Sidebilder
PDF
ePub

Mr. Justice Pitney, concurring: In this case, as in No. 324, United States v. L. Cohen Grocery Co. [255 U. S. 81, ante, 516, 14 A.L.R. 1045, 41 Sup. Ct. Rep. 298], while concurring in the judgment of the court, I am unable to vield assent to the grounds upon which it is based.

Most of the counts in the indictment upon which plaintiffs in error were convicted allege specific violations of that provision of the Act of October 22, 1919 (chap. 80, § 2, 41 Stat. at L. 297, 298, amending 4 of the Act of August 10, 1917, chap. 53, 40 Stat. at L. 276, 277, Comp. Stat. § 31154ff, Fed. Stat. Anno. Supp. 1918, p. 183), which declares it unlawful "to make any unjust or unreasonable rate or charge in handling or dealing in or with any necessaries;" the alleged offenses having consisted in the sale of specific articles of merchandise at excessive prices. Respecting these, my views are expressed in the concurring opinion in the L. Cohen Grocery Co. Case.

U. S. 634, 638, 58 L. ed. 1510, 1511, 34
Sup. Ct. Rep. 924.

I assume (as the court has this day held) that the provision declaring it unlawful "to make any unjust or unreasonable rate or charge in handling or dealing in or with any necessaries" is unconstitutional for want of a definite standard; but this does not carry with it the provision now in question, since by § 22 of the Act of August 10, 1917 (40 Stat. at L. 283, chap. 53, Comp. Stat. § 3115100, Fed. Stat. Anno. Supp. 1918, p. 190), it is declared that if any clause, sentence, paragraph, or part of the act be adjudged to be invalid, this shall not affect or invalidate the remainder, but shall be confined in its operation to the clause, etc., directly involved,―a conclusive declaration [113] by Congress that the various provisions of this complicated statute shall be regarded as separable.

The record shows, however, that the trial court repeatedly rejected testimony offered by defendants for the purpose of showing the market value of the goods in question at times material to the controversy, and that exceptions were duly allowed. The effect of the rulings was to deprive defendants of the benefit of this standard, by which the jury might have determined whether the prices defendants agreed to exact for the merchandise were excessive; and for this reason only I concur in the reversal of the judgment of conviction as to this count. As to the other counts, I concur in the reversal upon the ground that the statute, in declaring it unlawful "to make any unjust or unreasonable rate or charge in handling or dealing in or with any necessaries," does not include the exaction of an excessive price for merchandise sold.

[112] The remaining count alleges a conspiracy to exact, and to aid and abet in exacting, excessive prices for certain specified necessaries. I see no unconstitutional lack of definiteness in the prohibition of a conspiracy to exact excessive prices for necessaries. In the absence of a statutory definition of, or method of determining, standard prices, with which to compare the prices alleged to be excessive, the natural standard, according to which this provision of the act ought to be interpreted, is that adopted in the ordinary transactions of men, and adhered to by the common law time out of mind, the standard of fair market value: the price prevailing under current conditions of supply and demand, uninfluenced by manipulation. So construed, I regard this provision as clearly constitutional, and need only refer to Nash v. United States, 229 U. S. 373, 377, 57 L. ed. 1232, 1235, 33 Sup. Ct. Rep. 780. International Harvester Co. v. Kentucky, VANDALIA RAILROAD COMPANY, Plff.

Mr. Justice Brandeis concurs in this opinion.

in Err.,

V.

GUSTAV A. SCHNULL, William J. Griffin, and George C. Griffin, Composing the Firm of Schnull & Company, et al.

(See S. C. Reporter's ed. 113-123.)

234 U. S. 216, 221-223, 58 L. ed. 1284, 1287, 1288, 34 Sup. Ct. Rep. 853, is distinguishable. In that case it was conceded, arguendo, that a standard fixed by market value under fair competition and normal market conditions was admissible; and the statute was denounced only because in truth it did not apply this standard, but called for an estimate of what prices would have been under non1. A state may not segregate a class of existent and imaginary conditions. To traffic and compel a carrier to transport it the same effect, Collins v. Kentucky, 234 | in intrastate commerce at less than cost,

Constitutional law due process of law state regulation of railway rates — confiscation.

determination below.

or without a substantial compensation, al- | Error to state court though the return by the carrier from its entire intrastate operations may be adequate.

[For other cases, see Constitutional 608-628, in Digest Sup. Ct. 1908.] Pleading

- averments

certainty.

Law.

2. The averment of a pleading need not be so certain that an affirmative allegation of the existence of a fact or condition must be accompanied by the negation of that which is contradictory to it or incon

sistent with it.

[For other cases, see Pleading, I. c, in Digest Sup. Ct. 1908.] Pleading

answer in rate case - sufficiency of averments.

3. Averments in the answer, in a suit to compel a railway company to keep in force certain intrastate freight rates prescribed by the order of a state commission,

which assert that the order of the commission will not yield revenue sufficient to reimburse the railway 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 be enforced, the railway company will be deprived of its property without due process of law, are sufficient to present the issue whether the order of the commission was invalid because it required a service that the rates did not compensate, although the answer does not allege that the rates are not compensatory of the cost of the service between the stations to which they apply, and fails to specify upon what part of the carrier's property the rates will not yield a fair

return.

[For other cases, see Pleading, III. h, in Digest Sup. Ct. 1908.]

Note.-On state regulation, generally, of tolls, rates, and prices-see note to Winchester & L. Turnp. Road Co. v. Croxton, 33 L.R.A. 177.

On elements entering into determination of reasonableness of railroad rates prescribed by the state for local trafficsee notes to Pennsylvania R. Co. v. Philadelphia County, 15 L.R.A.(N.S.) 108, and State ex rel. McCue v. Northern P. R. Co. 25 L.R.A. (N.S.) 1001.

On valuation upon which return from intrastate railway rates prescribed by the state is to be computed-see note to Simpson v. Shepard, 57 L. ed. U. S. 1511. On effect of fact that return as a whole is reasonable on right to require railroad to transport commodity for less than reasonable compensation-see note to Northern P. R. Co. v. North Dakota, L.R.A.1917F, 1158.

On reasonableness, generally, of state limitation of railroad rates-see note to Chicago, M. & St. P. R. Co. v. Tompkins, 44 L. ed. U. S. 417.

As to validity of class legislation, generally-see notes to State v. Goodwill, 6

[blocks in formation]

4. The Federal Supreme Court, on writ of error to a state court to review a judgment which affirmed a decree below, sustaining a demurrer to the answer in a suit by a shipper against a railway company to compel it to observe freight rates established by the state railroad commission, must assume that the highest state court considered all that was pertinent to the grounds of suit and the railway company's resistance, including the contention, urged for the first time in the Federal Supreme Court, that the answer failed to state a defense because the railway company had not pursued the remedy which the state had prescribed for relief against an order

of the commission.

[For other cases, see Appeal and Error, VIII.

d, 6, in Digest Sup. Ct. 1908.] Judgment

rate case dice.

res judicata decree in dismissal without preju

5. A decree of the Federal Supreme Court which, on the ground that the averments of the bill were not sustained by the proofs, reversed a decree below enjoining the enforcement of an order of a state railroad commission fixing maximum freight rates, challenged by a railway company as confiscatory, and remanded the cause with directions to dismiss the bill without prejudice, does not prevent such railway company from showing that such order is invalid when an attempt is made to enforce it at a subsequent period. [For other cases, see Judgment, III. f, in Digest Sup. Ct. 1908.]

[No. 125.]

L.R.A. 621; and State v. Loomis, 21 L.R.A. 789.

As to how and when questions must be raised and decided in a state court in order to make a case for a writ of error from the Supreme Court of the United States-see note to Mutual L. Ins. Co. v. McGrew, 63 L.R.A. 33.

On conclusiveness of prior decisions on subsequent appeals-see note to Hastings v. Foxworthy, 34 L.R.A. 321.

On effect of dismissal on second action -see note to Homer v. Brown, 14 L. ed. U. S. 970.

On conclusiveness of judgments, generally-see notes to Sharon v. Terry, 1 L.R.A. 572; Bolling v. Schuyler Nat. Bank, 3 L.R.A. 142; Wiese v. San

Francisco Musical Fund Soc. 7 L.R.A. 577; Morrill v. Morrill, 11 L.R.A. 155; Shores v. Hooper, 11 L.R.A. 308; Bank of United States v. Beverley, 11 L. ed. U. S. 76; Johnson Co. v. Wharton, 38 L. ed. U. S. 429; and Southern P. R. Co. v. United States, 42 L. ed. U. S. 355.

255 U. S.

Argued December 16 and 17, 1920. Decided | Ann. Cas. 1034; Northern P. R. Co. v.

IN

February 28, 1921.

IN ERROR to the Supreme Court of the State of Indiana to review a judgment which affirmed a judgment of the Supreme Court of Marion County, in that state, sustaining a demurrer to the answer in a suit by a shipper against a railway company to compel it to observe freight rates established by the state railroad commission. Reversed and remanded for further proceedings.

See same case below, 188 Ind. 87, P.U.R.1919C, 637, 122 N. E. 225. The facts are stated in the opinion.

Mr. D. P. Williams argued the cause, and, with Messrs. Samuel O. Pickens, Frederic D. McKenney, Charles W. Moores, R. F. Davidson, and Owen Pickens, filed a brief for plaintiff in er

ror:

The state has no power to segregate a certain class of railroad traffic, and require the carrier to carry and handle that traffic at unremunerative rates. Since the carrier is entitled to receive

a fair return upon the value of all of its property used for the benefit of the public, to hold that a carrier may be required to carry a part of its traffic at a loss would mean that that loss must be made good by rates imposed upon other parts of its traffic.

Northern P. R. Co. v. North Dakota, 236 U. S. 585, 598, 59 L. ed. 735, L.R.A. 1917F, 1148, P.U.R.1915C, 277, 35 Sup. Ct. Rep. 429, Ann. Cas. 1916A, 1.

While the state has a broad field for the exercise of its power in fixing intrastate rates of common carriers, it may not require the carriers to carry passengers at a rate which affords such a narrow, if any, margin over the cost of the traffic, that it is forced to carry, if not at or below cost, with merely a nominal reward.

Norfolk & W. R. Co. v. Conley, 236 U. S. 605, 59 L. ed. 745, P.U.R.1915C, 293, 35 Sup. Ct. Rep. 437; Brooks-Seanlon Co. v. Railroad Commission, 251 U. S. 396, 64 L. ed. 323, P.U.R.1920C, 579, 40 Sup. Ct. Rep. 183.

It must necessarily be that the question to be determined as to the remunerative or unremunerative character of the rates must be determined as of the date when the evidence is heard and the cause submitted for decision.

Wilcox v. Consolidated Gas Co. 212 U. S. 19, 52, 53 L. ed. 382, 399, 48 L.R.A. (N.S.) 1134, 29 Sup. Ct. Rep. 192, 15

North Dakota, 216 U. S. 579, 581, 54 L. ed. 624, 625, 30 Sup. Ct. Rep. 423; Norfolk & W. R. Co. v. Conley, 236 U. S. 605, 59 L. ed. 745, P.U.R.1915C, 293, 35 Sup. Ct. Rep. 437; Minnesota Rate Cases (Simpson v. Shepard) 230 U. S. 352, 57 L. ed. 1511, 48 L.R.A. (N.S.) 1151, 33 Sup. Ct. Rep. 729, Ann. Cas. 1916A, 18; Missouri Rate Cases (Knott v. Chicago, B. & Q. R. Co.) 230 U. S. 474, 57 L. ed. 1571, 33 Sup.. Ct. Rep. 975.

and issuable fact, and not a mere conThe answer clearly pleads an ultimate

clusion.

Bliss, Code Pl. §§ 140, 206, 209; Voiles v. Beard, 58 Ind. 510; Ripley County v. Hill, 115 Ind. 316, 16 N. E. 156.

Mr. Karl Knox Gartner argued the filed a brief for defendants in error: cause, and, with Mr. Gibbs L. Baker,

The supreme court of Indiana did not err in finding on the evidence of record that the rates were not shown to be confiscatory.

Wood v. Vandalia R. Co. 231 U. S. 1, 58 L. ed. 97, 34 Sup. Ct. Rep. 7.

The answer does not set out the facts

which, if proved, would, as a legal conclusion, result in confiscation. The allegation as made is an allegation of

mixed law and fact.

Reagan v. Farmers' Loan & T. Co. 154 U. S. 362, 401, 38 L. ed. 1014, 1024, 4 Inters. Com. Rep. 560, 14 Sup. Ct. Rep. 1047.

Messrs. Charles W. Smith, Henry H. Hornbrook, Charles Remster, Albert P. Smith, and Paul Y. Davis also filed a brief for defendants in error:

In attacking the reasonableness of a particular rate, it is not sufficient to show that such rate, applied generally, would be unremunerative.

Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 46 L. ed. 1151, 22 Sup. Ct. Rep. 900.

of the state supreme court remains unThe principle involved in the ruling shaken by the North Dakota and West

Virginia cases.

St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, 39 L. ed. 567, 15 Sup. Ct. Rep. 484; Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 46 L. ed. 1151, 22 Sup. Ct. Rep. 900; Willcox v. Consolidated Gas Co. 212 U. S. 19, 53 L. ed. 382, 48 L.R.A. (N.S.) 1134, 29 Sup. Ct. Rep. 192, 15 Ann. Cas. 1034.

Mr. Justice McKenna delivered the opinion of the court:

and leave the company a fair return upon the property used in the service. Defendants in error, alleging them- (2) Nor aver that, when taken in conselves to be engaged either as wholesale nection with the other rates lawfully or retail grocers in Indianapolis, Indi- prescribed by the commission and its ana, brought this suit against plaintiff successor, the public service commis in error, herein [115] called the Rail- sion, the rates did not afford an aderoad Company, to restrain it from charg- quate and remunerative compensation ing or receiving any other compensation for the handling and transportation of than that mentioned and described in all classes of freight or passengers covan order entered by the railroad com- ered by such orders. (3) The averment mission of the state on December 14, that the rates were not compensatory 1906, and which, it is alleged, became "states no issue of fact, but the mere effective February 14, 1907, and to re- conclusion of the pleader as to a maquire the Railroad Company to receive terial fact." (4) The answer did not and transport freight at the rates pre- profess to set out the schedules of rates scribed in the order of the commission. filed with the commission or posted The first pleading of the Railroad in the offices of the Railroad Company. Company was a demurrer to the com- And further, that if the schedules of plaint. We omit it as it was overruled, rates varied from those of the commisand as the case depends upon the answer sion, they were thus far unlawful and of the Railroad Company and a demur- invalid under the laws of the state, and rer to it. It was in three paragraphs. constituted no defense to the action; In the first it denied "each and every "the mere continuance in such wrongful material allegation" of the complaint. conduct" did "not constitute a defense." In the second it alleged that the order And further, if the rates charged were of the commission would not yield "rev- the same as those prescribed by the enue sufficient to reimburse the Rail-commission, the fact could be proved road Company for handling and carry under the general denial.

The

company elected to stand by its answer
and declined to plead further.
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

ing the classes of property specified in The demurrer was sustained by the the order, and provide a fair return on court and the Railroad Company ruled the property used in the service." And to answer by September 5, 1916. The 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 14th Amendment In the third paragraph it alleged that within sixty 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 services, 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 specify ing the grounds, as follows: (1) There was no statement that the [116] 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,

objection of the Railroad Company, a
transcript of the record of the suit
the Railroad Company
brought by
against Union B. Hunt et al., consti-
tuting the railroad commission of the
state, in the district court of the [117]
United States for the district of Indiana,
and a transcript of the record in the
same case in this court, entitled Wood v.
Vandalia R. Co. 231 U. S. 1, 58 L. ed.
97, 34 Sup. Ct. Rep. 7, and, over objec-
tion, 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 nonremunerative rates. In such cases

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 [118] to thus segregate a certain class of traffic and require the Railroad Company to carry that traffic at unremunerative rates." [188 Ind. 87, P.U.R. 1919C, 637, 122 N. E. 227.]

the shippers affected by the higher rates may have a basis for complaint. Smyth v. Ames, 169 U. S. 466, op. 540 et seq., 42 L. ed. 819, 847, 18 Sup. Ct. Rep. 418." The court considered that the principle of the proposition announced was, in its opinion, "strongly upheld" in Wood v. Vandalia R. 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 specified division in ascertaining whether a fair return is provided."

The court, therefore, makes clear the Federal question, and its decision makes the question precise by a contrast of the contentions of the parties. Let us repeat them: that of the Railroad Company is that the revenue from traffic to which the rates apply is the test of their legality, [119] and any deficiency in them cannot be made up by rates on some other traffic; that of the defendants in error is that the revenue from all of the intrastate business of the Railroad Company is to be taken into account, and if it be sufficient to remunerate the Railroad Company, the particular rates, though unremunerative, are nevertheless legal.

The question presented by the contentions is not easy of offhand solution, though its elements are easy of declaration. A railroad is private prop erty, and as such, a rate may be fixed for its use; but it is private property The cases that were adduced to sus- devoted to the public service, and as tain the respective contentions the court such it is subject to the power of the enumerated, but considered that there state to see and require that the rate was "little or no conflict" in them, and fixed be just and reasonable,-one that, that any confusion in them "almost alto- while it will yield a revenue to the gether disappears" when they "are read railroad, will be proportioned to that in view of the fundamental principles which should be charged to the public. involved." The court's conclusion from And this relation of right and power is the cases was, that "a carrier is entitled illustrated in many cases. It is deto fair remuneration on all its invest-clared in Northern P. R. Co. v. North ments and property. It is entitled to no Dakota, 236 U. S. 585, 59 L. ed. 735, more. For this it undertakes to rea- L.R.A.1917F, 1148, P.U.R.1915C, 277, sonably serve in the capacity chosen by it. It undertakes to serve for no less. If the carrier receives, in the aggregate, such fair remuneration, notwithstanding the rates on a part of its business are not remunerative, the carrier has no basis for complaint." And further: "When a rate on a part of the business is too low, some other part of the carrier's business may be paying too much, thus preventing a deficiency of income which would otherwise result from the

35 Sup. Ct. Rep. 429, Ann. Cas. 1916A, 1, and a test of it given; that is, when the right must yield to the power, and when the power is limited by the right. And there was a consideration and review of all of the elements involved. It was declared that the legislature "has a wide range of discretion in the exercise of the power to prescribe reasonable charges, and it is not bound to fix uniform rates for all commodities. or to secure the same percentage of

« ForrigeFortsett »