George Simpson v. David Shepard No 291 George Simpson v. Emma Kennedy No 292 George Simpson v. William Shillaber No 293

Citation57 L.Ed. 1511,33 S.Ct. 729,230 U.S. 352
Decision Date09 June 1913
Docket Number292,Nos. 291,293,s. 291
PartiesGEORGE T. SIMPSON et al., Appts., v. DAVID C. SHEPARD. NO 291. GEORGE T. SIMPSON et al., Appts., v. EMMA B. KENNEDY et al. NO 292. GEORGE T. SIMPSON et al., Appts., v. WILLIAM SHILLABER. * NO 293
CourtUnited States Supreme Court

Messrs. Thomas D. O'Brien for appellants:

[Argument of Counsel from pages 356-361 intentionally omitted]

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Mr. Edward T. Young, also for the appellants:

[Argument of Counsel from pages 361-363 intentionally omitted]

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Mr. Lyndon A. Smith, and Mr. George T. Simpson, Attorney General of Minnesota, for appellants.

Clifford Thorne, H. T. Clarke, Jr., George A. Henshaw, John Marshall, Royal C. Johnson,

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P. W. Dougherty, Grant G. Martin, U. G. Powell, J. H. Henderson, Dwight N. Lewis, William D. Williams, W. H. Stutsman, and H. R. Oglesby as amici curiae.

Messrs. Charles W. Bunn,

Mr. Justice Hughes delivered the opinion of the court:

These suits were brought by stockholders of the Northern Pacific Railway Company, the Great Northern Railway Company, and the Minneapolis & St. Louis Railroad Company, respectively, to restrain the enforcement of two orders of the Railroad & Warehouse Commission of the state of Minnesota, and two acts of the legislature of that state, prescribing maximum charges for transportation of freight and passengers, and to prevent the adoption or maintenance of these rates by the railroad companies. In addition to the companies, the attorney general of the state, the members of the Railroad & Warehouse Commission, and also, in the cases of the Northern Pacific and Great Northern Companies, certain representative shippers, were made defendants.

[Argument of Counsel from pages 364-371 intentionally omitted]

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Pierce Butler, Jared How, Hale Holden, and William D. Mitchell for appellees.

[Argument of Counsel from pages 371-376 intentionally omitted]

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Messrs. Edmund S. Durment,

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The orders and acts, which, by their terms related solely to charges for intrastate transportation, were as follows:

(1) The commission's order of September 6, 1906, effective November 15, 1906, fixing the maximum class rates for general merchandise.

(2) The act approved April 4, 1907, to take effect May 1, 1907, prescribing 2 cents a mile as the maximum fare for passengers, except for those under twelve years of age, for whom the maximum rate was to be 1 cent a mile. Laws of 1907, chap. 176.

(3) The act approved April 18, 1907, to take effect June 1, 1907, fixing maximum commodity rates for carload lots of specified weights. Laws of 1907, chap. 232.

(4) The commission's order of May 3, 1907, effective June 3, 1907, establishing maximum 'in-rates' for designated commodities in carload lots from St. Paul, Minneapolis, Minnesota Transfer, and Duluth to certain distributing centers. No complaint is made of this order in the case of the Minneapolis & St. Louis Railroad Company.

In 1905, the legislature of Minnesota had adopted a joint resolution directing the commission 'to undertake the work of securing a readjustment of the existing freight rates in this state, which will give a more uniform system of rates throughout the state, and a uniform scale of percentages which each class rate shall bear to the first class, the readjustment to secure a substantial reduction in the existing merchandise rates.' Laws of 1905, chap. 350. Pursuant to this direction, the commission conducted a prolonged investigation. Public hearings were held extending over several months, in which the railroad companies took an active part, submitting a large amount of testimony with respect to the matters involved. The commission found the existing class rates for general merchandise to be unreasonable, and by the order of September 6, 1906, above-mentioned, established

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a new schedule of lower maximum rates. These rates were applied to the classes shown by the so-called 'Western Classification' between stations in the state. This was a classification, by which articles were arranged in groups with reference to their general character, value, and the cost of transportation, and with modifications made from time to time, it had long been used by common carriers in the West and Northwest as a basis for rates, the commodities of each class taking the same rate under like conditions. In Minnesota, however, a large number of commodities, amounting to several hundred, had, by the intervention of the commission, been removed from this classification by the application of special rates, known as 'commodity rates,' or reduced in class so that the Western Classification in operation in that state was very materially different from that in general use as a basis of rates in other states.

The schedule of rates set forth in the order of September 6 was such that each rate for each class bore an exact relation to each other rate. The plan of the schedule was this: For first-class merchandise an allowance of 11.02 cents per cwt. was made for terminal charges, and in addition, there was permitted a hauling charge of .98 of a cent for each 5 miles up to 200 miles, for each 10 miles over 200 miles up to 400 miles, and for each 20 miles over 400 miles up to 500 miles. For other classes, the rates were a fixed per centum of the corresponding rates for the first class. These rates were maximum terminal rates; that is, they related to transportation to or from certain important stations called terminal or distributing stations. Between stations neither of which is so designated, the rates of the schedule might be increased by 5 per centum.

The railway companies complied with this order and the class rates were put into effect on November 15, 1906.

The commission also had under consideration a reduction in the commodity rates, at which certain commodities

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such as grain, coal, lumber, and live stock were moved in carload lots. Because of the agitation with respect to these charges, the railroad companies voluntarily reduced their rates about 10 per cent on grain (September 1, 1906) and coal (October 22, 1906). The commission, however, on December 14, 1906, ordered a further reduction in the commodity rates. The railroad companies brought suit in the circuit court of the United States, and obtained a temporary injunction restraining the enforcement of this order. Thereupon the legislature passed the act above mentioned, approved April 18, 1907, which established a new schedule of maximum commodity rates in all respects like that fixed by the commission, save that the reduction was not so great. The act grouped the various commodities which it embraced in several classes, for which different rates were prescribed. There was no fixed percentage relation between the clases, and no regular rate of progression of the various charges with increasing distance. In other respects the method of making the schedules was similar to that adopted in the order of September 6, 1906, the hauling charge decreasing as the mileage increases.

The remaining action with respect to freight rates was taken by the commission in the order of May 3, 1907, for the purpose of securing more favorable in-rates to a number of minor jobbing centers. It applied to certain commoditiess, such as groceries in carload lots, and was supplemental to the order of September 6, 1906, being intended to re-establish the relation which had previously existed between the in-rates to these distributing points and the general schedule of class rates.

The railroad companies obeyed this order of May 3, 1907, as they had that of September 6, 1906, and they also put into effect the passenger rate of 2 cents a mile. They were about to adopt the commodity rates fixed by the act of April 18, 1907, when these suits were brought and a

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temporary injunction restrained them from taking that course. The other rates, that is, the class rates, special in-rates, and the passenger rates were permitted to remain in force pending the suits.

The complainants assailed the acts and orders upon the grounds (1) that they amounted to an unconstitutional interference with interstate commerce (2) that they were confiscatory, and (3) that the penalties imposed for their violation were so severe as to result in a denial of the equal protection of the laws and a deprivation of property without due process of law. The jurisdiction of the circuit court was sustained in Ex parte Young, 209 U. S. 123, 52 L. ed. 714, 13 L.R.A.(N.S.) 932, 28 Sup. Ct. Rep. 441, 14 Ann. Cas. 764, where it was also held that the penal provisions of the acts, operating to preclude a fair opportunity to test their validity, were unconstitutional on their face. The circuit court then referred the suits to a special master, who took the evidence and made an elaborate report sustaining the complainants' contentions. His findings were confirmed by the court, and decrees were entered accordingly, adjudging the acts and orders (with the exception, in the case of the Minneapolis & St. Louis Railroad Company, of the order of May 3, 1907) to be void, and permanently enjoining the enforcement of the prescribed rates, freight and passenger, and their adoption or maintenance by the railroad companies. 184 Fed. 765.

From these decrees, the attorney general of the state and the members of the Railroad & Warehouse Commission prosecute these appeals.

The penal provisions being separable (Reagan v. Farmers' Loan & T. Co. 154 U. S. 362, 395, 38 L. ed. 1014, 1022, 4 Inters. Com. Rep. 560, 14 Sup. Ct. Rep. 1047; Willcox v. Consolidated Gas Co. 212 U. S. 19, 53, 54, 53 L. ed. 382, 400, 29 Sup. Ct. Rep. 192, 15 Ann. Cas. 1034; Grenada Lumber Co. v. Mississippi, 217 U. S. 433, 443, 54 L. ed. 826, 831, 30 Sup. Ct. Rep. 535; Western U. Teleg. Co. v. Richmond, 224 U. S. 160, 172, 56 L. ed. 710, 717, 32 Sup. Ct. Rep. 449), the question of the validity of the acts and orders fixing maximum rates is...

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