Louisville & N.R. Co. v. Siler

• Citation: 186 F. 176
• Decision Date: 09 January 1911
• Docket Number: 686.
• Parties: LOUISVILLE & N.R. CO. v. SILER et al.
• Court: U.S. District Court — Eastern District of Kentucky

186 F. 176

LOUISVILLE & N.R. CO. v. SILER et al.

No. 686.

United States Circuit Court, E.D. Kentucky.

January 9, 1911

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

Albert S. Brandeis, Henry L. Stone, and Wm. G. Dearing, for complainant.

Jas Breathitt, Atty. Gen., Jno. Francis Lockett, Asst. Atty. Gen., and McChord, Hines & Norman, for defendants.

Before WARRINGTON, Circuit Judge, and SANFORD and DENISON, District judges.

PER CURIAM.

In view of the character of some of the federal questions presented by the averments of the bill as amended and of the good faith in which the questions are urged, it is scarcely necessary to say that jurisdiction of the cause is vested in this court through the presence of those questions, no matter how it shall be found necessary to decide them, or whether to decide them at all. Siler v. Louisville & N.R.R. Co., 213 U.S. 175, 190, 29 Sup.Ct. 451, 53 L.Ed. 753

The nature of the federal questions made is for the most part like those relied on in that case, and they will be stated as we progress. The power of the Railroad Commission of Kentucky to adopt and enforce the orders in dispute, is denied.

By section 209 of the state Constitution, adopted September 28, 1891, a commission was established, to be known as the 'Railroad Commission,' comprising three commissioners, whose powers were to be--

'regulated by law; and until otherwise provided by law, the commission so created shall have the same powers and jurisdiction, perform the same duties, be subject to the same regulations and receive the same compensation as now conferred, prescribed and allowed by law to the existing railroad commissioners. ' Russell's St. Ky. 1909, p. 1622.

March 10, 1900, the General Assembly of Kentucky passed a law, known as the 'McChord Act,' entitled:

'An act to prevent railroad companies or corporations owning and operating a line, or lines of railroad and its officers, agents, and employes from charging collecting or receiving extortionate freight or passenger rates in this commonwealth, and to further increase and define the duties and powers of the Railroad Commission in reference thereto, and prescribing the manner of enforcing the provisions of this act and penalties for the violation of its provisions. ' Laws 1900, c. 2; Ky. St. c. 32, Sec. 820a; Russell's St. 1909, pp. 1303, 1304.

The body of the act need not be set out, for it appears in 213 U.S. at page 179, 29 Sup.Ct. 451, 53 L.Ed. 753, as also 183 U.S. at page 484, 22 Sup.Ct. 165, 46 L.Ed. 289, and in 103 F. at page 218. The rate order now in dispute was made by the Commission in virtue of this act. As pointed out in the statement, the constitutional validity of the act is challenged under both the state and federal Constitutions. The act has never been passed upon by the Court of Appeals of Kentucky; but it is claimed that certain other statutes which in parts at least were kindred to portions of the McChord act have been passed upon by the Court of Appeals. We shall consider these later.

The McChord act was, however, held to be violative of certain provisions of the state and federal Constitutions in a decision rendered by Judge Evans shortly after the enactment of the law. Louisville & N.R.R. Co. v. McChord, 103 F. 216. That suit was one of several brought by a number of railroad companies operating roads within the state, to enjoin the Commission from carrying into effect any of the provisions of the act. Upon appeal directly to the Supreme Court, it was held that the suits and the orders made in them were premature, and the decrees were reversed and the cases remanded, with direction to sustain the demurrers and dismiss the bills. The constitutional validity of the McChord act was not determined. McChord v. Louisville & Nashville Rd. Co., 183 U.S. 483, 22 Sup.Ct. 165, 46 L.Ed. 289.

Later the complainant in the present suit filed a bill in this court to enjoin the enforcement of a certain order made by the Railroad Commission providing maximum rates for the transportation of all commodities by the railroad company to and from all points within the state. The cause was by stipulation submitted to Judge Cochran, who followed the decision of Judge Evans, holding the McChord act to be unconstitutional. Upon direct appeal to the Supreme Court it was again found unnecessary to pass upon the validity of the act, the court holding that 'under the statute the Commission had no authority to make a general tariff,' and the final decree of the Circuit Court was for that reason affirmed. Siler v. Louisville & Nashville R.R. Co., supra, 213 U.S. 198, 29 Sup.Ct. 457, 53 L.Ed. 753.

We are thus brought to a consideration of the validity of the present orders of the Commission. It appears by the bill that on May 30, 1910, a number of distilling companies located and engaged in Kentucky in the manufacture, storage, and preparation for market and sale of whisky and other distillery supplies and products, and in shipping the same to and from their respective plants, filed a joint petition as plaintiffs with the Railroad Commission against the present complainant, alleging that their respective plants were located upon lines and at certain named stations of the railroad, which are specially set forth in the bill; that in order to operate their distilleries it was necessary for each of the distilling companies to cause to be transported over the railroad lines, from various points shown in an exhibit filed with the petition, certain commodities required in the manufacture and preparation of whisky and other distillery products for the market; that complaint was made in the petition of certain rates which were being exacted for transportation of the commodities mentioned between stated points of origin and destination both within the state of Kentucky, and in connection with the rates so charged certain other rates were set forth for transportation of the same commodities between the same points, which had been charged prior to March 25, 1910; that the rates complained of were in excess of the former rates, and were extortionate, unjust, and unreasonable, while the former rates had been maintained for many years, and were just and reasonable; and that the petitioners prayed that the Commission would, after due notice and investigation, make and fix just and reasonable rates, and not in excess of those charged prior to March 25, 1910. By a second paragraph the petitioners claimed reparation to the extent of the difference between the former rates and the existing rates; the amount claimed by each petitioner being specifically stated, with a prayer accordingly. It is further stated in the original bill:

'The evidence did show, and it is a fact, that on and for a number of years prior to the 25th day of March, A.D. 1910, this complainant did have in effect upon its lines of railroad, from the points of origin aforesaid to said points of destination, rates of transportation covering supplies for distilleries that were established and effective alone for the benefit of owners of distilleries located at said last-named points, and with a purpose to encourage the manufacture of whisky at said points on the lines of railroad of complainant; and it was shown by the evidence at said hearing, and it is a fact, that said rates (all of which were contained in the tariffs of complainant) did not apply to shipments of said supplies from the same points of origin to the same points of destination, when said supplies were intended for other uses than those of the distilleries, but, on the contrary, in such cases, the rates that were contained in its tariffs were, in fact charged, collected, and received as aforesaid for like supplies when intended for distillery uses.

* * * That at all such times said rates, applicable when the supplies were not for the use of distilleries, were the same rates which, under the tariff effective March 25, 1910, were made applicable also to said supplies when for such use; in other words, the difference in the rates based upon the intended uses of the supplies was abolished, but the rates made effective March 25, 1910, as aforesaid, were and are reasonable and just.'

Plainly the issues before the Commission involved the question whether the rates which had for years prior to March 25, 1910, been charged for the carriage of distillers' supplies and products within the state of Kentucky, should be restored, and whether the difference between those rates and the rates which had been put into effect on March 25, 1910, and thereafter exacted down to the filing of the petition before the Railroad Commission, was recoverable as reparation. Upon these issues and the evidence adduced, as well as the arguments and briefs of counsel for both sides, the Commission on August 10, 1910, made the two orders. The recitals contained in these orders are alike, so far as they relate to the filing of the written complaint and exhibits, to the transmission of certified copies thereof by mail to the railroad company, to a written communication from the chairman of the Commission advising the railroad company of the general nature of the complaint and fixing a day for the hearing more than 10 days thereafter for the time and place of hearing and the appearance of the parties by their counsel, to the fact of testimony being adduced and the hearings upon both testimony and arguments, including the filing of briefs, and following these in the first order this appears:

'The Commission, now being fully advised, is of the opinion, and so orders, that the rates now charged, collected, and received by defendants for the transportation of the commodities to and from the points hereinafter stated are extortionate, unjust, and unreasonable,

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