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THE FEDERAL COURTS
AND THE
O R D E R S
OF THE
Interstate Commerce Commission.
- aº
By H. T. NEWCOMB,
Of the Bar of the District of Columbia.
Author of “Railway Economics,” “The Postal Deficit,”
“Some Consequences of the Trust Movement,” “A Study in
Municipal Socialism,” “Some Recent Phases of the Labor Problem.”
“The Work of the Interstate Commerce Commission,” “Who Own the Railroads,”
“The Regulation of Interstate Railways,” etc., etc.
“My own judgment is that the Interstate Commerce Commission,
notwithstanding my great respect for that body—a respect which
I share with many lawyers and nearly all the judges of this country-
has failed in its part of the administrative work of putting into
execution the Interstate Commerce act. I think the Commission
has looked at it from a wrong attitude of mind. I think it has
put itself rather in the position of a court than that of an inquisitor.
I think it has deserted the inquisition, which is the Commission's
part of the work, and has been trying to climb upon the tribune,
which is another part of the work. I think it has put on the robes,
when perhaps it ought to have worn the overalls.”
—JUDGE GRosscup, March 11, 1905.
PRESS OF GIBSON BROTHERS.
WASHINGTON, D. C.
1905.
AND THE
O R D E R S
Interstate Commerce Commission.
By H. T. NEWCOMB,
. . . . . . . Of the Bar of the District of Columbia. . . . . .
. . . . . . Author of “Railway Economics,” “The Postal Deficit,”, “ . . . . . . . . . . . . .
“Some Consequences of the Trust Movement,” “A Study in
Municipal Socialism,” “Some Recent Phases of the Labor Problem.” . . . . . . . . . . . . . .
“The Work of the Interstate Commerce Commission,” “Who Own the Railroads,” . . .
“The Regulation of Interstate Railways,” etc., etc.
-----------------------------
- “My own judgment is that the Interstate Commerce. Commission, . . . . . . . . . . . . . . . . . . . . . . . . . .
notwithstanding my great respect for that body—a respect which . . . . . . . . . . .
I share with many lawyers and nearly all the judges of this country--- . . . . . . .
has failed in its part of the administrative work of putting into
execution the Interstate Commerce act. I think the Commission. . . . . . . . . . . . .
has 10oked at it from a wrong attitude of mind. I think it has . . . .
put itself rather in the position of a court than that of an inquisitor.
I think it has deserted the inquisition, which is the Commission's
part of the work, and has been trying to climb upon the tribune,
which is another part of the work, I think it has put on the robes,
when perhaps it ought to have worn the overalls.” . . . . .
—Jup GB. Grosscup, March 11 , 1 905, .
washingTON, D. C.
* - - - -
1.























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CONTENTS.
PAGE.
The Federal Courts and the Orders of the Interstate Commerce Com-
mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Few Cases have gone to the Courts. . . . . . . . . . . . . . . . . . . . . 7
Passenger Traffic Cases. . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 9
Carriers’ Methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Long and Short-haul Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . 1I
A Peculiar View. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Attempts at Rate Making. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
Powers of the Commission. . . . . . . . . . . . . . . . . '• • * * * * * * * * * 16
Memorandum. In re Refusals of Federal Courts to Enforce the Orders
of the Interstate Commerce Commission. . . . . . . . . . . . . . . . . . . . 21
Rentucky and Indiana Bridge Company Case. . . . . . . . . . . 21
Party Rate Case. . . . . . . . . . . . . . . . . . . . . . . . . . . • - - - - - - - - 29
San Bernardino Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Coxe Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Social Circle Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Cartage Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Orange Rates Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Import Rates Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Delaware Grange Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Nashville Coal Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Chattanooga Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Georgia Commission Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Troy Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Window Shades Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Freight Bureau Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 111
Summerville Hay Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Truck Farmers’ Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Iron Rates Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Piedmont Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Lagrange Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Griffin Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
4 CONTENTS.
Spokane Falls Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Cattle Raisers’ Association Case. . . . . . . . . . . . . . . . . . . . . . . 160
Danville Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Savannah Naval Stores Case. . . . . . . . . . . . . . . . . . . . . . . . . . 176
Wilmington Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Hampton Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Orange Routing Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
Kearney Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Hay Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Appendix: Extracts from the Act to Regulate Commerce. . . . . . . . . 199
First Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Second Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Third Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Fourth Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Thirteenth Section... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Sixteenth Section.......... . . . . . . . . . . . . . . . . . . . . . . . . . 203
THE FEDERAL COURTS AND THE ORDERS
OF THE INTERSTATE COMMERCE COMI-
MISSION.
BY H. T. NEWCOMB.
The annual report of the Interstate Commerce Commis-
sion submitted to Congress in December, 1904, shows
that at that time there had been received by the Com-
mission 789 formal and 3,223 informal complaints. On
October 9, 1904, the Commission had rendered 297 formal
decisions, but as two or more cases were often considered
and decided together, the total number of cases decided
amounted to 359. Of the cases decided, 194 were decided
in favor of the complainants; that is, there were 194 cases in
which, if the action recommended by the Commission had
been taken by the defendants, some benefit would have
accrued to those who prompted the complaints. A report
submitted to the United States Senate, by the Commission,
on December 21, 1896 (Senate Document No. 30, Fifty-
fourth Congress, Second Session), shows the action taken
by the defendants in 107 instances in which the decision of
the Commission was more or less favorable to the com-
plainants. From this report it appears that in 58 of the
107 cases included, there was complete, voluntary obedience
~gs sº Jº *** 4- -
6 THE COURTS AND THE COMMISSION.
to the Commission's order. In 11 more there was volun-
tary, partial obedience, while in another case the Commis-
sion reports that “some changes” were made. It is to be
observed, concerning these twelve cases, that the degree of
obedience was at least sufficient to prevent further action on
the part of the Commission or the complainants. It ap-
pears, therefore, that in 107 cases there were only 37 in
which the defendants declined substantially to comply
with the Commission's recommendations.
The informal complaints considered by the Commission
are settled without formal reports or orders. As the
Commission has decided but 359 out of 789 formal
complaints and as it has never been charged that its docket
is clogged by an excessive number of undecided cases, the
inference is warranted that more than half of the cases
formally submitted are settled while pending. It follows
that 90 per cent of the matters submitted to the Commis-
sion are settled satisfactorily to both parties without formal
orders. Of the 10 per cent not settled in that way it ap-
pears that, up to the present time, in almost one-half the
defendants have been justified in their refusal to make the
desired changes in rates or methods by the final conclusions
of the Commission. As already noted, in only 194 out of
more than 4,000 cases submitted, has the Commission seen
fit to order changes in rates or in methods or practices which
affect or control rates. But when the Commission has
REVERSED BY THE COURTs. 7
issued formal orders requiring affirmative action on the
part of the railways, they have usually been obeyed.
The best available record, quoted above, shows that they
have been obeyed in nearly 70 per cent of the cases.
FEw CASEs HAVE GONE TO THE Courts.
When obedience to an order of the Commission is refused,
that body, or any one interested, has the right to appeal to
a Circuit Court of the United States, sitting in equity, for a
decree requiring obedience. Up to the present date (April
10, 1905), 45 cases of this sort have gone to the courts.
Eleven of these cases have either been withdrawn, or have
not been actively prosecuted, or there has not yet been
time for judicial action. Sixteen of them have been car-
ried to the Supreme Court of the United States, and in no
case has that body decided in favor of the enforcement of
the Commission's order; in one case, only, its decree re-
quired the enforcement of a portion of the order. Of the
remaining 28 cases the Commission has lost 26. Appeals
are now pending from three of these cases in which the
decision was adverse to the Commission, and from one
in which it was adverse to the railway defendant.
Had the Interstate Commerce law from the beginning
been in the form which the Commission now desires shall be
substituted for the present statute, the only cases, out of
the more than 4,000 which have been submitted to the
8 THE COURTS AND THE COMMISSION.
Commission, that would have been affected, are the 45
which have gone to the courts, or less than 11-5 per cent of
the total number. As has already been shown only 34 of
these cases have been adjudicated, but the decisions of the
courts show that in a large portion of the adjudicated cases
such a difference in the law would not have affected the
result. In other words, it is not true, as is so frequently
asserted by those who desire radical legislation, that the
frequent disapproval of the conclusions of the Commis-
sion by the Federal courts, has been wholly due to the
fact that the Commission's interpretation of the law has
not had the sanction of the courts. While it is per-
fectly true that, in the natural desire to enlarge the scope
of its authority, the Commission has often reached con-
clusions of law which the courts have declared to be erron-
eous, it is equally true that its determinations of facts and
the conclusions which it has drawn from them, have fre-
quently received judicial condemnation. A study of the
decisions of the courts, with a view to determining whether,
on the whole, the results of the litigation in the several cases
have been such as tend toward the establishment and
perpetuation of just relations between shippers and car-
riers, affords a complete refutation to the argument so often
advanced that the Commission has been right, that the law
is wrong, and that, therefore, the law ought to be modified.
PASSENGER TRAFFIC. 9
PASSENGER TRAFFIC CASEs.
Passenger rates have been the subject of controversy in
but two of the cases in which the Courts have been appealed
to for the enforcement of the Commission's orders. One of
these cases was that of a negro named Heard, who obtained
an order from the Commission directing the Georgia Railroad
to discontinue practices, connected with the use of so-called
“Jim Crow” cars, which were regarded as unjustly dis-
criminating against the complainant. This case was with-
drawn before decision. The other passenger rate case is
known as the “Party Rate” case (see page 29). It
arose through the desire of one railway company to be
relieved from one phase of its competition with a rival
carrier. The order of the Commission would have miti-
gated the competition in the desired degree had not the
Court declined to enforce it. Whether the outcome of this
case resulted in substantial justice may be inferred from
the statement of the Court that in making these “party
rates” the defendant was merely putting into practice a
“reasonable and well settled business practice,” that its
revenues would “be seriously impaired” if the practice
were discontinued, and that this practice afforded “con-
venience and benefit” to a portion of the public.
10 THE COURTS AND THE COMMISSION.
CARRIERs' METHODs.
Three of the cases which have gone to the Courts have
related to transportation practices rather than to rates.
j
One of these, the “Orange Routing” case (see page 182),
appears to have been due to an effort on the part of the
complainants to Secure the continuance of illegal and secret
deviations from the schedules, by parties other than the
defendants, which amounted to rebates. The Commission
decided in favor of the complainants, but there was a
strong dissenting opinion from the Chairman (see page 183).
The Circuit Court has decided this case in favor of the en-
forcement of the Commission's order, but an appeal is now
pending. Another case of this character, the “Cartage”
case (see page 47), was prompted by the desire of one rail-
way to weaken a competitor. In this effort the carrier was
able to secure the co-operation of the Commission, but
again its decision did not survive judicial scrutiny. The
Circuit Court called attention to the admission of the coun-
sel for the complainants before the Commission, that the
complainant had no real grievance but had been instigated
in making complaint by a railway which was paying the
expenses of the litigation, and the Circuit Court of Appeals
noted that the effect of enforcing the order would practi-
cally deprive the defendant of its ability to compete with
the rival which was responsible for the complaint. Another
LONG AND SHORT HAUL CASES. 11
of these cases was brought at the instance of a railway
which desired to be relieved of a contract that it had en-
tered into with other railways, and to force the latter to
provide, at their own expense, facilities for bringing about
that result. The Circuit Court, which refused to enforce
the Commission's order, declared this to be the fact, and
asserted that the Interstate Commerce law “was never
intended to invade the domain of private contracts between
common carriers, which were valid when made, and are not
in conflict with the provisions of the law.”
LONG AND SHORT HAUL CASEs.
The remaining cases in which appeal has been made to
the courts have been those in which the Commission has at-
tempted to control adjustments among freight rates.
Roughly speaking, these are of two classes. Those in which
the whole question has been that of absolute or relative rea-
sonableness under the First or Third sections of the Act, and
those in which the Fourth or long and short haul section has
been involved. Of the long and short haul cases, which
considerably exceed the others in number, it may be said
that, if in any of them there were unjust relations which
might have been relieved through the lawful action of the
Commission, that body adopted an erroneous interpretation
of the law which prevented the beneficial results that might
have followed action clearly within its authority. The only
12 THE COURTS AND THE COMMISSION.
case under the Fourth section which can be regarded as an
exception to this rule is the “San Bernardino” case (see
page 34), decided by the Commission while it adhered to the
rule, laid down by Judge Cooley with the unanimous ap-
proval of his colleagues as members of the original Commis-
sion, that the carriers must judge for themselves in each in-
stance whether there are dissimliar circumstances and con-
difions which permitexceptions to the general rule that there
shall be no higher charge for intermediate hauls than for
longer hauls over the same line in the same direction, when
the latter include the former. In the “San Bernardino”
case, however, the Court, while not criticising the conclu-
sions of the Commission as to matters of law, declared that
the facts were “widely different from those set out in the
report of the Commission.”
From its organization in 1887 until November, 1892, the
Commission adhered to the rule, just referred to, which was
formulated in the first important case that arose under the
Fourth section. In deciding the Georgia Commission cases
(see page 87), however, the Commission abandoned this
rule so far as it related to the competition of carriers subject
to the Act to regulate commerce and declared that where
the dissimilarity of circumstances relied on to justify excep-
tions to the general rule were the consequence of such com-
petition, dissimilarity could not be set up as a defense to a
complaint of violation of the law, but must be made the
A PECULIAR VIEW. 13
basis of an application to the Commission for permission to
make the greater charge for the intermediate haul. After
adopting this interpretation of the law, the Commission for
a number of years declined to consider evidence tending to
prove the existence of dissimilar conditions arising through
the competition of interstate railway carriers or of different
markets, thus preventing the introduction of testimony
which the courts have declared to be of controlling import-
ance. It is true that this erroneous interpretation of the
law has prevented the enforcement of the orders in these
cases, but it is equally true that the Commission never ex-
pected obedience to them, and that they are to be regarded
as strategic moves in a combat which the Commission pro-
posed to conduct along lines that it hoped would force the
carriers to appeal to it for relief. There seems to be ample
justification, not only in the case to which it was applied,
but in most of these cases, for the observation of the Su-
preme Court, in deciding the Chattanooga case (see page
78), that in making its order “the Commission thought that
literal enforcement would bring about an injustice # * *”
In fact, before making some of them, the Commission al-
lowed an interval to elapse for the avowed purpose of per-
mitting applications for relief, and it provided for the sus-
pension of several of the orders after they were made in case
such application should be made. In many of these cases
the Courts distinctly expressed the view that there was no
14 THE COURTS AND THE COMMISSION.
injustice in the rate relations which were made the subject
of complaint, and there can be no controversy over the sug-
gestion that their enforcement would have brought injus-
tice. There is probably no one of these cases in which the
enforcement of the Commission's order would, directly,
have modified the rates actually paid. The carriers affected
might have been compelled to withdraw their competition
for the long haul traffic, but it is not at all likely that in any
case they could have afforded to reduce their intermediate
rates to the level fixed by competition at the terminals. In
a few more recent cases the Commission has recognized the
illegality of its former efforts and has given what it has re-
garded as sufficient consideration to competition of the char-
acter formerly declared to be without effect as a defense.
In these cases, however, the Commission appears to have
fallen into the error of imagining that it was the purpose of
the law to deprive certain communities of natural advan-
tages of location which enable them to enjoy the service of
great and competing routes of transportation, by land or by
water or by both.
The Griffin case (see page 148) is typical. The court said
that the enforcement of the Commission's order would, as
its first effect, “immediately disorganize and disarrange the
entire commerce of which Macon is the receiving and dis-
tributing point;” and that, without material benefit to the
producers and consumers at Griffin, “the commerce of
ATTEMPTS AT RATE MAKING. 15
Macon would be destroyed in exact proportion with its ina-
bility to meet the prices of its competitors.”
ATTEMPTS AT RATE MAKING.
The last class of cases which need be mentioned is that in
which the Commission has attempted to control rates either
absolutely or relatively. The cases of this sort which have
gone to the courts have sometimes been decided against the
Commission because of its attempts to exercise legislative
functions that have never been delegated to it, but a study
of the decisions themselves, affords ample warrant for the
statement that the disapproval of the Commission’s action
has usually extended to its conclusions upon the facts.
Thus, in the “Coxe” case (see page 37) the court reported
that the basis of the Commission's determination as to what
constituted a reasonable rate under the circumstances was
an “unwarrantable” and “unreliable” estimate which the
Commission had based upon “an erroneous principle.” In
the “Social Circle” case (see page 42) the court declared that
the Commission had omitted to consider a fact of controll-
ing importance, and in the “Cattle Raisers’.” case (see page
160) the Supreme Court distinctly said that in its opinion
“the order of the Commission was not sustained by the
facts upon which it was predicated.”
16 THE COURTS AND THE COMMISSION.
PoweRs of THE COMMISSION.
It is frequently urged that when the courts have differed
with the Commission in their conclusions of fact, it has been
as a consequence of the right of the courts to make their
investigations as broad as seems to them desirable. They
are not bound by the testimony heard by the Commission.
It has been common for new festimony fo he introduced in
the Circuit Courts, and some of the decisions show that this
testimony has been of controlling force. The investigat-
ing powers of the Commission, however, are most ample.
It is not strictly bound by the ordinary rules of evidence,
and the courts have held that in deciding whether their aid
shall be available, as provided in the law, for compelling the
production of testimony, either oral or documentary,
before the Commission, they must be very liberal in de-
termining what inquiries are material and relevant. In
other words, if in certain cases the record made before the
Commission has not been complete enough to afford the
basis of a satisfactory determination of the matters involved
by the courts, it has been because the Commission itself did
not utilize the broad powers of investigation conferred upon
it by Congress. It has always had the power to extend its
investigations in any case to the most remotely relevant or
material fact. If it has failed to appreciate the importance
of evidential facts which have been brought out in sub-
sequent proceedings before the courts, it is certainly credit-
EXTENSIVE POWERS OF THE COMMISSION. 17
able to the wisdom of Congress that the law has provided
for supplementing its inquiries.
The Commission is not a powerless or impotent body.
The interpretation of the present statute by the courts is
now almost, if not quite complete. If the Commission
chooses frankly to accept the definitions of its authority laid
down by the courts, and to proceed in accordance with them
there can be no genuine case of injustice in the relations
between railway carriers and their patrons, in which some
relief cannot be secured under the statute as it stands. The
records show that numerous modifications in rate schedules
have been secured through the operation of the law and the
intervention of the Commission. It is only in less than 2
per cent of the cases of alleged injustice which have been
brought to the attention of the Commission that the record
discloses that it has not succeeded in doing that which it has
attempted. A part of this 2 per cent of all the cases has
gone to the courts, and in all but three instances the courts
have, for one reason or another, concluded that the Com-
mission has acted illegally.
The brief epitome of the cases which has been given above
is supplemented by the memorandum on the following
pages in which each of them is separately considered and
analyzed. There are very few in which the extracts from
the decisions of the courts that are given do not show that,
to the judicial view, the action of the Commission appeared
to be unwise as well as unlawful.
MEMORANDUM
In re Refusals of Federal Courts to
enforce the orders of the Interstate
Commerce Commission.
-------
--------
-
-ºw -
-**
MEMORAN DUM
In re Refusals of Federal Courts to
enforce the orders of the Interstate
Commerce Commission:
*-
-ºr
Kentucky and Indiana Bridge Company Case.”
“The law never contemplated such results.”—Decision of the
Circuit Court in this case.
In this case the Commission entered an order in favor of
the complainant which was not obeyed by the defendant
and proceedings were instituted in the Circuit Court by the
complainant before the Commission for the enforcement of
the latter's order. The Circuit Court dismissed the com-
plaint and no appeal was taken.
This is a leading case in the interpretation of the Inter-
state Commerce law, and has apparently settled for all time
* The Kentucky and Indiana Bridge Company vs. The Louisville and
Nashville Railroad Company; Inter. Com. Comm. (2 I. C. C. Rep. 162),
decided August 2, 1888. The Kentucky and Indiana Bridge Company
vs. The Louisville and Nashville Railroad Company; Circuit Court for
the District of Kentucky (37 Fed. Rep. 567), decided January 7, 1889.
22 THE COURTS AND THE COMMISSION.
many important points as to the jurisdiction and powers
conferred upon the Commission or which can constitution-
ally be conferred upon a body so constituted. These mat-
ters, however, are not germane to the present inquiry which
is whether, on the whole, the result of the litigation was
in accordance with substantial justice.
On June 5, 1872, the Louisville and Nashville, the Jeffer-
sonville, Madison & Indianapolis, and the Ohio & Mississippi
railway companies entered into a contract with the Louis-
ville Bridge Company, a corporation with which the com-
plainant in this case afterwards became a competitor, the
contract stipulating, among other things, that the Ohio &
Mississippi Railway would forward over the bridge of the
Louisville Bridge Company “all the freight, passengers,
mails, express matter, and other goods carried on and over
their roads, to and from Louisville and to and from points
which require their passage over the Ohio river at or near
Louisville.” On September 26, 1886, the Ohio and Missis-
sippi entered into a contract with the complainant, The
Kentucky and Indiana Bridge Company, which contem-
plated the abandonment of the pre-existing contract of the
former with the Louisville Bridge Company and the trans-
fer of its business across the Ohio river near Louisville to
the complainant. The continued use of the bridge of the
Louisville Bridge Company by the Ohio and Mississippi, in
accordance with its former contract, was decidedly to the
KENTUCKY AND INDIANA BRIDGE CO. CASE. 23
advantage of the defendant. In order to compel such use
the defendant refused to interchange traffic with the com-
plainant at Seventh street and Magnolia avenue in Louis-
ville, where their lines were physically connected, and de-
manded that such traffic be delivered at one or the other of
its four freight yards in the city of Louisville. The com-
plaint was brought by the Kentucky and Indiana Bridge
Company for the purpose of compelling interchange at
Seventh street and Magnolia avenue and was really in-
tended to compel the defendant to permit the Ohio & Mis-
sissippi, which was not a party to the action, to do that
which was in violation of its contract with the defendant.
The order of the Commission would have produced this
result, and the refusal of the Circuit Court to enforce that
order was therefore a refusal to use the process of that Court
to aid in the violation of a contract. The following is from
the decision of Judge Jackson:
“While the Ohio and Mississippi Railway Company is
not an actual party to this controversy, which this court is
required ‘to hear and determine as a court of equity,’ it is
however, perfectly manifest that this proceeding, as well as
that before the Commission, is intended for the private bene-
fit not merely of petitioner, but of the Ohio & Mississippi
Railway Company; and its object is to relieve the latter
from the contract of June 5, 1872, in order that petitioner
may secure from it the rental stipulated to be paid for the use
24 THE COURTS AND THE COMMISSION.
of its bridge; the Ohio & Mississippi Railway Company not
being bound by the contract of September 29, 1886, to pay
petitioner ‘any tolls’ thereunder until its liability for
tolls, charges, or rentals under the contract of June 5, 1872,
with the Louisville Bridge Company, is removed. Now,
the contract of June 5, 1872, which the Ohio & Mississippi
Railway Company entered into with the Louisville Bridge
Company and other railroad companies, including respon-
dent, and in the maintenance and enforcement of which
respondent has a direct business and pecuniary interest,
was neither abrogated nor annulled by the Act to regulate
commerce. The provisions of that contract are not in con-
flict, but in strict conformity, with both the letter and spirit
of the act of Congress.
“Under the terms and operation of that contract, which is
still in full force as against the Ohio & Mississippi Railway
Company and all parties thereto, the Ohio & Mississippi
Railway Company had and enjoyed all reasonable, proper,
and equal facilities with any and every other railroad com-
pany entering Louisville from the north side of the Ohio
river, and interchanging traffic with respondent. It vol-
untarily abandoned these facilities in 1888, changed its
business to the petitioner's bridge, not in the interest of the
public or of the interstate commerce it handled, but for its
private benefit and advantage; and petitioner now seeks
to secure for it, as well as for itself, the same terms and
facilities which existed under the contract of June 5, 1872,
and without subjecting either to the obligation of compen-
sating respondent, or sharing in the expense of an inter-
change, as provided in the contracts of May 22, 1873, and
KENTUCKY AND INDIANA BRIDGE CO. CASE. 25
May 16, 1888. The Act to regulate commerce, no more
than the act of June 15, 1866 (Section 5258, Rev. Stat.
U. S.), was never intended to invade the domain of private
Contracts between common carriers, which were valid when
made, and are not in conflict with the provisions of the law.
“In Railroad Co. v. Richmond, 19 Wall. 590, the Supreme
Court says of such contracts, ‘that the observance of good
faith between parties and the upholding of private con-
tracts and enforcing their obligations, are matters of
higher moment and importance to the public welfare, and
far more reaching in their consequences, than the public
policy sought to be established in the facilitation of com-
mercial intercourse among the States, which the act of
June 15, 1866, aimed to promote.” Under such circum-
stances as surround the parties, neither the Ohio & Missis-
sippi Railway Company nor the petitioner, who, for private
advantage, is co-operating with the Ohio & Mississippi
Railway Company in trying to escape from the obligations
of said contract of June 5, 1872, are in a position to com-
mend themselves to the favorable consideration of a court
of equity, and no strained construction of the law should be
made in order to afford them or either of them, the relief
they seek at the hands of the court.”
On the question of fact as to whether the point of inter-
change demanded by the complainant was a suitable one
the Commission and the Court differed widely. The Com-
mission said:
‘We hold that the point of connection at Seventh street
26 THE COURTS AND THE COMMISSION.
and Magnolia avenue in Louisville is a convenient and
suitable point for making exchange of traffic between com-
plainant and any carrier that may make use of its tracks,
and the defendant.”
The Court, on the same point, said:
“The fourth point presented in this case, which is whether
petitioner's connection with respondent's road at Seventh
street and Magnolia avenue in Louisville, is a proper, suit-
able, and convenient place for the interchange of traffic
between them and the railroads using petitioner's track,
and whether respondent’s refusal to interchange at said
point is an unreasonable and unjust discrimination against
petitioner, and the carriers using its tracks, involves ques-
tions both of fact and law. * * *
“Now, it clearly appears from the foregoing statement of
facts that respondent has already established, and has in
use in the city of Louisville, four suitable, ample, and conven-
iently located and fully-equipped yards and depots, at
one or the other of which it receives and delivers all freights
arriving at or departing from Louisville, and makes all its
interchanges of freights with other lines, furnishing to the
latter at said places ‘all reasonable, proper, and equal
facilities,’ not only for such interchange of traffic, but also
“for receiving, forwarding, and delivering of passengers and
property to and from its line or lines, and those connecting
therewith,’ and does this without discrimination in its
rates and charges as between such connecting lines. At
petitioner's Seventh street and Magnolia avenue connec-
KENTUCKY AND INDIANA BRIDGE CO. CASE. 27
tion neither respondent nor petitioner has any yard, station
or depot; neither owns any ground there except respon-
dent's right of way, 66 feet in width on which its double
main tracks are located; neither has any buildings, sheds,
or platforms there for the reception and accommodation of
freights to be handled and exchanged at that point; nor
has either of them any clerks or employees stationed there
for the inspection of cars, receipting for freights, etc. With-
out such accommodations, and without the employment of
such clerical force located there, an interchange of traffic at
said point cannot be made in a proper and convenient way
to either party. * * *
“With no facilities at said Seventh Street and Magnolia
connection for the interchange of traffic, or for the receiv-
ing, forwarding, and delivering of property there, and being
under no legal duty or obligation to provide such facilities
at said point, upon what principle can it be successfully
asserted that in declining to transact such business at such
place respondent is refusing or denying to petitioner and
the roads using its track ‘all proper, reasonable, and equal
facilities’ for the interchange of traffic, or for receiving,
forwarding, and delivering of property, such as it has pro-
vided and affords to other connecting lines at its Ninth and
Broadway yard and depot? # * *
“It is perfectly manifest from the location of the said
Seventh street and Magnolia connection, and from the lack
of all suitable and proper accommodations there for con-
ducting the business involved in the interchange of freights,
and from the manner in which such freight, whether in car-
load or broken lots, would have to be handled by respon-
28 THE COURTS AND THE COMMISSION.
dent, that, if respondent is required to furnish at that point
all proper, reasonable, and equal facilities, or, as required by
the order of the Commission, “the same equal facilities’ which
it furnishes and affords to the lines connecting with it at
Ninth and Broadway yard, petitioner will thereby secure
benefits and advantages superior to those conferred upon
any other connecting line or lines, and largely, if not en-
tirely, at respondent's expense. The order of the Com-
mission imposes no terms and conditions under which the
interchange at said connection shall be made. * * *
“But,without the imposition of such terms and conditions
it is clear that petitioner and the railroads using its tracks
and seeking an interchange at said connection will secure,
without cost, to themselves or compensation to respondent,
services, and the benefit of facilities and of employees, for
which other connecting lines interchanging at other places
make respondent compensation, and bear their proportion
of the terminal expense. The law never contemplated such
results.”
PARTY RATE CASE. 29
Party Rate Case.*
“It was not the design of the Act to stifle competition.”—
Decision of the Supreme Court in this case.
The Commission's order in this case did not have the ap-
proval of either of the courts which passed upon it. It is
worth noting that while the original complaint was filed with
the Commission on July 10, 1889, and decision rendered on
February 21, 1890, seven months and eleven days thereafter,
the petition for the enforcement of the Commission's order
which was filed in the Circuit Court on May 1, 1890, was dis-
missed by that court on August 11, 1890, or only three months
and eleven days later.
The complainant in this case, being a railway company, was
engaged in competition with the defendant for passenger
traffic, and the latter chose to offer prospective passengers
opportunity to combine in parties of ten or more and to pur-
chase single tickets covering such groups of travellers at a
lower average charge per capita than the single fare at the
* Pittsburg, Cincinnati & St. Louis Railway Company vs. Baltimore
& Ohio Railroad Company; Inter. Com. Comm. (3 I. C. C. Rep. 465),
decided February 21, 1890. Interstate Commerce Commission vs.
Baltimore & Ohio Railroad Company; Circuit Court, Southern District
of Ohio (43 Fed. Rep. 37), decided August 11, 1890. Interstate Com-
merce Commission, Appellant, vs. Baltimore & Ohio Railroad Com-
pany; Supreme Court of the United States (145 U. S. 263), decided May
16, 1892.
30 THE COURTS AND THE COMMISSION.
same time in force. Tickets of this class had long been known
in railway practice by the name of “party-rate” tickets. The
complainant did not care to issue tickets of this sort but
objected to the business which they attracted going exclus-
ively to its rival. The former, therefore, wished to have the
practice of issuing such tickets declared illegal. The party
rates of the defendant were not restricted to any particular
class or section of the public but were open to all. On this
point the Commission said:
“By the party-rate system the carrier says to all persons in
substance—if you want one ticket for the transportation of
ten or more persons on the same train to the same destination
you can have it at a specified reduced rate below the reg-
ular rates.”
The precise question before the Commission was whether
persons travelling in groups of ten or more are carried under
circumstances and conditions substantially similar to other
persons travelling at the same time, singly, between the same
points in the same direction. The broader question now
under discussion is whether there is substantial injustice in
charging the former less than the latter. The Commission
discussed both questions and decided them both in the affirm-
ative; the Circuit Court and the Supreme Court also dis-
cussed them both and decided both in the negative. Judge
Jackson, who rendered the decision in the Circuit Court, said:
PARTY RATE CASE. 31
“Now it is neither claimed nor proved in the present case
that defendant's charges, either for single passenger or ‘party-
rate’ tickets, are in themselves unjust and unreasonable. On
the contrary, both rates are shown to be just and reasonable.
The public has, therefore, no ground of complaint on that
Score, nor has any legitimate complaint been made on its be-
half, either by the original petitioner or by the Commission.”
Further along in the decision, taking up the question of
relative justice, he said:
“It is clearly shown by the proof that the same business
reasons, considerations, circumstances, and conditions which
induce the most enlightened railroad management, having
due regard both to the interests of their lines and to the con-
venience of the public, to make reduced rates on mileage,
excursion, long distances, round trip, time trip, or specified
number of trip tickets apply in all their force to “party-
rate’ tickets for ten or more persons travelling together in
one body on a single ticket. Reduced rates to these several
classes or descriptions of passenger traffic rest upon the
same general principle, which the Act to regulate commerce
nowhere calls in question, that common carriers may right-
fully so adjust their charges as to encourage and develop
travel; that the amount or volume of such traffic is a legiti-
mate element to be considered in determining what reduc-
tion should be made over local or ordinary rates, so as to
make both correspond with the cost of service and the fair
profit which the carrier is entitled to earn from each class
of travel. Quantity of traffic affects both the cost of service
32 THE COURTS AND THE COMMISSION.
and the legitimate profit which may be demanded for such
service. When the profit on frequency of trips or on larger
numbers transported at reduced rates reasonably corres-
ponds with the fair profit of the carrier on a single trip, or
smaller number transported at the ordinary higher rate,
the carrier making such an adjustment of its charges with
a view of encouraging and developing its legitimate business
is only putting into practice the reasonable and well settled
business principle of every avocation or trade, which recog-
nizes quantity, whether arising from the number or size of
the transactions, as a proper element in the consideration
and adjustment of the price. No complaint was ever made
against common carriers acting upon this principle. * * *
“The evidence before us shows that, if ‘party-rate’ tickets,
as described and used by defendant, cannot be lawfully
issued or should be discontinued, the revenues of common
carriers derived from passenger traffic will be seriously
impaired, while the convenience and benefit to the public,
traveling in parties or bodies of ten or more, such as amuse-
ment companies, associations, clubs, organizations, dele-
gates, and representatives attending conventions, religious,
educational, or political, will at the same time be greatly
interrupted and prejudiced.”
The Supreme Court sustained the view of the Circuit
Court, and the decision by Judge Brown received the unan-
imous approval of his colleagues. It repeats much of the
reasoning adopted by Judge Jackson and only a brief quo-
tation need be made.
In part, the Supreme Court said:
PARTY RATE CASE. 33
“These tickets then being within the commutation prin-
ciple of allowing reduced rates in consideration of increased
mileage, the real question is, whether this operates as an un-
due or unreasonable preference or advantage to this partic-
ular description of traffic, or an unjust discrimination against
others, * * * Even if the same reduced rate be allowed
to every one doing the same amount of business, such dis-
crimination may, if carried too far, operate unjustly upon
the smaller dealers engaged in the same business and enable
the larger ones to drive them out of the market. The same
result, however, does not follow from the sale of a ticket for
a number of passengers at a less rate than for a single pas-
senger; it does not operate to the prejudice of the single
passenger who cannot be said to be injured by the fact that
another is able in a particular instance to travel at a less
rate than he. If it operates injuriously toward anyone it is
the rival road, which has not adopted corresponding rates;
but, as before observed, it was not the design of the Act to
stifle competition, nor is there any legal injustice in one
person procuring a particular service cheaper than another.
>k >{< >k >{< >}: :}; >|<
“The evidence shows that the amount of business done by
means of these party-rate tickets is very large; that the-
atrical and operatic companies base their calculation of
profits to a certain extent upon the reduced rates allowed
by railroads; and that the attendance at conventions, polit-
ical and religious, social and scientific, is, in a great meas-
ure determined by the ability of the delegates to go and
come at a reduced charge. If these tickets were withdrawn
the defendant road would lose a large amount of travel, and
the single trip passenger would gain absolutely nothing.”
34 THE COURTS AND THE COMMISSION.
San Bernardino Case.”
“The facts * * * are widely different from those set out
in the report of the Commission.”—Decision of the Cir-
cuit Court in this case.
In this case the Board of Trade of San Bernardino con-
tended that the higher charges from New York, Cincinnati,
Detroit, Chicago, and St. Louis to San Bernardino, than
from the same points, over the same lines, to Los Angeles,
a more distant point, were in violation of the Fourth sec-
tion, or long and short haul clause of the Interstate Com-
merce law. This clause forbids higher charges to inter-
mediate than to more distant points on the same line in the
same direction when the transportation to the points com-
pared is contemporaneous and is undertaken under “sub-
stantially similar circumstances and conditions.” The de-
fendant alleged that the lower charge to Los Angeles was
justified by dissimilar conditions growing out of water
competition at that point which did not exist at San Ber-
nardino. The Commission decided in favor of the com-
* The San Bernardino Board of Trade vs. The Atchison, Topeka &
Santa Fe Railroad Company et al.; Interstate Commerce Commission
(4 I. C. C. Rep. 104), decided July 19, 1890. Interstate Commerce
Commission vs. Atchison, Topeka & Santa Fe Railroad Company et al.;
Circuit Court Southern District of California (50 Fed. Rep. 295), de-
cided April 25, 1892.
SAN BERNARDINO CASE. 35
plainant, denying the existence of actual water competition
at Los Angeles, and declaring that potential competition
could not be made to justify an exception to the ground-
rule of the Fourth section. Its order required the discon-
tinuance of the existing relation on September 1, 1890. It
would have been satisfied either by a reduction of the San
Bernardino rates or by advancing the Los Angeles rates.
As this order was not obeyed the Commission appealed
to the Circuit Court for its enforcement. The Court de-
cided adversely to the Commission. In its opinion it
declared that:
“The common carrier cannot be required to ignore or
overcome existing differences in the transportation facilities
of different localities, created, not by its own arbitrary
action, but by nature or by enterprises beyond its control.”
The defendant before the court contended that the Com-
mission's findings of fact did not accurately portray the
real conditions which controlled the transportation to Los
Angeles and San Bernardino, respectively, and the court
declared that with respect to the water competition at Los
Angeles, the facts were “widely different from those set out
in the report of the Commission.” After quoting at length
testimony which clearly establishes the existence of actual
water competition, of controlling force and amount, at Los
Angeles, the court said:
36 THE COURTS AND THE COMMISSION.
“The testimony in the case is altogether too voluminous
to refer to in detail, but I think it is safe to say, generally,
that it shows that the water carriers mentioned are now,
and that some of them for years past have been, com-
peting with the overland railroads for the carriage of gen-
eral freight, including the commodities mentioned in the
petition, from the cities and country east of the Missouri
river to the Pacific coast, including the city of Los Angeles;
that they are and have been actively engaged in such trans-
portation, soliciting the freight and carrying what they can
get; and that they actually do carry an important part of
many of the commodities mentioned in the petition.
“The fact that such means of transportation actually exist,
and is actually and actively seeking the traffic, constitutes
competition, and was doubtless one of the most important
factors in making Los Angeles a terminal point. Not only
does the evidence show that such water competition exists,
but it shows that the shipments by water are increasing;
and a number of the witnesses testify that, in the event the
all-rail rates should be increased from what they are now,
it would result in much larger shipments by water, both in
Quantity and kind. For the reason stated I am of the
opinion that the circumstances and conditions attending
the transportation of the commodities in question to Los
Angeles and San Bernardino are essentially dissimilar, and,
therefore, that the long and short-haul clause of the Inter-
state Commerce act does not apply to the case. As has
been said, it is not claimed that the rates to San Bernardino
are otherwise unjust or unreasonable.”
THE COXE CASE. - 37
The Coxe Case.*
“The Commission's estimate * * * rests upon an erro-
neous principle and is unreliable.”—Decision of the Cir-
cuit Court in this case. --
The object of the original complaint in this case was to
Secure a reduction in the charges for carrying anthracite
from the mines owned by the complainant to Perth Amboy,
New Jersey, the tide-water point reached by the defendant.
The Commission ordered a reduction and afterward peti-
tioned the Circuit Court to enforce its order. After an ad-
verse decision by the Circuit Court the Commission appealed
to the Circuit Court of Appeals, but subsequently withdrew
its appeal. In denying the request of the Commission the
Circuit Court, in an opinion by Judge Acheson, said:
“The Commission found, and in its report states, that the
operating cost of carrying a ton of anthracite coal from the
Lehigh anthracite regions to Perth Amboy was eighty-five
cents. This conclusion the Commission deduced from the
* Coxe Brothers & Company vs. The Lehigh Valley Railroad Company
Interstate Commerce Commission (4 I. C. C. Rep. 535), decided March
13, 1891. Interstate Commerce Commission vs. Lehigh Valley Railroad
Company; Circuit Court, Eastern District of Pennsylvania (74 Fed. Rep.
784), decided May 11, 1896. Interstate Commerce Commission, Ap-
pellant, vs. Lehigh Valley Railroad Company; Circuit Court of Appeals,
Third Circuit (32 Fed. Rep. 1002), minute of withdrawal of suit on mo-
tion of appellant.
38 THE COURTS AND THE COMMISSION.
Lehigh Valley Railroad Company's annual report for the
year ending November 30, 1887. In the report of the Com-
mission are the following statements and tables: ‘The busi-
ness; receipts, with sources from which derived; expenses,
and on what account incurred, for year ending November
30, 1887, as appears from the annual report of said railroad
company, were:

cºlºne r *::::. Expenses. Net receipts.
Coal, tons 513,889,171.02 $6,165,411 29 || $3,431,609 83 $2,733,801 46
Other freight, tons............... 253,564,921.56 2,430,761 13 | 1,902,595 93 528,165 20
Passenger, express and mail. 44,512,264,10 1,122,833 65 808,190 49 314,693 16
Totals.............................................. $9,719,056 07 || $6,142,396 25 $3,567,659 82
“‘From the above reported facts it appears that the ton-
mile receipts, expenses, and profits, or net receipts, for the
year 1887, were on:
Gross receipts | Expenses per | Net receipts
per ton per ton per per ton per
mile, mills. mile, mills. mile, mills.
Coal .................................................. 12.00 6.67 5.32
General freight.................................. 9.58 7.50 2.08
“‘The operating expenses for the transportation of all
freight are sixty-three per cent of the reported operating
income, while the cost of transporting coal is but fifty-six
per cent of the income from coal, as appears from the said
annual report of 1887. The estimated cost of carrying coal
from the Lehigh and Mahanoy regions to Perth Amboy,
based on said report, is eighty-five cents per ton, which, for
THE COXE CASE. 39
the group or average distance of 149 miles, is nearly six
mills per ton per mile, taking the tide coal as an average;
Some being carried to other points at lower, and some at
higher, rates.’
“Now, certainly, there is no statements in the railroad
company's report to the effect that the cost of carrying coal
from the Lehigh and Mahanoy regions to Perth Amboy was
eighty-five cents per ton. That is the estimate of the Com-
mission, and it purports to rest upon the report of the rail-
road company for the year 1887. That report shows that
the gross receipts from all coal carried by the defendant
during the year averaged twelve mills per ton per mile, and
that the average cost of carrying each ton of coal per mile
was 6.67 mills. Upon the basis of this average cost per
mile, namely, 6.67 mills, the cost of transporting a ton of
coal from the Lehigh and Mahanoy regions to Perth Amboy
(149 miles) would be 99.38 cents. By what method, then,
did the Commission proceed in making its estimate? No
satisfactory answer to this inquiry is to be found in the
report of the Commission. The counsel for the Commis-
sion, in a supplemental brief furnished the court since the
hearing of the case, makes this explanation: ‘The correct
method of obtaining such cost of transportation, and the
method which the Commission has again stated, since the
argument, to have been the one adopted by it, is shown as
follows.’
“The counsel then states that the Commission found from
the railroad company's report for 1887, that the operating
expense on all coal carried from all points of shipment to
all destinations during that year was about fifty-six per
40 THE COURTS AND THE COMMISSION.
cent of the gross coal receipts; that the Commission ascer-
tained that the average rate charged by the company for
carrying the larger sizes of coal from the Lehigh and
Mahanoy mines to Perth Amboy in 1887 was $1.54 per ton,
and that the average rate charged upon the pea, buckwheat,
and culm was $1.36 per ton; that the Commission esti-
mated that 75 per cent of this tonnage took the $1.54 aver-
age rate, and that twenty-five per cent thereof took the
$1.36 average rate, and hence that the average revenue per
ton from this tidal coal was $1.495. The counsel's brief
then proceeds thus:
“The fair average gross receipts perton actually obtained
by the company in 1887 for carrying anthracite coal from
the Lehigh and Mahanoy mines to Perth Amboy having
thus been found to be $1.495 per ton, and it having also
been ascertained, as above shown, that nearly fifty-six per
cent. of the company’s gross revenue from coal was ab-
sorbed by the cost of carriage, it follows that fifty-six per
cent. of the average rate of $1.495 per ton would furnish
83.7 cents as the basis on which to estimate the cost of
carrying a ton from said coal regions to Perth Amboy in
1887. The Commission, to be entirely safe, increased this
by 1.3 cents, and placed its estimate of the cost of car-
riage at eighty-five cents per ton. The calculation above
described applies the coefficient of expenses on coal traffic
(56 per cent of gross receipts) directly to the traffic
in question and the receipts actually received for its trans-
portation.’
“If the explanation thus given by the counsel for the Com-
mission is a correct statement of the method pursued by
THE COXE CASE, 41
the Commission in making its estimate of eighty-five cents,
then, in our judgment, that method is without justification.
For having adopted an estimated average rate of revenue,
namely, $1.495, from each ton of coal carried over the 149
miles from the Lehigh and Mahanoy regions to Perth Am-
boy, the Commission assumed that the expenses of the
transportation of coal over this particular branch of the
defendant’s railroad system was necessarily only the aver-
age cost of the carriage of all coal upon the defendant's
entire system. The assumption which thus underlies the
Commission's estimate is unwarrantable. Merely because
the cost of carriage of all coal upon the defendant’s entire
railroad system from all points of shipment to all destina-
tions was fifty-six per cent of the gross receipts from all
coal, is no reason for concluding that upon a particular line
or part of the system the cost of carriage bears the same
ratio to the coal receipts from that particular line or part.
The railroad company's report for 1887, upon which the
Commission based its estimate, does not furnish the data
by which the actual cost of carrying coal from the Lehigh
and Mahanoy mines to Perth Amboy can be ascertained.
The Commission, therefore, resorted to an estimate of the
carrying cost. That estimate, however, as we have seen,
rests upon an erroneous principle, and is unreliable.
Hence the order based thereon cannot be sustained, and
is not to be judicially enforced.
“We have only to add that the evidence before us is quite
convincing that the actual cost of transporting coal from
the Lehigh and Mahanoy regions to Perth Amboy was and
is considerably more than eighty-five cents per ton.”
42 THE COURTS AND THE COMMISSION,
The Social Circle Case.”
“If the Commission, instead of withholding judgment in such
a matter until an issue shall be made and the facts
found, itself faces a rate, that rate is prejudged by the
Commission to he reasonable.”—Decision of the Su-
preme Court in this case.
This case is especially interesting because it is the only
one in which any part of an order of the Interstate Com-
merce Commission has received the approval of the United
States Supreme Court. The original complaint involved
the rate on buggies, carriages, and freight taking “first
class” rates from Cincinnati to Social Circle, Georgia, and
from the same point to Atlanta. The complaint concerning
the rate to Social Circle involved the Fourth section, or long
and short haul clause, of the law, and the facts showed that
while the rate to Social Circle was $1.37 per hundred pounds
* The James & Mayer Buggy Company vs. The Cincinnati, New Or-
leans & Texas Pacific Railway Company, The Western & Atlantic Rail-
road Company, and The Georgia Railroad Company; Interstate Com-
merce Commission (4 I. C. C. Rep. 744), decided June 29, 1891. Inter-
state Commerce Commission vs. Same Defendants; Circuit Court, North-
ern District of Georgia (56 Fed. Rep. 925), decided June 3, 1893. Inter-
state Commerce Commission, Appellant, vs. Same Defendants; Circuit
Court of Appeals, Fifth Circuit (4 Inter. Com. Rep. 582), decided May
29, 1894. Cincinnati, New Orleans & Texas Pacific Railway Company
et al., Appellants, vs. Interstate Commerce Commission; Interstate
Commerce Commission, Appellant, vs. Cincinnati. New Orleans & Texas
Pacific; Supreme Court (162 U. S. 184), decided March 30, 1896.
THE SOCIAL CIRCLE CASE. 43
the same kind of freight was carried through Social Circle
to Augusta for $1.07 per one hundred pounds. The Atlanta
rate was alleged to be unjust in comparison with that to
Augusta because both were the same while the route
through Atlanta to Augusta was 171 miles longer than the
route to Atlanta. On both points the Commission decided
in favor of the complainant. The defendants were ordered
to “cease and desist” from charging more from Cincinnati
to Social Circle than to Augusta and from charging more
than $1.00 per hundred pounds to Atlanta.
The Circuit Court refused to enforce any part of this
order and dismissed the petition of the Commission. Its
refusal, so far as concerns the Social Circle rate, was based
wholly upon its interpretation of the meaning of the word
“line” in the Interstate Commerce law, and the decision
contains no statement of the views of the court as to the
substantial justice of charging more to Social Circle than to
Augusta. As the order of the Commission so far as it
affected the Social Circle rate was subsequently approved
and its enforcement decreed by the Supreme Court, it is not
necessary now to consider that question. On the point of
the reasonableness of the Atlantarate all of the courts which
passed upon the case disagreed with the Commission. The
report of the latter indicates that it did not have a great
deal of evidence on which to decide this point. The follow-
ing is an extract:
44 THE COURTS AND THE COMMISSION.
“The only testimony offered or heard as to the reason-
ableness of the rate to Atlanta in question was that of the
vice-president of the Cincinnati, New Orleans & Texas
Pacific Company, whose deposition was taken at the in-
stance of said company. The witness testified that he had
been in the railroad service about twenty-six years, and
had much to do with rates during all that time, and that he
considered $1.01 per 100 pounds, in less than car loads, a
reasonable rate on first-class freight from Cincinnati, Ohio,
to Atlanta, Georgia. This statement or estimate of the
rate from Cincinnati to Atlanta, we believe, is fully as high
as it may reasonably be, if not higher than it should be;
but without more thorough investigation than it is now
practicable to make we do not feel justified in determining
upon a more moderate rate than $1.00 per 100 pounds of
first-class freight in less than car loads. The rate on this
freight from Cincinnati to Birmingham, Alabama, is 89
cents, as compared with $1.07 to Atlanta; the distance
being substantially the same. There is apparently noth-
ing in the nature and character of the service to justify
such difference, or, in fact, to warrant any substantial vari-
ance in the Atlanta and Birmingham rates from Cincin-
nati.”
Discussing the foregoing the opinion of the Circuit Court
Says:
“It will be perceived that the only finding of fact was the
testimony of one witness that the rate of $1.01 was reason-
able, and the comparative rate to Birmingham, on which
THE SOCIAL CIRCLE CASE. 45
the Commission seems to lay stress. It seems that for a
short time at least a rate of $1.01 was in force from Cincin-
nati to Atlanta, and that it was as to this rate that the testi-
mony of one witness before the Commission was taken. It
appears in evidence here that the rate from Cincinnati to
Atlanta, in 1879, was $1.39, and that afterwards it was $1.10,
and subsequently $1.07, except, perhaps, as stated, it was
for a short time $1.01. As to the rate to Birmingham,
there is evidence before the court, which was evidently not
before the Commission, namely, that the rate from Cincin-
nati to Birmingham, which seems previously to have been
$1.08, was forced down to eighty-nine cents by the building
of the Kansas City, Memphis & Birmingham railroad,
which new road caused the establishment of a rate of
seventy-five cents from Memphis to Birmingham; and
by reason of water routes to the northwest such competi-
tion was brought about that the present rate of eighty-nine
cents from Cincinnati to Birmingham was the result. It
seems to be no sufficient reason to determine the rate from
Cincinnati to Atlanta, unreasonable because of the lower
rate to Birmingham, when such lower rate is caused by con-
ditions which do not operate as to Atlanta. * * *
“The conclusion of the Commission should undoubtedly
be considered in connection with the facts on which that
conclusion was based; and the principal fact which seems
to have been in the mind of the Commission is satisfactorily
explained here, as has been indicated. The evidence
offered here on behalf of the railroads, is, in the opinion of
the court, sufficient to overcome any prima facie case that
may have been made by the findings of the Commission.
46 THE COURTS AND THE COMMISSION.
On the whole testimony, as now before the court, it is not
believed that the Commission would have found the rate
in question to be unreasonable.”
The Circuit Court of Appeals reversed the decision of the
Circuit Court and ordered the enforcement of the Commis-
sion's order relating to the Social Circle rate, but denied its
petition as to the Atlanta rate. Both parties appealed to
the Supreme Court, the Commission asking for the enforce-
ment of its order as to the Atlanta rate, the railways seek-
ing the reversal of the decree of the Circuit Court of Appeals
as to the Social Circle rate. -
The Supreme Court sustained the Circuit Court of Ap-
peals on both points in a most notable decision, written by
Judge Shiras, in which it declared that the Commission had
not received from Congress the power to fix or make rates.
This decision was rendered on March 30, 1896. The posi-
tion taken by the Supreme Court in regard to the Atlanta
rate is shown by the following:
“As already stated, the Circuit Court of Appeals adopted
the views of the Circuit Court, in respect to the reasonable-
ness of the rate charged on first-class freight carried on
defendant’s line from Cincinnati to Atlanta; and as both
courts found the existing rate to have been reasonable, we
do not feel disposed to review their finding on that matter
of fact.”
CARTAGE CASE. 47
Cartage Case.*
“Not in fact the complaint of a shipper but of a rival and
competing line.”—Dissenting opinion of Commissioner
Bragg.
The complainants in this case were engaged in business
at Ionia, Michigan, which is a point on the defendant’s line
between Detroit and Grand Rapids. The substance of
their complaint was that the defendant supplied free cartage
of freight between its depot in Grand Rapids and the stores,
warehouses, etc., of its patrons, while the consignees and
shippers at Ionia were required to perform their own
cartage. The following stipulation of fact, among others,
was agreed to by both parties before the Commission:
“That the respondent provides, at its own expense,
drays, carts and trucks at the city of Grand Rapids for the
service of transporting merchandise and freight generally,
* Mary O. Stone and Thomas Carten vs. The Detroit, Grand Haven
and Milwaukee Railway Compaay; Interstate Commerce Commission
(3 I. C. C. Rep. 613), decided April 26, 1890. Interstate Commerce
Commission vs. Detroit, Grand Haven and Milwaukee Railway Com-
pany; Circuit Court, Western District of Michigan, Southern Division
(57 Fed. Rep. 1005), decided October 6, 1893. Detroit, Grand Haven
& Milwaukee Railway Company, Appellant, vs. Interstate Commerce
Commission. Circuit Court of Appeals, Sixth Circuit (74 Fed. Rep.
803), decided April 14, 1896. Interstate Commerce Commission, Ap-
pellant, vs. Detroit, Grand Haven and Milwaukee Railway Company;
Supreme Court (167 U. S. 633), decided May 24, 1897.
48 THE COURTS AND THE COMMISSION.
as well as merchandise and freight consigned from Phila-
delphia, New York, Boston, and points east of Detroit,
between its station at Grand Rapids and the places of busi-
ness of merchants, traders, and other patrons of its road at
that place, which service it performs without additional
charge to the owner or shipper of property on account
thereof; that this service is not furnished to complainants
or other merchants, traders, and patrons of its road at the
city of Ionia; that this service at Grand Rapids has been
openly and notoriously rendered for a long period of time,
to wit, for twenty-five years and upwards; that its sta-
tion at the said city of Grand Rapids is within the corporate
limits thereof, and is on an average one-and-a-quarter miles
from the business sections of said city where the traffic of the
places tributary to respondent's road originates and termi-
nates, while respondent's station for receipting and dis-
charging freight and property at the city of Ionia is not to
exceed an eighth of a mile from the business centre of said
city; that at the city of Grand Rapids there are two other
railroads, the Michigan Central Railroad and the Grand
Rapids, Lansing and Detroit Railroad, both of which are
immediately and directly in competition with respondent's
road for the business of Grand Rapids; that the stations of
both of said roads for receiving and discharging freight and
property at Grand Rapids, are near the business centre of
said city, requiring only short haul to and from their sta-
tions, on an average about one-quarter of a mile; that
respondent did the carting of freight to and from its station
at Grand Rapids, substantially in the same manner as at
present, long prior to the time when either said Michigan
CARTAGE CASE. 49
Central or Grand Rapids, Lansing and Detroit railroads
was constructed to that place.”
The schedule rates to Ionia and Grand Rapids were the
S2,1][162.
Three of the five members of the Commission took the
view that to supply free cartage at Grand Rapids and not
at Ionia, was illegal. They regarded it as an illegal con-
cession from the published rate, as an unjust discrimination
in favor of Grand Rapids and as in violation of the long and
short haul clause. Commissioner Veazey did not sit in
the case and Commissioner Bragg wrote an opinion strongly
dissenting from the view of the majority. The latter said
in part:
“If the construction of the statute reached in this pro-
ceeding by the majority of the Commission is to be adopted
as the rule on this subject, the point of receipt or delivery of
freight in every case may become material in determining
the question of a violation of section four; or of an unlaw-
ful preference; or of an unreasonable or unjust prejudice;
and towns where the station is comparatively distant may
insist that other towns beyond them on the same line can-
not enjoy the advantage of stations much nearer unless a
corresponding change in rates is made because drayage is
materially less. It will then logically follow and be next
in order for us to prescribe what must be the average dis-
tance of a depot from the business portion of a town or city
in order to avoid unjust discrimination, or unlawful prefer-
50 THE COURTS AND THE COMMISSION.
ence, or undue or unreasonable prejudice to the business of
such town or city. * * *
“* * * As incident to its business, a carrier, like
the defendant, has a right to engage in the cartage of goods
to and from its depot. It may make a reasonable charge
for this service; but if it does it must charge all alike for the
same service at the same depot. In the accommodation
of its traffic and in the exigencies of its business it may, as a
transportation expense, make no charge for such service;
but if it does this it must treat all alike at that depot and
must not show preference to some over others in rendering
the same service. * * * A depot warehouse is a con-
venience of which it may avail itself or not as it may deter-
mine the accommodation of its traffic requires at a particu-
lar station, or it may make personal delivery of freight to
every consignee of that station, or receive at his place of
business freight from every shipper at that station, provided
in doing so it treats all fairly and alike and makes no extor-
tionate charge for the service rendered. * * *
“It seems that for about three months the Michigan Cen-
tral Railroad Company and the Detroit, Lansing and North-
ern Railroad Company transported their freight to and
from Grand Rapids in the same manner that it is now com-
plained by the Michigan Central Railroad Company that it
is done by the defendant. But they abandoned this about
twelve months ago, for what cause is not shown; and then
petitioners were procured to make this complaint by the
Michigan Central Railroad Company. By this method of
business at Grand Rapids no injury or prejudice is shown
to have been done to the business of Ionia and no shipper
CARTAGE CASE. 51
or consignee at Ionia complains of it or demands that the
defendant shall do its business in this way at Ionia. This
complaint is in substance and in fact the complaint of the
Michigan Central Railroad Company, a rival and competi-
tor of the defendant for the business of Grand Rapids, and
the purpose of it is manifest; and this is stated in no spirit
of criticism or censure, but as a fact that is deemed of some
importance in the case, for it shows that it is not in fact
the complaint of a shipper but of a rival and competing
line, who alone is to be benefited by a decision against the
defendant.” < * *
“A delivery or receipt of freight such as is here made by
the defendant at Grand Rapids is made by railway carriers
at other exceptional stations in the State of Michigan, and
by railway carriers at exceptional stations in other States
of the Union. Its origin, as a rule, is found in the fact that
one carrier is unable to locate its depot otherwise than at a
long distance from the business portion of a city or town,
while other carriers have succeeded in establishing their
depots near to or in the business portion of such city, or
town. The carrier whose depot is thus located at the
greater distance resorts to this expensive method of trans-
porting its traffic and equalizing its terminal facilities, as
far as this may be done in this manner, with those of its
competitors in transporting freight to and from that town
or city, as the case may be. Ordinarily other carriers adopt
the same method of doing business at such city or town by
way of competition. * * *
“Actual and fair competition between carriers for trans-
portation traffic was one of the chief objects aimed at by
52 THE COURTS AND THE COMMISSION.
Congress in the enactment of the Act to regulate commerce.
This is apparent not only from the debates but from the
section against pooling—section 5 of the Act. This view
of the statute has been repeatedly recognized by the Inter-
state Commerce Commission in its annual reports and in its
decisions. Where rival carriers are engaged in active com-
petition for the business of a common point upon their
lines, and of necessity make their transportation rates
the same upon freight to and from that point, it is
wholly immaterial upon a question of the justice and
reasonableness of such rates, or whether they comply with
the law as to the long-and-short-haul clause, that it
costs one of them more than it does the other to trans-
port the freight, or to receive or deliver it, for in every
such instance that is more or less the case. In disposing
of such a case the Commission would enter into no such
question as that. The two cents per hundred pounds esti-
mated as being expended by the defendant under the cir-
cumstances and conditions shown by the evidence in trans-
porting freight to and from Grand Rapids is nothing more
nor less than an expenditure of that amount in the cost it
incurs in the transportation of its freight. Similar in-
stances may be found in most, if not all, of the States of
the American Union, in exceptional cases. The expense
incurred in such a case is met by the transportation rate
charged, and is covered by that rate. A blow that strikes
down the benefits of such competition to the business of
Grand Rapids, and to the business of the defendant, and
which will benefit alone its rival and competing lines at
Grand Rapids, without conferring any benefit whatever
CARTAGE CASE. 53
upon Ionia, and upon the grounds here claimed, is a result
that, in my humble opinion, is not sanctioned by the Act
to regulate commerce. The attempt to justify it on the
ground that it is the extirpation of either an old or a young
abuse is not warranted by the evidence in this proceeding
and the statute we are required to administer.”
The Circuit Court directed the enforcement of the Com-
mission's order although Judge Severens wrote a dissenting
opinion, and Judge Taft, in delivering the opinion of the
Court referred to the admission of counsel for the com-
plainants before the Commission that his clients—
“had no real grievance, but were instigated to their
prosecution by a competitor of the defendant, the Michigan
Central Railway, which is paying the expenses of the liti-
gation.”
Judge Severens said, among other things, of the argument
which would sustain the Commission's order:
“The argument appears to me to rest upon unsubstantial
grounds which have been swept away by the rulings of the
Commission itself upon constructions of the law which have
been acquiesced in as just and reasonable.”
In overruling the Circuit Court and refusing to enforce
the order of the Commission, the Circuit Court of Appeals
left no room for doubt as to its opinion concerning the ques-
tion here under consideration, which is whether the final
54 THE COURTS AND THE COMMISSION.
determination of the case was in the direction of substan-
tial justice. The concluding sentence of the opinion,
written by Judge Hammond, referring to the order of the
Commission reads as follows:
“In any view, therefore, either because this order was
not according to the right of the case, as we understand it,
or because it directed an improper mode of redressing the
abuse, if any existed, the decree must be reversed, and the
cause remanded to the Circuit Court, with directions to
dismiss the petition, with costs.”
Elsewhere in the opinion, which is long, exhaustive and
able, the Court said:
“We have come to the conclusion that, so looking at the
facts and circumstances of this case, none of the sections
of this Act have becn violated by the fact that the railroad
company collects and delivers at the premises of the con-
signors and consignees at Grand Rapids, and does not col-
lect and deliver at the premises of the consignors and con-
signees at Ionia. The two localities are widely separated
in distance, and so related to the general trade with which
this transportation traffic is concerned that they are not
at all competitors with each other in that trade. It is
found as a fact in this case that there is “but slight compe-
tition’ between them, and we take it, for practical purposes,
that there is none. This extra accessorial service which is
rendered at Grand Rapids could not well be an undue and
unreasonable advantage or preference of a rival in trade,
CARTAGE CASE. 55
when there is no competition in trade and such rivalry does
not in fact exist. * * *
“Our law affords abundant instances of its tender regard
of the established customs of the people. We think that
the consequences of the deprivation to the people of Grand
Rapids of this custom may be held to be one of the circum-
stances which may relieve a carrier from the statutory
obligation of equal facilities elsewhere, to say nothing of
injury to itself. There having been no such long-estab-
lished custom at Ionia, and their station having been loca-
ted much nearer to the business portion of the town than
at Grand Rapids, exhibits a dissimilarity of circumstances
between the two places. * * *
“Finally we have a circumstance not more important than
those to which we have adverted, but more striking in its
appearance of importance, and that is the competition of
rival carriers at Grand Rapids for the same traffic. It
needs nothing more than the mere suggestion of the facts
themselves to display the disadvantage there would be to
this company if it remained with its station houses in the
suburbs of Grand Rapids, without the privilege of collect-
ing and delivering by carts, while its rivals had station
houses located immediately in the business centre of the
city. It does not, then, become a matter of competition
and business rivalry, but substantially of the annihilation
of the business of this company at that point, or, more
intolerably, a denial to this company of the right to compete
with its rivals as now it may. Its only possible remedy
would be the building of its tracks into the city, at the cost
we have suggested. There is no such condition or circum-
stance as this at Ionia. * * *
56 THE COURTS AND THE COMMISSION.
“Now, then, the only effect of the fact of competition, in
such a state of things as that we have had at Grand Rapids,
is that this carrier loses the traffic entirely, not because it
cannot make, under the statute, a lesser rate to shippers on
its lines than at Ionia, the shorter haul, but because it can-
not afford them equal facilities of access. The statute can-
not be violated merely to get traffic from a rival by giving
lesser rates than to people more favorably situated; cannot
bleed Ionia to make up for the misfortunes of competition
at Grand Rapids, for Congress has prohibited such a prac-
tice, but it has not prohibited the carrier from resorting to
a cheaper method of securing access at Grand Rapids than
one more costly. It has not prohibited this company from
entering into competition with its rivals by some mode of
access to shippers at Grand Rapids, and why not this mode?
It has not been prohibited from extending its lines and
placing its station houses alongside of those of its rivals, and
why should it be prohibited from sending its carts there? It
has not, we think, and these prohibitions of the statute
should not be allowed to so operate by mere construction
Of Words. * * *
“The whole of these dissimilarities of condition and cir-
cumstance, as between Grand Rapids and Ionia, whether
of competition, or what not, may, in our view, be summed
up in the statement that this particular carrier cannot have
access to the traffic at Grand Rapids without this cartage
service that is complained of by Ionia, while at that station
it can have access to the relatively insignificant traffic there
given to the carrier without it.”
ORANGE RATES CASE. 57
The Supreme Court unanimously affirmed the conclu-
sions reached by the Circuit Court of Appeals, but the opin-
ion, by Judge Shiras, deals almost exclusively with questions
of a purely legal character. It is noted, however that the
practice of paying cartage at Grand Rapids had been
“openly and notoriously” followed for twenty-five years
and that in the case in hand there was no complaint “by
any resident at Grand Rapids.”
Orange Rates Case.*
“Building up indirectly and by implication a power which is
not in terms granted.”—Decision of the Supreme Court
in the “Freight Bureau ’’ cases.
This is the second of the cases, to be taken up in this
memorandum, which were finally determined upon the
interpretation of the law fixed by the Supreme Court in
declaring that Congress has not conferred rate-making
power upon the Commission. It was decided immediately
* The Railroad Commission of Florida vs. The Savannah, Florida and
Western Railway Company et al.; Interstate Commerce Commission (5.
I. C. C. Rep. 13, and application for re-hearing denied, 5 I. C. C. Rep.
136), decided October 29, 1891. Florida. Fruit Exchange vs. Same de-
fendants; Circuit Court, Northern District of Florida (4 Inter. Com. Rep.
400), decided December 1, 1892. Savannah, Florida and Western Rail-
way Company et al., Appellants, vs. Florida. Fruit Exchange; Circuit
Court of Appeals, Fifth Circuit (4 Inter. Com. Rep. 589), decided May
29, 1894. Savannah, Florida and Western Railway Company et al.,
Appellants, vs. Florida. Fruit Exchange; Supreme Court (167 U. S. 512),
decided May 24, 1897.
58 THE COURTS AND THE COMMISSION.
after the case of the Commission vs. The Cincinnati, New
Orleans and Texas Pacific (167 U. S. 479) popularly known
as the “Freight Bureau” case (see page 111), in which the
Supreme Court re-affirmed and explained the doctrine of the
“Social Circle” case (162 U. S. 184). Judge Swayne, in the
Circuit Court, and Judges Pardee and McCormick, in the
Circuit Court of Appeals, decided in favor of the Commis-
sion. In neither case, however, is there a reported opinion
and the Supreme Court merely entered a statement that the
decision was controlled by that in the “Freight Bureau.”
case. It is not possible, therefore, to draw from the expres–
sions of the courts any conclusions upon the question here
under consideration.
Import Rates Case.”
“The effort of the Commission, by a rigid general order, to de-
prive the inland consumers of the advantage of through
rates * * * seems to create the very mischief which
it was one of the objects of the Act to remedy.”—Decision
of the Supreme Court in this case.
* The New York Board of Trade and Transportation et al. vs. The
Pennsylvania Railroad Company et al.; Interstate Commerce Commis-
sion (4 I. C. C. Rep. 447), decided January 29, 1891. Interstate Com-
merce Commission vs. Texas Pacific Railway Company; Circuit Court,
Southern District of New York (52 Fed. Rep. 187), decided October 4,
1892. Interstate Commerce Commission vs. Texas and Pacific Railway
Company; Circuit Court of Appeals, Second Circuit (57 Fed. Rep. 948),
decided October 17, 1893. Texas and Pacific Railway Company, Ap-
pellant, vs. Interstate Commerce Commission; Supreme Court (162
U. S. 197), decided March 30, 1896. -
IMPORT RATES CASE. • * 59
The complaint in this case was that the defendants charged
lower rates from American ports to interior points of desti-
nation, on traffic originating in Europe, than were charged -
at the same time on similar traffic originating at the same
American ports and carried by the same routes to the same
destinations. The question, therefore, was whether the fact
of foreign origin constituted a dissimilar circumstance or
condition, in the contemplation of the Act to regulate com-
merce, and thus justified the difference in charges. The
Commission held, in substance, that while the law confers
authority over import traffic that authority does not extend
to the regulation of the rates charged from the foreign port
to the American port, but attaches solely to the inland car-
riage and that, as to the inland carriage, the law does not
recognize any dissimilarity of conditions growing out of the
foreign origin of the traffic. In other words both imported
and domestic traffic, regardless of whether the former is
or is not carried on a through bill-of-lading from the foreign
port of origin to the American interior point of destination,
must be carried from American ports to inland points at
equal rates. As it appeared from the record that several
of the carriers who were parties defendant before the Com-
mission, had ceased, prior to the Commission's decision, to
charge less for import traffic, the case was dismissed as to all
such carriers and the final order was directed against only
The Texas & Pacific, Southern Pacific, Northern Pacific,
60 THE COURTS AND THE COMMISSION.
Lehigh Valley, Canadian Pacific, and a few other railways.
Subsequently proceedings were begun by the Interstate
Commerce Commission to enforce its order against the Texas
and Pacific Railway. A decree requiring obedience to the
Commission's order was issued by the Circuit Court and
affirmed, on appeal, by the Circuit Court of Appeals, al-
though the latter apparently doubted the validity of the
Commission's conclusion that—
“foreign and home merchandise, under the operation of
the statute, when handled and transported by interstate
carriers, engaged in carriage in the United States, stand
exactly upon the same basis of equality as to tolls, rates,
charges, and treatment for similar services rendered.”
Upon this point Judge Shipman, in rendering the opinion
of the Circuit Court of Appeals, said:
|
“This rule, having been founded upon a construction of
the statute, is a very broad one. It is applicable to all the
foreign circumstances and conditions which affect rates,
and the question whether it must be universally applied
without regard to any circumstances which may exist in a
foreign country, and whether dissimilarities which have a.
foreign origin are to be excluded from consideration under
the operation of the statue, is an exceedingly important
one, whose ultimate decision may have a wider influence
upon the interstate commerce of the country than we can
foresee. This legal question was not discussed in the ex-
port rate case, which was treated “as one of practical policy.’
IMPORT RATES CASE. 61
We are not disposed to pass authoritatively upon this ques-
tion, except in a case which demands it, and in which the
effect of this construction of the statute is naturally the sub-
ject of discussion. This petition presents a question of
narrow limits, which relates only to the validity of the order
so far forth as it concerns the conduct of the defendant in
its joint rates for transportation of imported traffic from
New Orleans to San Francisco, and is whether these rates
subject domestic traffic between the same points to an
undue disadvantage.”
The Supreme Court reversed the action of the lower Federal
courts and remanded the case to the Circuit Court with
directions to dismiss the Commission's petition. The opin-
ion of the Supreme Court was prepared by Judge Shiras.
The conclusions of the Commission are criticised on the
ground that:
“The Commission justified its action wholly upon the
construction put by it on the Act to regulate commerce, as
forbidding the Commission to consider the ‘circumstances
and conditions’ attendant upon the foreign traffic as such
“circumstances and conditions’ as they are directed in the
Act to consider. The Commission thought it was con-
strained by the Act to regard foreign and domestic traffic
as like kinds of traffic under substantially similar circum-
stances and conditions, and that the action of the defendant
company in procuring through traffic that would, except
for the through rates, not reach the port of New Orleans,
and in taking its pro rata share of such rates, was an act of
“unjust discrimination,’ within the meaning of the Act.”
62 THE COURTS AND THE COMMISSION.
Continuing, the Court said that in construing the Act as
indicated by the foregoing the Commission erred and, in
another place, it said that “it would be difficult to use lan-
guage more unmistakably signifying” the precise opposite
of the construction followed by the Commission. In one
paragraph the court characterized the order of the Com-
mission as an effort to deprive inland consumers of the
advantage of through rates, saying:
“The effort of the Commission, by a rigid general order,
to deprive the inland consumers of the advantage of
through rates, and to thus give an advantage to the traders
and manufacturers of the large seaboard cities, seeins to
create the very mischief which it was one of the objects of
the Act to remedy.”
The broad vicw of the Supreme Court, throughout this
decision, is ill sliiking UUIIlrast, to the narrow and rigid inter-
pretation of the law adopted by the Commission. Witness
the following from the Court:
“As we have already said, it could not be supposed that
Congress, in regulating commerce, would intend to forbid
or destroy an existing branch of commerce, of value to the
common carriers and to the consumers within the United
States. Clearly, express language must be used in the Act
to justify such a supposition.
“So far from finding such language, we read the Act in
question to direct the Commission, when asked to find a
IMPORT | RATES CASE. 63
common carrier guilty of a disregard of the Act, to take
into consideration all the facts of the given case—among
which are to be considered the welfare and advantage of
the common carrier, and of the great body of the citizens of
the United States who constitute the consumers and recipi-
ents of the merchandise carried; and that the attention of
the Commission is not to be confined to the advantage of
shippers and merchants who deal at or near the ports of the
United States, in articles of domestic production. Un-
doubtedly the latter are likewise entitled to be considered;
but we cannot concede that the Commission is shut up by
the terms of this Act to solely regard the complaints of one
class of the community. We think that Congress has here
pointed out that, in considering questions of this sort, the
Commission is not only to consider the wishes and interests
of the shippers and merchants of large cities, but to consider
also the desire and advantage of the carriers in securing
special forms of traffic, and the interest of the public that
the carriers should secure that traffic, rather than abandon
it, or not attempt to secure it. It is self-evident that many
cases may and do arise where, although the object of the
carriers is to secure the traffic for their own purposes and
upon their own lines, yet, nevertheless, the very fact that
they seek, by the charges they make, to secure it, operates
in the interests of the public.”
The absence of any complaint from the citizens of New
Orleans, the point at which the Texas and Pacific Railway,
the only defendant named in the proceedings in the courts,
received the traffic in question, was noted by the Supreme
64 - THE COURTS AND THE COMMISSION.
Court, as well as the equally significant absence of such com-
plaint from the communities to which the traffic was des-
tined. On this point the Court said:
“As we have already stated, the Commission did not
charge or find that the local rates charged by the defendant
company were unreasonable, nor did they find that any
complaint was made by the city of New Orleans, or by any
person or organization there doing business. Much less
did they find that any complaint was made by the localities
to which this traffic was carried, or that any cause for such
complaint existed.” - -
In other words, this case, like many of those herein dis-
cussed, originated solely in the desire of one or more of
several competitors to utilize the Interstate Commerce law
and the Commission as a means of crippling a rival or rivals.
Again, inuicating its Urvad view of questions arising under
the Interstate Commerce law, the Supreme Court said:
“The conclusions that we draw from the history and lan-
guage of the Act, and from the decisions of our own and the
English courts, are mainly these: That the purpose of the
Act is to promote and facilitate commerce by the adoption
of regulations to make charges for transportation just and
reasonable, and to forbid undue and unreasonable prefer-
ences or discriminations. That, in passing upon questions
arising under the Act, the tribunal appointed to enforce its
provisions, whether the Commission or the courts, is em-
IMPORT RATES CASE. 65
powered to fully consider all the circumstances and con-
ditions that reasonably apply to the situation and that, in
the exercise of its jurisdiction, the tribunal may and should
consider the legitimate interests as well of the carrying com-
panies as of the traders and shippers, and in considering
whether any particular locality is subjected to an undue
preference or disadvantage, the welfare of the communities
occupying the localities where the goods are delivered is to
be considered as well as that of the communities which are
in the locality of the place of shipment. That among the
circumstances and conditions to be considered as well in
the case of traffic originating in foreign ports as in the
case of traffic originating within the limits of the United
States, competition that affects rates should be considered,
and in deciding whether rates and charges made at a low
rate to secure foreign freights which would otherwise go by
other competitive routes are or are not undue and unjust,
the fair interests of the carrier companies and the welfare
of the community which is to receive and consume the
commodities are to be considered. That if the Commis-
sion, instead of confining its action to redressing, on com-
plaint made by some particular person, firm, corporation,
or locality, some specific disregard by common carriers of
provisions of the Act, proposes to promulgate general
orders, which thereby become rules of action to the carry-
ing companies, the spirit and letter of the Act require that
such orders should have in view the purpose of promoting
and facilitating commerce, and the welfare of all to be
affected, as well the carriers as the traders and consumers
of the country.”
66 THE COURTS AND THE COMMISSION.
The opinion refers to the passage, already quoted, from
the decision of the Circuit Court of Appeals, and, speaking
of it as an intimation of “dissent from,” or at least of “dis-
trust of ’’ the view of the Commission, declares that:
“If the Circuit Court of Appeals were of opinion that the
Commission in making its order had misconceived the
extent of its powers, and if the Circuit Court had erred in
affirming the validity of an order made under such miscon-
ception, the duty of the Circuit Court of Appeals was to
reverse the decree, set aside the order, and remand the
cause to the Commission in order that it might, if it saw
fit, proceed therein according to law.”
Finally the Supreme Court said:
“The mere fact that the disparity between the through and
the local rates was considerable did not, of itself, warrant
the court in finding that such disparity constituted an undue
discrimination—much less did it justify the court in finding
that the entire difference between the two rates was undue
or unreasonable, especially as there was no person, firm, or
corporation complaining that he or they had been aggrieved
by such disparity.”
DELAWARE GRANGE CASE. *} {
Delaware Grange Case.*
“It could not be supposed that Congress, in regulating com-
merce, would intend to forbid or destroy an existing branch
of commerce.”—Decision of the Supreme Court in the
“Import Rates” case.
The complaint in this case related to the charges for
carrying the perishable products of the truck farms and
market gardens located on the peninsula occupied by the
State of Delaware and a portion of the State of Maryland.
It was charged that these rates were unreasonable in them-
selves and also in violation of the long and short haul sec-
tion of the law, as they were higher than those over the same
route from Norfolk and vicinity. With regard to some of
the rates complained of the Commission decided in favor
of the complainants. Suit to enforce its order was begun
and decided adversely to the Commission. The case does
not appear to have been reported and the facts have been
obtained for this memorandum from the following para-
graph, which is to be found on page 29 of the Seventh An-
nual (1893) Report of the Commission:
“The case pending against the New York, Philadelphia
and Norfolk Railroad Company and the Pennsylvania Rail-
* The Delaware State Grange of the Patrons of Husbandry vs. The
New York, Philadelphia and Norfolk Railroad Company et al.; Inter-
state Commerce Commission (4 I. C. C. Rep. 588), decided April 13, 1891.
68 THE COURTS AND THE COMMISSION.
road Company and subsidiary roads was heard during the
past year and decided adversely to the Commission. The
case originated upon the complaint of the Delaware State
Grange, and proceeded upon the theory that the rates on
farm produce from the Maryland and Virginia peninsula to
Philadelphia and New York were unreasonable in them-
selves, and particularly as compared with the rates on the
same articles from Norfolk. The decision of the Commis-
sion recognized the very serious influence exerted by the
near presence of active water competition, and only required
the adjustment of rates as to some particulars where the
rates seemed to be upon an illogical basis. Parties in inter-
est, desiring to review the subject, employed a counsel and
the Commission consented to the bringing of the suit to
enforce the decision, which resulted as stated, and no
appeal has been taken.”
Naghvillc Coal Cago.”
“The order is without precedent or analogy in court judgments
or decrees.”—Decision of the Circuit Court in this case.
The Commission's order in this case was, in substance,
that while the rate on coal from the mines on the Henderson
and Owensboro divisions of the Louisville and Nashville
* In the matter of alleged unlawful charges for the Transportation of
Coal by the Louisville and Nashville Railroad Company; Interstate
Commerce Commission (5 I. C. C. Rep. 466), decided November 17, 1892;
Interstate Commerce Commission vs. Louisville and Nashville Railroad
Company; Circuit Court, Middle District of Tennessee (73 Feb. Rep.
409), decided April 17, 1896. -
NASHVILLE COAL CASE. 69
Railroad to Memphis was $140 per ton, the rate from the
same points to Nashville on “run of mines, nut and slack”
coal should not exceed $1.00 and that on “screened” coal
should not exceed $1.15 per ton, and that any reduction in
the rate to Memphis should be accompanied by a propor-
tionate reduction in that to Nashville. The opinion of the
Commission says:
“At present there is a uniform rate from the western Ken-
tucky mines to Nashville of $1.00 per ton to all persons, on
the kinds of coal known as ‘run of mines, nut and slack,”
and this rate does not vary with the season. On ‘screened
coal’ the rate is $1.15 per ton during the period from April
1st to September 1st, while for the remainder of the year, .
viz: from September 1st to April 1st, it has been fixed at
$1.40 per ton. * * *
“The amount of the difference made at different sea-
sons of the year, cannot, however, be justified either by the
evidence in this case or by the custom of the roads < * *
there seems no good reason why the practice should longer
exist.”
It is obvious from the foregoing, that the effect of the
Commission's order would be the enforcement of the rule,
suggested in the last paragraph of the quotation, that rates
should not vary with the season. The Commission ap-
pealed to the Circuit Court for a decree enforcing its order,
and its petition was denied. The decision of the Court
characterizes the order of the Commission as “without
70 THE COURTS AND THE COMMISSION.
precedent or analogy in court judgments or decrees,” and
summarizes the reasons impelling a refusal to grant the
desired decree as follows:
“There is in the case, in my opinion, no discrimination
under section 2, and no undue advantage under section 3,
to the Memphis trader as against the Nashville trader; and
the proposition that the railroad was without power fo
make a difference in the summer and winter rates was, I
think, erroneous; and whether or not, the Nashville rate,
considered upon its own merits, is unjust and unreasonably
high, was not inquired about nor decided by the Com-
mission.”
Concerning the suggestion that the railway ought not to
be permitted to continue the practice of making lower rates
to Nashville in summer than in winter the Court said:
“The Commission based its ruling in part upon the
ground that the defendant railway company was without
right to make any difference between what may be called
the summer and winter rates, and the Commission required
the company to reduce its winter rate so as to conform to
the summer rate, and make that uniform the year round,
and this brings up the question whether its opinion on that
point was sound. Neither the Commission in its report,
nor its able counsel in the argument, have referred the
Court to any particular provision of the Interstate Com-
merce act with the terms or just implication of which this
mode of doing business is in conflict. The Commission, in
NASHVILLE COAL CASE. 71
its report, assigns no reason why such mode of business is
not lawful, except the statement that it is not customary.
Indeed, counsel for the Commission took occasion to say
expressly that he regarded this mode of adjusting its rates
by the defendant so as to furnish a lower rate during the
summer, or dull season, than was furnished during the win-
ter, or active season, as a sound, perfectly just, and proper
business method in and of itself, and apparently conceding
that it might be well if the act of Congress allowed the busi-
ness to be transacted in this way. It is difficult to under-
stand how the question of whether such a difference in
rates had been customary or not was controlling in the
decision of that point. It has not been suggested that
there is any particular common-law principle which pro-
hibited what was thus done, and it is certain that methods
of business have been followed for almost time out of mind
closely analogous to this. It is customary in manufactur-
ing and other industrial establishments to lower the price
of goods in order to keep business going during the summer,
or dull season of the year. And so, too, it is a matter of
common knowledge that coal in any market may be bought
during the summer or heated season of the year at rates
lower than it can be obtained during the winter, when the
consumption is large, and the demand for this commodity
active. It is well known, as the proof in this case abun-
dantly shows, that it is very difficult for mining and manu-
facturing establishments to find market during the summer
months for the product or output of such establishments.
This is due to the fact that there is comparatively little
demand for their products during those months. It has
72 THE COURTS AND THE COMMISSION.
come to be well known, therefore, as the ‘surplus output.”
of product, and the question of a market for such surplus
output during the dull season of the year is everywhere
recognized as a difficult one, and concessions are made in
prices and rates in order that this surplus output may be
handled. This is necessary to enable those owning and
operating such establishments to furnish employment to the
common laborers of the country, whose subsistence depends
upon continuous employment. It enables those operating
such concerns to keep their working forces together, in order
that a sufficient output may be furnished during the active
season of the year to meet the increased demands of the
trade. It is apparent, therefore, that no sound public
policy is affected by such mode of doing business, and coun-
sel admits that it is in itself reasonable, just, and humane
to those who need consideration most. It would be sur-
prising, therefore, if it could be found that a mere business
method, wholly without objection within itself, is repug-
nant to the spirit and purpose of the Interstate Commerce
act. The injurious effect of a suspension of business dur-
ing a dull season with idle machinery, and with those
dependent on wages thrown out of employment, is cer-
tainly entitled to some consideration in following out the
possible results of such a rule as the Commission here an-
nounces. And if those who own and operate mining estab-
lishments may properly attempt to keep the same going
during the summer season, it would be singular if the rail-
road company may not also have the right of keeping such
appliances and cars as it devotes to the coal traffic from
becoming idle, and also avoid throwing the crews of men
NASHVILLE COAL CASE. 73
who operate such cars out of employment, by joining with
the coal miners in a reduction of rates in order to find a
market for the surplus output. The Interstate Commerce
act is not to be construed so as to abridge or take away the
common-law right of the carrier to make contracts and
adopt proper business methods further than its terms and
recognized purposes require. * * *
“I am, therefore, without further discussion, clearly of
opinion that the defendant railroad company had the right
to make a difference in its summer and winter rates on the
coal traffic. It is to be observed that I am not now called
upon to pronounce any opinion as to whether either the
summer or winter rate is in and of itself just and reasonable,
being restricted, as before stated, to an approval or disap-
proval of the action of the Commission.”
On the question of fact involved in this case, which was
whether the rates in question had been shown to discriminate
unjustly against Nashville, the court disagreed with the
Commission.
The former said:
“Taking the case as it was, and the rates as put in effect
at the time the Commission decided the case, Memphis was
left with an even or flat rate of $1.40 per ton on all classes
of coal the year round; and Nashville with a rate of $1.00
per ton on the cheaper class of coal, uniform for all seasons
of the year, and with a rate of $1.15 on ‘screened’ coal dur-
ing the summer, and $1.40 during the winter. This was a
difference of 40 cents per ton on the lower grade of coal
74 THE COURTS AND THE COMMISSION.
(which was more largely consumed) in favor of Nashville
the year round, and a difference of 25 cents per ton on
‘screened or grate’ coal during the summer, with the same
rate as Memphis on that class of coal during the winter.
The average for the year on either class was much in favor
of Nashville. It would hardly be contended that this abso-
lute advantage in rates to Nashville as against Memphis
would work such discrimination as to injuriously affect
Nashville in commerce, Industrial pursuits, or growth, and
there is no proof in the record indicating any such condition
of things as this. Under such rates every consumer and
every trader at Memphis would pay a higher price for coal of
the same quality than would be paid by the trader or con-
sumer at Nashville. Just how this could injuriously aſſect
Nashville has not been suggested, and it is certain, I think,
that no process of reasoning could show how an injurious
result to Nashville is brought about, unless upon the basis
of a relative rate which consumers and traders at each place
should have, taking into account the relative distance of the
two cities from the Earlington mines, and by putting the
rates between the two places on a mileage basis only. * * *
“In the absence of a more definite finding and statement
of conclusions by the Commission, it must be assumed, as I
think the result shows, that the Commission contrasted the
distance at which the two cities are situated from the mines,
and also contrasted the difference in rates, and concluded
that the Nashville rate was relatively too high, and that this
mode of adjusting the rates gave an undue preference, and
was a violation of section 3 of the act; and that the Com-
mission rested its decision in part, though not entirely, upon
this proposition.”
NASHVILLE COAL CASE. 75
The decision in this case sharply criticises the Commission
for failure to present the case to the court in a proper and
intelligible form, saying:
“The Commission is authorized to provide for the publi-
cation of its reports and decisions, and for the distribution
thereof. Other sections of the act, not necessary to be set
out herein, make it evident, in my opinion, that while the
investigation and report of the Commission and its order
thereon, as stated, do not constitute a judicial proceeding,
still it was the intention of Congress that the procedure
should substantially conform to that before a court, charged
with the duty of finding the facts, and giving judgment
thereon, or to the investigation and report of a referee or
special master in chancery, passing on both facts and law.
Congress having provided for such investigation and report
in general terms only, it is not to be doubted that substan-
tial conformity to a judicial proceeding was contemplated.
And the importance of the Commission’s action, taking
substantially the form of a judicial proceeding, is apparent
when it is recognized that the Commission is composed of
men of ability and experience, selected for this position with
reference to their particular qualifications therefor, and
whose entire time is devoted to questions arising under this
Act. This gives to the Commission's finding and opinion
great weight, and entitles it to great consideration, both by
the parties affected and by the courts, when called upon to
enforce obedience to its mandates. For the Commission's
investigation and opinion to have this intended value, how-
ever, it should, in fact, conform to the purpose of Congress
76 THE COURTS AND THE COMMISSION.
in requiring such proceedings. It is not sufficient, there-
fore, in a report of its findings of fact and conclusions, to do
so in such general way as not to disclose its views upon par-
ticular phases of the evidence, or its conclusions of law upon
facts found with reference to the particular issues in the
case. Stated in another form, it is not sufficient for the
report to be made up of mere conclusions. Its opinion or
report should show what the issues in the case are, and what
ſacts it ſinds in regard to such issues. The report should
make suitable reference to the evidence adduced in regard
to any particular question, where there is a conflict in the
proof, showing how the Commission settles the disputed
fact; or, if the evidence in regard to any issue is undisputed,
state that fact. In other words, the report should give the
parties to be affected, as well as the court, in any judicial
proceeding afterwards instituted, definite and distinct in-
formation as to what was found as facts, and the Commis-
sion's opinion thereon, such as would be necessary to make
a judicial Upilliull Suſſieieill, allu Satisfactory for the purpose
of ordinary litigation. Now, the report of the Commission
in this case does nothing of this kind. It was not intended
to cast upon the courts the labor of an original and indepen-
dent examination, as in a case instituted here in the first
instance. If so, action by the Commission would be idle.
The report should on all issues make a distinct showing, so
that on its face it would be prima facie good as required
under the Act. The main issue made in the answer to the
original complaint, as well as now in the answer to the suit
in this court, is and was that the difference in the rates from
the Earlington mines to Nashville and those from the same
NASHVILLE COAL CASE. 77
point to Memphis was rendered necessary and was justified
by competitive freight rates at that point, and particularly
in regard to the rates on coal, by competition in coal coming
from the Pittsburg mines by means of river transportation
to Memphis. The report of the Commission, notwithstand-
ing this was the main issue, makes but a passing allusion to
the fact of competition at Memphis. The report shows
nothing as to the cost of coal at the Pittsburg mines, the
rate per ton at which it was transported to Memphis, or the
price at which such coal was sold; and the Commission
does not consider nor decide to what extent, if at all, this
competition affects the rates which the Louisville & Nash-
ville Railroad Company can make on coal shipped from the
Earlington mines to Memphis, so that the rate, together
with the price, will enable that coal to be handled on the
Memphis market. If the facts in relation to this question
of competition were at all important, in this case, it is cer-
tain that the Commission did not so consider it, as that
entire subject was summarily dismissed without any finding
of facts or the expression of any opinion in regard thereto.
Indeed, much of the argument at the bar on both sides has
been directed to the question of what the Commission did or
did not find or decide in this case. It is contended, for exam-
ple, by the learned counsel for the Commission, that it did
investigate, and did decide that the rate from Earlington
to Nashville was in and of itself unreasonable and unjustly
high without regard to the Memphis rate at all; while coun-
sel for the defendant earnestly insists (and successfully, I
think) that the Commission decided no such question. It is
to be regretted, of course, that a report so important as this,
78 THE COURTS AND THE COMMISSION.
both in its effect on the parties and as a basis of suit in this
court, should become the subject of construction in order to
ascertain what was really decided.”
Chattanooga Case.*
“The record makes it clear that in allowing this order the Com-
mission thought thul its literul enſurcement would briny
about an injustice.”—Decision of the Supreme Court in
this case.
This is the first, to be discussed in this memorandum, of a
series of cases of which it must be said that, if it is conceded
that the facts put in controversy by the complaint estab-
lish a genuine case of injustice, the erroneous conclusions of
law adopted by the Commission stood in the way of ado-
quate relief to the complainant. In this particular case
the order of the Commission was based upon an interpreta-
tion of law which went so far as to preclude any real inves-
tigation of the facts by the Commission. The Circuit
Court rejected utterly the interpretation of the law adopted
* The Board of Trade of Chattanooga vs. The East Tennessee, Vir-
ginia & Georgia Railway Company et al.; Interstate Commerce Commis-
sion (5 I. C. C. Rep. 546), decided December 30, 1892. Interstate Com-
merce Commission vs. East Tennessee, Virginia & Georgia Railway
Company et al.; Circuit Court, Eastern District of Tennessee (85 Fed.
Rep. 107), decided February 2, 1898. East Tennessee, Virginia &
Georgia Railway Company et al., Appellants, vs. Interstate Commerce
Commission; Supreme Court (181 U. S. 1), decided April 8, 1901.
CHATTANOOGA CASE. 79
by the Commission, but conducted an inquiry of its own
concerning the facts, and upon the basis thus formed issued
a decree enforcing the Commission's order. In this course
it had the approval of the Circuit Court of Appeals which
affirmed the decree. The Supreme Court, however, found
insuperable obstacles to enforcing the order of the Com-
mission upon findings of fact made by the lower Federal
courts when those findings appeared to the Court of last
resort, as they did in this instance, to be “irreconcilable
with what was found by the Commission.”
The complaint in this case related to through rates
from Boston, New York, Philadelphia, and Baltimore to
Chattanooga. It was alleged that these rates were unrea-
sonable and unjust in themselves, and that, as compared
with rates from the same points to Nashville and Memphis,
they subjected the residents of Chattanooga to unjust
prejudice and disadvantage. Further, as the rates to Nash-
ville and Memphis were lower than to Chattanooga and the
latter is an intermediate point on some of the routes to the
two former cities it was alleged that the long and short haul
clause was violated. The case was decided by the Com-
mission wholly upon the latter ground and upon the narrow
and unsubstantial basis of its ruling in the Georgia Commis-
sion cases (5 I. C. C. Rep. 324), which was as follows:
“The carrier has the right to judge in the first instance
whether it is justified in making the greater charge for the
80 THE COURTS AND THE COMMISSION.
shorter distance under the Fourth section in all cases where
the circumstances and conditions arise wholly upon its own
line or through competition for the same traffic with car-
riers not subject to regulation under the Act to regulate
commerce. In other cases under the Fourth section, the
circumstances and conditions are not presumptively dis-
similar, and carriers must not charge less for the longer dis-
tance, except upon the order of this Commission.”
The Commission, therefore, issued its order commanding
the defendants “to cease and desist from making, enforcing
or receiving any higher rates” to Chattanooga than to Nash-
ville. It was deemed:
“unnecessary to make any comment upon the rates in
force at Memphis, or give any directions in respect thereto,
because * * * the fundamental question in this case
arises between Chattanooga and Nashville and an equitable
adjustment of ratcs between those towns may obviate any
separate consideration of the Memphis tariff.”
Concerning the Commission's order in this case the Su-
preme Court said:
“The record makes it clear that in allowing this order
the Commission thought that its literal enforcement would
bring about an injustice, and, therefore, that the order was
entered solely because it was deemed that the technical
requirements of the statute must be complied with.”
There is ample justification for this conclusion of the
CHATTANOOGA CASE. 81
Supreme Court in the report and opinion of the Commission.
Indeed it is beyond question that the Commission fully
understood that the acceptance of its order as a legal Order
by the defendants or its sanction by the final decree of the
Courts would result in an appeal to the Commission by the
defendant carrier for relief from the general rule of the
long and short haul clause and that when such a petition
was received and considered it expected to find reasons for
authorizing lower rates to Nashville than to Chattanooga,
the intermediate point. Thus, after reviewing the facts
and in commencing the statement of its conclusions the
Commission said:
“The situation which we have thus attempted to describe
is one of peculiar difficulty. It is easy to perceive the dis-
advantages which gave rise to this complaint, but the
remedy that can be applied, with due regard to the rights
of the carriers affected, is not readily discovered. The
prejudice to which Chattanooga is subjected by reason of
the lower rates of transportation to Nashville and Memphis
is obvious and conceded, but how to avoid that result with-
out unjust consequences to the defendants is an extremely
obstinate problem.”
The opinion of the Commission in this case, from which
the foregoing is quoted, was prepared by Mr. Chairman
Knapp, a master of English and one accustomed carefully
to weigh the nicest distinctions in the meaning of words.
82 THE COURTS AND THE COMMISSION.
It should not escape attention, therefore, that he speaks of
“prejudice” and not, in the terms of the law, of “undue or
unreasonable prejudice” as resulting to Chattanooga from
the adjustment of rates then in controversy. Stronger
evidence that the Commission knew that injustice would
result from the literal enforcement of its order is found in
the following extract from its opinion:
* * * this disposition of the case is not intended
to preclude the defendants from applying to the Commis-
sion for relief from the restrictions imposed by the Fourth
section of the Act, on the ground that the situation in
which they are placed with reference to this Nashville
traffic constitutes one of the ‘special cases’ to which the
proviso clause of that section should be applied.”
& 4
Again, in concluding its report and opinion, the Commis-
sion said:
“To enable the defendants to apply for relief under the
proviso clause of the Fourth section of the Act to regulate
commerce, this order will be suspended until the first day
of February, 1893; * * * In case such relief shall be
applied for within the time mentioned, the question of fur-
ther suspending this order until the hearing and determina-
tion of such application will be duly considered.”
The enforcement of the Commission's order would not,
directly at least, have brought about any modification of
CHATTANOOGA CASE. S3
the rates in force either to Chattanooga or to Nashville.
The defendant carriers could not have afforded to reduce
their Chattanooga rates to the level of the Nashville rates;
they could not control the latter. All that would have
happened would have been the withdrawal of the routes
via Chattanooga from competition for Nashville business.
As it is to be supposed that the Nashville business, although
not paying a share proportionate to its volume of the main-
tenance expenses and fixed charges of the routes through
Chattanooga, contributed something to one or both of these
necessary items in the total cost of transportation it is
probable that the withdrawal of these routes from the com-
petition for Nashville traffic might indirectly have caused
an advance in some other charges, possibly those at Chatta-
nooga. The Commission thoroughly understood that the
Chattanooga lines were not able to control the Nashville
rates, for it said in its opinion:
“* * * the present Nashville rate is prescribed by the
rail lines, reaching that point via Cincinnati, and that the
defendant lines through Chattanooga have no voice or influ-
ence in determining its amount. These lines are under
compulsion, therefore, to meet the rates which other car-
Tiers have established, or leave those carriers in undisturbed
possession of the entire traffic. They have no alternative
but to accept the measure of compensation dictated by
independent rivals, or abandon the large percentage of Nash-
ville business which they now secure.”
84 THE COURTS AND THE COMMISSION.
Again, clearly showing its appreciation of the injustice
which might result from the enforcement of the terms of its
order, the Commission declared that “the allowance of the
same rate” to Chattanooga as to Nashville “might reduce
their revenues,” meaning those of the railways then engaged
in carrying traffic through Chattanooga to Nashville, “be-
low the limits of fair compensation.”
If the enforcement of an order would be unjust, as the
Supreme Court said in this case it would be, it seems to
follow that refusal to enforce it is in the direction of sub-
stantial justice. A quotation from the decision of the
Supreme Court is pertinent. That Court said:
“* * * the lesser charge upon which both the assump-
tion of preference and discrimination is predicated is sanc-
tioned by the statute, which causes the competition to give
rise to the right to make such lesser charge. Tndeed, the
findings of fact made by the Commission in this case leave
no room for the contention that either undue preference in
favor of Nashville or unjust discrimination against Chatta-
nooga arose merely from the act of the carriers in meeting
the competition existing at Nashville. The Commission
found that if the defendant carriers had not adjusted their
rates to meet the competitive condition at Nashville, the
only consequence would have been to deflect the traffic at
the reduced rates over other lines. From this it follows
that, even although the defendant carriers had not taken
the dissimilarity of circumstances and conditions into view,
CHATTANOOGA CASE. 85
and had continued their rates to Nashville just as if there
had been no dissimilarity of circumstance and condition,
the preference in favor of Nashville growing out of the con-
ditions there existing would have remained in force, and
hence the discrimination which thereby arose against Chat-
tanooga would have likewise continued to exist. In other
words, both Nashville and Chattanooga would have been
exactly in the same position if the long and short haul clause
had not been brought into play.”
Thus, although the Supreme Court, like the Commission,
decided this question upon purely legal grounds it appears
that the respective judgments differed in this, viz: that the
Supreme Court believed that its decree would prevent in-
justice while the Commission knew that, unless prevented
by further proceedings, the enforcement of its order would
produce injustice.
Discussing the legal question, which was of controlling
force, the Supreme Court thrust aside the Commission's con-
clusions of law, in the following language:
“Taking into view the terms of the order and thereasons
given by the Commission for considering only one aspect of
the controversy and excluding all others, it is obvious that
that body construed the Act to regulate commerce as mean-
ing that, however controlling competition might be on rates
to any given place, if it arose from the action of one or more
carriers who were subject to the law to regulate commerce,
the dissimilarity of circumstance and condition provided in
86 THE COURTS AND THE COMMISSION.
the fourth section could not be produced by such competi-
tion unless the previous assent of the Commission was given
to the taking by the carrier of such competition into view
in fixing rates to the competitive point. This in effect was
to say that the dissimilarity of circumstance and condition
prescribed in the law was not the criterion by which to de-
termine the right of a carrier to charge a lesser rate for the
longer than for the shorter distance, unless the assent of the
Commission was asked and given. This in substance but de
cided that the dissimilarity of circumstances and conditions
prescribed in the law was not the rule by which to determine
the right of a carrier to charge a lesser rate for the longer
than for the shorter distance, but that such right solely
sprang from the assent of the Commission. In other words,
that the dissimilarity of circumstances and conditions be-
came a factor only in consequence of an act of grace or of a dis-
cretion flowing from or exercised by the Commission. This
logical result of the construction of the statute adopted by
the Commission was well illustraleu by the facts found by it
and to which the theory announced was in this case applied.
Thus, although the Commission found as a fact that the com-
petition at Nashville was of such a preponderating nature
that the carriers must either continue to charge a lesser rate
for a longer haul to Nashville than was asked for the shorter
haul to Chattanooga, or abandon all Nashville traffic, never-
theless they were forbidden to make the lesser charge for the
longer haul. In other words, they were ordered to desist
from all Nashville traffic unless they applied to the Commis-
sion for the privilege of continuing such traffic by obtaining
its assent to meet the dominant rate prevailing at Nash-
GEORGIA COMMISSION CASES. 87
ville. But since the ruling of the Commission was made in
this case, it has been settled by this court that competition
which is controlling on traffic and rates produces in and of
itself the dissimilarity of circumstance and condition de-
scribed in the statute, and that where this condition exists a
carrier has a right of his own motion to take it into view in
fixing rates to the competitive point. That is to say, that
the dissimilarity of circumstance and condition pointed out
by the statute, which relieves from the long and short haul
clause arises from the command of the statute, and not from
the assent of the Commission; the law, and not the discre-
tion of the Commission, determining the rights of the parties.
It follows that the construction affixed by the Commission
to the statute upon which its entire action was predicated
was wrong.” - -
Georgia Commission Cases.*
“The rates in controversy were in and of themselves just and
reasonable, and did not give rise either to undue prefer-
ence or to unjust discrimination.”—Decision of the Su-
preme Court in these cases.
* L. N. Trammel, Allen Fort, and Virgil Powers, constituting and
composing the Railroad Commission of Georgia, vs. The Clyde Steam-
ship Company et al.; Interstate Commerce Commission (5 I. C. C. Rep.
324), decided November 11, 1892. Interstate Commerce Commission
vs. Western & Atlantic Railroad Company et al.; Circuit Court, North-
ern District of Georgia (88 Fed. Rep. 186), decided June 15, 1898. In-
terstate Commerce Commission vs. Western & Atlantic Railroad Com-
pany et al.; Circuit Court of Appeals, Fifth Circiuit (93 Fed. Rep. 83).
Interstate Commerce Commission vs. Western & Atlantic Railroad Com-
pany et al.; Supreme Court (181 U. S. 29), decided April 8, 1901.
88 THE COURTS AND THE COMMISSION.
Seven complaints filed with the Interstate Commerce
Commission at substantially the same time by the Railroad
Commission of Georgia, included that entitled as above, and
were heard and decided together. All the complaints al-
leged that certain rates established and maintained by the
defendant carriers were “unreasonable, discriminating and
in direct violation of Section Four of the Act to regulate
commerce.” The decision of the Commission states that:
“The main question presented by the pleadings is whether
charges which are greater for shorter than for longer dis-
tances in the same direction over the defendant lines are un-
lawful under the statute.”
This decision is notable as that in which the Commission
reversed the opinion concerning the effect of competition of
carriers subject to the law in relieving from the general rule
of the Fourth section which it had formerly entertained.
On June 15, 1887, the Interstate Commerce Commission,
in an opinion prepared by Judge Cooley and unanimously
approved by his colleagues (in the matter of the Petition of
The Louisville & Nashville Railroad Company, 1 I. C. C.
Rep. 31), said:
“But that which the Act does not declare unlawful must
remain lawful if it was so before; and that which it fails to
forbid the carrier is left at liberty to do without permission
GEORGIA COMMISSION CASES. 89
of any one. The charging or receiving the greater com-
pensation for the shorter than for the longer haul is seen to
be forbidden only when both are under substantially simi-
lar circumstances and conditions; and, therefore, if in any
case the carrier, without first obtaining an order of relief,
shall depart from the general rule, its doing so will not alone
convict it of illegality, since if the circumstances and con-
ditions of the two hauls are dissimilar the statute is not
violated * * * it will be found on investigation that
cases will exist in which, unless the force of strictly railroad
competition is allowed to create exceptions under the stat-
ute, an existing competition which is supposed to be of pub-
lic interest must come to an end. And where that is the
case the strong lines will in general be gainers at the expense
and sometimes to the destruction of those which are weaker.
* * * a strict enforcement of the general rule might be
found quite as injurious to the public interests as to those
of the railroads which would thereby be shut out from com—
petition.”
The syllabus of the decision, from the body of which the
foregoing has been quoted, contains the following:
“When a railroad company claims that the circum-
stances and conditions of long and short hauls on its line
are so dissimilar as to justify its making the greater charge
on the shorter haul, the Commission will not on its petition
decide upon the justice of its claim, but will leave it to take
the initiative in fixing rates, and will decide upon their jus-
tice and propriety when complaint is made by persons or
90 THE COURTS AND THE COMMISSION.
localities who consider themselves injured. * * * the
prohibition in the Fourth section of the Act to regulate com-
merce against a greater charge for a shorter than for a
longer distance over the same line in the same direction,
the shorter being included in the longer distance, as quali-
fied therein is limited to cases in which the circumstances
and conditions are substantially similar. * * * the ex-
istence of actual competition which is of controlling force,
in respect to traffic important in amount, may make out
the dissimilar circumstances and conditions entitling the
carrier to charge less for the longer than for the shorter haul
over the same line in the same direction, the shorter being
included in the longer, in the following cases:
1. When the competition is with carriers by water which
are not subject to the provisions of the statute.
2. When the competition is with foreign or other rail-
roads which are not subject to the provisions of the statute.
3. In rare and peculiar cases of competition between rail-
roads which are subject to the statute, when a strict appli-
cation of the general rule of the statute would be destruc-
tive of legitimate competition.”
In the Georgia Commission cases the defense of the car-
riers was precisely in accordance with the terms of the
foregoing extracts. The report and opinion of the Com-
mission, on these cases, says: -
“The defendants in their answers deny that transporta-
tion to the longer and shorter distance points is under sub-
stantially similar circumstances and conditions, and that
GEORGIA COMMISSION CASES. 91
therefore the greater charges for shorter distances com-
plained of do not contravene the provisions of the Act to
regulate commerce. The principal grounds on which this
denial is based are the competition of all rail and part rail
and part water lines from the same point of consignment
to the same point of destination; the competition of all
rail and part rail and part water lines from different points
of consignment to the same destination; and the influence
of water routes which either reach the point of destination
direct, or deliver to a connecting carrier at a point in the
same territory.”
Two of the seven Georgia Commission cases were dis-
missed, but in five of them orders favorable to the com-
plainants were issued. To take this course the Commission
plainly reversed its former position, saying:
“In stating in that opinion what kinds of competition
might entitle the carrier to make lesser long-haul charges,
or that create dissimilar circumstances and conditions
under which it would be justified in charging more for
shorter hauls, we now think, in the light of more than five
years' operation of the statute, that the Commission should
not have included in such statement, “rare and peculiar
cases of competition between railroads subject to the Act
where a strict application of the general rule of the statute
would be destructive of legitimate competition,’ if this
language in the opinion was fairly susceptible of the inter-
pretation which the carriers have put upon it. As an excep-
tion it was not consistent with the otherwise harmonious
theory on which the whole opinion was based.
92 THE COURTS AND THE COMMISSION.
“It constituted an exception to the clear reservation for
the primary action of the Commission in cases involving
competition between carriers subject to the act which is im-
plied in the Fourth section. Because the instances of such
“rare and peculiar' cases cited in the opinion are such as in-
dicate a hardship that the Commission would not fail to
recognize, and by an order under the provisory clause re-
lieve, if applied for, was no good ground for permitting the
carriers to determine for themselves what cases of such
competition are rare and peculiar or when any cases of strife
for traffic between carriers subject to the law will, if the
strict rule of the Fourth section is applied, be “destructive of
legitimate competition.' * * *
“We think there is nothing in the statute which war-
ranted the exception.”
The conclusion of law adopted by the Commission was
that, when the dissimilarity of circumstances and conditions
alleged in justification of a greater charge for the short haul
is the result of the competition of other carriers subject to
the law, the railways claiming such justification cannot
avail themselves of it in defending rates questioned by com-
plaints before the Commission, but must make them the
basis of applications for relief under the “proviso’’ clause
of the Fourth section. The following is from the report and
opinion.’
“A concise statement of this construction of the Fourth
section on the point above discussed is: The carrier has a
GEORGIA COMMISSION CASES. 93
right to judge in the first instance whether it is justified in
making the greater charge for the shorter distance under the
fourth section in all cases, where the circumstances and
conditions arose wholly upon its own line or through compe-
tition for the same traffic with carriers not subject to regu-
lation under the Act to regulate commerce. In other cases
under the Fourth section, the circumstances and conditions
are not presumptively dissimilar, and carriers must not
charge less for the longer distance, except upon the order of
this Commission.* Aside from overruling the “rare and
peculiar cases, exception, this construction is no departure
from previous rulings and is not new.”
This amazing conclusion, that permission must be ap-
plied for in order to obtain the right to do that which is no-
where forbidden, prevented any inquiry by the Commission
concerning the substantial merits of the controversy before
it. There was no finding that the conditions were “sub-
stantially similar,” but only that the defendants had not
taken the proper course to avail themselves of the kind of
dissimilarity which they alleged. The Commission's orders
encouraged them to apply for relief from the general rule of
the Fourth section. One of the orders was outlined in the
opinion, as follows: .
“The Order will therefore be that the defendants in this
case cease and desist, within twenty days after receiving a
* The italics in this quotation are in the original.
94 THE COURTS AND THE COMMISSION.
copy thereof, from charging or receiving any greater com—
pensation in the aggregate for the transportation of a like
kind of property from Cincinnati or other points, called and
known as Ohio river points, for the shorter distance to
Calhoun, Adairsville, Kingston, Cartersville, Acworth, or
Marietta, than for the longer distance over the same line in
the samc dircction to Atlanta, thc shorter being included
within the longer distance; or, that the defendants make
and file with the Commission, within the time above
specified, an application or applications, as the case may
require, as provided in the proviso of the Fourth section
of the Act to regulate commerce, for relief from the opera-
tion of that section in respect to the prohibition therein
contained against charging or receiving any greater com-
pensation in the aggregate for the transportation of like
kind of property from Cincinnati and other Ohio river
points to the shorter distance points above mentioned than
for such transportation over the same line in the same direc-
tion for the longer distance to Atlanta, and show cause
within sixty days after service of the order why such appli-
cation for relief should be granted; and upon such applica-
tion the evidence already taken in this case may be used.
In case the application for relief shall be denied the order to
cease and desist shall stand, and compliance therewith will
be required within twenty days after service of the order
denying the application.”
Orders of similar tenor were issued in the other cases
They were not obeyed. It is scarcely possible that any one
ever expected them to be obeyed. If the Commission had
GEORGIA COMMISSION CASES. 95
followed another course; if it had inquired fully and care-
fully into the reasonableness of the rates complained
against; if after such inquiry it had found them unreason-
able and issued a lawful order of relief to the complainants,
that order would probably have received, as had such
orders in the past; prompt, voluntary obedience. If not
voluntarily obeyed the Courts would have compelled obe-
dience. But by adopting an interpretation of the law
radically different from that unanimously announced five
years earlier; an interpretation which but a single judge,
among the large number who have passed upon it, has ever
approved, the Commission suspended for an indefinite per-
iod the usefulness of the machinery for affording relief
which the law had placed in its keeping.
The Circuit Court declined to enforce these orders, be-
cause, in the language of the Supreme Court:
“The court decided that the Commission had errone-
neously construed the statute in holding that competition
which was actual and substantial in its effect upon rates,
if resulting from the action of other carriers who were sub-
ject to the Act to regulate Commerce, could not produce
the dissimilarity of circumstances and conditions provided
in the Fourth section of the Act, so as to enable a carrier in
adjusting rates to take into view such competition without
the previous assent of the Commission.” -
But the foregoing was not the sole reason for the dis-
96 THE COURTS AND THE COMMISSION.
missal of the Commission's petitions in these cases by the
Circuit Court. The Supreme Court declares further, con-
cerning the Circuit Court's action, that:
“It moreover found that the rates in controversy were
in and of themselves just and reasonable, and did not give
rise either to undue preference or unjust discrimination.”
The Circuit Court of Appeals, and finally, the Supreme
Court, affirmed the refusal of the Circuit Court to enforce
these orders. The following is from the opinion of the
Supreme Court:
“* * * the error committed by the Commission in
interpreting the statute in these cases has been at least
twice heretofore pointed out in the decisions of this Court,
and hence further examination of the subject is unneces-
sary. * * * Despite, however, the error of law which
the Commission committed in these cases, and in conse-
quence of which error it made no investigation of the facts,
but postponed the performance of its duty on this subject
until a further application was made for relief, it is now
urged that we should enter into an original investigation of
the facts for the purpose of considering a number of ques-
tions as to discrimination, as to preference, as to reason-
ableness of rates, as to the relation which the rates at some
places bore to those at others, in order to discharge the duty
which the statute has expressly in the first instance declared
should be performed by the Commission.”
TROY CASE. 97
Troy Case.”
“The evidence shows that such a rate would be absolutely ruin-
ous.”—Decision of the Circuit Court in this case.
The specific charges made by the complainant before the
Commission, insisted upon at the hearing before it and to
which the testimony taken by it relates, all depend upon al-
leged violations of the Fourth, or long and short haul, Sec-
tion of the law. The vast scope of the case and the neces-
sarily far-reaching consequence of the enforcement of the
views of the complainant are best indicated by an enu-
meration of the items of complaint which may be quoted
from the Commission’s report and opinion. It thus appears
that the grounds of complaint were:
“1. That the Alabama Midland and the defendant roads
connecting and forming lines with it from Baltimore, New
York and the east to Troy and Montgomery charge and
collect a higher rate on shipments of class goods from those
* The Board of Trade of Troy, Alabama, vs. The Alabama Midland
Bailway Company et al.; Interstate Commerce Commission (4 Inter.
Com. Rep. 348), decided August 15, 1893. Interstate Commerce Com-
mission vs. Alabama Midland Railway Company et al.; Circuit Court,
Middle District of Alabama (69 Fed. Rep. 227), decided July 9, 1895.
Interstate Commerce Commission, Appellant, vs. Alabama Midland
Railway Company et al.; Circuit Court of Appeals (74 Fed. Rep. 715),
decided June 2, 1896. Interstate Commerce Commission, Appellant, vs.
Alabama Midland Railway Company et al.; Supreme Court (168 U. S.
144), decided November 8, 1897.
98 THE COURTS AND THE COMMISSION.
cities to Troy than on such shipments through Troy to
Montgomery, the latter being the longer distance point by
fifty-two miles.
“2. That the ‘Alabama Midland and the Georgia Central
and their connections unjustly discriminate against Troy,
and in favor of Montgomery’ in charging and collecting
$3.22 per ton to Troy on phosphate rock shipped from the
South Carolina and Florida fields and only $3.00 per ton
oil such shiplue11's Lo Moulgoillery, the longer distance
point by both said roads, and that all phosphate rock car-
ried from said fields to Montgomery over the road of the
Alabama Midland has to be hauled through Troy.
“3. That the rates on cotton established by said two roads
and their connections on shipments to the Atlantic scaports,
Brunswick, Savannah and Charleston, unjustly discrim-
inate against Troy and in favor of Montgomery, in that the
rate per hundred pounds from Troy is 47 cents and that
from Montgomery, the longer distance point, is only 40
cents, and that such shipments from Montgomery over the
road of the Alabama Midland have to pass through Troy.
“4. That on shipments for export from Montgomery and
other points within what is termed in the complaint ‘the
jurisdiction’ of the Southern Railway and Steamship Asso-
ciation, to the Atlantic seaports, Brunswick, Savannah,
Charleston, West Point and Norfolk, a lower rate is charged
than the regular published tariff rate to such seaports, in
that Montgomery and such other points are allowed by the
rules of said Association to ship through to Liverpool via
any of those Seaports at the lowest through rate via any one
of them on the day of the shipment, which may be much less
TROY CASE. 99
than the sum of the regular published rail rate and the
ocean rate via the port of shipment; that this reduction
is taken from the published tariff rail rate to the port of
shipment; and that, this privilege being denied to Troy, is
an unjust discrimination against Troy in favor of Montgom-
ery and such other favored cities and that it is, also, a dis-
crimination against shipments which terminate at such sea-
port in favor of shipments for export.
“5. That Troy is unjustly discriminated against in being
charged on shipments of cotton via Montgomery to New
Orleans the full local rate to Montgomery by both the
Alabama Midland and the Georgia Central.
“6. That the rates on “class’ goods from western and
northwestern points established by the defendants forming
lines from those points to Troy are relatively unjust and
discriminatory as against Troy when compared with the
rates over such lines to Montgomery and Columbus.”
The order of the Commission, as summarized in its report
and opinion, was as follows:
“* * * that the roads participating in the traffic
involved cease and desist (1) from charging and collecting
on class goods shipped from Louisville, St. Louis, and Cin-
cinnati to Troy a higher rate than is now charged and col-
lected on such shipments to Columbus and Eufaula; (2)
from charging and collecting on cotton shipped from Troy
via Montgomery to New Orleans a higher through rate than
50 cents per hundred pounds; (3) from charging and col-
lecting on shipments of cotton from Troy for export via the
100 THE COURTS AND THE COMMISSION.
Atlantic seaports, Brunswick, Savannah, Charleston, West
Point, and Norfolk, a higher rate to those ports than is
charged and collected on such shipments from Montgomery;
(4) from charging and collecting on cotton shipped from
Troy to Brunswick, Savannah, and Charleston, a higher
rate than is charged and collected on such shipments from
Montgomery through Troy to those ports; (5) from charg—
ing and collecting on class goods, shipped from New York,
Baltimore, and the northeast to Troy, a higher rate than
is charged and collected on such shipments to Montgom-
ery; and (6) from charging and collecting on phosphate
rock shipped from the South Carolina and Florida fields to
Troy, a higher rate than is charged and collected on such
shipments through Troy to Montgomery.”
The Commission did not lose sight of the fact that obedi-
ence to its order would require sweeping changes in other
rates than those complained of and a general readjustment
of charges in the territory contiguous to Troy. On this
point the Commission said:
“It is claimed on the part of the roads that the estab-
lishment of lower rates to Troy will disarrange and call for
a readjustment of the rates to the localities around Troy in
order to prevent unjust discrimination in favor of Troy and
against such localities. It appears from the tariffs on file
with the Commission that the through rates to these points
around Troy are made on the basis of the rates to Mont-
gomery plus the local rates from Montgomery on—in
other wºrds, that Montgomery is given the undue advan-
TROY CASE. 101
tage of a ‘trade center’ as against these points. This being
the case, these rates now call for re-adjustment, with a view
of remedying the unjust discrimination thus appearing.
The adjustment of the rates to these points so as to make
them conform to the reduced rates which we have ordered
for Troy, will tend to bring them in line with the law and do
away with the unjust discrimination in favor of Montgom-
ery, already existing under them. It certainly cannot be
held to be a valid objection to the correction of unlawful
rates to one locality, that it involves a like correction as to
other localities. Unjust discrimination as between locali-
ties or individuals cannot be essential to the business pros-
perity of the roads; on the contrary, we believe that in the
end, if not immediately, their financial welfare would be
promoted by the application in the matter of rate making
of the principle of absolute fairness as between all interests,
large and small, enjoined by the statute. Rates should,
in the first instance, be fixed upon a fairly remunerative
basis, and then so applied as to result in no undue advan-
tage or disadvantage to any interest. It will devolve upon
the roads to make whatever changes in rates to surrounding
towns may be incidental to, and a necessary consequence
of, compliance in good faith with our order in reference to
the rates to Troy.” \ -
The Circuit Court refused to grant a decree enforcing the
Commission's order, and expressed the opinion that to
require conformity to the demands of the complainant
before the Commission would be “absolutely ruinous” to
102 THE COURTS AND THE COMMISSION.
the Alabama Midland Railway Company. The words of
the opinion, on this point, follow:
“The Troy parties claim that they shall not only have
the advantage of the reduced rates between the shipping
points and Montgomery, but that they are entitled to such
reduced rates from Montgomery to Troy. The same thing
is claimed on cotton shipped from Troy to New Orleans,
via Montgomery, which is a combination of a through rate
to New Orleans from Montgomery, plus the local rate from
Troy to Montgomery. The evidence shows that such a
rate would be absolutely ruinous to the Midland; that it
would not pay operating expenses; and, besides, there is no
section of the law under which such contention can be
maintained.” .
Treating of the “basing point” system of rate-making
which prevails in the region in which the rates complained
of were in force the same Court said:
“In the case of transportation of property from eastern
or northeastern points (New York, Philadelphia, Balti-
more, etc.), whether it is all rail, or by water to Savannah
and then by rail to Montgomery, through Troy, on the
Midland, or from northwestern points (such as Cincinnati,
Louisville, St. Louis, etc.), through Montgomery to Troy,
there is what may be called a “long haul;’ and for this haul
there are competing lines, all rail or all water, in some cases,
or part by rail and part by water, and this gives rise to
through rates and through rates give rise to ‘basing
points’ or ‘trade centers,’ which, in the very nature of
TROY CASE. - * 103
things, are determined by questions of competition between
lines engaged in, and seeking a share in, the carrying trade
of the country. Water transportation is, doubtless, a
large factor in the determination of these basing points.
Other considerations may enter into the matter, but the
real source of it must chiefly be found in the competition
between our great lines of transportation, reaching out, as
they do, for a share in the commerce of the country, and,
as a general rule, cheapening the necessaries of life brought
to every man's door.”
Immediately following the foregoing the Court discussed
the justice of the rates to Montgomery and Columbus, the
cities against whose more favorable position in the adjust-
ment of charges, Troy particularly complained, saying:
“Doubtless, there may be cases where these basing points
or trade centers are fixed and determined arbitrarily, and
where the motive for it may be a purpose to build up one
locality at the expense of another, in violation of the spirit
and provisions of the Act of Congress; but is that the case
we are dealing with here? It is common knowledge—it is
history—that Montgomery was a distributing point before
its railroad system was known, and when there were no
trunk lines of railroad, such as we now have, competing for
a share of her business. Troy is a city of about 4,000 or
5,000 population, with two railroads, one of which has been
but recently constructed. It is not a large distributing
point; and it is not on any navigable water course. The
complaint would almost seem to be that the railroad com-
104 THE COURTS AND THE COMMISSION.
panies had not made her a basing point; and that Mont-
gomery, west of her, on the Alabama river, and Columbus
east of her, on the Chattahoochee river, being basing points,
this operated to her prejudice as a business point, which it
no doubt does; and this is, perhaps, her real cause of com-
plaint.”
The use of the word “prejudice” in the foregoing will
not mislead any one who examines the opinion of the Court.
The difference between “ prejudice” and “undue or un
reasonable prejudice” was carefully and accurately distin-
guished, as appears from the following quotation:
“The words ‘any undue or unreasonable preference or
advantage’ plainly imply that every preference or advan-
tage is not condemned, but such, only, as are undue or un-
reasonable.”
Reviewing and affirming the action of the Circuit Court
the Circuit Court of Appeals declared that—
“The rates in question, when separately considered, are
not unreasonable or unjust. * * * The volume of popu-
lation and of business at Montgomery is many times larger
than it is at Troy. There are more, many more railway
lines running to and through Montgomery, connecting it
with all the distant markets. The Alabama river, open all
the year, is capable, if need be, of bearing to Mobile, on the
sea, the burden of all the goods of every class that pass to
or from Montgomery. * * * There is no suggestion in
TROY CASE. 105
the evidence that the traffic managers * * * are in-
competent, or under the bias of any personal preference for
Montgomery or prejudice against Troy that has led them,
or is likely to lead them, to unjustly discriminate against
Troy. * * * The volume of trade to be competed for,
the number of carriers actually actively competing for it, a
constantly open river present to take a large part of it when-
ever the railroad rates rise up to the mark of profitable
water carriage, seem to us, as they did to the Circuit Court,
to constitute circumstances and conditions at Montgomery
Substantially dissimilar from those existing at Troy, and to
relieve the carriers from the charges preferred against them
by its board of trade.”
It will be observed that both the Circuit Court and the Cir-
cuit Court of Appeals specifically decided that the order of
the Commission was not warranted by the facts. The Su-
preme Court took the same ground, and with equal definite-
ness, saying:
“Coming at last to the questions of fact in this case, we
encounter a large amount of conflicting evidence. It seems
undeniable, as the effect of the evidence on both sides,
that an actual dissimilarity of circumstances and conditions
exists between the cities concerned, both as respects the
volume of their respective trade and the competition, affect-
ing rates, occasioned by rival routes by land and water.
Indeed, the Commission itself recognized such a state of
facts by making an allowance in the rates prescribed, for
106 THE COURTS AND THE COMMISSION.
dissimilarity resulting from competition, and it was con-
tended on behalf of the Commission, both in the courts
below and in this court, that the competition did not justify
the discrimination against Troy to the extent shown, and
that the allowance made therefor by the Commission was a
due allowance.
“The issue is thus restricted to the question of the prepond-
erance of the evidence on the respective sides of the contro-
versy. We have read the evidence disclosed by the record,
and have endeavored to weigh it with the aid of able and
elaborate discussion by the respective counsel.
“No useful purpose would be served by an attempt to
formally state and analyze the evidence, but the result is
that we are not convinced that the courts below erred in
their estimate of the evidence, and that we perceive no
error in the principles of law on which they proceeded in the
application of the evidence.”
Window Shades Case.*
“The parlies have been subjected to the delay and expense of
trying an eartraneous issue.”—Decision of the Circuit
Court in this case.
The complaint in this case was against the classification
* Alanson S. Page et al. vs. The Delaware, Lackawanna & Western
Trailroad Company et al.; Interstate Commerce Commission (6 lnter.
Com. Rep. 148), decided March 23, 1894. Interstate Commerce Com-
mission vs. Delaware, Lackawanna & Western Railroad Company et al.;
Circuit Court, Northern District of New York (64 Fed. Rep. 723), de-
cided December 3, 1894. - -
WINDOW SHADES CASE. 107
of window shades enforced by the defendants. This was
alleged to be higher than that of other property of a similar
kind in the elements of value, risk, compactness and cost of
Service. The comparison insisted upon was with “window
hollands, and shade cloth, plain, uncut and undecorated.”
The latter articles took third class rates, which were much
lower than the first-class rates which were applicable to win-
dow shades. The testimony indicated that the complain-
ants had for some time obtained the lower rates by incor-
rectly describing their shipments as window hollands. The
Commission said:
“Complainants have described their shipments of win-
dow shades as window hollands for the evident purpose of
thereby obtaining lower rates than could lawfully have been
charged if the proper description had been given; and, ex-
cept when corrections were made by the carriers’ inspection
bureaus, this purpose was accomplished by the acceptance
of such shipments as window hollands by the receiving road
and the improper billing thereof by the local agent at third-
class instead of first-class rates. * * * the practice
finally resulted in the remonstrance on the part of the car-
riers on January 24, 1893.”
After this remonstrance, from the defendants, complaint
was, on March 3, 1893, made to the Commission.
The Commission was not deterred from granting the order
asked for by the complainants by the fact that they had been
108 THE COURTS AND THE COMMISSION.
in the habit of incorrectly describing their shipments” for the
apparent purpose of obtaining lower rates than were at the
time lawful. The Commission said:
“We have first to determine what effect the complainants'
admitted practice of shipping shades as hollands shall have
upon our action in this case. The classification as regards
these two articles was and is in no wise ambiguous, and
we find that complainants did persist in designating their
shade shipments as hollands with a view of securing third
instead of first-class rates thereon. * * * We think
they were keenly alive to the impropriety of shipping shades
under the name of hollands; * * * *
In spite of the foregoing the Commission ordered a reduc-
tion in the classification of window shades in less than car-
* Section 10 of the Interstate Commerce law includes the following:
“Any person and any officer or agent of any corporation or company who
shall deliver property for transportation to any common carrier, subject
to the provisions of this act, or for whom as consignor or consignee any
such carrier shall transport property, who shall knowingly and wilfully,
by false billing, false classification, false weighing, false representation
of the contents of the package, or false report of weight, or by any other
device or means, whether with or without the consent or connivance of
the carrier, its agent or agents, obtain transportation for such property
at less than the regular rates then established and in force on the line of
transportation, shall be deemed guilty of fraud, which is hereby de-
clared to be a misdemeanor, and shall, upon conviction thereof in any
court of the United States of competent jurisdiction within the district
in which such offense was committed, be subject for each offense to a
fine of not exceeding five thousand dollars or imprisonment in the peni-
tentiary for a term of not exceeding two years, or both, in the discretion
of the court.
WINDOW SHADES CASE. 109.
load quantity shipments to the level asked by the complain-
ants. This order was not obeyed by the defendants. The
Circuit Court on being asked to enforce the order refused to
do so. The opinion by Judge Wallace reads, in full, as
follows:
“The order of the Interstate Commerce Commission which
the Court is now asked to enforce prohibits the railway car-
riers, the parties respondent, from charging any greater
compensation for the transportation of window shades of
any description—whether the cheap article, worth $3.00 per
dozen, or the hand-decorated article, worth $10.00 per pair—
than the third-class rate, the rate charged for the transpor-
tation of the materials used in making window shades. Such
an order, in my judgment, ignores the element of the value
of the service in fixing the reasonable compensation of the
carrier, and denies him any remuneration for additional
risk. I cannot regard it as justifiable upon principle, and
must refuse to enforce it. The petition is dismissed.”
Upon the rendering of the foregoing decision the Commis-
sion certified to the Court, in substance, that:
“* * * in making the order which the court is asked
in this case to enforce, the Commission did not design to
make one so broad as its terms import, * * * *
and, as complainant, asked for a rehearing. Upon this ap-
plication, which was denied, the Court said:
110 THE COURTS AND THE COMMISSION.
“The Court cannot substitute, for an order actually made,
One such as the Commission might or should have made, or
such as the Commission intended to, but failed to, make.
This Court has no revisory power over the orders of the
Commission. Its function in a proceeding like this is merely
to inquire whether the respondents, the common carriers,
have refused or neglected to perform any lawful order or
requirement of the Commission. It cannot undertake to
decide whether the respondents have violated one which
the Commission might have lawfully made. It is not a
violent presumption that if the order had been, in terms, one
such as the Commission intended to make, the respondents
would have contested its propriety, and refused to obey it.
But such an issue is not here. As framed, the respondents,
in my judgment, were justified in refusing to obey it. It is
much to be regretted that the real controversy between the
Minnetto Shade-Cloth Company and the respondents is not
presented by the application to enforce the order made by
the Corunnission, and that the parties have been subjected
to the delay and expense of trying an extraneous issue; but
the misfortune is not remediable by a rehearing, and a re-
hearing is therefore denied.” .
The decision of the Circuit Court was not appealed from.
Further interpretation of the law by the courts has disclosed
that the order of the Commission was unlawful on grounds
other than that regarded by Judge Wallace as conclusive.
FREIGHT BUREAU CASES. 111
Freight Bureau Cases.”
“The importance of the question cannot be overestimated.”—
Decision of the Supreme Court in this case.
The complaint, in this case involved the entire adjustment
of railway rates on through, southward bound freight,
throughout the whole region east of the Mississippi river.
Perhaps this will be made clearer by quoting from the state-
ment of the complaints with which the report and opinion
of the Commission begins. The Commission said:
“The complaints in these cases, which were heard and
may be disposed of together, were filed, respectively, by
the Freight Bureau of the Cincinnati Chamber of Commerce
and the Chicago Freight Bureau. The former will herein-
after be referred to as the Cincinnati case, and the latter as
the Chicago case.
* The Freight Bureau of the Cincinnati Chamber of Commerce vs. The
Cincinnati, New Orleans & Texas Pacific Railway Company et al.; The
Chicago Freight Bureau vs. The Louisville, New Albany & Chicago Rail-
way Company et al.; Interstate Commerce Commission (4 Inter. Com.
Rep. 592), decided May 29, 1894. Interstate Commerce Commission vs.
Cincinnati, New Orleans & Texas Pacific Railway Company et al.; Cir-
cult Court, Southern District of Ohio, Western Division (76 Fed. Rep.
183), decided October 8, 1896. Shinkle, Wilson & Kreis Company et al.
vs. Louisville & Nashville Railroad Company et al.; Circuit Court,
Southern District of Ohio, Western Division (62 Fed. Rep. 690, 76 Fed.
Rep. 1007), decided July 30, 1894. Interstate Commerce Commission,
Appellant, vs. Cincinnati, New Orleans & Texas Pacific Railway Com-
pany; Supreme Court (167 U. S. 479), decided May 24, 1897.
112 THE COURTS AND THE COMMISSION.
“In both complaints, Baltimore, Philadelphia, NewYork,
Boston and contiguous territory, are designated ‘Eastern
Seaboard territory;' Knoxville and Chattanooga, Tennes-
see, Rome and Atlanta, Georgia, Birmingham, Anniston
and Selma, Alabama, Meridian, Mississippi, and contiguous
territory, “Southern territory;' and Cincinnati, Ohio,
Louisville, Kentucky, Indianapolis and Evansville, Indiana,
Chicago and Cairo, Illinois, St. Louis, Missouri, and contigu-
ous territory, “Central territory.’ These designations will
be so applied in this opinion.
“The general ground of complaint in the Cincinnati case is
that the rates of freight established by the defendant car-
Tiers from the Eastern Seaboard and Central territories,
respectively, to Southern territory, “unjustly discriminate
in favor of the merchants and manufacturers whose busi-
ness is located and transacted in Eastern Seaboard terri-
tory and against the merchants and manufacturers whose
business is located and transacted in Cincinnati and other
points in Central territory.’ It is stated that ‘the burden
of the complaint lies against the relation which exists be-
tween the current rates of freight on manufactured articles
and merchandise” (numbered classes) from Eastern Sea-
board territory to Southern territory, and the current rates
of freight exacted upon like commodities when shipped from
Central territory to the South, and against the unfair basis
of general construction of the tariffs under consideration
whereby the rates charged for transportation of commodi-
ties classified under “numbered classes’ bear a much higher
percentage relation to the rates from New York than do the
rates on commodities enumerated under the “lettered classes’
FREIGHT BUREAU CASES. 113
(food products and similar heavy traffic); and it is alleged,
‘that this improper relation between rates has the effect of
restraining and impeding the growth of productive indus-
tries in Central territory and encouraging and promoting
similar industries in Eastern Seaboard territory, and is the
direct result of an agreement established by convention
between the officers of defendants, whereby in order to
Secure stability in rates and to prevent competition between
the lines leading respectively from the Eastern Seaboard
and Central territories to the South, it was decided to secure
to the Eastern lines and Eastern territory the traffic in
merchandise and manufactured articles and to the Western
territory the traffic in food products and similar heavy
commodities.” In support of these charges as to the alleged
“improper relation’ between the rates from Eastern terri-
tory and Central territory to Southern territory, and be-
tween those on the numbered and lettered classes, tabular
statements are given of the distances, and class rates from
leading points in the Eastern and Central territories to
the points named above in Southern territory and of the
percentage relation borne by rates and distances from Cin-
cinnati to those from New York.
“The complaint in the Chicago case contains similar tabu-
lar statements and charges, made applicable to Chicago,
and in addition calls in question the reasonableness in
themselves of the through rates from Chicago to Southern
territory by the averments ‘that traffic between Chicago
and the Southern territory is through traffic and it is unjust
to Chicago that rates from that point should be exacted by
defendants based upon unreasonably high rates between
114 THE COURTS AND THE COMMISSION.
Cincinnati and other Ohio river crossings and Southern
territory, to which are added substantially the local rates in
cffect from Chicago to Cincinnati and said other Ohio river
crossings,’ and that “if Cincinnati rates are to be taken as a
basis, the rates from Chicago to Southern territory should
be some fair percentage above the rates from Cincinnati,
or some other arbitraries above the Cincinnati rates as the
present New York and Boston rates are above the rates
from Baltimore.’ It is also alleged that ‘the same rates are
charged from New York and from Boston to points in
Southern territory whose distances vary more than 500
miles,’ and it is claimed, that if equal rates prevail from
points widely separated in Eastern territory such as New
York and Boston to Southern territory, the same basis
should govern in rate making to the same Southern points
from stations in Central territory, such as Cincinnati and
Chicago, which are Iuuchi Ilearer LUgellier lllau New York
and Boston.’ The prayer of the complainants in both
cages is for an order commanding the defendants to desist
from the alleged violations of the Act to regulate com-
merce and requiring them to so adjust their several freight
tariffs as to afford the merchants and manufacturers of
Cincinnati and Chicago and other points in contiguous terri-
tory ‘a fair and equal opportunity to deliver their products
to consumers in the South upon such terms of equality com-
pared with their competitors in Eastern Seaboard territory,
as their geographical position, commercial ability and
ample transportation facilities will justify.’”
The order of the Commission required reductions in the
FREIGHT BUREAU CASES. 115
rates charged from Chicago and Cincinnati to Knoxville,
Chattanooga, Rome, Atlanta, Meridian, Birmingham,
Anniston, and Selma and the further readjustment of rates
indicated as follows:
“And said defendants * * * are also hereby noti-
fied and required to further readjust their tariffs of rates
and charges, so that * * * rates * * * from Cin-
cinnati and Chicago to southern points other than those here-
inabove specified shall be in due and proper relation to rates
put into effect by said defendants in compliance with the
provisions of this order.”
The foregoing contrasts strangely with the unanimous
decision of the original Commission, written by Judge
Schoonmaker (see Thatcher v. Delaware & Hudson Canal
Company, 1 I. C. C. Rep. 152), in which the following ap-
pears: -
“* * * what the complainant asks from the Com-
mission is an order that shall require the several defendant
roads to receive freights at his elevator at Schenectady for
transportation to Boston and Boston points at rates less
than are now charged by the same roads for the transporta-
tion of like freights to Boston and Boston points, from
staticns on the same lines nearer to the points of destina-
tion, * * * This is the only question which is so pre-
Sented by the complaint that the Commission can pass upon
it. It may be truthfully said that the several defendants
might avoid any conflict with the Fourth section of the act
116 THE COURTS AND THE COMMISSION.
by reducing their charges to Boston and Boston points from
the stations east of Schenectady; but this complaint does
not ask the Commission to compel such reduction, nor has
any evidence been given or offered which would enable us
to determine what would be proper and just rates from any
such stations. It is therefore impossible to fix them in
this case, even if the Commission had power to make rates
generally, which it has not. Its power in respect to rates
is to determine whether those which the roads impose are
for any reason in conflict with the statute.”
The following table shows the rates in cents per 100
pounds in force from Cincinnati at the time the report and
opinion was prepared and the rates ordered by the Com-
mission:
CLASSES.
1. 2. 4. 5.
To—
old|*|old|*|old tº old|*|old|*|ola º
rate. dered. rate. dered. rate. dered. rate. dered. rate. dered. rate. dered
Knoxville, Tenn ... . . . . . . . 76 53 || 65 45 || 57 37 47 27 | 40 22 30 20
Chattanooga, Tenn. . . . . . . . 76 60 65 54 57 40 || 47 30 | 40 24 || 30 22
Rome, Ga. . . . . . . º e º e º is tº e e 107 75 92 64 || 81 54 | 68 44 || 56 34 || 46 24
Atlanta, Ga. . . . . . . . . . . . . . 107 86 92 73 81 60 | 68 45 56 35 | 46 27
Meridian, Miss. . . . . . . . . . . . 122 114 |102 98 || 89 80 75 62 62 49 54 38
Birmingham, Ala. . . . . . . . . . 89 87 79 74 | 68 60 55 46 || 47 36 36 28
Anniston, Ala. . . . . . . . . . . . . 107 86 92 73 || 81 60 | 68 45 56 35 | 46 27
Selma, Ala . . . . . . . . . . . . . . . 108 108 ||102 92 88 78 71 60 59 48 || 47 36
5

118 . THE COURTS AND THE COMMISSION.
Similar reductions from Chicago were ordered and had
the changes been made corresponding modifications in the
rates from all points north of the Ohio river as well as to all
southern points would have been necessary. The drastic
character of the changes is apparent from the table. The
Commission appeared to appreciate this, for it declared that
“even pecuniary embarrassment of a road” would not jus-
tify the maintenance of the former rates, although it at-
tempted to qualify this by asserting that “it is believed”
that “the reduction ordered in these cases” would increase
the tonnage affected so greatly as to augment the revenue
there from. Such, said the Commission, is “the natural ten-
dency, but it said nothing of the increased cost of handling
the extra traffic which it anticipated. It is important to
note also that the Commission paid little or no attention to
Ilie existing relations among the rates which if affempted to
change. Thus, although the rates from Cincinnati to Knox-
ville and Chattanooga were the same the Commission sought
to give Knoxville much lower rates than Chattanooga, tak-
ing, for example, twenty cents from the second-class rate of
sixty-five cents to Knoxville and but eleven cents from the
same rate to Chattanooga. The first-class rate of $1.07 to
Anniston was ordered reduced by twenty-one cents, but the
first-class rate of $1.08 to Selma was left untouched. The
decision in this case, following that in the Social Circle case
(see page 42), the courts did not discuss, at any length,
FREIGHT BUREAU CASES. 119
any other than the legal aspects of the case. After a Cir-
cuit Court decision adverse to the Commission the case was
certified to the Supreme Court on the following question:
“Had the Interstate Commerce Commission jurisdictional
power to make the order hereinbefore set forth, all proceed-
ings preceding said order being due and regular, so far as
procedure is concerned.”
Although regarding the question as the same as that de-
cided in the Social Circle case, the Supreme Court thought
that it was its duty to re-examine it in its entirety, and to
“determine what powers Congress has given to the Commis-
sion in respect to the matter of rates.” Concerning the
importance of the controversy the Court said:
“The importance of the question cannot be overesti-
mated. Billions of dollars are invested in railroad proper-
ties. Millions of passengers, as well as millions of tons of
freight, are moved each year by the railroad companies, and
this transportation is carried on by a multitude of corpora-
tions working in different parts of the country and sub-
jected to varying and diverse conditions. * * *
“The power to prescribe a tariff of rates for carriage by a
common carrier * * * having respect to the large
amount of property invested in railroads, the various com-
panies engaged therein, the thousands of miles of road and
the millions of tons of freight carried, the varying and di-
verse conditions attaching to such carriage, is a power of
supreme delicacy and importance.”
120 THE COURTS AND THE COMMISSION.
The Supreme Court also declared that the power claimed
by the Commission is general rate-making power and of a
legislative character. Quotations on these points follow:
“It is one thing to inquire whether the rates which have
been charged and collected are reasonable—that is a judic-
cial act; but an entirely different thing to prescribe rates
which shall be charged in the future—that is a legislative
act. * * * It will be seen that in this case the Inter-
state Commerce Commission assumed the right to prescribe
rates which should control in the future. * * * Some
reliance was placed in the argument on this sentence, found
in the opinion of this Court in Cincinnati, N. O. & T. P. R.
Co. vs. Interstate Commerce Commission, 162 U. S. 184,
(5 Inters. Com. Rep. 391): -
“‘If the Commission, instead of withholding judgment in
such a matter until an issue shall be made and the facts
found, itself fixes a rate, that rate is prejudged by the Com-
mission as reasonable.’ And it is thought that this Court
meant thereby that while the Commission was not in the
first instance authorized to fix a rate, yet that it could, when-
ever complaint of an existing rate was made, give notice
and direct a hearing, and upon such hearing determine
whether the rate established was reasonable or unreasonable,
and also what would be a reasonable rate if the one pre-
scribed was found not to be, and that such order could be
made the basis of a judgment in mandamus requiring the
carrier thereafter to conform to such new rate. And the
argument is now made, and made with force, that while the
Commission may not have the legislative power of estab-
* FREIGHT BUREAU CASES. 121
lishing rates, it has the judicial power of determining that a
rate already established is unreasonable, and with it the
power of determining what should be a reasonable rate,
and enforce its judgment in this respect by proceedings in
mandamus.
“The vice of this argument is that it is building up indi-
rectly and by implication a power which is not in terms
granted. It is not to be supposed that Congress would ever
authorize an administrative body to establish rates without
inquiry and examination; to evolve, as it were, out of its
own consciousness, the satisfactory solution of the difficult
problem of just and reasonable rates for all the various
roads in the country. And if it had intended to grant the
power to establish rates, it would have said so in unmistak-
able terms. In this connection it must be borne in mind
that the Commission is not limited in its inquiry and action
to cases in which a formal complaint has been made, but
under §13, ‘may institute an inquiry on its own motion in
the same manner and to the same effect as though com-
plaint had been made.’ By $14 whenever an investigation
is made by the Commission, it becomes its duty to make a
report in writing, which shall include a finding of the facts
upon which its conclusions are based, together with a rec-
ommendation as to what reparation, if any, Ought to be
made to any party or parties who may be found to have
been injured. And by §§15 and 16, if it appears to the satis-
faction of the Commission that anything has been done or
omitted to be done, in violation of the provisions of the Act,
or of any law cognizable by the Commission, it is made its
duty to cause a copy of its report to be delivered to the
122 THE COURTS AND THE COMMISSION.
carrier, with notice to desist, and failing that to apply to
the courts for an order compelling obedience. There is
nothing in the act requiring the Commission to proceed
singly against each railroad company for each supposed or
alleged violation of the Act. In this very case the order of
the Commission was directed against a score or more of
colupallies and determined the maximum rates on half a
dozen classes of freight from Cincinnati and Chicago,
respectively, to several named southern points and the
territory contiguous thereto, so that if the power exists, as
is claimed, there would be no escape from the conclusion
that if would be within the discretion of the Commission
of its own motion to suggest that the interstate rates
on all the roads of the country were unjust and unrea-
sonable, notify the several roads of such opinion, direct a
hearing and upon such hearing make one general order,
reaching to every road and covering every rate. It will
never do to make a provision prescribing the mode and
manner applicable to all Investigations and all actions
equivalent to a grant of power in reference to some specific
matter not otherwise conferred.”
The Court further said:
“The grant of such a power is never to be implied. The
power itself is so vast and comprehensive, so largely affect-
ing the rights of carrier and shipper, as well as indirectly all
commercial transactions, the language by which the power
is given had been so often used and was so familiar to the
legislative mind and is capable of such definite and exact
SUMMERVILLE HAY CASE. 123
statement, that no just rule of construction would tolerate
a grant of such power by mere implication.” + “ ”
“The words and phrases efficacious to make such a dele-
gation of power are well understood and have been fre-
quently used, and if Congress had intended to grant such a
power to the Interstate Commerce Commission it cannot be
doubted that it would have used language open to no mis-
construction, but clear and direct.”
Summerville Hay Case.”
“The Interstate Commerce law was intended to promote trade.
Such a construction as is now sought would destroy com-
petition, the life of trade.”—Decision of the Circuit Court
in this case.
The rate on hay from Memphis, Tennessee, to Charles-
ton, South Carolina, was nineteen cents per hundred-
weight. The complainant did business at Summerville,
South Carolina, an intermediate point on defendants'
line from Memphis to Charleston and on shipments of hay
* H. W. Behlmer vs. The Memphis & Charleston Railroad Company
et al.; Interstate Commerce Commission (4 Inter. Com. Rep. 521), de-
cided June 27, 1894. Behlmer vs. Louisville & Nashville Railroad Com-
pany et al.; Circuit Court, District of South Carolina (71 Fed. Rep. 835),
decided January 22, 1896. Behlmer vs. Louisville & Nashville Railroad
Company et al.; Circuit Court of Appeals, Fourth Circuit (83 Fed. Rep.
898), decided November 3, 1897. Louisville & Nashville Railroad Com-
pany et al., Appellants, vs. Henry W. Behlmer; Supreme Court (175
U. S. 648), decided January 8, 1900.
124 THE COURTS AND THE COMMISSION.
from Memphis to Summerville over their line was charged
twenty-eight cents per hundredweight, a rate equal to the
Memphis to Charleston rate plus the local rate back from
Charleston to Summerville. On this state of facts com-
plaint was made to the Commission and an order obtained
requiring the defendants to charge as low rates from Mem-
phis to Summerville as to Charleston. The Commission,
in 1ts decision gave ample evidence of the fact that this
Order was no more than a move in a game of checkers
which it proposed to play with the defendants, and that it
had as little expectation of obedicnce as it had confidence
In the substantial Justice of the rule which the order nomi-
nally prescribed. The Commission wished to be appealed
to for a relieving order under the “proviso.” clause of the
Fourth section of the law and, in order to compel the de-
fendants to submit such an appeal, refused to consider
the circumstances and conditions which might justify lower
rates to Charleston than to Memphis. The Commission said:
“There is no showing in this proceeding of competition
by lines not subject to the Act to regulate commerce for the
carriage of hay from Memphis to Charleston, and the fact
that there may be competition for such traffic by lines which
are subject to the Act, or that hay may be carried to Charles-
ton by various rail and water or part rail and part water
routes from points other than Memphis, does not justify the
defendant carriers in departing from the general rule of the
SUMMERVILLE HAY CASE. 125
Fourth section upon their own motion. Such considerations
may constitute reasons for applying to the Commission for
relief under the proviso clause of that section, but for reasons
stated in our decisions of the cases above cited they do not
justify carriers in departing from the rule of the Fourth sec-
tion without such a relieving order. * * * The justin-
terests of the carriers are fully protected by the proviso
clause of the Fourth section. * * * The very reason why
the proviso was added to the section was to enable carriers
to obtain relief from hardship in special cases if, upon ap-
plication for relief, they make it appear that hardship act-
ually exists. Neither of the defendants having applied for
relief under the proviso to the fourth section, order will
be entered, * * * but without prejudice to the right
of said defendants to apply for relief under the Fourth sec-
tion of the Act to regulate commerce. The filing of an
application for relief by the defendants or either of them,
before the time above specified, will, if it refers to trans-
portation over this line to Charleston, operate as a stay
upon this order during the pendency of proceedings on such
application.”
The defendant carriers declined the game which the Com-
mission offered to play with them; they preferred to stand
upon their rights under the law, which, in their opinion,
justified the lower rate to Charleston. In this position they
soon obtained formal judicial approval.
The Circuit Court said:
126 THE COURTS AND THE COMMISSION.
“The defendants did not avail themselves of this pro-
viso, notwithstanding that the Commission opened the
door for them to do so. So the question in this case is:
Was this charge of twenty-eight cents per hundredweight
from Memphis to Summerville made by these defendants,
and was it made under substantially similar circumstances
and conditions as the charge of nineteen cents per hundred-
weight from Memphis to Charleston, the distance from
Memphis to Summerville being shorter than the distance.
from Memphis to Charleston, both Summerville and Char-
leston being on the same line, and in the same direction?
>k >k >{<
“The circumstances of the case at bar are closely like those
of the case just quoted. Charleston is a competitive point
between all railroad routes, routes partly by rail and partly
by water, and routes all water. If the defendants had not
consented with each other to lower the rate, no hay what-
ever would come from the lay-p1Uulucing territory tribu-
tary to Memphis, and all the southeast Atlantic States
would be compelled to rely on other portions of the West,
North, or Northeast for hay. The evidence clearly shows
that the rate to Charleston was forced down by this com-
petition. But this is an advantage to all the territory
tributary to Charleston, and all stations share in it. No
such competition exists at Summerville, a small inland
town. If it, and others like it, were permitted to share in
the circumstances and conditions surrounding Charleston,
and to get the benefit of the competition which Charleston
enjoys and they have not, then, ea necessitate the South
Carolina Railway will be called upon to elect between its
SUMMERVILLE HAY CASE. 127
through business and its local business, and in this election
to give up the former. Thus, all stations on the line of road
will pay local freight on hay, and the market, to the extent
of imports from Memphis, will be destroyed. The Inter-
state Commerce law was intended to promote trade. Such
a construction as is now sought would destroy competition,
the life of trade.”
The Circuit Court of Appeals in an opinion by Judge Goff,
reversed the decision of the Circuit Court and issued a
decree substantially similar to the order of the Commission.
From this conclusion, Judge Morris dissented, saying,
among other things:
“ * * * the Commission did not pass upon the ques-
tion of the dissimilarity of the circumstances and conditions
nor upon the question whether the rate for the shorter
haul was of itself reasonable and just. They took the law
to be that, by charging a greater rate for the shorter haul
over the same line, the carriers were prima facie without
justification, and that they could only be permitted law-
fully to make the charge after they had been authorized
upon application to the Commission under the proviso of
the Fourth Section. * * *
“It was error, I think, for the Commission to hold that the
carriers could not justify themselves because they had not
first made application for relief under the proviso of the
Fourth section. It has been held that, if the carrier can
show that the circumstances and conditions of the two hauls
are dissimilar, the statute has not been violated. * * *
128 THE COURTS AND THE COMMISSION.
“And this seems a reasonable construction of the law.
The case, therefore, it appears to me, came into the Circuit
Court without any finding of fact upon which an order
against the carriers could be predicated. The Circuit judge
examined the testimony, and considered the evidence tend-
ing to prove that the through rate had been forced down by
the natural advantages of Charleston as a trade center,
having numerous routes by rail, by rail and water, and by
water over which merchandise of the kind in question was
brought to that city, and to compete with which the defen-
dant carriers were obliged to reduce their railroad rates on
through freight to Charleston. Summerville had no simi-
lar natural or artificial advantages, and its only carrier,
the South Carolina and Georgia Railroad, was not subject
to having its local rates forced down by competition below
what was reasonable and just. Upon consideration of all
the proven facts, the circuit judge found that the circum-
stances and conditions were not substantially similar and
that the defendant carriers had not violated the Act. With
this conclusion I agree. There is abundant proof to sup-
port it, and also to show the destructive loss which would
result to the South Carolina and Georgia Railroad (the
successor of the South Carolina Railroad) if it was required
to conform its local rates to its share of the through rates.”
The decision of the Supreme Court was against the Com-
mission. Judge Brewer, delivering the opinion of the Court,
referred to the conclusions of the Commission as follows:
“The ruling was, then, this, that some kinds of com-
SUMMERVILLE HAY CASE. 129
petition, however material and substantial in their oper-
ation, were yet inadequate for the purpose of creating dis-
similarity in circumstance and condition, to justify the
independent action of the carrier, although the identical
conditions of competition might be sufficient to produce
such dissimilarity as to justify the Commission, on applica-
tion made to it for such purpose, to authorize the carrier to
charge less for a longer than was exacted for a shorter dis-
tance. * * * the construction given in this cause by
the Interstate Commerce Commission and the Circuit
Court of Appeals to the Fourth section of the Act to regulate
commerce was erroneous.”
The Supreme Court also made it clear that if there was
anything unreasonable under the law in the rates com-
plained of or in their adjustment, the Commission, through
its erroneous interpretation of the law and its refusal to
consider material facts when the case was before it, had
stood in the way of a prompt rectification of the situation.
The court said:
“If, then, we were to undertake the duty of weighing the
evidence in this record, we would be called upon as a matter
of original action, to investigate all these serious considera-
tions which were shut out from view by the Commission
and were not weighed by the Circuit Court of Appeals,
because both the Commission and the Court erroneously
construed the statute. But the law attributes prima facie
effect to the findings of fact made by the Commission, and
130 THE COURTS AND THE COMMISSION.
that body, from the nature of its organization and the duties
imposed upon it by the statute is peculiarly competent to
pass upon questions of fact of the character here arising.”
Truck Farmers’ Case.*
“The Court can only enjorce the lawful orders of the Commis-
Sion.”—Decision of the Circuit Court in this case.
The complaint in this case involved the rates on straw-
berries and vegetables from Charleston to Baltimore, Phil-
adelphia, New York, and othel uul (leaster11 IIIarkels. The
substantial portion of the order of the Commission follows:
“Ordered and adjudged that the defendants (naming
them), and each of them, do, within ten days after service
of this order, wholly cease and desist and thenceforth ab-
stain from charging or receiving any greater compensation
in the aggregate for the transportation from Charleston, in
the State of South Carolina, to Jersey City, in the State of
New Jersey, of the following named and described com-
modities, whether shipped to New York, N. Y., and de-
livered to consignees at Jersey City, or shipped to Jersey
* The Truck Farmers’ Association of Charleston and Vicinity vs. The
Northeastern Railroad Company of South Carolina et al.; Interstate
Commerce Commission (6 Inter. Com. Rep. 295), decided April 6, 1895.
Interstate Commerce Commission vs. Northeastern Railroad Company
et al.; Circuit Court, District of South Carolina (74 Fed. Rep. 70), de-
cided April 30, 1896. Interstate Commerce Commission vs. North-
eastern Railroad Company et al.; Circuit Court of Appeals, Fourth Cir-
cuit (83 Fed. Rep. 611), decided November 3, 1897.
TRUCK FARMERS’ CASE. 131
City, than is hereinafter set forth as follows, to wit: (1) Six
cents per quart, $1.92 per crate of 32 quarts, or $3.84 per
100 pounds, as the total charge for the transportation of,
including cost of refrigeration en route, and all services in-
cident to such transportation of, strawberries from Charles-
ton aforesaid to Jersey City aforesaid. (2) Fifty-nine and
one-half cents per standard barrel or barrel crate for the
transportation of apples, onions, turnips, squash, or cymling,
or egg plant, from Charleston aforesaid to Jersey City afore-
said. (3) A rate or sum for the transportation of cab-
bages shipped in standard barrels or barrel crates from
Charleston aforesaid to Jersey City aforesaid, or New York,
N. Y., which is three-fourths of the rate or sum contempo-
raneously charged by defendants on potatoes shipped in
standard barrels or barrel crates between said points. It
is further ordered that said defendants be, and they sever-
ally are hereby, required to readjust their rates for the
transportation of the commodities hereinabove specified
from Charleston aforesaid to Philadelphia, Pa., Baltimore,
Md., and Washington, D. C., so as to bring them in con-
formity with the law when compared with rates to Jersey
City or New York, which will be put into effect by said de-
fendants under the terms of this order.” -
No opinion as to the reasonableness of the rates involved
was expressed either by the Circuit Court or by the Circuit
Court of Appeals. The gist of both opinions is contained
in the following sentence from the opinion of the Circuit
Court, delivered by Judge Simonton:
132 THE COURTS AND THE COMMISSION.
“The Interstate Commerce Commission asks this Court
to enforce its orders fixing rates for truck between Charles-
ton and New York. The Court can only enforce the lawful
Orders of the Commission. As has been seen, the Commission
is not warranted by the Act of Congress to fix rates, and to
this extent its order is not lawful.”
There was no appeal to the Supreme Court in this case.
Iron Rates Case.*
“The Irulerslate Commerce Commission has not been vested
with the legislative power to prescribe rates.”—Decision
of the Circuit Court of Appeals in this case.
The facts in this case and its history before the Circuit
Court are otated by the Commission in its I'ourteentlı (1900)
Annual Report, as follows:
“In November, 1895, the Commission decided, in a case
* Colorado Fuel & Iron Company vs. The Southern Pacific Company
et al.; Interstate Commerce Commission (6 Inter. Com. Rep. 488),
decided November 25, 1895. Interstate Commerce Commission vs.
Southern Pacific Company et al.; Circuit Court, District of Colorado
(74 Fed. Rep. 42), plea to jurisdiction overruled May 12, 1896. South-
ern Pacific Company, Appellants, vs. Colorado Fuel and Iron Com-
pany; Colorado Fuel & Iron Company, Appellants, vs. Southern Pacific
Company et al.; Circuit Court of Appeals, Eighth Circuit (101 Fed. Rep.
779), decided April 16, 1900. Colorado Fuel & Iron Company, Appel-
lant, vs. Southern Pacific Company et al.; Supreme Court (46 L. Ed.
1264), dismissed for stipulation, November 8, 1901.
IRON RATES CASE. 133
brought by the Colorado Fuel and Iron Company, that the
rate charged by carriers from Pueblo, Colorado, to San
Francisco, California, on iron and steel articles, amounting
to $1.60 per 100 pounds, was unlawful under the Act to
regulate commerce, and that the rates charged on such
articles from Pueblo to San Francisco should not be more
than 75 per cent of the rates contemporaneously charged
on like traffic from Chicago to San Francisco, nor more than
45 cents per 100 pounds on steel rails and fastenings, and
37% cents per 100 pounds on bar iron and other enumerated
iron articles. The maximum rates so fixed were 75 per
cent of the rates then in force from Chicago to San Fran-
cisco.
“The rates ordered by the Commission were not put in
force as required by the order, and a proceeding was insti-
tuted in the Circuit Court for the District of Colorado to
enforce the order. While that suit was pending, and after
the court had overruled a demurrer filed by the Southern
Pacific, the rates required under the order of the Commis-
sion were put into effect by the carriers. These rates were
maintained for about two years and until about October
17, 1898, when the Southern Pacific Company gave notice
of a proposed increase in rates to 60 cents per 100 pounds
on steel rails and fastenings, and 75 cents per 100 pounds on
other steel and iron products. Thereupon the Colorado Fuel
and Iron Company filed a billin the Circuit Court for the Dis-
trict of Colorado against the Southern Pacific Company and
its connecting railroads for the purpose of preventing them
from putting in force such increased rates, and prayed for
an injunction. No answers having been filed, a decree pro
134 THE COURTS AND THE COMMISSION.
confesso was subsequently entered. The complainant also
having asked for damages in the sum of $100,000, subse-
quent proceedings were taken before a master to ascertain
the amount of the complainant's damages, and after the
master had filed his report recommending a decree for
damages in the sum of $35,300 the case came before the
court for final hearing and decree.
“The court rojoctod tho complainant's demand for dam-
ages, but awarded an injunction, first, that the defendants be
enjoined and restrained from further continuing to violate
and disobey the order of the Commission, and, second, that
the defendants be enjoined and required, in respect of
complainant's traffic from Pueblo to San Francisco and
other points in California, to cease and desist from un-
just and unreasonable charges, or from demanding a
greater compensation for services to be rendered the com-
plainant than they charge other persons for a like and con-
temporaneous service in the transporation of like kind of
traffic under substantially similar circumstances and condi-
tions, or from giving undue and unreasonable preference
and advantage to particular persons, corporations, and
localities at Chicago, Ill., and elsewhere eastward of that
city, or from subjecting the complainant and its traffic to
undue and unreasonable prejudice and disadvantage and
unjust discrimination, or from preventing the complainant
from having its interstate traffic moved upon terms and
conditions as favorable as those given by them for like
traffic under similar circumstances and conditions for other
shipments.
“A third paragraph in the restraining order required the
IRON RATES CASE. 135
defendant carriers to move the interstate traffic of the com-
plainant at the samerates charged and upon terms as favor-
able as those given by the defendants, under similar condi-
tions, to any other shipper, to the end that they charge
and demand from the complainant for transportation from
Pueblo to San Francisco and other California points on steel
rails and fastenings no more than 45 cents per 100 pounds,
and on bar iron and other iron articles named no more than
37% cents per 100 pounds.”
The Colorado Fuel & Iron Company appealed from that
portion of the decree which disallowed the damages that
it claimed, and the Southern Pacific from that portion re-
lating to its rates. Both points were decided against the
complainant before the Commission, and the ensuing ap-
peal to the Supreme Court was dismissed by agreement
between the parties. The decision of the Circuit Court of
Appeals contains the following suggestions concerning the
power which the Commission assumed to exercise:
“* * * the Interstate Commerce Commission has not
been vested with the legislative power to prescribe rates,
either directly or indirectly. Prescribing a rate from
Pueblo, Colo., to San Francisco, Cal., by reference to a rate
that had theretofore been established by carriers between
Chicago and San Francisco, involved the exercise of legisla-
tive functions to the same extent as fixing the rate between
the former points on an independent consideration of what
would be a reasonable compensation for the service. In
either event, far reaching questions of public policy arise,
136 THE COURTS AND THE COMMISSION.
and many circumstances and conditions affect the question
to be solved, so that it cannot be said that the problem of
fixing a reasonable rate from Colorado points to the Pacific
Slope became a simple one involving no exercise of legis-
lative discretion, when it appeared that the carriers had
established a rate from Chicago to Pacific coast points.”
Again, in this case, if is apparenf from the decision of the
Court that, if it be admitted that there were equities between
the parties which required correction by a lawful order of
the Commission, the latter, by assuming to exercise powers
not conforced upon it by Congross, indofinitoly postponod
the correction of evils which it was created to eradicate.
Thus the court said:
“It must also be bornc in mind that in the case in hand we
are not called upon to deal with a joint through line, and with
a rate to an intermediate point on that line, which, by the
express command of Congress, cannot be made greater than
the through rate, if the conditions of carriage are substan-
tially the same. No joint through line under a common
control and management is disclosed by the present record.
Besides, the Commission by its order of November 25, 1895,
did not enjoin that the rate for the short haul from Pueblo
to San Francisco should not exceed the rate for the long
haul from Chicago, but it went beyond that limit, and
undertook to declare that the rate for the shorter distance
should not exceed three-fourths of the rate for the longer
distance, thereby assuming to establish a rate by relation.
IRON RATES CASE. 137
We feel constrained to hold that the Commission exceeded
its authority in this part of the order, and that it had no
more power to fix a rate from Pueblo to San Francisco by
relation to the theretofore existing rate from Chicago to
San Francisco than it had to fix the former rate upon an
independent consideration of what would be a reasonable
charge.”
The Court also used the following suggestive language
concerning the opportunities for legal redress open to
shippers who are unreasonably treated by railway carriers:
“When the carrier promulgates a schedule of rates without
previous conference with its patrons, it acts under the
mandate of the statute and the Common Law that all rates
must be fair and reasonable, and under and subject to the
rule that it may be called to account by the shipper in an
action at law for damages, provided any unreasonable or
unjust rate or charge is either exacted from the shipper or
demanded. When a rate that has been exacted or de-
manded is challenged on the ground that it was unreason-
able or unjust, it is within the province of a court and jury
to determine the issue so raised, and to redress the wrong, if
one has been committed; but, before an alleged unreasonable
rate has been either paid or demanded on an actual tender
of merchandise for shipment, it is not within the legiti-
mate province of a court of equity to interpose and fix a
maximum rate, and thereupon enjoin the carrier from
demanding more than the rate so established. Such an
Order effectually deprives an interstate carrier of its right
138 THE COURTS ANI) THE COMMISSION.
to change and fix rates which is conceded to it by the Inter-
state Commerce act. It is tantamount both to making a
contract between the shipper and the carrier, and to an
exercise of the legislative power of prescribing rates, neither
of which powers properly belongs to a court of equity.
>k :: *k
“Aside from the foregoing considerations, we perceive
no reason why the remedy at law for the threatened wrong
should be pronounced ineffectual or inadequate. The
damages that the complainant will sustain if it is right in its
contention as to the unreasonableness of the proposed rates
can be ascertained by a court and jury, while it is not sug-
gested that the defendant company is insolvent, or that it
will be unable to respond for such damages as a jury Iſlay
assess. Besides, a single verdict before a jury establishing
the unreasonableness or discriminating character of the
propogod rate would probably lead to a withdrawal of the
rate, and avoid the necessity of further actions.”
Piedmont Cases.”
“The Commission did not consider whether the rates to Pied-
mont and Anniston, respectively, were just and reason-
able.”—Decision of the Circuit Court in this case.
The complainants before the Commission, in these cases,
* E. D. McClelen et al. vs. The Southern Railway et al., two cases; In-
terstate Commerce Commission (6 Inter. Com. Rep. 588), decided June
6, 1896. Interstate Commerce Commission vs. Southern Railway Com-
pany et al., two cases; Circuit Court, Northern District of Alabama,
Southern Division; (105 Fed. Rep. 703), decided November 3, 1900.
PIEDMONT CASES. 139
which were heard and decided together, included the Mayor
and certain business men of the town of Piedmont, Ala-
bama. They objected to the adjustment of rates from
New York, Philadelphia, Baltimore and Chattanooga as
between Piedmont and Anniston, Alabama, contending
that in comparison with the rates to the latter point, those
to the former were “unreasonable and unjust” thus giving
“an undue and unreasonable preference or advantage to
Anniston and subjecting Piedmont and those doing busi-
ness in the surrounding country to an undue prejudice or
disadvantage.” It was also urged that Piedmont being an
intermediate point on defendants’ line to Anniston the long
and short haul clause of the law was violated by the higher
charges to the former than to the latter. It was not con-
tended that the rates to either Piedmont or Anniston were
unjust or unreasonable in themselves. In deciding the
cases the Commission said:
“There is no charge in either complaint that the rates in
question to Piedmont are excessive, or are unreasonable in
themselves, but the complaint in substance is that they are
unreasonable and unjust as compared with the rates to Annis-
ton,” in that they give the latter city an undue preference or
advantage, and subject the former to an undue prejudice or
disadvantage in territory in which they meet in active com-
petition. The exaction, without lawful excuse, of a greater
* The italics are in the original.
140 THE COURTS AND THE COMMISSI()N.
compensation in the aggregate for the shorter than for the
longer haul over the same line in the same direction, the
shorter being included in the longer, which is forbidden by
Section four of the Act to regulate commerce, is only a form
of unjust discrimination or undue preference, to which, it
seems, Congress desired to call particular attention because
of its prevalence in certain sections of the country.” -
The case was tried as one arising under the long and short
haul clause of the law and the possibility that other sections
of the statute might be found on investigation to be appli-
cable was not, apparently, regarded as of sufficient
weight to warrant its consideration. The Commission,
being still under the impression that an appeal to itſ in
dulgence was necessary to warrant railways in recogniz-
ing in their rate sheets certain elements of dissimilarity
of circumstances and conditions, and no request for the
exercise of the dispensing power which it imagined itself to
possess having been made, decided the matter in almost
summary fashion. Its “conclusions” occupy less than two
printed pages and the following is an extract:
“The defendants claim that the greater charges for the
shorter distances to Piedmont, as shown in these cases,
are justified by the competition of another railroad carrier
subject to the Act to regulate commerce. Under the
construction by the Commission of the Fourth section,
or “long and short haul clause,’ of the statute, in its
former rulings, this claim cannot be admitted except upon
PIEDMONT CASES. 141
application to the Commission for exemption from the rule,
because the competition under which the defendants would
justify the lower rates to Anniston, the longer haul, than
to Piedmont, the shorter haul, arises with a competitor, the
Louisville and Nashville Railroad Company, which is an
interstate carrier by rail and amenable to the Act to regu-
late commerce. The elements of competition and all mat-
ters relative thereto may be presented to the Commission
for determination upon application of defendants for relief
from the operation of the Fourth section of the Act, under
the proviso to said Act. The decision herein is in no wise
to be construed to preclude the defendants from making
such application under the provisions of the Act.”
The Circuit Court, in declaring that the Commission had
not made a lawful order, and therefore had not made one
which the courts could enforce, called attention to the
Commission's failure to take a broad view of the facts
involved, saying:
“The Commission did not consider whether the rates to
Piedmont and Anniston, respectively, were just and rea-
sonable, * * * The Commission did not consider
whether the disparity in rates between Piedmont and Annis-
ton constituted an unjust discrimination against Piedmont
under the second section, or an undue preference of Annis-
ton under the Third section, of the Act, * * * When it
approached the Fourth section of the Act, the Commission
declined to weigh the evidence before it as to the existence
of competition at Anniston, except so far as to enable it to
142 THE COURTS AND THE COMMISSION.
determine that the evidence established that the competi-
tion at Anniston relied upon by the carriers was alone
engendered by the presence there of other carriers, who
were subject to the Commerce law.”
No appeal was taken by the Commission in this case.
La Grange Casc.”
“We jail to see how there was any just cause of complaint.”—
Decision of the Supreme Court in this case.
This case is especially notable as being the first arising
under the long and short haul clause in which the Commis-
Sion recognized the construction of the statute, which had
been sanctioned in successive decisions by the Federal
courts, that competition by carriers subject to the Act
may produce the dissimilar circumstances and conditions
which make the Fourth section inapplicable. The com-
plaint alleged that the rates charged by the defendants on
shipments from New Orleans to La Grange, Georgia, were
* Fuller E. Calloway vs. Louisville & Nashville Railroad Company et
al.; Interstate Commerce Commission (7 Inter. Com. Rep. 431), decided
December 31, 1897. Interstate Commerce Commission vs. Louisville
& Nashville Railroad Company et al.; Circuit Court, Southern District
of Alabama (102 Fed. Rep. 709), decided December 2, 1899. Louisville
& Nashville Railroad Company et al., Appellants, vs. Interstate Com.
merce Commission; Circuit Court of Appeals, Fifth Circuit (108 Fed-
Rep. 988), decided May 14, 1901. Interstate Commerce Commission,
Appellant, vs. Louisville & Nashville Railroad Company et al.; Supreme
Court (190 U. S. 273), decided May 18, 1903.
LA GRANGE CASE. 143
unjust and unreasonable in themselves, and relatively un-
just and unreasonable as compared to lower rates charged
by the defendants for carrying the same commodities from
New Orleans, through La Grange, to Hogansville, Newnan,
Palmetto and Fairburn, Georgia, and other localities. The
rates to the points named were made by adding to the
through rates to Atlanta, a point further from New Orleans
than any of those named, the local rates back from Atlanta
to the respective destinations. Thus the local stations were
given the benefit of any reduction in the Atlanta rate due
to competition at that point. The Commission, however,
decided that the rates to La Grange were unreasonable in the
extent in which they exceeded those to Hogansville, Newnan,
Palmetto or Fairburn. The record on which this order of
the Commission was based contained no testimony in Sup-
port of the complaint except that of the complainant, but
it did include a great deal of evidence, both oral and docu-
mentary, which was introduced by the defendant carriers
in support of their position. This position is fairly set
forth by the following extract from one of the answers to
the complaint. -
“The rates from Atlanta to those stations, respectively,
LaGrange, Hogansville, Newnan, Palmetto and Fairburn,
are fixed by the Georgia Railroad Commission, and are just
and reasonable. The rates from New Orleans to Atlanta,
are fixed by the competition between markets, and the com-
144 THE COURTS AND THE COMMISSION.
petition between carriers, as explained above, and are just
and reasonable. The rates charged by respondents are the
sum of those rates, and therefore respondents’ rates them-
selves are just and reasonable. The reason that Fairburn,
Palmetto, Newnan and Hogansville have lower rates than
LaGrange is due alone to the fact that they are nearer to
Atlanta, and not to any favoritism or discrimination on the
part of respondents.”
The order not being obeyed, the Commission appealed to
the Circuit Court, which issued an injunction restraining
the defendants from continuing their disobedience thereto.
This court, while concurring in some of the conclusions of
the Commission, expressed itself in part as follows:
“The Court is not so clear as to the proposition that the
rates from New Orleans to LaGrange are unreasonable and
unjust in themselves, and relatively so as compared with
the rates to Atlanta. The question as to what is a reason-
able and just rate is a very difficult one. “No more diffi-
cult problem can be presented than this.' * * * But
the findings of fact in the report of the Commission are
made by law prima facie evidence of the matters therein
stated, and the conclusions of the Commission based upon
such findings are presumed to be well founded and correct,
and they will not be set aside unless error clearly appears.”
The Circuit Court of Appeals overruled the Circuit Court,
citing the Georgia Commission cases, and remanded the case
to the Circuit Court with instructions to set aside its decree
LA GRANGE CASE. 145
and to dismiss the application without prejudice to the right
of the Commission to proceed and to determine the con-
troversy according to law. The Commission, however,
appealed to the Supreme Court, which affirmed the action
of the Circuit Court of Appeals. The following statement
of the theory of rate-making which resulted in the use of
the combination based upon Atlanta, rather than upon a
point through which the traffic was actually carried, appears
in the opinion of the Supreme Court. f
“The sum of the rate to LaGrange was arrived at by
charging the low rate produced by competition at Atlanta,
and adding thereto the sum of the local rate back from
Atlanta to LaGrange. The same rule was applied to the
stations between LaGrange and Atlanta, each of those sta-
tions receiving, therefore, a somewhat lower rate than La
Grange, although they were located a greater distance from
New Orleans and nearer Atlanta. The sum by which the
rates from New Orleans to these respective stations between
LaGrange and Atlanta were lower than the LaGrange
rates, was dependent upon the distance these respective
stations were from Atlanta. It was shown, however, and
is unquestioned, that, except in a particular to which we
shall have occasion hereafter to refer, if the charge had been
based on the nearest competitive point south of LaGrange—
that is, Montgomery—and there had been added to the
competitive rate to Montgomery the local rate from Mont-
gomery to LaGrange and the other stations beyond, the
freight rates on shipments from New Orleans to LaGrange
146 THE COURTS AND THE COMMISSION.
would have been much greater than the rates now com-
plained of as excessive. In other words, the railroads, in-
stead of putting out of view the competition prevailing at
Atlanta, when they fixed the rates to the non-competitive
points, took the low rates prevailing at Atlanta, as a basis,
and added thereto the local rate from Atlanta, the result
being that the places in question were given the advantage
resulting from their proximity to Atlanta, the competitive
point, in proportion to the degree of such proximity.”
Continuing, the Supreme Court said:
“When tle situatiui, just slaleul is cultiprelieuded, it
results that the complaint in effect was that a method of
rate-making had been resorted to which gave the places
referred to a lower rate than they otherwise would have
enjoyed. In this situation of affairs, we fail to see how
there was any just cause of complaint. Clearly, if, disre-
garding the competition at Atlanta, the higher rate had
been established from New Orleans to the non-competitive
points within the designated radius from Atlanta, the inevi-
table result would have been to cause the traffic to move
from New Orleans to the competitive point (Atlanta), and
thence to the places in question, thus bringing about the
same rates now complained of. It having been established
that competition affecting rates existing at a particular
point (Atlanta) produced the dissimilarity of circumstances
and conditions contemplated by the 4th section of the
Act, we think it inevitably followed that the railway com-
panies had a right to take the lower rate prevailing at
LA GRANGE CASE. 147
Atlanta as a basis for the charge made to places in territory
contiguous to Atlanta, and to ask, in addition to the low
competitive rate, the local rate from Atlanta to such places,
provided thereby no increased charges resulted over those
which would have been occasioned if the low rate to Atlanta
had been left out of view. That is to say, it seems incon-
trovertible that in making the rate, as the railroads had a
right to meet the competition, they were authorized to give
the shippers the benefit of it by according to them a lower
rate than would otherwise have been afforded. True it is,
that by this method a lower rate from New Orleans than
was exacted at LaGrange obtained at the longer distance
places lying between LaGrange and Atlanta, but this was
only the result of their proximity to the competitive point,
and they hence obtained only the advantage resulting from
their situation. It could be no legal disadvantage to La
Grange, since, if the low competitive rate prevailing at
Atlanta had been disregarded, and the rate had been fixed
with reference to Montgomery, and the local rate from
thence on, the sole result would have been, as we have pre-
viously said, to cause the traffic to move along the line of
least resistance to Atlanta, and thence to the places named,
leaving LaGrange in the exact position in which it was
placed by the rates now complained of.
“It is to be observed that it is shown that the local charges
on freight moved between Atlanta and La Grange and the
stations intermediate—all of the points being in the State
of Georgia—conformed to the requirements of the Georgia
State Railroad Commission.”
148 THE COURTS AND THE COMMISSION.
The Supreme Court further expressed the opinion that:
“* * * there was nothing in the evidence taken be-
fore the Commission to lend support to the finding that the
rates to LaGrange were intrinsically unreasonable, * * * *
Griffin Case.*
“Shall government undertake the impossible, but injurious,
task of making the commercial advantages of one place
equal to those of another ?”—Decision of the Circuit Court
in this case. -
The complainants before the Commission, wholesale and –
retail grocers in the city of Griffin, Georgia, contended that
the rates to that point from Cincinnati and Louisville were
in violation of the long and short haul clause because they
were higher than on like freight carried through Griffin to
Macon. They also alleged that the rates to Griſſin were
unreasonable in themselves and relatively so as compared
with rates to Macon. The defendants denied that the rates
to Griffin were unreasonable in themselves, that they dis-
criminated unjustly as between Griffin and Macon, and
asserted that the Fourth section was not violated because
* Brewer & Hanleiter vs. Louisville & Nashville Railroad Company et
al.; Interstate Commerce Commission (7 Inter. Com. Rep. 224), decided
June 29, 1897. Brewer et al. vs. Central of Georgia Railway Company
et al.; Circuit Court, Southern District of Georgia, Eastern Division
(84 Fed. Rep. 258), decided January 8, 1898.
GRIFFIN CASE. 149
dissimilar circumstances and conditions controlled the rates
to the respective points. The opinion of the Commission
discloses the fact that no evidence was introduced in Sup-
port of the contention that the rates to Griffin were in them-
selves excessive or unreasonable. Several witnesses testi-
fied that they were reasonable. The Commission further
said that the question whether there was unjust discrimi-
nation against Griffin and in favor of Macon “is probably
a question of law, depending upon the other facts herein
found.” The far greater portion of the opinion, and ap-
parently of the testimony, was devoted to the question
whether there existed the substantial dissimilarity of con-
ditions and circumstances, as between Griffin and Macon,
necessary to render the long and short haul clause inappli-
cable. The following are extracts from the report and
opinion of the Commission:
“Atlanta is what is called, in the parlance of southern
rate-making, a basing point. Griffin is not a basing point.
The rate to Griffin is made by adding to the Atlanta rate
the local rate from Atlanta to Griffin. Macon is also a
basing point, and the rate to Macon and Atlanta is in most
instances the same. * * * The defendants contended
in the first place that the rates to Macon were affected by
water competition. Macon is situated upon the Ocmulgee
river. The Altamaha river is formed by a junction of the
Ocmulgee and Oconee rivers, and empties into the ocean
between Savannah and Brunswick. Regular lines of freight
150 THE COURTS AND THE COMMISSION.
and passenger steamers run between both of these ports and
New York City. Lines of railway also lead from both
Savannah and Brunswick to Macon, and freight is carried
by ocean and rail from New York to Macon over these lines
of railway upon a joint through rate. * * * The de-
fendants also claimed that competition between railroads
and markets created the necessary dissimilarity of circum-
stances and conditions. Five independent lines of railway
tº-y ºf º-º-º: sº *-* *-* *** * *-* *-* *-ºs ºs ºf º- º sºº-ºº-ºº g *** *** * *-* =^*** *-ºs ºf -ºs.º. ºf * *** *-* *** *-* * * * * *
enter Macon. These lines through their different connec-
tions by rail, and by rail and water, reach all parts of the
United States and actively compete for business from all
available directions.
“By means of these railway lines the markets in all parts
of the United States are brought into connection with Ma-
con, and many of those markets seek a rate which will enable
them to dispose of their various products in Macon. Under
the present adjustment of rates, the supplies consumed in
Macon are obtained both from the eastern and from the
western markets. * * * The defendants insisted that
the Macon rate was made by conditions over which they
had no control, and that it was beyond their power to alter
this rate. If the Macon rate was fixed and they had no
right under the law to make higher rates to intermediate
points between Macon and Atlanta, then one of two things
must happen, either they must raise their rate to Macon, and
so entirely lose that competitive business, or they must
lower their rates to intermediate points and so lose the
difference between the present rates and the Macon rate;
and the Central of Georgia Railway insisted that in either
case its revenues would be unwarrantably crippled. * * *
GRIFFIN CASE. 151
We hold upon the findings before us that Griffin is entitled
to as low a rate from Louisville and Cincinnati as is Macon,
and that the charge of a higher rate is an unjust discrimi-
nation under Section Three. * * * Are the rates com-
plained of in violation of the 4th section? Confessedly
they are, unless justified by dissimilar circumstances and
conditions.
“The defendants rely upon water competition to make out
the necessary dissimilarity, but there are no facts in the case
upon which to base that contention. * * * The de-
fendants also rely upon competition between railroads and
markets. This competition does undoubtedly exist in a
most active form, and is the controlling factor in making
the Macon rate; but that it creates such dissimilarity of
circumstances and conditions as will justify the carrier in
charging more for the short than for the long haul without
an order of this Commission is no longer an open question
with us. * * * If by the reduction of the rate to inter-
mediate points the revenue of the Central of Georgia Rail-
way Company will be unwarrantably lessened—and upon
that question we express no opinion—then the defendant
should readjust its rates by raising the Macon rates suffi-
ciently to offset the reduction to intermediate points, and
thereby remove the present unjust discrimination. Its
answer is that it could not, if it would, do this; that the
Macon rate is beyond its power to modify. The Macon rate
is the result of agreement. The Central of Georgia Railway
Company is a party to that agreement, and has the same
power over it that every other party has. If it has not
sufficient influence to secure the adoption of such rates as
152 THE COURTS AND THE COMMISSION.
will, under the law, yield to it a proper revenue, that is the
misfortune of those who have become the owners of this
property, which must be endured as every other misad-
venture of business is.”
In accordance with the opinion containing the foregoing
the Commission ordered the defendants to “cease and de-
sist” from charging more to Griffin on shipments from Cin-
cinnati and Louisville, than to Macon. This order the
Circuit Court refused to enforce, declaring that it was not a
“lawful order.” The Court said, in part:
“There is no contention that the Macon rates are in them-
selves unreasonable. By what specific charge, and by what
specific facts, then, is the finding of unjust discrimination
supported? Not, certainly, by the mere fact that the Griffin
rate is higher and the Macon rate is lower. There can be no
unjust discrimination of which commissions and courts can
take cognizance, * * * unless it also be an unlawful
discrimination. To have merited the animadversions of
the Commission, these rates relative to these two Georgia
cities must have been denounced by positive law, or its neces-
sary implications.” # * * There are many circumstances
and conditions at the important distributing point Macon
* The Court quoted here from the opinion of the Commission, written
by Judge Cooley, in re Louisville & Nashville. The extract selected by
the Court includes the following: “The courts and the commissions of
the United States must look to what is expressed or necessarily implied
by the law for their authority to decide issues, and thus ascertain and
determine the rights of contending parties.”
GRIFFIN CASE. 153
affecting railroad rates which do not exist at Griffin, < * *
It cannot be doubtful that it is easily feasible for Macon
merchants to confront the railroads with water competi-
tion, * * * But water transportation is not the im-
portant element of that strenuous competition between
carrier and carrier and market and market which makes the
conditions and circumstances at Macon so dissimilar from
those at Griffin. It is perhaps enough to point out that the
Commission reports this competition to exist in its most ac-
tive form. To test the extent of these dissimilar conditions,
I have but to point to what would be the result if the Macon
rates were advanced to equal the Griffin rates. Railroad
competition at Macon exceeds that at Griffin as the com-
peting roads which center at Macon exceed the com-
peting roads which pass Griffin, and the competition of
markets which Macon merchants are compelled to meet is
far greater than that which confronts the Griffin merchants.
To illustrate, Macon competes with Savannah for the trade
of much of the country traversed by the main line of the de-
fendant company. It competes with Eufaula and Columbus
on the Southwestern Railroad and its several branches, and
the several other lines reaching the city with numerous
markets and communities, none of which the merchants of
Griffin can reasonably hope to reach. It is evident, there-
fore, that, since these competitive markets have, many of
them, equal advantages in rates with Macon, if there be an
advance in the cost of transportation, the commerce of
Macon would be destroyed in exact proportion with its
inability to meet the prices of its competitors. While this is
true, the producers and consumers at Griffin would not be
154 THE COURTS AND THE COMMISSION.
benefited by the advance of Macon rates. * * * Ana-
lyzing the proposition of the complainant, made, it seems to
me in disregard of the dissimilar circumstances and condi-
tions existing at Macon, it would, if successfully maintained,
result in the destruction of the immense wholesale and retail
commerce of Macon upon which thousands depend for their
daily livelihood, which serves a vast territory, and the incre-
mcnt of which adds thougands annually to the aggregate
wealth of the State, in order to give a possible benefit to a few
Griffin merchants. Even this advantage to the merchants
of Griffin is scarcely more than problematical. Griffin,
with equal rates, could not successfully compete with Macon,
unless it could approximate its large supply of capital, so
essential to modern commerce. * * * The effect. On the
defendant company would also be damaging, perhaps in-
calculably so, * * * how stands the trivial and prob-
lematical advantage which Brewer & Hanleiter, and per-
haps other Griffin merchants, might obtain by increasing
the Macon rates, when compared to the stupendous dis-
advantage which would almost certainly result to the latter
community and to one of its principal railroads, if the com—
petition of carrier with carrier and market with market,
ever present there, should be ignored by the courts? Shall
the authorities of government have no concern for the
safety of millions of capital invested or accumulated through
long years of enterprise and diligent business exertion by
the people of the latter city? Shall the millions they have
invested in railroads from their own means, to afford to the
State great systems of transportation, result in their ruin?
Shall government undertake the impossible, but injurious
SPOKANE FALLS CASE. 155
task of making the commercial advantages of one place
equal to those of another? It might as well attempt to
equalize the intellectual powers of its people. There should
be no attempt to deprive a community of its natural ad-
vantages, or those legitimate rewards which flow from large
investments, business industries, and competing systems
of transportation to facilitate and increase commerce. The
Act to regulate commerce has no such purpose, and yet this
appears to be the inevitable result of the relief the com-
plainants seek in this case. * * * The application is
for a temporary injunction, the first effect of which would
be to immediately disorganize and disarrange the entire
commerce of which Macon is the receiving and distributing
point, with the more injurious consequences to which I have
already adverted.”
No appeal was taken from this decision.
Spokane Falls Case.”
“The lesser charge upon which both the assumption of preſer-
ence and discrimination is predicated is sanctioned by
the statute.”—Decision of the Supreme Court in the
“Chattanooga’’ case.
* The Merchants' Union of Spokane Falls vs. The Northern Pacific
Railroad Company, and the Union Pacific Railway Company; Inter-
state Commerce Commission (5 I. C. C. Rep. 478), decided November 28,
1892. Farmers' Loan & Trust Company vs. Northern Pacific Railway
Company, in re Holly et al.; Circuit Court, District of Washington,
|Northern Division (83 Fed. Rep. 249), decided October 16, 1897.
156 THE COURTS AND THE COMMISSION.
The original complaint in this case was filed with the
Commission on April 2, 1889, and the Commission's decision
was rendered on November 28, 1892, three years, seven
months and twenty-six days thereafter. Application to
the Circuit Court to enforce the order was made sometime
in 1894, and the decision of that Court, refusing to enforce
the Commission's order, was rendered on October 16, 1897.
The complainants before the Commission charged that
rates to Spokane Falls were unreasonable in themselves
and also so adjusted with relation to the rates to Portland,
Tacoma, Seattle, Ellensburg and Missoula as to discriminate
unjustly against Spokane Falls. It was also claimed that
the practice of carrying traffic through Spokane Falls to
Portland, Tacoma and Seattle for lower rates than were
charged for contemporancous shipments of similar freight
destined to Spokane Falls constituted a violation of the long
and short haul clause. The defendants denied all the alle-
gations of injustice and asserted that the through rates to
Portland, Tacoma and Seattle were forced by competition,
both by ocean carriers and by the Canadian Pacific Rail-
way, which did not exist at Spokane Falls. The Commis-
sion concluded that this competition was actual and suffi-
cient inforce to create substantially dissimilar circumstances
and conditions within the meaning of the law. On this
point the Commission said:
SPOKANE FAILLS CASE. 157
“The circumstances and conditions under which through
transportation is effected over the lines of the Northern
Pacific to its western terminals are substantially different
from those attending like transportation to Spokane, such
dissimilarity consisting in the competition at these terminal
points of carriers not subject to the Act. To what extent
this competition is created by the rates made and traffic
secured by the Canadian Pacific road does not very clearly
appear. The known facts concerning that road, however,
are not wanting in significance. It is a foreign railroad,
chartered and subsidized by a foreign government and not
directly amenable to the regulating authority of Congress.
It extends entirely across the continent at no great distance
from our Northern border, and is so located and connected
with domestic lines as to constitute a prominent factor in
all questions of transportation between the eastern and
western sections of the United States, * * * we are
constrained to hold that water competition of controlling
force, and affecting a variety of traffic important in char-
acter and amount, actually exists at these several terminals,
and that such competition taken in connection with the
competitive position and attitude of the Canadian Pacific
road, justifies the defendants in accepting less compensation
On eastern shipments to the cities of Portland, Tacoma and
Seattle than they may lawfully charge on like shipments to
the intermediate city of Spokane.”
The Commission, however, was of the opinion that some
of the rates to the Pacific coast cities named were lower than
was necessary to prevent the business going to ocean car-
158 THE COURTS AND THE COMMISSION.
riers and took the interesting position that to proportion
the charges on articles not likely, in any event, to be carried
by water to those made necessary by water competition
for articles that could easily be diverted to the ocean routes
is not permissible under the law. The logical result of this
position would have been an order requiring advances in
many of the rates to the cities indicated. The Commission
said:
“Nothing but the stress of unavoidable competition can
legalize the inequality resulting from higher rates for shorter
than for longer hauls. It is evident, therefore, that no
article should be carried to terminal points at commodity
rates, which if the class rates were imposed, would still seek
rail rather than water transportation. * * * Theoreti-
cally it would be suitable to examine the entire list of com-
modities with the view of ascertaining which of them in fact
are practically adapted to ocean carriage, and to restrict the
defendants in making lower terminal rates to such articles
as are actually subject to water competition.”
The conclusion that competition justified lower rates on
certain articles when shipped to the Pacific coast than when
shipped to Spokane Falls, did not, in the view of the Com-
mission, warrant the adjustment which it found to exist.
The rates to Spokane Falls were declared to be excessive by
comparison with these applied to traffic not subject to water
competition, although destined to coast points. The rates
on the several “classes” of freight (articles not taking special
SPOKANE FALLS CASE, 159
commodity rates) then being the same to Spokane as to
Portland, Tacoma and Seattle the Commission ordered a
reduction of 18 per cent and decided that the rates to Spo-
kane on traffic of kinds not subject to competition when
destined to the coast should not exceed 82 per cent of the
rates to coast points. The Commission supplemented these
conclusions by the following:
“It is quite apparant that a reduction of Spokane rates in
compliance with this decision will require some modifica-
tion in rates to shorter distance points to avoid infraction of
the long and short haul clause of the statute. This will
especially be the case on the line of the Union Pacific be-
tween Pendleton and Spokane, to both of which towns the
rates on that road are the same. The lines of the defend-
ants in this territory are practically parallel, the Northern
Pacific reaching Pendleton through Spokane, and the Union
Pacific reaching Spokane through Pendleton; but whatever
embarrassment may result from this situation must be met
in the first instance by the railroads themselves.”
The Circuit Court, which was appealed to for the enforce-
ment of the Commission's order, found that it was “so in-
herently defective that it cannot be enforced” and the
Master in Chancery selected to investigate the case reported:
“That the rates from Eastern terminal points to Spokane
are reasonable in themselves, and relatively reasonable on
all classes of goods.”
No appeal from this decision was taken.
160 THE COURTS AND THE COMMISSION.
Cattle Raisers’ Association Case.*
“There can be no possible view of the case by which the conclu-
Sion that the rates were unjust and unreasonable can be
sustained. * * * the order of the Commission was
not sustainca by the facts wbon which it was predicated.”—
Decision of the Supreme Court in this case.
On June 1, 1894, a switching charge of $2 was imposed by
the railways centering in Chicago upon shipments of cattle
and other live stock, destined to that city. The complain-
ant, an association of cattle owners and producers, with
members in the States of Texas, Kansas, Montana, North
Dakota, South Dakota and in the Indian Territory, com-
plained to the Commission that this addition made the rates
to Chicago excessive and unreasonable, to the extent of $2.
They also asserted that no such charge was made at East St.
Louis, Kansas City or Omaha; that there was no switching
* Cattle Raisers' Association of Texas vs. Fort Worth & Denver City
Railway Company and others; Interstate Commerce Commission (7
Inter. Com. Rep. 513), decided January 20, 1898. Interstate Com-
merce Commission vs. Chicago, Burlington & Quincy Railroad Company
et al.; Circuit Court, Northern District of Illinois, Northern Division
(98 Fed. Rep. 173), decided December 4, 1899. Interstate Commerce
Commission, Appellant, vs. Chicago, Burlington & Quincy Railroad Com-
pany et al.; Circuit Court of Appeals, Seventh Circuit (103 Fed. Rep.
249), decided June 15, 1900. Interstate Commerce Commission, Appel-
lant, vs. Chicago, Burlington & Quincy Railroad Company et al.; Su-
preme Court (186 U. S. 320), decided June 2, 1902.
CATTLE RAISERS’ ASSOCIATION CASE. 161
charge in Chicago on “dead” freight, and that consequently
this charge amounted to an unjust discrimination in favor of
the other cities named, and also in favor of “dead” freight.
The relief asked for was an order commanding the defend-
ants to desist from enforcing this charge and reparation for
the amount thus collected from the members of the Asso-
ciation. Those of the defendants whose lines did not reach
Chicago, denied that they had any share in the imposition
of this switching charge, and declared that they did not
receive any portion of it in the division of the through rates.
The lines entering Chicago asserted that, previous to June 1,
1894, the Union Stock Yards and Transit Company, in order
to attract business to its yards, had rendered service over
its tracks without exacting any terminal charge; that at
the time the charge was imposed the rate to Chicago had
become unreasonably low; that on and after that date the
Stock Yards company insisted upon a trackage payment of
from 80 cents to $1.50, and that after paying these charges
the balance of the $2 switching charge did not leave enough
to pay the actual cost of switching. They denied that there
was any illegal discrimination or any violation of the Inter-
state Commerce law. The Commission, having been admon-
ished by the Supreme Court that its authority does not
extend to prescribing a rate for the future (see Interstate
Commerce Commission vs. Cincinnati, New Orleans and
Texas & Pacific, 167 U.S. 479), merely ordered the defendant
162 THE COURTS AND THE COMMISSION.
carriers “to cease and desist” from charging and collect-
ing the charge of $2 but did not refrain from saying
that “our judgment is, therefore, that the exaction of a
terminal charge of more than $1 per car is in violation of the
First and possibly the Third section of the Act, and that the
defendants ought not to exact more than this sum.” The
order in this case was passed upon successively by the Fod-
eral Circuit Court, Court of Appeals, and the Supreme Court,
and in no case was it approved. The following is from the
decision by Judge Kohlsaat, who delivered the opinion of the
Circuif, Collrf: -
“Prior to the year 1893, the Stock Yards company, which
owns or controls the tracks required for the movement of
freight between the tracks of the several defendants and the
stock yards, had given to the defendants the free use of said
tracks; the carriers being at the expense only of the actual
cost of haulage and handling. In 1893 the Stock Yards
company assumed the entire work of hauling cars from the
intersection of said stock yards tracks with defendants'
lines, respectively, to the yards, and charged the defendants
therefor on the basis of what it had cost defendants there-
tofore for the same service. On June 1, 1894, the Stock
Yards company added to this sum a trackage charge of 40
cents per car each way, then for the first time imposed.
Partly to meet this new expense, and partly to reimburse
themselves for the actual outlay theretofore borne by them
in delivering at the stockyards, the defendants, respectively,
by concerted action, duly filed schedules of new rates to that
CATTLE RAISERS’ ASSOCIATION CASE. 163
point, with the commission, as required by the act, whereby
they created a rate to points on their lines in Chicago, and a
terminal charge to cover the expense of delivering stock
from their tracks to the said stock yards. This terminal
charge was fixed at $2 per car. The trackage charge above
referred to amounted to the sum of 80 cents per car. Thus
the former through rate to the stock yards, taking the Chi-
cago and terminal rates together, was arbitrarily increased
in the sum of $1.20 per car. Since that time the Chicago
rate has been greatly reduced, so that the question now
presented is whether the imposition of the terminal charge
of $2 upon the theretofore existing Chicago rate was unlaw-
ful and unjust. *
“Upon the hearing of defendants’ demurrers to said peti-
tion (94 Fed. 272), this court held that it was entirely within
the power of petitioner, in a proper case, to require the
defendants to cease and refrain from the enforcement of a
freight rate which the petitioner found to be unjust and un-
lawful, even though the Commission has no power to pre-
scribe a rate. Manifestly, if the defendants did effect a
segregation of their freight charges from Missouri river and
other stock-shipping centers to the Chicago stock yards, so
that the Chicago rate did not include the expenses or charges
incurred in the delivery at the stock yards from the tracks
of defendants, and did make a special rate from their tracks
to the stock yards, there can be no question of double charge
involved. Unless the one or the other of these charges, in
and of itself, is unjust and unlawful, or the same was illegally
made, the petitioners' contention must fail. The justness
and fairness of the Chicago rate is not called in question in
this proceeding.
164 THE COURTS AND THE COMMISSION.
“The act provides in what manner rates may be changed.
The defendants have complied with that requirement, and
there can be no doubt that they have, as they legally might,
divided up or segregated their Chicago and terminal charges.
That such segregation could have been legally accomplished,
and was both advisable and desirable, was unequivocally
held in the case of Walker vs. Keenan, 19 C. C. A. 668, 73
Ted. 758. This, too, is the spirit of the Covington Stock
Yards case, II Sup. Ct. 461, 35 L. Ed. 37. It is just and
reasonable that one who ships to points on the tracks of the
several defendants in Chicago should not be required to pay
a rate which is based in part upon the actual cost to the
carrier of delivery at the stock yards from the point to which
he ships. He should not be required to go to the stock
yards to get his money's worth.
“Therefore, the only question remaining is as to the law-
fulness and justice of this terminal charge, in and of itself.
The petitioner admits that, if it is to be considered by itself,
it must be held to be reasonable, and therefore just and law-
ful. Having held that it must be so considered, there re-
mains no alternative but to deny the prayer of said petition,
and the same is denied. In view of the above, it becomes
unnecessary to pass upon the question as to whether or not
this cause is properly within the Interstate Commerce act.”
It will be noted that the Circuit Court in rendering the
opinion from which the foregoing is an extract, confined itself
wholly to a discussion of the facts and expressly refrained
from considering whether the order, if it could have been
CATTLE RAISERS’ ASSOCIATION CASE. 165
held to be consistent with the facts, was one which the Com-
mission had power to make. The following is from the
opinion of the Circuit Court of Appeals, delivered orally by
Mr. Justice Brown: -
“While I do not think railway companies would be bound
to furnish terminal facilities of this kind for an occasional
horse, or perhaps even for an occasional and wholly ex-
ceptional car load of live stock, yet, if cattle became a sub-
stantial part of the traffic, I have no doubt provision should
be made for their reception.
“In 1865 the Union Stock Yards were organized, a large
area of lands purchased, and separate tracks laid by the
stock yards company, connecting with practically all the
railways running to Chicago. From this time the demand
for separate terminal facilities at each of these railways
seems to have ceased, and all cattle were consigned for de-
livery at the stock yards,-not for the purpose of being
claimed there by the consignee, but for the purpose of find-
ing a market for them. Here all the cattle consigned to
Chicago are deposited for slaughter or for further shipment,
and great slaughtering houses have been erected in the
vicinity of the yards for the disposition of the cattle. Pro-
viding a market for cattle is certainly no part of the busi-
ness of the railway company; and I think, therefore, any
extra expense occasioned from the time the cars contain-
ing the cattle leave the tracks of the company, and until they
arrive at the stock yards and the empty cars are returned,
the company is entitled to make an additional terminal
charge, equivalent to the expense occasioned to it by pro-
166 THE COURTS AND THE COMMISSION.
viding these extra facilities. Prior to June 1, 1894, the rail-
way companies seemed to have assumed this burden them-
Selves, but at this time a trackage was imposed by the stock
yards of from 40 to 75 cents each way upon every car going
and returning to the tracks of the railway company to the
stock yards. It is insisted that, as this is the only extra
expense then occasioned, any charge beyond that was un-
reasonable and improper. I do not think that necessarily
follows. While the imposition of this trackage charge by
the Union Stock Yards was doubtless the immediate
occasion for a reformation of its traffic, the railway compan-
ies were then at liberty to adopt a new schedule with rela-
tion to these terminal facilities, and charge what they
arºlinally rºi isf, them.
“The evidence is that it costs some railways a trific less
than $2, and some considerably more than that. The aver-
age seems to have been somewhat more than $2. But we
think it was proper for the railway companies, whether the
expense to the companies were a few cents more or less, to
adopt this amount as an approximate charge, and that their
action in so doing should be sustained.”
The Supreme Court unanimously confirmed the decree of
the Circuit Court of Appeals, in an elaborate opinion in
which the court clearly indicated its belief that the Com-
mission's order was not justified by the facts.
“It needs no reasoning to demonstrate that the Com-
mission correctly held that the mere imposition by the stock
yards company of a new burden, averaging $1 per car, did
CATTLE RAISERS’ ASSOCIATION CASE. 167
not justify an additional charge by the carriers of $2 per car.
It is likewise equally plain that if the prior rate was just and
reasonable, as the Commission found it to be, that the ad-
dition, without reason, of $1 per car, caused the rate to be-
come unjust and unreasonable to the extent of the $1 extra.
“It follows that the order of the Commission was right if
its correctness depends upon the considerations previously
stated. But such is not the case. In the report on the
original hearing the Commission said:
“‘If the through rate were what was really aimed at by
the complaint, then all ground of complaint has been
removed since the complaint itself was filed. About
October the 1st, 1896, rates on live stock from points
embraced in the territory covered by this complaint to
all western markets, including Chicago, were reduced 5
cents per 100 pounds. This would amount to from $10 to
$15 per car. Therefore the Texas shipper would actually
deliver his stock in Chicago for from $8 to $13 per car load
cheaper than he could before the $2 rate was imposed, and
all the complaint asks for is the abolishment of that ter-
minal charge. This charge is imposed by the terminal car-
riers at Chicago, and those carriers receive and retain the
amount of that charge. The complaint is that this charge
is an unlawful one; that no matter what the Chicago rate
may be the addition of this particular sum to that rate is in
violation of the Act to regulate commerce.”
“In other words, it was held that the rate, which was un-
just and unreasonable solely because of the $1 excess, con-
tinued to be unjust and unreasonable after this rate had
been reduced by from $10 to $15. This was based, not upon
I68 THE COURTS AND THE COMMISSION.
a finding of fact, as of course it could not have been so
based,—but rested alone on the ruling by the Commission
that it could not consider the reduction in the through rate,
but must confine its attention to the $2 terminal rate, since
that alone was the subject-matter of the complaint. But, as
we have previously shown, the Commission, in considering
the terminal rate, had expressly found that it was less than
the cost of service and was, therefore, infrinsically just and
reasonable, and could Uilly be treated as unjust and un-
reasonable by considering ‘the circumstances of the case;’
that is, the through rate, and the fact that a terminal charge
was included in it, which, when added to the $2 charge,
caused the terminal charge as a whole to be unreasonable.
Having therefore decided that the $2 terminal charge could
only be held to be unjust and unreasonable by combining it
with the charge embraced in the through rate, necessarily
the through rate was entitled to be taken into consideration
if the previous conclusions of the Commission were well
founded. It cannot be in reason said that the inherent
reasonableness of the terminal rate, separately considered, is
irrelevant because its unreasonableness is to be determined
by considering the through rate and the terminal charge
contained in it, and yet when the reasonableness of the rate
is demonstrated, by considering the through rate as reduced,
it be then held that the through rate should not be con-
sidered. In other words, two absolutely conflicting propo-
sitions cannot at the same time be adopted. As the finding
was that that both the terminal charge of $2 and the through
rate as reduced when separately considered was just and
reasonable, and as the further finding was that as a conse-
DAN VILLE CASE. 169
quence of the reduction of from $10 to $15 per car, the
rates, considered together, were just and reasonable, it
follows that there can be no possible view of the case by
which the conclusion that the rates were unjust and un-
reasonable can be sustained.” # * *
“Being then constrained to the conclusion that the order
of the Commission was not sustained by the facts upon
which it was predicated, we cannot enter into an indepen-
dent investigation of the facts, even if it be conceded, the
record is in a condition to enable us to do so, in order that
new and substantive findings of fact may be evolved, upon
which the order of the Commission may be sustained.”
Danville Case.”
“The Danville rates are not unreasonably high.”—Decision
of the Circuit Court in this case.
The complainants in this case asked the Commission to
order a readjustment of the following rates to and from
Danville:
* City of Danville and others vs. Southern Railway Company and
others; Interstate Commerce Commission (8 Inter. Com. Rep. 409
and 571), decided February 17, 1900; petition for rehearing dis-
missed November 17, 1900. Interstate Commerce Commission vs.
Southern Railway Company; Circuit Court, Western District of Vir-
ginia (117 Fed. Rep. 741), decided August 4, 1902. Interstate Com-
merce Commission, Appellant, vs. Southern Railway Company; Circuit
Court of Appeals, Fourth Circuit (122 Fed. Rep. 800), decided May 5
1903.
170 THE COURTS AND THE COMMISSION.
“First, those to Danville from northern and eastern
cities; second, rates on sugar, molasses, rice and coffee
from New Orleans to Danville; third, rates from certain
western points to Danville; fourth, the rate on tobacco
from Danville to western points.”
There appears to have been no suggestion that the rates
questioned were excessive or unreasonable in themselves,
but it was urged that they were unreasonable in comparison
with those to Richmond and Lynchburg, particularly the
latter. The case was heard and considered by the Com-
mission as though the Southern Railway were the sole de-
ſendant. The position of that railway, as reported by the
Commission, was as follows:
“The Southern came into this field of competition last of
all. When that company determined to compete for this
trafficit simply met the rates of the Chesapeake & Ohio and
the Norfolk & Western which were already in effect, and
this is all it has ever done. It has not reduced the Rich-
mond or Lynchburg or Norfolk rate. It has not raised
the Danville rate. It has in no way intensified the
discrimination against Danville, but has simply left the
situation where it found it. By entering this competitive
field it did not injure Danville; to withdraw from it would
not benefit Danville. The business is a source of some profit
to the Southern company; therefore, that company should
be allowed to continue in it.”
The disposition of the case by the Commission is indicated
by the following extract from its report and opinion:
DANVILLE CASE. 171
“We think that under all the circumstances and condi-
tions the rate to Lynchburg may properly be somewhat
lower than the rate to Danville. We do not think that the
present difference in rates is justifiable; or, in other words,
we do not think that the circumstances and conditions justify
the rates now in force. It is our opinion that rates from
northern and eastern cities to Danville and rates from New
Orleans upon the commodities mentioned in the complaint
to Danville should not exceed those to Lynchburg by more
than 10 per cent, and that rates between Danville and the
west should not exceed those between Lynchburg and the
west by more than 15 per cent. This also applies to the
rate on tobacco from Danville to Louisville. It may well
be called outrageous to impose upon the chief industry of
Danville a rate from Danville to Louisville 15 cents above
the rate from Lynchburg to Louisville, when the difference
in rates upon that class of merchandise in the reverse direc-
tion is only 2% cents.
“Our conclusions being as above indicated, the question
arises, What order can be made? We find that circum-
stances and conditions are different at Danville than they
are at Lynchburg, and that that difference might justify a
higher rate at Danville, but that there is no dissimilarity of
circumstances and conditions that justifies the present rate.
The decisions of the United States Supreme Court leave
our power under the Fourth section in such a case somewhat
doubtful. That court decides apparently that the question
is not whether there is a difference in circumstances and
conditions, but whether there is a sufficient difference to
warrant the lower rate at the more distant point. The
172 THE COURTS AND THE COMMISSION.
same reasoning would apparently lead to the conclusion
that we might inquire whether the circumstances and con-
ditions were so different as to warrant the rate actually in
effect. For the purposes of this case we hold that the inter-
pretation last suggested is the true one, and that inasmuch
as the rates considered by us are not justified by competi-
tive circumstances and conditions they are unlawful
under the Fourth section.
“This question is not, perhaps, of much practical impor-
tance. The complaint alleges that the defendant by main-
taining these rates not only violates the Fourth but also
the third section of the Act, in that it creates and con-
tinues an unjust discrimination against Danville as coin-
parod with Lynchburg, We have found that the discrimi-
nation exists. We have found that it is without justifica-
tion. It is, therefore, an unjust discrimination under the
Third section, which must be prohibited. There is some
question here as to whether this Commission has power to
determine definitely for the future the relation in rates
which should exist between Danville and Lynchburg, but
unless these rates are adjusted in substantial accordance
with the views hereinbefore expressed, we shall attempt to
do so.
“The testimony in this case was general, having reference
to no special commodity except tobacco, Sugar, molasses,
rice and coffee. It may happen that the percentage of
difference in rates between Lynchburg and Danville should
be greater in case of some commodities than in others. The
carriers themselves can make this readjustment in a much
more Satisfactory manner than can this Commission, and
DAN VILLE CASE. * 173
we have concluded to make no further order in the premises
at present, in the hope that such a voluntary readjustment
will be undertaken. If by May 1, next, the defendant has
not put into effect rates substantially in accord with the
views here indicated, we will then consider the matter fur-
ther, and make some definite order in the premises.”
The defendants, on April 27, 1900, applied for a rehear-
ing, but this petition was denied by a decision rendered on
November 17, of the same year. In denying this petition,
however, the Commission extended the time for compliance
with its recommendations to December 31, 1900, saying:
“No order will be made until December 31, 1900. If the
Southern Railway signifies by that time its disposition to
endeavor to make this readjustment, such further time will
be allowed as may be reasonably necessary. Otherwise an
order will then issue in the premises.”
An order finally having been issued and not complied
with an application for its enforcement was made and
denied. The Circuit Court said, in part:
“The evidence in this case leaves no room for doubt that
the competition at Lynchburg (as well as at Richmond), is
real and substantial; that it comes about mainly, if not
entirely, from conditions not within the control of the defen-
dant; and that there is a modicum of profit to the defen-
dant in transporting freight to and from Lynchburg and
Richmond. It follows that in reaching a conclusion in this
174 THE COURTS AND THE COMMISSION.
case adverse to the defendant the rates to and from Danville
must be held unreasonable in and of themselves. If rea-
sonable, they cannot be held to subject Danville to an undue
prejudice, or to give Lynchburg an undue preference,
merely because the Lynchburg rates are considerably lower.
* * * Whether or not the Danville rates are reasonable
per se is a question that has given me no small amount of
trouble. * * * The effect of the preseill, lates on thc
growth and prosperity of Danville is worthy of careful con-
sideration. * * * If the testimony for the complain-
ant had shown that Danville had not prospered as it should
have done, or that its trade terriluſ y llad been reduced, in
comparison with other cities where collipeLiliull had not
produced unusually low rates, and where the circumstances
are otherwise similar to those at Danville, it would be
proper to conclude from such testimony that the Danville
rates are too high. But such testimony was not offered.
* * * It is difficult to conceive of any interest that the
defendant could have to unduly prefer Lynchburg and
oppress Danville, for the defendant has practically the
whole of the transportation to and from Danville, and only
a portion of that to and from Lynchburg. * * * If we
consider the income derived from the whole system of the
Southern Railway Company, there is 110 doubt left by the
evidence that its earnings are rather less than a fair return.
* * * The inconclusive and unsatisfactory results, and
the inherent difficulties in applying the above mentioned
tests, have led me to the conclusion that the most satisfac-
tory test to be applied in this case is to compare the Dan-
ville rates with those in force at numerous other cities and
DAN WILLE CASE. 175
towns in the South, where the circumstances are as nearly
as may be similar to those at Danville. * * * The
result of comparison between these rates and the Danville
rates is the conclusion that the latter compare favorably
with the former. * * * As judged, then, by this last
test, I am led to the conclusion that the Danville rates are
not unreasonably high.”
The Circuit Court, therefore, refused to enforce the Com-
mission’s order. This refusal was affirmed by the Circuit
Court of Appeals, which, after quoting approvingly from
the opinion of the Circuit Court, said, in part:
“It being, therefore, ascertained that the low rates to
Lynchburg and Richmond are due to active, legitimate com-
petition, and that the local rates charged by the Southern
Railway Company, from Lynchburg to Danville are not
within themselves unreasonable, we are of the opinion that
the principles of law as above stated apply, and the judg-
ment of the Circuit Court is affirmed.”
An appeal to the Supreme Court, in this case, is now
pending.
176 THE COURTS AND THE COMMISSION.
Savamnah Naval Stores Case.”
“It is not so much the difficulty of the law as it is of its admin-
†stration. * * * The Commission * * * I
think, has put on the robes when, perhaps, it ought to have
worm the omeralls.”—Judge Grosscup, speech before Eco-
nomic Club of Boston, on March 11, 1905. Reported in
“Freight” for April, 1905.
In this case the Circuit Court directed obedience to the
Commission's order and the defendant railways did not
appeal.
Wilmington Case.t
“There are sufficient reasons for dissimilarity in rates.”—De-
- cision of the Circuit Court in this case.
The complainant before the Commission alleged that the
defendant's rates for the transportation of freight from
* Savannah Bureau of Freight and Transportation et al. vs. Louisville
& Nashville Railroad Company et al.; Interstate Commerce Commission
(8 Inter. Com. Rep. 377), decided January 8, 1900. Interstate Com-
merce Commission vs. Louisville & Nashville Railroad Company et al.;
Circuit Court, Southern District of Georgia, Eastern Division (118 Fed.
Rep. 613), decided July 1, 1902.
f The Wilmington Tariff Association of Wilmington, North Carolina,
vs. The Cincinnati, Portsmouth & Virginia Railroad Company et al.;
Interstate Commerce Commission (9 Inter. Com. Rep. 118), decided De-
cember 17, 1901. Interstate Commerce Commission vs. Cincinnati
Portsmouth & Virginia Railroad Company et al.; Circuit Court, Eastern
Division of North Carolina (124 Fed. Rep. 624), decided August 10, 1903
WILMINGTON CASE. 177
Louisville, Cincinnati, St. Louis, Chicago and other points
of shipment to Wilmington, North Carolina, were un-
reasonable and unjust as compared with those from the
same points of shipment to Norfolk, Richmond and other
Virginia cities. It was alleged that in order not to subject
Wilmington to undue prejudice and disadvantage within the
meaning of the law, there should be such an adjustment, as
between Norfolk and Wilmington, that either rates should be
the same to both ports or that the differences should be in
proportion to the short line distances or upon a differential
basis. The defendants contended that the circumstances
and conditions controlling rates at Wilmington and at Nor-
folk were substantially dissimilar and that while water com-
petition decreases the rates of both ports it is much stronger
at Norfolk. The Commission concluded that the rates from
Cincinnati and Louisville to Wilmington were not unreason-
able as compared with those from the same points to Nor-
folk, but that the adjustment as between St. Louis, East
St. Louis, Chicago and Wilmington on the one hand, and
St. Louis, East St. Louis, Chicago and Norfolk on the other,
was unduly disadvantageous to those doing business at
Wilmington. Its order was that the rates from the three
points named should be relatively reasonable and just, and
that those from East St. Louis to Wilmington should not ex-
ceed 135 per cent of the rates contemporaneously charged
from East St. Louis to Norfolk. Issuance of this order was
178 THE COURTS AND THE COMMISSION.
suspended for forty days after service of the report and
opinion of the Commission upon the defendant carriers in
order that they might have opportunity to make the ad-
justment recommended and they were directed in the mean-
time to file a report of their action with the Commission.
The Circuit Court refused to enforce the order of the Com-
mission aud the following are extracts from its opinion:
“If competition controls rates—and there is no conten-
tion that it should not and does not—Norfolk and Richmond
are territorially located to be entitled to trunk line rates,
which have been extended to that territory. * * * This
trunk line rate is not shown to have been extended to Nor-
folk and Richmond from any disposition to favor these
points or prejudice Wilmington, but on account of the com-
petition referred to, * * * the competition at Wil-
mington, with one line of steamers and two systems of rail-
road, is not near so great, active and sharp. If the rule
established by the courts in the case cited and others
* * * be applied, there are sufficient reasons for dissimi-
larity in rates, * * * competition fixes freight rates, as it
gives life to commerce. * * * As pointed out, the ter-
ritory north and west of the Ohio river is in a sharply con-
tested section for freights—in the ‘trunk line' territory,
which has been extended to include Norfolk and Richmond,
with their several competing carriers by rail and water—
a geographic, traffic and commercial advantage which Wil-
mington does not enjoy. The one favored more by natural
and artificial (constructed) lines of traffic; both enjoying in
HAMPTON CASE. 179
proportion thereto their advantages over other points and
cities having no water transportation or served by fewer
lines of railroad. Courts and commissions must and do
recognize these differences, as do carriers in fixing their
freight rates.”
No appeal was taken by the Commission from the decision
of the Circuit Court in this case.
Hampton Case.”
“The fallacy involved is that Hampton, which is an inland
place, with no matural advantages, shall be put upon the
same footing as Palatka.”—Decision of the Circuit Court
in this case.
The complainant before the Commission alleged violation
of the long and short haul clause of the law, in that rates
from St. Louis, Nashville, and Chattanooga to Hampton, *
Elorida, were higher than on shipments of similar freight
through Hampton to Palatka, Florida. It was also al-
leged that the rates in question were unjust and unreason-
able in themselves and afforded an undue and unreasonable
preference and advantage to dealers in Palatka. The
defendants denied that the conditions were substantially
*Board of Trade of the City of Hampton, Florida, vs. Nashville, Chat-
tanooga, and St. Louis Railway Company et al.; Interstate Commerce
Commission (8 Inter. Com. Rep. 503), decided March 10, 1900. Inter-
state Commerce Commission vs. Nashville, Chattanooga and St. Louis
Railway Company et al.; Circuit Court of Appeals, Fifth Circuit (120
|Fed. Rep. 934), decided Feb. 24, 1903.
18U THE COURTS AND THE COMMISSION.
similar and insisted that the rates to Palatka were controlled
by the water route between Jacksonville and Palatka on the
St. Johns river. The Commission thought that somewhat
higher rates to Hampton than to Palatka were justified,
but that the Third and Fourth sections were violated by
those then in force. It indicated the opinion that the ex-
cess over the Palatka rate on first class freight, which could
he allowed on traffic destined to Hampton, would not be
more than 10 cents per 100 pounds, and that similar differ-
entials should be allowed on the lower classes. This opinion
being rendered on March 10, 1900, the Commission said that
“no order will be made in this case now. If by May 1, next,
the rates in question have been readjusted in substantial
accordance with this opinion the complaint will be dis-
missed; otherwise the order will issue in the premises.”
The Circuit Court dismissed a petition to enforce the order
of the Commission, but without rendering a written opinion.
Appeal was taken and the Circuit Court of Appeals affirmed
the decree of the Circuit Court. The Court said:
“As we read the opinion of the Commission, filed as an
exhibit to the bill, the Commission did not find that the
Hampton rates were in and of themselves unreasonable,
but found argumentatively that they were too high, not as
based upon the matters to be considered in determining such
questions, * * * but largely upon a consideration of rates
and charges between St. Louis, Nashville, and Chattanooga,
HAMPTON CASE. 181
and Jacksonville and Palatka, Florida. The evidence sub-
mitted to the Commission, supplemented by all evidence
taken in the Circuit Court, is not sufficient for us to find
affirmatively that the Hampton rates were in and of them-
selves unreasonable. * * *
“The bill also charges that the Hampton rates are in viola-
tion of Section 3 of the Commerce act, in that said rates,
taken in connection with the rates of the appellees from the
same northern points to Palatka, Florida, give said Palatka
an undue preference and advantage over said Hampton,
and subject said Hampton to an undue prejudice through
this advantage. The basis of this complaint is that goods
shipped from St. Louis and Tennessee points to Palatka
can be thereafter shipped by Palatka merchants to Hamp-
ton, and there sold on an equal footing with the same goods
shipped from St. Louis and Tennessee points direct to Hamp-
ton, thus enabling the Palatka merchants to compete in
Hampton with the Hampton merchants; while the rates as
charged will not allow the Hampton merchants to ship goods
from St. Louis and Tennessee points to Hampton, and from
there to Palatka, to compete in Palatka on the same footing
with Palatka merchants. In other words, it is charged as
a duty of the Georgia, Florida & Southern Railway Com-
pany, the terminal carrier, to make such rates to Hampton
and Palatka as will enable the Hampton merchants to com-
pete in Palatka with Palatka merchants dealing in western
goods; but it must not be forgotten that the rates to Pa-
latka, which is a competitive point, are made by other car-
riers with through lines which are not parties to this suit.
The fallacy involved is that Hampton, which is an inland
182 THE COURTS AND THE COMMISSION.
place with no natural advantages, shall be put upon the
same footing as Palatka, which is situated upon a stream
navigable all the year round, and has, in addition, several
through railroad connections. It seems to be clear that
the same reasons, in which we concur, which justify the
Commission in finding that the defendant carriers can law-
fully charge more for the short haul to Hampton than the
long haul to Palatka over the same line, sufficiently answer
this charge of discrimination.”
Orange Routing Case.”
“Equal or equivalent service at equal cost is constantly at the
disposal of all who desire it.”—Dissenting opinion of
Chairman Knapp in this case.
The complainants before the Commission in this case al-
leged that the Southern Pacific and the Atchison, Topeka
and Santa Fe railways had unlawfully agreed to pool their
traffic in oranges, lemons, and other citrus fruits originating
in Southern California. This allegation was based upon the
statement that prior to January 1, 1900, the complainants
had exercised without objection from the defendants the
* The Consolidated Forwarding Company vs. The Southern Pacific
Company et al.; The Southern California Fruit Exchange vs. The South-
ern Pacific Company et al.; Interstate Commerce Commission (9 Inter.
Com. Rep. 182), decided April 19, 1902. Interstate Commerce Commis-
sion vs. Southern Pacific Company et al.; Circuit Court, Southern Dis–
trict of California, Southern Division (123 Fed. Rep. 597), decided June
1, 1903, and (132 Fed. Rep. 829), decided September 6, 1904.
ORANGE ROUTING CASE. 183
privilege of selecting the routes over which their shipments
should be carried to eastern destinations, but that upon the
date named the defendants had established a rule which they
had since continued to enforce, under which the initial car-
rier reserved the right to choose the eastern connection to
which it would deliver the traffic for shipment to destina-
tion. The defendants supported this rule upon the ground
that it was necessary to reserve to the initial carrier the
right to select the route by which it would forward the traffic
in order to secure a discontinuance of the practice of paying
rebates. The Commission declared the evidence insuffi-
cient to warrant conclusions upon the question whether the
defendant carriers maintained a pool of citrus fruit traffic
or whether the rates charged were unreasonable and unjust.
Four of the Commissioners, however, thought that the prac-
tice of denying to the shippers the privilege of selecting the
routes beyond those of the initial carriers was illegal, and an
order in conformity with this conclusion was issued. This
order was sustained by the Circuit Court. When the case
was decided by the Commission, the Chairman of the Com-
mission, Honorable Martin A. Knapp, dissented from the
view of his colleagues, and issued a strong dissenting opin-
ion. The following quotations from this opinion are ex-
tremely significant:
“The tariffs under which the traffic in question is carried
contain the following notation: ; In guargneeing the
184 THE COURTS AND THE COMMISSION.
through rate named herein, the absolute and unqualified
right of routing beyond its own terminal is reserved to the
initial carrier giving the guaranty.’ This is in effect a con-
dition upon which the joint through rates are offered, and I
perceive no good reason why such a condition may not be
lawfully imposed. Connecting carriers are not required to
form through routes or establish joint rates. They do so only
by voluntary action. They are free to make such arrange-
ments with each other and to discontinue them as and when
they see fit. No law compels these privileges to be afforded
or prevents their withdrawal. Since through routes and
joint rates are wholly in the discretion of the carriers, both
as to their establishment and termination, why may they
not be offered on condition that the initial carrier shall con-
trol the routing?
“The Common Law doctrine upon this point appears to
be well settled.
“‘At Common Law a carrier is not bound to carry except
on his own line, and we think it quite clear that if he contracts
to go beyond he may, in the absence of statutory regula-
tions to the contrary, determine for himself what agencies he
will employ. His contract is equivalent to an extension of
his line for the purposes of the contract, and if he holds him-
self out as a carrier beyond the line, so that he may be re-
quired to carry in that way for all alike, he may nevertheless
confine himself in carrying to the particular route he
chooses to use.' * * *
“The sole ground, apparently, upon which the conclusion
of my colleagues rests is that the common-law rule has been
changed by the Sixth section of the Act to regulate com-
ORANGE ROUTING CASE. 185
merce. I am unable to accept such a construction of that
section. It certainly contains no express limitation upon
the right otherwise concededly enjoyed by the carrier, nor
do I find in its provisions anything which takes away that
right by implication. For aught I can see, the exercise of
the right is entirely consistent with the due performance of
every obligation which the Sixth section imposes.
“In my judgment it is technical, if not inaccurate, to say
that, if the carrier as a matter of law may control the rout-
ing, ‘then a route or tariff may be available to one shipper
but not to another, and open one minute to a shipper but
closed the next.” The tariff, that is, the rate, between any
named points is all the while open and available to every
shipper. Carriage to a given destination is continuously
offered to all, and for the same charge. There is no grant-
ing to one person of a rate to a place and at the same time
refusing to another person the same rate to the same place.
Equal or equivalent service at equal cost is constantly at
the disposal of all who desire it. True, the initial carrier
selects the agency beyond its own line for completing the
service, but how does that abridge any right which the
regulating statute gives to the shipper? # * * sº
“Of course the carrier must exercise the right of routing
in such way as to avoid discrimination between dif-
ferent shippers. That goes without saying. And it is
a significant fact in this connection that it was not alleged
in the complaints, proved at the hearing or claimed in argu-
ment that any actual discrimination between shippers had
resulted from the control of the routing by the defendant
carriers. This at least shows that it is practicable for car-
186 THE COURTS AND THE COMMISSI()N.
riers to comply with the primary requirements of the Act,
which enjoin equality of treatment to all shippers, and at
the same time, in cases like the one under consideration,
exercise the right of routing traffic over connecting lines.
To say that the condition contained in these tariffs cannot
be enforced without unjust and unreasonable discrimina-
tion is to contradict the undisputed testimony in this case
and assert a result which concededly has not occurred.
* >k :k
“Disconnected from the privilege of diversion, it is not
perceived that the legitimate value to the shipper of the
right of routing is important. That right is important to
the carrier; and this we may properly take into account in
deciding to which of them the right belongs.
“As the question turns upon the construction of a stat-
ute, we may well consider the bearing of either view upon
the general purposes of the Act and the public interests
involved. This suggests certain facts which seem to me
highly persuasive. Prior to January 1, 1900, the shippers
were allowed to route this traffic according to their own
pleasure. During that time they secured large sums in
rebates which were paid by the refrigerator companies and
by eastern connections of the initial carriers. One of these
complainants received from this illicit source in the years.
1895, 1896, 1898 and 1899 nearly $175,000.00. The amount
received in 1897 was not ascertained, but it presumably
equaled the average of the four years named. When rout-
ing was denied to the shippers, on January 1, 1900, these
rebates entirely ceased and have not since been obtained.
No explanation was offered to modify the natural inference
ORANGE ROUTING CASE. 187
from these admitted facts. They illumine the case beyond
the need of comment. Under routing by the shippers the
law against rate-cutting was flagrantly disregarded; under
routing by the carriers this law has been observed. In my
judgment the Commission should not seek to enforce a rule
of conduct which, as experience shows, may aid illegal
practices, unless clearly convinced that the provision in
Question so requires. If the Sixth section permits a con-
struction, as I am confident it does, which lessens induce-
ment and opportunity for offensive wrongdoing, that con-
struction should be adopted. And if the Commission has
any discretion in the premises, as I think it has, its discre-
tion ought not to be exercised in favor of the confessed
beneficiaries of criminal transactions.
“It is stated in the prevailing report that a tonnage pool
of this traffic was established as between the connecting
carriers, and that the defendants so controlled the routing
as to effect a violation of the anti-pooling section of the
Act. A careful examination of the evidence fails to con-
vince me that there is any substantial basis for this conclu-
sion. To my mind the inference is not warranted by the
testimony. Indeed, this charge seems rather inconsistent
with the finding that the actual routing was generally ac-
cording to the request of the shippers. If in most instances,
as is admitted, this traffic was carried by the route se–
lected by the shipper, it is difficult to see how the connect-
ing carriers were at the same time ‘pooling’ it in violation
of the Fifth section. * * * Apart from other considera–
tions, I am of opinion that control of routing by the carrier
tends on the whole to public advantage. The more exten-
188 THE COURTS AND THE COMMISSION.
sively through routes are formed by connecting lines, the
wider and more general the movement of traffic under
through rates, the greater the benefit—other things being
equal—to both producer and consumer. Indeed, the public
interest goes, as was said by the Commission in its Second
Annual report to the Congress, ‘to the establishment of such
relations among the managers of roads as will lead to the exten-
sion of their traffic arrangements with mutual responsibility
just as far as may be possible, so that the public may have
in the service performed all the benefits and conveniences that
might be expected to follow from general federation.’
“Since these desirable results depend upon voluntary
association, and since the inducement to the carriers to
unite their facilities must to a great extent come from recip-
rocal dealings and an equitable interchange of business, it
would seem that the control of routing is quite essential to
the purposes they have in view, and the mutual interest
which prompts them to co-operate. * * *
“It seems to me that the tendency of the principle for
which complainants contend is against the legitimate ex-
tension of through routes and other forms of lawful associa-
tion, to say nothing of the opportunity it may afford for
prohibited practices. And if denying to the carrier the
right in question should have the effect, as plainly it might,
of reducing the number of available routes, not only for
orange shipments but for the movement of traffic generally,
I should regard the result as decidedly unfortunate. There-
fore, without amplifying the argument, on grounds of public
policy, and having reference to the greatest public benefit,
including observance of the law in other respects, I hold that
KEARNEY CASE. 189
the rule most likely to prove beneficial in practical opera-
tion is the rule which accords the right of routing to the
carrier.” -
Kearney Case.*
“The mere fact that the disparity between the through and the ,
local rates was considerable did not, of itself, warrant
* * * finding that such disparity constituted an
wndue discrimination.”—Decision of the Supreme Court
in the “Import Rates” case.
The complainant before the Commission, a citizen of
Kearney, Nebraska, a traveling salesman by vocation, al-
leged that rates from Pacific Coast points in California to
Kearney, were unreasonable and unjust as compared with
those from the same points to Omaha. While other com-
modities were referred to in the complaint, the case appears
to have been heard, and considered on the question of the
reasonableness of the rates on sugar. Among the findings of
fact by the Commission is the following:
“In charging a higher rate on sugar or other commodities
from California points to Kearney, the shorter distance,
* A. J. Gustin vs. Burlington & Missouri River Railroad in Nebraska
et al.; Interstate Commerce Commission (8 Inter. Com. Rep. 481), de-
cided March 9, 1900.
190 THE COURTS AND THE COMMISSION.
than it charges to Omaha, the longer distance, the defend-
ants, the Burlington & Missouri River Railroad in Nebraska,
is not violating the Fourth section of the Act, for the reason
that the shorter distance to Kearney is not included within
the longer distance to Omaha. The carriage of such freight
consigned to the places named is over the same line in the
same direction, only so far as Kenesaw, Nebraska, at which
point that for Kearney diverges and is carried thence over
another of defendant's lines, while that for Omaha contin-
ues along the same line. This being the case the necessity
for further consideration of the allegation of a violation of
section four on the part of this defendant in connection with
its charges from California points to Kearney and Omaha
is eliminated. The Union Pacific Railway Company with
its Western connection, the Southern Pacific Company, then,
are the only defendant carriers open to a charge of possible
violation of the provision of Section Four in respect to their
charges on this particular traffic.” ſ
The Commission concluded that the Union Pacific and
Southern Pacific in the carriage of sugar over their connect-
ing lines from the Pacific coast to Omaha meet competitive
conditions which do not exist at Kearney, and that these
differences in conditions justify a somewhat lower rate to
Omaha than to Kearney. The difference which should be
permitted, however, ought not, in the Commission's opinion,
to exceed 15 cents per 100 pounds, while the difference in
effect at the time the decision was rendered was 27 cents.
The Commission recommended, therefore, that while the
HAY CASE. 191
rate of fifty cents per 100 pounds, then in force to Omaha
remained in effect, the rate to Kearney should not exceed
65 cents per 100 pounds. -
The decision of the Circuit Court in this case has not yet
been reported. The Commission states, in its Eighteenth
(1904) Annual Report (page 80), that the court has refused
to enforce the order on the ground that the Kearney rate
was not found to be unreasonable in itself and that it ought
not to have been compared with the Omaha rate which was
controlled by competition.
Hay Case.”
“If no lawful order has been made there is no order to enforce.”
—Decision of the Circuit Court in this case.
This case involved the legality of the transfer of ship-
ments of hay and straw in car loads from the fifth to the sixth
class, which was made by the defendant carriers on the first
day of January, 1900. The Commission ordered the resto-
ration of the old classification. The Circuit Court did not
* The National Hay Association vs. Lake Shore & Michigan Southern
Railway Company et al.; Interstate Commerce Commission (9 Inter.
Com. Rep. 264), decided October 16, 1902. Interstate Commerce Com-
mission vs. Lake Shore & Michigan Southern Railway Company et al.;
Circuit Court, Northern District of Ohio, Eastern Division; is not re-
ported.
192 THE COURTS AND THE COMMISSION.
consider this a “lawful order” and dismissed the petition, of
the Commission, for its enforcement. The Court said in
part:
“The defendants object to a decree in this cause against
them, first, for the reason that the order made by the Com-
mission is not a lawful order, in that it is an attempt to fix
rates. It is undoubtedly the law, as shown by ample author-
ity, and was so conceded at the hearing, that the Commis-
sion has no power, directly or indirectly, to make an order
fixing rates to be observed in the future. The order
made by the Commission, and sought here to be enforced,
undeniably undertakes to fix a rate for the carriage of hay
and straw, by ordering that the defendant companies shall
cease and desist from failing and neglecting to properly
classify hay and straw in car loads as sixth-class freight,
with other articles included in class 6 of their freight classi-
fication, and from failing and neglecting to apply sixth-
class rates for the transportation of hay and straw when
shipped in car loads. There is another provision of the
order, to the effect that the railroad companies shall cease
and desist from classifying hay and straw in car loads as
fifth-class freight and from charging and exacting fifth-class
rates for the transportation of such commodities in car load
quantities. * * *
“It is no province of this court to sit in review of the
order of the Commission. This hearing is de novo, and this
suit, as has been stated, has for its purpose the enforcement
of a lawful order of the Commission. If no lawful order has
been made, there is no order to enforce. * * *
HAY CASE. - 193
“The question arises, Can the first part of the order which
directs the defendants to cease and desist from keeping hay
and straw in the fifth class and charging the rates attached
thereto stand alone without support from the last part of
the order, which directs that hay and straw shall be placed
in the sixth class and be subject to the freight rate attached
to that class? If only the second part of the order had been
made it would have included the first. An order that hay
and straw shall be put into the sixth class contains within
itself an order that it shall be taken from the fifth-class,
since commodities cannot be in two classes at the same time
any more than a physical object may be in two localities at
the same time. It seems plain, from the opinion of the
Commission and its findings of fact that what was sought
to be done was to remedy what appeared to the Commis-
sion to have been the unlawful conduct of the defendants,
to wit, the raising of hay and straw from the sixth class to
the fifth. The order, therefore, was adopted to compel the
railroads to reverse their action and restore hay and straw
to the sixth class. * * *
“I find, then, that the order, as an entirety, is beyond the
power of the Commission to make, and is, therefore, not a
lawful order, and is not an order which this court is empow-
ered by the statute to enforce.
“It has been urged in behalf of the Commission that the
court has general equity powers in this cause to make such
mandatory injunction, other than the enforcement of the
order of the Commission, as will satisfy justice. The Act
itself confines the action of this court to the enforcement of
the lawful orders or requirements of the Interstate Com-
194 THE COURTS AND THE COMMISSION.
merce Commission. It has been frequently decided in the
Federal courts that, under the act, the function of the court
is to enforce, or refuse to enforce, the order of the Commis-
sion as made; that the court can not amend or modify an
order to make another order; that the Federal court has no
revisory power over the orders of the Commission and that
it cannot undertake to decide whether the respondents have
violated an order which the Commission might lawfully have
made. There is ample reason for this lolding, in this, that
the only standing in court which the Interstate Commerce
Commission has as a complainant is by virtue of the stat-
ute; that it has no general equities in its favor; and that,
consequently, the court must be confined in its orders and
decrees, when the Interstate Commerce Commission is a
complainant, to the rights of recovery given to the Commis-
sion by the statute.
“This view of the law of the case and the record renders if
unnecessary to go into the question as to whether or not 30
cents per 100 pounds was an unreasonable freight charge
for hay and straw. Taking into the consideration only the
cost of carrying hay and straw, and their character as arti-
cles of transportation, as shown by the evidence, it is not
clear at all that the rate of 30 cents per 100 pounds is an
unreasonable and unjust freight charge. The contention
of complainant is, rather, that charging a different freight
rate for the carriage of hay and straw from the rate charged
for the carriage of wheat, is unfair discrimination against
wheat. These articles are so different in their character,
and the conditions of traffic with respect to wheat are so
entirely different from those which pertain to the carriage
HAY CASE. 195
of hay and straw, that I am of the opinion that the fact that
wheat is carried for a less rate than hay and straw is not
proof that the higher rate charged for the carriage of hay
and straw is unreasonable and unjust.”
mºnºmºmºm
APPENDIX.
APPENDIX.
EXTRACTS FROM THE ACT TO REGULATE COM-
MERCE.
FIRST SECTION.
The provisions of this act shall apply to any common car-
rier or carriers engaged in the transportation of passengers
or property wholly by railroad, or partly by railroad and
partly by water when both are used, under a common con-
trol, management, or arrangement, for a continuous car-
riage or shipment, from one State or Territory of the United
States, or the District of Columbia, to any other State or
Territory of the United States, or the District of Columbia,
or from any place in the United States to an adjacent for-
eign country, or from any place in the United States through
a foreign country to any other place in the United States,
and also to the transportation in like manner of property
shipped from any place in the United States to a foreign
country and carried from such place to a port of transship-
ment, or shipped from a foreign country to any place in the
United States and carried to such place from a port of entry
either in the United States or an adjacent foreign country:
Provided, however, That the provisions of this act shall not
apply to the transportation of passengers or property, or
to the receiving, delivering, storage, or handling of property,
wholly within one State, and not shipped to or from a for-
eign country from or to any State or Territory as aforesaid.
The term “railroad” as used in this act shall include all
bridges and ferries used or operated in connection with any
railroad, and also all the road in use by any corporation
operating a railroad, whether owned or operated under a
200 THE COURTS AND THE COMMISSION.
contract, agreement, or lease; and the term “transporta-
tion” shall include all instrumentalities of shipment or
carriage.
All charges made for any service rendered or to be ren-
dered in the transportation of passengers or property as
aforesaid, or in connection therewith, or for the receiving,
delivering, storage, or handling of such property, shall be
reasonable and just; and every unjust and unreasonable
charge for such service is prohibited and declared to be
1Inlawful.
SECOND SECTION.
That if any common carrier subject to the provisions of
this act, shall, directly or indirectly, by any special rate, re-
bate, drawback, or other device, charge, demand, collect,
or receive from any person or persons a greater or less com-
pensation for any service rendered, or to be rendered, in the
transportation of passengers or property, subject to the pro-
visions of this act, than it charges, demands, collects, or
receives from any other person or persons for doing for him
or them a like and contemporaneous service in the trans-
portation of a like kind of traffic under substantially similar
circumstances and conditions, such common carrier shall be
deemed guilty of unjust discrimination, which is hereby
prohibited and declared to be unlawful.
THIRD SECTION.
That it shall be unlawful for any common carrier subject
to the provisions of this act to make or give any undue or
unreasonable preference or advantage to any particular
person, company, firm, corporation, or locality, or any par-
ticular description of traffic, in any respect whatsoever, or
to subject any particular person, company, firm, corpora-
APPENDIX. 201
tion, or locality, or any particular description of traffic, to
any undue or unreasonable prejudice or disadvantage in any
respect whatsoever. -
Every common carrier subject to the provisions of this
act, shall according to their respective powers, afford all
reasonable, proper, and equal facilities for the interchange
of traffic between their respective lines, and for the receiv-
ing, forwarding, and delivering of passengers and property
to and from their several lines and those connecting there-
with, and shall not discriminate in their rates and charges
between such connecting lines; but this shall not be con-
strued as requiring any such common carrier to give the use
of its tracks or terminal facilities to another carrier engaged
in like business.
FOURTH SECTION.
That it shall be unlawful for any common carrier subject
to the provisions of this act to charge or receive any greater
compensation in the aggregate for the transportation of
passengers or of like kind or property, under substantially
similar circumstances and conditions, for a shorter than for
a longer distance over the same line, in the same direction,
the shorter being included within the longer distance; but
this shall not be construed as authorizing any common car-
rier within the terms of this act to charge and receive as
great compensation for a shorter as for a longer distance:
Provided, however, That upon application to the Commis-
sion appointed under the provisions of this act, such com-
mon carrier may, in special cases, after investigation by the
Commission, be authorized to charge less for longer than
for shorter distances for the transportation of passengers or
property; and the Commission may from time to time pre-
scribe the extent to which such designated common carrier
may be relieved from the operation of this section of this act.
202 THE COURTS AND THE COMMISSION.
THIRTEENTH SECTION.
That any person, firm, corporation, or association, or any
mercantile, agricultural, or manufacturing society, or any
body politic or municipal organization complaining of any-
thing done or omitted to be done by any common carrier
subject to the provisions of this act in contravention of the
provisions thereof, may apply to said Commission by peti-
tion, which shall briefly state the facts; whereupon a state-
ment of the charges thus made shall be forwarded by the
Commission to such common carrier, who shall be called
upon to satisfy the complaint or to answer the same in writ-
ing within a reasonable time, to be specified by the Com-
mission. If such common carrier, within the time specified,
shall make reparation for the injury alleged to have been
done, said carrier shall be relieved of liability to the com-
plainant only for the particular violation of law thus com-
plained of. If such carrier shall not satisfy the complaint
within the time specified, or there shall appear to be any
reasonable ground for investigating said complaint, it shall
be the duty of the Commission to investigate the matters
complained of in such manner and by such means as it shall
deem proper.
Said Commission shall in like manner investigate any
complaint forwarded by the railroad commissioner or rail-
road commission of any State or Territory, at the request of
such commissioner or commission, and may institute any in-
quiry on its own motion in the same manner and to the same
effect as though complaint had been made.
No complaint shall at any time be dismissed because of
the absence of direct damage to the complainant.
APPENDIX. - 203
SIXTEENTH SECTION.
(As amended March 2, 1889.) That whenever any com-
mon carrier, as defined in and subject to the provisions of
this act, shall violate, or refuse or neglect to obey or perform
any lawful order or requirement of the Commission created by
this act, not founded upon a controversy requiring a trial by
jury, as provided by the seventh amendment to the Constitu-
tion of the United States, it shall be lawful for the Commis-
sion or for any company or person interested in such order or
requirement, to apply in a summary way, by petition, to the
Circuit Court of the United States sitting inequity in the judi-
cial district in which the common carrier complained of has
its principal office, or in which the violation or disobedience
of such order or requirement shall happen, alleging such viola-
tion or disobedience, as the case may be; and the said court
shall have power to hear and determine the matter, on such
short notice to the common carrier complained of as the court
shall deem reasonable; and such notice may be served on
such common carrier, his or its officers, agents, or servants in
such manner as the court shall direct; and said courtshall pro-
ceed to hear and determine the matter speedily as a court of
equity, and without the formal pleadings and proceedings ap-
plicable to ordinary suits in equity, but in such manner as to do
justice in the premises; and to this end such court shall have
power, if it think fit, to direct and prosecute in such mode and
by such persons as it may appoint all suchinquiries as the court
may think needful to enable it to form a just judgment in the
matter of such petition; and on such hearing the findings of
fact in the report of said Commission shall be prima facie evi-
dence of the matters therein stated; and if it be made to ap-
pear to such court, on such hearing or on report of any such
person or persons, that the lawful order or requirement of said
Commission drawn in question has been violated or disobeyed,
it shall be lawful for such court to issue a writ of injunction or
204 THE COURTS AND THE COMMISSION.
other proper process, mandatory or otherwise, to restrain
such common carrier from further continuing such violation
or disobedience of such order or requirement of said Commis-
sion, and enjoining obedience to the same; and in case of any
disobedience of any such writ of injunction or other proper
process, mandatory or otherwise, it shall be lawful for such
court to issue writs of attachment, or any other process of said
court incident or applicable to writs of injunction or other
proper process mandatory or otherwise, against such common
carrier, and if a corporation, against one or more of the direc-
tors, officers, or agents of the same, or against any owner,
lessee, trustee, receiver, or other person failing to obey such
writ of injunction or other proper process, mandatory or other-
wise; and said court may, if it shall think fit, make an order
directing such common carrier or other person so disobeying
such writ of injunction or other proper process, mandatory or
otherwise, to pay such sum of money, not exceeding for each
carrier or person in default the sum of five hundred dollars for
every day, after a day to be named in the order, that such
carrier or other person shall fail to obey such injunction or
other proper process, mandatory or otherwise; and such
moneys shall be payable as the court shall direct, either to the
party complaining or into court, to abide the ultimate decis-
ion of the court, or into the Treasury; and payment thereof
may, without prejudice to any other mode of recovering the
same, be enforced by attachment or order in the nature of
a writ of execution, in like manner as if the same had been re-
covered by a final decree in personam in such court. When the
subject in dispute shall be of the value of two thousand dollars
or more, either party to such proceeding before said court
may appeal to the Supreme Court of the United States, under
the same regulations, now provided by law in respect of secur-
ity for such appeal; but such appeal shall not operate to stay
or supersede the order of the court or the execution of any
writ or process thereon; and such court may, in every such
APPENDIX. 205
matter, order the payment of such costs and counsel fees as
shall be deemed reasonable. Whenever any such petition
shall be filed or presented by the Commission it shall be the
duty of the district attorney, under the direction of the
Attorney-General of the United States, to prosecute the same;
and the costs and expenses of such prosecution shall be paid
out of the appropriation for the expenses of the courts of the
United States.
If the matters involved in any such order or requirement
of said Commission are founded upon a controversy requir–
ing a trial by jury, as provided by the seventh amendment to
the Constitution of the United States, and any such common
carrier shall violate or refuse or neglect to obey or perform the
same, after notice given by said Commission as provided in the
fifteenth section of this act, it shall be lawful for any company
or person interested in such order or requirement to apply in
a summary way by petition to the Circuit Court of the United
States sitting as a court of law in the judicial district in which
the carrier complained of has its principal office, or in which
the violation or disobedience of such order or requirement
shall happen, alleging such violation or disobedience, as the
case may be; and said court shall by its order then fix a time
and place for the trial of said cause, which shall not be less
than twenty nor more than forty days from the time said
order is made, and it shall be the duty of the marshal of the
district in which said proceeding is pending to forthwith serve
a copy of Said petition, and of said order, upon each of the de-
fendants, and it shall be the duty of the defendants to file
their answers to said petition within ten days after the service
of the same upon them as aforesaid. At the trial the findings
of fact of said Commission as set forth in its report shall be
prima facie evidence of the matters therein stated, and if
either party shall demand a jury or shall omit to waive a jury
the court shall, by its order, direct the marshal forthwith to
Summon a jury to try the cause; but if all the parties shall
206 THE COURTS AND THE COMMISIONS.
waive a jury in writing, then the court shall try the issues in
said cause and render its judgment thereon. If the subject
in dispute shall be of the value of two thousand dollars or
more either party may appeal to the Supreme Court of the
United States under the same regulations now provided by
law in respect to security for such appeal; but such appeal
must be taken within twenty days from the day of the rendi-
tion of the judgment of said circuit court. If the judgment
of the circuit court shall be in favor of the party complaining,
he or they shall be entitled to recover a reasonable counsel or
attorney's fee, to be fixed by the court, which shall be collected
as a part of the costs in the case. For the purposes of this act,
excepting its penal provisions, the circuit courts of the United
States shall be deemed to be always in session.
DATE DUE
DO NOT RETURN B00KS ON SUNDAY
T W C W E E K B O O K
Form 7079 3-50 30M S

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