U.S. Supreme Court
Regents v. Carroll, 338 U.S. 586 (1950)
Regents v. Carroll
Argued December 9, 1949
Decided February 6, 1950
338 U.S. 586
1. The Federal Communications Commission renewed a license for a radio station only after the applicant (petitioner here), pursuant to a condition prescribed by the Commission and without respondents' consent, repudiated a contract with respondents. The Commission had determined that, unless the contract were given "no further effect," a renewal of the license would not be in the public interest. This was based on findings that the contract jeopardized petitioner's financial position, and that it allowed respondents to profit from a situation created by a previous contract with petitioner which the Commission had held illegal. Respondents were not parties to the proceedings before the Commission, and did not seek to intervene, but they subsequently sued in a state court and obtained a judgment for the amount due under the contract.
Held: the judgment of the state court did not contravene the Supremacy Clause of Article VI of the Constitution. Pp. 338 U. S. 587-603.
2. Whether petitioner was entitled to have its defense of impossibility of performance sustained is a question of state law. P. 338 U. S. 594.
3. Under the Communications Act of 1934, the Commission's regulatory powers center around the grant or revocation of licenses. Pp. 338 U. S. 594-600.
4. Under § 303(r) of the Act, authorizing the Commission to prescribe such "conditions" as are "necessary to carry out the provisions" of the Act, the Commission may impose conditions which an applicant must meet before it will be granted a license; but imposition of such conditions cannot directly affect the applicant's responsibilities to a third party dealing with the applicant. P. 338 U. S. 600.
5. The Commission could insist that the applicant change its situation before it granted a license, but it could not act as a bankruptcy court to change the situation for the applicant. Pp. 338 U. S. 600-602.
6. The Act does not authorize the Commission to determine the validity of contracts between licensees and others. P. 338 U. S. 602. chanroblesvirtualawlibrary
7. A different result is not required by the fact that respondents had knowledge of the Commission's action in denying a license unless the contract were given "no effect" and they made no effort to intervene in the proceedings before the Commission. Pp. 338 U. S. 602-603.
78 Ga.App. 292, 50 S.E.2d 808, affirmed.
Notwithstanding an order of the Federal Communications Commission (11 F.C.C. 71) renewing petitioner's license for a radio station on condition that petitioner repudiate a contract with respondents, a Georgia court awarded respondents a judgment for the amount due under the contract. The Court of Appeals of Georgia affirmed. 78 Ga.App. 292, 50 S.E.2d 808. The Supreme Court of Georgia denied certiorari. 78 Ga.App. 898. This Court granted certiorari. 338 U.S. 846. Affirmed, p. 338 U. S. 603.