Edson v. Southern Pacific Railroad

From the manner in which the case has been presented in the briefs and in the oral argument of counsel, we conclude that no importance is attached to the appeal from the order, since the discussion is based entirely upon the facts as admitted by the pleadings or found by the court, among which, however, are not included such general conclusions of fact as may be found inconsistent with the more specific findings. This being so, the findings themselves will clearly present the ease to be decided. They are as follows:—

“1.

“For some time prior to July 18th, 1898, the San Francisco and San Joaquin Valley Railroad Company owned and operated a line of railroad between Fresno and Stockton, this state. By arrangement with an independent line of steamers running from Stockton to San Francisco, said railroad company established a through first-class unlimited passenger rate between Fresno and San Francisco of $3.75, which was in effect upon said date (and continued until December 9th, 1898, when said rate was withdrawn).

“2.

“On July 18th, 1898, and for many years prior thereto, defendant Southern Pacific Railroad Company owned, and defendant Southern Pacific Company, as its lessee, operated, a line of railroad from Stockton to Fresno, and another all-rail line from San Francisco to Fresno.

“3.

“Prior to said date defendant Southern Pacific Company charged, as a first-class unlimited passenger rate, with all the incidents prescribed by law, on its all-rail line between San Francisco and Fresno, $5.90, which rate was regularly established by the board of railroad commissioners of this state, and has not been modified by said board.

“On said date defendant issued its circular 86 referred to in the complaint, hut said circular did not purport to modify or reduce the rate last aforementioned, or any rate on the first-mentioned line of railroad of said defendant between Stockton and Fresno, but purported to and did offer to the public over said last-mentioned all-rail line between San Francisco and Fresno, a rate of $3.75 for first-class passenger travel, subject to the following limitations and conditions, viz.: that the tickets issued thereunder should be good only on the day of sale, or upon such date as the agent selling the same should punch in the margin or stamp on the back thereof, that continuous passage must be made and no stop-over privileges be allowed thereon; that liability for baggage should be limited to the sum of one hundred dollars, and no baggage should be checked thereon to any point short of the ultimate destination named therein.

“4.

“That all of the tickets issued between San Francisco and Fresno by said defendant at the rate of $3.75 contained said limitations and conditions plainly printed upon their face, and said defendant at all times strictly insisted upon the observance of said limitations and conditions, and all passengers purchasing and using said 'tickets accepted and used the same subject thereto.

“5.

“That on the 20th day of March, 1900, said defendant withdrew and discontinued said rate of $3.75 and the issue of the special limited tickets aforesaid.

“6.

“That during the whole of said period between the 18th day of July, 1898, and the 20th day of March, 1900, the first-class unlimited passenger rate of $5.90 first hereinbefore mentioned was in force and effect, and was not withdrawn by said defendant, but unlimited first-class passenger tickets, at said rate, with all their legal incidents, were at all times kept for sale by said defendant, and were, in fact, during the whole of said period sold by it to such persons as desired to purchase the same.

“7.

“That the limitations and conditions contained as aforesaid in said tickets sold at the $3.75 rate constitute substantial

differences from the service rendered, and materially diminish the accommodations and privileges to which a passenger would be entitled, under the $5.90 rate.

“8.

“That the $3.75 rate, with its inferior accommodations and privileges, was put into effect for the purpose of competition with the San Francisco and San Joaquin Valley Railroad Company, but by reason of the difference in service, and the fact that the $5.90 rate was at all times kept in force and tickets sold and kept for sale thereunder, said $3.75 rate was not a reduction of or substitute for the $5.90 rate.

“9.

“That at no time during the whole of said period from July 18, 1898, to March 20, 1900, did the defendant lower its rates of transportation of passengers, nor has it since said period raised or increased said rates.

“10.

“That during all said period from July 18, 1898, to March 20, 1900, the unlimited passenger tickets mentioned in finding No. 6 were at all times in good faith kept for sale and sold by defendants and used by purchasers thereof in accordance with and with the full benefit of the privileges conferred thereby.”

Nos. 7 and 9 of these findings and the latter part of No. 8 are not treated by plaintiffs as findings of fact, but as mere conclusions drawn from the specific facts found, which, according to the argument of counsel, involve an opposite conclusion.

This contention raises the first question to be considered, for if we should agree with the judge of the superior court that there has been no infraction of the state constitution there would be no occasion to inquire whether there was a conflict between it and the federal constitution, for courts do not go out of their way to decide constitutional questions even when nothing more is involved than the validity of a clause of an act of the legislature, and still less will they go to the extent of declaring void an important provision of our fundamental law in a case which demands no consideration of the question.

What, then, is a lowering of rates within the meaning of the constitution ?

We think it clear that it refers to and comprehends all established rates for ascertained services, whether those prescribed by the railroad commissioners or fixed by the corporation themselves within the maximum so prescribed. We do not understand that the railroad commissioners do more than to prescribe the maximum charge allowable. Within that maximum a corporation may establish its own rates, but whether it charges the maximum or less, it must have some established rate of fare, upon tender of which a passenger may demand a ticket entitling the holder at any time within six months to ride from the place of purchase to the depot of destination or to any intermediate station with the right to stop over, and afterwards, within the six months, resume his journey. (Civ. Code, sec. 490; Robinson v. Southern Pacific Co., 105 Cal. 526 .) Subject, however, to this strict obligation to provide and furnish what may be called an unlimited ticket—a ticket which secures to the passenger the stop-over, and other statutory privileges—it is conceded that a railroad corporation may issue a limited ticket if the passenger in consideration of some abatement of the regular rate is willing to contract for a curtailment of the statutory privileges. Such a rate, we suppose, if regularly established and offered to the public generally, would come within the meaning of the constitution. This, however, is a question which does not call for a decision in the present case. The defendants are not charged with having first lowered and- afterwards raised their rates on limited tickets; their offense, if any, consists solely in the fact that for the purpose of competing with another railroad they sold to all persons desiring them limited tickets for $3.75 when the regular fare for unlimited tickets was $5.90, and that afterwards they withdrew the limited tickets, with the necessary effect of compelling all "passengers to pay the higher rate.

In form it must be conceded this was not a lowering of the established rate. It was merely the fixing of a different rate for a different service—a lower rate for an inferior service. But for the purpose of giving effect to a statute, and a fortiori for the purpose of enforcing a provision of the constitution, it is the substance, not the mere form, of a transaction

The fact that the old regular ticket was kept on sale at the old rate of $5.90 does not invalidate this conclusion. If I have been offering to perform a certain service for ten dollars, and afterwards offer to perform a nominally different but substantially identical service for five dollars, I cannot deny that I have lowered my rate merely because I have proclaimed my willingness to accept the old rate from those who are willing to pay it. If two rates are offered for what to nineteen men out of twenty is the same service, the lower rate as to the nineteen is the only rate.

Now, the meaning of the constitutional -provision is sufficiently clear if its terms alone are considered. It was intended to secure legitimate competition by preventing railroad corporations from reducing fares below remunerative rates for the purpose of crushing weaker rivals, and thus securing a monopoly. To accomplish this object they are warned that if for the purpose of competition they establish a confiscatory rate they cannot raise it again without the consent of the state. This construction seems to assert itself in the very language of the provision and is fully confirmed

The only alternative to this proposition is, that the courts may scrutinize the terms of the limited ticket and may inquire into the conditions surrounding the traffic for the purpose of determining whether what purports to be a special contract for inferior services is not in reality a lowered rate for the same, or substantially the same, service. If this cannot be done one of two things must follow: either that the constitutional provision in question is a . dead letter or else that all such contracts are forbidden. In the Robinson case it was assumed, and we think correctly assumed, that such contracts are lawful, but if the effect of holding such contracts lawful would make the law defeat the constitution we should feel constrained to modify the opinion then expressed, for a law, whether enacted by the legislature or evoked by construction of the courts, can never nullify the constitution. We do not, however, concede the existence of any conflict between the constitution and what was said in the Robinson case. Contracts for limited tickets are valid, but in a controversy of this complexion the courts will look behind the form of the transaction to determine whether such contract offered to the public generally amounts in fact to a lowering of rates. In so holding we do not question the legal principles for which the respondents contend. We concede that

The only difficulty in applying this doctrine to the present case arises from the fact that according to the findings of the superior court (No. 9) the defendant did not lower its rate. If this finding is to stand as a finding of fact, it ends the case so far as the appeal from the judgment is concerned, and the plaintiffs would be compelled to fall back upon their appeal from the order denying a new trial, regarding which, as-above stated, nothing has been said in the argument. But we think finding No. 9 is merely a conclusion drawn from the specific facts found and inconsistent with those facts if, as we have above assumed, we are authorized to take judicial notice of the notorious fact (fully proved, but not found in this case) that comparatively few persons exercise or claim the privileges, or any of them, denied to purchasers of limited tickets. The great majority of persons traveling back and forth between San Francisco and points in the interior of the state purchase their tickets at the time of starting and have no desire to transfer them or to stop over at intermediate stations. If their baggage sometimes exceeds one hundred dollars in value the risk of loss is so slight that the premium on insurance against loss would be a trifle. To save two dollars and fifteen cents on a fare to or from Fresno by taking a limited ticket would be a clear gain of that amount—not perhaps to nineteen out of twenty passengers, but certainly to so large a number as to count heavily in the matter of com

Counsel for respondents have not on the present appeal renewed their former contention, that the limited tickets sold for $3.75 were the “excursion or commutation” tickets referred to in section 21 of article XII of the constitution, and it "is perhaps unnecessary to make any reference to that provision. It is sufficient to say, that in our opinion the last clause of section 21 was not intended to modify section 20 in any respect, but is simply a qualification of the preceding clause of the same section. The two sections embrace distinct-subjects. The first deals with pooling and competition between independent transportation companies. The second with discriminations between persons and places by the same company. To prevent discrimination between places it is provided by section 21 that no greater charge shall be made for transportation over a shorter distance than is made for a longer distance, including the shorter. As a qualification to this provision, and for no other purpose, the proviso as to excursion and commutation tickets is added, leaving the provision of section 20 as to competition between rival lines entirely unaffected.

For the reasons and upon the grounds stated, we hold that the defendant the Southern Pacific Company did lower its rate from $5.90 to $3.75, within the meaning of the constitution.

But was the rate lowered for “the purpose of competing with any other common carrier” within the meaning and intent of that qualifying clause Í In the ordinary sense of the word, no doubt the rate was lowered for the purpose of competition, and the superior court has found as a fact that what we have held to have been, in substance though not in form, a lowering of rates was for the purpose of competition. But if we consider the evident intent of the provision in question,

We think the judgment and order of the superior' court should be affirmed, not because the rate was not lowered, but because it was not lowered for the purpose' of competition within the proper construction of the constitution.

It is so ordered.

Angellotti, J., Shaw, J., and Van Dyke, J., concurred.

concurring.—I concur in the judgment of affirmance upon the ground last stated in the opinion of the chief justice. I dissent, however, from that part of the opinion which holds that the facts in this case constitute, under any view, a lowering of a rate within the meaning of the constitution. And, in my opinion, a still stronger and clearer ground for affirming the judgment is in the finding of the lower court “that at no time during the whole of said period from July 18, 1898, to March 20, 1900, did the defendant lower its rates for transportation of passengers, nor has it since said period raised or increased said rates.”

The provisions of the constitution in question are not only new and unusual, but severely restrictive of ordinary personal rights, and highly penal in their character. The corporation coming within their penalty is deprived of the beneficial use and enjoyment of its property, and, if the see

Applying these principles to the case at bar, it seems quite clear that the acts done by respondents do not bring them within the prohibitory language of section 20. That language includes only the lowering and subsequent increasing of a rate. Of course, the lowering of a rate presupposes a previous existing rate which may be lowered; and a rate is clearly a sum fixed to be charged for a certain service. It is quite common for railroad companies to have different kinds of tickets offering different kinds of services for which different rates are charged, and to lower the rate in one of such tickets would be simply to lessen the charge for the same, while leaving the service to which it entitled the passenger unchanged. In the case at bar the respondents had an established rate of $5.90 for a ticket which entitled the purchaser to all the usual rights and accommodations of an unlimited first-class ticket—including the stop-over privilege, the right to use it at any time within six months, transferability, etc. Now, they did not directly, or expressly, or as a matter of fact, lower the rate on that ticket. They did not withdraw it, nor deny those desiring to purchase it any of the rights or services which it undertook to give; on the other hand, it was kept on sale, and was sold, and those purchasing it got all it purported to give. How, therefore, can it be said that they lowered the rate on such ticket? What they did was to also sell another ticket at the rate of $3.75 by which they contracted for different and inferior services; they did not lower the rate for the services guaranteed by the $5.90 ticket. The two different tickets, with two different rates, stood together. They, therefore, did not do anything which section 20 prohibits, under any possible construction which could reasonably be given to it.

Really, the contention of appellants rests upon the proposition that section 20 prohibited respondent from selling any other kind of ticket than the $5.90 ticket, for any other kind of service. But there is no such prohibition. Such prohibition could not be judicially put into the constitution by any kind of reasonable construction—even without reference to the principle of interpretation which, as hereinbefore stated,

There is still a further contention that there is no substantial difference between the services given under the $5.90 . ticket and those allowed under the $3.75 ticket, and that therefore the asserted difference is merely colorable. If that be so, then upon the payment of the $5.90 fare the passenger would not be entitled to the stop-over right, or the six months time, etc., but the railroad company could compel him to accept the ticket which represented the $3.75 fare, because, as asserted, there is “no substantial difference” between the two services. Certainly no one would contend for this proposition. The fact is that those rights which accrue under the $5.90 ticket, and could not be asserted under the $3.75 ticket, are substantial and material, and have been the foundation of a large amount of litigation. (See chap. LXVII of Elliott on Railroads, vol. 4, p. 2482, on “Tickets, Pares, and Passes,” and the numerous cases there cited.) Indeed, the decision of this court in the important case of Robinson v. Southern Pacific Co., 105 Cal. 526 , rested entirely upon the important and substantial value of the stop-over privilege—where it was held that the ticket issued by the defendant in that case, taken in connection with certain statutory provisions, entitle plaintiff to a stop-over privilege which was enforced by the judgment. But in that case the distinction between different kinds of tickets and fares was fully recognized. The court, in response to a petition for rehearing, said: “We do not hold, and it does not follow from the views herein ex

It is argued that the acts of respondents _ constitute an evasion of section 20—the word “evasion” evidently being used in its worst sense. But, as stated in Endlieh on Interpretations, “It is not evading an act to keep outside of it,” and a provision of law “is always subject to evasion in that sense; for there is no obligation not to do what the legislature has not really prohibited.” (Sec. 144.) And there is no significance attaching to the fact that there was evidence to the point that a large majority of the passengers bought the $3.75 ticket, while a comparatively small number bought the $5.90 ticket. Whether or not respondents subjected themselves to the drastic and ruinous penalty of section 20 depends upon what they did—not on what others did. So remote a consideration is entirely beyond the principles of construction which, as hereinbefore stated, apply to restrictive and penal provisions such as those here involved.

Under the foregoing views the second question—that is, whether or not the said section 20 is in conflict with the fourteenth amendment of the constitution of the United States— need not be- determined or discussed.

Henshaw, J., concurred, with McFarland, J.

Rehearing denied.