United States of America v. Lehigh Valley Railroad Company

• Decision Date: 03 April 1911
• Docket Number: No. 536,536
• Citation: 220 U.S. 257,55 L.Ed. 458,31 S.Ct. 387
• Parties: UNITED STATES OF AMERICA, Appt., v. LEHIGH VALLEY RAILROAD COMPANY
• Court: U.S. Supreme Court

220 U.S. 257

31 S.Ct. 387

55 L.Ed. 458

UNITED STATES OF AMERICA, Appt.,

v LEHIGH VALLEY RAILROAD COMPANY.

No. 536.

Argued January 5, 1911.

Decided April 3, 1911.

Messrs. Wade H. Ellis, Edwin P. Grosvenor, and Attorney General Wickersham for appellant.

[Argument of Counsel from pages 258-261 intentionally omitted] Messrs. John G. Johnson, Frank H. Platt, and J. F. Schaperkotter for appellee.

[Argument of Counsel from pages 261-263 intentionally omitted] Mr. Chief Justice White delivered the opinion of the court:

This case is one of what were known as the commodity cases, previously decided and reported in 213 U. S. 366, 53 L. ed. 836, 29 Sup. Ct. Rep. 527. 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 1st 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 from 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. at L. 584, chap. 3591, U. S. Comp. Stat. Supp. 1909, p. 1150.

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. at L. 823, chap. 544 U. S. Comp. Stat. Supp. 1909, p. 1211. 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 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 attributed to it by the United States, the court held it to be repugnant to the Constitution. Judgments and decrees were accordingly entered, denying the applications for mandamus, and dismissing the bills of complaint. The reasons which led to this action were expounded in one opinion, made applicable to all the cases, the court briefly but comprehensively stating the facts in each case which were relied upon by the government as bringing the defendant corporation within the clause as the government construed it. The cases were then brought here.

As was done in the lower court, the cases here were all disposed of by one opinion, the facts in each case as summarized by the court below being stated. In deciding the cases, it became necessary first to ascertain the meaning of the commodities clause. In performing this duty, the conclusion was reached that the clause did not have the far-reaching significance attributed to it by the government, and which had been substantially adopted by the court below, but, on the contrary, had a much narrower meaning. Attention was directed to the fact that the statute disjunctively applied four generic prohibitions; that is, it forbade a railway company from transporting in interstate commerce articles or commodities, 1, which it had manufactured, mined, or produced; 2, which have been so mined, manufactured, or produced under its authority; 3, which it owns in whole or in part; and, 4, in which it has an interest, direct or indirect. All these prohibitions, however, were held to have but a common purpose, 'that is, the dissociation of railroad companies prior to transportation from articles or commodities, whether the as- sociation resulted from manufacture, mining, production, or ownership, or interest, direct or indirect.'

In coming to determine whether the government was correct in its contention that these prohibitions operated to prevent a railroad company from transporting a product because it was owned by or had been mined, manufactured, or produced by a corporation in which the railroad company was the owner of stock, irrespective of the amount of such stock ownership, it was expressly decided that the prohibitions of the statute were addressed only to a legal or equitable interest in the commodities to which the prohibitions referred; that they therefore did not prohibit a railroad company from transporting commodities mined, manufactured, produced, or owned by a distinct corporation, merely because the railroad company was the owner of some or all of the stock in such corporation.

Summing up its review as to the true construction of the commodities clause, the court held (p. 415) that it prohibited 'a railroad company engaged in interstate commerce from transporting in such commerce articles or commodities under the following circumstances and conditions: (a) When the article or commodity has been manufactured, mined, or produced by a carrier or under its authority, and at the time of transportation the carrier has not in good faith, before the act of transportation, dissociated itself from such article or commodity; (b) when the carrier owns the article or commodity to be transported, in whole or in part; (c) when the carrier, at the time of transportation, has an interest, direct or indirect, in a legal or equitable sense, in the article or commodity, not including, therefore, articles or commodities manufactured, mined, or produced or owned, etc., by a bona fide corporation in which the railroad company is a stockholder.

Thus construed, the clause was held to be within the power of Congress to enact. As this conclusion rendered it necessary to reverse the action of the court below, which had been exclusively predicated upon the unconstitutionality of the statute, the question arose as to what disposition should be made of the cases. That is to say, the constitutionality of the statute being settled and its true meaning being expounded, the question was whether the cases should be finally disposed of or should be left in such a position as to give the government the right to proceed to apply and enforce the prohibitions of the statute against the various corporations which were defendants, if it deemed a good case existed for so doing. Disposing of this subject in the light of the consent upon which the cases had been tried in the court below, and of the error which had obtained as to the true meaning of the statute, and of the consequent concentration of the attention of the court and of the parties to the...