author: Mr. Justice Fortas Mr. Justice Black,

text:
    NORFOLK & WESTERN RAILWAY CO. et al. v. MISSOURI STATE TAX COMMISSION et al.
    No. 324.
    Argued January 25, 1968.
    Decided March 11, 1968.

      William H. Allen argued the cause for appellants. With him on the briefs were Charles L. Bacon, Frederick Beihl, James E. Carr, Melvin J. Strouse and Christopher S. Bond.

      William A. Peterson, Assistant Attorney General of Missouri, argued the cause for appellees. With him on the brief were Norman H. Anderson, Attorney General, Thomas J. Downey, First Assistant Attorney General, and Walter W. Nowotny, Jr., Assistant Attorney General.
   Mr. Justice Fortas

delivered the opinion of the Court.

This case brings before us, once again, troublesome problems arising from state taxation of an interstate commercial enterprise. At issue is a tax assessment pursuant to a Missouri statute specifying the manner in which railroad rolling stock is to be assessed for the State’s ad valorem tax on that property.

In 1964 the Norfolk & Western Railway Co. (N & W), a Virginia corporation with interstate rail operations, leased all of the property of appellant Wabash Railroad Company. The Wabash owned substantial fixed property and rolling stock, and did substantial business in Missouri as well as in other States. Prior to the lease, N & W owned no fixed property and only a minimal amount of rolling stock in Missouri. N & W is primarily a coal-carrying railroad. Much of its equipment and all of its specialized coal-carrying equipment are generally located in the coal regions of Virginia, West Virginia, and Kentucky, and along the coal-ferrying routes from those regions to the eastern seaboard and the Great Lakes. Scarcely any of the specialized equipment ever enters Missouri. According to appellants, the Wabash property in Missouri was leased by N & W in order to diversify its business, not to provide the opportunity for an integrated through movement of traffic.

By the terms of the lease, the N & W became obligated to pay the 1965 taxes on the property of the Wabash in Missouri and elsewhere. Upon receiving notice of the 1965 assessment from the appellee Missouri Tax Commission, the N & W filed a request for an adjustment and hearing before the Commission. The hearing was held, and the Commission sustained its assessment against the taxpayer’s challenge. On judicial review, the Commission’s decision was affirmed without opinion by the Circuit Court of Cole County, and then by the Supreme Court of Missouri. Appellants filed an appeal in this Court, contending that the assessment in effect reached property not located in Missouri and thus violated the Due Process Clause and the Commerce Clause of the United States Constitution. We noted probable jurisdiction. 389 U. S. 810 (1967).

I.

The Missouri property taxable to the N & W was assessed by the State Tax Commission at $31,298,939. Of this sum, $12,177,597 relates to fixed property within the State, an assessment that is not challenged by appellants. Their attack is aimed only at that portion of the assessment relating to rolling stock, $19,981,757.

With respect to the assessment of rolling stock, the Commission used the familiar mileage formula authorized by the Missouri statute. In relevant part, this provides (§ 151.060 subd. 3):

“. . . when any railroad shall extend beyond the limits of this state and into another state in which a tax is levied and paid on the rolling stock of such road, then the said commission shall assess, equalize and adjust only such proportion of the total value of all the rolling stock of such railroad company as the number of miles of such road in this state bears to the total length of the road as owned or controlled by such company.”

The Commission arrived at the assessment of rolling stock by first determining the value of all rolling stock, regardless of where located, owned or leased by the N & W as of the tax day, January 1, 1965. Value was ascertained by totaling the original cost, less accrued depreciation at 5% a year up to 75% of cost, of each locomotive, car, and other piece of mobile equipment. To the total value, $513,309,877, was applied an “equalizing factor” of 47%, employed in assessing all railroad property in an attempt to bring such assessments down to the level of other property assessments in Missouri. The Commission next found that 8.2824% of all the main and branch line road (excluding secondary and side tracks) owned, leased, or controlled by the N & W was situated in Missouri. This percentage was applied to the equalized value of all N & W rolling stock, and the resulting figure was $19,981,757.

There is no suggestion in this case that the Commission failed to follow the literal command of the statute. The problem arises because of appellants’ contention that, in mechanically applying the statutory formula, the Commission here arrived at an unconscionable and unconstitutional result. It is their submission that the assessment was so far out of line with the actual facts of record with respect to the value of taxable rolling stock in the State as to amount to an unconstitutional attempt to exercise state taxing power on out-of-state property.

Appellants submitted evidence based upon an inventory of all N & W rolling stock that was actually in Missouri on tax day. The equalized value of this rolling stock, calculated on the same cost-less-depreciation basis employed by the Commission, was approximately $7,600,000, as compared with the assessed value of $19,981,000. Appellants also submitted evidence to show that the tax-day inventory was not unusual. The evidence showed that, both before and in the months immediately after the Wabash lease, the equalized value of the N & W rolling stock actually in Missouri never ranged far above the $7,600,000 figure. In the preceding year, 1964, the rolling stock assessment against the Wabash was only $9,177,683, and appellants demonstrated that neither the amount of rolling stock in Missouri nor the Missouri operations of the N & W and Wabash had materially increased in the intervening period. The assessment of the fixed properties (for which no mileage formula was applied) hardly increased between 1964 and 1965. In 1964, prior to the lease, the fixed properties in Missouri were assessed at $12,092,594; in 1965, after the lease, the assessment was $12,177,597.

The Supreme Court of Missouri concluded that the result reached by the Commission was justifiable. It pointed out that the statutory method used by the Commission proceeds on the assumption that “rolling stock is substantially evenly divided throughout the railroad’s entire system, and the percentage of all units which are located in Missouri at any given time, or for any given period of time, will be substantially the same as the percentage of all the miles of road of the railroad located in Missouri.” It then held that the evaluation found by the Commission could be justified on the theory of “enhancement,” although the Commission had not referred to that principle. The court described the theory as follows:

“The theory underlying such method of assessment is that rolling stock regularly employed in one state has an enhanced or augmented value when it is connected to, and because of its connection with, an integrated operational whole and may, therefore, be taxed according to its value ‘as part of the system, although the other parts be outside the State; — in other words, the tax may be made to cover the enhanced value which comes to the property in the State through its organic relation to the system.’ Pullman Co. v. Richardson, 261 U. S. 330, 338.”

The court correctly noted, however, that “even if the validity of such methods be conceded, the results, to be valid, must be free of excessiveness and discrimination.” It concluded that in the present case, the result reached by the Commission was justifiable. We disagree. In our opinion, the assessment violates the Due Process and Commerce Clauses of the Constitution.

II.

Established principles are not lacking in this much discussed area of the law. It is of course settled that a State may impose a property tax upon its fair share of an interstate transportation enterprise. Marye v. Baltimore & Ohio R. Co., 127 U. S. 117, 123-124 (1888) ; Pullman’s Palace Car Co. v. Pennsylvania, 141 U. S. 18 (1891); Ott v. Mississippi Valley Barge Line Co., 336 U. S. 169 (1949); Braniff Airways, Inc. v. Nebraska State Board of Equalization and Assessment, 347 U. S. 590 (1954). That fair share may be regarded as the value, appropriately ascertained, of tangible assets permanently or habitually employed in the taxing State, including a portion of the intangible, or “going-concern,” value of the enterprise. Railway Express Agency v. Virginia, 347 U. S. 359, 364 (1954); Cudahy Packing Co. v. Minnesota, 246 U. S. 450, 455 (1918); Adams Express Co. v. Ohio State Auditor, 166 U. S. 185, 218-225 (1897). The value may be ascertained by reference to the total system of which the intrastate assets are a part. As the Court has stated the rule, “the tax may be made to cover the enhanced value which comes to the [tangible] property in the State through its organic relation to the [interstate] system.” Pullman Co. v. Richardson, 261 U. S. 330, 338 (1923). Going-concern value, of course, is an elusive concept not susceptible of exact measurement. Rowley v. Chicago N. W. R. Co., 293 U. S. 102, 109 (1934); Nashville, C. & St. L. R. Co. v. Browning, 310 U. S. 362, 365-366 (1940). As a consequence, the States have been permitted considerable latitude in devising formulas to measure the value of tangible property located within their borders. Union Tank Line Co. v. Wright, 249 U. S. 275, 282 (1919). Such formulas usually involve a determination of the percentage of the taxpayer’s tangible assets situated in the taxing State and the application of this percentage to a figure representing the total going-concern value of the enterprise. See, e. g., Rowley v. Chicago & N. W. R. Co., 293 U. S. 102 (1934); Pittsburgh, C., C. & St. L. R. Co. v. Backus, 154 U. S. 421 (1894). A number of such formulas have been sustained by the Court, even though it could not be demonstrated that the results they yielded were precise evaluations of assets located within the taxing State. See, e. g., Nashville, C. & St. L. R. Co. v. Browning, 310 U. S. 362, 365-366 (1940).

On the other hand, the Court has insisted for many years that a State is not entitled to tax tangible or intangible property that is unconnected with the State. The Delaware Railroad Tax, 18 Wall. 206, 229 (1874); Fargo v. Hart, 193 U. S. 490, 499 (1904). In some cases the Court has concluded that States have, in fact, cast their tax burden upon property located beyond their borders. Fargo v. Hart, 193 U. S. 490, 499-503 (1904); Union Tank Line Co. v. Wright, 249 U. S. 275, 283-286 (1919); Wallace v. Hines, 253 U. S. 66, 69-70 (1920); Southern R. Co. v. Kentucky, 274 U. S. 76, 81-84 (1927). The taxation of property not located in the taxing State is constitutionally invalid, both because it imposes an illegitimate restraint on interstate commerce and because it denies to the taxpayer the process that is his due. A State will not be permitted, under the shelter of an imprecise allocation formula or by ignoring the peculiarities of a given enterprise, to “project the taxing power of the state plainly beyond its borders.” Nashville, C. & St. L. R. Co. v. Browning, 310 U. S. 362, 365 (1940). Any formula used must bear a rational relationship, both on its face and in its application, to property values connected with the taxing State. Fargo v. Hart, 193 U. S. 490, 499-500 (1904).

III.

Applying these principles to the facts of the case now before us, we conclude that Missouri’s assessment of N & W’s rolling stock cannot be sustained. This Court has, in various contexts, permitted mileage formulas as a basis for taxation. See, e. g., Pittsburgh, C., C. & St. L. R. Co. v. Backus, 164 U. S. 421 (1894). A railroad challenging the result reached by the application of such a formula has a heavy burden. See Butler Brothers v. McColgan, 315 U. S. 501, 507 (1942); Norfolk & Western R. Co. v. North Carolina, 297 U. S. 682, 688 (1936). If is confronted by the vastness of the State’s taxing power and the latitude that the exercise of that power must be given before it encounters constitutional restraints. Its task is to show that application of the mileage method in its case has resulted in such gross overreaching, beyond the values represented by the intrastate assets purported to be taxed, as to violate the Due Process and Commerce Clauses of the Constitution. Cf. Capitol Greyhound Lines v. Brice, 339 U. S. 542, 547 (1950). But here the appellants have borne that burden, and the State has made no effort to offset the convincing case that they have made.

Here, the record shows that rigid application of the mileage formula led to a grossly distorted result. The rolling stock in Missouri was assessed to N & W at $19,981,757. It was practically the same property that had been assessed the preceding year at $9,177,683 to the Wabash. Appellants introduced evidence of the results of an actual count of the rolling stock in Missouri. On the basis of this actual count, the equalized assessment would have been less than half of the value assessed by the State Commission. The Commission’s mileage formula resulted in postulating that N & W’s rolling stock in Missouri constituted 8.2824% of its rolling stock. But appellants showed that the rolling stock usually employed in the State comprised only about 2.71% by number of units (and only 3.16% by cost-less-depreciation value) of the total N & W fleet.

Our decisions recognize the practical difficulties involved and do not require any close correspondence between the result of computations using the mileage formula and the value of property actually located in the State, but our cases certainly forbid an unexplained discrepancy as gross as that in this case. Such discrepancy certainly means that the impact of the state tax is not confined to intrastate property even within the broad tolerance permitted. The facts of life do not neatly lend themselves to the niceties of constitutionalism; but neither does the Constitution tolerate any result, however distorted, just because it is the product of a convenient mathematical formula which, in most situations, may produce a tolerable product.

The basic difficulty here is that the record is totally barren of any evidence relating to enhancement or to going-concern or intangible value, or to any other factor which might offset the devastating effect of the demonstrated discrepancy. The Missouri Supreme Court attempted to justify the result by reference to “enhanced” value, but the Missouri Commission made no effort to show such value or to measure the extent to which it might be attributed to the rolling stock in the State. In fact, N & W showed that it is chiefly a coal-carrying railroad, 70% of whose 1964 revenue was derived from coal traffic. It demonstrated that its coal operations require a great deal of specialized equipment, scarcely any of which ever enters Missouri. It showed that traffic density on its Missouri tracks was only 54% of traffic density on the N & W system as a whole. Finally, it proved that the overwhelming majority of its rolling stock regularly present in Missouri was rolling stock it had leased from the Wabash. As long ago as Pittsburgh, C., C. & St. L. R. Co. v. Backus, 154 U. S. 421 (1894), we indicated that an otherwise valid mileage formula might not be validly applied to ascertain the value of tangible assets within the taxing State in exceptional situations, for example, “where in certain localities the company is engaged in a particular kind of business requiring for sole use in such localities an extra amount of rolling stock.” Id., at 431.

The Missouri Supreme Court did not challenge the factual data submitted by the N & W. Its decision that these data did not place this cáse within the realm of “exceptional situations” recognized by this Court was apparently based on the conclusion that the lease transaction between Wabash and the N & W had increased the value of tangible assets formerly belonging to the two separate lines. This may be true, but it does not follow that the Constitution permits us, without evidence as to the amount of enhancement that may be assumed, to bridge the chasm between the formula and the facts of record. The difference between the assessed value and the actual value as shown by the evidence to which we have referred is too great to be explained by the mere assertion, without more, that it is due to a.n assumed and nonparticularized increase in intangible value. See Wallace v. Hines, 253 U. S. 66, 69 (1920).

As the Court recognized in Fargo v. Hart, 193 U. S. 490, 499-500 (1904), care must be exercised lest the mileage formula

“be made a means of unlawfully taxing the privilege, or property outside the State, under the name of enhanced value or good will, if it is not closely confined to its true meaning. So long as it fairly may be assumed that the different parts of a line are about equal in value a division by mileage is justifiable. But it is recognized in the cases that if for instance a railroad company had terminals in one State equal in value to all the rest of the line through another, the latter State could not make use of the unity of the road to equalize the value of every mile. That would be taxing property outside of the State under a pretense.”

We repeat that it is not necessary that a State demonstrate that its use of the mileage formula has resulted in an exact measure of value. But when a taxpayer comes forward with strong evidence tending to prove that the mileage formula will yield a grossly distorted result in its particular case, the State is obliged to counter that evidence or to make the accommodations necessary to assure that its taxing power is confined to its constitutional limits. If it fails to do so and if the record shows that the taxpayer has sustained the burden of proof to show that the tax is so excessive as to burden interstate commerce, the taxpayer must prevail.

IY.

Accordingly, we conclude that, on the present record, Missouri has in this case exceeded the limits of her constitutional power to tax, as defined by the Due Process and Commerce Clauses. It will be open to the Missouri Supreme Court, so far as our action today is concerned, to remand the case to the appropriate tribunal to reopen the record for additional evidence to support the assessment. We vacate the judgment of the Supreme Court of Missouri and remand the cause to it for further proceedings not inconsistent with our decision.

Vacated and remanded.

Mr. Justice Black,

dissenting.

It is established law, as the Court apparently recognizes in its opinion, that an interstate company challenging a state apportionment of the company’s property taxable in the State has the heavy burden of proving by “clear and cogent evidence” that the apportionment is grossly and flagrantly excessive. See, e. g., Railway Express Agency v. Virginia, 358 U. S. 434, 444, and cases cited. I agree with the Supreme Court of Missouri that appellant railroad failed to meet that burden and would therefore affirm its judgment. See its opinion at 426 S. W. 2d 362.

It is true that most of the cars used in Missouri by N & W were owned by the Wabash Railroad and that before transfer to N & W they had been assessed at $9,177,683 as against the assessment here of $19,981,757. But this, of course, does not prove that the higher assessment was too much. For, as the Supreme Court of Missouri pointed out, this Court has held that “a mere increase in the assessment does not prove that the last assessment is wrong. Something more is necessary before it can be adjudged that the assessment is illegal and excessive . . . .” Pittsburgh, C., C. & St. L. R. Co. v. Backus, 154 U. S. 421, 432. The court below held, and this Court agrees, that in pricing the value of the rolling stock the Commission was authorized to consider intangible values, such as goodwill and values added because of the enhancement to the property in Missouri brought about by being merged into the entire N & W system. This consideration of enhanced value is not new (see, e. g., Pullman Co. v. Richardson, 261 U. S. 330, 338), and, as the Court points out, it is because of this intangible factor of enhancement that States are allowed wide discretion in determining the value of tangible property located within their borders. Thus, mileage formulas, such as the one used here, have generally been upheld. As this Court said in Nashville, C. & St. L. R. Co. v. Browning, 310 U. S. 362, “In basing its apportionment on mileage, the Tennessee Commission adopted a familiar and frequently sanctioned formula [cases cited].” 310 U. S., at 365.' It has never been contended that mileage formulas are completely accurate, but because States must consider such intangibles as enhancement value, these formulas are allowed except where the taxpayer can show, as the Court puts it, “that application of the mileage method in its case has resulted in such gross overreaching, beyond the values represented by the intrastate assets purported to be taxed, as to violate the Due Process and Commerce Clauses of the Constitution.” I do not believe that appellants have made such a showing here. The fatal flaw with the appellants’ case is that they have not proved that the tax is excessive when possible enhancement of value due to the merger is considered. The Court’s opinion admits as much when it says that “the record is totally barren of any evidence relating to enhancement or to going-concern or intangible value, or to any other factor .. . .” Where I differ with the Court is that I believe the burden of proof is on the railroad to show that the tax is excessive under all considerations rather than on the Commission to show sufficient enhancement of value to justify the tax.

This Court has recognized before, and indeed the majority pays lip service to the fact today, that it is impossible for a State to develop tax statutes with mathematical perfection. Indeed, as was stated in International Harvester Co. v. Evatt, 329 U. S. 416: “Unless a palpably disproportionate result comes from an apportionment, a result which makes it patent that the tax is levied upon interstate commerce rather than upon an intrastate privilege, this Court has not been willing to nullify honest state efforts to make apportionments.” 329 U. S., at 422-423. And the “burden is on the taxpayer to make oppression manifest by clear and cogent evidence.” Norfolk & Western R. Co. v. North Carolina, 297 U. S. 682, 688. Since appellants here did not prove that the enhanced value of the rolling stock was less than the tax assessment, or that the State was imposing on N&W taxes that were exorbitant on the full value of all its property, cf. Capitol Greyhound Lines v. Brice, 339 U. S. 642, I would affirm the decision of the Missouri Supreme Court.

       The tax in question applies to “all real property . . . [and] tangible personal property . . . owned, hired or leased by any railroad company ... in this state.” Intangible personal property is explicitly exempted from this tax. Mo. Rev. Stat. § 151.010 (1959).

       As of January 1, 1966, the N & W purchased the Wabash rolling stock that it had previously leased, while continuing to lease Wabash fixed property. This change in the relationship between N & W and the Wabash has no effect on the issues presented to us. Our analysis would apply both before and after the purchase of the Wabash rolling stock.

       The Commission deducted from the sum of these two figures $860,415, representing an “economic factor” which is allowed to all railroads in varying amounts. Exactly the same deduction had been allowed the Wabash in each of the three preceding years.

       Appellants further argue that the arbitrariness of the result reached here is shown by the fact that if the rolling stock in Missouri had been taxable to the Wabash in 1965, rather than to N & W, the application of the formula to the same rolling stock would have resulted in an assessment of little more than half of that which was actually levied ($10,103,340).

       We have said: “The problem under the Commerce Clause is to determine ‘what portion of an interstate organism may appropriately be attributed to each of the various states in which it functions.' Nashville, C. & St. L. R. Co. v. Browning, 310 U. S. 362, 365. So far as due process is concerned the only question is whether the tax in practical operation has relation to opportunities, benefits, or protection conferred or afforded by the taxing State. See Wisconsin v. J. C. Penney Co., 311 U. S. 435, 444. Those requirements are satisfied if the tax is fairly apportioned to the commerce carried on within the State.” Ott v. Mississippi Valley Barge Line Co., 336 U. S. 169, 174 (1949). Neither appellants nor appellees contend that these two analyses bear different implications insofar as our present case is concerned.

       As the Court stated in Wallace v. Hines, 253 U. S., at 69: “The only reason for allowing a State to look beyond its borders when it taxes the property of -foreign corporations is that it may get the true value of the things within it, when they are part of an organic system of wide extent, that gives them a value above what they otherwise would possess. The purpose is not ... to open to taxation what is not within the State. Therefore no property of ... an interstate road situated elsewhere can be taken into account unless it can be seen in some plain and fairly intelligible way that it adds to the value of the road and the rights exercised in the State.”

       “[I]f the ratio of the value of the property in [the State] to the value of the whole property of the company be less than that which the length of the road in [the State] bears to its entire length, . . . a tax imposed upon the property in [the State] according to the ratio of the length of its road to the length of the whole road must necessarily fall upon property out of the State.” The Delaware Railroad Tax, 18 Wall. 206, 230-231 (1874).

      This is a familiar principle of valuation in such tax cases. See Fargo v. Hart, 193 U. S. 490, 499; Galveston, H. & S. A. R. Co. v. Texas, 210 U. S. 217, 225; United States Express Co. v. Minnesota, 223 U. S. 335, 347; Union Tank Line Co. v. Wright, 249 U. S. 275, 282.


source: Caselaw Access Project

author: Per Curiam. Mr. Justice Black, Mr. Justice Harlan, and Mr. Justice Stewart,

license: Public Domain

text:
    LEE, COMMISSIONER OF CORRECTIONS OF ALABAMA, et al. v. WASHINGTON et al.
    No. 75.
    Argued November 7, 1967.
    Decided March 11, 1968.

      Nicholas S. Hare, Special Assistant Attorney General of Alabama, argued the cause for appellants. With him on the briefs were MacDonald Gallion, Attorney General, Gordon Madison, Assistant Attorney General, and J. M. Breckenridge.

      Charles Morgan, Jr., argued the cause for appellees. With him on the brief were Orzell Billingsley, Jr., and Melvin L. Wulf.

   Per Curiam.

This appeal challenges a decree of a three-judge District Court declaring that certain Alabama statutes violate the Fourteenth Amendment to the extent that they require segregation of the races, in prisons and jails, and establishing a schedule for desegregation of these institutions. The State’s contentions that Rule 23 of the Federal Rules of Civil Procedure, which relates to class actions, was violated in this case and that the challenged statutes are not unconstitutional are without merit. The remaining contention of the State is that the specific orders directing desegregation of prisons and jails make no allowance for the necessities of prison security and discipline, but we do not so read the “Order, Judgment and Decree” of the District Court, which when read as a whole we find unexceptionable.

The judgment is affirmed.

Mr. Justice Black, Mr. Justice Harlan, and Mr. Justice Stewart,

concurring.

In joining the opinion of the Court, we wish to make explicit something that is left to be gathered only by implication from the Court’s opinion. This is that prison authorities have the right, acting in good faith and in particularized circumstances, to take into account racial tensions in maintaining security, discipline, and good order in prisons and jails. We are unwilling to assume that state or local prison authorities might mistakenly regard such an explicit pronouncement as evincing any dilution of this Court’s firm commitment to the Fourteenth Amendment’s prohibition of racial discrimination.


author: Per Curiam.

text:
    WALKER v. WAINWRIGHT, CORRECTIONS DIRECTOR.
    No. 786,
    Mise.
    Decided March 11, 1968.
   Per Curiam.

On September 30, 1960, the petitioner was convicted of first degree murder and was sentenced to life imprisonment. On May 25, 1965, he was found guilty of aggravated assault and was sentenced to five years in the state penitentiary, to commence when he had completed serving the sentence for murder.

Having attempted without success to challenge his murder conviction on federal constitutional grounds in the state courts, the petitioner sought a writ of habeas corpus in the United States District Court for the Southern District of Florida. He contended that he had been deprived of counsel at his preliminary hearing, that a coerced confession had been used against him at trial, and that he had been denied the right to an effective appeal.

The District Court observed that, even if the petitioner's contentions were accepted and his murder conviction reversed, he would still face a five-year prison term for aggravated assault. Because a favorable decision on the murder conviction would not result in the petitioner's immediate release from prison, the District Court thought itself powerless to consider the merits of his claims and therefore denied his habeas corpus petition without further consideration. In short, the District Court held that the petitioner could not challenge his life sentence until after he had served it. The United States Court of Appeals for the Fifth Circuit summarily rejected the petitioner’s application for a certificate of probable cause, and he then sought review in this Court.

In reaching its conclusion, the District Court relied upon McNally v. Hill, 293 U. S. 131, for the broad proposition that the “Writ of Habeas Corpus may not be used as a means of securing judicial decision of a question which, even if determined in the prisoner’s favor, could not result in his immediate release.” The McNally decision, however, held only that a prisoner cannot employ federal habeas corpus to attack a “sentence which [he] has not begun to serve.” 293 U. S., at 138. Here the District Court has turned that doctrine inside out by telling the petitioner that he cannot attack the life sentence he has begun to serve — until after he has finished serving it. We need not consider the continued vitality of the McNally holding in this case, for neither McNally nor anything else in our jurisprudence can support the extraordinary predicament in which the District Court has placed this petitioner.

Whatever. its other functions, the great and central office of the writ of habeas corpus is to test the legality of a prisoner’s current detention. The petitioner is now serving a life sentence imposed pursuant to a conviction for murder. If, as he contends, that conviction was obtained in violation of the Constitution, then his confinement is unlawful. It is immaterial that another prison term might still await him even if he should successfully establish the unconstitutionality of his present imprisonment.

The motion for leave to proceed in forma pauperis and the petition for certiorari are granted, the judgment is reversed, and the case is remanded to the District Court for further proceedings consistent with this opinion.

It is so ordered.


text:
    LOOKRETIS v. UNITED STATES.
    No. 913.
    Decided March 11, 1968.

      Maurice J. Walsh for petitioner.

      Solicitor General Griswold for the United States.
   Per Curiam.

The petition for a writ of certiorari is granted, the judgment is vacated, and the case is remanded for further consideration in the light of Chapman v. California, 386 U. S. 18, and Marchetti v. United States, ante, p. 39.

Mr. Justice White is of the opinion that the petition for a writ of certiorari should be denied.


text:
    HETTLEMAN et al. v. CHICAGO LAW INSTITUTE et al.
    No. 961.
    Decided March 11, 1968.

      Julius L. Sherwin for appellants.

      William G. Clark, Attorney General of Illinois, John J. O’Toole, Assistant Attorney General, John J. Stamos, Edward J. Hladis and Ronald Butler for appellees.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for a writ of certiorari, certiorari is denied.


text:
    WISEMAN, DIRECTOR OF INTERNAL REVENUE FOR THE DISTRICT OF OKLAHOMA v. BARBY et ux.
    No. 871.
    Decided March 11, 1968.

      Solicitor General Griswold, Assistant Attorney General Rogovin, Harris Weinstein and Grant W. Wiprud for petitioner.

      John K. Speck for respondents.
   Per Curiam.

The petition for a writ of certiorari is granted and the judgment is reversed. Commissioner v. P. G. Lake, Inc., 356 U. S. 260.

Mr. Justice Stewart and Mr. Justice White are of the opinion that the petition for a writ of certiorari should be granted and the case set down for oral argument.

Mr. Justice Douglas is of the opinion that the petition for a writ of certiorari should be denied.


text:
    FELTON et al. v. CITY OF PENSACOLA.
    No. 934.
    Decided March 11, 1968.

      Stanley Fleishman, Sam Rosenwein and Hugh W. Gibert for petitioners.

      Dave Catón for respondent.
   Per Curiam.

The petition for a writ of certiorari is granted and the judgment of the District Court of Appeal of Florida, First District, is reversed. Redrup v. New York, 386 U. S. 767.

The Chief Justice would grant the petition and reverse because of the failure of the trial court to adhere to the standard for judging obscenity announced in Roth v. United States, 354 U. S. 476.

Mr. Justice Harlan would affirm the judgment of the state court upon the premises stated in his separate opinion in Roth v. United States, 354 U. S. 476, 496, and his dissenting opinion in Memoirs v. Massachusetts, 383 U. S. 413, 455.


author:
Mr. Chief Justice Warren Mr. Justice Fortas, Mr. Justice Harlan,
      Mr. Justice Stewart,

text:
    FEDERAL TRADE COMMISSION v. FRED MEYER, INC., et al.
    No. 27.
    Argued November 6, 1967.
    Decided March 18, 1968.

      Daniel M. Friedman argued the cause for petitioner. On the brief were Solicitor General Marshall, Assistant Attorney General Turner, Francis X. Beytagh, Jr., James Mcl. Henderson and E. K. Elkins.

      Edward F. Howrey argued the cause for respondents. With him on the brief were Terrence C. Sheehy and George W. Mead.

      Morris B. Ahram filed a brief for the Atlantic Coast Independent Distributors Association, Inc., as amicus curiae, urging reversal.

      Gilbert H. Weil filed a brief for Clairol Incorporated, as amicus curiae, urging affirmance.
   Mr. Chief Justice Warren

delivered the opinion of the Court.

The Federal Trade Commission, after extensive proceedings, ruled that respondents, the corporate owner of a chain of supermarkets and two of its officers, had unlawfully induced certain suppliers to engage in discriminatory pricing and sales promotional activities prohibited by §§ 2 (a) and 2 (d) of the Clayton Act, as amended by the Robinson-Patman Act. 63 F. T. C.-(1963). The Court of Appeals for the Ninth Circuit disagreed with the Commission’s construction of § 2 (d) and reversed in part its ruling that the section had been violated. 359 F. 2d 351 (1966). We granted certiorari, 386 U. S. 907 (1967), because the case presents important questions concerning the scope of a key provision of the Robinson-Patman Act.

I.

Section 2 (d) makes it unlawful for a supplier'in interstate commerce to grant advertising or other sales promotional allowances to one “customer” who resells the supplier’s “products or commodities” unless the allowances are “available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.” Although we have limited our review of this case to one aspect of the alleged § 2 (d) violations, full understanding of the issues requires a brief exposition of the facts from which the Commission concluded that respondents had induced violations of both §§ 2 (a) and 2 (d). The relevant facts found by the Commission were not disturbed by the Court of Appeals.

Respondent Fred Meyer, Inc., operates a chain of 13 supermarkets in the Portland, Oregon, area which engage in the retail sale of groceries, drugs, variety items, and a limited line of clothing. In 1957 Meyer’s sales exceeded $40,000,000. According to its 1960 prospectus, it made one-fourth of the retail food sales in the Portland area and was the second largest seller of all goods in that area. Since 1936 Meyer has conducted annually a four-week promotional campaign in its stores based on the distribution of coupon books to consumers. The books usually contain 72 pages, each page featuring a single product being sold by Meyer at a reduced price. The consumer buys the book for the nominal sum of 10$ and must surrender the appropriate coupon when making his purchase of goods. A coupon often represents a reduction of one-third or more from Meyer’s regular price for the featured item, and the cover of the 1957 book stated that the use of all 72 coupons would result in total savings of more than $54. The promotional campaign is highly successful. Meyer sold 138,700 books in 1957 and 121,270 in 1958. Aside from the nominal 100 paid by consumers for the coupon books, Meyer finances the promotion by charging the supplier of each featured product a fee of at least $350 for each coupon-page advertising his product. Some participating suppliers further underwrite the promotion by giving Meyer price reductions on its purchases of featured items, by replacing at no cost a percentage of the goods sold by Meyer during the campaign, or by redeeming coupons in cash at an agreed rate.

The Commission concluded that this promotional scheme, as conducted in the years 1956 through 1958, violated §§ 2 (d) and 2(a) in the following respects: First, the $350 paid to Meyer by each of four suppliers participating in the campaigns represented promotional allowances paid in violation of § 2 (d) because similar allowances were not made available on proportionally equal terms to competing customers. Second, the additional value given Meyer by these suppliers in the form of discounts, free replacements of goods sold and coupon redemptions amounted to price discrimination prohibited by § 2 (a). The Commission held that by inducing the suppliers to discriminate in price, respondents had violated § 2 (f) of the Act, and that by inducing them to grant discriminatory promotional allowances, respondents had engaged in an unfair method of competition in violation of § 5 (a) of the Federal Trade Commission Act.

Both before the Commission and in the Court of Appeals, respondents argued that it was not established that two participating suppliers, Tri-Valley Packing Association and Idaho Canning Company, had violated § 2 (d). Meyer purchased directly from both of these suppliers. Tri-Valley participated in the 1957 promotion by paying Meyer $350 for a coupon-page featuring Tri-Valley’s brand of canned peaches and by replacing in merchandise every third can sold by Meyer on the coupon’s offer of three cans for the price of two. Idaho Canning participated in the 1957 promotion on substantially identical terms, except that the coupon-page it purchased offered three cans of corn for the price of two. The Commission found that two wholesalers, Hudson House and Wadhams & Co., both of which resold to Meyer’s retail competitors, had been disfavored in these transactions in that Hudson House had purchased canned peaches from Tri-Valley and both Hudson House and Wadhams had purchased canned corn from Idaho Can-rung, but neither of the two wholesalers had been accorded promotional allowances comparable to those received by Meyer. Respondents argued that, purely as a matter of statutory construction, Tri-Valley and Idaho Canning could not have violated the requirement of proportional equality among “customers competing in the distribution” of their products because (1) Meyer, a retailer, was not “competing” in the distribution of canned corn and peaches with the disfavored wholesalers, Hudson House and Wadhams, and (2) the retailers found by the Commission to be competing with Meyer in the resale of these products were not “customers” of TriValley and Idaho Canning but were customers of Hudson House and Wadhams.

The Commission rejected this reading of § 2 (d), noting that, if respondents’ view prevailed, a retailer buying from a wholesaler and having no direct dealings with his supplier would receive no protection against discriminatory promotional allowances given his competitor who purchased directly from the supplier. The Commission held that § 2 (d) prohibits a supplier from granting promotional allowances to a direct-buying retailer, such as Meyer, unless the allowances are also made available to wholesalers who purchase from the supplier and resell to the direct-buying retailer’s competitors. Accordingly, the Commission’s cease-and-desist order included a provision barring respondents from inducing suppliers to grant them promotional allowances not available to “customers who resell to purchasers who compete with respondents in the resale of such supplier’s products.” 63 F. T. C., at • — . One Commissioner, while agreeing with the majority that respondents had induced TriValley and Idaho Canning to violate § 2 (d), dissented in part on the ground that the order should have required the promotional allowances to be made available to the retailers competing with Meyer rather than to wholesalers who resold to them. Thus, in his view, the competing retailers were “customers” of Tri-Valley and Idaho Canning within the meaning of the statute. The Court of Appeals adopted the interpretation of § 2 (d) urged by respondents. Consequently, it set aside the portion of the Commission’s order set out above.

We agree with the Commission that the proscription of § 2 (d) reaches the kind of discriminatory promotional allowances granted Meyer by Tri-Valley and Idaho Canning. Therefore, we reverse the judgment of the Court of Appeals on this point. However, because we have concluded that Meyer’s retail competitors, rather than the two wholesalers, were competing customers under the statute, we also remand the case for appropriate modification of the Commission’s order. We deal first with respondents’ arguments, second with the opinion of the Court of Appeals, and third with the Commission’s order.

II.

Respondents press upon us a view of § 2 (d) which leaves retailers who buy from wholesalers for the most part unprotected from discriminatory promotional allowances granted their direct-buying competitors. We are told that § 2 (d) in specific terms requires this result. To benefit from the statute’s requirement of proportional equality, it is urged, a buyer must be a “competing customer” within the narrowest sense of that phrase. Thus, the wholesalers in this case are not competing customers because they do not compete with Meyer, and the retailers who do compete with Meyer in the resale of the suppliers’ products are outside the protection of § 2 (d) because they are not customers of the suppliers. For reasons stated below, we agree with respondents that, on the facts of this case, § 2 (d) reaches only discrimination between customers competing for resales at the same functional level and, therefore, does not mandate proportional equality between Meyer and the two wholesalers. But we cannot accept the second half of this argument, for it rests on a narrow definition of “customer” which becomes wholly untenable when viewed in light of the central purpose of § 2 (d) and the economic realities with which its framers were concerned.

Conceding that the Robinson-Patman amendments by no means represent an exemplar of legislative clarity, we cannot, in the absence of an unmistakable directive, construe the Act in a manner which runs counter to the broad goals which Congress intended it to effectuate. See, e. g., FTC v. Sun Oil Co., 371 U. S. 505, 516-521 (1963); Elizabeth Arden Sales Corp. v. Gus Blass Co., 150 F. 2d 988, 991-993 (C. A. 8th Cir.), cert. denied, 326 U. S. 773 (1945). We start with the proposition that “[t]he Robinson-Patman Act was enacted in 1936 to curb and prohibit all devices by which large buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power.” FTC v. Henry Broch & Co., 363 U. S. 166, 168 (1960). The role within the statutory scheme which Congress intended for § 2 (d) is well documented in the legislative history. An investigation of chain store buying practices undertaken by the Federal Trade Commission, at Congress’ request, had indicated that § 2 of the Clayton Act was an inadequate deterrent against outright price discrimination. The investigation also revealed that certain practices by which large buyers induced concessions which their smaller competitors could not obtain were wholly beyond the reach of § 2. It is significant that congressional concern had focused on the buying practices of large retailers, particularly the chain stores, because it was felt that they were threatening the continued existence of the independent merchant. Indeed, before Congress acted, some States had attempted to limit the growth of retail chains through express prohibitions against further extensions and through taxation. One of the practices disclosed by the Commission’s investigation was that by which large retailers induced concessions from suppliers in the form of advertising and other sales promotional allowances. The draftsman of the provision which eventually emerged as § 2 (d) explained that, even when such payments were made for actual sales promotional services, they were a form of indirect price discrimination because the recipient of the allowances could shift part of his advertising costs to his supplier while his disfavored competitor could not. That Congress adopted this view of the practice it sought to eliminate by § 2 (d) is demonstrated by the words used by the Senate Judiciary Committee in recommending enactment of the section:

“Still another favored medium for the granting of oppressive discriminations is found in the practice of large buyer customers to demand, and of their sellers to grant, special allowances in purported payment of advertising and other sales promotional services, which the customer agrees to render with reference to the seller's products, or sometimes with reference to his business generally. Such an allowance becomes unjust when the service is not rendered as agreed and paid for, or when, if rendered, the payment is grossly in excess of its value, or when in any case the customer is deriving from it equal benefit to his own business and is thus enabled to shift to his vendor substantial portions of his own advertising cost, while his smaller competitor, unable to command such allowances, cannot do so.”

Congress chose to deter such indirect price discrimination by prohibiting the granting of sales promotional allowances to one customer unless accorded on proportionally equal terms to all competing customers.

Of course, neither the Committee Report nor other parts of the legislative history in so many words define “custome/^ to include retailers who purchase through wholesalers and compete with direct buyers in resales. But a narrower reading of § 2 (d) would lead to the following anomalous result. On the one hand, direct-buying retailers like Meyer, who resell large quantities of their suppliers’ products and therefore find it feasible to undertake the traditional wholesaling functions for themselves, would be protected by the provision from the granting of discriminatory promotional allowances to their direct-buying competitors. On the other hand, smaller retailers whose only access to suppliers is through independent wholesalers would not be entitled to this protection. Such a result would be diametrically opposed to Congress’ clearly stated intent to improve the competitive position of small retailers by eliminating what was regarded as an abusive form of discrimination. If we were to read “customer” as excluding retailers who buy through wholesalers and compete with direct buyers, we would frustrate the purpose of § 2 (d). We effectuate it by holding that the section includes such competing retailers within the protected class.

III.

The Commission did not press in the Court of Appeals the position of one Commissioner that retailers who purchased through Hudson House and Wadhams and competed with Meyer in resales were customers of Tri-Valley and Idaho Canning. Consequently, that court gave almost no consideration to the construction of § 2 (d) which we hold to be the proper one. Citing its prior ruling in Tri-Valley Packing Assn. v. FTC, 329 F. 2d 694, 709-710 (C. A. 9th Cir. 1964), the court merely stated that a § 2 (d) violation could not be made out unless (1) Tri-Valley and Idaho Canning had in some way dealt directly with retailers competing with Meyer, and (2) canned peaches and corn sold by the two suppliers could be traced through Hudson House and Wad-hams to the shelves of the competing retailers. 359 F. 2d, at 359-360, 362-363. In the view of the Court of Appeals, these two requirements compose the elements of the “indirect customer” doctrine under which the Commission and the courts impose § 2 (d) liability when a supplier in effect supplants his intermediate distributors in dealings with those to whom the distributors resell and favors some of the distributors’ accounts over others. See American News Co. v. FTC, 300 F. 2d 104, 109 (C. A. 2d Cir.), cert. denied, 371 U. S. 824 (1962); K. S. Corp. v. Chemstrand Corp., 198 F. Supp. 310, 312-313 (D. C. S. D. N. Y. 1961); Kay Windsor Frocks, Inc., 51 F. T. C. 89, 95-96 (1954); F. Rowe, Price Discrimination Under the Robinson-Patman Act 398-399 (1962), 90 (1964 Supp.). We need not and do not question the validity of this doctrine as applied to pierce a supplier’s unrealistic claim that a reseller favored by him is actually the customer of an intermediate distributor. Nor do we reach the question whether a retailer may succeed in a private action based on § 2 (d) without proving that he in fact resold the supplier’s product in competition with a favored buyer. In the case before us, it is conceded that Meyer was a customer of Tri-Valley and Idaho Canning. Moreover, as indicated by its approval of the Commission’s § 2 (a) ruling, the Court of Appeals did not question the Commission’s finding that Meyer competed in the resale of Tri-Valley and Idaho Canning products with retailers who purchased through Hudson House and Wadhams. Given these findings, it was unnecessary for the Commission to resort to the indirect customer doctrine. Whether suppliers deal directly with disfavored competitors or not, they can, and here did, afford a direct buyer the kind of competitive advantage which § 2 (d) was intended to eliminate. In light of our holding that “customers” in § 2 (d) includes retailers who buy through wholesalers and compete with a direct buyer in the resale of the supplier’s product, the requirement of direct dealing between the supplier and disfavored competitors imposed by the Court of Appeals rests on too narrow a reading of the statute. Further, in light of the Commission’s finding that Meyer competed in the resale of the Idaho Canning and Tri-Valley products with other retailers in the area who purchased through Hudson House and Wadhams and in light of the fact that the Court of Appeals did not disturb this finding, the court misapprehended the Commission’s burden in requiring it to trace those products to the shelves of the disfavored retailers.

IV.

The Commission’s view of the impact of respondents’ argument in no way conflicts with our own. In rejecting respondents’ construction of § 2 (d), the Commission observed:

“The net result of this argument is that the entire structure of ‘independent’ food merchants — including the traditional wholesaler and his numerous, small retailer-customers — are placed completely outside the pale of Section 2 (d) of the amended Clayton Act insofar as their competition with the direct-buying 'chains’ is concerned.
“We are not persuaded that Congress either intended or effected any such result when it passed Section 2 (d). In the first place, such a construction goes squarely against the well-known purposes of the Act itself, namely, to give the ‘independent’ food sellers an even break in their competition with the ‘chains.’ ”

But rather than concluding, as we have, that retailers who purchased through Hudson House and Wadhams and competed with Meyer in resales were 'disfavored customers of Tri-Valley and Idaho Canning, a majority of the Commission held that the wholesalers, Hudson House and Wadhams, were the customers entitled to promotional allowances on proportionally equal terms with Meyer. Although we approach the Commission’s ruling with the deference due the agency charged with day-today administration of the Act, we hold that, at least on the facts before us, § 2 (d) does not require proportional equality between Meyer and the two wholesalers.

The Commission believed it found support for its position in the language of § 2 (d) itself, which requires that promotional allowances be accorded on proportionally equal terms to “customers competing in the distribution” of a supplier’s product, rather than merely to customers competing in resales. The majority reasoned that Hudson House and Wadhams, when they resold to Meyer’s retail competitors, were competing with Meyer in the distribution of Tri-Valley and Idaho Canning products because the two wholesalers were “seeking exactly the same consumer dollars that respondents are after.” 63 F. T. C., at-. While it cannot be doubted that Congress reasonably could have employed such a broad concept of competition in § 2 (d), we do not believe that the use of the word “distribution” rather than “resale” is a clear indication that it did, and what discussion there was of the promotional allowance provision during the congressional hearings indicates that the section was meant to impose proportional equality only where buyers competed on the same functional level. Thus, in reporting the provision, both the Senate and House Judiciary Committees used the following example:

“To illustrate: Where, as was revealed in the hearings earlier referred to in this report, a manufacturer grants a particular chain distributor an advertising allowance of a stated amount per month per store in which the former’s goods are sold, a competing customer with a smaller number of stores, but equally able to furnish the same service per store, and under conditions of the same value to the seller, would be entitled to a similar allowance on that basis.”

This illustration and others which- could be cited are not conclusive, but they do strongly suggest that the competition with which Congress was concerned in § 2 (d) was that between buyers who competed in resales of the supplier’s products. And, as stated above, Congress’ objective was to assure that all sellers, regardless of size, competing directly for the same customers would receive even-handed treatment from their suppliers. We noted in FTC v. Sun Oil Co., 371 U. S. 505 (1963), that when Congress wished to expand the meaning of competition to include more than resellers operating on the same functional level, it knew how to do so in unmistakable terms. It did so in § 2 (a) of the Act by prohibiting price discrimination which may “injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them.” Id., at 514 — 515; see FTC v. Morton Salt Co., 334 U. S. 37, 55 (1948). We stated in Sun Oil that:

“There is no reason appearing on the face of the statute to assume that Congress intended to invoke by omission in § 2 (b) the same broad meaning of competition or competitor which it explicitly provided by inclusion in § 2 (a); the reasonable inference is quite the contrary.”

In the present case, too, we think “the reasonable inference” is that Congress did not intend such a broad meaning of competition in§2(d). We recognize that it would be both inappropriate and unwise to attempt to formulate an all-embracing rule applying the elusive language of the section to every system of distribution a supplier might devise for getting his product to the consumer. But, on the concrete facts here presented, it is clear that the direct impact of Meyer’s receiving discriminatory promotional allowances is felt by the disfavored retailers with whom Meyer competes in resales. We cannot assume without a clear indication from Congress that § 2 (d) was intended to compel the supplier to pay the allowances to a reseller further up the distributive chain who might or might not pass them on to the level where the impact would be felt directly. We conclude that the most reasonable construction of § 2 (d) is one which places on the supplier the responsibility for making promotional allowances available to those resellers who compete directly with the favored buyer.

The Commission argues here that the view we take of § 2 (d) is impracticable because suppliers will not always find it feasible to bypass their wholesalers and grant promotional allowances directly to their numerous retail outlets. Our decision does not necessitate such bypassing. We hold only that, when a supplier gives allowances to a direct-buying retailer, he must also make them available on comparable terms to those who buy his products through wholesalers and compete with the direct buyer in resales. Nothing we have said bars a supplier, consistently with other provisions of the antitrust laws, from utilizing his wholesalers to distribute payments or administer a promotional program, so long as the supplier takes responsibility, under rules and guides promulgated by the Commission for the regulation of such practices, for seeing that the allowances are made available to all who compete in the resale of his product.

The judgment of the Court of Appeals, insofar as it held that the promotional allowances granted Meyer by Tri-Valley and Idaho Canning did not violate § 2 (d), is reversed. The case is remanded to the Court of Appeals with directions to remand to the Commission for further proceedings consistent with this opinion.

It is so ordered.

Mr. Justice Marshall took no part in the consideration or decision of this case.

Mr. Justice Fortas,

concurring.

I agree with the result in this case and I join the Court's opinion. The net of our decision, as I see it, is this. The statute permits a supplier to make payment to retailers for services and facilities only if such payment or its equivalent is made available to all competing retailers handling the supplier’s product. If they choose to render the same or equivalent service or furnish the same or equivalent facilities, they are entitled to the same payment. I believe that this result, obviously intended by the Congress, can best be squared with the language of § 2 (d) by the device of regarding the wholesaler and his retail customer as a unit for purposes of that section. The Court is clearly correct in my view in requiring that the opportunity to participate be afforded to the competing retailer, and not merely to the wholesaler. This is the plain thrust and purpose of the section. The supplier may satisfy this obligation by direct dealing with the competing retailer or by arrangement with the wholesaler reasonably designed to transmit to the retailer participation in the program if the retailer chooses to accept.

Mr. Justice Harlan,

dissenting.

I dissent because I believe the time has come for a change in approach to Robinson-Patman Act cases that, as here, can only be decided by a judicial tour de force. No doubt, the broad purpose of the Act was to protect small sellers from the advantages their larger competitors can obtain through greater buying power. In implementing this purpose, however, the statute imposes a hodgepodge of confusing, inconsistent, and frequently misdirected restrictions. In such a situation it seems to me the wiser course for this Court to hew as closely as possible to the wandering line that the statute has drawn (with due deference to the expertise of the Commission charged with enforcing the statute) and not to read into the Act its own notions of how best to protect “little people” from “big people.”

In this case, certain suppliers made promotional allowances to the company, a direct-buying retailer. The Act provides that if promotional allowances are made to one customer they must also be made, on a basis of proportional equality, to all other “customers competing in the distribution” of the supplier’s product. The suppliers here involved did not make the promotional allowances given to the company available to certain retailers who compete with it but who buy not from the suppliers themselves but from wholesalers who in turn buy from the suppliers. The Court now holds, for the first time, 32 years after the passage of the Act, that although these disfavored retailers are not literally “customers” of the suppliers, the “broad goals” of the Act require them to be treated as if they were.

Unfortunately, nothing in the Act and not one word of legislative history the Court has found suggest that Congress meant the word “customers” to mean “non-customers who the Court thinks need protection.” The Federal Trade Commission refused to accept the suggestion of one Commissioner that this unexpected non-literal reading of the word would best effectuate the Act's purposes, so that Commission expertise cannot in this instance be brought to bear in support of the Court's construction.

Furthermore, the failure of the Act to extend explicit protection in the present situation cannot be dismissed as mere legislative oversight. Compelling suppliers to make promotional allowances available to retailers with whom they do not deal is no simple matter. The supplier could deal through his wholesalers, imposing restrictions on them to guarantee that an “allowance” is actually passed through to retailers, only by running afoul of the Sherman Act. Nor would it simplify matters to make the allowances directly available to retailers: by hypothesis, the retailers in question are too small to make direct dealing efficient, and in any event the suppliers and retailers would constantly risk a Sherman Act charge, by the wholesaler in the middle, that they were conspiring in restraint of him.

In addition, under the present circumstances the very idea of “proportional equality” is almost meaningless. The supplier is asked to offer “equal” promotional allow-anees to a direct-buying chain and a set of small retailers who buy through wholesalers who presumably carry much of the promotion load; the supplier risks treble damages if his guess as to what is even-handed treatment turns out to be erroneous. Even if it were desirable to force suppliers to submit every promotion to the FTC for advance approval, the Commission’s refusal to require equality between customers and noncustomers here does not indicate that the experts are sanguine about the possibility of working out a rational definition of proportional equality under these circumstances.

The supplier can, of course, resolutely refuse to enter into promotional programs, a course of action that would effectively avoid favoring large distributors. In doing so, however, he would be abandoning one significant form of competition with his fellow suppliers, and would risk the disfavor of retailers who might prevail on differently situated and less timorous competitive suppliers for assistance.

Congress, concerned as it was for small retailers, did not explicitly impose the particular restriction on suppliers announced today. Since, for all we know, the omission may have been deliberate in light of practical considerations, I prefer to take the statute as we find it. This course of action here and in similarly opaque cases might at least encourage the Congress to give this notoriously amorphous statute the thorough overhauling that has long been due. On this basis I consider that this case should go for the respondents.

Mr. Justice Stewart,

dissenting.

Section 2 (d) of the Clayton Act, as amended by the Robinson-Patman Act, makes it unlawful for a supplier to grant to a customer a promotional allowance which is not available to “all other customers competing in the distribution of such products or commodities.” The Federal Trade Commission held that the respondent retailer had violated § 2 (d) by inducing certain of its direct suppliers to grant it promotional allowances which were not available to wholesalers who sold the suppliers’ products to retailers competing with the respondent. The Court of Appeals refused to enforce this part of the Commission’s order on the ground that the wholesalers were not customers “competing” with the respondent. We granted certiorari limited to a single question:

“Whether a supplier’s granting to a retailer who buys directly from it promotional allowances that are not made available to a wholesaler who resells to retailers competing with the direct-buying retailer violates Section 2 (d) of the Robinson-Patman Act.” 386 U. S. 907.

The Court today agrees with the Court of Appeals’ answer to this question and holds that wholesalers are not customers “competing” with the respondent. But the Court nevertheless goes on to hold that § 2 (d) was violated upon a theory not argued here by either party. The theory is that retailers who are in fact customers of independent wholesalers are somehow also “customers” of the suppliers of those wholesalers. The Commission has never suggested that this case should turn on any such construction of the term “customer.” Cf. SEC v. Chenery Corp., 318 U. S. 80.

Because the Court of Appeals was correct in rejecting the Commission’s construction of § 2 (d), I would affirm its judgment. But, at the very least, the case should be remanded in order to give the respondent notice and an opportunity to defend against the novel construction of § 2 (d) under which the Court today finds the respondent to be a violator of the law. Due process requires no less. Cf. Cole v. Arkansas, 333 U. S. 196.

       38 Stat. 730, as amended, 49 Stat. 1526, 1527, 15 U. S. C. §§ 13 (a), 13 (d). Section 2 (a) provides in pertinent part:
      “[I]t shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, . . . where the effect of such discrimination may be ... to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: . . .”
      Section 2 (d) provides in full:
      “[I]t shall be unlawful for any person engaged in commerce to pay or contract for the payment of anything of value to or for the benefit of a customer of such person in the course of such commerce as compensation or in consideration for any services or facilities furnished by or through such customer in connection with the processing, handling, sale, or offering for sale of any products or commodities manufactured, sold, or offered for sale by such person, unless such payment or consideration is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.”

       See n. 1, supra.

       The Commission and respondents filed separate petitions for certiorari to review different rulings of the Court of Appeals. Respondents contended (1) that the Commission had failed to show that respondents’ inducement of §§ 2 (a) and 2 (d) violations had been knowing and (2) that the Commission’s order prohibiting future inducement of § 2 (d) violations was too broad. The Commission’s petition raised the question “[w]hether a supplier’s granting to a retailer who buys directly from it promotional allowances that are not made available to a wholesaler who resells to retailers competing with the direct-buying retailer violates Section 2 (d) of the Robinson-Patman Act.” The Commission also presented an additional question which it sought to reserve only if respondents’ petition were granted. We denied respondents’ petition, 386 U. S. 908 (1967), and specifically limited our review on the Commission’s petition to the issue of statutory interpretation therein presented. 386 ü. S. 907 (1967).

       The Commission found that the total of $25,200 received by-Meyer from 72 participating suppliers in each of the years 1956 and 1957 more than covered Meyer’s cost of publishing, distributing, and publicizing the coupon books in those years. The Commission characterized as “clear profit” the $13,870 paid Meyer by consumer purchasers of the books in 1957.

       See n. 1, supra.

       15 U. S. C. § 13 (f):
      “It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.”

       38 Stat. 719, as amended, 66 Stat. 632, 15 U. S. C. § 45 (a):
      “(1) Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful.
      “(6) The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations . . . from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce.”

       63 F. T. C., at — (Commissioner Elman, concurring in part and dissenting in part).

       This case, in its present posture, does not present the question whether the functional label used by a manufacturer or reseller reflects his actual position in the distributive chain. Compare FTC v. Ruberoid Co., 343 U. S. 470, 475 (1952); cf. FTC v. Simplicity Pattern Co., 360 U. S. 55, 62-63 (1959).

        Automatic Canteen Co. v. FTC, 346 U. S. 61, 65 (1953); see F. Rowe, Price Discrimination Under the Robinson-Patman Act 20 (1962).

       S. Res. No. 224, 70th Cong., 1st Sess., 69 Cong. Rec. 7857 (1928).

         Federal Trade Commission, Final Report on the Chain-Store Investigation, S. Doc. No. 4, 74th Cong., 1st Sess., 63-65, 90-91, 96-97 (1935).

        Id., at 57-65. See also Hearings before the Special House Committee on Investigation of American Retail Federation, 74th Cong., 1st Sess. (1935).

       See C. Austin, Price Discrimination and Related Problems under the Robinson-Patman Act 6-11 (2d rev. ed. 1959). In presenting his bill to the House Judiciary Committee, Representative Patman stated:
      “I believe it is the opinion of everyone who has studied this subject, that the day of the independent merchant is gone unless something is done and done quickly. He cannot possibly survive under that system. So we have reached the crossroads; we must either turn the food and grocery business of this . . . country over to a few corporate chains, or we have got to pass laws that will give the people, who built this country in time of peace and who saved it in time of war, an opportunity to exist — not to give them any special rights, special privileges, or special benefits, but just to deny their competitors the special benefits that they are getting, that they should not be permitted to have.” Hearings on H. R. 8442, 4995, and 5062 before the House Committee on the Judiciary, 74th Cong., 1st Sess., 5-6 (1935).

       See Federal Trade Commission, Final Report on the Chain-Store Investigation, supra, n. 12, at 78-82.

        Id., at 44-46, 61. See also Hearings before the Special House Committee on Investigation of American Retail Federation, 74th Cong., 1st Sess., Vol. 3, No. 1, at 66-88 (1935).

       Hearings on Bills to Amend the Clayton Act before a Subcommittee of the House Committee on the Judiciary, 74th Cong., 2d Sess., 464 (1936) (Mr. Teegarden).

       S. Rep. No. 1502, 74th Cong., 2d Sess., 7 (1936). The House Judiciary Committee reported the provision favorably in identical terms. H. R. Rep. No. 2287, 74th Cong., 2d Sess., 15-16 (1936).

       The Commission’s § 2 (a) and § 2 (d) rulings were both based on findings that retailers in the Portland area who purchased through Hudson House and Wadhams competed with Meyer in the resale of Idaho Canning com and Tri-Valley peaches. The Court of Appeals could not have consistently set aside these findings with regard to the § 2 (d) violations while upholding them with respect to § 2 (a).

       63 F. T. C., at —.

       S. Rep. No. 1502, 74th Cong., 2d Sess., 8 (1936); H. R. Rep. No. 2287, 74th Cong., 2d Sess., 16 (1936).

       See n. 14, supra.

       371 U. S., at 515.

       See 16 CFR §§ 1.55-1.66; of. “Guides for Allowances and Services,” 1 CCH Trade Reg. Rep. ¶ 3980, at 6073-6079.

       See, e. g., F. Rowe, Price Discrimination Under the Robinson-Patman Act 534; Stedman, Twenty-four Years of the Robinson-Patman Act, 1960 Wis. L. Rev. 197, 218.

      We need not here consider refinements of the problem — e. g., the duty of the supplier to tailor his offer so that it is within the practical capability of all competing retailers; or negatively, to avoid making an offer which does not permit fair participation by all types of retailers of the product, as a practical matter.

       See, e. g., Levi, The Robinson-Patman Act — Is It in the Public Interest?, 1 ABA Antitrust Section 60 (1952-1953). As Professor Levi noted, published criticism of the Act is unsportingly easy to find: “the literature on the Act has become something of a contest of witticisms to relieve an otherwise dreary picture.” Ibid. An example is Eine Kleine Juristische Schlummergeschichte, 79 Harv. L. Rev. 921.

       See, e. g., Shniderman, The Impact of the Robinson-Patman Act on Pricing Flexibility, 57 Nw. U. L. Rev. 173; Austem, Presumption and Percipience About Competitive Effect Under Section 2 of the Clayton Act, 81 Harv. L. Rev. 773. The confusion is all the more unfortunate in a field where actual conflicting objectives are many: “competitive” purposes are often at odds with “protective” purposes; the defense of traders at one level of distribution may be inconsistent with the liberty of traders at another level, and with the interests of consumers.

       Under Albrecht v. Herald Co., ante, p. 145, it would presumably be unlawful per se for a supplier to attempt to prevent his wholesalers from absorbing the allowance by charging higher prices.

       Under Albrecht, supra, n. 4, it is difficult to see why an agreement between supplier and retailer sufficient to insure that wholesalers in the middle do not absorb promotional allowances would not constitute a combination in restraint of these wholesalers.

       See Friendly, The Gap in Lawmaking — Judges Who Can’t and Legislators Who Won’t, 63 Col. L. Rev. 787, 794: “The tiniest fraction of the time spent by lawyers, legal writers, administrators, and judges in an unsuccessful endeavor to elucidate the obscurities of this statute would have sufficed to put the house in order once the problems were revealed; but that time has not been spent.”

       In this opinion the term “respondent” refers to Fred Meyer, Inc.

       One Commissioner attempted in vain to persuade the Commission to accept the theory which the Court today adopts: “What made this practice illegal, as I see it, is that the allowances were not also made available on proportionally equal terms to Meyer’s retail competitors. But that is not the Commission’s view of the law.” 63 F. T. C., at - (Commissioner Elman, concurring in part and dissenting in part).


author: Mr. Chief Justice Warren

text:
    POAFPYBITTY et al. v. SKELLY OIL CO.
    No. 65.
    Argued January 24, 1968.
    Decided March 18, 1968.

      Charles Hill Johns argued the cause for petitioners. With him on the briefs was Houston Bus Hill.

      John H. Cantrell argued the cause for respondent. With him on the brief was 8. W. Wells.

      Solicitor General Griswold, Acting Assistant Attorney General Williams and Roger P. Marquis filed a brief for the United States, as amicus curiae, urging reversal.
   Mr. Chief Justice Warren

delivered the opinion of of Court.

The question presented is whether petitioners, who are Comanche Indians, have standing to sue under an oil and gas lease approved by the Department of the Interior for use on land held by Indians under trust patents issued by the United States.

In 1947 the Acting Commissioner of Indian Affairs approved an oil and gas lease which petitioners had executed to respondent, Skelly Oil Company, on the form prescribed by the Department of the Interior. The first well was drilled in 1956, and seven producing wells were soon completed. In 1961 petitioners retained counsel with the approval of the Department of the Interior and brought this damage action against respondent in the District Court of Oklahoma County, Oklahoma, alleging that respondent had breached the express and implied covenants in the lease and had thereby impaired petitioners’ royalties. Respondent notified the Department of the Interior and the Bureau of Indian Affairs of the litigation, but the Government made no attempt to intervene in the proceedings. The petition filed in the District Court asserted that respondent had permitted natural gas being produced from the wells to escape despite the fact that there was a pipeline less than a mile from the land. Petitioners claimed that respondent ignored their request that the gas be marketed and continued to allow the gas to be wasted in violation of the terms of the lease. The District Court sustained respondent’s demurrer and dismissed the petition. The Supreme Court of Oklahoma affirmed on the ground that petitioners were precluded from suing by the provisions of the lease and by the regulations promulgated by the Secretary of the Interior to control oil and gas leases on restricted Indian land. We granted certiorari, 389 U. S. 814 (1967), to determine whether the federal restrictions imposed on the Indians prevented them from vindicating their rights. In our view, the decision below unduly restricts the right of the Indians to seek judicial relief for a claimed injury to their interests under the oil and gas lease.

The trust patents to the land in question were issued, to petitioners under the General Allotment Act of 1887, 24 Stat. 388, as amended, 25 U. S. C. §§ 331-358, which provided that individual Indians were to be allotted land on their reservations and that the United States was to hold the land “in trust for the sole use and benefit of the Indian” allottees for a 25-year period. 25 U. S. C. § 348. During the trust period, which has been repeatedly extended, restricted Indian land may be sold or leased only with the consent of the Secretary of the Interior. In our view, these restrictions on the Indian’s control of his land are mere incidents of the promises made by the United States in various treaties to protect Indian land and have no effect on the Indian’s capacity to institute the court action necessary to protect his property. In order to fulfill these national promises to safeguard Indian land and at the same time “to prepare the Indians to take their place as independent, qualified members of the modern body politic,” Board of County Comm’rs v. Seber, 318 U. S. 705, 715 (1943), the allotment system was created with the Indians receiving ownership rights in the land while the United States retained the power to scrutinize the various transactions by which the Indian might be separated from that property. Squire v. Capoeman, 351 U. S. 1, 9 (1956). See, e. g., 18 Cong. Rec. 190-192 (1886). This dual purpose of the allotment system would be frustrated unless both the Indian and the United States were empowered to seek judicial relief to protect the allotment. The obligation and power of the United States to institute such litigation to aid the Indian in the protection of his rights in his allotment were recognized in United States v. Rickert, 188 U. S. 432 (1903); Heckman v. United States, 224 U. S. 413 (1912); and United States v. Candelaria, 271 U. S. 432 (1926). See generally Federal Indian Law 326-341 (Dept, of Interior, 1958). In Heckman, an action brought by the United States to set aside an improper conveyance of restricted land, this Court realized that the allotment system created interests in both the Indian and the United States. “A transfer of the allotments is not simply a violation of the proprietary rights of the Indian. It violates the governmental rights of the United States.” 224 U. S., at 438. In holding that the United States could sue to protect the allotment, the Court indicated that the Government could either bring the necessary suit itself or allow the litigation to be prosecuted by the Indian.

“In what cases the United States will undertake to represent Indian owners of restricted lands in suits of this sort is left under the acts of Congress to the discretion of the Executive Department. The allottee may be permitted to bring his own action, or if so brought the United States may aid him in its conduct .... And when the United States itself undertakes to represent the allottees of lands under restriction and brings suit to cancel prohibited transfers, such action necessarily precludes the prosecution by the allottees of any other suit for a similar purpose relating to the same property.” Id., at 446.

Later decisions followed the implications of Heckman and held that the right of the United States to institute a suit to protect the allotment did not diminish the Indian’s right to sue on his own behalf. In Creek Nation v. United States, 318 U. S. 629 (1943), this Court held that Indian tribes had the power to sue a railroad for the improper use of Indian land even though the tribes could not sue the United States for its failure to collect the sums allegedly due. The Court stated, “That the United States also had a right to sue did not necessarily preclude the tribes from bringing their own actions.” Id., at 640. Accord, Lane v. Pueblo of Santa Rosa, 249 U. S. 110 (1919); Skokomish Indian Tribe v. France, 269 F. 2d 555 (C. A. 9th Cir. 1969). Nor does the existence of the Government’s power to sue affect the rights of the individual Indian. “A restricted Indian is not without capacity to sue or to be sued with respect to his affairs, including his restricted property. . . . Both the Act of April 12, 1926 and the decision ... in Heck-man v. United States . . . recognize capacity in a restricted Indian to sue or defend actions in his own behalf subject only to the right of the Government to intervene.” Sadler v. Public Nat. Bank & Trust Co., 172 F. 2d 870, 874 (C. A. 10th Cir. 1949). And in Choctaw & Chickasaw Nations v. Seitz, 193 F. 2d 456, 459 (C. A. 10th Cir. 1951), the court stated that Heckmcm, supra, Lane, supra, and Candelaria, supra, “clearly recognized the rights of restricted Indians and Indian tribes or pueblos to maintain actions with respect to their lands, although the United States would not be bound by the judgment in such an action, to which it was not a party, brought by the restricted Indian or an Indian tribe or pueblo.” In Brown v. Anderson, 61 Okla. 136, 160 P. 724 (1916), the Oklahoma Supreme Court itself held that Heckman had “fully answered” the argument that only the United States as guardian of the Indian could bring a suit to cancel an improper conveyance of a restricted Indian allotment. The court held:

“Osborne Anderson, the defendant in error, although a full blood Indian, was a citizen of the United States and of the state of Oklahoma. No good reason appears why he should be denied the privilege of appealing to the courts of the state the same as any other citizen to enforce his rights to property, even though such property be land upon which restrictions against alienation have been imposed by an act of Congress.” 61 Okla., at 138-139, 160 R, at 726.

See Bell v. Fitzpatrick, 53 Okla. 574, 157 P. 334 (1916) ; L. Mills, Oklahoma Indian Land Laws §328 (1924). We agree that the federal restrictions preventing the Indian from selling or leasing his allotted land without the consent of a governmental official do not prevent the Indian landowner, like other property owners, from maintaining suits appropriate to the protection of his rights.

There remains the question whether the terms of the oil and gas lease or the regulations promulgated by the Secretary of the Interior to govern those leases prevent the Indians from seeking judicial relief for an alleged impairment of their interests under the lease. Respondent argues that the Secretary has such complete control over the lease that only he can institute the necessary court action.

The leasing of allotted land for mining purposes “by said allottee” is expressly authorized by 25 U. S. C. § 396. Although the approval of the Secretary is required, he is not the lessor and he cannot grant the lease on his own authority. The Secretary is authorized to promulgate regulations controlling the operation and development of the lease and to issue necessary written instructions to the lessee. Ibid. See generally 25 CFR §§ 172.1-172.33 (1967); 30 CFR §§ 221.1-221.67 (1967). The lessee is required to furnish a surety bond, in an amount satisfactory to the Secretary, guaranteeing compliance with the terms of the lease, which incorporate the regulations of the Secretary. 25 U. S. C. § 396c. The Secretary has the power to inspect the leased premises and the books and records of the lessee. 25 CFR § 172.25 (1967). The Secretary also has the power to impose such restrictions as to the time for the drilling of wells or the production from any well “as in his judgment may be necessary or proper for the protection of the natural resources of the leased land and in the interests of the Indian lessor.” 25 CFR § 172.24 (1967). The lessee must furnish the Secretary with a monthly report disclosing all operations conducted on the lease, 30 CFR §§ 221.60-221.65 (1967), and must pay the royalties to the Secretary who deposits them to the credit of the Indian lessor. 25 CFR §§ 172.14, 172.16 (1967). The lessee agrees to drill wells which the Secretary determines are necessary to protect the leased land from drainage by another well on adjoining property. 30 CFR § 221.21 (1967). Finally, the lessee is obligated to prevent the waste of oil and gas and agrees to pay the Indian lessor the full value of all gas wasted, unless the Secretary determines at the request of the lessee that the waste was sanctioned by state and federal law. 30 CFR §§ 221.18, 221.35 (1967).

While the United States has exercised its supervisory authority over oil and gas leases in considerable detail, we find nothing in this regulatory scheme which would preclude petitioners from seeking judicial relief for an alleged violation of the lease. If the Government does determine that there has been waste in violation of a lease, it will of course satisfy its trust obligations by filing the necessary court action. However, there is nothing in the lease or regulations requiring the Indians to seek administrative action- from the Government instead of instituting legal proceedings on their own. The existence of the power of the United States to sue upon a violation of the lease no more diminishes the right of the Indian to maintain an action to protect that lease than the general power of the United States to safeguard an allotment affected the capacity of the Indian to protect that allotment. Furthermore, the Bureau of Indian Affairs, which is the agency of the Department of the Interior charged with fulfilling the trust obligations of the United States, is faced “with an almost staggering problem in attempting to discharge its trust obligations with respect to thousands upon thousands of scattered Indian allotments. In some cases, the adequate fulfillment of trust responsibilities on these allotments would undoubtedly involve administrative costs running many times the income value of the property.” H. R. Rep. No. 2503, 82d Cong., 2d Sess., 23 (1952). Recognizing these administrative burdens and realizing that the Indian’s right to sue should not depend on the good judgment or zeal of a. government attorney, the United States has indicated its support of petitioners’ position that Indians have a capacity to sue under the oil and gas lease.

The regulations do empower the Secretary to cancel a lease “for good cause upon application of the lessor or lessee, or if at any time the Secretary is satisfied that the provisions of the lease or of any regulations heretofore or hereafter prescribed have been violated.” 25 CFR § 172.23 (1967). However, there is no justification for concluding that the severe sanction of cancellation of the lease is the only relief for all breaches of the lease terms or for any failure to pay royalties. Both the lessor and the lessee may wish to resolve their disagreement by the payment of damages and not by the cancellation of a basically satisfactory lease.

Nor is the capacity of the Indian defeated by § 6 of the lease, which provides that the Secretary may cancel the lease “before restrictions are removed,” and concludes, “Provided, That after restrictions are removed the lessor shall have and be entitled to any available remedy in law or equity for breach of this contract by the lessee.” There is no warrant for implying by negative inference from this proviso a denial of all remedies otherwise available to the Indian prior to the removal of the federal restrictions on his power to alienate the land. Section 6 merely provides that when the federal restrictions on alienation are terminated, the federal supervision over the lease will likewise come to an end, without impairing the continuing rights of the Indian. Compare 25 CFR § 172.28 (1967).

Respondent's argument that the judgment in its favor should be sustained on available adequate state procedural grounds is untenable. Since the Oklahoma Supreme Court’s decision rested solely on federal grounds, that court must have either rejected or failed to reach the asserted state grounds. Furthermore, we intimate no view on the merits of the case. If the lessee has conformed to all of the requirements of the federal regulations and has not breached any of the terms of the lease, the suit may fail. We merely hold that the Indian lessors have the capacity to maintain an action seeking damages for the alleged breach of the oil and gas lease. Accordingly, the judgment of the Supreme Court of Oklahoma is reversed and the cause is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

Mr. Justice Marshall took no part in the consideration or decision of this case.

       The Area Director of the Bureau of Indian Affairs approved a contract between petitioners and an attorney for legal services to be rendered in connection with this litigation. The Area Director has been delegated the authority to approve the employment of attorneys for individual Indians who may be compensated on a quantum meruit basis from restricted trust funds. Section 269 of Order 551 of the Commissioner of Indian Affairs, 16 Fed. Reg. 2939 (1951), as amended, 22 Fed. Reg. 6066 (1957).

       The petition also alleged that the waste of natural gas violated § 86.3 of the Oklahoma Oil and Gas Conservation Act. Okla. Stat. Tit. 52, §86.3 (1951). In response to a motion to require petitioners to elect between or state separately a cause of action under the lease and one based on tort, the District Court, with the approval of the parties, struck the alleged violation of the conservation statute from the petition. After petitioners announced that the petition then stated only one cause of action which sought recovery for the breach of the lease, the District Court denied the motion.

       The lease provides:
      “3. In consideration of the foregoing, the lessee hereby agrees:
      “(f) Diligence, prevention of waste. — To exercise reasonable diligence in drilling and operating wells for oil and gas on the lands covered hereby, while such products can be secured in paying quantities; to carry on all operations hereunder in a good and workmanlike manner in accordance with approved methods and practice, having due regard for the prevention of waste of oil or gas developed on the land . . . .”
      See 30 CFR, §§221.18, 221.35 (1967).

       The opinion of the Oklahoma Supreme Court is not reported.

       Indians are expressly authorized to institute proceedings against the United States to establish their right to an allotment. 25 U. S. C. § 345.

       See note following 25 U. S. C. § 348. And see 25 U. S. C. § 462, which provides: “The existing periods of trust placed upon any Indian lands and any restriction on alienation thereof are extended and continued until otherwise directed by Congress.”

       “This national interest is not to be expressed in terms of property, or to be limited to the assertion of rights incident to the ownership of a reversion or to the holding of a technical title in trust.” Heckman v. United, States, 224 U. S. 413, 437 (1912), quoted with approval in United States v. Hellard, 322 U. S. 363, 366 (1944).

       Indians of course are now authorized to bring claims against the United States. See Indian Claims Commission Act, 60 Stat. 1049 (1946), 25 U. S. C. §§ 70-70w. For claims arising after August 13, 1946, see 28 U. S. C. § 1505, conferring jurisdiction on the Court of Claims.

      “[T]he rights of restricted Indians and Indian tribes or pueblos to maintain actions with respect to their lands are clearly recognized, although the United States might not be bound by a judgment in such an action to which it was not a party.” Federal Indian Law 336 (1958).

       A proviso to § 396 does give the Secretary the power to offer leases on his own if the allottee is deceased and the heirs have not been determined or cannot be found. 25 U. S. C. § 396.

       The Memorandum for the United States as amicus curiae states, at 7:
      “In sum, respondent’s contention that, until the trusteeship is ended, the Indian landowners are disabled from maintaining suit for breach of a lease they have granted of their own property is unsupported in the governing statutes, the implementing regulations, or the terms of the lease.”

       Section 6 of the lease provides:
      “6. Cancellation and forfeiture. — When, in the opinion of the Secretary of the Interior, there has been a violation of any of the terms and conditions of this lease before restrictions are removed, the Secretary of the Interior shall have the right at any time after 30 days notice to the lessee, specifying the terms and conditions violated, and after a hearing, if the lessee shall so request within 30 days of receipt of notice, to declare this lease null and void, and the lessor shall then be entitled and authorized to take immediate possession of the land: Provided, That after restrictions are removed the lessor shall have and be entitled to any available remedy in law or equity for breach of this contract by the lessee.”

       The regulation dealing with the removal of restrictions avoids the danger of a negative inference by stating: “Oil and gas leases ... on land from all of which restrictions against alienation have been or shall be removed, even if such leases contain provisions authorizing supervision by the Department, shall, after such removal of restrictions against alienation, be operated entirely free from such supervision, and the authority and power delegated to the Secretary of the Interior in said leases shall cease 25 CFR § 172.28 (1967).