Reagan v. Farmers' Loan & Trust Co.

Headnotes

1. Administrative Law — State Railroad Commissions A state statute establishing a railroad commission with power to classify and regulate rates is a valid exercise of state sovereignty, and the commission it creates is an administrative board carrying into effect the will of the State as expressed by its legislation; no valid objection can be made to the general features of such an act entrusting the commission with the duty of prescribing rates and regulations for the management of the railroads of the State. Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362 (1894); Railroad Commission Cases, 116 U.S. 307
2. Civil Procedure — Federal Jurisdiction over Suits Against State Officers A citizen of another State aggrieved by rates prescribed by a state railroad commission may seek a remedy in equity against the commissioners in the Circuit Court of the United States, and the Circuit Court has jurisdiction over such a suit under the statutes regulating its general jurisdiction; such a suit is not a suit against the State, because the State has no pecuniary interest in the relief sought and no pecuniary obligation of the State will be enforced and none of its property affected by the decree. Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362 (1894)
3. Remedies — Power to Review Commission-Fixed Rates A court of equity has power to decree that rates established by a commission are unreasonable and unjust and to restrain their enforcement, but it has no power to establish rates itself or to restrain the commission from again establishing rates. Reagan v. Farmers' Loan & Trust Co., 154 U.S. 362 (1894)
4. Administrative Law — Powers and Duties of Railroad Commission A railroad commission is vested with power and duty to classify and subdivide freight into classes, to fix for each class a reasonable rate for each railroad, to establish joint rates for connecting lines and apportion charges among them, to alter or abolish any classification or rate when necessary, and to prescribe reasonable rates for the transportation of passengers and for all other services performed by railroads subject to the act. Texas Act of April 3, 1891, §§ 3, (d)–(k)
5. Administrative Law — Procedural Requirements Before establishing rates, a commission must give the affected railroad company notice of the time and place of the rate-fixing proceeding, and the company is entitled to be heard, with process to enforce the attendance of its witnesses served as in civil cases. Texas Act of April 3, 1891, § 4
6. Administrative Law — Conclusiveness of Commission Rates Rates, charges, and classifications prescribed by a railroad commission are conclusively deemed reasonable and just in actions between private parties and railway companies, and may not be controverted until finally found otherwise in a direct action brought for that purpose, but in every action authorized to be brought by the attorney general the defense that the rates are unreasonable may be interposed. Texas Act of April 3, 1891, § 5
7. Administrative Law — Judicial Review A railroad company or other interested party dissatisfied with any decision, rate, classification, rule, or order of the commission may file a petition against the commission as defendant in a court of competent jurisdiction in the county designated by statute, which action has precedence over other causes and in which the burden rests upon the plaintiff to show by clear and satisfactory evidence that the challenged rates or regulations are unreasonable and unjust. Texas Act of April 3, 1891, §§ 6, 7
8. Administrative Law — Penalties for Violating Commission Rates A railroad company that charges, collects, or receives a greater rate than that fixed by the commission is guilty of extortion and forfeits to the State a sum not less than $100 nor more than $5,000 for each offense; a separate penalty of not less than $500 nor more than $5,000 is imposed for unjust discrimination and upon officers and agents for certain offenses; and a railroad violating the act is liable to persons injured for the damages sustained. Texas Act of April 3, 1891, §§ 14–17
9. Constitutional Law — Eleventh Amendment A suit by a citizen of one state against the attorney general of another state in his official capacity is prohibited by the Eleventh Amendment if the law under which he purports to act is valid and constitutional, because the State is in effect the real party in interest; a State's immunity from suit is absolute and unqualified and cannot be abridged by the character of the suit or the capacity in which the officer is sued. In re Ayers, 123 U.S. 443; Pennoyer v. McConnaughy, 140 U.S. 1, 10; In re Tyler, 149 U.S. 164, 190, 191
10. Constitutional Law — Eleventh Amendment An injunction sought against a state attorney general solely for the purpose of arresting proceedings in the state courts in the name of the State is expressly forbidden by statute, and it is immaterial that the law under which he proposes to act may be invalid. Rev. Stat. § 720; Rensselaer Saratoga Railroad v. Bennington Rutland Railroad, 18 F. 617
11. Constitutional Law — Eleventh Amendment A State, like any other government, can waive its exemption from suit, and the limitations of the Eleventh Amendment create a personal privilege that the State may waive at any time.
12. Contracts Law — Corporate Charters as Contracts A corporation's charter is a contract protected by the clause of the National Constitution prohibiting a State from passing any law impairing the obligation of contracts, and where the charter expressly grants to the corporation power to charge and collect a definite sum per mile for the transportation of persons or property, that express stipulation forms part of the obligation of the State, which it cannot repudiate. Dartmouth College case, 4 Wheat. 518
13. Constitutional Law — Judicial Review A State has the power to regulate rates, either immediately by legislative act or through a commission, but the exercise of that power is subject to the prohibitions of the Fourteenth Amendment; rates fixed by a State or commission are presumptively valid, but are void if the affected carrier establishes in a proper judicial proceeding that they are unreasonable, and the question of reasonableness is in all cases ultimately a judicial question requiring due process of law for its determination. Munn v. Illinois, 94 U.S. 113; Chicago, Milwaukee & St. Paul Railway v. Minnesota, 134 U.S. 418
14. Constitutional Law — Due Process It is not competent for a State to enact that rates fixed by a commission, whether ex parte or after notice and investigation, are conclusive or final, because such an act would be unconstitutional, denying the company due process of law, depriving it of the lawful use of its property, and denying equal protection of the laws. Chicago, Milwaukee & St. Paul Railway v. Minnesota, 134 U.S. 418, 458
15. Constitutional Law — Equal Protection The equal protection of the laws forbids legislation by which the property of one individual is, without compensation, wrested from him for the benefit of another or of the public, and a State may not, consistent with the equal protection of the laws and the spirit of common justice, compel one class to suffer loss by law so that others may make gain. U.S. Const. amend. XIV
16. Remedies — Limitations on Judicial Power over Rates The formation of a tariff of charges for transportation by a common carrier is generally a legislative or administrative, rather than a judicial, function; courts have jurisdiction to inquire whether rates are unjust and unreasonable and to restrain their operation, but they are not authorized to revise or change a body of rates, to frame a schedule of rates, or to engage in any mere administrative work.
17. Administrative Law — Severability of Invalid Statutory Provisions One section or part of an act may be invalid without affecting the validity of the remaining portion of the statute, and an independent provision may be dropped out if that which is left is fully operative as a law, unless it is evident from a consideration of all the sections that the legislature would not have enacted that which is within independently of that beyond its power; a provision prescribing penalties may be dropped without affecting the validity of the remaining portions.
18. Administrative Law — Prima Facie Effect of Commission Rates If the rates established by a commission are not conclusive, they are at least prima facie evidence of what is reasonable and just.
19. Evidence — Judicial Notice Courts cannot assume, merely from judicial notice of circumstances such as the existence of parallel railroads or a period of financial depression, facts that would diminish a railroad's apparent need for the rates at issue; the significance of facts showing a railroad's expenditures cannot be destroyed by any mere manner of bookkeeping or classification of expenditures.
20. Constitutional Law — Due Process Justice demands that everyone should receive some compensation for the use of his money or property if possible without prejudice to the rights of others, and it is not just to deprive one party of all compensation in order that another may make some profit; circumstances may nevertheless justify a tariff that produces no profit, including extravagance, waste in management, enormous salaries, unjust discrimination, construction at a time when costs were at their highest, or unwisely building a road where there is no sufficient business to sustain it.