William Wood v. Vandalia Railroad Company

Decision Date20 October 1913
Docket NumberNo. 11,11
Citation231 U.S. 1,58 L.Ed. 97,34 S.Ct. 7
PartiesWILLIAM J. WOOD, John F. McClure, Frank E. Payne, et al., Appts., v. VANDALIA RAILROAD COMPANY
CourtU.S. Supreme Court

Messrs. James E. McCullough, Charles W. Smith, Henry H. Hornbrook, Albert P. Smith, Bernard Korbly, Willard New, and Mr. Thomas M. Honan, Attorney General of Indiana, for appellants.

Messrs. John G. Williams, Frederic D. McKenney, D. P. Williams, and S. O. Pickens for appellee.

Mr. Justice Hughes delivered the opinion of the court:

The bill in this suit was filed by the Vandalia Railroad Company, appellee, to restrain the enforcement of an order made by the Railroad Commission of Indiana, on December 14, 1906, prescribing maximum freight rates for certain intrastate traffic. The ground of attack was that the rates so fixed would not yield sufficient revenue to pay the actual cost to the transportation covered by the order, and, hence, that the order violated the 14th Amendment of the Constitution of the United States. The case was referred to a special master, who made a report, sustaining the contention of the railroad company, which was confirmed by the circuit court. Decree was entered accordingly, setting aside the order, and permanently enjoining proceedings to enforce it. Members of the commission, and the shippers on whose petition this action was taken (who were made defendants below), prosecute this appeal.

The assignments of error are addressed to the single point that the evidence failed to warrant the conclusion that the prescribed rates were so unreasonably low that, if they were maintained, the company would be deprived of its property without due process of law.

The Vandalia Railroad Company is a consolidated corporation, organized on January 1, 1905, under the laws of Indiana and Illinois, pursuant to an agreement made by five railroad companies. Of these the Terre Haute & Indianapolis Company owned a railroad extending from Indianapolis westward to the boundary between the states of Indiana and Illinois, and the St. Louis, Vandalia, & Terre Haute Company owned a railroad extending from that point to East St. Louis, Illinois. These two lines, forming a continuous route between Indianapolis and East St. Louis, constituted what was called the St. Louis division of the new company. The other lines entering into the consolidation were the Terre Haute & Logansport, from Terre Haute to Logansport and South Bend, Indiana; the Logansport and Toledo, from Logansport to Butler, Indiana; and the Indianapolis & Vincennes, from Indianapolis to Vincennes, Indiana.

The order applied to that portion of the Vandalia Company's road which lay between Indianapolis and the western boundary of Indiana, a distance of about 80 miles, which originally belonged to the Terre Haute & Indianapolis Company. The order was further limited to the freight traffic moving on 'class rates;' that is, to the traffic, having its origin and destination on this part of the company's line, which was embraced in the six classes of the 'Official classification' as theretofore established by the company. The existing class rates were found by the commission to be unreasonably high, and the maximum rates in question were ordered to be substituted as just and reasonable.

There was no proof of the value of the complainant's property within the state of Indiana, or of the return it received from its entire intrastate business. Nor was there proof of the value of that portion of its road which was affected by the order, or of the return from all of its intrastate business upon that part of its lines. No attempt was made to supply proof of that sort. For all that appears the Vandalia Company might enjoy, notwithstanding the enforcement of the rates in question, ample revenue from its intrastate operations to give it a fair return both as to all its lines within the state and also as to that portion to which the order referred.

The total tonnage of all kinds of freight on the 80 miles of railroad from Indianapolis to the Illinois boundary cannot be ascertained from the evidence. The amount of traffic moving on commodity rates is not shown. It was found by the master, and it is undisputed, that the gross revenue from the transportation of that portion of the traffic which constituted the classified intrastate freight, on the described 80 miles of road, during the three years prior to the making of the order, was as follows: 1904, $79,803.80; 1905, $91,067.56; 1906, $102,241.15; and that the gross revenue from the same traffic, under the rates prescribed by the Commission, would have been in 1904, $52,222.12; in 1905, $60,079.13; in 1906, $66,936.99. This would have been a large reduction in the gross revenue from that particular traffic, but it must not be overlooked that the Commission found that the former rates were excessive; and the effect of this reduction upon the company's net return was to be satisfactorily proved, and could not be assumed.

The conclusion in the court below was reached in the following manner: The complainant showed, and the master found, that for the year 1904 the operating expenses upon the line between Indianapolis and the Illinois boundary were 74.50 per cent of the whole earnings upon that line from every source, and that after consolidation, in the years 1905 and 1906, the operating expenses of the entire St. Louis division were respectively 73.03 and 73.64 per cent of the entire earnings of that division. These ratios...

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