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FEDERAL INJUNCTION OF STATE OFFICERS.
FRIDAY, FEBRUARY 16, 1912.
COMMITTEE ON THE JUDICIARY,
Washington, D. C.
The subcommittee met at 2.30 o'clock p. m.
Also present: Hon. John E. Eustis, a member of the Public Service Commission of the first district of the State of New York; Hon. Ira B. Mills, a member of the Railroad and Warehouse Commission of the State of Minnesota, and others interested in the proposed legislation.
Senator BROWN (chairman). This is a hearing on the bill S. 4366, introduced by Senator Nelson (by request), entitled "A bill to amend the act entitled 'An act to codify, revise, and amend the laws relating to the judiciary,' approved March 3, 1911."
The bill is as follows:
[S. 4366, Sixty-second Congress, second session.]
IN THE SENATE OF THE UNITED STATES.
Mr. Nelson (by request) introduced the following bill; which was read twice and referred to the Committee on the Judiciary.
A BILL To amend the act entitled "An act to codify, revise, and amend the laws relating to the judiciary," approved March third, nineteen hundred and eleven.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section two hundred and sixty-five of the act of Congress approved March third, nineteen hundred and eleven, entitled "An act to codify, revise, and amend the laws relating to the judiciary," be, and the same is hereby, amended so as to read as follows:
"SEC. 265. The writ of injunction shall not be granted by any court of the United States to stay the proceedings in any court of a State except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy; or to restrain the enforcement, operation, or execution of any statute of the State or any order, rule, or regulation having the force of a statute of a State, or order, rule, or regulation made by a commission or body authorized by State laws to regulate and control common carriers or other public-service corporations."
Senator BROWN. We shall be glad to hear you, Commissioner Eustis.
STATEMENT OF HON. JOHN E. EUSTIS, A MEMBER OF THE PUBLIC-SERVICE COMMISSION OF THE FIRST DISTRICT OF THE STATE OF NEW YORK.
Senator BROWN. You are a member of the Public-Service Commission of New York?
Commissioner EUSTIS. Yes; a member of the commission of the first district.
Senator BROWN. How long have you been on the commission? Commissioner EUSTIS. I have been on the commission since its organization on July 1, 1907.
Senator BROWN. Generally speaking, what jurisdiction does that commission have over common carriers?
Commissioner EUSTIS. The jurisdiction of our commission is limited to the common carriers and public-service corporations that are located within the city of New York; and there is another commission up the State, which they call the commission of the second district, that has jurisdiction over the common carriers for the rest of the State. We have very little to do under our jurisdiction with steam railroads. It is only the terminals of those railroads and the transportation of those railroads within the local district of the city that we have jurisdiction over, so far as steam railroads are concerned.
Senator BROWN. Have you examined Senate bill 4366, introduced by Senator Nelson?
Commissioner EUSTIS. I have.
Senator Brown. And is it in regard to that bill which you desire to offer your suggestions?
Commissioner EUSTIS. I was appointed by the chairman of the National Association of Railroad Commissioners, being a member of the judiciary committee of that association, and when I was notified this bill was introduced I became interested, and in certain ways it affects our work; but not as much as the commissions in the Western States.
Senator BROWN. The committee would be pleased to have you state in your own way your suggestions in regard to this proposed legislation.
Commissioner EUSTIS. This amendment is very much needed to keep up with the progress of the times. The regulation of publicservice corporations is now generally recognized. Nearly every State has its commission and more recent commissions are vested with greater powers than the earlier ones.
It seems to me hardly necessary to say a word to this committee as to the necessity of these commissions. The principle of monopoly controlling many of these corporations to avoid unnecessary waste and expense makes State regulation necessary. Unregulated monopoly is inconsistent with justice or with the State's duty to its citizens.
The law as it is prohibits the writ of injunction in United States courts to stay the proceedings in any State court except where authorized in bankruptcy proceedings a very proper proceeding, as such proceedings are wholly within the jurisdiction of the United States courts.
The proceedings of the State, railroad, or public-service commission are under State laws, and very similar to State court proceedings and legislative action. The general powers of these commissions make them quasi legislative and judicial. They are composed of men familiar with the work they have to do, and have the time to make all necessary investigations to arrive at a just determination of the many questions that arise between the public-service corporations and the people, which legislative committees have not the time or the means to ascertain.
These commissions are well organized and have trained experts in almost every department of their work to investigate and find out exactly what circumstances are in each particular case, so that when they come to make their determination they do it with all the facts before them, which is quite the contrary to what was the case heretofore, in my opinion. The legislatures formerly attempted to pass the necessary laws and regulations in regard to these matters through the committees of the legislature, where they hear the popular clamor from one side and then they hear the railroad on the other side, and then they act without knowing very much about the details or the facts.
Perhaps the most serious obstacle to efficient public-service regulation has been the delay in the enforcement of commission orders consequent upon the review of such orders by the courts. In some cases an order becomes entirely inapplicable before its enforcement is finally permitted on appeal to the highest court. The expense of protracted litigation and the prospect that when such litigation is completed conditions will have so changed as to make the relief petitioned for entirely inadequate or useless impairs seriously the value of public-service regulation.
We have had that to a considerable degree in our State where we have issued an order and the very matter we wished to regulate expired before the case could be settled in the highest court. Even in our State courts our action is reviewed by certiorari, and then they take it to the court of appeals, and by the time we get a decision the benefit is entirely lost.
The States have to a certain extent appreciated this difficulty, and the State regulatory laws usually provide methods of facilitating litigation. Thus, these laws often provide that public-service cases shall have precedence over other civil suits in the State courts. In certain cases it is provided that the appeal shall lie from the order of the commission to the court of the district in which the State capital is located. In other cases provision is made for an appeal to the State supreme court, thus doing away with one or two steps in the litigation and saving many months' time.
These attempts of the State to expedite public-service cases have been made entirely ineffective by the resort of the companies to the Federal, district, and circuit courts. These courts have assumed Jurisdiction, and thus the carefully worked out plans of the States to expedite public-service cases have been frustrated. I find in many cases where they can not succeed otherwise they get a stockholder living in New Jersey to come over in New York in order to throw the case into the United States court.
Article XI of the amendments to the United States Constitution, adopted in 1798, provides:
The judicial power of the United States shall not be construed to extend to any suit in law or equity commenced or prosecuted against one of the United States by citizens of another State, or by citizens or subjects of any foreign State.
An order regulating the rates or service of a public-service corporation made by a State commission is clearly the act of the State. The apparent purpose of this eleventh amendment is, however, circumvented by the plan of having stockholders of the corporation begin suit in the Federal courts against the companies themselves
and the attorney general or commission to enjoin the enforcement of State regulations.
It would certainly be a stricter compliance with the spirit of the eleventh amendment to do away with this interference on the part of the inferior Federal courts with the enforcement of State regulations.
In these matters involving the exercise of powers entrusted by the Federal Constitution to the States there should be no interference on constitutional grounds until the regulation complained of has been passed on by the highest authority established by the State, and then the appeal should lie directly to the Supreme Court of the United States.
This measure of home rule is highly desirable, and conforms to the spirit of our institutions and our Federal plan of government. The States themselves can best appreciate the necessity for expediting public-service cases in order to secure efficient regulation, and if the right of appeal from the State supreme court to the United States Supreme Court is preserved the guarantees of the Federal Constitution may be effectively invoked to preserve the rights of the individual or corporation.
The question of delay in the enforcement of the orders of the State commission is a vital one. Often the greatest benefit has been lost by prolonged litigation, and with great expense to the State, and the large corporations as a rule go to the limit to secure delay. I know that from experience.
The passage of this amendment will not solve this problem entirely, but it will go a long way toward it by relegating the corporations to the State courts, where they still have many friends. To this they should not object, as they get their franchise right in each case from the State. All questions of dispute between the citizens of the State and themselves should, in the first instance at least, be submitted to the State court.
I would like to add, in conclusion, that if this is a good amendment prompt action should be taken, and I have tried to show that it is necessary and good, and I think it should, if possible, be acted upon, so that the gentlemen who are now giving their utmost effort to the enforcement of these regulations may have the aid and benefit of this amendment.
Senator OVERMAN. Is this a substitute?
Commissioner MILLS. Yes, sir; that is the original draft of the substitute you have in your hand.
Senator ÖVERMAN. This is what you propose?
Commissioner MILLS. Yes, sir.
Senator OVERMAN. You are in favor of the substitute?
A BILL To amend section two hundred and sixty-five of an act entitled "An act to codify, revise, and amend the laws relating to the judiciary," approved March third, nineteen hundred and eleven, designated as "the Judicial Code.'
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section two hundred and sixty-five of the act of Congress approved March third, nineteen hundred and eleven, entitled "An act to codify, revise, and amend the laws relating to the judiciary," be, and the same is, hereby amended so as to read as follows:
SEC. 265. The writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a State, except in cases where such injunction