(40 Sup.Ct.) STRICTED BY CONSTITUTIONAL LIMITATIONS Another assignment of error, dealt with | 5. TERRITORIES 11 CONGRESS NOT REby the Supreme Court of Oklahoma, that a jury of less than 12 returned the verdict, conforming to the state practice, does not seem to be pressed here. In any event it is disposed of by St. Louis & San Francisco R. R. Co. v. Brown, 241 U. S. 223, 36 Sup. Ct. 602, The constitutional limitations of power on the authority of Congress when legislating for trolling on Congress when it comes to exert the United States are not applicable and conlegislative powers over territory not forming part of United States, because not incorporated therein. 60 L. Ed. 966. We find no error in the judgment of the Supreme Court of Oklahoma and the same is Affirmed. (Argued Jan. 27, 1920. Decided March 1, 1920.) No. 190. 1. CONSTITUTIONAL LAW 297 EMINENT (251 U. S. 401) Proceeding before the Board of Public BOARD OF PUBLIC UTILITY COM'RS v. Utility Commissioners of the Philippine Islands against Yuchausti & Co. and others. 2. POST OFFICE 22 ACCEPTANCE OF LICENSE NOT VOLUNTARY ASSUMPTION OF OBLIGATION TO CARRY MAILS FREE. On Writ of Certiorari to the Supreme Court of the Philippine Islands. Assuming that, under the Philippine Bill of Rights, the government could not require the free carriage of mail as a condition of engaging in the coastwise trade, shipowners did not, by accepting a license on such condition, voluntarily assume the obligation of free carriage. *Mr. Chief Justice WHITE delivered the opinion of the Court. Was error committed by the court below The guaranty by the Philippine Bill of Rights of due process, or its prohibition against the taking of private property for public use without compensation, is not violated by requiring vessels engaging in the coastwise trade to carry the mails free if the Philippine gov-in deciding that the Philippine law which ernment possessed the power to so limit the imposed upon vessels engaged in the coastright to engage in the coastwise trade. wise trade, for the privilege of so engaging, the duty to carry the mails free to and from their ports of touch, was void for repugnancy to the Philippine Bill of Rights is the question which comes before us for decision as the result of the allowance of a writ of certiorari. 4. TERRITORIES 17- PHILIPPINE GOVERN- RIAGE OF MAIL BY VESSELS ENGAGING IN The Philippine government has power to require the free carriage of the mail as a condition of engaging in the coastwise trade in view of the power exercised over preceding forms of government and the provisions of Act April 15, 1904, § 3, authorizing the Philippine government to adopt regulations governing transportation between places in the Islands. Messrs. Chester J. Gerkin and Edward S. Bailey, both of Washington, D. C., for petitioner. Messrs. Alexander Britton and Evans Browne, both of Washington, D. C., for respondents. #402 The issue will be clarified by a brief reference to the antecedents of the controversy. Under the Spanish law as enforced in the Philippine Islands before the American domRIGHTS TO BE CONSTRUED AS IN THE UNITED existed. Upon the cession of the Islands to ination the duty of free carriage as stated 3. TERRITORIES 15-PHILIPPINE BILL OF STATES, BUT APPLICATION DEPENDENT ON The provisions of the Bill of Rights of the Philippine Islands are to have the settled construction they have received in the United States, but their application to governmental powers must depend on the nature and character of the powers conferred by Congress on the government of the Islands. the United States and the establishment there of a military government the existing condition of the subject was continued in force. It thus continued until the government passed into the hands of the Philippine Commission and was by that body specifically recognized and its further enforcement directed. Thus it prevailed without interruption until 1902 when the first act of Congress providing a general system of civil government for the Islands was passed, and it further remained operative until 1904 when Congress passed the act of that year specifically dealing with the authority of the Philippine government to provide for the coastwise trade, as follows (33 Stat. 181): "Until Congress shall have authorized the registry as vessels of the United States of vessels owned in the Philippine Archipelago the government of the Philippine Islands is hereby For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes carry the mails free, and, if it did, to enforce it without regard to the defense as to the repugnancy of the statute to the Bill of Rights, since that question was proper only to be disposed of by judicial action. In fact the continued operation of the obli *403 The Supreme Court, to which the controversy was taken, not differing as to the existence of the statutory duty, reversed the order on the ground that such duty could not be exacted consistently with the clauses of the Bill of Rights relied upon. No opinion stating the reasons for this conclusion was expressed, but a member of the court dissented and stated his reasons in an elaborate opinion. gation to carry the mails free which arose from engaging in the coastwise trade, it may be taken for granted, remained in force until 1916, since the obligation was recognized as being yet in existence and the duty to enforce it for the future was directed by article 310 of the Administrative Code of that year, in which Code were also stated the existing provisions as to the registry, licensing, etc., of Philippine vessels. That the requirement continued operative thereafter results from the further fact that it was re-expressed in section 658 of the Administrative Code of 1917, which Code was adopted to meet the exigencies created by the later Organic Act of the Philippine Islands enacted by Congress in August, 1916 (39 Stat. 545 [Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3804a et seq.]). [1, 2] It is impossible to conceive how either the guaranty by the Bill of Rights of due process or its prohibition against the taking of private property for public use without compensation can have the slightest application to the case if the Philippine government possessed the plenary power, under the sanction of Congress, to limit the right to engage in the coastwise trade to those who agree to carry the mails free. It must follow that the existence of such power is the real question which is required to be decided. In saying this we put out of view as obviously erroneous the contention that, even though the Bill of Rights applied and limited the authority of the government so as to prevent the exaction by law of the free carriage of the mails, that result is not applicable here because by accepting a license the shipowners voluntarily assumed the obligation of free carriage. Southern Pacific Co. v. Denton, 146 U. S. 202, 207, 13 (Sup. Ct. 44, 36 L. We have not stopped to refer to the Spanish law, to the military orders to the reports of civilian officials, and to the action of the Philippine Commission on the subject, as above stated, because the references to them were made below in marginal note A, which Mr. Justice Carson made a part of his dissenting opinion (— P. I. —). It is undoubted that during all this period vessels were permitted to engage in the coastwise trade only upon the issuance to and the acceptance by them of licenses the enjoy- Ed. 942; Western Union Tel. Co. v. Kansas, ment of which depended upon the perform-216 U. S. 1, 27-30, 30 Sup. Ct. 190, 54 L. Ed. ance of the legal duty of the free carriage 355; Pullman Co. *v. Kansas, 216 U. S. 56, *405 of the mails. 70, 30 Sup. Ct. 232, 54 L. Ed. 378; Meyer v. 32 Sup. Ct. 218, 56 L. Ed. 445; Kansas City Wells, Fargo & Co., 223 U. S. 298, 300, 301, Ry. v. Kansas, 240 U. S. 227, 233-234, 36 Tel. Co. v. Foster, 247 U. S. 105, 114, 38 Sup. Sup. Ct. 261, 60 L. Ed. 617; Western Union Ct. 438, 62 L. Ed. 1006, 1 A. L. R. 1278. [3] To what extent the Bill of Rights The respondents were in 1916 the owners of steam vessels of Philippine registry licensed to engage in the coastwise trade upon the condition stated, and the controversy before us arose in consequence of a notice given by them to the Philippine Director of Posts that after a date designated they would no longer comply with the duty to carry the mails free. That official sought its enforce-limits the authority of the government of the ment at the hands of the Board of Public Philippine Islands over the subject of the free carriage of the mails is, then, the deterUtility Commissioners. Before that Board minative factor. the respondents, the licensees, relied upon Beyond doubt Congress, the assertion that the section of the Admin- in providing a Bill of Rights for those Isistrative Code imposing the duty of free mail lands, intended its provisions to have there carriage was in conflict with the provisions the settled construction they have received in the United States. But it must be and is of the Philippine Bill of Rights, *guaranteeing indisputable that, when the provisions of due process and prohibiting the taking of such Bill come to be applied to governmental private property for public use without just powers in the Philippine Islands, the result compensation. The Board overruled the de- of their application must depend upon the fense and awarded an order directing com- nature and character of the powers conferred pliance with the law and therefore prohibited by Congress upon the government of the Isthe carrying out of the intention to discon- lands. To illustrate, where a particular tinue. In reaching this conclusion the Board activity in the Philippine Islands is, as the held that its sole duty was to ascertain result of power conferred by Congress, under whether the law imposed the obligation to governmental control to such an extent that *404 authorized to adopt, from time to time, and enforce regulations governing the transportation of merchandise and passengers between ports or places in the Philippine Archipelago." Sec tion 3. (40 Sup.Ct.) States are applicable and are controlling upon Congress when it comes to exert, in virtue of the sovereignty of the United States, legislative power over territory not forming the right to engage in it can be made by the Philippine government dependent upon the performance of a particular duty, it is obvious that the exaction of such a duty, as such prerequisite condition, can be neither a denial of due process or a taking of property without compensation. ⚫407 part of the United States because not *incorporated therein. Downes v. Bidwell, 182 U. S. 244, 21 Sup. Ct. 770, 45 L. Ed. 1088; Hawail v. Mankichi, 190 U. S. 197, 220, 23 Sup. [4] Coming to the proposition to which the case is therefore ultimately reduced, we see no reason to doubt that the Philippine gov-Ct. 787, 47 L. Ed. 1016; Dorr v. United ernment had the power to deal with the States, 195 U. S. 138, 24 Sup. Ct. 808, 49 L. coastwise trade so as to permit its enjoy-Ed. 128, 1 Ann. Cas. €97; Dowdell v. United ment only by those who were willing to com- States, 221 U. S. 325, 332, 31 Sup. Ct. 599, ply with the condition as to free mail car- 55 L. Ed. 753; Ocampo v. United States, 234 riage, and therefore that no violation of in- U. S. 91, 98, 34 Sup. Ct. 712, 58 L. Ed. 1231. dividual right could have resulted from giving effect to such condition. We reach this conclusion because the possession and exercise of such power in the Islands before their cession to the United States, its exer tion under the military government of the United States which followed the cession, and its continuance by every form of civil The error which thus underlies the whole argument becomes more conspicuously manifest by recalling that Congress in the act of 1904 expressly provided that the authority which that act gave should exist only until Congress should otherwise provide, and, besides, that before the passage of that act, Act July 1, 1902, § 86 (32 Stat. 691, 712), provided "that all laws passed by the government of the Philippine Islands shall be reported to Congress, which hereby reserves the power and authority to annul the same." Judgment reversed. *406 *government created by Congress for the Islands, compels to that view in the absence of any law expressly providing to the contrary or which by reasonable implication leads to that result. 1920.) No. 330. THROUGH PIPE LINES TO CONSUMERS IN AN, Indeed the conclusion that the power was possessed does not rest alone upon the general consideration stated, since it is additionally sustained by recalling the express provision of the act of Congress of 1904, to which we have previously referred, giving authority for the registry of Philippine vessels and recognizing the power of the (Argued Dec. 8 and 9, 1919. Decided March 1, government of the Philippine Islands to deal with the coastwise trade, an authority which, as it contains no provision tending to the contrary, must be construed as applicable to 1. COMMERCE 33 TRANSMISSION OF GAS and sanctioning the power which had been exerted from the very inception of the American domination, to provide as to that trade for the free carriage of the mails. In other words, in view of the power to impose the burden in question, exerted in the Philippine Islands from the beginning and which was then being exerted under the authority of Congress, the conferring by Congress upon the Philippine government by the act of 1904 of the authority to make regulations concerning such trade was a recognition of the right to make the regulation theretofore made, which was then in force, and which continued to be in force up to the time of the bringing of this suit, without disapproval or change by Congress. (252 U. S. 23) PENNSYLVANIA GAS CO. V. PUBLIC The transmission and sale of natural gas produced in one state and transported by means of pipe lines and directly furnished to consumers in another state by the company so producing and transporting it is "interstate commerce." [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Interstate Commerce.] 2. COMMERCE 10-UNTIL CONGRESS ACTS STATE MAY REGULATE LOCAL MATTERS INDIRECTLY AFFECTING INTERSTATE COMMERCE. While a state may not directly regulate or burden interstate commerce, until Congress acts under its superior authority, it may protect or regulate matters of local interest, though indirectly affecting such commerce. 3. COMMERCE 10-STATE MAY REGULATE PRICE OF GAS TRANSMITTED THROUGH PIPE [5] When the authority which the act of 1904 gave is borne in mind it makes it clear that the mistake which underlies the entire argument as to the nonexistence of power here relied upon arises from the erroneous assumption that the constitutional limitations Where a gas company is supplying gas to of power which operate upon the authority of local consumers, who are reached by the use Congress when legislating for the United of the streets of a city in which its pipes are For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes laid, and is performing a service similar to that [tention of the plaintiff in error that the auof a local plant furnishing gas to consumers, the state may, until Congress asserts its superior power, regulate the price of the gas to consumers, though it is brought through pipe lines from another state by the company so furnishing it. thority undertaken to be exercised by the commission, and sustained by the court, was interstate commerce, and violative of the conan attempt under state authority to regulate stitutional power granted to Congress over commerce among the states. The facts are #28 In Error to the Supreme Court of the undisputed. The plaintiff in error, the PennState of New York. sylvania Gas Company, is a corporation orProhibition proceeding by the Pennsylvania ganized under the laws of the state of PennGas Company against the Public Service Com-sylvania and engaged in transmitting and mission, Second District, of State of New selling natural gas in the state of New York York and others. An order of the Appellate and Pennsylvania. It transports the gas by Division (184 App. Div. 556, 171 N. Y. Supp. pipe lines about fifty miles in length from the 1028), reversing an order of the Special Term source of supply in the state of Pennsylvania (103 Misc. Rep. 37, 169 N. Y. Supp. 820), was into the state of New York. It sells and affirmed by the Court of Appeals of New York delivers gas to consumers in the city of (225 N. Y. 397, 122 N. E. 260), and the peti- Jamestown, in the town of Ellicott, and in the tioner brings error. Affirmed. village of Falconer, all in Chatauqua county, New York. It also sells and delivers natural gas to consumers in the cities of Warren, Corry and Erie in Pennsylvania. Messrs. John E. Mullin, of Kane, Pa., and Marion H. Fisher, of Jamestown, N. Y., for plaintiff in error. Messrs. Ledyard P. Hale, of Albany, N. Y., and Louis L. 'Thrasher, of Jamestown, N. Y., for defendants in error. *26 *Mr. Justice DAY delivered the opinion of the Court. [1] We think that the transmission and sale of natural gas produced in one state, transported by means of pipe lines and directly furnished to consumers in another state is interstate commerce within the principles of the cases already determined by this court. West This writ of error brings before us for con- Sup. Ct. 564, 55 L. Ed. 716, 35 L. R. A. (N. S.) v. Kansas Natural Gas Co., 221 U. S. 229, 31 sideration the question whether the Public Service Commission of the State of New York U. S. 217, 32 Sup. Ct. 442, 56 L. Ed. 738; 1193; Haskell v. Kansas Natural Gas Co., 224 has the power to regulate rates at which Western Union Telegraph Co. v. Foster, 247 natural gas shall be furnished by the Pennsyl-U. S. 105, 38 Sup. Ct. 438, 62 L. Ed. 1006, 1 A. vania Gas Company, plaintiff in error, to consumers in the city of Jamestown in the state L. R. 1278. *27 of New York. The Court of Appeals of New York (225 N. Y. 397, 122 N. E. 260) held that the Commission had such authority. The statute of the state of New York, section 65 Public Service Commission Law (Laws 1910, c. 480), provides: "Every gas corporation, every electrical corporation and every municipality shall furnish and provide such service, instrumentalities and facilities as shall be safe and adequate and in all respects just and reasonable. All charges made or demanded by any such gas corporation, electrical corporation or municipality for gas, electricity or any service rendered or to be rendered, shall be just and reasonable and not more than allowed by law or by order of the commission having jurisdiction. Every unjust or unreasonable charge made or demanded for gas, electricity or any such service, or in connection therewith, or in excess of that allowed by law or by the order of the commission is prohibited." | This case differs from Public Utilities Commission v. Landon, 249 U. S. 236, 39 Sup. Ct. 268, 63 L. Ed. 577, wherein we dealt with the piping of natural gas from one state to another, and its sale to independent local gas companies in the receiving state, and held that the retailing of gas by the local companies to their consumers was intrastate commerce and not a continuation of interstate commerce, although the mains of the local companies receiving and distributing the gas to local consumers were connected permanently with those of the transmitting company. Under the circumstances set forth in that ended when the gas passed into the local case we held that the interstate movement mains; that the rates to be charged by the local companies had but an indirect effect upon interstate commerce and, therefore, the matter was subject to local regulation. In the instant case the gas is transmitted directly from the source of supply in Pennsyltowns of New York and Pennsylvania, above vania to the consumers in the cities and mentioned. Its transmission is direct, and without intervention of any sort between the seller and the buyer. The transmission is continuous and single and is in our opinion, a transmission in interstate commerce, and *29 therefore subject to applicable constitutional limitations which govern the states in dealing (40 Sup.Ct.) with matters of the character of the one now before us. [2] The general principle is well established and often asserted in the decisions of this court that the state may not directly regulate or. burden interstate commerce. That subject, so far as legislative regulation is concerned, has been committed by the Constitution to the control of the federal Congress. But while admitting this general principle, it, like others of a general naturę, is subject to qualifications not inconsistent with the general rule, which now are as well established as the principle itself. the state appropriately deals in making reason- commerce as to be within the reach of the fed- The rates of gas companies transmitting In dealing with interstate commerce it is not in some instances regarded as an infringement upon the authority delegated to Congress, to permit the states to pass laws indi-gas in interstate commerce are not only not rectly affecting such commerce, when need-regulated by Congress, but the Interstate ed to protect or regulate matters of local in- Commerce Act expressly withholds the subterest. Such laws are operative until Con- ject from federal control. Chapter 309, § 7, gress acts under its superior authority by 36 Stat. 539, 544 (Comp. St. § 8563). regulating the subject-matter for itself. In varying forms this subject has frequently been before this court. The previous cases were fully reviewed and deductions made interstate transmis*sion, is local in its nature, therefrom in the Minnesota Rate Cases, 230 and pertains to the furnishing of natural gas U. S. 352, 33 Sup. Ct. 729, 57 L. Ed. 1511, to local consumers within the city of James48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, town in the state of New York. The pipes 18. The paramount authority of Congress which reach the customers served are supover the regulation of interstate commerce plied with gas directly from the main of the was again asserted in those cases. It was company which brings it into the state, nevertheless recognized that there existed in nevertheless the service rendered is essentialthe states a permissible exercise of authority, |ly local, and the sale of gas is by the company which they might use until Congress had taken to local consumers who are reached by the possession of the field of regulation. After use of the streets of the city in which the stating the limitations upon state authority, pipes are laid, and through which the gas is of this subject, we said (230 U. S. 402, 33 Sup. conducted to factories and residences as it is Ct. 741, 57 L. Ed. 1511, 48 L. R. A. [N. S.] required for use. The service is similar to 1151, Ann. Cas. 1916A, 18): that of a local plant furnishing gas to consumers in a city. [3] The thing which the state commission has undertaken to regulate, while part of an #31 *30 "But within these limitations there necessarily remains to the states, until Congress acts, a wide range for the permissible exercise of power appropriate to their territorial jurisdiction although interstate commerce may be affected. It extends to those matters of a local nature as to which it is impossible to derive from the constitutional grant an intention that they should go uncontrolled *pending federal intervention. Thus, there are certain subjects having the most obvious and direct relation to interstate commerce, which nevertheless, with the acquiescence of Congress, have been controlled by state Legislature from the foundation of the government because of the necessity that they should not remain unregulated and that their regulation should be adapted to varying But this fact does not prevent the state from local exigencies; hence, the absence of regula-making local regulations of a reasonable tion by Congress in such matters has not im- character. Such regulations are always subported that there should be no restriction but ject to the exercise of authority by Congress rather that the states should continue to supply enabling it to exert its superior power under the needed rules until Congress should decide the commerce clause of the Constitution. to supersede them. * Our system of government is a practical adjustment by which the national authority as conferred by the Con stitution is maintained in its full scope without unnecessary loss of local efficiency. Where the subject is peculiarly one of local concern, and from its nature belongs to the class with which This local service is not of that character which requires general and uniform regulation of rates by congressional action, and which has always been held beyond the power of the states although Congress has not legislated upon the subject. While the manner in which the business is conducted is part of interstate commerce, its regulation in the distribution of gas to the local consumers is required in the public interest and has not been attempted under the superior authority of Congress. affect the interstate business of the company. It may be conceded that the local rates may The principles announced, often reiterated in the decisions of this court were applied in the judgment affirmed by the Court of Appeals of New York, and we agree with that court that until the subject-matter is regulated by congressional action, the exercise of |