State ex rel. Railroad Commissioners v. Louisville

62 Fla. 315

• Court: Supreme Court of Florida
• Decided: June 15, 1911
• Status: Published

Opinion

Whitfield, C. J.

— The purpose of this proceeding is to enforce the order of the Railroad Commissioners set out in the statement requiring the respondents to cease carrying freight cars in certain designated trains between Jacksonville and Pensacola, points within this State, and to observe a prescribed schedule in the operation of such trains.

It is not contended that the order the relators seek to have enforced is illegal on its face. The questions presented are whether the averments of the return to the alternative writ that are admitted by the demurrer show that the enforcement of the order as made (1) will deny to the respondents in their property rights due process and equal protection of the laws; (2) will unlawfully burden or regulate interstate commerce; (3) will be unreasonable, unnecessary, arbitrary and impracticable with reference to the respondents and the public who are affected by the order.

The demurrer admits as true all well pleaded averments of fact, and also all fair and pertinent inferences or conclusions of fact, contained in the return, that are not inconsistent with or repugnant to the accompanying specific detailed averments of facts and circumstances. But the demurrer does not admit conclusions of law stated in the return. If the facts stated in the return and admitted by the demurrer do not amount to a defense to the writ, the demurrer is well taken. But if the detailed specific facts and circumstances that are well pleaded, justify the conclusions of fact and of law- that are asserted, and constitute a defense to the alternative writ, the demurrer should be overruled.

Railroad companies are by the State permitted to use franchises and to render the public service of common carriers, primarily to meet the reasonable requirements of transportation for the public. For such service the carrier is under the law entitled to only a reasonable compensation to be ascertained by a proper consideration of all the facts and circumstances affecting the service, both as to the carrier and as to the public severably and collectively who are to be served. Property, labor and management are under the law devoted to the public service voluntarily engaged in, subject to the burden of lawful governmental regulation in the interest of the public to be served, as well as subject to the requirement of law that reasonably adequate facilities shall be afforded, and that only reasonable compensation is allowed. Remuneration for the property and labor used depends upon the result.of a reasonable compensation for service rendered. The amount and reasonableness of the return for property used in the service resulting from compensation for service rendered depends upon circumstances in the absence of valid legislation on the subject. If a governmental regulation does not unreasonably discriminate against a carrier there is no denial of the equal protection of the laws. • If. a regulation. is not so unreasonable, unjust and arbitrary as to prevent the carrier from receiving a just compensation for service rendered, there is no deprivation of property without due process of law. If a regulation does not directly and materially burden Interstate Commerce or conflict with regulations prescribed or lawfully authorized by Congress, the interstate commerce clause of the Federal Constitution is not violated. If a regulation within the authority conferred in not in its terms or in its operation unjust and unreasonable as to the carrier or as to the persons, localities or commodities affected by it, the authority given by the statute to the Railroad Commissioners to make just and reasonable rules and regulations as to intrastate transportation is not exceeded or violated.

< The Railroad Commissioners are statutory officers authorized by the constitution. Their power and duties are only such as are expressly or impliedly conferred by statutes. When acting within the authority conferred upon them, a wide discretion is accorded to the Railroad Commissioners; and an alleged abuse of discretion by them must be affirmatively and sufficiently shown by admissions or proofs before the courts will interfere. Valid regulations of the Railroad Commission should be made effective as contemplated by the constitution and statutes. The Railroad Commission is a branch of the State Governmental authority, and the statute expressly provides that rates, rules and regulations made by them shall be regarded as prima facie reasonable and just. If the admissions or proofs in judicial proceedings clearly show a regulation of the Eailroad Commissioners to he a violation of law or an abuse of discretion that in effect confiscates property, or unreasonably and illegally imposes burdens affecting property rights, it operates as or amounts to a deprivation by the State of private property rights without due process of law or to a denial by the State of the equal protection of the laws, and the courts will afford appropriate relief. Likewise if a regulation is shown by admissions or proofs to be an unlawful burden upon Interstate Commerce or to be a violation of any provision of law, the courts will, in appropriate proceedings, interfere and enforce the law.

A railroad common carrier may, in addition to the facilities and accommodations already furnished, be required to render a particular service that it is essentially the duty of the carrier to do for the reasonable convenience of its patrons among the public, and to meet the reasonable requirements of the public service undertaken. Even though such a particular duty if enforced would be in itself unremunerative and burdensome, such a result would be an incident to the service voluntarily undertaken, in consideration of the franchises permitted-to be used for the public good, and the property rights of the carrier would not thereby be unlawfully invaded, if the particular service is reasonably necessary for the public convenience, and the burden to the carrier has some fair relation to the benefits accruing to the public, and the burden of the particular service, considered with reference to the entire business of the carrier, does not in reality amount to a denial to the carrier of a reasonable compensation for the service rendered by it as an entirety. See State ex rel. Railroad Commissioners v. Florida East Coast R. Co. 57 Fla. 522, 49 South. Rep 43, North Carolina Corporation Commission v. Atlantic Coast Line R. Co. 137 , 49 S. E. Rep. 191; affirmed in 206 U. S. 1, 27 Sup. Ct. Rep. 585 11, Ann. Cas. 398.

Where it appears that a particular service is a duty vitally necessary to the public, and its performance is essential in adequately rendering a general public service as common carrier, the fact that the performance of the particular duty will be unremunerative will not in view of the nature of the duty to the public excuse non-performance. See New York v. Barker, 179 U. S. 287, 21 Sup. Ct. Rep. 124; Missouri Pac. Ry. Co. v. Kansas, 216 U. S. 262, 30 Sup. Ct. Rep. 330. And if the performance of a particular useful, but non-essential duty will as a part of a general public service contribute to the public convenience, the fact that the particular service must be rendered at a loss, does not, in view of the nature of the duty required, excuse non-performance; but the loss occasioned by the performance of the particular duty may be considered in determining the reasonableness of the order requiring the particular service to be rendered. Atlantic Coast Line Railroad Company v. North Carolina Corporation Commission, 206 U. S. 1, 27 Sup. Ct. Rep. 585.

The general and special powers conferred by the statutes of the State upon the Railroad Commissioners are ample to authorize them to make and enforce just and reasonable orders, rules and regulations for the furnishing by the respondents of reasonably adequate facilities and accommodations to the traveling public by the operation of the two passenger trains mentioned in the order, separate from freight cars, and for establishing schedules to be observed in operating such passenger trains between points within this State; and all such orders, rules- and regulations when made are by the statute declared to be prima facie reasonable and just. If such particular regulations are reasonably useful and expedient for the just requirements of the public service being performed by the respondents, thereby making it a duty of the carrier to render the service, the regulations if not illegal may be énforced even though the service required is not remunerative, unless it is made to clearly appear that the particular- regulations are so unreasonable and arbitrary that their enforcement will operate to deny to the respondents a reasonable compensation for the entire service rendered by the carrier.

In determining whether a rate, rule, regulation or order of the Eailroad Commission upon a subject within its authority is so unreasonable and arbitrary as to be illegal and unenforcable. the court, in deference to the governmental functions conferred by law upon the Commissioners, will not only require the prima facies of reasonableness impressed by the statute upon the rate, rule, regulation or order to be overcome by admission or proofs, but will require the admissions or proofs of facts tending to show unreasonableness to be clear and convincing, every reasonable doubt being yielded in favor of the rate, rule, regulation or order.

The reasonableness of a rate, rule, regulation or order of the Eailroad Commissioners is to be determined by a consideration of the rights of all parties directly and materially affected by the rate, rule, regulation or order. This involves a consideration of all the facts and circumstances by such appropriate processes and standards of reasoning and computation as are afforded by law or by common experience and the dictates of right and justice.

In determining whether the burden of a particular regulation enforced by State authority is confiscatory and unlawful because it prevents a railroad company from receiving a reasonable compensation for the service rendered taken as an entirety, the fair actual value of all the property and labor and management rightly used in rendering the service should be considered. The cost of reproduction of the property may be an element to be considered in ascertaining the real value of the property used, but it is not the value that is to be arbitrarily considered in determining what is a reasonable compensation for the service rendered as a whole by a common carrier. Wilcox v. Consolidated Gas Company, 212 U. S. 19, 192 Sup. Ct. Rep. 29. Where the same property, labor and management are used at the same time by a common carrier in interstate and intrastate commerce, the value of the property and labor and management used should be properly apportioned in determining the reasonableness of the compensation for service rendered by the carrier in the intrastate business taken separately and as an entirety, or in connection with the interstate business concurrently done. See State ex. rel. Atty. Gen. v. Atlantic Coast Line R. Co., 48 Fla. 146, 37 South Rep. 657; State ex. rel. S. A. L. Ry., 48 Fla. 129, 37 South. Rep. 314.

■ The averments of the return as to the enforcement of the order being adenial of due process and equal protection of the laws are as follows:

“That the Louisville & Nashville Railroad Company has operated and managed its roads lying in the State of Florida, including the line between Pensacola and River Junction, with the utmost economy, consistent with the safety and dispatch of its passengers, and with the safe and prompt handling of its freights; that it has purchased supplies and equipments of the class and character required, as cheaply as.it could get them; that its employes are paid as low wages as they would be employed at, taking into consideration their efficiency and ability,to handle thé.teiins 0f the said Louisville & Nash¡ville. Railroad Company, with despatch and safety; that all expenditures made in connection with and upon the said lines of railroad have been made as cheaply as possible ; yet, that by and from the operation of the said road, conducted in the best manner known to the respondent, and as it believes, in the most economical manner possible, the said respondent has not been able,by the operation of its said lines in Florida, to receive from its business on said roads, and thereby to realize a sum sufficient to pay its operating expenses, and interest exceeding 3% upon the cost of reproduction of said road; that money cannot be borrowed in the State of Florida, for ordinary purposes for use in industrial enterprises, at less than from 7% to 8%, and for use in large enterprises, like the construction and improvement of railroads, for less than 5% to 6%; and that the profits ordinarily made by industrial enterprises in Florida usually exceed 8%; that the legal rate of interest in the State of Florida allowed upon judgments and decrees and upon contracts where no rate is stipulated thereon, is 8%; and that if the said schedule directed by Order No. 346 be put into operation, and the said freight cars eliminated from trains Nos. 1 and 4, the cost of operating under said schedule, and the loss of the fast freight business, or the cost of operating' a special fast freight train, would reduce the net receipts of the said respondent from the operation of its said lines, and would render it still more unable to realize from said operation sufficient to pay the cost of operation of said lines, and any interest exceeding 3% upon the cost of reproduction of the same.

And the said respondent says that the putting into effect of the said Order 346, producing the said result, would be a deprivation by the State of Florida of the respondent of its property without due process of law, and in violation of the provisions of the Fourteenth Amendment of the Constitution of the United States, and would deny to the said respondent the equal protection of the law, and thereby violate the provisions of the said constitutional amendment.

That the Seaboard Air Line Railway Company has operated and managed its roads lying in the State of Florida, including the line between Jacksonville and Pénsacoía, with the utmost economy, consistent with the .safety and despatch of its passengers, and with the safe and prompt handling of its freights; that it has purchased supplies and equipment of the class and character required, as cheaply as it could get them; that its employes are paid as low wages as they would be employed at, taking into consideration their efficiency and ability to handle the trains of the said railway, with despatch and safety; that all expenditures made in connection with and upon the said lines of railroad have been made as cheaply as possible; yet, that by and from the operation of the said road, conducted in the best manner known to this respondent, and as it believes, in the most economical manner possible, the said respondent has not been able, by the operation of its said lines, in Florida, to receive from its business on said roads, and thereby to realize a sum sufficient to pay its operating expenses, and over a reasonable rate of interest upon the cost of reproduction of the said road; and that if the said schedule directed by Order No. 3á6 were put into operation, and the said freight cars eliminated from trains Nos. 78 and 79, the cost of operating under said schedule, and the loss arising from the loss of the fast freight business, or the cost of operating a special fast freight train, would reduce the net receipts of the said respondent from the operation of its said lines, and would render it still more unable to realize from said operation sufficient to pay the cost of operation of said lines, and any interest upon the cost of reproduction of the same.

And the said respondent says that the putting into effect of the said Order No. 346, producing the said result, would be a deprivation by the State of Florida of the said respondent of its property, without due process of law, and in violation of the provisions of the Fourteenth Amendment of the Constitution of the United States, and would deny to the said respondent the equal protectiion of the law, and thereby violate the provisions of the said constitutional amendment.”

These averments considered separately or in connection with other averments do not show that the enforcement of the order will illegally deprive the respondents of property rights without due process or equal protection of law, because the regulation requires the performance of a duty of respondents, useful and expedient if not necessary to the public good, and it does not appear that the regulation will deprive the respondents of a reasonable compensation for the entire service that is rendered by the carrier. There is besides no averment that the conclusion of illegality asserted will result if the real value of the property and labor used in rendering the entire intrastate service is considered in ascertaining whether the regulation will deny to the respondent a reasonable compensation for the intrastate service considered as an entirety, or that the proportion of the same property and labor that is also used for interstate commerce has not been included in the estimate upon which the conclusion of confiscation is asserted. No such unjust discrimination or unfair classification of persons affected by the regulation appears from the facts alleged as will justify the asserted conclusion that the respondents will in substantial reality be denied the equal protection of the laws if the order is enforced.

The State may enforce regulations to be observed by a railroad common carrier in intrastate transportation for the safety and convenience of the public who are affected by the regulation even though- interstate commerce is 'thereby indirectly and incidentally affected, without violating the interstate clause of the Federal Constitution, where such regulations are in aid of, or do not in fact impose substantial burden upon lawful interstate commerce or do not conflict with regulations of the subject that are legally prescribed or authorized by Congress. State v. Atlantic Coast Line R. Co., 56 Fla. 617, 47 South. Rep. 969, 32 L. R. A. (N. S.) 639; 7 Ann. Cas 5, and notes; Gladson v. State of Minnesota, 166 U. S. 427, 17 Sup. Ct. Rep. 627; Lake Shore & M. S. Ry. Co. v. State of Ohio, 173 U. S. 285, 19 Sup. Ct. Rep. 465; Chicago, R. I. & Pac. Ry. Co. v. Arkansas, 219 U. S. 453, 31 Sup. Ct. Rep. 275; Missouri Pac. Ry. Co. v. Kansas, 216 U. S. 262, 30 Sup. Ct. Rep. 330.

The avennents of the return as to the order being an unlawful regulation of interstate commerce are as follows:

“That the passengers who travel upon trains Nos. 1 and 4 of said respondent, between Pensacola and River Junction, are in part passengers who are destined to and come and go from and to points out of the State of Florida, to and from points in the State of Florida; that the freight cars carried on said trains are, in by far the largest part, through cars between points in Florida and between points outside of Florida, and laden with through freight between said points; that said through passenger and freight traffic by said trains Nos. 1 ánd 4 is Interstate Commerce; and that the regulation of the schedules of said trains by.the Eelators, in the manner and to the extent which would be effected by the operation of said order, and the prohibition of pulling fast freight cars upon the said trains, as hereinbefore set forth, would constitute an unnecessary, arbitrary and unreasonable interference with, delay of and injury to Interstate Commerce, and be in violation of the exclusive power conferred upon Congress by the Constitution of the United States, and especially by Section 8 of Article 1 of said constitution.”

“That the passengers who travel upon the trains 78 and 79 of the said respondent, between Jacksonville and Eiver Junction, are in part passengers who are destined to and come and go from and to points out of the State of Florida to and from points in the State of Florida; that the freight cars carried on said trains are, in by far the largest part, through cars between points in Florida and points outside of Florida, and laden with through freight between said points; that the said passenger and freight traffic- is Interstate Commerce, and that the regulation of the schedules of said trains by the relators, in the manner and to the extent which would be effected by said Order, and the prohibition of carrying said freight cars on said trains, as hereinbefore set forth, would constitute an unnecessary, arbitrary and unreasonable interference with, delay of and injury to Interstate Commerce, and would be in violation of the exclusive power conferred upon Congress by the Constitution of the United States, and especially by Section 8 of Article 1, of the said Constitution.”

While upon the facts admitted by the demurrer the regulation if enforced may incidentally and to some appreciable extent effect interstate commerce, it is not clearly shown that any substantial burden would thereby be imposed upon interstate commerce. Nor does it appear that the regulation would conflict with any regulation of the subject by authority of Congress. The presumptions are in favor of the order, and the regulation may result in an aid to interstate commerce that is consistent with congressional regulations and best subserve the interests of the public and the carrier. Respondents are not forbidden to operate a separate fast freight train for interstate freight. Interstate passengers will be benefited by the order. The reasonable requirements of passengers should not be subordinated to freight.

The order requiring passenger trains instead of mixed passenger and freight trains to be operated is prima facie reasonable and just, it apparently would be a convenience to interstate passengers and to all others, and it does not clearly appear from the averments of the return admitted by the demurrer, that the enforcement of the order in this severable particular will deny to the respondents due process or equal protection of the laws, or unlawfully burden interstate commerce, or that such regulation will operate unreasonably or unjustly on the respondents so as to make it beyond the authority of the Commissioners to make and enforce. The expediency of, if not the necessity for, the regulation to subserve the public convenience is shown by the order. In so far as the order requires the operation of separate passenger trains it may be enforced by appropriate mandatory writ.

Where a governmental regulation is directly prescribed by valid legislative enactment its expediency and reasonableness, when no violation of organic law is involved, will not be inquired into by the courts, since the legislature and the judiciary are co-ordinate branches of the State government, and legislative action is subject only to the organic law and is reviewable by the courts only when the supreme law of the land is violated.

But action taken by an administrative officer or board must not only be in accordance with organic law, but it must conform to applicable valid statutes and must be reasonable in its operation. Such administrative action is also subject to judicial review as to matters that are not concluded by the exercise of administrative discretion and action. Even though, the law gives to administrative action the effect of prima facie reasonableness, the courts may inquire into the reasonableness of the aption. If in appropriate judicial proceedings it clearly appears that the administrative action complained of is an abuse of discretion and is not in fact reasonable, it will not be enforced, and it may be annulled or checked.. Administrative discretion and action involving matters of mere expediency not amounting to unreasonableness or illegality will in general not be interfered with by the courts.

It is the duty of the carrier to render a service that is reasonably adequate and of most convenience to the greatest number of the public affected by the service.

The Eailroad Commissioners are authorized to make and enforce only reasonable and just rules and regulations for intrastate transportation. In determining the reasonableness of a regulation authorized by the statute “for the establishing of such schedules for the arrival and departure of trains at depots as public comfort and convenience may require,” the necessities and convenience of the public to be affected by the regulation should be considered as a whole and severally, regard being had for the number and reasonable requirements of patrons at different points on the line, and from connecting lines as well as the rights of the carrier. See State ex rel. Railroad Com’rs. v. Florida East Coast R. Co., 58 Fla. 524, 50 South. Rep. 425.

It clearly appears from the averments and the fair inferences of fact contained in the return and admitted by the demurrer that the enforcement of the schedule set out in the order will make the trains reach each terminus at such an early hour of the day as to result m great inconvenience to the large number of passengers on the line and from connecting lipes who daily patronize these trains to and from the termini and points on the line some distance from each terminus, while it would add correspondingly little to the convenience of the limited number of through passengers and to those from the more central points on the line, besides the loss that would result to the carrier by a decrease of the number of passengers from .and to points on the line nearer to each terminus, and the admittedly impracticability in important respects of the schedule prescribed.

The status of prima facie reasonableness given to the order by the statute and the presumptions in favor of the action of the Commissioners indulged in by the court are manifestly overcome by the facts and the fair inferences therefrom that are admitted by the demurrer. While the order indicates the expediency for a schedule more suitable than the present one in furnishing reasonably adequate facilities and accommodations to meet the just requirement of the patrons of the line, considered as a whole and by reasonable classifications, it is apparent from the admission of the demurrer that the schedule as prescribed in the order sought to be enforced, is not reasonáble and just in its effect upon the carriers and the patrons. It thus clearly appears that the order in so far as it prescribes the particular schedule for the arrival add departure of the designated trains is an unjust and unreasonable regulation not authoi’ized nor contemplated, but impliedly forbidden by the statute in expressly authorizing 'only just and reasonable regulations.

The power to make reasonable rules and regulations for establishing schedules does not contemplate that the Commissioners shall arbitrarily assume the actual control and management of the physical property of the carrier, so as to unlawfully deprive the carrier of its right to manage its own property; but such grant of power does contemplate that the Railroad Commissioners by making and enforcing just and reasonable rules and orders, shall supervise and regulate “the establishing” of proper schedules, as in all other matters affecting the service within the authority conferred by statute.

The Railroad Commissioners may perform their duties conferred by statute without awaiting a specific complaint to be made to them, therefore a motion of the relators is granted to strike the paragraph of the return numbered 12, averring in effect that no sufficient or appropriate specific complaint has been made to the Commissioners upon which to base their order.

The mandatory parts of the alternative writ being admittedly severable the demurrer to the return is sustained in so far as the return relates to the portion of the writ requiring the respondents to discontinue the hauling of freight cars on Louisville & Nashville trains No. 1 and No. 4, and on Seaboard Air Line trains No. 78 and No. 79, as stated in the writ; and the demurrer to the return is overruled in so far as the return relates to the portion of the writ requiring the respondents to' observe the prescribed schedule in the operation of the mentioned trains. % t>

Shackleford and Cockrell, J. J., concur. Taylor, Hocker and Parkhill, J. J., concur in the opinion.