United States v. New York Cent. & H.R.R. Co.

• Decision Date: 06 July 1906
• Parties: UNITED STATES v. NEW YORK CENT. & H.R.R. CO. SAME v. NEW YORK CENT. & H.R.R. CO. et al. (two cases). SAME v. GUILFORD et al.
• Court: U.S. District Court — Southern District of New York

146 F. 298

UNITED STATES v. NEW YORK CENT. & H.R.R. CO. SAME v. NEW YORK CENT. & H.R.R. CO. et al. (two cases). SAME v. GUILFORD et al.

United States Circuit Court, S.D. New York.

July 6, 1906

Henry L. Stimson, U.S. Atty., William S. Ball, J. Osgood Nichols and Henry A. Wise, Asst. U.S. Attys.

Austen G. Fox and John D. Lindsay, for defendants New York Cent. &amp H.R.R. Co., Nathan Guilford, and Fred L. Pomeroy.

Michael H. Cardozo and Howard S. Gans, for defendants C. Goodloe Edgar and Edwin Earle.

HOLT District Judge.

These are demurrers to four indictments. The indictments are based on alleged violations of the act to regulate commerce, passed February 4, 1887, commonly called the 'Interstate Commerce Act,' and the various acts amending and supplementing it, including the act of February 19, 1903 (Chapter 708, 32 Stat. 847 (U.S. Comp. St. Supp. 1905, p 599)), commonly called the 'Elkins Act'. Three of the indictments charge a giving or taking of rebates in violation of such act, and one a conspiracy to commit an offense against the United States by inducing the giving and taking of a rebate, in violation of such act. The demurrers were argued at the same time and will be considered together.

The indictment against the New York Central & Hudson River Railroad Company contains two counts. The first count charges, in substance, that the defendant was a railroad corporation engaged in the transportation of freight for hire over its own and connecting roads, between, among other points, New York and Cleveland, Ohio; that its freight schedule, published as required by the interstate commerce act, fixed the rate for freight on sugar from New York to Cleveland at 21 cents per 100 pounds; that on November 20 1902, the officers of the American Sugar Refining Company, a New Jersey corporation, induced the defendant to enter into the unlawful agreement to allow the sugar company a rebate of 6 cents per 100 pounds on sugar shipped by it to Cleveland for reconsignment to further points, and 4 cents per 100 pounds on sugar shipped to Cleveland to go no further; that the sugar company shipped various consignments of sugar under said agreement over defendant's road and connecting roads to Cleveland, and paid the schedule rate of 21 cents per 100 pounds; that afterwards claims for rebate on said shipments were presented by the sugar company to the defendant, upon which on April 2, 1903, the defendant paid to the sugar company by way of rebate $26,141.81. The second count is substantially the same as the first, except that the allegations of a preliminary agreement to pay rebates is omitted. The demurrer to this indictment alleges, in substance, that the acts set forth in the indictment and in each count thereof do not constitute a crime under the laws of the United States, and that the indictment is not sufficiently definite and certain.

The principal objection to this indictment urged by the defendant's counsel is that the charge made in both counts, that an unlawful discrimination was made in favor of the sugar company against other persons is not sufficiently pleaded, because no other person is named who was charged a larger rate, and reliance is put on the case of United States v. Hanley (D.C.) 71 F. 672. In that case it was held, in substance, that the interstate commerce act prohibited discrimination in rates between shippers, and also deviations from the schedule rates; that if a indictment was based on alleged discriminations between different shippers it was not enough to show that a particular shipper was charged less than the scheduled rate, but the indictment must allege that some other person designated in the indictment had been charged a higher rate. The court held that, as the company might make an equal reduction to everybody from the scheduled rate, an allegation that a rebate from the scheduled rate had been returned to a particular shipper was not a sufficient allegation of an unlawful discrimination. If it were necessary to base the decision of this demurrer upon this point, I should hesitate to follow the decision in United States v. Hanley. I think that if a railroad company receives from a shipper the full schedule rate, and then repays him a percentage of the amount paid as a rebate, there is weighty ground to hold that it is presumptively guilty of illegal discrimination under the act; and that if in fact the railroad company has pursued the extremely improbable course of making a uniform reduction of its rates to everybody, while retaining a higher rate on its published schedules, no substantial injustice will be done to any defendant if he is left to prove that fact as part of his defense. But, without passing definitely upon this question, it is sufficient to say that the case of United States v. Hanley also held that the payment of a rebate from the schedule rates violated the provisions of the act prohibiting deviations from the published rates. The allegations of this indictment certainly support that charge sufficiently. In my opinion the indictment is sufficiently definite and specific, and I think that the demurrer to it should be overruled.

The indictment against the New York Central & Hudson River Railroad Company and Nathan Guilford charges, in substance, that at all the times stated in the indictment the railroad company's scheduled rate on sugar from New York to Detroit, Mich., was 23 cents per 100 pounds; that Guilford was the other defendant's traffic manager; that on October 15, 1902, Lowell M. Palmer and Thomas P. Riley, acting as agents of the American Sugar Refining Company and of the firm of W.H. Edgar & Son of Detroit, induced the railroad company and Guilford to agree to pay a rebate of 2 cents per 100 pounds on all sugar shipped by the sugar company to Edgar & Son; that shipments were thereafter made and the scheduled rates paid; that thereafter, on May 14, 1903, the defendants paid to said Palmer, as such agent, $920.39 as a rebate. The grounds of demurrer to this indictment are that it is insufficient in law, and that the acts set forth in it do not constitute a crime. The objections urged in its support by counsel are that it does not properly allege that any discrimination resulted, that it does not allege any willful failure by the railroad company to observe the published tariff, and that the individual defendant is improperly joined with the corporation. The point of failure to properly allege discrimination I have already discussed under the first indictment considered. The fact that the indictment alleges that the full schedule rate was first paid to the railroad company, and that thereafter $920.39 was paid by the defendants to Palmer as agent for the shippers 'by way of rebate and concession in respect to the transportation of said sugars under said unlawful agreement' is in my opinion a sufficient allegation that the payment was a willfull failure to observe the published tariff; and as the interstate commerce act as amended and the Elkins act provide that the corporation and its agents may be criminally liable for giving rebates, I do not see why these defendants cannot be prosecuted for the same offense in one indictment. I think, therefore, that the demurrer to the indictment against the railroad company and Guilford should be overruled.

The indictment against the New York Central & Hudson River Railroad Company, Nathan Guilford, and Fred L. Pomeroy is, in substance, similar to the one against the railroad company and Guilford, and the objections taken to it in the demurrer and the agreement of counsel are similar to the objections taken to the indictment in that case. I think, therefore, that the demurrer to this indictment should be overruled.

The indictment against Nathan Guilford, Fred L. Pomeroy, C Goodloe Edgar, and Edwin Earle differs essentially from the three other indictments. It is an indictment for an alleged conspiracy under section 5440 of the United States Revised Statutes (U.S.Comp.St. 1901, p. 3676). This indictment charges, in substance, that the New York Central & Hudson River Railroad Company was engaged in the transportation of freight for hire over an interstate route to Detroit, Mich., by its own and connecting lines; that it had published a schedule of rates over this route under the interstate commerce laws; that the rate for sugar from New York to Detroit was 23 cents per 100 pounds; that the American Sugar Refining Company and the American Sugar Refining Company of New York were corporations engaged in selling and shipping sugar from New York over said route; that the defendants Edgar and Earle with one James E. Edgar, now deceased, were a firm doing business in Detroit under the style of W.H. Edgar & Son; that the defendants Guilford and Pomeroy were traffic managers of the railroad company; that Palmer and Riley were agents both for the sugar companies and for Edgar & Son; that on April 1, 1904, at the Southern District of New York, the said Guilford, Pomeroy, James Edgar, C. Goodloe Edgar, and Earle, with other persons to the jurors unknown, conspired with each other and with said Palmer and Riley to commit an offense against the United States by causing and procuring the said railroad company to give rebates on sugar shipped by the sugar companies at New York to Edgar & Son...