from. Ferna.ndina to the local stations on his line, and on such as are sent or received in like manner by the Clyde Line he prorates in such manner that shipPQrB and passengers pay the railroad less than on similar business via the petitioners' line, to the manifest injury of petitioners i (3) that respondent exacts frpm petitioners on their business prepayment of freight and does not'make the same exactions from the Clyde Line, which places the petitioners at a disadvantage with the business community. The respondent admits the facts to be as charged, but justifies them on the ground that thefacilities offered by petitioners were not of that satisfactory character, either in permanency or quality of service, which met the emergencies of his railroad in iits active competition with a rival road and rival ocean steam-ships, alld that the acts complained of were necessary to be done in order to inaugurate and maintain the efficient service of the line complained against. The acts complained of terminated with the enforcement of the interstate commerce 8.ct, and the present hearing is on petition for an order on the recei"ver to pay over to petitioners the difference in thtl amounts collected by reon freights and passengers; etc., over the charges for like services on business via the Clyde Line, while such rates were in fbrce. The intervention was referred to the master, the Honorable Joseph H. Durkee, to take and state an account between the petitioner and the receiver, the court all questions of law and equity. This master filed his report, which is as follows: "The petitioner owns and operates a line of steam-ships between the ports of-Fernandina and New York, and the intermediate ports of Port Royal and Brunswick. whiclutre engaged in general freight and passenger business. These steamers made connection at Fernandina with the line of railroad now operated b,)' the respondent, and through bills of lading, through passenger tickets. and baggage checks were used interchangeably on these lines. In November, 1886, W. P. Clyde Co, established a line of steamers from New York to Fernandina and to Jacksonville, and with the respondent, as receiver of the Florida Railway &; Navigation Company, made contracts as his oon necting line. Thereafter the petitioner complains that the said receiver, through his agents, issued instruetions on February 12, 1887. that on and after the 18th of that month full local rates would be demanded upon all freights delivered by petitioner to receiver at Fernandina for points in the interior of Florida, or from such points to Fernandina; and that on the same day the rMeiver caused freight rate N0.4,551 to be issued, whereby petitiuner or shipper was compelled to pay 8 cents ,per cubic foot to respondent's line of railr9M upon cedar from Cedar Keys to New York, leaving but 2 cents per cubic foot for petitioner, the through rate being 10 cents per cubic foot, while prior to that time the division of rates gave to the petitioner 7 cents per cubic foot on log cedar and 5 cents per cubic foot on box cedar, and to the respondfmt 3 cents per cubic foot on eUt:h of the above classes. On the 15th day of February, 1887,the respondent caused freight rate No.4, 567 to be issued, to take effect on the 18th day of the same month,noted "Applicable only to Mallory Line," wbile retaining totals of through rates, gave to the respondent's line of railroad a greater proportion Qfsllch rate'S than had been hitherto charged on through business via Mallory Line. On February 24, 1887, the respondent caused instructions to be given to his agents not to issue any bills of lading inconllection with any steam-sbipsotber than the Clyde Line. and steamin connection with said J.;ailroad to Brunswick and Savannah,
and not to receive from and deliver to any steamer other than Clyde Line. to carry any freight consigned to petitioner without prepayment of all freight charges. By the operation and effect of these several orders regarding freight rates the petitioner avers that he has been improperly discriminated against to the benefit of the Clyde Line. The respondent states that these orders regarding freight charges did not affect the totals of through rates, but did affect the proportions received by the respective lines. The losses sustained by the Mallory Line by the payment of freight moneys and freight charges in excess of the freight and freight charges collected against the W. P. Clyde Steam-Ship Company for carriage of like freight appear to be as follows: [Then follows a statement of losses $1.805.32. The eleven items of overcharge in excess of amounts charged via Clyde Line amount to $1.805.32.] In regard to the claim of $105.66 it appears by Exhibit E to have been paid by the Florida Railway & Navigation Company. The claim for uncollected freight bills. amounting to $893.89. represents amounts paid by Mallory Line to the respondent for forwarding freight from Fernandina to destination. advanced charges, and have been collected wholly or in part by petitioner. and cannot be stated by the master. As to the loss sustained by the payment of freight charges on the part of petitioner. which the respondent has not refunded. there is nothing before the master to show amount uncollected. JOSEPH H. DURKEE. Master. "Respectfully submjtted. "Jacksonville. FlO1'ida, December 15. 1887." The law of Florida upon the subject of discrimination in freight rates will be found in the Internal Improvement Act of January 6. 1855.c, 1564. This makes Rny freight,rate"discriminating against the .interests of the people a criminal offense, punishable by a fine of five hundred dollars." It is to be observed that the railroad of which the respondellt is the receiver was constructed under the provisions of this act, and by means of large gratuities granted to it by the state. The constitution of Florida, (article 16, § 30,). adopted in 1886. authorized the legislature to prohibit discrimination. It is true that the legislature of the state has not carried the latter provision into its statutory enactments. but in the administration of a railroad by a United States court through its ceiver it would seem obligatory upon the court to have great deference and consideration. for the fundamental law of the state. It cannot be doubted from the report of themaster thatadiscrimi1llltion against the intervenors' line of steam-ships was continuous and injurious. at least to the amount of the master's findings. This was ognized, besides, on two occasions by a distinguished jurist presiding in this court, both Hon. THOMAS SEATTLE, the district judge, presiding, and Hon. DON A. PARDEE, the circuit judge, made orders to forbid the discriminations of the receiver against the intervenors' line. The question. indeed. seems to be settled by the decision. of; Hon. DON A. PARDEE, circuit judge, in the case of Mi8souri P,q,c.Ry· .Co. v. Texas 1'.. P,y. Co., 30 Fed. Rep. 2. The facts are simiJar ito. those found by the master. In that case the Texas &; Pacific :Railroad, Company, like the Florida Railway &; by the aids and" grants and donations of land from the state. Section 10 of the Texas act provided, like the Florida act, that any discrimina-
to charges for freight or passehgers,or iuany othEJr ter, shotifd'notBe made' by the Texas & Pacific Railroad Com pany . It is Florida act made disci'iminatioll , by it,s corpopte beneficiary, a criminal offense, punishable by a fine of $500; but it is a wellby statute, with a penaltyatsettled principle that a qontrac! tached, is void. Harrill v. Runnels, How. 79-83. Whether or not this penal statute would havetheprecise legal effect of the Texas enactment, certain it is that this courtcould not justifiably condone the continuous vic)lation of a penal statute on the part of its receiver. 'The decision of Judge l:'AR1;>EE is therefore in point, and, in ourjndgment, its clearness, force, of reasoning, and weight of authority mnstcontrol the decision here. "If respondents;" says Judge PARDEE, "are, as they seem to say,charging the petitioner's lines less per ton per mile than the charges made on respondents' line to freight shippers, under the same condition as for'(iistance and shipping points, thEm respondents are disagainst shippers thaLare forced to use their lines, which ought not to oe permitted under any circumstances, and particularly on a railroad to the cOllE>trnction of which the general government and the state of Texas contributed so large a portion of the public lands." We believe it is true that the general government likewise cOlltri buted to the construction of the railroad of-which the receiver of this court has charge. "For the relief of petitioilers," continuE\s Judge PARDEE, "an order will be entered directing the to give them the Same rates and the . same privileges for doing .business in all respeets as' are given to other connecting lines, suhstantiallyas prayed for in their petition." Extend, jug-legitimately, as we think.:.....the principle of this decision to the facts foundhy the master, the receiver should be directed to pay to the ihtetvenors the SUms found by. the Inflster to have been exacted from the intervenors as theresnlt ofthis 'unjustifiable discrimination. See, also, &ofteld v. Railroad 00., decided by the supreme court·of Ohio, reported in SN. E.Rep. 907; MiJiJ8enger V. Railroad 00.,18 Amer. 754, New Jerseyconrtof appeals; McDuffee v. Railroad Co., 13 Amer. Rep. 72, SUpreme court of New HampshirejRailroad Co. v. People, (Ill.) 8 Amer. Rep. 690; Hay8 v. Rail1;oad 'Co:, 12 Fed. 309; Judge BAXTER; Menacho v.' Ward, 27 Fed. Rep; 529, (rule of evidence;) McCoy v. Railroad'Co.,IS Fed. Rep. 3, and li'ote,p. 11; Railroad CU8es, 110 U. S. 661-682, 4,8up. Ct. Rep. 185. In the Iattpr case the court dedare:
i'''Ara:iIl'<nid QOlDl'any is prohihitE'd,both by thecomtnon law and by the COlistlhltion of Colurado, from. discriminating unl;ellsonably infa\or of or against any other company seeking to do business onits road." i '
:A'multitude of similar cases might be stated, but, the principle and policy of the' la w hovingbeen 'embodied into the federal statutes reIating'.fointerest of commerce, :ihe ,citation is perhaps superfl.uQus. ,POl' thereasOllBstated the master's report in this case will stund confirmed,and a drawn directing the receiver to pay to the inter\'enors, or the· sum found in the themllster.
I'. , ; I':;' (
CENTRAL TROST CO. V. FLORIDA RY.i& NAV. CO.
Rv. & . venor.)
(Circuit oourt, N. D. Florida.
'Where a railroad has been to secure bonds which have beenguarantied by the state, a decree that. a certain bra.nch of the road is not S)l bjeet to· the mortgage lien is of no validity,when made in a suit in which the bondholders are not represented, and of which tne state bas not'been notified, and which'fSbrought in a county in' which no part Of saidb",uoh road is situated. . Notice, at B. foreclosure sale;'of an adverse claim under 'an invalid deoreepf court does not affect the purohaser's title. .
.' · '.'
S. MORTGAGE FORECLosURE-NOTICE.
InEquity. . Petition Jor intervention. SPEER, J .. This is an, intervention .in a billwberethe complainants .are trustees under deeds of trust made to secure a large amount of bonds issued on the railroad of the defendant company, to-wit, the Florida Railway & Navi/1;ation Company. This company wasdncorpOl;ated under a general act of the legislature oBhe state of Florida. It issued six million of bonds, .with the deed of trust; above-mentioned. to the Central Trust Company of NewYoik. By the bill, in which the: intervention before the court is presented,_ the,e :Wjlj.sobtained:a.decree and a judicial sale of the 'entire line from Chattahoochee to Jacksonville. There were also. sold the branch.i'oadsto St..: Marks'and Monticello.: Upon the-last .......,a short road-this controversydepends,-,tbe road from to Cedar Keys and Waldo to Wildwood, and afterwards: built to Plant City, with extension, to Tavares; upon which. there was an issue of underlying bonds.. The Florida Central & Western ,Railroad wal3 alBoorganized under a general act. They likewise issued· bonds on 234 miles !of railroad .from Chattahoochee: toJacksonville, with .branches to St. Marks, to Tallahassee, and Monticello to Drifton, 202 miles. Eight hundred and eight thousand dollars of the ·bonds-$12.000 a mile.......,were issued in March, 1881, and a deed of trust to secure the payment of the same was made to the Guarantee Trust & Safe-Deposit Company. The Florida Central & Western Railrooo.·was formed by a combination of the lines of two companies, which were subject to foreclosure and sold, as appears in the case of; Schutte against the railroad company and others; the ·decree having,been rendered on :May 31, 1879, and the sale having' been made in 1881. The roads were as follows: (1) The Florida Qentral Railroad Company, 60 miles, from .Tacksonville to Lake City; Jacksonville, Pensacola & Mobile Railroad Company, LakeCityto,Cllllttahoochee, with the branches above mentioned. Therewll,s aISQan.ililsp.e of bonds to the state of Florida for four millions of dollars fOf the of the Florida Central Railroad. Company. These bonds exchange of three million dollars of bonds of the latter compaI).y,;;allP one million additional, which were issued under the acts of ):&69, 'and January', 1S7Q. (chapteliS 1716, 1731 oftbe.. Laws 9fFlorid,a.)