The Passenger Rate War in North Carolina

BY ROBERT W. WINSTON, ESQUIRE

Of Durham, N. C.

By an Act of the General Assembly of North Carolina, passed during the present year, severe penalties are prescribed for railroads, except very short lines and new roads, that charge a passenger rate exceeding 24 cents a mile. Previous to said act, first and second-class rates prevailed in this State; the first-class rate was 34 cents a mile, the second-class rate was 24 cents a mile. The act of 1907 abolishes the difference between first and second-class and puts all passengers upon a common basis. By the terms of this act the new rate went into effect July 1, 1907. During the month of June, 1907, the Southern Railway Company applied to U. S. Circuit Judge Pritchard and obtained an injunction restraining the Corporation Commission of North Carolina from performing any duties in respect to the new act, and restraining it and all other persons, etc., from endeavoring to enforce the penalties provided in the act or from preferring indictments against agents of railroads selling tickets at the old rate. Judge Pritchard heard argument at Asheville in June, 1907, upon the question of continuing his restraining order until the hearing of the case. After lengthy argument by attorneys representing the railroad and the Corporation Commission, but not the State of North Carolina, the injunction was continued until the hearing, and railroads continued to sell tickets at the old rates.

During the month of July, Wake Criminal Court convened in Raleigh, Judge Long presiding. In addressing the grand jury Judge Long, as is the North Carolina custom, delivered a charge reminding the jury of its duties towards the State and the people thereof, and directing them very particularly to inquire whether the railroads of the State were violating criminal law in selling tickets at a higher rate than that provided by the statute, to-wit: 24 cents a mile. In consequence of this charge Southern Railway Ticket Agent Green was indicted for selling a ticket in Raleigh at a rate exceeding 24 cents. After considerable skirmishing, the railroad and its ticket agent were put to their trials. The South

ern Railway contended that Wake Criminal Court did not have jurisdiction of the case because it was then pending in the Circuit Court of the United States, also that the rate fixed by the North Carolina Legislature was so low as to amount to a confiscation of its property, and that said act was not in consonance with Section 1, Article 14, of the Amendments to the Constitution of the United States, in that it deprived the railway company of the equal protection of the laws. The railway company offered no evidence tending to show that the act was unconstitutional on the ground that the rate was confiscatory. It claimed that it had not sufficient time to procure this evidence, though the trial judge offered to prolong the trial a month or more if necessary, and the attorneys for the State insisted that all facts bearing on this contention were in the ready possession of the defendant, since the same ground had just been traveled over in Judge Pritchard's court. Trial Judge Long held that the act was constitutional; that the Criminal Court of Wake County had jurisdiction; that the act was self-executing; that it stood alone and was not to be taken in connection with other railroad legislation enacted at former sessions of the legislature. The trial judge likewise held that the act did not impinge upon the Fourteenth Amendment to the Constitution of the United States. The jury found both the ticket agent and the Southern Railway guilty of a misdemeanor in selling a ticket at a higher rate than 24 cents. The agent, promising not to sell tickets again, was not punished and the same terms were offered to the Southern Railway if it would obey the act of 1907. The Southern Railway refused to desist from violating the act and was fined by the court the sum of $30,000. From this judgment an appeal was taken to the Supreme Court of North Carolina, where it will be argued during the present month. Meanwhile evidence as to the confiscatory character of the rate is being taken before a Standing Master in Equity in the case pending in Judge Pritchard's court. Both the case originating in Wake Criminal Court and the case originating in Judge Pritchard's court are rapidly hastening to the Supreme Court of the United States, where the clash between the State court and United States court, thus for the first time presented in this shape, will be determined.

It is interesting to note that while Ticket Agent Green was in cus

tody of the sheriff of Wake County, i. e., during his trial, the Southern Railway applied to Judge Pritchard for a writ of habeas corpus asking his discharge on the ground that he was protected by the injunctive order theretofore granted by the Circuit Court. There is no doubt that the ticket agent would have been taken from the Wake County sheriff by a United States marshal and set at liberty by Judge Pritchard, who went from his home in Asheville to the Criminal Court in Raleigh, but for a coup d'etat of the Wake Criminal Court. Judge Long released the ticket agent from the sheriff and took him in his own custody. Now, if the marshal shall serve his writ of habeas corpus it must be upon Benjamin Franklin Long, Judge of the Courts of Law and Equity of the Sovereign State of North Carolina! What effect such a proceeding would have had upon the people of North Carolina no one can tell, nor was any one willing to make the experiment. The writ of habeas corpus was not executed.

One who is not a lawyer cannot understand what difference it makes whether a case originate in the State court or in a United States court, when, in either event, it must finally reach the Supreme Court of the United States and be there heard and determined. The difference, however, is a material one. When the highest court of a State construes a statute, that construction is taken by the Supreme Court of the United States and is accepted by the latter court as the law of the case. Therefore it makes a world of difference whether Judge Pritchard shall first construe the act of 1907 or whether the Supreme Court of North Carolina shall first construe the same. Judge Pritchard has held in his written opinion in this case, that the act of 1907 is not selfexecuting; that by the principle of in pari materia, the act of 1907 is to be construed in connection with all other railroad legislation of the State of North Carolina, and that when so construed the Corporation Commission and the Attorney-General of the State of North Carolina have duties to perform in respect to said act, and that said act cannot be put into effect except after these duties are performed by said officials. Indeed Judge Pritchard holds that a rate of 24 cents is not fixed by the act of 1907 and that the said act simply provides that the rate shall not exceed 24 cents, leaving it to the Commission, under a former statute, to fix the rate at less than 24 cents if it see fit to do so.

On the contrary, if the Supreme Court of North Carolina shall affirm Judge Long, they will hold that the act of 1907 is selfexecuting; that it stands alone, unmixed with any other railroad legislation; that the Corporation Commission of North Carolina having fixed a rate at 34 and 24 cents respectively, the legislature of 1907 (dissatisfied with this ruling of the Corporation Commission) took the matter of passenger rates entirely away from the Corporation Commission, fixed a flat rate of 24 cents and enacted a statute of only five paragraphs, simply providing for penalties against any one who violated the provisions of said act. If the Supreme Court of North Carolina shall hold that the act of 1907 is self-executing and that the Corporation Commission and the Attorney-General had nothing to do with giving effect to the statute, and if the Supreme Court of the United States accept this construction, it is conceded, on all sides perhaps, that the Circuit Court had no power or authority to restrain the State or any one representing the State from enforcing the act of 1907 by any means in its power.

The decision of the Supreme Court of the United States in these cases will have a far-reaching effect upon the future relation of State and Federal courts. If the Supreme Court of the United States shall hold that any person or corporation who deems himself or itself aggrieved by an act of a State legislature, which infringes upon the Constitution of the United States, may apply to a United States Judge for an order restraining an enforcement of the obnoxious statute, it would seem to follow that the local affairs of the States, in respect to all these matters, would at once pass into the jurisdiction of United States Courts. Let us illustrate by the recent bucket-shop cases: These cases reached the Supreme Court of the United States by writ of error from the State courts, that is to say parties operating offices of this kind were indicted in the State Court. They were convicted, fined $5.00 each, appealed to the State Supreme Court and by writ of error reached the Supreme Court of the United States, where Mr. Justice White delivered the opinion affirming the construction of the said statute placed upon the same by Chief Justice Walter Clark, of the North Carolina Supreme Court. Let us suppose that these parties had, in the first instance, applied to a United States Judge for a restraining order and had alleged that an

obnoxious statute had been passed violating the Fourteenth Amendment to the Constitution and had obtained a construction of the act from a United States Judge. This construction by such judge, when afterwards reviewed by the Supreme Court of the United States, would become a law of the State and thus the regulation of local affairs of the State would be removed from the jurisdiction of the State Court to the United States Courts. Such a condition would be unfortunate, especially in a State like North Carolina, where all officers, including judges, are elected by the people and where, in the olden days, Nathaniel Macon declared that most officers should be elected every year!

Let us take another illustration relating to the State control of the liquor traffic. In many counties in North Carolina by statute the finding of more than one quart of whiskey in one's possession raises a presumption that he is a dealer in whiskey. This act was tested through the North Carolina courts and it was held by our North Carolina Supreme Court to be constitutional. It is more than probable that if it had reached the Supreme Court of the United States, res integra, that court would have held it unconstitutional, because it deprives one of his liberty without due process of law.

Heretofore several cases have reached the Supreme Court of the United States involving the constitutionality of acts somewhat similar to the passenger rate act of 1907, but never before has so sharp a conflict between the State and the United States Courts been presented. Never before has a State indicted, tried and punished a person for doing an act, while an injunctive order of a United States Court attempted to give him leave to do that act, and never before was it contended that a State in its corporate capacity could be restrained from enforcing its criminal statutes. The State of North Carolina contends that, protected by the Eleventh Amendment to the Constitution, it cannot be sued in a United States Court except by its consent; that it has never consented to be sued in this matter, and that the Eleventh Amendment must stand in its integrity.

The State of North Carolina also insists that it was not a party to the suit in Judge Pritchard's Court, either by name or in spirit; that the Circuit Court had no jurisdiction over it; that it is not within the spirit or the letter of the injunctive order. Or, on