Ohio Oil Co. v. Conway, 281 U.S. 146 (1930)
Case details
Bluebook Citation
Ohio Oil Co. v. Conway, 281 U.S. 146 (1930)
Full caption
OHIO OIL COMPANY v. CONWAY, SUPERVISOR OF PUBLIC ACCOUNTS OF LOUISIANA.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Decided
Apr. 14, 1930
Majority
Hughes (Chief Justice)
Majority
Holmes (Justice)
OHIO OIL COMPANY v. CONWAY, SUPERVISOR OF PUBLIC ACCOUNTS OF LOUISIANA.
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF LOUISIANA.
No. 440. Argued March 4, 1930.—Decided April 14, 1930.
1. A Louisiana severance tax on crude petroleum at specific rates per barrel, the rates varying in accordance with a classification of the oils based on the Baume Scale of Gravity, held consistent with Art. X, § 21 of the Louisiana Constitution, which provides that such natural resources “ may be classified for the purpose of taxation and such taxes predicated upon either the quantity or the value of the product at the time and place where it was severed.” P. 158.
2. The Fourteenth Amendment imposes no iron rule of equality prohibiting the flexibility and variety appropriate to schemes of state taxation. P. 159.
3. A State may impose different specific taxes on different products and in so doing is not required to make close distinctions or to maintain a precise, scientific uniformity with reference to composition, use, or value. It may classify broadly the subjects of taxation if it does so on a rational basis, avoiding classification that is palpably arbitrary. P. 159.
4. In laying a graduated specific severance tax per barrel on oils sold primarily for their gasoline content, resort to Baume gravity p. 147146 Argument for Appellant.
as the basis of classification cannot be regarded as palpably arbitrary, it appearing that gravity, though not invariably accurate as a test, is generally regarded in the industry as indicative of gasoline content and is used by the industry, including the complaining taxpayer, in fixing the prices of such oils. P. 160.
5. A graduation of the tax on this basis, which treats all oils of the same gravity alike, is not repugnant to the equal protection clause of the Fourteenth Amendment merely because the tax falls more heavily upon some oils than upon others of equal gravity due to the fact that there are various gravity schedules of prices and that some oils are sold at flat prices. P. 160.
6. The statute in question, by graduating the tax per barrel in accordance with a classification of oils based on their Baume gravity, had the effect of including in the division of lowest tax a class of oils valuable chiefly as a source of lubricating oil rather than of gasoline, which are tested in the industry by their viscosity and sulphur content, not by their Baume gravity, and are not sold on the latter basis. It resulted that the tax on these oils was lower in proportion to value than that imposed on other oils not so well suited for making lubricating oil. Held that the discrimination was not repugnant to the equal protection clause, since the oils especially suitable for making lubricating oil might lawfully have been classified apart for taxation, or not taxed at all, because of their distinct composition and utility {Heisler v. Colliery Co., 260 U. S. 245), and the statute was not made invalid by the failure to describe them scientifically. P. 161.
7. The State is not prevented by the Federal Constitution from putting the same specific severance tax on the same sort of oils used in the same way, merely because particular producers of such oils obtain different prices for them. P. 162.
34 F. (2d) 47, affirmed.
Appeal from a decree of the District Court of three judges, which dismissed the Oil Company’s bill seeking to enjoin the enforcement of a Louisiana tax. The case was here before on appeal from an order denying an interlocutory injunction, 279 U. S. 813.
Mr. Sidney L. Herold, with whom Messrs. Sumter Cousin and R. L. Benoit were on the brief, for appellant.
Argument for Appellant. 281 U. S.
Gravity in no respect enters as a common measurement into the ascertainment of the relative values of oils produced within Louisiana; and the selection of gravity as the basis of such admeasurements ineluctably leads to a systematic discrimination against the producers in the fields in which this complainant operates.
If gravity is not a common measure of value as between oils of different composition, there could be no more justification for its use in the measurement of the tax on all oils generally than there could be for the use of either the passenger-mile base or the ton-mile base for determining a common rate for both freight and passenger tariffs. Nor is it enough for the State to point out merely that the oils are of different weights. It is necessary that there be in that fact some reason for using it as a basis of classification. Louisville Gas & Elec. Co. n. Coleman, 277 U. S. 32.
Nothing can serve as a basis of classification that is not relevant either to value, to utility, to profit or to some end or purpose of sound public policy, where the direct result of its use is the imposition of materially variant tax burdens on persons similarly situated. Taxes may be levied on natural resources severed from the soil or water, to be paid proportionately by the owners thereof at the time of severance. The Louisiana Constitution and the statute both speak of the tax as one upon the product.
The case is entirely different from Choctaw, 0. & G. Ry. Co. v. Harrison, 235 U. S. 290, and Oliver Iron Mining Co. v. Lord, 262 U. S. 172, where the tax was of a percentage on the gross receipts, or of the gross value of the product. Likewise, it differs from Gulf Refining Co. v. McFarland, 154 La. 251, 264 U. S. 573.
If this were in form a general property tax, and the assessing authorities had proceeded to value the properties of the various producers in the State, not according to their value, but according to the gravity of the oil produced, the same concrete result would have been p. 149146 Argument for Appellant.
reached as in this case; and it is settled law that in such a case relief would be granted because of the violation of the equal protection clause of the Fourteenth Amendment occasioned by such act. Raymond v. Chicago Traction Co., 207 U. S. 20; Sunday Lake Iron Co. v. Wakefield Township, 247 U. S. 350; Sioux City Bridge Co. v. Dakota County, 260 U. S. 441; N. C. & St. P. R. Co. v. Taylor, 86 Fed. 168; Louisville Trust Co. v. Stone, 107 Fed. 305; Louisville Gas & Elec. Co. v. Coleman, 277 U. S. 32; Martin v. District of Columbia, 205 U. S. 135; Bell’s Gap R. Co. v. Pennsylvania, 134 U. S. 232.
Whether the denial of equal protection results from the use of the gravity scale or from the arbitrary system of classification thereunder, is immaterial.
Oils produced in the same district, and even from the same lease, would fall by the operation of the statute into separate classes paying entirely different and discriminatory rates of taxation. The record contains nothing from which the conclusion could be reached that an oil of 32 gravity produced in a particular field should pay a tax of 5 cents per barrel, while oil of 32.1 gravity in the same field should pay a tax of 8 cents per barrel; and yet such is the effect of the statute. The arrangement of the progression of the tax is such that the increase necessarily and systematically is unrelated to increase in value.
The act works a systematic and hostile discrimination against appellant in favor of others similarly situated, for at all times higher gravity oils of lower value are burdened with a materially higher tax than oils of lower gravity and greater value. The act “ has no tendency to produce equality.” Cf. Air Way Electrical Appliance Corp. v. Day, 266 U. S. 71; Yick Wo v. Hopkins, 118 U. S. 369; Sunday Lake Iron Co. v. Wakefield Township, 247 U. S. 350; Southern Ry. Co. v. Green, 216 U. S. 400.
Act 5 of 1928 of the Louisiana Legislature is void as in conflict with § 21 of Article X of the Constitution of
Opinion of the Court. 281 U. S.
Louisiana. The tax is levied neither according to quantity nor to value.
The only measure of quantity is the barrel of 42 gallons. And yet the statute directly provides that such quantity shall be taxed, not at a fixed rate, but according to a scale under which the highest tax is almost three times that of the lowest one.
Mr. George Seth Guion, with whom Messrs. Percy Saint, Attorney General of Louisiana, and W. H. Thompson, Assistant Attorney General, were on the brief, for appellee.
Mr. Chief Justice Hughes delivered the opinion of the Court.
The Ohio Oil Company brought this suit in the District Court to enjoin the enforcement of a statute of Louisiana (Act 5 of 1928) imposing a severance tax upon the production of oil. The statute as applied to the complainant was attacked as a violation both of the constitution of Louisiana and of the equal protection clause of the Fourteenth Amendment of the Federal Constitution. It was alleged that the laws of the State afforded no remedy for the recovery of taxes illegally exacted. On appeal from an order denying an interlocutory injunction, this Court decided that the questions presented could not be resolved satisfactorily upon the affidavits submitted, and directed that an injunction should be granted pendente lite on stated terms. 279 U. S. 813. Trial was had before the District Court, as specially constituted under the applicable statute, and a decree was entered dismissing the bill. 34 Fed. (2d) 47. The complainant appeals.
In the year 1921, the constitution of Louisiana was amended so as to provide that natural resources severed from the soil or water might be classified for the purpose of taxation and that taxes might be “ predicated upon p. 151either the quantity or value of the product at the time and place where it is severed” (Const. Art. X, Sec. 21)? By Act 140 of 1922, section 2, natural resources were divided into two classes, and taxes were levied on oil and gas at three per cent, of the gross market value of the total production, and on all other natural resources at two per cent, of the gross market value. The Supreme Court of Louisiana, sustaining this tax on oil and natural gas, held that it was not a property tax but was an excise tax upon the privilege of severing, although it was measured by the value of the property severed. This decision was affirmed here. Gulf Refining Company v. McFarland, 154 La. Ann. 251; 264 U. S. 573. .
In 1928, the legislature of Louisiana enacted the statute now in question which amended the prior act so as to tax various natural resources on the basis of the quantity severed. Under this amendment taxes on oil were classified according to gravity and ran from four cents a barrel of 42 gallons on oil of 28 degrees gravity and below, to eleven cents a barrel on oil above 43 degrees gravity (Act 5 of 1928).2
2
The text of section 2 of Act 5 of 1928 in relation to oil is as follows: “ Taxes on natural resources severed from the soil or water . . . shall be predicated on the quantity severed, and shall be paid at the following rates: “b. (1) On oil above 28 gravity and not above 31 gravity, four and one-fourth (4)4) cents per barrel of 42 gallons. “b. (2) On oil above 31 gravity and not above 32 gravity, five (5) cents per barrel of 42 gallons. “(c) On oil above 32 gravity and not above 36 gravity, eight (8) cents per barrel of 42 gallons. “(d) On oil above 36 gravity and not above 43 gravity, ten (10) cents per barrel of 42 gallons. “(e) On oil above 43 gravity, eleven (11) cents per barrd of 42 gallons.”
1
Section 21 is as follows: “ Taxes may be levied on natural resources severed from the soil or water, to be paid proportionately by the owners thereof at the time of severance. Such natural resources may be classified for the purpose of taxation and such taxes predicated upon either the quantity or value of the product at the time and place where it is severed. No severance tax shall be levied by any parish or other local subdivision of the State. “No further or additional tax or license shall be levied or imposed upon oil or gas leases or rights, nor shall any additional value be added to the assessment of land, by reason of the presence of oil or gas therein or their production therefrom.”
Opinion of the Court. 281 U. S.
The business of the complainant in Louisiana is that of producing and selling oil and not of refining it. The production of the complainant is in the following fields: Haynesville, in the parish of Claiborne; Cotton Valley, in the parish of Webster; Pine Island, in the parish of Caddo; Urania, in the parish of La Salle. All these fields are in North Louisiana. The bulk of the complainant’s production is in the Haynesville, Cotton Valley and Pine Island fields. Its production in these fields from January to June, 1928, inclusive, amounted to 723,192 barrels out of its total production in Louisiana of 762,139 barrels; and from August, 1928, to March, 1929, inclusive, to 690,397 barrels out of its total production of 705,301 barrels; the remainder was Urania production.
Gravity as used in the statute, and in oil price quotations, is not specific gravity, but what is called Baume gravity, under which the lighter the oil the higher the gravity. The record shows that, generally speaking, crude petroleums are divided into three classes—paraffine base, asphalt base, and mixed base, the last being a combination of paraffine and asphalt base. The higher gravity oils usually have a paraffine base, while the lower gravity oils usually have an asphalt base. All three of these classes are found in Louisiana. In North Louisiana
“(7) a. On oil of 28 gravity and below, four (4) cents per barrel of 42 gallons.
there are paraffine base, asphalt base and mixed base crudes, the oils generally having paraffine base, while in South Louisiana the oil produced is mostly asphalt base.
The process of refining oil is distillation. The evidence is that paraffine base oil in that manner yields gasoline, kerosene, gas oil, some lubricating oil and wax. Gasoline comes off first and is the most valuable component of such oil. Asphalt base oil usually yields a very small amount of gasoline by distillation, the first product ordinarily being gas oil, then lubricating oil, and the residuum, asphalt. The gas oil may be subjected to the cracking process and gasoline may be obtained in that way. The value of asphalt base oil is largely for the manufacture of lubricating oil, and the value for this purpose is determined by viscosity and sulphur content, not by gravity. The coastal oils of South Louisiana are divided into “A” and “ B ” grades, “ Grade A” being the oils that are useful in the production of lubricating oil, and the other oils being classed as “ Grade B.” While gravity is not the determining factor, it appears from the testimony that “ Grade A” oils must be less than 25 degrees gravity.
Asphalt base oils- are produced in North Louisiana in the fields of Pine Island, Urania, Hosston and Bellevue. The last three named are suitable for making lubricating oil, but the Pine Island heavy oil does not have that value. The evidence is that the Urania, Hosston and Bellevue oils, used for that purpose, are practically the same as the coastal “ Grade A” oils.
Gravity is said to be an index of relative value of oils only in the same pool or district, and oils of different gravity are produced in the same fields and from the same tracts of land and sometimes from the same sand. But it appears that, with respect to paraffine base oils, the higher the gravity, the greater is the gasoline content,
Opinion of the Court. 281U. S.
which as between these oils is largely determinative of price. Gravity in such cases is a rough and familiar method of approximating the gasoline content, and in many fields price quotations of crude oil above 28 degrees are graduated according to gravity.
Crude oil as it comes from the wells is run into tanks from which the purchaser sells to pipe lines, the well-recognized market prices being the prices posted by the pipe line companies buying the oil. The complainant states that the oil produced in its Haynesville field was from 33 to 36 degrees gravity; in its Cotton Valley field, one class was between 28 and 31 degrees gravity and another above 43 degrees gravity; in its Pine Island field, its production was from 37 to 41 degrees gravity. The complainant purchased no crude oil except that, in the Haynesville field, it bought some of the royalty oil of the lessors under its leases. The complainant’s cashier testified at the trial that complainant’s “purchases and sales in each field in which it operates are made on a gravity basis.”
This testimony is not understood to include the Urania field in which the complainant was not operating at the time but had been operating until shortly before. The oil from the Urania field, which was about 20 degrees gravity, as well as that of the Bellevue and Hosston fields in North Louisiana, and the 11 Grade A” coastal oils of South Louisiana, were sold at a flat price and not by gravity. “ Grade B ” oil, it was testified, was usually sold on a gravity schedule.
In 1928, the production of oil in Louisiana was about 22,000,000 barrels, of which approximately two-thirds was produced in North Louisiana, and of this amount nearly two-thirds was sold on a gravity basis, and the remainder at a flat price. Of the production in South Louisiana, about one-half was sold on a gravity basis.
Price quotations, concededly accurate, for Louisiana crude oils, as well as for Mid-Continent, North and p. 155Central Texas, Gulf Coast, and other sections, are shown in the trade journals and were put in evidence. The quotations that are according to gravity have a rising scale of prices as gravity increases.3
3
Among the price quotations for crude oil produced in Louisiana-Arkansas, set forth in “ The Oil Weekly ” of May 25, 1928, are the following: Louisiana -Arkansas (All Companies )* Homer, Haynesville, Caddo, El Dorado, De Soto and Crichton and Cotton Valley.** Below 28 gravity............................................................................... $0.91 28 to 28.9 gravity.................................................................................... 96 29 to 29.9 gravity.......................................................................... 1.01 30 to 30.9 gravity............................................................................ 1.06 31 to 31.9 gravity........................................................................... 1.11 32 to 32.9 gravity............................................................................ 1.16 33 to 33.9 gravity........................................................................... 1.19 34 to 34.9 gravity........................................................................... 1.22 35 to 35.9 gravity........................................................................... 1.25 36 to 36.9 gravity............................................................................ 1.28 37 to 37.9 gravity........................................................................... 1.31 38 to 38.9 gravity............................................................................ 1.34 39 to 39.9 gravity........................................................................... 1.37 40 to 40.9 gravity........................................................................... 1.40 41 to 41.9 gravity............................................................................ 1.43 42 to 42.9 gravity........................................................................... 1.46 43 to 43.9 gravity..................................... ...................................... 1.49 44 to 44.9 gravity........................................................................... 1.52 45 to 45.9 gravity........................................................................... 1.55 46 to 46.9 gravity.... :................................................;................. 1.58 47 to 47.9 gravity........................................................................... 1.61 48 to 48.9 gravity........................................................................... 1.64 49 to 49.9 gravity........................................................................... 1.67 50 to 50.9 gravity......................................................................... 1.70 51 to 51.9 gravity........................................................................... 1.73 52 and above.......................................................................... 1.76
*
Shreveport-El Dorado’s postings stop at about 40 gravity.
**
Below 36 gravity, the posting on Cotton Valley is 75 cents. From 36 to 52 and above the regular gravity schedule is followed.
In the case of the oils under 28 degrees gravity that were sold at aflatprice, itappears that there was a considerable differencebetween the price of oils of the North and SouthLouisianafields. Withrespect to oils
Bellevue.............................................................................................. $1.25 Jennings............................................................................................ 1.15 Vinton................................................................................................. 1.30 Edgerly.............................................................................................. 1.30 Starks Dome..................................................................................... 1.30 Urania............................. ..........................................................................75
Calion........................................................................................................ 75
Another list of quotations in the same issue of “ The Oil Weekly ” is as follows:
Gulf Coast
Grade “A” all companies............................................................... $1.20 Gulf Coast Light Oil, below 25....................................................... 1.15 25 to 25.9 gravity........................................................................... 1.17 26 to 26.9 gravity........................................................................... 1.19 27 to 27.9 gravity........................................................................... 1.21 28 to 28.9 gravity........................................................................... 1.23 29 to 29.9 gravity......................... 1.25 30 to 30.9 gravity........................................................................... 1.27 31 to 31.9 gravity........................................................................... 1.29 32 to 32.9 gravity........................................................................... 1.31 33 to 33.9 gravity........................................................................... 1.33 34 to 34.9 gravity........................................................................... 1.35 35 to 35.9 gravity........................................................................... 1.37 36 to 36.9 gravity........................................................................... 1.39 37 to 37.9 gravity........................................................................... 1.41 38 to 38.9 gravity........................................................................... 1.43 39 to 39.9 gravity.......................................................................... 1.45 40 and above..................................................................................... 1.47
Humble Oil & Refining Company’s postings on Gulf Coast Light stop at 35 to 35.9. Its price on all crudes above 35 to $1.37 per barrel.
Magnolia Petroleum Company’s postings stop at 31 to 31.9. p. 157suitable for making lubricating oil, the evidence is that in February, 1928, the price of the complainant’s Urania oil was 75 cents a barrel, while that of the coastal “ Grade A” oils was $1.20 a barrel, and the Louisiana tax on each, the gravity being under 28 degrees, was four cents a barrel. The respondent states that the oils of these Louisiana fields are shipped to a common market, Port Arthur, Texas, and, by reason of the greater distance, the transportation charges for the oils of North Louisiana are
The following table is taken from “ The Oil and Gas Journal ” of
June 13, 1929:
Crude Oil Gravity Table
|
- -
Tex. Pan
C., crudes, Pan Crude Central Crockett, N. , Howard,asMex. (TexasHutchinson Arkansas Light
Gravity Kans., and La. Upton Tex N. Lea, Ark. (Texas handle)County handle) and Panhandle) Wyo. Creek, & 3 Coast) (G. (South Texas)
(Texas
Winkler,Pecos,and
Okla., No. Crane, Stephens,WheelerGray Carson Salt Grade Somerset
I
1 2 3 4 5 6 7 8 9 10
24 and above__________ Below 24______________
Below 25. . 0.85 0.70 1 15 25 to 25.9______________ .90 .74 1 18 26 to 26.9______________ .95 .78 1. 21 27 to 27.9______________ 1.00 .82 1.24
Below 28______________ 1.00 0.90 0.90 0.90 0.90 28 to 28.9______________ 1.05 1.05 .86 .94 .90 .90 .90 1. 27 29 to 29.9______________ 1.10 1.10 .90 .98 .90 .95 .90 1.10 1.30 30 to 30.9_____________ 1.15 1.15 .94 1.02 .95 1.00 .90 1.15 1 33 31 to 31.9______________ 1.20 1.20 .98 1.06 1.00 1.05 .90 1. 20 1 36 32 to 32.9______________ 1.25 1.25 1.02 1.10 1.05 1.10 .95 1. 25 1 39 1 05 33 to 33.9_____________ 1.30 1.30 1.06 34 to 34.9______________ 1.35 1.35 1.10 35 to 35.9______________ 1.40 1.40 1.14 36 to 36.9______________ 1.45 1.45 1.18 37 to 37.9______________ 1.50 1.50 38 to 38.9______________ 1.55 1.55 39 to 39.9______________ 1.60 1.60 40 to 40.9______________ 1.65 1.65 41 to 41.9______________ 1.70 1.70 42 to 42.9______________ 1. 75 1.75 43 to 43.9______________ 1.80 1.80 44 and above__________ 1.85 1.85 p. 158greater than those from South Louisiana; this fact, the respondent insists, accounts for the difference in the price of the oils at the wells.
1
10 1.15 1.00 1.30 1 42 1 07 1.15 1.20 1.05 1.35 1 45 1 09 1.20 1.25 1.10 1.40 1 48 1 11 1.25 1.30 1.15 1.45 1 13 1.30 1.35 1.20 1.50 1 15 1.35 1.40 1.25 1 17 1.40 1.45 1.30 1.45 1.50 1.35 1.50 1. 55 1.40 1.55 1.60 1.45 1.60 1.65 1.50 1.65 1.70 1.55
The complainant’s contention under the constitution of Louisiana is that the tax is invalid because it was not levied according to either quantity or value. It manifestly is a specific tax at a rate per barrel of 42 gallons, and not strictly ad valorem. The graduation of the tax according to the gravity of the oil does not make it other than a tax according to quantity, that is, per barrel, as the oils of different classes are treated for the purpose of the tax as being in effect different commodities, each of which has its separate tax. We have not been referred to any decision of the state court upon the point and, until that court pronounces otherwise, we see no reason to hold that the tax is unauthorized by the State.
The further argument is made that the classification of oils is unreasonable and hence is not permitted by the state constitution. This is substantially the same question, from the standpoint of state authority, that is presented as a Federal ground of attack under the Fourteenth Amendment.
The complainant contends that the statute of Louisiana, imposing a tax according to gravity, operates as an arbitrary discrimination; that it discriminates in a wholly unjustifiable manner between the oils of the North Louisiana and South Louisiana fields, and also between the fields producing asphalt base oils. The tax on its production in the Haynesville, Cotton Valley and Pine Island fields is said to be at a rate from about six to seven and one-half per cent, of its value; and on the production in the Urania field, at about five and one-third per cent, of the value; while on the production in fields in South Louisiana, and in the Bellevue field, in North Louisiana, the tax is between three and three and one-half per cent, of the value.
The applicable principles are familiar. The States have a wide discretion in the imposition of taxes. When dealing with their proper domestic concerns, and not trenching upon the prerogatives of the national government or violating the guarantees of the Federal Constitution, the States have the attribute of sovereign powers in devising their fiscal systems to insure revenue and foster their local interests. The States, in the exercise of their taxing power, as with respect to the exertion of other powers, are subject to the requirements of the due process and the equal protection clauses of the Fourteenth Amendment, but that Amendment imposes no iron rule of equality, prohibiting the flexibility and variety that are appropriate to schemes of taxation. The State may tax real and personal property in a different manner. It may grant exemptions. The State is not limited to ad valorem taxation. It may impose different specific taxes upon different trades and professions and may vary the rates of excise upon various products. In levying such taxes, the State is not required to resort to close distinctions or to maintain a precise, scientific uniformity with reference to composition, use or value. To hold otherwise would be to subject the essential taxing power of the State to an intolerable supervision, hostile to the basic principles of our Government and wholly beyond the protection which the general clause of the Fourteenth Amendment was intended to assure. Bell's Gap Railroad Company v. Pennsylvania, 134 U. S. 232, 237; Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283, 293; Southwestern Oil Company v. Texas, 217 U. S. 114, 121; Brown-Forman Company n. Kentucky, 217 U. S. 563, 573; Sunday Lake Iron Company v. Wakefield, 247 U. S. 350, 353; Heisler n. Thomas Colliery Company, 260 U. S. 245, 255; Oliver Iron Mining Company n. Lord, 262 U. S. 172, 179; Stebbins v. Riley, 268 U. S. 137, 142.
Opinion of the Court. 281 U. S.
With all this freedom of action, there is a point beyond which the State can not go without violating the equal protection clause. The State may classify broadly the subjects of taxation, but in doing so it must proceed upon a rational basis. The State is not at liberty to resort to a classification that is palpably arbitrary. The rule is generally stated to be that the classification “ must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike.” Royster Guano Company v. Virginia, 253 U. S. 412, 415; Louisville Gas Company n. Coleman, 277 U. S. 32, 37; Air-Way Corporation v. Day, 266 U. S. 71, 85; Schlesinger v. Wisconsin, 270 U. S. 230, 240.
In the present instance it is apparent that a classification according to gravity cannot be regarded as palpably arbitrary. While the Baume gravity of oils may vary, even in the same fields, it has been used by the oil industry as indicating in a general way, apparently satisfactory for practical purposes, the gasoline content. In laying a specific severance tax per barrel, the State was not compelled to make an exact determination of the composition of each oil produced. At least with respect to oils sold primarily for the gasoline they contained, it cannot be said that the State attempted a hostile and unjustifiable discrimination in graduating its tax according to gravity, when the industry itself resorted to the factor of gravity in fixing the scale of prices for such oils. Further, the complainant is in no position to contest the action of the State in adopting a gravity basis with respect to the production of its oils in the Haynesville, Cotton Valley and Pine Island fields, which constituted over ninety per cent, of its entire production, as the complainant itself sold these oils on a gravity basis. If it be granted, as we think it must be, that the State could adjust the severance tax with respect to such oils according to gravity, the p. 161question comes simply to that of the particular graduation of the tax. There are, it is true, various gravity schedules of prices, and the same fields may produce oils of different gravities, and oils broadly of the same sort may be sold at flat prices, but, if the State was at liberty to adopt a gravity scale for oils which in such large measure were sold on this basis, the State was not required to grade its tax with a nicety which would assign to every oil produced a grade absolutely corresponding to its actual value. That would mean that the State could tax only on a strictly ad valorem basis, a contention wholly inadmissible. In grading a tax, admittedly within its power to levy, the State had a large discretion and there appears to be no ground for holding that there was such an abuse in this instance as to create constitutional invalidity. Clark n. Titusville, 184 U. S. 329, 331. The graduation of the tax on these oils corresponded generally to the supposed increase of gasoline content, and all oils of the same gravity were treated alike.
The question raised by the complainant has particular bearing upon the discrimination with respect to oils under 28 degrees gravity. The complainant in this respect must stand on its own case. Its oil of this sort is its Urania production, and that oil, as well as that of the Bellevue field in North Louisiana, is said to be “ practically the same ” as the coastal 11 Grade A” oils of South Louisiana. According to complainant’s own showing, these oils are especially suited to the manufacture of lubricating oil and are dealt in with that in view. While in such cases, gravity is not the criterion, but rather viscosity and sulphur content, these are oils of relatively low gravity, that is, under 28 degrees, and the Louisiana severance tax is a uniform one of four cents a barrel. As these last mentioned oils had a distinct composition and a different utility, the State could impose a tax upon them which was different from that imposed upon the other oils pro-
982340—30----- 11
duced by the complainant and not so well suited for the
making of lubricating oil. The State might have con-
cluded not to tax the former at all, and in that case there
would have been no constitutional ground of complaint
because a tax was laid on the different oils of the Haynes-
ville, Cotton Valley and Pine Island fields. In Heisler
of a statute of Pennsylvania because it levied a tax on
anthracite coal and not on bituminous coal. The conten-
tion was founded on the fact that both were fuels and
that anthracite coal in steam sizes competed with bitumi-
nous coal and certain sub-grades of the latter competed
with certain sub-grades of anthracite. The Court, ac-
cepting the fact of competition, nevertheless sustained
the tax, holding that the differences between the two sorts
of coal justified the classification. If the State had de-
scribed the oils especially suitable for the manufacture
of lubricating oil with respect to their composition or
use, and had taxed them at four cents a barrel, it could
not be said that the statute wTas beyond the power of the
State to enact simply because it subjected the complain-
ant to a different tax on its oils of a different character.
The statute is not made invalid by reason of a failure to
describe the oils scientifically.
The question is thus reduced to the discrimination alleged with respect to the tax on the complainant’s Urania production as compared with similar oils. As all these oils bear the same tax of four cents a barrel, the complainant manifestly has no ground for complaint on this score unless it can be found in differences in the prices of these oils. Urania oil was sold at seventy-five cents a barrel, while 11 Grade A” oil brought $1.20 a barrel. The record affords no explanation of the reason for this wide spread in the price of oils, said to be practically the same and used for the same purpose, unless it be the one advanced by the respondent that the difference is due to the p. 163146 Syllabus
distance of the fields from the common market and the consequent difference in transportation charges. Whether or not this is an adequate explanation, it can not be said that the State, from the standpoint of the Federal Constitution, could not put the same specific severance tax on the same sort of oils used in the. same way, merely because particular producers of such oils might obtain different prices. There may be many reasons why one owner obtains more in gross return for the same sort of commodities than another owner, and still other reasons why the net returns of the one may be more than those of the other. This Court recently decided that a tax imposed by Alabama on those selling cigars and cigarettes, which was based on the 11 wholesale sales price ” was not repugnant to the Fourteenth Amendment because of an alleged difference in the wholesale prices paid by dealers who bought from the manufacturers and by those who did not. Exchange Drug Company n. Long, decided March 12, 1930, post, p. 693. A classification of theatres for license fees according to prices of admission was held to be valid, although some of the theatres charging the higher admission, and paying the higher tax, had the less revenue. Metropolis Theatre Company v. Chicago, 228 U. S. 61. We find no ground for holding that the tax in this instance violated the Federal Constitution.
Judgment affirmed.
KENTUCKY v. INDIANA et al. No. 16, Original. Argued March 3, 4, 1930.—Decided April 14, 1930.
Kentucky sued Indiana in this Court on a contract between them for the building, with the consent of Congress, of a bridge across the Ohio River. Certain individuals, who were citizens, voters and taxpayers of Indiana and who had brought a suit in an Indiana court to restrain its officers from performing the contract, upon the ground that it was unauthorized by the law of Indiana and
Syllabus. 281 U. S.
void, were joined as defendants in Kentucky’s bill. The bill prayed for a decree requiring Indiana to specifically perform the contract and enjoining the individuals from prosecuting their suit. The individuals contested the jurisdiction of this Court and the validity of the contract. But Indiana admitted its validity and averred her desire to perform it, setting up as her only excuse for delay the litigation in the Indiana court and her unwillingness to proceed until there had been a final adjudication establishing her right to perform, adding that if this Court should grant the relief prayed against her by Kentucky, she would proceed immediately to perform the contract. Held:
1. That a controversy between the two States is presented, within the original jurisdiction of this Court. P. 173.
2. A State sued in this Court by virtue of the original jurisdiction over controversies between States, must be deemed to represent all its citizens, and its appropriate appearance here by its proper officers is conclusive upon that point. Id.
3. Citizens, voters and taxpayers of a State, merely as such and without showing any further or proper interest, have no separate, individual right to contest in such a suit the position taken by the State itself. Id.
4. An individual citizen may be made a party where relief is properly sought against him in a suit between States, and in such case he should have opportunity to show the nature of his interest and why the relief asked against him individually should not be granted. Id.
5. In the present instance, since the individuals have no interest with respect to the contract or its performance other than that of citizens and taxpayers generally of Indiana, and since they were joined as defendants merely for relief against them incidental to the relief sought by the plaintiff against the defendant State, they have no standing to litigate the validity and enforceability of the contract as between the States. P. 174.
6. Inasmuch as a decree of this Court in this suit would bind the State of Indiana and, on being shown, would bar any inconsistent proceedings in her courts, no sufficient ground appears for maintaining the bill against the individual defendants, and it should be dismissed as against them. P. 175.
7. If, in accordance with the pleading of each State, the contract be deemed authorized and valid, the mere pendency of the suit by citizens to restrain its performance does not constitute a defense. P. 176, p. 165163 Argument for Kentucky.
8. Where States are before this Court for the determination of a controversy between them, the Court must pass upon every question essential to such determination, although local legislation and questions of state authorization may be involved. P. 176.
9. It being conceded by the parties that performance of the contract is a matter of grave interest to the two States and to the public, and that delay is causing irreparable injury to Kentucky not remediable at law, postponement of decision, merely that this Court might have the advantage of a decision by the Indiana court in the suit of the Indiana citizens, would not be justified. P. 177.
10. Upon the record in this case, it is unnecessary for the Court to search the legislation underlying the contract in order to discover grounds of defense which the defendant State does not attempt to assert. P. 178. Bill dismissed as to individual defendants. Decree for plaintiff against defendant State.
Final Hearing, upon the pleadings and an agreed statement of facts, of a suit by Kentucky for specific performance by Indiana of a contract between them to build a bridge, and for an injunction to restrain individual defendants from prosecuting litigation in Indiana impeding the performance of the contract by that State.
Mr. Clifford E. Smith, Assistant Attorney General of Kentucky, with whom Messrs. J. W. Cammack, Attorney General, and M. B. Holifield, Assistant Attorney General, were on the brief, for the Commonwealth of Kentucky.
The individual defendants have no right to induce or cause the State of Indiana to breach its contract with Kentucky. It would be an anomaly if the contract entered into by the proper officers pursuant to legislative authority could be declared invalid by the courts of either State. If such were the rule, the courts of one State might hold the contract to be valid and the courts of the other State might hold it to be invalid. Cf. Arkansas v. Tennessee, 246 U. S. 158.
The prosecution of the suit in Indiana is of little importance, for the reason that the decisions of the courts
Argument for Kentucky. 281 U.S.
of Indiana cannot be binding on Kentucky; but the pendency of the suit has led Indiana to refuse to perform the covenants of the contract, and the only tribunal that does or can have jurisdiction of all the parties, and which can pass upon the validity of the contract and enforce performance thereof is this Court. Since this Court has exclusive jurisdiction to hear and determine the controversy, it has power under § 263 of the Judicial Code to prevent the further prosecution of the suit in the state •court and to require the individuals to appear in this Court and assert their claims here.
The bill presents a “ case ” and 11 controversy ” between Kentucky and Indiana, and citizens of the State of Indiana, within the original jurisdiction of this Court under Art. Ill, § 2, of the Constitution and § 233 of the Judicial Code. Virginia v. West Virginia, 246 U. S. 565; Kansas v. Colorado, 185 U. S. 125; Oklahoma v. Atchison, T. & S. F. R. Co., 220 U. S. 277; Wisconsin v. Pelican Ins. Co., 127 U. S. 265; Louisiana v. Texas, 176 U. S. 1; Pennsylvania v. Wheeling & Belmont Bridge Co., 13 How. 519; Muskrat v. United. States, 219 U. S. 346; In re Pacific R. Co., 32 Fed. 241; Foster de Elam v. Neilson, 2 Pet. 253; Missouri v. Illinois, 200 U. S. 496; South Dakota v. North Carolina, 192 U. S. 286; Cohens v. Virginia, 6 Wheat. 264; Rhode Island v. Massachusetts, 12 Pet. 657; Missouri n. Illinois, 180 U. S. 208; Kansas v. Colorado, 206 U. S. 46; In re Ayers, 123 U. S. 443.
The contract is fully authorized and supported by the statutes of Indiana, Kentucky, and the United States, and was made pursuant to express consent of Congress.
The contract should be specifically enforced on the grounds of the public interest, inadequacy of a legal remedy, multiplicity of suits, and the definiteness of the contract, as all of the technical and supervisory services have been provided for by the employment of consulting engineers.
163 Argument for Individual Defendants.
The provision of § 265 of the Judicial Code forbidding injunctions to stay proceedings in state courts must be construed in connection with § 262 of the Judicial Code; and if a federal court has obtained jurisdiction of the case, it can take such action as may be necessary to maintain its authority and enforce its decree. In the case at bar the Supreme Court of the United States has original and exclusive jurisdiction, and the Indiana court has neither jurisdiction of the parties to the contract involved, nor of the subject matter.
Mr. Thomas P. Littlepage presented the oral argument, and Messrs. Fred C. Gause, Walter Pritchard, Frank H. Hatfield, and Louis L. Roberts, were on the brief, for the individual defendants.
The bill presents no controversy between two States, or between a State and another State and citizens of another State.
The contract contains no limitation date for performance, nor does it provide that time is of the essence, nor does it fix any dates for the performance of any of its provisions. The mere fact that Indiana is unwilling to proceed until the validity of the contract is determined, does not constitute a breach; and inasmuch as both the bill and the answer state that Indiana is willing to perform the contract in accordance with its terms, there can be no controversy between the two States which would authorize the institution of this suit.
There is no contractual or other obligation between the individual defendants and Kentucky, nor can there be any claim by Kentucky that such defendants by instituting their litigation violated any rights of Kentucky. The relief sought by Kentucky against them is only to restrain action in the state court in order to obviate the allegation of Indiana that it is unwilling to proceed with the contract until such litigation is disposed of.
Argument for Individual Defendants. 281 U. S.
The bill seeks an injunction to stay proceedings in a state court of general jurisdiction. Under § 265 of the Judicial Code, such injunction is prohibited. Slaughter House Cases, 10 Wall. 273; Moran v. Storges, 154 U. S. 256; Iowa v. Schlimmer, 248 U. S. 115; Sargent n. Hilton, 115 U. S. 348; Essaner v. Kane, 258 U. S. 358.
The contract was entered into by the State Highway Commission of Indiana without authority and is unenforceable against Indiana.
Kentucky has a plain, adequate and complete remedy at law for any breach of the contract by suit in this Court against Indiana for damages.
In so far as the bill prays for a decree of specific performance, such decree would require action by political and legislative authority of another State, and this Court would not ordinarily undertake such authority; and moreover, a court will not decree specific performance of a building and construction contract such as that here involved; and prayer for a decree restraining Indiana from failing to perform the contract is in effect merely a prayer for specific performance.
The only effective relief sought by the bill is an injunction to stay proceedings in a local state court attacking the validity of the contract and the right of officers of the State of Indiana to disburse funds in carrying out the contract, involving the interpretation of the Indiana law with respect to which a decision of the Supreme Court of Indiana would be final.
Inasmuch as there is now pending in the Indiana state courts of general jurisdiction a case involving the interpretation of Indiana statutes, as to which the opinion of the Supreme Court of Indiana would be final, there is now no occasion for this Court to attempt to interpret such statutes.
Messrs. Arthur L. Gillion, former Attorney General of Indiana, James M. Ogden, Attorney General, and Connor D. Ross, Assistant Attorney General, were on the briefs for the State of Indiana.
Mr. Chief Justice Hughes delivered the opinion of the Court.
In September, 1928, the Commonwealth of Kentucky and the State of Indiana, by their respective Highway Commissions, entered into a contract for the building of a bridge across the Ohio River between Evansville, Indiana, and Henderson, Kentucky. The contract was approved by the Governor and, as to legality and form, also by the Attorney General, of each State. The contract recited the acts of Congress and of the state legislatures which were deemed to authorize the enterprise. Acts of Congress of July 11, 1916, 39 Stat. 355; March 2, 1927, 44 Stat. 1337; March 3, 1927, 44 Stat. 1398. Indiana, Act of 1919, Chap. 53; Act of 1927, Chap. 10. Kentucky, Acts of 1928, chapters 172 and 174. The State of Indiana immediately began the performance of the covenants of the contract on its part and, thereupon, nine citizens and taxpayers of Indiana brought suit in the Superior Court of Marion County in that State to enjoin the members of the Highway Commission and other officers of Indiana from carrying out the contract upon the ground that it was unauthorized and void.
The Commonwealth of Kentucky then asked leave to file the bill of complaint in this suit against the State of Indiana and the individuals who were plaintiffs in the suit in the state court, seeking to restrain the breach of the contract and the prosecution of that suit, and for specific performance. In its return to the order to show p. 170cause why this leave should not be granted, the State of Indiana said that it had “ no cause to show ”; that the State intended ultimately to perform the contract, if performance were permitted or ordered by the courts in which the litigation over the contract was pending, but that it did not intend to do so until after that litigation had finally been disposed of favorably to its performance; that the State of Indiana had entered into the contract by virtue of authority of its own statutes and of the Act of Congress of March 2, 1927; that as there was no court having complete jurisdiction over the parties and subject matter, other than this Court, the State yielded to the jurisdiction of this Court, and that it was in the public interest that an early adjudication be had which would be final and binding upon all parties interested.
Leave being granted, the bill of complaint herein was filed. It set forth the contract and the pertinent statutes, the pendency of the Indiana suit (to which the Commonwealth of Kentucky was not, and could not be made, a party), that the delay in the construction of the bridge would cause irreparable injury to the Commonwealth of Kentucky, and that the complainant had no adequate remedy other than through this suit. The complaint further alleged that the northern approach to the bridge would rest on and extend over Indiana soil and the southern approach would be on Kentucky soil; that the State of Indiana as well as the Commonwealth of Kentucky had full authority to enter into the contract under the state statutes cited, and that the contract was also authorized by the acts of Congress to which reference was made. The complaint was later amended to correct an inaccurate citation.
Separate answers were filed by the State of Indiana and by the individual defendants. The answer of the State of Indiana admitted that the allegations of the complaint were true. The answer then averred:
“ The only excuse which the State of Indiana offers for failure to perform the contract set out in plaintiff’s complaint is the litigation, mentioned in the complaint, instituted by her above-named co-defendants against the officers of the State of Indiana whose function it is to perform said contract. The resulting delay in performance of said contract is in breach of its terms, which contemplate immediate and continued performance.”
After stating that as the validity of the contract had been drawn in question in the litigation in the state court, the State did not feel warranted in proceeding until there was a final adjudication establishing its right to perform, the answer added:
“ The State of Indiana believes said contract is valid. If this honorable court shall grant the relief prayed against Indiana by plaintiff Commonwealth of Kentucky in either of its paragraphs of complaint, the State of Indiana will thereupon immediately proceed with the performance of said contract and will continue such performance until the objects of said contract shall have been fully attained as contemplated by the terms thereof.”
The individual defendants filed an answer and, at the same time, moved to dismiss the complaint upon the-ground that there was no controversy between the two States or between the Commonwealth of Kentucky and the individual defendants; that under Section 265 of the Judicial Code no injunction should be granted staying proceedings in the suit in the state court; that the proceedings involved the interpretation of the statutes and laws of Indiana; that the contract was not binding on the State of Indiana, being made without authority of law; and that the Commonwealth of Kentucky had an adequate remedy at law. The answer of the individual defendants admitted the making of the contract but denied its validity. The parties, pursuant to a stipulation, p. 172moved to submit the case upon the pleadings and briefs, including the separate motion of the individual, defendants to dismiss. The motion to submit was denied, the motion to dismiss was postponed, and the case was assigned for oral argument. Later, the Commonwealth of Kentucky moved to strike out the answers and for a decree pro confesso.
After hearing argument, the court overruled the motion to dismiss in so far as it questioned the jurisdiction of the court to entertain the bill of complaint and to proceed to a hearing and determination of the merits of the controversy, and directed that all other questions sought to be presented by that motion be reserved for further consideration at the hearing upon the merits.
A statement of facts, to which the complainant, the defendant State and the individual defendants agreed, was then filed. It admitted the allegations of the complaint with respect to the enactment of the various statutes mentioned and the making of the contract. It set forth that the State of Indiana by its Highway Commission and proper officers were “ now ready and anxious to perform said contract,” but would not do so until there was a final adjudication by the Supreme Court of Indiana or by this Court; that it was of great interest and concern to both States that the litigation should be determined as early as possible, consistently with the convenience of the Court; that the failure of the State of Indiana promptly to perform the covenants of the contract on its part had caused and will cause the Commonwealth of Kentucky injury and damage for which no adequate remedy at law exists; and that the Commonwealth of Kentucky was, and had been, “ ready, able and willing ” to perform the covenants of the contract on its part. It was also stated that all the allegations made by the State of Indiana in its answer were true. There was p. 173further agreement to the effect that the blue prints and drawings filed herein correctly showed the location approved for the bridge by both States, the boundary line between the States, the location of the spans, bridge structure and approaches, the high water lines and the topography at the site of the bridge. It was agreed that the individual defendants were citizens, voters and taxpayers of Indiana and the operators of automobiles on which they paid license fees to that State. Pursuant to a stipulation, the Highway Commission of Indiana filed a statement showing the appropriations made by that State bearing upon the construction of the bridge.
A motion to set the cause for hearing upon the pleadings and the agreed statement of facts was granted, and the cause has been heard.
The question of the jurisdiction of this Court was determined on the hearing of the motion to dismiss. The State of Indiana, while desiring to perform its contract, is not going on with its performance because of a suit brought by its citizens in its own court. There is thus a controversy between the States, although a limited one.
A State suing, or sued, in this Court, by virtue of the original jurisdiction over controversies between States, must be deemed to represent all its citizens. The appropriate appearance here of a State by its proper officers, either as complainant or defendant, is conclusive upon this point. Citizens, voters and taxpayers, merely as such, of either State, without a showing of any further and proper interest, have no separate individual right to contest in such a suit the position taken by the State itself. Otherwise, all the citizens of both States, as one citizen, voter and taxpayer has as much right as another in this respect, would be entitled to be heard. An individual citizen may be made a party where relief is properly sought as against him, and in such case he should have
Opinion of the Court. 281 U.S.
suitable opportunity to show the nature of his interest and why the relief asked against him individually should not be granted.
If the controversy within the original jurisdiction of this Court is over a contract alleged to have been made between two States, to which ,an individual defendant is not a party, it is manifest that such an individual defendant, merely as a citizen, voter and taxpayer of the defendant State, is not entitled to enter upon a separate contest in relation to the merits of the controversy so far as it relates to the making of the contract by the two States and the obligations that the contract imposes upon his State, and does not relate to any separate and proper interest of his own. The fact that an individual citizen in such a case is made a party defendant in order that the complainant may obtain some particular relief against him, which is merely incidental to the complete relief to which the complainant would be entitled if it should prevail as against the defendant State, gives such an individual defendant no standing to litigate on his own behalf the merits of a controversy which, properly viewed, lies solely between the States, but only to contest the propriety of the particular relief sought against him in case the decision on the merits is against his State. This gives an individual defendant in such a suit between States full opportunity to litigate the only question which concerns him individually as distinguished from the questions which concern him only in common with all the citizens of his State.
In the present instance, there is no showing that the individual defendants have any interest whatever with respect to the contract and its performance other than that of the citizens and taxpayers, generally, of Indiana, an interest which that State in this suit fully represents. The individual defendants have presented no defense p. 175other than that which they seek to make on behalf of their State with respect to the making of the contract by that State and the obligations thereby imposed upon it. The particular relief asked against them is sought only as an incident to the relief which the Commonwealth of Kentucky seeks against the State of Indiana. The individual defendants were made parties solely for the purpose of obtaining an injunction against them restraining the prosecution of the suit in the state court. Such an injunction is not needed, as a decree in this suit would bind the State of Indiana and on being shown would bar any inconsistent proceedings in the courts of that State. As no sufficient ground appears for maintaining the bill of complaint against the individual defendants, it should be dismissed as against them.
The question, then, is as to the case made by the Commonwealth of Kentucky against the State of Indiana. By admitting in its answer that the allegations of the complaint are true, the State of Indiana admits the making of the contract and the authority of its officers to make it under the applicable legislation. Not only are the allegations of fact in the complaint conceded to be true but there is also no dispute as to the legal import of these facts. Instead of presenting any legal ground for contesting the validity of the contract, the State of Indiana expressly asserts in its answer that it believes the contract is valid. There is no suggestion of any inadvertence in the answer. On the contrary it is the deliberate statement of the position of the State of Indiana in the light of the litigation in the state court and of the questions there sought to be raised. The only suggestion of a defense for its failure to perform the contract, that is, what the State of Indiana in its answer characterizes as its “only excuse,” is the pendency of this litigation in the state court. The State of Indiana avers that it
Opinion of the Court. 281 U.S.
does not feel warranted in proceeding in the absence of a final determination establishing its right to proceed under the contract.
It is manifest that if, in accordance with the pleading of each State, the contract for the building of the bridge is deemed to be authorized and valid, the mere pendency of a suit brought by citizens to restrain performance does not constitute a defense. In that aspect, the question would be, not as to a defense on the merits, but whether this Court should withhold a final determination merely because of the fact that such a suit is pending. This question raises important considerations. It can not be gainsaid that in a controversy with respect to a contract between States, as to which the original jurisdiction of this Court is invoked, this Court has the authority and duty to determine for itself all questions that pertain to the obligations of the contract alleged. The fact that the solution of these questions may involve the determination of the effect of the local legislation of either State, as well as of acts of Congress, which are said to authorize the contract, in no way affects the duty of this Court to act as the final, constitutional arbiter in deciding the questions properly presented. It has frequently been held that when a question is suitably raised whether the law of a State has impaired the obligation of a contract, in violation of the constitutional provision, this Court must determine for itself whether a contract exists, what are its obligations, and whether they have been impaired by the legislation of the State. While this Court always examines with appropriate respect the decisions of state courts bearing upon such questions, such decisions do not detract from the responsibility of this Court in reaching its own conclusions as to the contract, its obligations and impairment, for otherwise the constitutional guaranty could not properly be enforced. Larson v. South Dakota, 278 U. S. 429, 433, and cases there cited. Where the
States themselves are before this Court for the determination of a controversy between them, neither can determine their rights inter sese, and this Court must pass upon every question essential to such a determination, although local legislation and questions of state authorization may be involved. Virginia v. West Virginia, 11 Wall. 39, 56; 220 U. S. 1, 28. A decision in the present instance by the state court would not determine the controversy here.
It is none the less true that this Court might await such a decision, in order that it might have the advantage of the views of the state court, if sufficient grounds appeared for delaying final action. The question is as to the existence of such grounds in this case. The gravity of the situation can not be ignored. The injury to the Commonwealth of Kentucky by the delay in the performance of the contract by the State of Indiana is definitely alleged and expressly admitted. That injury is concededly irreparable—without adequate remedy at law. It is specifically set forth in the agreed statement of facts that “ it is of great interest and concern to the States of Indiana and Kentucky and the United States and the citizens thereof generally who will travel said Route 41 ” (the highway through the States which will be made continuous by the construction of the bridge) “ to have as early determination of this litigation as is possible.” In these circumstances there would appear to be no adequate ground for withholding the determination of this suit because of objections raised by individuals, merely in their capacity as citizens, voters and taxpayers of Indiana, objections which the State itself declines to sponsor.
It would be a serious matter, where a State has entered into a contract with another State, the validity of the contract not being questioned by either State, if individual citizens could delay the prompt performance which was admittedly important, not only to the com-
982340—30-------12
Opinion of the Court. 281 U.S.
plainant State but to the people of both States, merely by bringing a suit. It is not difficult to institute suits, and contracts between States, of increasing importance as interstate interests grow in complexity, would be at the mercy of individuals, if the action of the latter, without more, unsupported by any proper averments on the part of the State itself questioning its obligations, should lead this Court to stay its hand in giving the relief to which the complainant State would otherwise be entitled and of which it stood seriously in need.
On such a record as we have in this case, it is unnecessary for the Court to search the legislation underlying the contract in order to discover grounds of defense which the defendant State does not attempt to assert. The State of Indiana concludes its answer by saying that if a decree goes against it as prayed for, the State will at once proceed with the performance of the contract and fully complete that performance according to its terms.
We conclude that the controversy between the States is within the original jurisdiction of this Court; that the defendant State has shown no adequate defense to this suit; that nothing appears which would justify delay in rendering a decree; and that the Commonwealth of Kentucky is entitled to the relief sought against the State of Indiana.
The complainant and the defendant State will be accorded twenty days within which to submit a form of decree to carry these conclusions into effect. Costs will be divided equally between the States.
Dismissed as to individual defendants.
Decree for complainant against the defendant State.
Syllabus.
WISCONSIN et al. v. ILLINOIS et al.
MICHIGAN v. ILLINOIS et al.
NEW YORK v. ILLINOIS et al.
Nos. 7, 11, and 12, Original. Argued March 12, 13, 1930.—Decided April 14, 1930.
1. Passing upon the Master’s report in this case and the exceptions thereto, the Court determines the amounts by which the unlawful diversion of water from Lake Michigan (278 U. S. 367) should be diminished from time to time and the times to be fixed for each step; the plans proposed for disposal of the Chicago sewage are considered as material only as bearing on what those determinations should be; the defendants must find the way to comply with the determinations. P. 197.
2. The performance to be exacted of the defendant State is to be gauged by- what is possible if it devotes all its powers to the exigency. The State can base no defences upon difficulties which it has itself created, nor upon anything in its own constitution that may stand in the way of prompt action. Id.
3. In determining the extent to which the diversion of water should be reduced and the times at which the reductions should take place, a recent rise in the level of Lake Michigan cannot be taken into account, since, apart from speculation as to the duration of the rise, delays are allowable only for the purpose of limiting within fair possibility, the requirements of immediate justice pressed by the complaining States. Id.
4. These requirements as between the parties are the constitutional rights of those States, subject to whatever modification they may hereafter be subjected to by Congress acting within its authority. Id.
5. In present conditions there is no invasion of the authority of Congress by the former decision in these cases; and the right of the plaintiffs to a decree is not affected by the possibility that Congress may take some action in the matter. Id.
6. The Court approves the Master’s recommendations as to the amounts in which the diversion shall be successively reduced and the times within which the reductions shall be made, with a provision requiring the defendant Sanitary District to file with the Clerk of this Court, at stated periods, reports of the progress of
Statement of the Case. 281 U.S.
the work involved, at the coming in of which either party may make application to the Court for such action as may be suitable. P. 198.
7. All action of the parties and the Court in this case will be subject to any order that Congress may make in pursuance of its constitutional powers and any modification that necessity may show should be made by this Court. Id.
8. The Court rejects the plaintiffs’ demands that all diversion through the Drainage Canal cease, that the canal be closed at its connection with the Des Plaines River, with an incidental return of the flow of the Chicago River to its original course into the Lake, and also (a demand not contemplated by their bills) that all water pumped in the Sanitary District for domestic purposes be returned to the Lake after being purified in sewage works, and adopts as more reasonable the Master’s report that, as the best way of preventing the pollution of navigable waters, an outflow from the canal into the Des Plaines should be permitted and that the interests of navigation in the Chicago River, as a part of the Port of Chicago, will require the diversion of an annual average not exceeding 1500 c. f. s., in addition to domestic pumpage after sewage treatment. P. 199.
9. The claims of the complaining States should not be pressed to a logical extreme without regard to relative suffering and to the time during which the plaintiffs have let the defendants go on without complaint. P. 200.
10. If the amount of water withdrawn for domestic purposes should be excessive, it will be open to complaint. Id.
11. Whether the right for domestic use extends to great industrial plants (not argued) may be open for consideration at some future time. Id.
12. The defendants, having made the suits necessary by persisting in unjustifiable acts, must pay the costs of the litigation. Id.
Decree directed, subject to future modification.
Suits brought originally in this Court by the States of Wisconsin, Minnesota, Ohio, Pennsylvania, Michigan, and New York, against the State of Illinois and the Chicago Sanitary District, to enjoin further taking of water from Lake Michigan for the purpose of carrying off the sewage of Chicago and vicinity through a drainage canal. Pursuant to the opinion reported in 278 U. S. 367, the case
Argument, for Complainants.
was referred for the second time to Charles E. Hughes, Esquire, as Special Master. The Master was directed to take testimony on the practical measures needed to dispose of the sewage without the unlawful diversions of water, and the time required for their completion, and to report his conclusions for the formulation of a decree. The decision now reported was rendered after a hearing upon exceptions to the Master’s report under the second reference.
Messrs. Raymond T. Jackson, Special Assistant Attorney General of Wisconsin; Gilbert Bettman, Attorney General of Ohio; Wilbur M. Brucker, Attorney General of Michigan; and Newton D. Baker, Special Assistant Attorney General of Ohio; with whom Messrs. John W. Reynolds, Attorney General, Herman L. Ekern, Special Assistant Attorney General, and Herbert H. Naujoks, Assistant Attorney General, of Wisconsin; Henry N. Benson, Attorney General of Minnesota; and Cyrus E. Wood, Attorney General and Thomas E. Taylor, Deputy Attorney General, of Pennsylvania, were on the brief, for the complainant States of Wisconsin, Minnesota, Ohio, Pennsylvania, and Michigan.
No diversion or flow at Lockport is necessary or legally admissible for the purpose of maintaining navigation in the Chicago River as part of the Port of Chicago, or for any other purpose, upon the completion of the program of practical measures.
The Master, in his original report, found that Illinois had no power to divert water from the Great Lakes-St. Lawrence Watershed as against the complainant States, and that finding was confirmed by this Court. 278 U. S. 367. His later conclusion would overrule the previous decision of this Court. It would not only authorize Illinois to withhold its entire natural contribution to the Great Lakes System, but also to abstract from two to five
Argument for Complainants. 281 U. S.
or six times the amount in addition (depending on whether the'domestic pumpage be included). This additional water, contributed by the lower riparian States, would never have been within the boundaries of Illinois except for her unlawful act. No equity to take it can be founded upon a claim that it is or will be useful to the appropriator. It could not be said that the expense which the defendant would save by the appropriation would exceed the damage inflicted upon the complainants. But a State can not justify the taking of waters of another State upon the ground that it can derive a greater profit from their use than could the rightful owner. Wyoming v. Colorado, 259 U. S. 419. The complainant States need give no reason for keeping their own. Hudson County Water Co. v. McCarter, 209 U. S. 349.
This Court did not delegate to the Master the discretion or duty to apportion the waters between the complainant States and Illinois, on the basis of use which he might think most beneficial, or on any other basis. His exposition of the basis upon which his conclusion rests demonstrates that it is without legal basis and not responsive to the mandate of re-reference issued by the Court.
The Court held that no diversion was admissible in the interests of sanitation and that the defendants must provide some method of disposing of the sewage other than promoting or continuing the existing diversion. If any diversion were to be justified by reason of or as incident to the disposal of the sewage, the burden was on the defendants to establish both its necessity and extent as an equitable defense pro tanto.
This Court expressly held that Congress had not attempted to authorize any diversion for navigation purposes on the Illinois or Mississippi Rivers and that no diversion of water for such purposes could be allowed in this case. The Master has specifically found that there has been no subsequent action by the Congress. The p. 183179 Argument for Complainants.
question, therefore, here to be determined is solely whether on the completion of this program, the diversion of any quantity of water will be required in order to maintain such navigation as may use the Port of Chicago and the Chicago River in connection with the Great Lakes-St. Lawrence System. There is no navigation in any practical sense coming into the Chicago River by way of the Illinois Waterway or the Illinois-Michigan Canal. Only a few canoes and small pleasure craft have passed through the little lock of the Sanitary District.
With the cessation of all flow at Lockport, navigable depths will be increased in the Chicago River and the Drainage Canal because of the reversal of slope incident to restoration of the natural flow into Lake Michigan. The inquiry is then immediately reduced to the question of whether any diversion of water is necessary after completion of this program in order to prevent a nuisance which will obstruct navigation in the Chicago River as part of the Port of Chicago.
With the completion of practical measures recommended by the Master (less control works) or of complainants’ program, for the disposition of the sewage without diversion and with no flow at Lockport, no interference with or obstruction in fact to navigation or navigable capacity will be created in the Chicago River as part of the Port of Chicago.
Assuming, solely for the sake of argument, that the Court, in adverting to the possibility of some negligible (juantity of diversion being necessary to maintain navigation in the Chicago River, referred not merely to the preservation of adequate depths and widths, but to the prevention of any nuisance conditions arising from the disposal of the sewage which could create an interference with, or obstruction to, navigation or navigable capacity, complainants assume that the Court did not have in mind any fanciful standard for the Chicago River, but intended
Argument for Complainants. 281 U. S.
simply to secure practical conditions which have been found adequate for navigation in line with the experience in navigable harbors generally.
While defendants originally contended that the discharge of the entire volume of raw sewage into the Chicago River did not create any interference with navigation, ever since this Court held that diversion for sanitation is illegal and inadmissible, defendants have steadily attempted to create an impression that, in order to maintain navigation at Chicago, it is necessary to eliminate all possibility of contamination of the water in the River, no matter how negligible, so that in effect it may be as pure as it was when there was no City of Chicago. If the contentions of the defendants were correct, there would be no free and unobstructed navigation at any of the substantial ports of the United States, and navigation, instead of growing, upon the lakes and elsewhere, would have died out long ago, as the cities continued to grow. On the contrary, it has rapidly increased. Cf. New York n. New Jersey, 256 U. S. 296.
Analysis of the evidence demonstrates that no diversion is necessary to maintain navigation in the Chicago River.
If it be assumed that the program of practical measures recommended by the Master is not adequate to prevent interference with navigation in the Chicago River as part of the Port of Chicago, with no flow at Lockport, then other available practical measures must be included in the program; and with their inclusion, no claim of a necessity for any diversion to maintain navigation in tfie Chicago River can be supported.
If an unusual standard of purity and beauty in the interests of navigation is to be adopted for the Chicago River, then there are available practical measures other than diversion for accomplishing such a standard.
Practical measures are available to wholly eliminate the effluent of the sewage treatment works and the discharge p. 185179 Argument for Complainants.
of any untreated sewage at times of storm from the Chicago River, if that is deemed necessary. In any event, no permanent diversion in abridgement of complainants’ rights is admissible as a matter of law.
Diversion to remove a nuisance created by the sewage of Chicago is not in aid of navigation.
Congress, by general and special legislation, has affirmatively determined that the discharge of local sewage and street wash into any of the navigable waters of the United States shall not constitute an obstruction to navigation or navigable capacity as a matter of law. U. S. C., Title 33, §§ 407, 421. This determination is conclusive. Pennsylvania v. Wheeling Bridge Co., 18 How. 421; Southern Pacific Co. v. Olympian Dredging Co., 260 U. S. 205. It seems that, in New York v. New Jersey, 256 U. S. 296, this statute was not construed.
If the Court should find that there is any basis in fact for any diversion, subsequent to the completion of the program of practical measures, in the interests of navigation, complainants reassert their contentions (laid aside without decision in the opinion of January 14, 1929) that neither the State of Illinois nor the Federal Government has the power to authorize the diversion of any water in the Great Lakes-St. Lawrence Watershed to the Mississippi Watershed without the consent of the complainant States.
The City of Chicago does not divert the unconsumed portion of its domestic pumpage; it would have no legal right so to do against the objection of these complainants; and if such a right be conceded for the sake of argument, such a diversion could not be made the basis of diverting an additional quantity of water in derogation of the rights of the complainants.
Domestic pumpage does not cease to be water because it has become in a greater or lesser degree contaminated through its reasonable use for domestic purposes.
Argument for Complainants. 281 U. S.
The State of Illinois under the circumstances of this case has not the power to authorize Chicago to take its domestic water supply from the Great Lakes Watershed and divert the unconsumed portion to the Mississippi Watershed. Holyoke Water Power Co. v. Connecticut River Co., 22 Blatch. 131, 20 Fed. 71; Saunders v. Bluefield Imp. Co., 58 Fed. 133; Pine v. New York, 50 C. C. A. 145, 112 Fed. 98, reversed on other grounds, 185 U. S. 93; Rutz v. St. Louis, 7 Fed. 438; Hoge n. Eaton, 135 Fed. 411.
The common law of waters obtains in the complainant and defendant States. Every riparian owner is entitled to the natural flow of the stream or watercourse without substantial diminution in either quantity or quality, and an upper riparian owner must return any waters diverted from a watercourse before it leaves his land. Kimberly & Clark Co. v. Hewitt, 79 Wis. 334; Priewe n. Wisconsin Land & Imp. Co., 93 Wis. 534; Dwight n. Hayes, 150 Ill. 237; Minnesota Loan & T. Co. v. St. Anthony Falls Waterpower Co., 82 Minn. 505; Pinney v. Luce, 44 Minn. 367; Clark v. Pennsylvania R. Co., 145 Pa. St. 438; Miller v. Miller, 9 Pa. 74; Strobel v. Kerr Salt Co., 164 N. Y. 303; Loranger v. Flint, 185 Mich. 454; Stock v. Jefferson, 114 Mich. 357; Canton v. Shock, 66 Oh. St. 19; Stock n. Hillsdale, 155 Mich. 375; Philadelphia v. Collins, 68 Pa. St. 106; Haupt’s Appeal, 125 Pa. St. 211; Lord v. Meadville Water Co., 135 Pa. 122; Crill v. Rome, 47 How. Pr. Rep. 398; Sumner n. Gloversville, 71 N. Y. S. 1088; Smith v. Rochester, 92 N. Y. 463; Fulton Light, H. & P. Co. n. State, 200 N. Y. 400; Minneapolis Mill Co. v. Water Comm’n, 56 Minn. 485; Kimberly & Clark Co. v. Hewitt, 79 Wis. 334; Green Bay & Co. v. Kaukauna Water Co., 90 Wis. 370; Elgin v. Elgin Hydraulic Co., 85 Ill. App. 182, affirmed, 194 Ill. 476.
The Master committed no error in not allowing a longer period of time for the construction and placing in operation of the practical measures recommended by him.
179 Argument for New York.
This Court has already decided, Wisconsin v. Illinois, 278 U. S. 367, that it has the jurisdiction to determine the extent of diversion, if any, which is legal, and its right so to do is clear.
The Master should have recommended that costs be taxed against the defendants, including the fees of the Master. Nebraska v. Iowa, 143 U. S. 359; South Dakota v. North Carolina, 192 U. S. 286; New York v. New Jersey, 256 U. S. 296; North Dakota V. Minnesota, 263 U. S. 583.
Mr. Hamilton Ward, Attorney General of New York, submitted for the complainant State of New York.
The program outlined by the Master is not an adequate program of practical measures for the disposition of the sewage in the Sanitary District through other means than lake diversion, as interpreted by the Master, and does not comply with the order of this Court dated January 14, 1929.
The inclusion by the Master of controlling works as a part of his program of practical measures for the disposition of sewage was erroneous because it preserves rather than prevents diversion and because it conditions complainant’s relief upon the discretion of the Secretary of War.
Upon the completion of the sewage disposal program, no diversion or flow at Lockport is necessary or legally admissible to maintain navigation in the Chicago River as part of the Port of Chicago.
Diversion is not necessary in the interests of navigation on the Chicago River as a part of the Great Lakes system.
Upon completion of the practical measures recommended by the Master, or of complainant’s program, there will be no nuisance in the Chicago River such as to require the diversion of any lake water.
Argument for Defendants. 281 U.S.
In New York v. New Jersey, 256 U. S. 296, the discharge of sewage into New York Harbor with only simple preliminary treatment for the removal of gross material was held not to be harmful to navigation.
Congress by general and special legislation has affirmatively determined that the discharge of local sewage and street wash into any of the navigable waters of the United States shall not constitute an obstruction of navigation or navigable capacity as a matter of law, U. S. C., Title 33, §§ 407, 421. This is conclusive. Monongahela Bridge Co. v. United States, 216 U. S. 177.
The time allowed by the Master for the construction and placing in operation of practical measures for sewage disposal is sufficient.
The jurisdiction of this Court to fix the amount of diversion in the interest of navigation has been decided. Wisconsin v. Illinois, 278 U. S. 376.
The Master was correct in not allowing additional diversion in the alleged interest of navigation in the Illinois River or Michigan Canal, and in finding it practicable to determine permissible reductions in diversion during the construction.
The decree proposed should have awarded costs to the complainant including the fees of the Master. North Dakota v. Minnesota, 263 U. S. 583.
Messrs. John W. Davis, James M. Beck and Edmund D. Adcock, with whom Messrs. Oscar E. Carlstrom, Attorney General of Illinois, Walter E. Beebe, George F. Barrett, James Hamilton Lewis, Louis J. Behan, William P. Sidley and Cornelius Lynde were on the brief, for the defendants, the State of Illinois and the Sanitary District of Chicago.*
* Mr. Carlstrom appeared as representing the State of Illinois; Mr. Beebe as Attorney, and Messrs. Barrett and Adcock as Solicitors, of the Sanitary District of Chicago. Messrs. Davis, Beck, Lewis, and p. 189179 Argument for Defendants.
The manner and conditions of the discharge and flow of wastes in the navigable waters must be within the paramount power of Congress to regulate. Congress has provided for regulation by the Secretary of War on the recommendation of the Chief of Engineers. It would be improper for the Court to step over into this field of the political department.
The bills do not seek to interfere with the discharge of Chicago’s sewage, wastes and storm water to the Des Plaines River.
Pursuant to these bills, much evidence was offered by complainants at the 1926-27 hearings, and their witnesses at those hearings never contemplated discharge of treated or untreated sewage and storm waters into Lake Michigan.
This Court’s opinion of January 14, 1929, does not contemplate preventing discharge of sewage effluent, waste, storm water and rain water run-off to the Des Plaines River, nor does it intend that diversion from the Lake should cease. The Court understood that the only question involved was as to the amount of water that should be “ directly abstracted from Lake Michigan.”
The City of Chicago has the right to take water from Lake Michigan for its domestic purposes and discharge the drainage, sewage or effluent or wastes from sewage purification works wherever in its judgment it may deem most appropriate.
The Supreme Court, in original suits between States, adopts the law of the complainants and defendants as announced by Constitution, statute, or the opinions of their courts. Wyoming v. Colorado, 206 U. S. 46.
Behan appeared as counsel for the Sanitary District, as did also Messrs. Sidley and Lynde, the last two representing the Association of Commerce of Chicago.
Mr. Lewis was present at the argument, but yielded his time to Mr. Adcock.
. Argument for Defendants. 281 U.S.
The law of the complainant and defendant States is that a city located upon a public navigable waterway has the right to take water for its domestic purposes and appropriate it for all the uses to which the city may put it, such as drinking, cooking, sanitary, manufacturing, fire department and such like, either as riparian owner or by virtue of a grant by the State of such use of public waters, and no lower or other riparian owner can complain of such use for domestic purposes. City of Canton v. Shock, 66 Ohio 19; Minneapolis Mill Co. v. Board of Water Comm’rs, 56 Minn. 485; Lamprey v. Minnesota, 52 Minn. 181; Loranger v. City of Flint, 185 Mich. 454; Appeal of Frank Haupt, 125 Pa. St. 211; Philadelphia v. Collins, 68 Pa. 106; Philadelphia v. Comm’rs of Spring Garden, 7 Pa. 348; Filbert v. Dechert, 22 Pa. Sup. Ct. 362; Palmer Water Co. n. Lehighton Water S. Co., 280 Pa. St. 492; Boalsburg Water Co. v. State College Water Co., 240 Pa. St. 198; Scranton Gas & W. Co. v. D. L. & W. R. Co., 240 Pa. St. 604; Crill v. The City of Rome, 47 How. Prac. Rep. 398; Illinois Central R. Co. v. Illinois, 146 U. S. 387; Strobel v. Kerr Salt Co., 164 N. Y. 303; United P. B. Co. v. Iroquois P. & P. Co., 226 N. Y. 38; Haseltine v. Case, 46 Wis. 391; State v. Southerland, 166 Wis. 511; Metropolitan Investment Co. v. Milwaukee, 165 Wis. 216; Thomas Furnace Co. n. Milwaukee, 156 Wis. 549; Wisconsin River Imp. Co. v. Lyons, 30 Wis. 61; Diana Shooting Club v. Husting, 156 Wis. 261; City of Elgin v. Elgin Hydraulic Co., 85 Ill. App. 182; Watuppa Reservoir Co. v. Fall River, 147 Mass. 548; Fisk v. Hartford, 69 Conn. 375; City of Auburn v. Union Water Power Co., 90 Me. 576; Barre Water Co. n. Carnes, 65 Vt. 626.
Diversions of water from one watershed to another have been the common practice of complainant States. These diversions have been acquiesced in and were undoubtedly made for the purpose of taking advantage of the natural p. 191179 Argument for Defendants.
The Acts of Congress of 1822 and 1827, and the Acts of Illinois, have brought Chicago within the watershed of the Mississippi River, at least for the purpose of discharging the run-off of the Chicago River drainage area and sewage. Missouri v. Illinois, 200 U. S. 496.
Since about 1865, there has been discharged to the Des Plaines River by way of the Illinois and Michigan Canal, or the Sanitary and Ship Canal, and from the Chicago River, an amount of sewage and water equal to the average rain water run-off of the Chicago River drainage area and the sewage and wastes.
After the works recommended in the Master’s report for the treatment of sewage and wastes have been installed, then there will have been disposed of and eliminated all the sewage and wastes that may be so disposed of from a practicable standpoint.- There will be left a residue of wastes in the effluents and in the storm water after such works are put in operation. Therefore, a reasonable amount of water will be required and may be diverted from Lake Michigan to prevent nuisance to or interference with navigation or navigable waters in the port and harbor of Chicago and in Lake Michigan, to prevent pollution and impairment of the domestic water supply, and bathing beaches, and to prevent other nuisances.
The Court in exercising its jurisdiction in controversies between States, will apply the principle of comity and equality of right and opportunity and such equitable principles as will effect a just and equitable solution of the problem under all the circumstances of the case.
Equality of right does not mean an equal division of water. The States stand on an equal level or plane. Each State has the right to take advantage of what nature
Argument for Defendants. 281 U.S.
has by reason of its topography, natural resources and other advantages provided it, even though in putting such resources to the best available uses, the State may encroach to some extent upon the solitary rights or the equally full enjoyment of rights of some other State or States. Each State has an equal right to use those great natural assets which are available to many States in common, and in appropriating part is not to be limited by technical or narrow rules. Thus generally the public welfare of the people of all the States will be advanced.
The discharge of the effluent and storm water, together with a reasonable amount of water direct from Lake Michigan, to the Des Plaines River, constitutes the natural and logical method of disposing of these wastes and protecting navigation.
The ordinary rain water run-off of the Calumet and Chicago River drainage areas must necessarily become mixed with and a part of the sewage. In any event, this ordinary rain water run-off has been discharged to the Des Plaines River since 1865. In this there has been such long acquiescence that there can be no possibility of complaint. The amount of water required from Lake Michigan to protect navigation is small, and the effect, if any, upon the interests of complainant States, is negligible in comparison with the great financial burden that would be placed upon the people of Chicago, and the inconveniences from nuisance to the people living at Chicago, as well as to the persons navigating the Lakes. Kansas v. Colorado, 206 U. S. 46; North Dakota v. Minnesota, 263 U. S. 365; Wyoming v. Colorado, 259 U. S. 419; Minnesota Rate Cases, 230 U. S. 352; Kansas v. Colorado, 185 U. S. 125.
The recent Colorado River compact is excellent authority in support of the doctrine of equal right and opportunity between States, and becomes a persuasive p. 193179 Argument for Defendants.
precedent in applying interstate law principles in controversies between the States.
The discharge into Lake Michigan of effluent from treatment plants, storm water, untreated sewage therein and drainage, as complainants propose, would forever impair Chicago’s only water supply.
The practicable measures required for the disposition of the sewage and wastes of the Sanitary District, do not embrace the additional works which the complainants now insist should have been included by the Master.
The diversion from Lake Michigan, when all the sewage treatment works are in operation, should be fixed with relation to the needs and interest of navigation not only of the port and harbor of Chicago, but also of the Des Plaines and Illinois Rivers. Wisconsin v. Illinois, 278 U. S. 367; New York n. New Jersey, 256 U. S. 296. Considering the interests of navigation on the Illinois River, as well as that at the port of Chicago, the evidence is undisputed that approximately 5,000 c. f. s. of diversion, including domestic pumpage, is required to maintain unobjectionable conditions on the Illinois River.
Considering only the waters of the port of Chicago, 2,000 c. f. s., in addition to domestic pumpage and rain water run-off is required for navigation.
The modern trend of thought, congressional legislation, and official action of government and state officers is toward keeping and maintaining navigable and other waters of the United States free from future pollution by sewage and waste contamination of cities. Missouri v. Illinois, 200 U. S. 496; New York n. New Jersey, 256 U. S. 296.
The provision for controlling works to prevent reversals of the Chicago River into the Lake, is part of the defendants’ construction program to provide practical measures in order that the amount of water diverted from the Lake, when all the works are in operation, may be reduced to
98234°—30------13
Argument for Defendants. 281U. S.
the lowest practicable amount consistent with the interests of navigation and prevention of nuisance to the various interests involved.
Unless such controlling works are installed, it will be impracticable, as the Master found, to reduce the diversion below 6,500 cubic second feet.
The drainage canal and the Chicago River are navigable waters of the United States, and it will be necessary before such controlling works may be installed, that the plans therefor be approved by the Secretary of War, on the recommendation of the Chief of Engineers, under § 10 of the Rivers and Harbors Act of March 3, 1899. Mortell v. Clark, 272 Ill. 201; People n. Economy Power & L. Co., 241 Ill. 329; Ex parte Boyer, 109 U. S. 628; United States v. Cress, 243 U. S. 316; Perry v. Haines, 191 U. S. 17; DuPont v. Miller, 310 Ill. 140.
The Master has found that such controlling works will not materially interfere with navigation, and has provided by his form of decree that the defendant Sanitary District shall immediately submit plans to the War Department for such control works and that the control works shall be constructed and installed by the Sanitary District within two years after the date of the approval of such plans by the War Department. Consequently, an exception on any prognosis that they may not be built is without merit.
The amounts of the diversion at various times during the period of construction, and the amount after all the works are completed, should be fixed by the Secretary of War, on the recommendation of the Chief of Engineers.
The opinion of January 14, 1929, intends that the Secretary of War, on the recommendation of the Chief of Engineers, shall continue the exercise of the functions heretofore exercised in fixing the amounts of the diversions in the, interests of navigation and its protection as the exigencies of the situation may prompt.
179 Argument for Defendants.
The Court ought not to take any action in fixing the amount of the diversion which will invade the sphere of action of the political department. The Court’s opinion of January 14, 1929, must not be so construed and, if it may bear such construction, it should be modified. Sanitary District v. United States, 266 U. S. 405; Pacific Tel. Co. v. Oregon, 223 U. S. 118; Prentis v. Atlantic Coast Line, 211 U. S. 210.
It is impracticable now to fix amounts of the diversion. The practical solution is to provide by the decree that the diversion shall be, during the construction period, such amounts as may be determined by permits issued according to law by the Secretary of War on the recommendation of the Chief of Engineers; but that such permits shall be subject to review by this Court on the evidence already submitted and any further evidence that may then be presented.
The time fixed by the Master’s report for the installation of all the different works is too short.
The rise in lake levels since the introduction of the evidence on which the Court’s opinion of January 14, 1929, was rendered, should have caused the Master to disregard his conclusion that the Court intended to impose “ an immediately heavy burden ” in the installation of works. Reasonable time for completion should have been allowed. The shorter time which would impose such immediately heavy burden is. inequitable under the circumstances.
Liberal allowance for unforeseeable delays in the construction of such vast and unusual works, should have been made, which would have extended the construction period beyond the date fixed by the Master.
It is inappropriate at this time to determine which one of the parties shall pay the costs. Cf. North Dakota v. Minnesota, 263 U. S. 583; Kansas v. Colorado, 206 U. S. 46; Wyoming v. Colorado, 259 U. S. 496.
Opinion of the Court. 281U. S.
Messrs. Stratton Shartel, Attorney General of Missouri, J. W. Cammack, Attorney General of Kentucky, Charles H. Thompson, Attorney General of Tennessee, Percy Saint, Attorney General of Louisiana, Rush H. Knox, Attorney General of Mississippi, Hal L. Norwood, Attorney General of Arkansas, and Daniel N. Kirby, on behalf of the Mississippi Valley States, intervening defendants, joined in the foregoing brief.
Mr. Justice Holmes delivered the opinion of the Court.
These suits, brought to prevent the State of Illinois and the Sanitary District of Chicago from continuing to withdraw water from Lake Michigan as they now are doing, have passed through their first stage in this Court. The facts were set forth in detail and the law governing the parties was established by the decision reported in 278 U. S. 367. It was decided that the defendant State and its creature the Sanitary District were reducing the level of the Great Lakes, were inflicting great losses upon the complainants and were violating their rights, by diverting from Lake Michigan 8,500 or more cubic feet per second into the Chicago Drainage Canal for the purpose of diluting and carrying away the sewage of Chicago. The diversion of the water for that purpose was held illegal, but the restoration of the just rights of the complainants was made gradual rather than immediate in order to avoid so far as might be the possible pestilence and ruin with which the defendants have done much to confront themselves. The case was referred a second time to the master to consider what measures would be necessary and what time required to effect the object to be attained. The master now has reported. Both sides have taken exceptions, but, as we shall endeavor to show, the issues open here are of no great scope.
The defendants have submitted their plans for the disposal of the sewage of Chicago in such a way as to diminish so far as possible the diversion of water from the Lake. In the main these plans are approved by the complainants. The master has given them a most thorough and conscientious examination. But they are material only as bearing on the amount of diminution to be required from time to time and the times to be fixed for each step, and therefore we shall not repeat the examination. It already has been decided that the defendants are doing a wrong to the complainants and that they must stop it. They must find out a way at their peril. We have only to consider what is possible if the State of Illinois devotes all its powers to dealing with an exigency to the magnitude of which it seems not yet to have fully awaked. It can base no defences upon difficulties that it has itself created. If its constitution stands in the way of prompt action it must amend it or yield to an authority that is paramount to the State.
The defendants’ exceptions deal with the extent to which the diversion of water should be reduced and to the time at which the reductions should take place. They argue that a recent rise in the level, of Lake Michigan should be taken into account. This cannot be done. Apart from the speculation involved as to the duration of the rise, there is a wrong to be righted, and the delays allowed are allowed only for the purpose of limiting, within fair possibility, the requirements of immediate justice pressed by the complaining States. These requirements as between the parties are the constitutional right of those States, subject to whatever modification they hereafter may be subjected to by Congress acting within its authority. It will be time enough to consider the scope of that authority when it is exercised. In present conditions there is no invasion of it by the former decision of this Court, as urged by the defendants. The
Opinion of the Court. 281U. S.
right of the complainants to a decree is not affected by the possibility that Congress may take some action in the matter. See Southern Utilities Co. v. Palatka, 268 U. S. 232, 233. Kansas v. Colorado, 206 U. S. 46, 117.
The master finds that, on and after July 1, 1930, the diversion of water from Lake Michigan should not be allowed to exceed an annual average of 6,500 cubic feet per second in addition to what is drawn for domestic uses. He finds that when the contemplated controlling works are constructed that are necessary for the purpose of preventing reversals of the Chicago River at times of storm and the introduction of storm flow into Lake Michigan, works that will require the approval of the Secretary of War and that the master finds should be completed and put in operation within two years after the approval is given, and probably by December 31, 1935, the diversion should be limited to an annual average of 5,000 c. f. s. “ in addition to domestic pumpage.” On this point we deal only with the amount and the time. When the whole system for sewage treatment is complete and the controlling works installed he finds that the diversion should be cut down to an annual average of 1,500 c. f. s. in addition to domestic pumpage. This, he finds, should be accomplished on or before December 31, 1938; and the full operation of one of the contemplated works, the West Side Sewage Treatment Plant, which would permit a partial reduction of the diversion, is to be not later than December 31, 1935. These recommendations are subject to the appointment of a commission to supervise the work, or, better in our opinion, to the filing with the clerk of this Court, at stated periods, by the Sanitary District, of reports as to the progress of the work, at the coming in of which either party may make application to the Court for such action as may seem to be suitable. All action of the parties and the Court in this case will be subject, of course, to any order that Congress may p. 199make in pursuance of its constitutional powers and any modification that necessity may show should be made by this Court. These recommendations we approve within the limits stated above, and they will be embodied in the decree. The defendants argue for delay at every point but we have indicated sufficiently why their arguments cannot prevail. The master was as liberal in the allowance of time as the evidence permitted him to be.
The exceptions of the complainants go mainly to a point not yet mentioned. The sewage of Chicago at present is discharged into a canal that extends to Lockport on the Des Plaines River, (which flows into the Illinois, which in its turn flows into the Mississippi,) from Wilmette on the north and a point on the Lake near the boundary line of Indiana on the south, with another intake midway between these two at the mouth of the Chicago River, which has been reversed from its former flow into Lake Michigan to a flow from the Lake. The change is narrated at length in the former decision of this case. 278 U. S. 367, 401, et seq. See also Missouri v. Illinois, 180 U. S. 208, 211, et seq. s. c. 200 U. S. 496. It is partially to oxidize and carry off this sewage that the main diversion of water is made. The complainants demand that this diversion cease, and the canal be closed at Lockport, with an incidental return of the Chicago River to its original course. They also argue that what is called the domestic pumpage after being purified in the sewage works be returned to the Lake. These demands seem to us excessive upon the facts in this case. The master reports that the best way of preventing the pollution of navigable waters is to permit an outflow from the Drainage Canal at Lockport, and that the interests of navigation in the Chicago River as a part of the port of Chicago will require the diversion of an annual average of from 1,000 c. f. s. to 1,500 c. f. s. in addition to domestic pumpage after the sewage
Opinion of the Court. 281U. S.
treatment program has been carried out. The canal was opened at the beginning of the century, thirty years ago. In 1900 it already was a subject of litigation in this Court. The amount of water ultimately to be withdrawn unless Congress may prescribe a different measure is relatively small. We think that upon the principles stated in Missouri v. Illinois, 200 U. S. 496, 520, et seq., the claims of the complainants should not be pressed to a logical extreme without regard to relative suffering and the time during which the complainants have let the defendants go on without complaint.
Perhaps the complainants would not be very insistent with regard to the 1,000 or 1,500 c. f. s. which earlier in this case they seemed to admit to be reasonable, if then-demand were allowed that the domestic pumpage be purified and returned to the Lake—a demand not contemplated by their bill. But purification is not absolute. How nearly perfect it will be with the colossal works that the defendants have started is somewhat a matter of speculation. The master estimates that with efficient operation the proposed treatment should reach an average of 85 per cent purification and probably will be 90 per cent or more. Even so we are somewhat surprised that the complainants should desire the effluent returned. The withdrawal of water for domestic purposes is not assailed by the complainants and we are of opinion that the course recommended by the master is more reasonable than the opposite demand. If the amount withdrawn should be excessive, it will be open to complaint. Whether the right for domestic use extends to great industrial plants within the District has not been argued but may be open to consideration at some future time.
We see no reason why costs should not be paid by the defendants, who have made this suit necessary by persisting in unjustifiable acts. North Dakota v. Minnesota, 263 U. S. 583.
A decree will be entered to the effect that, subject to such modifications as may be ordered by the Court hereafter,
1. On and after July 1, 1930, the defendants, the State of Illinois and the Sanitary District of Chicago, are enjoined from diverting any of the waters of the Great Lakes-St. Lawrence system or watershed through the Chicago Drainage Canal and its auxiliary channels or otherwise in excess of an annual average of 6,500 c. f. s. in addition to domestic pumpage.
2. That on and after December 31, 1935, unless good cause be shown to the contrary the said defendants are enjoined from diverting as above in excess of an annual average of 5,000 c. f. s. in addition to domestic pumpage.
3. That on and after December 31, 1938, the said defendants are enjoined from diverting as above in excess of the annual average of 1,500 c. f. s. in addition to domestic pumpage.
4. That the provisions of this decree as to the diverting of the waters of the Great Lakes-St. Lawrence system or watershed relate to the flow diverted by the defendants exclusive of the water drawn by the City of Chicago for domestic water supply purposes and entering the Chicago River and its branches or the Calumet River or the Chicago Drainage Canal as sewage. The amount so diverted is to be determined by deducting from the total flow at Lockport the amount of water pumped by the City of Chicago into its water mains and as so computed will include the run-off of the Chicago and Calumet drainage area.
5. That the defendant the Sanitary District of Chicago shall file with the clerk of this Court semi-annually on July first and January first of each year, beginning July first, 1930, a report to this Court adequately setting forth the progress made in the construction of the sewage treatment plants and appurtenances outlined in the program as proposed by the Sanitary District of Chicago, and also
Syllabus. 281 U. S.
setting forth the extent and effects of the operation of the sewage treatment plants, respectively, that shall have been placed in operation, and also the average diversion of water from Lake Michigan during the period from the entry of this decree down to the date of such report.
6. That on the coming in of each of said reports, and on due notice to the other parties, any of the parties to the above entitled suits, complainants or defendants, may apply to the Court for such action or relief, either with respect to the time to be allowed for the construction, or the progress of construction, or the methods of operation, of any of said sewage treatment plants, or with respect to the diversion of water from Lake Michigan, as may be deemed to be appropriate.
7. That any of the parties hereto, complainants or defendants, may, irrespective of the filing of the above-described reports, apply at the foot of this decree for any other or further action or relief, and this Court retains jurisdiction of the above-entitled suits for the purpose of any order or direction, or modification of this decree, or any supplemental decree, which it may deem at any .time to be proper in relation to the subject matter in controversy.
The Chief Justice took no part in the consideration or decision of these cases.
UNITED STATES v. ADAMS.
SAME v. SAME.
APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF ARKANSAS.
Nos. 281 and 282. Argued March 6, 1930.—Decided April 14, 1930.
1. Under Rev. Stats. § 5209, as amended; U. S. C., Title 12, § 592; which punishes any officer of a federal reserve or member bank p. 203who snakes any false entry in any .book or report of the bank with intent to defraud or deceive, etc., two entries on a bank’s books referring to the same transaction, based upon the same draft and which were the correlated means of accomplishing a single fraud, are not separately punishable as separate offenses. P. 204.
2. The offense under this section of making a false entry in a report of condition of a bank, showing a credit, is distinct from the offense of making an earlier false entry on its books, showing the same credit. P. 205.
3. In a prosecution under this section for making a false entry of credit in a report of the bank’s condition, with intent to defraud and deceive, a former acquittal upon a charge of making with like intent earlier entries of the. same credit on the bank’s books, is not a bar, since the acquittal, though it establishes that the book entries were not made with criminal intent, does not establish that they were true, and non constat but that the accused may have learned of their falsity after entering them on the books and before making the report. P. 205.
No. 281 affirmed.
No. 282 reversed.
Appeals from judgments of the District Court sustaining pleas of former acquittal in bar of two indictments, one charging that the appellee made a false entry on a book of a bank of which he was president, and the other that he made a false entry in a report of its condition.
Assistant Attorney General Sisson, with whom Assistant Attorney General Luhring, and Messrs. George C. Butte and Harry S. Ridgely were on the briefs, for the United States.
Mr. T. H. Caraway for Adams.
Mr. Justice Holmes delivered the opinion of the Court.
The defendant was indicted for a false entry in a book of a bank of which he was president, and which was a member of the Federal reserve system. The entry imported that he had made a deposit of $75,000 to the
Opinion of the Court. 281U S
credit of himself and sons, which it is averred that he had not made. The book was a ledger showing the accoimt of D. D. Adams & Sons, among others, with the bank. Ihe defendant pleaded a former acquittal. The Previous indictment was for a false entry in another book of the bank known as the journal ledger and daily balance book, and imported a remittance of $75,000 to another bank to the credit of the defendant’s own for which the defendant took credit as above stated. This remittance was a draft for $75,000 which it was alleged that Adams was not entitled to draw. The two entries had reference to the same transaction, were based upon the same draft and were the correlated means of accomplishing a single fraud if fraud there had been. The District Court held that on its construction of Rev. Sts. § 5209 as amended by the Act of September 26, 1918 c 177 § 7? 40 Stat. 967, 972; U. S. C., Title 12, § 592, there could be but one prosecution for false entries based upon any single draft, even though several different entries were made in the different books of the bank, all relating to the same. Therefore it sustained the plea. The United States appealed.
It is a short point. The statute punishes any officer of a Federal reserve bank who makes any false entry in any book of the bank with intent, &c. The Government contends for the most literal reading of the words, and that every such entry is a separate offense to be separately punished. But we think that it cannot have been contemplated that the mere multiplication of entries, all to the same point and with a single intent, should multiply the punishment in proportion to the complexity of the bookkeeping. The judgment in this case is affirmed.
The second case presents a more delicate question than the previous one, although it was thought by the District Court to come under the same principle. This indictment is for a false entry in a report of conditions of the defendant’s bank showing as due from banks other p. 205than Federal reserve banks $138,409.52 instead of the true sum $91,284.27. The plea of former acquittal we take as intended to allege that the difference was made by three items in respect of which the defendant had been indicted for false entries in the books of the bank, of a similar character to those in the other case, with intent to defraud the bank and the examiners appointed to examine its affairs. On this indictment also the defendant was acquitted. It is obvious that technically the plea was bad because the offense alleged was a different offense. The report is not an entry in the books of the bank and does not purport to be a mere transcript of entries. It is a present affirmation as to the resources of the bank—a document different from the books of the bank and having a different purpose. But although not technically a former acquittal, the judgment was conclusive upon, all that it decided. United States v. Oppenheimer, 242 U. S. 85* ' It establishes that at the time of making the entries, the defendant was not guilty of an intent to defraud the bank or the examiners. It does not establish that the entries were true, although that might have been a ground for the verdict. Washington, Alexandria <& Georgetown Steam Packet Co. n. Sickles, 5 Wall. 580. De Sollar v. Hanscome, 158 U. S. 216, 221, 222. An alternative possible ground is that although the entries were untrue the defendant believed them to be true or for some reason believed them to be justified. However unlikely it may be that there was a different intent at the time of the later act from that with which the entries were made in the books of the bank, it is entirely possible that the defendant supposed himself to be acting lawfully at the earlier moment, but that he had acquired more accurate knowledge before he signed the report, that he then knew that it was false and was guilty then although not before. Judgment affirmed.
282. Judgment reversed.