Baltimore & O. R. v. Western Union Telegraph Co.

241 F. 162, 1917 U.S. Dist. LEXIS 1298

• Court: District Court, S.D. New York
• Decided: February 19, 1917
• Status: Published

Opinion

MAYER, District Judge

(after stating the facts as above). [1] The complaint sets up a cause of equity under the authority of such cases as Bank of Kentucky v. Stone et al. (C. C.) 88 Fed. 383, and United States Life Ins. Co. v. Cable, 98 Fed. 761, 39 C. C. A. 264.

[2] The question here under consideration is the meaning of the expression “the exchange of services” as found in the act approved on June 18, 1910.

The contract between these parties is typical of contracts between railroad companies and the Telegraph Co. throughout the United States, and the importance of the question may be realized when it is stated that the telegraph lines operated and controlled by defendant comprise over 200,000 miles of poles and cables and over 1,000,000 miles of wire, that defendant has nearly 25,000 offices, about 20,000 of which are railroad offices, yielding revenues too small to pay for maintenance separate and apart from the advantage derived from contracts with the railroad companies, and that a very large part of defendant’s system is constructed in accordance with approximately 1,300 contracts with approximately 300 different railroads and railroad systems; all such contracts being similar in their underlying provisions with that between the parties to this suit.

Whether the meaning of the “exchange of services” is determined by (a) the narrow test of verbal literalism, or (b) the broader rule of ascertaining the intention of the Congress "from the language used in the act and * * * by a resort to the history of the times when it was passed” (United States v. Trans-Missouri Freight Association, 166 U. S. 290, 318, 17 Sup. Ct. 540, 41 L. Ed. 1007), the result is the same.

(a) “Exchange” has a well-settled meaning in common acceptation. W ebster’s definition is:

“The act of giving or taking one thing for another which, is regarded as an 'equivalent; as an exchange of cattle for grain.”

But, while the trader may, for purposes of his own calculation, put his own value on his cattle or his grain, the transaction as between the parties is not measured in money. The owner of the cattle wants grain, while the owner of the grain wants cattle, and each is satisfied to exchange the thing for the thing, instead of agreeing that the market value of'the cattle is so much per head and the market value of the grain so much per bushel and exchanging on the exact basis of multiplying the unit by the number of heads or the number of bushels intended to be transferred one to the other.

This popular meaning of “exchange” used and understood in the ■common speech of people has been accepted and defined by Codes and courts. No more apt nor concise definition can be found than that in the Civil Code of Louisiana (article 2660):

“Exchange is a contract, by which the parties to the contract give one to the other, one thing for another, whatever it be, except money; for in that case it would be a sale.”

See, also, Civil Codes of California, § 1804, North Dakota, § 6003, South Dakota, § 1348, and Montana, § 5129. And the courts in one form of phraseology or another seem to have uniformly followed the definition of exchange given by Judge Story in Buffum v. Merry, 4 .Fed. Cas. 605 :

• “What is a sale or exchange? Blaekstone says it is a transmutation of property from) one man to another in consideration of some price or recompense in value. If it be a commutation of goods for goods, it is more properly an exchange.” Elwell v. Chamberlin, 31 N. Y. 611, 624; Cooper v. State, 37 Ark. 412, 418; Chapman v. Hughes, 134 Cal. 641, 657, 58 Pac. 298, 69 Pac. 974, 60 Pac. 982; Forkner v. State, 95 Ind. 406; Edwards & Beardsley v. Cottrell & Babcock, 43 Iowa, 194; Labaree v. Kloslerman, 33 Neb. 150, 49 N. W. 1102. Vail v. Strong, 10 Vt. 457, 467; Long v. Fuller, 21 Wis. 121, 124.

“Exchange of services,” therefore, dearly refers to the kind of services which the Railroad can render to the Telegraph Co., and vice versa, in connection with the business of transmitting intelligence by telegraph for the Railroad or of transporting men and material for the Telegraph Co., as the case may be. To say that the exchange must he on the basis of the lawful tariff rates of the Railroad and of the reasonable charges of the Telegraph Co., regularly charged other cus-' tomers for similar services, is but another way of asserting that the. proviso of the statute is without meaning. A statute was not necessary to figure out the service in this way, for such a method merely means that the Railroad in return for $100 worth of • transportation at lawful rates may be paid by $100 worth of telegraph transmission charged at the reasonable and nondiscriminatory rates secured by the statute — all of which could be done without the or any proviso, as a mere matter of bookkeeping. And, if it was intended that upon such a method of calculation any excess of services by the Railroad over the services of the'Telegraph Co., or vice versa, should he paid for by virtue of the statute, then the Railroad and the Telegraph Co. were placed in no different relation with each other than they were with any one else, and hence the proviso was meiyaingless and useless — a conclusion always avoided in construing a statute.

The views-stated supra lead to the same result (although arrived at on a different theory) as the commission applied to “on line” service in its conference ruling of March 28, 1916. In that ruling, the commission sought to distinguish between “on line” and “off line” service, and such is now the position of its counsel. The argument is thus stated:

“Where a railroad company transports free or at reduced rates the men or material of a telegraph company engaged or to be used in the construction of telegraph facilities along the lines of the railroad, it is performing for the shipper a service so closely analogous to the transportation of its own employes and property as not to transcend the spirit of the act. So, also, where a telegraph company transmits the messages of a railroad company between poinfe along the lines of the railroad, it is pm-forming a service which the railroad, but for the contract of exchange, would have to perform for itself, and the performance of such services by the telegraph company free or at reduced rates is not in contravention of the statute. * * *

“Where a railroad company, however, transports the ufen or material of si telegraph company for the construction or maintenance of service off the lines of Hie railroad, or where the telegraph company transmits the messages of the railroad to or from points off its lines, each company is performing for the other a service practically identical with the service which each respectively renders for the public. For either of such carriers to render such services at other than,the regularly published rates and reasonable charges prescribed in the act would be to discriminate against other shippers, passengers, and, senders of telegram's not so favored.”

But there is nothing in the statute nor in its “spirit” which justifies this distinction. The Congress by appropriate and concise language could have differentiated between “on line” and “off line” services. On the contrary, however, its words “the exchange of services” were of the broadest character and without limitation as to whether the “services” were “on line” or “off line”; and it is,significant that in a statute bringing in telegraph, telephone, and cable companies,for the first time and having as one of its important features the safeguarding of the public against discrimination, so pronounced an exception should be made without qualifications of any kind, in respect of contracts with common carriers, “for the exchange of services.”

(b) Where, in addition to the language of the statute, considered by itself, the intention of the Congress is sought in the light of relevant history, the construction already indicated is amply confirmed.

. As counsel for defendant said in the suit in Maryland between these same parties:

“Tlie railroad and. the telegraph are the Siamese Twins of commerce, born at the same period of time, developed side by side, united by necessity; and * * * what the laws of trade and usage have thus joined together it could not have been the purpose of Congress to put asunder. * * ”

Since the middle qf the last century, the railroads and the telegraph company entered into the relations illustrated by the contract here under consideration, and, as in this case, these contracts have been- renewed from time to time, their duration being for long periods of years, all looking to the establishment of a settled status and modus vivendi by virtue tof tire very nature of the contract and the business and operating relations of the parties.

At the outset, it is apparent that the contract contains important provisions so interwoven and so interdependent that it must he regarded as an entire contract. Obviously, such a contract is entered into only after the most careful consideration, involving an understanding of the practical and financial results to each of the parties. The provisions as to rights of way, joint superintendency, and the like, and the value of the services each to the other, including, among other things, the payment by the Telegraph Co. to the Railroad of $60,000 per annum, all demonstrate that the exchange of railroad service as such for telegraph' service as such, rests on the other mutual obligations secured by the contract. That this was known and appreciated by the commission appears fully from its rulings. With its knowledge, based upon comprehensive experience in regard to and understanding of administrative features and effects, the commission clearly indicated that its rulings were based solely on- its interpretation of the statutes, and not upon any detrimental results which would follow from the interpretation contended for by the railroads and the telegraph companies.

In its Twenty-First Annual Report to the Congress dated December 23, 1907, the commission referred to its rulings made up to that time and stated its views in the language of its ruling of December, 1906, a significant part of which was:

“Contracts between telegraph companies and carriers for the maintenance of .telegraph lines on the rights of way of railroads are sui generis and unlike any other contracts with carriers that have come to our attention. So far as we can now see, the full performance of such contraéis by file carriers with whom they are made would not affect any public or private interest adversely.”

In its Twenty-Second Annual Report to the Congress dated December 24, 1908, the commission again referred to its rulings and reports in respect of this subject-matter.

The Annual Report of 1909 made no reference to the subject-matter, and, although dated December 21, 1909, there is nothing to show when or if it was laid before the Sixty-First Congress which reconvened January 4, 1910, and adjourned sine die June 25, 1910.

The "Sixtieth Congress was not in session at the date of the 1908 report, and, as it held a session of only two months in the winter of 1909, it probably had no opportunity to consider the report of 1908.

It may, however, fairly be assumed that the Sixty-First Congress gave consideration to the reports of 1907 and 1908 from the administrative body peculiarly equipped to inform it in respect of matters coming under its (the commission’s) observation. Aldridge v. Williams, 3 How. 9, 11 L. Ed. 469 ; United States v. Union Pacific R. R. Co., 91 U. S. 72, 79, 23 L. Ed. 224; United States v. Trans-Missouri Freight Association, supra.

The bill creating the Cpmmeree Court in which the amendment of 1910 was incorporated was an elaborate measure, and the proviso here considered could not have been evolved from inner consciousness nor suddenly have been flashed from a clear sky.

Resort to the commission’s reports and to the contracts on file then showed, as it does now, that the commission apparently reluctantly had made a sort of divided ruling going as far as it felt it could in preserving the integrity of these contracts and going no further only because of its interpretation of the applicable statutes, but contemporaneously announcing most affirmatively that the full performance of the contracts would not affect any public or private interest adversely. Further, this ruling was not accepted nor acquiesced in, and, in the absence of clear and explicit language, it seems idle to contend that the Congress was merely incorporating the rulings of the commission in the statute distinguishing between “on line” and “off line” services when inter alia, under its jurisdiction as to carriers, the commission had already recognized the lawful character of the contracts as affecting “on line” services and, when the Congress, almost by virtue of lay knowledge, must have appreciated that “off line” service may be as vital to telegraph or railroad operation “on line” as “on line” service.

Thus, if a bridge has been swept away at A, on the line of the railroad, is it any less vital to telegraph that intelligence to a connecting carrier at B off the line, than to the railroad’s agent at C on the line ? or if a telegraph wire has been destroyed at A at a point one yard off the line, is it any less vital for the railroad to transport men and material to replace the destroyed wire than to do the same transportation to replace the same destroyed wire at B on the line, one yard this side of A? That the courts will not take so narrow or differentiated a view of the statute as to answer these questions in the affirmative has already been indicated by United States v. Erie Railroad, 235 U. S. 513, 35 Sup. Ct. 193, 59 L. Ed. 335, and United States v. Erie Railroad, 236 U. S. 259, 35 Sup. Ct 396, 59 L. Ed. 567.

[3] In addition to these considerations, it is further fair to assume that the Congress had knowledge of the necessarily intimate relation between the railroads and the telegraph companies as shown by its own acts and the decisions of courts. Pacific Railroad Act of July 1, 1862, c. 120, 12 Stat. at Earge, 489; Texas & Pacific Incorporation Act of March 3, 1871, c. 122, 16 Stat. at Earge, 573; Indian Reservation Railroad Act of 1899, c. 374, 30 Stat. at Large, 990 (Comp. St. 1913, §§ 4181-4188); Enid, etc., Railroad Act of 1902, c. 134, 32 Stat. at Large, 43; United States v. Union Pacific Ry. Co., 160 U. S. 1, 16 Sup. Ct. 190, 40 L. Ed. 319; St. Paul, M. & M. Ry. Co. v. Western Union-Telegraph Co., 118 Fed. 497, 55 C. C. A. 263; United States v. Northern Pacific R. R. Co. (C. C.) 120 Fed. 546; Western Union Telegraph Co. v. Pa. R. R. Co., 195 U. S. 540, 25 Sup. Ct. 133, 49 L. Ed. 312, 1 Ann. Cas. 517; Western Union Telegraph Co. v. Pa. R. R. Co., 129 Fed. 849, 64 C. C. A. 285, 68 L. R. A. 968.

It is unnecessary to elaborate further upon-additional facts and arguments advanced by the parties in support of the contention that the conference ruling of March 28, 1916,-cannot, be sustained. But there are some significant observations in the opinion' of Mr. Justice McKenna in United States v. Erie Railroad, 236 U. S. 259, 35 Sup. Ct. 396, 59 L. Ed. 567, which are here serviceable.

First. As concisely stated in the headnote, a ruling of the Interstate Commission which was never enforced — the custom of tire carriers being uniformly the other way — cannot have the weight ordinarily accorded to the contemporaneous construction of a statute by the officers upon whom is imposed the duty of administering it.

Second. Analogously with the observation as to- the interchange of passes that the Congress considered “that the best safeguard against its abuse was the interest of the carriers,” and that the exercise of the right “has its justification in a strictly business policy, and, instead of being a burden upon the resources of the companies it is an aid to them,” it may be similarly said here that the exchange of services, whether viewed in its comprehensive aspect or merely as an exchange of telegraph service as such for railroad service as such, is based on business policies providently entered upon and safeguarded by Self-interest, and so the Congress must have realized. The .contracts do not provide for “free” services in the true sense. They are not within the evil which evoked remedies against practices such as are discussed in Louisville & Nashville R. R. Co. v. Mottley, 219 U. S. 467, 31 Sup. Ct. 265, 55 L. Ed. 297, 34 L. R. A. (N. S.) 671, and Chi. Ind. & L. Ry. Co. v. United States, 219 U. S. 486, 31 Sup. Ct. 272, 55 L. Ed. 305, but they are, indeed, sui generis, entitled in the interest both of the public and the parties to be completely performed in accordance with their provisions and in accordance with what seems- undoubtedly to have been the intent of the statute.

It follows that plaintiff may have a decree as prayed for.

Settle decree on notice to all counsel who participated in the argument.