The San Francisco call., 1899-05-14
.HERR|N WROTE
BLACKST0CK'S
REPORT
Continued from First Page.

Judge McKenna, based upon numerous
decisions of the Supreme Court of the
United States, is that while the commits
sion has the constitutional and statutory
authority to regulate and to fix freights
and fares, yet the same must be just
and reasonable and the question as to
whether or not they are just and reason
able may be investigated and determined
by a court of competent jurisdiction, it
having been established by the decisions
that if the Legislature OF commission
created by the Legislature or by consti-
tutional law shall have justly and rea-
sonably regulated and fixed freight and
fares of common carriers, the same must
be sustained by the courts, but if, on the
contrary, they are fixed by the Legisla-
ture or the commission unreasonable and
unjust and confiscatory in their charac-
ter, then the court will declare them to be
void and of no effect
The respondents, the Railroad Commits
sioners, in their answer to the complain
ants bill, in addition to denying all the
allegations thereof, raised a number of
important affirmative defenses, among
which was the alleged unlawful combina-
ton of the so-called Pacific system, and
the illegality of the leases made by the
constituent railroad companies compos-
ing said system to the Southern Pacific
company. JuuSe MChGlIHd, III passing <
upon these important propositions, held
that the commission was estopped from
raising them, because in its resolution it
had recognized the system and undertook
to fix the rate of charges which the roads
operated by the Southern Pacific Com
pany of California should be permitted to
charge as whole. 1t was further held
by Judge McKenna in this regard that,
while it was the duty of the commission
to regulate and fix freight and fares, yet
it had no Jurisdiction to investigate ques-
tions regarding the corporate powers of
railroad and transportation companies or
regarding contracts made or entered into
by them for the purposes of combination
or otherwise.
It is evident that many questions which
might be raised against the railroad COM
pany in these matters have been fore
closed by the particular form of the ac-
ton of the commission complained of in
this case, and it certainly is desirable
that in any litigation which may be
raised the action of the commission
should be in such form as would enable
the commission to defend its action as
thoroughly as possible.
So far as this case is concerned, it ap-
pears that the only material question pre-
sented is as to whether or not the per
cent grain-rate schedule promulgated by
the commission is fair, just and reason
able. 1t is matter of common knowledge,
and undoubtedly the fact, that the South
ern Pacific Company, in order to meet
the competition of the Valley Road has
reduced its rates in the territory affected
by that competition, so that the same are
now, and have been for some time, as low
as or even lower than the rates prescribed
by the s per cent grain-rate schedule of
the commission; also that reductions have
been made by the Southern Pacific Com
pany in the Sacramento Valley, so that
at the present time the difference be-
tween the rates actually enforced by the
railroad company and the rates proposed
by the s per cent grain-rate schedule is
very small, such difference, in all prob
ability not affecting the revenue of the
company to an extent exceeding $50, 900
per annum. Certainly, as the case now
stands, the substantial pecuniary matters
in issue are slight, and the question is
whether a decision of these matters in
favor of the State will justify the great
expense and delay which must be in
Cured in order to reach a final decision.
| am advised by the Attorney General
and by counsel retained in this case by
our predecessors that it will require enor-
nous labor and a very wide range of in
vestigation of expert witnesses and the
expenditure of not less than $50. 900 to
prepare the case for submission by the
respondents to the Circuit Court for deci-
sion; that it will take years to try it, one
counsel stating that it will require pos
sibly five or six years, another one that it
would not take less than four years to
take the case through the Supreme Court
of the United States, where it would in
evitably be taken should it be pushed to
final judgment. | am further advised, as
appears by the records and by the report
of the Attorney General to the Assembly,
that up to the present time there has
been paid and incurred in counsel fees
and expenses of this case more than SAB 900
the counsel fees alone amounting to over
$50 ,000 And it further appears from like