Зображення сторінки

S. 83, 22 Sup. Ct. 31, 46 L. Ed. 92, Circuit Judge Thayer, who heard the case below, decided that the act in question was valid, and, notwithstanding that the court in that case was of opinion that the act was constitutional and dismissed the bill, nevertheless, the learned judge granted an order restraining the enforcement of the act of the Legislature until the matter could be determined by the Supreme Court. That portion of the order embodied as a part of the final decree is as. follows:

“The great importance of the questions involved in these cases will doubtlessOccaSion an appeal to the Supreme Court of the United States, where they will be finally settled and determined. If, on such appeal, the Kansas statutecomplained of should be adjudged invalid for any reason, and in the meantime the statutory schedule of rates should be enforced, the stockyards would sustain a great and irreparable loss. Under such circumstances, as was said in substance by the Supreme Court in Hovey v. McDonald, 109 U. S. 161, 3 Sup. Ct. 136, 27 L. Ed. 888, it is the right and duty of the trial court to maintain, if possible, the status quo pending an appeal, if the questions at iSsue are involved in doubt; and equity rule 93 was enacted in recognition of that right. The court is of opinion that the cases at bar are of such moment and the questions at issue so balanced with doubt as to justify and require an exercise of the power in question. Therefore, although the bills will be dismissed, yet an order will at the same time be entered restoring and continuing in force the injunction which was heretofore granted for the term of 10 days, and, if in the meantime an appeal shall be taken, such injunction will be continued in force until the appeal is heard and determined in the Supreme Court of the United States, provided that, in addition to the ordinary appeal bond, the Kansas City Stockyards Company shall make and file in this court its bond in the penal sum of $200,000, payable to the clerk of this court and his successors in office, for the benefit of whom it may concern, conditioned that, in the event the decree dismissing the bills is affirmed, it will, on demand, pay to the party or parties entitled thereto all overcharges for yarding and feeding live stock at its stockyards in Kansas City, Kan, and Kansas City, Mo., which it may have exacted in violations of sections 4 and 5 of the Kansas statute relative to stockyards, approved March 3, 1897, since an injunction was first awarded herein, to wit, on April -—, 1907 ; and that it will in like manner pay such overcharges, if any, as it may continue to exact in violation of said statute during the pendency of the appeal. * " ' ”

Thus it will be seen that in that instance, notwithstanding the fact that the circuit judge was of opinion. that the statute challenged was valid, yet, in the exercise of his discretion, an order was made restraining the enforcement of the statute until there could be a final hearing of the same by the Supreme Court.

The action of Judge Thayer in that case affords a striking illustration as to the extent to which a court of equity will go in order to preserve the status quo and thus prevent irreparable injury in a cause where it has assumed jurisdiction. The Supreme Court held that Judge Thayer’s action in continuing the restraining order, under the circumstances, was proper, and Mr. Justice Brewer, who delivered the opin-Y ion of the court, in referring to the action of the lower court, said:

“,The learned circuit judge, in deciding the case, appreciated the importance of the questions involved, and, although denying the relief sought by

the plaintiffs, exercised his power of continuing the restraining order until. such time as these questions could be determined.”

It should be Observed that the learned justice concedes to the Cir—cuit Court the power to continue the restraining order until the ques--. tions involved could be determined. And the reasons for continuing


the restraining order in the case at bar are much stronger than those

which induced Judge Thayer to restrain the enforcement of the act in

glat case pending the final determination of the same by the Supreme ourt.

Notwithstanding the fact that the court had at the hearing of this motion considered section 4 of the rate act of 1907, and was of opinion that the same was unconstitutional, yet during the preparation of this opinion, and before the court had expressed its views in respect to the same, it was called upon to determine the validity of that section in the case of Ex parte Jas. H. Wood, 155 Fed. 190, and, after carefully considering the same, reached the conclusion that the said section was on its face unconstitutional and void.

Inasmuch as the allegations of the bill, supported by the evidence, show that, unless the restraining order heretofore granted is continued until the final hearing, the complainant will suffer great and irreparable injury, in the event the act in question should be finally declared invalid, the court is of opinion that such order should be continued until the final hearing; and, in order that the traveling public may be fully protected in the event that the act should be ultimately declared to be valid, the complainant will be required to give ample bond to secure the payment of a sufficient sum into the registry of the court to reimburse those who may purchase tickets of complainant in the meantime, a sum equal to the difference between the present rate and the proposed rate.

NOTE. Subsequent to the granting of an order continuing the interlocutory injunction until the final hearing, to Wit, on the 29th day of July, 1907, the complainant through its counsel filed a petition asking a modification of the interlocutory injunction to the extent of permitting it to put in operation a 21;; cent rate in accordance with the provisions of the act passed by the Legislature of North Carolina.

It is stated, in the petition substantially that the Governor of the state had threatened to institute proceedings in the state court for the purpose of annulling the lease of the North Carolina Railroad Company, and also to call a special session of the Legislature with the view of securing the passage of additional legislation affecting the rights of the complainant; that a number of suits had been instituted in the state courts against complainant and its agents on account of its having complied with the terms of the decree of this court granting an interlocutory injunction; that the Governor of the state had issued a circular letter to the superior court judges of the state, advising them that it was their duty to see that all parties who failed to comply with the provisions of the act of 1907 were prosecuted, regardless of the order which this court had made temporarily suspending the enforcement of the same; that these attacks on the part of the Governor and state officials against the company and its agents and in the manner therein described had had the effect of demoralizing the servants, agents, and employés of the company to such an extent as to render it well nigh

.impossible for complainant to properly discharge the duties which it

owed the public as a common carrier, and that, owing to many other reasons stated therein,- the complainant was deterred from asserting the rights which were guaranteed it by the Constitution of the United States. For a more complete statement of facts reference is made to the petition which has been filed, and is a part of the record.

After considering the petition, the court made the followmg statement:

“The application now made to modify the injunctions heretofore granted in these causes present a condition of affairs unprecedented in the judicial annals of this country. After a full and complete hearing of the matters raised by the pleadings in these causes, injunctions, pending the hearing of the questions involved in the original suits, were granted. The court, in granting such injunctions, followed the course approved by the Supreme Court of the United States in the cases of Smyth v. Ames, Reagan v. Farmers’ Loan & Trust Company, Cotting v. Kansas Stockyards Company, and Front v. Starr,

and followed by the Circuit Courts of the United States in numerous other cases.”

The effect Of the order restraining the Corporation Commission of North Carolina et al. was to preserve the rights of the parties until the master to whom this cause had been referred could have an opportunity to report the facts and thereby enable the court to correctly determine whether the act in question is confiscatory, and, in order tO protect the traveling public, the complainants were required to give ample bond and security to secure the payment into the registry of the court a sum sufficient to pay the difference between the present rate and the proposed rate to those who might in the meantime purchase tickets.

It is unjust to say that the question of states’ rights is involved in this controversy. It is equally unjust to insist that what the court has done in the premises was an interference on the part Of the federal court with the state courts. However, on the other hand, there has been a manifest disposition on the part of the state officials to interfere with the orderly procedure of the federal court in the exercise of those powers necessarily incident to the protection of its jurisdiction.

If this kind of obstruction should prevail, and citizens are thus to be denied the rights guaranteed them by the Constitution Of the United States, then those provisions of the Constitution would become a dead letter, as there would be no means of enforcing them. \/Vhen the motion for an interlocutory injunction was made in these causes, there was full argument before me by counsel representing the complainant and by counsel representing the defendants, the members of the Corporation Commission, the Attorney General, and the Assistant Attorney General of North Carolina. This argument lasted over several days and covered all points at issue. Upon this argument and my consideration of the case I entered the interlocutory injunctions. On a subsequent occasion the matter was again presented on the trial of a writ of habeas corpus, at which time a written opinion was delivered fully stating the views of the court. The court feels no doubt as to the soundness of the views therein expressed, nor as to its power and duty to enter the interlocutory decree, nor, in order to protect the jurisdic— tion of this court, to discharge on habeas corpus the persons who had been arrested by the state authorities for compliance with the orders of this court.


The court still considers that it would be its duty to continue this protection whenever its action in the premises should be thus lawfully invoked. But, as the complainants, for the protection of whose rights the interlocutory decrees were entered, now move the court permission to surrender the protectiOn of said order to the extent indicated in their respective petitions, there is nothing for the court to do except to grant the permission prayed.

In view of the facts contained in the petition, the court at that time entered an order modifying the order theretofore granted in accordance with the request of the petitioner.


(Circuit Court, M. D. Alabama. July 14, 1907.)


The state, unless forbidden by its own Constitution, or estopped by its dealings with a particular corporation, or a right has vested in such corporation to do business in consequence of contracts and investments made on the faith of state statutes, may at any time, and for any cause, exercise its sovereign, political, prerogative of preventing, at its own pleasure, any foreign corporation from doing a domestic business in its borders.

[Ed. Note—For cases in point, see Cent. Dig. vol. 12, Corporations, § 2505.

Exclusive regulation and taxation of foreign corporations, see note to McCanna & Fraser Co. v. Citizens’ Trust & Surety Co., 24 C. C. A. 13.]


Section 240 of the Constitution of Alabama of 1901, which gives the right to foreign corporations “to sue in all courts, in like cases, as natural persons,” prohibits any court from giving effect to an enactment which provides that the bringing of a suit by a foreign corporation in the federal court shall ipso facto forfeit its right to do domestic business in Alabama, when, under the law of the land, no such consequence attaches to a domestic corporation or a natural person for bringing a like suit. The fourteenth amendment also annuls such a statute, since its enforcement would amount to a denial of the equal protection of the laws to the foreign corporation.

[Ed. Note—For cases in point, see Cent. Dig. vol. 10, Constitutional Law, § 678.]


Where state statutes provide that a domestic corporation may sell “all its property, roadbed, rights and franchises” to a foreign railroad corporation, and such property, when so purchased, “shall be subject, in all respects, to the laws of the state as if owned by a domestic corporation,” and set forth other terms upon which such foreign railroad corporation may lease, operate, and aid domestic railroad corporations, the provisions of such statutes enter into and form part of the obligation of the contracts made thereunder between the domestic railroad corporation and the foreign railroad corporation.


The state, after foreign corporations have invested large sums of money, and made contracts in the purchase and lease of domestic railroads, and in carrying on domestic and foreign commerce, on the faith of such statutes, cannot deny or impair the enjoyment of the vested right, thus ac

quired, to do such business, by the exercise of its arbitrary prerogative, which might otherwise exist, to prevent foreign corporations, at its pleasure, from doing a domestic business in its borders. The state is

' estopped, by the acceptance of the proposals made in its own laws and acts done on the faith thereof, to claim or exercise such a prerogative thereafter; and it is also forbidden. to exercise it, because the denial to the foreign corporation of the right to do domestic business would be a denial or impairment by the state of the obligation of contracts, which the Constitution of the state and United States forbids the state to effect by any law.

[Ed. Note.--Estoppel against, see notes to State v. Jackson, L. & S. R. Co., 16 C. C. A. 353.]

5. SAME—DUE Paocnss OF LAW.

After such purchase and lease of domestic railroad property by foreign railroad corporations, their owners and lessees hold them, with the right to operate them in both domestic and interstate commerce, for the time and upon the conditions the law provided, and the state cannot interfere with any lawful use of such property by the foreign corporation, except by forfeiture of the right so to use the property, for misuser or nonuser, for cause defined by law, applicable alike to all persons similarly situated, and only after hearing and judgment in the courts.

[Ed. Note—For cases in point, see Cent. Dig. vol. 10, Constitutional Law, §§ 762, 763.]


The police power is limited to the prevention and punishment of such acts as may, or do, menace the welfare, happiness, morals, or peace of the state, and the people within its borders, and as these cannot be invaded or imperiled by the exercise of the right to resort to a federal court, which is given by the supreme law of the land, no court can recognize the bringing of such a' suit as any legal cause for the forfeiture of any vested right of property.

[Ed. Note—For cases in point, see Cent. Dig. vol. 10, Constitutional Law, § 148.]


Under the fourteenth amendment, the basis of all calculations as to the reasonableness of rates charged by a railroad must be the fair value of the property used by it for the convenience of the public; and, as to rates prescribed for transportation of persons and property carried only within the limits of the state, the reasonableness of such rates must be based upon the value of the property devoted to domestic commerce, without reference to the value of the property devoted to interstate commerce, and neither the profits nor the losses in the one business can be estimated in determining the reasonableness of the rates as to the other.

[Ed. Note—For cases in point, see Cent. Dig. vol; 9, Carriers, § 19.]

8. SAME—DETERMINATION. As the Constitution forbids rates to be fixed unreasonably low, a court, _ when asked to enjoin the enforcement of rate legislation, on the ground that it violates the Constitution in this respect, must necessarily ascertain the facts upon which the reasonableness of the rates depends before it can pronounce upon the validity of the statute.


Rates fixed by statute are prima facie reasonable, and the burden devolves upon him who complains of them to show to the contrary. When, upon application for preliminary injunction, complainant shows a state of facts, which, taken in connection with the opposing evidence, presents a reasonable probability that the rates may be adjudged invalid on final hearing, the court, acting for the best interest of all concerned, in view of the facts of the particular case, will balance the relative harm which may befall the adverse interests from the issue of the writ, and grant or withhold the writ accordingly. Under the facts of this case, the com

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