State v. Northern Pacific Railway Co.

• Citation: 145 N.W. 135,26 N.D. 438
• Decision Date: 02 January 1914
• Docket Number: 81912
• Court: North Dakota Supreme Court

145 N.W. 135

26 N.D. 438

STATE OF NORTH DAKOTA EX REL. T. F. MCCUE, Attorney General, v. NORTHERN PACIFIC RAILWAY COMPANY and Great Northern Railway Company and Minneapolis, St. Paul, & Sault Ste. Marie Railway Company

No. 81912

Supreme Court of North Dakota

January 2, 1914

Proceedings on application on behalf of the State for an original writ directing the observance of the freight rates in question, and enjoining the collection of higher than the maximum statutory rate.

Writs granted. Costs and disbursements of State ordered taxed by the Clerk.

Writes issued.

Andrew Miller, C. L. Young, Alfred Zuger, for plaintiff.

The opinions of railway officials are not proper evidence. They are too hazy and indefinite to receive serious consideration. Interstate Commerce Commission v. Union P. R. Co. 222 U.S. 548, 56 L.Ed. 312, 32 S.Ct. 108; Ames v. Union P. R. Co. 64 F. 188; F. Schumacher Mill. Co. v. Chicago R. I. & P. R. R. Co. 6 Inters. Com. Rep. 66.

The principle that the compensation should bear a reasonable relation to the risk and responsibility assumed is the settled rule of the common law. Kansas City Southern R Co. v. Carl, 227 U.S. 639, 57 L.Ed. 683, 33 S.Ct. 391; 2 Wyman, Pub. Service Corp. § 1232; Beale & W. R. Rate Regulation, § 554.

Brief consideration of the characteristics of lignite coal will show the injustice of allotting to it a cost determined without regard to such characteristics. The expense of handling it is low. The carrier neither loads nor unloads the cars. The rate should be fixed in the light of these facts. Tift v. Southern R. Co. 10 Inters. Com. Rep. 548 138 F. 764; Louisville, E. & St. L. Consol. R. Co. v. Wilson, 132 Ind. 517, 18 L.R.A. 105, 32 N.E. 311; Trades League v. Philadelphia, W. & B. R. Co. 8 Inters. Com. Rep. 368; American Cent. Ins. Co. v. Chicago & A. R. Co. 74 Mo.App. 89; Hays v. Pennsylvania Co. 12 F. 309; 2 Wyman, Pub. Service Corp. § 1348; Denison Light & P. Co. v. Missouri, K. & T. R. Co. 10 Inters. Com. Rep. 337; F. Schumacher Mill. Co. v. Chicago, R. I. & P. R. Co. 6 Inters. Com. Rep. 66; Coxe Bros. & Co. v. Lehigh Valley R. Co. 3 Inters. Com. Rep. 460, 4 I. C. C. Rep. 535; Interstate Commerce Commission v. Chicago, G. W. R. Co. 141 F. 1015; Re Advances on Coal, 22 Inters. Com. Rep. 604.

Circumstances may exist under which rates are reasonable which do not afford a net income above the cost of operation and taxes, or the cost of operation, taxes, and fixed charges. State ex rel. State R. Comrs. v. Seaboard Air Line R. Co. 48 Fla. 129, 37 So. 314; St. Louis & S. F. R. Co. v. Gill, 156 U.S. 649, 39 L.Ed. 567, 15 S.Ct. 484; Minneapolis & St. L. R. Co. v. Minnesota, 186 U.S. 257, 46 L.Ed. 1151, 22 S.Ct. 900; Wyman, Pub. Service Corp. § 1201; 3 Enc. U.S. S.Ct. 632; Freund, Pol. Power, § 551; Interstate Consol. Street R. Co. v. Massachusetts, 207 U.S. 79, 52 L.Ed. 115, 28 S.Ct. 26, 12 Ann. Cas. 555; Willcox v. Consolidated Gas Co. 212 U.S. 19, 52, 53 L.Ed. 382, 400, 48 L.R.A.(N.S.) 1134, 29 S.Ct. 192, 15 Ann. Cas. 1034; Atlantic Coast Line R. Co. v. North Carolina Corp. Commission, 206 U.S. 1, 51 L.Ed. 933, 27 S.Ct. 585, 11 Ann. Cas. 398.

To determine whether rates are confiscatory or not, all sources of revenue must be considered. Minneapolis & St. L. R. Co. v. Minnesota, 186 U.S. 257, 46 L.Ed. 1151, 22 S.Ct. 900; Atlantic Coast Line R. Co. v. North Carolina Corp. Commission, 206 U.S. 1, 51 L.Ed. 933, 27 S.Ct. 585, 11 Ann. Cas. 398; State ex rel. State R. Comrs. v. Seaboard Air Line R. Co. 48 Fla. 129, 37 So. 314.

If the net earnings from all sources are compensatory, this is sufficient, and a given rate on a certain commodity cannot be said to be confiscatory. Matthews v. Corporation Comrs. 106 F. 10; Southern R. Co. v. McNeill, 155 F. 787; Re Arkansas Rate Cases, 187 F. 307; Interstate Commerce Commission v. Union P. R. Co. 222 U.S. 541, 549, 56 L.Ed. 308, 312, 32 S.Ct. 108; Atlantic Coast Line R. Co. v. North Carolina Corp. Commission, 206 U.S. 1, 51 L.Ed. 933, 27 S.Ct. 585, 11 Ann. Cas. 398; Seaboard Air Line R. Co. v. Florida, 203 U.S. 269, 51 L.Ed. 178, 27 S.Ct. 108; Covington & L. Turnp. Road Co. v. Sandford, 164 U.S. 596, 41 L.Ed. 566, 17 S.Ct. 198; Smyth v. Ames, 169 U.S. 467, 42 L.Ed. 819, 18 S.Ct. 418; Munn v. Illinois, 94 U.S. 113, 24 L.Ed. 77; People v. Budd, 117 N.Y. 1, 5 L.R.A. 559, 22 N.E. 670.

The power of states to regulate within their limits matters of internal police includes, under that general designation, whatever will promote the peace, comfort, convenience, and prosperity of the people, and is not limited to health, morals, or safety of the public. Escanaba & L. M. Transp. Co. v. Chicago, 107 U.S. 678, 27 L.Ed. 442, 2 S.Ct. 185; Lake Shore & M. S. R. Co. v. Ohio, 173 U.S. 297, 43 L.Ed. 706, 19 S.Ct. 465; Noble State Bank v. Haskell, 219 U.S. 112, 55 L.Ed. 117, 32 L.R.A. (N.S.) 1062, 31 S.Ct. 186, Ann. Cas. 1912A, 487; Camfield v. United States, 167 U.S. 518, 42 L.Ed. 260, 17 S.Ct. 864; Gladson v. Minnesota, 166 U.S. 427-430, 41 L.Ed. 1064, 1065, 17 S.Ct. 627; Wisconsin, M. & P. R. Co. v. Jacobson, 179 U.S. 287, 45 L.Ed. 194, 21 S.Ct. 115; Atlantic Coast Line R. Co. v. North Carolina Corp. Commission, 206 U.S. 1, 51 L.Ed. 933, 27 S.Ct. 585, 11 Ann. Cas. 398.

In the proper application and enforcement of these losses for the general welfare of the whole people, relatively small individual losses may occur. But this is not an argument against such law. Martin v. District of Columbia, 205 U.S. 135, 139, 51 L.Ed. 743, 744, 27 S.Ct. 440; Camfield v. United States, 167 U.S. 518, 524, 42 L.Ed. 260, 262, 17 S.Ct. 864; American Sugar Ref. Co. v. Louisiana, 179 U.S. 89, 92, 95, 45 L.Ed. 102, 103, 105, 21 S.Ct. 43; Williams v. Fears, 179 U.S. 270, 276, 45 L.Ed. 186, 189, 21 S.Ct. 128; W. W. Cargill Co. v. Minnesota, 180 U.S. 452, 469, 45 L.Ed. 619, 627, 21 S.Ct. 423; Quong Wing v. Kirkendall, 223 U.S. 62, 56 L.Ed. 351, 32 S.Ct. 192; Cobb v. Northern P. R. Co. 20 Inters. Com. Rep. 100; Great Northern R. Co. v. Chicago, M. & St. P. R. Co. 5 I. C. C. Rep. 571.

The burden of proving that the constitutional guaranty of protection to property is infringed is upon the defendant. Chicago, M. & St. P. R. Co. v. Tompkins, 176 U.S. 173, 44 L.Ed. 420, 20 S.Ct. 336; Re Arkansas Rate Cases, 187 F. 290; Chicago & G. T. R. Co. v. Wellman, 143 U.S. 339, 344, 36 L.Ed. 176, 179, 12 S.Ct. 400; Reagan v. Farmers' Loan & T. Co. 154 U.S. 362, 399, 38 L.Ed. 1014, 1024, 4 Inters. Com. Rep. 560, 14 S.Ct. 1047; Smyth v. Ames, 169 U.S. 467, 42 L.Ed. 819, 18 S.Ct. 418; Henderson Bridge Co. v. Henderson, 173 U.S. 592, 614, 615, 43 L.Ed. 823, 831, 19 S.Ct. 553.

It is the settled doctrine that if a railroad, as an entirety, does a business that is compensatory, it has no legal right to complain that an act of the legislature may deprive it of revenue over a portion of its line, or injuriously affect its business as to a part thereof. St. Louis & S. F. R. Co. v. Gill, 156 U.S. 649, 39 L.Ed. 567, 15 S.Ct. 484; People ex rel. Cantrell v. St. Louis, A. & T. H. R. Co. 176 Ill. 512, 35 L.R.A. 656, 52 N.E. 292.

Watson & Young (Charles W. Bunn and Charles Donnelly, of counsel), for Northern Pacific Railway Company.

In determining the reasonableness of a rate, if the entire intrastate business is to be taken as a basis of reasoning, why not take the business of the company in all states? Smyth v. Ames, 169 U.S. 540-543, 42 L.Ed. 847, 848, 18 S.Ct. 418.

The Supreme Court of the United States never meant to affirm any such holding. If it had so intended, no leave would have been granted to improve the character of the proof. Interstate Commerce Commission v. Union P. R. Co. 222 U.S. 541, 549, 56 L.Ed. 308, 312, 32 S.Ct. 108; St. Louis & S. F. R. Co. v. Gill, 156 U.S. 649, 39 L.Ed. 567, 15 S.Ct. 484; Atlantic Coast Line R. Co. v. North Carolina Corp. Commission, 206 U.S. 1, 25, 26, 51 L.Ed. 933, 944, 945, 27 S.Ct. 585, 11 Ann. Cas. 398; Missouri, K. & T. R. Co. v. Interstate Commerce Commission, 164 F. 645.

A. H. Bright, John L. Erdall, and Cobb, Wheelwright, & Dille, for the Minneapolis, St. Paul & Sault Ste. Marie Railway Company.

E. C. Lindley, Sanford H. E. Freund and C. J. Murphy, for Great Northern Railway Company.

GOSS J. SPALDING, Ch. J. (concurring).

OPINION

GOSS, J.

Three separate actions are decided by this one opinion. Each was begun by the state of North Dakota, ex rel. attorney general against the common carriers involved, the Northern Pacific, Minneapolis, St. Paul, & Sault Ste. Marie, and Great Northern Railway Companies. In 1907, Attorney General McCue petitioned this court for its prerogative writ of injunction to restrain the defendants from further noncompliance with chapter 51 of the Session Laws of 1907, that had been in effect since July 1st of that year, and had been ignored by these common carriers. On hearing the writs were issued as prayed for. See opinion of this court, 19 N.D. 45, 25 L.R.A. (N.S.) 1001, 120 N.W. 869. The railroads appealed to the United States Supreme Court, where the cases were affirmed in 216 U.S. 579, 54 L.Ed. 624, 30 S.Ct. 423, without prejudice, but permission was granted the carriers to reopen the cases after the rates had been put in force for a sufficient time so that a test of the reasonableness of the rate attacked could be had from the results of operating under the rate, and, accordingly, the carriers have reopened the cases, after the rate had been put in effect for over a year, and they have offered testimony touching the reasonableness of the maximum statutory rate, contending it to be so low as to be confiscatory of their property, and void under the 14th Amendment to the United States Constitution. The cases were tried as one action under the stipulation that any evidence in the case might be considered as proof as to any or all of ...