Chapter X: Regulation of Freight and Passenger Tariffs

Leaving the subject of temperance and prohibition for the present, the next important question of a public nature in which I became interested professionally was the question of the regulation of freight and passenger tariffs by the general assembly of the state. The general assembly of 1888 enacted a law providing for the election of three Railroad Commissioners, and gave them authority to prepare schedules of rates that might be charged by the railroads of the state for the transportation of freight and passengers.

Under this statute the people elected as Commissioners Frank T. Campbell, Peter A. Dey, and Spencer Smith. In pursuance of the authority of the statute these Commissioners proceeded to formulate schedules of rates to be charged by the several railroads of the state. The law required the Commissioners to publish for three successive weeks in certain newspapers the date at which these rates should take effect. Before the third publication was made the attorneys of the Northwestern Railroad Company telegraphed to the Railroad Commissioners requesting a change of the date of the taking effect of their proposed schedule of rates, and received from the secretary of the board, under the instructions of Mr. Dey, an answer that the time of the taking effect would be changed accordingly. A new advertisement was prepared and published, but before the three insertions were completed three of the principal railroad companies operating in the state; to-wit, the Northwestern, Chicago, Burlington & Quincy, and the Milwaukee & St. Paul filed their petitions with the circuit court of the United States for an injunction against the further publication of the notice, on the ground that the rates fixed by the Railroad Commissioners were not _compensatory_. The hearing of this application was had before Justice Brewer at his residence in Leavenworth, Kansas. I was employed by the Railroad Commissioners to appear in their behalf, and Mr. James T. Lain, of Davenport, was employed by certain shippers of that place to appear with me in the case. We argued the case before Justice Brewer, and he granted the injunction on the 28th of July, 1888. This injunction in large part was based upon the evidence of the complainants' general manager to the effect that the Commissioners had adopted a classification known as the western classification, which, as compared with the classification known as the Illinois classification made a difference against the railroads of fifty per cent. Subsequent to the granting of these injunctions, upon complaint of certain shippers the Railroad Commissioners, after a hearing before them, proceeded to formulate new schedules, and in pursuance of what appeared to be the principal objection at the former hearing they adopted a classification more favorable to the railroad companies known as the Illinois classification. Immediately upon this action of the Railroad Commissioners the railroad companies filed a supplemental bill asking a further injunction to restrain the Railroad Commissioners from putting into effect these new rates with the new classification. Mr. Campbell of the Railroad Commissioners immediately waited on me asking my further appearance in the cause to argue the question of a further injunction as against their new schedules and classification. He expressed a doubt as to whether or not it was worth our efforts to defeat this new application as he was disposed to think that Judge Brewer would grant whatever the railroad companies might ask in this behalf. I told him that he had a duty to perform as a public officer, in my opinion, and if the Commissioners did their duty in making the proper resistance to this new application, the responsibility would rest with Judge Brewer if he failed in his duty. We accordingly made the necessary preparation for a hearing, which was finally had at St. Paul, Minnesota. In the argument of this case the attorneys for the three railroads applying for the injunction made a very formidable array of distinguished counsel embracing the ablest lawyers of Chicago and Milwaukee. A. J. Baker was then Attorney General of the state of Iowa and nominally appeared with me for the Commissioners, but gave me no assistance whatever. We had for an audience in the argument of the case many leading men of Minnesota, members of the State Grange of that state, which association was then in session at St. Paul. I took into the court-room a blackboard that I extemporized for the occasion and taking several copies of the official reports of the railroads in question, I put one copy in the hands of Justice Brewer, holding another copy in my hand and putting the figures upon the blackboard, showing the earnings of these railroads and what they were pleased to call their fixed charges, and demonstrating beyond question that the complaints made of the proposed railroad rates were without foundation. The same person who had made an affidavit in regard to the difference between the Illinois and the western classification had made a new affidavit stating that there was an error in his former computation. I criticised with some severity the reliability of the affidavits in which mistakes occurred according to the convenience and exigencies of this litigation. I had not much confidence in the result, however, but I felt quite complimented when a number of the leading men of the Minnesota Grange, who were present at the argument, made me a complimentary visit at the hotel that evening. The attorney for the railroad company who was expected to make the closing argument in the case complained that he did not feel very well and only spoke about fifteen or twenty minutes in a general way, without going into the facts or figures in the case. My supposed assistant, the Attorney General of the state of Iowa, took no part in the argument, and on my way home that night I learned that he had been in conference with Mr. Stickney of the Chicago Great Western Railroad Company, and had made an arrangement with that gentleman for employment as attorney for that corporation, to take effect at the close of his then official term which was to occur in a few months. On the 2nd day of the ensuing February, 1889, Justice Brewer filed in the circuit court his opinion refusing the injunction on the supplemental bill and entering an order dissolving the injunctions theretofore granted, at the cost of the complainants. The railroad companies made no further fight against the action of the Railroad Commissioners but acquiesced therein, and found the earnings of their several roads "compensatory."

Concurrent with this proceeding on the part of the Northwestern Railroad Company and the Chicago, Burlington & Quincy, and Milwaukee & St. Paul, the Chicago, Rock Island & Pacific Railroad Company and the Burlington, Cedar Rapids & Northern applied to and obtained from Judge Fairall, of Iowa City, district judge of Johnson county, an injunction against the Railroad Commissioners to the same effect as that issued by Justice Brewer. I appeared with Mr. Lain before the district court and argued a motion to dissolve this injunction before Judge Fairall, which was refused, and from his order refusing to dissolve the injunction we at once took an appeal to the supreme court of Iowa. This appeal was heard and submitted to the supreme court by both printed and oral argument, but after the action of Justice Brewer upon the supplemental bill in the federal court, the attorneys for the Chicago, Rock Island & Pacific Railroad Company and the Burlington, Cedar Rapids & Northern dismissed their suit in the district court of Johnson county, and then applied to the supreme court for an order dismissing the appeal in that court. We resisted this application, but the court held that as the original suit was dismissed the injunction itself necessarily was dissolved, and as the appeal was only from an interlocutory order, the court had no occasion to deliver an opinion upon the merits of the controversy. The opinion of the court permitting these parties to dismiss their suit in this manner will be found in 76th Iowa, 278.

Mr. A. B. Cummins, since Governor of the state of Iowa, has lately been posing as the original friend of the people in this fight against railroad injustice. It would be well to state here that I do not know when he became a convert to the importance of regulating the action of railroads in justice to the people, but as the foregoing was the first great contest we had in Iowa on this subject, I give here a speech delivered by that gentleman as late as December 22, 1891, at a banquet of the Railroad Employees' Club, as follows:

It is the railroad, it is the spirit that has moved and stimulated
that property which has made it possible to people in the valley of
the Mississippi, which has made it possible to create within the
limits of the United States a greater wealth than has any other
nation on the face of the earth. I speak of the transportation
industry as limited to railways, and so limited, it is instructive
to reflect that the railways of the earth are now of the value of
something near $33,000,000,000, an appalling sum that no human mind
can appreciate, save when compared with some other species of
property. The railways of the earth, without reckoning either "wind
or water," are equal to one-tenth of all the property of the world.
The railways represent substantially one-third of all the invested
capital of mankind; and if all the currency of the civilized world
and its gold and all its silver and its currency in paper; all its
precious stones, its diamonds and rubies were heaped together in
such places as would contain them, they would still represent less
than one-half of the railway property of the world. The comparisons
indicate in what a stupendous enterprise you are now engaged. I
have no disposition, whatever, to convert a single sentiment
suggested by my brother Wallace, I do not recognize a conflict
between the farmers of the nation or the state of Iowa and the
railways. No fair man ought to recognize any such conflict, but
THAT THE STATE OF IOWA OR THAT HER ORGANIZED TRIBUNALS HAVE DONE
INJUSTICE TO THE RAILWAYS AND THROUGH THEM TO THE RAILWAY
EMPLOYEES, NO FAIR MINDED MAN CAN DISPUTE. These systems grew up;
they most naturally fall into the hands best adapted to organize
and handle them, and I would be the last man in the world to claim
that, as they grew up, as they were systemized and organized, that
wrong was not done here or wrong was not done there. I know too
well that there were grievous complaints justly made against the
management of railways not only in this state, but in many others.
But I beg the people of Iowa to remember, and the railway employees
to remember that, although railway managers and railway presidents
may sometimes be unjust, that affords no excuse whatever for the
sovereign power of the state of Iowa in being unjust. The wrongs of
capital produce, it is said, the anarchist--so it is with respect
to the wrongs perpetrated by the railway companies, the railway
organizations. They created a prejudice which, in its impetus, has
carried the attack made upon the railway property far beyond what
is justified by the sober second thought and judgment of those who
instituted it, and far beyond the limits which the fair-minded
people of Iowa now justify.

The constitution of the United States in express terms gives to the congress of the United States the power to regulate commerce between the states and with foreign nations. In pursuance of this power and duty imposed by the constitution, the congress of the United States in February, 1887, enacted a statute defining the duties and obligations of common carriers engaged in the transportation of freight and passengers between the states, and by express terms gave to the people a right of action in the federal courts against any railroad company violating its duty as defined by the act. This right of action was by civil suit for such damages as inured to the party by reason of a wrongful act of a common carrier.

The Chicago & Northwestern Railroad Company had a main line of road extending from Chicago, in the state of Illinois, located through the state of Iowa to Council Bluffs on the Missouri river. From the main line of this road at Carroll, in Carroll county, this company had constructed a number of branches running northwest from that point, known as the Sac City Branch and the Sioux City and Mapleton Branch. During the year 1890 we brought a number of suits against the Chicago & Northwestern Railroad Company for unjust discrimination and overcharge for shipments of corn and oats from various points on these branch roads to Chicago, and also a number of suits for shipments made at Carroll and points west on the main line of its road. The cases for shipments on the branch lines of its road were settled by the company, and we collected for our clients about $75,000. Suits for shipments on the main line of its road were contested by the railroad company. We tried two of these cases before the United States circuit court at Des Moines, Judge Shiras presiding, and obtained verdicts and judgments in the causes. The railroad company took a writ of error to the United States court of appeals, and these causes were submitted to that court upon both oral and printed arguments at the May term, 1892, of that court, sitting at St. Louis, Missouri. After the causes had been so submitted, Judge N. M. Hubbard who had made the argument in behalf of the railroad company, left St. Louis and went to Chicago for consultation with the general solicitor of that road, Mr. Goudy. After a few days, the court of appeals still being in session at St. Louis, Judge Hubbard appeared before the court, without any notice to me, and had the order submitting the causes set aside and dismissed his appeal or writ of error. After a few weeks had elapsed he sued out another writ of error in the same cases to the United States court of appeals, which, according to the arrangements for the sitting of that court, would be held at St. Paul in the state of Minnesota, and Justice Brewer of the supreme court of the United States would be in attendance as the presiding judge of that court.

It would be too long and too tedious a story to enter into particulars in regard to these suits, and the questions of fact and law involved in them. The unusual and unwarranted conduct of the attorneys for the Northwestern road in getting these cases before Justice Brewer for his decision and determination was by no means a compliment to the judge for whom they manifested such a strong partiality. Neither would I indulge in any surmise as to the grounds for their partiality. It is sufficient to say they were not disappointed in the result and that Judge Brewer reversed both of these judgments.

I afterward determined if possible to obtain the opinion of the supreme court of the United States upon the questions of law involved in these cases. I accordingly brought another suit for another client; to-wit, one E. M. Parsons, in a case involving an amount sufficient to entitle me to an appeal directly to the supreme court of the United States, having previously attempted to get the supreme court of the United States to review the decision of Justice Brewer in the former cases upon writs of certiorari, the same being denied by the supreme court. Judge Shiras, presiding in the circuit court at Des Moines, in view of the action of the circuit court of appeals in the other cases, sustained a demurrer pro forma to my amended petition filed in the Parsons case, and it was upon demurrer admitting the averments and allegations in this petition that the case was heard before the supreme court of the United States. Justice Brewer delivered the opinion in the Parsons case in which he held that the statements of the petition did not entitle the plaintiff to recovery. The opinion discloses the fact that Judge Brewer was somewhat offended at my attempt to have the supreme court pass upon the questions of law involved in the cases that he had disposed of as the presiding judge in the court or appeals. I had supposed that a judge of the supreme court of the United States would regard it rather as a compliment than otherwise to his sense of fairness to believe that he was capable of impartially and without prejudice, sitting with his brother judges, to review one of his own decisions, but the opinion shows plainly that I overestimated that distinguished jurist, and that he thought more of his infallibility than I did of his impartiality. This opinion of the court will be found in the case of Parsons vs. The Chicago & Northwestern Railroad Company in volume 167, _United States Reports_, 324. The court in this opinion asserts the very extraordinary position that the Interstate Commerce Law in providing a remedy whereby a shipper of grain might recover his actual damages for a refusal of the railroad company to comply with the law which was enacted for his protection, was in the nature of a penal statute, and that the petition of the plaintiff in such a case must expressly aver and negative the existence of any possible excuse for the wrong committed by the railroad company.

One great benefit to the public of these suits against the Chicago & Northwestern Railroad Company was to arouse public attention to the necessity of further legislation by congress in order to carry out the design of the original act for the protection of the public. Congress had already by amendment to the act provided for penalties against any parties violating its provisions, but the suits that I brought were simply for actual damages and injuries, and not for any penalty whatever under the law. The penal clause in the act as amended March 2, 1889, reads as follows: "That any common carrier subject to the provisions of this act, or, wherever such common carrier is a corporation, any director or other officer thereof, or any receiver, trustee, lessee, agent, or person, acting for or employed by such corporation, who, alone or with any other corporation, company, person, or party, shall willfully do or cause to be done, or shall willfully suffer or permit to be done, any act, matter, or thing in this act prohibited or declared to be unlawful, or who shall aid or abet therein, or shall willfully omit or fail to do any act, matter, or thing in this act required to be done, or shall cause or willfully suffer or permit any act, matter or thing so directed or required by this act to be done not to be so done, or shall aid or abet in such omission or failure, or shall be guilty of any infraction of this act, or shall aid or abet therein, shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof in any district court of the United States within the jurisdiction of which such offense was committed, be subject to a fine of not to exceed five thousand dollars for each offense: Provided, that if the offense for which any person shall be convicted as aforesaid shall be an unlawful discrimination in rates, fares, charges, for transportation of passengers or property, such person shall, in addition to the fine herein provided for, be liable to imprisonment in the penitentiary for a term of not exceeding two years, or both such fine and imprisonment, in the discretion of the court." The charge of Judge Shiras to the jury in the two cases tried before the United States circuit court, before referred to, will be found in full in volume 48 of the _Federal Reporter_, commencing on page 50, and the opinion of Justice Brewer, presiding in the circuit court of appeals, before referred to, in which he reverses these judgments, will be found in the 10 U.S. court of appeals on page 430.

It may be interesting to any law student and to anyone who desires to determine where right and justice should have prevailed, to compare the charge of Judge Shiras to the jury and the principles of law recognized by Judge Shiras, with the opinion of Justice Brewer. It is not within my purpose to re-argue any of my causes in this paper.

It is sufficient to say that the supreme court held the provisions of the inter-state commerce law, that gave to shippers a remedy for unjust discrimination by a civil suit for damages, to be a penal statute upon the ground that if the railroad company discriminated by charging one person ten dollars for a particular service and charged another person twenty dollars for a like service, then a suit to recover back the ten dollars thus unjustly demanded and received by the railroad company was in the nature of a statute to recover a penalty. Upon this mode of reasoning a suit against any person or corporation who unjustly and unlawfully gets possession of my money, for the purpose of recovering back what they illegally obtained, would come under the head of a suit to recover a penalty. The trouble with the supreme court of the United States has been that they have uniformly regarded this legislation by congress to protect the people against unjust charges and discriminations as intended to punish the railroad companies of the country, and the court has felt called upon to protect the railroads from legislation interfering with their absolute control over their freight and passenger traffic. The court has assumed the role of a conservative element in the government, intended for the protection of railroad property against the legislative power of the country.