Louisville & Nashville R. Co. v. Cook Brewing Co.
223 U.S. 70 (1912)

Annotate this Case

U.S. Supreme Court

Louisville & Nashville R. Co. v. Cook Brewing Co., 223 U.S. 70 (1912)

Louisville & Nashville Railroad Co, v. F. W. Cook Brewing Co.

No. 64

Submitted November 13, 1911

Decided January 22, 1912

223 U.S. 70

APPEAL FROM THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

This Court has jurisdiction of an appeal from the Circuit Court of Appeals in this case, as the jurisdiction of the circuit court did not depend only on diversity of citizenship, but the constitutionality of a state law and the construction of a federal statute were also involved.

Where relief in equity may be admissible under any circumstances at all, the objection of adequate remedy at law comes too late when made for the first time in this Court.

Where a common carrier threatens to abjure its functions and duties as such in regard to a commodity, equity can grant relief to a dealer in such commodity whose business would be ruined by such continual action by the common carrier.

Beer and other intoxicating liquors are a recognized and legitimate subjects of interstate commerce.

Page 223 U. S. 71

A state cannot forbid a common carrier to transport intoxicating liquors from a consignor in one state to a consignee in another state.

Until transportation of intoxicating liquor from one state to another is concluded by delivery to the consignee, the article transported does not become subject to state regulation.

The Wilson Act of August 8, 1890, c. 728, 26 Stat. 313, does not apply to interstate shipments of liquor until delivery to the consignee.

The Kentucky statute of 1906 prohibiting common carriers from transporting intoxicating liquors to "dry" points in Kentucky, while a valid enactment as to intrastate shipments, was not effective as to interstate shipments; in that respect, it was an unconstitutional interference with interstate commerce.

A state statute regulating shipments of common carriers, although legal as to intrastate shipments, if illegal as to interstate shipments imposes no obligation upon the carrier in regard thereto, nor affords any excuse for refusal to perform its duties as a carrier.

Where the action of the common carrier is not discriminatory and the question is not an administrative one within the scope of the Interstate Commerce Commission, a question of general law as to the duties of the carrier arises which is one for a judicial tribunal, and not competent for the Commission, and the fact that the carrier may have filed notice with the Commission does not give it jurisdiction of the subject.

Where reasonableness of, or discrimination in, rates is not an element, but the common carrier bases a refusal to perform its duty as such on legislative enactments, a shipper can resort to the courts to compel him to do so without first obtaining a finding from the Interstate Commerce Commission. Texas & Pacific Railway v. Abilene Cotton Oil Co.,204 U. S. 246, distinguished.

172 F. 117 affirmed.

This suit started in a court of the State of Indiana, and was removed by the defendant, now the appellant, to the circuit court of the United States.

The brewing company is an Indiana corporation, engaged in brewing beer at Evansville, Indiana, and sells its product in state and interstate trade. The railroad company is a Kentucky corporation, owning and operating a line of railway extending into many states, including Indiana and Kentucky.

Page 223 U. S. 72

The complaint averred that, although prepayment of freight had been tendered and every shipping regulation complied with, the railroad company had refused to accept for carriage from Evansville, Indiana, to stations on the line of its railway in the State of Kentucky, beer in kegs and cases, consigned to points which were "local option" or "dry" localities under the law of Kentucky, and had notified complainant and the public that it would discontinue receiving consignments of beer or other liquors for points in the State of Kentucky where the local option law of that state was in operation. The prayer of the bill was that the railroad company be enjoined from so refusing to accept the product of the brewing company for transportation from Evansville to such local option points in Kentucky.

A preliminary injunction was issued as prayed. Thereupon the defendant removed the case to the circuit court of the United States upon the ground that there was diversity of citizenship, and also because the case involved questions arising under the Constitution and laws of the United States -- namely, the validity of the law of Kentucky prohibiting the transportation and delivery of liquors to points in that state where the sale was prohibited, and also as a case arising under the act of Congress regulating interstate commerce of February 4, 1887, 24 Stat. 379, c. 104, as amended June 29, 1906, 34 Stat. 584, c. 3591. An answer was then filed and the cause heard upon bill and answer, with the result that the preliminary injunction allowed by the state court was made permanent, and the railroad company enjoined from refusing to receive and carry beer from Evansville to any point upon its line of road in the State of Kentucky, wet or dry. An appeal by the railroad company to the circuit court of appeals resulted in an affirmance of the order of the circuit court. For the opinion, see 172 F. 117

Page 223 U. S. 80

MR. JUSTICE LURTON, after making the above statement, delivered the opinion of the Court.

1. The jurisdiction of this Court to entertain an appeal in this case cannot be seriously controverted. The jurisdiction of the circuit court was not dependent alone upon diversity of citizenship. There was involved not only the validity of the law of Kentucky as a regulation of interstate commerce, but a question as to whether the sole remedy in any such case was not by an application to the Interstate Commerce Commission.

2. The objection that there was an adequate remedy at law, assuming that the subject is one for any tribunal other

Page 223 U. S. 81

than the Interstate Commerce Commission, comes too late, if ever available, the objection being now made for the first time, so far as is discoverable from the record. The announced purpose of the railroad company to abjure its function and duty as a common carrier in respect of interstate shipments of all intoxicating liquors to localities in the State of Kentucky where the Kentucky local option prohibition laws prevailed threatened the ruin of complainant's business, and relief by injunction against such a continued course of conduct was certainly one which in such circumstances might be granted. Where the case is one in which, under any circumstances, relief in equity may be admissible, it is too late to say that there was an adequate remedy at law only upon review proceedings. Kilbourn v. Sunderland,130 U. S. 505.

3. The case was heard upon bill and answer. The defense is based solely upon the terms of the Kentucky act of March 21, 1906, now § 2569a, Carroll's Kentucky Statutes of 1909, entitled an act "to Regulate the Carrying, Moving, Delivery, Transferring or Distribution of Intoxicating Liquors in Local-option Districts." By that act, it is made unlawful for any common carrier to transport beer or any intoxicating liquor to any consignee in any locality within the state where the sale of such liquors has been prohibited by vote of the people under the local option law of the state. A violation of the law subjects the offender to a fine of not less than fifty nor more than one hundred dollars for each offense.

Upon the assumption that this legislation effectively prohibited both state and interstate transportation of such commodities within the state, the railroad company notified all of its agents, in and out of the state, to refuse to receive such liquors when consigned to any local option point. This notification was by a printed circular letter, which set out the full text of the act, and gave a full list of all such local option points. In express terms, this

Page 223 U. S. 82

notification applied to both inter- and intrastate shipments, and, it is averred, this circular was filed with the Interstate Commerce Commission. It is not, however, averred that the Commission either took any action thereon or that it was asked to take any action.

The legality of the attitude of the railroad company toward interstate shipments of intoxicating liquors to local option points in Kentucky must turn upon the validity of that legislation as applied to interstate shipments.

By a long line of decisions, beginning even prior to Leisy v. Hardin,135 U. S. 100, it has been indisputably determined:

a. That beer and other intoxicating liquors are a recognized and legitimate subject of interstate commerce;

b. That it is not competent for any state to forbid any common carrier to transport such articles from a consignor in one state to a consignee in another;

c. That until such transportation is concluded by delivery to the consignee, such commodities do not become subject to state regulation, restraining their sale or disposition.

The Wilson Act, which subjects such liquors to state regulation, although still in the original packages, does not apply before actual delivery to such consignee where the shipment is interstate. Some of the many later cases in which these matters have been so determined and the Wilson Act construed are: Rhodes v. Iowa,170 U. S. 412; Vance v. Vandercook Co.,170 U. S. 438; Heyman v. Southern Railway,203 U. S. 270; Adams Express Co. v. Kentucky,214 U. S. 218.

Valid as the Kentucky legislation undoubtedly was as a regulation in respect to intrastate shipments of such articles, it was most obviously never an effective enactment insofar as it undertook to regulate interstate shipments to dry points. Pending this very litigation, the Kentucky Court of Appeals, upon the authority of the line of cases

Page 223 U. S. 83

above cited, reached the same conclusion. Cincinnati, N. O. & T. P. R. Co. v. Commonwealth, 126 Ky. 563.

The obligation of the railroad company to conform to the requirements of the Kentucky law so far as that law prohibited intrastate shipments is clear, and to this extent its circular notification was commendable. But the duty of this company, as an interstate common carrier for hire, to receive for transportation to consignees upon its line in Kentucky from consignors in other states any commodity which is an ordinary subject of interstate commerce and such transportation could not be prohibited by any law of the state of such consignee, inasmuch as any such law would be an unlawful regulation of interstate commerce not authorized by the police power of the state. It is obvious, therefore, that, insofar as the Kentucky statute was an illegal regulation of interstate commerce, it neither imposed an obligation to obey nor affords an excuse for refusal to perform the general duty of the railroad company as a common carrier of freight.

The fact that the circular notice of the company referred to was filed with the Interstate Commerce Commission is incidentally stated in the answer of the company, and this fact is now made the basis for an argument that neither the state court nor the circuit court had any jurisdiction, and that an application should have been made to the Interstate Commerce Commission for an order requiring the railroad company to desist from refusing to transport such articles in interstate commerce.

Why should the brewing company have made complaint to the Commission? What relief could it afford? There was no tariff question. There was no discrimination against shipments tendered by complainant and like shipments tendered by other brewers to the same points. There was no claim that the commodities tendered were inherently dangerous to transport, or that the railroad company did not have transportation facilities. Evansville

Page 223 U. S. 84

was not discriminated against in favor of like shipments to the same points. To say that there was a discrimination between shipments of intoxicants and other commodities does not make a case of discrimination or preference where the denial of such shipments is based, as is the case here, wholly and solely upon an illegal restraint upon that kind of interstate commerce is to reason in a circle, for the question comes back at last to the validity of the law forbidding such shipments. There was no discrimination if the law was valid, and the result must turn not upon any administrative question or questions of fact within the scope of the power of the Commission, but upon the validity of the legislation which controlled the action of the carrier. That is a question of general law, for a judicial tribunal, and one not competent for the Commission, as a purely administrative body.

The decision in the case of Texas & Pacific Railway v. Abilene Cotton Oil Co.,204 U. S. 426, is not applicable here. The question there was one of the reasonableness of a rate. Such a question is primarily one of administrative character, and the propriety of a prior resort to the Commission to obtain a ruling upon the question of reasonableness involved the very heart of the whole statute. That there might be uniformity in ratemaking necessarily required a resort to that body as a basis for a common law recovery of an excessive charge.

The result is that the decree of the court below must be

Affirmed.

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