CONSTITUTIONAL LAW - FEDERAL POWER TO DISPOSE OF PROPERTY - USE OF IMPOSED CONDITIONS TO INDUCE STATE CONFORMITY TO CONGRESSIONAL POLICY

A federal grant of public land to the city of San Francisco, on condition that the land be used for municipal production and distribution- of water and electricity, contained an express prohibition against the sale of electric energy to any private company for resale. The United States sought to enjoin the city from carrying out a contract with a private corporation whereby the latter distributed the electricity to consumers at rates set by the state railroad commission. The federal circuit court of appeals declared the relationship between the city and corporation was that of agency, rather than vendor and vendee. On appeal to the Supreme Court, held, injunction should be granted as the contract was a sale of electricity in violation of a valid condition in the grant. United States v. City and County of San Francisco, 310 U. S. 16, 60 S. Ct. 749 (1940), reversing City and County of San Francisco v. United States, (C. C. A. 9th, 1936) 106 F. (2d) 569