Northern Pac. Ry. Co. v. Pacific Coast Lumber Mfrs.' Ass'n

• Citation: 165 F. 1
• Decision Date: 05 October 1908
• Docket Number: 1,520.
• Parties: NORTHERN PAC. RY. CO. et al. v. PACIFIC COAST LUMBER MFRS.' ASS'N et al.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

165 F. 1

NORTHERN PAC. RY. CO. et al. v. PACIFIC COAST LUMBER MFRS.' ASS'N et al.

No. 1,520.

United States Court of Appeals, Ninth Circuit.

October 5, 1908

The appeal in this case is taken from a temporary injunction order made in a case in which the appellees herein consisting of a number of corporations and persons engaged in the lumber and shingle business in the states of Washington and California, brought their bill against the Northern Pacific Railway, a corporation of the state of Wisconsin, the Great Northern Railway Company, a corporation of the state of Minnesota, the Chicago, Burlington & Quincy Railroad Company a corporation of the state of Iowa, the Oregon Railroad &amp Navigation Company, a corporation of the state of Oregon, the Oregon Short Line Railroad Company and the Union Pacific Railroad Company, corporations of the state of Utah, each of which corporations, the bill alleged, was engaged in business within the district in which the suit was brought. The bill alleged in substance that the appellants are common carriers engaged in commerce between the states, and as such had the power, by concurrence of action, to absolutely fix and maintain rates on lumber and forest products from points within the state of Washington to eastern and southern destinations in other states; that the interests controlling the Great Northern Railway Company also dominate and control the Northern Pacific Railway Company, and that these two dominate and control the Chicago, Burlington & Quincy Railroad Company through the ownership of its capital stock so that there is no competition between said lines; that the Union Pacific Railroad Company dominates and controls the Oregon Railroad & Navigation Company and the Oregon Short Line Railroad Company by virtue of ownership of the stock of said two companies, so that there is no competition between said lines; that, in making freight rates from the Pacific Northwest to the East, all of said lines act in concert through the medium of the Transcontinental Freight Bureau; that the first group of railroad companies so mentioned are designated in the bill the 'Hill Lines,' and the second group, the 'Harriman Lines'; that said corporations have filed with the Interstate Commerce Commission and have published, to take effect on November 1, 1907, a revised tariff of rates on lumber and other forest products from the state of Washington and other Northwestern points of origin to Eastern and Southeastern destinations in other states, whereby such rates are to be advanced 10 cents a hundred pounds to eastern destinations and 5 cents a hundred pounds to certain Southeastern destinations; that said rates will go into effect on November 1, 1907, unless restrained by the court; that in promulgating said tariff the said railroad companies have combined, conspired, and agreed to enormously advance the rates, and that such advance is made in restraint of interstate trade and in violation of the act of Congress of July 2, 1890, c. 647, 26 Stat. 209 (U.S. Comp. St. 1901, p. 3200), known as the 'Sherman Anti-Trust Act,' and of acts amendatory thereof; that said increase in rates is unjust, unreasonable, and in violation of section 1 of the act of Congress of February 4, 1887, c. 104, 24 Stat. 379 (U.S. Comp. St. 1901, p. 3154), known as the 'Act to regulate commerce,' and the acts amendatory thereof; that the Great Northern Railway Company and the Northern Pacific Railway Company, in connection with other participating carriers, have filed with the Interstate Commerce Commission, to take effect November 1, 1907, a revised tariff of rates on lumber and other forest products from the state of Washington and other Northwestern points of origin, to Porthill, Idaho, and to Gateway, Sweet Grass, and Butte, Mont., and intermediate points, and to Sherwood, Crosby, Maxbass, Antler, Bunseith, St. John, Hansboro, Sarles, Hanna, Walhallo, Neche, Ojata, Argusville, Colfax, and Hankinson, N.D., and intermediate points, whereby the prevailing rates are to be greatly advanced; that such rates will go into effect unless restrained by the order of the court; that said advances in rates are unjust, unreasonable, and arbitrary, and in violation of The sherman anti-trust act, and of the act to regulate commerce. The bill charges, upon information and belief, that an agreement and understanding exists between the Hill lines and the Harriman lines, whereby the Northwest Pacific Coast territory is parceled between them for transportation purposes, and that, in pursuance of such agreement and understanding, neither will invade the territory of the other; that upon shipments of lumber originating in the territory of the one, to be transported over the lines of the other, a large if not prohibitive differential in rates is exacted, so that practically each dominates the transportation from points within its own territory, and names the rate to be exacted therefrom; that the advance in rates announced to become effective on November 1, 1907, was brought about by agreements and understandings between said Hill and Harriman lines in suppression of competition and for their mutual advantage, without regard to the rights and interests of the public; that the appellees and others engaged in the lumber business in the state of Washington have invested in plant, machinery, equipment, and appurtenances $100,000,000, not including the value of the material on hand, logs, standing timber or timber lands, and that more than 90,000 persons are directly engaged in said industry, the annual pay roll whereof exceeds $60,000,000, and that approximately 200,000 people are directly dependent upon said industry; that the annual output of lumber exceeds $65,000,000, and the annual output of shingles exceeds $17,000,000; that the freight paid annually on shipments from the points in the state of Washington to be transported to other states approximates $25,000,000; that a large part of such investment in the lumber industry was made upon faith that the existing rates of freight to the consuming markets would not be increased, but rather decreased, and the appellees allege on information and belief that the rates generally in the United States on the average of all traffic have been reduced 20 per cent. in the last 20 years, and allege that the existing rates on lumber were voluntarily established by the carriers in the year 1893, and ever since have been continuously in effect. The bill sets up the present tariff as it has existed for 14 years, and alleges that under such rates it is difficult for the lumber manufacturers of Washington to compete in the markets with similar products, and that only in the highest grades on the market, under said rates, can they move their product to consuming territories in other states. The bill alleges that not only are the existing rates greater than a large part of the traffic can bear, but that under said rates the appellants have greatly prospered. The bill then sets forth in detail the proportion of tonnage of forest products to other products carried by said railroad companies under the present rate, and alleges that dividends have been paid by said companies in addition to operating expenses, fixed charges, a large amount of interest on bonds and indebtedness, and large expenditures for improvements, and that the tonnage on forest products constitute 17.33 per cent. of their entire tonnage, and has paid 27.80 per cent. of the entire gross earnings of the Great Northern Railway Company; that the proposed advance in rates will greatly injure, and to a large extent destroy, the lumber industry in the state of Washington, and will work irreparable injury to the appellees and others engaged in the business in that state and in the Northwest Pacific Coast, as well as cause serious detriment to the public interests; that the advance will amount to $48 a car on lumber and $36 a car on shingles to St. Paul, Denver, Chicago, and other Eastern markets, which is excessive, unreasonable, and unjust, and more than the traffic can bear; that the proposed advanced rates will force the mills to shut down; that the appellees have no remedy at law; that the Interstate Commerce Commission has no jurisdiction to afford relief in the premises until after the threatened advance in rates shall have gone into effect, and the reasonableness thereof shall have been investigated and determined by said commission, and that in the meantime the advance in rates would drive the appellees out of competing markets, disrupt the established trade regulations of the appellees, and force them to shut down their lumber mills or to make enormous sacrifices in the disposition of their product, which injury is irreparable, and incapable of pecuniary estimation.

The bill was filed on October 1, 1907. On October 31, the Circuit Court made an order holding in abeyance certain motions and pleas to the jurisdiction of the court over the parties defendant, and enjoining the appellants, until the further order of the court, from putting into effect the advanced rates or any rates in advance of the present established rates, and directing that the appellees execute to the appellants a bond with good and sufficient sureties in the sum of $250,000 to indemnify them from loss, cost, and damages by reason of the injunction, in case said advance in rates should finally be held to be reasonable, or in case rates in excess of the existing tariff should be established by the Interstate Commerce Commission.

James B. Kerr and W. W. Cotton, for appellants.

Wimbish, Watkins & Ellis and Austin E. Griffiths, for appellees.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

GILBERT Circuit Judge (after stating the facts as above).

The appellees moved to dismiss the appeal...