Atlantic Coast Line R. Co. v. Macon Grocery Co.

• Decision Date: 05 January 1909
• Docket Number: 1,854.
• Citation: 166 F. 206
• Parties: ATLANTIC COAST LINE R. CO. et al. v. MACON GROCERY CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

166 F. 206

ATLANTIC COAST LINE R. CO. et al. v. MACON GROCERY CO. et al.

No. 1,854.

United States Court of Appeals, Fifth Circuit.

January 5, 1909

Jno. L Tye, Henry L. Stone, Claude Waller, Sanders McDaniel, R. C Alston, Ed Baxter, W. E. Kay, and C. B. Northrop, for appellants.

William A. Wimbish, Edgar Watkins, and Alex. Akerman, for appellees.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

McCORMICK Circuit Judge.

On July 25, 1908, the appellees, the Macon Grocery Company and other domestic corporations in the state of Georgia, and certain partnerships and individuals having their principal places of business in the Southern district of Georgia and domiciled therein, and all alleging themselves to be citizens of that state, engaged as wholesale dealers in groceries, food products, and like commodities, exhibited to one of the judges of the Circuit Court of the Southern District of Georgia their bill of complaint against the appellants, the Atlantic Coast Line Railroad Company, a corporation and citizen of the state of Virginia, the Louisville & Nashville Railroad Company, a corporation and citizen of the state of Kentucky, the Nashville, Chattanooga & St. Louis Railway, a corporation and citizen of the state of Tennessee, the Southern Railway Company, a corporation and citizen of the state of Virginia, and the Cincinnati, New Orleans & Texas &amp Texas Pacific railway Company, a corporation and citizen of the state of Ohio, and applied for and obtained from the judge an order whereby the appellants were required to be and appear before him at a time and place named in the order to show cause why an injunction pendente lite should not be granted as prayed for in the bill; and, in the meantime and until the further order of the court, were temporarily restrained from putting into effect the advance in freight rates, referred to in the bill, to be made effective August 1, 1908, in so far as all points in the state of Georgia are concerned.

In their bill the appellees allege, in substance, that the appellants are common carriers by railroad engaged in the transportation of interstate commerce, including grain and grain products, hay, and meats, from Ohio and Mississippi river crossings, Nashville, Tenn., and related points, to points in Southeastern territory, including the state of Georgia; that each of the appellants is a member of the Southeastern Freight Association, which, appellees, allege was organized and is maintained under agreements and for purposes which constitute an illegal combination in restraint of interstate trade, and for fostering monopoly in the destruction of fair competition among carriers engaged in such trade; that the appellants the Atlantic Coast Line Railroad Company and the Nashville, Chattanooga & St. Louis Railway form a part of the Louisville & Nashville Railroad System, and the appellant Cincinnati, New Orleans & Texas Pacific Railway Company forms a part of the Southern Railway System; that these two systems have continuous lines from said crossings to Southeastern destinations and are natural competitors, so that any combination, agreement, or understanding between them whereby rates are advanced and maintained is in suppression of competition; that during the year 1904 there was discontent with the railroad rates of freight from both Eastern and Western points of origin to Atlanta and related points, which included Macon and other cities in Georgia, but after conferences in the latter part of that year were held certain reductions were accorded by the railway companies in the rates on classes B, C, D, and F, flour in sacks, fresh meats, C.L., from said crossings to Atlanta and other points related, effective February 1, 1905, which rates, as reduced, were reasonable and had been since maintained; that in June, 1908, a concerted movement was begun looking to an increase in the rates on said classes and commodities from and to said points; that it was recognized that each of said two systems must unite in any such proposed increase, and, to accomplish the purpose, the intervention of the said association was sought and employed; that a declaration was filed with said association by the appellants the Louisville & Nashville Railroad Company, the Atlantic Coast Line Railroad Company, and the Southern Railway Company, composing said systems, announcing that on August 1, 1908, they would make effective certain advances in the rates, as set out in the bill, on classes B, C, D, and F, fresh meats, C.L., grain, grain products, hay, and packing-house products, from said crossings, Nashville, Tenn., and points with relation thereto, to Southeastern points; that the Central of Georgia Railway Company (which is not sued) also joined in such declaration, which was communicated by the chairman of said association to each of the lines of railroad interested, in the form of a circular; that the concurrence of action on the part of said two systems suppressed competition and forced all connecting carriers either to concur in the advances or give up the traffic, and such connecting carriers did concur therein, acting through the agency of said association; that subsequently the Louisville & Nashville Railroad System and the Southern Railway System filed with the Interstate Commerce Commission their freight tariffs embodying said advances, and gave notice that the new tariffs would become effective on August 1, 1908; that in each of these tariffs practically every interested line joined as a participating carrier, a list of such participating lines numbering 73, including each of the appellants, being shown on page 2 of these tariffs.

The alleged method employed by the railway companies in advancing rates through the medium of said association is set out in the bill; and it is further alleged in the bill that the territory of said Southeastern Freight Association may be roughly described as the states of South Carolina, Florida Georgia, and that portion of Alabama east of a line drawn from Chattanooga through Birmingham, Selma, and Montgomery to Pensacola; that the territory west of that line and east of the Mississippi river, embracing Mississippi and parts of Louisiana and Alabama, comes within the dominion of another like association called the Southeastern Mississippi Valley Association; that the states of Tennessee and Kentucky, including said crossings, are either embraced in the last-mentioned association, or in some other association bearing a similar relation to the Southeastern Freight Association; that the territory north of the Ohio river and west of the Mississippi river is dominated by similar traffic associations; that the advance in rates complained of, effective August 1, 1908, was the outcome of understandings and agreements in suppression of competition and an unlawful combination in restraint of interstate trade, arrived at and made effective through the agency of the Southeastern Freight Association and other affiliated associations, and the acts of such combination in advancing rates was the result of a conspiracy which is unlawful at common law and under the statutes of the United States; that the proposed advance was upon commodities of prime utility and daily necessity, and entitled to as low a rate as may be consistent with a fair return to the carrier for the transportation service performed; that said advance would disturb existing trade relations, causing loss to appellees and injury to the consuming public; that the commodities upon which the rates were to be advanced were of such necessity, and the supply from other sources was so limited, that considerable traffic would continue to move, even under the alleged exorbitant and unjust rates represented by the advance, but the effect of the increased rates would inevitably restrict the volume of the traffic, reduce the business of the appellees and other dealers, and deprive the consuming public, or some part thereof, of the ability to purchase and use said commodities to the extent to which they are entitled, to the irreparable loss and injury of the appellees and others similarly situated, and to the prejudice of the public interest; that appellees' legal remedy was inadequate for the loss and damage resulting to them from the exaction of unjust and unreasonable rates, and the consequent restriction of their business was a constantly recurring grievance incapable of pecuniary estimation; that should the advance be ascertained and declared to be unjust and unreasonable and reparation be allowed, not only would such remedy be inadequate to compensate for the loss and damage suffered, but the enforcement of the right of reparation or of the right to threefold damages authorized under the Sherman anti-trust act (Act July 2, 1890, c. 647, 26 Stat. 209 (U.S. Comp. St. 1901, p. 3200)) would result in a multiplicity of suits; that under the reduced rates effective February 1, 1905, traffic moved freely and the carriers prospered until the coming about of the abnormal conditions following the financial panic of October and November, 1907; that for some months thereafter the volume of railway traffic greatly declined, resulting in a loss to the carriers of both gross and net earnings; that this loss was attributable to a decrease in the volume of all traffic, but appellees believed it to be true that the decline in other traffic was much greater than in the commodities on which the proposed advance in rates applied; that not only were the carriers injuriously affected by the panic, but all lines and classes of business and industries suffered loss; that the net earnings of the appellants and other carriers in recent months had shown an advance, and there existed a reasonable expectation that net earnings of appellants and other...