Southern Pac. Co. v. Campbell

• Decision Date: 03 July 1911
• Docket Number: 3,675.
• Citation: 189 F. 182
• Parties: SOUTHERN PAC. CO. et al. v. CAMPBELL et al.
• Court: U.S. District Court — District of Oregon

189 F. 182

SOUTHERN PAC. CO. et al. v. CAMPBELL et al.

No. 3,675.

United States Circuit Court, D. Oregon.

July 3, 1911

W. D Fenton, Jas. E. Fenton, and Ben C. Dey, for complainants.

J. N Teal and Clyde B. Aitchison, for defendants.

BEAN District Judge.

This suit has been submitted on a demurrer to a bill to enjoin the enforcement of an order of the State Railroad Commission fixing certain class rates from Portland south over the lines for the Oregon & California Railroad Company, operated by the Southern Pacific Company, as lessee.

In September, 1910, the commission upon due investigation, and after a hearing by the complainant company, found that certain enumerated class rates on freight from Portland south to various stations in Oregon, then in force on complainant's lines, were unjust, unreasonable, and excessive, and unjustly discriminatory as against the several stations and localities and as between various classes of commodities, and, by an order duly made and entered, fixed rates decided and found by it to be just, reasonable, and nondiscriminatory, in lieu thereof, expressly providing in the order that it should not be construed to apply to interstate commerce. It is alleged that the rates fixed by the commission, if enforced, will reduce the receipts of the complainant company, local and interstate, which for the year 1909 amounted to $7,104,081, by the sum of $276,931.80; but it is admitted by its counsel that this was an error in the footing, and that the actual estimated reduction will be $156,072.48 annually.

Without referring to the allegations of the complaint at length, the objections made to the order sought to be enjoined may be summarized as follows:

First. The act of the Legislature creating the railroad commission is unconstitutional and void: (a) Because of the excessive penalties and burdens imposed for refusal to obey the orders of the commission; (b) because its provisions are not uniform and equal in their application; (c) because it confers upon the commission legislative, executive, and judicial powers (d) because rate making is a legislative function, and a rate cannot be made to take effect upon the order of a subordinate commission; (e) because it requires a railroad company aggrieved by an order of the commission to prosecute any suit to review the same in the state courts; (f) because it provides for a judicial review of the orders of the commission.

Second. The order in question is violative of the Constitution of the United States because it directly and materially affects interstate commerce, since the rate on interstate traffic over complainant's lines in Oregon is made up by the through rate to Portland with the local rate out.

Third. The law under which the Oregon & California Railroad Company was incorporated provides that a corporation organized thereunder 'shall have power to collect and receive such tolls and freights for transportation of persons and property as it may prescribe ' and thus deprives the state of the power to fix rates for transportation of freight or passengers.

Fourth. The rates fixed by the commission and sought to be enjoined in this suit are so unreasonably low as to amount to a confiscation pro tanto of complainant's property.

Fifth. The order of the commission was based upon an arbitrary approval of class 1 of rates then in force on complainant's line and an arbitrary spread between such class and other classes without any reference to the distance the traffic was to be carried, the character or nature of the service to be performed, or the compensation that should be paid therefor.

Seventh. That the rates prescribed by the commission are unreasonable, and this court should review the same under the provisions of the commission act.

These several questions have been elaborately argued orally and by printed briefs. A large part of the discussion herein is directed to the constitutionality of the railroad commission act, and the contention that the order sought to be enjoined directly and materially affects interstate commerce. Both of these questions were considered and decided by this court in the Campbell Case (O.R.N. v. Campbell, 173 F. 957). The opinion of Judge Wolverton in that case contains such an exhaustive, satisfactory, and full discussion of the subject as to leave nothing to be added. I fully concur in his views and am unable to distinguish this case in principle from the one decided by him. The averments in the bill that the order of the commission interferes with interstate commerce is but the conclusion of the pleader and is not in harmony with the facts alleged. Morrow, Circuit Judge, says:

'A rate fixed by a state railroad commission for intrastate traffic, if just and reasonable in and of itself, cannot be held to be unlawful and discriminatory because it may conflict with some rate fixed by the railroad company for interstate traffic. Upon adjustment the latter rate must yield. ' Woodside v. Tonopah & G.R. co. (C.C.) 184 F. 360.

The next point is disposed of by this court and the state Supreme Court in Ex parte Koehler, Receiver (C.C.) 23 F. 529, and State v. S.P., 23 Or. 424, 31 P. 960.

The remaining points may be considered together. Rate making is a legislative function, and, when rates are fixed by the Legislature or a subordinate body to which the power has been duly delegated, they will not be declared invalid by the federal courts unless they are so unreasonably low that their enforcement would amount to the taking of property for public use without compensation and therefore practically a confiscation thereof. Willcox v. Cons. Gas Co., 212 U.S. 19, 29 Sup.Ct. 192, 53 L.Ed. 382. When it is shown that the prescribed rates will prevent the carrier from earning such compensation as under the circumstances is just, both to it and the public, their enforcement will be enjoined. Smyth v. Ames, 169 U.S. 466, 18 Sup.Ct. 418, 42 L.Ed. 819. But the rates now in controversy were made by the state commission in the light of the knowledge of the facts, and after a thorough investigation and a hearing of the party interested. They are made by law prima facie lawful, and are therefore presumed to be reasonable, fair, and just.

A.C.L.R.R. v. Fla. ex rel. Ellis, 203 U.S. 256, 27 Sup.Ct. 108, 51 L.Ed. 174; Inter. Com. v. C., R.I. & P.R.R., 218 U.S. 88, 30 Sup.Ct. 651, 54 L.Ed. 946; Ill. Cen. v. Inter. Com. Com., 206 U.S. 441, 27 Sup.Ct. 700, 51 L.Ed. 1128.

The burden is on the complainant to show by clear and satisfactory...