Gulf, C. & S. F. Ry. Co. v. American Sugar Refining Co.

• Decision Date: 28 June 1939
• Docket Number: No. 8876.,8876.
• Citation: 130 S.W.2d 1030
• Parties: GULF, C. & S. F. RY. CO. v. AMERICAN SUGAR REFINING CO.
• Court: Texas Court of Appeals

130 S.W.2d 1030

GULF, C. & S. F. RY. CO. v. AMERICAN SUGAR REFINING CO.

No. 8876.

Court of Civil Appeals of Texas. Austin.

June 28, 1939.

Rehearing Denied July 19, 1939.

Appeal from District Court, Galveston County; C. G. Dibrell, Judge.

Separate suits by American Sugar Refining Company against Gulf, Colorado & Santa Fe Railway Company for alleged overcharges, and by the Railway Company against the Refining Company for alleged undercharges, were consolidated and claim of Railway Company was treated as a cross-action. From judgment for Refining Company for overcharges and that Railway Company take nothing on its cross-action, Railway Company appeals.

Reversed and rendered.

Terry, Cavin & Mills, G. B. Ross and V. W. McLeod, all of Galveston, for appellant.

Fulbright, Crooker & Freeman, C. A. Leddy, and J. H. Crooker, Jr., all of Houston, for appellee.

Joseph C. Hutcheson, III, and Harry R. Jones, both of Houston, for amici curiae.

BLAIR, Justice.

This litigation arose as follows:

In April, 1927, the Railroad Commission issued its Circular No. 7193, prescribing freight rates for shipment of sugar and molasses in Texas. In March, 1928, the Commission issued its Circular No. 7529, providing that shipments of sugar from Galveston, Sugar Land, and Texas City, to points distant 100 miles from Houston should observe as maximum the rates applicable from Houston to the same points. The rates prescribed in Circular No. 7529 were to become effective May 1, 1928. On April 30, 1928, appellant herein, Gulf, Colorado and Santa Fe Railway Company, and the Houston Chamber of Commerce, and others filed suits against the Railroad Commission in the District Court of Travis County as an appeal under Art. 6453, R. S.1925, to enjoin and annul the rates prescribed in Circular No. 7529, alleging that they were discriminatory and invalid. Appellee herein, American Sugar Refining Company, was not a party to the suit. On November 22, 1928, the District Court denied the relief prayed for, decreeing the rates prescribed in Circular No. 7529 to be valid. Appellant applied the rates prescribed in Circular No. 7193 until December 8, 1928, on which date it put into effect the rates prescribed in Circular No. 7529, and on that date published and filed same with the Commission under protest which recited that said rates were being contested in the aforementioned suit, and declared that if the contested rates were held invalid, it intended to collect the undercharges due in the premises. On June 21, 1929, this court reversed the judgment of the District Court and rendered judgment cancelling, annulling, and perpetually enjoining Commission Circular No. 7529, upon the ground of discrimination. Houston Chamber of Commerce v. Railroad Commission of Texas, Tex.Civ.App., 19 S. W.2d 583. The Supreme Court affirmed the judgment of this court on January 23, 1935. 124 Tex. 375, 78 S.W.2d 591. On March 7, 1935, the Commission issued notice to the effect that because of these decisions the provisions of Circular No. 7529 were "void." Thereafter appellee sued appellant for $5,689.51 overcharges, being the agreed difference between the rates collected by appellant under Circular No. 7193 and the rates it would have collected under Circular No. 7529, if it had put same into effect from May 1, 1928, the effective date of same, and the date which the District Court finally disposed of the case, December 8, 1928. In a separate suit, appellant sued appellee for $1,499 undercharges, being the agreed difference between the rates appellant would have collected from appellee under Circular No. 7193 and the rates actually collected under Circular No. 7529, from December 8, 1928, to April 21, 1929. These suits were consolidated, and appellant's claim for undercharges became its cross-action against appellee in the consolidated suit, which was tried upon an agreed statement of facts. Judgment was rendered for appellee against appellant for $5,689.50 overcharges, and that appellant take nothing on its cross-action; hence this appeal.

The validity of appellee's judgment for $5,689.50 for overcharges turns upon the sole question of whether the rates prescribed in Circular No. 7529 were in force from the effective date recited therein, May 1, 1928, to December 8, 1928, and involves a construction of Art. 6452, which reads as follows: "In all actions between private parties and railway companies brought under this law, the rates, charges, orders, rules, regulations and classifications prescribed by the Commission before the institution of such actions shall be held conclusive, and deemed and accepted to be reasonable, fair, and just, and in such respects shall not be controverted therein until finally found otherwise in a direct action brought for the purpose in the manner prescribed by the two succeeding articles."

Appellee contends that this statute made conclusive the rates prescribed in Circular No. 7529 upon appellant until the date they were set aside by final judgment of the District Court of Travis County; and that until such judgment became final the rates prescribed in said Circular were the only legal rates which the railroad could lawfully charge and collect from appellee.

Appellant contends that the rates prescribed in Circular No. 7529 were not effective between said dates, because before they became effective they were attacked in the suit filed by it in the manner required by Art. 6453, and were found by this court in its judgment of June 21, 1929, to be invalid, which judgment was later affirmed by the Supreme Court; and that said rates were therefore invalid from their inception, entitling appellant to collect at all times the valid rates prescribed in Circular No. 7193, which were intended to be superseded by the invalid rates prescribed in Circular No. 7529. In consequence, appellant contends that the judgment in favor of appellee for alleged overcharges should be set aside; and that it should recover judgment on its cross-action against appellee for the undercharges due on the valid rates.

We have reached the conclusion that appellant's contentions should be sustained.

The manifest purpose of Art. 6452 is to prevent collateral attacks being made upon an order or rate of the Commission. It merely declares that the rates fixed by the Commission shall in all suits between the carrier and shipper be deemed conclusive and that same shall not be controverted, "until finally found otherwise in a direct action brought for the purpose." The statute does not provide that the rates fixed by the Commission shall be conclusive forever, but merely provides that they "shall not be controverted * * * until finally found otherwise in a direct action brought for the purpose," which language clearly evidences the intention of the legislature as not prohibiting actions between private parties and railway companies brought after the rates have been declared illegal in the statutory action instituted for that purpose. Such statutory appeal is prescribed by Art. 6453, with the burden of proof placed by Art. 6454 upon the complaining party. After a rate has been declared illegal in such statutory proceeding, both the shipper and the railroad have the right to have applied the legal rate, and may recover for overcharges or undercharges as the facts may warrant, based upon the legal rate, which in the instant case is the rate prescribed in Circular No. 7193.

We construe Art. 6452 as being merely procedural and as not attempting to determine the substantive rights of shippers and railroads. It was so construed in the case of Texas Steel Co. v. Ft. Worth & D. C. Ry. Co., 120 Tex., 597, 40 S.W.2d 78, 82, wherein the court say: "If an order of the commission, lawful on its face, can be collaterally attacked in the various courts and counties of the state on grounds such as those urged in the instant case, interminable confusion would result, and railroad companies, though honestly endeavoring to obey the law and the orders of the commission could be mulcted in large sums in damages and penalties, and the orders and rates of the commission rendered hazardous to obey."

If Art. 6452 should be construed as contended for by appellee, a grave question as to its constitutionality is raised. It is essential, particularly where a rate is attacked as being confiscatory, that an appeal to the court from the order of the Commission fixing the attacked rate be allowed in order to meet the requirements of the due process clauses of both the State and the Federal Constitutions. Fourteenth Amendment U. S. Constitution, U.S.C.A. and Sec. 19 of Art. 1 of Tex. Constitution, Vernon's Ann.St. Article 6452 makes no attempt to except confiscatory rates from its operation. The appeal allowed by Art. 6453 would not afford full relief, if the railroads are bound by the rates which have been successfully attacked in the method prescribed by statute pending the time required for the court to determine their invalidity. Appellee's construction of the statute necessarily means that even though Circular No. 7529 was subsequently annulled by the court order, the railroad would nevertheless be liable to it for the difference between the amount collected under the legal rates prescribed in Circular No. 7193 and the illegal rates prescribed in Circular No. 7529. By the same reasoning, the railroad could be held liable for the statutory penalties, if it failed to apply the illegal rates pending the appeal and final judgment annulling the rates. This same interpretation was placed upon Art. 6452 by the Federal Circuit Court in the case of Mercantile Trust Co. v. Texas & P. Ry. Co., C.C., 51 F. 529, 542, and was declared to be unconstitutional under such interpretation. The court referring to this statute held as follows: "The act appears with studious, but with illogical ingenuity to endeavor to contrive a due process of law that would, while the due process was proceeding, permit the doing of the...