State v. Union Pacific Railroad Company

• Decision Date: 23 May 1910
• Docket Number: 15,988
• Citation: 126 N.W. 859,87 Neb. 29
• Parties: STATE OF NEBRASKA v. UNION PACIFIC RAILROAD COMPANY
• Court: Nebraska Supreme Court

126 N.W. 859

87 Neb. 29

STATE OF NEBRASKA v. UNION PACIFIC RAILROAD COMPANY

No. 15,988

Supreme Court of Nebraska

May 23, 1910

ORIGINAL action by the state to enjoin defendant from carrying out certain contracts. Injunction allowed.

INJUNCTION ALLOWED.

William T. Thompson, Attorney General, for plaintiff.

Nelson H. Loomis, Edson Rich and E. H. Crocker, contra.

LETTON J. ROSE, J., not sitting.

OPINION

LETTON, J.

This is an original action in this court brought by the attorney general in the name of the state and by the authority of the Nebraska State Railway Commission to enjoin the defendant railroad company and its officers, agents, and servants from carrying out certain contracts made with the owners of certain newspapers in the state of Nebraska providing for the issuance of railroad tickets and the furnishing of transportation to certain classes of persons named in the contract, for advertising to be furnished the railroad company in the newspapers belonging to the other contracting parties. A temporary restraining order was prayed for and granted at the time of the filing of the petition. It is shown by the evidence that the command of the restraining order was obeyed and that since its issuance no other contracts of the kind have been entered into, the contracts in existence have been abrogated, and the transportation issued recalled. The defendant railroad company, however, still insists that the execution of such contracts and the furnishing of transportation in accordance therewith is not a violation of law, and, while obeying the restraining order, insists upon its right to have this question determined.

Before considering the legal proposition involved, it will be necessary to summarily state the evidence. A copy of a contract entered into with the owner of the "New Era" of Kearney is set forth in the petition, and it is conceded that contracts entered into with a number of other publishers in the state are substantially the same. The contract referred to is as follows:

"Whereas, W. L. Hand, of Kearney, Nebr., is the President of the New Era Standard, a daily, semi-weekly, weekly, monthly newspaper, published at Kearney, in the county of Buffalo, and state of Nebraska, a general weekly newspaper, established 1880, having a circulation of 1,000 copies per issue, desires to enter into a contract with the Union Pacific Railroad Co. for advertising in said newspaper as hereinafter provided: Now, therefore, this agreement made and entered into upon the second day of January, 1908, by and between the said W. L. Hand, as party of the first part, and said Union Pacific Railroad Co., as party of the second part, witnesseth: That the party of the first part agrees to publish in the issue of said paper, at agreed rates, from January second, 1908, to Dec. 31, 1908, as follows:

"1st.--Such display advertisements, or lines of local notices in the regular local news columns of said paper from time to time during the life of this contract, as shall be furnished in manuscript or printed copy by the party of the second part.

"2d.--It is agreed that in full payment for the said advertising, the said second party shall pay, and the first party shall accept nontransferable advertising transportation over the lines of Union Pacific Railroad Co. in the state of Nebraska only, to the value of one hundred ($ 100.00), the transportation not to be limited beyond the time the contract expires, and not extended under any circumstances. The Union Pacific Railroad Co. reserves to itself the right to limit such transportation to any train or class of trains, and to refuse to honor said transportation upon any special, limited or fast mail train.

"3d.--It is understood that no ticket issued under this contract shall under any circumstances be used by the holder for any part of an interstate journey, and if presented for passage in connection with an interstate journey, shall be void and conductor will lift ticket or tickets and collect full fare.

"4th.--It is also further agreed that the transportation above referred to must be requested and used during the calendar year, and that no claim for failure so to do will be considered. The transportation referred to above is to be granted for W. L. Hand, who occupies the position of Editor and Manager, family of W. L. Hand, John A. Rhone, who occupies the position of Secretary and Foreman, and family of A. Rhone on the newspaper above mentioned, or in the name of the Wife, Son or Daughter of the Proprietor, Business Manager or Editor of the paper above mentioned.

"5th.--It is understood and agreed that, should said transportation be sold, loaned or traded off, or presented for passage by any person other than the one whose name is written thereon, it shall then be taken up by the conductor and not again made good by the party of the second part to the said first party. The misuse of transportation may be considered as sufficient cause for the cancelation of this contract.

"6th.--It is also understood and agreed that no additional transportation is to be granted on account of said advertisement, and that the conditions specified on each ticket are hereby made a part of this contract.

"7th.--The party of the second part will not pay for the publication of its time tables unless such publication be specially authorized in writing by the General Passenger Agent of Union Pacific Railroad Co.

"8th.--The party of the second part reserves the right to revoke this contract at will, discontinue the advertisement, and call in the transportation issued.

"9th.--If the ownership of said publication be transferred, it is agreed that the assumption of this contract is to be made a part of the consideration for said transfer. Otherwise this contract shall thereby be canceled and all transportation thereunder shall thereby become void.

"10th.--Should the person or persons to whom transportation is issued on account of this contract sever his or her connection with said paper from any cause whatever, then the transportation held by such person or persons shall be surrendered to the party of the second part at once and no transportation issued for any other person or persons on account of said paper until after the said transportation has been returned. It is also agreed that a copy of each issue of said paper shall be mailed free to agent of said Co. at Kearney, Nebr., and Chas. Ware, Superintendent at Omaha, Nebr., and also one to E. L. Lomax, General Passenger Agent, at Omaha, Nebr. All requests for transportation must be made through the agent above.

"11th.--This contract expires Dec. 31, 1908.

"In witness whereof, the said first party has hereunto set his hand and seal, and the said party of the second part has caused this contract to be executed by its General Passenger Agent upon the second day of January, 1908. (Signed) New Era Pub. Co, by W. L. Hand, Pres. Union Pacific Railroad Co. By (Signed) E. L. Lomax, General Passenger Agent. Darlow."

The testimony of the employee in charge of the advertising department of the defendant in regard to the customary dealings with newspaper owners under the contract is to the effect that the advertisements placed in all such newspapers are to be charged at the regular rate charged by the newspaper in each case to the public generally for the same service, which would vary in different localities; that a statement or bill would be rendered by the publisher for the advertising done, and that the transportation issued did not exceed the value of the advertising when the transportation was measured at the rate of two cents per mile; that it was not issued when the advertising was placed, but after the advertising had been run, and the statement of the amount due followed; that the transportation issued did not exceed the amount of the bills rendered, and that special forms of trip, 500-mile, and 1,000-mile tickets were issued under these contracts. It is also shown that the railroad company had no permission or authority from the railway commission to enter into the contracts, either before or after their execution.

The attorney general contends that the contracts and the tickets issued in conformity therewith constitute a violation of the acts popularly known as the "Railway Commission Act" (laws 1907, ch. 90, Ann. St. 1909, secs. 10649-10663), the "Anti-Pass Act" (laws 1907, ch. 93, Ann. St. 1909, secs. 10664, 10665), and the "Two-Cent Fare Act" (laws 1907, ch. 92, Ann. St. 1909, secs. 10618, 10619), and that the transportation issued under the contract constituted a special rate, an unjust discrimination, and an unreasonable preference, as defined by said acts. He takes the broad ground that transportation furnished by a railroad company for any consideration other than a money consideration, to an adult, and at a rate other than two cents per mile, constitutes an unjust discrimination prohibited by law.

The defendant contends that, under the contract, the railroad company paid for the advertising furnished at the regular published and current rates by credits upon its books for the amount furnished, and that the transportation was paid for at the full legal rate of two cents per mile by such credits; that the Nebraska law is designedly different from the interstate commerce acts, in that it does not prohibit "different" compensation for transportation, and does not limit payment to cash only; that if the act had regulated the medium of payment it would have been unconstitutional; that there was no attempt to discriminate, or to violate the two-cent fare law, and that what was done had no such effect.

The sections of the statutes (Ann. St., 1909) controlling the case are as follows:

Section 10618. "It shall be unlawful for any...