Southern Pac. Co. v. Arlington Heights Fruit Co.

• Decision Date: 09 October 1911
• Docket Number: 1,804.
• Citation: 191 F. 101
• Parties: SOUTHERN PAC. CO. et al. v. ARLINGTON HEIGHTS FRUIT CO. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

191 F. 101

SOUTHERN PAC. CO. et al. v. ARLINGTON HEIGHTS FRUIT CO. et al.

No. 1,804.

United States Court of Appeals, Ninth Circuit.

October 9, 1911

This is a suit instituted November 9, 1909, for injunctive relief temporary in character, until the Interstate Commerce Commission shall have determined whether in point of fact a freight rate which the appellants propose to establish for the transportation of lemons from the Southern district of California to markets in the Middle West and elsewhere is unjust and unreasonable. The appellees were complainants below. After a hearing upon affidavits presented by the respective parties, a temporary injunction was granted. This appeal is from the decree thus rendered. Prior to this hearing certain preliminary questions pertaining to the jurisdiction of the court and to the insufficiency of the cause of suit were disposed of. To understand fully the nature of such questions, a more extended statement of the cause of suit must be made. The Arlington Heights Fruit Company and numerous other corporations and individuals bring this suit in behalf of themselves and all others similarly situated against the Southern Pacific Company, the Atcheson Topeka & Santa Fe Railway Company, the San Pedro, Los Angeles & Salt Lake Railroad Company, and the Transcontinental Freight Bureau, which latter association, it is alleged, is an unincorporated concern, and is composed of the three above-named railway companies and a number of other corporations engaged in like transportation business. The complainants are all citizens and residents of the state of California. All the defendants are citizens and residents of states other than the state of California, namely, the Southern Pacific Company of the state of Kentucky, the Santa Fe Railway Company of the state of Kansas, and the San Pedro Railroad Company of the state of Utah, but each of said railway companies has an office within and is doing business in the state of California, and is operating lines of railroad for the transportation of passengers and freight from within the state, and especially from within the Southern district of California, into and through other states and territories, and is subject to the provision of the act of Congress entitled 'An act to regulate commerce,' approved February 4, 1887, and all acts amendatory thereof and supplementary thereto. There is no allegation as to the residence and citizenship of the defendant Transcontinental Freight Bureau, but it is averred that it controls the fixing of freight rates upon lines from all California points into other states and territories, and that said defendant railway companies are the principal members of said bureau and control and direct the policy and operations of said bureau; that said defendant railway companies, through contracts and traffic arrangements with other connecting carriers, have established through routes and joint rates for the carriage of lemons from California points to all points in the United States and Canada; that the defendant railway companies issue to complainants bills of lading for through shipment into other states and territories, and complainants have no dealings whatever with such connecting carriers, all of which connecting carriers are corporations of states other than California, and have no lines of railway therein; that the complainants are engaged in the business of growing, buying, selling, and packing lemons, and of shipping the same from Southern California points over the lines of the defendant railway companies to various cities and towns throughout the United States, and have made large investments in their business, and that the defendant railway companies have an entire monopoly upon the transportation of lemons from points in California to the markets where the same are sold in large quantities; that prior to February 11, 1905 the Consolidated Forwarding Company, the Southern California Fruit Exchange, and other growers and shippers of lemons filed complaints against the defendant railway companies other than the San Pedro Railroad Company, before the Interstate Commerce Commission, charging that the then existing rates for transporting citrus fruits, including lemons, from points within the state to points without, which was $1.25 per hundred pounds, was unreasonable and unjust, whereby it was sought to have the rates reduced on lemons in car load lots to $1 per 100 pounds; that the Interstate Commerce Commission promulgated its order on the 11th day of February, 1905, declaring $1.10 per 100 pounds in car load lots to be just and reasonable, but that prior to such promulgation the defendant railway companies, other than the San Pedro Railroad Company, voluntarily reduced the said rates from $1.25 to $1 per hundred pounds, car load lots, which rate has ever since been the duly filed, published, and legal rate upon lemons transported as aforesaid. The findings of the Interstate Commerce Commision were accompanied by various statistical matters showing the growth and development of the lemon industry and the shipping facilities attending it. Speaking generally, it is further alleged that the lemon industry has vastly increased in later years, which has been encouraged by the defendant railway companies through the fixing and maintenance of the said rate of $1 per 100 pounds, but that even then the California growers have been unable to compete with the importations of foreign growers and shippers on the Atlantic seaboard, and during a number of months in they year have been unable to compete with such importations in the Middle Western states east of the Missouri river; that, to remedy this condition and to permit the lemon industry of California to exist and to enlarge the markets therefor, Congress on August 5, 1909, enacted that the various duties on foreign lemons be increased from 1 to 1 1/2 cents per pound; that such increase was essential to enable the California growers to dispose of their entire crop, and to prevent foreign growers from occupying the market, and thus occasioning complainants serious loss and damage; that immediately upon the enactment of said tariff the defendant railway companies announced an increase of 15 cents per 100 pounds on lemons to certain points in the United States and Canada, to become effective December 6, 1909, which tariffs have been filed with the Interstate Commerce Commission, and that the result of said increase will be to destroy the parity and equality between the marketing of foreign and California lemons within the United States during a great portion of the year. In short, it is alleged, with appropriate detail of facts, that, if such increase of rate is maintained, it will result in the destruction in a large measure of the lemon industry in California, and cause the complainants irreparable injury, that the previous rate under all the conditions existing is reasonable and just, and that, upon the other hand, the increase is arbitrary, unreasonable, and unjust, and will leave to the complainants no substantial remuneration for their products, all of which is in violation of the interstate commerce act of February 4, 1887, and the amendments thereof, and also of the Sherman anti-trust act, approved July 2, 1890, and will deprive complainants of their property without due process of law, contrary to the federal Constitution. It is further alleged that the defendants have conspired to discriminate against the complainants and their business, and thereby to monopolize interstate commerce as it pertains to the transportation of lemons in certain sections of the country; that complainants have filed their complaints before the Interstate Commerce Commission respecting such illegal and excessive charges, where the matter is now pending; and that, unless restrained, the defendant railway companies will put such illegal and unjust rates into effect on and after December 6, 1909. The prayer is for an order to show cause why a temporary injunction should not issue restraining defendants from putting such unlawful rate into effect until the final disposition of the matter by the Interstate Commerce Commission. The order was duly issued requiring the defendants to show cause on November 22, 1909. On that day the several defendant railway companies appeared specially, each by a plea setting forth, in effect, first, that it is a corporation organized and incorporated in a state other than the state of California, and is not a citizen or inhabitant of the state of California, that it appears upon the face of the bill that this is a civil suit, wherein the jurisdiction of the court is not founded only on the fact that it is between citizens of different states, but is also based upon acts of Congress relating to interstate commerce showing cause of suit thereunder; second, that the court has no jurisdiction to determine whether the published rates are reasonable or unreasonable prior to a determination of that question by the Interstate Commerce Commission; and, third, that the rates complained of are joint through rates established by contract between the defendant railway companies and their connecting carriers, that such connecting carriers are indispensable parties to the suit, and that without them the court is powerless to make and order or decree affecting such contract or the rights of any of the parties thereto not joined in the suit. The language introducing the plea of the Santa Fe Railway Company is as follows: 'Specially appearing under protest for the purpose of this plea to the jurisdiction of the court under the bill for injunction filed in the above-entitled suit, and for no other, says. ' The language of each of the other two railway defendants is: 'Enters this court in limine solely...