Midland Valley Railroad v. Hoffman Coal Co.

120 S.W. 380, 91 Ark. 180, 1909 Ark. LEXIS 148

• Court: Supreme Court of Arkansas
• Decided: May 10, 1909
• Status: Published

Opinions

Hart, J.,

(after stating the facts). I. Counsel for appellant first challenges the jurisdiction of the State courts. He insists that, as all the cars were to be used for interstate shipments, the count below was without jurisdiction; and that, under the Hepburn amendment to the Interstate Commerce Act, the forum in which appellee should have sought reparation was either the Interstate Commerce Commission, or the United States courts of competent jurisdiction. His chief reliance in support of his contention is based upon the decision of the Supreme Court of the United States in the case of the Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U. S. 426, as applied to the provisions of the Interstate Commerce Act. We do not consider that case applicable to the question now under discussion. In the Abilene Cotton Oil Company case the shipper sought reparation in the State court, and his cause of action was based upon the unreasonableness of an established freight rate. The court held that he could not maintain an action at law in such case prior to a finding by the Interstate Commerce Commission that the rates were unreasonable. In that case it was insisted by the shipper that section 22 of the act of Congress to regulate commerce, viz: “Nothing in this act contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this act are in adition to such remedies,” gave the court jurisdiction. In reference thereto Mr. Justice White, who delivered the opinion of the court, said:

“This clause, however, cannot be construed as continuing in shippers a common-law right, the continued existence of which would be absolutely inconsistent with the provisions of the act. In other words, the act cannot be held to destroy itself. The clause is concerned alone with rights recognized in or duties imposed by the act, and the manifest purpose of the provision in question was to make plain the intention that any specific remedy given by the act should be regarded as cumulative, when other appropriate - common-law or statutory remedies existed for the redress of the particular grievance or wrong dealt with in the act.”

The court held that the shipper must seek redress primarily through the Interstate Commerce Commission, where the unreasonableness of an established freight rate was involved, because in that way only could uniformity of rates be preserved. That was the sole .ground of the decision, as is emphasized by the later decision of the Southern Ry. Co. v. Tift, 206 U. S. 428, where it was held that, after a freight rate has been found, upon testimony,-by the commission to be unreasonable, the testimony and finding of the commission may be made the basis of a decree in a United States circuit court, sitting in equity, enjoining the carrier from enforcing such unreasonable rate.

In the case of Danciger v. Wells Fargo & Co., 154 Fed. 379, which was a suit by a shipper against a carrier to require it to receive .and transport property tendered for shipment, the court held it to be one to compel the performance of a duty imposed on it by law, and to be within the jurisdiction of the courts. In disposing of the question the court used this language:

“A further contention made by the defendant is that the court of exclusive original jurisdiction in this controversy is the Interstate Commerce Commission, and that this court has no jurisdiction in the first instance to afford to complainants the relief here sought; and much reliance is placed by the defendants on the case of Texas & Pac. Ry. Co. v. Abilene Cotton Oil Co., 204 U. S. 426, 27 Sup. Ct. 350, 51 L. Ed. 553. From a reading of that case, I do not consider it applicable to the state of facts here presented. If the controversy here was as to whether the defendants were charging excessive or unreasonable rates for the shipments tendered by complainants, the case relied upon would to my mind be in point; but as the ground of relief sought by complainants in the case at bar is the performance by defendants of a duty imposed upon them by law, which they wholly neglect and refuse to perform, I think such question is one for the determination of the courts.”

In the case of Chicago, R. I. & P. Ry. Co. v. Clements, (Tex. Civ. App.) 115 S. W. 664, the court held: “The liability of connecting carriers for breach of their common-law or contractual duty in respect to property received for shipment is not regulated or affected by the interstate commerce act, though the shipment is an interstate one, and therefore an action against them for injuries to the property caused by negligence and delay in transportation, being based on a breach of such duty, and not on any infraction of said act, is properly brought in a State court.”

This, too, is the construction placed upon the act by the Interstate Commerce Commission. In the case of Richmond Elevator Co. v. Pere Marquette Rd. Co., 10 I. C. R. 636, it is said: “The act to regulate commerce contains no provision which expressly or by proper implication gives this commission jurisdiction in cases merely showing delay or negligence in the receipt, forwarding or delivery of property offered for transportation, and this necessarily includes failure on the part of the carrier to furnish cars for the movement of freight within a reasonable time.” To the same effect see Smeltzer v. St. L. & S. F. Rd. Co., 158 Fed. 649, by Rogers, Dist. Judge; Southern Pac. Co. v. Crenshaw Bros. (Ga. App.), 63 S. E. 865, by Mr. Justice Powell.

The case now under consideration involves the liability of the carrier to the shipper for an alleged breach of its common-law or contractual duty for its failure to furnish cars, and does not involve any infraction of the provisions of the interstate commerce act; and we are of the opinion that the suit was properly brought in the State court. This view, we think, is the logical result to be deduced from the reasoning of the authorities cited supra, and from the opinion of this court in the case of Halliday Milling Co. v. La. & N. W. Rd. Co., 80 Ark. 536. Hence the court properly overruled the demurrer to the jurisdiction of the court.

II. Counsel for appellant urges that the court below erred in not sustaining appellant’s motion to transfer the cause to the United States court for the Western District of Arkansas. Assuming that the case was removable, the petition was not filed in time. “A petition for removal of a cause to a Federal court which is filed after the time allowed by the statutes of this State for filing of answers to complaints is too late.” Kansas City So. Ry. Co. v. McGinty, 76 Ark. 356, and cases cited.

The time to file a petition for removal is not extended by an extension of the time to answer. Moon on Removal of Causes, § 156 and cases cited. In the case of Ruby Canyon Gold Min. Co. v. Hunter, 60 Fed. 305, the court said that the act of Congress is imperative, and requires the petition to be filed within the time fixed by the statute (where the statute fixes it), or within the time fixed by the rule of court (where the rule of court fixes it), and not within any time that a defendant may obtain by stipulation with the plaintiff, or by order of court.”

It follows then that, the petition for removal not having been filed within the time fixed by statute for filing answer, the court was right in denying it.

III. Appellant alleged in one paragraph of its answer that appellee associated itself with others in forming a pool or trust for the sale of coal, and that it sold all its coal through the Mc-Alester Fuel Company, which was a member of the pool or trust, and that such agreement was an illegal combination in violation of the statutes of the State of Arkansas and of the United States. Appellant further alleged that all the profits that appellee made or could have made, had appellant furnished it cars, were made on account of it being a member of the pool or trust to regulate and control the price of coal.

Appellee filed a motion to strike out that paragraph of appellant’s answer, which motion was sustained by the court. Counsel for appellant predicates error in the action of the court in that regard. To sustain his contention, counsel has cited the case of Continental Wall Paper Co. v. Voight & Sons Company, 212 U. S. 227, 29 S. C. Rep. 280. In that case the court held (quoting headnotes):

“1. A recovery upon an account for goods sold and delivered by a corporation created to effectuate a combination of wall paper manufacturers, intended and having the effect directly to restrain and monopolize trade and commerce, in violation of the antitrust act of July 2, 1890 (26 Stat, at L. 209, chap. 647, U. S. Comp. Stat. 1901, p. 3200), cannot be had where the account is made up, within the knowledge of both buyer and seller, with direct reference to, and in execution of, the agreements which constitute the illegal combination.

“2. Defendants in an action for goods sold and delivered are entitled to judgment on a demurrer admitting the allegations of a defense set up by thé answer, which in substance disclose that plaintiff is the selling agent of a combination of wall paper manufacturers which offends against the anti-trust- act of July 2, 1890; that, in carrying out such combination, defendants were virtually compelled to sign a jobber’s agreement, which, in effect, bound them to buy from' the plaintiff all the wall paper needed in their business at certain fixed prices, and not to sell at lower prices or upon better terms than those at which plaintiff itself sells to dealers other than jobbers; that the goods in question were ordered pursuant to such agreement and at the prices fixed; that such prices were unreasonable; and that all the transactions between the parties were in furtherance of the illegal combination.”

The grounds of the decision in that case are based upon a state of facts essentially different from those presented by the record in the present case. 'There both parties to the suit were parties to the illegal agreement, and it was held that the courts will refuse to render any assistance in carrying out an illegal agreement on the ground of public policy; and that in no other way could the public be protected. In the instant case appellant was not a member of the pool, and the contract made by it with appellee, an alleged'member of the pool, was collateral to the unlawful combination, and not tainted thereby. Neither the common law nor contractual duty of appellant to furnish cars was in any way connected with the illegal combination, and they are therefore unaffected thereby. The rule is that an otherwise legal contract is not affected by another collateral contract, which might be illegal. This distinction is made plain by the decision in the case of Chicago Wall Paper Mills v. General Paper Co., 147 Fed. 491. The facts in that case were that a number of wall paper companies combined together to arbitrarily fix the prices of wall paper and to control the sale of the same. The General Paper Company was a member of the combination, and became the exclusive sales agent of the other members, with the exclusive power to determine the extent of the output, and to arbitrarily fix the prices. It sold a large quantity of wall paper to the Chicago Wall Paiper Company, and, not being able to obtain payment, brought suit to recover the purchase price of the goods. The same defense was interposed in that case as in the present one. The court held that “a contract for the sale of merchandise is not rendered illegal by the fact that the selling corporation is a trust or monopoly organized in violation of law, either Federal or State, the contract of sale being collateral and having no direct relation to the unlawful scheme or combination.”

This distinction was also recognized in the case of Connolly v. Union Sewer Pipe Co., 184 U. S. 540, the court holding that “a violation of the Sherman Anti-Trust Act of July 2, 1890, by the formationn of a combination in restraint of trade, by which a penalty is incurred under the statute, does not preclude the company thus illegally formed from recovering on collateral contracts for the purchase price of goods.”

IV. On the measure of damages the court gave the following instruction: “6. If you find for the plaintiff under the instructions given you in this case, then you are to determine what damage, if any, it has suffered by reason of the failure of the defendant company to furnish cars for the disposition of its coal. If you find plaintiff could and would have sold its coal from its mines at a profit to itself, and was prevented by the wrongful act of the defendant from making such sale and earning such profits, then the defendant must compensate it in damages for the amount of the profit or'gain which this prevented it from making. In arriving at such amount, you should consider the nature of its business, the condition of the coal, the kind of coal that it produced, the quantity of coal that it produced, its opportunity for selling and the market price at which it could have sold; and the price or prices at which the coal produced by it should and would have been sold, less the cost of producing and marketing such coal, including the royalties to be paid 'thereon, would be the measure of its recovery. And in this connection I charge you that the cost of production above referred to must be measured and computed on the bases of a reasonable car supply.”

Counsel for appellant assigns as error the action of the court in giving this instruction. The general principles applicable to the subject are stated in the case of Central Coal & Coke Co. v. Hartman, 49 C. C. A. 244, as follows:

“Now, the anticipated profits of a business are generally so dependent upon numerous and uncertain contingencies that their amount is not susceptible of proof, with any reasonable degree of certainty; hence the general rule that the expected profits of a commercial business are too remote, speculative and uncertain to warrant a judgment for their loss (citing cases). There is a notable exception to this general rule. It is that the loss of profits from the destruction or interruption of an established business may be recovered where the plaintiff makes it reasonably certain by competent proof what the amount of his loss actually was. The reason for this exception is that the owner of a long-established business generally has it in his power to prove the amount of capital he has invested, the market rate of interest thereon, the amount of the monthly and yearly expenses of operating his business, and the monthly and yearly income he derives from it for a long time before and for the time during the interruption of which he complains. * * * One, however, who would avail himself of this exception to the general rule must bring his proof within the reason which warrants the exception. He who is prevented from embarking in a new business can recover no .profits because there are no provable data of past business from which the fact that anticipated profits would have been realized can be legally deduced.”

In the case of Baxley v. Tallassee & M. R. Co. (Ala.) 29 So. 451, in discussing the measure of damages in an action by a shipper against a carrier for breach of contract to furnish cars, the court recognized this .exception to the general rule, and said: “The special circumstances which we have hypothesized, taken in connection with notice to defendant of them, take the case out of the general rule of damages obtaining in cases of failure by common carrier to carry and deliver, and bring it within the special rule formulated above, on the theory that such damages were within contemplation of the parties.”

The exception to the general rule was recognized and applied by this court in the case of Border City Ice & Coal Co. v. Adams, 69 Ark. 219. See also Goebel v. Hough, 26 Minn. 252.

In the case of Atlantic Coast Line R. Co. v. Geraty, 166 Fed. 10, the court held (syllabus) : “Where a carrier, having facilities for furnishing shippers of vegetables refrigerator cars in which to transport the same, which cars the carrier did not own as a part of its equipment, had led the plaintiff and other vegetable growers in the region to expect that, if they raised vegetables, refrigerator cars necessary for their transportation would be obtainable, plaintiff was entitled to recover damages sustained by the carrier’s refusal to furnish refrigerator cars for the transportation of plaintiff’s cabbages on reasonable demand.”

In the case under consideration appellee had an established business, and had been encouraged by appellant to open its mine. Appellant had entered into an agreement to furnish cars to appellee, and bound appellee not to enter into a contract with another line of railway for shipment of its coal. Appellant knew that certain fixed charges had to be met, whether-the mine ran or was idle. It knew that the only practical way to mine the coal was, at the close of each day’s work, to “shoot down” and separate from the main bed of coal a sufficient amount of coal to keep the employees busy throughout the succeeding day, loading it on the mining cars to be hoisted to the tipple and there be emptied into the railroad cars; that it is not practical to store the coal, but that the mining and transportation must be carried on together.

Tested by the principles announced above, in connection with the special circumstances adduced in evidence and the notice appellant had of these circumstances, we are of the opinion that the net profits of operating the mine as damages for a breach of the contract may fairly be said to have been in contemplation of the parties when the contract for furnishing cars for the shipment of appellee’s coal was entered into.

V. Appellee, in making its case, was allowed to introduce evidence to the effect that there was no congestion of traffic on the line of appellant or connecting carriers during the time for which appellant is charged with failure to furnish cars, and that during such period the car service on such connecting lines was good. One of the defenses interposed by appellant was that during such period there was an unprecedented demand for cars, and it adduced evidence tending to show that there was a congestion of traffic on all the connecting lines of appellant. Appellee should not have anticipated its defense, but should have presented testimony in rebuttal to contradict that of appellant: The order of the introduction of the testimony, however, was a matter in the discretion of the court, and we cannot say that the action of the court was prejudicial to the rights of appellant. Butler v. State, 83 Ark. 272.

VI. Objection is also made to the admission of testimony on the part of appellee with reference to the effect the failure to furnish cars would have upon the mine as to expense of maintenance and also as to the cost of mining the coal. This evidence was admissible in arriving at the net profits.

Objection was also made to the introduction of certain letters of the officials of the railroad. These letters were competent in so far as they tended to show that the officers of the railroad knew that appellant did not have sufficient cars to meet the Ordinary demands of the shippers.

VII. The court gave the following instructions: “4. You are further instructed that the fact that connecting lines have failed and refused to return promptly the cars of the defendant is no valid legal excuse or defense in this case absolving the defendant from its obligation to furnish with reasonable promptness and diligence sufficient cars for the transportation of plaintiff’s coal.”

“5. You are instructed that, in order for the Midland Valley Railroad Company to avail itself of a defense that it could not furnish plaintiff cars because there was a great congestion of traffic, it must appear to your mind by a preponderance of evidence that there was such an unprecedented and extraordinary amount of freight offered for transportation as that it could not have been reasonably anticipated by the defendant company. And you are further instructed in this connection that it is the duty of the defendant company to keep in touch with natural conditions and with the usual natural developments of the country.”

Counsel assigns as error the action- of the court in giving the fourth instruction just quoted. A majority of the judges think that under the rule announced in the case of St. Louis S. W. Ry. Co. v. State, 85 Ark. 311, and in St. Louis S. W. Ry. Co. v. Phoenix Cotton Oil Co., 88 Ark. 594, the giving of this instruction was error. A supplemental opinion on this point has been written by Chief Justice McCulloch. The writer of this opinion thinks no prejudice resulted from the giving of that instruction. The court in its fifth instruction, just quoted, correctly instructed the jury on appellant’s defense of there being an unprecedented demand for cars. Appellant by its own contract agreed to send its cars off its own line. In the case of St. Louis S. W. Ry. Co. v. State, supra, the court said: “Until appellant carrier shows reasonable rules and regulations for the interchange of cars, it can not avail itself of those rules of interchange as causing and excusing its default to the public, for the rules here shown have proved unreasonable and inefficient before this default occurred.”

So, in the present case the writer thinks that the uncontradicted testimony showed that the rules and regulations had proved inefficient for the purpose for which they were designed before the default herein complained of occurred.

Other assignments of error are urged upon us; but, inasmuch as we have reversed the case for the error already indicated, we have deemed it proper to pass upon only such other assignments of error as seem to us from the present state of the record will necessarily arise on a new trial of the case.

As the majority of the judges are of the opinion that the giving of the fourth instruction above quoted was prejudicial to appellant, the judgment is reversed and the cause remanded.