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Skelly Oil Co. v. Phillips Petroleum Co. - 339 U.S. 667, 70 S. Ct. 876 (1950)

Rule:

The operation of the Declaratory Judgment Act, 28 U.S.C.S. § 2201, is procedural only. Congress has enlarged the range of remedies available in the federal courts but has not extended their jurisdiction. When concerned with the power of the inferior federal courts to entertain litigation within the restricted area to which the Constitution and Acts of Congress confine them, "jurisdiction" means the kinds of issues which give right of entrance to federal courts. Jurisdiction in this sense has not been altered by the Declaratory Judgment Act.

Facts:

Respondent oil company had contracts with petitioners’ petroleum companies to purchase gas for resale to a pipeline company which had applied for a certificate of public convenience and necessity under the Natural Gas Act. Each contract provided for termination by the producer upon notice to respondent at any time after December 1, 1946, "but before the issuance of such certificate." The order for the certificate issuance was not made public until December 2, 1946, on which day petitioners severally notified respondent of the termination of their contracts.  Respondent sued petitioner under the Declaratory Judgment Act, 28 U.S.C.S. § 2201. The district court decreed that the contracts between the parties had not been effectively terminated and that each of such contracts remain in full force and effect. The appellate court affirmed. On further appeal, Supreme Court of the United States reversed the judgment with directions that the cause be dismissed with respect to some of petitioners and vacated and remanded for further proceedings with respect to another petitioner.

Issue:

Did the suit asking for a purchase contract to be declared in full force and effect between several parties arise under the US Constitution, laws, or treaties of the United States so as to provide declaratory relief under the Federal Declaratory Judgment Act, 28 U.S.C.S. § 2201?

Answer:

No.

Conclusion:

With respect to some of petitioners, the matter in controversy on which petitioner petroleum companies sought a declaratory judgment did not arise under the laws of the United States and that jurisdiction could not be sustained. A different situation existed with respect to the other petitioner because diversity of citizenship existed. Whether the statutory requirement governing the contract with that petitioner was satisfied was undecided by the district court, and, therefore, should be remanded for a resolution of the merits.

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