Chicago, B. & Q.R. Co. v. Dey

• Decision Date: 02 February 1889
• Citation: 38 F. 656
• Parties: CHICAGO, B. & Q.R. CO. v. DEY et al., Railroad Commissioners. CHICAGO, M. & St. P. RY. CO. v. SAME.
• Court: U.S. District Court — Southern District of Iowa

38 F. 656

CHICAGO, B. & Q.R. CO. v. DEY et al., Railroad Commissioners.

CHICAGO, M. & St. P. RY. CO. v. SAME.

United States Circuit Court, S.D. Iowa, Central Division.

February 2, 1889

Wirt Dexter, for complainant.

A. J Baker, Atty. Gen., for defendants.

BREWER J.

This case is submitted on an application for a temporary injunction. On the 28th of June, 1888, this complainant filed a bill in this court asking an injunction restraining the defendants as railroad commissioners of the state of Iowa from putting in force a certain schedule of rates on freight. After a lengthy hearing, and on the 27th day of July, a temporary injunction was issued as prayed for. Now the complainant files this, a supplemental bill, alleging that defendants are seeking to evade the force of that injunction and to case upon complainant a schedule of rates substantially the same as that heretofore enjoined, or at least that the difference is so slight as to indicate a mere evasion. The gist of the complaint is that certain jobbers and manufacturers of Iowa, interested in reducing the rates of freight, formed associations for that purpose, and employed special counsel to assist the attorney general in resisting the original application. That after the injunction had been granted a meeting of such jobbers and manufacturers was held in Davenport on August 14th, for the purpose of devising and adopting a plan of procedure for evading the operation of such injunction. In pursuance of the plan devised a circular was sent out, marked 'Strictly Confidential,' to various parties in the state, in which it was recited that sections 18, 19, and 20 authorized complaints to the railroad commissioners of every unreasonable charge, and required the commissioners upon such complaints to summon the railroad making such charge to appear and show that it was a reasonable one; and, if found by the commissioners to be unreasonable, they were to make a reasonable rate which would become prima facie evidence; and further, that when such rates were once established the railroad would become liable for all the penalties. The circular then reads:

'Therefore the committee recommended that the jobber at every shipping and manufacturing point secure evidence of the unreasonable rates being collected by the railroads, and file them with the proper petition with the railroad commissioners at once. This plan being carried out at all points would quickly enable the commissioners to establish schedule rates which the railroad managers could neither question nor controvert as prima facie evidence of reasonable rates, and they would be in force until their unreasonableness was declared by the courts, the important point being to get the rates into effect at once, and have them in effect while the litigation is proceeding.'

In pursuance of this plan a complaint was filed by Robert Donahue and others, alleging generally that the railroad company, complaint herein, had attempted to put in force schedules of rates unreasonable and extortionate, and praying for an examination. Upon the hearing, after objection by the railroad company, a full schedule of rates for complainant's road in the state of Iowa was prescribed by the commissioners, and then follows a matter which it is painful to record. The three gentlemen who had been railroad commissioners were candidates for election at the November election. A decision of this complaint was filed with the secretary on the 3d day of November, three days before the election, signed by two of the commissioners. The third appended to that decision the following:

'Mr. Fred Wilde of Davenport, secretary of the Twin Cities' Freight Association, in a letter dated October 31, has threatened me in the name of the jobbers of the state with their opposition to my candidacy for railroad commissioner unless the opinion of this board in the Davenport case was made public on or before Friday, November 2, 1888. I infer that the demand is that the decision must be in compliance with their views. In this situation I am compelled by my feelings of self-respect to decline until after election to give any expression of my views upon the subject. I do not believe that a public officer whose duty it is to determine questions of this kind, which are practically judicial, should allow personal interests to sway his judgment.

(Signed)

'PETER A. DEY.

'Des Moines, Nov. 3, 1888.'

It is further alleged that this schedule adopted by the commissioners was the same as that they were enjoined from putting in force, with merely a change in change in the classification from the so-called 'Illinois' to the so-called 'Western' classification, that making a difference of only 2 1/2 per cent. in the complainant's earnings,-- the former schedule reducing them 30 per cent., and the latter 27 1/2 per cent.; and also that this schedule is unreasonable in that by it the complainant would not earn its operating expenses and fixed charges. It is still further asserted that sections 18, 19, and 20, under which these proceedings were had, gave no authority for the making of an entire schedule, and only aim at the correction of a single wrong in the matter of charges.

To this bill of complaint defendants have filed an answer, averring that in their actions they were simply obeying the commands of the statute; that a complaint was duly filed with them charging excessive rates on the part of the complainant; that they gave notice to complainant, a hearing was had, and that they endeavored to obtain evidence as to the actual cost of the railroad property in Iowa, or a fair and reasonable cost of such property, as well as the relation of such cost to the bonds and stocks upon which interest and dividends were claimed; that they failed to receive from complainant any satisfactory information; that they heard all the testimony that was offered on either side, and made their decision on such testimony; that the complainant in fact is seeking dividends on watered stock. They further aver that they had no part in the transactions of the jobbers and manufacturers; and with reference to the letter received by Mr. Dey the other commissioners say they received no letter or other communication of any nature or kind, verbal or written, in respect to their action prior to the making and signing of the decision; that that decision was made and signed on the 26th of October, and was not then announced on account of the absence of Mr. Dey, and because they were waiting for his action. With reference to the allegation in the bill that the change in the classification from the Illinois to the Western makes but a slight change in the earnings of the complainant,-- a difference of only 2 1/2 per cent.,-- they aver that if such fact was shown by any calculation made by the complainant it was not communicated to them; and that the only evidence they had on that subject was the affidavit of complainant's general manager filed on the original hearing, averring that the two classifications made a difference of about 15 per cent., and also the bills filed by the three railroad companies at that time, in one of which (the complainant's bill) it was alleged that 'a comparison between the Western classification being used by some fifty or more roads west of Chicago, and the Illinois classification which the Iowa commissioners proposed to adopt for their new rates, computed upon a basis of one hundred mile distances, in each case shows an average reduction of about fifty per cent. upon fifteen or twenty per cent. of the total number of articles named in the classification, and these articles so reduced comprise about three-fourths of the entire tonnage of the state of Iowa. ' They further say that upon the hearing before them they inquired in reference to this matter of the complainant's general manager, and his reply was in accordance with the foregoing statements, and then generally allege that the schedule as prepared by them is reasonable and just, and will, if enforced everywhere on complainant's line, enable it to pay operating expenses and fixed charges, and beyond that a handsome dividend.

This summary of the bill of complaint and answer discloses the questions presented, and in support of these matters quite a volume of testimony has been presented, consisting of affidavits, testimony taken before the commissioners upon the hearing of the complaint, and upon which they acted in comparing the schedule with the reports of the complainant of its business to the railroad commissioners of Iowa for the last two or three years. This amount of testimony, as well as the intricacies and difficulties of the questions involved, is the reason for the time which has been taken for examination in reaching my conclusions.

There are substantially three questions presented. First. Has there been an invasion of the injunction ordered heretofore issued, and therefore a practical contempt of that order? Second. Did the sections of the statute under which the commissioners acted give authority to render such decision and establish a full schedule of rates for the complainant? Third. Is the schedule announced just and reasonable?

With reference to the first question there is little room for doubt. In the injunction which was issued there was no assumption of power to prescribe rates, and no pretense of interfering with the commissioners in the discharge of any duties imposed upon them by statute. The limits of judicial interference were I think, clearly stated in the opinion filed. Railway Co. v. Dey, 35 F. 866. Beyond that limit, as I said, the courts have no power to go; and the whole matter is relegated to the discretion of the commissioners. It would be strange indeed, after the various adjudications of ...