Siler v. Louisville & Nashville Railroad Company

The Louisville & Nashville Railroad Company, hereinafter called the company, filed its bill July 25, 1906, in the circuit court of the United States for the eastern district of Kentucky, to enjoin the enforcement of a certain order made by the railroad commission of Kentucky (hereafter called the commission), providing what are termed maximum rates on the transportation of all commodities upon the railroad of the company to and from all points within the state. In its bill the company contended that the order as to rates of transportation was void, because it was, upon several stated grounds, in violation of certain named provisions of the Constitution of the United States, among them being the claim that the rate were so low as to be confiscatory. It was also contended that the statute was an interference, in its results, with interstate commerce. The company also contended (among other objections not of a Federal nature) that the commission had no power to make the order in question under a correct and proper construction of the state statute of March 10, 1900, under which the commission assumed to exercise the power to fix the rates provided for in its order.

The circuit court decided that such act, hereinafter fully set forth, and called the 'McChord act,' and also the order of the railroad commission of Kentucky, complained of, irrespective of any claim that such order was confiscatory, violated the provisions of § 1 of the 14th Amendment to the Constitution of the United States, prohibiting any state from depriving any person of property without due process of law, and from denying to any person within its jurisdiction the equal protection of the laws, and that the order of the commission, so far as it was applicable to the company, was, therefore, null and void, and the special commissioner who had been appointed to take evidence in the case as to the character of the rates, and other matters, was directed to so report. (The court decided the case upon the authority of Louisville & N. R. Co. v. McChord, 103 Fed. 216, reversed on other grounds in 183 U.S. 483, 46 L. ed. 289, 22 Sup. Ct. Rep. 165.)

A final decree having been made pursuant to the decision of the court, the commission appealed directly to this court from such decree. The proceedings which led up to the decree from which the commission has appealed, without the court passing upon the allegation of the confiscatory nature of the rates, were by means of a stipulation made in order to facilitate matters by reason of which the court decided, as matter of law, the order and act were both invalid, and it perpetually enjoined the enforcement of the order as to rates as well as the procuring of indictments against the officers of the company or the company itself.

The appellants disputed the jurisdiction of the circuit court upon grounds which are particularly stated in the opinion herein, and they took issue on many of the material allegations contained in the bill of complaint.

The facts upon which the questions in this case arise are as follows: The company was duly incorporated under an act of the general assembly of the state of Kentucky, approved March 5, 1850. It has a large mileage, amounting to over 1,200 miles within the state, and it operates its road within the state in connection with other portions of its road in other states, having altogether, in Kentucky and such other states, a mileage of over 4,000 miles. It claims to have a contract right to fixrates as provided in its charter, and it contends that the order of the commission violates that right as well as other rights protected by the Federal Constitution.

The state adopted a new constitution on the 28th day of September, 1891, by § 209 of which the present railroad commission of the state was established.

It is asserted by the company, though such assertion is denied, that up to March 10, 1900, the commission or its predecessors had not been empowered by constitutional or statutory provision to regulate or fix the rate of compensation which a railroad company might charge for the service of transporting freight or passengers over its lines in the state. On the above-mentioned date the general assembly enacted what is generally called the 'McChord act,' which is set forth in full in the margin.

An Act to Prevent Railroad Companies or Corporations Owning and Operating a Line or Lines of Railroad, and Its Officers, Agents, and Employees, from Charging, Collecting, or Receiving Extortionate Freight or Passenger Rates in This Commonwealth, and to Further Increase The act has not been construed by the court of appeals, the highest court of the state of Kentucky, upon the question hereinafter discussed, nor has it been held valid as to all of its provisions, with regard to the constitution of the state or of the United States, by any court, state or Federal.

After its passage, and in December, 1904, and January and February, 1905, one Guenther, a citizen of Owensboro, Kentucky, made complaints to the commission, in which he complained generally (but without specifying any in particular) that the rates charged by the company, and also by the Illinois Central Railway, and the Louisville, Henderson, & St. Louis Railway Company, on interstate freight to and from Owensboro, as compared with the rates on like freight to and from Evansville, Indiana, and on intrastate freight to and from points in Kentucky to and from Owensboro, were unjust and unreasonable. A petition in regard to interstate rates was subsequently filed with the Interstate Commerce Commission, where it is still pending and undetermined. As to regulating the local rates complained of, the commission then made no finding.

Afterwards, Guenther prepared an amended complaint, which was filed with the commission some time early in September, 1905, in which this company and all the other railroad companies operating lines in the state of Kentucky were made defendants, and wherein it was alleged, in substance (and again without any details), that all local freights from and to all local points in the state of Kentucky, as fixed and charged by the defendant railroad companies on all classes of freight, were excessive, discriminatory, and extortionate, and he prayed the commission to revise and adjust the rates, not only in and out of Owensboro, but to revise and adjust the rates between all local points from and to every local point throughout the state of Kentucky.

Subsequently, on the 14th of September, 1905, three lumber companies of Louisville, Kentucky, tendered their petition to be made parties to the Guenther proceedings then pending, and they adopted the general language of his complaint with respect to all local rates in the state, and they added complaints in regard to the rates on logs, lumber, and cross ties.

On the 3d of October, 1905, the state of Kentucky, through certain attorneys, filed a petition to intervene on the part of the state in the Guenther proceedings, and sought to make the state a party complainant against all the railroad companies as defendants operating lines in the state. The petition was opposed by the company on the ground that the state had no standing in the proceedings, and certainly none by the attorneys named, but it was granted, and the state intervened as prayed for, and was made a party complainant so that it might prosecute the proceedings against the company and all the other carriers made defendants therein. The proceedings against the various railroad companies within the state were subsequently consolidated before the commission.

Before answering the complaints of Guenther, the lumber companies, and the state of Kentucky against the defendant company and the other railroad companies in that state, the company, in this case, duly objected to the proceedings before the commission on various grounds, among them, that the complaint did not state facts sufficient to constitute a cause of action against the company, and on the ground that the complaints were not sufficiently definite and specific, and that the complaints should show specifically what rates are claimed to be exorbitant, excessive, or extortionate, or what commodity or which communities the rates of the company discriminate against.

An objection was also duly and in season made, that the commission had no power to fix a general maximum rate or rates for all commodities from and to all points within the state, but that specific complaint should be made as to the particular rates complained of. The commission ruled that the entire subject of railroad rates was before it, and decided to proceed with its investigation of such rates on all railroads and between all places and on all classes of commodities within the state of Kentucky.

By virtue of the complaints above adverted to, the proceedings against substantially all the railroad companies of the state were then continued, and the commission heard and decided the question of rates relating to this company, and some, but not all, of the other roads in the state.

The commission subsequently, and on July 20, 1906, promulgated its order making schedules for 'Maximum Rates on Freight,' and it applied one schedule, called 'Kentucky Railroad Commission's Standard Tariff, No. 1,' to this company and four other companies within the state, although, in the case of one of the four (the Chesapeake & Ohio Railroad Company), no notice of such tariff was ever served upon it. Another schedule, called 'Kentucky Railroad Commission's Standard Tariff, No. 2,' applied to the Illinois Central Railroad Company alone, and the commission left several railroad companies untouched by either of such schedules, or by any schedule, although they were defendants in this proceeding. In its opinion the commission stated as follows: 'The several complaints, which, for convenience, have been consolidated and heard together in this investigation, raise for the first time in Kentucky the question of the reasonableness of all rates, for the transportation of all commodities, upon all railroads, to and from all points within the state.' Messrs. C. C. McChord, Robert H. Winn, and James Breathitt for appellants.

[Argument of Counsel from Pages 183-187 intentionally omitted]

Mr. Henry L. Stone for appellee.

Statement by Mr. Justice Peckham:

[Argument of Counsel from pages 187-190 intentionally omitted]

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