Darnell v. George Edwards

• Decision Date: 11 June 1917
• Docket Number: No. 216,216
• Parties: R. J. DARNELL, Appt., v. GEORGE R. EDWARDS, F. M. Sheppard, and W. B. Wilson, Constituting the Mississippi Railroad Commission
• Court: U.S. Supreme Court

244 U.S. 564

37 S.Ct. 701

61 L.Ed. 1317

R. J. DARNELL, Appt.,

v GEORGE R. EDWARDS, F. M. Sheppard, and W. B. Wilson, Constituting the Mississippi Railroad Commission.

No. 216.

Argued and submitted April 25, 1917.

Decided June 11, 1917.

Messrs. Roger Montgomery and William P. Metcalf for appellant.

Messrs. James N. Flowers, J. B. Harris, James Stone, George H. Ethridge, Asst. Atty. Gen., W. R. Woods, and J. M. Kuykendall, for appellees.

Mr. Justice Pitney delivered the opinion of the court:

Appellant filed his bill in the district court against the members of the Mississippi Railroad Commission, an administrative body having the usual powers, in which he sought relief by injunction against an order prescribing maximum rates on logs in carload lots transported in intrastate commerce, upon a railroad operated by him; the ground of his complaint being that the rates were so low as to be confiscatory and therefore violative of the due process of law provision of the 14th Amend- ment. The court refused a preliminary injunction (209 Fed. 99), and, upon final hearing, dismissed the bill. The case is brought here by direct appeal because of the constitutional question, under § 238, Judicial Code [36 Stat. at L. 1157, chap. 231, Comp. Stat. 1916, § 1215].

The railroad in question is known as the Batesville Southwestern, and extends from a junction with the Illinois Central at Batesville for a distance of about 17 miles through a timber country, its entire line being within the state of Mississippi. It was built jointly by appellant and the Illinois Central Railroad Company, under a contract pursuant to which he disbursed approximately $146,000 and the company approximately $98,000. The contract was made in 1910, and by its terms Darnell was to maintain and operate the road for twenty years, the company to pay him for maintaining it $143 per mile per annum, and the road was to become the property of the company at the end of twenty years without further payment; the agreement, however, being subject to termination by the company prior to the expiration of the twenty years upon specified terms. The building of the road was commenced about June, 1911. Darnell began operating it as a common carrier in March, 1912, but its construction was not finally completed until about the middle of June, 1914.

The road is of standard gauge and construction, ballasted, and built in a first-class manner. Its traffic consists almost wholly of shipments of logs in carload lots from points along the line to the terminus at Batesville.

Pending the construction of the road, the Batesville Southwestern Railroad Company was organized as a corporation to take over the property, but the road remained in the hands of Darnell as lessee. In April, 1912, he established and promulgated a tariff providing a uniform rate for freight on logs in carload lots, with a minimum of 4,500 feet, regardless of the kind or character of the timber; which was, for 10 miles and under, $2.80 per thousand feet; 10 to 15 miles, $3.35 per thousand; 15 to 20 miles, $3.90 per thousand. Complaint having been made to the Mississippi Railroad Commission, by citizens interested in the logging business, that these rates were extortionate, unjust, and confiscatory, a hearing was had, and, as a result, the Commission, in July, 1913, made an order reducing the rates nearly 50 per cent on oak, ash and hickory, and more than 50 per cent on other kinds of logs.

It appears that at the time of the construction of the railroad Darnell individually was the owner of a large amount (at the time of the hearing he owned 19,000 acres) of timber land in the country through which the road was projected, and that this furnished the reason for his interest in its construction and operation. At the same time he owned the principal part of the stock of R. J. Darnell, Incorporated, a lumber-milling corporation; but between that time and the time of the hearing the bulk of the stock had passed into the hands of his sons, he still remaining president of the company, and having sold to it the timber on the lands owned by him, the company agreeing to cut it, have it hauled, and loaded on the cars, and to pay him a fixed amount per stump.

The bill of complaint showed gross receipts from the operation of the railroad for the year ending June 30, 1913, amounting to $15,553.01, and operating expenses $4,296.20, leaving net earnings of $11,256.81. Against this, however, complainant charged as an annual rental $8,133.39, this being 1/20 of $162,667.69, then stated to be the amount invested by him in the construction of the road. Deducting this so-called rental charge left only $3,123.42, or less than 2 per cent on the sum alleged to have been expended by complainant. These figures were the result of the rates established by him; and it was alleged that at the much lower rates established by the Commission the road would yield no return above operating expenses.

The bill was filed in September, 1913, the Commission's...