Under the constitution and laws of Oklahoma, an order of the
state Corporation Commission declaring a laundry to be a monopoly
and its business public, and limiting its rates, was not reviewable
directly, by appeal, mandamus, prohibition or otherwise, in any
court of the state, and the only recourse for securing a judicial
test of the adequacy of the rates fixed was to disobey the order
and to appeal to the state supreme court from further action of the
Page 252 U. S. 332
when taken, imposing a penalty for contempt; a penalty as high
as $500 might be imposed, and, semble,
a new one for each
violation of the order, and each day's refusal was declared to be a
separate offense. Held,
applying Ex Parte Young,
209 U. S. 123
209 U. S. 147
and other cases, that the provisions relating to the enforcement of
the rates by penalties were violative of the Fourteenth Amendment,
without regard to the question of the insufficiency of the rates.
P. 252 U. S.
Jurisdiction of the district court having attached in a suit to
enjoin the enforcement of such a rate-fixing order and infliction
of penalties, it is not divested by a change in the state law
permitting direct review of the order in the state court. P.
252 U. S.
Enforcement of the penalties should be enjoined until the
district court can determine whether the rates are confiscatory,
and if they be found so, their enforcement, by penalties or
otherwise, should be enjoined permanently; and, if found not
confiscatory, there should be a permanent injunction of penalties
accrued pendente lite
if the plaintiff had reasonable
ground for contesting the rates as confiscatory. Id.
The state Commission need not be enjoined from investigating
plaintiff's rates and practices, but its findings and conclusions
must be subjected to the review of the district court in the
injunction case, and may be made part of the final proofs therein.
P. 252 U. S.
The case is stated in the opinion.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
This suit was brought in the District Court of the United States
for the Western District of Oklahoma by the Oklahoma Operating
Company against the Corporation Commission of that state to enjoin
it from entertaining complaints against the company for the
violation of orders limiting the rates for laundry work in Oklahoma
Page 252 U. S. 333
theretofore entered by the Commission, under § 8235 [Footnote 1
] of the Revised Laws of
Oklahoma (1910), and from doing any other acts or things to enforce
said orders. The case comes here under § 266 of the Judicial Code
by direct appeal from an order denying a motion for a preliminary
injunction heard before three judges. The appellant presents to
this Court the question whether § 8235 is void under the Fourteenth
Amendment, contending that, under the laws of the state, there was
no opportunity of reviewing judicially a legislative rate fixed
pursuant to that section except by way of defense to proceedings
for contempt which might be instituted for violating the order, and
that the possible penalties for such violation were so heavy as to
prohibit resort to that remedy.
The bill as amended makes the following allegations: in 1913,
the Commission entered an order declaring the Oklahoma Operating
Company a monopoly and its business a public one, and directed it
not to increase the rates then being charged except upon
application to and permission of the Commission. Since that time,
operating costs have risen greatly and rates for laundry work
Page 252 U. S. 334
in 1913 have become noncompensatory. Accordingly, in January,
1918, the company moved the Commission to set aside its order of
1913 on the ground that the laundry business was not within the
purview of § 8235, that the company was not a monopoly within the
meaning of that section, and that the section was void. The
Commission denied this motion, and thereafter the company
established rates higher than those prevailing in 1913. On account
of this, it is now threatened with proceedings for contempt. Since
the establishment of these higher rates, the company has been
summoned before the Commission to give information as to the cost
of performing laundry service in Oklahoma City and information in
general to determine what may be reasonable rates for laundry
service in that city. Upon these allegations, a preliminary
injunction was sought below to restrain the Commission from
entertaining complaints for violation of its order fixing rates and
to enjoin it from proceeding with the investigation regarding the
cost of the service.
The scope of § 8235 and the prescribed course of proceedings
thereunder, as construed by the supreme court of the state
(Harriss-Irby Cotton Co. v. State,
31 Okl. 603;
Shawnee Gas & Electric Co. v. State,
31 Okl. 505;
Oklahoma Gin Co. v. State,
63 Okla. 10), in connection
with other legislation (§§ 1192 to 1207 of the Revised Code of
1910) and provisions of the state constitution (Article IX, §§ 18
to 23), are, so far as here material, these: whenever any business,
by reason of its nature, extent, or the exercise of a virtual
monopoly therein, is such that the public must use the same or its
services, it is deemed a public business, and as such is subject to
the duty to render its services upon reasonable terms without
discrimination. If any public business violates such duty, the
Corporation Commission has power to regulate its rates and
practices. Disobedience to an order establishing rates may be
punished as a contempt, and the Commission has power,
Page 252 U. S. 335
sitting as a court, to impose a penalty therefor not exceeding
$500 a day. Each day's continuance of failure or refusal to obey
the order constitutes a separate offense. The original order may
not be made, nor any penalty imposed, except upon due notice and
hearing. No court of the state, except the supreme court by way of
appeal, may review, correct, or annul any action of the Commission
within the scope of its authority or suspend the execution thereof,
and the supreme court may not review an order fixing rates by
direct appeal from such order. But, in the proceedings for
contempt, the validity of the original order may be assailed, and
for that purpose, among others, new evidence may be introduced.
When a penalty for failure to obey an order has been imposed, an
appeal lies to the supreme court. On this appeal, the validity of
the original order may be reviewed; the appeal is allowed as of
right upon filing a bond with sureties in double the amount of the
fine imposed; the filing of the bond suspends the fine, and the
period of suspension may not be computed against a concern in
fixing the amount of liability for fines.
The order of the Commission prohibiting the company from
charging, without its permission, rates higher than those
prevailing in 1913 in effect prescribed maximum rates for the
service. It was therefore a legislative order, and, under the
Fourteenth Amendment, plaintiff was entitled to an opportunity for
a review in the courts of its contention that the rates were not
compensatory. Chicago, Milwaukee & St. Paul Ry. Co. v.
Minnesota, 134 U. S. 418
134 U. S.
-458; Ex parte Young, 209 U.
, 209 U. S.
-166. The Constitution of the state prohibited any of
its courts from reviewing any action of the Commission within its
authority except by way of appeal to the supreme court (Article IX,
§ 20), and the supreme court had construed the constitution and
applicable provisions of the statutes as not permitting a direct
Page 252 U. S. 336
orders fixing rates. Harriss-Irby Cotton Co. v. State,
On behalf of the Commission, it was urged at the oral
argument that a judicial review of the order fixing rates might
have been had also by writ of mandamus or of prohibition issuing
out of the supreme court of the state. But, in view of the
provision of the state constitution just referred to, it must be
assumed, in the absence of a decision of a state court to the
contrary, that neither remedy, even if otherwise available, could
be used to review an order alleged to be void because confiscatory.
"that the writs of mandamus and prohibition shall lie from the
supreme court to the commission in all cases where such writs,
respectively, would lie to any inferior court or officer"
appears to have no application here. The challenge of a
prescribed rate as being confiscatory raises a question not as to
the scope of the Commission's authority, but of the correctness of
the exercise of its judgment. Compare Hirsh v. Twyford,
Okl. 220, 230.
So it appears that the only judicial review of an order fixing
rates possible under the laws of the state was that arising in
proceedings to punish for contempt. T he Constitution endows the
Commission with the powers of a court to enforce its orders by such
proceedings. Article IX, §§ 18, 19. By boldly violating an order, a
party against whom it was directed may provoke a complaint, and if
the complaint results in a citation to show cause why he should not
be punished for contempt, he may justify before the Commission by
showing that the order violated was invalid, unjust, or
unreasonable. If he fails to satisfy the Commission that it erred
in this respect, a judicial review is opened to him by way of
appeal on the whole record to the supreme court. But the penalties
which may possibly be imposed if he pursues this course without
success are such as might well deter even the boldest and most
confident. The penalty for refusal to
Page 252 U. S. 337
obey an order may be $500, and each day's continuance of the
refusal after service of the order it is declared "shall be a
separate offense." The penalty may apparently be imposed for each
instance of violation of the order. In Oklahoma Gin Co. v.
State, post, 252 U. S. 339
appears that the full penalty of $500, with the provision for the
like penalty for each subsequent day's violation of the order, was
imposed in each of three complaints there involved, although they
were merely different instances of charges in excess of a single
prescribed rate. Obviously a judicial review beset by such
deterrents does not satisfy the constitutional requirements, even
if otherwise adequate, and therefore the provisions of the acts
relating to the enforcement of the rates by penalties are
unconstitutional without regard to the question of the
insufficiency of those rates. Ex parte Young, 209 U.
, 209 U. S. 147
Missouri Pacific Railway Co. v. Tucker, 230 U.
, 230 U. S. 349
Wadley Southern Ry. Co. v. Georgia, 235 U.
, 235 U. S.
The plaintiff is entitled to a temporary injunction restraining
the Corporation Commission from enforcing the penalties. Since this
suit was commenced, the legislature has provided by c. 52, § 3, of
the Laws of 1919 (Sess.Laws Oklahoma 1919, p. 87) that, in actions
arising before the Commission under § 8235, there shall be the same
right of direct appeal to the supreme court of the state as had
theretofore existed in the case of transportation and transmission
companies under Article IX, § 20, of the constitution. But, as
plaintiff was obliged to resort to a federal court of equity for
relief, it ought to retain jurisdiction of the cause in order to
make that relief as full and complete as the circumstances of the
case and the nature of the proofs may require. The suit should
therefore proceed for the purpose of determining whether the
maximum rates fixed by the Commission are, under present
conditions, confiscatory. If they are found to be so, a permanent
injunction should issue to restrain their
Page 252 U. S. 338
enforcement either by means of penalties or otherwise, as
through an assertion by customers of alleged rights arising out of
the Commission's orders. Missouri v. Chicago, Burlington &
Quincy R. Co., 241 U. S. 533
241 U. S. 538
If, upon final hearing, the maximum rates fixed should be found not
to be confiscatory, a permanent injunction should nevertheless
issue to restrain enforcement of penalties accrued pendente
provided that it also be found that the plaintiff had
reasonable ground to contest them as being confiscatory.
It does not follow that the Commission need be restrained from
proceeding with an investigation of plaintiff's rates and practices
so long as its findings and conclusions are subjected to the review
of the district court herein. Indeed, such investigation and the
results of it might with appropriateness be made a part of the
final proofs in the cause. [Footnote 2
These conclusions require that the decree of the district court
be reversed, and that the case be remanded for further proceedings
in conformity with this opinion.
"8235. Public Business Defined. Whenever any business, by reason
of its nature, extent, or the existence of a virtual monopoly
therein, is such that the public must use the same, or its
services, or the consideration by it given or taken or offered, or
the commodities bought or sold therein are offered or taken by
purchase or sale in such a manner as to make it of public
consequence or to affect the community at large as to supply,
demand . . . or rate thereof, or said business is conducted in
violation of the first section of this article, said business is a
public business, and subject to be controlled by the state, by the
corporation commission, or by an action in any district court of
the state, as to all of its practices, prices, rates and charges.
And it is hereby declared to be the duty of any person, firm, or
corporation engaged in any public business to render its services
and offer its commodities, or either, upon reasonable terms,
without discrimination and adequately to the needs of the public
considering the facilities of said business."
In Ex parte Young, 209 U. S. 123
209 U. S. 133
the district court appears to have considered whether the rates
were reasonable although the penal features of the act were
declared void. Missouri P. Ry. Co. v. Tucker, 230 U.
, was an action for the penalty, and the question
here raised was not involved. That it is the penalty provision and
not the rate provision which is void appears from the cases in
which the validity of statutes was sustained because the
objectionable penalty provisions were severable and there was no
attempt to enforce the penalties. Willcox v. Consolidated Gas
Co., 212 U. S. 19
212 U. S. 53
United States v. Delaware & Hudson Co., 213 U.
, 213 U. S. 417
Grenada Lumber Co. v. Mississippi, 217 U.
, 217 U. S. 443
Atchison, Topeka & Santa Fe Ry. Co. v. O'Connor,
223 U. S. 280
223 U. S. 286
Wadley Southern Ry. v. Georgia, 235 U.
, 235 U. S.