Minneapolis, St. Paul & Sault Ste. Marie Railway Co. v. Menasha Wooden Ware Co.

150 N.W. 411, 159 Wis. 130, 1914 Wisc. LEXIS 382

Opinions

VxNje, J.

That' it was the avowed purpose of ch. 362, Laws of 1905 (secs. 1797 — 1 to 1797 — 36, Stats.), and the acts amendatory thereof, known as the Wisconsin Railroad Commission Act, to secure nondiscriminating, just, and reasonable rates for all services rendered by railroads as common carriers of persons and property within the state is so plain from tbe language of tlie act as not to admit of serious doubt. Sec. 1797 — 3 provides:

‘■’Every railroad is hereby required to furnish reasonably adequate service and facilities, and the charges made for any service rendered or to be rendered in the transportation of passengers or property or for any service in connection therewith, or for the receiving, switching, delivering, storing or handling of such property, shall be reasonable and just, and every unjust and unreasonable charge for such service is prohibited and declared to be unlawful.”

Sec. 1797 — 23 declares any undue or unreasonable preference or advantage -or disadvantage to any person, firm, or corporation unlawful and prohibits the same; and sec. 1797 — 24 penalizes rebates, concessions, or discriminations in respect to the transportation of any property within the state. Treble damages are provided for in behalf of the person, firm, or corporation injured thereby in addition to the penalty accruing to the state. Sec. 1797 — 25. These provisions taken in connection with the whole scheme of the act unmistakably point to the conclusion that railroad rates within the state should, after the act took effect, be reasonable, nondiscriminating, and apply to all shippers alike within the territory and for the commodity covered by the tariff rates.

The question therefore arises whether or not the contract between the parties was superseded by the Railroad Commission Act and the filing of tariffs affecting the freight in question in accordance with the provisions of such act. The defendant claims that its contract was in no wise affected by the enactment of the act and the filing by plaintiff of tariffs thereunder, because the contract, being valid when made, could not' by reason of the provisions of the federal and state constitutions prohibiting the passage of any law impairing the obligations of contracts be invalidated by any legislative act. And it relies especially upon the case of Superior v. Douglas Co. T. Co. 141 Wis. 363, 122 N. W. 1023, as being decisive of tbe correctness of the position taken. It further claims that in any event sec. 1791 — 6 saves the contract, because that section in its terms saves transit and special contract rates.

Does the Railroad Commission Act, irrespective of sec. 1197 — -6, and the filing of tariffs thereunder covering the transportation provided for in the contract supersede it? That it would be superseded except for the constitutional provisions above referred to is quite plain. The act provided that the lowest schedule of rates in force in April, 1905, should constitute the lawful schedule of rates until changed by the filing of other tariffs. Sec. 1797 — 35. Sec. 1797 — 4 makes it' the duty of every railroad to file with the commission a full schedule of rates in force for all services rendered by it within the state. And sub. (c) thereof declared:

“It shall be unlawful for any railroad to charge, demand, collect or receive a greater or less compensation for the transportation of passengers or property or for any service in connection therewith than is specified in such printed schedules, including schedules of joint rates, as may at the time be in force, and the rates, fares and charges named therein shall be the lawful rates, fares and charges until the same are changed as herein provided.”

So it is plain as stated in Frank A. Graham Ice Co. v. C., M. & St. P. R. Co. 153 Wis. 145, 140 N. W. 1097, that the legislature intended to and did provide' for an exclusive method of fixing freight rates, in so far as it could constitutionally do so.

The contract relied upon by the defendant was entered into pursuant to the provisions of sub. 9 of sec. 1828, Stats. 1898, which gave the railroad company the right to regulate the compensation to be paid for transporting passengers and property, and it is conceded by plaintiff that it was valid when made. The corporate power thus granted to the plaintiff to regulate the compensation to be paid for its services was granted subject to the right of the state to amend or annul it. There was no absolute irrevocable grant of power to the railroad company to forever regulate rates, but only a grant of power to be exercised by it' until modified, amended, or resumed by the state. The power to regulate the rates of common carriers is a sovereign power of the state. Milwaukee E. R. & L. Co. v. Railroad Comm. 153 Wis. 592, 142 N. W. 491. And every contract made as to such rates with a corporation authorized to contract in reference thereto is made with the knowledge of and subject to the right' of the state at any time to resume the exercise of such sovereign power. The legislative right to supersede it is as clear as though it were written into the contract' itself, for the law implies it. This was expressly held in Milwaukee E. R. & L. Co. v. Railroad Comm., supra, and as there stated was involved in the decision in Manitowoc v. Manitowoc & N. T. Co. 145 Wis. 13, 129 N. W. 925, only in the latter case it was held the state had not exercised its power to act. To construe sub. 9 of see. 1828, Stats. 1898, as authorizing railroad companies to make contracts for rates binding tipon the state when it resumes its rate-making power woidd be to hold that the legislature could part with an attribute of sovereignty. This it cannot do. In a democracy there can be no abdication. Sovereignty is not subject to a perpetual gift, grant, or barter. A perpetual grant under sovereign power may be made, but not a perpetual grant of sovereign power. The railroad company was but an agency of the state in regulating rates, and as such it had no authority to enter into a contract not subject to modification or revocation by the state. Manitowoc v. Manitowoc & N. T. Co. 145 Wis. 13, 129 N. W. 925; La Crosse v. La Crosse G. & E. Co. 145 Wis. 408, 130 N. W. 530; Kenosha v. Kenosha H. T. Co. 149 Wis. 338, 135 N. W. 848. Federal authorities are to the same effect. It has been uniformly held by the supreme court of the United States that contracts between private parties and common carriers fixing compensation to be paid for transportation, though made under state or federal authority, are made subject' to the right of the state or of Congress to modify or annul them under their sovereign power to regulate rates. Georgia R. & B. Co. v. Smith, 128 U. S. 174, 9 Sup. Ct. 47; Armour P. Co. v. U. S. 209 U. S. 56, 28 Sup. Ct. 428; Louisville & N. R. Co. v. Mottley, 219 U. S. 461, 31 Sup. Ct. 265; Portland R., L. & P. Co. v. Railroad Comm. 229 U. S. 397, 33 Sup. Ct. 820. To the same effect is Seaman v. M. & R. R. R. Co. (Minn.) 149 N. W. 134, a ease almost identical with the one at bar.

As pointed out in Kenosha v. Kenosha H. T. Co. 149 Wis. 338, 135 N. W. 848, the contract in the case of Superior v. Douglas Co. T. Co. 141 Wis. 363, 122 N. W. 1023, was in fact saved by the provisions of sec. 1797m — 91 exempting existing contracts from the provisions of the Public Utility Act as to discrimination, whether or not the opinion in the case based it upon that ground. In so far as there is language in that opinion to the effect that a contract for a public utility rate made prior to the passage of the Public Utility Law would be saved by the constitutional prohibition against laws impairing the obligations of contracts, irrespective of the exempting part of the law referred to, it is disapproved.

AAThen the plaintiff filed its tariffs covering the freight rates for the transportation of the freight included in the contract, the latter became inoperative. -The state had then, through the instrumentality and by the method by it prescribed, fixed another rate which became the only lawful rate till changed as provided for in the act. There was no change made in the tariffs filed during the period the freight in question was transported.

Sec. 1797 — 6 provides:

“Nothing in'sections 1797 — 1 to 1797 — 38, inclusive, shall be construed to prevent concentration, commodity, transit and other special contract rates, but all such rates shall be open to all shippers for a like kind of traffic under similar circumstances and conditions, and shall be subject to the provisions of sections 1797 — -1 to 1797 — -38, inclusive, as to the printing and filing of the same. Provided, all such rates shall be under the supervision and regulation of the commission.”

The claim that this contract is saved under the clause “transit and other special contract rates” is not well taken. The section quoted refers to rates made'in the future under the - supervision and regulation of the commission and complying with the requirements of the section. It does not relate to special contracts existing at the time the law took effect. The very purpose of the act was to abolish all existing private, secret, and special contracts and traffic arrangements and to place all shippers in future upon an equality so far as practicable. The abuses under the old system consisted chiefly in favored shippers and favored^localities, resulting in discrimi-nations and inequalities enabling the favored shippers to crash competition and the favored localities to thrive at the expense of those less favored. These were some of the more important abuses the act sought to abolish. It's effect would in a large measure be rendered nugatory had existing contracts and tariff agreements been preserved. In order to strike at the root' of the evil it was necessary for the state to resume full control of its rate-regulating power and to start ^with a clean slate. This it did by providing that' in future all railroad transportation rates within the state should be under the supervision and control of the commission, subject to the provisions of law relative thereto. As to the invalidity generally of contracts inconsistent with published tariffs, see 4 Ruling Case Law, 603 et seq. and cases cited.

The circuit court should have entered judgment for the amount of the tariff rate, viz. $3,217.04, less any payments made thereon, with interest on such sum from March 16, 1912, the time of the commencement of the action.

By the Court. — Judgment reversed, and cause remanded with directions to enter judgment as indicated in the opinion.