Chicago & N.W. Ry. Co. v. Dey

• Decision Date: 27 July 1888
• Parties: CHICAGO & N.W. RY. CO. v. DEY et al., Railway Commissioners.
• Court: U.S. District Court — Southern District of Iowa

35 F. 866

CHICAGO & N.W. RY. CO. v. DEY et al., Railway Commissioners.

United States Circuit Court, S.D. Iowa.

July 27, 1888

W. C Goudy, for complainant.

A. J Baker, Atty. Gen., and C. C. Nourse, for respondents.

Under the provisions of chapter 28, Laws 22d Gen. Assem. Iowa, the defendants, as railroad commissioners of said state, on the 14th day of June last, made a schedule of reasonable maximum rates of charges for the transportation of freight and cars on the railroads in the state of Iowa, and also made a classification of freight to accompany and be a part of the schedule of rates so made. Acting under the provisions of section 17, they caused notice to be published in the Daily News, and in the Iowa Capital, daily newspapers published in the city of Des Moines, for eight consecutive days, beginning on the 14th day of June, when the first insertion was put in the paper, and ending on the 21st day of June, the date of the last insertion. On the 22d of June, one of the railroad commissioners, at the request of some of the general officers of the railroads, caused the notice to be changed, and thereafter published, designating the 5th day of July as the time when said rates would take effect, instead of the 28th day of June, as fixed by the board of railroad commissioners and as first published by its order. The bill for injunction recites the material provisions of chapter 28, Laws 22d Gen. Assem., authorizing and directing the railroad commissioners to make the schedule. It is charged in the bill that the law is unconstitutional in that-- First, it seeks to deprive the complainant of its property without due process of law; second, the power to fix rates for common carriers is a legislative function, and cannot be delegated to commissioners; third, the provision making the schedule of rates prima facie evidence that the rates so fixed are reasonable, is unconstitutional, and deprives the complainant of the right of trial by jury; fourth, the provisions of the law defining what acts shall constitute extortion are so indefinite and uncertain as to render the law void. It is further charged that the rates as fixed are not reasonable rates, but that they are unjust and unreasonable, and so law as that, if enforced, the complainant will not be able to earn sufficient to pay its operating expenses, fixed charges, and have a surplus left to pay dividends on stock; and that the result will be to render many, if not all, the railroads of Iowa insolvent. The prayer of the bill is that the railroad commissioners be enjoined and restrained from further publishing notice of said schedule, and also that they be enjoined from instituting or prosecuting any suits for penalties provided in said act, from entering complaint, or making orders thereon, and instituting or causing to be instituted any suits to enforce such orders having for their object the enforcement of said schedule, and asking for a temporary injunction restraining the defendants from continuing the publication of said notice, and from instituting and prosecuting suits during the pendency of this suit. Upon presentation of said bill to Judge BREWER, in chambers, a restraining order was issued, and the case was set for hearing on the motion for temporary injunction before the judge at chambers, in Leavenworth, Kan., on July 5, 1888. No pleadings were filed at such hearing by the defendants further than a written protest against the jurisdiction of the court to hear and determine the controversy in question, for the reason that, while the suit was nominally against railroad commissioners, it was in fact a suit against the state, and fell within the prohibition of the eleventh amendment of the constitution of the United States.

It is competent for the state legislature to fix the rates and classifications which may be charged by common carriers of any kind in the transportation either of freight or passengers from point to point within the state. Munn v. Illinois, 94 U.S. 113; Railroad Co. v. Iowa, Id. 155; Peik v. Railroad Co., Id. 164; Stone v. Trust Co., 116 U.S. 307, 6 S.Ct. 334; Railroad Co. v. People, 77 Ill. 443; Tilley v. Railroad Co., 5 Fed.Rep. 641; Railroad Co. v. Commissioners, 70 Ga. 694. This power may be delegated to commissioners. Munn v. Illinois supra; State v. Railroad Co., 36 N.W. 308, 35 N.W. 118; Stone v. Trust Co., supra; State v. Railway Co., 37 N.W. 782; Railroad Co. v. Commissioners, 70 Ga. 694; Railroad Co. v. People, supra; Tilley v. Railroad Co., supra; State v. Railroad Co., 35 N.W. 125. When the rates have been thus established by the commissioners, the courts cannot interfere therewith, nor can the court limit the board in fixing such rates. Tilley v. Railroad Co., supra; State v. Railway Co., supra. General laws fixing maximum rates do not deprive the corporation of its property without due process of law. The question as to the inadequacy of the rate is not one to be considered on the hearing of the motion for preliminary injunction. If the rates be unreasonable, there is an adequate remedy, either by a change of rates by the commission, or it may show that fact in any suit which may be brought against it under the law.

This is an action against the state, and not against the defendants named in the petition. In re Ayers, 123 U.S. 443, 8 S.Ct. 164. Where it is manifest on the face of the record that the defendants have no individual interest in the controversy, and the relief sought against them is only in their official capacity as representatives of the state, which alone is to be affected by the decree, the question whether the suit is not substantially one against the state is one of jurisdiction. See, also, Hagood v. Southern, 117 U.S. 52, 6 S.Ct. 608; Louisiana v. Jumel, 107 U.S. 711, 2 S.Ct. 128; New Hampshire v. Louisiana, 108 U.S. 76, 2 S.Ct. 176. The state cannot be restrained from enforcing its penal and criminal statutes. In re Sawyer, 124 U.S. 210, 211, 219, 8 S.Ct. 482.

BREWER J.

This is a bill filed by the complainant, a railroad corporation, organized under the laws of the state of Illinois, against Peter A. Dey and others, they being the railroad commissioners of the state of Iowa, and seeks to enjoin them from putting in force a certain schedule of rates prepared by them for all transportation within the limits of the state. The matter is now submitted on an application for a preliminary injunction. The defendants have filed a protest, something in the nature of a plea to the jurisdiction, in which they represent that they have no personal interest in the matter; that all they have done or intend to do is as officers of the state, and that the only real party in interest is the state; and therefore urge that this court has no jurisdiction. No one can be insensible to the importance of this as well as the other questions in the case. On the one hand are vast properties invested in the legitimate business of railroad transportation, insisting that their rights are threatened with irreparable injury, and that this court alone can afford them adequate protection. On the other hand are defendants, claiming to represent the sovereign state of Iowa, insisting that she should be permitted to enforce her own laws upon property within her jurisdiction, free from any judicial interference. Not only are the interests at stake large, but, beyond that, the questions discussed are many of them of exceeding difficulty, and the paths to be trod in their examination ones upon which the lamps of precedent have as yet thrown but a feeble and glimmering light.

Of course, as jurisdiction is challenged, it presents the first matter of inquiry. The objection is that the state is really, though not nominally, the defendant, and that, under the eleventh amendment, federal courts cannot take jurisdiction of suits by individuals against states. The records of the supreme court disclose many cases in which this defense has been presented, and to those cases we turn for light upon the question. The early rule of that court was laid down by Chief Justice MARSHALL, in the case of Osborn v. Bank, 9 Wheat. 738, in which he said:

'It may, we think, be laid down as the rule, which admits of no exception, that in all cases where jurisdiction depends upon party, it is the party named in the record; consequently the eleventh amendment, which restrains the jurisdiction granted by the constitution over suits against states, is of necessity limited to those suits in which the state is the party on the record.'

Similar language is found in Davis v. Gray, 16 Wall. 203. But recent cases set aside that rule, and establish a more reasonable one,-- that that amendment covers not only suits brought against the state by name, but those against its officers, agents, and representatives, where the state though not named as defendant, is the real party against which relief is asked and the judgment will operate. In re Ayers, 123 U.S. 443, 8 S.Ct. 164. In this case the matter is discussed at length, and previous decisions examined and explained. The state is not here a nominal party. Is it the real party against which relief is asked, and upon which the judgment will operate? And here must be noticed the manifest distinction which exists between the state and the citizens of the state. A judgment may affect and operate upon one or more citizens without affecting or operating upon the state in any such direct manner as to make it the real party in interest. It must also be noticed that sometimes the relations of the state to its citizens and others is a purely business relation, while again it is entirely governmental. The state enters into contracts as an individual, both in respect to real and personal property. It issues bonds or other promises to pay, and...