The Birmingham age-herald., 1911-04-04
SUPREME COURT TAXES 4 RAP Al
 THE RAILROADS
Officials Predict Separation of Railroads From the
 Coal Business
CHARGES VIOLATION
 OF HEPBURN LAW
Government Is Given Opportunity of Enjoining Lehigh Valley Rail- road From Carrying Coal in
 Violation of Law

flOldtlOH OI LAW
 Washington. April 3-The commodities
 clause" of the Hepburn rate law inter-
 preted two years ago by the supreme
 court of the United States into what was
 commonly supposed to be an impotent group of words, was given new life to-
 day by that same tribunal in a second 1 interpretation. So effective was the re-
 consideration of the subject that gov
 ernment officials tonight predict that the evils sought to be corrected by the leg l islation will now be remedied and raii- l road bushes henceforth divorced from
 coal business.
 By virtue of the decision the govern
 ment will be given an opportunity to
 enjoin the Lehigh Valley Railroad com
 rany from carrying coal in alleged vio- | lation of the ''commodities clause" of the
 Hepburn rate law H | The circuit court of the United States
 for the eastern district of Pennsylvania
 denounced the law as unconstitutional.
 The supreme court of the United States
 reversed the lower court holding the
 law constitutional as construed. The | ceedings.
 l The government then took the position | that the supreme court had decided
 merely that ownership by railroad of
 a stock company was not such an in-
 terest in coal was proposed by the
 law. Therefore it sought to amend it's
 original petition for injunction so as to
 allege that the coal companies were
 mere devices of the railroads to evade
 the law and that the railroads had
 legal or equitable interest in the coal The government made a test case suit l against the Lehigh Valley Railroad com
 pany.
 The lower court refused permission to
 amend and likewise refused request to
 dismiss the suits against the Earle rail-
 road company. the Central Railroad d
 New Jersey and the Pennsylvania Rali-
 road company without pretudces so that new suits can be ins sit-sef igntnst kaa
 companies From these rhlings tho gov
 ernment appealed to the supreme court.
 Decision Announced
 | Chief Justice White today announced
 the decision of the court. The entire
 bench agreed with his statement. al 1 lnOuSn OH lht PANNiObS eS'iHi''e''etS'i ~-
 the case Justice Harlan dissented from
 the judgment of the court.
 The chief justice today took the posi-
 ton that the lower court had erred in
 refusing to allow the government to
 amend it's original petition. He referred
 to the refusal as ''an absolute abuse of
 discretion" He said, however, that the
 abuse was obviously oceasioned by
 misconception of the character of the
 action of this court and the scope of the
 mandate
 i While that decision expressly held,' said the chief justice in referring to the holding of the supreme court two years ago, that stock ownership by railroad company in a bona fide cor porat tion irrespective of the extent Of such ownership, did not preclude railroad company from transporting the commodity manufactured, mined, produced or owned by such corpora tion, nothing in that conclusion fore closed the right of the government to question the power of the railroad com many to transport in interstate com- merce commodity manufactured, mined. owned or produced by cor poration in which the railroad held stock ana where lut poWti ol thc railroad company as stockholder was used to obliterate all distinctions be- tween the two corporations. That is to say where the power was eXerted in such manner as to commngle affairs of both as by necessary effect to make such affairs practically undistinguish- able and therefore to cause both cor porations to be one for all purposes.
 The decision was summed up by the chief justice in these words:
 Violates Commodity Clause
 'It must be held that while the right of a railroad company as stockhold- CT to use its stock ownership for the purpose of a bona fide separate admin istration of the affairs of the corpora ton in which 1t has stock Interest may not be denied. the use of such stock ownership in substance for the pur- pose of destroying the entity of a producing. etc, corporation, and of commin gling It's affairs in administra-
 tion with the affairs of the railroad company so as to make the two cor porations virtually one, brings the railroad company so voluntarily acting as to such producing, etc, corporation within the prohibition of the commod- | fties clause. In other words, that by operation and effect of the commod- | ities clause there is duty cast upon a railroad company purposing to carry I l the producing. etc. corporation in which it has a stock interest, not to abuse such power virtually to | do bv indirection that which the cem- 1 modities clause prohibits, duty which nlainly would be violated by the un- necessary commingling of the affairs of the producing company with its own so as to cause them to be one and in- separable.
 As a result of the decisions the low
 CT court will not allow the government | to amend its petition in the Lehigh Valley railroad case. A different situ- | ation arises in regard to the Erie. the | Central of New Jersey and the Penn l sylvania. In those cases the govern | ment did not \ask for leave to amend, | considering the Lehigh Valley suit g. l test case. The government did ask l the court to dismiss the Erie, Central | tral and Pennsylvania cases without 1 prejudice but this was refused and
 the circuit court dismissed the cases.
 This dismissal was today approved hy | the supreme court. Ordinarily this
 would preclude the government bring
 ing new suits against these railroads. | Government officials tonight expressed doubt as to whether further proceed :, ings could be taken against the Erie, Central and Pennsylvania, but an inc tCONTINUED ON PAGE 1l