Detroit & M.R. Co. v. Michigan Railroad Commission

• Citation: 203 F. 864
• Decision Date: 22 March 1913
• Docket Number: 5,533.
• Court: U.S. District Court — Eastern District of Michigan
• Parties: DETROIT & M.R. CO. v. MICHIGAN RAILROAD COMMISSION et al.

203 F. 864

DETROIT & M.R. CO. v. MICHIGAN RAILROAD COMMISSION et al.

No. 5,533.

United States District Court, E.D. Michigan, Southern Division.

March 22, 1913

James McNamara and Fred A. Baker, both of Detroit, Mich., for complainant.

Assistant Attorney General McGill and Gillett & Clark, of Bay City Mich., for defendants.

Before KNAPPEN and DENISON, Circuit Judges, and TUTTLE, District judge.

PER CURIAM.

Complainant owns and operates a railroad running both north and south from Alpena. All questions here involved are with regard to traffic moving wholly within the state. The railroad company pursuant to the Michigan statute and the regulations of the Michigan Railroad Commission, made and published a local tariff, known as 'M.R.C. (Michigan Railroad Commission) 205,' giving rates upon logs from specified stations to Alpena. It later so made and published a mileage tariff known as 'M.R.C. 208,' giving mileage rates on logs applicable 'only when the manufactured product is to be reshipped via the Detroit & Mackinac Railway, and in the absence of tariffs naming specific rates. ' If the mileage basis, specified in tariff M.R.C. 208, was applied to the local rates fixed by tariff M.R.C. 205, they would be greatly reduced. Certain shippers complained to the Commission that the rates in 205 were unreasonable, and that this tariff, in connection with 208, operated as a discrimination against them, and favored other shippers, who were so situated as to take advantage of 208. Due notice was given, other shippers intervened on both sides of the controversy, proofs were taken, and a hearing had before the Commission. It found that the complaint was well based, and that the rates in tariff 205 were unjust, unreasonable, and excessive; and it ordered that the railway company should make and publish a new local tariff with specified lower rates. This required new tariff was made up mainly, if not wholly, by applying the mileage rate fixed in tariff 208. The Commission also made a further order, which need not be described, because fully within the rule which we are to consider.

The Michigan Railroad Commission Act (No. 300, Pub. Acts Mich 1909), which undertakes, quoting from its title, to 'define and regulate common carriers and the receiving, transportation and delivery of persons and property, prevent imposition, unreasonable rates, prevent unjust discrimination, insure adequate service, create the Michigan Railroad Commission,' etc., contains a variety of provisions, of which those thought to be here important are quoted in the margin. ^[1] Thereupon the railway company filed, in the circuit court for the county of Wayne, in chancery, its bill of complaint, reciting the facts above stated, and alleging the cost of its road, cost of operation, and value of the products shipped; that the local tariff under attack was, in all respects, just and fair; that the special mileage tariff (M.R.C. 208) was justified by special conditions stated; and that the two tariffs did not operate to cause any improper discrimination. It also alleges that the orders in question were against the just rights of complainant, and were unjust, unreasonable, and illegal, and if put into execution will financially cripple the complainant and interfere with the just and legal operation of its railroad; that no effort was made by the Commission to ascertain the cost of the carriage involved; that portions of the hauls covered by the order are upon logging branches, which are not railroads within the jurisdiction of the Commission; that the rates in M.R.C. 205 do not exceed the actual cost of carriage with a reasonable profit added; that complainant cannot be required to perform such services for less than cost and a reasonable profit; and that the orders of the Commission operate to compel service for less than such cost and a fair profit, and are in conflict with the due process of law clause of the fourteenth amendment to the federal Constitution. It further shows that, if the orders are enforced, its earning capacity will be reduced below the minimum rate of return on its investment, and its capital will be impaired, and its property will be taken, and again invokes the protection of the fourteenth amendment. It thereupon prays (1) that the logging spurs and branches be declared not subject to regulation by the Commission; (2) that the tariff rates of M.R.C. 205 may be decreed to be reasonable and just, and those fixed by the Commission to be unreasonable and unjust; (3) that the rates fixed by the Commission may be decreed to be confiscatory, and a deprivation of property without due process of law; (4) that the rates fixed by the Commission may be declared to be in conflict with the Michigan Constitution; and prays for general relief.

The Commission and intervening shippers answered, a large amount of evidence was taken, and the circuit judge certified the evidence to the Commission. It made a report to the court, adhering to its former opinion, and stating the reasons therefor. The circuit judge filed an elaborate opinion, pursuant to which the bill was dismissed. The complainant appealed to the Supreme Court of Michigan, the case was there heard like any other appeal in chancery, and the decree of the Wayne circuit court was affirmed. Detroit & Mackinac Railroad Co. v. Michigan Railroad Commission, 137 N.W. 329, decided July 22, 1912.

Complainant's application for the allowance of an appeal or writ of error to the Supreme Court of the United States was denied by Mr. Justice Day. His order of denial did not state the reasons therefor. Thereupon complainant filed its bill in this court. This bill is essentially similar to that filed in the Wayne circuit court, recounts the same proceedings, sets up substantially the same grounds of right, and prays for substantially the same relief.

Upon the argument of the motion for preliminary injunction, many different questions were presented; but we find it necessary to consider only one, and that is whether or not the matter is res judicata by reason of the action of the Michigan state courts. On the one hand, it is urged that complainant and the intervening shippers who approved its action have been fully heard in a court of competent jurisdiction, and have been defeated by the final decree of the court of last resort; on the other hand, it is said that the proceedings in the Michigan courts were various steps to the final fixing of the rate, and that there has not, as yet, been any judicial decision.

Complainant's counsel, in maintaining this proposition, relies essentially upon the decision of the United States Supreme Court in Prentis v. Atlantic Coast Line, 211 U.S. 210, 29 Sup.Ct. 67, 53 L.Ed. 150, and it is only necessary to determine whether that case is applicable. It arose in Virginia, and it seems that, in that state, there is no constitutional separation of the legislative and judicial powers, but that the state Railway Commission possesses power of both characters. From its decision, which is thus both a legislative act and a judicial decree, an appeal is provided to the Supreme Court of Appeals of the state; here, also, this dual character of power continues.

In the opinion in the Prentis Case (211 U.S. 227, 29 Sup.Ct. 70, 53 L.Ed. 150), and after stating the conclusion-- a conclusion vital to the result reached-- that the order and decree of the Commission was so far legislative that it would not be res judicata, but would be open to attack in subsequent litigation, Mr. Justice Holmes stated the further conclusion, not so vital, but not irrelevant:

'And all that we have said would be equally true if an appeal had been taken to the Supreme Court of Appeals and it had confirmed the rate. Its action in doing so would not have been judicial, although the questions debated by it might have been the same that might come before it as a court, and would have been discussed and passed upon by it in the same way that it would deal with them if they arose afterwards in a case properly so called. We gather that these are the views of the Supreme Court of Appeals itself. Atlantic Coast Line Ry. Co. v. Commonwealth, 102 Va. 599, 621 (46 S.E. 911). They are implied in many cases in this and other United States courts in which the enforcement of rates has been enjoined, notwithstanding notice and hearing, and what counsel in this case call litigation in advance. Legislation cannot bolster itself up in that way. Litigation cannot arise until the moment of legislation has past.'

It is quite obvious that what is here said about the decision of the Supreme Court of Appeals, and the argument for its application to the instant case, depend utterly upon the idea that the action of the Supreme Court of Appeals, in an appeal from the Railway Commission, was so far legislative, rather than judicial, in character, that it must be subject to be treated as legislation is treated. Is this, then, true of the review provided for by the Michigan statute?

We pass by the natural query whether the whole matter is not determined, without analysis of the statute, but necessarily by the constitutional policy of Michigan, whereby judicial power cannot be vested in anything but the courts, or legislative power be vested in either of the other governmental branches. The 1909 Constitution of Michigan (article 4, Secs. 1 and 2) provides that the powers of government are divided into three departments, the legislative, executive, and judicial, and that no person belonging to one department shall exercise powers properly belonging to another, except in cases expressly provided in the Constitution. These provisions are the same as found in article 3 of the Constitution of 1850, and this rule of strict division and limitation...