; McFadden v. Railway Co., 241 Fed. 562, — C. C. A.

Arguments have been made, and pressed with great earnestness, which are in substance to the effect that the court erred in holding in the former decision that the business was interstate commerce, and that in fact the entire business transacted by the receiver, whether relating to the state of Kansas or to the state of Missouri, is not interstate commerce. I have given to this matter all the attention which I have been able to give it, and also to the arguments of counsel upon this question. While I admit that there may be possible doubt as to the correctness of the conclusion reached, yet I do not see any reason at this time for reversing the decision as to the Kansas defendants; and I hold as to the Missouri defendants that the business transacted by the receiver in transporting natural gas from Oklahoma and selling it in Missouri is interstate commerce.

[2] It has been suggested by counsel that the situation presents a clash between the principle that a state may control public utilities do

ing business within its boundaries and the principle that a state may not directly impose a burden on interstate commerce. If there is such a clash between these two principles, then I am clearly of the opinion that the decision must be in favor of the principle that the state may not directly burden or interfere with interstate commerce. That principle must prevail, rather than the principle that the state under all circumstances must have the fullest control over a public utility doing business within its borders. Whether there is such a clash between these two principles is not necessary for me to determine at this time.

[3] The Missouri Commission has made no orders fixing general rates for the sale of gas by the receiver within the state of Missouri, as was the case in regard to the Kansas defendants. But the Missouri Commission has done certain specific acts; amongst others, it has suspended schedules of rates which were agreed upon by the receiver and the distributing companies, and has threatened the distributing companies with further action against them if they should undertake to enforce those rates. It has also taken the position through its counsel in open court that it would recognize no rates as valid, unless those rates were first submitted to the Commission for its approval and approved by it. Not only that, it has taken jurisdiction over complaints by the distributing companies, and in some instances I think by the cities, as to rates; but, instead of proceeding to hearing upon these complaints, it has suspended the hearings from time to time, without attempting to reach any definite conclusion. It has attempted, by order made in August, 1916, to establish a new rate for natural gas in Kansas City, Mo. In these various acts the defendant cities have severally participated. The result of all this is that the receiver is seriously hampered in his business, and the distributing companies are also seriously hampered in their business, in attempting to put in a schedule of rates for the various cities in Missouri. In my judgment these acts on the part of the Missouri Commission constitute an attempt to directly interfere with and directly burden interstate commerce. am likewise of the opinion that they also in effect constitute the taking of the property of the receiver without due process of law.

Now, as to the second main question, namely, the question of the supply contracts: These supply contracts were entered into by the original parties during the years from 1905 to 1908 or 1909, and perhaps later. As far as I have been able to examine them, they all contain one clause, which is very similar, and I do not know but it is identical in its wording:

“However, as the production of gas from the wells and the conveying of it from long distances is subject to accidents and interruptions and failures, the party of the first part does not under this contract undertake to furnish the parties of the second part with an uninterrupted supply of gas for the period named herein, but only to furnish such supply for such a period of time as the wells and pipe lines of the party of the first part and such other resources as the party of the first part shall be able to command are capable of supplying. And it is expressly understood and agreed by the parties of the second part that the party of the first part shall not be liable for any loss, damage, or injury that may result, either directly or indirectly, from such shortages or interruptions; but said party of the first part agrees to use diligence to supply the parties of the second part with a constant and sufficient supply of merchantable gas for all consumers."

All the contracts which I have examined contain a provision similar to that quoted. They all contain, also, or at least those which I have examined contain, certain provisions restrictive on the parties to the contract, restrictive as to the right of the parties furnishing the gas to furnish it to any other person or corporation doing business in the zone or district specified, and restrictive as against the distributing companies to prevent them from purchasing gas from any other person or corporation than the person named in the contract who is furnishing the gas, except under certain conditions.

In April, 1912, the Supreme Court of Kansas had occasion to review these contracts, and, while there is a difference amongst counsel as to just what the judgment of that court was in its effect, I think it must be conceded by all that the Supreme Court of the state of Kansas took the view that there were certain clauses, at least, in those contracts that were contrary to the statutes of the state of Kansas, and also contrary to public policy. It may very well be doubted whether those same restrictive clauses were not also a violation of the statutes of the United States against trusts and monopolies. State v. Kansas Natural Gas Co., No. 17977 (no written opinion filed); Montague & Co. v. Lowry, 193 U. S. 38, 24 Sup. Ct. 307, 48 L. Ed. 608.

With full knowledge of these facts, the United States District Court of the state of Kansas made an order in October, 1912, touching these contracts, and the gist of that order was that those contracts should not be binding upon the receiver, except upon further express order of the court. The Circuit Court of Appeals for this circuit in a decision in a case arising out of this general gas controversy upon a contract, not a supply contract, but a lease contract, also held that that contract was not binding upon the receiver, and took occasion in its decision to refer to the above-mentioned express order of the United States District Court of Kansas. K. C. Pipe Line Co. v. Fidelity Co., 217 Fed. 187, 133 C. C. A. 181. On two separate occasions the district court of Montgomery county, Kan., has held that these supply contracts are not merely not binding upon the receiver, but invalid in their inception, as being against the statutes of the state of Kansas, and being also against the statutes of the United States, as well as against public policy.

[4] There never has been any formal adoption by the receiver of these supply contracts. In such case it is not the law that a contract shall be binding upon the receiver until it is disavowed by him, but the law is that it is not binding upon the receiver until it is accepted by him; and, while it is true that ordinarily the law requires the receiver to indicate within a reasonable time whether or not he will accept a contract, in this particular case the court relieved the receiver of any necessity for taking any action by expressly ordering that the contract should not be binding upon the receiver until the court by its order made it binding. It was not necessary for the receiver to take any action on his part. If the other parties to the contract wished to have these contracts made binding upon the receiver, the court was open to them to make an application, and upon that application the court would have made such an order as was deemed necessary. No such action was ever taken, and the order of the court made in October,

1912, still stands, that these contracts are not binding upon the receiver until the further orders of the court may make them so.

Now, whether these contracts were originally valid or invalid, and whether they became functi officio, even if they were valid in their inception, are questions that it is not necessary for the court to decide at this time. T'he Kansas Natural Gas Company has in its pleadings prayed to have these contracts set aside as to it. I do not deem it advisable at this time to make any decision with regard to the validity of the contracts as between the original parties to them, whether they are still valid, whether they have ceased to be valid, or whether they were invalid in their inception. While I shall deny the prayer of the Kansas Natural Company at this time, it will be without prejudice to any action on the part of that company that it may see fit to take, whether in the cases that are pending in this court No. 1351 Equity, or No. 1 Equity, or otherwise. If it should see fit to take proper action to determine the validity of these contracts, this decision will not prejudice it from so doing.

The conclusions which I reach are that the business transacted by the receiver in Missouri is interstate commerce, that the supply contracts are not binding upon the receiver, that the Missouri Commission should be enjoined, and that such of the other defendants as have done acts or made any threats towards commencing any suit or proceedings, looking towards the enforcement of the supply contracts as against the receiver, should also be enjoined. A decree may be prepared accordingly.

UNITED STATES V. STEPHENS.
(District Court, D. Delaware. November 13, 1917.)

No. 1.

1. ARMY AND NAVY -20_CONSCRIPTION FOR FOREIGN SERVICE—"MILITIA."

Congress under the power given by Const. art. 1, § 8, to declare war, raise armies, and do all things necessary and proper for execution of that power, can by conscription organize the militia of the United States, as defined by National Defense Act June 3, 1916, & 57 (Comp. St. 1916, 8 3041), for foreign warfare, and as incident thereto provide for enforced registration of those liable to the service, as done by Selective Draft Act May 18, 1917, § 5; the power given by such section of the Constitution to provide for calling forth the militia to execute the laws of the Union, suppress insurrections, and repel invasions, with the implied inhibition against calling it out for any other purpose, relating to the organized state militia as such.

[Ed. Note.-For other definitions, see Words and Phrases, First and

Second Series, Militia.] 2. ARMY AND Navy Ou20_CONSTITUTIONAL LAW CM84-RELIGIOUS LIBERTY

-SELECTIVE DRAFT LAW-"LAW RESPECTING AN ESTABLISHMENT OF RELIGION OR PROHIBITING THE FREE EXERCISE THEREOF."

Selective Draft Act May 18, 1917, $ 4, exempting ministers and students in recognized theological schools, is not a “law respecting an establishment of religion, or prohibiting the free exercise thereof," within the

meaning of Const. Amend. 1. Om For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

3. STATUTES Om 64(1)—EFFECT OF PARTIAL INVALIDITY.

Were provision of Selective Draft Act May 18, 1917, § 4, exempting clergy and divinity students unconstitutional, it, while falling, would

not affect the rest of the act, which is clearly separable therefrom. 4. ARMY AND NAVY 20_CONSTITUTIONAL LAW C 62-DELEGATING LEGI8

LATIVE POWER—ESTABLISHING “COURTS"-SELECTIVE DRAFT BOARDS.

Const. art. 3, § 1, vesting the judicial power in the Supreme Court and such inferior courts as Congress may establish, is not contravened by Selective Draft Act May 18, 1917, § 4, authorizing the President to create and establish boards, to determine, subject to review by him, questions of exemption; they, though clothed with discretionary and quasi judicial powers, being essentially part and parcel of the executive machinery of the government.

[Ed. Note.-For other definitions, see Words and Phrases, First and

Second Series, Court.] 5. STATUTES O 64(1)—EFFECT OF PARTIAL INVALIDITY.

Were Selective Draft Act May 18, 1917, § 4, in so far as providing that certain officers and classes of persons, though exempt from selective draft, shall not be exempt from service in any capacity that the President shall declare to be noncombatant, to be held to contemplate involuntary servi. tude, in contravention of Const. Amend. 13, it would merely fall, and,

being separable, not affect any other provision of the act. 6. ARMY AND Navy Oun 20—CONSTITUTIONAL LAW Om62-DELEGATING LEG

ISLATIVE POWER-RAISING ARMY,

Selective Draft Act May 18, 1917, § 1, providing that the President be and hereby is "authorized” to raise, organize, officer, and equip all or such number of the increments of the regular army provided for by National Defense Act June 3, 1916, as he may deem necessary to raise all organizations of the regular army to the maximum enlisted strength authorized by law, to draft and organize and officer any or all members of the National Guard and of the National Guard Reserves, and to raise by draft as therein provided, and organize, officer, and equip an additional force of 500,000, or such part or parts thereof as he may at any time deem necessary, considered with the preceding words, “In view of the existing emergency, which demands the raising of troops in addition to those now available," and with section 2, providing that the enlisted men required to raise and maintain the organization of the regular army and to complete and maintain the organizations embodying the members of the National Guard drafted into the service of the United States, at the maximum legal strength as by this act provided, shall be raised by voluntary enlistment, or, if and whenever the President decides that they cannot effectually be so raised or maintained, then by selective draft, and with Joint Resolution April 6, 1917, declaring a state of war between the United States and the Imperial German Government, and that the President is authorized and "directed” to “employ the entire naval and military forces of the United States and the resources of the government to carry on war against the Imperial German Government," does not delegate to the President the power, vested in Congress, to raise an army ; it not attempting to give him an uncontrolled option to take or omit to take steps for the organization and equipment of the miliary forces of the United States as contemplated by Congress, but merely committing to him the execution of the general scheme of Congress, with necessarily large discretionary powers.

Donald Stephens was indicted for failure to register under Act May 18, 1917. On demurrer to indictment. Demurrer overruled.

Charles F. Curley, U. S. Atty., of Wilmington, Del.
Henry Budd, of Philadelphia, Pa., for defendant.
For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

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