Source: https://supreme.justia.com/cases/federal/us/245/136/
Timestamp: 2019-04-22 08:12:27+00:00

Document:
Meanings and relations of the terms "through route," "through rate," "joint rate," "sum of the locals," "division of joint rate," "rate-breaking point" and "combination rate" explained and defined.
Railroad companies, which, though chartered by different states, are all operating interstate railroads and otherwise engaged in interstate commerce, and which have established a through route between interstate points with a through rate consisting of the sum of the local rates, or of a combination of a local rate with a joint rate to an intermediate point, are not deprived of their rights under the Fifth Amendment when required, by an order of the Interstate Commerce Commission, to substitute a joint through rate (of reasonable amount) for the through rate thus existing, and to maintain the same through route or, at their election, substitute a modification of it which the Commission has found preferable.
Such an order is within the power conferred upon the Commission by the Act to Regulate Commerce, as amended.
The Commission's order, establishing through routes and a joint rate on logs and lumber from the "blanket territory" of Arkansas to Paducah, Kentucky, which permitted complaining carriers to maintain their route via Cairo, Illinois, or to substitute a route via Memphis, Tennessee, which the Commission found to be the more natural one, the joint rate fixed by the Commission to be the same in either case, is consistent with that provision of § 15 of the Act to Regulate Commerce forbidding the Commission to embrace in a through route "less than the entire length" of a railroad "unless to do so would make such through route unreasonably long."
The power of Congress and of the Commission to prevent interstate carriers from discriminating against a particular locality applies to carriers the lines of which do not reach the locality, but which bill through traffic to it over connecting lines.
An order of the Commission requiring carriers to reduce existing through rates by establishing joint rates, or, in the alternative, new through routes with joint rates, rests on § 15 of the Act to Regulate Commerce. It is not to be regarded as primarily an order to remove discrimination in violation of § 3, even though discrimination in rates as between two localities may have furnished the occasion for the complaint upon which the Commission acted and may have afforded reason for the rate fixed by its order.
Paducah, Kentucky, and reducing existing rates. An application was made for a temporary injunction. Both defendants moved to dismiss the bill. The Commission also answered. The case was fully heard upon the evidence before three judges "as upon final submission upon the merits;" a decree was entered dismissing the bill without costs (234 F. 668), and the case comes to this Court by direct appeal.
Paducah is situated on the south bank of the Ohio River, 42 miles above Cairo, Illinois, which lies on the north bank of the Ohio near its confluence with the Mississippi. An important business in each city is manufacturing and jobbing lumber. They compete in both the buying and the selling markets. Each draws its supplies of logs and lumber, in part, from the extensive region lying west of the Mississippi and south of the Arkansas River, known in the trade as the "blanket territory." [Footnote 2] The distances from this region to Paducah are not greater than to Cairo; but, prior to the order of the Interstate Commerce Commission herein complained of, the through freight rate on logs and lumber was 22 cents per hundred pounds to Paducah, while it was only 16 cents to Cairo.
Island with the Illinois Central at Memphis is made under similar conditions.
"with joint rates . . . which shall not exceed the rates contemporaneously charged for the transportation of logs and lumber from the same points to Cairo."
(d) That the distances to Paducah via Cairo were so much greater than the distances via Memphis "that the natural route is via Memphis, rather than via Cairo;"
(e) That through routes and joint rates not higher than the Cairo rate should be established from the "blanket territory" to Paducah via either Memphis or Cairo.
of the evidence before the Commission, of which there was ample to sustain its findings. Some relate to the form of the order, which was clearly appropriate. Few only of the errors assigned require discussion here.
First: The carriers deny that the Commission has the power to compel them to establish through routes and joint rates. It is admitted that all the complaining carriers were interstate railroads and were engaged otherwise in interstate commerce. It is undisputed that for many years there has been over the lines of two of these carriers a through route to Paducah via Cairo, and over the other a through route via Memphis, and that, on all the lines, there were through rates. But it is contended that if a carrier establishes a through route and joint rate with its connections, it creates in effect a relation of partnership, that this relation must be entered into, if at all, voluntarily, and that to "compel a carrier chartered by a state" to enter into such a relation with a carrier chartered in another state violates the Fifth Amendment of the federal Constitution.
the "blanket territory" to Paducah, thus reducing the existing through rate. The carrier connecting at Cairo (the Illinois Central) and all but one of the carriers connecting with these complainants in the "blanket territory," acquiesced in the order establishing this joint rate. The Illinois Central's share of the 22-cent rate was its local rate of 6 cents. If these complaining carriers cannot reach satisfactory agreements with the Illinois Central as to what its share of the 16-cent rate should be, they may, under § 15 of the Act to Regulate Commerce, apply to the Commission for an appropriate order. In respect to the Rock Island, the situation is similar.
the Commission. And there is no foundation in fact or law for the contention of complainants that the Commission disregarded the provision of § 15, by which it is prohibited from embracing in a through route "less than the entire length of a" railroad "unless to do so would make the route unreasonably long." Whether a carrier engaged solely in intrastate commerce could be compelled by Congress to enter interstate commerce, or even whether a carrier, having entered into some interstate commerce, may be compelled to enter into all, we have no occasion to consider, [Footnote 7] for the complaining carriers had voluntarily entered into the particular class of interstate commerce with Paducah to which alone the order related.
Second: Carriers insist also that the order is void on the ground that, since their "rails do not reach Paducah, they cannot be guilty of discrimination against that city." They, however, bill traffic via Cairo or Memphis through to Paducah in connection with the Illinois Central, thus reaching Paducah, although not on their own rails. And thereby they become effective instruments of discrimination. Localities require protection as much from combinations of connecting carriers as from single carriers whose "rails" reach them. Clearly the power of Congress and of the Commission to prevent interstate carriers from practicing discrimination against a particular locality is not confined to those whose rails enter it. Cincinnati, New Orleans & Texas Pacific Railway v. Interstate Commerce Commission, supra.
one to prevent discrimination. Orders to remove discrimination, as commonly framed, do not fix rates. They merely determine the relation of rates, by prohibiting the carrier from charging more for carriage to one locality than under similar conditions to another, and they usually leave the carriers free to remove the discrimination either by raising the lower rate or by lowering the higher rate or by doing both. American Express Co. v. Caldwell, 244 U. S. 617, 244 U. S. 624. The order here complained of gives the carriers no such option. It directs that the rates to Paducah shall be "not in excess of the rates at present in effect from the same points or groups to Cairo, Illinois." In other words, the Commission having found the 22-cent rate unduly high, reduces it to 16 cents by establishing joint through rates. The injury resulting from discrimination was doubtless the reason which induced the Paducah Board of Trade to institute the proceedings, and the Commission may have considered the existence of the lower rate to Cairo persuasive evidence that the 22-cent rate to Paducah was unreasonably high and the resulting discrimination strong reason for establishing the 16-cent joint rate. But the order is strictly one under § 15 of the Act to Regulate Commerce to reduce existing through rates by establishing joint rates or, in the alternative, to establish new through routes with joint rates. It is not primarily an order to remove discrimination in violation of § 3.
A fourth carrier, the Louisiana & Arkansas Railway Company, was permitted to intervene as party plaintiff and joined in the appeal, but the special facts concerning it are not of importance.
This region is called "blanket territory" because a "blanket" rate on logs and lumber is made from all shipping points within the territory to points beyond. That is, the rate is the same regardless of the distance hauled within the territory, which extends about 400 miles from north to south and 300 from east to west.
The distance on the Illinois Central from Memphis to Paducah is about 169 miles. The Nashville, Chattanooga & St. Louis Railroad also has a line from Memphis to Paducah, but it is much longer.
A "through route" is an arrangement, express or implied, between connecting railroads for the continuous carriage of goods from the originating point on the line of one carrier to destination on the line of another. Through carriage implies a "through rate." This "through rate" is not necessarily a "joint rate." It may be merely an aggregation of separate rates fixed independently by the several carriers forming the "through route," as where the "through rate" is "the sum of the locals" on the several connecting lines or is the sum of lower rates otherwise separately established by them for through transportation. Through Rates and Through Routes, 12 I.C.C. 164, 166. Ordinarily "through rates" lower than "the sum of the locals" are "joint rates." Prior to the amendment of the Act to Regulate Commerce (1906, c. 3591, § 4, 34 Stat. 584, 590) authorizing the Commission to establish through routes and joint rates, all "joint rates" were (as most still are) the result of agreements between carriers, which fix also the "divisions" -- that is, the share of the "joint rate" to be received by each. New York, New Haven & Hartford R. Co. v. Platt, 7 I.C.C. 323, 329. The bases of such divisions differ greatly in practice. Sometimes all the carriers participate in the joint rate in the proportions which their local rates bear to the sum of the locals; in other words, the percentage of reduction from the local rate is the same for each. Sometimes one carrier is allowed the full local, while the rate of another is seriously reduced. The share of each being a matter of bargain, it may be fixed at an arbitrary amount. Chamber of Commerce of Milwaukee v. Flint & Pere Marquette R. Co., 2 I.C.C. 553, 567-568. In constructing the joint rates, the charge per mile ordinarily decreases with the increase of the length of haul. But even where the through route and through rates are matters of express agreement between the carriers, a continuous "joint rate" does not always extend from the point of origin to point of destination. There may be, on the "through route" an intermediate point at which, in common railroad practice, the rate "breaks." That is, the "joint rate" from the point of origin ends at this "rate-breaking point," and there is charged for the distance beyond the same local rate or joint rate that would have been charged had the business originated at this intermediate point. That is, instead of a "joint through rate," there is a "combination." The so-called "Ohio river crossings" or "gateways" are among the "rate-breaking points." See Rates on Lumber from Southern Points, 34 I.C.C. 652, 654; Lehigh Portland Cement Co. v. B. & O. S.W. R. Co., 35 I.C.C. 14, 17; Interstate Commerce Commission v. Chicago, Rock Island & Pacific Railway, 218 U. S. 88, 218 U. S. 90.
The log and lumber rates from blanket territory to Cairo and Paducah or competitive points had been investigated by the Commission also in earlier proceedings. Rates on Lumber from Southern Points, 34 I.C.C. 652; Wisconsin & Arkansas Lumber Co. v. St. Louis, Iron Mountain & Southern Railway, 33 I.C.C. 33; Paducah Board of Trade v. Illinois Central Railroad, 29 I.C.C. 583; Lumberman's Exchange of St. Louis v. Anderson & Saline River Railroad, 24 I.C.C. 220; Chicago Lumber & Coal Co. v. Tioga Southeastern Railway Co., 16 I.C.C. 323; Central Yellow Pine Association v. Illinois Central Railroad, 10 I.C.C. 505. See also St. Louis, Iron Mountain & Southern Railway v. United States, 217 F. 80.
O'Keefe v. United States, 240 U. S. 294; Interstate Commerce Commission v. Northern Pacific Ry. Co., 216 U. S. 538.
But see Michigan Central Railroad v. Michigan R. Co., 236 U. S. 615, 236 U. S. 631; Minneapolis & St. Louis R. Co. v. Minnesota, 186 U. S. 257; Wisconsin, Minnesota & Pacific R. Co. v. Jacobson, 179 U. S. 287. Compare Norfolk & Western Ry. Co. v. Dixie Tobacco Co., 228 U. S. 593, 228 U. S. 595; Galveston, Harrisburg & San Antonio Ry. Co. v. Wallace, 223 U. S. 481, 223 U. S. 491.

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