220 U.S. 257 (1911), 536, United States v. Lehigh Valley Railroad Company

Docket Nº:No. 536
Citation:220 U.S. 257, 31 S.Ct. 387, 55 L.Ed. 458
Party Name:United States v. Lehigh Valley Railroad Company
Case Date:April 03, 1911
Court:United States Supreme Court
 
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Page 257

220 U.S. 257 (1911)

31 S.Ct. 387, 55 L.Ed. 458

United States

v.

Lehigh Valley Railroad Company

No. 536

United States Supreme Court

April 3, 1911

Argued January 5, 1911

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Syllabus

The rule that the allowance of amendments to pleadings is discretionary with the trial court and not to be reviewed on appeal except in case of gross abuse does not apply where such discretion is controlled by this Court and the refusal to allow an amendment defeats the evident purpose of this Court in remanding the case.

Where the refusal of the circuit court to allow an amendment is in conflict with the opinion and mandate of this Court, there is an abuse of discretion which this Court can and will correct on appeal, even if such abuse be the result of misconception of the opinion and of the scope of the mandate.

While the decision of this Court in this and other commodities clause cases, 213 U.S. 366, expressly held that, under the commodities clause, stock ownership by a railroad company in a bona fide corporation, irrespective of the extent of such ownership, does not preclude the railroad company from transporting the commodities manufactured, produced, or owned by such corporation, it is still open to the government to question the right of the railroad company to transport commodities of a corporation in which the company owns stock and uses its power as a stockholder to obliterate all distinctions between the two corporations, and an amendment to the original bill in one of the commodities cases alleging such facts as show the absolute control by the defendant railroad company, through stock ownership, over the corporation whose commodities are being transported is germane to the original bill, and should have been allowed by the trial court.

By the operation and effect of the commodities clause, a duty has been cast upon an interstate carrier not to abuse its power as a stockholder of a corporation whose commodities it transports in interstate commerce by so commingling the affairs of that corporation with its own as to cause the two corporations to become one and inseparable.

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The facts are stated in the opinion.

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WHITE, J., lead opinion

MR. CHIEF JUSTICE WHITE delivered the opinion of the Court.

This case is one of what were known as the commodities cases, previously decided and reported in United States v. Delaware & Hudson Co., 213 U.S. 366. The controversy now is but a sequel to that disposed of in the previous cases. To understand the question now for consideration, it is essential to have in mind the contentions which arose for decision upon the previous appeal and the disposition which was made of them. We therefore refer to those subjects.

The United States proceeded, both by suits in equity and mandamus, against certain railroad companies, including the Lehigh Valley, to prohibit them from transporting coal in interstate commerce in violation of what were deemed to be the prohibitions of the fifth paragraph of the first section of the Act to Regulate Commerce, as amended on June 29, 1906, usually referred to as the commodities clause of the Hepburn Act. The clause is as follows:

From and after May first, nineteen hundred and eight, it shall be unlawful for any railroad company to transport

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from [31 S.Ct. 388] any state, territory, or the District of Columbia to any other state, territory, or the District of Columbia or to any foreign country any article or commodity, other than timber and the manufactured products thereof, manufactured, mined, or produced by it, or under its authority, or which it may own in whole of in part, or in which it may have any interest, direct or indirect, except such articles or commodities as may be necessary or intended for its use in the conduct of its business as a common carrier.

34 Stat. 584, c. 3591.

In effect, the contention of the government was that the clause in question prohibited railroad companies from moving in the channels of interstate commerce articles or commodities other than the articles excepted by the provision, which had been manufactured, mined, or produced by the companies or under their authority, or which were at the time of the transportation owned by them or which had been previously owned by them in whole or in part, or in which the companies then or previously had any interest, direct or indirect. The government, moreover, insisted that these general propositions embraced the movement by the companies in interstate commerce of a commodity which had been manufactured, mined, or produced by a corporation in which the transporting railroad company was a stockholder, irrespective of the extent of such stock ownership. The railroad companies in effect defended the suits upon the ground that the statute, as construed by the government, was repugnant to the Constitution. Each of the cases was submitted upon bill and answer and petition and return to the circuit court of the United States for the Eastern District of Pennsylvania, held by three circuit judges under the Expediting Act of February 11, 1903, 32 Stat. 823, c. 544. The submission in each case was made as a result of a stipulation between counsel

that the submission on bill and answer and any averment or admission in the pleadings of either party

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shall in no wise prejudice the said parties in any other suit or proceeding heretofore or hereafter instituted, and shall be operative and take effect only with respect to the present suit and for the purpose thereof.

Treating the commodities clause in question as having the significance...

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