Source: https://supreme.justia.com/cases/federal/us/294/499/
Timestamp: 2019-04-22 18:18:34+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 294 › United States v. Chicago, M., St.P. & Pacific R. Co.
United States v. Chicago, Milwaukee, St. Paul & Pacific R. Co.
1. An order of the Interstate Commerce Commission disapproving reduced rates proposed by a carrier is void unless supported by findings of the basic or quasi-jurisdictional facts conditioning the power of the Commission. P. 294 U. S. 504.
2. Such findings should be precise and clear. P. 294 U. S. 511.
3. There is a zone of reasonableness between rates that are excessively high and rates that are less than compensatory within which a carrier is ordinarily free to adjust its charges for itself. P. 294 U. S. 506.
4. A rate schedule initiated by a carrier must be upheld as lawful unless adequate reasons are presented for setting it aside. P. 294 U. S. 510.
would disturb the prevailing rate structure, grouping, and differentials, and possibly lead to a "rate war" between carriers. Pp. 294 U. S. 507, 294 U. S. 509.
Appeal from a decree of the District Court of three judges, which enjoined the enforcement of an order of the Interstate Commerce Commission annulling reductions proposed by the Milwaukee Railroad of some of its rates on coal.
railroads and producers in Illinois, the Interstate Commerce Commission suspended the proposed tariffs, and afterwards annulled them. 197 I.C.C. 245; 200 I.C.C. 609. A District Court of three judges has perpetually enjoined the enforcement of the order of the Commission, thereby reinstating the tariffs established by the carrier. 8 F.Supp. 970. The case is here upon appeal. Judicial Code, § 210, 28 U.S.C. § 47a.
The rates in controversy affect the transportation of coal from groups of mines in Indiana known as the Brazil-Clinton and the Linton-Sullivan origin groups to Rockford and Freeport, Illinois, and certain intermediate points. Up to the effective date of the new schedule, the rate to Rockford and Freeport from the Brazil-Clinton group had been $1.87 per ton, and from the Linton-Sullivan group $1.92. The proposed change called for a reduction of 17 cents, with the result that the rates between the points mentioned became $1.70 and $1.75, respectively. Reductions ranging from 4 to 10 cents were proposed for other destinations nearer to the point of origin.
"The principal competition of the Illinois producers at these destinations comes from Indiana, and we find no sufficient justification for requiring any of the Illinois rates to these points to be increased until the low rates from Indiana referred to have been placed upon a level more nearly commensurate with the general level of rates in this territory."
one side of the relation. Those on the other side were subject to change at the instance of the carriers affected to the same extent as they had been before. The forces of competition were left to do their work.
From the situation in Illinois, we turn to that in Indiana and Kentucky. Again we confine ourselves to the report unless testimony is mentioned. Six carriers in addition to Milwaukee are in competition for the carriage of coal from groups in Indiana to points in Northern Illinois. These lines are the means of transportation for the product of the coal mines at Princeton and Booneville. They compete also to a slight extent for the carriage of coal from the Brazil and Linton groups, though the testimony is that their traffic from those points is only 1% or less, as compared with 99% belonging to Milwaukee. For all these Indiana routes, group rates have been maintained for many years as the outcome of agreement among the carriers concerned. Rates from Linton-Sullivan were 5 cents higher than from Brazil-Clinton, those from Princeton 7 cents higher than from Linton-Sullivan, and those from Booneville 10 cents higher than from Princeton. If Milwaukee is upheld in the reduction of its own schedule from Brazil and Linton northward, there is likely to be an attempt by other Indiana carriers to make proportionate reductions from points along their lines.
The change of rates in Illinois had repercussions also upon tariffs in Kentucky. As far back as 1927, the Commission fixed a differential of 35 cents in favor of the roads from the Western Kentucky mines as compared with those from the mines in Southern Illinois. Illinois-Indiana Coal cases, 128 I.C.C. 265; West Kentucky Coal Bureau v. Illinois Central R. Co., 172 I.C.C. 279. Upon the lowering of intrastate rates for Illinois carriers, the Western Kentucky carriers restored the preexisting relation between themselves and their Illinois competitors by reducing their own rates to the extent of the established differential.
The Commission made an order approving the reduction.
With these changes in the rates in Illinois and Kentucky, there remained only the rates from the groups in Indiana that were out of line with the proportion maintained for many years. To restore that proportion, Milwaukee filed a new schedule whereby the rates from Brazil-Clinton to Rockford and Freeport were again placed at a parity with those from Springfield to the same places, the rates from Linton-Sullivan being correspondingly adjusted. This is the schedule that has been disapproved by the Commission. Two reports were filed, one in November, 1933, the other in April, 1934. The first, which came from a division of the Commission, was confirmed by the entire body upon denying a petition for rehearing. Suit for an injunction was promptly started by the carrier. Two days before the day appointed for the hearing, the Commission, of its own motion, reopened the proceeding, and thereafter filed a second report amplifying the first one. Following that report, the suit was brought to trial upon supplemental pleadings. The carrier took the position (1) that the order of the Commission was not supported by the finding, and (2) that, irrespective of the findings, it was not supported by the evidence. The District Court gave a decree for the complainant upon the second ground, without passing upon the first. Upon appeal to this Court by the Commission and by intervening railroads, the appellees (the Milwaukee and intervening coal producers) renew the grounds of challenge put forward at the trial.
This Court has held that an order of the Interstate Commerce Commission is void unless supported by findings of the basic or quasi-jurisdictional facts conditioning its power. Florida v. United States, 282 U. S. 194, 282 U. S. 215; United States v. Baltimore & Ohio R. Co., 293 U. S. 454.
"In the absence of such findings, we are not called upon to examine the evidence in order to resolve opposing contentions as to what it shows or to spell out and state such conclusions of fact as it may permit."
Florida v. United States, supra. Orderly review requires that this objection being basic and jurisdictional be disposed of at the beginning.
"to the need, in the public interest, of adequate and efficient railway transportation service at the lowest cost consistent with the furnishing of such service, and to the need of revenues sufficient to enable the carriers, under honest, economical, and efficient management, to provide such service."
cause a disruption of the longstanding rate relation existing for competitive purposes between the several Indiana groups."
"We find that the proposed rates would be unreasonable, and in violation of §§ 1(5) [which denounces unreasonable charges] and 15a(2) of the act [which has been summarized above]."
The statement in the second of these paragraphs that the proposed rates would be "unreasonable" must be read in the light of the report as a whole, and then appears as a conclusion insufficient as a finding unless supported by facts more particularly stated. Cf. Florida v. United States, supra, at p. 282 U. S. 213; Southern Pacific Co. v. Interstate Commerce Comm'n, 219 U. S. 433, 219 U. S. 449. There is no suggestion in the report that the rates have been so reduced as to be less than compensatory. True, they do not reach the maxima beyond which charges are excessive. On the other hand, they do not pass the minima beyond which charges are too low. A zone of reasonableness exists between maxima and minima within which a carrier is ordinarily free to adjust its charges for itself. Texas & Pacific Ry. Co. v. United States, 289 U. S. 627, 289 U. S. 636; United States v. Illinois Central R. Co., 263 U. S. 515, 263 U. S. 522. We lay to one side cases of discrimination or preference or rivalry so keen as to be a menace to the steady and efficient service called for by the statute. Interstate Commerce Act, § 15a. Those tendencies excluded, "a carrier is entitled to initiate rates and, in this connection, to adopt such policy of ratemaking as to it seems wise." United States v. Illinois Central R. Co., supra.
areas and disturb groupings and differentials maintained for many years. This brings us to the question whether such disruption and disturbance may be deemed a sufficient reason for taking from a carrier the privilege of reaching out for a larger share of the business of transportation and initiating its own schedule to help it in the struggle. For an answer to that question, other facts, exhibited with greater particularity in other parts of the report, must be brought forward and considered. Those affecting the Indiana groups may conveniently be stated first; those affecting groups in Illinois afterwards.
Every change of a rate schedule, either voluntary or involuntary, is a disruption pro tanto of the rate structure theretofore prevailing. Plainly such a disruption, without more, is no sufficient reason for prohibiting a change. The Indiana carriers, by long continued cooperation, have maintained a fixed schedule of differentials between mines in the southern group (Princeton and Booneville) and mines farther to the north. There is not a fact stated in the report to indicate that it will be unjust or impracticable to apply the new Milwaukee rates to the other lines in Indiana after increasing them by the differentials hitherto prevailing. There is not a fact to indicate that the rates so reduced will be less than compensatory, or that capacity for service to the public will be impaired or put in jeopardy.
"The raising of rates does not necessarily increase revenue. It may, in particular localities, reduce revenue instead of increasing it, by discouraging patronage."
does not make it wrongful for Milwaukee to restore the longstanding parity between Brazil and Springfield. At the very least, the findings should inform us, if only approximately, of the extent of the expected loss; they should make it clear whether the impairment of revenues will be trivial or substantial, for only thus can the impairment be related to capacity for service. Cf. Florida v. United States, 292 U. S. 1, 292 U. S. 9. Nothing of the kind is shown. The schedules are to be congealed as they exist, because, if not congealed, they will be fluid, fluidity is change, and change has the potency, if not the promise, of disturbance. As to conditions in Indians, this and hardly more is the teaching of the report.
We pass to the relation between the Indiana groups and those in Illinois. As we have seen, parity of rates had been maintained for many years between Indiana lines transporting coal from Brazil-Clinton to Northern Illinois and Illinois lines transporting coal from Springfield. There was no complaint by the Commission during those years that the relation was unfair. There was no holding to that effect when orders of the state commission prescribing lower rates in Illinois were kept in operation against the protest of Milwaukee. Intrastate Rates on Bituminous Coal between Points in Illinois, supra. The significance of that decision has been considered already in the course of this opinion. As we have striven to make clear, the Commission did not rule that the effect of the new rates was to establish a fair relation, still less the only fair one, between Illinois and Indiana, a relation to be maintained as something fixed and constant. The findings then made are repeated by quotation in the report in this proceeding without comment or explanation that would give them another meaning. If the schedule in controversy is to be rejected as oppressive or unreasonable, the grounds for the rejection must be looked for somewhere else than in the earlier decision.
and may build the structure of the rates accordingly. Florida v. United States, 292 U. S. 1; United States v. Louisiana, 290 U. S. 70.
In the light of these considerations, it is not the Milwaukee that is subject to the reproach of dealing with the matter piecemeal. All that the Milwaukee has done is to initiate a schedule which must be upheld as lawful unless adequate reasons are presented for setting it aside. Cf. Anchor Coal Co. v. United States, 25 F.2d 462; Atchison, T. & S.F. Ry. Co. v. United States, 279 U. S. 768, 279 U. S. 773. The reproach of piecemeal action is incurred by the Commission, which has not adjudged the fairness of the relation now subsisting between Illinois and Indiana rates, which has not questioned its own capacity to prevent unjust reprisals, which has put off to an indefinite future the remodeling of the rate structure for all the carriers affected, and which has left this particular carrier helpless in the interval. In brief, a schedule of lowered tariffs has been cancelled though the facts that control the validity of the reduction have yet to be determined. This was not a full discharge by the Commission of an immediate responsibility. It was inaction and postponement. Responsibility was shifted from the shoulders of the present to the shoulders of the days to come.
conflicting inferences. Something more precise is requisite in the quasi-jurisdictional findings of an administrative agency. Beaumont, S.L. & W. Ry. Co. v. United States, 282 U. S. 74, 282 U. S. 86; Florida v. United States, 282 U. S. 194, 282 U. S. 215. We must know what a decision means before the duty becomes ours to say whether it is right or wrong.
The decree should be affirmed, and it is so ordered.
* See the last two paragraphs of the first report by Division No. 2, which the second report has readopted and confirmed.

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