Appendix — City & County of San Francisco v. Trans World Airlines, Inc.

Supreme Court brief1956

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Text

regulations.* The law to that effect is well settled, see

Annot. 9 A.L.R. 1423. Such contracts are subject to

a condition implied in law that rates and charges may

be superseded by utility regulation. Where, however,

the municipality enters into a contract pursuant to

express statutory authority to contract, the courts

have recognized that the specific authority to contract,

insofar as this authority conflicts with the general

power conferred on the municipality to regulate public

utility rates, should prevail.

In Limoneira Co. v. Ry. Comm., 174 Cal. 232, 162

Pac. 1023, the Supreme Court of California recog-

nized the distinction between the two lines of author-

ity, stating, p. 238:

“The uniform course of decision of the United

States Supreme Court on questions similar in prin-

ciple precludes any claim that the exercise by the

state of the power to thus affect such an existing

contract as that here involved impairs the obligation

of contract within the meaning of the federal consti-

tution. We are speaking, of course, of a situation

where the state cannot be held as a matter of fact

’Pinney and Boyle Co. v. Los Angeles Gas, ete. Corp., 168 Cal.

2d 12, 141 Pac. 620;

Law v. Railroad Comm., 184 Cal. 737, 195 Pac. 423;

Market St. Ry. Co. v. Pac. Gas & Elee. Co., D.C.N.D. Cal.

1925, 6 F.2d 633, appeal dismissed 271 U.S. 691;

Sutter Butte Canal Co. v. Railroad Comm., 202 Cal. 179, 259

P. 937, aff'd 279 U.S. 125;

Midland Realty Co. v. Kansas City Power and Light Co., 300

U.S. 109, rehearing denied 300 U.S. 687;

or ‘aga Co. v. Georgia Public Service Corp., 248

to have surrendered to the public utility involved, by

something tantamount to a contract between it and

the public utility, any portion of the named

The trial court attempted to distinguish the

St. Cloud and Vicksburg cases, supra, on the theory

that these decisions apply only to charges applicable

“not to any one customer, but to all members of the

public served,’’ whereas in the present case the con-

tract is between a municipality and a single customer.

We think, however, that the instant case falls within

the principle stated in the St. Cloud and Vicksburg

decisions. If the municipality may be deemed as in

the St. Cloud and Vicksburg cases to have surren-

dered its regulatory power as to the entire public,

certainly iv has the lesser power to suspend its rate-

making authority as to a single customer. In Femmer

v. City of Juneau, supra, this court decided that a

municipality could so do. We conclude that insofar

as the resolution of the Public Utilities Commission

purported to abrogate the rates and charges fixed by

the 1942 contract the resolution was void.

The City further contends that the rates and

charges pertinent to the common use facilities are

governed by the provisions of the contract wherein

T.W.A. is authorized to use the said facilities ‘‘on

the same terms and conditions as apply to others.’’

This provision is followed, however, by a lengthy

designation of fees which purports to set up an

elaborate rate schedule. There can be no doubt on a

reading of the agreement that the latter was intended

AeA Api RRC OPULA AIRS MLSE AERA RN EE

xii

to fix the rates and charges for the common use

facilities.

Reversed.

(Endorsed:) Opinion. Filed Dee. 19, 1955.

Paul P. O’Brien, Clerk.

EXHIBIT “B”’

United States Court of Appeals

for the Ninth Circuit

Trans World Airlines, Inc., a corpora-

tion, Appellant,

VS.

City and County of San Francisco,

a municipal corporation, Philip S.

Landis, Sam McKee, Victor S.

Swanson, Edward B. Baron and

Donald A. Cameron, as members of > No. 14,523

the Public Utilities Commission of

the City and County of San Fran-

cisco, G. M. Dixon, as Manager and

Chief Engineer of the San Francisco

Airport, and J. M. Turner, Manager

of Utilities for the Public Utilities

Commission of the City and County

of San Francisco, Appellees.

JUDGMENT

Appeal from the United States District Court for

the Northern District of California, Southern Divi-

sion.

This cause came on to be heard on the Transcript

of the Record from the United States District Court

for the Northern District of California, and was duly

submitted.

xiv

On consideration whereof, It is now here ordered

and adjudged by this Court, that the Judgment of

the said District Court in this cause be, and hereby

is reversed, with costs in favor of the Appellant, and

against the Appellees.

It is Further Ordered and adjudged by this

Court, that the Appellant recover against the Ap-

pellees for its costs herein expended and have execu-

tion therefor.

(Endorsed) Judgment filed and Entered: December

19, 1955, Paul P. O’Brien, Clerk.

EXHIBIT “Cc”

In the United States District Court

For the Northern District of California,

Southern Division

Civil No. 30,326

Trans World Airlines, Inc., formerly |

known as Transcontinental & West-

ern Air, Inc., a Delaware corporation,

Plaintiff and Cross-Defendant,

vs. >

City and County of San Francisco, a

California municipal corporation, et

aL,

Defendants and Cross-Complainants. ;

Rocue, District Judge: Plaintiff is a corporation

which in the course of its business utilizes land and

facilities so that its airplanes may land, take off, and

be serviced and stored.

Defendant, represented by its Public Utilities Com-

mission, business operator of the San Francisco Air-

port, in 1942 entered into a 20 year lease agreement

with the plaintiff to furnish the land and facilities

8 used.

Twice during the life of this lease between the

parties litigant, the Public Utilities Commission of

the City regulated and prescribed rates which plain-

xvi

tiff and the other airlines were to pay for using the

airport.

The rates prescribed by the Public Utilities Com-

mission were higher than the rates fixed by the lease

of plaintiff and defendant. Plaintiff refused, and still

refuses to pay these higher rates, insisting that the

limits of its liability are the charges fixed by the

lease. Defendant has advised plaintiff that it must

pay under the schedule of rates and charges, and

that in default of such payments the airline will be

deprived of certain facilities at the airport. This

action for declaratory relief followed.

The City contends that the rates in the schedules

are enforceable only as they apply to landings, take-

offs, and other common use facilities; as to those

properties not used in common it is admitted that

the lease controls. The questions advanced may be

summarized as follows:

(1) Does the furnishing of common use facilities

at the airport to the airlines constitute a public util-

ity service?

(2) Does the Public Utilities Commission of the

City have rate-making jurisdiction over the airport!

(3) Does the law allow a public utility to depart

from the regular schedule of rates and charges by

contract ?

(4) Does the doctrine of commercial frustration

apply to the facts of this case?

[a en a a a a

1. Public Utility Function.

In the total design of the airport “‘common use fa-

cilities” are installed which are available in the oper-

ation of all aircraft. These are the runways, where

planes land and take off; the landing aprons or ramps

where passengers and cargo are taken on and dis-

charged; the taxi-ways which connect the runways

with the loading aprons or ramps; and other con-

veniences and facilities such as lights, signals, bea-

cons, control tower, etc., shared by all airline com-

panies utilizing the airport. The defendant main-

tains that the utilization of the enumerated areas and

facilities involves the provision of a public utility

service to the airlines as customers of this service.

Plaintiff counters with the proposition that the

public to be served by the airport is the general pub-

lie which uses it; that these people, and not the air-

lines, are the true customers of the airport’s facil-

ities. To support its argument plaintiff points out

that 3,250,000 members of the general public used

the airport last year, but that only 12 airlines are

parties to the contracts entered into for facilities.

However, the fact that only relatively few airlines

wwe the service does not control the question. The

tumber using the service may be few in number.

Camp Rincon Resort Co. v. Eshleman (1916) 172 Cal.

%1, 158 Pac. 186. Indeed, the fact that only one

customer uses the services rendered does not control

the question. Ford Hydro-Electric Co. v. Town of

Aurora (1932) 240 N. W. 418, 206 Wis. 316,

xviii

What does control then? The factor which as far

as the public is concerned which determines whether

an agency is a public utility, is whether all persons,

many or few, corporate or individual, who from the

nature of the service rendered are in a position to

require it, have a right to be supplied the service on

equal terms. Allen v. R. RB. Commission (1918) 179

Cal. 68, 175 Pac. 466. The limitations of place, re-

quirements, ability to pay and other facts determine

the customers that will use a particular service.

Terminal Taxicab Co. v. Kuntz (1916) 241 U. 8. 252,

60 L. Ed. 984.

Plaintiff cites the cases of Marin Water Co. v. Town

of Sausalito (1914) 168 Cal. 587, 143 Pac. 767, and

Del Mar Water Co. v. Eshleman (1914) 167 Cal. 666,

140 Pac. 591, as instances where the court found that

the contracting parties were not in a relationship of

public utility and customer. In the Marin Water

ease a water company contracted to supply a munic-

ipality with a bulk supply of water for 10 years. The

municipality in turn sold the water to its inhabitants.

The question raised was whether the water company

was functioning as a public utility in supplying the

City with water under this contract. This case is in-

applicable as it involves a sale in bulk of a commod-

ity from one utility to another. In the instant case

there is a continuing service rendered by one utility

to another, this latter utility being a member of the

general public served.

The Del Mar case is also distinguishable. The court

found in this case that the utility had not offered

——_- -f> 2 oo fee

xix

its water to the general public. The sale of water

to the 17 inhabitants of the town of Del Mar was

on a per barrel basis. It was like the private sale

of water by a farmer having a well ir. his backyard.

This case is limited to cases presenting similar facts.

The public function of a municipal airport is ree-

ognized in many cases, State ex rel. City of Lincoln

v. Johnson (1928) 117 Neb. 301, 220 N. W. 273; State

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

Price v. Storms, et al., Board of Trustees, Town of

Okewah (1942) 191 Okla. 410, 130 Pac. (2d) 523;

Jones v. Keck (1946) 74 Ohio App. 549, 74 N. E.

(2d) 644; 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. In the case of Toledo v. Jenkins, cited

supra, the court stated, ‘‘The statutory provisions

confer upon the municipal corporation power to own

or lease and operate landing fields and improve them

with runways, buildings or other structures, so as to

make them fully equipped aircraft and transporta-

tion terminals. As an airport of that character is a

public utility (State ex rel. Chandler v. Jackson, 121

Ohio St. 186, 167 N. E. 396), the Toledo Municipal

Airport was and is a complete public utility.”

The San Francisco Airport has been built with

public funds for the public use. It is the determina-

tion of this court that this use is twofold. On one

hand for the use of the air-traveling public, and on

the other, for the use of those individuals and corpo-

rations using the airport for their aircraft. Certainly

this latter group is more restricted than the former,

but this fact does not mitigate against the publie

utility function of the City as regards the common

use facilities. These facilities are offered to the air-

line companies as customers of the airport; they are

offered as a public utility service.

2. Rate-Fixing Power of the San Francisco Pub-

lic Utilities Commission Over the San Francisco

cisco Airport.

Section 121 of the charter of the City and County

of San Francisco gives the Public Utilities Commis-

sion jurisdiction over the airport, and provides in

part:

“The public utilities commission shall have charge

of the construction, management, supervision, mainte-

nance, extension, operation and control of all public

utilities and other properties used, owned, acquired,

leased or constructed by the city and county, includ-

ing airports, for the purposes of supplying any pub

lic utility service to the city and county and its inhab-

itants, to territory outside the limits of the city and

county, and to the inhabitants thereof.”’

The rate-fixing power of the Public Utilities Com-

mission is found in Section 130 of the charter, which

provides in part:

“The commission shall have the power to fix,

change and adjust rates, charges or fares for the fur-

nishing of service by any utility under its jurisdie-

tion, and to collect by appropriate means all amounts

due for said service, and to discontinue service to

xxi

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 different

classes of service or consumers. The commission 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.’’

No confusion should arise by reason of the coinci-

dence that the rate-fixing body in this case happens

to be the Public Utilities Commission, also having

jurisdiction over the utility itself. In entering the

lease the Public Utilities Commission was acting pro-

prietarily. In the exercise of its rate-fixing power

the commission is acting as a public rate-fixing body

even though it is engaged in a function as operator of

the utilities. Connett v. City of Jerseyville, 110 Fed.

(2d) 1013. In California a municipality has the power

to fix rates and charges of municipally owned util-

ities. Durant v. City of Beverly Hills (1940) 39 Cal.

App. (2d) 133, 102 Pac. (2d) 739; Jochimsen v. City

of Los Angeles (1921) 54 Cal. App. 715, 202 Pac.

92; Bowles v. City and County of San Francisco

(1946) 64 Fed. Supp. 609; City of Pasadena v. Rail-

road Commission (1920) 183 Cal. 526, 192 Pac. 25.

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. Yosemite, etc. v. State

Board of Equalization (1943) 59 Cal. App. (2d) 39.

Under Section 130 of the charter the Public Utilities

xxii

Commission is empowered to establish rates and

charges for the furnishing of utility services outside

the limits of the city and the rates to be charged

therefor. In order for the services of an airport to

be rendered outside the limits of a municipality it

necessarily follows that the airport be constructed

outside the boundaries of the municipality.

Plaintiff contends that the police power of the city,

including its rate-fixing power ceases at its borders,

and that only a proprietary power may be exercised

beyond its borders. South Pasadena v. Terminal Ry.

Co. (1895) 109 Cal. 319, 41 Pac. 1093; Incorporated

Town of Sibley v. Ocheydan Electric Co. (1922) 1%

Iowa 950, 187 N. W. 560; City of Colorado Springs

v. Colorado City (1908) 42 Colo. 75, 94 Pac. 316.

This is true except in those cases where the legisla-

ture has provided for the exercise of this power. The

charter of the city, approved by the legislature, spe

cifically provides for the exercise of this power, and

therefore the Public Utilities Commission has jurisdic-

tion to set the rates and charges for the common use

facilities at the airport.

3. Departure From the Prescribed Rates by Con-

tract.

It is this court’s decision that in affording the com-

mon use facilities at the airport to the airlines that

the City is engaged in a public utility function. Plain-

tiff contends that, notwithstanding this fact, the City

can by lease agreement fix with each individual air-

xxiii

line using the airport the charges for these facilities

and services for a definite term.

Plaintiff cites two Supreme Court cases, Home

Telephone Co. v. Los Angeles (1908) 211 U. 8. 265,

and Public Service Co. v. St. Cloud (1924) 265 U. S.

352, as instances where a public utility was held to

have entered into a binding contract for the furnish-

ing of a utility service at a fixed charge, Both cases

are distinguishable from the instant case.

The charges fixed by contract in both of these cases

were applicable not to any one consumer alone, but to

all members of the public served. In other words, any

member of the public utilizing the public utility serv-

ice offered had a right to be served at the same price

paid by those similarly situated. In the instant case

the lease agreement constitutes nothing more than a

contract between one consumer, and a public utility,

not for the purpose of establishing a uniform rate to

be charged all members of the public using the utility,

but rather to establish a preferential position for this

oe consumer for twenty years. A contract of this

type is entirely valid when executed, and is binding

in the absence of rate regulation by the Public Utili-

ties Commission acting on behalf of the public. Any

intention on the part of the parties to fix charges not

subject to regulation is inoperative as a matter of law.

The decisions next mentioned fully support the con-

dusion that, with reference to the common use facili-

ties, the general schedule applicable to all must as a

matter of law, be applied to this contract.

Xxiv

The case of Pinney d&: Boyle Co. v. Los Angeles Gas

Co. (1914) 168 Cal. 12, 141 Pac. 620, decided by the

Supreme Court of this state is in point. This was a

suit to enforce the terms of a contract entered into be-

tween plaintiff and defendant whereby the plaintiff

agreed to take for operation of its machinery, and

defendant to supply electricity for that purpose. De-

fendant was engaged as a public utility in the supply

of electricity to the inhabitants of the City of Los

Angeles. While this private contract between the par-

ties was in existence, the City of Los Angeles, through

its legislative body, regulated and prescribed the rates

which the defendant public service corporation was

permitted to charge consumers. Apparently, at the

time of the contract, the rate-fixing power had not

been exercised by the municipality.

The court held that the fixation of the rate thus

adopted controlled over the terms of the contract. The

court ruled that a contract of such nature must neces-

sarily yield to a subsequent exercise of the rate-fixing

power. This was on the ground that the parties are

deemed to have contracted with that result in view. A

holding, identical to that made in the ease which has

preceded appears in Law v. Railroad Commission

(1921) 184 Cal. 737, 195 Pac. 423.

Various other decisions of the Supreme Court of

California are in accord. Leavitt v. Lassen Irrigation

Co. (1909) 157 Cal. 82, 106 Pac. 404; Limoneira Co. ¥.

Railroad Commission (1917) 174 Cal. 232, 162 Paz.

1033.

ee ne, a aS

xxV

Decisions of the Supreme Court of the United

States are in accord. Midland Realty Co. v. Kansas

City Power and Light ‘Co., 300 U.S. 109, 81 L. Ed.

540, 57 S. Ct. 345; Union Drygoods Co. v. Georgia

Public Service Corp., 248 U. 8S. 372, 63 L. Ed. 309,

37 8. Ct. 117, 9 A.L.R. 1420. See also, Annotation 74

L. Ed. 234 reviewing both the California and Federal

eases on this subject.

Plaintiff contends that it would be unfair for this

court to declare the lease inoperative, and to hold it

subject to the prescribed rates and regulations of the

Publie Utilities Commission. The reason put forth is

that plaintiff would not have entered into a lease of

hangar space without having fixed with the City in

advance the charges as to the common use facilities.

This arguinent is without merit. If it were not a

manufacturer might well argue that he would not have

leased a factory for 20 years except for the fact that

he was able to fix by contract the price of his elec-

tricity and water for the same period. Clearly if a

contract had been entered into for these utility serv-

ices at a fixed rate, subsequent regulation by the

proper body, would affect the charges agreed upon.

The fact that the City is both the lessor of hangar

space and the provider of the common use facilities

does not change the holding in this case. The hangars

are constructed and leased so that the customers of

the City at the airport (the airlines) can better avail

themselves of the common facilities offered. This in

no way affects the holding that the airport, as far as

ann my eh alll a a alli lla

xxvi

the common use facilities are concerned, is offering

a public utility service, the rates for which can be set

by the Public Utilities Commission of San Francisco.

4. Commercial Frustration as a Defense.

The City as a distinct and separate defense contends

that the “‘doctrine of commercial frustration’’ should

apply in this case, thus enabling the City to avoid the

lease agreement with plaintiff.

It is evident from the testimony and documentary

evidence presented in this case that this defense is

without merit.

In accordance with the foregoing it is Ordered

1. That Trans World Airlines, Inc., account to

the defendants and cross-complainants in this action

as to the extent of its operations to and from San

Francisco Airport from and after December 31, 1950.

2. That judgment be entered herein in favor of

defendants, on findings of fact and conclusions of law,

and that the injunction pendente lite be denied.

3. That judgment in favor of cross-complainants

be entered herein in an amount to be determined

Counsel is directed to prepare findings of fact ané

conclusions of law in conformance with the opinion

Each party to pay its own costs.

FILED |

APR 1) 1956

APOLD 8. WILEY, Clerk

Inu the Supreme

OF THE

0. United States

ds Octoser Term, 1955

: No. 765

is Crry anp County or San Francisco, }

a municipal corporation, et al.,

Petitioners,

vs.

Trans Wortp Arr.inzs, Ixc.,

a corporation,

to Respondent. J

“4 BRIEF OF RESPONDENT, TRANS WORLD AIRLINES, INC.,

, IN OPPOSITION TO PETITION FOR A

of WRIT OF CERTIORARI.

iW,

Loyp Wricurt,

nts 1125 - 111 West Seventh Street,

ed. Los Angeles 14, California,

nd Evcene M. Prince,

on Francis R. KirkKHam,

Norx Dyer,

Standard Oil Building,

San Francisco 4, California,

Attorneys for Respondent.

PRENAU-WaLsi PRintING Co., Sax Francisco, CaLirorma

28a .

Table of Contents

Page

I TO aio basse: aac daiciwiktnds dees vce 1

OMENS Tes 5.5.3 ois 6805s i tee bewaddes coolewl 2

SE, MNO sn vodusetauacacercnbesiaous 2

Correction of Petitioners’ Statement of the Case

eR | | Ee rrnl eer cir wei 8

MUNI. docllner cam kcecedskntnnisieses aun, 12

A. There Is No Merit in the City’s Reasons for

Allowance of the Writ (Answering Petition for

SR I Rs ge 12

1. No conflict with state law.................. 12

2. No jurisdiction in Civil Aeronautics Board

to regulate airport charges for use of airport

MEE (occ ulevedectatuaheneadiisbadides 13

3. No conflict with decisions of the Supreme

SE -advwksdsbeacdedtagunsveasensidiaec. 15

4. No conflict between circuits................. 16

B. It Is Immaterial in the Case at Bar Whether or

Not the Airport Is a Public Utility ( Answering

Petition for Certiorari, pp. 9-12)............... 17

C. There Is No Legal Objection to Fixing Public

Utility Rates by Contract Where the Statute So

Authorizes (Answering Petition for Certiorari,

i SK keeuh ne Suses Vadbnbdacceatiweedack. 18

D. The 1942 Contract Was Not Subject to Change

by Rate Regulation (Answering Petition for Cer-

Cs I te bib 0k ba 56 ccvacnueetanles ci. 19

E. The Operation of the Airport Is Not a **Municipal

Affair’’ Outside the Scope of the General Laws

of the State (Answering Petition for Certiorari,

SR, Be Pirisccdtandskaavedstdancnabeeun coed. 20

F. The Validity of the Contract Does Not Depend on

Any Administrative Action to Be Taken by the

Civil Aeronautics Board (Answering Petition for

I, SI ED 683 od nn ed bred chb sce e eeu 21

ii TasLe or ConTENTS

Page

G. The State Public Utilities Commission Has No

Jurisdiction in This Matter (Answering Petition

for Certiorari, pp. 31-34).........--+.--e-eeees 21

Conclusion (Answering Petition for Certiorari, pp. 34-35)... 22

Table of Authorities Cited

Cases

B Pages

Barringer & Co. v. United States, 319 U.S. 1.............. 16

Bay Cities Transit Co. v. Los Angeles, 16 Cal.2d 772, 108

DE SEN Sebsbsbistardcesensbevneeds cbestubes ceskesees 5

City of Pasadena v. Railroad Commission, 183 Cal. 526, 192

Pt Mr Gilde thohtnntctiebpeeeebiddhsskaankacdusedenée 12

Civie Center Assn. v. Railroad Comm., 175 Cal. 441, 166

Pi istaddsnoskadssksatddodkans-0eskakdhe ceed tule 5

Coleman v. City of Oakland, 110 Cal.App. 715, 295 Pac. 59 7

Daniels, Ex Parte, 183 Cal. 636, 192 Pac. 442............. 5

Durant v. City of Beverly Hills, 39 Cal. App.2d 133, 102 P.

BU cndedddhudekscericsdddbascsebipecdeshbusadeh as 16

Ex Parte Daniels, 183 Cal. 636, 192 Pac. 442.............. 5

Federal Power Commission v. Sierra Pacific Power Company,

i i a eke Cec besuceskenaee 6 8

Femmer v. City of Juneau, 97 F.2d 649.................. 5

In the Matter of the Complaint of Various Air Carriers and

Foreign Air Carriers Serving Miami, Florida, Civil Aero-

nautics Board, Docket No. 7324, Order No. E-9911, Janu-

Sy Ee PE dawhed chueye rub vetlacedenalséveubecesws's 15

Limoneira Co. v. Railroad Commission, 174 Cal. 232, 162

Ed sscdad dévdedulsedecaciadeedtdsadhdvevethed 19

Live Oak W.U. Assn. v. Railroad Com., 192 Cal. 132, 219

DGC Ch ipasrh ke budipeetibesesenube bebeateecie 16

Los Angeles Ry. Corp. v. Los Angeles, 16 Cal.2d 779, 108

Say RE RR a a I Ea wy a ee 5

iv Taste or AuTHorities Crrep

M Pages

Marin Water ete. Co. v. Town of Sausalito, 168 Cal. 587,

Sk Seewrrrrrrrrr riyrrr irri iii 7

Pac. Tel. & Tel. Co. v. City of Los Angeles, 44 Cal.2d 272,

SER DOR GE, dc ndecncccotecetccpepncesgsestces so eetes 5, 20

Pasadena, City of, v. Railroad Commission, 183 Cal. 526

TE TE, nccccdcccdvcccecssctsncdactseseneresones 12

People v. Western Airlines, Inc., 42 Cal.2d 621, 268 P.2d 723 22

Pignet v. City of Santa Monica, 29 Cal.App.2d 286, 84 P.2d

Didi tacaddupewhetewiedas speeteeseremesfeucenewss 7

Pinney & Boyle Co. v. L. A. Gas ete. Corp., 168 Cal. 12, 141

i i Cie tevebbedbetatnveudvereenedpereeueriehs 20

Polk v. City of Los Angeles, 26 Cal.2d 519, 159 P.2d 931. . .13, 22

S.S.W., Inc. v. Air Transport Ass’n of America, 191 F.2d

OD ash beden pawe Neb cee abi perneaviessbeedscdeesos 16-17, 21

Siler v. Louisville & Nashville R.R. Co., 213 U.S. 175...... 15

Stark v. Wickard, 321 U.S. 288.........---eeeeceeeeeeens 15

Texarkana v. Arkansas Gas Co., 306 U.S. 188............. 19

Texas & Pacific Ry. Co. v. U.S., 289 U.S. 627..........-.. 16

United Gas Pipe Line Company v. Mobile Gas Service Cor-

poration, 24 U.S. Law Week 4090...........-.. 9, 15, 16, 18, 19

U.S. v. Wabash R. Co., 321 U.S. 403.....--. 2. ce eee eeeees 16

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

Vicksburg v. Vicksburg Waterworks Co., 206 U.S. 496...... 6

West Coast Adver. Co. v. San Francisco, 14 Cal.2d 516, 95

re Me. o. . ceudacntdhekbhectadeseadeesednG¥utes 5

Tasiz or AurHorities Crrep Vv

Constitutions and Statutes

Constitution of California: Pages

eM NE SEG dud vo 5s <b eb deo owed voceeenesdeine 13

A Ee dnwsaest fice 4kdc Wo sv nbiccukeace 4,13

Wee EMR RU ca ssh adccssciviersnedeneedccc ca, 13, 20

TRUS ce ci bseeeduercscekeone cee eedscs 13

ce sincnto ie acd d ithe sede ech ede rk 21

Cal.Stats. 1927, p. 485 (Municipal and County Airport Law) 4

Cal. Stats. 1931, ¢. 56, see. 121, p. 2973 (Charter of the City

and County of San Francisco)..................-.0---. 8

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Civil Aeronautics Act (52 Stat. 993) :

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Federal Airport Act (60 Stat. 170) :

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Miscellaneous

Iu the Supreme Court

OF THE

Rnited States

Octoser Term, 1955

No. 765

Crry anp County or San Francisco,

a municipal corporation, et al.,

Petitioners,

vs. .

Trans Worvp Arruinzs, Inc.,

a corporation,

Respondent.

BRIEF FOR RESPONDENT IN OPPOSITION.

OPINIONS BELOW.

The opinion of the Court of Appeals (R. 727) is re-

ported at 228 F.2d 473. The opinion of the District

Court (R. 167) is reported at 119 F.Supp. 516. Each is

reprinted in the appendix to the petition for a writ of

certiorari.

IL.

STATUTES INVOLVED.

The pertinent parts of the statutes involved are printed

in the appendix to this brief.

—_—

Ii.

PRELIMINARY STATEMENT.

Petitioner, the City and County of San Francisco, as

operator of the San Francisco International Airport,

made a contract granting the respondent airline the right

to use the facilities of the airport and providing the

charges for such use (R. 16, 20-21). This contract was

made in 1942 for a 20-year term (R. 14, 16). Thereafter

in 1951 the City claimed that the contract charges (R. 20-

21) were superseded by its own unilateral action under

an alleged power of public utility rate making (R. 55) as

to the runways, navigation aids, passenger and baggage

areas, and other facilities used by other airlines as well

as by TWA (‘‘common use facilities’). Respondent sued

for declaratory relief. The Court of Appeals, reversing

the judgment of the District Court (R. 167) held the con-

tract valid (R. 727).

The petition for certiorari is inaccurate, both in its

statement of the case and of the questions involved. As

will appear, there is no conflict of decision between cir-

enits, nor any conflict between the decision of the Court

of Appeals and California law. Contrary to assertions of

the petition, the case involves no question of public

importance. The only federal question discussed in the

petition (p. 7) is unsubstantial on the face of the statutes

cited. It was raised for the first time by the City’s peti-

tion for rehearing in the Court of Appeals, a petition

which that court denied without opinion.

The case involves no question concerning legislative

power. What Congress or the California Legislature

might constitutionally do in regulating charges by air-

ports to airlines for the use of airport facilities is not

before the Court. No such regulation has been undertaken

by federal authority, and the state statute expressly au-

thorizes the present contract.

The Civil Aeronautics Act, first referred to in the City’s

petition for rehearing in the Court of Appeals, gives the

Civil Aeronautics Board the power to regulate air carriers

and the rates of air carriers (June 23, 1938, secs. 404,

1002, 52 Stat. 993, 1018; 49 U.S.C. 484, 642(d); Appendix,

this brief, p. v.) It does not provide for regulating air-

ports or the charges of airports, or for any filing by

airports of tariffs or rate schedules.

The Federal Airport Act (May 13, 1946, 60 Stat. 170,

49 U.S.C. 1101), one section of which (49 U.S.C. 1110) is

cited in the petition for certiorari (pp. 13, 30), is not

a statute regulating airports, but authorizes Federal

monetary and other aid for airport development and con-

struction. It was not mentioned below until the petition

for rehearing.

The case turns solely upon questions of California law.

The state statute gives municipalities, in the words of

the Court of Appeals, ‘‘plenary authority to lease and

contract’’ concerning the use of the facilities of municipal

‘2

airports and the charges therefor (Appendix, Petition for

Certiorari, p. iv).!. The City has never disputed that the

statute grants contracting authority. The City’s point is

that the statute does not apply to cities with freeholders’

charters—though the statute says it does*—because opera-

tion of the airport is a ‘‘municipal affair’’ (see Petition

for Certiorari, pp. 19 et seq.).

As pointed out by the Court of Appeals in overruling

the City’s contention, the term ‘‘municipal affair’’ is a

technical one, governed by California law. Under section

8(j) of Article XI of the California Constitution (Ap-

pendix, this brief, p. i), the term marks a line between

matters subject exclusively to municipal control and those

governed by general state laws. A city with a free-

holders’ charter is bound by general state law except

as to ‘‘municipal affairs’’; i.e., under the California cases

construing the state Constitution, matters of strictly local

interest. The operation of an international airport is not

a matter of strictly local interest and is subject, therefore,

to the general laws of the state. As the Court of Appeals

said (Appendix, Petition for Certiorari, p. Vv):

on 448

to San Francisco, the only city and county in the state. The

statute makes general reference to airport facilities, but it also

mentions ‘‘all places for flying take-off and landing of aircraft

¢ © © signal lights, radio equipment *¢ © © and other air naviga-

tion facilities’’—in the idiom of the case at bar, ‘‘common use

facilities.” See Appendix, this brief, p. ii.

‘*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 in-

terest. Any doubt is to be resolved in favor of state

regulatory power. [Citing California decisions*).

> * > ” *

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 a

part of a global system of air transportation.’’

’Among the decisions cited are: Pacific Tel. & Tel. Co. v. City

of Los Angeles (1955) 44 Cal.2d 272, 282 P.2d 36, holding that

the right to conduct a telephone business in Los Angeles is not

a municipal affair; Los Angeles Ry. Corp. v. Los Angeles (1940)

16 Cal.2d 779, 783-785, 108 P.2d 430, holding that the city has no

right to require two-men crews on car lines serving both the city

and the outlying areas; Bay Cities Transit Co. v. Los Angeles

(1940) 16 Cal.2d 772, 777, 108 P.2d 435, holding that the city

has no right to divert busses from the Venice freeway; Civic

Center Assn. v. Railroad Comm, (1917) 175 Cal. 441, 450-451,

166 Pac. 351, holding that the state commission has the right, and

the city no right, to compel railroads to establish a union depot

in Los Angeles.

See alse Pacific Tel. & Tel. Co. v. City of Los Angeles (1955)

44 Cal.2d 272, 282 P.2d 36; Ex Parte Daniels (1920) 183 Cal.

636, 192 Pac. 442, holding that ‘‘if there is a doubt as to whether

or not such regulation is a municipal affair, that doubt must be

resolved in favor of the legislative authority of the state’’ (183

Cal. 639).

If the operation of the airport were a ‘‘municipal affair’’—

which it is not—the City would still have had charter authority

to make the contract in suit because a freeholders’ charter gives

the city all powers over municipal affairs which are not expressly

withheld (West Coast Adver. Co. v. San Francisco (1939) 14 Cal.

2d 516, 95 P.2d 138). Contracting authority is also implicit in

the City’s statutory and charter power to manage the airport

(see Appendix, this brief, pp. iii, iv; Femmer v. City of Juneau

(9 Cir. 1938) 97 F.2d 649, 652).

The existence of express statutory authority for the

contract in suit makes applicable a legal principle ‘*too

frequently declared to admit of doubt,’’* which is com-

pletely decisive of the case. Where a municipal corpora-

tion has statutory authority to deal with a given situation

either by contract or as a matter of utility rate regula-

tion, then if it elects to proceed by contract it is bound

by the contract for the full term, and cannot unilaterally

alter the contract under regulatory powers. The Court

of Appeals held that the present case, involving a contract

for a nonexclusive use by a public service corporation of

a municipally owned facility, is typically within this rule.

The court cited many supporting authorities, including

decisions of this Court (Appendix, Petition for Certiorari,

pp. viii-ix).°

‘Vicksburg v. Vicksburg Waterworks Co. (1907) 206 US. 496,

508, quoted by the Court of Appeals (Appendix, Petition for

Certiorari, p. ix).

5The Court of Appeals said (Appendix, Petition for Certiorari,

pp. viii-ix) :

‘““The City has bound itself as to rates and charges for the

common use facilities by entering into a valid contract ex-

pressly authorized by state law. Even so, argues the City,

the rate schedule of the contract was superseded by subse-

quent regulation by the Public Utilities Commission. In dis-

cussing this contention we assume arguendo that the Public

Utilities Commission’s regulatory jurisdiction extends to the

airport.

The City had authority under this assumption to proceed

by contract or by regulation. It elected to proceed by con-

tract. 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 AmJur., §88:

‘It has been held in numerous cases, however, that a state

legislature unless prohibited by constitutional provision may

authorize a municipal corporation to establish by an inviolable

contract the rates to be charged by a public utility for 4

reasonable term of years, the effect of which is to suspend,

eS ee | aie a See ee

‘.

Since the rule applies where a municipality has coezist-

ing contracting and regulatory authority, and elects, as

did the City here, to proceed by contract, it follows that

the contract in suit is valid whether or not the airport

or some segment of it is a public utility. It is valid

regardless of whether the City has, or had in 1942, regu-

latory power over charges to the airlines for the use of

airport facilities. Such questions are simply immaterial

in the case at bar. The Court of Appeals assumed ‘‘argu-

endo’’ that the City has regulatory power over the airport

(Appendix, Petition for Certiorari, p. viii).

Since the belatedly raised federal question is unsub-

stantial, and since the California statute expressly au-

thorized the City to make this contract, the principle

applied by the Court of Appeals requires the decision

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 Public Service Co. v.

St. Cloud, 265 U.S. 352, Vicksburg v. Vicksburg Waterworks

Co., 206 U.S. 496, and Femmer vy. City of Juneau, 9 Cir.

1938, 97 F.2d 649. In the Vicksburg case 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 US.

1-7, New Orleans Waterworks Co. v. Rivers, 167 U.S. 674,

Freeport Water Co. v. Freeport, 180 U.S. 587-593.’

In the instant case the statutory authority conferring the

power to contract was more express than that found sufficient

in the cases above noted.’’

California municipalities operate municipal airports in their

proprietary capacity (Pignet v. City of Santa Monica (1938) 29

Cal.App.2d 286, 287, 84 P.2d 166; Coleman v. City of Oakland

(1930) 110 Cal.App. 715, 719-720, 295 Pae. 59: Marin Water etc.

Co. v. Town of Sausalito (1914) 168 Cal. 587, 594-595, 143 Pae.

767).

which that court made and would, we submit, permit no

other. We will, nevertheless, comment on each point

made by the petition, starting with its statement of the

case, which is inadequate to the point of misleading.

IV.

CORRECTION OF PETITIONERS’ STATEMENT OF

THE CASE (Petition, pp. 3-7).

The instrument by which the City claims that the 1942

contract was superseded as to charges for the common use

facilities is a ‘‘schedule”’ of the municipal Publie Utilities

Commission effective January 1, 1951 (R. 55). Actually

this schedule does not purport to affect the contract; its

opening paragraph, to which no reference is made in the

petition for certiorari, is as follows (R. 55):

‘Section 1. General Provisions: Except as other-

wise provided, or amended by agreement, the Public

Utilities Commission hereby adopts the following

rates and charges for the use of the facilities and

services of the San Francisco Airport.’”

The petition for certiorari creates throughout the mis-

impression that the municipal Public Utilities Commission

is a purely regulatory body. Actually it has broad powers

of management over the airport (Charter, sec. 121, quoted

Appendix, this brief, p. iv); it is a managerial as well

Even apart from the express exception in the schedule, the

City could not affect the contract merely by its own unilateral

action in filing a new ‘‘schedule of rates.’’ See Federal Power

Commission v. Sierra Pacific Power Company (Feb. 27, 1956' 24

US. Law Week 4094, 4095, and Wichita R.R. v. Pub. Util.

Comm. (1922) 260 U.S. 48, 58.

NT ORB: "La ‘ apnea

as a regulatory body. The Commission and its representa-

tive, the airport manager, negotiated the present con-

tract (R. 309), and treated it for eight years as a contract.

None of the facts in this regard appear from the petition

for certiorari. Briefly they are:

When the agreement was made in 1942 the airport had

only two scheduled air carriers, TWA and United Airlines

(R. 277, 308). The Airport Manager testified that com-

petition with other airports to obtain permanent airline

service was a factor inducing the City to make the agree-

ment (R. 315, 317-318).7

The Airport Manager, after negotiations with TWA,

made a draft of agreement (R. 310); the City Attorney’s

office worked it into final form (R. 310); it was then

approved by the City Attorney, by the Manager of Util-

ities and by the Director of Properties (R. 36); recom-

mended by the Public Utilities Commission (R. 39), and

executed by the Mayor after public advertisement and

upon unanimous authorization by the Board of Super-

visors (R. 36-41). Three supplementary agreements were

*The following language of this court in United Gas Pipe Line

Company v. Mobile Gas Service Corporation (Feb. 27, 1956) 24

U.S. Law Week 4090, has some pertinence here (p. 4093) :

“‘Our conclusion that the Natural Gas Act does not em-

power natural gas companies unilaterally to change their

contracts fully promotes the purposes of the Act. By pre-

serving the integrity of contracts, it permits the stability of

supply arrangements which all agree is essential to the health

of the natural gas industry. Conversion by consumers, par-

ticularly industrial users, to the use of natural gas may

frequently require substantial investments which the con-

sumer would be unwilling to make without long-term commit-

ments from the distributor, and the distributor ean hardly

make such commitments if its supply contracts are subject

to unilateral change by the natural gas company whenever

its interests so dictate.’’

me tomy One:

made in 1946, 1947, and 1948 (R. 41-43, 45-52). None

referred to ‘‘rate schedules’’ and all expressly confirmed

the original agreement; illustrative is the supplement of

June 2, 1948 (R. 54).

In 1946 the Public Utilities Commission made a new

‘*schedule of rates and charges’’ (City’s Exh. B, an orig-

inal exhibit (R. 721)). Like the later schedule of 1951

it applied ‘‘except as otherwise provided, or amended by

agreement.’’ The petition for certiorari mentions the 1946

schedule (p. 5) but not the exception therein, nor the fact

that although the scheduled charges were higher, the City

continued to bill TWA at contract rates (R. 248, 254).

In December 1947, the City made an agrecinent with

United Air Lines of a general nature similar to the agree-

ment with TWA (R. 393), again electing to proceed by

contract rather than by its supposed power of rate regu-

lation.

At pages 4-5 the petition quotes part of section 3 of the

contract, arguing that, as a matter of contract, the charges

therein set forth would vary in accordance with future

‘‘schedules’’ adopted by the Commission. This point

simply involves construction of the contract and is not

assigned as a reason for granting the writ. The Court

of Appeals rejected the argument, holding that the con-

tract phrase ‘‘use, in common with others authorized so

to do and on the same terms and conditions as apply to

others,’’ refers to use and not to rates of charge (Ap-

pendix, Petition for Certiorari, p. xi). The Court pointed

out that the contract sets forth the charges explicitly

(R. 20-21); it sets them up as contractual items without

reference to any ‘‘schedule,’’ existing or future (R. 20-

F ye ame aed AAT men Ce Ry RT ey « 4 . y aa

21); the charges were fixed by negotiation (R. 285, 309) ;

section 13 prohibits charges or fees ‘‘Except as otherwise

expressly provided for in this lease and agreement’’

(R. 28).

The petition refers to the large sums spent for airport

improvements since the making of the 1942 contract, but

does not relate these statements to any legal issue. The

contract, obviously contemplating the probability of such

improvements, provided for escalation of contract charges

in several particulars, including escalation for increase in

size of planes (R. 21, 324).

The petition by its insistence that ‘‘the airport” is a

public utility tends to create the impression that the City

regulates the ‘‘rates’’ to be paid by all enterprises using

airport facilities, with TWA as a lonely exception. Actu-

ally the City claims rate-making power only as to one

segment of airport operation, i.e., the use of certain facil-

ities by the airlines and various matters relating to deliv-

ery of petroleum products for aircraft use (R. 68-72). It

disclaims rate-fixing power as to almost all enterprises

using the airport, regardless of whether they use its

facilities ‘‘in common.’’ There is no fixing of ‘utility

rates’’ to be paid by bus lines or other transportation

companies, by public utilities serving the airport, or by

parking lots, renters of office and administration space, or

by concessions and services of all sorts and kinds (R. 384-

390). Regulatory authority is disclaimed as to many

facilties used by the airlines; thus the contract in suit

is admittedly binding (R. 390) in its provisions concern-

ing hangar space, parking space for aircraft, shop and

repair facilities, and office and administrative quarters

(R. 15-18).

The above facts show, contrary to the implications of

the petition, that even the City’s claims for regulatory

authority at the airport are very limited, and that con-

tractual arrangements under the City’s proprietary

powers of management are the rule, not the exception, in

providing for the use of airport facilities.

ARGUMENT.

A. THERE IS NO MERIT IN THE CITY'S REASONS FOR ALLOW-

ANCE OF THE WRIT

(Answering Petition for Certiorari, pp. 7-8).

1. No conflict with state law. :

The alleged conflict relates to the ruling of the Court

of Appeals that operation of the airport is not a ‘‘munici-

pal affair’ and consequently is subject to the general

laws of the state which gave specific authority for the

contract in suit.

The City argues this point at pages 19-27 of the peti-

tion for certiorari, and the gist of its argument is this

sentence (p. 22):

‘‘If municipally owned water, light, heat and power

systems are ‘municipal affairs,’ it necessarily fol-

lows that a municipally owned airport is a ‘mu-

nicipal affair.’ ”’

The cases, including City of Pasadena v. Railr_ad

Commission (1928) 183 Cal. 526, 192 Pac. 95, cited in the

petition for certiorari (p. 22) to show that a city water-

works is a ‘‘municipal affair,’’ were not decided under

elt

the municipal affair provisions of the California Consti-

tution (Article XI, sees. 6, 8(j), Appendix, this brief, p. i).

They do not hold that the operation even of a municipal

waterworks is beyond the operation of general state laws.

Their point is that under another provision of the Cali-

fornia Constitution, section 19 of Article XI, munici-

palities can operate certain public works and that section

22 of Article XII gives the state Public Utilities Com-

mission no jurisdiction over them. Polk v. City of Los

Angeles (1945) 26 Cal.2d 519, 539, 159 P.2d 931, quoted in

the petition (p. 23) is one of the California cases explicit

on this point.

Further, while a municipal waterworks or bus line

might be of purely local interest and hence a ‘‘municipal

affair,’’ such reasoning could not be applied to an inter-

national airport. This is shown by the California cases

cited by the Court of Appeals (Appendix, Petition for

Certiorari, pp. v-vii, and supra 5), concerning which

the court said (Appendix, Petition for Certiorari, p. vi) :

**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.’’

2. No jurisdiction in Civil Aeronautics Board to regulate air-

port charges for use of airport facilities.

Here the decision of the Court of Appeals is said to

raise ‘‘the question of whether the Civil Aeronautics

Board has jurisdiction to regulate rates and charges for

common use facilities at airports serving interstate air

carriers.” The opinion of the Court of Appeals does

not discuss such a question because the City first raised

it by petition for rehearing.

The Civil Aeronautics Act answers the City’s ques-

tion in the negative. A quick panoramic view of the

statute can be had by looking at the outline of subchap-

ters and headings in the United States Code (49 U.S.C.A.

401 et seq.). Subchapter 4 deals with ‘‘ Air Carrier Eco-

nomic Regulation.’”” The statute gives the Civil Aero-

nautics Board authority to regulate interstate and inter-

national air carriers, and as to rates, gives authority to

regulate the rates of such carriers (see 49 U.S.C. 482,

484; see also 642(d) quoted in the appendix to this

brief, pp. vi-vii).

In the report of the Senate Committee on Commerce

preceding the enactment of the Civil Aeronautics Act,

the Committee said:

‘‘The bill provides for the usual system of eco-

nomic regulation of air-transportation companies and

applies to all air carriers, who operate as common

carriers or who transport mail by air. The legislation

is adapted to the special characteristics of transpor-

tatic by air and is, at present, carried no further

than is necessary in the interests of the public and

of civil aeronautics’ (S. Rept. 1661, 75th Cong., 3d

Sess., Apr. 20, 1938).

Section 401 of the statute giving definitions includes

the following (49 U.S.C. 401(10)):

‘¢* Air transportation’ means interstate, overseas,

or foreign air transportation or the transportation

of mail by aircraft.’’

The statute does not provide for regulating charges by

airports for the use of airport facilities.* It may be noted

in this regard that a complaint case before the Civil Aero-

nautics Board was recently brought by several airlines,

who alleged illegality in sliding scale landing charges

made by the Miami International Airport. The Board

dismissed the complaint as outside its jurisdiction (In

the Matter of the Complaint of Various Air Carriers

and Foreign Air Carriers Serving Miami, Florida, Civil

Aeronautics Board, Docket No. 7324, Order No. E-9911,

January 12, 1956).

3. No conflict with decisions of the Supreme Court.

The decision below is said to permit ‘‘discrimination”’

contrary to decisions of the Supreme Court, presumably

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

169, and other cases cited later in the petition (pp. 15-16).

All these cases involved carrier-shipper relations, which

the case at bar does not. All but one were under the

Interstate Commerce Act. Decisions under that Act, how-

ever, are not controlling under statutes with different

provisions (United Gas Pipe Line Company v. Mobile

Gas Service Corporation (Feb. 27, 1956) 24 U.S. Law

Week 4090, 4091, involving the Natural Gas Act).®

‘Regulatory authority, of course, cannot be implied but must

rest upon some explicit provision in the statute (Stark v. Wickard

(1944) 321 U.S. 288; Siler v. Louisville & Nashville R. R. Co.

(1909) 213 U.S. 175, 194).

**In this respect [permitting rates to be established ini-

tially by contract], the Act is in marked contrast to the

Interstate Commerce Act, which in effect precludes: private

rate agreements by its requirement that the rates to all

shippers be uniform, a requirement which made unnecessary

any provision for filing contracts. See Armour Packing Co,

There is no pleading, no evidence, and no finding of

discrimination in the case at bar. The record shows only

that the rates in the 1942 contract are lower than those

in the 1951 ‘‘schedule’”’ of the City. But difference and

discrimination are not synonymous terms.'® A contract

authorized by law is not an illegal ‘‘discrimination”’.

The very existence of statutory contracting authority

contemplates that the terms of contracts may differ ;

otherwise the grant of authority is meaningless (see

United Gas Pipe Line Company v. Mobile Gas Service

Corporation, quoted below, n. 9).

4. No conflict between circuits.

This alleged conflict is with S. S. W., Inc. v. Air Trans-

port Ass’n of America (D.C.Cir. 1951) 191 F.2d 658 (Pe-

tition for Certiorari, p. 28). In that case a **non-sched-

uled”’ interstate air carrier brought suit under the anti-

trust laws against certificated carriers and their trade

association, alleging conspiracy to monopolize air-borne

v. United States, 209 U.S. 56. The Commission in its brief

recognizes this basic difference between the two Acts and

notes the differing natures of the industries which gave rise

to it. The vast number of retail transactions of railroads

made policing of individual transactions administratively im-

possible; effective regulation could be accomplished only by

requiring compliance with a single schedule of rates appli-

cable to all shippers. On the other hand, only a relatively

few wholesale transactions are regulated by the Natural Gas

Act and these typically require substantial investment in

capacity and facilities for the service of a particular dis-

tributor.”’

The petition for certiorari points out that twelve scheduled

airlines now use the San Franciseo Airport (p. 3).

101.8. v. Wabash R. Co. (1944) 321 U.S. 403, 411; Barringer &

Co. v. United States (1942) 319 US. 1, 7; Texas & Pacific Ry.

Co. v. U.S. (1933) 289 U.S. 627; Live Oak W. U. Assn. v. Rail-

road Com. (1923) 192 Cal. 132, 219 Pac. 65; Durant v. City of

Beverly Hills (1940) 39 Cal.App.2d 133, 102 P.2d 759.

commerce by various illegal practices (191 F.2d 660).

The court held that the same act by an air carrier might

violate the antitrust laws and also the Civil Aeronautics

Act; however, that there would be no antitrust violation

in a practice of air carriers which the Civil Aeronautics

Board, acting within its jurisdiction, found to be legal

under the Civil Aeronautics Act (191 F.2d 664); hence

that there was an administrative remedy to exhaust, and

that the antitrust suit should be stayed pending the

Board’s determination as to the validity under the Civil

Aeronautics Act of the practices charged (191 F.2d 664).

The above case, we submit, is so remote from the case

at bar as to have no bearing on it. The City argues

that TWA was under obligation to get the 1942 contract

approved by the Civil Aeronautics Board (Petition for

Certiorari, pp. 28-29). The statute contains no such re-

quirement. The City cites section 412 (49 U.S.C. 492),

but that section by its terms is not applicable. It re-

lates to pooling and other agreements ‘‘between such

air carrier, foreign air carrier, or other carrier.”

B. IT IS IMMATERIAL IN THE CASE AT BAR WHETHER OR

NOT THE AIRPORT IS A PUBLIC UTILITY

(Answering Petition for Certiorari, pp. 9-12).

As held by the Court of Appeals the statutory au-

thority of the City to make the contract in suit establishes

its validity regardless of coexisting authority in the City

(if such there was) to deal with the subject matter by

rate regulation. Whether the airport is a public utility

and what rate regulatory authority the City has there

are not material questions in the case at bar (supra 7).

a —,

For the same reason the City’s citations at page 10 of

the petition for certiorari are immaterial. It may be

added, however, that the cases do not hold that a mu-

nicipal airport is necessarily a public utility (as the City

says), but rather that it is a public enterprise justifying

‘‘the expenditure of municipal funds, the use of the tax

power, the use of public properties or the use of con-

demnation proceedings’’ (Opinion, Court of Appeals, Ap-

pendix, Petition for Certiorari, p. vii, discussing the

same cases now cited).

0. THERE IS NO LEGAL OBJECTION TO FIXING PUBLIC UTIL

ITY RATES BY CONTRACT WHERE THE STATUTE SO AU-

THORIZES

(Answering Petition for Certiorari, pp. 13-16).

Contrary to the City’s argument here made, public

utility rates can be fixed by contract if the statute so au-

thorizes (United Gas Pipe Line Company v. Mobile Gas

Service Corporation (Feb. 27, 1956) 24 U.S. Law Week

4090, 4091, and many cases cited by the Court of Appeals;