from the plaintiffs a copy of a portrait and ,'8rphotvgraph "of Mr. Oorliss, from which they have made tWo plateS, one of which they propose to insert, in the, publication. J?ut it appears from the evidence that, these pictures were ,obtained on certain conditions, which the defendants have not complied with. This matter directly concerns the exclusive right of property which the plaintiffs have in the painting and photograph, and it would be a violation of oonfide'1lce, or a breach of contract between the parties, to permit the defendants, under these circumstances, to use either of the pll'!tes. Pollard v. Photographic 00., 40 Ch..Div. 345; Prince Albert v. Strange, 1 Macn. & G. 25. The injunction is denied as to the publication, and granted as to the use of the plates.
OLYDE et at v.RIOHMOND & D. R. 00. et aL
HUIDEKOPER, et at v. DUNOAN et al. (Oircuit Court,
South carolina. September 15, 1893.)
FEDERAL OOURTS-JURISDICTION-AcTION AGAINST RAILROAD COMMISSIONERS.
A proceeding by receivers of a railroad against state commissioners for relief against alleged unjust and unreasonable rates for freight transportation established by such commissi()ners, is not a proceedingagainst the state, within Oonst. U. S. Amend. 11, inhibiting the exercise of jurisdiction by federal courts in sults brought against one of the United States by of another state. As such a proceeding presents no question of penalties, the fact that the act authorizing the commissioners to fix rates requires actions to recover penalties for disregarding them to be brought in the name of the state, and for Its bene:fit, does not make the state in any sense a party or privy to the record.
SAME-WHEN STATE A PARTY.
SAME-SOUTH CAROLINA DISPENSARY ACT.
That the state, under the operation of the "dispensary act," approved December 24,1892, has a material interest in such a proceeding, as a large, and perhaps the only, shipper of liquors, does not make it a party to the proceedings, so as to preclude the federal court from exercising jurisdiction.
RAILROAD COMMISSIONERS-EsTABLISHMENT OF RATES-DUE PROCESS OF LAW.
Railroad companies have the right to require that state railroad commissions fix just and reasonable freight transportation rates, and the changing or lowering of such rates so as to injure the railroad company in its property rights is a deprivation of llroperty without due process of law, within the inhibition of the state and federal constitutions, and justifies the interposition of the courts to inquire into the reasonableness or justness of the rates, and a court, to that end, may appoint a special master to take testimony in relation thereto, and to report thereon.
In Equity. Petition by Frederick W. Huidekoper and Reuben Foster, receivers of the Richmond & Danville Railroad Oompany, appointed in the suit of William P. Olyde and others .against said company and others,forrelief against the action of D'Arcy P. Duncan, Henry R. Thomas, and Jefferson A. Sligh, railroad commissioners for the state of South Oarolina, in changing freight
CLYDE V. RICHMOND & D. R. CO.
transportation rates, and establishing new rates. Reference to a special master ordered to ascertain as to whether the established rate is just and reasonable. H. L. Bond, Jr., and J. S. Cothran, for petitioners. D. A. Townsend, Atty. Gen., for respondents. SIMONTON, District Judge. This is a petition filed in a cause pending in this court. In effect it is an ancillary bill filed by the receivers, praying relief against the action of the board of railroad commissioners. The act complained of is the change of rates for transportation of liquors in glass, and the establishment of a new rate, which is charged to be neither just nor reasonable, nor a proper remuneration for the service rendered. The defense set up is in the nature of a demurrer or plea sustained. by an answer. The demurrer or plea sets up several grounds of objection to the jurisdiction of the court The first alleges want of jurisdiction because of the character of the parties; the others because of the subject-matter. It is maintained that this proceeding is ill reality against the state of South Carolina,and cannot be maintained under the eleventh amendment. Two reasons are assigned. The one is that "under the operation of the dispensary law the state has a real material value to itself in this question;" .the other is that the railroad law, which authorizes the commission to fix rates, provides that the action for the penalties for disregarding them shall be in the name of the state, and for her benefit This last objection may be disposed of at once. Whatever course may be followed on an application for an injunction against a suit instituted in the name of the state for penalties, its discussion now would be premature. This case presents no question of penalties. The state is in no sense a party to the record, or privy to the record. The· constitutionality of the statute under which respondents act is not in issue. The learned counsel for the state admit that the declaration of this statute, that the rates fixed by the commission shall be sufficient evidence that they are just and reasonable, does not preclude the courts from examining into the fact whether they are just and reasonable. 'l'he sole issue in this case is this: Under the statute the respondents are authorized and directed to make just and reasonable rates for the transportation of freight. The petition alleges that cer· tain rates made by them are neither just nor reasonable. In this issue the sovereignty of the state is in no way involved. See Railway Co. v. Dey, 35 Fed. Rep. 873. The other reason-that under the operation of the dispensary act the state has a material interest in this question, and is there· fore a party to this cause-is equally untenable. This assumes that the state is engaged in the business of distributing and selling liquors, and that it is a large, perhaps the only, shipper. With· out discussing the question whether in engaging in a business the state does not as to that business strip herself of her sovereign ('haracter, the fact that she is a shipper of liquors does not make
herapartrto a,'s'1Jit '(If rates fixed,by tl\is so, ,then in every proceeding to obtain a review of the action of railroad cOIllillissions in fixing rates every shipper has right to be a party. The, petition had alleged that the sole for the reduction of the rate of liquors was the passage of the dispensary law, and the desire to increase the profits made, by the state in the sale of liquor thereunder. The second Pl.U'4gritph of the secl;md subdivision of the answer emthis charge. , , It denies that there was any consideration of this cllaracrter moVing to the change, ()r any other considemtion than 'that the rates last fixed by them were reasonable and just. This declaration, made by gentiemen of character and position, settles this question. The other objections are to the jurisdiction of this court over the ,subject-matter. These objections are met by the language of Mr. Justice 'Miller in his concurring opinion in ''Chicago, M. & St. P. By. CO. ",.'Minnesota, S. 418, 10 Sup. Ct. Rep. 462, 702:
"The proper, If the only, mode of judicial rellef against the tariff of rates established by, tb,e legislature or by. its commission is by bill chancery, asserting its unreasonable character, and its conflict with the constl· tutIon of the United States,"
In the same opinion he says:
"There Is an ultimate remedy by parties aggrieved [by the acts of a railin: the courts for relief, and especially in the courts' of the road United States, where the taritX of rates.established either by the legislawre or by the commisSion Is such as to a party of his property without due Ufocess of laW,"
This brings us to the merits of the case.' In 'determining and affixing, rates for transportation of freight by railroad the several articles subjects of transfer are arranged under a classification based apparently upon their relative value, destructibility, combustibility, bulk, ellse or difficulty in handling, aJ}.d such like considerations. Under this classification the classes are desigby numera;}s, nn.mbers; and letters, thus: lIII, III, II, I, Ii, 1, 2, 3, 4, 0, 6, A,B,C,D, E, F, G, H, J, K, L, M, N, 0, P, T. This mode: of classification is· of almost universal use in this country and Canada, and it largely promotes interstate' cOIllillerce. The several articles are arranged in these classes, and rates affixed to them, the highest rate being for the class IIII, and so on, growing less. Anterior· to' 26th May, 1893, the railroad commission, predecessors of the present board, had either fixed or approved on the class of goods now in qllestion the following rates:
Liquors, whisky, domestic bl:l1Ddles,and domestic Wines, In wood, at actual weight" 0, R. L., .value limited to 75 cents per gallon, so indorsed onB/L, and quantity .. Liquors, whisky In wood, No 0.' at actual weight . · Liquors, whIsk:r in boxes orbllskets Liquors, In glass, boxes, or baB1i:.ets, N. O. S.·······.···· Liquors, in wood, N. O.S., . actual ·············· Class. Class if Released.
CLYDE V. RJCIDWND & D. R. CO.
On 26th ]\fay, 1893, the present board made a change whereby liquors, whisky, domestic brandies, and domestic wines in glass, packed, if at carrier's risk, were placed in class 2; 'if released, in class H. And on 23d June, 1893, the board adopted the following additional classification: "Liquocs, whisky, domestic brandies, domestic wines, in glass, securely packed 'in barrels, value limited to 75· cents per gallon, and so indorsed on BIL, fl." It is said that under this last classification the reduction of rate amounts to 26i per cent. It is charged to be not just nor reasonable. Any private person in the conduct of his business can place any price he pleases upon his property or his service, and those who choose to deal with him have no right to complain. But persons or corporations exercising a franchise-a right given them by the sovereign authority-cannot charge any price for service rendered under the franchise which is not just and reasonable. To secure the enforcement of this rule so far as railroads are concerned, railroad commissioners are appointed, whose duty it is to see that rates for the transportation of freight, and sometimes of passengers, are just and reasonable. The establishment of such commission is clearly within the constitutional rights of the states. Munn v. Illinois, 94 U. S. 113; Water Works v. Schottler, 110 U. S. 347, 4 Sup. Ct. Rep. 48; Railroad Commission Cases, 116U. S. 307, 6 Sup. Ct. Rep. 334, 348, 349, 388, 391, 1191, But the power of these commissioners,and, ipdeed, of that of the states appointing them, is not unlimited. Corporations are, as it is said, the creatures of statute, and owe the breath of their life to the state creating them. But corporations a,e only an aggregation of persons acting as a unit. So long as they exist they . come under the protection of the constitutions of their state and of the United States. Not only is it the right of the public that the rates be just and reasonable, and the duty of the commissioners to see that they axe just and reasonable; there is a correlative right in the railroads that the rates imposed on them be just and :reasonable, and if they be just and reasonable it is their right that they remain unchanged. If for the benefit of any part of the people, of the whole people, rates of transportation by railroad are changed and lowered so as to injure the vested rights of the carrier in his property, the provision embodied in every state constitution forbidding the use of private property for public purposes without just compensation, and the provision of the federal constitution forbidding the states to deprive a person of his property without due process of law, present an impassable barrier to such action. Mr. Justice Miller, in Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. 8. 418, 10 Sup. Ct. Rep. 462, 702; Budd v. New York, 143 U. S. 517, 12 Sup. Ct. Rep. 468; Railroad Co. v. Wellman, 143 IT. S. 339, 12 Sup. Ct. Rep. 400, quoting Stone v. Trust Co., 116 U. S. 307, 6 Sup. Ct. Rep. 334, 388, 1191. The enforcement of these constitutional rights under our system of government belongs to the courts. They can always institute tp.e inquiry whether the rates imposed by a commission are just llnd reasonable, and on the determination of this question
depends. their right to interfere. The measure of what is, in this sense, just and reasonable, is not the value of the to the person to whom it is rendered. The true measure is 'the proper return to the individual or corporation rendering the service. The value of a service rendered to a consignee by a carrier depends upon fluctuating circumstances, the condition of the market for goods and for money, the present demand; for the goods by the public, his own present supply. ' The value of tp.e service to the' consignee must constantly vary, and can nerver be easily reached, and as between several consignees 'at the same point of delivery must also greatly vary." No commissiOli could fix a rate on this basis. On the other hand, the remuneration to the carrier-the remuneration which he should reasonably expect-depends On certain fixed and almost the reasonable return for the investment, due regard being had tollie public interest . The question in the case under discussion is, is this rate recently imposed by the respondents, be it a change of rate or a new classification, just and reasonable? Mr. Justice Brewer,' While on the circuit bench, deflnes what just and reasonable rates, or rather states what rates are not just and reasonable. "A schedule Of rates, when the rates prescribed do not pay the costs' service, cannot be enforced." Railroad Co. v. Becker, 35, Fed. Rep. 885. In another case-Railway CO. v. Dey, 35 Fed. Rep. enters into an elaborate illustration of these terms. "When the rates pi'escribed will not pay :somecompensation>to the owners, then it is the duty of the courts to interfere, and protect the companies from such rates." He defibes "compensation" to mean enough to pay costs of service; fixed charges of interest, ahd a dividend, however small. One of the difficulties in this case is that tile complaint is of the reduction of one kind of shipment onlY,-liquors, whi!Sky, domestic brandies, domestic 'wines, in glass, securely packed in barrels, limited to 75 cents per gallon, and so indorsed dIi respondents deny that this'is any reduction at all. These liquors, whiskies, etc., have neV'er before this been transported in that way, packed in barrels. It is a new classification. It was faintly suggested at the hearing that, as all these shipments are distinctly "released," the liability of the carrier is reduced to a minimum, and, taking intoconsideratiQn the ease of handling this character of goods, should be in H. But "released" only means that in case of damage the liqnorcan only be valued at 75 cents per gallon. This explodes'the idea of the absence of responsibility, which is magnified by the fact that the fragile packages are concealed in a 'barrel, and if broken the carrier cannot possibly show when the breakage occurred. 'Another and a very strong ground is that by the operation of the dispensary law the sWpments are largely increased, and so counterbalance the low rate. This act requires all liquors to be carried to Columbia, and from thence to be distributed to the several dispensaries. This distribution. is for the roost part in small packages,
CENTRAL TRUST CO. V. WABASH, ST. L. &I P. RY. CO.
pacKed in barrels, and under tM short-haul rates. The emptied barrels, somethnes with the emptied packages, are retuJ.'ned to Columbia, and this process is repeated several times duYrng the year. But the question always remains, does this rate pay the cost of transportation? Is it remunerative? If it be not, then the increase of business increases the loss. On the other hand, reduction of rates on one article does not necessarily reduce income. Railroad Co. v. Wellman, 143 U. S. 339, 12 Sup. Ct. Rep. 400. Nor is there anything stated and admitted in the record from which the court could say that this ohange or reduction or new classification, call it as we may, reduces the income of the petitioners below the remunerative point. In this preliminary proceeding this may have been impossible.
It is ordered, that for this case R. W. Shand, Esq., be appointed special master. That he take testimony as to whether the charge complained of in this record is just and reasonable in the sense indicated in this opinion; that is to say, is it a just and reasonable reward to the petitioners for the service rendered? Does the rate proposed affect the income of the petitioners? In what way, and to what extent?-with leave to any special matter.
OENTRAL TRUST CO. OF NEW YORK v. WABASH, ST. L. & P. RY. 00., (HANES et al., Interveners.) (Circuit Court, D. Indiana. September 15, 1893.) No. 7,935.
WATER COURSES-OBSTRUCTION BY RAILROAD EMBANK)fENT"':"VIS MAJOR.
In 1855 or 1856 a railway company constructed an embankment, with a substantial stone" culvert, over a stream dry at times in summer, but at times of heavy rains discharging a large quantity of water. In 1876 ihe railway was sold under foreclosure to another company, which in 1877, consolidating, formed the defendant company. Subsequently one of the intervening petitioners erected a mill above, and the other placed a lumber yard below, the embankment. On several occasions the capacity of the culvert was overtaxed for a short time, but in May, 1886, in consequence of a heavy rain storm following a cyclone, the water backed up and flooded the mill, and in July, 1888, as the result of unusual, extraordinary, and unprecedented rainfalls, the embankment broke, the mill was again flooded, and the lumber and lumber yard destroyed. Hela that, as the causes of the injuries complained of were such as could not be anticipated or guarded against by the exercise of ordinary and reasonable foresight, care, and skill, the defendant was not liable. The conduct of the petitioners in constructing the mill, and placing the lumber yard where, if the culvert and embankment were insufficient, injury would certainly result, should be considered in determining the reo sIlonsibility of defendant. The mere continuance of the culvert and embankment was insufficient to charge the defendant with liability, in the absence of knowledge or notice that they a nuisance. .