Macon Grocery Co. v. Atlantic C. L. R. Co.

SPEER, District Judge (after stating the facts as above). It is most significant that, while there were in attendance on the hearing at Mt. Airy, a large number of counsel and railway officials of great experience, extensive knowledge, and high rank-, no sort of effort was made to contradict or explain any of the evidence, offered by the complainants. The court was furnished neither with affidavits, oral testimony, nor explanations relating to the grave and serious complaints set forth in the complainants’ bill and supported by proof. The respondents were content to rely on their demurrer, and the argument was restricted to the following points: First, that the court had no jurisdiction; second, that the Interstate Commerce Commission has no jurisdiction with regard to these rates; and," third, that, if the new rates were put into effect, it would merely restore the rates which existed prior to 1905, and that such rates are reasonable. The last point is a question of fact, not raised by answer or in any appropriate form. It does not appear in the record, nor, if the pleadings and proof justified a consideration of this assertion, would it appear material to the present inquiry at this stage of the case. A condensed statement of the case will, it is thought, suffice to ascertain the rights and responsibilities of the parties as they appear from the record. It is insisted thal the court is without jurisdiction to stay the enforcement of rates' confessedly imposed by a confessedly unlawful combination in restraint of trade which will in all likelihood withdraw and withhold for many years from the resources of complainants many thousands of dollars thus exacted, and during all of this time give the use of such sums to the respondents, with a consequent disorganization of business, increase in the price of living, diminution in the. profits of the manufacturer and producer, decrease in the purchasing capacity -of the salary or wage earner, and a possible paralysis of that recuperative movement which elevates and brightens the hopes of the people at this time. This contention is based upon the assertion that a circuit court of equity of the United — 747 — States has no jurisdiction to accord the relief, or any effective part of the relief sought by this bill. The proposition of the respondents is based upon a bold and unqualified denial of any judicial power_ in lilis country to restrain any rate, however enormous it may be, levied for transportation in interstate commerce, no matter how flagrantly in ■violation of the interstate commerce law, or the penal statutes of the United States, that imposition may be. The position of the respondents is made clear by the following colloquy between the^ court and their counsel: “Judge Speer: You stated yesterday these shippers cannot sue in the state courts? “Mr. H. Li. Stone: They cannot sue anywhere until the Commission has passed upon it. * * * “Judge Speer: You might then increase the rate 50 per cent, or to any amount and the shipper has no redress? “Mr. Stone: We may assume many impossibilities. “Judge Speer: Then the whole power is with the railroads, and the people arc absolutely helpless? “Mr. Stone: Not at all, sir; I do not concede that. Congress has prescribed these particular regulations to regulate commerce, and they must be regulated accordingly, and not otherwise. A rate, so far as it is initial is concerned, is left to the carriers by Congress. Congress could prescribe rates itself, if it was desired to do so, If it was thought wise for all of these carriers to observe. It delegated to the Commission the power on complaint, after full hearing, to substitute a rate of freight for the one fixed by the carriers. * * * in the meantime Congress has provided in its wisdom that those rates thus initiated and put into effect by the carrier itself, not by Congress, and not by the Commission, should be the only legal rate, and that no more, no less, or different ra te can bo collected by the carrier. * * * “Jvidge Speer: You collect say from a Georgia shipper this increase of rate; his only right of redress Is a suit against your railroad? “Mr. Stone: After the Commission has held the rate to be unreasonable, and fixed the amount of his damages, and allowed the carrier a certain time in which to pa y it. Then he can go into court * * “Judge Speer: Then you contend that the only district in which (the carrier) may be sued is in the district of which he is an inhabitant? “Mr. Stone: That is in a suit for an award of damages. There is no provision in tiie interstate commerce act that the shipper may file an injunction suit in a district outside of that in which the carrier has his principal operating office, or in which he is an inhabitant. “Judge Speer: Then the American people are In the attitude in relation to the railroads that the railroads can levy any rate, whatever they choose to levy, no matter how extravagant they may be, and no individual has auy redress until he has prosecuted his ease before the Interstate Commerce Commission, and until he has then prosecuted it further before a United States court having jurisdiction; that is to say, where the railroad is an inhabitant. In the meantime the railroad company can keep his money, and the money of everybody in like standing? “Mr. Stone: Unquestionably, sir; and, if there is any fault with that system, the complaint should be made to Congress for amendments to the acts, aiid not to the court.” It follows that, if the proposition of respondents on this subject is maintainable, all that the genius of executive statesmanship, the assiduity and learning of jurists, and the patriotic purposes of Congress have attempted toward the settlement of the vast controversies involved in the regulation of interstate commerce will be profitless and indeed impotent. While this is true, the varied, conspicuous, and combined mentality of those distinguished corporate specialists, who, like — 748 — the Choros of the Greek tragedy, clustered about the Choryphceus of the drama, played in the.humble schoolhouse of this mountain village, was able to point out not one controlling precedent for a contention so vital to the future of the country. Precedents, it is true, were cited, but at a glance they are distinguishable from the case before the court and the decisions of the Supreme Court of the United States and the other courts which uphold the jurisdiction assailed. The first and the most important of these is the case of the Texas & Pacific Railway Company v. Abilene Cotton Oil Company, 204 U. S. 426, 27 Sup. Ct. 350, 51 L. Ed. 553. What seems the cardinal error of the learned counsel for the respondents in his attempt to apply this precedent to the case at bar is that he fails to distinguish between an action in a state court at common law and a suit in equity in a Circuit Court of the United States. The distinction is discoverable, and we believe is generally. understood. In the Abilene Case the Oil Company brought an action at law to recover $1,951.83. This sum had been exacted over the. protest of the company for the shipment of car loads of cotton seed. Among other defenses the railway company defended on the ground that the shipments were interstate, and were, therefore, governed by the act of Congress to regulate commerce. The rate had already been established, and it had not been pronounced unreasonable by the Interstate Commerce Commission. The trial court of first instance made findings of fact: (1) That this was an interstate.shipment; (2) that the defendant complied with the interstate commerce law, except that the rates were excessive; and (3) that the rate charged by the defendant was that established under the interstate commerce law.' But it held that the plaintiff could not recover. o It was a Texas case, and the Court of ’Civil Appeals of that state reversed the decision of the trial court, and found but one question essential for its decision. That was. “whether, consistently with the act to regulate commerce, there was power in the court to grant ‘relief’ upon the finding that the rate charged for the interstate shipment Was unreasonable, although such rate Was the one fixed by the duly published and filed rate sheet, and when the rate had not been found to be unreasonable by the Interstate Commerce Commission.” The court then proceeded to grant what it termed “relief,” which was a judgment for the excessive freights charged. The Supreme Court in a very clear and strongly reasoned opinion by Mr. Justice White reversed this conclusion. Throughout the opinion, the observations of the learned justice were directed exclusively to actions at law for damages, and attempts to obtain pecuniary reparation ; in other words, to actions at common law, and indeed, to such actions in state courts. Again and again he reiterates the inimical effect upon the interstate commerce laws enacted by Congress of the action of “courts and juries” in different states. He sums up the conclusion of the court, as follows: “In other words, we think it inevitably follows from the context of the act that the independent right of an individual originally to maintain actions in courts to obtain pecuniary redress for violations of the act conferred by the ninth section must be confined to redress of such wrongs as can, consistently with the context of the act, be redressed by courts, without previous action by the commission, and therefore does not imply the power in a court to primari — 749 — ly hear complaints concerning wrongs of the character of the one here complained oí” [i. e., a claim for damages at common law]. The cases cited by the learned associate justice in support of his conclusions also clarify the differentiating view between that case and the case at bar. Swift v. Philadelphia, etc., Ry. Co. (C. C.) 64 Fed. 59, was an action at law to recover damages. So, also, in Gulf, Colorado, etc., Ry. Co. v. Hefley, 158 U. S. 98, 15 Sup. Ct. 802, 39 L. Ed. 910, the carrier refused to deliver, because the shipper would not pay a, higher established schedule rate than that specified in the bill of lading. The judgment of a state court enforcing the penalty was reversed upon the ground that the state statute was repugnant to the act to regulate commerce. In Texas & Pacific Ry. Co. v. Mugg, 202 U. S. 242, 26 Sup. Ct. 628, 50 L. Ed. 1011, also cited by the associate justice, a recovery at law of the excess freights above the quoted rate was allowed by the Texas court. The Supreme Court reversed this judgment. The upshot of the Abilene Case and of all the decisions cited by the learned justice sustains the counsel for the respondents in his unreserved proposition that the shippers have no relief whatever at common law in the courts of a state against exactions, however unwarrantably made by the carriers of interstate commerce. Let us see, however, whether this dominating principle is applicable to a case like that before this court, where a number of shippers seek to prevent, by resort to the strong and flexible powers in equity of courts of the United States, the imposition of rates declared and admitted to be unreasonable, and confessedly (for the demurrer confesses it) imposed in violation of the anti-trust law, denouncing combinations in restraint of trade and commerce. The Abilene Cotton Oil Company Case which we have been discussing was decided February 25, .1907. On May 27th of the same year the Supreme Court had under review from this court the case of the Southern Railway Company v. Tift, 206 U. S. 428, 27 Sup. Ct. 709, 51 L. Ed. 1124, otherwise known as the “Lumber Rate Case.” In the Tift Case, in the Circuit Court, the identical objection for want of jurisdiction with which the complainants are here confronted was presented in several hearings. There, too, when the bill was filed, the rate had not been enforced. As in the case at bar, it had been merely threatened. The case may be found reported in 123 Fed. 789, and the decision in the second and final hearing in 138 Fed. 753 (2 Federal Anti-Trust Decisions; p. 733). Said the court in the first of those cases: “It is, however, insisted that this power of the court cannot be exercised until the Interstate Commerce Commission has acted, but that Commission is expressly denied the power of injunction, or any judicial power. This it has been conclusively held remains with the courts, interstate Commerce Com. v. C., N. O. & T. P. R. Co., 167 U. S. 479, 17 Sup. Ct. 896, 42 L. Ed. 243. How, then, can it be said that the original and plenary power of the court of equity in such matters must be postponed to await the action of the Interstate Commerce Commission? It is true that the statute regulating interstate commerce permits a resort to the common-law action for damages for violation of its provisions, and it is urged that this remedy is exclusive. This does not follow. In the nature of things, there must be a vast variety of controversies in which the remedy at law on an action brought by the individual wronged is utterly inadequate to afford relief either to the individual, or to multitudes who are in similar case with him. It is often in the power of a railroad company to — 750 — greatly injure, or wholly destroy, one’s business, or a general business of a particular class. In such case injunction would be the appropriate remedy. So an injunction is granted to prevent illegal discrimination, and illegal exactions in excess of rates fixed by law. This is upon the ground, in part, that, the injury being a constantly recurring one, there is no adequate remedy at law. 1 High on Injunc. § 616, etc. * * * It may safely be declared that a Legislature will never be presumed to have denied by implication those general powers of a court of equity, which have been ingrafted in our jurisprudence ‘for the correction of that wherein the law, by reason of its universality, is deficient.’ Because one special remedy has been afforded it does not follow that the general powers of equity are annulled.” The case of United States v. Union Pacific R. Co., 160 U. S. 1, 16 Sup. Ct, 190, 40 L. Ed. 319, was cited, and the language of the court quoted as follows : “It is not enough that-there is a remedy at law. It must be plain and adequate, or in other words, as practical and efficient to the ends of justice and its prompt administration as the remedy in equity.” Numerous other authorities w,ere cited in support of these propositions-. It follows that the challenge to the jurisdiction could not have been more definitely made, or more definitely decided. We have seen that jurisdiction was maintained. An appeal was then taken to the Supreme Court of the United States. Now, there is nothing 'about which that great court is more sensitive than an unauthorized exercise of jurisdiction on its own part, or on the part of any of the “inferior courts” created by Congress. It has often held that it is the duty of such courts sua sponte to raise the question of jurisdiction, even though the parties should fail to do so. No failure of jurisdiction can escape the persjricacity of that august tribunal. Its holding, then, in the Tift Case seems conclusive of this controversy. Said Associate Justice McKenna for the court (Southern Ry. Co. v. Tift, 206 U. S. 437, 27 Sup. Ct. 711, 51 L. Ed. 1124): “In the case at bar * * * there are assignments of error based on the objections to the jurisdiction of the circuit court. These might present serious questions, in view of our decision in Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U. S. 426, 27 Sup. Ct. 350, 51 L. Ed. 553, upon a different record than that before us. We are not required to say, however, that because an action at law for damages to recover unreasonable rates which have been exacted in accordance with the schedule of rates as filed is forbidden by the interstate commerce act, a suit in equity is. also forbidden to prevent a filing or enforcement of a schedule of unreasonable rates, or a change to unjust or unreasonable rates.” What fairer or more obvious distinction has been indicated by the Supreme Court? In the Abilene Cotton Oil Company Case, in an action at common law, they denied jurisdiction. That was a different record from this before them, but because of that decision they were not required to say that “a suit in equity is also forbidden to prevent a filing or enforcement of a schedule of unreasonable rates, or a change to unjust or unreasonable rates.” If the court had been so required, it would have made the ■ requirement effective. The absence of jurisdiction and the requirement are one and the same thing. Since the great tribunal was not so required, there is no law to forbid a suit in equity “to prevent a filing or enforcement of a schedule of unreasonable rates, or a change to unjust or unreasonable rates.” — 751 — The demurrer here admits the case before us to be a suit of that precise character. The learned counsel who argued this question had much to say of the difference between the record in the Tift Case and the record in the case now before the court, and much to say of the remarkable care of counsel to keep out of the record in this case certain features which appeared in the record of the Tift Case. It will be difficult, however, to eliminate the fundamental question of jurisdiction, which was raised in both, and which the Supreme Court would have raised if the parties themselves had not raised it. It is true, as stated by the learned counsel for the respondents, that something was said about the stipulation in the Tift Case by Associate Justice McKenna. But the stipulation only related to reparation, and to the admission of evidence. No stipulation, however, could have given the court jurisdiction. This has been repeatedly held. The jurisdiction of the court in equity and its jurisdiction as a court of the United States- is thus immovably fixed. It is true that, because the railroads there promised to pay back to the shippers the sum total of the excess charges, the court did not grant the injunction, but it is not unsafe to say that save for that stipulation the injunction against the increase would have been promptly granted. The case was sent to the Interstate Commerce Commission, and its assistance invoked. Upon this the Supreme Court observes (page 437 of 206 U. S, page 711 of 27 Sup. Ct. [51 L,. Ed. 1124]): “The Circuit Court granted no relief prejudicial to appellants on the original bill. It sent the parties to the Interstate Commerce Commission, * * * ” etc. But, if we were without the assistance of the paramount authority of the Supreme Court, abundant support of the jurisdiction may be found in the decisions of the Circuit Courts and the Court of Appeals of our own circuit. In the case of Blindell v. Hagan et al. (C. C.) 54 FFed. 40, that brilliant lawyer and jurist, the late Judge Billings, while holding that the anti-trust law alone did not authorize the bringing of injunction suits, or suits in equity by parties other than the government, yet he maintained the jurisdiction of the Circuit Court to enjoin a combination of persons from interfering with the rights of a party, in order to prevent a multiplicity of suits at law, and for the reason that damages at law for interrupting business and interstate profits of pending enterprises must be conjectural, and not susceptible of proof. Quoting from Fonblanque’s Equity, at page 3, the learned judge said: “The foundation of this jurisdiction of equity is the probability of irreparable mischief, the inadequacy of a pecuniary compensation, and the prevention of a multiplicity of suits.” An appeal was taken to the Circuit Court of Appeals, Circuit Judges Pardee and McCormick and District Judge Toulmin presiding, and that court maintained the jurisdiction on the general principles of equitable jurisdiction. In the case of Gulf, C. & S. Ry. Co. v. Miami Steamship Company, 86 Fed. 421, 30 C. C. A. 156, the Circuit Court of Appeals of the Fifth — 752 — Circuit, Circuit Judges Pardee and McCormick and District Judge Swayne presiding, declared: “We do not doubt the general jurisdiction of the Circuit Court as a court of equity to afford preventive relief in a proper case against threatened injury, about to result to an individual from any unlawful agreement, combination, or conspiracy, in restraint of trade.” Judge McCormick for the court, in a strong and carefully considered opinion, refers to the case of In re Debs, 158 U. S. 564, 15 Sup. Ct. 900, 39 L. Ed. 1092. There the Circuit Court had rested its jurisdiction mainly on the anti-trust law, but the Supreme Court — to use the language of Judge McCormick — “entered into no examination of that act, preferring to rest its judgment on the broader ground of the general jurisdiction of a court of equity to prevent injury in such cases.” “The Supreme Court,” however, he continues, “was careful to observe that it must not be understood from its putting its judgment on the broader ground that it dissented from the conclusion of the Circuit Court in reference to the scope of the act.” We understand, although the opinion has not been reported, that a similar conclusion has been reached by Judge Cornelius H. Hanford of the District of Washington in a case of a threatened advance of fates from points on the Pacific Coast. In a recent case, Kiser Co. v. Central of Georgia Ry. Co. et al., 158 Fed. 193, decided by Judge Newman at Circuit in the Northern District of Georgia, an analysis of the Abilene Cotton Oil Case and of the Tift Case was given by that eminent jurist. He remarks: “From wbat is said in both cases the ruling would seem to be that general power over interstate rates, to be charged by common carriers, is given to the Interstate Commerce Commission, and that for the courts to undertake to determine what are reasonable or unreasonable rates would interfere and conflict with the exercise of this power by the Commission, although instances might arise in which it would be proper for a court of equity to enjoin the enforcement of unreasonable rates, or a change to unjust or unreasonable rates. * * * This action of a court of equity will not interfere with the final exercise by the Interstate Commerce Commission of the full powers granted to it by the act of Congress of 1887 * * * or under the act of June, 1906, ‘to determine and prescribe what will be a just and reasonable rate, charge, or charges, to be hereafter observed as a maximum to be charged.’ This seems to be the clear meaning of these decisions. It appears, therefore, that the court might properly enjoin carriers from establishing or increasing .to an unreasonable rate, at the same time leaving the matter in such shape as that the Interstate Commerce1 Commission may ultimately determine whether .the contemplated increase is just or reasonable.” The learned judge held that the restraining order should remain in force a reasonable length of time to allow complainants to present the controversy to the Interstate Commerce Commission, and that the case should be stayed until a determination by that body as to whether the proposed increase in rates was reasonable and proper, and as to what was a reasonable rate. This was the course taken in the Tift Case, and, as we have intimated in the ruling on the pleas to the jurisdiction, the same direction will be given now.- We have no doubt that the Interstate Commerce Commission will promptly take hold of the controversy. But it is said that — 753 — the Commission can do nothing until the rates have been put into effect, and the money of the shippers collected. This is a very comfortable doctrine for the respondents. It is not, however, borne out by the conduct of the Commission in previous cases (as we understand, in the Pacific Coast Lumber Rate Case), or by the language of the act regulating commerce. Act Feb. 4, 1887, c. 104, 24 Stat. 383 [U. S. Comp. St. 1901, p. 3164], Section 13 provides how, and by whom, complaints can be made and served, but it also declares that: “Said Commission * * * may institute any inquiry on its own motion in the same manner and to the same effect as though complaint had been made.” The jurisdiction of the Commission is then fixed to pass upon the proceeding here. But must the Commission wait until the rate is collected? Not so. The act of Congress, known as the “Hepburn Act,” amendment of Act June 29, 1906, c. 3591, § 4, 34 Stat. 589 (U. S. Comp. St. Supp. 1907, p. 900), provides: “That the Commission is authorized and empowered, and it shall be its duty whenever after full hearing upon a complaint, made as provided in section 13 of this Act, or upon complaint of any common carrier, it shall be of the opinion that any of the rates or charges whatsoever, demanded, charged, or collected by any common carrier or carriers subject to the provisions of this act [to act thereon, etc.].” In addition to this, by the same section, the Commission is empowered after hearing on a complaint to establish through rates and joint rates “as the maximum to be charged,” etc. Since then the Commission has the power to make the inquiry of its own motion. It is scarcely probable that it would refuse to do so at the request of shippers, directed to appear before it by a court of the United States. Since they have the power to fix the maximum rate, they can readily determine whether the increase which is threatened or “demanded,” and which but for the injunction would this day have been “charged” by these respondents, is justifiable. This is a practical solution of the difficulty. To quote anew the language of the Supreme Court in the Tift Case,-it is not “prejudicial” to the respondents. The Commission has the power to advance the hearing, and promptly dispose of it. ■ Its action would thus confound the unqualified assertion of the learned counsel for the respondents here that no person who is threatened with injury of this character, no matter how ominous or odious may be the exaction, is lawfully entitled to a hearing anywhere before any tribunal, until the exaction is enforced, and his money is taken. The rates which the defendant companies now propose to increase were fixed after careful conference by agreement with bodies of the people representing shipping interests. Under them the railroads and the country had attained a prosperity as hopeful as either had ever known. The temporary depression which ensued was not ascribable to the insufficiency of these rates. Great bodies of the people indeed insisted that they were too high, and the agitation which resulted doubtless contributed in some measure to the business depression which followed. From this the country is rapidly recuperating. The reports of stock sales and bank clearings in evidence show this to be true. It should be remembered that nothing offered by the complainants has — 754 — been in any sense contradicted or disproved. In view of the character of the discussion before the court, it is perhaps appropriate to say that the vast majority of pur thoughtful people have no unkind feeling toward the railroads. Indeed, they have manifested a warm and cordial sympathy with those truly great men, of whom many hold high station in these great companies, and who toil with constancy for the betterment of their properties, and as a consequence for the welfare of the country. Significant of this disposition, by a decided maj'ority the people have recently nominated for Governor of our state a railroad man, whose upright character, and whose complete familiarity with these and kindred topics, may give assurance that corporate, and as well private and public, interests will be lawfully conserved. And yet, while the ink is scarcely dry on his letter of acceptance, Georgia and three other Southern states, all barely convalescent from the wasting fever of panic, are threatened with an advance of rates, some of which (as it appears from the uncontradicted proof) will make the charges of transportation for the necessities of life greater than they have been in the memory of a generation. No policy could be more-disastrous to the efforts of conservative government. Nor are the courts less entitled than the people to consideration from the representatives of the railway companies. When lately in North Carolina and Alabama their rates were assailed, they sought the protection of these courts. In proper cases it is always afforded them. It may be well if more temperate and considerate bearing shall obtain in their management and representation, even in those cases where they do not prevail. In accordance with these views, an interlocutory decree will be granted, declining to dissolve the temporary restraining order now of force, and continuing the same in full effect until the further order of the court. The decree will also provide in effective terms that the complainants, and others who may have the right to intervene, shall within 10 days make complaint to the Interstate Commerce Commission; ask that body (if necessary) that it may take the initiative in this investigation, if need be, .fix the maximum rates, and give such other aid and assistance to the parties in controversy and to the court as in the j'udgment of the Commission may seem in accordance with the law and the rights involved.