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Alton Railroad Company, the Chicago Great Western Railway Company, and Missouri Pacific Railway Company. On demurrers filed in the United States circuit court for the northern district of Illinois the cases were argued, and on April 24, 1903, Judge Grosscup filed an opinion (122 Fed. Rep., 544). In this opinion the general question was stated to be, “Can a suit in equity be maintained at the instance of the Government to restrain a railroad from discrimination in rates?” The bill averred that such discrimination was practiced in the transportation of grain and grain products and packing-house products, including dressed meat; that in the transportation of grain it had gone so far that each railroad reaching into the grain districts had eliminated all competitive dealers, leaving only a single favored dealer, who purchased all the grain at all the stations along the lines of the roads.
The court said that, of course, under such conditions the grain grower was deprived of the benefit of competition among dealers; that the practical effect was the same as if the railroads had established agencies of their own to purchase the grain, and by giving these discriminatory advantages had excluded all other grain purchasers from the field; that such a policy necessarily destroys the competition to which the grain growers in a given district are entitled; that discrimination of this character is, of course, contrary to the plain provisions of the interstate commerce act and upon which criminal prosecutions could be maintained, and each grain grower could individually maintain a civil suit for such damages as he might show, and the interstate commerce act in terms contains these remedies.
But, the court said, the act previous to the recent Elkins Act (passed February 19, 1903), did not in terms confer jurisdiction over such matters upon a court of equity, and the real questions were: Has a court of equity under its general chancery jurisdiction power to remedy the wrong shown; and can that power be invoked at the instance of the Government? The court said that it had no doubt whatever respecting the jurisdiction of the court to remedy the wrong shown; that actions at law for the injuries described were plainly inadequate; that nothing short of the prohibitive arm of a court of chancery could give to the grain growers and other producers affected by this policy of the railroads the free competitive field for the sale of their products to which they are entitled, as a substantive right, under the terms of the interstate commerce act. It was held, therefore, that at the instance of someone a suit in equity would lie to prohibit the further execution of this discriminative policy.
But whether such suit would lie at the instance of the Government or must be brought by the individuals injured was a question the determination of which, the court said, a number of considerations bearing upon the subject must be brought together and borne in mind.
The first consideration was that the right of the individual under the interstate commerce act is one obtained under a special statute of the United States Government. The next is that the violation complained of was by a common carrier who, to the extent that the Government may regulate the rates and other incidents of commerce, is a servant of the Government. The third is that the injury to each shipper is so infinitesimal compared with the cost of litigation that unless there could be a common assertion of right by someone on behalf of all the right would not be asserted at all, and the fourth is that the
persons affected constitute the entire population of the districts through which the roads run, by reason of which the remedy asked is in the nature of government for entire population rather than individual redress for injuries done to a person here and there. The court said that in its judgment this constitutes a state of facts that gives to the Government the right to bring this suit; that the question is analogous to those equitable actions by which many people obtaining rights from a common source may be protected at the suit of such common source, and it finds precedent in the cases where the Government, in its relation of parent, may assert the rights of the individuals constituting the population to be affected.
The court then considered the case of the Missouri Pacific Railway against the United States (189 U. S., 274) and said that in that case the right of the Government to maintain a suit somewhat similar to this had been denied. But in that case, said the court, the Interstate Commerce Commission had never granted a hearing or made an order in the matters involved; the Commission is a tribunal instituted by the Government to inquire primarily into the fact as to whether discrimination exists; to it the shipper can bring his grievance; before it the railroads have a right to be heard; that until an inquiry is there made and a finding and order had the jurisdiction of a court of equity may not be invoked, because for the court to take hold at that primary point in the case would be to transfer the jurisdiction of the Interstate Commerce Commission to first inquire into the facts to the court of equity; that, because of this, the Supreme Court held in the Missouri Pacific case that the suit could not proceed, except under the Elkins Act subsequently enacted, but no opinion was expressed upon the right of the Government to bring suit in cases where there had been a preliminary inquiry and finding by the Interstate Commerce Commission.
However, the court said: The Elkins Act is remedial; it extends the equity jurisdiction of the court not to every violation of the interstate commerce law thereafter transpiring, but to every violation irrespective of whether it transpired previously or subsequently, and such was the construction put upon it by the Supreme Court in the Missouri Pacific case above mentioned. The ruling of the court was that a decree might be drawn showing that the case came on upon a demurrer and that the motion for the preliminary injunction was renewed at the time the opinion was filed so as to bring it subsequent to the Elkins Act, and that a preliminary injunction commensurate with the needs of the case should be continued. The cases are yet to be heard on motions by the Government for permanent injunctions, those pending in the western district of Missouri as well as those in the northern district of Illinois. A stipulation has been entered into between the counsel for the Government and the railway companies under which decrees will be entered in all of the cases according to the decree which may be entered in the case against the Atchison, Topeka & Santa Fe Railway Company which is pending in the western district of Missouri.
In April last, upon affidavit filed by William C. Bullitt, a shipper of coal from points in West Virginia to Eastern markets, the Commission instituted an investigation respecting the rates charged by the Chesapeake & Ohio Railway Company for the transportation of coal from West Virginia mines to Newport News, Va. In that investigation it appeared that the Chesapeake & Ohio Railway Company had a short time previously entered into an arrangement with the New York, New Haven & Hartford Railway Company to deliver some 60,000 tons of coal from mines in the Kanawha district of West Virginia to the New York, New Haven & Hartford, at New Haven, or other points in New England designated by the latter company, at a total cost of $2.75 per ton at New Haven and at other points according to the relation of prices in comparison with the price obtaining at New Haven; it also appeared in this investigation, that under that arrangement the Chesapeake & Ohio Railway Company would obtain for the transportation over its own line from the Kanawha district to Newport News much less than its established tariff rate. It seems that the arrangement was made in the spring of 1903 to satisfy a claim for damages made by the New Haven road against the Chesapeake & Ohio for failure to perform a previous contract entered into between the same parties in December, 1896, by which it was provided that the Chesapeake & Ohio would furnish the New Haven road from its own line 2,000,000 tons of coal of the best quality, upon monthly requisitions by the New Haven road not to exceed 400,000 tons per year. This contract was to run from July 1, 1897, to July 1, 1902.
During the strike period of 1902 the Chesapeake & Ohio failed to deliver coal called for by the New Haven road, and on July 1 of that year was short some 60,000 tons. The price to be paid under this contract was the same as that specified by the arrangement of 1902, $2.75 per ton delivered at New Haven or other New England points according to the New Haven basis. An examination of the published tariff of the Chesapeake & Ohio in force between July 1, 1897 and July 1,
1902, from the New River district of West Virginia, from whence the coal was carried to Newport News, the cost of the coal at the mines, the cost of water transportation from Newport News to New Haven and other New England destinations, marine insurance, and the cost of discharging at destination, all of which items were shown generally during the investigation, indicated a total lack of observance by the Chesapeake & Ohio of its tariff rates as applied to this coal. It was also stated that the tariff rates had been charged to all other shippers of coal from the New River and Kanawha districts to Newport News.
Upon this investigation a petition was prepared under the Elkins Act of February 19, 1903, and under the direction of the AttorneyGeneral was filed in the western district of Virginia praying for an injunction restraining the Chespeake & Ohio from continuing to depart from its established tariff rates upon coal or other interstate traffic in which it was or might be engaged, and also to restrain the New York, New Haven & Hartford Railroad Company from having its coal or other traffic transported for it by the Chesapeake & Ohio at less than the published rates of the last-named company. A temporary injunction in accordance with the prayer of the petition was granted by Judge McDowell sitting in that court, and on December 1 the case came up for trial upon motion to make the injunction permanent, but no decision has as yet been rendered.
CASES INVOLVING ENFORCEMENT OF ORDERS OF THE COMMISSION.
Five court decisions have been rendered since our last annual report in cases involving the enforcement of orders issued by the Commission. These are what are known as the Orange Routing case, relating to the routing of oranges from southern California to eastern markets; the La Grange, Ga., Hampton, Fla., and Danville, Va., long and short haul cases; and a case originating at Wilmington, N. C., relating to rates from western points to Wilmington as compared with those to Norfolk and other Virginia cities.
The Orange Routing Case. The Commission in April, 1902, entered an order in two cases brought by the Southern California Fruit Exchange and the Consolidated Forwarding Company against the Southern Pacific and Atchison, Topeka & Santa Fe systems in favor of the complainants. In this order the carriers were required to cease and desist from maintaining and enforcing a regulation whereby shippers of oranges, lemons, and other citrus fruits from points in southern California to points on and east of the Missouri River and other destinations were denied the right of designating the route for the transportation of such property when shipping such property over any of defendants' established or published joint or continuous lines or routes between any of such points of shipment and destination at the published schedule rate of charge applying over said
route or line, and the carriers were also required in such order to wholly cease and desist from refusing as initial carriers to keep open to the public their published rate or charge on oranges, lemons, and other citrus fruits between points of shipment and destination during the time such rate or charge may be lawfully in force over each route or line published in their joint schedule or tariff, and from continuing the present practice whereby the application of such published established routes, when specified by shippers for the transportation of their property, is allowed or withheld from such shippers and the property shipped by them as the defendants or they may determine. This order the carriers refused to obey, and a proceeding to enforce it was begun in the United States circuit court for the southern district of California. The carriers demurred to the petition filed by the Commission, and after argument upon the demurrers Judge Wellborn, of the United States circuit court for that district, rendered a decision overruling the demurrer and allowing the defendants thirty days within which to file their answers. The points in the decision are as follows (123 Fed. Rep., 597):
In a suit by the Interstate Commerce Commission against a railroad company to enforce obedience to an order requiring it to desist from the enforcement of a rule reserving to itself, as initial carrier, the unqualified right of routing beyond its own terminal all shipments made under an established through joint rate, the connecting carriers joining in the making of such through rate, while proper, are not necessary, parties.
A finding by the Interstate Commerce Commission that a rule promulgated by railroad companies, and the practice thereunder, with respect to a particular kind of traffic, subject shippers to an undue, unjust, and unreasonable prejudice and disadvantage, and give to the carriers an undue and unreasonable preference and advantage, is one of fact; and an order, based thereon, requiring the companies to desist from maintaining and enforcing such rule, as in violation of section 3 of the interstate commerce law, is prima facie a lawful order, such as a court is required to enforce in a suit instituted for that purpose under section 16.
A finding by the Interstate Commerce Commission that the purpose and effect of a rule and practice adopted by railroad companies, by which, as initial carriers, they reserved the right to route through shipments beyond their own lines, were to assist in carrying into effect a pooling agreement between their connecting carriers, made in violation of section 5 of the interstate commerce law, is pertinent to, and supports the lawfulness of, an order requiring the companies to desist from maintaining and enforcing such rule.
On demurrer to a bill filed by the Interstate Commerce Commission for the enforcement of an order made by it, any substantial doubt as to the lawfulness of the order should be resolved in its favor.
No final decision in this case has as yet been rendered.
The La Grange, Ga., Long and Short-Haul Case.—This was a case involving greater charges on freight traffic from New Orleans, La., to La Grange, Ga., than for the longer distances over the same line to Hogansville, Newnan, Palmetto, and Fairburn, Ga., under the long and short haul clause of the act; greater charges from New Orleans to La Grange than to Atlanta and other longer distance points under