State v. Missouri, K. & T. Ry. Co. of Texas

• Decision Date: 26 February 1906
• Citation: State v. Missouri, K. & T. Ry. Co. of Texas, 91 S.W. 214, 13 Ann. Cas. 1072 (Tex. 1906)
• Parties: STATE v. MISSOURI, K. & T. RY. CO. OF TEXAS et al.
• Court: Texas Supreme Court

Page 214

91 S.W. 214

STATE v. MISSOURI, K. & T. RY. CO. OF TEXAS et al.

Supreme Court of Texas.

February 26, 1906.

Certified Questions from Court of Civil Appeals of Third Supreme Judicial District.

Action by the state against the Missouri, Kansas & Texas Railway Company of Texas and another. From a judgment dismissing the petition, the state appealed to the Court of Civil Appeals, which certifies questions to the Supreme Court.

R. V. Davidson, Atty. Gen., Warren W. Moore, Dist. Atty., Lackey & Lewright, and Allen & Hart, for the State. Baker, Botts, Parker & Garwood, Alexander & Thompson, T. S. Miller, Fiset & McClendon, and Clarence H. Miller, for appellees.

WILLIAMS, J.

This case is submitted upon the following certificate from the Court of Civil Appeals for the Third District:

"This is a case now pending in the Court of Civil Appeals of the Third Supreme Judicial District of Texas, wherein the state of Texas in the district court of Travis county sought to recover from the appellees penalties for an alleged breach and violation of the anti-trust acts of 1899 and 1903. A general demurrer in the court below was sustained to the petition, and the case dismissed, from which judgment the state of Texas has appealed. The petition is as follows:

"`First. That the state of Texas is the plaintiff herein and is represented by Warren W. Moore, her district attorney in and for the Twenty-Sixth judicial district of Texas, and acting under the authority and by the direction of the Attorney General of the state of Texas. That said district attorney applied to the railroad commission of Texas for permission and direction to bring this suit, but such permission and direction were declined by said railroad commission of Texas, because they had no jurisdiction in the matter and had nothing to do with the case. The defendants are the Missouri, Kansas & Texas Railway Company of Texas, a railroad company incorporated under the laws of the state of Texas, and the American Express Company, a joint-stock company organized under the laws of the state of New York, doing business in Texas and having about 1,500 stockholders or members of said stock company residing in various parts of the country, whose names and residences are unknown to the plaintiff.

"`Second. That on the days and dates hereinafter mentioned, the defendant Missouri, Kansas & Texas Railway Company of Texas was engaged in operating a railroad from Denison to Galveston, with various branches and feeders, and was a common carrier for hire in the state of Texas, being the owner of and in control of a railroad as above set out. That the defendant the American Express Company, along with three other express companies, the Pacific Express Company, the Wells-Fargo Express Company, and the United States Express Company, were each and all engaged in the express business in the state of Texas, and were carrying on such business as a common carrier for hire over the various lines of railway within the state of Texas, and were in active competition with each other in such express business, that they, the said express companies, competed actively with each other in the rates charged, the promptness of service rendered for a given rate, the facilities afforded shippers and the public generally in dealing with them, in the courtesy of employés, and in the nature and character of the services rendered, and in many other ways were competing, and did compete and could compete with each other in the state of Texas.'"

The certificate here sets out the allegations of the petition as to a contract made between the parties defendant January 31, 1900, and as to that contract and the acts done under it, being in violation of the anti-trust act of 1899, which allegations are omitted for reasons hereinafter stated. The petition then proceeds to allege the making of a second contract as follows:

"`Seventh. Plaintiff says that heretofore, to wit, on the 23d day of September, A. D. 1902, the defendant the Missouri, Kansas & Texas Railway Company of Texas entered into a contract and agreement with the defendant American Express Company, a joint-stock association doing business in the state of Texas, whereby it was agreed by and between said railway company and said express company, among other things, as follows:

"`(a) That the railway company agreed to transport all the express matter of the express company to and from all stations upon its lines of railroad and branches which were then owned and operated by it and which might thereafter be owned and operated by it during the life of said contract.

"`(b) The railway company further agreed that "none of its employés for himself, or for the railway company, shall be allowed during the continuance of this agreement to transmit money, valuable packages, goods or merchandise of any kind whatsoever, except regular passengers' baggage, and supplies for the railway company's eating houses upon the passenger trains of the said railway company, except that the railway company reserves the right to transport dogs in its passenger trains when accompanied by the owner, and also to transport corpses."

"`(c) It was further agreed that the railway company would not contract with any party or parties to do an express business over said road, or any portion thereof, during the existence of the agreement.

"`(d) It was further agreed that, if the railway company constructed, leased, operated, or acquired other lines during the life of the agreement, the express company should have the same exclusive facilities over all such lines in so far as the railway company could legally grant such facilities; "it being understood that if the railway company by its trackage arrangement with other railway companies which it may deem best to make hereafter, or if it compelled by legislation or judicial proceedings, to grant to any other express or transportation company facilities for carrying on an express business on its lines, or any part of the same, the revenue derived from the facilities so afforded such other express or transportation company shall be credited to the express company in its payment provided for under the terms of the agreement." And it was further agreed that the compensation to such other transportation company or companies should not be less than the compensation provided for by the contract to be paid to the express company for the same service.

"`(e) It was further agreed that the express company would transport, free of charge, over its lines, matters of any kind, property of the railway company, when such shipments did not exceed 20 pounds in weight, between any points reached by said express company, and would charge on shipments exceeding 20 pounds in weight of the property of the railway company to and from any points reached by the express company off of the line of the railway company and the Missouri, Kansas & Texas Railway Company (of Kansas) 75 per cent. of its regular tariff on such shipments, and it was provided that the above should apply to the business of the Southwestern Development Company, "being an associated company of the railway company."

"`(f) The express company further agreed that it would not issue any local rates per hundred pounds between points on the railway company's lines "which shall be less than one and one-half times the railway company's freight rate per hundred pounds on the same commodity between the same points," unless consent to the contrary had been obtained from the traffic manager of the railway company; but it was provided that the express company shall be permitted to make such rates between competitive points as will enable it to compete successfully with other express companies operating on other lines of railway, the express company agreeing to notify the railway company of any reduction of rates made on account of competition, and when such competitive rates are reduced to one and one-half times the freight rates of such commodity the express company agrees that no further reduction shall be made in such competitive rates without the consent of the railway company.

"`(g) It was agreed that the sum of $7,732.12 shall be paid by said express company quarterly to said railway company, and that if 50 per cent. of the gross receipts of such company from traffic on the lines thereof should be in excess of that sum that such 50 per cent. should be paid.

"`(h) It was further agreed by and between said parties that said contract should become effective and be in force from and after the first day of February, 1903, and should continue in force for a period of 10 years.'"

The petition then charges violations of the act of 1899 in the making and carrying out of this contract up to March 31, 1903, when the act of that year became a law, and proceeds:

"`Ninth. Plaintiff says that after the 31st day of March, 1903, and up to and including the trial of this case, the defendant railway company and defendant express company aforesaid continued to treat said contract last aforesaid—that is to say, the contract entered into on the 23d day of September, 1902—as a valid and binding contract between said parties, and executed and carried out said contract.

"`Tenth. That by the execution and carrying out of the contract last aforesaid after the 31st day of March, 1903, said defendant railway company and said express company each became and was a trust, and each entered into a combination of capital, skill, and acts by and with persons, firms, corporations, and associations of persons, to wit, each defendant with the other for the following purposes:

"`(1) To create and carry out restrictions in trade and aids to commerce and in preparation of products for market and transportation, and to create and carry out restrictions in the free pursuit of a business authorized and permitted by the laws of this state, and said combination tended to carry out and create such restrictions.

"`(2) To prevent...