Source: https://supreme.justia.com/cases/federal/us/249/557/
Timestamp: 2019-04-25 17:52:31+00:00

Document:
Where a suit to enjoin the enforcement of an order of the Interstate Commerce Commission is based upon the ground that the order exceeded the statutory powers of the Commission, and hence is void, the courts may entertain jurisdiction notwithstanding no attempt has been made by the plaintiff to obtain redress from the Commission itself. P. 249 U. S. 562.
Where rates allowed by the Commission in a proceeding initiated by carriers for relief from the long and short haul clause were later increased as a result of orders made when the proceeding was reopened on the application of a state commission and a merchants association, held that the new orders were to be regarded as resting upon the original petition of the carriers, so that, under the jurisdictional Act of October 22, 1913, a suit to enjoin their enforcement was properly brought in a judicial district where one of the carriers, a party defendant, had its residence. P. 249 U. S. 563.
The clause in § 4 of the Commerce Act, as amended June 18, 1910, providing that, when a railroad carrier shall, in competition with a water route, reduce rates between competitive points, it shall not be permitted to increase them unless, after hearing by the Commission, it shall be found that the proposed increase rests upon changed conditions other than elimination of water competition, has no application where the reduction was with the approval of the Commission, ordered after hearing, upon application by the carrier for relief from the long and short haul clause. P. 249 U. S. 564.
Held that, in this case, changed conditions "other than the elimination of water competition" were found by the Commission. P. 249 U. S. 569.
An order under § 4 of the act granting relief from the long and short haul clause is subject to future modification by the Commission without any application from the carrier. P. 249 U. S. 570.
"Whenever a carrier by railroad shall, in competition with a water route or routes, reduce the rates on the carriage of any species of freight to or from competitive points, it shall not be permitted to increase such rates unless, after hearing by the Interstate Commerce Commission, it shall be found that such proposed increase rests upon changed conditions other than the elimination of water competition."
"Commission shall have held a hearing to determine whether the proposed increases rest upon changed conditions other than the elimination of water competition."
effective April 10, 1916, and on that date, the 65-cent rate became operative.
During March, 1916, two applications had been made to the Commission in the same proceeding on behalf of shippers to reopen for further consideration other fourth section applications of carriers concerning westbound transcontinental rates and for modification of orders issued thereon. The petitioners for such modification were the Spokane Merchants' Association and the Railroad Commission of Nevada, which had theretofore taken an active part in the proceedings. Railroad Commission of Nevada v. Southern Pacific Co., 21 I.C.C. 329; Commodity Rates to Pacific Coast Terminals, 32 I.C.C. 611. Their prayer was for removal of the existing discrimination in transcontinental freight rates against the intermountain territory and in favor of the Pacific Coast ports. The ground alleged for seeking the modification was that, by reason of slides in the Panama Canal and the increased demand for shipping due to the world war, water competition, which had theretofore been held to justify lower rates to the Pacific Coast ports, had in large part disappeared. Thereupon, the Commission reopened, on April 1, 1916, these applications, including that on which was entered the order of March 1, 1916, respecting iron and steel rates from Pittsburgh to Seattle, and a hearing was ordered "respecting the changed conditions which are alleged in justification of a modification of the Commission's orders."
"the war and an unparalleled rise in prices for ocean transportation have so changed the situation as to transform a relation of rates which was justified when established to one that is now unjustly discriminatory against intermediate points."
It found also that these conditions were temporary. An order (amended July 13, 1916) was then entered, effective September 1, 1916, rescinding those previously entered on the several applications of carriers, including that of March 1, 1916, authorizing the 65-cent Pittsburgh-Seattle rate, and the carriers were directed to reduce the degree of discrimination then existing in favor of Pacific Coast ports as against intermediate territory.
of the tariffs and a hearing, and again the request was not granted.
Commission v. Diffenbaugh, 222 U. S. 42, 222 U. S. 49; Louisiana & Pacific Ry. Co. v. United States, 209 F. 244, 251; Atlantic Coast Line R. Co. v. Interstate Commerce Commission, 194 F. 449, 451. The Sacramento Case, supra, was a case of this character. Compare Interstate Commerce Commission v. Louisville & Nashville R. Co., 227 U. S. 88, 227 U. S. 92; Southern Pacific Co. v. Interstate Commerce Commission, 219 U. S. 433. The district court properly assumed jurisdiction of this suit.
"The venue of any suit hereafter brought to enforce, suspend, or set aside, in whole or in part, any order of the Interstate Commerce Commission shall be in the judicial district wherein is the residence of the party or any of the parties upon whose petition the order was made."
District of Washington, and the Railroad Commission of Nevada, a resident of the District of Nevada. The applications of these parties, filed in March, 1916, were doubtless instrumental in securing a reopening of the proceedings which resulted in the order complained of. But the proceedings in which the order was made were the original application of carriers for relief under the fourth section. The report and the order are entitled, "In the Matter of Reopening Fourth Section Applications." One of the carriers which had made such application for relief from the provisions of the fourth section was a resident of Oregon, namely the Oregon-Washington Railroad & Navigation Company, and, as it was joined as defendant in the suit, the District Court of Oregon had jurisdiction over the parties.
Third. The main contention of plaintiff is that, as the carriers had in 1916 reduced the rate from 80 cents to 65 cents, neither the carriers nor the Commission had power to increase the rate without a prior finding by the Commission upon proper hearing "that such proposed increase rests upon changed conditions other than the elimination of water competition," and that no such hearing had been had or finding made.
power to fix, after such hearing, the rate which should be charged, Interstate Commerce Commission v. Humbolt Steamship Co., 224 U. S. 474, 224 U. S. 483, and the Act of 1910 had given it power to suspend, during investigation, tariffs for new rates, and placed upon the carrier the burden of proof to establish the reasonableness of the increased rates, M. C. Kiser Co. v. Central of Georgia Ry. Co., 236 F. 573.
rates lies in its power to prevent unjust discrimination. Compare Houston, East & West Texas Ry. Co. v. United States, 234 U. S. 342. The order prohibiting the unjust discrimination, however, leaves the carrier free to continue the lower rate; the compulsion being that if the low rate is retained, the rate applicable to the locality or article discriminated against must be reduced. That is, the carrier may remove the discrimination either by raising the lower rate to the relative level of the higher, or by lowering the higher to the relative level of the lower, or by equalizing conditions through fixing rates at some intermediate point. American Express Co. v. Caldwell, 244 U. S. 617, 244 U. S. 624.
to keep in effect the low rate to the more distant point by lowering the rates to intermediate points.
"unless, after hearing by the Interstate Commerce Commission, it shall be found that such proposed increase rests upon changed conditions other than the elimination of water competition. . . . This provision may become operative in any case where there has been competition between a railroad and a water line, inland or coastwise. But we have now to determine merely whether the prohibition applies where the rates in question were reduced with the approval of the Commission given after hearing, by order entered upon application of the carrier for relief from the operation of the fourth section."
"from time to time" to determine "the extent to which [the] . . . carrier may be relieved from the operation of this section." In other words, the leave granted is not for all time. It is revocable at any time, either because it was improvidently granted or because new conditions have arisen which make its continuance inequitable. The specific purpose of the last paragraph of § 4 is to ensure and preserve water competition -- to prevent competition that kills. A reduction made under the authority of a fourth section order after full hearing must have been found by the Commission to have been reasonably necessary in order to preserve competition between the rail and the water carrier. A reduction so made is not within the reason of the prohibition declared by the last paragraph. Transportation conditions are not static; the oppressor of today may tomorrow be the oppressed. And, in order to preserve competition between rail and water carriers, it is necessary that the Commission's power to approve a modification of rates be as broad as it is to approve a modification in order to prevent unjust discrimination. Even a literal reading of § 4 would not require that prohibition contained in the last paragraph be extended to reductions made with the approval of the Commission. The preceding paragraph declares 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." The last paragraph is a part of the section. Why should not the Commission's power to relieve be extended to it?
low rate would have to be continued permanently, and other water competition be thereby prevented from arising, unless perchance some changed condition should develop which might make removal of the bar possible. Or, if the reduction if the rail rate, sanctioned by the Commission under the fourth section as not unjustly discriminating against intermediate points, because forced upon the rail carriers by oppressive water competition designed to destroy its business to the port, should become thereafter unjustly discriminatory because the water carrier, destroyed by its own rate cutting, abandoned the route, still the low rail rate and resulting discrimination would have to continue. Only compelling language could cause us to impute to Congress the intention to produce results so absurd, and the language of the last paragraph of § 4 is clearly susceptible of the more reasonable construction contended for by defendants.
"the withdrawal of boats from this [coast to coast] service has not been on account of the rates made by the rail carriers with which the boats compete, but on account of slides in the Panama Canal and the extraordinary rise in ocean freights,"
part upon the measure of the rates they would be able to secure for this service in competition with the rail lines."
It is clear that the changed conditions so found are something other than the "elimination of water competition" which Congress intended should not justify raising the reduced rates. Compare American Insulated Wire & Cable Co. v. Chicago & Northwestern Ry. Co., 26 I.C.C. 415, 416.
Fifth. The plaintiff attacks, however, the validity of the order of June 5, 1916 (amended July 13, 1916), also on the ground that it was not made upon application of the carrier, insisting that application by the carrier is not only a prerequisite to the original granting of relief under the fourth section, but also to the modification from time to time by the Commission of the relief afforded. This Court expressed in the Sacramento case, supra, at p. 242 U. S. 187, its doubt whether such application was a prerequisite even to the original granting of relief. It is clear that application by the carrier is not a prerequisite to modification. As shown above, orders granting relief under the fourth section are not grants in perpetuity. Neither a carrier nor a favored community acquires thereby vested rights. Necessarily implied in each such order is the term "until otherwise ordered by the Commission," and the original application is always subject to be reopened, as it was here.
80 cents was the specific published rate, but the combination of the Pittsburgh-Chicago rate of 18.9 cents and the Chicago-Seattle rate of 55 cents was 73.9 cents, and it was at this rate that the traffic from Pittsburgh actually moved.
By Act of August 9, 1917, c. 50, § 4, 40 Stat. 270, 272, it was provided that, until January 1, 1920, no increased rate or fare shall be filed except after approval thereof has been secured from the Commission. On the 28th day of December, 1917, the government took control of the railroads, as a war measure, under Act of August 29, 1916, c. 418, 39 Stat. 619, 645. Proclamation of December 26, 1917, Proclamations 1917-1918, pp. 89, 90.
Subject only to the requirement of notice as provided in § 6 of the Act to Regulate Commerce, as amended.

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