Porto Rico v. American Railroad

9 P.R. Fed. 579

• Court: District Court, D. Puerto Rico
• Decided: April 30, 1917
• Docket: No. 992
• Status: Published

Opinion

HamiltoN, Judge,

delivered the following opinion:

The questions raised by the pleadings relate to the condition of railroad regulation subsequent to the passage of the new organic act, commonly called the Jones Act, of March 2, 1917, but prior to the first election provided for in said act and necessarily prior to the formation of the Public Service Commission provided for by § 38 of said act, which is to be composed in part of certain officers to be elected at the same time with the legislature, to wit, July 16, 1917. It is contended on behalf of the plaintiff that the subject is covered by the Local Act of March 12, 1908, found in the Compilation of 1911, page 72, while, on the other hand, the defendant contends that this act either was never in force, or has been repealed by the new organic act, and that the so-called national Hepburn Act of June 29, 1906, is by the Jones Act, § 38, expressly declared inapplicable to Porto Eico. Tbe solution of this question requires tbe consideration of several matters.

1. It bas been decided by tbe Supreme Court in American R. Co. Didricksen, 221 U. S. 145, 57 L. ed. 456, 33 Sup. Ct. Rep. 224, and other cases, tbat Porto Eico is a territory of tbe United States for tbe purposes of tbe safety appliance and similar regulative legislation. As these are merely incidental to commerce, there can be no doubt tbat what is ordinarily called tbe Interstate Commerce Act of February 4, 1887, as amended, and the Hepburn Act of June 29, 1909 (34 Stat. at L. 584, chap. 3591, Comp. Stat. 1916, § 8563), likewise applied and apply to Porto Eico so far as not locally inapplicable. This principle was declared in § 14 of tbe Foraker Act, and is reiterated in § 9 of tbe Jones Act, as follows: Tbat “the statutory laws of tbe United States not locally inapplicable, except as hereinbefore or hereinafter otherwise provided, shall have tbe same force and effect in Porto Eico as in tbe United States, except tbe internal revenue laws.” [39 Stat. at L. —, chap. 145, Comp. Stat. —, § 3803 c c c.] It is not necessary for tbe purposes of this case to discuss tbe technical relation of Porto Eico to tbe rest of tbe Union. It is a territory, and a territory, with different rights and duties from tbe old ones contiguous to tbe original states within the continental limits of tbe United States. These were formed under one general plan, originating indeed before tbe present Union, when what is called tbe Northwest Territory was ceded by tbe • states in 1787, and more particularly after tbe acquisition of Louisiana in 1803, Florida in 1819, and Texas and tbe new Southwest after tbe Mexican War of 1848. Tbe principles governing such territories were so uniform tbat they were comprised in one system found in the Eevised Statutes of tbe United States, §§ 1839-1895, Comp. Stat. 1916, §§ 3425-3430, 3432-3439, 3442-3444, 3446-3449, 3452-3457, 3459-3468, 3470, 3471, 3473-3475, 3477, 3478, 3489, 3522, 3524-3527. With the acquisition of Alaska in 1867, Hawaii in 1898, and Porto Pico and the Philippines in the same year, there has been a change of system. These possessions, extending from the Arctic ocean to the tropics in both hemispheres-, have called for special acts in each case. What are called the Insular Cases in Downes v. Bidwell, 182 U. S. 244, 45 L. ed. 1088, 21 Sup. Ct. Rep. 770, have determined that the United States can acquire territory which is not incorporated into the Union until Congress so specifically enacts. What legislation amounts to such incorporation is a question which does not arise in this case. Suffice it that Porto Pico was subject to the Interstate Commerce Act and similar legislation until specifically excepted by the Jones Act of March 2, 1917. So far as relates to Porto- Pico, the intention of Congress clearly is to give the people full power of local legislation, subject to the disallowance by Congress, but to retain national affairs within the entire power of Congress. The exact line between the two it may sometimes be difficult to prescribe, just as it has been found difficult in the relations of the states, which are, as Porto Pico is not, component parts of the United States. The present is only one of many questions which are bound to arise growing out of this new system of territorial organization, and must be approached with the realization of the wide scope which Congress has chosen to give to the territorial power. The power of Congress in regard to territories is sometimes referred to article 4, § 3, of the Constitution, which says : “The Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to tbe United States.” On the other band, there is some reason to think that this referred only to what is called the Northwest Territory, already belonging to the United States, and that the makers of the Constitution did not contemplate further extension of the country’s limits. On this view, however, Congress would have even greater powers under the war and treaty clauses of the Constitution. The nation can under these unquestionably acquire new territory, and if, as determined in the Insular Cases, this does not become immediately a part of the Union, it is subject to the absolute discretion of Congress, with the sole limitation that Congress itself, being created by the Constitution, cannot transgress even on the outside the fundamental principles thereof. These are, for instance, what are ordinarily called the rights of man, and are discussed arguendo by Mr. Justice Brown in Downes v. Bidwell, 182 U. S. 244, 282, 45 L. ed. 1088, 1104, 21 Sup. Ct. Rep. 770. In regard to Porto Rico, Congress has not only constituted a quasi sovereignty as declared in the Rosaly Case, 227 U. S. 584, 57 L. ed 655, 33 Sup. Ct. Rep. 333, but has now, by the Jones Act, expressly declared certain national legislation inapplicable. Whether the 14th Amendment as such applies is not material, because, without being called the 14th Amendment, it is expressly provided in the Bill of Eights in § 2 of the Jones Act that “no law shall be enacted in Porto Eico which shall deprive any person of life, liberty, or property without due process of law, or deny to any person therein the equal protection of the laws.” [39 Stat. at L. —, chap. 145, Comp. Stat. — , § 3803 aa.] The effect of this is what must now be determined. Smyth v. Ames, 169 U. S. 466, 42 L. ed. 466, 18 Sup. Ct. Rep. 418.

2. At common law a shipper by a common carrier could sue in the courts for any overcharge, that is to say, any unreasonable charge for transportation of freight. Texas & P. R. Co. v. Abilene Cotton Oil Co. 204 U. S. 426, 436, 51 L. ed. 553, 557, 27 Sup. Ct. Rep. 350, 9 Ann. Cas. 1075. Por public reasons connected with general regulation, Congress saw fit, February 4, 1887 (24 Stat. at L. 379, chap. 104), to institute the Interstate Commerce Commission, and this law, with amendments, regulated commerce between the states. It was amended by what is called the Hepburn Act, June 29, 1906, 34 Stat. at L. 584, chap. 3591, Comp. Stat. 1916, § 8569, of which § 2 requires every common carrier to file with the Commission, and print and keep open for public inspection, schedules showing all rates, and “no change shall be made in the rates, fares and charges . . which have been filed and published by any common carrier in compliance with the requirements of this section except after thirty days’ notice to the Commission and to the public published as aforesaid, which shall plainly state the changes proposed to be made in the schedule then in force and the time when the changed rates, fares or charges will go into effect.” This section is an amendment of § 6 of Act of March 2, 1889. The provisions of this act applied “to any common carrier or carriers engaged in the transportation of passengers or property, wholly by railroad . . . from one place in a territory to another place in the same territory. . . There would seem to be no doubt that this section applied to Porto Pico. In point of fact, the Interstate Commerce Commission has not assumed active jurisdiction in Porto Pico, except that one of its members has been here, and the Commission has made orders from time to time in regard to safety appliance devices on Porto Pican railroads. There seems to be no contention that the American Railroad bas in this case filed its schedules with the Interstate Commerce Commission. On the contrary, it did file them with the Executive Council in 1907, and this body approved the rates heretofore existing. It is conceded that the proposed 20 per cent increase of rates has not been filed with the Interstate Commerce Commission, but notice has been given, by publication and otherwise, to shippers and to the Executive Council of Porto Rico of the proposed increase. This state of affairs grew out of the uncertainty whether the Interstate Commerce Act applied to Porto Rico or not, which was only removed by the decision in the Didricksen and similar cases. The Tones Act expressly abolishes the application of the Interstate Commerce Act, but this does not change the fact that it was applicable in 1907 and thereafter. The legality of the existing rates, however, is not in dispute. Whether notice was given to the Interstate Commerce Commission or not, they have been put in force and acted upon by the railroad and the public, and of them there is no complaint. As it was not disavowed by the Interstate Commerce Commission, the act of the Executive Council may possibly be considered as ratified and to have become the act of the Interstate Commerce Commission.

3. The action of the plaintiff in bringing this suit was at the instance of the Executive Council, and that body directed this action upon the bases that the local act of March 12, 1908, is in effect. There is no doubt that the Hepburn Act was paramount, and that so far as the local act conflicts therewith the local act must give way. But it is contended by the plaintiff that the local act is not inconsistent with the Hepburn Act so far as relates to rates. The local act in § 5, being amendment of 1911, says that public sex-pice corporations shall annually submit tariffs of charges, and the Executive Council not only examines these statements, but shall have “full power to amend, alter or add to or eliminate matter from such tariffs . . . and as so amended shall promulgate such tariff of charges . . . and the tariffs ... so promulgated shall until otherwise provided by the Executive Council constitute the tariffs . . . that shall be enforced by the public service corporations to which they apply, and such public service corporations shall not make any other such charge except as therein provided.” ■[Compilation 1911, § 342.] There may be amendment by the Council upon its own initiative or upon petition, “the intent of this section being to confer upon the Executive Council of Porto Eico, in respect to public service corporations . . . full power equitably and effectively to regulate the charges of said corporations and the conditions of service.” A fine is provided for violation of this provision. In § 7 it is declared “unlawful for any public corporation to charge, demand, collect, or receive a greater or less compensation for any service performed by it than is specified in the tariff . . . approved by the Executive Council,” under further penalties. Section 9 provides for emergency regulations by the Executive Council, and § 10 for complaints and investigation. Section 15 provides for suits at the instance of the Executive Council, and the case at bar is an instance in point.

Forfeiture of franchises is also provided for in certain cases.

The act is a comprehensive one, and provides for the regulation of all public service corporations, of which railroads are only one kind. It does not seem possible that this system as a whole can be consistent with that of national regulation of rates under the ITepburn Act. Whether there is any room for joint operation of the two laws need not be decided; but an act which gives the common carriers the right to fix their own rates upon thirty days’ notice, subject to regulation afterwards by the Interstate Commerce Commission, and an act which prohibits the enforcement of any rates until they have been approved by the Executive Council of Porto Pico would seem to have, in regard to rates, no room for common operation. If the Executive Council declined to authorize a rate, there would be nothing which the railroad could send up to the Interstate Commerce Commission, and the powers of' regulation by the national body would be subordinated to those of the local body. The two acts, therefore, are inconsistent and the Hepburn Act must prevail. Nor can acquiescence by Congress be properly inferred from length of time. This principle applies rather to construction of statutes than, as here, to the power to enact them. Congress does not need to disapprove a void law. Clayton v. Utah, 132 U. S. 632, 642, 33 L. ed. 455, 459, 10 Sup. Ct. Rep. 190.

4. It is contended, however, that, while this may be true, the local act may be regarded as. dormant, somewhat as in the case of local state regulations as to insolvency. These are dormant during the pendency of the national Bankruptcy Act. II Am. & Eng. Enc. Law, 2d ed. 59; Cyc. Bankruptcy, p. 421; § 5. This is not analogous to state local regulation of matters connected with interstate commerce, such as lighthouses, pilotage, and the like. Mobile v. Kimball, 102 U. S. 697, 26 L. ed. 239; Robbins v. Taxing Dist. 120 U. S. 492, 30 L. ed. 695, 1 Inters. Com. Rep. 45, 7 Sup. Ct. Rep. 592. It is based upon the principle that the state is a sovereign, and that its legislation survives a temporary regulation by Congress of the same, subject. It has been applied in Porto Eico in this court to certain commercial matters, on the ground that the Eoraker Act expi’essly continued in force tbe existing laws, except so far as affected by tbe national laws, sucb as bankruptcy. And tbe Jones Act in § 57 provides “that all laws and ordinances of Porto Eico now in force shall continue in force and effect.” Even upon tbe theory of suspension, it could not be said that tbe Porto Eican act was in force on March 2, 1917. A law that is suspended cannot be said to be in force. Tbe act of tbe Porto Eican legislature is not that of an independent body, like a state legislature, but is subordinate to legislation by Congress itself, that is to say, Congress confers tbe power of partial legislation on tbe local legislature. In no sense, when Congress itself acts upon tbe subject, can it be said that local legislation is suspended. It would amount to saying that a law which is repealed by a new act of Congress shall revive when tbe new law itself is repealed. This cannot be contended. Tbe case is even stronger, for the Porto Eican Act of 1908 was subsequent to tbe Act of Com gress of 1906, and it must be held that, so far as they covered tbe same ground, sucb as railroad rates, tbe Porto Eican act .never went into effect at all..

5. Tbe Local Law of 1908 applied to many other things than railroad rates, and to tbe extent of these other subjects it was a valid exercise of power granted by tbe Eoraker Act. Under tbe Eoraker Act, quite apart from tbe question of tbe Hepburn Act, Porto Eico could not legislate to tbe extent of fixing railroad rates. Tbe specific powers granted in tbe Eoraker Act do not embrace this subject, and it is doubtful whether Congress could give tbe power under tbe 14th Amendment. All Congress bad undertaken to do by tbe Hepburn Act was to allow tbe public authorities to declare void and unreasonable rates which bad been fixed by tbe carrier. It is not to be supposed that Congress meant in any event to authorize Porto Bieo to do more than Congress had done. It is the right of a carrier to fix its own rates subject to suit by an individual if a rate is unjust, and subject to general regulation by the public authorities. The Local Act of 1908 was valid as to all other subjects, and even as to railroads in certain respects. Por instance, there is nothing inconsistent with the act of Congress in the local requirement compelling railroads to file their rates with the Executive Council and otherwise make them public locally. This is merely following out the policy of the Hepburn Act. Nor is there anything improper in the provision in § 9 of the Act of 1908 that “the Executive Council shall have power in emergent cases to prevent injury to the business or interests of the people . . . temporarily to alter or amend any existing rate.” [Compilation 1911, § 346.] This would apply to any public service corporation other than railroads, and, if it affected an emergency not contemplated by the Hepburn Act, there is no reason why it would not apply even to railroads. A fortiori, if Congress repealed the Interstate Commerce Act, this discretionary power would still exist (Act March 2, 1917, § 57), not on the ground of any dormancy of the act, but on account of the coming about of the emergency which Congress had not provided for, nor had even inferentially declared should not be provided for. The fixing of rates is a legislative function. Reagan v. Farmers Loan & T. Co. 154 U. S. 397, 38 L. ed. 1023, 4 Inters. Com. Rep. 560, 14 Sup. Ct. Rep. 1047. It cannot be provided for by the courts or by the executive authority. It must be provided for by direct legislation or by fixing a commission to which shall be delegated such powers. In the case at bar this power would seem to rest at present with what is called the “legislative assembly” under § 38: “The legislative assembly of' Porto Eico is hereby authorized to enact laws relating to the regulation of the rates, tariffs, and service of public carriers by rail in Porto Eico.” [39 Stat. at L. —, chap. 145, Comp. Stat. —, § 3803p.] The legislative body in Porto Eico is elsewhere always called the “legislature,” consisting of a senate and lower house. Whether reference is made in this section to the existing legislative assembly so as to limit this power to this expiring body, or whether the reference is to the legislature under another name, is not now material. There is a legislative assembly at present from either point of view, but it is not necessary for either body to give the Executive Council power to provide for emergencies to prevent injury to the business or interests of the people. That has already been done by § 9 of the Act of 1908. Suppose, for instance, that an earthquake or cyclone destroyed a large part of the defendant railroad, the Executive Council would have the right under this section to provide for the emergency in favor of the railroad. Suppose, on the other hand, the railroad should wrongly think circumstances justified its increasing its rates 100 per cent, with the result of destroying the business and interests of the people. The Interstate Commerce Commission could not act, because its power has ceased. The legislature could not act, because the injury might be done before the legislative assembly could be reconvened. Section 9 is to be deemed as never dormant, but remaining in existence to meet any emergency, whether that is due to a change of legislative policy, natural events, or otherwise. The same result would follow if it was supposed that the repeal of the Interstate Commerce Act was intended by the Jones Act to occur only when the new local system has been thoroughly organized after tbe elections in July next. In sucb event tbe Interstate Commerce Commission would still have tbe potential power it bas always bad, but an emergency might occur wbicb tbe Interstate Commerce Commission, from its absence, could not rectify. The local law, in other words, is not to he considered as dormant, but as applying to anything or to any emergency wbicb comes within its scope, and does not come within tbe scope of tbe Interstate Commerce Commission. In view of tbe breadth and scope of tbe legislation of Congress as to Porto Rico it will not be presumed no power is granted to meet emergencies.

*

6. It seems that tbe defendant bas submitted to tbe jurisdiction of tbe Executive Council in the past, but considers that it bas no jurisdiction in tbe present. Jurisdiction cannot be conferred by consent, and whatever tbe acts of tbe parties in tbe past tbe question is only as to power in tbe present. Tbe defendant in this connection raises tbe point that tbe people of Porto Rico have no interest, and therefore cannot sue, courts being organized only to decide controversies between parties in interest. Section 15 of tbe local act declares that “whenever tbe Executive Council shall be of tbe opinion that a public service corporation, subject to its supervision, is failing or omitting . . . to do anything required of it by law ... or is doing anything or about to do anything . . . contrary to, or in violation of law ... it shall direct tbe attorney General of Porto Rico to commence an action or proceeding in tbe court having competent jurisdiction in tbe name of Tbe People of Porto Rico for tbe purpose of having said violation or threatened violation stopped or prevented, either by mandamus or injunction.” The attorney general shall thereupon take the proper steps. . . . “Such other persons and corporations as the court may deem necessary or proper to join as parties in order to make its order, judgment or writs effective, may be joined as parties upon application of the attorney general.” [Compilation 1911, § 352.] If the Executive Council has jurisdiction over emergencies, as above held, it has power to direct a suit to be filed-to cover the emergencies, and in that view of the case this suit is properly brought. Whether there shall be shown to exist such an emergency is a question of fact upon which the court does not pass. And whether there should not be joined as parties plaintiff or defendant, persons or corporations largely interested in the subject-matter, to wit, the tariff on sugar cane products, is a question which has not been presented. Under the new equity rules it would seem that persons interested may be joined pro inter se suo, so as to have the whole matter determined in one action. On the other hand, persons having such interest in the subject-matter of the action may not care to intervene under equity rule 31, and may prefer to proceed in their own individual actions. While the point is suggested, it is not necessary to discuss it further.

While, therefore, the present suit cannot, in the view of the court, be maintained under the power of the Executive Council to fix rates as declared by § I of the Local Act of 1908, it may be that the 20 per cent raise in rates proposed to be made by the railroad presents an emergency which will affect the business of the Island, according to § 15 of that act. It is agreed that a preliminary injunction, if issued, shall be without bond, and so the proper course would seem to be to retain the bill for five days so as to enable tbe plaintiff, if so disposed, to amend it so as to come under the emergency section of the Act of 1908, and make other parties if so disposed, and so justify a preliminary injunction.

It is accordingly ordered that the restraining order is continued in force for five days so as to permit proper amendment of the bill.

It is so ordered.

To use the thought of Chief Justice Marshall, we must remember it is a government we are expounding. M’Culloch v. Maryland, 4 Wheat. 407, 4 L. ed. 601.