Source: https://supreme.justia.com/cases/federal/us/245/6/
Timestamp: 2019-04-19 08:21:12+00:00

Document:
Whether the statutes of Maryland intend to authorize the Public Service Commission to revise intrastate commutation rates when such rates have already been established by voluntary action of the railroad company, is a question of state law concerning which the conclusion of the Court of Appeals of Maryland binds this Court upon a writ of error to review its judgment.
State regulation, through a public service commission, requiring a carrier to maintain commutation service between points within the state and fixing rates therefor which are less than the intrastate rate lawfully established for one-way intrastate travel in general, does not deprive the carrier of due process of law when the service so regulated was established by the carrier voluntarily and the rates fixed by the state are reasonable. Lake Shore & Michigan Southern Ry. Co. v. Smith, 173 U. S. 684, is distinguished, and the views expressed in that case which are inconsistent with the decision in this one are disapproved.
in force for ten years, there should be reserved to the railroad company the right to apply to the Commission after the lapse of a reasonable time for a rescission or modification of its order if experience demonstrated that the revenue derived under the tariff as established by the Commission was not properly compensatory for the services performed. 126 Md. 59.
Nov. 25, 1914 Filed Nov. 25, 1914 P.S.Com.
the Constitution of the United States. It is also averred in the bill that the order, if enforced, will work a discrimination against interstate travel in favor of travel within the state, and is otherwise unreasonable and void.
U.S. 684. In that case, a majority of this Court held a statute of the State of Michigan to be invalid. A previous statute of the state had fixed a maximum passenger rate of three cents per mile. The statute in controversy required the issuing of mileage books for a thousand miles, good for two years at a less rate. This Court held that a maximum rate for passengers having been established, that rate was to be regarded as the reasonable compensation for the service, and that the fixing of the less rate to particular individuals was an arbitrary exercise of legislative power and an unconstitutional interference with the business of the carrier, the effect of which was to violate the provisions of the Fourteenth Amendment to the federal Constitution by depriving the railroad company of its property without due process of law and denying to it the equal protection of the law.
right to issue tickets at reduced rates good for limited periods upon the principle of commutation was fully recognized. See pp. 145 U. S. 277-280.
"It was recognized [in the North Dakota case] that the state has a broad field for the exercise of its discretion in prescribing reasonable rates for common carriers within its jurisdiction; that it is not necessary that there should be uniform rates or the same percentage of profit on every sort of business, and that there is abundant room for reasonable classification and the adaptation of rates to various groups of services."
is involved in making and selling single tickets for single journeys to one-way passengers.
The service rendered the commuter, carrying little baggage and riding many times on a single ticket for short distances, is of a special character, and differs from that given the single-way passenger.
"Subdivision 4 of § 33 of the Public Service Commissions Law (Consol.Laws, c. 48 [Laws of 1910, c. 480], as amended by Laws of 1911, c. 546) empowers the Commission to fix reasonable and just rates for such service. It is urged, however, that the statute is invalid under the rule of Lake Shore, etc., R. Co. v. Smith, 173 U. S. 684. In that case, the statute of Michigan had fixed a maximum passenger rate at three cents per mile. A subsequent enactment required the issuing of mileage books for 1,000 miles, good for two years at a less rate. The Court held that, having fixed a uniform maximum rate as to all passengers, such rate was the reasonable compensation for the service, and that the fixing of a less rate to particular individuals was an unreasonable and arbitrary exercise of legislative power; that it was not for the convenience of the public, and thus within the police power, but was for the convenience of certain individuals who were permitted to travel upon the railroads for less than the reasonable rate prescribed by law; that the law was therefore in violation of the Fourteenth Amendment of the federal Constitution in depriving the company of its property without due process of law and by depriving it of the equal protection of the laws."
"In Beardsley v. N.Y. L. E. & W. R. Co., 162 N.Y. 230, the Court of Appeals felt constrained by the Smith case to declare the Mileage Book Law of this state invalid as to companies in existence at the time of its passage, but in Purdy v. Erie R. Co., 162 N.Y. 43, that law was held valid as to companies organized after the statute was passed."
doctrine of the cited cases beyond the limits therein established.'"
"In the Minnesota Rate Case (Simpson v. Shepard), 230 U. S. 352, the legality of an order of the Commission of that state was recognized which fixed a maximum freight rate and passenger rate, the latter at two cents a mile as the maximum fare for passengers twelve years of age or over, and one cent a mile for those under twelve years of age."
"In Interstate R. Co. v. Massachusetts, 207 U. S. 79, the Massachusetts law prescribing special rates less than the maximum for school children was held valid. These cases indicate that the Smith case is not to be extended beyond the facts upon which it rests."
"The Smith case distinguishes itself from this case where the Court (at p. 173 U. S. 693) says:"
"This act is not like one establishing certain hours in the day during which trains shall be run for a less charge than during the other hours. In such case, it is the establishing of maximum rates of fare for the whole public during those hours, and it is not a discrimination in favor of certain persons by which they can obtain lower rates by purchasing a certain number of tickets by reason of which the company is compelled to carry them at the reduced rate, and thus, in substance, to part with its property at a less sum than it would be otherwise entitled to charge. The power to compel the company to carry persons under the circumstances as provided for in this act for less than the usual rates does not seem to be based upon any reason which has hitherto been regarded as sufficient to authorize an interference with the corporation, although a common carrier and a railroad."
country where the surroundings are pleasanter, more healthy, and to the advantage of themselves and their families. It is a known fact that such rates exist upon all railways entering large cities, and have usually been established by the companies voluntarily in the interest of themselves and the public. The service is different in its nature from the other passenger service. It is so universal, of such large proportion, has become so necessary to the public that it cannot be said that the fixing of reasonable and just rates for it is unusual or unreasonable, or the granting of a benefit to individuals, and not for convenience to the public."
"Nearly one-half of the passengers handled by the relator at the Grand Central Terminal were of this class. Perhaps the same ratio would exist upon the other railroads serving the city. We conclude that the statute in question is valid as conferring a power on the Commission to regulate rates for the public convenience and welfare."
That decision was affirmed by the Court of Appeals of New York on the opinion of the Appellate Division. 215 N.Y. 689.
use of the tickets were also fixed by the act, and, among others, that they should be valid for two years after the date of purchase. It was held that, in the exercise of its general police power, a state may fix maximum fares, but that it may not fix a rate for 1,000-mile tickets that involves a discrimination in favor of those who buy them. The statute was held to be invalid. The case, however, involved mileage tickets which, we must repeat, differ very essentially in character from commutation tickets."
"We have been referred to no other adjudication by the courts, and are left to conclude that the precise point now before us has not been passed upon by the courts."
"It will not be necessary to dwell here upon the importance of the question not only to the particular suburban communities involved on the record before us, but to many other such communities throughout the country, the prosperity and growth of which largely depend upon an efficient and reasonable commutation service. Many such communities have not only been encouraged by the carriers, but were in fact originally established largely on their initiative. Suburban property has been bought, homes have been established, business relations made, and the entire course of life of many families adjusted to the conditions created by a commutation service. This may not have been done on the theory that the fares in effect at any particular time would always be maintained as maximum fares, but countless homes have been established in suburban communities in the belief that there would be a reasonable continuity in the fares, and that the carriers, in any event, would perform the service at all times for a reasonable compensation."
are mentioned together in § 22, the force and effect of that provision must necessarily differ with the differing character of the several kinds of tickets. It seems to be settled under that section that a carrier may enter upon the policy and practice of issuing mileage books and excursion tickets at less than its regular normal fare for the one-way journey, and, having adopted such a policy, may subsequently withdraw from it and refuse longer to issue such tickets. That has been the view of this Commission, and is the view generally entertained, although there may be exceptional circumstances where a different conclusion would be required. It by no means follows, however, that a carrier under § 22 may exercise the same scope and freedom of action with respect to commutation tickets."
The reasoning of these decisions is sound, and involves no violation of the federal Constitution. True it is that it may not be possible to reconcile these views with all that is said in the opinion delivered for the majority of the Court in the case of Lake Shore & Michigan Southern Ry. Co. v. Smith, supra. The views therein expressed which are inconsistent with the right of the states to fix reasonable commutation fares when the carrier has itself established fares for such service must be regarded as overruled by the decision in this case.
* Forty-Fourth Annual Report of the Railroad Commission for the year 1912 (Massachusetts) pp. 67, 107, 113; Public Utilities Reports, 1915B (Massachusetts) p. 362; Public Utilities Reports, 1915E (Rhode Island) p. 269; Public Service Commission Reports, Second District of N.Y. (New York) Vol. III, pp. 212, 461; idem, Vol. IV, p. 11; Public Utilities Reports, 1915B (New Jersey) p. 161; Public Utilities Commission Reports, 1914 (Illinois) Vol. I, pp. 553, 590; Public Utilities Commission Reports, 1913-1914 (Colorado) p. 131; Public Utilities Reports, 1915D (Idaho) p. 742; Opinions and Orders of the Railroad Commission (California) Vol. I, pp. 451, 855; idem, Vol. II, p. 910; idem, Vol. III pp. 5, 30, 32, 749, 800,807, 973; idem, Vol. v. p. 555; idem, Vol. VI, pp. 853, 1008; idem, Vol. VII, pp. 179, 894; The Commutation Rate case, 21 I.C.C. 428.

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