North American Co. v. St. Louis & S.F.R. Co.

• Decision Date: 23 August 1922
• Docket Number: 4174.
• Citation: 288 F. 612
• Court: U.S. District Court — Eastern District of Missouri
• Parties: NORTH AMERICAN CO. v. ST. LOUIS & S.F.R. CO. SPILLER v. ST. LOUIS-SAN FRANCISCO RY. CO. SPILLER et al. v. SAME.

288 F. 612

NORTH AMERICAN CO. v. ST. LOUIS & S.F.R. CO. SPILLER v. ST. LOUIS-SAN FRANCISCO RY. CO. SPILLER et al. v. SAME.

No. 4174.

United States District Court, E.D. Missouri.

August 23, 1922

[Copyrighted Material Omitted][Copyrighted Material Omitted]

W. F Evans and E. T. Miller, both of St. Louis, Mo., for exceptors.

S. H. Cowan, of Fort Worth, Tex., D. A. Murphy, of Kansas City, Mo., and John S. Leahy and Walter H. Saunders, both of St. Louis, Mo., for interveners.

SANBORN Circuit Judge.

Between August 16, 1906, and November 17, 1908, the St. Louis & San Francisco Railroad Company collected of certain shippers of cattle, whose claims are held by the interveners, legally established freight rates, which on April 14, 1908, the Interstate Commerce Commission found to be unreasonable and unjust to the extent of about 3 cents per 100 pounds.That Commission then held reasonable rates to be those in force prior to 1903, and by its order, made in July, 1908, the earlier rates were put in force November 17, 1908.The Commission reserved all questions of reparation, and on January 12, 1914, after a new hearing on the merits, ordered the railroad company to pay in reparation of the damages for the collection of the excessive charges about $30,000, interest, attorney's fees, and costs.For convenience in the treatment of this controversy the amount will be hereafter stated as $30,000, although that is not the exact amount.

In May, 1913, on the bill of the North American Company, a general creditor of the railroad company, brought for itself and all others of its class, this court appointed receivers of all the property of the railroad company for the benefit of all its creditors as their interests might appear; the receivers took possession of all its property and proceeded to operate it, and to distribute the proceeds thereof to its creditors.On April 3, 1914, the Rail Joint Company, a general creditor, filed a like bill, and that suit was consolidated with the suit of the North American Company under the title of 'North American Company, Complainant, v. St. Louis & San Francisco Railroad Company, Defendant, in Equity, No. 4174, Consolidated Cause. ' On May 29, 1914, in this consolidated cause, this court rendered an interlocutory decree to the effect that all the property of the railroad company was thereby impounded, sequestered, and set apart to pay the debts and obligations of the railroad company, that all parties who claimed any interest in or lien upon any of the property of the railroad company in the hands or control of the receivers should file verified statements of their claims with the special master on or before October 1, 1914, and that each of them who failed or refused so to do should, by such failure, be barred from receiving any share in the distribution of any of said funds of the property or of the proceeds thereof.Notice of this order and of the limitation of the time for the presentation of claims, in order to permit the holders thereof to derive any benefit from or share in the distribution of the property in the hands of the receivers or of its proceeds, was ordered to be and was duly given by a proper publication of the order itself.By subsequent orders this court extended the time for the presentation of such claims, until the necessity to know definitely the number and amount thereof as a basis for the bids of prospective purchasers at the approaching foreclosure sale who were to assume the payment of such claims, and as a basis for correct estimates of the amounts which various classes of creditors might expect to receive from the disposition of the property in the hands of the receivers became imperative, and that time finally expired on February 1, 1916.

On May 22, 1914, the trustees, under the general lien mortgage of the railroad company dated August 27, 1907, filed their bill for its foreclosure.On July 9, 1914, the trustee of the railroad company's refunding mortgage dated June 20, 1901, filed his bill for the foreclosure of that mortgage.The court appointed the same receivers that had been appointed in the previous suits, who immediately took possession of and impounded all the mortgaged property for the benefit of the mortgage bond holders, and by prior orders and by an order of January 21, 1916, all the suits that have been mentioned were consolidated into the single suit entitled 'North American Company, Complainant, v. St. Louis & San Francisco Railroad Company, Defendant, No. 4174, Consolidated Cause, Final,' and the final decree of foreclosure and sale was rendered in this consolidated cause and in each of its constituent causes.Substantially all the property of the railroad company was subject to the mortgages which were thereby foreclosed.

On March 31, 1916, the final decree of foreclosure and sale of all the property of the railroad company was rendered.On July 16, 1916, all this property was sold under that decree to purchasers for the St. Louis-San Francisco Railway Company, which subsequently assumed their obligations, received the property, and will hereafter be deemed and called the purchaser.On August 29, 1916, this court, after an extended hearing upon notice to all parties in interest, confirmed this sale.

The interveners had not filed any claim to any interest in or lien upon the property or the proceeds of the property of the railroad company which had come to the hands of the receivers, with the master or with the court, prior to the expiration of the time fixed for the filing of such claims on February 1, 1916, nor did they ever file any verified claims of that nature prior to the time when they filed their intervening petition herein on December 2, 1920; but at the hearing on the application for the confirmation of the sale on August 29, 1916, they gave notice to the parties to the consolidated cause that they had claims against the railroad company for illegal freight exactions that had been reduced to the judgment in the United States District Court for the Western District of Missouri of August 16, 1916, that appeal was being taken from that judgment by the railroad company and other carriers, and that the interveners would claim that their claims evidenced by that judgment were prior in lien and superior in equity to the liens and claims of every other party whomsoever upon and to the property of the railroad company in the hands of the receivers.No other or further suggestion, presentation, or action was made or taken by the interveners to present or prove their claims on or to the property sold and delivered to the purchaser, the railway company, under the foreclosure decree or against the railway company until December 2, 1920, when they applied to this court for leave to file their intervening petitions in this consolidated cause.The railroad company and the railway company opposed that application.

On February 12, 1921, this court granted the application.As was stated in its memorandum, it was not then persuaded that the interveners were not entitled to present their pleadings and evidence, and it was of the opinion that the claims of the interveners would more speedily reach a final and satisfactory adjudication by permitting them to plead and prove them than by refusing so to do.The court intended, by its order permitting the filing of the intervening petitions, as the special master rightly ruled, thereby to permit pleadings and proofs on the merits on all the issues raised by the interveners' petitions.It did not, however, intend by that order to determine, and did not determine, what the master's or the court's final adjudication should be or ought to be, on any of the issues presented after the answers of the railroad company and the railway company and the evidence of all the parties should be before them.

In the year 1903 the railroad company advanced its freight rates on shipments of cattle from the Southwest to Kansas City, Chicago, and other markets about 3 cents per 100 pounds, filed and published the schedules of the advanced rates, and otherwise complied with the requirements of the Act to Regulate Commerce, so that these advanced rates became in 1903, and until November 17, 1908, when, by the order of the Commission, based on its finding and opinion of April 14, 1908(Cattle Raiser's Association v. Missouri, Kansas & Texas Railway,13 Interst.Com.Com'nR. 418, 435) the reduced rates in existence prior to 1903 were again put in force, continued to be, the legal established rates, and the only rates which the railroad company could collect or receive without violating the act and subjecting itself to the heavy penalties prescribed for such violations.Act to Regulate Commerce, Secs. 2,6,10(United States Compiled Stat. Secs. 8564,8569,8574);Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co.,204 U.S. 436, 437, 27 Sup.Ct. 350, 51 L.Ed. 553, 9 Ann.Cas. 1075.'The tariff, so long as it was of force, was, in this respect, to be treated as though it had been a statute, binding as such upon railroad and shipper alike.If, as a fact, the rates were unreasonable the shipper was nevertheless bound to pay and the carrier to retain what had been paid, leaving, however, to the former the right to apply to the Commission for reparation. 'Penn. R.R. Co. v. International Coal Co., 230 U.S. 184, 197, 33 Sup.Ct. 893, 896(57 L.Ed. 1446, Ann. Cas. 1915A, 315);Robinson v. B. & O. Ry. Co.,222 U.S. 506, 509, 32 Sup.Ct. 114, 56 L.Ed. 288.

The railroad company and the other carriers engaged in transporting cattle from the Southwest strenuously contested the claims of the shippers that the advanced rates were unreasonable, and that the shippers were entitled to the damages as reparation for the loss sustained by their collection,...