Amicus Curiae Brief — St. Louis & San Francisco R. Co. v. Spiller

IN THE

SUPREME COURT OF THE UNITED STATES.

OCTOBER TERM, 1926.

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ST, LOUIS AND SAN FRANCISCO 4

RAILROAD COMPANY and ST.

LOUIS-SAN FRANCISCO RAILWAY

COMPANY,

Petitioners,

VS.

E, B, SPILLER et al.,

Respondents. .

_

ee —_— —

PETITION OF MISSOURI PACIFIC RALROAD

COMPANY FOR LEAVE TO FILE

AMICUS CURIAE BRIEF.

Comes now the Missouri Pacific Railroad Company, a

Missouri corporation, by its undersigned attorneys, here-

inafter for convenience termed intervener, and presents

to this Court the fact that claims outstanding against it

approximating, without interest, a million dollars, are

vitally affected by the decision of the Cireuit Court of

Appeals of the Eighth Cireuit in this ease, which de-

cision it is earnestly contended is in conflict, in many im.

portant respects, with the decisions of this Court and

with the decisions of other Cireuit Courts of Appeals, and

intervener, therefore, joins with the petitioners, St. Louis

and San Francisco Railroad Company et al., in urging

that certiorari to review the decision of the Circuit Court

of Appeals be granted, and prays for leave to enter its

appearance herein and file amicus curiae brief.

The interest of intervener in this litigation is by rea-

son of the following facts:

The Missouri Pacific Railroad Company, during 1917,

through foreclosure proceedings, acquired the property of

The Missouri Pacific Railway Company and the St. Louis,

Iron Mountain & Southern Railway Company. The or-

ders and proceedings in the receivership cases were very

similar to those in evidence in the case at bar. The

prior companies referred to, together with other Missouri

carriers, in 1905 enjoined the enforcement of certain Mis-

souri statutory rates, and under and pursuant to the au-

thority and orders of the United States District Court for

the Western District of Missouri proceeded to collect their

tariff rates then on file, which were in excess of the stat-

utory rates. The statutory rates were upheld by this

Court in 1913, and numerous claims for overcharges

arose predicated on the difference between the tariff rates

collected and the statutory rates. These overcharge

claims were solicited by a certain claim adjuster, who

’

during 1916, filed in the Missouri Pacifie-Iron Mountain

a wm

receivership proceedings claims approximating one mil-

lion dollars. The several hundred original petitions filed

by him in behalf of the various claimants were in the

nature of actions for an accounting predicated on the

trust-fund theory—that is to say, upon the theory that

title to the overcharges never passed to the carriers, and

that the overcharge funds were @b initio the property of

the shipper. These claims are stil] pending and this issue

is still being urged in connection with both the procedure

and the classification of the claim,

The Special Master, as well ag administrative Judges

Hook, Sanborn and Faris, have. so far uniformly held

that said overcharges having been collected under and

pursuant to a decree of a court ©f competert jurisdiction

both the legal and equitable title to the money passed to

the carrier at the time of the eollection, and that the

cause of action arose upon the reversal of the judgment,

the remedy being an action for money had and received

predicated on the right to restitution. None of the claims

has yet reached the Circuit Court: of Appeals. The views

of the Special Master and the respective administrative

Judges are very concisely set {forth in the unreported

opinion of Judge Sanborn, the relevant portion of which

appears in the appendix hereof, wherein he follows the

reasoning of this Court in the leading case of Bank of

United States v. Bank of Washington, 6 Pet. 8 (cited with

approval in Arkadelphia Company y, Ry. Co., 249 U.S.

145), to the effect that:

a! Bo

‘“‘The reversal of the judgment cannot have a

retroactive operation and make void that which was

lawful when done. The reversal of the judgment

gives a new right.’’

The overcharge claims against intervener which were

collected under and pursuant to a decree of a court of

competent jurisdiction which was afterwards reversed

are closely analogous to the claims in the case at bar,

wherein the rates were collected under and pursuant to a

lawfully filed tariff, which rates were afterwards deter-

mined to have been unreasonably high. The remedy in

the former instance is in the nature of an action for

money had and received, predicated on the right to resti-

tution, which right arises upon the reversal of the de-

eree. The right in the latter instance is reparation and

the remedy is a statutory action for damages.

United States Cireuit Judges Hook and Sanborn and

District Judge Faris, in the decisions above referred to,

have followed the long line of decisions quoted from in

the brief of petitioner, St. Louis and San Francisco Rail-

road Company, for writ of certiorari in this case, and the

decision of the Court of Appeals for the Eighth Judicial

Circuit in this case is diametrically opposed to those de-

cisions and to the rule of property established thereby,

upon which your intervener herein, it is respectfully con-

tended, has a right to rely.

By reason of the foregoing facts intervener avers that

its rights are vitally affected and greatly prejudiced by

os

each and all of the following findings of the Cireuit

Court of Appeals in this case, to wit:

(1) That claimants were not guilty of laches in failing

to file their claims, and it was error to dismiss their in-

tervening petitions on that ground (R. 722).

(2) That said claims arose after the entry of the final

decree and claimants were not precluded by the final de-

eree and order of confirmation of sale from asserting said

claims (R. 722).

(3) That the Railroad Company, in collecting rates

which the Commission later found to be unjust and un-

reasonable, and, therefore, unlawful, became a_ trustee

ex maleficio (R. 722).

(4) That claimants could invoke the trust-fund doe-

trine, even though the moneys collected could not be

traced into any distinct fund or into any specifie prop-

erty (R. 718).

(5) That an equitable action, based on the trust-fund

doctrine, was not inconsistent with the remedy by repara-

tion prescribed by the Act to Regulate Commerce (R.

719),

(6) That claimants were entitled to have their claims

established as preferential claims superior to the rights

of other creditors, including the bondholders, in the

amounts of the judgments obtained by them against the

Railroad Company, with interest from August 1, 1916, a

date more than three years after the date of appointment

of the Receivers on May 27, 1913 (R. 722).

per ten

Wherefore, intervener prays that certiorari be granted

and that intervener be permi intervene herein and

file amicus curiag briefs:

BY Kh a

Counkel * eae Missouri priit

Railroad Company.

State of Missouri, | _.

City of St. Louis. |

Thos. T. Railey, being duly sworn, makes oath and says

that he is attorney for intervener in the above cause, that

he has read the foregoing petition fer leave to intervene

and knows the contents thereof, and+hat the allegations

Subscribed and sworn to before me this able (day of

August, 1926.

My commission expires. VM i, coe, BA Pee &

eecseeeveeeseeseeasteeeeeveeneeeeen?

Notary Public.

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APPENDIX.

Extract from unreported opinion of Circuit Judge Wal-

ter H. Sanborn, filed March 5, 1923, holding that over-

charges collected under and pursuant to a decree of a

court of competent jurisdiction pending Missouri rate

litigation did not constitute trust funds.

* * * * * * *

“The question in this case, therefore, is not whether

or not the mortgagor company became and is liable to

pay to the interveners the amount of the excessive charges

it collected and interest thereon. It is admitted that the

mortgagor company is so liable. The interveners claim

more.

“They argue that the mortgagor company unlawfully

or wrongfully collected these charges; that one who un-

lawfully or wrongfully collects or obtains money or prop-

erty of another from him becomes immediately a trustee

ex maleficio of that money or property for the benefit of

him from whom he obtains it; and that, therefore, the

mortgagor company became, the instant it collected any

of these excessive charges, a trustee ex maleficio of the

moneys thus collected for the benefit of the interveners.

The soundness of the major premise of this syllogism is

challenged and the crucial question in this case is, did the

mortgagor company unlawfully or wrongfully collect these

excessive charges and thereby make itself a trustee ex

maleficio of the moneys it collected as fast as it received

them?

* * * * * * *

“From the time the District Court first held the statu-

tory rates of 1905 and 1907 confiseatory and issued its

first restraining order or injunction until the Supreme

a

a

Court reversed its final decree, that holding was ihe law

of the land on the subject of these rates so far as the

parties to the suit before that Court were concerned, be-

cause that Court was the judicial tribunal in which the

power was then vested and on which the duty was then

imposed to adjudge what rates were confiscatory and

what were not. While its holding and adjudication on

which all its injunctions were founded and its injunctive

orders remained in force, it was unlawful and wrongful

for the officers of the state or others to put in force the

statutory rates of 1905 and 1907, and the collection of

the higher earlier-established rates by the mortgagor

company was. lawful and right, because it was the duty

of that company to collect compensatory rates, and the

Court in which the power to determine what rates were

compensatory was vested had held that the lower statu-

tory rates were confiscatory and unconstitutional. Dur-

ing this time the putting in foree or enforcement of the

use of these statutory rates by the officers of the state,

their agents or others would have been unlawful, wrong-

ful and punishable by fine or imprisonment for violation

of the injunction, because during that time that judicial

determination was the law of the land as between the

parties to that suit. If the Supreme Court had affirmed

the holding of the District Court such would have been

the rights and relations of these parties and such the

law upon this subject still. Its reversal of that holding

adjudged that that holding was mistaken and erroneous,

and vested in the interveners a right to a reparation of

the losses thev had sustained by the collection of the ex-

cessive rates, of the amount of which those excessive rates

and interest on them were competent evidence. But that

reversal did not so relate back as to render the mortgagor

company’s collection of the excessive charges, which was

woes

rightful and lawful when it was made, wrongful and un-

lawful when it was made, nor did it have the effect to

charge the mortgagor company which lawfully and right-

fully made the collection and applied the moneys collected

to the payment of its current expenses and obligations

while the District Court’s holding and injunctions were

in force, as a trustee ex maleficio of those moneys as fast

as it coilected them.

“In this state of the case the interveners are entitled,

upon proper proof, to the allowance of their claims, as

general unsecured creditors of the mortgagor company,

but the Court is unable to find, in the collection by the

mortgagor company of these excessive charges in accord-

ance with the holdings, orders and injunctions of the

District Court in force at the time of their collection, any

fraud, misrepresentation, deceit, illegality, wrong or

breach of moral or legal duty that taints the conscience

of the mortgagor company or any of its officers whose

duty it was to advise and direct its course when these

charges were collected, or that justifies a charge of this

mortgagor company as a trustee er madleficio or a trustee

de son tort of the moneys collected from these excessive

charges while the adjudications and injunctions of the

District Court were in foree.

“Judge James A. Seddon, the Special Master in this

case; Judge George C. Hitcheock, the Special Master in

the case of Guaranty Trust Company of New York, and

Benjamin F. Edwards, trustees, against the Missouri Pa-

cific Railway Company in the matter of the intervention

of the Laclede Gas Light Company, after an exhaustive

stndy and consideration of the question here invelved and

a review of the authorities, and Judge Hook, upon eonsid-

eration of excentions to the renort of Judge Hitcheock,

have reached the conclusion which has just been stated,

ian tee

and the present consideration of the question has con-

vineed the Court that their decisions were right.

‘‘Reference is made to the reports of Special Masters

Hitchcock and Seddon for citations and reviews of the

authorities pertinent to the question that has been con-

sidered.

“This question was not discussed, determined or ad-

judged by the Court in St. Louis, Tron Mountain & South-

ern Ry. Co. v. McKnight, 244 U. 8, 368, 369, 371, 372, 375;

Bellamy v. St. Louis, Iron Mountain Ry. Co., 220 Fed.

876, 877; Love v. North American Company, 229 Fed.

103, and other like cases, in which the mortgagor was not

justified in its collection of excessive charges by the hold-

ing and injunctions in its favor in full force of the judi-

cial tribunal authorized to determine the question con-

fiseatory or not or in which the mortgagor company did

not claim such protection, or in which the question at

issue was the general liability of the company to pay the

shippers an amount equal to the excessive charges and

interest, and no question of its taking those collections as

a trustee ex maleficio was deliberately considered or de-

cided. And remarks of the Courts in their opinions in

such eases that might have been persuasive if they had

heen deliberately made after presentation and discussion

of the very questions here at issue are not very persua-

sive, much less authoritative here, under the oft-quoted

rule announced by Chief Justice Marshall in these words:

‘¢<Tt is a maxim, not to be disregarded, that gen-

eral expressions, in every opinion, are to be taken in

connection with the case in which those expressions

are used. If they go beyond the case they may be

respected, but ought not to control the judgment ina

subsequent suit, when the very point is presented for

decision. The reason of this maxim is obvious. The

a, ee

question actually before the Court is investigated

with care, and considered in its full extent. Other

principles which may serve to illustrate it are con-

sidered in their relation to the case decided, but

their possible bearing on all other eases is seldom

completely investigated’ (Cohens v. Virginia, 19 U.

S. 264, 399; King v. Pomeroy, 121 Fed. 287, 294;

Traer v. Fowler, 114 Fed. 810, 816).

“On the other hand, such established and indisputable

rules of law and equity as that a subsisting order, decree

or judgment of a court having jurisdiction of the sub-

ject matter and the parties, though subsequently re-

versed for error, is binding upon them and ecnstitutes a

sufficient justification for acts done under and in accord-

ance of it before its reversal, and that such a reversal

does not have such a retroactive effect as to make un-

lawful or wrong, at the times they are done, acts lawfully

done at such times in accordance with the order, judg-

ment or decree before its reversal. United States v.

Bank of Washington, 31 U. S. 716; Gat v. Smith, 39 N. H.

171, 176; Field v. Anderson, 103 Tll. 403, 406; 2 Freeman

on Judgments, Sec. 482; Ruling Case Law, See. 245, ought

not to be disregarded.

“The result is that the interveners were not entitled

to a discovery or accounting in equity on the ground that

the mortgagor company became a trustee ex maleficio of

the moneys collected from the excessive charges at the

times it collected them, because it did not become such a

trustee.”’