Oklahoma Packing Co. v. Oklahoma Gas & Electric Co. , 60 S. Ct. 215 ( 1940 )

Mr. Justice Frankfurter

delivered the opinion of the Court.

The case concerns a rate controversy which has been winding its slow way through state and federal courts for thirteen years.¹ While the relationship of two utilities with Wilson & Co., a consumer of natural gas, complicates the situation, the legal issues before us may be disposed of as though this were a typical case of a utility resisting an order reducing its rates.² Oklahoma Gas & Electric Company (hereafter called Gas & Electric) appealed to the Oklahoma Supreme Court from such an order by the Oklahoma Corporation Commission. The reduction was stayed pending the appeal, but to protect Wilson & Co. against a potential overcharge, Gas & Electric gave a supersedeas bond. Gas & Electric lost its appeal, Oklahoma Gas & Electric Co. v. Wilson & Co., 146 Okla. 272, 288 P. 316, and Wilson & Co. brought suit on the bond. That suit was instituted on December 3, 1931, in one of the district courts of Oklahoma. To enjoin prosecution of the latter suit Gas & Electric on May 20, 1932, invoked the jurisdiction of the United States District Court for the Western District of Oklahoma.³ After a complicated series of moves in both state and federal courts,'not necessary here to detail, this relief was granted by the District Court on September 10, 1937, and on December 19, 1938, sustained by the Circuit Court of Appeals. Oklahoma Packing Co. v. Oklahoma Gas & Electric Co., 100 F. 2d 770. Since the case in part was in conflict with the Second Circuit's decision in Neirbo Co. v. Bethlehem Shipbuilding Corp., 103 F. 2d 765, and also presented novel aspects of important questions of federal law, we granted certiorari, 306 U. S. 629. We are not concerned with the merits of the Commission’s order.

At the threshold we are met by the procedural objection, seasonably made, that Wilson & Co., a Delaware corporation, was improperly sued in the District Court of the Western District of Oklahoma. The objection is unavailable. Prior to this suit, Wilson & Co. had, agreeable to the laws of Oklahoma, designated an agent for service of process “in any action in the State of Oklahoma.” Both courts below found this to be in fact a consent on Wilson & Co.’s part to be sued in the courts of Oklahoma upon causes of action arising in that state. The Federal District Court is, we hold, a court of Oklahoma within the scope of that consent, and for the reasons indicated in Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U. S. 165, Wilson & Co. was amenable to' suit in the Western District of Oklahoma.

Petitioners further urge (1) that their plea of res judicata should have been sustained, and (2) that § 265 of the Judicial Act (Act of March 3, 1911, 36 Stat. 1162, 28 U. S. C. § 379, derived from § 5 of the Act of March 2, 1793, 1 Stat. 333, 335), was a bar to the suit.

The claim of res judicata is based on the prior determination in 1930 by the Supreme Court of Oklahoma that the contested order of the Corporation Commission Was valid. Oklahoma Gas & Electric Co. v. Wilson & Co., 146 Okla. 272; 288 P. 316. The pronouncements of the Oklahoma Supreme Court concerning the character of such a determination — whether under the Oklahoma. Constitution it was a “legislative” or “judicial” review — have for a time, however, been ambiguous and fluctuating. After the present bill was filed but before the challenged injunction was decreed, the Oklahoma Supreme Court had held that its decision in cases like that of Oklahoma Gas & Electric Co. v. Wilson & Co., was a judicial judgment. Oklahoma Cotton Ginners’ Assn. v. State, 174 Okla. 243; 51 P. 2d 327. But, in Community Natural Gas Co. v. Corporation Commission, 182 Okla. 137; 76 P. 2d 393, decided after the decree here in issue, the Oklahoma court formally characterized its review in cases prior to the decision in the Ginners’ case as “legislative,” refused to give that decision retroactive effect, and therefore deemed the res judicata doctrine inapplicable to these prior reviews-. Hence, the plea of res judicata in this case .must fail, for on that issue state law is determinative here. Union & Planters’ Bank v. Memphis, 189 U. S. 71; Covington v. First National Bank, 198 U. S. 100; Wright v. Georgia Railroad & Banking Co., 216 U. S. 420.

There remains, therefore, the applicability of § 265 of the Judicial Code.⁴ That provision would operate as a bar upon the power of the District Court to enjoin proceedings previously brought in the state court on the supersedeas bond, if “the only thing sought to be accomplished by this equitable' action” is to stay the continuance of that action. Such was the construction placed upon the bill by the earlier District Court of three judges, and such was this Court’s assumption when the latter decision came here on appeal. Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., 6 F. Supp. 893, 895; Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., 292 U. S. 386, 389. That case eliminated the Corporation Commission as party to the litigation. The District Court to which this Court remanded the matter summarized Gas & Electric’s claim by way of answer to the action brought by Wilson & Co. in the state court -as an attack upon the Commission’s order “for substantially the same reasons as set out” in the present bill.

The present suit, therefore, is one for an injunction “to stay proceedings” previously begun in a state court. The decree below is tnus within the plain interdiction of an Act of Congress, and not taken out of it by any of the exceptions which this Court has heretofore engrafted upon a limitation of the power of the federal courts dating almost from the beginning of our history and expressing an important Congressional policy — to prevent needless friction between state and federal courts. Compare Madisonville Traction Co. v. St. Bernard Mining Co., 196 U. S. 239; Simon v. Southern Railway Co., 238 U. S. 115; Wells Fargo & Co. v. Taylor, 254 U. S. 175. See Warren, “Federal and State Court Interference,” 43 Harv. L. Rev. 345, 372-77. That the injunction was a restraint of the parties and was not formally directed against the state court itself is immaterial. Hill v. Martin, 296 U. S. 393, 403. Cf. Kohn v. Central Distributing Co., 306 U. S. 531. Steelman v. All Continent Corp., 301 U. S. 278, pressed upon us by respondents and relied upon below, is plainly inapplicable.

Neither record nor findings below give any other basis for injunctive relief save the threatened injury implied in the state court lawsuit; and that could not be enjoined. The decree below is reversed, with directions to dismiss the bill.

Reversed.

The Chief Justice, Me. Justice McReynolds and Me. Justice Robeets adhere to the views expressed in their separate opinion in this case.

1 A history of the controversy is to be found in Oklahoma Gas & Electric Co. v. Wilson & Co., 146 Okla. 272; 288 P. 316; Oklahoma Gas & Electric Co. v. Wilson & Co., 54 F. 2d 596; Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., 6 F. Supp. 893; Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., 292 U. S. 386; Oklahoma Gas & Electric Co. v. Wilson & Co., 178 Okla. 604; 62 P. 2d 703; Oklahoma Packing Co. v. Oklahoma Gas & Electric Co., 100 F. 2d 770.

2 Oklahoma Natural Gas Co. and Oklahoma Gas and Electric Co., both engaged in the sale of natural gas in and about Oklahoma City, had agreed to a division of territory. Under that agreement, Wilson & Co. bought gas from Gas & Electric. The Oklahoma Corporation Commission found that Natural Gas had held itself out to provide gas to industrial consumers at a lower rate than that at which Wilson & Co. was able to buy from Gas & Electric. The Commission then ordered Natural Gas to provide Wilson & Co. with its gas at prevailing industrial rates. Both Natural Gas and Gas & Electric resisted the order. Natural Gas contended that it had never held itself out to industrial consumers; Gas & Electric claimed thát it was being unconstitutionally deprived of its right to sell to Wilson & Co. at the higher rate. If, pending appeal from the Commission, the order were not stayed, Wilson & Co. would have been able to purchase gas from Natural Gas at the lower rate and Gas & Electric would have been forced either to lower its rates to meet the competition or to lose the business.

3 In 1928 Nátural Gas complied with the order; and since that time Wilson & Co. has been buying gas at the lower rate prescribed by the Commission. The sole question now involved in these proceedings is the liability of Gas & Electric to Wilson & Co. .for alleged overcharges between 1926 and 1928. The District Court found specifically that the Corporation Commission had made no threat to enforce penalties for violations of the 1926 order, and as to the Commission, declined to grant any injunctive relief. Cf. Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., 292 U. S. 386, 390.

4 Section 265 provides: “The writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a State, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy.”