Source: https://supreme.justia.com/cases/federal/us/218/88/
Timestamp: 2019-04-25 15:50:23+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 218 › ICC v. Chicago, R.I. & Pacific Ry. Co.
The Interstate Commerce Commission did not base its order on an effort to apportion the country into zones tributary to trade centers and to build up new trade centers.
The outlook of the Interstate Commerce Commission and its powers are greater than the interests of the railroads, and are as comprehensive as the interests of the entire country.
The Interstate Commerce Commission was instituted to prevent discrimination between persons and places; rates may not only be investigated and pronounced unreasonable or discriminatory, but other rates may be prescribed.
The power of the Interstate Commerce Commission extends to the regulation of rates, whether the same be old or new, notwithstanding that interests attached to the rates may have to be changed in case the Commission exercises its power.
Railroad companies may complain of an order of the Commission reducing rates so far as it affects their revenue. They cannot complain of it simply because it affects shippers or places.
The primary jurisdiction as to fixing rate under the Interstate Commerce Act is with the Commission, and the power of the court is confined to a review of question of constitutional power exercised by the Commission.
In this case, the only question being as to power and the rates' not being confiscatory and the Commission's having acted within it power, the case is remanded with instructions to dismiss the bill.
The facts, which involve the validity of certain orders of the Interstate Commerce Commission affecting railroad freight rates to points known as Missouri River cities, are stated in the opinion.
Kansas City and St. Joseph, Missouri, and Omaha, Nebraska, cities on the Missouri River, and called throughout the record, and in this opinion, Missouri River cities.
The through class rates were reduced from 1/147, 2/120, 3/93, 4/68, 5/57 in cents per 100 pounds to 1/138, 2/113, 3/88, 4/64, 5/54. The numbers above the lines indicate the classes, and the numbers below the lines the rates.
"because those portions of the through rates which apply between the Mississippi River crossings and the Missouri River cities are too high. These are defendants' 'separately established rates,' which are 'applied to the through transportation,' and therefore the through rates should be adjusted by reduction of those factors or parts thereof which are found to be unreasonable."
The division of the rates, as established by the railroad, was as follows: from New York to the several Mississippi River crossings on traffic moving through them to points beyond, in cents per 100 pounds, 1/87, 2/75, 3/58, 4/41, 5/35. From the Mississippi River crossings to the Missouri River cities, 1/60, 2/45, 3/35, 4/27, 5/22. The latter are local class rates under the Western classification, and are those which the Commission adjudged too high, and which it reduced in cents per 100 pounds, to the following: 1/51, 2/38, 3/30, 4/23, 5/19. The amount of reduction it will be observed, is nine cents on first-class freight and a proportional reduction on the other four classes.
companies to cease and desist on or before the twenty-fifth of August, 1908, from charging, demanding, or collecting anything in excess of the rates last above set out, and the companies were required to put such rates in force before the twenty-fifth of August, 1908, and maintain them for a period of not less than two years.
"are arrived at by adding to the rates from Mississippi River points, as shown above, the following rates, subject to official classification, to-wit: 87¢, 75¢, 58¢, 41¢, and 35¢ per hundred pounds for said five classes, respectively; that the aforesaid through rates, applying from New York to Kansas City, are observed by defendant carriers on traffic moving by way of Chicago; that, in the division of said through rates from Atlantic seaboard to said three Missouri River cities, Kansas City, St. Joseph, and Omaha, each of said defendant railroad companies allows and pays to said Eastern connections 72.3¢, 62.4¢, 48.4¢, 34.3¢, and 29.4¢ per hundred pounds on the said five classes, respectively, and charges, accepts, and retains, as their respective shares of said through rates upon the several classes aforesaid, 74.7¢, 57.6¢, 44.6¢, 33.7¢ and 27.6¢ per hundred pounds."
River cities is given, which shows that the distances are not materially different, and also shows distances west of Chicago.
"are in themselves unreasonable and relatively unjust, unfair, and prejudicial as compared with rates from the same territory to St. Paul and Minneapolis,"
through the volume or tariff and the cost of handling it is not greater. Discrimination is alleged, with a detail of circumstances, against the Missouri River cities, and the violation of the Interstate Commerce Act.
What are conceived to be reasonable rates are set out, and that the rates charged are alleged to be discriminatory against the complainants, and are excessive and unreasonable in and of themselves, because higher and greater than enough to pay the cost of transportation and maintenance and a fair profit on the valuation of the property employed.
The railroad companies filed separate answers in which they admitted the charges and rates set out in the petition and the division thereof, but denied discrimination in favor of St. Paul and Minneapolis against the Missouri River cities, and alleged competitive conditions existing as to the first-named cities. They deny that the rates from the Atlantic seaboard to the last-named cities, suggested by the petitioners, would be reasonable or just, or that the rates charged are unduly high or excessive, or discriminate against the Missouri River cities or the petitioners.
be unfair and prejudicial compared to rates to St. Paul and Minneapolis, and "unreasonable and excessive in and of themselves." And, further, that the rates had been fixed and established by the railroad companies by virtue of joint traffic agreements, and had been duly filed, posted, and published by the companies, and that all the companies to such agreements were necessary parties. Fifty or more companies were named.
The Eastern companies (those operating east of Chicago), answering, denied that there was any agreement between them and the original respondents for the shipment and division of through rates between the Atlantic seaboard and St. Paul and Minneapolis, and alleged that, in conjunction with their several connections, they receive to Chicago the same rate in cents per hundred pounds as applied upon like tariff originating at the same points of origin and terminating at Chicago, and are not concerned with the rates or proportional rates charged or accepted by the different carriers from Chicago to St. Paul or Minneapolis. They also denied that they were parties to any joint tariff or class rates from the Atlantic seaboard to the Missouri River cities. They admitted participation in joint through class rates to Mississippi River points, and denied that they, however, were unreasonable or unjust in or of themselves, or as respectively applied to shipments destined to St. Paul or Minneapolis, or shipments destined to points west of the Mississippi River.
upon the bases of percentages of the rates from the points of origin to Chicago; that the said rates for the first five classes governed by the official classification from New York to East St. Louis of 87¢, 75¢, 58¢, 41¢, and 35¢ per hundred pounds, respectively, are applied as proportional rates to the various Mississippi River crossings north of East St. Louis, to and including East Dubuque, Illinois, and that from other Eastern points than New York City the rates to East St. Louis apply equally to said Mississippi River crossings, and all of such rates to said Mississippi River crossings apply uniformly upon all shipments destined to all points west of the Mississippi River and east of Pacific coast terminals and points taking the same rates. Respondents allege that all of the rates from Eastern points to said Mississippi River crossings are just and reasonable, in and of themselves and as applied to shipments destined to any point west of the Mississippi River and east of Pacific coast terminals."
They alleged that the rates to the Mississippi River crossings are governed by the official classification, and those from the latter crossings to the Missouri River points are governed by the Western classification, and that innumerable articles are differently classified in such classifications. That it would be impossible to establish joint through rates on the basis set out in the petition without simultaneously applying the official classification to all traffic from all Eastern points and all points intermediate between the rivers, and establishing relative through class rates from all such Eastern points to all such intermediate points between the rivers, and that this would require a general revision and reduction of rates, which would cause great hardship and irreparable injury to the respondents and other interstate carriers not parties to the proceeding.
not questioned by petitioners, and that the grievance of the latter, if they have any, lies in the rates applied by the original respondents from Chicago and the Mississippi River crossings to the Missouri River cities on shipments originating at Eastern points. They hence prayed to be dismissed. They were subsequently dismissed.
The Sioux City Commercial Club intervened and supported the petition, and prayed that whatever should be done for the other Missouri River cities should be done for Sioux City. The St. Paul Jobbers & Manufacturers Association and the Minneapolis Commercial Club intervened and in substance coincided with the views and interest of the defendant carriers.
A great deal of testimony was taken, and the order made which has been recited. The appellee companies then filed a bill in the Circuit Court of the United States for the Northern District of Illinois, Eastern Division, for a temporary and permanent injunction against the order, that it be annulled, and the Interstate Commerce Commission be enjoined from enforcing it. A temporary injunction was granted. It was made permanent on final hearing, the court dividing. 171 F. 680.
The pleadings in the case are very voluminous. They consist of the bill of the railroad companies, the answers to it by the Interstate Commerce Commission, and the intervening petitions of certain other railroad companies, and mercantile and manufacturing concerns.
are based: the official classification from the Atlantic seaboard to the Mississippi River, and the Western classification, between the river and the Missouri River cities; that the classifications materially differ and constrain different rates; that those between the rivers are just and reasonable and apply to all merchandise, whatever be its point of origin. That business conditions have grown up and are dependent upon the rates established, which will be disturbed by their alteration; that their alteration as required by the order of the Commission will compel a discrimination between shippers and localities, to do which is in excess of the powers of the Commission.
It is alleged that the rates are fair compared to the cost of service, absolutely and relatively, and that the rates east of the Mississippi River are not changed, the order affecting alone the proportion of the through rates charged by the complainant carriers, and will compel new through rates, which will not affect the proportion thereof received by the Eastern carriers.
And it is alleged that the Commission only has power to establish, after hearing on complaint, through rates and joint rates, and prescribe the just and reasonable proportions of such rates between the carriers only when they (the carriers) fail to agree upon the proportion or division thereof, and that there was no evidence that they had failed to agree upon such rates or the proportion and divisions thereof, and that therefore the order exceeds the power of the Commission, and deprives the companies of their property without due process of law, in violation of the Fifth Amendment of the Constitution of the United States.
reasonable in and of itself, and that "the whole and only reason and the whole and only conclusion" of the Commission upon which the reduction was ordered was because the Commission decided that merchandise shipped from the Atlantic seaboard should be transported by the companies at a lower charge than that exacted for the transportation of an equal amount of merchandise when the same was shipped from St. Louis, Chicago, or other points west of the Atlantic seaboard. And this, it alleged, is in excess of the powers of the Commission, misapplies the law, and compels the companies to serve a certain class of shippers at an unreasonable rate, and to take a rate lower than is charged other shippers for a like service, which involves less expense to the companies.
A loss of revenue is alleged which will result in a deprivation of their property without due process of law, and that the enforcement of the order, even if it be finally set aside, will cause great disturbance to the business of the companies.
The Commission meets those points with denials of the facts alleged and their consequences, and opposes them as well by other facts and considerations.
of traffic its proper division of costs, and that no method of apportionment can be devised except that which involves the exercise of judgment, and the results vary according to the method used. The Commission therefore says that the statements and allegations of the bill are mere conclusions and opinions, which necessarily involve consideration of all these complex and difficult problems, and should not be accepted for the purpose of setting aside its order.
Supplementing this, the Commission sets forth that, on the hearing before it, oral and documentary evidence was taken, to which it gave full consideration, and to the reports filed by the companies with it in accordance with the statute, and that its order was made in accordance with the statute, and that, so far from exceeding its powers, it might have made a greater reduction, but it left the companies on the Atlantic seaboard business destined to Missouri points to charge one hundred percent more than the same railroads voluntarily charge on transcontinental business, and it is alleged that it appeared from the testimony of one witness that the latter business yielded some profit, and by another witness, testifying as an expert, that a rate fifty percent higher would be "too large, of course."
The Commission alleges the reasonableness of the rates ordered by it, and that they are less than the companies charge and accept for transcontinental freight originating at the Atlantic seaboard and destined to Pacific coast terminals, the expense of service being no greater. A comparison is made also with Montana points and Spokane points, showing the rates to be less than to the Missouri River cities, carried on the same railroads. So also to Oklahoma common points. So also for traffic originating at Pittsburgh and carried through Chicago to Missouri River points, and at Chicago destined to Texas common points.
The reason given by the Commission for not disturbing the rates of the Eastern roads is that neither the complainant before it nor the companies charged that these rates were excessive, nor was a reduction of them sought; but, on the contrary, it was conceded that such rates were just and reasonable. The Eastern carriers were therefore dismissed from the proceedings.
The other allegations but give further details and illustrations of the foregoing.
An order was made allowing the Illinois Central Railway Company, the Atchison, Topeka & Santa Fe Railroad Company, the Chicago & Alton Railroad Company, the Missouri Pacific Railway Company, the Missouri, Kansas & Texas Railway Company, and the St. Louis & San Francisco Railroad Company to file petitions of intervention. The allegations of these petitions are substantially the same as those of the bill. The answer filed by the Interstate Commerce Commission to the bill was taken as filed to the intervening petition.
Leave to intervene was also given to certain business houses of Milwaukee, St. Louis, Chicago, Detroit, and Cleveland. Their petition set forth with some detail the discrimination, as it was alleged, that would be worked against them in favor of merchants at the Atlantic seaboard and Missouri River cities by the order of the Commission, and also the disturbance of the commercial conditions which would result from the order. The Burham Hanna Dry Goods Company, one of the complainants before the Commission, and a number of other corporations and co-partnerships were allowed to file petitions in intervention. The petitions defended the order of the Commission, and again asserted that the rates between the Mississippi and the Missouri Rivers were unreasonable.
Evidence was taken, and the court made the temporary injunction permanent.
"Indeed, the contest, in its larger aspect, is a contest not so much between the shippers and the railroads, as between the commercial and manufacturing interests of the Missouri River cities and of the Atlantic seaboard, on the one part (their interests being identical), and the commercial and manufacturing interests of what is known as the Central Traffic territory (the territory west of Buffalo, Pittsburgh, and Parkersburg, and east of the Mississippi River) on the other part."
"to protect to a certain degree the Missouri River jobbers and manufacturers within a certain zone of territory against the jobbers and manufacturers of Central Traffic Association territory . . . as also to open up to the Atlantic seaboard,"
"zones of territory, the advantages contained in the differential against the competition of both the intervening Central Traffic Association territory and the Missouri River territory."
"power artificially to apportion out the country into zones tributary to given trade centers, to be predetermined by the Commission, and nontributary to others."
This, it was further said, was a "power essentially different in principle from the mere power of naming rates that are reasonable."
it, in the order of the Commission, and which is intended to be exhibited by their voluminous pleadings and arguments. And such, it is insisted, was the conscious purpose of the Commission -- a view in which the circuit court concurred, deducing it from certain avowals of the Commission in its report.
"It must be understood, however, that these orders of the Commission are enjoined simply because, in our judgment, they lay upon the commerce and manufacturing of the localities affected an artificial hand that Congress never intended should be put forth, and therefore are outside the power conferred on the Commission by Congress -- for with the question of a reduction in rates, or a readjustment of rates, from which such artificial results have been eliminated we are not now dealing."
against the order of the Commission was not sustained by the evidence.
of each railway is required to be filed with it, and the subject is under constant investigation."
"the wisdom of Congress in conferring upon the Commission the power which has been lodged in that body to consider complaints as to violations of the statute, and to correct them if found to exist, or attack as crude or inexpedient the action of the Commission in performance of the administrative functions vested in it, and upon such assumption invoke the exercise of unwarranted judicial power to correct the assumed evils."
Interstate Commerce Commission v. Illinois Central Railway Company, 215 U. S. 452, 215 U. S. 478. It was, of course, recognized in that case that there must be power in the Commission to make the order which might be subject to attack, but want of power was distinguished from the mere expediency or wisdom of making it, which, it was declared, was not open to judicial review.
companies that it was the only issue presented to the Commission is not justified.
Freight Association territory; (c) that it arbitrarily attempts to change existing commercial conditions upon which the various distributing centers of the seaboard, Middle West, and West have become established; (d) the power of the Commission is limited to the reduction of unreasonable rates, and that the rates reduced are not shown to be such in themselves; (e) the order is void, it being an attempt at legislation on the subject of general adjustment of rates.
presented, that the chambers of commerce and boards of trades of certain Eastern cities have presented a brief in defense of the order, asserting a vital interest in its preservation, and exhibiting and illustrating the discrimination which, as they contend, exists against them by the breaking of rates at the Mississippi River crossings.
"these are the rates that are added to the rates up to the Mississippi River crossings to make up the through rates from the Atlantic seaboard to the Missouri River cities. Are these rates, as so used, and the through rates resulting therefrom, unwarrantably high or unduly discriminatory or unjustly prejudicial? Can they be changed without doing injustice elsewhere?"
"the equal opportunity in the distribution of merchandise with the merchants in the East, and with the merchants to the West of said cities, so far as their business is affected by trade rates."
"We are not impressed with the view that the system of making rates on certain basing lines should be abolished. No system of ratemaking has been suggested as a substitute for it, except one based upon the postage stamp theory, or one based strictly upon mileage. Either of these would create revolution in transportation affairs and chaos in commercial affairs that have been builded upon the system of ratemaking now in effect. It must not, however, be assumed that a basing line for rates may be established and be made an impassable barrier for through rates, or that cities or markets located at or upon such basing line have any inviolable possession of, or hold upon, the right to distribute traffic in or from the territory lying beyond. Development of natural resources, increase in population, growth of manufacturing or producing facilities, and increased traffic on railroads create changed conditions which may warrant changes in rates and in rate adjustments in order to afford just and reasonable opportunity for interchange of traffic between points of production and points of large consumption."
"the Pacific coast terminal rates, the Washington and Spokane common point rates, the Oklahoma rates, and the El Paso and Texas common point rates, are each and all a departure therefrom, and all are much less than the rates ordered by the Commission."
and their relative advantages or disadvantages would not be changed, while a very serious inroad upon the revenues of the carriers would inevitably result, and at a time of industrial depression when it could not well be borne. Such a change would necessitate corresponding changes in the rates to and from intermediate points, and would probably be reflected in changes in commodity rates as well. The local class rates between the rivers are high, but this is not the time to precipitate such a violent change as would follow an important reduction of them. The first-class rate from Buffalo to Chicago, about 540 miles, and from Pittsburgh to Chicago, about 465 miles, is 45 cents. From Cincinnati to Chicago, 306 miles, it is 40 cents."
We may say in passing that the passage thus quoted is one of those which is adduced to support the contention that the Commission's purpose was to introduce a new system of ratemaking and build up certain distributing centers. We do not think so. It only shows that the accusation that all rates between the rivers were too high might be justified, but that it would be unjust to the carriers to reduce them at that time. It is somewhat strange that that which was done in the interest of the carriers should be brought forward by them to attack the action of the Commission. It is very clear that, by a voluntary reduction by them of such rates, the equality of opportunity dependent upon them would be restored. We make this observation to bring out clearly the relation of the railroad companies to the grievance complained of. That the companies may complain of the reduction made by the Commission so far as it affects their revenues is one thing. To complain of it as it may affect shippers or trade centers is another. We have said several times that we will not listen to a party who complains of a grievance which is not his. Clark v. Kansas City, 176 U. S. 114, 176 U. S. 118; Smiley v. Kansas, 196 U. S. 447.
is not of consequence, for shippers and trade centers are here with complaints. It is doubtful if they are properly here, or rather, were properly permitted to intervene. We have said that the Act to Regulate Commerce was intended to be an effective means for redressing wrongs resulting from unjust discrimination and undue preference, and this must be so, whether persons or places be sufferers. Texas & P. Railway Co. v. Abilene Cotton Oil Co., 204 U. S. 426. We have also said that the primary jurisdiction is with the Commission, the power of the courts being that of review, and is confined in that review to questions of constitutional power and all pertinent questions as to whether the action of the Commission is within the scope of the delegated authority under which it purports to have been made. Interstate Commerce Commission v. Illinois Central R. Co., 215 U. S. 452, 215 U. S. 478.
The order of the Commission, besides, is strictly limited. It was intended to determine nothing, and it determines nothing but that the through rates on Atlantic seaboard shipments to the Missouri River cities are too high. That order is alone open to review. Whether other persons, cities, or areas of territory have grounds of complaint, the way is open by application to the Commission for inquiry and remedy. In that inquiry, many elements may enter upon which the judgment of the Commission should first pass, and of which the courts should not be called upon in advance to intimate an opinion. The reasons for this we have indicated, and they will be found at length in the cases which we have cited.
"Complainants are common carriers whose rates on certain traffic are directed to be reduced by the order complained of. Two grounds for injunction are alleged. One is that the new rates are confiscatory. There is no proof whatever that the rates which the Commission prescribed as just and reasonable are not sufficient to pay the cost of handling that traffic, to cover that traffic's full proportion of maintenance and overhead expenses, and to return to the carriers an ample net profit. Furthermore, proof is lacking that, if the carriers should reduce other rates to correct what they claim is the maladjustment caused by the Commission's order, the reduction would not leave them abundant net returns. For the purposes of this hearing, therefore, it must stand as an agreed fact that the present reduction is neither directly nor indirectly obnoxious to the charge of taking private property without just compensation."
We concur in these conclusions.
Decree reversed, and the case remanded with directions to dismiss the bill and all proceedings in the Circuit Court.
purpose of correcting the inequalities which otherwise would arise from the competitive rivalry between sections and places. As, in my opinion, the court below was correct in the view which it took of the order of the Commission, and was right in holding that the power which the order manifested was not conferred by law, I dissent from the judgment of reversal now announced. It does not, however, seem to me necessary that I should do more than state the fact of my dissent for the following reasons: the judgment of reversal is based not upon the ruling that the Commission possessed the authority to make the order if it was based upon the assertion of power upon which the court below found the order must necessarily rest, but exclusively upon the theory that the court below, while rightly holding the the Commission had not the power which it assumed that body had exerted in making the order, had nevertheless mistakenly enjoined the order because it did not exert, or attempt to exert, the power which the court conceived had been called into play in making it. In other words, although the opinion now announced excludes the authority which the lower court deemed the Commission had exerted by the order in question, it nevertheless maintains the order because of the conclusion that the order was but an exertion by the Commission of its authority on complaint that a rate was unreasonable of itself, to correct such rate by substituting a reasonable rate therefor. Although I am unable to agree with the reasoning by which the court now gives to the order of the Commission the narrow basis thus stated, as the solution of that question depends upon the idiosyncrasies of this particular case and involves no principle of general importance, it seems to me I am called upon to do no more than simply to state my inability to agree.
MR. JUSTICE HOLMES and MR. JUSTICE LURTON join in this dissent.

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