Source: https://supreme.justia.com/cases/federal/us/209/108/
Timestamp: 2019-04-22 00:54:57+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 209 › ICC v. Chicago Great Western Ry. Co.
Railroads are the private property of their owners, and while the public has the power to prescribe rules for securing faithful and efficient service and equality between shippers and communities, the public is in no proper sense a general manager. The companies may, subject to change of rates provided for in the Interstate Commerce Act, contract with shippers for single and successive transportation, and, in fixing their own rates, may take into account competition, provided it is genuine and not a mere pretense.
There is no presumption of wrong arising from a change of rate made by a carrier. The presumption of good faith and integrity attends the action of carrier as it does the action of other corporations and individuals, and those presumptions have not been overthrown by any legislation in respect to carriers.
A rate on the manufactured article resulting from genuine competition and natural conditions is not necessarily an undue and unreasonable discrimination against a manufacturing community because it is lower than the rate on the raw material, and, under the circumstances of this case, there was no undue and unreasonable discrimination against the Chicago packinghouse industries on the part of the railroads in making, as the result of actual competition and conditions, a lower rate for manufactured packinghouse products than for livestock from Missouri River points to Chicago.
"This case being at issue upon complaint and answers on file, and having been duly heard and submitted by the parties, and full investigation of the matters and things involved having been had, and the Commission having, on the date hereof, made and filed a report and opinion containing its findings of fact and conclusions thereon, which said report and opinion is hereby referred to and made a part of this order:"
and discrimination, in violation of the provisions of the Act to Regulate Commerce, and that said defendants be, and each of them is hereby, notified and required to cease and desist, on or before the fifteenth day of February, 1905, from maintaining or enforcing the said unlawful relation of rates, and from further continuing said unlawful prejudice and discrimination."
"And it is further ordered that a notice embodying this order be forthwith sent to each of the defendant corporations, together with a copy of the report and opinion of the Commission herein, in conformity with the provisions of section 15 of the Act to Regulate Commerce."
and packinghouse products between the same points. There can be, and is, no complaint as to such traffic. The local rates from the Missouri River and St. Paul, and from 150 miles east, to Chicago, are as shown in above schedule. These rates gradually decrease until the Mississippi River is reached, and the average Iowa rate is 21 cents. The great weight of evidence indicates that these rates are at least reasonably low."
"Second. That the cost of carrying livestock is greater than that of carrying dressed meats and packinghouse products."
"Third. That the value of the service of carriage is greater to the packers, because of the higher price of a car of dressed meats or packinghouse products. Dressed meats and packinghouse products are in value worth nearly twice as much as livestock. This factor is important, in ordinary cases, however, in part, because of the greater risk of carriage of high-priced commodities. In these cases, as to the particular commodities in question, the evidence shows that the defendant railroad companies pay out a much larger amount of damages for losses arising from the carriage of livestock than they do for losses arising from the carriage of dressed meats and packinghouse products, in proportion to the value of the products carried, and more in damages per car regardless of the value. This makes the risk of carriage greater for livestock. The result is that the value of the service is not such an important factor in this kind of a case as it is considered to be in ordinary cases."
Railway Company. There was not competition enough at said points to lower the rate as to livestock. There was little and different competition on rates as to livestock at points between the Missouri River and St. Paul and Chicago. The only places where the opportunities for competition existed as to livestock the same as to packinghouse products were immediately at Missouri River points and St. Paul, and there only as to livestock driven in on foot from the surrounding country. There is comparatively a small amount of this stock. If it was exactly the same kind of a commodity as that furnished by the packers, there would be an opportunity for competition in this at these points alone."
"Fifth. That the competition in question did not result from agreement of the defendants, but was actual, genuine competition."
"Sixth. That the present rates on livestock have not materially affected any of the markets, prices, or shipments; that they are reasonably fair to Chicago and to the shippers; that the shipments of livestock from points between Chicago and the Missouri River and St. Paul are as great in proportion to the volume of business as before the present rates were made; that the majority of the livestock comes to Chicago from points as near as 150 miles this side of the Missouri River and St. Paul, and that the lower rate given to the packers does not seem to directly influence or injure the shippers of livestock."
"Seventh. That the rates for carrying packers' products and dressed meats were remunerative. They did not pay any portion of the fixed charges and interest of the railroad companies, nor its full share of the operating expenses, but they did pay more than its cost of movement, and leave something to apply upon operating expenses."
"Eighth. That the welfare of the public, including the shippers, consumers, and all localities and markets, does not seem to be materially affected by the present rates."
and this, as a rule, has been applied to livestock and its finished products. This is not universal, however. There are many commodities where the raw material is charged more for carriage than its finished product, as in the case of the raw material of cotton and the compressed cotton, straw, unbaled and baled, pig iron and its products, and many other commodities. It also appears that for sixteen years out of twenty-three, between Missouri River points and St. Paul and Chicago, the published rates on livestock were higher than on dressed meats and packinghouse products. Many witnesses testified that the ideal rate for the finished product would be higher than the raw material. This, however, was based on the presumption that competition or commercial necessity did not interfere, and that the cost of service and value of the products would be greater in case of the finished products than in that of the raw material."
"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 particular description of traffic in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever."
"That whenever the Interstate Commerce Commission shall have reasonable ground for belief that any common carrier . . . is committing any discriminations forbidden by law, a petition may be presented alleging such facts' (such discrimination), 'to the circuit court of the United States sitting in equity having jurisdiction . . . and, upon being satisfied of the truth of the allegations of said petition, said court shall . . . require a discontinuance of such discrimination by proper orders, writs,"
upon a ministerial body, or legislative, and therefore, under the federal Constitution, a matter for congressional action, for, within any fair construction of the terms "undue or unreasonable," the findings of the circuit court place the action of the railroads outside the reach of condemnation.
"to establish and maintain a commercial exchange; to promote uniformity in the customs and usages of merchants; to provide for the speedy adjustment of all business disputes between its members; to facilitate the receiving and distributing of livestock, as well as to provide for and maintain a rigid inspection thereof, thereby guarding against the sale or use of unsound or unhealthy meats, and generally to secure to its members the benefits of cooperation in the furtherance of their legitimate pursuits."
Its members were, as found by the Commerce Commission, "engaged in the purchase, shipment, and sale of livestock for themselves and upon commission." It was such an association, with members engaged in the business named, that initiated these proceedings and in whose behalf they were primarily prosecuted. While it may be that the proceedings are not to be narrowly limited to an inquiry whether this particular complainant has been in any way injured by the action of the railroad companies, yet that question must be regarded as the one which was the special object of inquiry and consideration. It is true that the Commission subsequently commenced, under the Elkins Act, an independent suit in its own name, but it was practically to enforce the award made by the Commission after its inquiry into the controversy between the livestock exchange and the railroad companies.
"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 disadvantage to persons or traffic similarly circumstanced, the Act to Regulate Commerce leaves common carriers as they were at the common law -- free to make special rates 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 of their own situation and relation to it, and generally to manage their important interests upon the same principles which are regarded as sound and adopted in other trades and pursuits."
It follows that railroad companies may contract with shippers for a single transportation or for successive transportations, subject though it may be to a change of rates in the manner provided in the Interstate Commerce Act -- Armour Packing Co. v. United States, ante, p. 209 U. S. 56, and also that, in fixing their own rates, they may take into account competition with other carriers, provided only that the competition is genuine, and not a pretense. Int. Com. Comm. v. B. & O. R. Co., 145 U. S. 263; Texas & Pacific R. Co. v. Int. Com. Comm., 162 U. S. 197; Int. Com. Comm. v. Ala. Mid. Ry. Co., supra; L. & N. R. Co. v. Behlmer, 175 U. S. 648; East Tenn. &c. Ry. Co. v. Int. Com. Comm., 181 U. S. 1; Int. Com. Comm. v. L. & N. R. Co.190 U.S. 273.
when properly called upon, be able to give a good reason therefor, but the mere fact that a rate has been raised carries with it no presumption that it was not rightfully done. Those presumptions of good faith and integrity which have been recognized for ages as attending human action have not been overthrown by any legislation in respect to common carriers.
The Commerce Commission did not find whether the rates were reasonable or unreasonable per se. Its omission may have been owing, partly at least, to the decision in Interstate Commerce Commission v. C., N.O. & T. P. Ry. Company, 167 U. S. 506, for this controversy arose before the amendment of June 29, 1906. 34 Stat. 584. On the other hand, the circuit court found specifically that the livestock rates were reasonable, and also that the rates for carrying packers' products and dressed meats were remunerative. See Findings 1 and 7. Obviously shippers had, in the rates considered separately, no ground of challenge. But the burden of complaint is not that any rates, taken by themselves, were too high, but that the difference between those on livestock and those on dressed meats and packers' products worked an unjust discrimination.
"the making of the livestock rate higher than the product rate is violative of the almost universal rule that the rates on raw material shall not be higher than on the manufactured product."
This may be conceded, but that the rule is not universal the proposition itself recognizes, and the findings of the court give satisfactory reasons for the exception here shown. See Findings 2, 3, and 9. The cost of carriage, the risk of injury, the larger amount which the companies are called upon to pay out in damages make sufficient explanation. They do away with the idea that, in the relation established between the two kinds of charges, any undue or unreasonable preference was intended or secured.
that they are reasonably fair to Chicago and to the shippers; that the shipments of livestock from points between Chicago and the Missouri River and St. Paul are as great in proportion to the volume of business as before the present rates were made; that the majority of the livestock comes to Chicago from points as near as 150 miles this side of the Missouri River and St. Paul, and that the lower rate given to the packers does not seem to directly influence or injure the shippers of livestock."
If the rates complained of have not materially affected any of the markets, prices, or shipments; if they are reasonably fair to Chicago and the shippers; if the shipments of livestock from the West to Chicago are as great in proportion to the bulk of the business as before the present rates were made, and that lower rate given to the packers does not directly influence or injure the shippers of livestock -- it is difficult to see what foundation there can be for the claim of an undue and unreasonable preference. It would seem a fair inference from the findings that the real complaint was that the railroad companies did not so fix their rates as to help the Chicago packing industry; that they recognized the fact that along the Missouri River had been put up large packing houses, and, without any intent to injure Chicago, had fixed reasonable rates for the carrying of livestock to such packing houses and also to Chicago; that those packing houses, being nearer to the cattle fields, were able to engage in the packing industry as conveniently and successfully as the packing houses in Chicago. If we were at liberty to consider the mere question of sentiment, certainly to place packing houses close to the cattle fields, thus avoiding the necessity of long transportation of the living animals -- a transportation which cannot be accomplished without more or less suffering to them -- and to induce transportation to those nearer packing houses would deserve to be commended, rather than condemned.
of the original complainant, it would seem necessarily to result that the charge of an unlawful discrimination is not proved. In short, there was no intent on the part of the railway companies to do a wrongful act, and the act itself did not work any substantial injury to the rights of the complainant.
We have not attempted to review in detail the great mass of testimony, amounting to two enormous printed volumes. It is enough to say that an examination of it clearly shows sufficient reasons for the findings of fact made by the circuit court.
In short, the findings of the circuit court were warranted by the testimony, and those findings make it clear that there was no unlawful discrimination.
MR. JUSTICE MOODY did not hear the argument nor take part in the decision in this case.

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