freight services the common expenses and the | This division is said to have been built not in charges for property used in common. Upon a desire to serve local needs, but for the purthe whole evidence the court found that the pose of establishing a through line from two-cent fare would have resulted in a re- Duluth to Sault Ste. Marie. The statement, turn on intrastate passenger business of less if true, furnishes no reason for excluding it than 2 per cent. during the six years ending from the calculation. The cost per mile of June 30, 1917. transporting passengers varies greatly on different parts of the same railroad system according to circumstances, being dependent, among other things, upon the cost of the roadbed and terminals, the grade, the number and character of the trains, the density of traffic and the length of the haul. The justification for a uniform fare per mile is furnished by the doctrine of averages; and the Legislature of Michigan made clear its purpose to apply the doctrine of averages in order to give to travelers the benefit of the two-cent fare on those portions of a railroad on which travel was light and the cost of carrying each passenger necessarily far in excess of two cents a mile. For this act declares: Between the commencement of this suit and the entry of the final decree many of the questions in controversy below have been settled by the decisions of this Court in other cases. The state officials do not deny that there was legal evidence to justify the findings of fact made by the lower court; nor do they request that this court should undertake a general review of the evidence. But they insist that the finding of the district judge of the low return is erroneous, and that the error is due partly to his having included in his calculations property and operations which *should have been excluded, and partly to his having adopted improper formulas for the division of common charges and expenses as between the freight and the passenger services; and that if these specific errors are corrected it will appear that the two-cent fare would have been highly remunerative. These alleged errors must be considered separately. *611 [i. e., determining whether the year's gross passenger earnings equal $1,200 per mile], and the rate of fare shall be the same on all lines owned, leased, controlled or occupied by such company." In other words, the Legislature has declared that for the purpose of determining the right of an intrastate passenger to travel on any part of the company's lines at the rate of two cents a mile, all of the lines within the state must be treated as one; that those on which travel is light must be averaged with those on which it is dense; and ob [2] First. It is contended that the Western Division should be excluded from the calculation. The Duluth, South Shore & Atlantic Railway extends from Sault Ste. Marie to Duluth and has, including branches, 584 miles of line, 475 of which are in Michigan. The Eastern Division serves mainly the iron region; the Central, the copper country; the Western, extending through sparsely settled country from Nestoria, Mich., 101 miles to the Wisconsin state line, and thence to Duluth, serves mainly interstate business. Interstate Commerce Commission v. Union Pa-viously also that those parts of the system cific Railway Co., 222 U. S. 541, 32 Sup. Ct. 108, 56 L. Ed. 308; The Minnesota Rate Cases, 230 U. S. 352, 33 Sup. Ct. 729, 57 L. Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18; The Missouri Rate Cases, 230 U. S. 474, 33 Sup. Ct. 975, 57 L. Ed. 1571; Chesapeake & Ohio Ry. Co. v. Conley, 230 U. S. 513, 33 Sup. Ct. 985, 57 L. Ed. 1597; Oregon R. R. & N. Co. v. Campbell, 230 U. S. 525, 33 Sup. Ct. 1026, 57 L. Ed. 1604; Southern Pacific Co. v. Campbell, 230 U. S. 537, 33 Sup. Ct. 1027, 57 L. Ed. 1610; Allen v. St. Louis, I. M. & S. Ry. Co., 230 U. S. 553, 33 Sup. Ct. 1030, 57 L. Ed. 1625; Missouri Pacific Ry. Co. v. Tucker, 230 U. S. 340, 33 Sup. Ct. 961, 57 L. Ed. 1507; Wood v. Vandalia R. R. Co., 231 U. S. 1, 34 Sup. Ct. 7, 58 L. Ed. 97; Louisville & Nashville R. R. Co. v. Garrett, 231 U. S. 298, 34 Sup. Ct. 48, 58 L. Ed. 229; In re Engelhard, 231 U. S. 646, 34 Sup. Ct. 258, 58 L. Ed. 416; San Joaquin, etc., Irrigation Co. v. Stanislaus County, 233 U. S. 454, 34 Sup. Ct. 652, 58 L. Ed. 1041; Northern Pacifc Ry. Co. v. North Dakota, 236 U. S. 585, 35 Sup. Ct. 429, 59 L. Ed. 735, L. R. A. 1917F, 1148, Ann. Cas. 1916A, 1; Norfolk & Western Ry. Co. v. West Virginia, 236 U. S. 605, 35 Sup. Ct. 437, 59 L. Ed. 745; Missouri v. Chicago, B. & Q. R. R. Co., 241 U. S. 533, 36 Sup. Ct. 715, 60 L. Ed. 1148; Rowland v. St. Louis & San Francisco R. R. Co., 244 U. S. 108, 37 Sup. Ct. 577, 61 L. Ed. 1022; Darnell v. Ed Waits, 244 U. S. 564, 37 Sup. Ct. 701, 61 L. Ed. 1317; Denver v. Denver Union Water Co., 246 U. B.178, 38 Sup. Ct. 278, 62 L. Ed. 649. which are unprofitable must be taken with those which are profitable. Every part of the railroad system over which the passenger is entitled by the act to ride for a two-cent fare must be included in the computation undertaken to determine whether the prescribed rate is confiscatory. This is true, at least, in the absence of illegality or mismanagement in the acquisition or operation of the division in question; and of such there is not even a suggestion in the record. There is nothing in San Diego Land & Town Co. v. National City, 174 U. S. 739, 758, 19 Sup. Ct. 804, 43 L. Ed. 1154, or in San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 446, 23 Sup. Ct. 571, 47 L. Ed. 892, upon which the state officials rely, which is inconsistent with this conclusion. [3] Second. It is likewise contended that the so-called South Line between Marquette and Ishpeming should be excluded from the calculation. This line which for miles substantially parallels the main line, was origi. nally built as an independent road and was purchased by plaintiff's predecessor in 1881 (40 Sup.Ct.) *613 freight and passenger services, and not capable of direct allocation. What method should be pursued in making such division is a very difficult problem to which railroad accountants, the Interstate Commerce Commission and state Railroad Commissions have for years given serious attention.2 Despite much patient study and the exhibition of great ingenuity no wholly satisfactory method has yet been devised. The variables due to local conditions are numerous; and experience teaches us that it is much easier to reject formulas presented as being misleading than probably to avoid ruinous competition. It dividing charges and expenses common to is used mainly for heavy freight, and the intrastate passenger travel over it is light. It is asserted that the construction of this road was not required to supply the transportation needs, and that it would still be possible to carry all existing traffic between Marquette and *Ishpeming over the main line. What has been said above in regard to the Western Division applies equally to the South Line. [4] Third. It is contended also that a loss was incurred in operating through passenger trains from Houghton over the Mineral Range Railroad to Calumet and that such loss should be excluded from this calculation. This extension of plaintiff's service was clearly reasonable in view of the importance of Calumet, which lies only fourteen miles from its own lines. It was admitted by the state officials that passengers on the route were, under the act, entitled to travel at the two-cent rate. The fact that the service was furnished by acquiring traffic rights instead of by building an independent line, clearly affords no reason for excluding the results of the operation from the calculation. [5] Fourth. The further contention is made that the sleeping car, parlor car and dining car services should be treated as separate operations; that they should be charged with their proportion of specific and general expenses but credited only with the amounts received from charges for the specific service; and that no part of the apparent loss on these services should be taken into consideration in determining whether the two-cent fare is confiscatory. In support of this contention it is urged that these services were voluntary; that the law (Michigan Public Acts of 1875, No. 38) permits railroads to make special charges for these services "in addition to the regular passenger fares allowed by law," and that travelers in day coaches must not be allowed to suffer because a railroad fails to make these services compensatory. On American railroads of importance these services have been well-nigh universal for more than a generation; and the charges for them are substantially uniform throughout the country. It would be practically impossible, as it would be obviously unwise, for a railroad like the plain 614 tiff's either to discontinue the *services or to increase the charges to cover the cost of the particular service on its line. It is inconceivable that the Legislature of Michigan should have intended in enacting the twocent fare law to deny to its citizens these customary facilities; and for the purpose of determining whether the act is confiscatory the passenger service including these facilities must be treated as a whole. The fact al 615 to find one apparently *adequate. The science The decree of the District Court is between The Interstate Commerce Commission upon its organization July 1, 1887, required the railroads to report operating expenses separately as the freight and passenger services. The difficulties were so great and the results so widely discredited that the requirement was withdrawn as of June 30, 1894. The requirement was restored as of July 1, 1915. In the matter of separating of operating expenses, 30 Interst. Com'n R. 676. In the interval railroad accounting had in this respect made gradual advances. J. M. Talbott, Transportation by Rail (1904); Buell v. Chicago, Milwaukee & St. Paul Railway Co., 1 Wis. R. R. Com. 324 (1907); The Minnesota Rate Cases, 230 U. S. 352, 458-461, 33 Sup. Ct. 729, 57 L. Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18 (1912); 14 American Railway Engineering Association Proceedings, pp. Interst. Com'n R. 1, 12-30 (1915). See M. O. Lorenz Railroad Rate Making, 30 Quarterly Journal of Economics, pp. 221-232 (1916); W. J. Cunningham, The Separation of Railroad Operating Expenses between Freight and Passenger Services, 31 Quarterly Journal of Economics, pp. 200-249 (1917). 587, 1128-1135 (1913); Western Passenger Fares, 37 1917 according to the formula adopted by the trial judge was 1.20 per cent. By the use of a formula The average rate of return for the years 1914 more favorable to the defendant he found it to be 2.52 per cent. The modified revenue train mile ratio used by the plaintiff showed a loss of over $100,000 a year; while the gross ton mile ratio proposed by the defendant indicated an average return of at most 5.82 per cent. Of these methods employed by the parties it may be noted that the Interstate Commerce Commission has said: "The representatives of the state commissions adVocated the use of 'gross ton miles' as a basis, while the representatives of the railways favored engine ton miles.' The discussion seemed to be somewhat influenced by the possible effect of these respective bases on statistical evidence which might be introduced in passenger rate cases. It may fairly be said that the facts and arguments presented do not warrant the final approval by the Commission of either the gross ton mile or the locomotive ton mile at this time." Rules Governing leged that these facilities are used mainly by the Separation of Operating Expenses Between interstate travelers is immaterial. [6] Fifth. The remaining objection relates to the formula adopted by the lower court for Freight Service and Passenger Service on Large Steam Railways, Effective July 1, 1915, p. 3. These rules are now in process of revision. (250 U. S. 545) CARTAS v. UNITED STATES. (Submitted [on Motion to Dismiss or Affirm] Oct. 13, 1919. Decided Nov. 10, 1919.) No. 122. ARMY AND NAVY 15-AUTHORITY OF COM- Under Rev. St. § 1624 (Comp. St. § 2961), Articles for the Government of the Navy, art. 8, par. 13 (Com). St. § 2969), as elucidated by Navy Regulations, § 1020, where the commanding officer of an American Warship in Havana Harbor received on board the equivalent of $51, 000 in American gold coin, no contract arose between the United States and the depositor for the return of the gold to the depositor or his proper agent, so as to render the United States liable for its return to one not the agent of the depositor. Appeal from the Court of Claims. Suit by Ricardo Cartas against the United States. From a judgment dismissing the petition (48 Ct. Cl. 161), plaintiff appeals. Affirmed. Messrs. William R. Andrews, and George H. Lamar, both of Washington, D. C., for appellant. Messrs. Solicitor General Alex C. King, of Atlanta, Ga., Asst. Attorney General Davis, and George M. Anderson, of Washington, D. C., for the United States. Mr. Chief Justice WHITE delivered the opinion of the Court. This suit was brought to recover from the United States $51,000 in American gold coin *546 with interest from 1869, *based upon a contract alleged to have been made in that year by the United States as the result of a deposit of the principal sum claimed on a war vessel of the United States. The court, concluding that the facts alleged had no substantial tendency to establish a contract liability on the part of the United States either express or implied, dismissed the suit for want of jurisdiction as its power to adjudge against the United States extended only to obligations of that character. A written opinion was filed, but no finding of facts was made. The United States suggests that the cause be remanded for such finding, but if that course were pursued only the relevant facts could be embraced in the finding and as all such facts were admitted by the court below, the case is open to our consideration and we think there is no necessity for remanding it. In the petition which was filed in 1902 by Ricardo Cartas, now the appellant, it was alleged that about 33 years before, in January, 1869, Carlos del Costillo deposited on board the American flagship Contoocook, then in Havana Harbor, Spanish gold the equivalent of $51,000 in American gold coin. It was alleged that the deposit was evidenced by a receipt given by the American consul at Havana and that the petitioner was the grandson of Costillo and was vested by inheritance with all his rights growing out of the deposit. It was further alleged that the deposit was a contract between the depositor and the United States binding the United States to preserve and return the deposit when demanded, and that it had never been returned; indeed, that no demand for its return had been made during the time which elapsed either by Costillo or by any one authorized to represent him or his interest. Further, it was averred that, although it ap peared from the files of the Navy Department that a few months after the deposit was made, that is in April, 1869, it had been returned by the officer commanding the Contoo *547 *cook to one Arridondo, acting as the agent of Costillo and who was believed by such commanding officer to be fully authorized to receive it, nevertheless the contract obligation on the part of the United States yet existed because said Arridondo was not the agent of Costillo and the United States remained bound to return the said deposit and was not relieved therefrom by the payment made by such officer, although in good faith to a person not entitled to receive it. Admitting the facts thus alleged, it is indisputable that the only question for decision is the making of the alleged contract with the United States. Indeed, it is to that question and to that question alone that the errors assigned and the contentions advanced to sustain them relate. They all are based upon a power in the commanding officer to contract on behalf of the United States asserted to be conferred by paragraph 13 of article 8 of the "Articles for the Government of the Navy" (Rev. Stat. § 1624 [Comp. St. § 2969]), as elucidated by section 1020 of the Navy regulations. A brief reference to the matters thus relied upon will bring us to the end of the controversy. The first, the statutory provision, imposes a penalty upon any person in the navy who"takes, receives, or permits to be received, on board the vessel to which he is attached, any goods or merchandise, for freight, sale, or traffic, except gold, silver, or jewels, for freight or safe-keeping, or demands or receives any com pensation for the receipt or transportation of any other article than gold, silver, or jewels, without authority from the President or the Secretary of the Navy." The wide discretion possessed by the commanding officer of a naval vessel concerning the receipt on board, for the protection of private rights, of gold, silver or jewels, which it was the obvious purpose of this statute not to modify, since the power as to such articles was excepted from the additional limitation which the statute imposed For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes P 548 (40 Sup.Ct.) as to other articles, affords no ground for the implication that contract obligations would automatically arise as against the United States from the mere exercise by the officer of his discretion. A consideration of the nature of the objects which the provision excepted and the complex and varied character of the conditions which might call for the exercise of the discretion add cogency to this view and at once suggest the incongruity and conflict which must result from the contrary contention. And this view serves also to dispose of the contention based upon section 1020 of the Navy Regulations which but comprehensively recognizes that compensation due for services rendered as the result of the exercise of the discretion of the officer, to permit the articles in question to be taken on board, should be applied, not for the benefit of the United States in virtue of any contract relation with the subject, but for the benefit of the officers and men designated in the proportions stated in the regulation. Indeed, the co-ordination which the regulation thus manifests between the burden resulting from the exercise of the discretion to receive on board and the distribution of the emoluments DECREE IN BANKRUPTCY AS BASIS FOR ANCILLARY JURISDICTION. Decree in the matter of the bankruptcy of a partnership, in which petitions were pending to have T. declared a general partner, and liable Decree of District Court dismissing bill (254 Fed. 356) was modified and affirmed by the Circuit Court of Appeals (256 Fed. 512), and complainants bring certiorari to and appeal from the Circuit Court of Appeals. Appeal dismissed, and decree affirmed. *574 *Messrs. Lindley M. Garrison, Emanuel J. Myers, and Gordon S. P. Kleeberg, all of Messrs. William St. John Tozer, of New Mr. Justice HOLMES delivered the opinion of the Court. This is a bill in equity brought in the District Court of the United States for the Southern District of New York, by persons formerly doing business as partners under the name S. H. P. Pell & Co., to restrain the defendants from proceeding with a suit them with fraud in partnership transactions against them in South Carolina charging in cotton and seeking to recover a million and a half of doilars. The bill was dismissed on demurrer for want of equity by the District Court, 254 Fed. 356, and for want of jurisdic tion by the Circuit Court of Appeals, 256 Fed. 512. It is brought here by certiorari (No. 311) and by appeal (No. 335). the bill is ancillary to proceedings in bankThe ground of jurisdiction set up is that ruptcy against S. H. P. Pell & Co. in the same district. The present plaintiff Thompson was the only party served in the South Carolina suit and he alleges that he was a special partner under the laws of New York, that he was adjudicated not to be liable as a general partner in the bankruptcy proceedings and that the Court had ancillary jurisdiction to make its decree respected. The other partners set up a discharge under a *575 composition but as they were not served with process in South Carolina the only question raised before us is whether Thompson can maintain the bill. The bill discloses the following facts: Aft as such, that on T. complying with a composi-er the appointment of receivers in the banktion agreement he should be relieved of further ruptcy proceedings petitions were filed to liability to the receiver or the estate, and the have Thompson declared a general partner petitions declaring him liable as a general partner should be dismissed, merely determines that his property shall not be administered in the bankruptcy proceeding, and so does not give ancillary jurisdiction to the District Court to enjoin action against him for fraud of the firm thereafter discovered. On Writ of Certiorari to the United States Circuit Court of Appeals for the Second Cir cuit. Appeal from the United States Circuit Court of Appeals for the Second Circuit. Suit by Stephen H. P. Pell and others against W. Gordon McCabe, Jr., and another. and adjudicated a bankrupt with the other members of the firm. Later an offer of composition was made by the firm in consideration of the discharge of the bankrupts from their debts and the release of Thompson from liability to S. H. P. Pell & Co. and to any creditor of the firm who should assent to the composition. By the terms of the composition Thompson gave up a scheduled claim of over three million dollars and assumed obligations of over two million dollars for which property of his was pledged. Pursuant to this offer an agreement was made between Thompson and the receivers by which Thompson accepted the composition and agreed to For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes The claim of the present defendants in their action in South Carolina is based as we have said upon allegations of fraud, and it is further alleged in their complaint that they believed the representations said to be *577 pay the last mentioned obligations and the | Ct. 263, 63 L. Ed. 587; Manson v. Williams, receiver agreed to turn over the pledged se- | 213 U. S. 453, 29 Sup. Ct. 519, 53 L. Ed. 869. curities to him, he undertaking in case it should be adjudged that he was a general partner to hold the equities in the same as trustee for the estate-all conditioned upon the Court making an order approving the contract. The order was made on January 6, 1915. On January 25, 1915, the composition was declared to be for the best interests of his estate and the creditors thereof, it and the arrangement with Thompson were confirmed, and it was decreed that on his complying with its terms he should be "relieved of any further liability to the said receiver or the estate by reason of the order heretofore entered by this Court dated January 6, 1915 or otherwise." It was further decreed that the petitions to have Thompson de clared liable as a general partner be dismissed. The defendants had been notified of the bankruptcy and the appointment of receivers, had paid one claim made against them for the estate and had disputed another which is now the subject *of a suit in New York, but they did not appear in the bankruptcy proceedings, assent to the composition, or attempt to prove a claim. *576 We believe that we have stated the essential facts relied upon to support the bill. They seem to us not sufficient for that purpose. It is said that in pursuance of a contract sanctioned by the Court there was a settlement with Thompson discharging him from all liability to the firm and anyone claiming under it. We do not perceive that the decree just recited even purports to deal with the defendants' claim, and reading it in connection with the proposal as to Thompson in the offer of composition we find it at least difficult to understand it to have been directed against other creditors than those who assented to the latter. It is argued, to be sure, that the petitioners seeking to charge Thompson as a general partner were dismissed out and out and that that portion of the decree at least must be taken to operate in rem and decide against all the world that he was not one. But it would be going far to say that the dismissal was not to be read with the rest of the decree in determining its scope, especially when it is remembered that the composition bound the parties who brought the petitions thus dismissed. It is altogether probable that the dismissal was by consent. However this may be, the decree only determined as against everybody that Thompson's property should not be administered in the bankruptcy proceedings; it did not conclusively establish as against the present defendants the finding of facts upon which it is supposed to have been based, if there is any reason to suppose that the facts as to his relation to the firm were found. Gratiot State Bank v. Johnson, 249 U. S. 246, 39 Sup. fraudulent *until long after the decree set up here as a bar. If those allegations are proved the composition would not discharge the claim, and of course they were not passed upon in the bankruptcy court. A decree that, as we have tried to show, cannot be taken to deal with the defendants' rights does not give ancillary jurisdiction to the District Court to enforce it against them. The concession by the demurrer that Thompson was a special partner does not affect the scope of the decree, and the jurisdiction depends upon that alone. It is true that if he was only liable as a special partner the South Carolina suit cannot be maintained, but the allegations of fraud open the whole matter and moreover the question here is not whether that suit can be maintained but whether an injunction against it should be issued by the District Court. The appeal is dismissed and upon the writ of certiorari the decree dismissing the bill is affirmed. Appeal dismissed. (250 U. S. 596) NEW YORK CENT. R. CO. v. BIANC. (Argued Oct. 22 and 23, 1919. Decided Nov. 10, 1919.) Nos. 374, 375 and 376.-October Term, 1919. 1. CONSTITUTIONAL LAW 301 MASTER AND SERVANT 347-PERMITTING AWARD FOR FACIAL DISFIGUREMENT NOT A TAKING WITHOUT DUE PROCESS. Workmen's Compensation Law of the State of New York, amended and re-enacted by Laws 1914, c. 41 (Consol. Laws, c. 67), and section 15, amended by Laws 1916, c. 622, § 3, to authorize the Industrial Commission in its discretion, in case of an injury resulting in serious facial or head disfigurement, to make such award as it may deem proper and equitable, not to exceed $3,500, held not to deprive employers ordered to pay such an award of their property without due process of law, in contravention of Const. U. S. Amend. 14; the provision not being unreasonable, arbitrary, or contrary to fundamental right, while the allowance prescribed does not exceed the constitutional limitations on state power. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |