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one ought to doubt but that the statute will be upheld. It is too late to talk about the alleged wrongs of the Supreme Court declaring statutes void. That question was fought out 100 years ago, and from the organization of the Supreme Court, down to the year 1888, being the period covering the first 100 years of the United States Supreme Court, that court held 20 United States statutes void. During the same period, that court held 181 state statutes void, of which 14 were Missouri Statutes. See Appendix to volume 131, U. S. Reports. How many statutes have since been declared void by that court I have not taken the time to ascertain. Some of the statutes thus declared void were railway rate statutes enacted by the states.
These questions are of the greatest importance. There are many complications arising. Much is to be considered besides the mere rates or fares. There must be equality of rates—the treatment and charging of all alike. No rebates, no discriminations must be allowed. Safety of the public, including passengers and employés, must be considered. And as of much importance as any other question, if not the greatest of all, is the question of efficient service. Rapid and prompt delivery of freight must be had. Fast passenger trains, with but few stops, for passengers going a considerable distance, are demanded. Local trains for local passengers are required. To have such efficient service, reasonable compensation must be paid. All these questions are involved in the fixing of rates. Between the cities of St. Louis and St. Joseph, one line of railway is wholly within the state, while another and competing line a part of the distance is within the state of Kansas. A like situation exists between Kansas City and St. Joseph, and another like situation exists between Kansas City and Joplin. Possibly there are other like situations. In the case of Hanley v. Railroad, 187 U. S. 617, 23 Sup. Ct. 214, 47 L. Ed. 333, the Supreme Court decided that a railway connecting two points within a state, and doing business between the two points, but with a line outside of the state a part of the distance, was engaged in interstate commerce controllable only by enactments of Congress. What about the Missouri statute fixing rates over the one line wholly within the state, as against a competing line a part of the distance outside of the state? I do not intimate the conclusion, but that there is a question cannot be doubted. And, if the statute is void in part, is it separable, leaving the valid parts to stand with the void parts eliminated ? I simply mention these questions to show the gravity and importance of these cases, without in the slightest degree intimating the conclusion, often discussed by men of great ability, but upon which as yet there has been no conclusion reached, so far as I know, by any of the courts.
It is urged with much plausibility that by reason of the case of Fitts v. McGhee, 172 U. S. 516, 19 Sup. Ct. 269, 43 L. Ed. 535, that, because penalties are affixed to the statute of 1907, the criminal courts of the state only can take jurisdiction. I do not stop to review the various Missouri statutes upon the subject of both passengers and freight, all of which must be considered as in pari materia; but it is sufficient to say that the inflicting of penalties is not the only remedy. The Attornev General and railroad commissioners still have much to do with the enforcement of these statutes which the railways contend are void in part. These matters were considered, and a conclusion reached adversely to the contention of the officers of Missouri, by the Supreme Court of the United States, sustaining Judge Philips when presiding in this court, and reversing the Supreme Court of Missouri. Railroad v. Missouri R. Commissioners, 183 U. S. 53, 22 Sup. Ct. 18, 46 L. Ed. 78. As I understand, in the original 18 cases now pending in this court, the question was and is whether all the earnings in the aggregate are remunerative. That theory being, I suppose, by reason of the case of Smythe v. Ames (decided by the Supreme Court), 18 Sup. Ct. 418, 169 U. S. 466, 42 L. Ed. 819, and that question is still present under the General Statutes of Missouri, the Statutes of 1905, and the Statute of 1907 in question. The time is not far distant when the question will be raised, and possibly in these very cases, as to whether the statutes can stand, if some rates are too high, if the rates within the state in the aggregate are remunerative. The question will arise whether one person can have less than reasonable rates, and another be compelled to pay more than reasonable rates. Will it be a sufficient answer to say that in the aggregate the rates are remunerative? Or is that a question only between the individual and the railway company? Upon this question I intimate no ruling, but the importance of the question cannot be overestimated.
These cases will be set down for hearing. The orders heretofore made will stand, except as now modified. The two-cent passenger fare statute should be put in force, and kept in force for some months, with the rights of the railways later on to renew their motions to enjoin the enforcement of the statute. One class of people claim that with the two-cent fare travel will so increase as to make it remunerative. Others deny this. The Wisconsin commission but lately declared, after months of investigation, that in that state a two-cent passenger fare would be confiscatory. Gov. Hughes, by a recent veto message, so declared as against an enactment providing for the two-cent fare in the populous state of New York. It may be that what will be reasonable rates in parts of Missouri on one line will be unreasonable in another part of Missouri on another line. How can these questions be determined ? Is it not at present all speculation and guesswork? Of what value will be the testimony of an ordinary business man testifying by way of opinion? And of what value will be the testimony of railway experts giving opinion and illustrating his opinions by the use of many figures? Experience over a reasonable period of time ought to, and no doubt will, settle these questions, at least for the time being, although what may be a reasonable remuneration one year may be unremunerative five years hence. The Supreme Court of the United States, in Smythe v. Ames, referred to, took care of that question by keeping it open, with the right to open up the case from time to time as circumstances required.
Therefore the orders will be that this court retains jurisdiction of these cases, regardless of whether the pleadings tendered are considered as supplemental bills or original bills, and no order will be made for some months with reference to the two-cent fare statute, leaving it for the time being operative and as though in full force.
POOR et al. v. IOWA CENT. RY. CO. et al.
SHILLABER V. MINNEAPOLIS & ST. L. R. CO. et al.
(Circuit Court, S. D. Iowa, C. D. July 11, 1907.)
Nos. 2,452, 2,453. 1, COURTS-JURISDICTION OF FEDERAL COURTS-SUIT AGAINST STATE.
A federal court is not without jurisdiction of a suit to restrain the enforcement of a state statute fixing railroad rates, to which the officers of the state who are charged with such enforcement are made parties defendant, on the ground that such suit is in fact one against the state.
[Ed. Note.--For cases in point, see Cent. Dig. vol. 13, Courts, $ 84412.
Federal jurisdiction of suits against state, see note to Tindall v. Wes
ley, 13 C. C. A. 165.] 2. CORPORATIONS-STOCKHOLDERS' SUITS_EQUITY RULE 94.
Under equity rule 94, a stockholder in a railroad company cannot maintain a suit in a federal court to enjoin the company from obeying a state statute fixing freight or passenger rates, where the only effort made by the complainant to secure the desired action alleged in the bill was a demand on the directors, and the manner or reason for its refusal are not disclosed, since such refusal may have been a proper exercise of the
discretionary powers vested in the directors. In Equity. On motions for preliminary injunctions. Geo. H. Carr and Henry V. Poor, for complainants in both cases. Geo. W. Seevers, for both defendants. H. W. Byers, Atty. Gen. Iowa, amicus curiæ.
McPHERSON, District Judge. The two cases above entitled are brought by holders of stock in the said two companies. The companies only are defendants. The objects of the bills of complaint are to enjoin the defendants from putting into force and carrying out the provisions of the statute passed by the recent session of the Iowa Legislature and approved by the Governor of the state February 28, 1907, taking effect July 4, 1907, commonly known as the two-cent passenger fare statute. In the case against the Iowa Central, the statute if enforced allows the company to carry passengers within the state for two cents only; but, owing to the classification, and the small earnings of the other company in the other case, two and one-half cents per passenger per mile will be allowed.
The question as to the validity of railroad rate statutes is one of great importance. It is at all times a question of much delicacy when a court is asked to hold as void an act of a state Legislature or of Congress. All doubtful questions are solved by the courts in favor of the validity of such enactments. It is when, and only when, the court has no doubt as to the invalidity, that such a decree is rendered; and, when there is no doubt, courts do not hesitate to so declare. In the so-called Granger Cases, 94 U. S. 113–187, 24 L. Ed. 77, 94, 97, 99, 102, in 1876, the Supreme Court held that a Legislature has the power to enact a maximum rate statute. In case of State v. Railroad Commissioners, 36 N. W. 305, 23 Neb. 117, and Id., 37 N. W. 782, 38 Minn. 281, the Supreme Court of Minnesota held that the rates fixed by the state conimission could not be inquired into by the courts. But on writs of error the Supreme Court of the United States reversed the decision of the Minnesota court. Chicago, M. & St. P. R. Co. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 33 L. Ed. 970, and Minneapolis E. R. Co. v. Minnesota, 134 U. S. 475, 10 Sup. Ct. 473, 33 L. Ed. 985. From that time until the present, all the courts and the profession have understood that the Legislature, acting directly by statute or through a commission duly authorized, can fix maximum freight and passenger rates, subject to the right and power of the court by appropriate judicial proceedings to declare such statutes or orders void, if such rates are either confiscatory or unremunerative, for the reason that such proceedings are not due process of law, and are the taking of property without compensation, and therefore in violation of the United States Constitution. The Minnesota cases were reversed on the single proposition that the courts of that state had held that the rates thus fixed could not be inquired into by judicial proceedings. In Reagan v. Trust Company, 154 U. S. 362, 412, 14 Sup. Ct. 1047, 38 L. Ed. 1014, and Id., 154 U. S. 418, 14 Sup. Ct. 1062, 38 L. Ed. 1030, and Id., 154 U. S. 420, 14 Sup. Ct. 1062, 38 L. Ed. 1031, on proceedings in equity, the Supreme Court held that the rates thus fixed in the state of Texas were not remunerative, and were therefore void. In Smythe v. Ames, Receiver of the Union Pacific Railway Company, 169 U. S. 466, 18 Sup. Ct. 418, 42 L. Ed. 819, and Id., 171 U. S. 361, 18 Sup. Ct. 888, 43 L. Ed. 197, the Supreme Court held that the state freight rates thus fixed in Nebraska were void, because not remunerative. And the case of Cotting v. Kansas City Stock Yards, 183 U. S. 79, 22 Sup. Ct. 30, 46 L. Ed. 92, in declaring void by a bill in equity at the suit of a stockholder, a Kansas statute regulating and fixing rates of a stock yard company, while not in point on the question now before the court, is one of much importance as illustrating the various phases of the various questions. It would take many pages and much time to properly review those cases to which I have called attention. I have no such purpose. I call attention to them only to state what thus far has been decided. It has thus far been decided that the state Legislature has the power to establish the maximum railroad passenger and freight rates within the state, and that the fixing of such rates, whether done directly by the Legislature, or by a commission, is a legislative act.
It has been decided that such rates thus fixed are presumably fair and remunerative, and therefore valid, and that the company, stockholder, bondholder, or mortgagee challenging such rates has the burden of proof. It has been decided that the Circuit Courts of the United States have jurisdiction in most cases to adjudicate the questions. It is agreed by all that the state cannot regulate or control interstate rates. The business between two points within a state, over a line which a part of the distance is without the state, is interstate business, and therefore beyond the power of the state to control or regulate, as was held by the Supreme Court in Hanley v. Railroad, 187 U. S. 617, 23 Sup. Ct. 214, 47 L. Ed. 333.
It has been stated several times that proceedings in equity are the most seemly and suitable to properly determine the question, and this is so, because then the Supreme Court of the United States would
on the evidence render the final decrees. As that court is the final arbiter of all questions arising under the United States Constitution, it seems to me that all patriotic persons should welcome the opportunity of finally presenting these great questions to that court. Criminal cases against ticket agents, conductors, and other subordinates are unavailing. Decisions of state Supreme Courts, and I mention them with the greatcut respect, cannot make a final settlement of the questions. The Supreme Court of the United States only can render the decision, to which all will cheerfully bow and acquiesce. Whether in an equity case tried in the state courts, and taken to the Supreme Court by writ of error, can there be decided on the merits, is a question only to be suggested, and, of course, is beyond the power of this court to decide. And it has been decided that in determining whether the state rates thus fixed are remunerative, the interstate rate receipts cannot be considered. But the question argued on the hearing, of whether when the state rates, by practical effect, directly affect the interstate rates, is a question that has not yet been decided. And the question arises by suggestion of whether one person, whether a passenger or a shipper, can be charged more than a reasonable rate, in order to create earnings to make up the average, by reason of others getting rates at less than that which is reasonable. I only mention these matters to show the great importance of these and like cases. The responsibility resting upon the court is great. When these bills were presented, I directed that the Governor and Attorney General be given notice. This was not done with any thought of making them, or any other state officer, a party to the record. But it was done because there is here presented great public questions, and I deemed it seemly and courteous that those officers be given an opportunity to appear by intervention, if allowable, or otherwise, and be heard.
At this hearing the Attorney General of the state appeared as amicus curiæ only, and made two suggestions:
1. That these actions are collusive. The bills which are under oath, recite that the actions are not collusive. They are signed by eminent and reputable counsel. The only fact at all suggestive of collusion is that, no doubt, the companies will be pleased to have a decree rendered as prayed. But that is often true in judicial proceedings.
2. The Attorney General makes another, and a very important, suggestion; and that is, that this court has no jurisdiction over the state officers to adjudicate the question, even though the state officers were made parties. In my opinon the Attorney General is in error in this contention, and for the following reasons:
By section 2112 of the Iowa Code, the Iowa board of railroad commissioners have general supervision of railroads, and must investigate any alleged neglect or violations of the laws by any railway company. By section 2113, the board must investigate all complaints, and make orders. By section 2119, the state courts will enforce these orders. State officers make the classification on which passenger and freight rates are fixed. The board and other state officers, including the Attorney General, have much to do with enforcing, as well as fixing, rates, and what the earnings within the state will be. And the two-cent