profit on every sort of business 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 [120] 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 is taken into account. On that fact being satisfactorily established, the presumption of reasonableness is rebutted." And further, "it has repeatedly been assumed in the decisions of this court that the state has no arbitrary power over the carrier's rates, and may not select a particular commodity or class of traffic for carriage without reasonable reward." It was hence concluded that where there is such segregation, and 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." practice under which a rate which re- It is, however, contended by the de- 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 [122] that constitute mission, 251 U. S. 396, 64 L. ed. 323, the bases of the complaint, and puts P.U.R.1920C, 579, 40 Sup. Ct. Rep. 183. them and the effect of them in issue. In These cases leave nothing to be said, other words, the complaint deals with nor need we review the prior cases from the rates and service between designatwhich they are deductions. The conces- ed stations, and the answer deals with sion of counsel is "that it may be ad- those rates and that service. And the mitted that the North Dakota and West supreme court so regarded it, and exVirginia (Conley) cases have greatly plicitly said that the evidence made the discredited the previous theory and issue. Counsel attack the conclusion as unsupported, but we must accept it, as it is the judgment of the court we are reviewing, 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 Com pany "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. [123] 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 Company to restrain the order of the Commission involved in the present litigation, 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 Clarke dissent. 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 8 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 revePost Road Act of July 24, 1866 [14 Stat. nue derived from its intrastate business at L. 221, chap. 230], and is entitled as a whole becomes insufficient, and the to its benefits; that the tax is confis- tax may become a burden on its intercatory and prohibitive, and deprives the state business, "§ 7409, Rev. Stat. 1913, 'company of its property without due provides a remedy." process of law, in violation of the 14th Amendment of the Constitution of the United States. In specification of this defense it is alleged that the receipts of the company for 1914 on its [126] intrastate business were only $108.28, and for the year 1915, $83.96, and that the expenses properly chargeable against these years respectively, exclusive of the tax, were $185.56 and $154.26, and that its loss on intrastate business would have to be made up from interstate business; that the city is under no expense by reason of the poles and wires of the company being in the city, and that $60 a year is in excess of a rental charge upon them, and that the streets are post roads within the meaning of the Post Road Act of 1866. In further defense the answer alleges that the tax is one on interstate commerce; that it deprives the company of the equal protection of the laws, and impairs the obligation of a contract, both in violation of the Constitution of the United States. 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 [128] 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, and judgment was rendered upon the verdict. It was affirmed by the supreme court of the state, the supreme court deciding: (1) The tax was "not a mere license or regulation measure, but one designed for revenue purposes," and that its extent was "a matter for the judgment and discretion of the municipal government, subject only to the restriction that it must not be prohibitory." Citing Cooley, Taxn. 3d ed. 1139, 1440. (2) The tax was not prohibitive; that proof of loss for two years, without showing what volume of business was available in the municipality, or what portion was done by the company, or what its facilities were for handling the business, was not sufficient to show that a tax of $60, imposed for revenue purposes on the privilege of doing an intrastate business in a city of over 8,000 inhabitants, was able. (3) In imposing an occupation the tax for revenue purposes a municipality or u acts as the agent of the state, and where ing a tax is imposed upon a telegraph com- ar pany doing an intrastate [127] and tex unreason 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 did not work a forfeiture of such benefit certificate. [For other cases, see Appeal and Error, IX. Error to state court 1; IX. o, 2, in Digest Sup. Ct. 1908.] 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 [129] HARTFORD LIFE INSURANCE COMPANY, Plff. in Err., V. CECILIA BLINCOE,1 Administratrix of the Estate of Rosa Barber, Deceased. (See S. C. Reporter's ed. 129-138.) · judgment Appeal 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. questions re 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 in the Federal Supreme Court, although the of the statute to the circumstances of the latter court may consider the application [For other cases, see Appeal and Error, 21242151, in Digest Sup. Ct. 1908.] Constitutional law - due process of law - penalizing delay in paying claim. 4. Due process of law is not denied to an insurance company by a state statute under which, as construed by the state courts, a recovery of damages and attorneys' fees as for a vexatious refusal to pay a loss is permitted on the second trial of an action on the policy, following a reversal by the Federal Supreme Court of a judg 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. 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. company elected to stand by its answer and declined to plead further. The 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 praetice, 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 brought by the Railroad Company against Union B. Hunt et al., constituting 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 objection, 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 |