Pacific Telephone & Telegraph Co. v. Star Pub. Co.

• Decision Date: 20 October 1924
• Docket Number: No. 427.,427.
• Citation: 2 F.2d 151
• Court: U.S. District Court — Western District of Washington
• Parties: PACIFIC TELEPHONE & TELEGRAPH CO. v. STAR PUB. CO.

2 F.2d 151 (1924)

PACIFIC TELEPHONE & TELEGRAPH CO. v. STAR PUB. CO.

No. 427.

District Court, W. D. Washington, N. D.

October 20, 1924.

Otto B. Rupp, of Seattle, Wash., Post, Russell & Higgins, of Spokane, Wash., and Pillsbury, Madison & Sutro, of San Francisco, Cal., for plaintiff.

Herr, Bayley & Croson, of Seattle, Wash., for defendant.

NETERER, District Judge (after stating the facts as above).

The issue here, telephone rates, has been before the court in several relations. P. T. & T. Co. v. Dept. of Pub. Wks., ___ F.(2d) ___;² Id., 265 U. S. 196, 44 S. Ct. 553, 68 L. Ed. 975; and State ex rel. Seattle v. Dept. of Pub. Wks. et al., ___ F.(2d) ___,² decision filed Sept. 25, 1924. It is contended that the restraining order should not issue because violative of section 720, R. S. (Comp. St. § 1242). If this proceeding is ancillary to the case, supra, now pending in this court, the defendant may be enjoined. Traction Co. v. Mining Co., 196 U. S. 239, 25 S. Ct. 251, 49 L. Ed. 462; C. & O. Ry. Co. v. McCabe, 213 U. S. 207, 29 S. Ct. 430, 53 L. Ed. 765; C. & O. Ry. Co. v. McDonald, 214 U. S. 191, 29 S. Ct. 546, 53 L. Ed. 963; C. & O. Ry. Co. v. Cockrell, 232 U. S. 146, 34 S. Ct. 278, 58 L. Ed. 544. And in an ancillary action, jurisdictional requisite, diversity of citizenship, and amount involved, are not necessary. M., K. & T. Ry. Co. v. Chappell (D. C.) 206 F. 688; McCabe v. Guaranty Trust Co., 243 F. 845, 156 C. C. A. 357. See also cases in margin.¹ The avoidance of unseemly conflict between courts whose jurisdiction may embrace the same property or persons inspired section 720, supra, and the possession of the res vests the court which first acquired jurisdiction with power to adjudicate the controversy. F. L. & T. Co. v. Lake Street E. R. Co., 177 U. S. 51, 20 S. Ct. 564, 44 L. Ed. 667. And this applies whether the court takes possession of specific property or not. Looney v. E. T. Ry. Co., 247 U. S. 214, 38 S. Ct. 460, 62 L. Ed. 1084. That the rate case, supra, is not a proceeding in personam, but essentially in rem, is stated in People's Gaslight & Coke Co. v. City of Chicago (C. C.) 192 F. 398, and the same thought is expressed by the Supreme Court in Missouri v. Chicago, B. & Q. R. R. Co., 241 U. S. 533, 36 S. Ct. 715, 60 L. Ed. 1148, where it sustained the complaint of a railroad as to the confiscatory character of rates fixed by state law and the right to test the rates as a unit, claiming injunctive relief against the state law in its entirety and the officers having to do with its enforcement, citing Reagan v. F. L. & T. Co., 154 U. S. 362, 14 S. Ct. 1047, 38 L. Ed. 1014; Smyth v. Ames, 169 U. S. 466, 18 S. Ct. 418, 42 L. Ed. 819; Ex parte Young, 209 U. S. 123, 28 S. Ct. 441, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764; Willcox v. Consolidated Gas Co., 212 U. S. 19, 29 S. Ct. 192, 53 L. Ed. 382, 48 L. R. A. (N. S.) 1134, 15 Ann. Cas. 1034; Missouri Rate Case, 230 U. S. 474, 33 S. Ct. 975, 57 L. Ed. 1571; Norfolk & Western Ry. v. Conley, 236 U. S. 605, 35 S. Ct. 437, 59 L. Ed. 745.

In the Missouri Rate Case, 230 U. S. 474, 33 S. Ct. 975, 57 L. Ed. 1571, a restraining order was obtained against the enforcement of the Freight and Passenger Act of 1905 of Missouri. While the issue was pending before the master, to whom it was referred to take testimony, and before a report of his findings and conclusions was filed, the Missouri Legislature, in 1907, passed certain acts fixing certain minimum and maximum rates (intrastate) for named commodities. On the day these acts took effect bills were filed in the state court against the railway company by the state, requiring them to give effect to the new prescribed rates. The companies filed a supplemental bill in the action pending in the federal court, praying that the enforcement of the 1907 act be enjoined. The state contended that it had brought suit and the state court's jurisdiction was then exclusively vested. The federal court — (C. C.) 168 F. 317 — denied this contention. The Supreme Court said, at page 496 (33 S. Ct. 978):

"Neither can it be said that the state court had prior jurisdiction. That the state filed in one of its courts bills for the enforcement of the act of 1907, before the actual filing of the supplemental bills, may be true; but the application for leave to file the supplemental bills was pending in the Circuit Court of the United States, and action was suspended, merely to give opportunity for hearing, the court meanwhile restraining the enforcement of the new rates. In view of the pending bills assailing the act of 1905, the substantial identity of the question arising under the acts of 1907, and the pendency of the motion for leave to file supplemental bills, we are clearly of opinion that priority of jurisdiction belonged to the United States and the state court could not properly oust that jurisdiction."

In Re Engelhard, 231 U. S. 646, 651, 34 S. Ct. 258, 259 (58 L. Ed. 416) the court said:

"It is the universal practice, sustained by authority, that the only mode of judicial relief against unreasonable rates is by suit against the governmental authority which established them, or is charged with the duty of enforcing them. As was said by Mr. Justice Miller in Chicago, Mil. & St. P. Railway Co. v. Minnesota, 134 U. S. 418, 460, it was not competent for each individual having dealings with the regulated company `to raise a contest in the courts over the questions which ought to be settled in this general and conclusive way.'"

To the same effect is Ex parte Young, 209 U. S. 123, 161, 165, 28 S. Ct. 441, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764.

This case is clearly ancillary to the rate case, supra. The right of the parties there in issue cannot be determined in another court without conflicting with the jurisdiction here, and until this jurisdiction is exhausted no other court's jurisdiction may be invoked. See Starr v. Chicago, R. I. & P. Ry. Co. (C. C.) 110 F. 3, 6, 8, 9, and cases cited. Among other things, at page 6, the Circuit Court said:

"The foregoing principle is so indispensable to the harmonious working of our systems of federal and state jurisprudence that neither the Eleventh Amendment to the Constitution, nor section 720 of the Revised Statutes, which prohibits the issue by a court of the United States of a writ of injunction to stay proceedings in any court of a state, can be permitted to interfere with its maintenance. The court which first obtains jurisdiction of the subject-matter and of the necessary parties to a suit may, and if it discharges its duty it must, if necessary, issue its injunction to prevent any interference by any one with its effectual determination of the issues, and its administration of the rights and remedies involved in the litigation" (citing cases).

A case on all fours with the case in issue is Looney v. Eastern Texas Ry. Co., supra. Justice Clarke, at page 221 (38 S. Ct. 462), said:

"The use of the writ of injunction, by federal courts first acquiring jurisdiction over the parties or the subject-matter of a suit, for the purpose of protecting and preserving that jurisdiction until the object of the suit is accomplished and complete justice done between the parties, is familiar and long-established practice. * * * citing cases. So important is it that unseemly conflict of authority between state and federal courts should be avoided, by maintaining the jurisdiction of each free from the encroachments of the other, that * * * section 720 * * * has repeatedly been held not applicable to such an injunction" (citing cases).

See, also, cases cited below.²

The Department of Public Works is the representative of the telephone users, and the subscribers are bound by decree entered in the rate case, supra. The Missouri Rate Cases, 230 U. S. 474, 33 S. Ct. 975, 57 L. Ed. 1571; In re Engelhard, supra; Ex parte Young, supra; Mo. v. C., B. & Q. R. R. Co., supra; City of N. Y. v. Consolidated Gas Co., 253 U. S. 219, 40 S. Ct. 511, 64 L. Ed. 870. The court, in the case of New York v. New York Tel. Co., 261 U. S. 312, at page 315, 43 S. Ct. 372, 373 (67 L. Ed. 673) said:

"The necessary defendant in the suit to enjoin the orders lowering rates was the Public Service Commission, whose orders they were."

In Re Engelhard, supra, at page 651 (34 S. Ct. 259), the court said:

"It is the universal practice, sustained by authority, that the only mode of judicial relief against unreasonable rates is by suit against the governmental authority which established them or is charged with the duty of enforcing them.

Judge Morrow, of this circuit, in Spring Valley Waterworks v. City and County of San Francisco (C. C.) 124 F. 574, 602, said:

"The board of supervisors, or the municipal corporation, or perhaps both, represent the water ratepayers in this controversy, and are bound by the proceedings. This has been established by abundant authority."

See, also, cases cited below.³

It is said that this court, in Puget Sound Power & Light Company v. S. B. Asia et al., filed March 12, 1921, declined to enjoin a proceeding in the state court, and that this issue is similar. The issue in those cases (state court and this court) involved separate funds of the city — in the one court, a special fund; in the other court, the general fund — and the court said:

"The provision of the statute under which the utility was acquired did not obligate the general fund of the city to the payment of any portion, and the obligation of the city is distinctly limited to the special fund. Clearly the recourse of the plaintiff is to maintain the integrity of the special fund. It is stated that the design and purpose of the plaintiffs in the state court, defendants here, is to preserve the general fund from invasion for the purpose of repleting the special fund for any purpose. * * * The...