Platt v. Lecocq , 158 F. 723 ( 1907 )

SANBORN, Circuit Judge,

after stating the facts as above, delivered the opinion of the court.

The act to regulate commerce of the state of South Dakota, which is embodied in chapter 7 of its Revised Political Code, provides that the Board of Railroad Commissioners may investigate, and on notice to the carrier may hear and decide, on the complaint of a petitioner, the issue whether or not “anything has been done or omitted to be done in violation of this article, or of any law cognizable by said Commissioners” by such carrier, and that if they find such violation they may notify the carrier to desist therefrom. If the carrier does not comply with this notice or order, any person interested may apply to the proper circuit court of the state, “and said court shall proceed to hear and determine the matter speedily as a court of equity, and without the formal pleadings and proceedings applicable to ordinary suits in equity, but in such manner as to do justice in the premises.” Rev. Codes S. D., c. 7, §§ 431, 446, 447, 448, and 449, pp. 78, 83, 84, and 85. The bank and the Board of Commissioners of South Dakota proceeded in accordance with these statutes until the board had investigated and heard the matter here in controversy, upon the petition of the bank, and had made the order that the express company should receive the money and store it overnight for carriage on the morning trains. Thereupon the express company exhibited its bill in the court below to enjoin the board and the bank from enforcing this order, and defendants answered and filed a cross-bill, wherein they prayed the court below to enforce the order of the Commissioners, and it was upon these pleadings, after evidence and a final hearing upon the merits, that the court below entered its decree against the express company.

Rights created and remedies provided by the statutes of a state to be pursued in the state courts may be enforced and administered in the national courts, either at law or in equity, as the nature of the rights and remedies may require. “A party by going into a national court docs not lose any right or appropriate remedy of which he might have availed himself in the state courts of the same locality.” Davis v. Gray, 16 Wall. 203, 221, 21 L. Ed. 447; Darragh v. H. Wetter Mfg. Co., 23 C. C. A. 609, 617, 78 Fed. 7, 14; National Surety Co. v. State Bank, 56 C. C. A. 657, 667, 120 Fed. 593, 603, 61 L. R. A. 394; Barber Asphalt Co. v. Morris, 66 C. C. A. 55, 59, 132 Fed. 945, 949, 67 L. R. A. 761. The court below, therefore, in the hearing of this case and this court upon this appeal stand in the place of the circuit court of the state, and have plenary power under the statute of South Dakota to determine the original question of the reasonableness of the rules and practice of the express company, and “to do justice in the premises.” ¡The questions in this court arise on an appeal from a decree in equity where we must consider them de novo, invested with all the judicial and discretionary powers, and charged with all the duties of the chancellor in the court below. The questions at issue are, were the rules and practice of the express company in violation of any of the provisions of chapter 7 of the Revised Political Code of South Dakota, or of any law cognizable by the Railroad Commissioners of. that state, and if they were, was the order of the Commissioners unauthorized, or in violation of any of the provisions of the Constitution of the United States, or of the state, several of which are invoked by the counsel for the express company?

The only provisions of law that counsel for the bank contend were violated by the express company are section 437, c. 7, of the Revised Political Code, and section 1578 of the Revised Civil Code of South Dakota, which, so far as they are relevant here read in this way:

“Sec. 487. It shall be unlawful for any common carrier subject to the provisions of this article to make or give any preference or advantage to any particular person, company, firm, corporation or locality, or any particular description of traffic, in any respect whatever, or to subject any particular person, company, firm, corporation or locality, or any particular description of traffic to any prejudice or disadvantage in any respect whatsoever.” Rev. Codes, .p. 80.

“Sec. 1578. A common carrier must, if able to do so, accept and carry whatever is offered to him, at a reasonable time and place, of a kind that he undertakes or is accustomed to carry.” Rev. Codes, p. 786.

The legal effect of section 437 is to prohibit any common carrier from giving any unreasonable preference or advantage to, and from imposing any unreasonable prejudice or disadvantage upon, any particular person, company, firm, corporation, locality, or any particular description of traffic over any other person, company, firm, corporation, or locality, or any particular description of traffic similarly situated. Interstate Commerce Commission v. B. & O. Railroad, 145 U. S. 263, 278, 282-284, 12 Sup. Ct. 844, 36 L. Ed. 699; Interstate Commerce Commission v. B. & O. Railroad (C. C.) 43 Fed. 37, 47; Harp v. Choctaw, O. & G. R. Co., 61 C. C. A. 405, 412, 125 Fed. 445, 452; Oxlade v. Northeastern Ry., 15 Common Bench (N. S.) 680; U. S. v. Delaware, L. & W. R. Co. (C. C.) 40 Fed. 101, 103; Harp v. Choctaw, O. & G. R. Co. (C. C.) 118 Fed. 169, 176. The section is an anti-discrimination statute pure and simple. It is in pari materia with the first paragraph of section 3 of the Interstate Commerce Law of February 4, 1887, 24 Stat. 380, c. 104 [U. S. Comp. St. 1901, p. 3155], and must be interpreted in the same way. The burden was, therefore, upon the bank to prove that the rules and practice of the express company wrought a preference or advantage, or a prejudice or disadvantage to some party, locality, or description of traffic over another similarly situated. The record of this case has been searched in vain for any substantial evidence that any person, company, firm, corporation, locality, or description of traffic similarly situated to the bank and the city of Aberdeen, or to the business of carrying money by express, was given any preference or advantage by these rules and this practice, nor does the record contain any such evidence that either the bank, the city of Aberdeen, or the particular description of traffic here under consideration was subjected by these rules and this practice of the express company to any prejudice or disadvantage over any other party, locality, or description of traffic similarly situated. The bank and the city of Aberdeen were furnished the same opportunities and facilities for shipping their money by express on the morning trains that 41 other places and their inhabitants similarly situated in the state of South Dakota were provided with. The rules and practice of the express company were universal. They governed its business of receiving and carrying money out of 41 other places in South Dakota where there were departing morning trains, and where it will be necessary for the express company to store money overnight if it receives it during the business hours of the day preceding the departure of the trains upon which it must be carried.

On the other hand, there was evidence strongly tending to show that the order of the Commissioners would inevitably subject the transportation of money by express from the bank at Aberdeen to the towns specified in the bill to a disadvantage or prejudice to which the carriage of money by express from other parties and places similarly situated is not subject, and that it will impose upon this form of traffic another disadvantage, in that the express company will be compelled to carry it on at a loss, while the other forms of traffic similarly situated which it conducts may be carried at a profit. Since the rules and practice of the express company wrought no preference, prejudice, or disadvantage to any party or locality, or description of traffic over any party, locality, or description of traffic similarly situated, they did not violate section 437 of the Revised Political Code of South Dakota. Cincinnati Chamber of Commerce v. B. & O. S. W. R. Co., 10 Interst. Com. R. 378, 382, 383.

But the express company was a common carrier, and section 1578 required it to receive these packages of specie and currency at a reasonable time and place. Was it unreasonable for the company to refuse to receive on the day preceding the departure of the morning trains and to store overnight the specie and currency which the bank might tender it for transportation to its correspondents upon these trains? The Board of Railroad Commissioners and the court below have answered this query in the affirmative, and counsel of the bank cite in support of their conclusion section 449 of the Revised Political Code of South Dakota, which declares that in any hearing in the circuit court of the state the report of the Commissioners shall be prima facie evidence of the matter therein; Alsop v. Southern Express Company, 104 N. C. 278, 10 S. E. 297, 6 L. R. A. 271, in which the majority of the Supreme Court of North Carolina, Chief Justice Merrimon dissenting, held that an express company which at 2 in the afternoon, after the only daily train to the destination of the package had departed on its regular time at 12:55 in the afternoon, refused to receive a package of money containing $70 until the next morning, violated a statute of that state which required it to receive such packages “whenever tendered”; Atlantic Coast Line R. Co. v. North Carolina Corporation Commission, 206 U. S. 1, 27 Sup. Ct. 585, 595, 51 L. Ed. 933, wherein the Supreme Court was considering whether or not an order of the defendant in error that the railroad company should* operate an extra train so as to make a connection of trains at Selma was repugnant to the due process or equal protection clause of the fourteenth amendment, and that court held that it was not, and that the mere fact that the operation of the extra train would necessarily compel the company to incur a loss upon its operation when it did not appear that this loss would cause its income to be less than its operating expenses, fixed charges, and a reasonable return upon its capital, did not of itself give rise to the conclusion that the order requiring its operation was so unreasonable as to make it violative of the Constitution, but added, “Of course, the fact that the furnishing of a necessary facility ordered may occasion an incidental pecuniary loss is an important criteria to be taken into view in determining the reasonableness of the order, but it is not the only one”; St. L. & S. F. Ry. Co. v. Gill, 156 U. S. 649, 15 Sup. Ct. 484, 39 L. Ed. 567, and Minneapolis & St. L. R. R. Co. v. Minnesota, 186 U. S. 257, 267, 22 Sup. Ct. 900, 46 L. Ed. 1151, which are to the same effect — and they argue that because' ordinary business hours constitute a reasonable time to conduct ordinary business, because the bank will be subject to the risk of the loss of the money if it stores it overnight, and of danger of loss of more if it opens its vault before the morning trains start, because the other express companies operating on other lines of railroad receive specie and currency at Aberdeen for transportation on the day preceding the departure of the trains which carry it, and because the United States Express Company receives incoming packages of money during the evening and night, and delivers them the next morning, the rules and practice of the express company under consideration were unreasonable, and the order of the Commission and the decree of the court should be affirmed.

But the statutory presumption that the report and the order of the commission were correct is met by a counter presumption of law, of no inconsiderable strength, that the rules and practice of the express company, which are the product of the special knowledge, wisdom, and experience of its officers and agents, who have been trained in this special business, and presumptively know better than others under what regulations it ought to operate, are reasonable and just, both to the express company and to the public. The duty and the interest of the officers and agents of the express company alike incited them to make these rules and this practice fair and just, for if they were unreasonable to the company they necessarily inflicted injury upon it, and if they .were unjust to its customers they necessarily drove away the business of the express company, and proved deleterious to its interest.

A common carrier has the right to conduct its business in its own way in accordance with the rules of the common and statutory law. It is bound to receive and to transport goods of the character which it offers to carry at reasonable times and places, but at no other times or places. It has the right to make and enforce reasonable regulations which may lawfully fix the times, the places, the methods, and the forms in which it will receive the various commodities it undertakes to carry, and the rules which it thus adopts are presumptively right and reasonable. The burden is on him who assails them to prove that they are unfair and unjust, and it is only when it clearly appears by competent evidence that they are unreasonable that commissions or courts may lawfully interfere to' annul or to change them. Harp v. Choctaw, O. & G. R. Co., 61 C. C. A. 405, 410, 135 Fed. 445, 450; Lake Shore & Mich. Southern Ry. Co. v. Smith, 173 U. S. 684, 691, 19 Sup. Ct. 565, 43 L. Ed. 858; Harp v. Choctaw, O. & G. Ry. Co. (C. C.) 118 Fed. 169.

The business of a common carrier is not the storing or the safely keeping or the insuring of the safety of goods or money. Its business is the transportation of them. Nevertheless, it necessarily insures not only their carriage, but their safety from the time of its receipt of them for transportation until it delivers them at their destination. It may not lawfully refuse to receive them for carriage within a reasonable time before the transportation can commence, but, since the keeping and the insurance of the safety of the goods before and after the transportation are but the necessary incidents of the carriage, and do not constitute the chief undertaking or business of the carrier, no duty is imposed upon it to assume them an unreasonable length of time betore the carriage can begin. Not only this, but the reasonableness of the time before the transportation within which it is the duty of the carrier to receive money or goods for carriage must be measured primarily by the relation of this time to the business and the liabilities of the carrier, and not by its relation to the various trades and conveniences of its customers, although, of course, not without due consideration of the latter. A carrier does not undertake to operate, nor is he responsible for, the business of its customers, or for the conduct of that business, hence the carrier’s business should not be controlled primarily by the managers of the business of its customers. Lane v. Cotton, 1 Lord Raymond, 646, 652; 3 Comyns, 100, 105; 2 Parsons on Contracts (9th Ed.) *175; Story on Bailments (9th Ed.) § 508, p. 484; Hutchinson on Carriers, § 115.

The opinion of the majority of the Supreme Court of North Carolina in Alsop v. Southern Express Company, 104 N. C. 278, 10 S. E. 297, 6 L. R. A. 271, is not controlling in this case, and it is authoritative only so far as it is persuasive, and in the light of reason and principle it is not persuasive. When the only train on which an express company can carry a package of money to its destination leaves at 13:55 in the afternoon so that there are at least three business hours of that day before its departure, we are not persuaded that it is the duty of the carrier to receive the money at two in the afternoon of the preceding day and thereby to assume the liability of a warehouseman and an insurance company during the night. Its business is transporting, not storing and insuring, and no duty rests upon it to assume the responsibilities of the latter occupations farther than it is necessary to do so to conduct its business of transportation in a rational way, and in such a case the reasonable conduct of that business does not seem to us to require an express company to assume these responsibilities before the business hours of the day of the departure of the train. The dissenting opinion of the Chief Justice is more persuasive than the opinion of the majority of the court.

The opinions of the Supreme Court in Atlantic Coast Line R. R. Co. v. North Carolina Corporation Commission, 207 U. S. 1, 27 Sup. Ct. 585, 51 L. Ed. 933, St. L., etc., R. Co. v. Gill, 156 U. S. 649, 15 Sup. Ct. 484, 39 L. Ed. 567, and Minneapolis & St. L. R. R. Co. v. Minnesota, 186 U. S. 257, 267, 22 Sup. Ct. 900, 46 L. Ed. 1151, do not govern this case, because the Supreme Court was not considering and deciding in those cases, as this court must in the suit at bar, the original question whether or not the rules or practice of the quasi public corporations were reasonable, or what ought to be adjudged to do justice in the matter, but whether or not certain acts of Legislatures and Railroad Commissions were so unjust and confiscatory that they violated the Constitution of the United States. Questions of that nature cannot arise in this case because, as we have seen, this court is vested with plenary power in equity “to do justice in the premises” conferred by the Legislature of South Dakota upon the courts of that state of co-ordinate jurisdiction. The suit in hand is more analogous to Interstate Commerce Commission v. Delaware, L. & W. R. Co. (C. C.) 64 Fed. 723. The issue here is the original question of the reasonableness of the rules and practice of the express company, and upon that issue the relative cos.t of, and the revenue from, handling the packages of money, which the bank seeks to compel the express company to store overnight in accordance with the order of the Commissioners, are competent and important, if .not controlling, considerations. Atlantic Coast Line R. Co. v. North Carolina Corp. Com., 207 U. S. 1, 27 Sup. Ct. 595, 51 L. Ed. 933; Interstate Commerce Commission v. Delaware, L. & W. R. Co. (C. C.) 64 Fed. 724; Chicago, St. P., M. & O. Ry. Co. v. Becker (C. C.) 35 Fed. 883, 886.

It does not 'follow from the fact that ordinary business hours constitute a reasonable time to conduct ordinary business that such hours are a reasonable time to conduct all business, or that all business hours constitute a reasonable time for an express company to receive all packages of money for transportation. The reasonableness of the' time for their receipt is not to be determined by its relation to ordinary business hours alone, but by its relation to the business of the transportation of such packages, by the fact that this business is not and cannot be transacted in ordinary business hours, by the risks and liabilities entailed by receiving and storing such valuable and easily stolen packages, by the relative facilities and safeguards of the carrier and its customers for safely keeping money before the transportation commences, and by all the pertinent facts and circumstances of the case. The reasonableness of the time when an express company ought to receive and deliver packages of money is no criterion for the reasonableness of the time when a bank ought to conduct its ordinary business of receiving deposits, discounting commercial paper, and loaning money, nor is the reasonableness of banking hours any criterion for the reasonableness of the time of receiving or delivering packages of money and transacting the business of the express company. Marshall v. American Express Company, 7 Wis. 1, 73 Am. Dec. 381.

The fact that other express companies operating on other lines of railroad receive money at Aberdeen the day before they send it out is persuasive, but not conclusive, evidence that such a practice is reasonable. But the receipt by the United States Express Company of incoming packages in the evening and in the night, and their delivery in the morning, seems to be a necessity of the business, and is far from conclusive evidence that it would be reasonable to require the company to receive such packages the day before the morning trains depart and to store and insure them through the night.

Upon a review of the entire evidence, the case in hand is this: Other express companies at Aberdeen operating upon other railroads receive and keep overnight packages of specie and currency for transportation on the early morning trains of the following day, and the United States Express Company refuses to do so in accordance with rules of universal application which it has enforced for many years, and which it deems essential to the just and economical conduct of its business. It has the right to make and enforce lawful rules, and to conduct its business according to the common and statutory law without the interference of strangers to it. Its rules are presumptively fair and just, and courts and commissions should not annul or change them unless the fact that they and the practice under them are unreasonable clearly appears. The rates for the transportation of packages of currency insured by mail are from 20 per cent, to 25 per cent, less than the rates for their carriage by the express company. This express company operates between Minneapolis and Aberdeen, and its practice has been to receive and keep incoming packages of money, which arrived in the evening and night, and to deliver them the next day. The bank controlled the method by which the currency it received from Minneapolis should be shipped to it, and it caused none of it to be sent by the express company, but many hundred thousand dollars of it by mail during the year preceding the commencement of this suit. If all the outgoing packages of specie and currency from Aberdeen to the towns specified, in the report and order of the Commissioners should be sent by this express company its gross revenue from their carriage would not exceed $600, and its net income from it would be less than $40 under its present rules and practice. If it is required to receive moneys tendered for transportation to these towns on the day before the morning trains start it will be obliged to incur such additional expense and risk that this business will entail a net loss, this description of traffic will be preferred, and this bank and the city of Aberdeen will be preferred to other descriptions of traffic, towns, and their inhabitants that are probably similarly situated. The safe-keeping overnight and delivery in the morning before the trains start of the specie and currency which the bank might desire to ship by this express company upon these morning trains will entail no more expense upon the bank than their delivery the day before, while the receipt of them on the latter day and their storage overnight will cause the express company additional expense, and will make its business of handling'this money a losing one. The risk of keeping these packages of money overnight is less to the bank than to the express company; because it has a burglar proof vault, and trusty messengers for the purpose of keeping large amounts of money safely, and protecting them against robbers and fire in the city of Aberdeen, while the express company has no such safeguards and facilities in that city, and, finally,, the business of the bank is to receive and keep safely for its depositors in the city of Aberdeen, and to send to them and to others who buy or borrow it, the specie or currency deposited with it, and it has a suitable vault and trusty officers and servants to carry on this business and to protect this money. The business of the express company, on the other hand, is to transport money, to keep it safely, and to insure it against loss during its transportation, and for this purpose it has specially constructed stationary safes in cars and trusty messengers to travel with it, but it is no part of its business to store or to keep valuable packages of specie or currency for any length of time greater than is reasonably necessary to conduct its transportation. The trains under consideration do not leave Aberdeen at very early hours in the morning, and it is neither impossible, nor impracticable for the bank to deliver its packages of money to. the express company in the morning of the day before the trains start. To require the express company to receive these packages on the preceding day, and to store them and to insure their safe-keeping overnight is to transfer to the express company a part of the risk, responsibility, and business of the bank, a part of the safe-keeping of specie and currency in the city of Aberdeen, a part of its business which it has adequate safeguards to conduct, which it undertakes to carry on, and for which it presumably receives reasonable compensation, while the express company, which has no such facilities, can secure no such compensation, and does not offer or undertake to do any such business. In view of these facts, rules, and considerations, the evidence in this case falls far short of convincing proof that the rules and practice of the express company upon this subject which have been assailed here were unreasonable or unjust. Indeed, in our opinion, it would be far more unreasonable to require the express company to receive these packages of specie and currency for transportation on the morning trains the day before they start, and thereby to compel it to store and insure them overnight, than it would be to refuse so to do, and thus to leave the bank to send them insured by- mail at a lower rate, or to deliver them to the express company in the morning before the trains depart.

There is another consideration which leads to the same conclusion. Courts and commissions ought not to interfere with the established rules and practice of transportation companies on account of incidental inconveniences and trivial troubles to which the conduct of all business is necessarily subject. The business of railroad companies and express companies cannot be conducted for the purpose of carrying on the business of their customers exclusively, nor without some discomforts and inconveniences to all parties engaged in any of these occupations. Unless a clear injustice is perpetrated or a substantial injury is inflicted, or there is an imminent threat of them, the annoyances and inconveniences in the transaction of the business of the transportation companies should be left for correction to the pecuniary interests and business instincts of the respective parties concerned, and their laudable anxiety to secure, retain, and increase their business. No injustice has been perpetrated in this case. No serious damage has been, or is likely to be, inflicted upon the bank by the refusal of the express company to receive money until the morning of the day when the trains depart, in view of the pregnant fact that it has elected to cause its incoming currency to be shipped to it by mail for more than a year, and to the amounts of hundreds of thousands of dollars, when it could have caused it to have been sent by this express company. No other shipper is complaining, and the practice of the express company creates no preference or prejudice to party, locality, or description of traffic, while the practice which the bank seeks to enforce will inevitably compel other parties and other descriptions of traffic to bear a part of the burden 'of storing and keeping overnight the moneys it seeks to send out. There is no equity in this case of the bank, and it is entitled to no relief.

The decree below must accordingly be reversed, and the case must be remanded to the Circuit Court, with instructions to render a decree that the cross-bill be dismissed upon the merits, and that the bank and the Commissioners be enjoined from enforcing the order of the latter, and it is so ordered.

VAN DEVANTER, Circuit Judge, concurs in the result.