Vandalia Co v. Schnull
| Decision Date | 28 February 1921 |
| Docket Number | No. 125,125 |
| Citation | 65 L.Ed. 539,41 S.Ct. 324,255 U.S. 113 |
| Parties | VANDALIA R. CO. v. SCHNULL et al |
| Court | U.S. Supreme Court |
Messrs. D. P. Williams, of Pittsburgh, Pa., Samuel O. Pickens, of Indianapolis, Ind., and F. D. McKenney, of Washington, D. C., for plaintiff in error.
Messrs. Karl K. Gartner, of Washington, D. C., and Charles W. Smith and Henry H. Hornbrook, both of Indianapolis, Ind., for defendants in error.
Defendants in error, alleging themselves to be engaged either as wholesale or retail grocers in Indianapolis, Indiana, brought this suit against plaintiff in error, herein called the Railroad Company, to restrain it from charging or receiving any other compensation than that mentioned and described in an order entered by the Railroad Commission of the state on December 14, 1906, and which, it is alleged, became effective February 14, 1907, and to require the Railroad Company to receive and transport freight at the rates prescribed in the order of the commission.
The first pleading of the Railroad Company was a demurrer to the complaint. We omit it as it was overruled and as the case depends upon the answer of the Railroad Company and a demurrer to it. It was in three paragraphs. In the first it denied 'each and every material allegation' of the complaint. In the second it alleged that the order of the Commission would not yield 'revenue sufficient to reimburse the Railroad Company for handling and carrying the classes of property specified in the order, and provide a fair return on the property used in the service.' And that, therefore, if the order of the Commission should be enforced, the Railroad Company would be deprived of its property without due process of law in violation of the Fourteenth Amendment. In the third paragraph it alleged that within 60 days after the act of the state took effect it filed with the Commission a schedule of its rates and charges between all of the points in the state, that it had kept on file a like schedule in every station and depot and in its offices, that its charges had been in accordance with such schedules and were legal rates for the service, and that complainants (defendants in error) had not been and were not damaged thereby. Dismissal of the suit was prayed.
There was a demurrer to the second paragraph for insufficiency to constitute a defense, and, following the local practice, there was a memorandum specifying the grounds, as follows: (1) There was no statement that the order of the Commission was unremunerative or confiscatory at the time it was made, or at the time suit was brought, but only at the time the answer was filed. Nor did it aver that at either of those times the rates would not pay the cost of the service to which they were applicable and leave the company a fair return upon the property used in the service. (2) Nor aver that when taken in connection with the other rates lawfully prescribed by the Commission and its successor, the Public Service Commission, the rates did not afford an adequate and remunerative compensation for the handling and transportation of all classes of freight or passengers covered by such orders. (3) The averment that the rates were not compensatory 'states no issue of fact, but the mere conclusion of the pleader as to a material fact.' (4) The answer did not profess to set out the schedules of rates filed with the Commission or posted in the offices of the Railroad Company. And, further, that if the schedules of rates varied from those of the Commission, they were thus far unlawful and invalid under the laws of the state and constituted no defense to the action; 'the mere continuance in such wrongful conduct' did 'not constitute a defense.' And, further, if the rates charged were the same as those prescribed by the Commission, the fact could be proved under the general denial.
The demurrer was sustained by the court and the Railroad Company ruled to answer by September 5, 1916. The company elected to stand by its answer and declined to plead further. The case, therefore, rested on the complaint and the denial of its allegations by the Railroad Company, and upon the issue thus made there was a trial upon which there were admitted in evidence over the objection of the Railroad Company, a transcript of the record of the suit brought by the Railroad Company against Union B. Hunt et al., constituting the Railroad Commission of the state, in the District Court of the United States for the District of Indiana, and a transcript of the record in the same case in this court, entitled Wood v. Vandalia Railroad Co., 231 U. S. 1, 34 Sup. Ct. 7, 58 L. Ed. 97, and, over objection, the proceedings before the Railroad Commission under which the order was made, establishing the rates that are the subject of controversy.
The court enjoined the Railroad Company from charging, collecting or receiving from plaintiffs and others in like situation other rates than those mentioned in the order of the Commission, and enjoined the rates in excess thereof. The decree specifically mentioned the rates to be charged. It was affirmed by the Supreme Court of the state.
It will be observed, therefore, that one of the grounds of the demurrer to the second paragraph of the answer of the Railroad Company was not that the rates were noncompensatory but that they were not alleged to be so at the time of the order of the commission or at the commencement of the suit, but were only alleged to be so at the time of filing the answer. The Supreme Court seems to intimate concurrence in this view of the answer, but said whether its ruling be based on that construction of the answer 'or upon the evidence heard' it, the court, was satisfied that the railroad had 'not tendered or made a defense, and that the decision' of the trial court was correct.
The court put in contrast the contentions of the parties as follows:
'Appellees [plaintiffs] assert that, for all that thus appears, appellant may receive sufficient net income on all its other business on this division, and on all of its business, including the specified classes, on other divisions, to furnish it a fair return on all its investments and operations, including the transportation of these classes, and therefore appellant will receive all to which it is entitled, though this order be enforced.' 'Appellant [Railroad Company] asserts that the state has no power to thus segregate a certain class of traffic and require the railroad company to carry that traffic at unremunerative rates.'
The cases that were adduced to sustain the respective contentions the court enumerated, but considered that there was 'little or no conflict' in them and that any confusion in them 'almost altogether disappears' when they 'are read in view of the fundamental principles involved.' The court's conclusion from the cases was, that——
And further——
The court considered that the principle of the proposition announced was in its opinion 'strongly upheld' in Wood v. Vandalia Railroad Co., which the court regarded 'to say the least' as holding that the hearing upon the character of rates 'is not properly confined to the particular rates and the 'actual cost and outlay' in carrying the classes specified on a * * * division in ascertaining whether a fair return is provided.'
The court, therefore, makes clear...
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