« ForrigeFortsett »
affirmed by the supreme court of the nonremunerative rates. 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  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.]
In such cases
the shippers affected by the higher
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,  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 more. For this it undertakes to reasonably serve in the capacity chosen by it. It undertakes to serve for no less. If the carrier receives, in the aggregate, such fair remuneration, notwithstand ing 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
Dakota, 236 U. S. 585, 59 L. ed. 735, L.R.A.1917F, 1148, P.U.R.1915C, 277, 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
profit on every sort of business
practice under which a rate which re-
It is not bound to prescribe separate rates for every individual service performed, but it may group services by fixing rates for classes of traffic." And this court will not sit in judgment upon such action and substitute its judgment for that of the legislature when reviewing "a particular tariff or schedule which yields substantial compensation for the services it embraces when the profitableness of the intrastate business as a whole is not involved." "But," the court said, "a different question arises when the state has segregated  a commodity or a class of traffic, and has attempted to compel the carrier to transport it at a loss or without substantial compensation even though the entire traffic to which the rate is applied It is, however, contended by the deis taken into account. On that fact be- fendants in error that the averments of ing satisfactorily established, the pre- the answer (second paragraph) are not sumption of reasonableness is rebutted." sufficient to present the issue of law And further, "it has repeatedly been based upon it because it does not allege assumed in the decisions of this court that the rates are not compensatory of that the state has no arbitrary power the cost of the service "between the over the carrier's rates, and may not stations to which the rates apply," and select a particular commodity or class that, therefore, it may well be that they of traffic for carriage without reason- are remunerative of that service, and able reward." It was hence concluded "only be nonremunerative when applied that where there is such segregation, to some other carriage." And it is furand a rate imposed which would compel the carrier to transport a commodity "for less than the proper cost of transportation, or virtually at cost," the carrier would be "denied a reasonable reward for its service," and "the state has exceeded its authority."
ther urged that the answer fails to
The case and its principle were followed and illustrated in Norfolk & W. R. Co. v. Conley, 236 U. S. 605, 59 L. ed. | 745, P.U.R.1915C, 293, 35 Sup. Ct. Rep. 437, and the principle applied to a passenger rate. It was there said, explain- The distinctions are artificial and ing the "range of permissible action" by strained. They are an attempt to make a state, that it, the state, "has no arbi- the necessary implications of the answer trary power over rates; and no part of it. The averment of a pleadthat the state may not select a commod-ing need not be so certain that an ity, or class of traffic, and instead of affirmative allegation of the existence fixing what may be deemed to be rea- of a fact or condition must be accomsonable compensation for its carriage, panied by the negation of that which is compel the carrier to transport it either contradictory to it or inconsistent with at less than cost, or for a compensation it. The answer, besides, is addressed to that is merely nominal." See also the complaint and to the rates and order Brooks-Scanlon Co. v. Railroad Com- of the commission  that constitute mission, 251 U. S. 396, 64 L. ed. 323, P.U.R.1920C, 579, 40 Sup. Ct. Rep. 183. These cases leave nothing to be said, nor need we review the prior cases from which they are deductions. The concession of counsel is "that it may be admitted that the North Dakota and West Virginia (Conley) cases have greatly discredited the previous theory and
the bases of the complaint, and puts them and the effect of them in issue. In other words, the complaint deals with the rates and service between designated stations, and the answer deals with those rates and that service. And the supreme court so regarded it, and explicitly said that the evidence made the issue. Counsel attack the conclusion as
unsupported, but we must accept it, as, Company to restrain the order of the it is the judgment of the court we are Commission involved in the present litreviewing, and it is to be estimated by the reasons given for it.
We therefore repeat: We regard the answer as a reply to the complaint, and as alleging the invalidity of the order of the commission because it required a service that the rates did not compensate; and necessarily this involves a consideration of all of the elements which are involved in that service, and determine its effect. It is to be remembered that we are dealing with a pleading. What the evidence may show we can neither know nor anticipate.
Another contention of defendants in error is that the law of the state prescribes the remedy to be pursued against an order of the commission to be to procure from the secretary of the commission a transcript of the proceedings before the commission, and file such transcript with a statement of the causes of complaint against the action of the commission in the office of the
clerk of the appellate court of the state within a designated time, and give notice to the commission. And it is said the appellate court is given power to affirm the action of the commission, or to change, modify, or set it aside, as justice may require, and that its judg ment is made final. This procedure was not followed, it is said, and that hence the answer ( 2) of the Railroad Company "was not a compliance with this requirement of the substantive law of Indiana, and for that reason failed to state a defense."
The contention is made for the first time in this court.  Its lateness may not militate against it, but that it did not occur sooner to counsel, and not at all to the supreme court, demonstrates its unsoundness. It is to be remembered that this is a suit, not by the Railroad Company, but against the company, and its purpose is to enforce rates established by the railroad commission, which the Railroad Company is resisting. The decision of the supreme court upon the grounds of suit and resistance is here for review, and we must assume that all that was pertinent to either the court considered, and regarded all else untenable, including the contention now urged by counsel. It must, therefore, be rejected.
The final contention of defendants in error is that Wood v. Vandalia R. Co. 231 U. S. 1, 58 L. ed. 97, 34 Sup. Ct. Rep. 7, is res judicata of the issues in this case. The suit was by the Railroad
igation, and the ground of attack was, as it is here, that the rates ordered were not compensatory of the service to which they applied. The averments of the bill we held unsustained by the proofs, and nothing more was decided. The judgment was not that the order of the commission was valid, but that it was not shown by the bill to be invalid, and the bill was dismissed without prejudice. That is, without preclusion of the right to show it invalid when attempted to be enforced at a subsequent period. Missouri v. Chicago, B. & Q. R. Co. 241 U. S. 533, 539, 540, 60 L. ed. 1148, 1154, 1155, 36 Sup. Ct. Rep. 715. We cannot, therefore, yield to the contention.
It follows that the decree must be reversed and it is so ordered, and the case remanded for further proceedings not inconsistent with this opinion.
Mr. Justice Day, Mr. Justice Pitney, Mr. Justice Brandeis, and Mr. Justice
A municipal license tax of $60 a year upon the privilege of doing an intrastate telegraph business in a city having
Note. On the power of states to control or impose burdens on interstate telegraph and telephone companies-see note to Postal Teleg. Cable Co. v. Baltimore, 24 L.R.A. 161.
On state law affecting telegraphs as regulation of interstate commerce-see note to Western U. Teleg. Co. v. Commercial Mill. Co. 36 L.R.A. (N.S.) 220.
On validity of license fee exacted of telegraph and telephone companies as affected by amount-see note to Troy v. Western U. Teleg. Co. 27 L.R.A.(N.S.) 627.
As to taxation of corporate franchises in the United States-see note to Louisville Tobacco Warehouse Co. v. Com. 57 L.R.A. 33.
The only contention that the Postal Company makes here is that the tax "is in effect an imposition upon its interstate business." It has this effect, is the assertion, because its "intrastate business at Fremont is insufficient to pay the tax," which, if compelled, must be paid from the company's interstate business," because it is required to do an intrastate business by § 7408 of the state statutes, and its charges are prescribed by the section. For the contention and its supporting assertions the company relies on Postal Teleg.-Cable Co. v. Richmond, 249 U. S. 252, 63 L. ed. 590, 39 Sup. Ct. Rep. 265.
that it has accepted the terms of the, an interstate business, and the reve-
The case was tried to a jury, which, after evidence taken, was instructed by the court to return a verdict for the city in the sum of $135.
We cannot assign to that case the determining force that counsel attribute to it. The case clearly declares that a license tax may be lawfully imposed on a telegraph company for the right to do business within the borders of the municipalities of a state. The power, of course, has its limitations, and must be exercised with due relation to the company's interstate business. That relation is always to be considered, but it is not disposed of by the simple assertion of a loss. The cause of it or the condition of it is to be considered. In this case the tax is $60 a year. It certainly cannot be said that it is repellent from its amount, and there is no pretense that its imposition "is a disguised attempt to tax interstate commerce." The Postal Company, when it entered the city, the "ordinance levying the tax then being in existence, did not declare against its legality, or complain of its detrimental operation. Indeed, for the privilege of entering the city it subjected itself to further regulation, licensing, and taxing. And it paid the tax from that time until 1914. The allegation in its answer that it paid the  tax "through the mistake and inadvertence of" its "clerical force" we are not disposed to accept, without more, as an explanation.
A motion for new trial was denied,
The supreme court expressed the view that mere proof of loss for two years, which may have been exceptional, determined nothing in the absence of a showing
business was available to
what facilities it had held that, the city behe state, any deficit x imposed on the inthe company can be
[For other cases, see Appeal and Error, IX.
1; IX. o, 2, in Digest Sup. Ct. 1908.] Error to state court
scope of review
- questions of local law.
2. Questions of local law are not open to review in the Federal Supreme Court on writ of error to a state court. [For other cases, see Appeal and Error, 2072
2226, in Digest Sup. Ct. 1908.] Error to state court viewable
prevented from becoming a burden upon | did not work a forfeiture of such benefit the company's interstate business by an application to the state railway commission under the provisions of § 7409, for an increase of its intrastate rates. And the suggestion is pertinent. The company, as we have seen, cites § 7408 as a compulsion upon it to engage in intrastate business and at designated rates. From the rigor of the requirement § 7409 provides a mode of relief, and until it is denied, the company cannot complain, under the circumstances presented by this record. In other words, if § 7408 is imperative upon the company to continue intrastate business, § 7409 affords a means of obtaining relief from burdensome obedience. The sections are counterparts. If submission to § 7408 results in insufficient revenue and a burden up-case to be rather hard. on interstate commerce, it is made the duty of the railway commission, by § 7409, upon complaint of the Postal Company, to raise the intrastate rate "fixed" in § 7408. No attempt to secure relief under § 7409 appears to have been made. Judgment affirmed.
 HARTFORD LIFE INSURANCE COMPANY, Plff. in Err.,
CECILIA BLINCOE,1 Administratrix of the Estate of Rosa Barber, Deceased.
(See S. C. Reporter's ed. 129-138.)
1 Death of Rosa Barber, the defendant in error herein, suggested, and the appearance of Cecilia Blincoe, administratrix of the estate of Rosa Barber, deceased, as defendant in error in this cause, filed and entered October 13, 1919, per stipulation of counsel, and on motion in behalf of counsel for the defendant in error.
statutory construction. 3. The proper construction of a state statute providing for the recovery of damages and attorneys' fees for vexatious refusal to pay a loss under a policy of insurance is for the state courts to determine; and their conclusion is not open to review latter court may consider the application in the Federal Supreme Court, although the of the statute to the circumstances of the
[For other cases, see Appeal and Error, 21242151, in Digest Sup. Ct. 1908.]
Constitutional law · due process of law
Note.-As to full faith and credit to be given to state records and judicial proceedings-see notes to Lindley v. O'Reilly, 1 L.R.A. 79; Cummington v. Belchertown, 4 L.R.A. 131; Wiese v. San Francisco Musical Fund Soc. 7 L.R.A. 578; Rand v. Hanson, 12 L.R.A. 574; Mills v. Duryee, 3 L. ed. U. S. 411; Darby v. Mayer, 6 L. ed. U. S. 367; D'Arcy v. Ketchum, 13 L. ed. U. S. 648; and Huntington v. Attrill, 36 L. ed. U. S. 1123.
On conclusiveness of prior decision on second appeal-see note to Hastings v. Foxworthy, 34 L.R.A. 321.
As to laws or judgments of courts of state in which insurance company is incorporated as binding in other statessee note to Hartford L. Ins. Co. v. Ibs, L.R.A.1916A, 770.
As to validity of statutory provision for attorneys' fees-see note to Union Terminal Co. v. Turner Constr. Co. 11 A.L.R. 884, 900.
And see note to this case in the state supreme court as reported in 12 A.L.R. 765.
On what questions the Federal Supreme Court will consider in reviewing the judgments of state courts--see note to Missouri ex rel. Hill v. Dockery, 63 L.R.A. 571.