# Texas Railway Company v. Interstate Commerce Commission/Opinion of the Court

* Court Documents
* Case Syllabus
* Opinion of the Court
* Dissenting Opinion Harlan
United States Supreme Court
162 U.S. 197
Texas Railway Company v. Interstate Commerce Commission
It was claimed in the courts below, and it is also urged in this court, that the interstate commerce commission is not a corporate body or person in whose name a suit can be instituted. It seems to be thought that the commission can only sue in the names of the persons composing it.
The sixteenth section of the act to regulate commerce, as amended March 2, 1889, provides that 'whenever any common carrier, as defined in and subject to the provisions of that act, shall violate, or refuse or neglect to obey or perform, any lawful order or requirement of the commission created by the act, not founded upon a controversy requiring a trial by jury, as provided by the seventh amendment to the constitution of the United States, it shall be lawful for the commission, 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 in equity in the judicial 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 violation 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 court shall proceed to hear and determine the matter speedily as a court of equity, and without the formal pleadings and proceedings applicable to ordinary suits in equity, but in such manner as to do equity in the premises.' The language contained in the eleventh section creating the commission is as follows: 'That a commission is hereby created and established to be known as the i terstate commerce commission, which shall be composed of five commissioners, who shall be appointed by the president, by and with the advice and consent of the senate. * * * No vacancy in the commission shall impair the right of the remaining commissioners to exercise all the powers of the commission.' And in the seventeenth section it is provided that 'said commission shall have an official seal, which shall be judicially noticed.'
In the case of Interstate Commerce Commission v. Baltimore & O. R. Co., a suit was instituted by the commission in the circuit court of the United States for the Southern district of Ohio, and the decree of that court was affirmed by this court. 145 U.S. 264, 12 Sup. Ct. 844. Likewise, in the case of Interstate Commerce Commission v. Atchison, T. & S. F. R. Co., a suit was brought in the circuit court of the United States for the district of California, by the commission eo nomine against that company, wherein it was held by this court that an appeal did not lie directly to this court since the creation of the circuit court of appeals. 149 U.S. 264, 13 Sup. Ct. 837.
In neither of these cases was any objection made to the right of the commission to sue by its statutory designation.
We think that the language of the statute, in creating the commission, and in providing that it shall be lawful for the commission to apply by petition to the circuit court sitting in equity, sufficiently implies the intention of congress to create a body corporate with legal capacity to be a party plaintiff or defendant in the federal courts.
Another formal objection made to the jurisdiction of the circuit court was raised by a plea in abatement denying that the Texas & Pacific Railroad Company had its principal office in the state of New York, or that the acts complained of took place within the judicial district of said court.
Upon facts made to appear by affidavits submitted by both parties, under a stipulation, the circuit court overruled the plea. Our examination of the facts so submitted, and which are brought before us by a bill of exceptions, has not convinced us that the court erred in overruling the plea.
Another objection urged is that, as the order of the commission involves rates participated in by the Southern Pacific Company, as owner of a portion of the line over which the through freight is carried, that company was a necessary party. Undoubtedly, that company would have been a proper party, but we agree with the circuit court in thinking that it was not a necessary one.
We come now to the main question of the case, and that is whether the commission erred, when making the order of January 29, 1891, in not taking into consideration the ocean competition as constituting a dissimilar condition, and in holding that no circumstances and conditions which exist beyond the seaboard in the United States could be legitimately regarded by them for the purpose of justifying a difference in rates between import and domestic traffic.
The answer of the Texas & Pacific Railway Company to the petition of the New York Board of Trade and Transportation before the interstate commerce commission, and the answer of said company to the petition of the commission filed in the circuit court, allege: That rates for the transportation of commodities from Liverpool and London, England, to San Francisco, Cal., are in effect fixed and controlled by the competition of sailing vessels for the entire distance; by steamships and sailing vessels in connection with railroads across the Isthmus of Panama; by steamships and sailing vessels from Europe to New Orleans, connecting these, under through arrangements with the Southern Pacific Company, to San Francisco. That, unless the defendant company charges substantially the rates specified in its answer, it would be prevented, by reason of the competition aforesaid, from engaging in the carrying and transportion of property and import traffic from Liverpool and London to San Francisco, and would lose the revenue erived by it therefrom, which is considerable, and important and valuable to said company. that the rates charged by it are not to the prejudice or disadvantage of New Orleans, and work no injury to that community, because, if said company is prevented from participating in said traffic, such traffic would move via the other routes and lines aforesaid without benefit to New Orleans, but, on the contrary, to its disadvantage. That the foreign or import traffic is upon orders by persons, firms, and corporations in San Francisco and vicinity, buying direct of first hands in London, Liverpool, and other European markets; and, if the order of the commission should be carried into effect, it would not result in discontinuance of that practice or in inducing them to buy in New Orleans in any event. That the result of the order would be to injuriously affect the defendant company in the carriage of articles of foreign imports to Memphis, St. Louis, Kansas City, and other Missouri river points. That by such order the defendant company would be prevented from competing for freight to important points in the state of Texas with the railroad system of that state, having Galveston as a receiving port, and which railroad system is not subject to the control of the interstate commerce commission. These allegations of the answer were not traversed or denied by the commission, but are confirmed by the findings of the commission attached as an exhibit to the petition in the case; and by said findings it further appears that the proportion the Texas & Pacific Railway receives of the through rate is remunerative; that the preponderance of its empty cars go noth during eight months of the year, and if something can be obtained to load, it is that much found, and anything is regarded as remunerative that can be obtained to put in its cars to pay mileage; that the competition which controls the making of rates to the Pacific coast is steamship by way of the Isthmus and in cheap heavy goods around Cape Horn; that the competition to interior points, such as Missouri river points and Denver, is from the trunk lines direct from the Atlantic seaboard; that the ships engaged in carrying to San Francisco around Cape Horn are almost wholly British bottoms; that the through bill of lading furnishes a collateral for the transaction of business, takes from the shipper and consignee both the care as to intermediate charges, elevators, wharves, and cost of handling, and puts it on the carrier, reduces the intermediate charges, very much facilitates the transaction of business, and helps to swell its volume; that the tendency of the through bill of lading is to eliminate the obstacles between the producer and consumer, and it has done much in that direction.
These and other uncontroverted facts that appear in this record would seem to constitute 'circumstances and conditions' worthy of consideration, when carriers are charged with being guilty of unjust discrimination, or of giving unreasonable and undue preference or advantage to any person or locality.
But we understand the view of the commission to have been that it was not competent for the commission to consider such facts; that it was shut up, by the terms of the act of congress, to consider only such 'circumstances and conditions' as pertained to the articles of traffic after they had reached and been delivered at a port of the United States or Canada.
It is proper that we should give the views of the commission in its own words:
'The statute has provided for the regulation of interstate traffic by interstate carriers, party by rail, and party by water, or all rail, shipped from one point in the United States to another destination within the United States, or from a point of shipment in the United States to a port of entry within the United States or an adjacent foreign country, or from a port of entry either within the United States or in an adjacent foreign country, on import traffic brought to such port of entry from a foreign port of shipment and destined to a place within the United States. In providing for this regulation, the statute has also provided for the mehtods of such regulation by publication of tariffs of rates and charges at points where the freight is received, and at which it is delivered, and also for taking into consideration the circumstances and conditions surrounding the transportation of the property. The statute has undertaken no such regulation from foreign ports of shipment to ports of entry either within the United States or to ports of entry in an adjacent foreign country, and, as between these ports, has provided for no publication of tariffs of rates and charges, but has left it to the unrestrained competition of ocean carriers, and all the circumstances and conditions surrounding it. These circumstances and conditions are, indeed, widely different, in many respects, from the circumstances and conditions surrounding the carriage of domestic interstate traffic between the states of the American Union by rail carriers; but as the regulation provided for by the act to regulate commerce does not undertake to regulate or govern them, they cannot be held to constitute reasons, in themselves, why imported freight brought to a port of entry of the United States or a port of entry of an adjacent foreign country, destined to a place within the United States, should be carried at a lower rate than domestic traffic from such ports of entry, respectively, to the places of destination, in the United States, over the same line and in the same direction. To hold otherwise would be for the commission to create exceptions to the operation of the statute not found in the statute, and no other power but congress can create such exception in the exercise of legislative authority.
'In the one case the freight is transported from a point of origin in the United States to a destination within the United States, or port of transshipment, if it be intended for export, upon open published rates, which must be reasonable and just, not unjustly preferential to one kind of traffic over another, and relatively fair and just as between localities; and the circumstances and conditions surrounding and involved in the transportation of the freight are in a very high degree material. In the other case, the freight originates in a foreign country, its carriage is commenced from a foreign port, it is carried upon rates that are not open and published, but are secret, and in making these rates it is wholly immaterial to the parties making them whether they are reasonable and just or not, so they take the freight and beat a rival, and it is equally immaterial to them whether they unjustly discriminate against surrounding or rival localities in such foreign country or not. Imported foreign merchandise has all the benefit and advantage of the low rates thus made in the foreign ports, and in the ocean carriage, arising from the peculiar circumstances and conditions under which that is done; but, when it reaches a port of entry of the United States, or a port of entry of a foreign country adjacent to the United States, in either event upon a through bill of lading, destined to a place in the United States, then its carriage from such port of entry to its place of destination in the United States, under the operation of the act to regulate commerce, must be under the inland tariff from such port of entry to such place of destination, covering other like kind of traffic in the elements of bulk, weight, value, and of carriage; and no unjust preference must be given to it in carriage or facilities of carriage over other freight. In such case, all the circumstances and conditions that have surrounded its rates and carriage from the foreign port to the port of entry have had their full weight and operation, and in its carriage from the port of entry to the place of its destination in the United States. The mere fact that it is foreign merchandise thus brought from a foreign port is not a circumstance of condition, under the operation of the act to regulate commerce, which entitles it to lower rates, or any other preference in facilities and carriage, over home merchandise, or other traffic of a like kind, carried by the inland carrier, from the port of entry to the place of destination in the United States, for the same distance, and over the same line. * * *
'The act to regulate commerce will be examined in vain to find any intimation that there shall be any difference made in the tolls, rates, or charges for, or any difference in the treatment of home and foreign merchandise, in respect to the same or similar service rendered in the transportation, when this transportation is done under the operation of this statute. Certainly, it would require a proviso or exception, plainly ingrafted upon the face of the act to regulate commerce, before any tribunal charged with its administration would be authorized to decide or hold that foreign merchandise was entitled to any preference in tolls, rates, or charges made for, or any difference in its treatment for, the same or similar service as against home merchandise. Foreign and home merchandise, therefore, under the operation of this 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.
'The business complained of in this proceeding is done in the shipment of foreign merchandise from foreign ports through ports of entry of the United States, or through ports of entry in a foreign country adjacent to the United States, to points of destination in the United States, upon through bills of lading.' 4 lnterst. Commerce Com. R. 512-516.
It is obvious, therefore, that the commission, in formulating the order of January 29, 1891, acted upon that view of the meaning of the statute which is expressed in the foregoing passages.
We have, therefore, to deal only with a question of law, and that is, what is the true construction, in respect to the matters involved in the present controversy, of the act to regulate commerce? If the construction put upon the act by the commission was right, then the order was lawful; otherwise, it was not.
Before we consider the phraseology of the statute, it may be well to advert to the causes which induced its enactment. They chiefly grew out of the use of railroads as the principal modern instrumentality of commerce. While shippers of merchandise are under no legal necessity to use railroads, practically they are. The demand for speedy and prompt movement virtually forbids the employment of slow and old-fashioned methods of transportation, at least in the case of the more valuable articles of traffic. At the same time, the immense outlay of money required to build and maintain railroads, and the necessity of resorting, in securing the rights of way, to the power of eminent domain, in effect disable individual merchants and shippers from themselves providing such means of carriage. From the very nature of the case, therefore, railroads are monopolies, and the evils that usually accompany monopolies soon began to show themselves, and were the cause of loud complaints. The companies owning the railroads were charged, and sometimes truthfully, with making unjust discriminations, between shippers and localities, with making secret agreements with some to the detriment of other patrons, and with making pools or combinations with each other, leading to oppression of entire communities.
Some of these mischiefs were partially remedied by special provisions inserted in the charters of the companies, and by general enactments by the several states, such as clauses restricting the rates of toll, and forbidding railroad companies form becoming concerned in the sale or production of articles carried, and from making unjust preferences. Relief, to some extent, was likewise found in the action of the courts in enforc ng the principles of the common law applicable to common carriers, particularly that one which requires uniformity of treatment in like conditions of service.
As, however, the powers of the states were restricted to their own territories, and did not enable them to efficiently control the management of great corporations, whose roads extend through the entire country, there was a general demand that congress, in the exercise of its plenaty power over the subject of foreign and interstate commerce, should deal with the evils complained of by a general enactment, and the statute in question was the result.
The scope or purpose of the act is, as declared in its title, to regulate commerce. It would, therefore, in advance of an examination of the text of the act, be reasonable to anticipate that the legislation would cover, or have regard to, the entire field of foreign and interstate commerce, and that its scheme of regulation would not be restricted to a partial treatment of the subject. So, too, it could not be readily supposed that congress intended, when regulating such commerce, to interfere with and interrupt, much less destroy, sources of trade and commerce already existing, nor to overlook the property rights of those who had invested money in the railroads of the country, nor to disregard the interests of the consumers, to furnish whom with merchandise is one of the principal objects of all systems of transportation.
Addressing ourselves to the express language of the statute, we find, in its first section, that the carriers that are declared to be subject to the act are those '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 control, management or arrangement, for a continuous carriage or shipment, from one state or territory of the United States, or the District of Columbia, or from any place in the United States to an adjacent foreign 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 transhipment, 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.'
It would be difficult to use language more unmistakably signifying that congress had in view the whole field of commerce (excepting commerce wholly within a state), as well that between the states and territories as that going to or coming from foreign countries.
In a later part of the section it is declared that 'the term 'transportation' shall include all instrumentalities of shipment or carriage.'
Having thus included in its scope the entire commerce of the United States, foreign and interstate, and subjected to its regulations all carriers engaged in the transportation of passengers or property, by whatever instrumentalities of shipment or carriage, the section proceeds to declare that 'all charges made for any service rendered or to be rendered 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 unlawful.'
The significance of this language, in thus extending the judgment of the tribunal established to enforce the provisions of the act to the entire service to be performed by carriers, is obvious.
Proceeding to the second section, we learn that its terms forbid any common carrier, subject to the provisions of the act, from charging, demanding, collecting, or receiving, 'from any person or persons a greater or less compensation for any service rendered or to be rendered, in the transportation of assengers or property, subject to the provisions of the 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 transportation of a like kind of traffic under substantially similar circumstances and conditions,' and declare that disregard of such prohibition shall be deemed 'unjust discrimination,' and unlawful.
Here, again, it is observable that this section contemplates that there shall be a tribunal capable of determining whether, in given cases, the services rendered are 'like and contemporaneous,' whether the respective traffic is of a 'like kind,' and whether the transportation is under 'substantially similar circumstances and conditions.'
The third section makes it 'unlawful for any common carrier, subject to the provisions of the act, to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality to any undue or unreasonable prejudice or disadvantage in any respect whatever.' It also provides that every such common carrier shall afford 'all reasonable, proper, and equal facilities for the interchange of traffic between their respective lines, and for the receiving, forwarding, and delivering of passengers and property to and from their respective lines and those connecting therewith, and shall not discriminate in their rates and charges between such connecting lines.'
The fourth section makes it unlawful for any such common carrier to 'charge or receive any greater compensation in the aggregate for the transportation of passengers or of like kind of 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 within the longer distance, but this shall not be construed as authorizing any such common carrier to charge and receive as great compensation for a shorter as for a longer distance'; and provision is likewise made that, 'upon application to the commission appointed under the provisions of the act, such common 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 that 'the commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section of the act.'
The powers of the interstate commission are not very clearly defined in the act, nor is its method of procedure very distinctly outlined. It is, however, declared in the twelfth section, as amended March 2, 1889, and February 10, 1891, that the commission 'shall have authority to inquire into the management of the business of all common carriers subject to the provisions of the act, and shall keep itself informed as to the manner and method in which the same is conducted, and shall have the right to obtain from such common carriers full and complete information necessary to enable the commission to perform the duties and carry out the objects for which it was created; and the commission is hereby authorized and required to execute and enforce the provisions of the act.' It is also made the duty of any district attorney of the United States to whom the commission may apply to institute in the proper court, and to prosecute under the direction of the attorney general of the United States, all necessary proceedings for the enforcement of the provisions of the act, and for the punishment of all violations thereof. And provision is made for complaints to be made by any person, firm, corporation, association, or any mercantile, agricultural, or manufacturing society, or any body politic or municipal organization, before the commission, and for an investigation of such complaints to be made by the commission and it is made the duty of the commission to make reports in writing in respect thereof, which shall include the findings of fact upon which the conclusions of the commission are based, together with its recommendation as to what reparation, if any, should be made by any common carrier to any party or parties who may be found to have been injured; and such findings so made shall thereafter, in all judicial proceedings, be deemed prima facie evidence as to each and any fact found.
In the present case no complaint seems to have been made before the commission by any person, firm, company, or other organization, against the Texas & Pacific Railway Company, of any disregard by said company of any provision of the statute resulting in any specific loss or damage to any one; nor has the commission, in its findings, disclosed any such loss or damage to any individual complainant. And it is made one of the contentions of the defendant company that the entire proceeding was outside of the sphere of action appointed by the act to the commission, which only had power, as claimed by defendant, to inquire into complaint made by some person or body injured by some described act of the defendant company.
The complaint in the present case was made by certain corporations of New York, Philadelphia, and San Francisco, known as 'boards of trade' or 'chambers of commerce,' which appear to be composed of merchants and traders in those cities engaged in the business of reaching and supplying the consumers of the United States with imported luxuries, necessities, and manufactured goods generally, and as active competitors with the merchants at Boston, Montreal, Philadelphia, New Orleans, San Francisco, Chicago, and merchants in foreign countries who import direct on through bills of lading issued abroad.
We shall assume, in the disposition of the present case, that a valid complaint may be made before the commission, by such trade organizations, based on a mode or manner of treating import traffic by a defendant company, without disclosing or containing charges of specific acts of discrimination or undue preference, resulting in loss or damage to individual persons, corporations, or associations.
We do not wish to be understood as implying that it would be competent for the commission, without a complaint made before it, and without a hearing, to subject common carriers to penalties. It is also obvious that if the commission does have the power, of its own motion, to promulgate general decrees or orders which thereby become rules of action to common carriers, such exercise of power must be confined to the obvious purposes and directions of the statute. Congress has not seen fit to grant legislative powers to the commission.
With these provisions of the act and these general principles in mind, we now come to consider the case in hand.
After an investigation made by the commission on a complaint against the Texas & Pacific Railway Company and other companies by the boards of trade above mentioned, the result reached was the order of the commission made on January 29, 1891, a disregard of which was complained of by the commission in its bill or petition filed in the circuit court of the United States.
The Texas & Pacific Railway Company, a corporation created by laws of the United States, and also possessed of certain grants from the state of Texas, owns a railroad extending from the city of New Orleans, through the state of Texas, to El Paso, where it connects with the rairoad of the Southern Pacific Company, the two roads forming a through route to San Francisco. The Texas & Apcific Railway Company has likewise connections with other railroads and steamers, forming through freight lines to Memphis, St. Louis, and other points on the Missouri river, and elsewhere.
The defendant company admitted that, as a scheme or mode of obtaining foreign traffic, it had agencies by which, and by the use of through bills of lading, it secured shipments of merchandi e from Liverpool and London, and other European ports, to San Francisco and to the other inland points named. It alleged that, in order to get this traffic, it was necessary to give through rates from the places of shipment to the places of final destination, and that in fixing said rates it was controlled by an ocean competition by sailing and steam vessels by way of the Isthmus and around the Horn, and also, to some extent, by a competition through the Canada route to the Pacific coast. These rates, so fixed and controlled, left to the defendant company and to the Southern Pacific Company, as their share of the charges made and collected, less than the local charges of said companies in transporting similar merchandise from New Orleans to San Francisco, and so, too, as to foreign merchandise carried to other inland points. The defendant further alleged that unless it used said means to get such traffic the merchandise to the Pacific coast would none of it reach New Orleans, but would go by the other means of transportation; that neither the community of New Orleans, nor any merchant or shipper thereof, was injured or made complaint; that the traffic thus secured was remunerative to the railway company, and was obviously beneficial to the consumers at the places of destination, who were thus enabled to get their goods at lower rates than would prevail if this custom of through rates was destroyed.
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.
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 cinditions' attendant upon the foreign traffic as such 'circumstances and conditions' as they are directed in the act to consider. The commission thought it was constrained by the act to regard foreign and domestic traffic as like kinds of traffic under substantially similar circumstances 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.
In so construing the act, we think the commission erred.
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 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 recipients 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. Undoubtedly 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.
Moreover, it must not be overlooked that this legislation is experimental. Even in construing the terms of a statute, courts must take notice of the history of legislation, and, out of different possible constructions, select and apply the one that best comports with the genius of our institutions, and therefore most likely to have been the construction intended by the lawmaking power. Commerce, in its largest sense, must be deemed to be one of the most important subjects of legislation; and an intention to promote and facilitate it, and not to hamper or destroy it, is naturally to be attributed to congress. The very terms of the statute, that charges must be 'reasonable,' that discrimination must not be 'unjust,' and that preference of advantage to any particular person, firm, corporation, or locality must not be 'undue' or 'unreasonable,' necessarily imply that strict uniformity is not to be enforced, but that all circumstances and conditions which reasonable men would regard as affecting the welfare of the carrying companies, and of the producers, shippers, and consumers, should be considered by a tribunal appointed to carry into effect and enforce the provisions of the act.
The principal purpose of the second section is to prevent unjust discrimination between shippers. It implies that in deciding whether differences in charges, in given cases, were or were not unjust, there must be a consideration of the several questions whether the services rendered were 'like and contemporaneous'; whether the kinds of traffic were 'like'; whether the transportation was effected under 'substantially similar circumstances and conditions.' To answer such questions, in any case coming before the commission, requires an investigation into the facts; and we think that congress must have intended that whatever would be regarded by common carriers, apart from the operation of the statute, as matters which warranted differences in charges, ought to be considered, in forming a judgment whether such differences were or were not 'unjust.' Some charges might be unjust to shippers, others might be unjust to the carriers. The rights and interests of both must, under the terms of the act, be regarded by the commission.
The third section forbids any undue or unreasonable preference or advantage in favor of any person, company, firm, corporation, or locality; and as there is nothing in the act which defines what shall be held to be due or undue, reasonable or unreasonable, such questions are questions not of law, but of fact. The mere circumstance that there is in a given case a preference or an advantage does not, of itself, show that such preference or advantage is undue or unreasonable, within the meaning of the act. Hence it follows that, before the commission can adjudge a common carrier to have acted unlawfully, it must ascertain the facts; and here, again, we think it evident that those facts and matters which carriers, apart from any question arising under the statute, would treat as calling, in given cases, for a preference or advantage, are facts and matters which must be considered by the commission in forming its judgment whether such preference or advantage is undue or unreasonable. When the section says that no locality shall be subjected to any undue or unreasonable prejudice or disadvantage in any respect whatsoever, it does not mean that the commission is to regard only the welfare of the locality or community where the traffic originates, or where the goods are shipped on the ca s. The welfare of the locality to which the goods are sent is also, under the terms and spirit of the act, to enter into the question.
The same observations are applicable to the fourth section, or the so-called 'long and short haul provision,' and it is unnecessary to repeat them.
The only argument, urged in favor of the view of the commission, that is drawn from the language of the statute, is found in those provisions of the statute that make it obligatory on the common carriers to publish their rates, and to file with the commission copies of joint tariffs of rates or charges over continuous lines or routes operated by more than one common carrier; and it is said that the place at which it would seem that joint rates should be published for the information of shippers would be at the place of origin of the freight, and that this cannot be done, or be compelled to be done, in foreign ports.
The force of this contention is not perceived. Room is left for the application of these provisions to traffic originating within the limits of the United States, even if, for any reason, they are not practically applicable to traffic originating elsewhere. Nor does it appear that the commission may not compel all common carriers within the reach of their jurisdiction to publish such rates, and to furnish the commission with all statements or reports prescribed by the statute. Nor was there any allegation, evidence, or finding in the present case that the Texas & Pacific Railway Company has failed to file with the commission copies of its joint tariffs, showing the joint rates from English ports to San Francisco, nor that the company has failed to make public such joint rates in such manner as the commission may have directed.
Another position taken by the commission in its report, and defended in the briefs of counsel, is that it is the duty of the commission to so construe the act to regulate commerce as to make it practically co-operate with what is assumed to be the policy of the ariff laws. This view is thus stated in the report:
'One paramount purpose of the act to regulate commerce, manifest in all its provisions, is to give to all dealers and shippers the same rates for similar services rendered by the carrier in transporting similar freight over its line. Now, it is apparent from the evidence in this case that many American manufacturers dealers, and localities, in almost every line of manufacture and business, are the competitors of foreign manufacturers, dealers, and localities, for supplying the wants of American consumers at interior places in the United States, and that, under domestic bills of lading, they seek to require from American carriers like service as their foreign competitors, in order to place their manufactured goods, property, and merchandise with interior consumers. The act to regulate commerce secures them this right. To deprive them of it by any course of transportation business or device is to violate the statute.' 4 Interst. Commerce Com. R. 514, 515.
Our reading of the act does not disclose any purpose or intention on the part of congress to thereby reinforce the provisions of the tariff laws. These laws differ wholly, in their objects, from the law to regulate commerce. Their main purpose is to collect revenues with which to meet the expenditures of the government, and those of their provisions, whereby congress seeks to so adjust rates as to protect American manufacturers and producers from competition by foreign low-priced labor, operate equally in all parts of the country.
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, seems to create the very mischief which it was one of the objects of the act to remedy.
Similar legislation by the parliament of England may render it profitable to examine some of the decisions of the courts of that cou try construing its provisions.
In fact, the second section of our act was modeled upon section 90 of the English railway clauses consolidation act of 1845, known as the 'Equality Clause'; and the third section of our act was modeled upon the second section of the English 'Act for the better regulation of the traffic on railways and canals' of July 10, 1854, and the eleventh section of the act of July 21, 1873, entitled 'An act to make better provision for the carrying into effect the railway and canal traffic act, 1854, and for other purposes connected therewith.'
One of the first cases that arose under the act of 1854 was that of Hozier v. Railway Co., 1 Nev. & McN. 27, where Hozier filed a petition against the railway company, alleging that he was aggrieved by being charged 9 shillings for traveling between Motherwell and Edinburgh, a distance of 43 miles, while passengers traveling in the same train, and in the class of carriage, between Glasgow and Edinburgh, were charged only 2 shillings, which was alleged to amount to an undue and unreasonable preference. But the petition was dismissed, and the court said: 'The only case stated in the petition is that passengers passing from Glasgow to Edinburgh are carried at a cheaper aggregate rate than passengers from Motherwell to either of these places. Now, that is an advantage, no doubt, to those passengers traveling between Edinburgh and Glasgow. But is it an unfair advantage over other passengers traveling between intermediate stations? The complainant must satisfy us that there is something unfair or unreasonable in what he complains of, in order to warrant any interference. I have read the statements in the petition, and listened to the argument in support of it, to find what there is unreasonable in giving that advantage to through passengers. What disadvantage do Motherwell passengers suffer by this? I think that no answer was given to this, except that there was none. This petitioner's complaint may be likened to that of the laborer who, having worked all day, complained that others, who had worked less, received a penny, like himself.'
The case of Foreman v. Railway Co., 2 Nev. & McN. 202, was decided by the English railway commissioners in 1875. The facts were that the complainants imported coal, in their own ships, from points in the north of England to Great Yarmouth, and forwarded the coal to various stations on the defendants' railway, between Great Yarmouth and Petersborough. The complaint was that the defendants' rates for carrying coal from Yarmouth to stations in the interior, at which complainants dealt, were unreasonably greater than the rates charged in the opposite direction, from Petersborough to such stations, and that such difference in rates was made by the defendants for the purpose of favoring the carriage of coal from the interior, as against coal brought to Yarmouth by sea, and carried thence into the interior over the defendants' railway. The commissioners found that it was true that the defendants did carry coal from the interior to London, Yarmouth, and other seaports on their line, at exceptionally law rates, but that this was done for the purpose of meeting the competition existing at those places. It appeared that the rate from Petersborough to Thetford, 51 miles, was 4 shillings, while the rate from Petersorough to Yarmouth, 100 miles, was only 3 shillings. The commissioners said: 'As, however, the complainants do not, as far as their trade in Yarmouth itself is concerned, use the Great Eastern Railway at all, the company cannot be said to prefer other traffic to theirs; nor does the traffic act prevent a railway company from having special rates of charge to a terminus to which traffic can be carried by other routes or other modes of carriage with which theirs is in competition.'
In Harris v. Railway, 1 Nev. & McN. 97, the court held it to be an undue preference for a railway company to concede to the owner of a colliery a lower rate than to the owners of ther collieries, from the same point of departure to the same point of arrival, merely because the person favored had threatened to build a railway for his coal, and to divert his traffic from defendant's railway. But Chief Justice Cockburn said: 'I quite agree that this court has intimated, if not absolutely decided, that a company is entitled to take into consideration any circumstances, either of a general or of a local character, in considering the rate of charge which they will impose upon any particular traffic. * * * As, for instance, in respect of terminal traffic, there might be competition with another railway; and in respect to terminal traffic, as distinguished from intermediate traffic, it might well be that they could afford to carry goods over the whole line cheaper, or proportionately so, than they could over an intermediate part of the line.'
In the case of Budd v. Railway Co., 4 Nev. & McN. 393, and in Evershed v. Railway Co., 3 App. Cas. 1029, it was held that it was not competent for the railway company to make discriminations between persons shipping from the same point of departure to the same point of arrival; but, even in those cases, it was conceded that there might be circumstances of competition which might be considered. At any rate, those cases have been much modified, if not fully overruled, by the latter cases, particularly in Denaby Main Colliery Co. v. Manchester, ect., Ry. Co., 11 App. Cas. 97, and in Phipps v. Railway Co. [1892] 2 Q. B. 248.
The latter was the case of an application, under the railway and canal traffic acts, for an order enjoining the defendants to desist from giving an undue preference to the owners of Butlins and Islip furnaces, and from subjecting the traffic of the complainants to an undue preference, in the matter of the rates charged for the conveyance of coal, coke, and pig-iron traffic, and also for an order enjoining the defendants to desist from giving an unreasonable preference or advantage to the owners of Butlins and Islip furnaces, and the traffic therefrom, by making an allowance of fourpence per ton in respect of coal, coke, and pig iron conveyed for them by the defendants. The sidings of the Duston furnaces, belonging to the complainants, were situated on the London & Northwestern Railway, at a distance of about 60 miles from Great Bridge, one of the pig-iron markets to the westward. The sidings of the Butlins and Islip furnaces were situated on the same railway, to the east of the Duston furnaces, and a distance from the pig-iron market, as to Butlins, of about 71 miles, and, as to Islip, of about 82 miles. Duston had only access to the London & Northwestern Railway, but Butlins and Islip had access, not only to the London & Northwestern Railway, but also to the Midland Railway. The London & Northwestern Railway Company, which carried the Butlins pig iron 11 miles further, and the Islip pig iron 22 miles further, than the Duston pig iron, charged Butlins 0.95d. per mile, and Islip 0.84d. per mile, while they charged Duston 1.05d. per mile; so that the total charge per ton of pig iron from Duston to the western markets was 5s. 2d., while the total charge per ton from either Butlins or Islip was 5s. 8d.
When the case was before the railway commissioners, it was said by Wills, J.: 'It is complained that, although along the London & N. W. Railway every ton of pig iron, every ton of coal, and every ton of coke travels a longer distance in order to reach Islip than in order to reach the applicant's premises, the charge that is put upon it, although greater than the charge which is put upon the traffic which goes to the applicant's premises, is not sufficiently greater to represent the increased distance * * * I first observe that these are, in my judgment, eminently practical questions, and if this court once attempts the hopeless task of dealing with questions of this kind with any approach to mathematical accuracy, and tries to introduce a precision which is unattainable in commercial and practical matters, it would do inf nite mischief, and no good. * * * It seems to me that we must take into account the fact that at Butlins and Islip there is an effective competition with the Midland. Although effective competition with another railway company or canal company will not, of itself, justify a preference which is otherwise quite beyond the mark, yet still it is not a circumstance that can be thrown out of the question, and I think there is abundance of authority for that. It follows also, I think, from the view which I am disposed to take of these-being eminently practical questions, that you must give due consideration to the commercial necessities of the companies, as a matter to be thrown in along with the others. * * * I wish emphatically to be considered as not having attempted to lay down any principles with regard to this question of undue preference, or as to the grounds upon which I have decided it. In my judgment, undue preference is a question of fact in each case.'
The railway commissioners refused to interfere, and the case was appealed. Lord Herschell stated the case, and said:
'This application is made under the second section of the railway and canal traffic act, 1854, which provides that 'no railway company shall make or give any undue or unreasonable preference or advantage to or in favor of any particular person or company, or any particular description of traffic, in any respect whatever, nor shall any such company subject any particular person or company, or particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatever.'
'The question, therefore, which the tribunal, whether it be the court or the commissioners, before whom such a question comes, has to determine, is whether an undue preference or advantage is being given, or whether the one party is being unduly prejudiced or put to a disadvantage, as compared with the other. I think it is clear that the section implies that there may be a preference, and that it does not make every inequality of charge an undue preference.
'Of course, if the circumstances so differ that the difference of charge is in exact conformity with the difference of circumstances, there would be no preference at all. But, as has been pointed out before, what the section provides is that there shall not be an undue or unreasonable preference or prejudice. And it cannot be doubted that whether, in particular instances, there has been an undue or unreasonable prejudice or preference, is a question of fact. In Palmer v. Railway Co., L. R. 1 C. P. 593, Chief Justice Erle said: 'I beg to say that the argument from authority seems to me to be without conclusive force in guiding the exercise of this jurisdiction; the question whether undue prejudice has been caused being a question of fact, depending on the matters proved in each case.'
'In Denaby Main Colliery Co. v. Manchester, etc., Ry. Co. 3 Nev. & McN. 426, when it was before the court of appeals, on an appeal arising out of the proceedings before the railway commissioners, Lord Selborne, then lord chancellor, said: 'The defendants gave a decided, distinct, and great advantage, as it appears to me, to the distant collieries. That may be due or undue, reasonable or unreasonable; but, under these circumstances, is not the reasonableness a question of fact? Is it not a question of fact, and not of law, whether such a preference is due or undue? Unless you can point to some other law which defines what shall be held to be reasonable or unreasonable, it must be, and is, a mere question, not of law, but of fact.'
'The lord chancellor there points out that the mere circumstance that there is an advantage does not, of itself, show that it is an undue preference, within the meaning of the act, and, further, that whether there be such undue preference or advantage is a question of fact, and of fact alone. No rule is given to guide the court or the tribunal in the determination of cases or applications made under this second section. The conclusion is one of fact, to be arrived at, looking at the matter broadly, and applying common sense to the facts that are proved. I quite agree with Mr. Justice Wills that it is impossible to exercise a jurisdiction such as is conferred by this section by any process of mere mathematical or arithmeticla calculation. When you have a variety of circumstances, differing in the one case from the other, you cannot say that a difference of circumstances represents or is equivalent to such a fraction of a penny difference of charge in the one case as compared with the other. A much broader view must be taken, and it would be hopeless to attempt to decide a case by any attempted calculation. I should say that the decision must be arrived at broadly and fairly, by looking at all the circumstances of the case,-that is, looking at all the circumstances which are proper to be looked at, because, of course, the very question in this case is whether a particular circumstance ought or ought not to be considered; but, keeping in view all the circumstances which may legitimately be taken into consideration, then it becomes a mere question of fact. * * * Now, there is no doubt that in coming to their determination the court below did have regard to competition between the Midland and the Northwestern, and the situation of these two furnaces which rendered such competition inevitable. If the appellants can make out that, in point of law, that is a consideration which cannot be permitted to have any influence at all, that those circumstances must be rigidly excluded from consideration, and that they are not circumstances legitimately to be considered, no doubt they establish that the court below has erred in point of law. But it is necessary for them to go as far as that in order to make any way with this appeal, because once admit that to any extent, for any purpose, the question of competition can be allowed to enter in, whether the court has given too much weight to it or too little becomes a question of fact, and not of law. The point is undoubtedly a very important one. * * *
'As I have already observed, the second section of the act of 1854 does not afford to the tribunal any kind of guide as to what is undue or unreasonable. It is left entirely to the judgment of the court on a review of the circumstances. Can we say that the local situation of one trader, as compared with another, which enables him, by having two competing routes, to enforce upon the carrier by either of these routes a certain amount of compliance with his demands, which would be impossible if he did not enjoy that advantage, is not among the circumstances which may be taken into consideration? I am looking at the question not as between trader and trader. It is said that it is unfair to the trader who is nearer the market that he should not enjoy the full benefit of the advantage to be derived from his geographical situation at a point on the railway nearer the market than his fellow trader who trades at a point more distant; but I cannot see, looking at the matter as between the two traders, why the advantageous position of the one trader, in having his works so placed that he has two competitive routes, is not as much a circumstance to be taken into consideration as the geographical position of the other trader, who, though he has not the advantage of competition, is situated at a point on the line geographically nearer the market. Why the local situation in regard to its proximity to the market is to be the only consideration to be taken into account in dealing with the matter, as a matter of what is reasonable and right as between the two traders, I cannot understand.
'Of course, if you are to exclude this from consideration altogether, the result must inevitably be to deprive the trader who has the two competing routes of a certain amount of the advantages which he derives from that favorable position of his works. All that I have to say is that I cannot find anythi g in the act which indicates that when you are left at large,-for you are left at large,-as to whether, as between two traders, the company is showing an undue and unreasonable preference to the one, as compared with the other, you are to leave out that circumstance, any more than any other circumstance which would affect men's minds. * * * One class of cases unquestionably intended to be covered by the section is that in which traffic from a distance, of a character that competes with the traffic nearer the market, is charged low rates because, unless such low rates were charged, it would not come into the market at all. It is certain, unless some such principle as that were adopted, a large town would necessarily have its food supply greatly raised in price. So that, although the object of the company is simply to get the traffic, the public have an interest in their getting the traffic and allowing the carriage at a rate which will render that traffic possible, and so bring the goods at a cheaper rate, and one which makes it possible for those at a greater distance to compete with those situate nearer to it. * * * I cannot but think that a lower rate which is charged from a more distant point by reason of a competing route which exists thence is one of the cases which may be taken into account under those provisions, and which would fall within the terms of the enactment.
'Suppose that to insist on absolutely equal rates would practically exclude one of the two railways from the traffic; it is obvious that these members of the public who are in the neighborhood where they can have the benefit of this competition would be prejudiced by any such proceedings. And further, inasmuch as competition undoubtedly tends to diminution of charges, and the charge of carriage is one which ultimately falls upon the consumer, it is obvious that the public have an interest in the proceedings under this act of parliament not being so used as to destroy a traffic which can never be secured but by some such reduction of charge, and the destruction of which would be prejudicial to the public, by tending to increase prices.'
The learned judge then proceeded to discuss the authorities, and pointed out that the case of Budd v. Railway Co., and Evershed's Case, are no longer law, so far as the second section of the act of 1854 is concerned.
Lindley and Kay, lord justices, gave concurring opinions, and the conclusion of the court was that the commissioners did not err in taking into consideration the fact that there was a competing line together with all the other facts of the case, and in holding that a preference or advantage thence arising was not undue or unreasonable.
The precise question now before us has never been decided in the American cases, but there are several in which somewhat analogous questions have been considered.
Atchison, T. & S. F. R. Co. v. Denver & N. O. R. Co., 110 U.S. 667, 4 Sup. Ct. 185, was a case arising under a provision of the constitution of the state of Colorado which declares 'that all individuals, associations, and corporations shall have equal rights to have persons and property transported over any railroad in this state, and no undue or unreasonable discrimination shall be made in charges or facilities for transportation of freight or passengers within the state, and no railroad company shall give any preference to individuals, associations, or corporations in furnishing cars or motive power.' This court held that under this constitutional provision a railroad company which had made provisions with a connecting road for the transaction of joint business at an established union junction was not required to make similar provisions with a rival connecting line at another near point on its line, and that the constitutional provision is not violated by refusing to give to a connecting road the same arrangement as to through rates which are given to another connecting line, unless the conditions as to the service are substant ally alike in both cases.
The sixth section of the act of congress (July 1, 1862) relative to the Union Pacific Railroad Company provided that the government shall at all times have the preference in the use of the railroad, 'at fair and reasonable rates of compensation, not to exceed the amount paid by private parties for the same kind of service.' In the case of Union Pac. Ry. Co. v. U.S., 117 U.S. 355, 6 Sup. Ct. 772, it was, in effect, held that the service rendered by a railway company in transporting local passengers from one point on its line to another is not identical with the service rendered in transporting through passengers over the same rails.
A petition was filed before the interstate commerce commission by the Pittsburgh, Cincinnati & St. Louis Railway Company against the Baltimore & Ohio Railroad Company, seeking to compel the latter company to withdraw from its lines of road, upon which business competition with that of the petitioner was transacted, the so-called 'party rates,' and to decline to give such rates in the future; also, for an order requiring said company to discontinue the practice of selling excursion tickets at less than the regular rate. The cause was heard before the commission, which held the so-called 'party-rate tickets,' in so far as they were sold for lower rates for each member of a party of 10 or more than rates contemporaneously charged for the transportation of single passengers between the same points, constituted unjust discrimination, and were therefore illegal. The defendant company refusing to obey the mandate of the commission, the latter filed a bill in the circuit court of the United States for the Southern district of Ohio, asking that the defendant be enjoined from continuing in its violation of the order of the commission. The circuit court dismissed the bill. Some of the observations made by Jackson, circuit judge, may well be cited (43 Fed. 37): 'Subject to the two leading prohibitions that their charges shall not be unjust or unreasonable, and that they shall not unjustly discriminate, so as to give undue preference or advantage, or subject to undue prejudice or disadvantage persons or traffic similarly circumstanced, the act to regulate commerce leaves common carriers as they were at the common law, free to make special contracts looking to the increase of their business, to classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce, and generally to manage their important interests upon the same principles which are regarded as sound, and adopted in other trades and pursuits. Conceding the same terms of contract to all persons equally, may not the carrier adopt both wholesale and retail rates for its transportation service?' Again: 'The English cases establish the rule that, in passing upon the question of undue or unreasonable preference or disadvantage, it is not only legitimate, but proper, to take into consideration, besides the mere differences in charges, various elements, such as the convenience of the public, the fair interests of the carrier, the relative quantities or volume of the traffic involved, the relative cost of the services and profit to the company, and the situation and circumstances of the respective customers with reference to each other, as competitive or otherwise.'
The case was brought this court, and the judgment of the circuit court dismissing the bill was affirmed. 145 U.S. 263, 12 Sup. Ct. 844. The court, through Mr. Justice Brown, cited with approval passages from the opinion of Judge Jackson in the court below, and, among other things, said: 'It is not all discriminations or preferences that fall within the inhibition of the statute; only such as are unjust and unreasonable.'
Again, speaking of the sale of a ticket for a number of passengers at a less rate than for a single passenger, it was said: '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 to any one, it is to 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. * * * If these tickets were withdrawn the defendant road would lose a large amount of travel, and the single-trip passenger would gain absolutely nothing.'
The conclusions that we draw from the history and language 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 preferences 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 empowered to fully consider all the circumstances and conditions 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 companies 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 commission, instead of confining its action to redressing, on complaint 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 carrying 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.
It may be said that it would be impossible for the commission to frame a general order if it were necessary to enter upon so wide a field of investigation, and if all interests that are liable to be affected were to be considered. This criticism, if well founded, would go to show that such orders are instances of general legislation, requiring an exercise of the lawmaking power, and that the general orders made by the commission in March, 1889, and January, 1891, instead of being regulations calculated to promote commerce and enforce the express provisions of the act, are themselves laws of wide import, destroying some branches of commerce that have long existed, and undertaking to change the laws and customs of transportation in the promotion of what is supposed to be public policy.
This is manifest from the facts furnished us in the report and findings of the commission, attached as an exhibit to the bill filed in the circuit court.
It is stated in that report that the Illinois Central Railroad Company, one of the respondents in the proceeding before the commission, averred in its answer that it was constrained, by its obedience to the order of March, 1889, to decline to take for shipment any import traffic, and, to its great detriment, to refrain from the business, for the reason tha , to meet the action of the competing lines, it would have to make a less rate on the import than on the domestic traffic.
Upon this disclosure that their order had resulted in depriving that company of a valuable part of its traffic (to say nothing of its necessary effect in increasing the charges to be finally paid by the consumers), the commission, in its report, naively remarks, 'This lets the Illinois Central Railway Company out.' 4 Interst. Commerce Com. R. 458.
We also learn from the same source that there was competent evidence adduced before the commission, on the part of the Pennsylvania Railroad Company, that since that company, in obedience to the order of March, 1889, has charged that full inland rate on the import traffic, the road's business in that particular has considerably fallen off; that the steamship lines have never assented to the road's charging its full inland rates, and have been making demands on the road for a proper division of the through rate; that, if it were definitely determined that the road was not at liberty to charge less than the full inland rate, the result would be that it would effectually close every steamship line sailing to and from Baltimore and Philadelphia.
The commission did not find it necessary to consider this evidence, because the Pennsylvania Railroad Company was before it in the attitude of having obeyed the order.
We do not refer to these matters for the purpose of indicating what conclusions ought to have been reached by the commission or by the courts below in respect to what were proper rates to be charged by the Texas & Pacific Railway Company. That was a question of fact, and, if the inquiry had been conducted on a proper basis, we should not have felt inclined to review conclusions so reached. But we mention them to show that there manifestly was error in excluding facts and circumstances that ought to have been considered, and that this error arose out of a misconception of the purpose and meaning of the act.
The circuit court held that the order of January 29, 1891, was a lawful order, and enjoined the defendant company from carrying any article of import traffic shipped from any foreign port through any port of entry in the United States, or any port of entry in a foreign country adjacent to the United States, upon through bills of lading, and destined to any place within the United States, upon any other than the published inland tariff covering the transportation of other freight of like kind over its line from such port of entry to such place of destination, or from charging or accepting for its share of through rates upon imported traffic a lower sum than it charges or receives for domestic traffic of like kind, to the same destination, from the point at which the imported traffic enters the country.
In treating the facts of the case the court say: 'It must be conceded as true, for the purposes of the present case, that the rates for the transportation of traffic from Liverpool and London to San Francisco are, in effect, fixed and controlled by the competition of sailing vessels between these ports, and also by the competition of steamships and sailing vessels in connection with railroads across the Isthmus of Panama, none of which are in any respect subject to the act to regulate commerce. It must also be conceded that the favorable rates given to the foreign traffic are, for reasons to which it is now unnecessary to revert, somewhat remunerative to the defendant; and it must also be conceded that the defendant would lose the foreign traffic, by reason of the competition referred to, and the revenue derived therefrom, unless it carries at the lower rates, and by so doing is enabled to get part of it, which would otherwise go from London and Liverpool to San Francisco, around the Horn, or by way of the Isthmus.' 52 Fed. 187.
The circuit court did not discuss the case at length, either as to its law or facts, but, in effect, approved the order of January 29, 1891 as valid, and enjoined the defendant company from disregarding it.
The circuit court of appeals seems to have disapproved of the construction put on the act by the commission. The language of the court was as follows: 'The commission contended that the defendant had violated the second section of the act to regulate commerce, which prohibits unjust discrimination in the compensation charged for like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, and had also violated the third section, which prohibits any undue or unreasonable preference or advantage to any particular description of traffic. The defendant insisted that the dissimilar conditions growing out of the ocean competition freed its conduct from the prohibition of the statute. The commission held that this class of dissimilar conditions was not in the contemplation of the statute, and was not to be regarded in the regulation of inland tariffs of rates.' Then, after citing a passage from the report of the commission, the court proceeds to say: 'Its conclusion was that foreign and home merchandise 'under the operation of the statute, when handled and transferred by interstate carriers engaged in carriage in the United States, stand exactly upon the same basis of equality as to tolls, charges, and treatment for similar services rendered.' 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 statute, is an exceedingly important one, the ultimate decision of which may have a wider influence upon the interstate commerce of the country than we can foresee. This legal question was not discussed in the exportrate case, which was treated 'as one of practical policy.' We are not disposed to pass authoritatively upon this question, except in a case which demands it, and in which the effect of this construction of the statute is naturally the subject of discussion.' 20 U.S. App. 6-9, 6 C. C. A. 653, 57 Fed. 948.
Having thus intimated its dissent from, or, at least, its distrust of, the view of the commission, the court proceeded to affirm the decree of the circuit court and the validity of the order of the commission, upon the ground that, even if ocean competition should be regarded as creating a dissimilar condition, yet that in the present case the disparity in rates was too great to be justified by that condition.
This course proceeded, we think, upon an erroneous view of the position of the case. That question was not presented to the consideration of the court. There was no allegation in the commission's bill or petition that the inland rates charged by the defendant company were unreasonable. That issue was not presented. The defendant company was not called upon to make any allegation on the subject. No testimony was adduced by either party on such an issue. What the commission complained of was that the defendant refused to recognize the lawfulness of its order; and what the defendant asserted, by way of defense, was that the order was invalid, because the commission had avowedly declined to consider certain 'circumstances and conditions,' which, under a proper construction of the act, it ought to have considered.
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 misconception, 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. The defend nt was entitled to have its defense considered, in the first instance, at least, by the commission, upon a full consideration of all the circumstances and conditions upon which a legitimate order could be founded. The questions whether certain charges were reasonable or otherwise, whether certain discriminations were due or undue, were questions of fact, to be passed upon by the commission in the light of all facts duly alleged and supported by competent evidence, and it did not comport with the true scheme of the statute that the circuit court of appeals should undertake, of its own motion, to find and pass upon such questions of fact, in a case in the position in which the present one was.
We do not, of course, mean to imply that the commission may not directly institute proceedings in a circuit court of the United States charging a common carrier with disregard of provisions of the act, and that thus it may become the duty of the court to try the case in the first instance. Nor can it be denied that, even when a petition is filed by the commission for the purpose of enforcing an order of its own, the court is authorized to 'hear and determine the matter as a court of equity,' which necessarily implies that the court is not concluded by the findings or conclusions of the commission; yet, as the act provides that on such hearing the findings of fact in the report of said commission shall be prima facie evidence of the matters therein stated, we think it plain that if, in such a case, the commission has failed, in its proceedings, to give notice to the alleged offender, or has unduly restricted its inquiries, upon a mistaken view of the law, the court ought not to accept the findings of the commission as a legal basis for its own action, but should either inquire into the facts on its own account, or send the case back to the commission to be lawfully proceeded in.
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.
The decree of the circuit court of appeals is reversed. The decree of the circuit court is also reversed, and the cause is remanded to that court, with directions to dismiss the bill.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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