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owner (sole stockholder) of the West Virginia corporation or on the theory that, as to the property purchased on forclosure, it became itself the Parkersburg Branch Railroad Company. In neither view did the trial court have jurisdiction of the controversy.

If the plaintiff sued as the corporate owner of the property, that is, as the Parkersburg Branch Railroad Company, but under the name of the Baltimore & Ohio, the trial court was without jurisdiction as a federal court, because both the Branch Railroad and the defendant were West Virginia corporations, and hence the controversy was wholly between citizens of the same State. If the Baltimore & Ohio sued as the Maryland corporation, owner of all the stock in the Parkersburg Branch Railroad Company, the trial court was without jurisdiction of the controversy, because the latter corporation, an indispensable party plaintiff, was not joined. Compare Davenport v. Dows, 18 Wall. 626. And it could not have been joined. Niles-Bement-Pond Co. v. Iron Moulders Union, 254 U. S. 77. For then one of the plaintiffs would have been a citizen of West Virginia; there would no longer have been complete diversity of citizenship; and the jurisdiction of the trial court would have been ousted.

So far as appears, the Branch Railroad was neither merged in, nor consolidated with, the Baltimore & Ohio. Nor was there a compulsory domestication of the latter in West Virginia. Martin's Administrator v. Baltimore & Ohio R. R., 151 U. S. 673. We have, therefore, no occasion to consider the questions involved in St. Louis & San Francisco v. James, 161 U. S. 545; Louisville, New Albany & Chicago Ry. v. Louisville Trust Co., 174 U. S. 552; Southern Ry. V. Allison, 190 U.S. 326, 337; Missouri Pacific Ry. v. Castle, 224 U. S. 541. Compare Memphis & Charleston R. R. v. Alabama, 107 U. S. 581; Patch v. Wabash R. R., 207 U. S. 277.

It would seem that the District Court must, upon the remand of the case to it, enter a decree of dismissal. But,

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as the question whether the trial court had jurisdiction does not appear to have been considered by either of the lower courts and was not discussed by the parties here, our direction to the Circuit Court of Appeals is to remand the case to the District Court for further proceedings not inconsistent with this opinion.





No. 371. Argued March 10, 11, 1925.-Decided April 13, 1925.

1. A judgment of a state supreme court sustaining an order of a

state commission which fixed intrastate railroad rates, and overruling the railroad's claim that the rates were confiscatory and based on arbitrary findings of fact unsupported by evidence; held

reviewable by writ of error. P. 42. 2. An administrative order fixing railroad rates upon a finding with

out evidence or made upon evidence that clearly does not support it, is an arbitrary act against which courts will afford relief.

P. 44. 3. In a hearing to determine rates for several carriers on intrastate

transportation of logs in carload lots, the average haul of which by each carrier was 32 miles, the carriers introduced persuasive evidence that existing rates did not yield any return on the property employed nor defray the operating costs of the traffic and its proportionate taxes; but the state administrative body, without attacking the proof or attempting to shcw by reasonably specific and direct evidence what the actual operating costs of the particular traffic were to the several carriers, lowered the rates on the basis of a composite figure, created largely from data in the carriers' reports and their exhibits in the case, representing the weighted average operating cost per thousand gross-ton-miles of all revenue freight carried on the carriers' railroad systems, including main line and branch line freight, interstate and intrastate, car

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load and less than carload, indiscriminately-Held that this was a

fundamental error and a denial of due process of law. P. 42. 4. The invalidity of an order arbitrarily lowering rates which the

evidence shows are confiscatory is not avoided by making it for

an experimental period. P. 45. 125 Wash. 584, reversed.

ERROR to a judgment of the Supreme Court of Washington affirming an order of the Department of Public Works, in a suit brought by the above named and three other railroads to set the order aside.

Mr. C. W. Bunn, for plaintiffs in error.

Mr. F. M. Dudley, with whom Mr. O. W. Dynes was on the brief, for Chicago, Milwaukee & St. Paul Railway Company.

Messrs. Raymond W. Clifford and Scott Z. Henderson, for defendants in error. Mr. John H. Dunbar, Attorney General of the State of Washington, and Mr. Stephen V. Carey, were on the brief.

Messrs. George T. Reid and Lorenzo B. da Ponte were on the brief, for Northern Pacific Railway Company; Messrs. Frederic G. Dorety and Thomas Balmer for the Great Northern Railway Company; and Messrs. Arthur C. Spencer and William A. Robbins for the OregonWashington Railroad & Navigation Company.

MR. JUSTICE BRANDEIS delivered the opinion of the Court.

The intrastate transportation of saw logs in car load lots constitutes a large part of all of the intrastate freight traffic in Washington on each of the four transcontinental railroad systems by which much of that service is performed. Prior to federal control the rates had, with

1 These are the Northern Pacific, the Great Northern, the Chicago, Milwaukee and St. Paul, and the Oregon-Washington of the Union Pacific System.


Opinion of the Court.

few exceptions, been initiated from time to time by individual tariffs of the several carriers. In 1918 the Director General of Railroads made a horizontal increase of 25 per cent. In 1920, after the decision in Ex parte 74, Increased Rates, 1920, 58 I. C. C. 220, a further increase of 25 per cent. was authorized by the Public Service Commission of the State. Complaint was made that some of the rates as so raised were excessive and discriminatory; and that the rate structure lacked uniformity.

On December 28, 1920, the Public Service Commission instituted a proceeding before itself for the purpose of investigating the log rates and making such order thereon as the facts found should warrant. Hearings were duly had in which shippers and the four transcontinental carriers participated. Much evidence was introduced. The carriers insisted that the existing rates were unremunerative. They also filed, during the hearings, a joint tariff embodying the higher rates which they deemed reasonable. A suspension order issued; and the two proceedings were consolidated. On February 1, 1922, the Department of Public Works (by which the functions of the Commission had come to be exercised) made a report in which it found that the existing rates were highly remunerative. Thereupon it entered an order which, among other things, abrogated all the intrastate log tariffs then in force; cancelled the suspended joint tariff filed by the carriers; and established a uniform distance tariff applicable to these railroads, to remain in effect during an experimental period of twelve months, or until further order of the Department. The tariff so prescribed reduced greatly the rates theretofore prevailing. It was estimated that the revenues of the several carriers from this traffic would be lessened from 15 to 37 per cent. and that additional losses in revenue would result from changes prescribed concerning minimum loadings.

This suit was brought by the carriers against the Department, in the Superior Court of Thurston County, to

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set aside the order on the ground, among others, that it deprived them of property in violation of the due process clause of the Fourteenth Amendment. The findings of fact upon which the order proceeded were attacked as arbitrary and unsupported by the evidence. The prescribed rates were assailed as confiscatory. Northern Pacific Ry. v. North Dakota, 236 U. S. 585. Upon the giving of bonds the court superseded and suspended the order, except in so far as it cancelled the joint tariff of higher rates filed by the carriers. After full hearing the court entered a final decree denying the relief sought. This was affirmed by the Supreme Court of the State, three judges dissenting. 125 Wash. 584. The case is here under § 237 of the Judicial Code as amended. A motion to dismiss on the ground that the judgment is not reviewable on writ of error was postponed to the hearing on merits. The motion is denied. Bluefield Water Works & Improvement Co. v. Public Service Commission, 262 U. S. 679, 683. As to the merits, many errors are assigned. It will be sufficient to consider one.3

The log traffic is limited substantially to the section of the State lying west of the Cascade Mountains. The average length of its haul on each of these roads is not more than 32 miles. The three principal carriers pre

2 On May 16, 1922, the Interstate Commerce Commission entered an order reducing Washington interstate rates, Reduced Rates, 1922, 68 I. C. C. 676. Thereupon the Department of Public Works made, on June 22, 1922, a corresponding reduction in the intrastate log rates, but it provided specifically that, in view of the pending litigation, this order should not apply to the carriers here involved. Second Annual Report of the Department of Public Works, p. 70, Appendix G.

3 The character of the proceeding in the state court and the provisions of law applicable thereto are set forth in Oregon R. R. & Navigation Co. v. Fairchild, 224 U. S. 510. It was co ed, as was there held, that the legal proceeding prescribed by the State affords an adequate opportunity for testing by judicial review the lawfulness of the order complained of.

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