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10 F.(20) 830 wherein the Public Utilities Commission of stituting or prosecuting any action or prothe state of Illinois, predecessor of the pres- ceeding of any character to recover any fine ent Illinois Commerce Commission, and oth- or penalty for violation by the plaintiff er public authorities, were enjoined from in- of the Illinois statute (Smith-Hurd Rev. St.

sonable depreciation accruing upon the physical General Assembly of the state of Illinois entiproperty thereof, and a fair return upon the tled "An act to provide for the regulation of fair value of the property used, possessed, and public utilities," approved June 30, 1913, and all operated by the complainant, used and useful in amendments thereto, to prevent said complainpublic service as a common carrier in the trans- ant from advancing its ticket fares to a basis portation of passengers for hire.

of not more than three (3) cents per passenger The court further finds that the value of the mile with a ten (10) cent minimum fare, or property of complainant, used and useful in from maintaining its rates on said basis, and furnishing passenger service, is not less than the said defendants are further enjoined and $3,518.991.50; that for the seven months of the restrained from instituting or prosecuting any year 1919 ending July 31 complainant received action, suit, or proceeding under said Public from the passenger department of its business, Utilities Act to punish complainant, or to refor depreciation and return on the investment, cover penalties from complainant for advancing $25,606.77; that all of complainant's operating its ticket fares to a basis of not more than expenses have greatly increased, especially dur- three (3) cents per passenger mile with a ten ing the past two years, and in addition to the (10) cent minimum fare, or from maintaining increased cost of operation reflected in state- its rates on said basis, and the said defendants ment of income presented by complainant, the are further enjoined and restrained from instinational War Labor Board, on August 12, 1919, tuting or prosecuting any action, suit, or prorendered a decision increasing the wages of mo- ceeding under said Public Utilities Act to puntormen and conductors and shopmen of the com- ish complainant, or to recover penalties from pany more than 12 per cent., said increase being complainant, for advancing its ticket fares to a retroactive to May 1, 1919, which will greatly basis of not more than three (3) cents per paslessen the amount of return aforesaid, and that senger mile with a ten (10) cent minimum on in. it appears that complainant will not have suf- terurban traffic, or from maintaining its rates ficient funds hand with which to pay the in- on said basis. terest on its bonded indebtedness, maturing Oc. This injunction is granted on condition that tober 1, 1919, and to continue to operate its said complainant shall not attempt to put in railroad and furnish satisfactory service to the force ticket fares on a basis of more than three public, unless its revenue be increased; and that (3) cents per passenger mile, with a ten (10) the provisions of section 233, chapter 114, of cent minimum, with train fare five (5) cents the Revised Statutes of Illinois, and the provi. additional when ticket fare is thirty (30) cents sions of the act of the General Assembly of the or less, and ten (10) cents additional when tickstate of Ilinois, entitled "An act providing for et fare is thirty-one (31) cents or over; and, the regulation of public utilities," approved June if said complainant shall put in force or attempt 30, 1913, and amendments thereto, which pre- to put in force fares on a basis of more than vent complainant from advancing its rates to a the rates of fare above specified, without having basis of not more than two cents per passenger first applied to and obtained permission from mile, violate the rights of complainant under this court, or from some state authority having the Fourteenth Amendment of the federal Con- jurisdiction in the premises, then this injunction stitution, and that the application of the provi- shall be inoperative. sions of said section of the statutes of Illinois It is further ordered that the Attorney Genand said act, so as to prevent an increase by eral of the state of Illinois and the members of complainant of its rate to a basis of three cents the Public Utilities Commission of the state of per passenger mile, will likewise deprive it of Illinois, the other defendants, and the comits rights under said Fourteenth Amendment. plainant, or any or either of them, may at any

It is therefore ordered, adjudged, and decreed time hereafter apply to this court in this proby the court that the defendants, and each and ceeding by bill, petition, or otherwise, for any all of them, and their successors in office, re- further order or decree in modification of this spectively, be and they are hereby enjoined and decree, whenever it shall appear that, by rearestrained from instituting or prosecuting any son of a change in circumstances, a modificaaction, suit, or proceeding of any kind or char- tion hereof may be equitable or proper, or acter to recover any fine, penalty, or demand whenever it shall appear that the effect of this for any violation or alleged violation by the decree is to protect the complainant against the complainant of an act of the General Assembly establishment and enforcement by the public of the state of Illinois, entitled "An act to es- authorities of Illinois of rates which are not in tablish and regulate the maximum rate of fact confiscatory and violative of the rights of charges for the transportation of passengers by complainant under the Fourteenth Amendment corporations or companies operating or control- of the federal Constitution. Until and unless ling railroads, in part or in whole in this state, such a subsequent modification of the terms of and to provide penalties for the violation of the this decree he had and entered, the same shall provisions thereof and repealing all acts and remain in full force and effect, and for the purparts of acts in conflict therewith,” approved pose of hearing and determining any such apMay 27, 1907, and all amendments thereto; that plication for the modification of this decree the said defendants and their respective successors court hereby retains jurisdiction of this cause. in office be and they are hereby enjoined from It is further ordered that the complainant adinstituting any proceeding or taking any action vise the court from time to time of any action pursuant to the provisions of the act of the taken under this decree and the results thereof.

1925, c. 114, § 154), commonly known as the Commerce Commission is powerless to the two-cent fare law and from instituting permit a railroad to violate the two-cent fare any action to recover penalties or fines from law, and that its rights, therefore, can be plaintiff because of any increase in its adequately protected only by continuation of rates in pursuance of said decree. Said in- the injunction heretofore entered. There is junction was granted upon condition that before the court at this time no showing, no the plaintiff not attempt to put in force contention, that the limits of rates fixed in any ticket fares upon a basis of more than said final decree as conditional to the issuance three cents per mile, with a ten-cent mini- of the injunction will be more than sufficient mum fare. The decree provided that any of to prevent confiscation of plaintiff's properthe defendants might thereafter apply for ty. The sole question is whether the plaintiff modification of the decree and that the court should be held to be a railroad, subject to retained jurisdiction of the cause.

the provisions of the two-cent fare law, or a The court in said decree found that the public utility, unaffected by that law, whose plaintiff is a railroad corporation duly rates must be fixed by the Illinois Commerce organized under the laws of the state of Commission. Illinois operating in passenger service 68 [1] The Illinois Legislature and courts rec miles of electric railroad in the counties of ognize two kinds of railroads, viz.: RailSt. Clair and Madison and that the said lines roads organized under "An act to provide are in direct competition with certain steam for the incorporation of associations that railroads; that to enforce the two-cent fare may be organized for the purpose of conlaw would violate the rights of plaintiff structing railways maintaining and operatunder the Fourteenth Amendment of the ing the same” (Smith-Hurd's Rev. St. 1925, United States Constitution and confiscate C. 114); and other railroads commonly complainant's property.

known as street or interurban railways, orThe petition now filed represents that ganized under the general Incorporation Act. certain conditions have changed with regard Section 1 of the aforementioned Railroad to the character of the traffic handled by Act provides that any number of persons the plaintiff, the districts in which it op- not less than five may become an incorporaterates and the ordinance under which it op- ed company, for the purpose of constructing erates. The petitioners represent that the and operating any railroad in the state. The plaintiff is not a steam road, and is not act fixes and defines the duties and powers of in direct competition with steam railroads, railroads. The Illinois Public Utilities Act but there is no averment that the plain- grants to the Illinois Commerce Commission tiff's line is not incorporated under the act the power to fix rates of public utilities, but of the Illinois Legislature (Smith-Hurd Rev. contains the exception that nothing in the act St. 1925, c. 114, § 1) providing for the in- shall be construed to repeal the two-cent fare corporation of railroads. The contention of law. The latter law makes it unlawful for the petitioner is that, independent of wheth- any railroad to charge in excess of two cents er plaintiff was incorporated under the per mile for the carriage of adult passengers, act aforesaid, its character is to be deter- provided the minimum charge be not less mined by the character of its traffic and its than five cents, and fixes certain penalties location and mode of operation, and that, for violation thereof. It follows from these considering such, it is not a railroad, but a two acts that the Illinois Commerce Commispublic utility-i. e., a street railway; that the sion has no power to fix rates in contraventwo-cent fare law does not apply, but that tion of the last-mentioned law for carriage the rates are to be fixed, as provided by law, upon railroads, but that upon street railways by the Illinois Commerce Commission. The or other public utilities the commission has ordinance under which the plaintiff oper- the power to fix any reasonable rate. ates in the city of Belleville stipulates that In the case of David Bradley Manufacthe rates may be fixed by the Commerce Com- turing Co. v. Chicago & Southern Tracmission or such other legal body as may tion Co., 82 N. E. 210, 229 Ill. 170, the have jurisdiction.

Supreme Court of Illinois said: “A corThe plaintiff contends that, so far as poration organized under the general Railthe enforcement of the two-cent fare law is road Act cannot be both a railroad and concerned, its character is to be determined a street railway.

A corporation by the fact that it is incorporated under the organized under the general Railroad Act act providing for the incorporation of rails should be regarded and treated as a comroads; that no other facts are material; that mercial railroad, having the regular pow

10 F.(20) 830 er of eminent domain, notwithstanding its dled and other facts cannot be sustained. articles of association state the purpose of The cases cited do not support such contenthe corporation to be to construct and oper- tion. In the case of Harvey v. Aurora & ate a street railroad, since the statute, and not G. Ry. Co., 51 N. E. 163, 174 Ill. 295, the the statement in the charter with reference court holds that the power and the status of to the objects of the corporation, controls its the corporation are to be determined by a charter powers." In the later case of Chi- consideration of the statute under which it cago & Southern Traction Co. v. Illinois Cen- is organized. In Wilder v. Aurora, etc., tral R. R. Co., 92 N. E. 586, 246 Ill. at Traction Co., 75 N. E. 194, 216 Ill. 493, the page 147, the same court said: “The mere court held that the character of the compafact that a part of the connected line of a ny incorporated under the Railroad Act was commercial railroad organized under the gen- that of a railroad. The court went further, eral Railroad Law is within the limits of a and said that the facts showing that it was city does not make the portion within such an electric line, doing business locally as a city a street railway.” In the case of Schlau- street railway company, as well as between der v. Chicago, etc., Co., 97 N. E. 235, 253 different cities, did not alter its status. This Ill. 158, the court said: “The defendant court is of the opinion that the latter conbeing organized under the general act for sideration of the facts was unnecessary, in the incorporation of railroads, its railroad view of the later decisions above cited hereis a commercial railroad, and we so decided in. In the case of Spalding v. Macomb & in Bradley Mfg. Co. v. Chicago & Southern West Illinois Railway Co., 80 N. E. 327, Traction Co. [82 N. E. 210] 229 Ill. 170. It 225 Ill. 585, there is no showing in the has the rights and is subject to the burdens opinion as to what statute the road was inimposed by law upon railroads so organized, corporated under. The court was forced to and the statute concerning fencing and op- determine the character of the corporation erating railroads applies to it.” These cases from the averments of fact of the bill of were followed by the Appellate Court of Il- complaint, which were admitted by the delinois in the case of Roy v. E. St. Louis & murrer. Suburban Railway Co., 119 Ill. App. 313, [4] True it is that in the cases of Hartzell wherein the present plaintiff was held to v. Alton, Granite & St. Louis Traction Co., be a railroad subject to all the burdens of 104 N. E. 1080, 263 Ill. 205, and Shea v. such a corporation and whose powers were Cleveland, C. C. & St. L. Railway Co., 95 N. limited to those of such a corporation. E. 63, 250 Ill. 97, the court held that, al[2] It follows from these decisions that the though the respective corporations were orplaintiff, having been organized as a rail- ganized under the general Incorporation Act road under the Railroad Act, is subject to as street railways, yet in view of the fact all of the burdens of such a corporation; that in each instance the company had asthat its powers are those of such a corpora- sumed to operate its line through the countion; that, inasmuch as the two-cent fare law try, outside of and between various municof Illinois forbids such corporation to fix ipalities, as well as within the same, it was fares at more than two cents per mile, the necessary, so far as the duty to fence its plaintiff is estopped to deny that it is bound line and to comply with the statutes regardby such act; and that the Illinois Commerce ing safety of the public, to treat it as a railCommission can grant to plaintiff no relief road, bound by the duties of railroad compain excess of that allowed by the two-cent fare nies, and that, if a corporation exercise the law. In the absence of the decree herein en- privilege of a railroad corporation, it will be tered, the authorities would have the right estopped to deny the liabilities of such a comand be under the duty to proceed to collect pany. But in the opinion of this court these the penalty provided by law, should the two decisions and any similar holdings are plaintiff charge fares in excess of two cents. not in any wise in conflict with the true To the collection of such penalties the plain- ground of decision in the present instance. tiff, in view of the fact that it is organized There is no holding in those cases that a railas a railroad under the Illinois act providing road, incorporated as such under the Railfor the incorporation of railroads and their road Act, may escape liability under the prooperation, would have no defense.

visions of that act as to fares or other bur[3] The petitioner's contention that whether dens by showing that it is also carrying on the plaintiff is a railroad, bound by the two- the functions of a street railway, as such are cent fare law, is to be determined by con- defined. It may well be that, by carrying on sideration of the character of traffic han- such additional functions, it thereby subjects

10 F.(20)-53


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itself to additional burdens; but it does not In Equity. Patent infringement suit by thereby relieve itself of the burdens of a the Mead-Morrison Manufacturing Company railroad to which by its incorporation it is against the Hauck Manufacturing Company. subjected.

Decree for plaintiff. Consequently the plaintiff, for the pur

Emery, Booth, Janney & Varney, of New pose of determining whether or not it is bound by the provisions of the two-cent York City (Frederick L. Emery, of New fare law, must be held to be a railroad. This York City, and L. G. Miller, of Boston,

& court has found that the two-cent fare law,

Mass., of counsel), for plaintiff. when applied to plaintiff's operations, con

Stephen J. Cox, of New York City, for

defendant. fiscates its property and deprives it of its rights under the Fourteenth Amendment to the Constitution. If the maximum limit CAMPBELL, District Judge. This is fixed in the said decree as a precautional con- an action in equity, brought by the plaindition to the issuance of the injunction, in- tiff, who is now the owner of patent No. serted for the benefit of the public, permits 1,405,146, issued by the United States Patof rates more than sufficient to reach the ent Office to John A. Mueller, for improve purpose of the decree, the proper parties in ment in forges, dated January 31, 1922, interést still have the right to make such against the defendant, to restrain the alleged showing to the court and obtain modification. infringement of the said patent and for damThis court stands as the duly constituted au- ages. The defendant interposed the defenses thority for the enforcement of the Constitu- of invalidity and noninfringement. tion and laws. Its decree was intended to This action is based on claims 1, 2, 3, 4, 7, prevent the plaintiff from being deprived 8, 9, 10, and 11 of the patent in suit, which of its constitutional rights, and the court, in read as follows: granting relief, endeavored to make it con- “1. A device of the character described ditional upon the plaintiff's fixing no rate comprising a heating chamber having an that would be unfair or unreasonable to opening at the top to permit manipulation the traveling public, or that would permit of of the material, and means to guide the an annual return more than sufficient to pre- flame across said opening and then downvent confiscation. The court remains ready wardly to the material to be acted on in said to receive and give full hearing to any


chamber. ing that conditions have so changed that it

“2. A device of the character described, is no longer violative of plaintiff's rights comprising a heating chamber having an to have the two-cent fare law in force, or

opening at the top to permit insertion and that the conditions imposed for the protec- removal of the material, means to guide the tion of the people upon which the injunction flame downwardly to the material to be acted was issued were not sufficiently limited to

on in said chamber, and means to direct protect the public. The present petition, presenting no such

a portion of the flame to said guiding question, must be denied.

means, and to direct another portion above said guiding means.

"3. A device of the character described,

comprising a heating chamber having an MEAD-MORRISON MFG. CO. V. HAUCK opening at the top to permit insertion and MFG. CO.

removal of the material, means forming a (District Court, E. D. New York. February 2, part of wall of said chamber to guide the 1926.)

flame downwardly to the

material to be acted No. 2046.

on in said chamber, and means to direct the

flame so as to deflect the waste gases away 1. Patents @mw 62—Party must establish antici.

pation beyond a reasonable doubt, to declare from said opening as they rise from the patent invalid.

chamber. Anticipation must be established beyond a 4. A device of the character described, reasonable doubt, in order to declare patent comprising a heating chamber having an invalid.

opening at the top to permit insertion and 2. Patents 328—1,405,146, claims 1, 2, 3, 4, removal of the material, means forming a 7, 8, 9, 10, !!, for improvement in forges, part of the wall of said chamber to guide the held valid and infringed.

flame downwardly to the material, and means Patent No. 1,405,146, claims 1, 2, 3, 4, 7, 8, 9, 10, 11, for improvement in forges, held to direct a portion of the flame to said guidvalid and infringed.

ing means, and to direct another portion

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10 F.(20) 834 above said guiding means through said open- the bottom downwardly on the rivets at the ing."

bottom of the chamber. 7. A device of the character described, The flame and hot gases of combustion, comprising a heating chamber having an after striking the rivets, swirl around and opening for manipulation of the material rise from the bottom of the chamber into the and means which guide the flame to said path of the direct blast, and are pushed forchamber, and which control the escape of wardly in the direction of this blast, so that, beat through said opening, so as to confine as they rise from the top of the chamber, such escape to a desired portion of said they move in a direction away from the opening.

operator. “8. A device of the character described, In the patentee's preferred form a porcomprising a heating chamber having an tion of the flame passes from the burner opening at the top for manipulation of the directly over the front edge of the inclined material, a blast to convey fuel to act on brick and causing the exhaust gases to move said material, and means to direct the blast more rapidly to the rear. across and directly beneath said opening, and One object of the invention is described then downwardly to the material to be.acted by the patentee in his specifications, as folon in said chamber.

lows: “9. A device of the character described, “One object of my invention is to provide comprising a heating chamber having an a device having an efficient heating chamber, opening at the top for manipulation of the combined with a conveniently located openmaterial, and means to provide a direct ing, to be used, not only for insertion, but blast across and directly beneath said open- also for removal, of the material, my device ing; said blast conveying fuel to act on said being especially useful for heating rivets, almaterial.

though other material may be advantageously “10. A device of the character described, heated." comprising a heating chamber having an And a feature of the invention with which opening at the top for manipulation of the we are concerned is also described by the material and for the venting of spent gases, patentee in his specifications as follows: said chamber being formed at the bottom to "In providing means to deflect the blast receive and hold the material while it is into operative relation with the material to being acted upon, a blast to convey fuel be acted upon, combined with an opening to act on said material, means to direct the over the blast suitable, not only for inserblast clear across and immediately beneath tion, but for removal, of the material, the said opening and above the material, and fuel whirling in the chamber, and some being means to direct the blast downwardly to the again deflected downwardly by the entering material to be treated, after the blast has blast, so that the space just above said openbeen directed across said opening.

ing is comparatively cool and accessible to the “11. A device of the character described, operator." comprising a heating chamber having an Also, according to the specifications, there opening at the top for manipulation of the are two other features of the invention, "comaterial and for the venting of spent gases, operating walls on the nozzle and cap," and said chamber being formed at the bottom to "guards to protect the nozzle and still permit receive and hold the material while it is access thereto,” but, as they are neither debeing acted upon, and also formed with a scribed in detail nor claimed, no further condeflecting wall, and means to direct a blast sideration need be given to them. clear across and immediately beneath said The defendant introduced in evidence as opening and above the material, said de- prior art 11 United States patents, as folflecting wall directing the blast downwardly lows: Nice, reissue No. 13,834, for heating to the material to be treated after the blast furnace, dated December 1, 1914; Cramphas been directed across said opening." ton, No. 111,616, for improvement in fur

The arrangement disclosed by the patent naces for burning pulverized fuel, dated Febin suit in substance consists of a box made ruary 7, 1871; Kite, No. 238,695, for hydroof ordinary fire brick, open at the top with carbon furnace, dated March 8, 1881; Barse, a torch of ordinary construction, projecting No. 345,356, for furnace for heating glass into it through a relatively small opening pots, crucibles, blanks, etc., dated July 13, at one end, and an inclined wall at the other 1886; Stevens, No. 348,700, for apparatus end, to deflect the flame which crosses from for burning petroleum, dated September 7, the burner beneath this opening, and above 1886; De Rome, No. 782,438, for furnace,

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