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catory rates fixed by a municipal ordinance of a local public service company, in that the general rule respecting the conclusiveness of a master's finding of fact when confirmed by the court would not be applied by the supreme court on appeal, that is, the court would not fetter its discretion or judgment by any artificial rules as to the weight of the master's findings, however useful and well settled these rules might be in ordinary litigation.1

Where the order of the commission, sought to be enjoined, commands the repayment by the railroad of excessive past rates to certain shippers, such shippers are necessary parties to a bill seeking to set aside the award.2

The exceptional character of this litigation is also peculiar in the provision of the decree which the supreme court said in the Nebraska case was wisely inserted, that the members of the state board had the right to show at any time that the conditions of business were so changed, that the rates enjoined would yield the railroads a just compensation; and in such case it would be the duty of the court to discharge the injunction. This precedent thus approved by the supreme court, has been usually followed in decrees in this class of litigation.*

§ 118. Temporary injunctions in federal control of state legislation. Where a federal court has jurisdiction to permanently enjoin the enforcement of railroad rates or other regulations, it also has power, while the inquiry is pending, to grant a temporary injunction to the same effect. Such temporary relief is granted upon the same grounds recognized as authorizing such relief in other cases, that is, to preserve the status quo and prevent a change of conditions during the litigation which may result in irremediable injury to some of the parties before their claims can be investigated and adjudicated."

1 Knoxville v. Knoxville Water Co., 212 U. S. 1, 53 L. Ed. 371 (1909).

2 L. & N. R. R. Co. v. Siler, supra.

* See Smythe v. Ames, supra. 4 The necessity of adjusting orders concerning rates to the probability of changing business conditions, is shown in the provi

sion of the Interstate Commerce Act limiting the orders of the commission for periods of two

years.

Ex parte Young, supra.

City of Newton v. Lewis, 79 Fed. Rep. 715 (1897); Stevens v. M. K. & T. R. R., 106 Fed. Rep. 771 (1901), C. C. A. 2nd circuit; Cartersville L. & N. Co. v. Carters

This principle has been applied by the courts in determining the right to a temporary injunction in railroad rate cases.1 In what is known as the Alabama rate case, the circuit court of appeals, fifth circuit, reversed the order of temporary injunction granted by the circuit court where the rates had not gone into effect. The circuit court of Minnesota declined to issue a preliminary injunction where the rates had been accepted and put in operation by the railroad companies, but allowed a temporary injunction as to certain rates which had not been put into effect, for the reason that they operated so as to preserve the status quo as to whether or not the rates were confiscatory until the final hearing.3

Where the enforcement of rates has been restrained by a restraining order pending the hearing of application for temporary injunction, the court, in denying the injunction, may in its descretion continue the restraining order upon condition, pending an appeal.*

§ 119. Temporary injunction under act of 1910.-Under the act establishing the circuit court of appeals, as amended, an appeal lay to that court from orders granting temporary injunctions, whether the causes were appealable on final hearing to such court or to the supreme court. Under the commerce court act of 1910, temporary injunctions against the enforcement of ville, 114 Fed. Rep. 699 (1901), same court; Louisville v. Cumberland Tel. Co., 111 Fed. Rep. 663 (1901), C. C. A. 6th circuit.

1 Central of Georgia Ry. Co. v. McLendon, 155 Fed. Rep. 974 (1907), and 157 Fed. Rep. 961.

2170 Fed. Rep. 225, reversing 161 Fed. Rep. 925.

3 Perkins v. Northern Pac., 155 Fed. Rep. 445 (1907). See also St. L. & S. F. R. R. Co. v. Hadley (a Missouri rate case), 155 Fed. Rep. 220. where the temporary injunc tion was denied because the rates had not been tested. In the Oklahoma rate cases a temporary injunction was granted by Hook, J., on the ground that the passenger,

and freight rates had been enforced for two years, and, on the affidavits, were held to be confiscatory. A. T. & S. F. R. R. Co. v. Love, 177 Fed. 493, affirmed by Circuit Court of Appeals (8th Cir.), 185 Fed. 321 (1911).

4 L. & N. R. R. Co. v. Siler, 186 Fed. Rep. 175, supra.

5 See Appendix. On hearing under this act of 1910 before Circuit Justice and two District judges, where application for temporary injunction against state rates of Nevada was denied on ground of insufficiency of proof. See Woodside v. Tonopola R. R., 184 Fed. Rep. 358 (1911).

state authority by state officials cannot be granted by the federal courts, unless the application shall be heard and determined by three judges, one of whom must be a justice of the supreme court or a circuit judge, and at least five days' notice of the hearing must be given to the governor or attorney-general; and such orders of injunction are appealable directly to the supreme court.

Under this act, an acting district judge cannot sit alone, either in granting an injunction order, or in vacating one which has been made, but he must call to his assistance two other judges, as required by the statute, to hear an application, either to grant or to vacate such an injunction. Mandamus to compel the judge to comply with the law is the proper remedy, where a single judge takes any action on such an injunction, as the right of appeal is not otherwise given by statute.1

§ 120 (97). Reasonableness and confiscation in regulation of rates. The standard of reasonableness in rates considered by the courts when the carrier complains of state imposed rates on intrastate traffic as confiscatory, in violation of the fourteenth amendment, is not the same as that involved in the determination of what is reasonable between a carrier and his patrons, whether the issue is raised under the interstate commerce act or otherwise. It is not what the carrier can exact or what the shipper can be forced to pay under the common law rule of reasonableness, but what limit the state can lawfully impose upon the carrier in making rates without violating the federal protection against taking of property without due process of law.

The burden of proof necessarily differs in the different classes of cases. When the federal authority is invoked against state imposed rates the presumption is that the state rates, whether made by the legislature or a commission, are presumed to be reasonable, and the burden is therefore upon the railroad to prove that the rates are unreasonable, that is confiscatory, in that they deprive the railroad of the rightful return to which it is entitled

1 Ex parte, in re Metropolitan Water Co. of West Virginia, 220 U. S. 539, 55 L. Ed. (1911), where a manadmus was issued, directing the acting district judge of the district of Kansas to set

aside an order vacating an injunc

tion order, and directing him to call to his assistance two other judges, as provided by the act, for hearing and determining an ap plication for an interlocutory injunction.

upon its property. If the railroad fails to prove this contention the suit must fail. The term "reasonable" in this class of actions is used in the sense of being non-confiscatory, that is, above the minimum which the railroad could be compelled to accept; and such a rate may be well within the maximum rate which a railroad could exact from its patrons as reasonable.'

On this issue therefore of the minimum rate which the carrier can be forced to charge the proof is necessarily directed to show that the rates will not permit the carrier to realize the adequate return to which it is lawfully entitled, upon its property devoted to the public use.

On the other hand neither the statutes nor the common law nor judicial decisions concerning state imposed rates furnish any definite standard for the determination of what is reasonable as between a carrier and its patrons. In ordinary business transactions a reasonable charge for a personal service is the resultant of the free economic forces of supply and demand. It is obvious that under the complicated conditions of railway transportation this free play of the economic forces of supply and demand does not ordinarily exist. When competition does act in determining railway rates, it is only at certain points, as terminal centers, where the rate may be made unreasonable from the carrier's point of view, while at local points on the same line it may not exist at all. The standard of reasonableness therefore is one thing for the railroad manager who wishes to secure at all times a reasonable profit upon the cost of services, and a

1 In Northern Pacific R. R. v. North Dakota, 216 U. S. 579, 54 L. E. 624 (1910), the supreme court, in affirming the judgment of the state court which sustained a coal rate which was alleged to be confiscatory, said that while the argument of the railroad seemed to have considerable probability, the evidence left the matter so much in doubt, that the decree was affirmed without prejudice to the rights of the company to reopen the case, if after adequate trial, it thought it could prove the

confiscatory character of the rate more clearly.

2 "What may be a reasonable rate or return as in the matter of legal policy, having due regard to encourage the investment of capital in railroad enterprises, is one question; but when the inquiry becomes a judicial problem to be considered as involving the tak ing or not taking the railroad's property, it is essentially a differ ent question." Opinion of circuit court in L. & N. R. Co. v. Siler, supra.

very different thing for the shipper who wishes to secure at all times a reasonable profit for his own business as against his competitors in other communities.1

§ 121 (98). State rates determined without reference to in. terstate traffic.-The complexity of our governmental system is illustrated in the regulation of the intrastate and interstate business of our railroads. Though the railroad may extend through several states, it is an entity operated as an entirety, all its income coming into and all its expenditures going out of a common fund, its capitalization includes all its property in and out of the state, and all its business, state or interstate, is transacted by the same employes and with the same equipment. All this, says the supreme court, has no application in determining the limits of the state power of regulation." The reasonableness of state rates, that is, whether or not confiscatory, must therefore be determined by the revenue from and the cost of traffic within the state without reference to the interstate traffic over which the state has no control. A state cannot justify unreasonably low rates on the ground that the railroad is earning large profits in its interstate business, nor can the railroad justify unreasonably large rates to domestic business in order to make up losses on its interstate business. This principle precludes the state from claiming that traffic beginning or ending in the state should be divided upon the mileage basis, as such interstate traffic

1 The supreme court said in the Trans-Missouri Freight Assor ciation case, supra, "What is a proper standard by which to judge the fact of reasonable rates?" And after commenting upon the different factors to be considered, said: "That it is quite apparent that it is exceedingly difficult to formulate even the terms of the rule itself which should govern in the matter of determining what would be reasonable rates for transportation, and that there was such an infinite variety of facts entering into the question of what is a reasonable rate, no mat

ter what standard is adopted, that
the indiviual shipper would be
practically remediless. It is also
true that the complexity of the
problem requires for its solution
the largest experience, and the
fullest knowledge of the details of
the cost of service, and all the
conditions of traffic." The ques-
tion of reasonableness in railroad
rates and the different factors in-
volved in its determination is
fully discussed in the opinions of
the Interstate Commerce Commis-
sion, see infra, § 246 et seq.
2 Smyth v. Ames, supra.

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