And inserting in lieu thereof, the word "jurors' fees, witness fees and fees of attorneys appointed by the court under the statute, for the defendant, shall be approved by the circuit judge and audited and allowed by the Board of State Auditors and paid by the State Treasurer upon the warrant of the Auditor General." The report was accepted and the committee discharged. The question being on the adoption of the amendment to the bill recommended by the committee, The amendment was adopted. The bill was referred to the Committee of the Whole and placed on the general orders. COMMUNICATIONS FROM STATE OFFICERS. The following communication from the Auditor General was received and read: Auditor General's Office, Lansing, Mich., February 6, 1917. Hon. Wayne R. Rice, Speaker of House of Representatives: Dear Sir: The report of the Auditor General for the fiscal year ending June 30, 1916, has been unavoidably delayed and will be placed on the desks of the members of the House today, and I would appreciate it if you will call the attention of the members of the House to the suggestions I have made relative to changes in the laws within the jurisdiction of the Auditor General which appear on pages three to five in the report. Respectfully, O. B. FULLER, The following communication from the Secretary of State was received and read: State of Michigan, Department of State, Hon. Charles S. Pierce, Clerk, House of Representatives, Lansing, Michigan. Dear Sir:-Under the provisions of section 5758, C. L. 1897, I have the honor to transmit herewith to the Legislature, a summary of the monthly reports of the Game, Fish and Forestry Warden for the years 1915 and 1916. COLEMAN C. VAUGHAN, Respectfully, The following is the summary: SUMMARY OF REPORTS OF GAME, FISH AND FORESTRY WARDEN FOR THE YEARS 1915 AND 1916. The following communication from the Attorney General was received and read: State of Michigan, Attorney General's Department, Hon. Chas. S. Pierce, Clerk of the House of Representatives, Lansing, Dear Sir:-You have recently transmitted to this department copy of House resolution number twenty-three, by which I am requested to submit to the House a statement of the history and present status of the case of the Duluth, South Shore and Atlantic Railway Company vs. Franz C. Kuhn, Attorney General et al. In accordance with this request, I wish to present the following facts: As a matter of legislative history, it will be recalled that at the session of 1907 the general railroad law was amended in such manner as to provide that all railroad companies whose gross earnings, as shown by their annual reports to the Commissioner of Railroads, exceeded the sum of one thousand two hundred dollars ($1,200.00) per mile should not charge more than two cents per mile for each passenger carried. Specific provisions were inserted in the act with reference to the transportation of children under the age of twelve, and also governing instances where the distance traveled was less than five miles. A proviso was inserted in this amendment exempting the railroads in the Upper Peninsula from the two-cent rate and permitting the same to charge a sum not exceeding three cents per mile for a distance exceeding ten miles. At the session of 1911 by Act No. 276 of the Public Acts of that year, the law was further amended and the proviso in favor of the railroads in the Upper Peninsula was eliminated. The effect of the amendment was, of course, to require that such roads should charge not more than two cents per mile, if their gross earnings exceeded one thousand two hundred dollars ($1,200.00) per mile. Before the amendment of 1911 became operative the Duluth, South Shore & Atlantic Railway Company started action in the Federal Circuit Court for the eastern district of Michigan to restrain the Attorney General and the Railroad Commission from enforcing against it the two-cent rate, alleging that the result of such enforcement would be to reduce the earnings of the company to such a point that it would thereby be prevented from earning a reasonable return on the value of its property devoted to the intra-state passenger business in Michigan, and that in consequence such rate would be confiscatory It appears that the bill of complaint was filed on the twenty-sixth day of July, 1911, and a temporary injunction was sought by the road to prevent the officers of the State from proceeding to enforce the reduced rate, pending the trial of the case and the determination thereof on the merits. On the same day that the bill was filed a restraining order was issued by the court to prevent any such action until such time as the motion for the temporary injunction might be submitted and determined. In accordance with the usual procedure in such cases an order to show cause was issued by the court and served upon the State officers concerned. It The records and files of the case indicate that there was some delay at the outset in answering the bill of complaint and the order to show cause. At this time the question of the constitutionality of the two-cent fare law of the State of Minnesota was pending before the Supreme Court of the United States. Many of the issues involved in that case were also involved in the Duluth, South Shore & Atlantic case. appears from certain stipulations entered into and filed by the parties that there was an expectation that the Minnesota case would be submitted to the Supreme Court during the month of October, 1911; and apparently it was hoped that an early decision might be had. As a matter of fact, however, the Minnesota rate case was not argued before the Supreme Court of the United States until the month of April, 1912, and was not decided until the ninth of June, 1913. At the institution of the proceeding Mr. Roger I. Wykes of Grand Rapids, Michigan, was employed to represent the State in the litigation. From that time up to the beginning of the present year Mr. Wykes has had full and complete charge of the case. When it was ascertained that the decision in the Minnesota case would be delayed beyond the expected time steps were taken to proceed with the litigation. On the twentysecond of March, 1912, the motion for the temporary injunction was argued before Judges Knappen, Dennison and Angell. Before the motion was decided, however, Judge Angell retired from the bench, thus necessitating a reargument. This has never been had, however. The restraining order issued by the court when the bill of complaint was filed has been continued in force by subsequent orders of the court made from time to time, so that as a practical proposition the officers of the State have been prevented from taking any steps to enforce the two-cent rate against the Duluth, South Shore & Atlantic Railway. It should be noted in this connection that, as a condition of the continuing in force of such restraining order, the company agreed in a stipulation bearing date September twentieth, 1911, that a rebate coupon or receipt should be given to each passenger paying an amount in excess of two cents per mile, agreeing that the company should refund the excess rate in the event that the law is finally adjudged valid as to it. It further appears that under date of October twenty-second, 1915, an order was entered by the court directing that the moneys collected from the excess fares should be deposited by the railroad company for the redemption or the refunding of the coupons or excess fare checks. On the seventeenth of May, 1912, a petition was presented to the court. requesting the appointment of a special master to take the testimony and report thereon. On the same day Mr. Herbert R. Baker was appointed by the court, and the actual taking of testimony appears to have been begun on the eighth of July following, at the city of Marquette. In the meantime, and on the twenty-ninth of May, 1912, the court made an order requiring the complainant railway company to file bond in the sum of two hundred thousand dollars ($200,000.00), as a condition of the continuance of the restraining order before referred to. It appears from the records of the case that testimony was taken from time to time during the remainder of 1912, and during the year 1913. It is my understanding that the decision in the Minnesota rate case which, as above suggested, was rendered on the ninth of June, 1913, necessitated the re-examination of certain witnesses and the taking of additional testimony, because of theories disapproved by the Federal Supreme Court. In the aggregate it appears that a large amount of testimony was taken. This phase of the case was completed on the twelfth of August, 1914. Appraisals were prepared by both sides, thus necessitating the employment, on behalf of the State, of several experts in this class of work. Mr. Charles Hansel of New York city was retained for this purpose, and he was assisted by a number of other persons associated with him. A considerable proportion of the proof taken consists of the examination of the experts on both sides for the purpose of ascertaining the proper valuation of the road. Upon the completion of the testimony, exhaustive briefs were prepared by counsel for the respective parties, and were submitted to the special master. On the seventeenth of February, 1915, oral arguments were begun before Mr. Baker in the city of Detroit, and continued for approximately three weeks. At the conclusion of this argument the case was regarded as submitted to the special master for his determination and report to the court. It appears, however, that further briefs were submitted on specific points at issue for the purpose of presenting the contentions of the parties to the case. Within the last few days Mr. Baker has filed his report with the court, the details of which have been indicated in the newspapers. It appears from this report that a tentative draft of the same was prepared some months ago and was submitted to counsel for the respective parties, presumably for the purpose of allowing the presentation of objections thereto. Availing themselves of the opportunity granted to them by the master, extended objections with the reasons on which the same were based were submitted and consideration thereto was given, as is indicated by the master's report. In endeavoring to comply with the resolution of the House, I have suggested in outline the history of the case as shown by the files and records of this office. It is, of course, impossible for me to explain in detail the reason for specific adjournments and continuances. No one excepting counsel having immediate charge of the litigation, is in position to speak as to these details. Unquestionably the matter has dragged a great deal longer than it reasonably should. Undoubtedly this delay has worked to the material advantage of the Duluth, South Shore & Atlantic. The granting of the restraining order without a hearing upon the merits put the railroad company in position where it could collect the three-cent rate just so long as such order remained in effect, and, in my opinion, that order gave an undue advantage to the railroad company. case. Mr. Baker's report and recommendations by no means settle this They are not final, and the whole matter will be submitted to the judgment and consideration of the United States District Court. The court is in no way bound by the report of the master, and is at liberty to disregard it. This department believes that a fair consideration of the testimony taken and the proper application of the rules of law pertaining thereto will result in the same determination as was arrived at in the Ann Arbor and Pere Marquette cases. As throwing further light upon this matter, I desire to call your attention to the fact that while the same was pending before Mr. Baker that there were two other applications made to enjoin the State from enforcing the two-cent rate. The first of these two was that commenced by the Ann Arbor Railroad Company on October 1, 1914, and the second by the Pere Marquette Railroad Company on the eighteenth of May, 1915. In each case an application for an injunction was denied by the Federal Circuit Judges, Knappen and Dennison, and District Judge Sessions. The Ann Arbor case was afterwards tried upon its merits and the bill dismissed. In each case an appeal has been taken to the United States Supreme Court by the railroad company. It is my understanding that the Pere Marquette does not intend to press its suit. The Ann Arbor case will have to be argued in the Supreme Court. The history of this litigation clearly demonstrates that the different departments of the State should be in entire co-operation and accord concerning its business with railroads and other public utilities. There is considerably more involved than the mere question of rates. question of proper and adequate service, of efficient and proper management and general fairness to the people of the State should all be considered before any backward step is taken. This department will gladly work along these lines. The I am attaching hereto an itemized statement of all money expended in the case, for which I am indebted to the courtesy of the Auditor General. I believe that this statement is so specific as to require no comment from me. Very respectfully, ALEX. J. GROESBECK, |