Frost v. Corporate Commission of Oklahoma
278 U.S. 515 (1929)

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U.S. Supreme Court

Frost v. Corporate Commission of Oklahoma, 278 U.S. 515 (1929)

Frost v. Corporate Commission of Oklahoma

No. 60

Argued November 26, 1928

Decided February 18, 1929

278 U.S. 515

Syllabus

1. By the statutes of Oklahoma, cotton gins operated for the ginning of seed cotton for the public for profit are declared to be public utilities in a public business, and no one may engage in the business without first securing a permit from a public commission, which is empowered to regulate the business and its rates and charges, as in the case of transportation and transmission companies. Held: that the right of one who has complied with the statutes and secured his permit is not a mere license, but a franchise granted by the state in consideration of the performance of a public service, and, as such it constitutes a property right within the protection of the Fourteenth Amendment. P. 278 U. S. 519.

Page 278 U. S. 516

2. While the franchise thus acquired does not preclude the state from making similar valid grants to others, it is exclusive against attempts to operate a competing gin without a permit or under a void permit, in either of which events the owner may resort to a court of equity to restrain the illegal operation as an invasion of his property rights if it threaten an impairment of his business. P. 278 U. S. 521.

3. An individual who obtained his permit to operate a cotton gin upon showing a public necessity therefor, as required by the statute, held entitled to an injunction restraining the state commission from granting a permit to a corporation without such a showing under a separable provision of the statute violating the equal protection clause of the Fourteenth Amendment. Id.

. 4. A state statute regulating the business of ginning cotton for the general public for profit which permits an individual to engage in such business only upon his first showing a public necessity therefor, but allows a corporation to engage in the same business, in the same locality, without such showing, discriminates against the individual in violation of the equal protection clause. The classification attempted is essentially arbitrary because based upon no real or substantial differences reasonably related to the subject of the legislation. P. 278 U. S. 521.

5. A cooperative ginning corporation formed under Oklahoma Comp.Stats.1921, § 5637, et seq., having a capital stock which, up to a certain amount, may be subscribed for by anyone; which is allowed to do business for others than its members, and to make profits and declare dividends not exceeding 8% per annum, and to apportion the remainder of its earnings among its members ratably upon the amount of products sold by them to the corporation is not a mutual association. P. 278 U. S. 523.

6. A proviso added to an existing statutory provision by a subsequent legislature, and the effect of which if it were part of the original enactment would be to render the whole unconstitutional, may be treated as a separate nullity, allowing the original to stand. P. 278 U. S. 525.

7. In such case, one who sought and obtained property rights under the original and valid part of the statute is not estopped from attacking the proviso. P. 278 U. S. 527.

26 F.2d 508 reversed.

Appeal from a final decree of the district court, of three judges, dismissing a bill to enjoin the Corporation

Page 278 U. S. 517

Commission of Oklahoma from issuing to a corporation a license to operate a cotton gin, and to enjoin the corporation from establishing and operating one. At an earlier stage, there was an order denying a preliminary injunction, which was affirmed by this Court, 274 U.S. 719.

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