Missouri Pac. Ry. Co. v. Texas & P. Ry. Co.

• Decision Date: 14 January 1887
• Citation: 30 F. 2
• Parties: MISSOURI PAC. RY. CO. v. TEXAS & PAC. RY. CO.
• Court: U.S. District Court — Eastern District of Louisiana

30 F. 2

MISSOURI PAC. RY. CO. v. TEXAS & PAC. RY. CO.

United States Circuit Court, E.D. Louisiana.

January 14, 1887

Frank G. Stubbs, for petitioner.

W. W Howe, for respondent.

PARDEE J.

In the matter of the intervening petition of the Vicksburg Shreveport & Pacific Railroad Company, and of Frank S. Bond receiver of the Vicksburg & Meridian Railroad Company, the petitioners allege that they are operating a connecting railway line of the Texas & Pacific Railway lines, and the gist of their complaint, as a basis of relief, is that the receivers of the Texas & Pacific Railway Company, appointed by this court in the above-entitled suit, to operate and manage the lines of the said company, have been and are discriminating against the lines operated by petitioners 'by requiring and receiving from them a much higher rate for the carriage of all classes of freight, both east and west bound, over said lines of which they are and have been receivers, than said receivers have required or received of other railroad companies and transportation lines, particularly the said Missouri Pacific Railway Company, and the said the St. Louis, Iron Mountain & Southern Railroad Company, for similar service, and similar carriage of like freight.'

The receivers answer at length, and as follows:

ANSWER.

First. Respondents submit to this honorable court that none of the matters in the said intervening petition mentioned and complained of are matters in respect of which the petitioners therein are entitled to relief in this proceeding, and in a court of equity; and they ask to have the same benefit of defense thereto as if they had demurred to said petition.

Second. These respondents admit the adoption and existence of the various statutes and constitutional provisions set forth in the said intervening petition, but, for greater certainty as to the specific language of said organic and statutory laws, they pray leave to refer to the same, as the same have been from time to time duly promulgated. But they specially deny that the provisions quoted from the constitution and statutes of the state of Texas have any application to the issue now existing between these respondents and the petitioners in the said intervening petition, or can take away any right conferred by the acts of congress with reference to the Texas & Pacific Railway Company. They do not admit the allegations of said petitioners with respect to the spirit and intent of the acts of congress and various other statutes and constitutional provisions quoted in said petition, but, so far as the same may apply to this controversy, they pray the court to interpret the same.

Third. Respondents admit that the Texas & Pacific Railway operates its lines to Shreveport, where it connects with petitioners' lines, and that the Vicksburg, Shreveport & Pacific Railroad was opened for general traffic about August, 1884. They admit that the same person is president of the Missouri, Kansas & Texas Railway Company and of the Texas & Pacific Railway Company, but they submit that this fact has no relevancy to the issues in this proceeding, since the Texas & Pacific Railway is being managed by respondents under the orders of the court. They aver that since their appointment as receivers the transportation department of the Texas & Pacific Railway has been distinct from that of any Missouri Pacific line; and since July, 1886, the freight traffic department has been under the sole charge of your respondents' general freight agent.

Fourth. They respectfully submit that it is unnecessary and would be irrelevant to inquire, in such a proceeding as this, into the details of the freight business of the Texas & Pacific Railway Company prior to the appointment of respondents as receivers. They admit their appointment and qualification, but they specially deny that, in managing the lines of railway under their charge, they have, as charged in said intervening petition, at all times or at any time, in violation of law and their duty, discriminated against said petitioners as set forth in said petition, and that they are still so discriminating, and will so continue unless prevented by this honorable court. They admit that certain correspondence was had, set forth as Exhibits A, B, C, and D of said petition; but submit that said letters must be considered in connection the other facts of this case. They do not admit the correctness of the Memorandum E, annexed as an exhibit of said petition, and they submit that its date, in June, 1884, shows that it has no relevancy to the issues herein, but, if it should be decreed relevant by the court, they leave the petitioners to make such proof of its correctness as they may be advised.

Fifth. They aver that in March, 1886, they made, with the lines represented by petitioners, through respective traffic agents, such traffic arrangements as would enable petitioners' said lines to compete on equal terms with all other lines for freight business to points on the Texas & Pacific Railway. Said arrangement was amended or modified from time to time, and finally, on the twenty-eighth of September, 1886, was put in the form of the memorandum hereto annexed as Exhibit R A of this answer. This was still further modified October 2, 1886, by the letter made part hereof as Exhibit R B. They aver that the arrangement set forth in said Exhibits R A and R B was acceptable to the traffic agents of petitioners' lines, and has been and is now in operation, without prejudice, however, to the hearing and decision of the issues in this matter. They aver that through rates from Cincinnati, and from other points tributary to petitioners' lines, to points on the Texas & Pacific Railway, are the same by petitioners' lines as by any other line, and nothing done by respondents has ever operated to divert traffic from petitioners' lines, or to discriminate against them. They specially deny that they have ever charged petitioners to or from Shreveport for freight any more than they charge for freight over their (respondents') own line, and they show that since March, 1886, such charges, as a rule, have been less than those made on their (respondents') own line, and less than justified by the letter of the law.

Sixth. Respondents aver that from the time they took possession of the Texas & Pacific Railway until September 1, 1886, the division of revenue on business interchanged between the roads of the Missouri Pacific system, intersecting the Texas & Pacific Railway, including the St. Louis, Iron Mountain & Southern and the Missouri, Kansas & Texas Railroads, was made on the basis of what was known as the 'Gault-Tucker award,' made by two expert traffic managers, viz., John C. Gault, now general manager of the petitioners' lines, and Joseph F. Tucker, then traffic manager of the Illinois Central system, and now assistant general manager of the Chicago, Milwaukee & St. Paul Railway. On the first of September, 1886, a new agreement for division of revenue on business interchanged between the said roads of the Missouri Pacific system and the Texas & Pacific Railway was duly made and executed, which has been in operation and duly acted upon by the parties thereto since said first of September, 1886. A copy of the same is made part hereof, as Exhibit R C of this answer. The petition and order to answer in this proceeding were served on the receivers through Lionel A. Sheldon, one of your respondents, on the ninth of September, 1886. They show that at the time of such service, and since, they have, as above, been acting in the premises under said agreement of September 1, 1886.

Seventh. Your respondents aver that the Missouri Pacific roads intersect the Texas & Pacific Railway at eight different points, while the Vicksburg, Shreveport & Pacific intersects the same at put one point. The effect is that the Missouri Pacific roads could, in the absence of this agreement of September 1st, deliver freight at these eight points without any payment to the Texas & Pacific Railway, and could also deliver freight for local points on the Eastern division of the Texas & Pacific Railway at better revenue to the Missouri Pacific roads than derived under said agreement. In other words, the Missouri Pacific roads pay more in many instances under said agreement, than they would in its absence; whereas, at Shreveport, petitioners' roads pay nothing in this way, but are in sharp local competition. As to the Rio Grande division, its principal business is the transportation of cattle, and the principal markets are St. Louis and Chicago. As to this business, petitioners' roads can offer respondents nothing, while the division of revenue therefrom allowed by the Missouri Pacific roads under said agreement is a liberal one. This fact is important in considering the propriety of the agreement of September 1, 1886. They further show that the effect of said agreement of September 1, 1886, is to give the Texas & Pacific Railway a large business in lumber from the pineries of Louisiana and Texas, and in salt from the mines of Iberia, for the north-west, which it could not do to advantage in the absence of the division of rates established by said agreement. They show that the same is true of the business in cotton to Mexico, and wheat to mills on its line. They further show that, in consequence of the position of Missouri Pacific lines on both sides of the Texas & Pacific road, the said agreement preserves to the latter a large amount of business which might be diverted by transportation over Missouri Pacific Railway lines now existing, or easily built. Said agreement also secures to the Texas & Pacific a quantity of business controlled by the Missouri Pacific system, destined to points competitive between the Texas & Pacific and...