Sprague v. Biggs

• Decision Date: 13 September 1945
• Docket Number: No. 28271.,28271.
• Citation: 390 Ill. 537,62 N.E.2d 420
• Parties: SPRAGUE et al. v. BIGGS et al.
• Court: Illinois Supreme Court

390 Ill. 537

62 N.E.2d 420

SPRAGUE et al.

v.BIGGS et al.

No. 28271.

Supreme Court of Illinois.

May 23, 1945.

Rehearing Denied Sept. 13, 1945.

Appeal from Circuit Court, Cook County; Philip J. Finnegan, judge.

Suit by Albert A. Sprague and others, trustees of Chicago Rapid Transit Company, against John D. Biggs and others, as members of the Illinois Commerce Commission, and others, to enjoin the enforcement of the Commission's orders regulating fares to be charged and collected by plaintiffs, wherein City of Chicago and others intervened. From a decree dismissing the complaint for want of equity, plaintiffs appeal.

Reversed and remanded with directions.

Herbert M. Johnson and Bell, Boyd & Marshall, all of Chicago (Thomas L. Marshall and David A. Watts, both of Chicago, of counsel), for appellants.

George F. Barrett, Atty. Gen. (William C. Wines and Stephen M. Fleming, both of Chicago, of counsel), for appellees John D. Biggs and others.

Barnet Hodes, Corporation Counsel, of Chicago (James J. Danaher and William H. Sexton, both of Chicago, of counsel), for appellee City of Chicago.

Richard H. Field, David F. Cavers, Harry R. Booth, Robert S. Keebler, and Herbert Sharfman, all of Washington D. D. (Alex Elson, of Chicago, of counsel), for appellees Fred M. Vinson and others.

MURPHY, Justice.

This suit was started in the circuit court of Cook county to enjoin the members of the Illinois Commerce Commission and the Attorney General from enforcing certain orders entered by the commission, regulating fares to be charged and collected by the plaintiffs, who are the trustees of the Chicago Rapid Transit Company property. The cause comes direct to this court on constitutional questions from a decree which dismissed the complaint for want of equity.

The Chicago Rapid Transit Company, an Illinois corporation, was organized in 1924 and succeeded to the ownership of the property and assets of four pre-existing railway corporations. It was in effect a consolidation of the property of the four companies, namely: The Northwestern Elevated Railway Company, South Side Elevated Railway Company, Metropolitan West Side Elevated Railway Company, and Chicago and Oak Park Elevated Railway Company. In June, 1932, the Federal district court appointed a receiver for the transit company properties and from that time to January, 1937, it operated as a public utility under a receivership of the said Federal court. On January 27, 1937, proceedings were filed in Federal court under section 77B of an act of the United States relating to bankruptcy, 11 U.S.C.A. s 207. A trustee was appointed pursuant to said act, and thereafter, on or about March 31, 1941, an additional trustee was appointed. Plaintiffs are acting in such capacity and will be referred to as trustees. During the receivership and later under the reorganization proceedings, the properties have been operated as a public utility subject to regulatory orders and measures imposed upon it by the Illinois Commerce Commission.

Various street railway companies operated surface streetcar systems in the city of Chicago, some of which were in localities serving the same area as the trustees' property. These several lines will be referred to collectively as the ‘surface lines.’ A third carrier operating in the city of Chicago and covering parts of the same field as trustees' property was the Chicago Motor Coach Company. It will be referred to as the ‘motor coach.’ Since 1935 the transit lines, surface lines and motor coach have been operating subject to the commission's order which required the issuance of intercompany passengertransfers between the transit company, on the one hand, and the surface lines, or the motor coach, on the other. The orders of the commission provided for a division of the fares, and, since this action included intercompany fares, the surface lines and motor coach were made parties defendant. They are not opposing the trustees' claims in this action, their only interest being in the percentage they shall receive if and when there is an increase in the intercompany fares. The city of Chicago obtained leave to intervene, filed an answer and resisted the application of the trustees for an increase of fares. A separate brief has been filed in this court on behalf of the city. Some of the contentions made in such brief are common to those made in the brief filed on behalf of the commission and the Attorney General. Unless otherwise noted, the designation of parties as defendants shall be intended to include the commission, Attorney General and the city of Chicago. One of the suburbs of the city of Chicago located in the area served by a part of the elevated line intervened but has not appeared or filed a separate brief in this case. The Economic Stabilization Director of the Federal government also intervened and a separate brief has been filed in his behalf.

In July, 1941, the trustees filed a proposed increased schedule of rates with the commission, which will be referred to as schedule No. 5. Schedule No. 5 referred solely to intracompany fares. The same day that schedule No. 5 was filed, the trustees filed a petition with the commission asking for an increase of intercompany fares. Schedule No. 5 was docketed under commissioners' cause No. 29923, which was a new number. The petition for an increase of intercompany fares was docketed under commission docket No. 22981, which was a number of a cause that had been pending for some time and there was involved and still pending under said number the final determination of the division of the intercompany fares between the transit company, surface lines and motor coach. Both matters were set for hearing and, after some evidence had been taken on the intracompany fare petition in No. 29923, the trustees, on November 5, 1941, filed two additional petitions, one under No. 29923, pertaining to intracompany fares and the other under No. 22981, pertaining to intercompany fares. Each petition contained allegations to the effect that the financial condition of the trust estate was such as to need an increase of fares, and in No. 29923 the prayer was that schedule No. 5 be put into immediate effect without the thirty-day statutory notice. The petition in No. 22981 asked for immediate increase of intercompany fares. Further evidence was heard in No. 22923 and during the course of the proceedings the parties stipulated that the evidence taken in such cause should be considered as evidence in No. 22981. On February 13, 1942, orders were entered in each of said causes denying the petitions for temporary increase of fares. On February 20, thereafter, this action was instituted based on the two orders of February 13 denying temporary increase. The taking of evidence was concluded in No. 22923, and on June 15, 1942, an order was entered permanently denying or suspending schedule No. 5. Thereafter the trustees filed the amended and supplemental complaint on which the cause was tried and in which they set forth the matters which occurred subsequent to the filing of the original complaint on February 20.

The gist of the trustees' action was that the two orders of February 13, denying a temporary increase of fares, and the order of June 15 permanently suspending schedule No. 5, deprived plaintiffs of their property without due process of law and was in violation of the State and Federal constitutions. After the pleadings were at issue, the cause was referred to a special master who found in favor of the plaintiffs and recommended a permanent injunction issue enjoining the enforcement of the orders above referred to. Exceptions were sustained to the special master's report and a decree entered dismissing the complaint for want of equity. This appeal followed.

Defendants advance various contentions which are preliminary to the main issues and which would, if sustained, furnish a basis for disposal of the case without a consideration of the real issue presented by the trustees. These several contentions will be given consideration first.

Defendants concede that under the authority of Peoples Gas Light & Coke Co. v. Slattery, 373 Ill. 31, 25 N.E.2d 482, a public utility has, under certain circumstances, the right to apply to a court of equity for relief against the orders of the commission, but defendants contend this action is not of that character. Defendantscontend that plaintiffs did not exhaust their administrative remedies before the commission as to the intercompany fares and that equity will not take jurisdiction even in a confiscation case until the utility has exhausted the remedies provided for under the Public Utilities Act.

It will be noted, from the statement as to the procedure had before the commission, that when the amended complaint was filed the commission had not entered a final order on the trustees' petition asking for an increase of intercompany fares. It is stated in the briefs that a large amount of evidence had been taken in such action but that it had not been concluded. Such proceeding involved matters in which the surface lines and the motor coach were interested. The question then is as to whether it was essential to the maintenance of this action that the matter of an increase of intercompany fares be first finally determined. The issue submitted for consideration by the amended and supplemental complaint is as to whether the facts pleaded, if proved, would show that the two orders of February 13, denying temporary increase of fares (intracompany and intercompany) and the order of June 15, denying the increase proposed in schedule No. 5, had the effect of compelling the trustees to continue operation under a schedule of fares that were confiscatory as to the trust property without due process, in violation of the State constitution and the Fourteenth Amendment of the Federal constitution. The trustees' application for temporary increase of intracompany fares was accompanied by the specific request...