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February 28, 1921



White, McKenna, Holmes, Day, Van Devanter, Pitney, McReynolds, Brandeis, Clarke

Author: Mckenna

[ 255 U.S. Page 114]

 MR. JUSTICE McKENNA delivered the opinion of the court.

Defendants in error, alleging themselves to be engaged either as wholesale or as retail grocers in Indianapolis, Indiana, brought this suit against plaintiff in error, herein

[ 255 U.S. Page 115]

     called the Railroad Company, to restrain it from charging or receiving any other compensation than that mentioned and described in an order entered by the Railroad Commission of the State on December 14, 1906, and which, it is alleged, became effective February 1, 1907, and to require the Railroad Company to receive and transport freight at the rates prescribed in the order of the Commission.

The first pleading of the Railroad Company was a demurrer to the complaint. We omit it, as it was overruled and as the case depends upon the answer of the Railroad Company and a demurrer to it. It was in three paragraphs. In the first it denied "each and every material allegation" of the complaint. In the second it alleged that the order of the Commission would not yield "revenue sufficient to reimburse defendant for its actual cost and outlay in handling and carrying the classes of property specified in said order, . . . and provide a fair return to defendant on the value of defendant's property used" in the service; and that, therefore, if the order of the Commission should be enforced, the Railroad Company would be deprived of its property without due process of law in violation of the Fourteenth Amendment. In the third paragraph it alleged that within 60 days after the act of the State took effect it filed with the Commission a schedule of its rates and charges between all of the points in the State, that it had kept on file a like schedule in every station and depot and in its offices, that its charges had been in accordance with such schedules and were legal rates for the service, and that complainants (defendants in error) had not been and were not damaged thereby. Dismissal of the suit was prayed.

There was a demurrer to the second paragraph for insufficiency to constitute a defense, and, following the local practice, there was a memorandum specifying the grounds, as follows: (1) There was no statement that the

[ 255 U.S. Page 116]

     order of the Commission was unremunerative or confiscatory at the time it was made, or at the time suit was brought, but only at the time the answer was filed. Nor did it aver that at either of those times the rates would not pay the cost of the service to which they were applicable and leave the company a fair return upon the property used in the service. (2) Nor aver that, when taken in connection with the other rates lawfully prescribed by the Commission and its successor, the Public Service Commission, the rates did not afford an adequate and remunerative compensation for the handling and transportation of all classes of freight or passengers covered by such orders. (3) The averment that the rates were not compensatory "states no issue of fact, but the mere conclusion of the pleader as to a material fact." (4) The answer did not profess to set out the schedules of rates filed with the Commission or posted in the offices of the Railroad Company. And further, that, if the schedules of rates varied from those of the Commission, they were thus far unlawful and invalid under the laws of the State and constituted no defense to the action; "the mere continuance in such wrongful conduct" did "not constitute a defense." And further, if the rates charged were the same as those prescribed by the Commission, the fact could be proved under the general denial.

The demurrer was sustained by the court and the Railroad Company ruled to answer by September 5, 1916. The company elected to stand by its answer and declined to plead further. The case, therefore, rested on the complaint and the denial of its allegations by the Railroad Company, and upon the issue thus made there was a trial upon which there were admitted in evidence over the objection of the Railroad Company, a transcript of the record of the suit brought by the Railroad Company against Union B. Hunt, et al., constituting the Railroad Commission of the State, in the District Court of the

[ 255 U.S. Page 117]

     United States for the District of Indiana, and a transcript of the record in the same case in this court, entitled Wood v. Vandalia R.R. Co., 231 U.S. 1, and, over objection, the proceedings before the Railroad Commission under which the order ...

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