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Texas Co. v. Chicago & Alton R. Co.

December 14, 1940


Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; Philip L. Sullivan, Judge.

Author: Treanor

Before EVANS, MAJOR, and TREANOR, Circuit Judges.

TREANOR, Circuit Judge.

The appeal is taken from a decree of the District Court which enforced a reparation award of the Illinois Commerce Commission in favor of claimant-appellee, Funks Grove Grain Company.

The basis of the reparation award was a charge by the receivers of the railways and property of the Chicago and Alton Railroad Company of allegedly excessive rates on Illinois intrastate shipments of coal. The claim for the enforcement of the award was filed in the receivership proceeding of the Chicago and Alton Railroad entitled "The Texas Company, et al. v. The Chicago and Alton Railroad, et al."

The receivers operated the road from August 30, 1922, to July 18, 1931, when the property was sold pursuant to a decree of foreclosure. The defendant-appellant, Alton Railroad Company, is the assignee of the purchasers at the foreclosure sale. The decree of foreclosure and sale provided that the purchaser or its assignee "shall pay * * * all unpaid indebtedness and liabilities of the receivers * * * incurred in the management or operation" of the road. Thereafter, the receivers were discharged by the District Court on November 9, 1931. By the terms of the order of discharge, the cause was kept open and jurisdiction was reserved to hear and determine all claims against the receivers "which * * * (had) arisen, or may arise, out of said receivership;" and the court ordered all such claims to be filed on or before February 4, 1932. In 1934, pursuant to provisions of Section 72 of the Illinois Public Utilities Act,*fn1 various shippers filed complaints before the Illinois commerce Commission charging that unreasonable rates were being exacted by the receivers. On May 17, 1928, the Commission entered an order finding that the rates charged were illegal but reserved jurisdiction to enter reparation awards. Thereafter, a rehearing was granted on petition of the carriers; hearings were held upon such rehearing, and on May 26, 1931, the commission entered an order finding the the rates exacted from plaintiff were excessive and that plaintiff was entitled to a reparation award. The order of the Commission, however, did not fix the amount due to plaintiff and did not order any payment, but merely provided that the parties make such compromise as they might be able to agree upon.

Thereupon plaintiff filed a claim in the District Court receivership proceedings based upon the Commission's order of May 26, 1931. Defendant moved to dismiss the claim; reference was made to a master who reported in 1937 that the order was incomplete and could not form the basis of a suit in a court because of lack of a finding of the amount due and an order for its payment. thereafter, plaintiff filed an instrument before the Commission styled "First Supplemental Petition" in which it alleged the Commission had failed to make its usual reparation order and plaintiff requested that proceedings be reopened and an enforceable award entered. This petition was denied. Thereafter, plaintiff filed another instrument before the Commission denominated "Petition for Rehearing on Order Denying First Supplemental Petition" which prayed that the Commission grant a rehearing of the matters referred to in the "First Supplemental Petition" and make a reparation order "or in any event make a final appealable order disposing of said claims." This petition was granted in 1938. Thereupon hearings were hald at which the receivers entered their appearance; and on March 17, 1939, the Commission entered a reparation order. The order was directed against the Chicago & Alton Railroad Company, the receivers, and the defendant, Alton Railroad Company, severally. Thereafter plaintiff moved the District Court for leave to amend its claim theretofore filed; the court granted leave and also set aside the master's previous report which the court had not yet acted upon. Plaintiff filed its amendment, defendant filed answer thereto, and plaintiff filed a reply. Reference was made to a master who filed a report recommending that the claim be allowed. The District Court approved and confirmed the report and entered a judgment order which adjudicated defendant to be indebted to plaintiff in a stated amount. The District Court allowed plaintiff reasonable attorneys' fees, which were ordered to be taxed and collected as part of the costs of the proceeding.

Several of defendant's points of error relied upon for reversal rest upon the contention that the so-called order of May 26, 1931, was a final order denying the claim for a reparation award.

We cannot construe the Commission's entry of May 26, 1931, as a denial of a reparation award since the entry expressly recognizes the claimant's right to reparation for excessive charges. It is in substance a general finding that the claimant is entitled to an award.

The Illinois Commerce Commission has jurisdiction to hear claims against a public utility based upon overcharges and to enter orders that the utility make due reparation for an overcharge; if the utility does not comply with the order the claimant may petition a court for enforcement of the order of reparation. It is clear that the type of order which the Commission is authorized to make is an order which is sufficiently definite for enforcement by decree of a court. In short, the order must direct payment of a fixed sum which represents the amount of the overcharge. The socalled order of May 26, 1931, does not meet the foregoing requirements and is not in any sense a final order which disposes of the reparation claim. Consequently, the cause was still pending and undisposed of when the plaintiff-claimant filed its petition in which it alleged that the Commission had failed to make its usual reparation order and requested that proceedings be reopened and an enforceable award entered. We are of the opinion that it was within the authority of the Commission to act upon such petition and to enter a proper reparation order.

The foregoing conclusion disposes of the arguments of defendant which depend for their validity upon the assumption that the so-called order of May 26, 1931, was a final order and that subsequent proceedings in relation thereto were in the nature of rehearings or proceedings to set aside a previous order.

The defendant asserts that the Commission had no jurisdiction to enter a reparation order against either the receivers or the defendant. But if the Commission had jurisdiction to enter the award against the receivers, there is no obstacle to enforcing it against the defendant, Alton Railroad Company, since the latter became liable to pay the award under the terms of the foreclosure sale under which it purchased the property. The only arguments advanced to show lack of jurisdiction over the receivers are that the receivers ceased operation and that they were discharged. Defendant states that "Their (receivers') final discharge on November 9, 1931, terminated all their liabilities and deprived the Commission of power to enter an ordr directed against them." This assertion does not square with the nature of the entry of discharge. Examination of such entry discloses that the receivership proceedings were not terminated by the order of discharge. The entry provided that the cause was retained and kept open and jurisdiction reserved to hear and determine all questions theretofore reserved, "including jurisdiction to ascertain and determine all claims * * * against said receivers * * * which have arisen or may arise out of said receivership. * * * " It was also provided that all claims against the receivers might be filed with the clerk of the court or with the present defendant-appellant, and that defendant should have the right, if it so elected, "to be substituted a party in lieu of said receivers, in any or all litigations by or against said receivers now pending on appeal or otherwise, or continue such litigation in the name of said receivers."

We cannot agree that the qualified discharge of the receivers terminated all jurisdiction over the receivers. To so hold it would be necessary to ignore the retention of jurisdiction to determine all claims against the receivers which "have arisen or may arise", the provision for future filing of claims against the receivers, and the final provision, quoted above, which clearly contemplated that there would not be a cessation of litigation then pending by or against the receivers. We are of the opinion that the District Court had authority to retain qualified jurisdiction over the receivers for the purpose recited in the order.

In respect to the merits of the reparation award the defendant opposed the enforcement order on several grounds, of which only the first need be considered by this Court. This ground may be stated as follows: The rates which were attacked by plaintiff and which were found excessive by the Commission were within the limits of a schedule of reasonable maximum rates prescribed by the Commission prior to the exaction of such rates. It follows, therefore, as a matter of law, that the Commission could not make a finding that rates were ...

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