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U.S. Supreme Court

Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (1950)

Skelly Oil Co. v. Phillips Petroleum Co.

No. 221

Argued December 9, 1949

Decided June 5, 1950

339 U.S. 667


Respondent oil company had contracts with three producers to purchase gas for resale to a pipeline company which had applied to the Federal Power Commission for a certificate of public convenience and necessity under the Natural Gas Act. Each contract provided for termination by the producer upon notice to the respondent at any time after December 1, 1946, "but before the issuance of such certificate." On November 30, 1946, the Commission ordered that a certificate of public convenience and necessity be issued to the pipeline company, upon specified terms and conditions. The order was not made public until December 2, 1946, on which day the producers severally notified respondent of the termination of their contracts. Alleging that a certificate of public convenience and necessity, "within the meaning of said Natural Gas Act and said contracts," had been issued prior to the attempt to terminate the contracts, respondent sued the three producers in the Federal District Court under the Declaratory Judgment Act for a declaration that the contracts were still "in effect and binding upon the parties thereto." The decree of the District Court that the contracts had not been effectively terminated, and were still in full force and effect, was affirmed by the Court of Appeals.


1. The matter in controversy as to which the respondent asked for a declaratory judgment is not one that "arises under" the laws of the United States, and since,.as to two of the defendant producers, there was no diversity of citizenship, the proceedings against them should have been dismissed for want of jurisdiction. Pp. 339 U. S. 671-674.

(a) By the Declaratory Judgment Act, Congress enlarged the range of remedies available in the federal courts, but did not extend their jurisdiction. Pp. 339 U. S. 671-672.

(b) Where the existence of a federal question is the basis of federal jurisdiction, such a federal question must be presented

Page 339 U. S. 668

by the plaintiff's claim itself, unaided by allegations in anticipation of defenses which might be interposed. P. 339 U. S. 672.

2. There being diversity of citizenship in the case of the third producer defendant, the District Court had jurisdiction of the suit as to it. P. 339 U. S. 674.

(a) There being diversity of citizenship between respondent and this defendant, and the venue being properly laid in the State where the suit was brought, the case was properly in the District Court. P. 339 U. S. 674.

(b) That the declaratory remedy which may be given by the federal court may not be available in the state courts is immaterial. P. 339 U. S. 674.

3. As to the third producer defendant, the judgment of the Court of Appeals is vacated and the cause is remanded in order that the Court of Appeals, either itself or by sending the case back to the District Court, may further explore the issues through ways that may be appropriate. Pp. 339 U. S. 674-679.

In a suit under the Federal Declaratory Judgment Act, the District Court decreed that the contracts between respondent and petitioners had not been terminated and remained in full force and effect. The Court of Appeals affirmed. 174 F.2d 89. This Court granted certiorari. 338 U.S. 846. As to one of the petitioners, the judgment is vacated and the cause remanded; as to the other two petitioners, the judgment is reversed with directions that the cause be dismissed. P. 679.

Page 339 U. S. 669

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