United States v. Milwaukee Refrigerator Transit Co.

• Decision Date: 31 May 1906
• Citation: 145 F. 1007
• Parties: UNITED STATES v. MILWAUKEE REFRIGERATOR TRANSIT CO. et al.
• Court: U.S. District Court — Eastern District of Wisconsin

145 F. 1007

UNITED STATES v. MILWAUKEE REFRIGERATOR TRANSIT CO. et al.

United States Circuit Court, E.D. Wisconsin.

May 31, 1906

[Copyrighted Material Omitted]

James G. Handen, for Pabst Brewing Co.

Geo. D VanDyke, for Milwaukee Refrigerator Co.

W. O Johnson, for Erie R. Co.

H. K. Butterfield and Charles Quarles, Special Counsel, for the United States.

Before GROSSCUP, BAKER, SEAMAN, and KOHLSAAT, Circuit Judges.

BAKER Circuit Judge.

This is a proceeding to enjoin the defendants from continuing practices which are claimed to be in violation of Elkins Act, Feb. 19, 1903, c. 708, 32 Stat. 847 (U.S. Comp. St. Supp. 1905, p. 599).

The charges in the petition are substantially these:

That the brewing company organized the refrigerator company, is the beneficial owner of the refrigerator company stock, and thereby indirectly receives the moneys paid by the railroad companies to the refrigerator company on account of beer shipments, as hereinafter stated.

That the refrigerator company, apart from the charge that it is a dummy of the brewing company, was organized and is being carried on as a device for the purpose and with the intent of exacting from the railroad companies a large proportion of the freight moneys for interstate and foreign shipments controlled by it; that it has obtained and holds contracts from the brewery company and other owners of goods, whereby it is given the exclusive control of shipments to competitive points; that it withholds such traffic from railroad companies which refuse to return to it from one-tenth to one-eighth of the freight moneys, and gives the business only to the railroad companies which contract to make such returns.

That the defendant railroad companies, with the intent of evading the law, have entered into such contracts with the refrigerator company, and thereunder have paid to the refrigerator company from one-tenth to one-eighth of the freight moneys on all traffic controlled by the refrigerator company.

That, unless restrained, the parties will continue these practices.

1. As to the brewing company.

The majority of the brewing company stock is owned by persons who have no interest in the refrigerator company. The stock of the refrigerator company was bought and paid for by the holders thereof with their own money and in their own interest. None of it is held in trust for the brewing company. The majority of it is owned by persons who also own brewing company stock. But the brewing company pays its freight in full, receives no rebates, and is not a party to the contracts between the refrigerator and the railroad companies. Under the evidence, the most that can fairly be said of the relations between the brewing and the refrigerator companies is that the former gave the control of shipments to the latter as a favor, and to enable it to profit thereby if it could. For failure of proof, the charges against the brewing company are dismissed.

2. Objections to the maintenance of this proceeding against the remaining defendants.

(1) Contention is made that equity jurisdiction does not inherently extend, and cannot by Congress be extended, to restraining the commission of crimes and misdemeanors.

To afford protection where other means are inadequate has been accounted the chief merit of equity. That the infraction of a complainant's rights may also constitute a crime is no reason for denying relief. Cases of refusal where no property was involved came largely, we believe, from the consideration that equity will not enter unenforceable decrees, and not from regard for the intending doer of the criminal act. If a complainant's rights, whether the higher and more sacred rights of person (Warfield's Case (Tex. Cr. Rep.) 50 S.W. 933, 76 Am.St.Rep. 727; Itzkovitch v. Whitaker (La.) 39 So. 499), or the lower and more sordid rights of property, cannot be adequately protected elsewhere; and if a decree and writ that will be enforceable can be framed, no court of equity should acknowledge itself wanting in the primary power of devising decrees and writs to meet the needs of the situation.

The evils that have resulted from railroad companies' secret abatement of published rates in favor of particular persons have long been matters of common report and discussion. If a person whose business was being undermined and ruined through advantages unlawfully given to a competitor should seek relief in equity, the objection that a property right was not involved would be wanting. Because the persons affected are so numerous and widely separated, because their injuries severally may be small, and because the United States has the regulation of interstate and foreign commerce, in our opinion Congress very clearly had the power to authorize equity proceedings by the United States as complainant (parens patriae in that respect), for the protection of all persons who would be injured by the unlawful practices. This conclusion necessarily was upheld in Swift v. U.S., 196 U.S. 375, 25 Sup.Ct. 276, 49 L.Ed. 518, though the contrary contention seems not to have been presented, and in Mo. Pac. Ry. v. U.S., 189 U.S. 274, 23 Sup.Ct. 507, 47 L.Ed. 811, wherein the question was argued by counsel.

(2) The Attorney General, of his own motion, directed the institution of this proceeding. Defendants claim that a suit of this kind will not lie except upon the initiative of the Interstate Commerce Commission. Section 3 of the Elkins Act (32 Stat. 848 (U.S. Comp. St. Supp. 1905, p. 600) opens by providing for action by the Commission after investigation. The bill, as it passed the Senate and went to the House, evidently contemplated no other mode. In the House, the mandate that 'it shall be the duty of the several district attorneys of the United States to institute and prosecute such proceedings' was amended by inserting after 'United States' the clause, 'whenever the Attorney General shall direct, either of his own motion, or upon the request of the Interstate Commerce Commission. ' Whatever doubt concerning the authority of the Attorney General to direct the bringing of this suit might arise from a mere reading of section 3 is removed, we think, by noting the history of the bill.

(3) A witness for complainant testified on cross-examination, in substance, that he was president of a rival refrigerator company; that he brought the alleged unlawful acts of defendants...