(39 Sup.Ct.) manding the Director General of the rail-[used upon or operated as a part of such rail or roads, appointed by the President, and the combined rail and water systems of transportaofficers of the Northern Pacific Railway Com- tion, to the end that said systems of transportapany to desist from charging for transporta- tion be utilized for the transfer and transportation in intrastate business in North Dakota the exclusion so far as may be necessary of all tion of troops, war material and equipment, to the rates fixed by the United States for such other traffic thereon, and that so far as such exservices. When this command was obeyed, clusive use be not necessary or desirable such the mandamus ordered that the Director Gen- systems of transportation be operated and utileral should thereafter exact for the services ized in the performance of such other services stated only lesser rates which were fixed as the national interest may require and of the in a schedule on file with the State Utilities usual and ordinary business and duties of comCommission prior to the bringing of suit and won carriers." Comp. St. 1918, § 1974a. which rates under the law of North Dakota could not be changed without the approval of the Utilities Commission. In the opinion of the court below it was stated that all the parties admitted that there was no question as to the jurisdiction to consider the controversy and that they all also agreed that no contention was presented as to the power of Congress to enact the law upon which the controversy depended, as the correct interpretation of such law was the only issue to be decided. We consequently put those subjects temporarily out of view. We say temporarily, since even upon the assumption that issues concerning them necessarily inhere in the cause and cannot be waived by the parties, we could not decide concerning such issues without interpreting the statute, which we proceed to do. * * On the 29th of August, 1916 (39 Stat. 645, c. 418 [Comp. St. § 1974a]), Congress gave the President power, "in time of war, to take possession and assume control of any system or systems of transportation, or any part thereof, and to utilize the same, to the exclusion as far as may be necessary of all other traffic thereon, for the transfer or transportation of troops, war material and equipment, or for such other purposes connected with the emergency as may be needful or desirable." War with Germany was declared in April, 1917, and with Austria on December 7th of the same year. *40 Stat. 1, c. | 1; 40 Stat. 429, c. 1. On December 26, 1917, the President, referring to the existing state of war and the power with which he had been invested by Congress in August, 1916, proclaimed that By the proclamation a Director General of Railroads was appointed with full authority to take possession and control of the systems embraced by the proclamation and to operate and administer the same. To this end the Director General was given authority to avail himself of the services of the existing railroad officials, boards of *directors, receivers, employés, etc., who were authorized to continue to perform their duties in accordance with their previous authority "until and except so far as such Director shall from time to time by general or special orders otherwise provide." Limited by the same qualification the systems of transportation taken over by the government were made subject to existing statutes and orders of the Interstate Commerce Commission and to all statutes and orders of regulating commissions of the vari ous states in which said systems or any part thereof might be located. In addition, however, to the limitation previously stated the proclamation in express terms declared: "But any orders, general or special, hereafter made by said Director, shall have paramount authority and be obeyed as such." The proclamation imposed the duty udon the Director General to negotiate with the owners of the railroad companies for an agreement as to compensation for the possession, use and control of their respective prop erties on the basis of an annual guaranteed compensation and with reservations in the interest of creditors, bondholders, etc. The proclamation in concluding declared that "From and after twelve o'clock on said twentyeighth day of December, 1917, all transportation systems included in this order and proclamation shall conclusively be deemed within the posses sion and control of said Director without further act or notice." * "Under and by virtue of the powers vested in me by the foregoing resolutions and statute, and by virtue of all other powers thereto me enabling, [I] do hereby ** take possession and assume control at 12 o'clock noon on the 28th of December, 1917, of each and every system of transportation and the appurtenances thereof located wholly or in part within the boundaries of the continental United States and consisting of railroads, and owned or controlled systems of coastwise and inland transportation, engaged in general transportation, whether operated by steam or by electric power, including also terminals, terminal companies and terminal associations, sleeping and parlor cars, private cars and private car lines, elevators, and ware-portation systems while under federal control, houses, telegraph and telephone lines, and all for the just compensation of their owners, and other equipment and appurtenances commonly for other purposes." "An act to provide for the operation of trans Carrying out the authority exerted by the proclamation, the railroads passed into the possession, control and operation of the Director General. On March 21, 1918 (Act March 21, 1918, c. 25, 40 Stat. 451 [Comp. St. 1918, § 3115a]). dealing with the subject Congress passed a law entitled: *On May 25, 1918, the Director General made an order establishing a schedule of rates for all roads under his control and cov roads and systems of transportation (called herein carriers), is hereby authorized to agree with and to guarantee to any such carrier making operating returns to the Interstate Commerce Commission, that during the period of such federal control it shall receive as just compensation an annual sum, payable from time to time in reasonable installments, for each year and pro rata for any fractional year of such federal control, not exceeding a sum equivalent as nearly as may be to its average annual railway operating income for the three years ended June 30, 1917." The opening sentences of the act declared: "The President, having in time of war taken over the possession, use, control, and operation **(called herein federal control) of certain rail-ering all classes of service, intrastate as well as interstate. The order made these rates effective on designated dates in the month of June and they were continuously enforced during a period of about eight months up to the 14th of February, 1919, when the bill in this case was filed by the State Utilities Commission for mandamus against the Director General and the officers of the Northern Pacific Railway, asserting the want of power in the United States over intrastate rates and the exclusive right of the state of North Dakota to fix such rates for all intrastate business done in that state. The Director General, admitting that he had made the order complained of and had collected the rates earned thereunder and paid them into the treasury of the United States, sustained his action and denied the alleged right of the state upon the legislation and official acts which we have stated. The Northern Pacific denied interest on the ground that its railway had passed under federal control and that it was receiving the compensation therefor which had been agreed on between itself and the United States. It alleged that the rates under the order complained of had been collected by the Director General through agents appointed by him who were not officials of the company and therefore it had no Without going into detail it suffices to say that the first eight sections of the act comprehensively provided for giving effect to the purposes just stated and in a general way contemplated affording what was deemed to be just compensation to the owners for the use of their property. In addition it empowered agreements in the interest of security holders of the railroads and sanctioned provisions deemed fair to the United States and to the owners of the property for betterments which might be required to be made during the term of control and for the return of the property when the government possession came to an end, which return was to be accomplished within a stated period after the cessation of war by the proclamation of the ratification of a peace treaty. upon a hearing concerning the justness and reasonableness of so much of any order of the President as establishes or changes any rate, fare, charge, classification, regulation or practice of any carrier under federal control, and may consider all the facts and circumstances existing at the time of the making of the same. In determining any question concerning any such rates, fares, charges, therein, the Interstate Commerce Commission shall classifications, regulations, or practices or changes give due consideration to the fact that the transportation systems are being operated under a unified and co-ordinated national control and not in competition. "After full hearing the commission may make such findings and orders as are authorized by the act to regulate commerce as amended, and said findings and orders shall be enforced as provided in ident shall find and certify to the Interstate Comsaid act: Provided, however, that when the Presmerce Commission that in order to defray the expenses of federal control and operation fairly chargeable to railway operating expenses, and also to pay railway tax accruals other than war taxes, net rents for joint facilities and equipment, and compensation to the carriers, operating as a unit, it is necessary to increase the railway operating revenues, the Interstate Commerce Commission in determining the justness and reasonableness of any rate, fare, charge, classification, regulation, or practice shall take into consideration said finding and certificate by the President, together with such recommendations as he may make." "Sec. 15. That nothing in this act shall be construed to amend, repeal, impair, or affect the existing laws or powers of the states in relation to taxation or the lawful police regulations of the several states, except wherein such laws, powers, or regulations may affect the transportation of troops, war materials, government supplies, or the issue of stocks and bonds." (39 Sup.Ct.) responsibility concerning them. The prayer | and to which the rates were to be applied. was that it be dismissed from the suit. The unison between that which is inferable and that which is expressed demonstrates the true significance of the statute. A brief consideration of the contentions Taking the case under the complaint, the returns and the exhibits, the court, as we have previously stated, two of its members dissenting, denied the authority of the Unit-relied upon to the contrary will at once show ed States and upheld that of the state, and either their inappositeness, the mistaken the mandamus was made peremptory as to premises upon which they rest, or the errors both the Director *General and the officers of of deduction upon which they proceed. It is the Northern Pacific Railway. We are thus argued that as state control over intrastate brought to the question whether the state au- rates was the rule prior to the enactment of thority controls the power of the United the statute creating the United States conStates as to intrastate rates. trol, the statute must be interpreted in the light of a presumption that a change as to state control was not made. But in view of the unambiguous provision of the statute as to the new character of control which it created, the principle of interpretation applied in its ultimate aspect virtually was: That because the statute made a fundamental change, it must be so interpreted as to prevent that change from becoming effective. [1] No elaboration could make clearer than do the act of Congress of 1916, the proclamation of the President exerting the powers given, and the act of 1918 dealing with the situation created by the exercise of such authority, that no divided but a complete possession and control were given the United States for all purposes as to the railroads in question. But if it be conceded that despite the absolute clarity of the provisions concerning the control given the United States, and the all-embracing scope of that control, there is room for some doubt, the consideration of the general context completely dispels hesitancy. How can any other conclusion be reached if consideration be given the comprehensive provisions concerning the administration by the United States of the property which it was authorized to take, the financial obligations under which it came and all the other duties and exactions which the act imposed, contemplating one control, one administration, one power for the accomplishment of the one purpose, the complete possession by governmental authority to replace for the period provided the private ownership theretofore existing. This being true, it must follow that there is no basis for the contention that the power to make rates and enforce them which was plainly essential to the authority given was not included in it. [2-5] Conclusive as are these inferences, they are superfluous, since the portion of section 10 as previously reproduced in the margin in express terms confers the complete and undivided power to fix rates. The provision is this: "That during the period of federal control, whenever in his opinion the public interest requires, the President may initiate rates, fares, charges, classifications, regulations, and practices by filing the same with the Interstate Commerce Commission, which said rates, fares, charges, classifications, regulations, and prac#tices shall not be suspended by the commission pending final determination." These quoted words are immediately followed by provisions further defining the power of the commission and its duty in the premises, so as to enable it beyond doubt to consider the situation resulting from the act Besides, the presumption in question but denied the power exerted in the adoption of the statute, and displaced by an imaginary the dominant presumption which arose by operation of the Constitution as an inevitable effect of the adoption of the statute, as shown by the following: (a) The complete and undivided character of the war power of the United States is not disputable. Selective Draft Law Cases, 245 U. S. 366, 38 Sup. Ct. 159, 62 L. Ed. 349, L. R. A. 1918C, 361, Ann. Cas. 1918B, 856; Ex parte Milligan, 4 Wall. 2, 18 L. Ed. 281; Legal Tender Cases, 12 Wall. 457, 20 L. Ed. 287; Stewart v. kahn, 11 Wall. 493, 20 L. Ed. 176. On the face of the statutes it is manifest that they were in terms based upon the war power, since the authority they gave arose only because of the existence of war, and the right to exert such authority was to cease upon the war's termination. To interpret, therefore, the exercise of the power by a presumption of the continuance of a state power limiting and controlling the national authority was but to deny its existence. It was akin to the contention that the supreme right to raise armies and use them in case of war did not extend to directing where and when they should be used. Cox v. Wood, 247 U. S. 3, 38 Sup. Ct. 421, 62 L. Ed. 947. the Constitution the authority of the govern(b) The elementary principle that under ment of the United States is paramount when exerted as to subjects concerning which it has the power to control, is indisputable. This being true, it results that although authority to regulate within a given sphere may exist in both the United States and in the states, when the former calls into play constitutional authority within such general sphere the necessary effect of doing so is, that to the extent that any conflict arises the state power is limited, since in case of #151 conflict that which is paramount necessarily to the application which was made of the ascontrols that which is subordinate. serted presumption to the excepting clauses of section 15 previously reproduced in the margin, since that section in the light of the purpose to retain the prior law is interpreted so as to cause it to be but an additional means of destroying the all-embracing power to initiate rates fixed by section 10. Again, as the power which was exerted was supreme, to interpret it upon the basis that its exercise must be presumed to be limited was to deny the power itself. Thus, once more it comes to pass that the application of the assumed presumption was in effect but a form of expression by which the power [6] It follows that the judgment below was which Congress had exerted was denied. In erroneous. The relief afforded against the fact, error arising from indulging in such officer of the United States proceeded upon erroneous presumption permeates every con- the basis that he was exerting a power not tention. To illustrate: Because in Reagan v. conferred by the statute, to the detriment of Mercantile Trust Co., 154 U. S. 418, 14 Sup. the rights and duties of the state authority, Ct. 1062, 38 L. Ed. 1030, and other cases un- and was subject therefore to be restrained necessary to be referred to, it was held that by state power within the limits of the statit would be presumed that Congress in creat- ute. Upon the premise upon which it rests, ing a corporation intended that it should be that is, the unlawful acts of the officers, the subject to applicable state laws and regula- proposition is undoubted, but in view of our tions so far as Congress did not otherwise | conclusion that the acts of the officers comprovide, therefore, because Congress had plained of were authorized by the law of the *taken over to the government of the United United States, the question arises how far, States property to be used by it in the per- that being established, it results that the suit formance of a governmental function, Con- was one against the United States over which gress must be presumed to have intended that there was no jurisdiction within the rulings such property (and such functions) should in Belknap v. Schild, 161 U. S. 10, 16 Sup. Ct. continue to be subject to and controlled by 443, 40 L. Ed. 599; Postal Supply Co. v. state power. Bruce, 194 U. S. 601, 24 Sup. Ct. S20, 48 L. Ed. 1134; Louisiana v. McAdoo, 234 U. S. 627, 34 Sup. Ct. 938, 58 L. Ed. 1506; Minnesota v. Hitchcock, 185 U. S. 373, 22 Sup. Ct. 650, 46 L. Ed. 954; Wells v. Roper, 246 U. S. 335, 38 Sup. Ct. 317, 62 L. Ed. 755. The principle of these cases however can only be applicable by giving effect to the conclusion we have reached as to the legality of the acts of the officers which were complained of, and to decide which question the United States was not a necessary party. This is undoubtedly true unless it can be said that the contentions concerning the want of power in the officers were so unsubstantial and frivolous as to afford no basis for jurisdiction and hence caused the suit to be from the beginning directly against the United States. As however we are of the opinion that there is no ground for that view, it follows that the case as made gave jurisdiction to dispose of the question of wrong committed by the officials and that a decree giving effect to our conclusion on that subject will dispose of the entire case. Our decree therefore must be and it is Reversed and remanded for further proceedings not inconsistent with this opinion. The confusion produced is again aptly illustrated by the rule of interpretation by which it is insisted that the express power to fix rates conferred by the statute was rightly disregarded. Thus, while admitting that the power which was conferred to initiate rates when considered in and of itself included all rates, it is nevertheless said that such power must be presumed to be limited to the only character of rates which under the prior law the Interstate Commerce Commission had the power to consider, that is, interstate rates, because the new rates when initiated were to be acted upon by that body. As, however, the statute in terms gives power to the Interstate Commerce Commission to consider the new rates in the light of the new and unified control which it creates, the error in the contention becomes manifest, even putting out of view the fact that by the effect of the duty imposed and the new control created the new rates applying to the new conditions were within the purview of the power which the Interstate Commerce Commission previously possessed. Certainly, to mistakenly disregard one provision of the statute intended to give effect to another and upon that basis to decide that the statute is not enforceable, cannot be said to be a correct interpretation. And this view is also true as Mr. Justice BRANDEIS concurs in the result. (39 Sup.Ct.) (250 U. S. 163) nifications, a comprehensive one embracing in DAKOTA CENT. TELEPHONE CO. et al. v. substance the whole field of state authority, and STATE OF SOUTH DAKOTA ex rel. a narrower one including only state power to PAYNE, Atty. Gen., et al. deal with health, safety, and morals, and the context showed that the latter was the one in 1 (Argued May 5 and 6, 1919. Decided June 2, tended by Congress. 1919.) No. 967. 1. TELEGRAPHS AND TELEPHONES 264, New, vol. 7A Key-No. Series-FEDERAL CONTROL-POWERS OF CONGRESS. Under its war power, Congress possessed the right to confer upon the President, as it did by joint resolution of July 16, 1918 (Comp. St. 1918, § 3115x, appendix), authority to take possession and control of telegraph, telephone, marine cable, or radio systems, and to operate the same as may be desirable for duration of the war. 2. CONSTITUTIONAL LAW 74. COURTS POWERS-GOVERNMENT CONTROL OF TELE GRAPHS. Where Congress, in the exercise of its war power, by resolution of July 16, 1918 (Comp. St. 1918, § 31154 x, appendix), authorized the President to take control and management of telegraph and telephone systems and to operate the same as may be desirable for the duration of the war, the question whether the conditions warranted the President in taking control of telegraph and telephone systems at the time he did is not a judicial one, being a matter for the executive and legislative branches. 3. TELEGRAPHS AND TELEPHONES 264, New, vol. 7A Key-No, Series CONTROL BY PRESIDENT-AUTHORITY CONFERRED. [Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Police Power.] 264, 5. TELEGRAPHS AND TELEPHONES Where Congress, in the valid exercise of its war power, authorized the President by a joint resolution of July 16, 1918 (Comp. St. 1918, § 3115 x, appendix), to assume control of telegraph and telephone companies, and the President assumed such control, and they were operated as a governmental agency, held, that the states cannot regulate intrastate rates, for there could be exerted, except upon the power of the would be nothing upon which the state power United States; that is, its authority to fix rates for the service it was rendering through a governmental agency. Mr. Justice Brandeis dissenting. Original action by the State, on the relation of Byron S. Payne, as Attorney General, and others against the Dakota Central Telephone Company and others. Defendants were enjoined from putting into effect a schedule of intrastate rates prepared by the Post In view of Act Oct. 30, 1918, the joint reso-master General, who under presidential proclution of July 16, 1918 (Comp. St. 1918, glamation had assumed control of telephone 3115x, appendix), authorizing the President companies (171 N. W. 277), and they bring to take possession and control of telegraphs, tel- error. Reversed, with directions. ephones, and cable and radio systems, and to operate the same during war, authorized him, as he did in case of telegraphs and telephones, to take complete possession and control of such systems, and to operate the same as might be desirable for duration of the war. In Error to the Supreme Court of the State of South Dakota. Mr. Solicitor General King, for plaintiffs in error. Mr. Oliver E. Sweet, of Rapid City, S. D., for defendants in error. 4. TELEGRAPHS AND TELEPHONES 264, New, vol. 7A Key-No. Series-FEDERAL CONTROL-REGULATION OF INTRASTATE RATES"POLICE POWER." The joint resolution of July 16, 1918 (Comp. St. 1918, § 3115% x, appendix), providing that the President during the then existing war should be empowered to take possession and assume control of telegraph, telephone, cable, and radio systems and to operate the same as might be needful for the duration of the war, providing that just compensation should be made, and that nothing should be construed to amend, repeal, impair, or affect the lawful police Ry. Co. v. State of North Dakota, 250 U. S. regulations of the several states, except wherein | 135, 39 Sup. Ct. 502, 63 L. Ed. -), just ansuch laws might affect the transmission of gov-nounced, where it was decided that under ernment communications, or the issue of stocks like conditions the state had no such power and bonds, did not reserve to the states the right under the guise of police power to regu- as far as may be necessary, by a separate as to railroad rates. We consider this case late intrastate rates of telegraph and telephone companies after the President had taken pos- opinion, however, because the authority unsession and was operating the same, for the der which the control was exerted is diswords "police power" are capable of two sig-tinct and because of the assumption in argu For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes *Mr. Chief Justice WHITE delivered the opinion of the Court. Involving as this case does the existence of state power to regulate, without the consent of the United States, telephone rates for business done wholly within the state over lines taken over into the possession of the United States and which by the exercise of its governmental authority it operates and controls, it does not in principle differ from the North Dakota case (Northern Pac. |