Missouri-Kansas-Texas R. of Texas v. Mars , 294 S.W. 941 ( 1927 )

Appellees do not question the paramount authority of Congress to pass laws controlling interstate commerce or carriers engaged in interstate commerce, nor do they question the authority of Congress to enact the Transportation Act of 1920 (41 Stat. 456), and especially the provisions herein involved. But they do allege that this is a defensive matter, and, in the absence of any showing to the contrary, that the law presumes that the defendant corporation and its promoters complied with the law, and especially with the Transportation Act, and in applying for and accepting a charter, and in operating the railroad thereunder, it or they impliedly represented to the state that it or they had complied with the requirements of said act. It is presumed that they who apply for the charter, as well as the secretary of state, who was the instrumentality of the government of the state of Texas in issuing the charter knew the law, and knew that before a charter could be legally issued to the new corporation, and in order to comply with the present article 6422, Rev. Statutes of 1925, permission must be secured by the promoters from the Interstate Commerce Commission to assume the debts of the sold-out corporation specified in this article.

In Weaver v. Palmer Bros. Co., 270 U.S. 402, 46 S. Ct. 320,70 L. Ed. 654, there was involved the question as to whether the provisions of a statute of the state of Pennsylvania, which prohibited the use of "shoddy," meaning any material which has been spun into yarn, knit or woven into fabric, and subsequently cut up, torn up, broken up, or ground up into comfortables, violates the due process clause, or the equal protection clause, of the Fourteenth Amendment of the Constitution of the United States. The Supreme Court said:

"Invalidity may be shown by things which will be judicially noticed, * * * or by facts established by evidence. The burden is on the attacking party to establish the invalidating facts" (citing Minnesota Rate Cases,230 U.S. 352, 33 S. Ct. 729, 57 L. Ed. 1511, 1563, 48 L.R.A. [N. S.] 1151, Ann.Cas. 1916A, 18). "Laws frequently are enforced which the court recognizes as possibly or probably invalid, if attacked by a different interest or in a different way."

In American Railway Express Co. v. Lindenburg, 260 U.S. 584,43 S. Ct. 206, 67 L. Ed. 414, 418, the question at issue was whether or not the Interstate Commerce Commission had ever authorized the express company to establish and maintain rates dependent upon declared or agreed values. If yea, the limitation of value stated in the receipt given by the company for baggage carried and lost was valid. Otherwise, such limitation was invalid under the provisions of the Second Cummins Amendment (U.S. Comp. St. § 8563 et seq.). No proof was made that the rate charged by the carrier and paid by the shipper had been authorized by the Interstate Commerce Commission. The Second Cummins Amendment is, in part, as follows:

"Provided, however, that the provisions hereof respecting liability for full actual loss, damage, or injury, notwithstanding any limitation of liability or recovery or representation or agreement or release as to value, and declaring any such limitation to be unlawful and void, shall not apply, first to baggage carried on passenger trains or boats, or trains or boats carrying passengers; second, to property, except ordinary live stock, received for transportation concerning which the carrier shall have been or shall hereafter be expressly authorized or required by order of the Interstate Commerce Commission to establish and maintain rates dependent upon the value declared in writing by the shipper or agreed upon in writing as the released value of the property, in which case such declaration or agreement shall have no other effect than to limit liability and recovery to an amount not exceeding the value so declared or released, and shall not, so far as relates to values, be held to be a violation of section ten of this act to regulate commerce, as amended," etc. U.S. Comp. St. § 8604a.

The principal question of law which was determined in this case, in so far as it is pertinent to the case at bar, was whether or not Lindenburg, the shipper, was bound by the terms of that part of the shipping contract or receipt which was issued by the company to him, and which stipulated that:

"In no event shall this company be held liable or responsible, nor shall any demand be made upon it beyond the sum of $50 upon any shipment of 100 pounds or less, and for not exceeding 50 cents per pound upon any shipment weighing more than 100 pounds and the liability of the express company is limited to the value above stated unless the just and true value is declared at time of shipment, and the declared value in excess of the value above specified is paid for, or agreed to be paid for under this company's schedule of charges for excess value."

The carrier affirmed and the shipper denied the validity and binding effect of the stipulation in question. It was proved by the carrier that a similar contract between the carrier and other shippers had been approved by an order of the Commission in accordance with the Second Cummins Amendment, which authorized the commissioner to approve such stipulation in such cases, but no such approval was shown in the particular case. In the absence of such approval by the Commission, such a stipulation would be void under the Carmack Amendment as amended by the First Cummins Amendment (U.S. Comp. St. §§ 8592, 8604a). The carrier as a defense to the action pleaded the provisions of the contract or receipt issued to the shipper exempting it from any liability in excess of the agreed or stipulated valuation. The plaintiff denied the validity of that defense because it had not been shown that the Commission had authorized the carrier to insert such a stipulation in its contract, and, hence, that the stipulation was invalid under the Carmack Amendment. On the issue thus raised, the question arose as to which party had the burden of proof, viz., the defendant to show that the Commission had granted such authority, or the plaintiff to show that such authority had not been granted.

In answering the question thus presented for decision, the Supreme Court said:

"A copy of the tariff, certified by the secretary of the Commission, was put in evidence. If these facts do not warrant the logical inference of a grant of authority they do afford the basis for a legal presumption to that effect, for, if petitioner was not duly authorized by the Commission, its action in attempting to limit its liability was unlawful, and, as this court said in Cincinnati, N. O. T. P. Ry. Co. v. Rankin, 241 U.S. 319, 327, 36 S. Ct. 555, 558 (60 L. Ed. 1022 [1026] L.R.A. 1917A, 265):

"`It cannot be assumed, merely because the contrary has not been established by proof, that an interstate carrier is conducting its affairs in violation of law. Such a carrier must comply with strict requirements of the federal statutes or become subject to heavy penalties, and in respect of transactions in the ordinary course of business it is entitled to the presumption of right conduct.'

"It is a rule of very general application, that where an act is done which can be done legally only after the performance of some prior act, proof of the latter carries with it a presumption of the due performance of the prior act." Knox County v. Ninth National Bank, 147 U.S. 91, 97,13 S. Ct. 267, 270, 37 L. Ed. 93, 95.

See, also, New York C. H.R. R. Co. v. Beaham, 242 U.S. 148, 151,37 S. Ct. 43, 61 L. Ed. 210, 216; Young v. South Tredegar Iron Co.,85 Tenn. 189, 2 S.W. 202, 4 Am. St. Rep. 752; Scottish Commercial Ins. Co. v. Plummer, 70 Me. 540, 544.

In the absence of proof to the contrary, we therefore indulge the presumption that, in basing its transportation charges upon the value recited in the receipt, the petitioner had due authority.

In the case cited (241 U.S. 327, 36 S. Ct. 558, 60 L. Ed. 1022, L.R.A. 1917A, 265), the Supreme Court further said:

"It cannot be assumed, merely because the contrary has not been established by proof, that an interstate carrier is conducting its affairs in violation of law. Such a carrier must comply with strict requirements of the federal statutes or become subject to heavy penalties, and in respect of transactions in the ordinary course of business it is entitled to the presumption of right conduct. The law `presumes that every man, in his private and official character, does his duty until the contrary is proved; it will presume that all things are rightly done, unless the circumstances of the case overturn this presumption, according to the maxim, Omnia presumuntur rite et solemnitur esse acta, donec probetur contratium.'"

In Bank of United States v. Dandridge, 12 Wheat. (25 U.S.) 64, 70, 6 L. Ed. 552554, the court said:

"If officers of the corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers will be deemed rightful, and the delegated authority will be presumed. * * * In short, we think that the acts of artificial persons afford the same presumptions as the acts of natural persons. Each affords presumptions, from acts done, of what must have preceded them, as matters of right, or matters of duty."

Where the illegality of a contract is not apparent upon its face, the burden of proof is on the party asserting it, the presumption being in favor of legality. 13 Corpus Juris, 761; Cundiff v. Campbell, 40 Tex. 142; Tucker v. Streetman, 38 Tex. 71; Olcott v. Gabert, 86 Tex. 122,23 S.W. 985; San Antonio Street Ry. Co. v. Adams, 87 Tex. 131,26 S.W. 1040; Foard County v. Sandifer, 105 Tex. 420, 151 S.W. 523.

In St. L., S. F. T. Ry. Co. v. Birge-Forbes Co. (Tex.Civ.App.)139 S.W. 3, writ of error denied, the court said:

"Again, the appellee's petition disclosed a legal contract, and the burden of establishing that it was illegal was upon the appellants. This would require appropriate pleadings and proof of the facts showing such illegality."

See Lancaster v. Wheeler, 266 S.W. 795, 796, by the Texarkana Court of Civil Appeals; C. R. I. G. Ry. Co. v. Shroyer (Tex.Civ.App.)197 S.W. 773, holding that an interstate carrier is entitled to the presumption that it is conducting its business lawfully; New York, etc., Ry. Co. v. Beaham, 242 U.S. 148, 37 S. Ct. 43, 61 L. Ed. 210, 216; Humble Oil Refining Co. v. Strauss (Tex.Civ.App.) 243 S.W. 528.

The writer is of the opinion that, in the absence of pleading and proof to the contrary, it should be presumed that the promoters and officers of the new corporation, when they applied to the state of Texas for a charter, represented to the secretary of state that the order had been obtained from the Interstate Commerce Commission authorizing the new corporation to assume the indebtedness of the sold-out corporation designated in article 6422. I do not think that the failure of plaintiffs' petition to show that such permission was secured renders it subject to a general demurrer.

By reason of other pressing official duties, the writer is precluded from a further discussion of the interesting question herein involved. He realizes the cogent force of the views of the majority, but does not believe that the petition of the plaintiffs below was subject to a general demurrer.