The record-union., 1896-12-01

representatives of the railroad that the
lesser branches of the corporation could
not be affected by the commission, In
,aSmuch as the minor roads were not
classed as Southern Pacific roads. 1t
had been held that the Southern Pacific
merely acted as the agent of the
branches, and as all resolutions of the
commissioners had been directed to the
Southern Pacific Company, necessarily
they did not affect the lesser or leased
roads,
Judge McKenna declared the conten-
tion false one. 1.-THE Board of Com
missioners is legally established
body, and its assumption that the
branch or leased roads formed a part of
the great system was correct. The
pewers vested in a corporation by its
charter could not be evaded nor
changed" said his honor.
Relative to the powers of the Com
mission to regulate and to enforce rates
Judge McKenna declared that in the
Legislature the power was practically
unlimited, and that the very existence
of carrier was it's subservience to
such powers of the commission. How
ever. certain decisions rendered in
number of cases placed a different
phase upon the matter.
Quoting these decisions, his honor
found that no commission had the pow
er to so affect the value of any prop
erty by reducing rates as to injure the
stockholders; that no legislation could
be effected unless it be shown to be
necessary and that the existing rates
were exorbiant. Similar limitations
,r-aro o1co - cOO-
tinued his honor, "the power of a State
to lower rates is absolute. but the re-
ductions must be reasonable and bound
by existing circumstances"
The other questions touched on in the
litigation were as to the legality or the
board 1t had been contended that
Messrs. LaRue and Stanton were rem
dered incompetent to act by reason OF
certain pledges made prior to their cleo
ton. Moreover, it was held by the rep
Tesentatives of the railroad that La
Rue was a shipper therefore Judge in
his own case, and that the board had
acted in an arbitrary manner. Another
contention was that in the law no men
ton was made to the effect that rea
sonable rates should be fixed. Judge
McKenna briefly disposed of this by
stating that in all cases it must be un-
derstood, whether expressed or not, that
reason should be exercised in the adop-
ton of nay law or rule of any commits
sion or similar body
AS to the contention regarding cleo
ton pledges, his honor held it to be of
no consequence at all, as the alleged
agreements to cut the rates had been
made before the election. The sug-
gestion as to LaRue being a shipper,
Judge McKenna seemed to consider of
equally slight Importance, in view of
the fact that it was the boards action
and not his individually that was in
question.
The matter of the deficits shown by
the Southern Pacific Company to exist
upon several branch roads was then
taken up Testimony introduced by the
railroad tended to show that the Oregon
and California road had not collected
receipts enough to pay the bonded in
debtedness. Judge McKenna, how
ever held that the deficit was not loss
to the Southern Pacific Company. by
reason OF the amount of money paid into
the general fund for the lease. The
road alone might appear to be losing
money, but as operated in conjunction
with the entire system clearly showed
no deficit
Up to this point Judge McKenna had
successfully overcome almost every
contention of the railroad, and it an
peared TO be foregone conclusion that
the decision would be favorable to the
commission. However the financial no.
sTtion proved to be the vital point at
issue.
During the taking of testimony in the
case the railroad had introduced owl
dence to show that during the wears
io34 ana 1879 the operating expenses of
the Southern Pacific system had been
greater than the receipts. In his de-
cislon to-day Judge McKenna carefully
reviewed the maze of figures in this
connection, and by series of compu
tations materially reduced the alleged
deilclts in the branch roads Indeed in
one instance. that of the California and
oregon Railroad, a surplus instead of
a loss could be shown.
Nevertheless, the total of all roads
clearly showed a loss for the year 1894
which in 1895 had increased Therefore
his honor decided that the ruling of the
commissioners had been unreasona Bile
and worked a hardship upon the rail-
road.
Therefore" he concluded, 'the order
OF the court is that that part of the or
der staying the execution of the reso-
luton of the Board of Railroad Com
m1Ssioners, reducing rates on grain 3
per cent. be continued until the further
order Of the court-that the balance of
the restraining order be dissolved
To summarize. his honor decides that
the Board of State Railroad Commits
sioners is legally organized body and
has the power 10 regulate rates But
that power is qualified by the reason
that all regulations or reductions must
be made reasonably and after due in
vestigation. In short, his honor finds
that the regulation of rates must be in
conformity with the earning capacity
Of the roads in question.
Relative to the - per cent. reduction
on freight rates 1t will be remembered
that the commissioners passed a reso-
luton only to make the cut after due
investigation. The cut has not yet
been made, and Judge McKenna held
that he could not pass upon any of the
acts of body not yet accomplished
Consequently no injunction could be
issued against law not in operation.
IOWA SHORT OF FUNDS.
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