MCWHORTER et al. v. PENSACOLA & A. R. Co.

(Supreme Court of Florida. November 21, 1888.)

1. STATE AND STATE OFFICERS-SUIT AGAINST STATE.

The rule which forbids suit against officers of a state, because, in effect, a suit against the state, seems to apply only where the interest of the state is through some contract or some property right of hers, or where her interest is in a suit in her own name, brought or threatened by her officers, to enforce some alleged claim of hers.

2. SAME-ENJOINING RAILROAD COMMISSIONERS.

Railroad commissioners being authorized by statute to make reasonable rules and regulations for all railroads in the state as to charges for transportation of passengers and freights, and to furnish each company with a schedule of charges made for its observance, and having fixed certain rates for one of the companies which it deems not reasonable and just, said company filed a bill against the commissioners to enjoin them from promulgating said rates, or any other rates substantially the same. Held, that this is not, in effect, a suit against the state; but the statute having prescribed a penalty for violation of the rates fixed, and authorized the commissioners to institute action in the name of the state to recover the penalty, in so far as the bill seeks to enjoin them from doing this, it is in effect a suit against the state.

8. INJUNCTION-AGAINST RAILROAD COMMISSIONERS-UNJUST RATES-Remedies.

Where the law invests an officer with discretion in the performance of an act, the courts will not interfere with or control his action by injunction. If injustice is done by his action, some other remedy must be sought. The statute gives these commissioners discrétion in making rates for railroads, and they are entitled to the benefit of this rule.

4. SAME EXAMINATION AS TO RATES.

Whether rates made by the commissioners are reasonable and just or not, even if subject to judicial control, is not open to inquiry in a suit to enjoin their discretionary action.

5. CONSTITUTIONAL LAW-DELEGATION OF LEGISLATIVE POWERS-RAILROAD COMMIS

SION.

A statute conferring on a commission authority to regulate the charges of railroads for transportation of passengers and freights is not a delegation of legislative power forbidden by the constitution of this state.

(Syllabus by the Court.)

Appeal from circuit court, Santa Rosa county; JAMES F. MCCLELLAN, Judge.

Action by the Pensacola & Atlantic Railroad Company against George G. McWhorter and others, as railroad commissioners, to enjoin them from promulgating rates for transportation, and procuring or permitting the institution of suits for the violation of rates heretofore fixed. From a decree overruling their demurrer defendants appeal.

The Attorney General, for appellants. W. A. Blount, for appellee.

MAXWELL, C. J. Appellants are commissioners, under an act of the legislature of Florida of 1887, "to provide for the regulation of railroad freight and passenger tariffs in this state; to prevent unjust discrimination in the rates charged for transportation of passengers and freights, and to prohibit railroad companies, corporations, and lessees in this state from charging other than just and reasonable rates, and to punish the same, and prescribe a mode of procedure and rules of evidence in relation thereto, and to appoint commissioners, and to prescribe their powers and duties in relation to the same." They bring this case here for a reversal of the decree overruling their demurrer to the bill of the Pensacola & Atlantic Railroad Company against them, which also enjoins them from "promulgating, as binding upon the complainant, the rates for transportation of freight and passengers heretofore prescribed by the defendants for the complainant, or other rates substantially the same as said rates, and from procuring or permitting the institution of any suits against the complainant for any alleged charges by the complainant in excess v.5so.no.10-9

of the said rates heretofore fixed, or in excess of any other rates which may be fixed by the defendants for the complainant, substantially the same as the said rates."

The gravamen of the bill is that the Pensacola & Atlantic Railroad Company is a corporation of the state of Florida empowered to construct and operate a railroad from some point on the Appalachicola river to the city of Pensacola; that the road was completed and began to operate in April, 1883, and has been operated ever since; that the defendants were appointed commissioners, under the act above mentioned; that they have fixed rates for freight and passenger transportation on the railroads of the state, including that of complainant, which they have determined to be just and reasonable charges to be made by said railroads, and have ordered the several companies, including complainant, not to make any charges greater than the rates so fixed; that they have fixed three cents per mile as the uniform rate to be charged by complainant for passengers, and have fixed rates for freight, varying with the distance of transportation, and with certain classification of the various kinds of freight, which they have arbitrarily adopted; that the rates thus fixed were made in spite of facts hereinafter stated, and argument thereon before defendants; and, as authorized by the act, complainant protested to defendants against the enforcement of said rates, but the defendants refused to change the same, and thereupon complainant appealed to the board of revisers provided by the act, but that board confirmed the action of defendants; that complainant, for reasons hereinafter stated, declined to adopt the rates thus prescribed, and have charged for passengers and freight more than said rates, but the rates so charged were just and reasonable, and in no instance has it made a charge that was not just and reasonable, never having charged for passengers more than five cents per mile, the rate authorized by its charter; that consequent upon such charges by complainant, which defendants allege to be in violation of the act and of their order, they demanded that complainant restore to the persons so charged the excess over the rates fixed by them, and upon complainant's refusal they have procured the attorney general of the state to bring several suits (naming them) to recover the penalties prescribed by the act for charges in excess of rates so fixed; that numerous persons who have been charged by complainant more than the rates fixed by defendants, relying on the authority of defendants to fix rates, have brought suits against complainant to recover damages for said alleged excessive charges; that said suits of the state, and of the said persons, are now pending, and the defendants announce their intention to procure other suits to be brought by the attorney general for every case of a charge by complainant in excess of the rates fixed by them; and that there are numerous cases of such excess, and complainant will continue to so charge until it be judicially determined that it has not the right to do so; that defendants have not the power to determine the justice or reasonableness of complainant's charges, because that involves a judicial function which they are inhibited from exercising by the constitution of the state; that if not judicial, it is legislative, and cannot be exercised by defendants; that if defendants have any power whatever in the premises, it is restricted to fixing rates that are in fact just and reasonable, and they cannot require complainant to reduce its rates to charges which are not reasonable and just to it; and that the rates prescribed by defendants are much less than those heretofore charged by complainant for the same services, and are neither just nor reasonable; for though its charges have been much greater than is allowed by the rates fixed by defendants, and have brought a much larger gross income than would be realized from said rates, yet complainant has not only failed to realize any interest upon its investment, but has failed to realize enough to meet the necessary expenses connected with the operation and ownership of its road. The bill then proceeds to give figures and statements as to the cost of construction and equipment of the road, and its actual

value, and as to earnings and expenses of its operation, going to show excess of expenses over earnings, and actual loss from the operation of the road during the more than five years of such operation to date, and alleges facts in regard to the condition and business of the country through which the road runs to show that such loss, even on the basis of its charges, will probably continue for some years. It further alleges that the rates prescribed by defendants are also unreasonable and unjust when compared with those permitted by them to other roads in the state, giving figures to show the difference; and that a reduction of its charges to the rates prescribed by defendants would compel complainant to forego any possibility of earning any interest on its investment, or any income from the operation of its road, and that to continue the operation at an actual loss would render its road valueless; and that defendants cannot, under the law, so act as to produce this result, for thereby complainant would be deprived of its property without due process of law, contrary to provision of section 1, art. 14, Const. U. S. The prayer of the bill was for the relief which was granted by the injunction.

On the argument of the demurrer to the bill the commissioners filed an affidavit, intended mainly to show that in their dealings with complainant they were not led to expect such complaints as the bill makes, and they say that if application had been made to them for a change or increase in the rates, and it had appeared to them reasonable and just, they doubtless would have made proper changes, as they did in cases of application by other roads.

The preliminary question raised by the demurrer arises on two of its grounds, the third and fourth, viz.: (3) That the court has no jurisdiction of the matters set forth in complainant's bill, or to grant relief in the premises; and (4) that this is in effect a suit against the state.

We will consider first whether this is, in effect, a suit against the state. If it is, it is well understood that it cannot be sustained, unless by consent of the state. The objection springs from the rule that a suit against officers of the state founded on any claim or complaint the adjudication of which against the officers would be, in effect, an adjudication against the state, is a suit against the state. In Osborn v. Bank, 9 Wheat. 738, and Davis v. Gray, 16 Wall. 203, the court announced that it would look only to the record to determine whether the state was a party. But in subsequent cases this test is treated as too narrow, and cases against officers were held to be cases against the state, although not named on the record. See Louisiana v. Jumel, 107 U. S. 711, 2 Sup. Ct. Rep. 128; Cunningham v. Railroad Co., 109 U. S. 446, 3 Sup. Ct. Rep. 292, 609; Hagood v. Southern, 117 U. S. 52, 6 Sup. Ct. Rep. 608; and In re Ayers, 123 U. S. 443, 8 Sup. Ct. Rep. 164. In the Virginia Coupon Cases, 114 U. S. 270-338, 5 Sup. Ct. Rep. 903-932, 962, 1020, the state being interested, but the court holding she was not a necessary party, it was nevertheless said in its opinion "that the question whether a suit is within the 11th amendment is not always determined by reference to the nominal parties on the record." And conversely, in the cases of New Hampshire and New York v. Louisiana, 108 U. S. 76, 2 Sup. Ct. Rep. 176, the court refused to sustain a suit of one state against another, although the constitution of the United States authorizes such a suit; because it appeared that while on the record the states suing were the nominal parties, yet they were acting for some of their citizens, who were the real parties in interest, and who could not themselves sue the state, being within the prohibition of the eleventh amendment. It cannot be said, therefore, that the case under consideration is not a case against the state simply because the record does not bear her name, and indeed there has been no contention to that effect. So the question is whether the case comes within any class in which a suit against ollicers is of such a character that a judgment or decree cannot be given in it without affecting some right or interest of the state, so that the effective operation of the judgment or decree is really against the state, rather than the officers sued. In other words,

would a decree against these commissioners be a decree against the state as the actual party?

The only cases in the supreme court of the United States in which it has been held that a suit against officers or others is a suit against the state are Louisiana v. Jumel, Cunningham v. Railroad Co., Hagood v. Southern, and In re Ayers, all cited above. We need only analyze these so far as to show the nature of the question involved in each. The first, Louisiana v. Jumel, was an attempt of bond creditors of the state to protect and enforce their rights under the law of 1874, which provided for the issue of the bonds they held, and under an amendment to the constitution of the same year which ratified the law, as against an ordinance of the new constitution of 1879 which stopped the further levy of the tax that this law authorized for the purpose of raising revenue to pay interest on the bonds, and also prevented the disbursing officers from using funds in the treasury derived from previous levies for paying such interest. The suits were against officers of the state. It was not denied that this ordinance was unconstitutional because impairing the obligation of a contract of the state; but the court held that the suits could not be sustained for the reason that the execution of her contract could not be enforced by a suit against her officers to which she was not a party. The case of Cunningham v. Railroad Co. was for the foreclosure of a mortgage to secure bonds issued by the company. Prior to its institution, the state of Georgia had gone into possession of the road, and was still in possession under purchase at a sale made on account of her lien to secure her indorsement of other bonds of the company. The court held that her interest in the property made her a necessary party, and it refused to entertain jurisdiction of the case, as she could not be sued without her consent. The case of Hagood v. Southern was a suit against officers of the state of South Carolina, on bond script issued by the state, which declared on its face that it was receivable "in payment of all taxes and dues to the state" to compel its receipt for taxes. This was held to be a suit that could not be maintained, because the state could not be compelled to perform her contract by a suit against her officers. The case of In re Ayers was on a writ of habeas corpus. A bill had been filed to enjoin officers of the state of Virginia from prosecuting suits in the name of the state against the tax-payers reported to be delinquent for the recovery of their taxes, the gravamen of the bill being that they refused to receive coupons of the state for taxes, though made receivable by law, and that this was a violation of the contract of the state, but that under a subsequent law suits were threatened against those who tendered the coupons, and would not otherwise pay their taxes. An injunction was granted, which the officers disobeyed, and they were put into custody for contempt. The writ of habeas corpus was for their relief. The court discharged the parties, holding that though the suits threatened might be a breach of the contract of the state, yet the injunctions should not have been granted, because the actual party upon whom it operated was the state, and not the officers who were sued, and there being no jurisdiction against the state the injunction was void, and did not furnish legal ground for the imprisonment. The court refused jurisdict.on of two of these suits, because they involved state contracts; of the third, because it involved property of the state; and of the fourth, because, although the foundation of the suit involved a contract of the state, the immediate proceeding was to relieve her officers from punishment for doing in her name that which, when done, would be her own act. Looking to cases we find in the state courts, they are substantially of the same nature. That of State v. Burke, 33 La. Ann. 498, was a suit presenting in part the same questions as those in Louisiana v. Jumel, and was decided adversely to the plaintiff, on the ground that if he had contract rights against the state they could not be enforced by a suit against her officers, she not being a party. In Weston v. Dane, 51 Me. 461; Marshall v. Clark, 22 Tex. 23, and Railroad Co. v. Ran

dolph, 24 Tex. 317, similar decisions were given, the cases being against officers on pecuniary claims against the state; and similar decisions in Printup v. Railroad Co., 45 Ga. 365, and Hosner v. De Young, 1 Tex. 764, being cases in which property claimed by the state was involved.

It appears, so far as we can find in the reported cases, that the rule which forbids a suit against officers, because in effect a suit against the state, applies only where the interest of the state is through some contract or some property right of hers, or where her interest is in a suit brought or threatened by her officers in her own name to enforce some alleged claim of hers. And it is important to observe the character of the interest. It is not enough that the state should have a mere interest in the vindication of her laws, or in their enforcement as affecting the public at large, or as they affect the rights of individuals or corporations, but it must be an interest of value to herself as a distinct entity,—of value in a material sense. She has an interest in the success of the policy of her laws, and in the just administration and execution of those laws, yet it is not an interest on which she can be said to be a party affected by any private suit arising under them, when it is not another and more direct interest inhering in some separate right or claim of right of her

own.

With this distinction in mind, how stands the present case? The fifth section of the act constituting the office of the commissioners provides that they shall "make and fix reasonable and just rates of freights and passenger tariffs, to be observed by all railroad companies doing business in this state, on the railroads thereof; shall make reasonable and just rules and regulations to be observed by all railroad companies doing business in this state as to charges at any and all points for the necessary handling and delivering of freights; shall make such just and reasonable rules and regulations as may be necessary for preventing unjust discriminations in the transportation of freight and passengers on the railroads in this state; shall make reasonable and just rates of charges for use of railroad cars carrying any and all kinds of freight and passengers on said railroads, no matter by whom owned or carried; and shall make just and reasonable rules and regulations, to be observed by said railroad companies on said railroads, to prevent giving of any rebate or bonus, directly or indirectly, and from misleading or deceiving the public in any manner as to the real rates charged for freight and passengers." The sixth section authorizes and requires the commissioners to "make, for each of the railroad companies doing business in this state, as soon as practicable, a schedule of just and reasonable rates of charges for the transportation of passengers and freights and cars on each of said railroads, and said schedules shall, in [any suit] brought against any such railroad corporations wherein is involved the charges of any such railroad corporations for the transportion of any passengers, or freight, or cars, or unjust discrimination in relation thereto, be deemed and taken in all courts of this state as sufficient evidence that the rates fixed therein are just and reasonable rates of charges for the transportation of passengers and freights and cars upon the railroads, and said commissioners shall from time to time, and as often as circumstances may require, change and revise said schedules." There are other provisions in these sections which it is needless to recite.

The principal complaint of the bill against the commissioners is that, in performing the duty imposed on them, they exceeded the authority given by the act, and fixed rates for the road of the complainant that were not reasonable and just; that if said rates are enforced the road will be operated at a a loss, to such extent as will render the property valueless; and that this amounts to a violation of the state constitution, which forbids the taking of private property without just compensation, and also of the constitution of the United States, in that it deprives complainant of its property without due process of law. There is here nothing that affects the state in any valuable