Spiller v. St. Louis & SFR Co.

• Decision Date: 24 June 1926
• Docket Number: No. 6786.,6786.
• Citation: 14 F.2d 284
• Parties: SPILLER et al. v. St. LOUIS & S. F. R. CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

14 F.2d 284 (1926)

SPILLER et al. v. St. LOUIS & S. F. R. CO. et al.^*

No. 6786.

Circuit Court of Appeals, Eighth Circuit.

June 24, 1926.

David A. Murphy, of Kansas City, Mo., and Walter H. Saunders, of St. Louis, Mo. (S. H. Cowan, of Fort Worth, Tex., and John S. Leahy, of St. Louis, Mo., on the brief), for appellants.

E. T. Miller, of St. Louis, Mo. (W. F. Evans, of St. Louis, Mo., on the brief), for appellees.

Before STONE, KENYON, and BOOTH, Circuit Judges.

KENYON, Circuit Judge.

The history of this controversy extends over a period of nearly 20 years. It is difficult to cover the facts in a brief narrative. However we endeavor so to do. The findings of the master and the statement by the trial court have little in dispute as to the controlling facts.

In 1903 the St. Louis & San Francisco Railroad Company, appellee (hereafter designated as the Railroad Company), and other railroads not here involved, advanced freight rates on cattle shipments from the state of Texas and other Western states to Kansas City, Chicago, St. Louis, and other primary markets 3 cents per hundredweight. These rates were challenged by divers parties as unreasonable, unjust, and unlawful; the special challenge being by the Cattle Raisers' Association of Texas. The Interstate Commerce Commission (hereinafter called the Commission) on August 16, 1905, found the rates to the extent of the increase of 3 cents per hundredweight to be unjust and unreasonable. Cattle Raisers' Ass'n of Texas v. Mo., K. & T. R. Co., 11 Interst. Com. Com'n R. 296.

Prior to the passage by the Congress of what is known as the Hepburn Act, June 29, 1906 (34 Stat. 584), there was no power in the Commission to prescribe rates for transportation of property. After this act became effective a petition was filed with the Commission to reopen the case. April 14, 1908 (Cattle Raisers' Ass'n of Texas v. Mo., K. & T. R. Co., 13 Interst. Com. Com'n R. 418), the Commission reaffirmed its position of August 16, 1905, and again pronounced the rates excessive and unreasonable, and made an order prescribing rates for the future to take effect November 17, 1908, being the rates existing prior to 1903, viz. 3 cents less per hundredweight. Questions of reparation to be allowed only from August 29, 1906, were reserved by the Commission, to be subsequently dealt with. This order was contested in the courts by the Railroad Companies.

Appellant Spiller (hereinafter with others designated as interveners) presented claims for reparation, based on said excessive rates exacted from August 29, 1906, to November 17, 1908, which were heard from time to time, and on January 12, 1914, the Commission made an order in which it directed the defendant Railroad Company to pay to intervener Spiller, who was assignee of a large number of claims, the sum of $27,682.75, plus interest to June 15, 1914, and also to pay to other shippers, who had not assigned their claims to Spiller, certain amounts as reparation for the excessive rates aggregating $3,244.61.

May 27, 1913, on the bill of complaint of North American Company (a general creditor), filed in the United States District Court, Eastern District of Missouri, receivers were appointed for the Railroad Company, who took over the general control, management, and operation of its properties. A like bill was filed by another creditor on April 3, 1914. After the appointment of the receivers, and within the time prescribed by the Act to Regulate Commerce, the orders of reparation made by the Commission in favor of interveners were served upon the Railroad Company and its receivers. They refused to pay the moneys which the Commission had ordered paid. May 22, 1914, the trustees under the general lien mortgage of the Railroad Company dated August 27, 1907, filed bill for foreclosure. July 9, 1914, the trustees of the Railroad Company's refunding mortgage dated June 20, 1901, filed a bill for foreclosure. The same receivers theretofore appointed were appointed in these proceedings and the entire matter was consolidated in a single suit entitled "North American Company, Complainant, v. St. Louis & San Francisco Railroad Company, Defendant, No. 4,174, Consolidated Cause Final." The final decree was rendered in the consolidated cause and each of its constituent causes.

On December 29, 1914, intervener Spiller filed suit under the provisions of section 16 of the Interstate Commerce Act (Comp. St. § 8584) in the District Court of the United States for the Western Division of the Western District of Missouri at Kansas City against the various railroads to enforce payment of the amount and interest that the Commission had ordered paid. The other interveners also filed suit. Attorneys employed by the receivers appeared in these cases and contested the same. Suits were also filed at Forth Worth and St. Louis by the same parties against the carriers, on the same cause of action, but were subsequently dismissed. Other railroad companies were joined as defendants in the suits at Kansas City, but they are not interested parties here. These cases proceeded to trial, and on August 16, 1916, intervener Spiller recovered judgment in the sum of $30,212.31, with interest thereon from August 1, 1916, and also judgment for $3,021.23 as attorney fees to be taxed as costs. The other appellants in this suit (sometimes hereafter designated as other interveners) recovered judgment for $3,658.55, with interest likewise, and $364.63 attorney fees, to be taxed as costs. Appeal was taken to this court on August 28, 1916, by the attorneys employed by the receivers of the Railroad Company. The attorneys for the Railway Company were also engaged in the case after November 1, 1916. It was agreed by stipulation that the appeal, while taken only in the case of E. B. Spiller v. Missouri, Kansas & Texas Railway Company et al., should be controlling in the case of E. B. Spiller et al. against the same defendants.

In the meantime an interlocutory decree had been entered in the receivership suit May 29, 1914, requiring that all claims against the Railroad Company be filed by October 1, 1914. These orders were extended and the final time for filing claims expired February 1, 1916. March 31, 1916, the final decree of foreclosure, providing for sale of the Railroad Company's property was entered, and on July 16, 1916, the property was sold either to or for the St. Louis & San Francisco Railway Company (hereinafter called the Railway Company). This sale was confirmed on August 29, 1916, which was 13 days after the judgments were rendered in the District Court at Kansas City before referred to, and the day after the Railroad Company had appealed from the same to this court. The Railway Company took charge of the properties about November 1, 1916. Prior to August 29, 1916, the date of the confirmation of the sale, interveners had no notice or knowledge of any order made by the court fixing the time within which claims could be filed in the cause. Notice of said order was made by publication, but no publication was made in Texas or Oklahoma, where all but a few of the claimants lived.

On August 29, 1916, attorneys for interveners gave notice in open court that they had claims against the defendant Railroad Company for illegal freight exactions, that the claims had been reduced to judgment in the District Court of the United States for the Western Division of the Western District of Missouri, that an appeal was being taken from said judgment by the Railroad Company and other carriers, and that the contention of the interveners was that their claims were prior in right and superior in equity to the claims of all other creditors, including bondholders. A written notice to the same effect was also served at the same time upon Henry W. Taft, attorney for the reorganization committee, and the Railway Company; also upon the attorney for the receivers and the attorney for the Railroad Company.

Under the plan of reorganization, securities of the new company were to be exchanged for securities of the old. The original plan was not approved by the Public Service Commission of Missouri, or at least it required modification thereof, and under the accepted plan of reorganization the stockholders of the old company were to receive and did receive more than $45,000,000 of the stock of the new company, as representing their equity in the property, without the payment of anything therefor. There is some claim in argument that this is not correct, but the record we are satisfied sustains it as a fact. A large amount of cash was turned over to the receivers by the Railroad Company (approximately $300,000) much in excess of the claims of interveners, and a large amount of cash was also turned over by the receivers to the reorganized Railway Company largely in excess of the claims of interveners.

October 29, 1917, this court (246 F. 1) reversed the judgment of the District Court of the United States for the Western Division of the Western District of Missouri, and remanded the case for a new trial, its mandate being filed March 27, 1918; the judgment having been modified to some extent on March 11, 1918 (249 F. 677). Interveners then took the case to the Supreme Court of the United States by certiorari. On May 17, 1920, the Supreme Court of the United States (253 U. S. 117, 40 S. Ct. 466, 64 L. Ed. 810) reversed the judgment of this court, and affirmed the judgment of the District Court for the Western Division of the Western District of Missouri; the mandate of the Supreme Court being filed in that court June 6, 1920. Applications were filed in that court for additional attorney fees, which were allowed.

December 2, 1920, interveners applied to the District Court of the Eastern Division of the Eastern District of Missouri for leave to file in the consolidated receivership cases intervening petitions setting forth their claims against the Railroad Company for illegal exactions of freight rates, for which ...