Source: https://www.legalcrystal.com/case/90412/prentis-vs-atlantic-coast-line-co
Timestamp: 2019-04-18 17:04:10+00:00

Document:
Respondent Atlantic Coast Line Co.
So far as the federal Constitution is concerned, a state may, by constitutional provision, unite legislative and judicial powers in the same body.
A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under existing laws, while legislation looks to the future and changes conditions, making new rules to be thereafter applied.
The making of a rate by a legislative body, after hearing the interested parties, is not res judicata upon the validity of the rate when questioned by those parties in a suit in a court. Litigation does not arise until after legislation; nor can a state make such legislative action res judicata in subsequent litigation.
Proceedings legislative in nature are not proceedings in a court within the meaning of Rev.Stat. § 720, no matter what may be the character of the body in which they take place.
Whether a railroad rate is confiscatory so as to deprive the company of its property without due process of law within the meaning of the Fourteenth Amendment depends upon the valuation of the property, the income derivable from the rate, and the proportion between the two, which are matters of fact which the company cannot be prevented from trying before a competent tribunal of its own choosing. Where a state railroad commission, which is granted power by the state constitution to make and enforce rates, enacts and attempts to enforce rates which are so low as to be confiscatory, the proper remedy is by bill in equity to enjoin such enforcement, and such a suit against the members of the commission will not be bad as one against the state, but it should not be commenced until the rate has been fixed by the body having the last word.
While a party does not lose his right to complain of action under an unconstitutional law by not using diligence to prevent its enactment, on a question of railroad rates, when an appeal to the supreme court of the state from an order of the state Corporation Commission fixing such rates is given by the state constitution, it is proper that dissatisfied railroads should take this matter to the Supreme Court of their state before bringing a bill in the Circuit Court of the United States. Under the circumstances of this case, action on a bill was suspended to await the result of such an appeal.
These are bills in equity brought in the circuit court to enjoin the members and clerk of the Virginia State Corporation Commission from publishing or taking any other steps to enforce a certain order fixing passenger rates. The bills allege, with some elaboration of the facts, that the rates in question are confiscatory, and other matters not necessary to mention, and set up the Fourteenth Amendment, etc. The defendants appeared specially, and by demurrer and plea, respectively, put forward that the proceedings before the commission are proceedings in a court of the state, which the courts of the United States are forbidden to enjoin, Rev.Stats., § 720, and that the decision of the commission makes the legality of the rates res judicata. On these pleadings, final decrees were entered for the plaintiffs, and the defendants appealed to this Court. Therefore, as the case is presented, it is to be assumed that the order confiscates the plaintiffs' property and infringes the Fourteenth Amendment if the matter is open to inquiry. The question principally argued, and the main question to be discussed, is whether the order is one which, in spite of its constitutional invalidity, the courts of the United States are not at liberty to impugn.
The State Corporation Commission is established and its powers are defined at length by the constitution of the state. There is no need to rehearse the provisions that give it dignity and importance or that add judicial to its other functions, because we shall assume that, for some purposes, it is a court within the meaning of Rev.Stat. § 720, and in the commonly accepted sense of that word. Among its duties, it exercises the authority of the state to supervise, regulate, and control public service corporations, and to that end, as is said by the Supreme Court of Virginia and repeated by counsel at the bar, it has been clothed with legislative, judicial, and executive powers. Norfolk & Portsmouth Belt Line R. Co. v. Commonwealth, 103 Va. 289, 294.
the action of the commission, and, in collateral proceedings, the validity of the rates established by it cannot be called in doubt.
On July 31, 1906, under the provisions outlined, the commission published in a newspaper notice to the several steam railroad companies doing business in Virginia, and all persons interested, that at a certain time and place, it would hear objections to an order prescribing a maximum rate of two cents a mile for the transportation of passengers, with details not needing to be stated. A hearing was had, and the complainants (appellees) severally appeared and urged objections similar to those set up in the bills. On April 27, 1907, the commission passed an order prescribing the rates, but in more specific form. For certain railroads named, including all of the complainants except as we shall state, the rate was to be two cents; for certain excepted branches of the Southern Railway Company, two and one-half; for others, including the Chesapeake Western Railway, three, and for others, three and one-half cents a mile, with a minimum charge of ten cents. Publication of the order was directed, and at that stage these bills were brought.
are judicial, and we shall assume, without deciding, that, if it was proceeding against the appellees to enforce this order and to punish them for a breach, it then would be sitting as a court, and would be protected from interference on the part of courts of the United States.
But we think it equally plain that the proceedings drawn in question here are legislative in their nature, and nonetheless so that they have taken place with a body which, at another moment or in its principal or dominant aspect, is a court such as is meant by § 720. A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end. Legislation, on the other hand, looks to the future and changes existing conditions by making a new rule, to be applied thereafter to all or some part of those subject to its power. The establishment of a rate is the making of a rule for the future, and therefore is an act legislative, not judicial, in kind, as seems to be fully recognized by the Supreme Court of Appeals, Commonwealth v. Atlantic Coast Line R. Co., 106 Va. 61, 64, and especially by its learned president in his pointed remarks in Winchester & Strasburg R. Co. v. Commonwealth, 106 Va. 264, 281. See further Interstate Commerce Commission v. Cincinnati, New Orleans & Texas Pacific Ry. Co., 167 U. S. 479 , 167 U. S. 499 -500, 167 U. S. 505 ; San Diego Land & Town Co. v. Jasper, 189 U. S. 439 , 189 U. S. 440 .
in many cases in this and other United States courts in which the enforcement of rates has been enjoined, notwithstanding notice and hearing and what counsel in this case call "litigation" in advance. Legislation cannot bolster itself up in that way. Litigation cannot arise until the moment of legislation is past. See Southern Ry. Co. v. Commonwealth, 107 Va. 771, 772.
It appears to us that the most plausible objection to these bills is not the one most dwelt upon in argument, but that they were brought too soon. Our doubt is a narrow one, and its limits should be understood. It seems to us clear that the appellees were not bound to wait for proceedings brought to enforce the rate and to punish them for departing from it. Those, we have assumed in favor of the appellants, would be proceedings in court, and could not be enjoined; while to confine the railroads to them for the assertion of their rights would be to deprive them of a part of those rights. If the railroads were required to take no active steps until they could bring a writ of error from this Court to the Supreme Court of Appeals after a final judgment, they would come here with the facts already found against them. But the determination as to their rights turns almost wholly upon the facts to be found. Whether their property was taken unconstitutionally depends upon the valuation of the property, the income to be derived from the proposed rate, and the proportion between the two -- pure matters of fact. When those are settled the law is tolerably plain. All their constitutional rights, we repeat, depend upon what the facts are found to be. They are not to be forbidden to try those facts before a court of their own choosing, if otherwise competent.
"A state cannot tie up a citizen of another state, having property within its territory invaded by unauthorized acts of its own officers, to suits for redress in its own courts."
this point are Chicago & N.W. Ry. Co. v. Dey, 35 F. 866; Northern Pacific Ry. Co. v. Keyes, 91 F. 47; Western Union Telegraph Co. v. Myatt, 98 F. 335.
We admit at once that they have not the same weight in this case. The question to be decided, we repeat, is legislative -- whether a certain rule shall be made. Although the appeal is given as a right, it is not a remedy, properly so called. At that time, no case exists. We should hesitate to say, as a general rule, that a right to resort to the courts could be made always to depend upon keeping a previous watch upon the bodies that make laws, and using every effort and all the machinery available to prevent unconstitutional laws from being passed. It might be said that a citizen has a right to assume that the Constitution will be respected, and that the very meaning of our system in giving the last word upon constitutional questions to the courts is that he may rest upon that assumption, and is not bound to be continually on the alert against covert or open attacks upon his rights in bodies that cannot finally take them away. It is a novel ground for denying a man a resort to the courts that he has not used due diligence to prevent a law from being passed.
be answered on the particular facts. The establishment of railroad rates is not like a law that affects private persons, who may never have heard of it till it was passed. It is a matter of great interest both to the railroads and to the public, and is watched by both with scrutinizing care. The railroads went into evidence before the commission. They very well might have taken the matter before the Supreme Court of Appeals. No new evidence and no great additional expense would have been involved.
The State of Virginia has endeavored to impose the highest safeguards possible upon the exercise of the great power given to the State Corporation Commission, not only by the character of the members of that commission, but by making its decisions dependent upon the assent of the same historic body that is entrusted with the preservation of the most valued constitutional rights, if the railroads see fit to appeal. It seems to us only a just recognition of the solicitude with which their rights have been guarded that they should make sure that the state, in its final legislative action, would not respect what they think their rights to be before resorting to the courts of the United States.
Central Ry. Co., 203 U. S. 335 ; Ex Parte Young, 209 U. S. 123 .
It is proper before closing to mention one decision that was relied upon by the appellees, and one or two other matters peculiar to the cases before the court. In McNeill v. Southern Ry. Co., 202 U. S. 543 , the same moment was selected for bringing suit as in these cases, while an examination of the laws of North Carolina discloses that there were statutory provisions for appeal somewhat similar to those in the Virginia Constitution to which we now are referring. But, apart from other differences, in that case, the ground of the decree was that the state commission was dealing with a subject matter beyond its power; no regulation would have been valid (202 U.S. 202 U. S. 561 ), and the considerations to which we now are giving weight naturally were not urged. But this decision suggests that, in three of the present cases, an equally potent constitutional bar is alleged against the proceedings of the commission. The Chesapeake & Ohio, the Norfolk & Western, and the Southern Railway Companies all set up general laws, alleged to be incorporated in their charters and to constitute contracts, providing that their tolls should not be diminished except under conditions of fact alleged not to exist.
that the evidence should be laid, in the first instance, before the body having the last legislative word.
There is yet another difficulty in applying to these cases the comity which it is desirable if possible to apply. The Virginia statute of April 15, 1903, enacted to carry into effect the provision of the Constitution, requires, by § 34, certain, if not all, appeals to be taken and perfected within six months from the date of the order. 1 Pollard's Code of Virginia, c. 56a, 714. It may be that, when an appeal is taken to the Supreme Court of Appeals, this section will be held to apply and the appeal be declared too late. We express no opinion upon the matter, which is for the state tribunals to decide, but simply notice a possibility. If the present bills should be dismissed, and then that possible conclusion reached, injustice might be done. As our decision does not go upon a denial of power to entertain the bills at the present stage, but upon our views as to what is the most proper and orderly course in cases of this sort when practicable, it seems to us that the bills should be retained for the present to await the result of the appeals if the companies see fit to take them. If the appeals are dismissed as brought too late, the companies will be entitled to decrees. If they are entertained and the orders of the commission affirmed, the bills may be dismissed without prejudice and filed again.
were prescribed in detail by the constitution of the state as well as by statute. It was made primarily a judicial court of record of limited jurisdiction, possessing also certain special legislative and executive powers. When it proposed to make a change in a rate of a public service corporation, or otherwise to prescribe a new regulation therefor, the commission was required, sitting as a court, to issue its process, in the nature of a rule, against the corporation concerned, requiring it to appear before the commission at a certain time and place and show cause, if any it could, why the proposed rate should not be prescribed. The judicial question involved on the return to such rule was whether or not the contemplated rate was confiscatory, or otherwise unjust or unreasonable, and in the hearing and disposition of this question the proceedings of the commission, as prescribed by law, were, in every respect, the same as those of any other judicial court of record. It issued, executed, and enforced its own writs and processes; it could issue and enforce writs of mandamus and injunction; it punished for contempt, and kept a complete record and docket of its proceedings; it summoned witnesses and compelled their attendance and the production of documents; it ruled upon the admissibility of evidence; it certified any exception to its rulings, and its judgments, decrees, and orders had the same force and effect as those of any other court of record in the state, and were enforced by its own proper processes. It was not subject to restraint by any other state court, and from any and every ruling or decision by it an appeal lay to the Supreme Court of Appeals of the state, and was heard upon the record made for and certified by the commission, exactly as in the case of appeals from any other court, and, pending the decision of such appeal, the order appealed from might, by a supersedeas, be suspended in its operation.
and inquire into and determine every judicial question coming before it. It has repeatedly held itself to be a court, and subject to all the obligations thereof, and the Supreme Court of Appeals, the highest state judicial tribunal, has formally and expressly so held.
When this Court shall have, in the manner above indicated, fully heard all parties interested, and, proceeding by due process of law as to them, has judicially determined that the proposed rate or regulation is not confiscatory nor otherwise unjust or unreasonable, then, but not until then, it is authorized by the Constitution and laws of Virginia to enter an order prescribing such rate or regulation, from which order an appeal lies to the Supreme Court of Appeals, with, as has been said, the right of suspension by supersedeas pending the appeal. Assuming that the prescribing of the rate after it has been judicially determined to be reasonable is necessarily a legislative act, then the constitution of the state expressly confers upon this commission the legislative power of prescribing a rate after it has judicially ascertained and decided it to be not below the limit of "reasonable."
"hear and consider any objections which may be urged against a rule, regulation, order, or requirement of the commission fixing and prescribing a maximum rate of charge of two cents per mile for the transportation of passengers over the line of any railroad company in this state, operated by steam, between points within the State of Virginia."
Accordingly, on November 1, 1906, the appellee companies appeared before the commission, and filed their answers in writing, setting forth why, in their opinion, the proposed two-cent rate would be less than reasonable.
hearing of this question of the reasonableness of the proposed rate, in which hearing the appellee companies were represented by counsel and introduced elaborate evidence.
No evidence was taken or considered save publicly in the open sessions of the commission, when appellees were given the fullest opportunity (of which they availed themselves) to be present, to introduce their own testimony, by witnesses and documents, to cross-examine opposing witnesses, to object to the introduction of witnesses or documents, and to except of record to any ruling whatever of the commission.
By this order, certain passenger rates -- in no case less than two cents per mile -- were prescribed for the defendant railroad companies, to go into effect on July 1, 1907, the commission being of opinion, and so deciding, that the rates therein fixed were not confiscatory nor otherwise unjust or unreasonable to said companies.
on June 27, 1907, to show cause why such injunction should not be granted. Appellants entered a special and limited appearance, and filed their joint and separate answers to the rule, in which they denied the jurisdiction of the court.
The cause having been heard on the rule and answers thereto, the circuit judge, on July 10, 1907, overruled the objection to the court's jurisdiction and granted injunctions pendente lite, as prayed for. Thereupon the defendant Prentis filed his demurrer, based on substantially the same grounds as those assigned in the answer to the rule, and the three other defendants filed their joint and separate plea, setting up specifically that the commission is a court within the purview of § 720 of the United States Revised Statutes, and on September 10, 1907, by leave of court, all four of the defendants filed their joint and separate plea of res judicata.
December 26, 1907, the court overruled the demurrer and both pleas, and, the defendants declining to answer further, a final decree was on that day entered in each case, taking the bills pro confesso and perpetuating the injunctions, with costs. Thereupon appeals were allowed and prosecuted from said final decrees.
some exceptional and imperative necessity is shown to exist, which cannot be asserted here.
"in the legal sense is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and goodwill, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws."
It is recognized as such by § 720 of the Revised Statutes.
take their chances for the fixing of rates in accordance with their views in a tribunal provided for that purpose by state constitution and laws, and then, if dissatisfied with the result, decline to seek a review in the highest court of the state, though possessed of the absolute right to do so, and invoke the power of the federal courts to put a stop to such proceedings, is, in my opinion, utterly inadmissible and of palpably dangerous tendency.
Such has been the law since 1793. In my judgment, the Virginia State Corporation Commission is, in every substantial sense, a court. It is conclusively shown to be such by the provisions of the Constitution and laws of Virginia, as interpreted by the highest court of Virginia and as summarized in the opinion of the CHIEF JUSTICE. If the commission is a court within the meaning of § 720, then the circuit court of the United States was wholly without authority to stay the proceedings of that tribunal by the writ of injunction. The circuit court could not grant the writ of injunction in face of the act of Congress expressly forbidding such action. No one will question the authority of Congress to prescribe the limits of the jurisdiction of the courts created by it.
by the judgment of the commission or by the judgment of the court of appeals of Virginia. A conclusive answer to this suggestion is that, if the final action of the commission in any case of ratemaking amounts to confiscation of the property of the corporation whose rates are regulated, and therefore is to be held wanting in due process of law as taking private property for public use without just compensation, and if such action be sustained by the highest court of Virginia, then the way is plainly open to bring that question to this Court upon writ of error. Rev.Stat. § 709. In this way, any federal right, specially set up and denied by the state tribunals, can be adequately protected by the final judgment of this Court.

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