West India & Panama Telegraph Co. v. Public Service Commission

10 P.R. Fed. 589

• Court: District Court, D. Puerto Rico
• Decided: August 28, 1918
• Docket: No. 1009
• Status: Published

Opinion

Hamilton, Judge,

delivered the following opinion:

The bill in this cause was filed April 9, 1918, and seeks to enjoin the Public Service Commission of Porto Rico from regulating the charges on cables between Porto Rico and the-' United States, which that Commission had ordered reduced 40 per cent. The matter comes up at present upon a motion of the defendant, joined in by the Insular Chamber of Commerce, heretofore permitted to intervene, raising the question of jurisdiction of this court and also moving to dismiss the bill for reasons set out.

1. The jurisdiction of this court in similar cases has been affirmed in a line of cases such as People v. American R. Co. 9 Porto Rico Fed. Rep. 519; Scoville v. Soler,- ante, 308, and Porto Rico American Tobacco Co. v. Benedicto, ante, 565. These rest upon the principle that an unconstitutional law is no law, and in attempting to enforce it an official is, to that extent, not acting as an official, but as an individual. This presupposes, however, the unconstitutionality or nullity from some cause in the act in question. There is a long line of decisions connected with interstate commerce, in which Federal courts have taken jurisdiction against state railroad commissions and Federal commissions, which need not be cited here.

2. Commerce may be said to be one of the most important bases of civilized life. A nation may exist without it, as in the instance of China, but national life, in the modern sense of the word, presupposes interchange of commodities and of thought. In fact the ease and'rapidity of communication may be said to be the test of civilization. So powerful do corporations and institutions connected with commerce become that in modern times they are everywhere the subject of regulation by the state, where, indeed, they are not actually functions performed by the state authorities. In the United States regulation has so far been preferred to public ownership'. When,.it ■comes to interstate communication, or what for our purpose is the same thing, communication from Porto Pico to the United States and foreign countries, the need of regulation is all the more apparent. The right to conduct such interchange is in the highest degree a public franchise and subject to regulation by the public. The regulation is sometimes provided for in the act of incorporation or permit to do business, but the two companies now concerned are corporations foreign to the United States and the charters are not in issue. This, however, makes very little difference, because the police power of the state extends to all such matters.

These principles are not open to doubt. It is the question of who shall apply them that gives rise to the case at bar. Is the regulation to be by the Interstate Commerce Commission created Feb. 4, 1881, 24 Stat. at L. 379, chap. 104, Comp. Stat. 1916, § 8563, as since amended, or is it to be by the Public Service Commission of Porto Rico created under § 38 of the Organic or Jones Act of March 2, 1917 ? The general relation of Porto Rico as a territory to the United States as a sovereign has been discussed in the recent case of Porto Rico American Tobacco Co v. Benedicto, and need not be reiterated; but the mutual relation of these two acts of Congress must be reviewed.

3. As held in People v. American R. Co. 9 Porto Rico Fed. Rep. 579, the interstate commerce commission applied in Porto Rico even though the Commission did not exercise its jurisdiction and was not aware of it until the Didrickson case. The provisions of this (Interstate Commerce) Act shall “apply to . . . telegraph, telephone and cable companies, (whether wire or wireless) engaged in sending messages from one state, territory or district of the United States to another state, territory or district of the United States or to any foreign country.” 36 Stat. at L. 544, chap. 309, § 7, U. S. Comp. Stat. 1916, § 8563. This on its face embraces cable companies, and therefore the plaintiffs herein. There is nothing so far to show that the Interstate Commerce Commission ever took jurisdiction of these companies or that these companies ever made reports or otherwise submitted to such jurisdiction. The law, however, does not depend upon whether the people accept it or not; indeed its greatest usefulness may be where people do not accept it. The points in the motion to dismiss based herein are not well taken. The question is as to the applicability of the law, not its actual application.

Says the Supreme Court in Hopkins v. United States, 171 U. S. 597, 43 L. ed. 297, 19 Sup. Ct. Rep. 40:

“Definitions as to what constitutes interstate commerce are not easily given so that they shall clearly define the full meaning of the term. We know from the cases decided in this court that it is a term of very large significance. It comprehends as it is said, intercourse for the purposes of trade in any and all its forms, including transportation, purchase, sale and exchange of commodities between the citizens of different States, and the power to regulate it embraces all the instruments by which such commerce may be conducted.”

It has been held that the telegraph is an instrument of commerce and that telegraph companies are subject to the regulating power of Congress with respect to their foreign and interstate business. Pensacola Teleg. Co. v. Western U. Teleg. Co. 96 U. S. 1, 24 L. ed. 708. A telegraph company occupies the same relation to commerce as a carrier of messages that a railroad company does as a carrier of goods. Both companies are instruments of commerce, and their business is commerce itself. They do their transportation in different ways, and their liabilities are in some respects different, but they are both indispensable to those engaged to any considerable extent in commercial pursuits. Western U. Teleg. Co. v. Texas, 105 U. S. 464, 26 L. ed. 1068. Commerce with foreign countries and commerce among the several states are the same in nature and grow out of the same constitutional grant. Const, art. I, § 8, cl. 3. Commercial intercourse is an element of commerce which comes within the regulating power of Congress. Gibbons v. Ogden, 9 Wheat. 1, 6 L. ed. 23. And these powers are not confined to the instrumentalities in use when the Constitution was adopted, blit keep pace with modern progress and adapt themselves to the new developments of time and circumstances. The importance of the telegraph in particular and the steps of .its development are set ont in Pensacola Teleg. Co. v. Western U. Teleg. Co. 96 U. S. 9, 24 L. ed. 710, and the same principles and probably the same importance can be attached to the growth of the submarine telegraph, which unifies the world as land telegraph does the different states of the American Union. Laws operating upon private messages sent out of the state amount to a regulation of foreign and interstate commerce beyond the power of the state. Western U. Teleg. Co. v. Texas, supra, 466.

Cable business therefore is a part of interstate commerce and there can be no question that up to the passage of the Jones Act the Interstate Commerce, Act applied. Did the Jones Act change the situation ?

4. The distance of Porto Rico from the mainland and difference of its economic conditions seem to call for some different regulation, and so Congress in the Jones Act, § 38, declared that “the Interstate Commerce Act and the several amendments . . . shall not apply to Porto Rico.

“The legislative assembly of Porto Rico is hereby authorized to enact laws relating to the regulation of the rates, tariffs and service of public carriers by rail in Porto Rico, and the Public Service Commission hereby created shall have power to enforce such laws under appropriate regulation.” [39 Stat. at L. 964, chap. 145, Comp. Stat. —, § 3803 p.] The acts now in question arise subsequent to this law. What-is the meaning of the law ?

It is suggested that the provision authorizing the legislative assembly to enact laws as to public carriers by rail is to be construed as limiting the preceding part of this same section, that is to say, as limiting the extent of the powers of the Public Service Commission above created. It may well be that the occasion for adding this provision was the special necessity of the separate regulation of railroads, as suggested by the Interstate Commerce Commission itself in its 29 th annual report, December 1, 1915. This, however, is not conclusive or perhaps even persuasive. It has been held that the debates of Congress cannot be taken into account as showing the intent of that body in regard to -the law which is passed. The question is as to the fair interpretation of the words actually used, not what Congress may have had in mind in adopting the particular words. If the mention of public carriers by rail had been intended as a limitation of the functions of the Public Service Commission it. would naturally have been so expressed by the use of the word “provided” or otherwise. As it stands it seems to be a distinct grant of power, and it will not be construed as a limitation.

5. The proper construction of the grant of power in § 38 of the Jones Act depends very largely upon the meaning of the words “Porto Pico.” It is declared that the Interstate Commerce Act shall not apply to “Porto Pico,” and the regulation of rates of public carriers by rail is necessarily and expressly limited to those in “Porto Rico.” There is no reason to suppose that what is included in Porto Pico in this section differs from what is included in Porto Pico in other sections of the act. Section 1. “To provide a civil government for Porto Pico,” declares that “The provisions of this act shall apply to the Island of Porto Pico and to the adjacent islands belonging to the United States and the waters of those islands; and the name Porto Pico as used in this act shall be held to include not only the island of that name, hut all the adjacent islands as aforesaid.” It is clear that the waters of Porto Rico must be limited to the territorial waters, that is to say, a league from the land. Why Congress should limit the activity of the government to a three mile zone is obvious. Ro country extends further than this limit. The same is true of every state in the American Union. Porto Rico has never been a state of the American nation, much less an independent state, and has never enjoyed the rights of sovereignty which appertain to the nation at large as to extraterritorial waters. The powers of its government are limited by the Organic Act which that government has seen fit to pass.

The legislation of Porto Rico itself in regard to the Public Service Commission tends in the same direction. The Public Service Commission Act of December 6,. 1917, now in question is a law of one hundred and ten sections, in its title “Defining public service companies; and providing for their regulation; prescribing, defining, regulating and limiting their rights, powers and duties; prescribing and defining the powers and duties of the Public Service Commission and its officers, prescribing and regulating the practice and procedure before such commission and upon appeal, and for other purposes.” The definition of public service companies is “such natural persons or bodies corporate as may engage in Porto Rico in any of the following pursuits or business . . . telegraph and telephone communications, whether by wire, wireless or by cable.” By its terms it is limited not to persons in Porto Rico, but to persons who may engage in such business in Porto Rico. It may be doubted whether this properly includes any business outside of the territorial limits of Porto Rico. The principal instrumentality of commerce to and from Porto Pico is that of shipping, and the act does not embrace this subject. Upon what principle, therefore, can it be supposed to embrace the lesser instrumentality of submarine cables ? It would seem that it has a field of operation in regard to cables laid or to be laid across the rivers and territorial waters of Porto Rico. Nothing in this long act tends to show that the control by the Public Service -Commission, or that the scope of the provisions themselves, were intended to transcend the limits of the Island. Sections 2(b), 3(o), 9(b), 10, 24, and 31 refer to cables, but not in any way implying that they are international. The only references to international or interstate commerce are like that in § 24, mentioning local piers for shipping. It may be Congress coxild make Porto Rico or any other territory its agent to regulate the tariff of a foreign corporation whose cable touches there, but it does not seem to have done so and the legislation even of that agent does not seem to have attempted to cover the point. And in point of fact § 106 as to interstate and foreign commerce shows the contrary, as follows: “Interstate and Foreign Commerce. — The provisions of this act, except when specifically so provided, shall not apply or be construed to apply to commerce with foreign nations or among the several states, except in so far as the same may be made applicable under the provisions of the Constitution of the United States or the Act of Congress.”

And not only are interstate telegraph messages not specifically covered by the Public Service Act, but they are expressly reserved for congressional regulation. The Supreme Court holds in Wabash St. L. & P. R. Co. v. Illinois, 118 U. S. 557, 558, 30 L. ed. 244, 1 Inters. Com. Rep. 31, T Sup. Ct. Rep. 4: “This court holds now, and has never consciously held otherwise that a statute of a state, intended to regulate, or to tax, or to impose any other restriction upon the transmission of persons or property or telegraphic messages from one state to another, is not within that class of legislation which the states may enact in the absence of legislation by Congress; and that such statutes are void even as to that part of such transmission which may be within the state.”

This is merely an application to telegraphs of principles made applicable to railroads in many other cases. Covington & C. Bridge Co. v. Kentucky, 154 U. S. 204, 38 L. ed. 962, 4 Inters. Com. Rep. 649, 14 Sup. Ct. Rep. 1087; Southern R. Co. v. Reid, 222 U. S. 424, 56 L. ed. 257, 32 Sup. Ct. Rep. 140; Southern B. Co. v. Burlington Lumber Co. 225 U. S. 99, 56 L. ed. 1001, 32 Sup. Ct. Rep. 657; Southern R. Co. v. Railroad Commission, 236 U. S. 439, 59 L. ed. 661, 35 Sup. Ct. Rep. 304; Erie R. Co. v. New York, 233 U. S. 671, 58 L. ed. 1149, 52 L.B.A. (N.S.) 266, 34 Sup. Ct. Rep. 756, Ann. Cas. 1915D, 138.

6. It is quite true that a cable stands, or more strictly speaking lies, in a different condition from other property from its very nature. Begarded as wire and gutta-percha it has practically no value until it is laid at the bottom of the ocean and connected at each end with suitable transmitting instruments on land. Typically it lies in the ocean outside the territorial limits of any nation. Nevertheless it is protected by international law. The ocean is not a No Mean’s Land, where anyone may take possession of anything he finds there. That is piracy. Not only ships sailing upon the face of the seas, but cables lying at the bottom, are fully protected by international law, treaties, and custom. The ocean is a tract of water held in common by

the nations of the world, to which any one of them can resort for suitable purposes. 29 Cyc. 1349; United States v. Rodgers, 150 U. S. 253, 37 L. ed. 1072, 14 Sup. Ct. Rep. 109. The individual must enforce his property rights there through his nation. It is true that a foreigner can come into the courts of any civilized nation and enforce rights connected with his property at sea, but this right is by virtue of treaties between nations. Everything connected with shipping above and cables below, therefore, is a matter of national and not local franchise, and consequently national and not local regulation. It is true that for some purposes local regulations prevail when Congress does not see fit to act. • Pilotage and lighthouse regulations are instances in point. On the othér hand there are some national

matters which cannot be the subject of local regulation. Norfolk & W. R. Co. v. Pennsylvania, 136 U. S. 114, 34 L. ed. 394, 3 Inters. Com. Rep. 178, 10 Sup. Ct. Rep. 958; Robbins v. Taxing Dist. 120 U. S. 489, 492, 30 L. ed. 694, 695, 1 Inters. Com. Rep. 45, 7 Sup. Ct. Rep. 592; An interstate telegraph is such an instance. Western U. Teleg. Co. v. Texas, 105 U. S. 460, 26 L. ed. 1068; Hopkins v. United States, 171 U. S. 5778, 597, 43 L. ed. 290, 297, 19 Sup. Ct. Rep. 40.

7. It is quite true' that the laws applicable to a state are not always applicable to a territory, for a state is not an instrumentality of the nation, but a component part, while on the other hand a territory is merely a subdivision constituted by Congress for local purposes, and upon the territory may be conferred whatever powers Congress may think proper for the more effective execution of even national functions, such as regulating international cables to Cuba and Santo Domingo. There certainly is, .however, no presumption that Congress is granting national functions to a local government beyond tbe terms of tbe grant itself, or wbat is necessary for tbe execution of tbe power in tbe grant. It is not to be presumed that Congress is granting to a territory extending three miles into tbe sea tbe national regulation of property more than thirteen-hundred miles from land, unless Congress distinctly so declares. Tbe only way that this power could be reasoned out as conferred by tbe Jones Act is, to consider tbe cable, because it begins at Porto Pico, as a kind of tent-able or appanage of Porto Pico, extending until it meets some conflicting jurisdiction. In tbe case of a cable to Pew York, how far would such power extend ? Tbe state of Pew York, like Porto Pico, has no jurisdiction beyond tbe 3-mile limit, and yet tbe cable would be an appanage of tbe office in Pew York just as much as it would be an ap-panage of the office in Porto Pico. Should it be considered in such case that Porto Pico, being tbe creature of Congress instead of a sovereign state like Pew York, has inherited tbe national powers from Porto Pico up to 3 miles from tbe state of Pew York? This would be extending tbe implied territorial powers beyond anything heretofore decided, and beyond any necessity for tbe government of Porto Pico. It would be adopting for this territory tbe principle which has been adopted by tbe Supreme Court of tbe United States for tbe nation at large (Wilson v. New, 243 U. S. 332, 61 L. ed. 155, L.P.A. 1911E, 938, 31 Sup. Ct. Rep. 298, Ann. Cas. 1918A, 1024), and would make Porto Pico not only a quasi sovereign as a territory, but more sovereign than a state of tbe Union.

Tbe acts of tbe government are in conformity with this principle. Tbe English company operates under a Spanish grant which in itself conferred no rights upon any insular authorities as such. The rights of the Trench company are quite recent, depending first upon a national grant by the President, itself requiring a permit from the executive council. The Presidential permit fixes the outside commercial rate, and subjects the company to “regulations prescribed by the executive council of Porto Eico from time to time of the terms and conditions of its telegraph service between Porto Eico and the city of Hew York, including the rates to be charged . . . within the limit above set forth in accordance with the provisions of the Organic Law of the said Island, and also subject to the reserved legislative power of the Congress of the United States.”

The local permit from the executive council provides “that within the limitations provided in the permit granted by the United States government . . . the charges of the said grantee for the transmission of messages between Porto Eico and the United States shall be subject to regulation by the executive council according to law.” So far as shown, however, there was no such regulation of charges until now by the Public Service Commission. This Commission does not inherit the exact duties of the executive council. Section 38 of the Jones Act gives to the Commission the granting of franchifees, and “the said Commission is also empowered and directed to discharge all the executive functions relating to public service corporations heretofore conferred by law upon the executive council,” there immediately following the repeal of the Interstate Commerce Act and its congeners. It would seem, therefore, that “the charges of said grantee for transmission of messages between Porto Eico and the United States” are subject to regulation by the Public Service Commission in the same manner as formerly by the executive council, “according to law.” This provision in the Jones Act cannot he considered as an independent grant of power, for it is declared to be “subject to law,” that is, subject either to the acts of Congress or to the acts of the Porto Rico legislature on “matters of a legislative character locally inapplicable.” This brings us back to the point above discussed, that is to say, that the Public Service Commission is confined to matters in Porto Rico.

Under a reasonable construction the national legislation does not seem to have conferred upon the legislation of Porto Rico powers beyond those necessary for local purposes, and the Interstate Commerce Commission has the same jurisdiction over submarine cables that it had before the passing of the Jones Act.

8. The bill in this case originally alleged in § 8 that the order of the Public Service Commission reducing rates 40 per cent “constitutes an attempt to take their property without due process of law, contrary to the Constitution and laws of the United States.” This was afterwards eliminated by amendment. The motion to dismiss now alleges that this eliminates the constitutional provision as to due process of law, and prevents the court from going into the question of the propriety of the rates charged. It would not seem, however, to eliminate the due process clause, for whether the court can investigate the propriety of the charges made or not, the order of the Public Service Commission on its face, according to other paragraphs of the bill, cuts off almost half of the revenue of the cable companies. If the Public Service Commission had the right to reduce rates, the court still would have to consider the propriety of the reduction so as to ascertain whether or not the reduction amounted to confiscation or was otherwise a deprivation of property rights. On the other hand, if, as is now determined, the Public Service Commission Rad no such right, the Commission is exercising a function which even more clearly does not belong to it, and under color of office would be depriving the plaintiffs of property without due process of law.

9. The court invited in persons deeming themselves "wronged by the reduction of the rates before this amendment to the bill was made. Petitioner, the chamber of commerce, intervened .after the amendment was made. How far under the circumstances it can now go into the question of rates by intervention need not be discussed at present. It could probably do so one way or the other as a person injured by the rates, if it proves injury. The rule is that at common law the shipper by a common carrier could sue in the courts for an overcharge. Texas & P. E. Co. v. Abilene Cotton Oil Co. 204 U. S. 426, 51 L. ed. 553, 27 Sup. Ct. Rep. 350, 9 Ann. Cas. 1075. For the purpose of an independent suit, however, there would have to be the requirements as to citizenship and amount involved. The point need not be further discussed at this time.

It follows, therefore, that the Public Service Commission of Porto Eico has not the power to fix cable rates for service outside the 3 mile limits of Porto Eico. It is clear that a reduction of 40 per cent on rates on all commercial messages between the United States and Porto Eico as ordered would exceed its power, and must therefore be enjoined. The motion to dismiss is therefore denied.

It is so ordered.