Bitterman v. Louisville & Nashville Railroad Company

Upon a bill filed on behalf of the Louisville & Nashville Railroad Company, the circuit court of the United States for the eastern district of Louisiana entered a decree perpetually enjoining the petitioners herein and four other ticket brokers, engaged in business in the city of New Orleans, from dealing in nontransferable round-trip tickets issued at reduced rates for passage over the lines of railway of the complainant on account of the United Confederate Veterans' Reunion and the Mardi-Gras celebration held in the city of New Orleans in the years 1903 and 1904, respectively. On an appeal prosecuted by the railroad company, complaining of the limited relief awarded, the circuit court of appeals held that the defendants should also be enjoined generally from dealing in nontransferable round-trip reduced-rate tickets whenever issued by the complainant, and ordered the cause to be remanded to the circuit court with directions to enter a decree in accordance with the views expressed in the opinion. (75 C. C. A. 192, 144 Fed. 34.) A writ of certiorari was thereupon allowed.

We summarize the averments of the complaint and answer. It was averred in the bill that complainant was a Kentucky corporation, operating about 3,000 miles of railway for the carriage of passengers, baggage, mail, express, and freight, its lines of road extending from New Orleans through various states, and making connections by which it reached all railroad stations in the United States, Canada, and Mexico. The seven persons named as defendants were averred to be citizens and residents of Louisiana, each engaged in the city of New Orleans as a ticket broker or scalper in the business of buying and selling the unused return portions of railroad passenger tickets, especially excursion or special-rate tickets issued on occasions of fairs, expositions, conventions, and the like. It was further averred that the defendants were joined in the bill, 'because their business and transactions complained of are in act, purpose, and effect identical, and in order to prevent a multiplicity of suits, the same relief being sought as to each and all of them.'

Six articles or paragraphs of the bill related to an approaching reunion of United Confederate Veterans to be held in the city of New Orleans, which it was expected would necessitate the transportation by the railroads entering New Orleans of 100,000 visitors, one fourth of which number would pass over the lines of railway of the complainant. A necessity was alleged to exist for special reduced rates of fare to secure a large attendance at such reunion, and it was averred that a rate of 1 cent a mile, one-third the regular rate, had been agreed upon for nontransferable round-trip, Reduced-rate tickets which were to be issued for the occasion, and it was stated 'that among the conditions on the face of said ticket, which ticket contract is signed by the original purchaser and the company, is one that said ticket is nontransferable, and, if prsented by any other than the original purchaser, who is required to sign the same at date of purchase, it will not be honored, but will be forfeited, and any agent or conductor of any of the lines over which it reads shall have the right to take up and cancel the entire ticket.' And for various alleged reasons, based mainly upon the large number of expected purchasers, it was averred that the return portion of each ticket was not required to be signed by the original purchaser or presented to an agent of the complainant in the city of New Orleans for the purpose of the identifications of the holder as the purchaser of the ticket.

It was averred that each defendant was accustomed to buy and sell the return coupons of nontransferable tickets, for the express purpose, and no other, of putting them in the hands of purchasers, to be fraudulently used for passage on the trains of complainant, and it was further averred that the defendants intended in like manner to fraudulently deal in the return portion of the tickets about to be issued for the reunion in question, and that complainant would sustain irreparable injury, for which it would have no adequate remedy at law, unless it was protected from such wrongful acts. It was further averred that unless relief was given the complainant would be compelled to abandon the making of reduced rates for conventions or other assemblies to be held in the city of New Orleans. Averments were also made as to the additional burden which would be cast upon complainant's conductors and train collectors by reason of the practice complained of, the danger which would arise of a multiplicity of suits for damages by reason of errors of such employees in endeavoring to prevent the fraudulent use of such tickets, and it was averred that it would be impossible, in many instances, to discover the persons who were wrongfully traveling upon the tickets and who were bound to pay the lawful and reasonable one-way rate for their transportation. The impossibility of securing evidence establishing the facts as to said fraud, the necessity, if such evidence could be obtained, of bringing a multiplicity of suits if a remedy at law was availed of, and the impracticability of estimating in dollars and cents the injury to its business, was set forth as making the remedy at law inadequate, and in addition it was charged that the defendants were financially irresponsible. The existence was also averred of various ticket brokers' associations, the members of which acted in concert. It was averred that a large part of the stock in trade of all ticket brokers and scalpers was the disposal of nontransferable railroad tickets, and it was further averred that ticket brokers and scalpers usually sought to avoid injunctions prohibiting the dealing in such tickets by assigning their business to some other ticket broker not named in the order, and it was averred that, in order to afford complete and effective relief, 'the restraining injunctive orders should be broad enough to include all who knowingly do what the order of court prohibits defendants from doing, or who aid or abet defendants in violating the injunction or in defeating the objects and purposes thereof.' Finally, it was alleged that the amount involved in the controversy exceeded, exclusive of interest and costs, the sum of $5,000, and that the value of the business which was sought to be protected, and the rights which the complainant asked to have recognized and enforced, exceeded, in the case of each defendant, the sum of $5,000, exclusive of interest and costs.

In addition to asking a temporary restraining order the bill prayed that defendants, their agents, etc., 'and all other persons whomsoever, though not named herein, from and after the time when they severally have knowledge of the entry of the restraining order and the existence of the injunction herein,' should be perpetually enjoined 'from buying, selling, dealing in, or solicting the purchase or sale of, any ticket or tickets or the return coupons or unused portions thereof issued by orator or by any other railroad company for use over orator's lines of railway or any part of them, which, by the terms thereof, are nontransferable, or from soliciting, advertising, encouraging, or procuring any person other than the original purchaser of such tickets, to use or attempt to use said tickets for passage on any train or trains of orator, especially including the nontransferable round-trip tickets issued for use on the occasion of the United Confederate Veterans' Reunion at New Orleans in May, 1903.'

Of the seven persons made defendants, three only appeared and answered, viz., Marcus K. Bitterman, Julius Mehlig, and Charles T. Kelsko, the petitioners in this court, on whose behalf a joint and several answer was filed.

The averments of the bill in respect to the citizenship of the complainant and the character and extent of its railway business was admitted. It was also admitted that the answering defendants were citizens and residents of Louisiana, but it was averred that they were each separately engaged in the ticket brokerage business, duly licensed to conduct such business by the state of Louisiana and the city of New Orleans, and it was expressly denied that the business operations and transactions of all the defendants named in the bill were in act, purpose, and effect identical. So also the answer admitted the averments of the bill in respect to the proposed reunion, the large attendance expected, the issue of reduced-rate, nontransferable tickets, and the necessity therefor, and the impracticability of requiring the signing of the return portion of each ticket by the purchaser.

It was admitted in the answer that the tickets usually issued by complainant and its connections when making reduced rates as to excusion tickets purported to be nontransferable and upon condition that, if presented by other than the original purchaser, who was supposed to sign the same at the date of purchase, it would not be honored, but would be forfeited, and that any agent or conductor should have the right to take up and cancel such ticket if presented for passage. In various paragraphs these restrictions or conditions were assailed as impracticable, unenforceable, and unlawful, and without consideration, and it was averred that the conditions were never enforced, and that the tickets were issued and bought with that understanding, and that no damage was caused to complainant by a person other than the original purchaser of a nontransferable reduced-rate ticket, traveling upon the return portion of such ticket, and that no loss or damage could be caused complainant by reason of the expected dealing by defendants in the reunion tickets referred to in the bill.

It was not only admitted in the answer that the answering defendants had in the past dealt in nontransferable railroad tickets issued by the complainant, but it was expressly declared to be their intention to continue the practice, particularly in respect to the tickets issued on account of the approaching reunion, and coupled with such averment it was asserted that no fraud would be committed or was intended in respect to the dealing in such tickets. We insert in the margin, portions of the answer relating to such admissions.

It was denied that the answering defendants were insolvent, but, on the contrary, it was averred that each was able to pay any judgment for damages which might be recovered against him. Denial was made of the allegation of the bill that the willingness or ability of the complainant to continue issuing special-rate tickets would be affected by the failure to obtain the relief sought by the bill, and, in the main, the averments of the article of the bill relating to various ticket brokers' associations were also denied.

As a distinct ground for denying the relief prayed, it was alleged in various forms that the issue of the proposed nontransferable tickets was the result of an unlawful confederation or combination between the various railroads whose roads entered into the city of New Orleans.

Upon the bill and answer a preliminary injunction was issued, restraining the dealing in nontransferable tickets issued for the approaching United Confederate Veterans' Reunion. Replication was duly filed to the answer. Subsequently, upon depositions taken in the cause, and upon affidavits showing the character of nontransferable tickets proposed to be issued for an approaching Mardi Gras festival, a further injunction pendente lite was granted as to dealings in the nontransferable reduced-rate, round-trip tickets issued for use on the occasion of the aforesaid Mardi Gras festival.

Thereafter a demurrer was filed to the bill for want of equity and because the case made by the bill was a moot, and not a real, controversy, and it was overruled. Then an application was made for leave to file a plea to the jurisdiction, which was refused.

At the hearing the complaint introduced the depositions of two witnesses and no evidence was given on behalf of the defendants. As before stated, the circuit court entered a final decree perpetually enjoining the dealing in nontransferable reduced-rate, round-trip tickets issued for the United Confederate Veterans' Reunion and the Mardi Gras festivals, and denying relief as to future issues of tickets of a like character.

On appeal and cross appeal the circuit court of appeals held that the complainant was entitled to the full relief prayed in the bill, and consequently to an injunction restraining the dealing by the defendants not only in the tickets issued for the United Confederate Veterans' Reunion and the past Mardi Gras festival, but from carrying on the business of like dealing in nontransferable reduced-rate tickets which might be issued in the future by the complainant, and the circuit court was directed to decree accordingly.

Messrs. Louis Marshall, Henry L Lazarus, and Moritz Rosenthal for petitioners.

[Argument of Counsel from pages 214-217 intentionally omitted]

Messrs. Joseph Paxton Blair, Brode B. Davis, and George Denegre for respondent.

[Argument of Counsel from pages 217-219 intentionally omitted]

Mr. Justice White, after making the foregoing statement, delivered the opinion of the court: