# Petition for Writ of Certiorari — City & County of San Francisco v. Trans World Airlines, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1956
- **Citation:** 351 U.S. 919

## Text

MAR 1 4 1956

Crry anp County or San Francisco, 7
a municipal corporation, et al.,
Petitioners,
vs.
Trans Word AIRLines, INc.,
a corporation,

Respondent. ;

PETITION FOR A WRIT OF CERTIORARI

to the United States Court of Appeals
for the Ninth Circuit.

Dion R. Hom,
City Attorney of the City and County of San Francisco,
Tuomas M. O’Connor,
Public Utilities Counsel of the City and County of San Francisco,
Frank J. NEEDLES,
Deputy City Attorney of the City and County of San Francisco,
206 City Hall, San Francisco 2, California,
Attorneys for Petitioners.

Subject Index
Page
PT .27c tevadhestuwedeaerinnd cesses reavenhincekd 2
EE ho cindadenvcsvenddddscnssnccesdinsntsesies 3
MC (iit vs bb ecedeésdudkenscacnenbadees 3
Reasons for Allowance of the Writ and Questions Presented
Se MN dui wa eck enechss sents susbaien tusdutadenaves 7

I. In the Ownership of a Municipal Airport, Virtually

Il.

Wholly Paid For by Petitioner’s Taxpayers’ Money, Is
the Petitioner Operating a Public Utility, Which Re-
quires Equal, Uniform and Non-discriminatory Charges
for All Air Carriers Engaged in Foreign Interstate
and Intrastate Air Commerce Using the Same Common
Use Facilities, Regardless of Purported Fixed Charges
Set Forth in a Contract Between Petitioner and Re-
SOO 0 k5.06500dcendis tdddugentsentedsnscodies

A. The Operation of a Municipally Owned Airport,
Especially the Common Use Facilities, Is a Public

B. The Petitioner in the Operation of a Publie Util-
ity (Airport) Is Required to Charge Equal, Uni-
form and Non-discriminatory Charges for All Air
Carriers Engaged in Interstate Air Commerce
Using the Same Common Use Facilities at the
BOE cn niinncdes thociccachéawebbdtes¥ikeweas

C. The Contract of 1942 Between Petitioner and
Respondent, Although Valid When Made, Was
Always Subject to Regulation.................

In the Ownership of a Municipal Airport, Is Petitioner

by Its Charter and State Law Operating This Public

Utility as a Municipal Affair?..............+++..+.-

If the Ownership of the Airport Is Not a Municipal
Affair Under the Control of Petitioner, Is It a Federal
Affair Under the Civil Aeronauties Act of 1938, As
Amended, Divesting the Federal Courts of Jurisdiction
Until Administrative Remedies Have Been Exhausted?

16

19

27

ii Suszszor Inpex

Page

IV. If the Operation of the Airport Is Neither a Municipal
Nor Federal Affair, It Must Be a State Affair Con-
trolled by the Publie Utilities Commission of the State

of California, and This Court Is Without Jurisdiction 31

St wet tee he SSOP OD PSO EP SO OCDE REP SSF Cee e®

Table of Authorities Cited
Cases Pages
Air Transport Association v. United States ((1955), 9th
ih; Sl Pe nth cerchewannakivhdn den piadeas 10

Baltimore & O. R. Co. v. United States (1939), 305 U.S.507 15
Bowles v. City and County of San Francisco (1946), 64

A Manieds hi nos cinch os theese addnehienbedns és 23
Burke v. Board of Trustees, ete., 4 Cal. App. 235......... 2
California v. United States (1943), 320 U.S. 577.......... 16
City and County of Denver v. Board of Commissioners, 113

e:: SUE G a e on de hen ee as he ie > 27

City of Ardmore v. Excise Board, 155 Okla. 126, 8 Pac. 242 27
City of Pasadena v. Railroad Commission (1920), 183 Cal.

Ml cinbackns Sie eatin bo bdak bade ceaboudd edi teka an 16, 23, 25
City of Toledo v. Jenkins (1944), 143 Ohio St. 141, 54 N_E.

a Mls toch er ewok nb idea maani aah a ahe knee docdee wiles 10
City of Wichita v. Clapp, 125 Kan. 100, 263 Pac. 12....... 27
Durant v. City of Beverly Hills (1940), 39 C.A. 2d 133, 102

Se ht bkSs 8 a kt hcl chats is elt pds tnd 22
Dysart v. St. Louis, 321 Mo. 514, 11 S.W. 2d 1045......... 27
Ebrite v. Crawford (1932), 215 Cal. 724............... 23, 24, 32

General American Tank Car Corp. v. El Dorado Terminal
Co. (1940), 308 U.S. 422, 60 S.Ct. 325, 84 L. Ed. 361.... 30

Hesse v. Rath, 249 N.Y. 435, 164 N.E. 342................ 26
Hillsborough County Aviation Authority v. National Airlines
(1953), 63 So. 2d 61, 40 A.L.R. 2d 1056................ 26
Home Telephone Co. v. Los Angeles, 211 U.S. 265......... 25
In re Cortaro Water Co. (1933), 3 Fed. Supp. 257........ 18
Jochimsen v. Los Angeles, 54 C.A. 715, 202 Pac. 902....... 22, 23

Jones v. Keck (1946), 74 Ohio App. 549, 74 N.E. 2d 644... 10

_ SRR Pce se meeneNCrnaoroTa ee rene

iv Taste or AuTHoriTIEs CITED

Pages

Kansas and State ex rel. Parker v. Kansas City, 151 Kan. 1,
97 Pac. 20 104... 2c cccccccccccccccccscccscscccees 15
Kennedy v. Ross (1946), 28 Cal. 2d 569, 170 Pac. 2d 904.. 19
Krenwinkle v. City of Los Angeles (1935), 4 Cal. 2d 611.23, 24, 32

Law v. Railroad Commission (1921), 184 Cal. 737......-... 18
Leavitt v. Lassen Irrigation Co. (1909), 157 Cal. 82........ 16, 18
Limoneira Co. v. Railroad Commission (1917), 174 Cal. 232.16, 18

Loop Lumber Co. v. Van Loben Sels, et al., 173 Cal. 228... @%
Midland Realty Co. v. Kansas City Power & Light (1936),

Mott v. Cline (1987), 900 Cal. 496....000ccesccevercoeeee 18
People v. Western Airlines, 42 Cal. 2d 621 Deh cok adam Gain 20, 35
Pinney & Boyle v. Los Angeles (1914), 168 Cal. 1B. ...200 18
Polk v. City of Los Angeles (1945), 26 Cal. 2d 519, 150

Daa BA GBT... ccccccccccccvcscccccccccescccecososoce 23
Price v. Storms, et al., Board of Trustees (1942), 191 Okla.

410, 180 Pac. 2d 523......--.eeececcceccereesensercees 10
Railroad Commission v. Los Angeles Railway (1929), 280

UG. 214B .cccccccccccccccccccccccccccccccsccseseocees 18

San Diego Water Co. v. San Diego (1897), 118 Cal. 556.... 16
South Pasadena v. Pasadena L. & W. Co., 152 Cal. 579, 93

Pac. 400... cc ccccccccccccccccccsccccccsccecesssocess 22
Spring Valley Water Co. v. San Francisco, 61 Cal. 3......- 16
§.S.W., Inc. v. Air Transport Ass’n of America (CADCC

(1955) ), 191 Fed. 2d 658......---+-eeeeeeereees 28, 30, 31, 34
State v. Board of County Commissioners (1947), 149 Ohio

St. 583, 79 N.E. 2d 698......-. cece cee eceereeeeccreeee 10
State v. Clausen, 157 Wash. 457, 289 Pac. 61.....---.----- 27

State v. Jackson (1929), 121 Ohio St. 186, 167 N.E. 396.... 10
State ex rel. City of Lincoln v. Johnson (1928), 117 Neb.
BOL, 220 N.W. 278....-0cecerccrececcrecentenerstecees 10

Union Drygoods Co. v. Georgia Publie Service Corp. (1919),
et ila a ea Bl tg A ADL EER POE

Union Pacific Railroad Co. v. United States (1941), 313
so cic a isp haga nnateberias

United States v. Baltimore & O. R. Co. (1948), 333 U.S. 169 15

Tasiz oy AvrHorirres Crrep Vv

West Coast Advertising Co. v. San Francisco (1939), 14

Ce, SS GR, GS Ba Bia as si vadccccncsdcocs ks 19
Yosemite Ete. v. State Board of Equalization (1943), 59

Se St Oe EP Sriehechbeate bes te ddedhddodekede nuh: 25

Constitutions

California Constitution: Pages

MD as CINE hb oc ene a ccccccwccccscccéccke 19, 24

ong cn ss scene cnedceaboausan 19

Es cccikswabadnescedscaeeevcct 19, 21

ee es I, VccekccccbdccébdsedesVicctave 20

Statutes
Airport Development Act, 49 U.S.C., Section 1110......... 30

Municipal and County Airport Law (Cal. Stats. 1927, p.458) 23
California Publie Utilities Code:

i vonsekiheiebinedeeababddtacdss bdecebuns 32
SE £04 Joab ctnestcabdaces eos bieeetesosebeds 32
DM f

Trans Wor.p Arrives, INc.,
a corporation,

Respondent.

PETITION FOR A WRIT OF CERTIORARI
to the United States Court of Appeals
for the Ninth Circuit.

The City and County of San Francisco, petitioner
herein, prays respectfully that this Court issue a writ
of certiorari to review the judgment of the United
States Court of Appeals for the Ninth Circuit
reversing the judgment of the District Court for the

Northern District of California, Southern Division,
wherein the Circuit Court of Appeals held that a con-
tract entered into with respondent, Trans World Air-
lines, Inc., in 1942 froze the established rates and
charges for the common use facilities at the San Fran-
cisco International Airport for a period of twenty
years, and that such rates and charges could not be
subsequently changed as to respondent, Trans World
Airlines, Inc., and that the City and County of San
Francisco is not entitled to judgment for the sum
of $95,942.64 from and after December 31, 1950 to
February 28, 1954, in accordance with the lawfully
established rates and charges fixed by the Public
Utilities Commission of petitioner and paid for by all
air carriers, with two exceptions, using the common
use facilities at the municipal airport.

JURISDICTION.

The judgment of the Court of Appeals for the
Ninth Circuit was filed and entered on December 19,
1955. (Exhibit ‘‘B’’.) A petition for rehearing was
filed on January 16, 1956; an order denying rehearing
was filed on January 31, 1956; an application for a
stay of mandate was filed on February 2, 1956, and
the mandate was by said Court of Appeals ordered
stayed on February 3, 1956, until March 5, 1956, and
on February 29, 1956, until March 19, 1956 or until
disposition of this petition.

The jurisdiction of this Court is invoked under
28 U.S.C., Section 1254(1).

OPINIONS BELOW.

The opinion of the Court of Appeals appears in the
appendix of this petition as Exhibit ‘‘A’’; and the
opinion of the District Court for the Northern Dis-
trict of California, Southern Division (119 Fed. Supp.
516), appears in the appendix of this petition as
Exhibit *‘C”’.

STATEMENT OF THE CASE.

In 1926 the voters of the City and County of
San Francisco approved an initial appropriation
of $100,000 for the construction of an airport. Since
that date, $50,000,000 of its taxpayers’ money has
been invested in the San Francisco International
Airport to make it one of the great air gateways
of the world. Twelve scheduled air carriers (Amer-
ican Airlines, Canadian Pacific, Ltd., Flying Tiger
Line, Inc., Japan Airlines, Pacifie Southwest Airlines,
Pan American World Airways, Qantas, Slick Air-
ways, Inc., Southwest Airways Co., Trans World Air-
lines, Ine., United Airlines, and Western Airlines,
Inc.) have been certificated to use this airport and its
terminal facilities. Also, there are numerous non-
scheduled carriers and private planes using the ter-
minal facilities. All aircraft use in common the run-
ways where planes land and take off; the landing
aprons, or ramps, where passengers and cargo are
taken on and discharged; the taxiways which connect
the runways with the landing aprons or ramps; and
other conveniences and facilities, such as lights, sig-

4

nals, beacons and control tower services. These are
designated the common use facilities of the airport.

In 1941 petitioner, through its Public Utilities Com-
mission, duly enacted a schedule of rates and charges
for the common use facilities at the municipal air-
port, which were applicable to all air carriers using
the facilities of its airport. The schedule of rates and
charges was fixed in accordance with Section 130 of
the Charter of the City and County of San Francisco.

Subsequent to the enactment of the schedule of
rates and charges, the petitioner in 1942 entered into
a contract with respondent, Trans World Airlines,
Inc., for certain land area, hangar facilities and
counter space for the sale of tickets in the terminal
building. The term of said contract was for twenty
years. Included in the contract was a schedule of
rates and charges for the common use facilities which
were identical, an exact transcription, in words and
figures, with the rates and charges set forth in the
duly enacted schedule of 1941 adopted by the Public
Utilities Commission of petitioner under Section 130
of the Charter of the City and County of San Fran-
cisco.

Incorporated in the agreement was this provision,
and it is fully set forth hereafter to emphasize its
importance in the controversy at bar. Section 3 of the
agreement states:

“Lessor further demises and lets unto Lessee
the use, in common with others authorized so to
do and on the same terms and conditions as apply
to others, of any and all general facilities, im-

provements, equipment and services which have
been or may hereafter be provided at said San
Francisco Municipal Airport, including, but with-
out limitation, the landing field, runways, aprons,
taxi-ways, sewerage and water facilities, marker
and surface lights, floodlights, landing lights, sig-
nals, beacons, aids, control tower, and other con-
veniences for loading, flying, landings, and take-
offs; and the causeways, docks, wharves and ap-
proaches thereto, parking areas, roads, streets,
bridges, spur tracks, and other facilities and ap-
purtenances of said Airport, for the Lessee, its

employees, passengers, guests, vendors and con-
tractors, patrons, and invitees, which use, without
limiting the generality thereof, shall include (all
of said facilities to be used and occupied in ac-
cordance with the rules and regulations of said

Airport) :”’

In 1946 the City, after extensive costly improve-
ments to the common use facilities fixed a new
schedule of rates and charges after due notice by
publication in a daily newspaper, public hearing, and
proceedings before the Board of Supervisors in ac-
cordance with Charter Section 130. (Exhs. S-1, S-2,
8-3, S-4, R. 624.)

Again, on November 12, 1950, and after further
extensive improvements including a new terminal
building then under construction, the petitioner’s
Public Utilities Commission adopted a schedule of
rates and charges after due notice by publication and
hearing for the use of the common use facilities at
- the Airport in accordance with Section 130 of the
Charter. Said schedule was approved by the Board

of Supervisors of the City and County of San Fran-
cisco and became effective on January 1, 1951. (Exh.
“B®”, R. 55; Exhs. T-1, T-2, T-3, T-4, R. 625.)

Respondent, Trans World Airlines, Inc., brought
this action for declaratory relief and injunction in
the United States District Court for the Northern
District of California, Southern Division.

The District Court ruled in accord with petitioner’s
legal conclusions that the furnishing of common use
facilities at the San Francisco International Airport
constituted a public utility service; that the Public
Utilities Commission of petitioner had rate-making
jurisdiction over the airport; and that the law does
not allow a public utility to depart from the regular
schedule of rates and charges by contract whereby one
consumer (TWA) would be given a preference over
other competing consumers in the same class.

The Court of Appeals, in reversing the decision of
the District Court, substantially adopted the respond-
ent’s contentions, and held that the operation of the
San Francisco International Airport was not a munic-
ipal affair, rather it was a federal or state affair;
that petitioner was governed by the State Municipal
and County Airport Act of 1927 rather than its Char-
ter of 1900 and its new Charter of 1932; that since
the Municipal and County Airport Act of 1927 per-
mitted contracts with air carriers for facilities at
municipally owned airports, the City and County of
San Francisco was bound by the terms of the contract
of 1942, and the rates for the common use facilities
were frozen for the duration of the contract (twenty

7

years); and that the City and County of San Fran-
cisco had by its action in entering into the contract
of 1942 suspended -its rate-making authority as to
respondent, Trans World Airlines, Inc. Further, the
Court of Appeals failed to rule on the question
whether in the operation of its airport, petitioner
is operating a public utility.

REASONS FOR ALLOWANCE OF THE WRIT AND
QUESTIONS PRESENTED FOR REVIEW.

1. The Court of Appeals has decided an important
state question in conflict with applicable state law, in
that its decision is contrary to numerous state appel-
late and Supreme Court decisions, holding that the
operation of municipally owned utilities is a “‘muniec-
ipal affair’’ within the meaning of a state constitu-
tional provision giving a municipal corporation oper-
ating under a freeholders’ charter governmental au-
thority over municipal affairs to the exclusion of the
state legislature.

2. The Court of Appeals has decided an important
question of federal law which has not been, but should
be, settled by this Court, in that said Court has ruled
that the operation of the said airport is not a munic-
ipal affair, but rather a state or federal affair, and
by so deciding, has raised the question of whether the
Civil Aermautics Board has jurisdiction to regulate
rates and charges for common use facilities at air-
ports serving interstate air carriers.

3. The Court of Appeals has decided a federal
question in a way in conflict with applicable decisions
of this Court, in that by this decision the Court of
Appeals permits petitioner to discriminate among the
several air carriers as to rates and charges for com-
mon use facilities at the said airport.

4. The Court of Appeals has rendered a decision
in conflict with the decision of another Court of Ap-
peals on the same matter, by failing to remand this
case to the District Court to await exhaustion of the
administrative remedy available to TWA before the
Civil Aeronautics Board.

All of the foregoing questions are of nationwide
importance and some are questions of first impres-
sion. Every municipality throughout the United States
which operates an airport and every air carrier will
be affected by the decision in this case, for the prob-
lem of rates and charges for common use facilities is
common to all, although in each case the problem
is colored by varying local statutes, constitutional and
substantive provisions.

The petitioner, air carriers, cities, counties and
states throughout the nation seek a final judicial
determination regarding the nation’s network of

airports by an answer to the questions as herein pre-
sented.

L

IN THE OWNERSHIP OF A MUNICIPAL AIRPORT, VIRTUALLY
WHOLLY PAID FOR BY PETITIONER'S TAXPAYERS’ MONEY,
IS THE PETITIONER OPERATING A PUBLIC UTILITY,
WHICH REQUIRES EQUAL, UNIFORM AND NON-DISORIMI-
NATORY CHARGES FOR ALL AIR CARRIERS ENGAGED IN
POREIGN INTERSTATE AND INTRASTATE AIR COMMERCE
USING THE SAME COMMON USE FACILITIES, REGARDLESS
OF PURPORTED FIXED CHARGES SET FORTH IN A OON-
TRACT BETWEEN PETITIONER AND RESPONDENT?

A. The Operation of a Municipally Owned Airport, Especially
the Common Use Facilities, Is a Public Utility Business.

Of prime importance to the whole aviation industry,
air carriers, airport operators and the Civil Aero-
nautics Administration is whether the operation of
an airport is within the public utility field. The ques-
tion has been presented in various state Courts and
slightly referred to in federal determinations. If the
operation of an airport is a public utility, no prefer-
ence for rates or charges can be given to one air
carrier over another in the same class.

In the instant case, the decision of the Court of
Appeals would permit twelve contracts varying as
to rates and charges between the petitioner and its
customers using the common use facilities at the mu-
nicipal airport; or, it would permit petitioner by
contract to give a preference to respondent for the
common use facilities as against air carriers in direct
competition with respondent. The District Court (119
Fed. Supp. 516) determined that all air carriers using
the common use facilities must be treated on a non-
discriminatory basis since the operation of the San
Francisco International Airport is a public utility
business.

: .

A review of the law in all jurisdictions where the
question has been presented definitely holds that the
operation of an airport by a municipality or other
governmental agency is within the public utility field.
See:

State v. Jackson (1929), 121 Ohio St. 186, 167
N.E. 396;

Jones v. Keck (1946), 74 Ohio App. 549, 74
N.E. 2d 644, 646;

State ex rel. City of Lincoln v. Johnson (1928),
117 Neb. 301, 220 N.W. 273, 274;

Price v. Storms, et al., Board of Trustees
(1942), 191 Okla. 410, 130 Pac. 2d 523;

City of Toledo v. Jenkins (1944), 143 Ohio St.
141, 54 N.E. 2d 656;

State v. Board of County Commissioners
(1947), 149 Ohio St. 583, 79 N.E. 2d 698;

Annotation, 161 A.L.R. 733.

In Air Transport Association v. United States
[ (1955), 9th C.C.A.], 221 Fed. 2d 467, the Court held
that the United States in the operation of the Elmen-
dorf Field in Alaska was engaged in a ‘‘public enter-
prise.”’

Respondent argues that the operation of the airport
and especially the promulgation of rates and charges
for the common use facilities is not a public utility
function. If respondent’s argument were true, peti-
tioner could forbid any air carrier from landing at
the San Francisco International Airport. It could,
at the termination of the contract cf 1942, charge
respondent any amount it so desired for landing and
takeoff charges, the use of taxiways, ramps and other

Lon

:

11

facilities. In other words, regardless of the provisions
of the Civil Aeronautics Act of 1938, as amended,
whereby respondent: received a certificate of public
convenience and necessity to serve Chicago, Illinois,
and San Francisco on a nonstop flight schedule, peti-
tioner, according to the argument of respondent, could
forbid respondent from landing and taking off at the
airport, or charge it six times more than it does Amer-
ican Airlines for the same privilege over the same
route.

That the San Francisco International Airport is a
public utility is fully recognized by the laws of the
State of California and the Charter of the City and
County of San Francisco.

Section 10001 of the Public Utilities Code of the
State of California defines ‘‘public utilities’ as it
pertains to municipalities in these words:

“**Publie utility’ defined. ‘Public utility’ as
used in this article, means the supply of a mu-
nicipal corporation alone or together with its
inhabitants, or any portion thereof, with water,
lights, heat, power, transportation of persons or
property, means of communication, or means of
promoting the public convenience.” (Emphasis
added.)

Section 10004 provides:

“Incidental powers included in power to ac-
quire and operate public utility. For the purpose
set forth in Sections 10002 and 10003 a municipal
corporation may acquire, own, control, sell or ex-
change lands, easements, licenses, and rights of
every nature within or without its corporate lim-
its, and may operate a public utility within or

SVQ...

a
12

without the corporate limits when necessary to
supply the municipality, or its inhabitants or any
portion thereof, with the service desired.” (Em-
phasis added.)

Section 120 of the Charter of the City and County
of San Francisco creates a public utilities commission
in the municipal government of the City and County
of San Francisco.

Section 121 of the Charter provides in part that:

“The public utilities commission shall have
charge of the construction, management, super-
vision, maintenance, extension, operation and con-
trol of all public utilities and other properties
used, owned, acquired, leased or constructed by
the city and county, including airports, for the
purpose of supplying any public utility service to
the city and county and its inhabitants, to terri-
tory outside the limits of the city and county, and
to the inhabitants thereof.’’ (Emphasis added.)

Section 122 of the Charter enacts that utilities
therein named, among which is the airport, **shall
each be designated as a department under the com-
mission.”’

Section 125 of the Charter provides, in part:

“The public utilities commission shall have

jurisdiction over the airport now being conducted
by the City and County of San Francisco, .. .”

It must be concluded, therefore, that petitioner
under federal, state, and City Charter provisions, in
the operation of the San Francisco Municipal Airport,
is engaged in a public utility business.

,4

_—

13

B. The Petitioner in the Operation of a Public Utility (Airport)
Is Required to Charge Equal, Uniform and Non-discrimina-
tory Charges for All Air Carriers Engaged in Interstate Air
Commerce Using the Same Common Use Facilities at the
Airport.

The fundamental principle of utility law, as adopted
by the District Court, that all customers (air carriers)
are to be charged equally and uniformly, without dis-
crimination, for the use of the common use facilities
at San Francisco International Airport, petitioner
submits is the recognized law of the United States.
This principle is set forth in the enactment of the
Civil Aeronautics Act of 1938, as amended.

The aircraft of all air carriers, scheduled and non-
scheduled, and all private aircraft are entitled, as a
matter of law, to land and take off from the San Fran-
cisco International Airport.

The provisions of the Public Utilities Code of the
State of California, and the case law of the Supreme
Court of the United States and California all empha-
size this principle.

Section 21637, Public Utilities Code of the State
of California (Stats. of 1953, Chapter 151, §1) pro-
vides :

“‘In no ease shall the public be deprived of its

rightful equal and uniform use of the airport, or
navigation facilities, or portion of either.”’

49 U.S.C., Section 1110, provides:
“The airport to which the provision relates will
be available for public use on fair and reasonable
terms and without unjust discrimination.” (Em-

phasis added.)

14

And in the enactment of the Civil Aeronautics Act
of 1938, as amended, the Congress of the United States
stated in the Declaration of Policy establishing the
Civil Aeronautics Board, 49 U.S.C., Section 402:

‘In the exercise and performance of its powers
and duties under this chapter, the board shall
consider the following, among other things, as
being in the public interest and in accordance
with the public convenience and necessity.

sé

‘““(¢) The promotion of adequate, economical
and efficient service by air carriers at reasonable
charges, without unjust discrimination, undue
preferences or advantages, or unfair or destruc-
tive competitive practices.’”” (Emphasis added.)

49 U.S.C., Section 484(b), provides:

‘“‘No air carrier or foreign air carrier shall
make, give, or cause any undue or unreasonable
preference or advantage to any particular person,
port, locality, or description of traffic in air trans-
portation in any respect whatsoever or subject
any particular person, port, locality, or descrip-
tion of traffic in air transportation to any wnjust
discrimination or any undue or unreasonable
prejudice or disadvantage in any respect whatso-
ever.’’ (Emphasis added.)

The Supreme Court of the United States has
uniformly held that there can be no discrimination
or discriminatory practices or preferences indulged in
by carriers in interstate commerce, whether by rail,
shipping or otherwise.

hepa

15

Baltimore & O. R. Co. v. United States (1939), 305
U.S. 507, held that where an interstate carrier’s ware-
house rates were not open to all shippers alike there
was a violation of the Interstate Commerce Act.

In United States v. Baltimore & O. R. Co. (1948),
333 U.S. 169, this Court stated:

“The Interstate Commerce Act is one of the
most comprehensive regulatory plans that Con-
gress has ever undertaken. The first act, and all
amendments to it, have aimed at wiping out
discriminations of all types. New York v. United

States, 331 U.S. 284, 296, 91 L. ed. 1492 on 1507,
67 S. Ct. 1207.

“It would be strange if this legislation left a
way open whereby carriers could engage in dis-
crimination merely by entering into contracts for
the use of trackage. In fact this court has long
recognized that the purpose of Congress to pre-
vent certain discriminations and prejudicial prac-
tices could not be frustrated by contracts even
though the contracts were executed before enact-
ment of the legislation.”

Kansas City, Kansas, attempted to give preferential
rates to tenants in its new terminal building. The
Supreme Court of Kansas, in Kansas and State ex
rel. Parker v. Kansas City, 151 Kan. 1, 97 Pac. 2d
104, held that the city had the authority to indulge
in such preferential practices. However, this practice
was enjoined as a violation of the Elkins Act in
Union Pacific Railroad Co. v. United States (1941),
313 U.S. 450.

16

The action of the Maritime Commission in forbid-
ding preferential treatment and establishing uniform
demurrage charges on wharves in San Francisco and
in the City of Oakland was upheld by the Court in
California v. United States (1943), 320 U.S, 577.

The California Supreme Court has repeatedly held
that public utility rates must be uniform, equal and

nondiscriminatory.

Limoneira Co. v. Railroad Commission (1917),
174 Cal. 232;

Leavitt v. Lassen Irrig. Co. (1909), 157 Cal. 82;

Spring Valley Water Co. v. San Francisco, 61
Cal. 3;

San Diego Water Co. v. San Diego (1897), 118
Cal. 556;

City of Pasadena v. Railroad Commission
(1920), 183 Cal. 526.

Also, Annotation in:
74 L. Ed. 234, et seq.

©. The Contract of 1942 Between Petitioner and Respondent,
Although Valid When Made, Was Always Subject to Regu-
lation.

There is no dispute as to the validity of the contract
entered into in 1942 between petitioner and respond-
ent. The rates for the common use facilities set forth
in the contract were the valid rates for all air carriers
using the same common use facilities at the San Fran-
cisco International Airport as duly enacted by peti-
tioner in 1941.

17

The Court of Appeals and respondent would divest
the Public Utilities Commission of petitioner from
ever changing the rates for the public utility service,
Le., the common use facilities, during the life of the
contract.

When the Public Utilities Commission duly enacted
a new schedule of rates in 1946 and again in 1950 for
the common use facilities at the airport, the contract
of 1942 between petitioner and respondent was sub-
jected to the new regulations governing charges.

In the instant case, the only governmental agency
that had the power to regulate the public utility rates
for the common use facilities was the Public Utilities
Commission of petitioner under Section 130 of the
Charter of the City and County of San Francisco.

Section 130 provides, in part:

“The commission shall have power to fix,
change and adjust rates, charges or fares for
the furnishing of service by any utility under its
jurisdiction, and to collect by appropriate means
all amounts due for said service, and to discon-
tinue service to delinquent consumers and to settle
and adjust claims arising out of the operation of
any said utilities.

‘Rates may be fixed at varying scales for dif-
ferent classes of service or consumers. The com-
mission may provide for the rendition of utility
service outside the limits of the city and county
and the rates to be charged therefor which may
include proportionate compensation for interest
during the construction of the utility rendering
such service,”’

18

Respondent was charged with the knowledge that
the common use facilities were always subject to regu-
lation by the proper governmental agency.

It is a fundamental principle of utility law, where
the law authorizes the regulation of service (common
use facilities) rendered the public, that such law be-
comes a part of and controls contracts providing for
the public service.

In re Cortaro Water Co. (1933), 3 Fed. Supp.
257 ;

17 C.J.8., §330, p. 784;

Pinney & Boyle v. Los Angeles (1914), 168
Cal. 12;

Law v. Railroad Commission (1921), 184 Cal.
737;

Leavitt v. Lassen Irrigation Co. (1909), 157
Cal. 82;

Limoneira Co. v. Railroad Commission (1917),
174 Cal. 232;

Mott v. Cline (1927), 200 Cal. 434;

Midland Realty Co. v. Kansas City Power &
Light (1936), 300 U.S. 109;

Union Drygoods Co. v. Georgia Public Service
Corp. (1919), 248 U.S. 372;

Railroad Commission v. Los ‘Angeles Railway
(1929), 280 U.S. 145, 152.

Also:
Annotation, 74 L. Ed. 234, reviewing both Cali-
fornia and Federal cases on this subject.

19

II.

IN THE OWNERSHIP OF A MUNICIPAL AIRPORT, IS PETI-
TIONER BY ITS CHARTER AND STATE LAW OPERATING
THIS PUBLIC UTILITY AS A MUNICIPAL AFFAIR?

Where a municipality avails itself of the provisions
of Article XI, Sections 6 and 8, of the California
Constitution, and becomes a chartered city, or being
a chartered city, or city and county, adopts a new
charter (as San Francisco did by adopting a new
charter in effect January 8, 1932), its powers over
municipal affairs become all embracing, restricted
and limited by the Charter only, and free from any
interference by the State through general laws. In
fact, the Charter supersedes all existing State laws
on the same subject matter. The city becomes inde-
pendent of general laws upon municipal affairs.
West Coast Advertising Co. v. San Francisco
(1939), 14 Cal. 2d 516, 95 Pac. 2d 138;
Kennedy v. Ross (1946) 28 Cal. 2d 569, 170
Pac. 2d 904.

Under the provisions of Article XI, §19 of the
State Constitution adopted in 1911 an airport is a
“municipal affair.” The first sentence of §19 of
Article XI provides:

“Any municipal corporation may establish and
operate public works for supplying its inhabi-
tants with light, water, power, heat, transporta-
tion, telephone service or other means of com-
munication.”’ (Emphasis added.)

An airport is a public work for supplying inhabi-
tants of the municipality with transportation within

aa

the meaning of the constitutional provision. This
is made clear in an interpretation by the State Su-
preme Court of the provisions of Section 20 of Article
XII of the California Constitution also adopted in
1911 relative to the powers of the State Public Utili-
ties Commission, in People v. Western Airlines, 42
C. 2d 621.

In that case, Western challenged the jurisdiction
of the State Public Utilities Commission to establish
intrastate rates for airline passengers on the ground
that Article XII, §20 of the Constitution which con-
ferred upon the Commission power over the rates
of ‘‘transportation companies’’ did not include air-
line companies. The Court, at page 635 stated as
follows:

‘“‘The fact that airline transportation compa-
nies were not in existence when the Constitution
was adopted in 1879 does not make them any the
less ‘transportation companies’ within the mean-
ing and contemplation of article XII. It was
well said by the Supreme Court of Nebraska in
State ex rel. State Railway Com. v. Ramsey
(1949), 151 Neb. 333, at page 338 (37 N.W. 2d
502): ‘. . . A Constitution is intended to meet
and be applied to any conditions and circum-
stances as they arise in the course of the progress
of the community. The terms and provisions
of constitutions are constantly expanded and
enlarged by construction to meet the advancing
affairs of men. While the powers granted
thereby do not change, they do apply in different
periods to all things to which they are in their

nature applicable. Pensacola Telegraph Co. v.

7 =

ere

21

Western Union Telegraph Co., 96 U.S. 1, 24
L.Ed. 708; 11 Am. Jur., Constitutional law §51,
p. 660; 9 Am. Jur., Carriers, §4, p. 430. These
principles have been held to be applicable to
transportation by air. ‘Transportation, as its
derivation denotes, is a carrying across, and,
whether the carrying be by rail, by water or
by air, the purpose in view and the thing done
are identical in result.’’ Curtiss-Wright Flying
Service v. Glose, 66 F. 2d 710, certiorari denied
290 U.S. 696 [154 S.Ct. 132, 78 L. Ed. 599]...
[citations omitted].’ ”’

Therefore, under Article XI, §19, San Francisco
was given the direct constitutional grant to establish
and “‘operate’’ an airport.

As heretofore pointed out, Sections 121, 122, 125,
and 130 of the Charter of the City and County of
San Francisco are the controlling laws as far as
petitioner is concerned in its operation of the airport.

These sections make the airport a public utility
under the jurisdiction of petitioner’s Public Utilities
Commission. Section 130 makes it mandatory for the
Public Utilities Commission to establish rates and
charges for the furnishing of services by any utility
under its jurisdiction.

The City owns its own water system, which serves
San Francisco, parts of Alameda County and most
of the San Francisco Peninsula area. This water
system links San Francisco with other areas and
serves neighboring and outlying communities; its
aqueducts and pipe lines stretch 150 miles from the

_ _ SARS meee m TSE N

high Sierras through the Coast Range to San Fran-
cisco. That the State of California is greatly con-
cerned with water is evidenced by a separate water
code which legislates for over fifty water agencies.
The use and control of water is more of a statewide
However, municipally owned water systems are
municipal affairs under the jurisdiction of the mu-
nicipality, and not subject to State regulation.

See:
South Pasadena v. Pasadena L. & W. Co., 152
Cal. 579, 93 Pac. 490;
City of Pasadena v. Railroad Commission, 183
Cal. 526, 192 Pac. 25;
Jochimsen v. Los Angeles, 54 C.A. 715, 202
Pac. 902.

If municipally owned water, light, heat and power
systems are ‘‘municipal affairs’, it necessarily follows
that a municipally owned airport is a ‘‘municipal
affair.”’

On the other hand all private public utility water
systems are under the jurisdiction of the Public
Utilities Commission of the State. In fact all private
public utilities are subject to the jurisdiction of the
State Public Utilities Commission.

The State Supreme Court long ago ruled that
municipally owned utilities were not under the juris-
diction of the State Public Utilities Commission. This
was amply pointed out by the Court in Durant v. City
of Beverly Hills (1940), 39 C.A. 2d 133, 137, 102 P,
2d 759.

And, in Polk v. City of Los Angeles (1945), 26
Cal. 2d 519, 539, 150 Pac. 2d 931, our Supreme Court
states : .

“The present Railroad Commission (now Pub-
lic Utilities Commission) was created by an
amendment to the Constitution on October 10,
1911 (Cal. Const., Art. XII §22). Thereafter
it was held that the powers conferred on the
commission did not extend to the regulation of
utilities operated by municipalities; that its
power of regulation was limited to privately
operated public utilities; and that the Legislature
could not extend that power to embrace mu-
nicipally operated utilities.”’

See also:
City of Pasadena v. Railroad Com. (1920), 183
Cal. 526, 192 P. 25;
Bowles v. City and County of San Francisco
(1946), 64 Fed. Supp. 609;
Jochimsen v. City of Los Angeles (1921), 54
C.A. 715, 202 P. 902.

The City cited both Krenwinkle v. City of Los
Angeles (1935), 4 Cal. 2d 611, and brite v. Crawford
(1932), 215 Cal. 724, to show that the California
Supreme Court regarded the operation of an airport
as a “‘municipal affair’. The Court of Appeals mis-
construed the purpose of the citations and stated:

‘These cases support the view that the conduct
of a municipal airport is a matter subject to
State Law.’’

San Francisco acquired its airport in 1926 prior
to the amendment of the Municipal and County Air-

24

port Law (Cal. Stats. 1927, p. 458). The airport
was not acquired under the State Airport Act as
in the Krenwinkle and Ebrite cases, supra. The
City’s xirport came into being under the provi-
sions of California Statutes of 1911, Chapter 715,
and Article XII of the Charter of 1900, as amended.
It was acquired as a public utility, just as the City
acquired the Spring Valley Water System, Market
Street Railway Company, and the California Street
Cable Railroad Company.

The fact that the Municipal and County Airport
Law refers to ‘“‘any such city and county” (San
Francisco being the only combined City and County
in the State) is of no significance, since the airport
was already established by petitioner prior to enact-
ment of the Municipal and County Airport Law.
The real question is whether the statute regulates
a matter of statewide concern or attempts to regulate
a municipal affair contrary to the provisions of Arti-
cle XI, §6 of the California Constitution. On two
occasions, where municipal affairs were involved,
California Courts have ruled that the San Francisco
charter and ordinance provisions prevail over gen-
eral statutes, in spite of the fact that the statutes
involved were addressed to ‘‘every city, or city and
county’? (Burke v. Board of Trustees, etc., 4 Cal.
App. 235), and to each contractor awarded a con-
struction contract ‘‘by any county, city and county,
city, town or district therein’. (Loop Lumber Co. v.
Van Loben Sels, et al., 173 Cal. 228).

i.

We have diligently searched the law in the State
of California and have been unable to find a single
case holding that where a municipality owns and
operates its own public utility, it is not a municipal
affair under the jurisdiction of the owner-munici-
pality.

Of main importance to the issue at bar and com-
pletely overlooked by the Court of Appeals was the
ratification of the new Charter of the City and County
of San Francisco in 1932 by the State Legislature.

The District Court pointed out that ‘the approved
charter of a municipality is a law of the state and
has the same force and effect as a law enacted by
the Legislature.” (Citing Yosemite Etc. v. State
Board of Equalization (1943), 59 Cal. App. 2d 39.)

The City agrees that when the contract was en-
tered into in 1942 with TWA it was a valid contract.
That contract, however, embodied every provision
of rates and charges for common use facilities at the
airport under the legal schedule adopted in 1941
by the City, under its Charter powers. The City at
the time of the contract was controlled by its Charter
of 1932 and not the general Municipal and County
Airport Law of 1927, which applied to cities and
counties that had not legislated on the same subject
matter.

Home Telephone Co. v. Los Angeles, 211 U.S. 265,
emphasizes that a City must have express power
through its charter to contract as to rates. No such
power is given to the petitioner through its Charter.

?

OW

The interpretation of what can and cannot be
done by authorities operating airports, especially
‘“eommon use facilities’ is ably expressed by the
Court in Hillsborough County Aviation Authority
v. National Airlines (1953), 63 So. 2d 61, 40 A.L.R.
2d 1056.

The contract of 1942 was valid when entered into
because the rates and charges set forth in the contract
were the valid rates for the ‘‘common use facilities’.
Those rates applied to all air carriers—not to TWA
alone. If the rates set forth in the contract were spe-
cial rates and not subject to further regulation by
the City, as a matter of law, the contract was ultra
vires, for the City is not empowered to divest itself
of its police power.

Commencing with the leading case of Hesse v. Rath,
249 N.Y. 435, 164 N.E. 342, it has universally been
held by the Courts that a City which owns and oper-
ates an airport performs this function as a matter of
local concern and is governed by the law applicable
to matters which concern the municipality exclusively
as a “‘local concern’”’ or “municipal affair.”

Mr. Justice Cardozo stated in the Hesse v. Rath
case:

“A city acts for city purposes when it builds

a dock or a bridge or a street or a subway. (Sun
Printing & Pub. Ass’n v. New York, 152 N.Y.
257, 46 N.E. 499, 37 L.R.A. 788) Its purpose is

not different when it builds an airport. (Wichita

v. Clapp, 125 Kan. 100, 263 Pac. 12, 63 A.L.R.
478) Aviation is today an established method of

27

transportation. The future—even the near future
—will make it more general. The city that is
without the foresight to build the ports for the
new traffic may soon be left behind in the race
of competition.’”’ (Emphasis added.)

Numerous other jurisdictions hold that the main-
tenance and operation of municipal airports are for a
municipal purpose and are municipal affairs. See:

City of Wichita v. Clapp, 125 Kan. 100, 263
Pace. 12;

Dysart v. St. Louis, 321 Mo. 514, 11 8.W. 2d
1045;

City of Ardmore v. Excise Board, 155 Okla.
126, 8 Pac. 2d 2;

State v. Clausen, 157 Wash. 457, 289 Pac. 61;

City and County of Denver v. Board of Com-
missioners, 113 Colo. 150, 156 Pace. 2d 101.

ITI.

IP THE OWNERSHIP OF THE AIRPORT IS NOT A MUNICIPAL
APFAIR UNDER THE CONTROL OF PETITIONER, I8 IT A
PEDERAL APFAIR UNDER THE CIVIL AERONAUTICS ACT
OF 1938, AS AMENDED, DIVESTING THE FEDERAL COURTS
OF JURISDICTION UNTIL ADMINISTRATIVE REMEDIES
HAVE BEEN EXHAUSTED?

Assuming without admitting, that the Court of Ap-
peals is correct, that petitioner can enter into a con-
tract giving a preference of rates and charges for the
common use facilities at the airport, the City submits

that such a contract must first be approved by the

Civil Aeronautics Board, since it would be a ‘federal
affair.’’

The evidence is uncontradicted that the contract in
question gives to TWA lower rates for the common
use facilities than those charged to ten other air car-
riers using the same common use facilities.

In S.S. W., Inc. v. Air Transport Ass’n of America
[CADCC (1955)], 191 Fed. 2d 658, the basis of the
complaint was that American Airlines, TWA, Braniff
Airlines, Colonial Airlines, Eastern Airlines, Capital
Airlines, Northwest Airlines, Pan American Airlines
and United Airlines had entered into an agreement
which violated the anti-trust laws. The Court ruled
that recourse must first be sought through the Civil
Aeronautics Board, and remanded the case to the Dis-
trict Court until the Civil Aeronautics Board had
determined if the contract in question was violative
of the provisions of the Civil Aeronautics Act of 1938,
as amended.

The Court stated (p. 661):

“The aircraft industry, like railroads and
power, is one in which Congress has decided that
the public interest is best served, not by free com-
petition, but rather by direct and uniform regula-
tion by an ‘agency authorized to supervise almost
every phase of the regulated company’s busi-
ness.’ ”

The Court further states (p. 662):

“Tt provides that ‘Every air carrier shall file
with the Board a true copy, or, if oral, a true
and complete memorandum, of every contract or

agreement (whether enforceable by provisions for
liquidated damages, penalties, bonds, or other-
wise) affecting air transportation and in force
on the effective date of this section or hereafter
entered into, or any modification or cancellation
thereof, between such air carrier and any other
air carrier, foreign air carrier, or other carrier
for pooling or apportioning earnings, losses, traf-
fic, service, or equipment, or relating to the estab-
lishment of transportation rates, fares, charges,
or classifications, or for preserving and improving
safety, economy, and efficiency of operation, or
for controlling, regulating, preventing, or other-
wise eliminating destructive, oppressive, or waste-
ful competition, or for regulatory stops, schedules,
and character of service, or for other cooperative
working arrangements.”’ (Emphasis added.)

In the case at bar there is no showing that TWA
had its contract approved by the Civil Aeronautics
Board by which it claims it is entitled to a preference
in rates for the common use facilities as against the
other air carriers using the same facilities under rates
and charges legally promulgated by the Publie Util-
ities Commission of the City.

The Civil Aeronautics Act provides for detailed and
comprehensive economic regulation by the Board. It
has control of certificates of public convenience and
necessity (49 U.S.C., Section 481); supervision of
rates and services (49 U.S.C., Section 484) ; authority
over mail rates (49 U.S.C., Section 486); loans and
financial aid from United States agencies (49 U.S.C.,
Section 490) and pooling or other agreement (49
U.S.C. 492).

Further, the Board is empowered to initiate or hear
complaints of ‘‘unfair or deceptive practices or unfair
methods of competition in air transportation,” and
to issue cease and desist orders against such practices
or methods of competition. (49 U.S.C., Section 491.)

Under the Airport Development Act, 49 U.S.C., See-
tion 1110 provides:

**As a condition precedent to his approval of a
project under this chapter, the Administrator
shall receive assurances in writing, satisfactory
to him, that—(1) the airport to which the project
relates will be available for public use on fair and
reasonable terms and without unjust discrimina-
tion.’”” (Emphasis added.)

In S. 8S. W., Inc. v. Air Transport Ass’n of Amer-
ica, supra, the Circuit Court remanded the case to
the District Court, as being consistent with General
American Tank Car Corp. v. El Dorado Terminal Co.
(1940), 308 U.S. 422, 433; 60 S.Ct. 325, 331; 84 L. Ed.
361, in which this Court said:

‘*‘When it appeared in the course of the litiga-
tion that an administrative problem, committed
to the Commission, was involved, the Court should
have stayed its hand pending the Commission’s
determination of the lawfulness and reasonable-
ness of the practices under the terms of the Act.
There should not be a dismissal but .. . the cause
should be held pending the conclusion of an ap-
propriate administrative proceeding.”

If the operation of the airport is a federal affair,
then, under the Civil Aeronautics Act, the Civil Aero-

31

nautics Board is a regulatory body with powers
analogous to those of the Interstate Commerce Com-
mission and the Maritime Commission.

The contract giving respondent, TWA, preferences
over other air carriers using the common use facilities
at the San Francisco International Airport should be
approved by the Civil Aeronautics Board before the
federal Courts take jurisdiction of the matter, and the
ease at bar should be remanded to the District Court
until such time as a ruling is made by the Civil Aero-
nautics Board, upon the right of the City to enter
into a contract giving preferential rates to TWA and
regulating the rates for the same facilities for ten
other scheduled air carriers. (S. S. W., Inc. v. Air
Transport Ass’n of America, et al., 191 Fed. 2d 658.)

We submit that if the matter before this Court is
a “federal affair’ the primary jurisdiction rests in
the Civil Aeronautics Board. Petitioner stil] em-
phasizes that the only logical and legal jurisdiction
in the instant case rests in petitioper’s Public Utilities
Commission.

IV.

IP THE OPERATION OF THE AIRPORT IS NEITHER A MUNICI.
PAL NOR FEDERAL AFFAIR, IT MUST BE A STATE AFFAIR
CONTROLLED BY THE PUBLIC UTILITIES COMMISSION OF

THE STATE OF CALIFORNIA, AND THIS COURT IS WITH-
OUT JURISDICTION.

Regulatory power must rest in some governmental
body if discrimination in the use of facilities eommon

—
32

to all air carriers is to be avoided. The City insists
that under Section 130 of the Charter it is empowered
to regulate the rates and charges for the common use
facilities at the airport.

The Court of Appeals in reviewing the Krenwinkle
and Ebrite cases, supra, states:
‘These cases support the fact that the conduct
of municipal airports is a matter subject to state
law.”’

Assuming, without admitting, that the operation of
an airport by a municipality is a “‘state affair’’, the
contract in question as to the common use facilities
would be ultra vires, since it gives preference to re-
spondent, TWA.

Section 453 of the Public Utilities Code of the State
of California provides:

‘*§453. Preferential rates prohibited. No pub-
lie utility shall, as to rates, charges, service, facil-
ities, or in any other respect, make or grant any
preference or advantage to any corporation or
person or subject any corporation or person to
any prejudice or disadvantage. No public utility
shall establish or maintain any unreasonable dif- —
ference as to rates, charges, service, facilities, or —
in any other respect, either as between localities
or as between classes of service. The commis-
sion may determine any question of fact arising
under this section.”’

Section 728 provides:
““§728. When fixing of rates by commission
required. Whenever the commission, after a hear-

ing, finds that the rates or classifications, are * * *
discriminatory, or preferential, the commission
shall determine and fix by order, the just, reason-
able, or sufficient rates, classifications, rules, prac-
tices, or contracts to be thereafter observed and
in force.”’

If the State owned or controlled the airport, the
contract in the instant case would be void. Section
21637 of the California Public Utilities Code provides,
in part:

“*§21637. Contracts, etc., for operation of air-
ports, etc. * * * In each case the commission may
establish the terms and conditions and fix the
charges, rentals, or fees for the privileges or serv-
ices, which shall be reasonable and uniform for
the same class of privilege or service and shall
be established with regard to the property and
improvement used and the expenses of operation
to the State. In no case shall the public be de-
prived of its rightful, equal, and uniform use of
the airport, air navigation facility, or portion of
either. The commission shall grant no exclusive
privilege for the sale or delivery of gasoline or
other petroleum products.’’

If the regulation of rates and charges of common
use facilities that respondent TWA complains is in
violation of the contract of 1942 and the question is
a “state affair’, according to the decision of the
Court of Appeals, then Section 1702 of the California
Public Utilities Code provides respondent TWA its

remedy.

__ AERC eT enan ene strane BE en

34

However, petitioner still emphasizes that the only
logical and legal jurisdiction rests in petitioner’s Pub-
lic Utilities Commission.

CONCLUSION.

The question involved in this controversy is a con-
flict between federal, state and municipal jurisdiction
over the regulatory power to set rates and charges
for public utility services, i.e., common use facilities
at a municipally owned airport.

The answer to the problem is novel, difficult and
important not only to petitioner and respondent, but
to all municipalities throughout the Nation, the air
carriers, States and the Civil Aeronautics Board.

Jurisdiction must rest somewhere, either in the city
that owns and operates the airport under its charter;
in the State, under the general laws vesting jurisdic-
tion in its public utilities commission; or in the Fed-
eral Government, under the Civil Aeronautics Act
of 1938, as amended.

Jurisdictional conflict exists between the federal,
state and local authorities.

The federal Court in S. S. W., Inc. v. Air Transport
Ass’n of America (1951), 191 Fed. 2d 658, stated, in
the matter of violation of the anti-trust laws, that jur-
isdiction rests with the Civil Aeronautics Board.

The Court of Appeals in the case at bar leaves the
question so vague that it cannot be determined

35

whether the federal, state or local authority has jur-
isdiction.

In People v. Western Airlines, 42 Cal. 2d 622, the
Supreme Court of California ruled that as to intra-
state fares, the Public Utilities Commission of the
State was the proper regulatory body.

In the case at bar, the District Court, 119 Fed.
Supp. 516, stated that the operation of the airport
was a public utility and the regulation of the common
use facilities was a public utility function under the
regulatory power of the petitioner through the pro-
visions of the Charter of 1932, especially Section 130
thereof.

Petitioner respectfully submits that for the forego-
ing reasons and questions involved herein this petition
for a writ of certiorari should be granted.

Dated, San Francisco, California,
March 2, 1956.

Respectfully submitted,
Dion R. Hoi,
City Attorney of the City and County of San Francisco,
THomas M. O’Connor,
Public Utilities Counsel of the City and County of San Francisco,

FRANK J. NEEDLES,
Deputy City Attorney of the City and County of San Francisco,
Attorneys for Petitioners.

(Appendix Follows.)

Appendix

EXHIBIT “A”
United States Court of Appeals
for the Ninth Circuit

"Trans World Airlines, Inc., a corpora-|
__ tion, Appellant,

vs.

| Gity and County of San Francisco, a

_ municipal corporation, Phillip S.
'. Landis, Sam McKee, Victor S. Swan-

son, Edward B. Baron and Donald No. 14,523
Pir A, Cameron, as members of the Pub- >
lie Utilities Commission of the City | Dee. 19, 1955
and County of San Francisco, G.
Dixon, as Manager and Chief Engi-
neer of the San Francisco Airport,
and J. M. Turner, Manager of Util-
ities for the Public Utilities Com-
mission of the City and County of
San Francisco, Appellees.

Appeal from the United States District Court for
the Northern District of California,
Southern Division.

Before: Stephens, Orr and Pope, Circuit Judges.
, Circuit Judge:
_ We have for determination the interesting question

“of whether or not the City and County of San Fran-

cisco, having contracted through its duly authorized
officials to permit Trans World Airlines, Inc., to use

' eommon use facilities’? at the San Francisco Inter-

national Airport, situate in San Mateo County, at
fixed rates for a term of years, may thereafter,
through its duly constituted Public Service Commis-
sion, change the contract rates.

In 1942 the City and County of San Francisco,
hereafter City, entered into a formal agreement, ex-
ecuted and to be performed in the state of California,
with Trans World Airlines, Inc., hereafter T.W.A.,
one of twelve scheduled airlines currently using the
airport. The lease was for a twenty-year term, at
charges fixed by the agreement. The property leased
consisted of a hangar and certain space in the admin-
istration building and, in addition, cer‘*in “‘common
use” facilities. Common use facilities are those areas
and facilities used in common by the several airlines.
Included in this category are landing fields, runways,
aprons, taxi-ways, sewerage, water facilities, various
lights and signals, control tower service and other
conveniences supplied by the airport.

On November 20, 1950, after notice and hearing,
the Public Utilities Commission of the City and
County of San Franciseo promulgated Resolution
No. 11,182, thereafter duly approved by the Board
of Supervisors of the City and County of San Fran-
cisco, purporting to establish prescribed rates and
charges for the use of the facilities of the airport.
The resolution fixed the charges for the common use

1Resolution No. 10,628, December 18, 1950.

iii

facilities at a figure higher than that set in the 1942
contract.

In January 1951 ‘the City notified T.W.A. that
T.W.A. would be expected to make payment for
future use of the common use facilities at the rates
fixed by the Commission’s schedule. It gave notice
that should T.W.A. fail to make such payments the
City would deny to T.W.A. the right to refuel its
planes at the airport. Thereupon T.W.A. sought an
injunction against this threatened action and prayed
for a declaratory judgment to the effect that its con-
tract rates are binding on the City. The City de-
fended on the ground that the 1942 contract was
superseded by the Commission’s resolution. The City
withdrew its threat to deny refueling privileges and
no hearing was held on the injunction issue. The Dis-
trict Court sustained the City’s theory and entered
judgment accordingly.

T.W.A. maintains that the City was granted express
statutory authority to enter into the subject contract
by section 4 of the Municipal and County Airport
Law (Cal. Stats. 1927, p. 458) which was in force in
1942. Section 4 provided, in part, as follows:

“In connection with the erection or maintenance
of any such airport or airports, or air navigation
facilities, any such city and county .. . or any munic-
ipal corporation, shall have the power and jurisdiction
... to lease or assign for operation such space or area,
. appurtenances, appliances or other conveniences nec-

*The provision was repealed in 1949 but similar provisions were
included in Government Code sections 50470-50478,

iv

essary or useful in connection therewith . . . to enter
into contracts or otherwise cooperate with the federal
government or other public or private agencies, and
otherwise exercise such powers as may be required
or convenient in the promotion of aeronautics and the
furtherance of commerce and navigation by air.”’

This statute grants plenary authority to lease and
contract. The use of the term ‘any such city and
county” is a direct reference to San Francisco, which
is the only combined city and county in the state.

It is not contended that in the execution of the con-
tract the parties failed to observe any formalities
necessary to the exercise of the powers conferred by
the statute. The City takes the position, however, that
the statute purports to regulate a “‘municipal affair”
and thereby violates certain prohibitions of the state

constitution.

Article XI, section 6 of the California constitution
provides, in part, as follows:

“| Gities and towns hereafter organized under
charters framed and adopted by authority of this
Constitution are hereby empowered, and cities and
towns heretofore organized by authority of this Con-
stitution may amend their charters in the manner
authorized by this Constitution so as to become like-
wise empowered hereunder, to make and enforce all
laws and regulations in respect to municipal affairs,
subject only to the restrictions and limitations pro-
vided in their several charters, and in respect to other
matters they shall be subject to and controlled by
general laws... .”

Article XI, section 8/j) provides in part:
“Municipal Affairs.

“It shall be competent in any charter framed under
the authority of this section to provide that the mu-
nicipality governed thereunder may make and enforce
all laws and regulations in respect to municipal af-
fairs, subject only to the restrictions and limitations
provided in their several charters and in respect to
other matters they shall be subject to general laws.”

T.W.A. recognizes that the effect of Article XI is
to preclude regulation by the state legislature of
“municipal affairs’*® but it contends that the opera-
tion involved in this suit is not included within the
meaning of that term as used in Article XI.
The phrase ‘‘municipal affair’ is a term of art. Its
meaning as used in the constitution must be sought
in the decisions of the California courts. The latter
courts have repeatedly declared that a matter is not
a “‘municipal affair’ unless it is of strictly local
interest. Any doubt is to be resolved in favor of state
regulatory power. Thus, in Los Angeles Ry. Corp. v.
Los Angeles, 16 Cal.2d 779, 783, 108 P.2d 430, the
Court said:
“. . . But the question here is disposed of by our
conclusion that the facts disclose that the one-man or
two-man operation of cars over the plaintiff’s railway
system is not a matter exclusively of municipal con-
*T.W.A. argues in the alternative that authority to enter into
the subject contract is contained in the San Franciseo Charter.
We inquire first as to the applicability of the statutory authori.

tation for the reason that the existence of such authorization is
material to other questions presented by this case.

vi

cern and is, therefore, not a municipal affair within
the meaning of said sections of the Constitution; and
that the question of such operation does not relate
merely to the power to make and enforce local, police
sanitary or other regulations covering the plaintiff
which it may be assumed has vested in the City of
Los Angeles, pursuant to the provisions of said sec-
tion 23; or, if it may be said to be a police regula-
tion, that it relates to a matter which is not strictly
a local affair and, therefore, has not been included in
the reserved power.”’

To the same effect, see City of Los Angeles v. Post
War, ete., Bd., 26 Cal.2d 101, 156 P.2d 746; Bay Cities
Transit Co. v. Los Angeles, 16 Cal.2d 772, 108 P.2d
435; Civic Center Assn. v. Railroad Comm., 175 Cal.
441, 166 Pac. 351; and Pac. Tel. & Tel. Co. v. City of
Los Angeles, 44 Cal.2d 272, 282 P.2d 36. See also,
McQuillin, Municipal Corporations, 3rd Ed., $4.85.
The facts of the instant case place it much farther
outside the orbit of a ‘“‘municipal affair” than do
those of any of the cases, supra.

The airport is not a strictly local affair. It is part
of a global system of air transportation. Its value
stems from the fact that it links the San Francisco
area with other areas served by airports. It directly
serves not only the City of San Francisco but all
neighboring and outlying communities. The airport is
used by military aircraft. Federal and state author-
ities regulate charges for common carrier air traffic.‘

‘See 49 U.S.C.A. §642; also, People v. Western Airlines, Ine.,
42 Cal. 2d 621, 268 P.2d 723.

vii

The City relies on the cases of Krenwinkle v. City
of Los Angeles, 4 Cal.2d 611, 51 P.2d 1098, and Ebrite
v. Crawford, 215 Cal. 724, 12 P.2d 937, in support of
its contention that the airport is a ‘municipal affair.”’
These cases, however, hold only that the maintenance
and operation of a municipal airport is an activity
in which a city may properly engage. In each case
the Court cited the municipal and county airport law,
supra, to show that the state had expressly authorized
this activity. If the Supreme Court of California
had viewed the operation of municipal airports as
a ‘municipal activity’’ in the technical sense of those
words, a matter thereby excluded from state regula-
tion, it could not have regarded the municipal and
county airport law as a source of authority to conduct
such airports. These cases support the view that the
conduct of municipal airports is a matter subject
to state law.

The authorities from other jurisdictions cited by
the City are distinguishable.’ They deal with the
question of whether or not a city has sufficient interest
in the construction and operation of an airport to
justify the expenditure of municipal funds, the use
of the tax power, the use of public properties or the
use of condemnation proceedings. As the Supreme
Court of California observed in the recent case of
Pacific Telephone and Telegraph Co. v. City of Los

‘City of Wichita v. Clapp, 125 Kan. 100, 263 Pac. 12;

Dysart v. St. Louis, 32 Mo. 514, 11 S.W.2d 1045;

City of Ardmore v. Excise Board, 155 Okla. 126, 8 P.2d 2;

State v. Clausen, 157 Wash. 457, 289 Pac. 61;

City and County of Denver v. Board of Commissioners, ete.,
113 Colo. 150, 156 P.2d 101.

viii

Angeles, supra, p. 281, the fact that the city could
lawfully regulate a business does not make the matter
a “municipal affair” in the sense that the general
state law is supplanted. We are persuaded that ex-
press statutory authorization existed for the execution
of the 1942 agreement.

The City has bound itself as to rates and charges
for the common use facilities by entering into a valid
contract expressly authorized by state law. Even 80,
argues the City, the rate schedule of the contract was
superseded by subsequent regulation by the Publie
Utilities Commission. In discussing this contention
we assume arguendo that the Public Utilities Com-
mission’s regulatory jurisdiction extends to the air-
port.*

The City had authority under this assumption to
proceed by contract or by regulation. It elected
to proceed by contract. The rule of law governing
a subsequent attempt by the municipality to vitiate a
contract such as that before us through subsequent
exercise of its regulatory power is well stated in 43
Am. Jur., §88:

“Tt has been held in numerous cases, however, that
a state legislature unless prohibited by constitutional

°T.W.A. urges that the airport is not a publie utility and
therefore subject to regulation by the Commission, that even
if it be ject to regulation the Commission has not lawfully
exercised its regulatory power in that there has been no finding
hearing that the contract rate was excessive and finally that
rms of the Commission’s resolution exempted the subject
tract. The resolution provided that the rates prescribed were
‘except as otherwise provided, or amended by agree

i

ee oo in, ee eed

Fa Ss eau ee

ix

provision may authorize a municipal corporation to
establish by an inviolable contract the rates to be
charged by a public ‘utility for a reasonable term
of years, the effect of which is to suspend, during the
life of the contract, the governmental power of the
state or municipality to fix or regulate the rates.’’ See
also, Annot. 74 L.Ed. 234, 236, to the same effect.

Authorities sustaining this rule are Publie Service
Co. v. St. Cloud, 265 U.S. 352, Vicksburg v. Vicksburg
Waterworks Co., 206 U.S. 496, and Femmer v. City
of Juneau, 9 Cir. 1938, 97 F.2d 649.’ In the Vicksburg
ease the Supreme Court held, p. 508:

“That a state may, in matters of proprietary rights,
exclude itself from the right to make regulations of
this kind or authorize municipal corporations to do
so, when the power is clearly conferred, has been too
frequently declared to admit of doubt. Los Angeles
v. Los Angeles City Water Co., 177 U.S. 558, Walla
Walla v. Walla Walla Water Co., 172 U.S. 1-7, New
Orleans Waterworks Co. v. Rivers, 167 U.S. 674, Free-
port Water Co. v. Freeport, 180 U.S. 587-593.”

In the instant case the statutory authority con-
ferring the power to contract was more express than
that found sufficient in the cases above noted.

The City cites a line of cases holding that contracts
entered into by a public utility and a private party
are subject to superseding subsequent rate making

"Cf. Home Telephone Co. v. Los Angeles, 211 U.S. 265.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386418_0491%3A1. Public record. Not legal advice.