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SILER V. LOUISVILLE & NASHVILLE R. CO., 213 U. S. 175 (1909)
U.S. Supreme Court
Siler v. Louisville & Nashville R. Co., 213 U.S. 175 (1909)
Siler v. Louisville & Nashville Railroad Company
Argued February 24, 25, 26, 1909
Decided April 5, 1909
213 U.S. 175
APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES
FOR THE EASTERN DISTRICT OF KENTUCKY
Where the federal questions raised by the bill are not merely colorable, but are raised in good faith and not in a fraudulent attempt to give jurisdiction to the circuit court, that court has jurisdiction, and can decide the case on local or state questions only, and it will not lose its jurisdiction of the case by omitting to decide the federal questions or deciding them adversely to the party claiming their benefit. Where the bill not only alleges that the statute creating the commission, but also the order of the commission sought to be enjoined, deprives complainant of its property without due process of law, and also violate other provisions of the Constitution, the circuit court obtains
jurisdiction without reference to the particular violation of the Fourteenth Amendment. Barney v. City of New York, 190 U. S. 430, distinguished.
The rule of this Court is not to decide constitutional questions if the case can be decided without doing so, and when, as in this case, it can dispose of the case by construction of the statute and on the lack of authority given by such statute to make the order complained of, it will do so, rather than on the constitutional questions involved.
Jurisdiction so extensive as to place in the hands of a commission power to make general maximum rates for all commodities between all points in the state is not to be implied, but must be given in language admitting no other reasonable construction, and this power cannot be found in the Kentucky Railroad Commission Act.
Notwithstanding the highest court of the state has not yet construed the statute involved, this Court must, in a case of which it has jurisdiction, construe it.
The fact that the legislature of a state gives to a railroad commission no power to raise rates, but only power to reduce rates found to be exorbitant after hearing on specific complaint, is an argument against construing the statute so as to give the commission power to fix maximum rates on all commodities.
Where a railroad commission, after a hearing on specific complaint as to a rate on a particular commodity, makes a general rate tariff for maximum rates on all commodities which is beyond its statutory power, the whole tariff falls, and the rate on the tariff on the particular commodity will not be separately sustained.
The Kentucky Railroad Commission having, after a hearing on complaints that the rates on lumber were too high, attempted to impose a general maximum intrastate tariff schedule, and the statute creating the commission not giving it authority to make such a schedule, this Court, without deciding whether either the statute or the order deprives the railroad companies of their property without due process of law, holds that the entire schedule of rates including those on lumber must fall as being beyond the jurisdiction of the commission to establish in that manner.
The Louisville & Nashville Railroad Company, hereinafter called the company, filed its bill July 25, 1906, in the Circuit Court of the United States for the Eastern District of Kentucky to enjoin the enforcement of a certain order made by the Railroad Commission of Kentucky (hereafter called the commission), providing what are termed maximum rates on
the transportation of all commodities upon the railroad of the company to and from all points within the state. In its bill, the company contended that the order as to rates of transportation was void because it was, upon several stated grounds, in violation of certain named provisions of the Constitution of the United States, among them being the claim that the rate were so low as to be confiscatory. It was also contended that the statute was an interference, in its results, with interstate commerce. The company also contended (among other objections not of a federal nature) that the commission had no power to make the order in question under a correct and proper construction of the state statute of March 10, 1900, under which the commission assumed to exercise the power to fix the rates provided for in its order.
The circuit court decided that such act, hereinafter fully set forth and called the "McChord act," and also the order of the Railroad Commission of Kentucky, complained of, irrespective of any claim that such order was confiscatory, violated the provisions of § 1 of the Fourteenth Amendment to the Constitution of the United States, prohibiting any state from depriving any person of property without due process of law, and from denying to any person within its jurisdiction the equal protection of the laws, and that the order of the commission, so far as it was applicable to the company, was therefore null and void, and the special commissioner who had been appointed to take evidence in the case as to the character of the rates, and other matters, was directed to so report. (The court decided the case upon the authority of Louisville &c. R. Co. v. McChord, 103 F. 216, reversed on other grounds in 183 U. S. 183 U.S. 483.)
A final decree having been made pursuant to the decision of the court, the commission appealed directly to this Court from such decree. The proceedings which led up to the decree from which the commission has appealed, without the court passing upon the allegation of the confiscatory nature of the rates, were by means of a stipulation made in order to facilitate matters
by reason of which the court decided, as matter of law, the order and act were both invalid, and it perpetually enjoined the enforcement of the order as to rates as well as the procuring of indictments against the officers of the company or the company itself.
The appellants disputed the jurisdiction of the circuit court upon grounds which are particularly stated in the opinion herein, and they took issue on many of the material allegations contained in the bill of complaint.
The facts upon which the questions in this case arise are as follows: the company was duly incorporated under an Act of the General Assembly of the State of Kentucky approved March 5, 1850. It has a large mileage, amounting to over 1,200 miles within the state, and it operates its road within the state in connection with other portions of its road in other states, having altogether in Kentucky and such other states a mileage of over 4,000 miles. It claims to have a contract right to fix rates as provided in its charter, and it contends that the order of the commission violates that right as well as other rights protected by the federal Constitution.
The state adopted a new constitution on the twenty-eighth day of September, 1891, by § 209 of which the present railroad commission of the state was established.
It is asserted by the company, though such assertion is denied, that up to March 10, 1900, the commission or its predecessors had not been empowered by constitutional or statutory provision to regulate or fix the rate of compensation which a railroad company might charge for the service of transporting freight or passengers over its lines in the state. On the above-mentioned date, the general assembly enacted what is generally called the "McChord act," which is set forth in full in the margin. *
The act has not been construed by the Court of Appeals, the highest court of the State of Kentucky, upon the question
hereinafter discussed, nor has it been held valid as to all of its provisions, with regard to the constitution of the state or of the United States, by any court, state or federal.
After its passage, and in December, 1904, and January and February, 1905, one Guenther, a citizen of Owensboro, Kentucky, made complaints to the commission in which he complained generally (but without specifying any in particular) that the rates charged by the company, and also by the Illinois Central Railway, and the Louisville, Henderson & St. Louis Railway Company, on interstate freight to and from Owensboro, as compared with the rates on like freight to and from Evansville, Indiana, and on intrastate freight to and from points in Kentucky to and from Owensboro, were unjust and unreasonable. A petition in regard to interstate rates was subsequently filed with the Interstate Commerce Commission, where it is still pending and undetermined. As to regulating the local rates complained of, the commission then made no finding.
Afterwards, Guenther prepared an amended complaint, which was filed with the commission some time early in September, 1905, in which this company and all the other railroad companies operating lines in the State of Kentucky were made
defendants, and wherein it was alleged, in substance (and again without any details), that all local freights from and to all local points in the State of Kentucky, as fixed and charged by the defendant railroad companies on all classes of freight, were excessive, discriminatory, and extortionate, and he prayed the commission to revise and adjust the rates not only in and out of Owensboro, but to revise and adjust the rates between all local points from and to every local point throughout the State of Kentucky.
Subsequently, on the fourteenth of September, 1905, three lumber companies of Louisville, Kentucky, tendered their petition to be made parties to the Guenther proceedings then pending, and they adopted the general language of his complaint with respect to all local rates in the state, and they added complaints in regard to the rates on logs, lumber, and cross-ties.
On the third of October, 1905, the State of Kentucky, through certain attorneys, filed a petition to intervene on the part of the state in the Guenther proceedings and sought to make the state a party complainant against all the railroad companies as defendants operating lines in the state. The petition was opposed by the company on the ground that the state had no standing in the proceedings, and certainly none by the attorneys named, but it was granted, and the state intervened as prayed for, and was made a party complainant so that it might prosecute the proceedings against the company and all the other carriers made defendants therein. The proceedings against the various railroad companies within the state were subsequently consolidated before the commission.
Before answering the complaints of Guenther, the lumber companies, and the State of Kentucky against the defendant company and the other railroad companies in that state, the company, in this case, duly objected to the proceedings before the commission on various grounds, among them, that the complaint did not state facts sufficient to constitute a cause of action against the company, and on the ground that the complaints were not sufficiently definite and specific, and that the complaints
should show specifically what rates are claimed to be exorbitant, excessive, or extortionate, or what commodity or which communities the rates of the company discriminate against.
An objection was also duly and in season made that the commission had no power to fix a general maximum rate or rates for all commodities from and to all points within the state, but that specific complaint should be made as to the particular rates complained of. The commission ruled that the entire subject of railroad rates was before it, and decided to proceed with its investigation of such rates on all railroads and between all places and on all classes of commodities within the State of Kentucky.
By virtue of the complaints above adverted to, the proceedings against substantially all the railroad companies of the state were then continued, and the commission heard and decided the question of rates relating to this company, and some, but not all, of the other roads in the state.
The commission subsequently, and on July 20, 1906, promulgated its order making schedules for "Maximum Rates on Freight," and it applied one schedule, called "Kentucky Railroad Commission's Standard Tariff, No. 1," to this company and four other companies within the state, although, in the case of one of the four (the Chesapeake & Ohio Railroad Company), no notice of such tariff was ever served upon it. Another schedule, called "Kentucky Railroad Commission's Standard Tariff, No. 2," applied to the Illinois Central Railroad Company alone, and the commission left several railroad companies untouched by either of such schedules, or by any schedule, although they were defendants in this proceeding. In its opinion, the commission stated as follows:
"The several complaints, which, for convenience, have been consolidated and heard together in this investigation, raise for the first time in Kentucky the question of the reasonableness of all rates, for the transportation of all commodities, upon all railroads, to and from all points within the state. "
MR. JUSTICE PECKHAM, after making the foregoing statement, delivered the opinion of the Court.
The appellants deny the jurisdiction of the circuit court in this case. There is no diverse citizenship in the case of this particular company, and the jurisdiction must depend upon the presence of a federal question. The bill filed by the company herein attacked the validity of the Act of the Legislature of Kentucky of March 10, 1900 (above set forth in full), on several grounds, as in violation of § 1 of the Fourteenth Amendment. It was also averred that the act was a violation of § 4, Article IV, of the federal Constitution in that it constituted an abandonment by the State of Kentucky of a republican
form of government insofar as it vested legislative, executive, and judicial powers of an absolute and arbitrary nature over railroad carriers in one body or tribunal, styled the railroad commission. The company also contended that the act was in violation of the federal Constitution on account of the enormous fines and penalties provided in the act as a punishment for a violation of any of its provisions; also that the enforcement of the act would operate to deprive the company of its property without due process of law, and would deny to it the equal protection of the laws in violation of § 1 of Article XIV of the Amendments to the Constitution of the United States. Other grounds of alleged invalidity of the act in question as in violation of the federal Constitution are set up in the bill. The bill also contained the averment that the order of the Railroad Commission of Kentucky in making a general schedule of maximum rates for the railroads mentioned in its order was invalid as unauthorized by the statute. This is, of course, a local or state question.
The federal questions as to the invalidity of the state statute because, as alleged, it was in violation of the federal Constitution gave the circuit court jurisdiction, and, having properly obtained it, that court had the right to decide all the question in the case even though it decided the federal questions adversely to the party raising them, or even if it omitted to decide them at all, but decided the case on local or state questions only.
This Court has the same right, and can, if it deem it proper, decide the local questions only, and omit to decide the federal questions, or decide them adversely to the party claiming their benefit. Horner v. United States, 143 U. S. 570, 143 U. S. 576; Fallbrook Irrigation Dist. v. Bradley, 164 U. S. 112, 164 U. S. 154; Penn Mutual Life Insurance Co. v. Austin, 168 U. S. 685, 168 U. S. 694; Burton v. United States, 196 U. S. 283, 196 U. S. 295; Williamson v. United States, 207 U. S. 425; People's Savings Bank v. Layman, 134 F. 635; Michigan Railroad Tax Cases, 138 F. 223. Of course, the federal question must not be merely colorable or
fraudulently set up for the mere purpose of endeavoring to give the court jurisdiction. Penn Mutual Life Insurance Co. v. Austin, 168 U. S. 685, 168 U. S. 695; Michigan Railroad Tax Cases, 138 F. 223, supra.
The character of some of the federal question raised is such as to show that they are not merely colorable, and have not been fraudulently raised for the purpose of attempting to give jurisdiction to a federal court.
The appellants, however, contend that the jurisdiction of the circuit court did not attach under the Fourteenth Amendment, because of the allegations contained in the bill of the company, in which was contained an averment that the defendants below (the appellants here) had not been vested with the power by either the Constitution of the State of Kentucky or by any act of its legislature, or by any law, to make and enter the order of July 20, 1906, complained of in the company's bill. The argument of the appellants is that, in order to violate the Fourteenth Amendment, the action complained of must be under the authority of the state, and where the allegation of the bill was that
"no power or authority had been vested in or conferred upon the appellants by the Act of March 10, 1900, or by any law, to make or fix the rates complained of,"
such allegation swept away the foundation for the claim of federal jurisdiction, inasmuch as, in such case, the action of the railroad commission was not the action of the state, and the principle decided in Barney v. New York, 193 U. S. 430, 193 U. S. 437, was applicable.
If the averment as to the invalidity of the order of the commission were the only ground upon which a federal question was founded, and if the bill alleged that the order was invalid because it was not authorized by the state, either by statute or in any other way, the objection might be good; but the bill sets up several federal questions. Some of them are directed to the invalidity of the statute itself, on the ground that it violates various named provisions of the federal Constitution in addition to and other than the Fourteenth Amendment, while some of the other federal questions are founded upon the
terms of the order made by the commission, under what is claimed by the commission to be the authority of the statute. The bill also sets up several local questions arising from the terms of the order, and which the company claims are unauthorized by the statute. The various questions are entirely separate from each other. Under these circumstances, there can be no doubt that the circuit court obtained jurisdiction over the case by virtue of the federal questions set up in the bill, without reference to the particular violation set up in regard to the Fourteenth Amendment.
Where a case in this Court can be decided without reference to questions arising under the federal Constitution, that course is usually pursued, and is not departed from without important reasons. In this case, we think it much better to decide it with regard to the question of a local nature, involving the construction of the state statute and the authority therein given to the commission to make the order in question, rather than to unnecessarily decide the various constitutional questions appearing in the record.
The commission has assumed the power under this statute of making what are termed general maximum rates for the transportation of all commodities, upon all railroads, to and from all points within the state, and this company is included in the general order made by the commission. This is an enormous power. Jurisdiction so extensive and comprehensive as must exist in a commission in the making of rates by one general tariff upon all classes of commodities upon all the railroads throughout the state is not to be implied. The proper establishment of reasonable rates upon all commodities carried by railroads, and relating to each and all of them within the state, depends upon so many facts, which may be very different in regard to each road, that it is plain the work ought not to be attempted without a profound and painstaking investigation, which could not be intelligently or with discrimination accomplished by wholesale. It may be matter of surprise to find such power granted to any commission, although it would seem
that it has in some cases been attempted. Interstate Commerce Commission v. Railway Co., 167 U. S. 479, 167 U. S. 495. In any event, the jurisdiction of the commission to establish all rates at one time, and in regard to all commodities, on all railroads in the state, on a general and comprehensive complaint to the commission that all rates are too high, or upon like information of the commission itself, must be conferred in plain language. The commission, as an extraordinary tribunal of the state, must have the power herein exercised conferred by a statute in language free from doubt. The power is not to be taken by implication; it must be given by language which admits of no other reasonable construction.
In this case, we are without the benefit of a construction of the statute by the highest state court of Kentucky, and we must proceed in the absence of state adjudication upon the subject. Nevertheless, we are compelled to the belief that the statute does not grant to the commission any such great and extensive power as it has assumed to exercise in making the order in question.
The first section of the statute provides for a complaint's being made to the commission accusing the railroad company of charging or receiving extortionate freight or passenger rates over its lines of railroad in that state, or, if the commission receive information or have reason to believe that such rate or rates are being charged, it is its duty in either case to hear and determine the matter as speedily as possible. The commission is to give the company complained of not less than ten days' notice, and the notice must contain a statement of the nature of the complaint or matter to be investigated, and if the commission, after investigation of the complaint or on its own information, determines that the company has been guilty of extortion, the commission is, in that case, authorized to make and fix
"a just and reasonable rate, toll, or compensation, which said railroad company or corporation shall charge, collect, or receive for like service thereafter rendered."
The whole section, it seems to us, proceeds upon the assumption that complaint
shall be made of some particular rate or rates' being charged, or if, without formal complaint, the commission receives information or has reason to believe that such rate or rates are being charged, then the investigation is to go on in relation to those particular rates. We cannot for one moment believe that, under such language as is contained in the section, the commission is clothed with jurisdiction, either upon complaint or upon its own information, to enter upon a general investigation of every rate upon every class of commodities carried by all the roads of the state from or to all points therein, and make a general tariff of rates throughout the state such as has been made in this case. No such power was given to the Interstate Commerce Commission. Interstate Commerce Commission v. Cincinnati &c. Railway Co., 167 U. S. 479, supra. As the express power was not given in so many words to the commission, this Court held that it could not be implied.
The so-called complaints, in this case above mentioned, are, as we construe the statute, entirely too general to raise any objection to a specific rate. Guenther, in his petition, in substance, alleged
"that all local freight rates to and from all local points in the State of Kentucky, as fixed and charged by all railroads, on all classes of freight, are excessive, discriminatory, and extortionate."
The lumber companies, which were permitted to intervene, made substantially the same complaint (with an addition as to lumber, ties, and logs), and the attorneys appearing in behalf of the State of Kentucky joined in the general complaint of Guenther. If complaint were necessary to enable the commission to make rates, the allegations in the complaint of Guenther were mere sweeping generalities, and were in no sense whatever a fair or honest compliance with the statute. The commission itself, in order to act, must have had some information or had some reasons to believe that certain rates were extortionate, and it could not, under this statute, enter upon a general attack upon all the rates of all the companies throughout the state, and make an order such as this in question. Such action is, in our judgment, founded upon a total
misconstruction of the statute, and an assumption on the part of the commission of a right and power to do that which the statute itself gives it no authority whatever to do.
And again, the section provides that, if the commission should determine that the company had been guilty of extortion, it must, instead of the extortionate rate, make and fix a reasonable and just rate, which the company may charge for its service thereafter rendered. This language is not apt by which to confer power to establish a schedule of rates applicable in all cases, to all commodities, and on all roads, and, on the contrary, it strengthens the view that no such general jurisdiction to establish rates in all cases for all roads throughout the state by a general tariff was in the contemplation of the framers of the statute.
It may also be stated that, if the statute was really intended to give the commission power to make a general schedule of rates, we should expect to find, almost necessarily, a right to increase as well as to reduce those rates in some instances, in order to produce an equality, where, otherwise, great inequalities might exist as a result of the putting the general schedule of reductions in force. Here is a case where the schedule of rates was reduced from twenty to twenty-five percent upon an average. Some of the rates not touched might require increase in order to make the whole schedule fair and reasonable, and yet the commission could not make the increase over the amount theretofore collected by the company. This seems to us to be a very strong argument in favor of the view that the legislature never intended to, and did not in fact give such a power to establish general maximum rates, but confined it to one or two or a few specified rates, which might be reduced upon complaint, and where there might be a real investigation of all the problems involved in the propriety of the reduction in a few distinct and separate cases. A sufficient investigation of the whole series of rates on all the roads in the state by one commission is almost an impossibility, and an attempt to do so would prove a failure, and would, in all probability, result in gross injustice
to the roads. The statute, it will be remembered, gives no power to the commission to fix rates unless it has already determined that the rates complained of, or which it has investigated upon its own information, are extortionate after hearing the parties, and then it fixes the rates at a just and reasonable amount. If no extortion is found in any particular rate, there can be no fixing of rates in that particular. And yet that particular rate might require increase in order to make the whole schedule just, fair, and reasonable. A general power to fix rates under such limitations cannot be supposed to have been within the intent of the legislature. The difference between the fixing of one rate or a few, upon specific complaint or information, and the adoption of a general scheme of rates, applicable in all cases to all the roads, is vast and important. In the one case, it can be fairly accomplished, while, in the other, the chances of injustice and great inequalities are infinite and almost certain to occur.
We do not say that, under this statute, as we construe it, there must be a separate proceeding or complaint for each separate rate. A complaint, or a proceeding on information by the commission itself, in regard to any road, may include more than the rate on one commodity or more than one rate, but there must be some specific complaint or information in regard to each rate to be investigated, and there can be, under this statute, no such wholesale complaint, which, by its looseness and its generalities, can be made applicable to every rate in operation on a railroad, or upon several or all of the railroads of the state. If the legislature intended to give such a universal and all-prevailing power, it is not too much to say that the language used in giving it should be so plain as not to permit of doubt as to the legislative intent.
The appellants contend that, in any event, the order made by the commission December 7, 1905, regarding rates on lumber, logs, and cross-ties, to and from all points in the state, ought to stand as reasonable and proper. The complaint made by the lumber dealers in their petition to intervene in the Guenther
proceeding adopted the language of that petition as to all rates, upon all commodities, upon all roads throughout the state, and then added a specific complaint as to the logs, etc. While the whole proceeding as to all rates was pending before the commission, it took up, as part of it, the question of the reasonableness of all the rates on lumber to and from all points in the state. This proceeding is therefore but a part of the whole proceeding, involving an investigation as to every rate on all commodities on every road throughout the state, and we do not think it a case where a particular rate on a specific commodity, applicable all through the state, upon all roads, should be separated from the general order, when the specific order was made after the general complaint was filed, and is itself a general order, and was made by the commission in the exercise of an assumed power claimed to be given by the statute, which claim we hold was totally unfounded. We therefore think that, in this particular case, the order as to lumber rates must fall with the rest of the assumed jurisdiction of the commission.
There is nothing in our decision in McChord v. L. & N. R. Co., 183 U. S. 483, which affects the question discussed in this opinion.
We are of opinion that, under the statute, the commission had no authority to make a general tariff of rates, and the final decree of the Circuit Court is, for that reason,
"An Act to Prevent Railroad Companies or Corporations Owning and Operating a Line or Lines of Railroad, and Its Officers, Agents, and Employees, from Charging, Collecting, or Receiving Extortionate Freight or Passenger Rates in This Commonwealth, and to Further Increase and Define the Duties and Powers of the railroad commission in Reference Thereto, and Prescribing the Manner of Enforcing the Provisions of This Act, and Penalties for the Violation of its Provisions."
"SEC. 1. When complaint shall be made to the railroad commission accusing any railroad company or corporation of charging, collecting, or receiving extortionate freight or passenger rates over its line or lines of railroad in this commonwealth, or when said commission shall receive information, or have reason to believe, that such rate or rates are being charged, collected, or received, it shall be the duty of said commission to hear and determine the matter as speedily as possible. They shall give the company or corporation complained of not less than ten days' notice, by letter mailed to an officer or employee of said company or corporation, stating the time and place of the hearing of same, also the nature of the complaint or matter to be investigated, and shall hear such statements, argument, or evidence offered by the parties as the commission may deem relevant, and, should the commission determine that the company or corporation is or has been guilty of extortion, said commission shall make and fix a just and reasonable rate, toll, or compensation, which said railroad company or corporation may charge, collect, or receive for like services thereafter rendered. The rate, toll, or compensation so fixed by the commission shall be entered and be an order on the record book of their office and signed by the commission, and a copy thereof mailed to an officer, agent, or employee of the railroad company or corporation affected thereby, and shall be in full force and effect at the expiration of ten days thereafter, and may be revoked or modified by an order likewise entered of record. And should said railroad company or corporation, or any officer, agent, or employee thereof, charge, collect, or receive a greater or higher rate, toll, or compensation for like services thereafter rendered than that made and fixed by said commission as herein provided, said company or corporation, and said officer, agent, or employee shall each be deemed guilty of extortion, and, upon conviction, shall be fined for the first offense in any sum not less than $500, nor more than $1,000, and, upon a second conviction, in any sum not less than $1,000 nor more than $2,000, and, for a third and succeeding conviction, in any sum not less than $2,000 nor more than $5,000."
"SEC. 2. The circuit court of any county into or through which the line or lines of road carrying such passenger or freight owned or operated by said railroad, and the Franklin Circuit Court, shall have jurisdiction of the offense against the railroad company or corporation offending, and the circuit court of the county where such offense may be committed by said officer, agent, or employee shall have jurisdiction in all prosecution against said officer, agent, or employee."
"SEC. 3. Prosecutions under this act shall be by indictment."
"SEC. 4. All prosecutions under this act shall be commenced within two years after the offense shall have been committed."
"SEC. 5. In making said investigation, said commission may, when deemed necessary, take the depositions of witnesses before an examiner or notary public, whose fee shall be paid by the state, and, upon the certificate of the chairman of the commission, approved by the governor, the auditor shall draw his warrant upon the treasury for its payment."
"Approved March 10, 1900."
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