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148M145“ Gun, Aentuoxy. ’
Dear air:-

1 have raga niLh a goug QCC‘ ul innereou carbon
copy ui your Latter to Mr. O. M. hardoznd, Vtocg Vlaia AgGHL, “539d
July lvtfl,1915, ;ugaLqu wLuh mumOLauaum u; cunnoxitics, both stat:
anu loderal, IdLuBLVG Lo unauthorxzeg DQLu u; LruAchI ox reduced
rate or excursion tLGLets or the unugpd portions of 55;: ticneta.

lourb truly,
/ f '
/<;:‘ éféz/5923é942¢(4(4.-
plszr t attornsfi, '
JJD/a

 4 V .
.
A
July 16, 1915.

Mr. 0. M. Herflesty,
Stool: Claim Agent, L (.1: H 3!; R Co.,
sexington, Eerzmeky.
fear Sir:

Esme time Lag-7:0, you asked me ii“ thuro 5.1:: ?..; my, 4.31150: the
sientueiqr or federal lax-‘:', “s; which Lho imzsuathoi'ized sale or tiuisfer
of reduced rate excursion tickets 0;: the unused p0; bi om: of such
tickets, may be puaished. or restraines. The sueoifie case to ‘.?;ieh
your in'miry sad I‘Offil‘féflifia arose, as I recall, in oozi'zmstim; flit}:
the rursiirg or Sunday excursions from: oliieimi—zti, oliio, to Return].
Bridge, Kent 11331;], on the Lline of the .VJ (.:’; ‘2, it» (':7',,5.3e::.1‘ing to "us 5;
i‘roquemt practise for _nessezgezs using; "those ones}: rate excursion
tickets to sell the 1' ;:trzrn portion, ;ovwring return ti'e.;s's'..oi't5'..tion
from liatursl tiric‘Lgs to Cineimmti.

zit ting: tins you submitter“; the annexation to me, the only
ionisions of tho .‘:/tats lav; '»‘vsizfoh I was :;])l": to ;"fiml lizgvizg: 32;“ sort
of {zygzlication to the 551m stion wckiine si'ovi sioiis CUIli-F;i)lai:fi in as
Let 0;? .,.Q;.i:';;h l3, "Li-[1.2, which aprons :2s Ghost-tar 55 off the get»: of "iii",
:21; ‘.‘-5.1.5???» :«3 051—209. and also no? Spike-111‘s at: sob-s1: 3035.033 l and £3 of Sec-
tion 173766. oi the Kont 2:31qu 5313:..tut es {1‘7sz 12:1.) This; at, 311:1”:‘3‘szl‘,
seems to have been int «7217": i} sin-"1;; to {1.0mm the .;zmsn oi‘ ill-
tickets on street or interurimzi I’sili‘oa-gz'is T1316 would 1154:5123: be 31:21:?
to s.r-‘pl;_; to a. stoma railroad or such .5: situation £153 is i‘.‘_‘='.,1Je, I 21:: ior::”::.£.:1tg: 25. =:*i.7:.r1”L:x-r ramp; to
the «is-"firist Attorney, 2;:. 3. TL. ’.":;;:‘.‘io’i,<'£, :12 f; .'xo‘u.:,i;1‘*.’i,3-z:, L~.-., may
find the collection of f‘.‘fU)3§‘-,&€’(j. s»:-:‘ri;;3:;2:zlo in the U122”... an; Lit-ate
10,§’if?1“tion 0:: th‘; subject is \'3f\;.zf;s‘fl;.12:/teal or salt s:_x>t3d :.:.i a mature
("fission of the Ifurztu: ;,‘ i“: 2:1“:1211 7.‘.os::-;.;'g‘::l;;.
I might add th: *1; I have 01%, gotten the il‘xf)§7a353§)ib‘}1
that the Interstats (1‘0 ":;"~»’3rco Ci??if1""j_?.7‘§3 14:13, ~4”...r~u;1r‘ll.1;(* ;‘a rule at: 3:311
mat? lit -:; em» like the one you E1037:- manta". may? to 20 122:1. :15: $712.
I have been ImiJiW'LI} to find {no}: {a rule and hm?) not i'mmd .57. Q'I"":‘¥3'_f‘t of
3113;321:241 are as 7613s: :Enetiiutefi under the 239w i:<‘1.>11;7t of the Inter-
é‘ta3.ts 00': .»..21‘0-3 him of the United "fitting: 01 Emit}? an“; rulings? oi the
I.:‘ztoretszte Commerce Commie“112311. I‘hs neat 113,071; rt :el'Lirf {granted
in -;on‘:'mr:tion with interstate. tram; y';1)§3f'L“5,1_-3’.031 is that (rumor-":0 by
the his isisrx of that Lz’uigrl'sne Court in the erase o Liaigt‘tbrz , :7. . i?
:'io::‘o(}0a. 207 Unl‘jo 270?:
If I em :7 33:17:: you myths}: in this connection, (3.0 not
imsitzvfiw to 05.1.11 11;-30:1 no.
Va r3; f; 3111:," grants,
onus. ‘$
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 ézt“ Indiana statute/§ection o,lR. S. 1676, 259 expressly
takes ”Special, hair-rare, or excursion bicxebs" out of the pro-
«an: r; ”i W
visions or the statute, neld constitutional. Frye vs. State
4 \ ’

o3 Ind. 552, 30 Am. H.23o.

1;, North Caronina Statute, Acts 1691 c. 290, sec. 1, makes
it a penal oiiense "to sell or deal in tickets issued by any rail-
road company". Defendant was indicted Ior the sale or Ongffiicket.
The court held that the sale of one fibres did not Violate the
statute; that if tne so tube should have read "no person snall sell
any ticket, issued by a R. R. 00.? tne statute would nave been vio-
M ,/
lated. State vs. Ray (N. C.) 14 S. E. 03.

a l» ,,w 7 . 7_ ~'“ W” a "w;i._ ,,.;
iév’v‘ Pennsylvania act2.,.' 1% A ‘r "i;“ {4 V. v” -‘ _"
"The act or Nay b, 10b3, entitled "An act to prevent Iraud upon
travelers" (P. L. 5oz) so tar as it relatis to tne questions involv-
ed in this case, is as Iollows:
"Whereas, numerous Irauds nave been practiced upon unsus-

pectin‘ travelers, by means or the sale by unauthorized persons,
of railway and otner tickets; and also, upon raiLroads and other
corporations, by one fraudulent use or DiCKeES, in violation or tne
contract or tneir purchase: Now, thererore, Winn the view or pre-
venting and punisning such frauds:

"Sed.l. Be it enacted," etc. "that it shall be the duty or
the owner, or owners, or any railroad, steamboat, or orher convey-
ance for the tranSporcation of passengers, to provide each agent,
wno may be authorized to sell tickets, or other certiiicabes, entitl-

6 ing the nolder to travel upon any railroad, Steamboat, or otner pub-
, lic convenience, witn a certiricate, setting Iorcn tne autnority
or such agent to make such sales; which certiiicute snall be duly
attested, by the corporate deal, id’such there be, or one owner
or ofiicer, wnose name is Signed upon tne tickets or coupois,
wnich such agents may sell. . »

"Sec. 2. That it shall not be iaWIul Ior any parson, not
possessed or such authority, so evidenced, to sell, corner, or trans-
ier, for any consideration whatever, the wnole or any part, of any
ticket, or tickets, passes, or other evidences or one holder's
title, to travel, on any railroad, steamboat, or other public
conveyance, Whether tne same be situated, operated, or owned, witn-
in, or without, tne linits OI this commonwealth.

Sec. 3. That any person, or persons, violating the provis-
, ions or one second section or this act, shall be deemed guilty of
misdemeanor, and shall be liable to be punished by a Iine, not ex-
ceeding Iive nundred dollars, and by imprisonment, non exceeding one
year, or either, or both , in the discretion or one court in which
such person, or persons shall be convicted".

Sec. 4 or tne act makes it tne duty of every autnorized
agent to exhibit to any person desiring to purcnase a tiCKet, or to
any officer or tne law who may request it, a certiIicwte or his au-

 O
tnority to sell, and to keep said certiiicate posted in a conSpic~
uous it! place in nib oIIice. Section 9 5 maKes it a duty oi the
owners or a railroad, steamboat, and other conVeyances to provide
ior the redemption of the Whole or any parts of any ticket or tick-
ets which the purchaser, for any reason, has not used or does not
desire to use, at a rate Which snail be equal to the diIierence
between the price paid for the Whole ticket and the cost or a tick-
et between the points for Which the prOportion of said ticket
was actually used; pronibits the sale by any person or the unused
portion 01 any ticket otherwise than by the presentation for re-
demption as provided in this section, provided that this act
should not pronibit any person wno had purchased a ticket Irom any
agent authorized by the act, with a bona Iide intention of trav-
elling upon the same, from selling any part or the same to any other
person, if such person travels upon the same. by an act approved
April 10,_lb72 (P. L. 51) the proviso or the IiIth section or the
act OI lbb3 Was amended by limiting the right or the person wno
had purchased a ticket from any agent authorized as provided in
the act or lob3, with a ggpaygiggmintention or travelling upon the
same the whole distance between the points named in the ticket,
to a sale or the unused portion to the companu that SOLd the same.
This statute Was held constitutional. ‘*

Com. vs. Keary 196 Penn. St: 500, 4b Atl. 472. ,
' ,7fg Illinois statutéwgimilat to tho Pennsylvania statuteg‘ ,.,U-
held constitutional. Durdick vs. People 149 I11. 000, 3b N. E. Q4o.

Minnesota statute sustained in an able ppinion by Judge
Mithhell. State vs. Corbett 57 Minn. 345, 59 N. W . 317.
5”, I Ari-I. a i .. , .
Municipal-stamuve Ioroiddinqthe traIIic in transier tick-
ets within the City limits held constitutional. an parte_Lorenzen.
(6&1.) 50 L. R. A. 55, b1 Pao. bb.
"We are unable to see wny the State which creates the
corporation and requres that it snall serve the public has not the
f power to adopt reasonable regulations means applicable to that serif
vice, whereby“.t no fraudulent imposiLion may be visited upon the
publbo". Ex parte O'Neill (Wash. ) 63 Pac. 104.
Oregon statute held constitutional. State vs. Thomson f’V '
04 Pac. 47o.
Montana statute held constitutional. State vs. Bern-
heim (monta) 49 P80. 44-10
"That the sale as well as the purchase or non- trans-
Ieraole tickets is a Iraud upon the carrier and the public, the ten-
,a’,
dency Which is the demorfilization 0: rates, has been settled by the
general consensus oI opbnion among the courts. This being so, an
9‘
7“!

 0
answer is Iurnished to the other branch oi the contentionjto~wit,
that the act is unconscitutional because or class legislation.
For, i: repressing the trairic is a proper exercise of the police
power then the objection does not lie that it is arbitrary of?”
class legislation. And such is the view or all the courts save
those or Newfi York, and, as we understand , the judgment or those
courts are rested upon statutéawhich, as construed by them. dis-
tbnguish them from our act,or 1905 and similar acts construed by the
various courts to whose opinion3we have reierred".
*- Samuelson vs. State 116 Tenn. 470, 115 Am? i. 505, 95 s. w. 1012.
' ilb.§éilroad and other transportation companies are 096- H
ated, organized, and put into operation ror the dividends they de-’ ”l
A» ff”). W 7A5?" ‘3" ‘3 . /‘
clara(iv theistockholders §HQthe perIormance or a public service.
The articles or incorporation provide; for a board or 4.3;;5;;‘7 . "a
whose primary §i3;3;; is to loom aIyer the interesfi‘oi the stock; -\ w
holders, while the state makes such regulations as it deems subser-
“’:: Q )4“ 71.x . XXV ,.,‘
vient to publioawfiitganins: Each interesc is mutally dependent on
the other. Destroy the dividends or the patronage or the public
and the company goes into the hands or 3;;flreceiver.
:: Ellhnanou¥iiiiiEEEOaxior the existence origaogtransoorta-
tion companies vasmtczpnniio is the sare tranSportation or passen-
gers and freight; the cause or reason Ior the eristence or the com—
panies,to the stockholders is the remuneration;;eoeived Ior such
tranSportation. K
The public is entitled to equal and reasonable rates and
the companies are entitled to a legitimate interest on the capital
invested. Just what the measure of reasonable rates :5; , and What
legitimate profit is, is determined by the companies,but it is sub-
ject to State or Interstate regulation.
Illinois, Indiana,Minnesota and a number or other states
have regulated the passenger rates within their jurisdiction. Just
recently the Interstate Commerce Commission permitted an increase
of five per cent in the Ireight rate schedule or the Central divis- 73
ion states.,[§l1 of which goes to Show the watchful supervision \a?‘

 O
that is exercised over transportation rates.
Any Iluctuation in rates is or mutual concern 00th to the
transportation companies and the public! Efur it results in a loss or
5
gain to one or the other. Consequently3to conserve the public inter-
est it is necessary that the tranSportation rates be as nearly con-
stant as the causes over which the companies and State have no con-
trol will admit. To accomplish this, it is expedient that the trans-
portation companies exercise exclusive control over the sale of tick-
ets, otherwise, one part or the public will be riding at the expense
or the other part,p1us the expenses and prorits OI the ticket broker.
r’
All large business enterprises are run on a close margin
OI prorits and any impertenont interierence, particularly so if the
ouainess 18 in the nature or a puolio service, should be eliminated.
AUTHORITIES.
6ch. 573, note 18.
7§yc. 447, note lo.
Scyo. lOb4.
28 anyc. 198. _ . .
Interstate Commerce Commission Reports or 1e90, '95, '9b.
U. S. Comp. Stat. 1901,880. 22, p. 3170.
U. 8. Comp. Stat. 1913 vol. 4, sec. 0595, p. 5001.
Schubach vs. McDonald Inc.) 76 s. w. 1020.
Bitterman vs. Louisville & Nasnville R. Co. 207 U. S. 205.
Nasnville, C. & St. L. R. R. vs. Mo Connell o2 Fed. 05.
Delaware, L. & W. R. Co. vs. Frank et al 110 Fed. 069.
Illinois C. R. vs. CaIIrey 128 Fed. 770.
Samuelson vs. State 11b Tenn. 470, 115 Am. S..R. CO5, 95 S. W. 1012.
PeoPle vs. Warden City Prison 157 N. Y. 110. 7
Kinner vs. Lake Shore R. Co. (Ohio) b9 N. E. bl4.
Frye vs. State 03 Ind. 552, 30 Am. R. 238.
State vs. Ray (N.;C.) 14 s. E. 63.
Com. vs. Aeary 196 3a. St. 500, 4b Atl. 472.
Burdick vs. Peeple 149 Ill. bOO, 3b N. E. 946.
State vs. Corbett 57 Minn._345, 59 N. W. 517.
State vs. Thompson (Ore.) 64 Pac. 47b.
State vs. Bernheim(Mont.} 49 Fee 441.
Ex parte O'Neil (WASHo) ca Pac)§104.
Ex parte Lorenzen,(Ca1.) 50 L. A. 55, 01 Pac ob.
Jannin vs. State (Texas) 51 S. W. 1120.
c7\’ /
L/
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114/

 I

A KEMORANDUMMJ JRIJF 0N ?HJ RJSTRLIHT AND “UIISHMJNT

OF TICKET "SCALPJRS", OR THE UNAUTHORISED Slag OR TRAN-

SFER OF TRANSPORTdTICH TICKZTS.

I.

The barter, sale and purchase of transportation tickets,
in derogation of the rights of the common carrier and to the prejudice
of the public welfare, is a grievance of long standing. It has b:en
contemned by the Interstate 40mmerce Commission. Enjoined by the
Federal courts, and made a crime by the several legislatures of eleven
states.

The Interstate Commerce Commission in 1890, recommended
to Congress that it take some action in regard to this traffic in
trans ortation tickets, known as ticket brokerage, and among other
things said:

"The business is therefore hurtful both to the reeds

and to the public in a financial Sense, are the extent of the
injury it is scarcely possible to measure * * * s * *

But the moral injurt both to Railroad officials and to

the public is even greater. To railroad officials the business
serVes as an invitation and an excuse for dishonest practices.
It is used as a COVGr, deceitful'anC transparent it is true,
for evasions of law and for dishonorable violations of compacts
among.competing roads texmflrmain agreed schedules of rates.
The public morals are affected by natural inferences that
railroad officials are deficient in Sense of honor and in-
tegrity, and that if the railroad code of ethics permits one
road to cheat another it is equally permissible for the

public to chest the railroads. The inevitable tenfcncy of the
practice, therefore, is to eliminate the moral element

and the rule of action that elemont in.lucstes - business

honor - from the practical field of transportation."

The Interstate Commerce Commission of 1895 eVen urged uith
greater energy that something be done to check this illegitimate
business:

"We deem it a S}001a1 duty to call your attention to the
persistent survival and continued increase of the illigitimste
business known as ticket brokerage or "scalping". So far from
Showing any signs of diminution it aymears to be steadily
enlarging in scone and volume. It is impossible to give any
reliable estimate of the number of pers0ns who take advantage cf
this means of wrocuring unlawful traflSnortatiOn, but it is
evident that a considerable percentage ofzrailroad passenger
travel is accomplished thr ugh the medium of tickets bought
at reduced rates of so—called brokers. In every city, and in

 . ‘ (2)
manyzpf the smafller towns, offices are to be found whose
proprietors sell railroad tickets to very mahy points at
less than the published tarilfs. The streets are placarded
with alluring advertisements, incoming and outgoing trav-
elers are Openly solicited, While in hotels and other public
places, and not inirequently in regular railroad stations,
:he runners and agents of these clandestine dealers invite
participation in tranSportation bargains, which upon their
face - to give then no harsher tenn ~ are an obvious evasion
of the law."

In 1896, the Interstate Commerce Commission again said:

"This illegitimate traffic has become a positiVe scan—

~ dal, and decisiVe measures should be taken to put an end to

: these illegal transactions. The remedy for this evil is eas—
ily found. A simple enactment would be sufficient, in our
judgment, to prevent these abuses and effectually check this
Species of misconduct. he, therefore, recomxcnd that it be
made a penal oiiense for any person to engage in the Disineus
of selling interstate passenger tickets unless he is an
authorized agent of the carrier, duly constituted such by
written appointnent; ans that every such person be required,
under appropriate noimlty, to exoose in his place of busi-
ness a certificate of his authority."

11. '

The Supremn Court of Hi souri has said -

"But no one has any right to buy a Special ticket at a
reduced rate which on its face recites that it is non-
transferable and that it is supported by the consideration
of a reduced rate, and thereby agree to such limitations,
and thereafter violate his agreement by transfering it to
another or complain that he has not the right to transfer it.
And no third person can acquire any right or interest, or
power or claim in or to the ticket, or to the privileges
conferred thereby other than the original nurchaser posses-
sed or could confer under it; and, if the original purchaser had
no power to transfer it, no assignee of such purchaSer aauld
acquire any right under it, for the original purchaser could
jive none". Schubac. vs. McDonald (Mo.) 78 S.L. 1020.

III.

Section 22 of the Federal Statutes provides : "That
nothing in this act Shall 813131,] to ......o...o...........the
issuance of mileage, excursion, or commutnti n perennger tickets"

' (oah . 104, U-b. Comp. Stat., 1901, p. 3170). This statute has
been construed in reference to ticket brokerage and spoken of as
imposing upon the common carrier the duty to see thet those tickets
sold at a reduced rate are not need by any one except those to whom
they are sold; that the use of such tickets by one not entitled to

 (3) _ ‘
the use of the same is a discrimination in his favor thft the COUJtS
will enjoin. Bittennan vs. Louisville & Nashville 3. Co. 207 U.S. 205.
The above statutory provision is still in full force and “ff ct.
U.S. Comp. Stat., 1913, Vol. 4, see. 8595, p. 3881.
, The question of restraining ticket brokers has bo2n brought
before the Federal courts on seVeral different occasions:

(Tennessee Centennial dxposition), (Nashville, 0. & St. L.

R. 00. vs. McConnell, 82 Fed. 65.) The managers of the orposition were
dealing in ticket traffic but were restrained; (Pen-American DXposi-
tion) (Delaware, L. & W. R. 00. vs. Frank et al, 110 Est. 689),
Petition dismiFSod — Plaintiff having come into court with unclean
hands must rely on its remedy at law; (Music festival 1903, St.
Louis, ) (Illinois, 0. R. Co. vs. Caffrcy, 128 Fed. 770, Injunction
to restrain traffic in excursion tickets granted; (Confederate ho-
union at New Orleans), Bittcnnan vs. Louisville & Nashville 1. Co.
207 U.S. 205, Injunction against ticket brokers granted.

G. A. of the Republic in Cleveland - (Ohio Case) The Ohio

Supreme court sustained an Injunction to stop the traffic in trans-
portation tickets. Kinner vs. Lake Shore 3-00. 69 N.3.614.
IV.
We now come to the provisions of the Qtatc Laws, in rc-
gard to ticket brokerage, and the judicial construction thereof.
he quote in full the Tennessee statute, Chap. 410, page 873, Session
Acts of 1895.

"An act to prohibit traffic in non-transferable signature
tickets, issued by comion carriers, and to require common
carriers to redeem unused or partly used tickets and to wrovide
punishment for the vioh.tion of this act. "

Sec. 1. Be it enacted by the general assembly of the
State of Tennessee, that it shall be unlawrul for any person,
other than the authorized agent for the common carrier issuing
the Same, to sell or otherwise deal in or offer to sell any
railroad, railway, steamShip or stzamboat passenger ti kct
which shows that it was issued and sold below the standard
schedule rate under contract with the original purchaser entered
upon such ticket and signed by the original purchaser, to the
effect that such ticket is non-transferable and void in the hands

 (4) .
of any person other than the original purchaser thereof: Provided,
howeVer, that nothing in this act shall be construed as deprivind the
hriginal purchaser of a transferable ticket of the right to 8911 same
to a person who will in good faith personally use it in the nrosecution
of a journey.

Sec. 2. Be it further enacted that it shall be the duty of
every common carrier that shall have sold any ticket or other evidence
of the purchaser's right to travel on its line (or any line of which
it forms a part), to, if the whole of such ticket be unused, redeem
the same, paying the original purchaser thereof the actual amount for
which said ticket was sold; or if any part of such ticket be unneed,

' to redeem such unused part, paying the original purchaser thereof,
at a rate which shall be equal to the difference between the urice
paid for the whole ticket and the price of a ticket between the
points for Which said ticket was actually used; provided, such pur-
chaser shall present such unused or partly need ticket for redemption
six (6) months after the date of its issuance to the officer or
agent who shall be designated by such common carrier to rodeonlun-
used or rtly used tickets, and the said officer shall, within
fifteen {35) days after the receipt of said ticket, redeem the same
as heroinbefore provided for. ”uch redemption shall be made without
cost of exchange or other expense to the purchaser of the ticket.

Sec. 3. Be it further enacted, that any person or corpora—
tion violating any of the provisions of this act shall be guilty of a
misdemeanor and shall, upon conviction thereof, be punished by fine
in the sum of not less than fifty (#50-00) dollars, nor more than one
hundred ($100) dollars.

Dec. 4, Be it further enacted, that this act take eiiect
from and after its passage, the public welfare requiring it."

Passed April 13th, 1905. etc. —

The above type of statute has been held constitutional in
all the jurisdictions in which it has arisen, except New York. It
is to be observed that this statute Arovidcs for the authorized sale
of tranSportation tickets, the redmnption of the seen or the unused
parts thereof, and a penalty for its violation.

The New York court held that the New York statute was a
violation of onevs personal liberty, one's preperty rights, and that it
Was class legislation, HoweVer, the New York statute was construed as
giving any duly authorized agent of the several carriers the right to
traffic in tickets to the exclusion of one that was not a duly authori-
zed agent. The opinion was given by a divided court. Pcoyle vs. tar-
een City Prison 157 N.Y.116.

Texas held that her act was unconstitutional because it
gave the company issuing the ticket the right to state at the time
the ticket was issued whether or not it would be penal to barter,etc.,
the Same, but it is recognized the right of the legislature to enact

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agent to exhibit to any person desiring to purchase a ticket,
or to any officer of the law who may request it, a certificate
of his authority to sell, and to keep said certificate posted in a -
conSpicuous place in his office. Section 5 makes it a duty of the
owners of a railroad, steamboat, and other conveyances to provide
for the redemption of the whole or any parts of any ticket or
tickets which the purchaser, for any reason, has not used or docs
not desire to use, at a rate Which shall be equal to the differ-
ence between the price said for the w