Poor v. Iowa Cent. Ry. Co.

• Decision Date: 11 July 1907
• Docket Number: 2,453.,2,452
• Citation: 155 F. 226
• Parties: POOR et al. v. IOWA CENT. RY. CO. et al. SHILLABER v. MINNEAPOLIS & ST. L.R. CO. et al.
• Court: U.S. District Court — Southern District of Iowa

155 F. 226

POOR et al. v. IOWA CENT. RY. CO. et al.

SHILLABER v. MINNEAPOLIS & ST. L.R. CO. et al.

Nos. 2,452, 2,453.

United States Circuit Court, S.D. Iowa, Central Division.

July 11, 1907

Geo. H Carr and Henry V. Poor, for complainants in both cases.

Geo. W Seevers, for both defendants.

H. W Byers, Atty. Gen. Iowa, amicus curiae.

McPHERSON District Judge.

The two cases above entitled are brought by holders of stock in the said two companies. The companies only are defendants. The objects of the bills of complaint are to enjoin the defendants from putting into force and carrying out the provisions of the statute passed by the recent session of the Iowa Legislature and approved by the Governor of the state February 28, 1907, taking effect July 4, 1907, commonly known as the two-cent passenger fare statute. In the case against the Iowa Central, the statute if enforced allows the company to carry passengers within the state for two cents only; but owing to the classification, and the small earnings of the other company in the other case, two and one-half cents per passenger per mile will be allowed.

The question as to the validity of railroad rate statutes is one of great importance. It is at all times a question of much delicacy when a court is asked to hold as void an act of a state Legislature or of Congress. All doubtful questions are solved by the courts in favor of the validity of such enactments. It is when, and only when, the court has no doubt as to the invalidity, that such a decree is rendered; and, when there is no doubt, courts do not hesitate to so declare. In the so-called Granger Cases, 94 U.S. 113-187, 24 L.Ed. 77, 94, 97, 99, 102, in 1876, the Supreme Court held that a Legislature has the power to enact a maximum rate statute. In case of State v. Railroad Commissioners, 36 N.W. 305, 23 Neb. 117, and Id., 37 N.W. 782, 38 Minn. 281, the Supreme Court of Minnesota held that the rates fixed by the state commission could not be inquired into by the courts. But on writs of error the Supreme Court of the United States reversed the decision of the Minnesota court. Chicago, M. & St. P.R. Co. v. Minnesota, 134 U.S. 418, 10 Sup.Ct. 462, 33 L.Ed. 970, and Minneapolis E.R. Co. v. Minnesota, 134 U.S. 475, 10 Sup.Ct. 473, 33 L.Ed. 985. From that time until the present, all the courts and the profession have understood that the Legislature, acting directly by statute or through a commission duly authorized, can fix maximum freight and passenger rates, subject to the right and power of the court by appropriate judicial proceedings to declare such statutes or orders void, if such rates are either confiscatory or unremunerative, for the reason that such proceedings are not due process of law, and are the taking of property without compensation, and therefore in violation of the United States Constitution. The Minnesota cases were reversed on the single proposition that the courts of that state had held that the rates thus fixed could not be inquired into by judicial proceedings. In Reagan v. Trust Company, 154 U.S. 362, 412, 14 Sup.Ct. 1047, 38 L.Ed. 1014, and Id., 154 U.S. 418, 14 Sup.Ct. 1062, 38 L.Ed. 1030, and Id., 154 U.S. 420, 14 Sup.Ct. 1062, 38 L.Ed. 1031, on proceedings in equity, the Supreme Court held that the rates thus fixed in the state of Texas were not remunerative, and were therefore void. In Smythe v. Ames, Receiver of the Union Pacific Railway Company, 169 U.S. 466, 18 Sup.Ct. 418, 42 L.Ed. 819, and Id., 171 U.S. 361, 18 Sup.Ct. 888, 43 L.Ed. 197, the Supreme Court held that the state freight rates thus fixed in Nebraska were void, because not remunerative. And the case of Cotting v. Kansas City Stock Yards, 183 U.S. 79, 22 Sup.Ct. 30, 46 L.Ed. 92, in declaring void by a bill in equity at the suit of a stockholder, a Kansas statute regulating and fixing rates of a stock yard company, while not in point on the question now before the court, is one of much importance as illustrating the various phases of the various questions. It would take many pages and much time to properly review those cases to which I have called attention. I have no such purpose. I call attention to them only to state what thus far has been decided. It has thus far been decided that the state Legislature has the power to establish the maximum railroad passenger and freight rates within the state, and that the fixing of such rates, whether done directly by the Legislature, or by a commission, is a legislative act.

It has been decided that such rates thus fixed are presumably fair and remunerative, and therefore valid, and that the company, stockholder, bondholder, or mortgagee challenging such rates has the burden of proof. It has been decided that the Circuit Courts of the United States have jurisdiction in most cases to adjudicate the questions. It is agreed by all that the state cannot regulate or control interstate rates. The business between two points within a state, over a line which a part of the distance is without the state, is interstate business, and therefore beyond the power of the state to control or regulate, as was held by the Supreme Court in Hanley v. Railroad, 187 U.S. 617, 23 Sup.Ct. 214, 47 L.Ed. 333.

It has been stated several times that proceedings in equity are the most seemly and suitable to properly determine the question and this is so, because then the Supreme Court of the United States would on the evidence render the final decrees. As that court is the final arbiter of all questions arising under the United States Constitution, it seems to me that all patriotic persons should welcome the opportunity of finally presenting these great questions to that court. Criminal cases against ticket agents, conductors, and other subordinates are unavailing. Decisions of state Supreme Courts, and I mention them with the greatest respect, cannot make a final settlement of the questions. The Supreme Court of the United States only can render the decision, to which all will cheerfully bow and acquiesce. Whether in an equity case tried in the state courts, and taken to the Supreme Court by writ of error, can there be decided on the merits, is a question only to be suggested, and, of course, is beyond the power of this court to decide. And it has been decided that in determining whether the state rates thus fixed are remunerative, the interstate rate receipts cannot be considered. But the question argued on the hearing, of whether when the state rates, by practical effect, directly affect the interstate rates, is a question that has not yet been decided. And the question arises by suggestion of whether one person, whether a passenger or a shipper, can be charged more than a reasonable rate, in order to create earnings to make up the average, by reason of others getting rates at less than that which is reasonable. I only mention these matters to show the great importance of these and like cases. The responsibility resting upon the...