Columbus Iron & Steel Co. v. Kanawha & M. Ry. Co.

• Decision Date: 27 May 1909
• Docket Number: 156.
• Citation: 171 F. 713
• Parties: COLUMBUS IRON & STEEL CO. v. KANAWHA & M. RY. CO.
• Court: U.S. Court of Appeals — Fourth Circuit

171 F. 713

COLUMBUS IRON & STEEL CO. v. KANAWHA & M. RY. CO.

No. 156.

United States Circuit Court, S.D. West Virginia.

May 27, 1909

On April 10, 1909, complainant tendered to a judge of the United States Circuit Court for the Southern District of West Virginia its bill against Kanawha & Michigan Railway Company seeking an injunction to restrain the defendant company from filing with the Interstate Commerce Commission a certain proposed schedule of joint rates on coal shipments between points on the line of defendant company in West Virginia and points on the Great Lakes, and from proceeding in any wise to put such proposed rates into effect. Upon the allegation contained in the original bill that the defendant proposed to file these rates with the Commission on April 12, 1909, and that there was no time to give notice to the defendant of the application for a preliminary restraining order, and that if the rates were permitted to be filed they would necessarily go into effect and be charged to the plaintiff, resulting in immediate and irreparable injury to it, the judge reluctantly granted a temporary restraining order, setting the motion for a preliminary injunction down for hearing on the 23d day of April, 1909; that being the earliest date on which the court (owing to prior engagements) would have an open date on which to hear the matter. On April 23, 1909, both parties to the bill appeared by their respective attorneys, and thereupon the plaintiff tendered and asked leave to file an amended bill, which leave was granted over the formal objection of defendant. The defendant thereupon tendered its written demurrer to the original bill, which by agreement of counsel in open court is to be treated as a demurrer to both the original and amended bills as filed, which demurrer was ordered to be filed, and the matters of law arising thereon were argued and submitted, and the temporary restraining order theretofore granted was continued in force pending the decision upon the demurrer.

The matter is now before me upon the motion for a temporary injunction and upon the said demurrer. The points specially relied on in the demurrer are in effect the following: (1) That it appears by the bill that the matter in dispute arises under the act of Congress regulating interstate commerce, and that it does not appear from the bill that the court has jurisdiction of the subject-matter, for the reason that it does not appear therefrom that the question of the reasonableness or fairness of the proposed rates has been passed upon by the Interstate Commerce Commission, in whom it is alleged, is vested the sole power to determine questions of that character relating to interstate commerce and that it does not appear that complainant, or any other person or corporation interested therein, has filed any complaint with said Commission respecting said proposed rates. (2) That the allegations of the bill do not make a case for equitable relief. In order to see just what the case made by the bill is, I will endeavor, as briefly as may be to present its essential features:

The complainant, reciting by way of preamble that it is a corporation organized under the laws of Ohio and a citizen of said state, brings this bill of complaint, 'for itself and for and on behalf of all persons or corporations engaged in mining and shipping coal to points on the Great Lakes over and by the line of the Kanawha & Michigan Railway Company, who would be affected by the proposed increase of rates in this bill complained of, against the Kanawha & Michigan Railway Company,' a corporation organized under the laws of West Virginia, and being a citizen of that state and a resident and inhabitant of the Southern judicial district thereof; that the plaintiff has two mines on the line of defendant's road in Fayette county, W.Va., and has invested about $275,000 in its business, and has contract for the coming year for 100,000 tons of coal for what is known as the 'lake trade'; that the entire product of its mines is shipped over the defendant's railway; that the defendant is a common carrier engaged in interstate commerce; that there are a great many other mines, besides plaintiff's, situate along defendant's line of road in Kanawha and Fayette counties, W. Va., which ship coal over defendant's line to lake ports; that all of these mines are in what is known as the 'Kanawha District,' and that all would be affected alike by the proposed increased rates from said district to lake ports; that since 1904 the defendant and its connecting lines have had in force a joint rate on coal of 97 cents per ton from all points in the Kanawha district to Toledo, Ohio, and that said rate is now in effect; that for the years 1901 to 1903 the rate from said district to Toledo was $1.02 per ton, and that, while said rate now in existence is not highly remunerative, it is a just and reasonable rate, 'because with an increase of said rates it would not be possible for the mines on said Kanawha & Michigan Railway to continue shipping into that market,' etc.; that in selling coal in the lake trade plaintiff not only competes with other producers on the line of defendant railway, but with other West Virginia coal fields, to wit, Thacker, Pocahontas, and Kenova districts on the Norfolk & Western Railway, Fairmont district on the Baltimore & Ohio Railway, Kanawha and New River on the Chesapeake & Ohio Railway, and also with coal from the Eastern Ohio district and coal from the Pittsburg district in Pennsylvania; that these competitors in the Ohio and Pittsburg districts, although now enjoying lower rates than those in force in the Kanawha district on defendant's line, have demanded of the railway companies on whose lines they are situated, to wit, the Pennsylvania Lines, the Wheeling & Lake Erie Railway Company, and the Baltimore & Ohio Railway Company, that the existing differentials be largely increased, either by a reduction of the rates to them or by an increase on the rates from the Kanawha district on defendant's line; that in obedience to these demands pressure has been brought to bear on defendant by the Pennsylvania Lines and by the Wheeling & Lake Erie Railway Company to compel it to increase its rates by threats to bring on a general rate war, and thus, though knowing that the existing rate is just and reasonable, defendant has been forced to yield, and has announced that, effective May 15th, the rates on lake coal to Toledo from Kanawha district will be $1.06 1/4 cents per ton; that if these rates are allowed to be filed and go into effect plaintiff will be unable to fill its contract without loss to itself; that plaintiff is without remedy at law, because if the rates go into effect they cannot be corrected by the Interstate Commerce Commission in time to enable plaintiff to gain any business in the lake trade this year, and that this will result in loss of business in future years, etc.; that existing rates give a present differential in favor of Ohio and Pennsylvania coal operators of 9 cents per ton and that the proposed increase of freight rate will increase this differential to 18 1/4 cents, which will practically bar West Virginia coal from the Kanawha district from the lake market. As a makeweight, probably, the bill avers that these proposed rates will be filed as the result of a combination, conspiracy, and agreement in restraint of interstate trade. It is also averred that the matter 'in controversy in this suit in the case of your orators alone is more than $2,000, exclusive of interest and costs.'

Z. T. Vinson and E. W. Knight, for plaintiff.

Jas. H. Hoyt, J. T. Lewis, J. H. Holt, and Jos. I. Doran (Holt & Duncan, of counsel), for defendant.

KELLER District Judge (after stating the facts as above).

The important inquiries suggested by the motion for a temporary injunction and by the demurrer to the bill are, first, has the court jurisdiction of the subject-matter of the bill; and, if so, second, does the bill make a case for the relief prayed for?

Manifestly, if the first inquiry be answered in the negative, there is no occasion to proceed with a consideration of the second. I will therefore first address myself to the broad and important question whether the Circuit Courts of the United States possess jurisdiction to grant relief of the character prayed for in this bill, and as a preliminary it is necessary to inquire just what that relief is, and under what grant of jurisdictional power the aid of the Circuit Court is asked; for it is axiomatic that the inferior federal courts are courts of limited jurisdiction, possessing only those powers which have been conferred on them by Congress under the permissive power granted by the Constitution for their establishment. U.S. v. Hudson, 7 Cranch, 32, 3 L.Ed. 259.

In the late case of Kentucky v. Powers, found in 201 U.S. 1, 26 Sup.Ct. 387, 50 L.Ed. 633, the same is expressed in these words:

'The subordinate judicial tribunals of the United States can exercise only such jurisdiction, civil and criminal, as may be authorized by act of Congress.'

I take it for granted that there is no contention here that this court can derive any jurisdictional power by reason of the allegations of the bill to the effect that the threatened wrong complained of originated as the result of an illegal combination and conspiracy in restraint of trade, because the definite threatened injury is the filing of interstate joint rates under the provisions of Interstate Commerce Act Feb. 4 1887, c. 104, 24 Stat. 379 (U.S. Comp. St. 1901, p. 3154), as amended by Act June 29, 1906, c. 359, 34 Stat. 584 (U.S. Comp. St. Supp. 1907, p. 892), and I gather that the allegations to which I have referred were introduced as foundations for evidence tending or...