Case Name: STATE OF NORTH DAKOTA EX REL. WM. LEMKE, Assistant Attorney General, Relator, v. CHICAGO & NORTHWESTERN RAILWAY COMPANY, Chicago, Milwaukee, & St. Paul Railway Company, Great Northern Railway Company, Midland Continental Railway Company, Minneapolis, St. Paul, & St. Ste. Marie Railway Company, Northern Pacific Railway Company, and Sam Aandahl, C. F. Dupuis, Frank Milhollan, as Board of Railroad Commissioners of State of North Dakota, Respondents
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1920-09-17
Citations: 46 N.D. 313
Docket Number: 
Parties: STATE OF NORTH DAKOTA EX REL. WM. LEMKE, Assistant Attorney General, Relator, v. CHICAGO & NORTHWESTERN RAILWAY COMPANY, Chicago, Milwaukee, & St. Paul Railway Company, Great Northern Railway Company, Midland Continental Railway Company, Minneapolis, St. Paul, & St. Ste. Marie Railway Company, Northern Pacific Railway Company, and Sam Aandahl, C. F. Dupuis, Frank Milhollan, as Board of Railroad Commissioners of State of North Dakota, Respondents.
Judges: Christianson, Ch. J., and Robinson, J., concur.
Reporter: North Dakota Reports
Volume: 46
Pages: 313–330

Head Matter:
STATE OF NORTH DAKOTA EX REL. WM. LEMKE, Assistant Attorney General, Relator, v. CHICAGO & NORTHWESTERN RAILWAY COMPANY, Chicago, Milwaukee, & St. Paul Railway Company, Great Northern Railway Company, Midland Continental Railway Company, Minneapolis, St. Paul, & St. Ste. Marie Railway Company, Northern Pacific Railway Company, and Sam Aandahl, C. F. Dupuis, Frank Milhollan, as Board of Railroad Commissioners of State of North Dakota, Respondents.
(179 N. W. 378.)
Carriers — rate order of railroad commissioners Iield void for lack of proper board action, and carriers restrained from enforcing increases.
The Board of Railroad Commissioners, pursuant to an application by the carriers, conducted a hearing attended throughout by one member of the board and a part of the time by two members. Several days thereafter a meeting of the hoard was held, at which the subject-matter of the application was discussed, but concerning which there was no vote taken on any matter presented in the application, although it is claimed an agreement as to disposition was reached. The minutes of the board do not show what action, if any, was taken. Subsequently, an order was issued under the seal of the board and signed by the secretary, disposing of the application, the secretary stating that such order was released pursuant to an understanding with one member of the board. It is held:
1. The purported order is void for lack of proper action by the Board of Railroad Commissioners, and the carriers are restrained from putting into effect rate increases based upon the purported order, and are required to refund increased charges which have been collected pursuant to such purported order.
Opinion filed September 17, 1920.
Original application for writ of injunction.
Writ granted.
Statement by Birdzelu, J. This is an original application for an alternative writ of injunction restraining the respondent railway companies from continuing to charge rates and fares according to schedules filed under a pux’ported order of the Board of Railroad Commissioners. Upon presentation of the application an order was issued out of this court, requiring the defendants to show cause why they should not be permanently _enjoined from charging any increase in intrastate passenger or freight rates, and from further contixxuing to charge the alleged unlawful incx’ease in intrastate freight axxd passenger rates put into effpet by them oxx September 1, 1920. Pending the heaxdng and the further order of the court they were enjoined from charging such rates and fares so put into effect, uxiless the increased charges be kept separate and apart and be subject to the order of the coux*t.
The petition alleges that on September 1, 1920, the respoxxdent railway companies increased their passenger rutes 20 per cent on intrastate commerce and their intrastate freight rates 35 per cent; that said increases are unjust, unreasonable, extortionate, and unlawful; that the increases wex*e made pursuant to the authority of a purported order of the Railroad Commission issued August 24, 1920. The authoxdty of the Railroad Comxnission to issue the order is dexxied, and it is further alleged that the same was never presexxted and adopted at a legal meeting of a majority of the board; that in fact two of the three commissioners were opposed to the order and to the increased rates, and had never given their consent or approval to the same.
It is also alleged that there had never been a proper hearing before the commission at which the public and shippers were given a fair opportunity to protect their interests; that the levels of intrastate freight and passenger rates of North Dakota are higher than in Minnesota and South Dakota by 40 per cent and 28 per cent, respectively; that the intrastate freight rates are made for the purpose of giving advantage to milling, packing, and other industries in Minneapolis, St. Paul, and other large cities, and, because of unjust discriminations, are destructive to similar industries in this state. The petition avers “that the intrastate rates in force August 81, 1920, were just and reasonable, and not confiscatory, and permit a reasonable profit.”
The prayer for relief asks that the defendants be restrained from continuing to charge the higher rates on intrastate traffic which were put in force on September 1st.
To the petition there is attached the affidavits of Frank Milhollan, a member of the Board of Railroad Commissioners, V. E. Smart, rate expert and statistician for the board, and a certified copy of the purported opinion and order complained of. The Milhollan affidavit states in substance that on August 21, 1920, there was a meeting of the Board of Railroad Commissioners, at which the question of increasing freight and passenger rates was discussed; that some notice of the hearing had been given sixteen days prior thereto, but it did not receive general publicity; that there were present at the hearing attorneys for the various railroads, but none representing the interests of the public and the shippers; that no final determination or decision of the matter was reached at this meeting nor at any subsequent meeting; that the affiant was not then, and is not now, satisfied that the railroads are entitled to the increase sought; that no opportunity was given the affiant to read the transcript or to consider the evidence submitted by the railroads as to the reasonableness of the increased rates; that there has been no subsequent meeting of the commissioners, and no legal meeting has been held at w’hich the increases were authorized; that Commissioner C. E. Dupuis, on or about the 24th day of August, caused the secretary of the commission to issue the order granting the increases complained of; that the rates were subsequently, on September 1, 1920, put into effect without authorization by the Board of Railroad Commissioners, and are contrary to the rates established by law; that neither affiant nor the chairman of the board, Sam Aandahl, ever saw the order until after it was issued; that neither of them signed it, and that, prior to the hearing above referred to, Commissioner Dupuis had held a meeting on August 12th and. 13th, at which hearing, he, Dupuis, was the only commissioner present; that affiant is informed and believes that the railroads were represented at that meeting by their attorneys, and. that four or five members of different shipping concerns were also present and protested against the increase. The affiant also swears to the disparity between the levels of the intrastate rates in North Dakota as compared with the rates in Minnesota and South Dakota, resulting in unjust discrimination prejudicial to the shipping interests of North Dakota and preferential to those of Minnesota and South Dakota as recited in the complaint.
The affidavit of the rate expert and statistician recites the meeting of August 12th and 13th, at which Commissioner Dupuis presided and at which the other two members of the Commission were not present, except Milhollan, who was there for two or three hours on the latter date; that the representatives of the railroads submitted evidence in support of their request for increased rates which did not convince the affiant of the necessity for the increase being applied to intrastate rates; that there was another meeting of the board on August 21st, at which meeting affiant was present the greater part of the time and at the conclusion thereof, and, so far as affiant knows, the board did not vote on the increase, and that affiant knows of no other meeting since. That during the forenoon of August 23d Mr. Dupuis directed affiant to prepare a tentative report, opinion, and order; that so far as affiant knows this report was never finally adopted at a legal meeting of the Board of Railroad Commissioners. This affidavit also supports the allegations of the complaint respecting disparity between the levels of the intrastate rates in North Dakota as compared with those of Minnesota and South Dakota.
The certified copy of the order identifies the matter pending before the commission as Case No. 1592, received May 18, 1920, heard August 12th and 13th, 1920, and decided August 2Í, 1920. It re cites as appearing for the commission, C. F. Dupuis, vice Chairman, Fred Bremier, director division of utilities, and V. E. Smart, rate expert and statistician. It further recites representation of the carriers by their attorneys and officials, giving the names, and other appearances on behalf of three commercial clubs of the state and the Employers’ Association of North Dakota. It is unnecessary to refer at length to the matters recited in the order. Suffice it to say for purposes of this proceeding that the order purports to authorize the increases complained of, although it does not authorize' all of the increases for which the carriers asked, such,"for instance, as increases in rates on milk and cream and surcharges and sleeping and parlor car fares. It contains the further and concluding provision that the case shall be kept open, and further hearings ordered for the purpose of adjusting discriminations eited in the report and for inquiring into the reasonableness of individual class and commodity rates and passenger fares established by the order. The discriminations referred to are those resulting from the disparity between intrastate class and commodity rates applicable in North Dakota compared with those of adjoining states similar to North Dakota from a transportation standpoint, which the commission recognized and found to exist, further finding that there was urgent need of adjustments to remove the saíne.
At the hearing held in this court on September 10th, separate answers and returns were made by the carrier defendants and the Board of Railroad Commissioners. The answer of the carrier defendants, other than the Midland Continental Railroad Company, states in substance that the increased rates became effective September 1st, pursuant to the order of the Board of Railroad Commissioners. It alleges that in fact the order is the order of the board, and denies that it was never adopted at a legal meeting of a majority of the members; that two members of the commission are opposed to said order, and that two had never given their consent or approval thereto. It alleges the fact to be that the order was approved by all three members of the commission. It also contains allegations in support of the regularity of the hearing on August 32th and 13th, alleging that public notices had been given, which were published in the newspapers as well as sent to commercial organizations in the principal cities of the state. It denies ¿hat the intrastate rates of North Dakota are 40 per cent higher on the average than those in Minnesota and 28 per cent higher than those in South Dakota. It admits that there are some rates in North Dakota which are higher than the rates on similar commodities in South Dakota and Minnesota, but alleges that it is their purpose to readjust all rates in the states through which they run, so that there shall be no difference in the levels of rates in the different states, except in those instances where there are circumstances or conditions which require different treatment. It recites and relies upon proceedings before the Interstate Commerce Commission in the case known as Ex Parte No. 74, wherein carriers were authorized to advance interstate freight rates 35 per cent and interstate passonger rates 20 per cent, alleging that said proceeding has been held open on the docket of the Interstate Commerce Commission for the purpose of adjusting irregularities in a manner similar to the continued pendency of this case before the state Board of Bailroad Commissioners for similar adjustment. They allege that at the hearing on August 12th and 13th, the defendants made the showing required by § 10, chapter 194, Laws of North Dakota 1919, and chapter 192 of the same laws, pursuant to which the Bailroad Commission had authority to authorize the increases. But it is further alleged that by virtue of the Act of Congress of February 28, 1920, known variously as the Transportation Act and the Esch-Cummins Law, and of action taken by the Federal government during the period of Federal control, the showing required by the North Dakota statutes last above referred to was not a necessary prerequisite to the exercise of jurisdiction by the board and to the granting of the increases requested.
The answer was accompanied by the affidavit of B. W. Scandrctt, which recites the facts anterior to the hearing. From this affidavit it appears that at a conference between the affiant, Commissioners Dupuis and Milhollan, and Director Bremier, it was mutually agreed that the hearing should be held on August 12th; that on August 12th and 13th, the hearing was held, Commissioner Milhollan arriving on August 13th in time to hear part of the evidence and the arguments summing up the testimony.
The Board of Bailroad Commissioners appear in this proceeding by the attorney general, and in their answer allege that the order is the lawful order of the board; that the same was in fact approved by all three of the commissioners. It alleges facts concerning notice of the hearing, to the effect that on August 2, 1920, notices were given by mail to the commercial clubs in the principal cities of the state, to various shippers, and that copies of the notice were furnished two daily newspapers in the state,—one in Bismarck and one in Fargo,—which notice was published and commented upon in both papers. Accompanying the answer of the board are the affidavits of Commissioners Aandahl and Dupuis. In the affidavit of the former it is stated that he did not attend the meeting on August 12th and 13th, but that he did attend a meeting on August 21st, at which there were present all three commissioners ; that, in addition to other business transacted at this meeting, the board considered the application of the railroads for increased rates, and that it was unanimously agreed by the members that the board would grant the carriers’ application for 20 per cent increase in passenger rates and 35 per cent increase in freight rates, but would deny the application for 50 per cent surcharge on Pullman parlor-car rates and for advanced cream and milk rates pending the consideration of the application of the express companies for similar advances in their milk and cream rates. Also that Y. E. Smart was authorized and directed by the board to prepare, under the supervision of Commissioner Dupuis, the formal report and order of the board in accordance with this decision. The affidavit of Commissioner Dupuis corroborates the affidavit of Aandahl in the matters above referred to.
Additional affidavits were filed on the return day which it will not be nee'" -cy to review at any length. Suffice it to say that Commissioner Aandahl swears that, so for as he recollects, no motion was put and passed authorizing the increase, but that he agreed to the increase, and is certain that the entire commission agreed to it; that affiant did not see the order as drawn or altered, nor did he know that it was altered prior to its being issued; that since the order has been issued he has carefully read it and that it conforms to the decision; that affiant, in arriving at his conclusion, believed that under the Esch-Cummins Act he could do nothing else than authorize the increase; that affiant did not read the transcript or other evidence submitted by the railroads and their attorneys.
The secretary of the board, J. II. Calderhead, certifies to the minutes of the meeting on August 21st. These minutes contain no reference to the application for increased rates further than the following state- meat: “The secretary was directed to ash an opinion of the attorney general as to the jurisdiction of the board over the passenger fares in this state.” In his affidavit, however* the secretary states that the matter of increased railroad rates was in fact discussed at the meeting of August 21st, but that no regular action was taken upon the matter, and that no meeting has been held since August 21st. In this affidavit the facts are stated relating to the issuance of the order in question as follows:
“That on August 24, 1920, an opinion, report, and order in the matter of application for increased passenger fares and freight rates was placed upon my desk for signature and seal, and that the same was. signed and sealed with a full knowledge of the fact that no action had been taken formally by the Board of Railroad Commissioners, in the adoption of said report and order, but upon an understanding from Commissioner Dupuis that same should be released.”
The return of the Midland Continental Railway Company states that it has not filed schedules of increases in its freight and passenger rates as alleged, and it is not interested in the subject-matter of litigation, and it asks that the action be dismissed as to it.
Wm. Lemlce, Special Assistant Attorney General, for State of North Dakota.
Wm. Langer, Attorney General, and F. F. Packard, Assistant Attorney General, for Board of Railroad Commissioners.
O. W. Bunn, M. L. Countryma/n, A. H. Lossow, D. F. Lyons, and B. W. Scandrett, for defendants Chicago & Northwestern Railway Company, Chicago, Milwaukee, & St. Paul Railway Company, Great Northern Railway Company, Minneapolis, St. Paul & St. Ste. Marie Railway Company, and Northern Pacific Railway Company.
G. M. Springer, for Midland Continental Railway Company.

Opinion:
Birdzell, J.
We have set forth the facts as stated in the affidavits somewhat fully for the reason that they have a direct bearing upon the validity of the order complained of. It' was conceded upon the argument that this is the decisive question in the case. Was there, or was there not, an order of the Board of Railroad Commissioners authorizing the increases complained of? In our view of the case the validity of the purported order does not depend upon the existence of any facts that might be more or loss controverted in the affidavits referred to in the foregoing statement. It seems, on the contrary, that the invalidity of the order is established by the facts concerning which there is a general agreement in all the affidavits.
It is elementary that the Board of Railroad Commissioners possesses only the authority conferred upon it by the constitution and the statutes of the state. Railroad Comrs. v. Oregon R. & Nav. Co. 17 Or. 65, 2 L.R.A. 195, 19 Pac. 702. Its action, therefore, concerning any subject-matter within its jurisdiction, to be valid, must be in substantial conformity with the statutes governing its procedure and must be consonant with due process of law. Washington ex rel. Oregon R. & Nav. Co. v. Fairchild, 224 U. S. 510, 56 L. ed. 863, 32 Sup. Ct. Rep. 535; Beale & W. Railroad Rate Regulation, § 1142. Testing the action of the board in this instance by these simple, yet fundamental, requirements, we are forced to the conclusion that the order in question is void. A brief statement of the reasons leading to this conclusion should demonstrate'its correctness.
The Board of Railroad Commissioners is a governmental body whose members are elected at large by the people. The governmental authority vested in the board combines administrative, legislative, and judicial functions. Within its range, therefore, the board exercises authority of the same kind as that vested separately in the three main departments of the government. It differs only in extent and finality. The statutes governing its procedure bear unmistakable evidence of intention on the part of the legislature to make its action effective upon the subjects committed to it and to clothe its regular action with presumptions of validity. To this end the board is charged with the duty of giving ample opportunity to interested parties to be heard before action is taken. It is required to preserve and transcribe the evidence upon which it acts. Sess. Laws 1919, § 42, chap. 192. See also § 4731 and 4741, Comp. Laws 1913. Its findings are likewise required to be filed (Sess. Laws 1919, § 42 and 43, chap. 192), and (Comp. Laws 1913, § 4741), and certified copies are made competent evidence in any proceeding, either before the commissioners or in any court, etc.
Appeals from its decisions are provided for. Sess. Laws 1919, § 34 and 35, chap. 192. It is inconceivable that upon an appeal from an order of tbe Board of Railroad Commissioners a court, in arriving at tbe substance of tbe matters agreed upon as findings or to be incoi'porated in an order or decision, should be compelled to extract them from the memory of officers and employees who might produce affidavits or give testimony to informal discussions during meetings of the board. The importance which the law attaches to the hearings, the findings, and the orders of this hoard, points unmistakably to the negation of any such procedure as this. If resort can he had to this method of arriving at the very substance of the matters agreed upon by the board, reasonable caution would suggest that such action should be deprived of any sort of presumption in its favor. Yet the statutes treating of the effect of decisions of the board are replete with provisions giving them presumptive validity, extending even, in some instances, to conclusive presumptions. Before any presumption could be indulged as to the correctness of the findings and conclusions, it ought at least to be requisite that there be the clearest possible evidence obtainable as to what the findings and conclusions are. Certainly no sort of presumption should arise in favor of a finding that can only be extracted from recollections of informal discussions. And even less should such findings be made a basis for an appeal. These statutes, as well as others which might be cited, render it clear that it was not within the contemplation of the legislature that the hoard of Railroad Commissioners could act upon any matter pending before it as so many individuals, and that the evidence of its action could be made to rest in the recollection of its members and employees.
A brief statement of the facts in the instant case, concerning which there is practically no dispute, will serve to point out wherein the purported action of the commission falls short of satisfying the above requirements. There is no minute record that any definite proposition involved in the application of the carriers was submitted to a vote of the commissioners and the vote taken thereon. There are no findings signed by a majority of the members. There is no order or decision signed by a majority of the members. The purported order was admittedly promulgated at the direction of one member of the hoard (whose good faith we have no occasion to impugn), acting, as he believed, under the most favorable view of the facts, in accordance with the desire and consent of the other two members, such consent being apparently a matter of inference drawn from an informal discussion. Such does not, in our opinion, constitute action by the Board of Railroad Commissioners.
Upon the argument it was suggested that the record of the action of the board was established by evidence of a very satisfactory character; namely, the affidavits of those most familiar with the facts,—the officers themselves. But in our view qf the matter it is not a question of verifying an official record. It is a question as to whether or not an official record has been made. We are of the opinion that the undisputed facts show that no official action has been taken on the matter pending before the Railroad Commission.
It follows, therefore, that the injunction should issue as prayed for, and that the excess rates and fares collected and held subject to the further order of this court should be distributed to the vaxious patrons of the roads as they have contributed to the same. It is so ordered.
Christianson, Ch. J., and Robinson, J., concur.