United States District Court—Northern District of Nem York THE State OF NEw YorRK AND CHARLES | D. Newron, Personally and as Attorney General of the State of New York, Plaintiffs VS. | Tue Unitep States and Encar E. Criark, CuHarRLEs C. McCuorp, Batruasar H. Meyer, Henry C. Hatt, Winturor M. DANIELS, CLtyDE B. AcHESON, ROBERT i. Wouuey, Josepy B. Hastman, HENRY J. Forp and Marxk W. Porter, constitu- ting THe INTERSTATE COMMERCE Com- MISSION. Defendants PETITION AND BILL OF COMPLAINT AND ORDER TO SHOW CAUSE Epwarp G. GRIFFIN, Deputy Attorney General of New York, Solicitor for the Plaintiffs, Office and Post Office Address, The Capitol, Albany, N. Y. ‘ f ate ar f Ota! ral Jean ? Path ‘i ai, uy IN THE DISTRICT. COURT OF THE UNITED STATES — NORTHERN DISTRICT OF NEW YORK. Tse State or New York and Cuarues D. Newron, Personally and as ATTORNEY-GENERAL OF THE STATE or New York, Plaintiff's, agaist Tue Unrrep States and Enaar HK. Cuarx, Cuaries C. McCuorp, BauttTuasar H. Meyer, Henry C. Haut, Winturop M. Danizts, Crype B. Acueson, Rosertr FE. Wottey, JosepH B. Hasrman, mh es Henry J. Forp and Marx W. Porter, Constituting Tur Iv- TERSTATE COMMERCE ComMISSION, Defendants. PETITION AND BILL OF COMPLAINT To the Honorable the Judges of the District ® Court of the Umted States for the Northern District of New York: The State of New York, Charles D. Newton, per- sonally and as Attorney-General of the State of cbietateer ee a r iSjers oN 10 A Complaint New York, bring this Bill of Complaint against the United States and the Interstate Commerce Commission and respectfully show unto this Hon- orable Court and allege as follows: 1. That the plaintiff, the State of New York, is one of the States of the United States, and Charles D. Newton is Attorney-General of the State of New York, duly qualified and acting as such, and is a citizen of the State of New York -and the United States, and have legal capacity to sue herein as will be made to more particularly appear with all other necessary allegations of jurisdictional facts that can hereinafter be more conveniently and precisely pleaded. The United States is made a party defendant herein by virtue of the authority and requirements of the Act of October 22, 1913, (38 State L. 219) and known as the District Court Act and because the Inter- state Commerce Commission, defendant herein, claims to have derived its authority for the uncon- stitutional and illegal acts committed by said Interstate Commerce Commission, and herein- after complained of from said defendant, the United States, and because the unconstitutional _ statutes hereinafter complained of were enacted pursuant to the authority of said defendant, the United States. 'The Interstate ‘Commerce Com- mission, a defendant herein, is a regulatory body over common carriers engaged in interstate com- merece established and existing under an Act of Congress known as the Interstate Commerce Act and consists of the following persons with their D Complaint residences as nearly as complainants can ascer- tain: Edgar IX. Clark, residing in the State of Iowa. Charles C. McChord, residing in the State of Kentucky. Balthasar H. Meyer, residing in the State of Wisconsin. Henry C. Hall, residing in the State of Colo- rado. | Winthrop M. Daniels, residing in the State of New Jersey. Clyde B. Acheson, residing in the State of Oregon. Robert W. Wooley, residing in the State of Virginia. Joseph B. Eastman, residing in the State of Massachusetts. Henry J. Ford, residing in the State of New Jersey. : Mark W. Potter, residing in the State of New York. 2. That this suit involves questions arising under the Constitution and Laws of the United States and is a case in which a State is a party and in which the United States and officers thereof are defendants as will be made to appear more particularly herein, and the amount involved in | the controversy as to each of the parties is in excess of $3,000 exclusive of interest and costs. - 3. That on or about the 28th day of December, 1917, the President of the United States took possession and control of the steam railroads operating as common carriers within the State 2 1l 12 13 14 15 16 17 18 19 20 6 ; Complaint of New York under the war powers pursuant to authority conferred by Congress. 4. That prior to May 28, 1918, the said common carriers had filed, published and put into effect certain schedules of fares, rates and charges which were then and had been demanded and col- lected by said common carriers for the transpor- tation of passengers, milk and cream, excess bag- gage and space in sleeping and parlor cars in accordance with the laws and constitution of the State of New York as made and provided. 5. That on or about the 28th day of May, 1918, the Director General of Railroads of the United States of America in disregard of the laws and constitution of the State of New York, but pur- suant to the authority conferred upon him by Con- gress under the war powers authorized said common carriers to increase in certain respects the rates, fares and charges in effect as aforesaid for the transportation of passengers and com- modities generally within the State of New York in intrastate traffic. 6. That pursuant to and in accordance with said authorization the said common carriers increased their fares and charges for the transportation of passengers and commodities in intrastate traffic within the State of New York. 7. That on or about the Ist day of March, 1920, the United States of America relinquished the possession, control and operation of said common carriers, but by statute provided that no rate, fare or charge then in effect should be reduced by or under the laws of the State of New York prior to the 1st day of September, 1920, without 7 Complaint the consent of the Interstate Commerce Commis- sion. 8. That on September 1, 1920, the laws and constitution of the State of New York in respect to the rates, fares and charges of said common carriers engaged in intrastate commerce within the State of New York again became effective, but said common earriers, continued to demand and collect the rates and charges previously au- thorized by the Director General of Railroads un- til November 29, 1920. 9. That on the 29th day of July, 1920, the Inter- state 'Commerce Commission, defendant herein, in a proceeding known as Ex Parte 74, 58 I. C. C. 220, authorized within a region that includes the State of New York an increase of 40 per centum in the interstate freight rates, 20 per centum in the interstate passenger fares, baggage charges and rates for milk and cream and also a surcharge of 50 per centum of the charge for space in sleeping and parlor cars in interstate carriage to accrue to said steam railroads operating as common carriers within the State of New York and else- where. 10. That thereafter the said steam railroads operating within the State of New York as com- mon carriers made informal application to the Public Service Commission, Second District of the State of New York, a regulatory body of the State of New York having general jurisdiction over common carriers engaged in intrastate com- merce, for permission to file effective on five days’ notice tariff supplements providing increases in 21 23 24. 25 26 27 28 29 30 8 Complaint the rates, fares and charges applicable to intra- state traffic within the State of New York and corresponding to those authorized for interstate traffic by the Interstate Commerce Commission as aforesaid. , 11. That so far as said application to said Public Service Commission related to the trans- portation of freight, except milk and cream, it was granted by said Public Service Commission by an order duly entered the 19th day of August, 1920, but so far as said application related to the transportation of passengers in intrastate com-— merce it was denied by order of the same date, as will more fully appear by true and complete copies of said order and the opinion of said Pub- lic Service Commission which are attached hereto, made a part hereof as if pleaded herein and marked ‘‘ papers 1 and 2.’’ 12. That thereafter a few of the steam railroads serving the State of New York as common ¢ar- riers filed with the Interstate Commerce Com- mission a petition, which was received by said Commission, pretending to act under authority of the Laws of the United States, as will more fully appear from a true and complete copy of said pe- tition which is attached hereto, made a part hereof as if pleaded herein and marked ‘‘ paper 3.’’ 13. That thereafter by order made on the 8th day of September, 1920, the Interstate Com- merce Commission, pretending to act under au- thority of the Laws of the United States, set a hearing upon said petition before one Mr. Wilbur La Roe, Jr., Chief Examiner of said Interstate Commerce Commission, on its behalf in the City Hy) Complaint of New York on the 13th day of September, 1920, and said hearing was held as will more fully ap- pear from a true and complete copy of the steno- graphic minutes of said hearing which are at- tached hereto, made a part hereof as if pleaded herein and marked ‘‘ paper 4.’’ 14. That the State of New York, through its Governor, was duly notified by the Interstate Commerce Commission of such hearing as by the statute of the Unted States made and provided and the State of New York formally and duly ap- peared therein, as a party respondent, by its At- torney-General, Charles D. Newton, and objected to the jurisdiction of the Interstate Commerce Commission. 15. That thereafter the hearing for argument was set by said Interstate Commerce Commission on the aforesaid record made before said La Roe and had before it, where said Commission pre- tended to act under the authority of the Laws of the United States, at its hearing room in the City of Washington, D. C., on the 11'th day of October, 1920, at which time and place the State of New York, formally and duly attended by its Attorney- General as a respondent therein and objected to the jurisdiction of the Interstate Commerce Com- mission. 16. That thereafter the Interstate Commerce Commission, pretending to act under the author- ity of the Laws of the United States, on the 13th day of November, 1920, made its report, findings and orders on said petition, and among other things complained of herein set aside and declared 3 31 32 33 34 35 36 37 38 39 40 10 Complaint null and void the existing rates, fares and charges for intrastate commerce allowed railroads oper- ating as common carriers in the State of New York under the laws and constitution o fthe State of New York and under their charters and franchises conferred upon them by the State of New York, as will more fully appear by a true and complete copy of said report, findings and orders which are attached hereto, made a part hereof, as if pleaded herein, and marked ‘‘paper 9.’’ 17. That thereafter the railroads operating within the State of New York in intrastate com- merce including some electric railways and which were joined in said order (with the exception of a few which are and had been defunct or have not and had no trackage in the State of New York, and do not and did not do any intrastate business in the State of New York) filed with the Inter- state Commerce ‘Commission certain tariffs and schedules increasing the rates, fares and charges for intrastate carriage as in said illegal and un- constitutional report, findings and orders of the Interstate Commerce Commission directed to be effective on the 29th day of November, 1920, and said Interstate Commerce Commission received them, pretending to act under the authority of the Laws of the United States. 18. That said railroads are now demanding and collecting, or threaten to demand and collect, the increased fares, rates and charges directed by said illegal and unconstitutional order of the In- terstate Commerce Commission. 19. That the New York ‘Central Railroad is a corporation organized and consolidated and doing iid Complaint business under the Laws of the State of New York and consists in part of a four track line running from the City of Albany to the City of Buffalo in the State of New York, chartered under a pri- vate law of the State of New York, and known as Laws of 1853, Chapter 76, duly enacted and pro- viding as follows: ‘“LAWS OF NEW-YORK oy (GHAR st 60. ‘* AN ACT to authorize the consolidation of certain railroad companies. ‘* Passed April 2, 1853. ‘“ The People of the State of New-York, represented in Senate and Assembly, do enact as follows: — ‘* Section 1. The Albany and Schenectady, Schenectady and Troy, Utica and Schenec- tady, Syracuse and Utica, Rochester and Syracuse, the Buffalo and Lockport, the Mo- hawk Valley, and the Syracuse and Utica direct, Buffalo and Rochester, Rochester, Lockport and Niagara Falls Railroad Com- panies, or any two or more of them, are hereby authorized at any time to consolidate such companies into a single corporation, in the manner following: ‘¢ 1. The directors of any two or more of such corporations may enter into an agree- ment, under their respective corporate seals, for the consolidation of the said corporations, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the new corporation, the number of directors thereof, which shall not be less than thirteen nor more than twenty-three, the time 4] 43 ff 46 47 48 49 50 12 Complaint and place of holding the first elections of di- rectors, the day for annual elections of di- rectors, the amount of capital, and the num- ber of shares of the stock of the new corpor- ations, which shall not be larger in amount than the aggregate amount of capital of the several companies thus consolidated, and shall not be increased, except in accordance . with the provisions of the act passed April second, eighteen hundred and fifty, the man- ner of converting the shares of capital stock in each of said corporations into the shares of such new corporation, the manner of pay- ing any shareholder that may decline taking shares in the new corporation, with such other details as they may deem necessary to embrace in such agreement, not inconsistent with the provisions of the act entitled ‘‘ An act to authorize the formation of railroad corporations and to regulate the same,’’ passed April second, eighteen hundred and fifty. ‘¢ 2. Such agreement of the directors shall not be deemed to be the agreement of the said ~ corporations so proposing to consolidate, until after it has been submitted to the stock- holders of each of said corporations respect- ively separately, at a meeting thereof to be called upon a notice of at least thirty days, specifying the time and place of such meet- ing and the object thereof, to be addressed to each of such stockholders, when their place of residence is known to the secretary and deposited in the post-office, and published for at least three successive weeks in the state paper, and in one of the newspapers printed in each of the counties through or into which the railroad of the said corporation shall ex- tend, and has been sanctioned and approved by such stockholders by the vote of at least two-thirds in amount of the stockholders: 13 Complaint present at such meetings respectively, voting by ballot in regard to such agreement either in person or by proxy, each share of such capital stock being entitled to one vote; and when such agreement of the directors has been sanctioned and approved by each of the meetings of the respective stockholders sep- arately, after being submitted to such meet- ings in the manner above mentioned, then such agreement of the directors shall be deemed to be the agreement of the said sev- eral corporations, and a sworn copy of the proceedings of such meetings, made by the secretaries thereof respectively, and attached to the said agreement, shall be evidence of the holding and of the action of such meeting's in the premises. ‘¢ Section 2. Upon the making of the said agreement mentioned in the preceding sec- tion in the manner required therein, and filing a duplicate or counterpart thereof in the office of the secretary of state, and immedi- ately upon and after the first election of di- rectors of said corporation, the said corpor- ation shall be merged in the new corporation provided for in the said agreement, to be known by the corporate name therein men- tioned, and the details of such agreement shall be carried into effect as provided therein, only such new corporation shall not have any larger powers than are granted by the act entitled ‘‘ An act to authorize the for- mation of railroad companies and to regulate the same,’’ passed April second eighteen hun- dred and fifty, or be exempt from the per- formance of any duty which the said several corporations may be liable to perform, ex- cept as herein provided. ‘¢ Section 3. Such new corporatisn shall pos- sess the general powers, and be subject to the 4. ol 52 53 55 a7 58 59 14 Complaint general liabilities and restrictions expressed in the third title of the eighteenth chapter of the first part of the Revised Statutes; 11 shall also have the general powers and privileges, and be subjected to the general liabilities, re- strictions, duties and provisions expressed and contained in the said act entitled ‘An act to authorize the formation of railroad corporations and to regulate the same,’ passed April second eighteen hundred and fifty, and the acts amending the same, so far as the same are applicable to a railroad cor- poration, where a railroad is constructed and put in operation. ‘¢ Section 4. Upon the election of the first board of directors of the said new corpora- tion created by the agreement of the several companies, all and singular the rights, fran- chises and interests of the said several cor- porations so consolidated, in and to every species of property real, personal and mixed, the things in action thereunto belonging, shall be deemed to be transferred to and vested in such new corporation, without any other deed or transfer; and such new corporation shall hold and enjoy the same, together with the rights of way, and all other rights of prop- erty, franchises and interests, in the same manner and to the same extent as if the said several corporations so consolidated should have continued to retain the title and transact the business of such corporation ;and the title and real estate acquired by either of the said corporations shall not be deemed to revert, or be impaired by means of such act of consgoli- dation, or anything relating thereto. ‘* Section 5. The rights of creditors of any corporations that shall be consolidated, shall not in any manner be impaired by any act of consolidation, nor shall any liability or cbli- 15 Complaint gation for the payment of any money now due or hereafter to become due to this state, or any individual, or any claim or demand for damages for any act done, or neglect suffered by any such corporation, be in the manner re- leased or impaired, but such new corporation is declared to succeed to such obligations and liabilities, and to be held liable to pay and dis- charge all the debts and liabilities of each of the corporations that shall be so consolidated, whether on contract, or for misconduct or neglect, either to this state or to individuals, and it shall be liable to have an action brought against it to enforce the payment of any money or damages, or the performance of any duty which any corporation consolidated into such new corporation was liable to pay or perform, in the same manner as if such new corporation had itself incurred the obli- gation or liability to pay such money or dam- ages, or perform such duty; and no svit, ac- tion or other proceeding now pending before any court or tribunal in which any railroad company that may be so consolidated is a party, shall be deemed to have abated or dis- continued, by reason of any such agreement of consolidation; but the same may be prose- cuted to final judgment in the same manner as if the said corporation had not entered into such agreement of consolidation, or the said new corporation may be substituted as a party in the place of any corporation of whick it shall be composed, by order of the court in which such action, suit or proceeding may be pending. ‘¢ Section 6. If any stockholder shall, at said meeting of stockholders, or within twenty days thereafter, object to said consol- idation, and demand payment for his stock, such stockholder or said new company may, 61 62 63 65 67 68 69 70 16 Complaint if said consolidation take effect at any time thereafter, apply to the supreme court at any special term thereof, held in any county through which any part of the said railroad may pass, for the appointment of three per- sons to appraise the value of ‘such stock. If the court shall be satisfied that reasonable notice has been given of such application, it shall thereupon appoint three persons to ap- praise the value of said stock, and shall des- ignate the time and place of meeting of such appraisers, and give such directions in re- gard to the proceedings on said appraisement as shall be deemed proper, and shall also di- rect the manner in which payment for such stock shall be made to such stockholder. The court may fill any vacancy in the board of appraisers occurring by refusal or neglect to serve, or otherwise; the appraisers shall meet at the time and place designated, and they or any two of them, after being duly sworn honestly and faithfully to discharge their duties, shall estimate and certify the value of such stock at the time of such dissent as aforesaid, and deliver one copy of their appraisal to the said company, and another to the said stockholder, if demanded; the charges and expenses of the appraisers shall be paid by the company. When the corpora- tion shall have paid the amount of the ap- praisal as directed by the court, such stock- holder shall cease to have any interest in the said stock, and in the corporate property of the said corporation, and the said stock may be held or disposed of by the said corpora- tion. ‘¢ Section 7. When any two or more of the railroad companies named in this act are so consolidated, said consolidated company shall carry way passengers on their road ata rate not to exceed two cents per mile. 17 Complaint ‘* Section 8. This act shall take effect im- mediately. ’’ That the railroads named in said Laws of 1853, Chapter 76, now constituting a part of the New York Central Railroad as aforesaid, accepted the conditions and provisions of said statute by filing a consolidation agreement in the office of the Sec- retary of State of the State of New York on July Oo, 1855, in accordance with said statute and said Laws of 1853, Chapter 76 remains unrepealed by the Legislature of the State of New York ‘and un- affected by any authority judicial or executive of the State of New York, except that said two cent fare was affirmatively duly and lawfully declared again effective on September 1, 1920. Said con- solidation agreement and said laws of 1853, Chap- ter 76, coustituting a charter contract, are still in full force and effect with many years to run and the said two cent fare for way passengers on the line between Albany and Buffalo is now the only legal and constitutional fare for intrastate traffic over said line in the State of New York. 20. ‘That the said New York Central Railroad Company is a citizen of the State of New York and a corporation organized ‘and doing business under its laws was one of the parties and the prin- cipal party upon whose petition said report, find- ings and order relative to transportation were made by the Interstate Commerce Commission as aforesaid and had then and has now a residence at the Union Station in the City of Albany, N. Y., where it keeps its principal place for doing busi- ness in the State of New York as a corporation 5 71 76 a7 78 79 18 Complaint organized under the Laws of the State of New York and which is within the Northern District of New York and said railroad company operates many miles of railroad with the appurtenances thereto within said Northern District. 21. That the plaintiff, State of New York, is one of the states of the United States and was a party in the proceeding before the Interstate Commerce Commission as aforesaid, and said railroads joined in said order of the Interstate Commerce Commission operate within its boundaries in intrastate commerce, as is more particularly shown by a schedule which is at- tached hereto, made a part hereof as if pleaded herein and marked ‘‘ paper 6;’’ said railroads in the carrying on of intrastate commerce within the State of New York are solely under the dominion of the State of New York and subject only and ex- clusively to its laws and constitution. The State of New York annually expends large sums of money for milk and cream carried by said rail- roads in intrastate commerce and spends more and less than $365,000 in purchasing transporta- tion for its employees traveling on its business and governmental functions from said railroads, joined in said order of the Interstate Commerce Commission. Most of the railroads joined in said order are corporations chartered under the Laws of the State of New York and are citizens thereof and all are doing business under the laws of the State of New York which are set aside and de- stroyed by the action of the Interstate Com- merce Commission. The State of New York thus suffers irreparable damage. ag Complaint That the rates, fares and charges for intrastate commerce within the State of New York ‘fixed by its laws and constitution as aforesaid for the rail- roads joimed in said order of the Interstate Com- merce Commission have not and will not result in undue prejudice or unjust burdens or pre- ference or advantage or discrimination in favor of intrastate commerce and against interstate or foreign commerce or against any person or locality. That of the railroads joined in said order of the Interstate Commerce Commission and actually doing intrastate business within the State of New York, the New York Central Railroad Company over its main line between New York and the Pennsylvania Railroad Company over its main line, the Erie Railroad Company over its main line, the Lehigh Valley Railroad Company over its main line, the Delaware, Lackawanna & Western Railroad Company over its main line, the Delaware & Hudson Company over its main line, The New York, New Haven and Hartford Railroad Company over its main line, the New York, Ontario and Western Railway Company over its main line, the Central New England Rail- way Company over its main line, the Buffalo, Rochester & Pittsburg Railway Company over its main line do a considerable interstate passenger and milk and cream business in connection with a very important intrastate passenger and milk and eream business both in volume and revenue. That as to the branch lines of the aforesaid railroads and as to all the other railroads named in said order of the Interstate Commerce Commis- sion and aetually doing an intrastate business within the State of New York, their interstate 81 83 84. 86 87 88 89 20 Complaint business for passengers and milk and cream is insignificant as compared with their intrastate business both in volume and revenue. That in the case of the Ulster & Delaware Railroad Company the rates, fares and charges allowed said carriers under the laws and constitution of the State of New York for intrastate business are higher than those allowed by the United States for the same classes of business in interstate commerce. That many of the railroads joined in said order are parallelled by or compete with common carriers — operated by electricity or motive power other than steam or compete with such carriers, but which are not joined in said order. a can of milk originating there and moving through Castleton to New York, the interstate rate from Rupert —let me start the other way around. That route to Castleton is a very cir- cuitous route. A. It is. Q. There is a more direct line through Cam- bridge? A. But that is the end of the Delaware and Hudson Railroad at Eagle Bridge. It wants to get the 100-per cent haul for itself. (. Yes, but as I understand it, the rate via that circuitous route meets the rate of the direct route to New York. A. No, the rate from Hagle Bridge is what it was on August 25, 1920. The rate from West Rupert, Vermont, is 20 per cent higher, because it is in Vermont. That situation cannot exist continuously. | 799 800 163 Paper 4 @. You mean to say that you did not increase by 20 per cent the rate from EHagle Bridge to New York, via Rupert? A. I should say not. @. Why didn’t you? A. Because it would be regarded as intrastate. Q. Who would regard it as intrastate? A. Ido not know. Mr. Waldron: It is all interstate from Eagle Bridge clear to Fairhaven, inclusive, because it passes in and out of the State of Vermont. We increased all of the rates. Hixam. LaRoe: Then Mr. Kallman’s testimony will have to be corrected to that extent. The Witness: I am in error. Mr. Waldron: To Whitehall there has been no increase, but Fairhaven, the last station in Ver- mont has been increased, and all stations south of Fairhaven and Castleton, whether in the State of Vermont or in the State of New York. The Witness: I stand corrected. (. 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