The San Francisco Call. Newspaper, December 1, 1896, Page 1

Judge MecKenna - Hands Down His Long-Ex- pected Decision. payment of the interest aforesaid, which amount in the aggregate to 8,420,000 or thereabouts. That none of the lesser companies, except the California Pacific Company and Northern Railway Company, have for more than a year last past received or been entitled to any profit or net income whatever, or been able to pay any dividend to stockholders. That the rent received by the California Pacific Company and Northern Railway Company, after de- ducting necessary payments of interest and expenses, amounts to less than 24 per cent per aunum upon their respective capital stock, and that this must be expended in betterments and additions which are neces- sary for the proper operation and equipment of the road. That the cost and value of the provertiss largely exceed the bonded indebtedness re- spectively thereon. That complainant has invested 34,832, 491 78 in the purchase of property necessarily used and necessary to be used for and in con- nection with the operation of sald roads as said Pacific system, and of said amount the sum of $4,000,000 is invested in California. That in order to enable complainant to operate said road it must receive income suf- ficlent to pay expense, interest, etc., and is en- titled to some profit. That the complainant is engaged in State and interstate traffic, and that the rules of the latter haye been fixed in pursuance of the provisions of the act to reculate interstate commerce, and that the rates on State traflic bave been fixed as to the roads in California and Oregon by the Board of Railroad Commis- sioners of said States, and in Nevada and the Territories in accordance with the laws thereof | respectively. That the rates upon frelghts arising and transported entirely in California are now lower, both actually and relatively, than the | rates on freight arising and transported en- VIEWS OF THE PARTIES TO THE CONTROVERSY. |4t oce mbmore the sedkbrbnr o opackts | said roads down to the commencement of the | year 1894, and that in that year an ususual | depression in business occurred so reducing the business of the complainant as to render {its income insufficient to pay expenses, as | hereinbefore set forth. The said depression, it is alleged, on information and belief, will not| be relieved and that the business will not be | increased during the present or the nexten- suing year. That from time to time reduc- tions have been made in rates, and from Janu- ary, 1889, to June, 1895, to the amount of more than 35 per cent, A table, showing the reduction by years, is given in the bill. g Receipts and Expenditures. # That the total receipts and expenditures of the Pacific system during the calendar year | 1894 were as foliows: Receipts.. Expenditures EXISTING GRAIN RATES ARE TO STAND. Constitutionality of the Commis- sion Upheld in Unequivocal Language. L s \“ Final Trial of the Question of What Are Rea- sonable Rates Yet to Come— Com- missioners to Confer To- Morrow. Two important points stand out prom- | called away on some urgent business. He inently in the decision rendered by | returned shortly and sat with the specta- Judge Joseph McKenna of the United | tors during the remainder of the reading. States Circuit Court yesterday in the | W. F. Herrin, chief counsel of the South- case of the Southern Pacific Company |ern Paciic Company, was absent owing to against the Board of Railroad Commis- | the death of his wife’s father, Judge Peter | sioners of the State of California. Van Clief. The proposed reduction of 8 per cent| Judge McKenna occupied two and a 31,458,522 64 81,744,785 34 Showing a deficiency of. & 276,262 70 That the total receips for the first six months of the current year (1895), from the 1st day of January to the 30th of June, for the Pacific system, were as follows: | Receipts.... N / . . \ \ 7 / 0 $14,836.125 77 in the grain rates of the complainant are declared to be urjust and unrea- sonable, and the constitutionality of the commission is sustained. It is now more then fourteen montis since the -suit. -was-instituted court to enjoin the eotiniigsio: forcing the reduced grain rates and from making further reductions to the extent of 25 per cent, as outlined In a resolution adopted by the board. Pending the hearing of the case proper a temporary injunction was granted. Affi- dayits - were subsequently filcd and argu- ments made thereon looking to the disso- | the conrmission of | lution on the part of this restraining order, and the decision of Judge McKenna reiates simply to this temporary 1njunction. The main issue as to the reasonableness or unreasonableness of the proposed 8 per cent reduction re- mains yet to be determined. Many side issues were brought into the case, but the mosi important of these were set aside by the court as not being perti- nent or necessary to the consideration of the main questions in controversy. It was 11 o’clock to the minute when Judge McKenna began the reading of his long-expected and anxiously looked-for decision. The courtroom was crowded with a briliiant array of legal talent. Prominent among those present were: Governor Budd, Attorney-General Fitz- perald, Robert Y. Hayne, J. E. Foulds, Jobn Garber, Chairman H. M. La Rue of the Railroad Commission, Henry N. Clement, R. T.Clement, Thomas J. Clu- nie, Andrew J. Clunie, Marshal Barry Baldwin, United States District Attorney Foote and his assistant, Mr. Kmight. Shortly after the Judge began to deliver his decision he espied the Governor within tte inclosure reserved for members of the bar and invited the chief executive of the State to a seat beside him. The Governor, however, did not remain long, as he was 1 | | half hours in reading the seventy pages of type-written matter, comprising about 21,000 words, which constituted his deci- sion. No in‘ermission was taken. On the part of the rairoad people the decision is looked upon as a virtual vi great satisfaction., /It is claimed by the latter that while thie 8 per cent reduc- tion was declared unreasonable on the | showing made before the court, the astual trial of the issue on its merits will produce a vastly different class and amount of evi- dence, with g probable different result in the final gecision. 1t now remains for the Railroad Com- mission 10 make ont a case, showing that its proposed 8 per cent uctioh is not un- reasonable. There will be a confereuce | to-morrow in the office of Attorney-Gen- eral Fitzgerald between the Railroad Commissioners, the Attorney-Genera! and the other attorneys who have heretofore legally represented the commission, in order to decide upon a future course. leil iy THE DECISION. The decision abridged only as to unes- sential matters is as follows: This suit is brought against the Board of Railroad Commissioners to enjoin them from enforcing a certain resolution reducing the rates on grain and other freight on the lines of railroad operated by complainant. The bill of eomplaint alieges the jurisdictional | facts and the official cherecter of respondents, and that the complainant is a corporation and was Incorporated and organized by an act of the commonweslth of Kentucky empowering it to operate the lines of railroads described and operating them &s Onue system generally known as the Pacific system of complainant. | That it has a paid up capital stock of $120,- 934,170 00, distributed among 150 share- holders. That by the leases to it complainant is re- quired to operate and maintain said roads in good repair, pay taxes and provide for the Expenditures. Leaving a deficiency of The items are given. system is a convenience to the public. The A of 3 yearly. n, 61,070 O4. All its other employes, number.. ing 15,064, received an average daily compen- sation of $254: total yearly compensation, $11,972,667 73. That these rates were not unreasonable. g That the rates in force upon the several rail- roads cperated by complainant have been fixed according to cireumstances anda condi- tions surrounding the traffie, and with a care- ful regard to those conditions which affect thelr relative adjustment and elassification, | and_are fair to shippers, and in many cases | are fixed at the actual cost of transportation by reason of water and railroad competition. That, notwithstanding the premises, the Board of Railroad Commissioners did, on the 12th end 13th days of September, 1895, pass and adopt the resolutions complained of. Here the court quotes the resolution pro- viding for the reduction of 8 per cent in grain rates on the Southern Pacific Com- pany’s road in California, R The decision continues to state the aver- ments of complainant as follows: That, pursuant to the resolution, a schedule of the grain rates was prepared and served cn complainant on the 26th dey of September, 1895, and that the board is proceeding to pre- pare & schedule of other rates and will not later | than January 1, 1896, enforce them unless re- strained. Complainant avers that there is no reason to believe that there can be and will be an in- crease of complsinant’s business, and that the rates and reductions were resolved on arbi- trarily and without evidence and will be un- just, unfair and unreasonable and confisea- tory of the property rights of complainant and its lessors. That there is no reason to expect a compen- sating increase of business, and hence, during the next ensming year there will be a defi- ciency of $2,363,82014 on the California roads. GOVERNOR BUDD PLEASED. b Considers the Decision of Judge McKenna of Great Importance and Future Advantage to the State. Governor Budd considers the decision a most important victory for the State, and one from which good results will follow for the shipper over the different railroad lines in California, said last night: He “I have not yet read the decision in full, nor did 1 hear all of it as it was rendered. ““The legal part of the decision is; in portion s, strongly in the interest of the State, although the findings ofifact by the court are equally strong against the State and led to the restraining order. ““The court has upheld the constitutionality of the Railroad Commission, its power to fix the rates of freights and fares, but has reserved to the courts themselves the settlement of the question as to whether such rates are reasonable. In doing this it has necessarily nullified that section of our constitution which declares that the finding$ of the commission shall be conclusive. “In my message to the Legislature I recommended a constitutional amendment reorganizing the Railroad Commission along certain lines, and providing that its findings should not be declared con- clusive, but should be declared ‘prima facie reasonable, allowing either party to apply to the courts in case of dispute or manifest wrong.’ other parts of the message. The reason for such a recommendation is made manifest in ““There were several law points that 1 had hoped the court would decide in favor of the State, but which it found against it. The findings of the court, however, as to the powers of the com- mission, as to its being the eye and the arm of the State in dealing with transportation questions, and as to its ability to fix rates and enforce them, even without notice, make this commission in the future one of great importance. “We will not always have the presént depression, nor will the strike of 1894 and the hard entail loss upon themselves. fa times of 1895 enable the transportation agents to claim the reductions made by our Commissioners The law being fixed, the only question for determination will be the against the railroad it should not be against the shipper. “Whether the case is to be appealed or not I am not informed. “This is all I can state until after 1 have read the whole decision carefully,” t as to whether the charge imposed is reasonable or not. And if the rate fixed be not conclusive I presume it will be. 16,314,302 16 1,476,176 39 That there has been atall times economy ofop. eration, and that the operation of said road asa 7 / / Judge: McKenna Deliveriiy- His Dectiton’ in’ the, Géeat, Raflroad Case. That the defendants threaten a reduction In the rates of passenger fares, which are already just and reasonable. Complain of the Constitution. That the provisions of the constitution of the State of California and the act of the Legis- lature in aid thereof are in violation of sec- tion 1 cf the fourteenth amendment of the constitution of the United States. There were filed with the bill affidavits sup- porting its allegations and a temporary re- straining order was granted, and also an order to show cause why it should not remain pend- ing the suit. Upcn the hearing refuting afii- davits were filed by respondents, and against these and in supportof the bill complainant also filed other affidavits. There were also presented voluminous extracts from the testi- mony taken by the Pacific Railway Commis- sion to show & wasteful and extravagant con- structson of ceriain of the roads, and alsoa diversion of the revenue to dividends instead | of being employed in debt paying. The case has been elaborately argued—how elaborately is indicated by the fact that when put into printed form the arguments of com- plainant’s counsel occuppy 1147 pages and those of respondents’ 1031 pages. It is need- less to say that counsel were all able and that neither abused nor wasted the opportanity given to them nor neglected a single topic whica could {llustrate or expound the intricate problems involved in the controversy. The evidence and the argnments had to be con- sid by me, and tkis accounts in part for the time I have taken for decision. In part itis accounted for by other and impera.ive demands on my attention. This opinton will be long, and, while there is justification for it, I have, nevertheless, leaned against.a too elaborate exposition, but I hope in avoiding prolixity T have not slighted any essential proposition or failed to make my meaning lain., i ! The many prop ositions urged upon my con- side: on may not with clearness be tabu- lated or présented in a determined order. Some, however, naturally assume & prece- dence, and of these the two following are earnestly and ably urged bythe counsel for respondents as settling the controversy: 1. That action on the grain resolution is | completed and hence the Board ot Raflroad Commissioners has no further office to per- form. Or, putting it another way, the sched- ule has’become the law of the land, to be en- forced by suit by the proper State officers or by snippers. yfl. A?’;‘a the other resolution, which may, b called the 25 per cent resolution, action bas not gone far enough. It isclaimed to %e but a resolution of inquiry upon which action is not yet determined. At this point the court cited the sections of the State constitution and the statutes from which the commission derives its ex- istence and powers, and continued as fol- lows: The constitution is certainly not clear ana interpretation must be exercised by a very careful consideration of its language. After providing for the election of Railroad Commisstoners, it enumerates their auties as {ollows (which I shall number for the purpose of distinction and reference): Baid Commissioners shall have the and it shall be their duty, 1. To establish rates of charges for t tation of passengers and freights by railroad and other transportation. companies, and pub- lish the swme from time to time with such ‘changes as they may make. 2. To examine the books, records and papers of all railroad and other trausportation com- panies, and for this purpose they shull have the power to jssue subpenas and all other necessary process. . 8..To hear and determine complaints against zxm and other transportation companies, power, send for persons and papers, to.administer | . oaths, take testimony, and punish for con- { tempt of their ordets and processes in' the ! same manner and 10 the same extent as courts .of record, and to enforce their decisions and | correct abuses through the medium of the courts. 4. 8aid Commissioners shall subscribe (pre- | scribe) a uniform system of accounts to be kept by all such corpérations and companies. Powers of the Board Defined. It is'under the third of the said enumerated provivious' of the' board that there.is'an im- plicit direction to “‘enforee their decisions and correct abuses through the mediim of the courts.” 4 1t appears, therefore, that the board may hear snd determine complaints. What com- plaints? Surely these rmay be as. broad as the board’s powers are, and as various as the mis- conduct of transportation companies, Upon whose complaint? Must the board wait, as & court does, to be invoked? Is it not'a aifferent instrumentality from a court? An active, seeking, supervising one—the eye and the activity of the State—expected to see and do whst private interests may overlook or be deterred from doing? Ithinkso. But,grant I am wrong, the board has the further power to correct abuses. What abuses? Only those complained of or those besides which itdis- covers? If only those ecomplained of, the phrase “to correct abuses” is but a repetition of the phrase ‘to enforce their decisions.” Primarily, we may not assume that it is super- fluous, and reflection of the purposes of the constituticn convinces that it was not in- tended to be. It must be construed asan in- dependent gift of power giving the Commis: sioners as ample administrative powers -in proper places as -judicial and legislative powers in proper places. That this construc- tion will mnke the board more efficient there can be no doubt, and I am not disposed to in- terpret any ambiguity so as to take awaya valuable power and one so consistent with and maybe necessary to the purposes for which the commission was created. The first contention is, therefore, not good. The second contention is that the 25 per ceny resolution is only one of inquiry, not one of definite action,or necessarily one even of intended action. Mr. La Rue and Mr.Stanton aver that they did not intend the resolution as a final judg- ment of the board, but that the board in- tended a more definite and particular investi- gation into the condition of the several rail- roads forming the Pacific system ot complain- ant, and” that regulation or non-regulation will depend upon that investigation, and more explicitly and emphatically have they stated this through their counsel. Iam disposed to accept this as true and sin- cere. Indeed Idonot know how not to doso | regarding them, as they must be regarded as truthful, nor doI care to risk the slightest embarrassuient to them as officers in any proper investigation of the complainant or any of its consiituent roads, the results of which cannot be put into torce, even if it was desired to, except in a direct and .open wi and the detriment of which, if any, can be ar- rested before it fall. The respondents object to the remedy of the bill and insist that no injunction can be | granted becanse the things to be restrained, it is claimed, 'are criminal prosecutions, and ‘them a court of equity cannot enjoin. + o+ Not a Criminal Proceeding. ' The answer to this contention is that this is not a suit to restrain a criminal prosecution It is 8 suit to restrain an asserted illegal action of the Board of Bailroad Commis- sioners which wiil in_nriously affect the inter« ests and property rights of the complainant. There are two other propositions made by respondents which precede the consideration ot the merits properly so called. They are as follows: 1. That the leases executed by the several lessor companies to the complairant, by the terms ‘of which all qf their franchises and property were transferred, are void becauso executed without express Congressional or legislativenuthority, and, therefore, ultrs vires of the purposes for which those corporations were createa. 2. That the so-called Pacific system is an unfawful combination in violation of section 20, article XII, of the Constitution of the State. These propositions are countered by the complainant by the objections that the Board ‘of Commissioners’ cannot be heard to make either proposition; not the first, because the leases are not open to collateral attack on the ground of uitra vires in this proceeding and under the circumstances of this case; that the sovereign alome can object, and ' that they must be held valid until declared otherwise by & direct ‘procéeding. Not the second, because the Board of Rallroad Commissioners has dealt with and its proceedings and orders are against the Southern Pacific Company and not the several or any of the lessor companies. ‘The case at bar is not between the contracte Santa @ VOLUME XXVI. Dailp Seantinel, SANTA CRUZ, CAL, SATURDAY MORNING, NOVEMBER 28, 18¢6. NO. 3s. 'SAN FRANCISCO JOURNALISM. - We are assured, on reliable authority, that the rumored changes -in THE CALL management are yarns without foundation. The gentleman who informed us is in clase touch with the proprietors of THE CALL, and knows what he is talking about. We do not see any necessity for a change, as Charles M. Shortridge is conducting THE CALL on the right principles. He labors for the interest of California, which is the secret of the present popularity of THE CALL. When he went to San Francisco he outlined a policy of friefidship for the other newspapers whereby they might labor in harmony for the upbuilding of the State. For a few months he was let alone, but soon the envious feelings of the Examiner began to crop out. To the interior journalists the reason for this was plain, as-it was noticéable that THE CALL advertising and subscription patronage was increasing; and this fact was sufficient for the Examiner to attempt to break down THE CALL’S influence. This paper has gone beyond the realms of respectable journalism by attacking Mr. Shortridge personally, and has even unnecessarily abused his brother, the Hon. Samuel Shortridge. Why the lat- ter should come in for vilification is something we cannot understand. He is a private citizen, holding no public office, and in no way a subject for unjust criticism. We have known the Shortridges for years. The success of Charles M. Shortridge in journalism has not been paralleled on this coast. He began at the lowsst round of the journalistic ladder in San Jose, and by sheer industry and perseverance he has climbed to the top, while some of the carping newspaper writers have never been able to get beyond their basement environment. They are the same space-writers they were years ago, envious and jealous of the success of others. We know that the Shortridges are stayers, and, like Napoleon’s old guard, they never surrender. An attack on them only tends to increase their fighting ardor. We have known Samuel M. Shortridge as a teacher and attorney. He was not born with a golden spoon in his mouth. What ‘success he has attained has been won by energy, perseverance and merit. To the young men he is an example of what can be accomplished in our State. It is indeed a compliment to him in one sense that he has aroused envy and jealousy. The world is never jealous of an unsuccessful man. The great trouble in San Francisco has been that the newspapers have indulged in too much personal journalism, which has done incalculable damage to the State. If the space devoted to personal attacks had been used in advocating the interests of California benefit would have resulted. The San Francisco journals have had their imitators in the country. _Some journalists prefer to write a mean, biting, cutting article regarding their contemporaries to saying something which will benefit a community. The people have become tired of this style of journalism, realizing that to build up the State only newspapers which advocate its interests are deserving of support. -~ As' an example of this, we are told that the day after the big Republican parade in San Francisco 175 subscribers, all business men, stopped their subscriptions to the Examiner because of its unfair and biased account of the demonstration. We have known a journal to exist whose sole stock in trade was abuse, but the end of such a newspaper must be the little end.