Open App →
Home › Case briefs › Federal Courts

Skelly Oil Co. v. Phillips Petroleum Co.

Supreme Court of the United States · 1950 · Federal Courts
339 U.S. 667 (1950)
Updated
Federal Courtsdeclaratory judgmentswell-pleaded complaintDeclaratory Judgment Actfederal-question jurisdictionwell-pleaded complaint ruleanticipated defensearising under

Facts

Michigan-Wisconsin sought a Federal Power Commission certificate under the Natural Gas Act for a pipeline project, and Phillips contracted with Skelly, Stanolind, and Magnolia to buy Hugoton Field gas for resale to Michigan-Wisconsin. Each contract allowed the seller to terminate if Michigan-Wisconsin failed to secure from the Commission by October 1, 1946, a certificate of public convenience and necessity, with termination notice permitted after December 1, 1946, but before issuance of such certificate. On November 30, 1946, the Commission adopted an order stating that a certificate was issued subject to conditions, but the order's contents were not made public until December 2. On December 2, petitioners notified Phillips that they were terminating the contracts, and Phillips then sought a federal declaratory judgment that the contracts were still binding.

Issue

Whether Phillips' declaratory judgment action arose under federal law within the meaning of 28 U.S.C. § 1331 when the underlying contract claim was created by state law and the federal issue appeared only in response to an anticipated defense. As to Magnolia, where diversity existed, the Court also considered whether the judgment on the merits should stand or be vacated for further proceedings concerning the meaning of issuance of a certificate.

Rule

The Declaratory Judgment Act enlarges remedies but does not enlarge the subject-matter jurisdiction of the federal courts. A case does not arise under federal law for § 1331 purposes unless the plaintiff's own well-pleaded claim presents a federal question unaided by allegations anticipating defenses; a federal issue that would enter only by way of an anticipated defense is insufficient.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

  • The court's holding and reasoning
  • Doctrine tests, pitfalls & exam hypotheticals
  • 10 practice questions + 4 AI-graded essays on this case
Sign up free to see more →
Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.
In Tulsa, Nora Benton contracted with Red Mesa Aggregates, a New Mexico company, to buy gravel under a supply agreement governed by Oklahoma contract law. After a dispute arose, Nora filed in federal court seeking a declaratory judgment that the contract remained enforceable, alleging that Red Mesa's expected excuse for nonperformance depended on the meaning of a federal environmental permit; the parties are not diverse.

Does the federal district court have federal-question jurisdiction?

Explanation. Federal-question jurisdiction is determined by asking whether the plaintiff's own coercive claim would arise under federal law. Here, absent declaratory procedure, Nora's claim would be for contract enforcement under state law. The federal permit issue would enter only in anticipation of Red Mesa's defense, which is insufficient under the well-pleaded complaint rule. The Declaratory Judgment Act is procedural only and does not enlarge jurisdiction. (Derived from Skelly Oil Co. v. Phillips Petroleum Co. (1950).)