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"The Secretary of the Treasury cannot by his regulations alter or amend a revenue law. All he can do is to regulate the mode of proceeding to carry into effect what Congress has enacted."
In United States v. Eaton, 144 U. S. 677-687, 12 Sup. Ct. 764, 36 L. Ed. 591, a regulation made by the Commissioner of Internal Revenue, and approved by the Secretary of the Treasury, was under discussion. That regulation was, under the act of August 2, 1886, c. 840, 24 Stat. 209 [U. S. Comp. St. 1901, p. 2228], in relation to the sale of oleomargarine, which required wholesale dealers therein to keep a book and make monthly return showing certain prescribed matters. A wholesale dealer in oleomargarine failed to comply with the regulation made by the secretary, and it was decided that he was not held to the penalty imposed by section 18 of the act (24 Stat. 212 [U. S. Comp. St. 1901, p. 2234]), because he did not fail to do a thing required by law in carrying on or conducting his business; that a sufficient statutory authority should exist for declaring any act or omission a criminal offense. The act referred to was not so broad in its terms as the one under consideration. The section considered by the court which prescribed the penalty follows:
"That if any manufacturer of oleomargarine, any dealer therein or any importer or exporter thereof shall knowingly or willfully omit, neglect or refuse to do, or cause to be done, any of the things required by law in the carrying on or conducting of his business, or shall do anything by this act prohibited, if there be no specific penalty or punishment imposed by any other section of this act for the neglecting, omitting or refusing to do. or for doing or causing to be done the thing required or prohibited, he shall pay a penalty," etc.
In discussing the statute the Supreme Court laid down this wholesome doctrine:
"Much more does this principle apply to a case where it is sought substantially to prescribe a criminal offense by the regulation of a department. It is a principle of criminal law that an offense which may be the subject of criminal procedure is an act committed or omitted 'in violation of a public law, either forbidding or commanding it. 4 American & English Encyclopedia of Law, 642; 4 Bl. Com. 5. It would be a very dangerous principle to hold that a thing prescribed by the Commissioner of Internal Revenue, as a needful regulation under the oleomargarine act, for carrying it into effect, could be considered as a thing 'required by law' in the carrying on or conducting of the business of a wholesale dealer in oleomargarine, in such manner as to become a criminal offense punishable under section 18 of the act. *** It is necessary that a sufficient statutory authority should exist for declaring any act or omission a criminal offense, and we do not think that the statutory authority in the present case is sufficient."
To like effect are United States v. Maid (D. C.) 116 Fed. 650, and United States v. Blasingame (D. C.) 116 Fed. 654.
Have we here a case involving the delegation of legislative power? That Congress intended to punish by penalty made certain the violation of regulations made by the Secretary of Agriculture, and to declare the same a criminal offense, is beyond controversy. But the grazing of stock upon the forest reserves has not been prohibited by any congressional act. The prohibition rests entirely upon regulations made by the secretary. Regulation No. 9 prescribes, as we
have seen, that all persons before grazing sheep in a forest reserve must secure a permit, and any person responsible for grazing the same without a permit becomes a violator of the law; that is, whoever violates a rule promulgated by the secretary violates a law passed by Congress. The evident embarrassment attending the making of regulation 9, in an attempt to bring it within the act of Congress, is apparent by the language used. Clearly there was a keen appreciation of the necessity of supplying that which Congress had failed to enact, and this was attempted by the use of the words, "is liable to punishment for violation of the law." At times the line is somewhat indistinct between that which constitutes the delegation of legislative power and the delegation of administrative authority.
This case does not fall within the rule so well explained and amplified by the authorities that the executive branch of the government may make proper rules and regulations for carrying into effect the legislative will of Congress. The president may be authorized to declare by proclamation that a law shall go into effect upon the happening of a certain contingency. The Secretary of the Treasury may make rules and regulations for the enforcement of the revenue statutes and the like. So may the heads of all the departments make like regulations, but the authority to do so must be expressly delegated, and the law must be complete in itself. The rules and regulations may only be prescribed for carrying out what Congress has expressly declared to be the law. Such powers do not pertain to the legislative functions, but are referable to administrative duties. Congress cannot leave a statute to be enlarged upon either by the courts or the executive department. It cannot authorize any other branch of the government to define that which is purely legislative, and that is purely legislative which defines rights, permits things to be done, or prohibits the doing thereof. Certainly here, it is the Secretary of Agriculture who has undertaken to enact this law. He it is who has designated that which constitutes the crime. The thing prohibited, the thing for which the party is to be punished, the act which is the offense, is prescribed by the secretary, and not enacted by Congress. As we have seen, this cannot be done.
The objection to the indictment is the absence of a law defining the act therein charged as a criminal offense. Upon that ground the demurrer must be sustained, and the defendant discharged.
HELENA POWER TRANSMISSION CO. v. SPRATT et al.
(Circuit Court, D. Montana. June 20, 1906.)
1. REMOVAL OF CAUSES-SUITS REMOVABLE-PROCEEDING TO CONDEMN LAND.
[Ed. Note.-For cases in point, see vol. 42, Cent. Dig. Removal of Causes, § 18.]
2. SAME-MOTION TO REMAND-RECORD TO BE CONSIDERED.
A cause removed into a federal court on the ground of diversity of citizenship will be remanded unless the jurisdiction of such court appears from the record, which includes for the purposes of such motion the petition for removal and all pleadings and other papers previously properly filed in the suit in the state court.
[Ed. Note.-For cases in point, see vol. 42, Cent. Dig. Removal of Causes, §§ 218-220, 227.]
3. SAME SEPARABLE CONTROVERSY.
Where it appears from the record in a proceeding in a state court to condemn land that the equitable title to the land is in a defendant who is a citizen of the state, while the legal title is in another defendant who is a citizen of another state, there is no separable controversy between the plaintiff and the nonresident defendant, which entitles the latter to remove the cause.
[Ed. Note.-For cases in point, see vol. 42, Cent. Dig. Removal of Causes, §§ 94, 102.
Separable controversy, ground for removal of suit to federal court, see notes to Robbins v. Ellenbogen, 18 C. C. A. 86; Mecke v. Valleytown Mineral Co., 35 C. C. A. 155.]
On Motion to Remand to State Court.
The plaintiff, a New Jersey corporation, on April 25th last instituted this proceeding in the state courts, under the eminent domain laws of the state of Montana, to condemn certain lands for flooding purposes; it being alleged that it is necessary for it to cover the lands described with water in the operation of its dam and electrical plant. It alleges that five tracts, each of which is separately described, are necessary. No question arises as to any of the tracts except what is called No. 5. Plaintiff alleges that the reputed owners of No. 5 tract are the Eldorado Gold & Gem Company of Montana, Limited, a Michigan corporation, or W. H. Sanborn and Sanborn, his wife, and that if any other persons have any interest in said premises, as owners or otherwise, such persons or owners are unknown to plaintiff. All the tracts, except No. 5, are alleged to be owned by defendants other than Sanborn and wife. The defendants Augustus N. Spratt and Elizabeth B. Spratt, by Messrs. M. S. Gunn ard J. B. Clayberg, their attorneys, answered the plaintiff's complaint, denying that the use for which plaintiff was seeking to condemn the land was a public use, and denying upon information and belief that any of the defendants have any right, title, or interest in or to the premises described in the complaint, and alleging that defendant Spratt is the owner, in the possession, and entitled to the possession, of all the property described in the complaint, except the fifth parcel, and as to that tract defendant Spratt alleged that he has an equitable interest therein and title thereto, the legal title being in the defendant W. H. Sanborn. Spratt pleaded that the taking of the property would be in violation of the law and of the fourteenth amendment to the Constitution of the United States. Upon June 9th Messrs. M. S. Gunn and J. B. Clayberg also appeared as counsel in the state court for the defendants W. H. Sanborn, Anna Sanborn, and the Eldorado Gold & Gem Company of Montana, Limited, and demurred to the complaint, on the ground that it did not state facts sufficient to constitute a cause of action or to warrant the relief prayed for therein. Upon the same day the same three defendants, by Mr. J. B. Clayberg, their attorney, filed a petition for removal of the cause to the Circuit Court of the United States. In this petition defendants alleged that the value of the property exceeded $2,000, and that the suit was to condemn certain lands and premises owned by and belonging to the petitioners. The land described was that which was included in the fifth paragraph of the complaint (tract No. 5), as heretofore referred to. The petitioners alleged that when the suit was commenced and now the controversy between plaintiff and petitioners was and is wholly between citizens of different states, and could be fully determined as between them, and
that petitioners Sanborn and wife were and are citizens of the state of Michigan, and that the Eldorado Gold & Gem Company was and is a citizen of Michigan, and not a resident or citizen of the state of Montana; that the plaintiff is a New Jersey corporation, citizen of New Jersey; that plaintiff seeks to condemn five separate and specific pieces or descriptions of real estate; that the complaint does not allege that any of the defendants other than petitioners are interested in the above-described property of petitioners sought to be condemned, but that it is owned solely by petitioners; that the matter in controversy between petitioners and plaintiff is separate from the matter or matters in controversy between the plaintiff and the other defendants herein, and that none of the other defendants herein are necessary or proper parties to the controversy between plaintiff and petitioners; that a separate action could be maintained by plaintiff against petitioners for the condemnation of the special property alleged to be owned by petitioners without joining as defendants any of the other defendants named in the above-entitled suit; that the Circuit Court of the United States, Ninth Circuit, in and for the District of Montana, has full and complete jurisdiction of such controversy and action, and the same can be fully determined therein; that the time in which petitioners may appear in said suit had not elapsed. The necessary bond on removal was given, and an order of removal was made by the judge of the state district court. The plaintiff in this, the Circuit Court of the United States, has filed a motion to remand, upon the ground that this court has not jurisdiction.
Wallace & Donnelly and Carpenter, Day & Carpenter, for plaintiff. J. B. Clayberg and M. S. Gunn, for defendants.
HUNT, District Judge (after stating the facts). After a careful examination of the authorities, I have concluded that the proceeding in the state court is a suit or controversy to which the judicial power of the United States extends. Traction Co. v. Mining Co., 196 U. S. 246, 25 Sup. Ct. 251, 49 L. Ed. 462; South Dakota Central Ry. Co. v. C. M. & St. P. R. Co. (C. C. A.) 141 Fed. 578. The proceeding under the statutes of the state of Montana must be in court from its initiation. It is therefore to be distinguished from a proceeding purely administrative until report is filed. Title 7, pt. 3, Eminent Domain, Code Civ. Proc. Mont.; Boom Co. v. Patterson, 98 U. S. 403, 25 L. Ed. 206; Upshur Co. v. Rich, 135 U. S. 457, 477, 10 Sup. Ct. 651, 34 L. Ed. 196. To determine whether there is a separable controversy the court may examine the record as it stood when the petition for removal was granted. The suggestion made by myself during the argument that the case of Tennessee v. Union Planters' Bank, 152 U. S. 454, 14 Sup. Ct. 654, 38 L. Ed. 511, seemed to limit the inquiry to an examination of the plaintiff's complaint only was founded upon an impression that the doctrine of that decision went as far as indicated. But after re-examining the case I find that the opinion of Justice Gray discusses the removal of a case where removal is sought solely upon the ground that a federal question is involved; and the decision was that no case can be removed from a state court into a Circuit Court of the United States on the sole ground that it is one arising under the Constitution, laws, or treaties of the United States, unless that appears by plaintiff's statement of his own claim. The same rule was upheld in Chappell v. Waterworth, 155 U. S. 102, 15 Sup. Ct. 34, 39 L. Ed. 85; Walker v. Collins, 167 U. S. 57, 17 Sup. Ct. 738, 42 L. Ed. 76; Galveston Railway v. Texas, 170 U. S. 235, 18 Sup. Ct. 603, 42 L, Ed. 1017; B. & M. Co.
v. M. O. P. Co., 188 U. S. 632, 23 Sup. Ct. 434, 47 L. Ed. 626, and Gableman v. Peoria, etc., Ry. Co., 179 U. S. 335, 21 Sup. Ct. 171, 45 L. Ed. 220; and, if it does not so appear, the want of it cannot be supplied by any statement of the petition for removal or in the subsequent pleadings. Worthington v. Mitchell (C. C.) 140 Fed. 947. Where, however, removal is sought upon the grounds of diversity of citizenship, the court will remand to the state court a suit which the face of the record fails to show is within the jurisdiction of the Circuit Court, and by the record are meant pleadings and other papers properly filed in the state court before and at the time the petition for removal is filed, and the petition may be included. In Traction Co. v. Mining Co., 196 U. S. 246, 25 Sup. Ct. 251, 49 L. Ed. 462, the court included the petition for removal as one of the papers constituting the record to be examined. "It is well settled," says Justice Harlan in that case, "that if, upon the face of the record, including the petition for removal, a suit does not appear to be a removable one, then the state court is not bound to surrender its jurisdiction, and may proceed as if no application for removal had been made." Among the earlier cases supporting this recent utterance of the court is Insurance Co. v. Pechner, 95 U. S. 183, 24 L. Ed. 427, where Chief Justice Waite said:
"This right of removal is statutory. Before a party can avail himself of it, he must show upon the record that his is a case which comes within the provisions of the statute. His petition for removal, when filed, becomes a part of the record in the cause. It should state facts, which, taken in connection with such as already appear, entitle him to the transfer. If he fails in this, he has not, in law, shown to the court that it cannot 'proceed further with the cause.' Having once acquired jurisdiction, the court may proceed until it is judicially informed that its power over the cause has been suspended."
In Stone v. South Carolina, 117 U. S. 430, 6 Sup. Ct. 799, 29 L. Ed. 962, Chief Justice Waite repeated the language quoted, and added that the petition must show a right in the petitioner to demand a removal. In Carson v. Hyatt, 118 U. S. 279, 6 Sup. Ct. 1050, 30 L. Ed. 167, Chief Justice Waite again spoke for the court, and the statements of the petition were considered as part of the record of the case. In Burlington, etc., Ry. Co. v. Dunn, 122 U. S. 513, 7 Sup. Ct. 1262, 30 L. Ed. 1159, the court, once more speaking through Chief Justice Waite, cites Railway Co. v. Ramsey, 22 Wall. (U. S.) 322, 22 L. Ed. 823, to the effect that when a petition for a removal of a cause to the Circuit Court of the United States is filed in a cause pending in a state court, the state courts are at liberty to consider the actual facts, as well as the law arising on the face of the record, after the presentation of the petition for removal. Of course the issues of fact made upon the petition for removal can only be tried in the Circuit Court, but the state court may determine for itself whether on the face of the record removal must be had. "The theory," Chief Justice Waite continues, “on which it [the rule] rests is that the record closes, so far as the question of removal is concerned, when the petition for removal is filed and the necessary security furnished. It presents then to the state court a pure question of law, and that is whether, admitting the facts stated in the petition for removal to be true, it appears on the face of the record,