State v. Adams Express Company
| Decision Date | 25 September 1909 |
| Docket Number | 15,310 |
| Citation | 122 N.W. 691,85 Neb. 25 |
| Parties | STATE OF NEBRASKA v. ADAMS EXPRESS COMPANY. [*] |
| Court | Nebraska Supreme Court |
ORIGINAL action by the state to enjoin defendant from putting into effect charges or rates other than those established by law. Judgment for state.
Defendant's exceptions overruled; and the report of the referee sustained.
William T. Thompson, Attorney General, for plaintiff.
Charles J. Greene and Ralph W. Breckenridge, contra.
OPINION
This is an action in equity by which the state of Nebraska, as plaintiff, has invoked the original jurisdiction of this court to enjoin the defendant (the Adams Express Company) from charging or receiving for services between places in Nebraska any sum in excess of 75 per cent. of certain charges exacted by defendant under its schedule of rates in force on the 1st day of January, 1907. The reduction of rates in question was sought to be accomplished by an act of the legislative assembly of that year (laws 1907, ch. 91), which reads as follows:
The act above quoted was passed by the legislature in the exercise of the power of the state to regulate defendant as a common carrier of express matter or articles of commerce between places in Nebraska. Defendant threatened to disobey the law, to prevent the state from controlling its internal commerce on defendant's lines of transportation between places in Nebraska, and to charge and collect for intrastate services compensation in excess of the maximum rates fixed by the legislature. The attorney general thereupon commenced this action and obtained a restraining order preventing the defendant from carrying out its threat of disobedience. Early in the history of the litigation defendant challenged the jurisdiction of the court, and filed a petition and bond for removal. The record was thereupon lodged in the circuit court of the United States for the federal district of Nebraska, where the defendant was unable to sustain its contention, and the cause was remanded to this court. On proper pleas, and after a full hearing, the jurisdiction of the court and the right of the state to maintain the action were sustained. State v. Adams Express Co., 80 Neb. 840, 115 N.W. 625; State v. Pacific Express Co., 80 Neb. 823, 115 N.W. 619. Having finally adjudicated those questions, they will not again be referred to in this opinion.
After the settlement of the preliminary questions the defendant filed its answer, alleging, among other things: First, that a horizontal cut of 25 per cent. of its rates was impractical and unreasonable; that the rates thus fixed by the statute are confiscatory; that the defendant is thereby deprived of its right to a reasonable profit on its business and its property investment, and therefore the act is unconstitutional; second, that the penalties provided by the act for a violation of its provisions are so unreasonable, excessive and drastic as to prevent the defendant from securing a judicial inquiry into the validity of the statute without incurring a prohibitive risk, and that they therefore constitute a violation of the equality clause of the fourteenth amendment of the federal constitution. The allegations of the answer were controverted by a reply, and after the issues were thus joined the Honorable John J. Sullivan was appointed as a referee to take and report the evidence, together with his conclusions of facts and law, to the court, with all convenient speed. A large amount of testimony was taken, which is now before us, together with the referee's report. His findings of facts were generally for the plaintiff, and his conclusions of law are as follows: "My conclusions of law are: First, that the Sibley act (which is the statute in question), so far as it affects the business of the Adams Express Company, is not confiscatory; second, that judgment on the merits should be rendered in favor of the state and against the defendant company." To this report the defendant has filed exceptions so voluminous that to quote them would extend this opinion to an unreasonable length; but such of them as are necessary to a correct disposition of the case, together with the particular findings of fact to which they refer, will be noticed, considered and decided under proper subdivisions. The case has been argued and submitted on its merits, and therefore, if the report of the referee is sustained, judgment must be entered for the state; while, on the other hand, if the exceptions are allowed, we may make such disposition of the case as we think the evidence requires.
Defendant first excepts to the report as a whole, and particularly to the findings of fact contained therein, "Because the same are not sustained by the evidence." The determination of the question thus raised requires a careful examination of the testimony taken by the referee. In making the investigation we start with the presumption that the statute in question is a valid and constitutional exercise of legislative power. Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362, 395, 38 L.Ed. 1014, 14 S.Ct. 1047; Ex parte Young, 209 U.S. 123, 52 L.Ed. 714, 28 S.Ct. 441. The concurring opinion of Field, J., in Ruggles v. Illinois, 108 U.S. 526, 541, 27 L.Ed. 812, 2 S.Ct. 832; State v. Fremont, E. & M. V. R. Co., 22 Neb. 313, 35 N.W. 118; Davis v. State, 51 Neb. 301, 70 N.W. 984. In the case last cited the rule is well stated as follows: "Every legislative act comes before this court surrounded with the presumption of constitutionality, and this presumption continues until the act under review clearly appears to contravene some provision of the constitution." This rule places the burden of proof on the defendant, and before we can strike down the statute it must show by a preponderance of the evidence that the rates fixed thereby are so low as to be clearly confiscatory. Chicago, M. & St. P. R. Co. v. Tompkins, 176 U.S. 167, 44 L.Ed. 417, 20 S.Ct. 336; Ex parte Young, supra.
The facts of this case, which are not in dispute, are that the defendant is a common carrier. It operates in 28 states and upon 34,862 miles of railroad and other lines of transportation. It is not incorporated, but is a joint stock company. It has a capital stock of $ 12,000,000, divided into 120,000 shares, which are owned by 2,700 shareholders, whose identity is not disclosed. The territory in which it operates is divided into three departments. The western department, which includes Nebraska, is operated over 18,652 miles of transportation lines. The Nebraska mileage, all of which is upon the Burlington lines, is 2,514 miles. The company has 272 offices in this state, and about 450 employees. The value of the property employed in carrying on its entire business is not disclosed, but the estimated value of the portion devoted to the service in Nebraska is between $ 50,000 and $ 60,000. The gross revenues of the company upon all of its lines for the year ending December 31, 1907, were $ 27,822,738.23. Its operating expenses for the same period were $ 27,356,345.17, leaving a net profit of $ 466,393, or 1.6 per cent. of the gross receipts.
Assuming the burden of proof above mentioned as to the remaining facts, the defendant produced as witness Mr. Glenn, the auditor of the western department, and Mr. Waters, the general auditor of the company, and, as a summary of their evidence, has placed in the record its exhibit 5. This, after having been revised by counsel to correct errors, shows that the business of the company in this state for the year ending December 31, 1907, resulted in a net income of $ 12,689.94. Those witnesses were afterwards recalled, and an attempt was made to show by them that the terminal expenses properly chargeable to Nebraska business would reduce the net earnings of the company for the year 1907 to approximately $ 8,216.03. The...
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