Source: http://supreme.nolo.com/us/289/627/case.html
Timestamp: 2019-06-19 09:35:34
Document Index: 342588312

Matched Legal Cases: ['§ 3', '§ 3', '§ 15', '§ 15', '§ 3', '§ 3', '§ 3', '§ 15']

TEXAS & PACIFIC RAILWAY CO. V. UNITED STATES, 289 U. S. 627 - Volume 289 - 1933 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 289 > TEXAS & PACIFIC RAILWAY CO. V. UNITED STATES, 289 U. S. 627 (1933) > Full Text
The Galveston Commercial Association complained to the Interstate Commerce Commission that carload commodity rates on import, export, and coastwise traffic between a portion of western classification territory and Galveston were unreasonable, and their relationship with those to and from Houston, Texas City, Beaumont, Port Arthur, and Orange, Texas, and New Orleans, Louisiana, was unduly prejudicial to Galveston. [Footnote 1] The claim of unreasonableness
On rehearing, the prior decision was modified by including the other Texas ports with Galveston in the finding of undue prejudice; substituting a 25 percent difference in distance for the 100-mile basis; exempting from the scope of the order rates to or from points on the Texas & Pacific and the Louisiana Railroad & Navigation Company; [Footnote 3] exempting rates on petroleum
Long prior to the passage of the Act to regulate commerce, the railroads, recognizing this situation and desiring to hold to their own lines the traffic running to ports which they serve, equalized rates through the ports reached by their own lines with those maintained by their rivals to other ports, or established differentials in favor of their own ports in order to retain a portion of the competitive export business. And a carrier serving two ports has, for like reason, fixed an equal or lower rate to the more distant of the two solely to meet the competition of rivals who reached it by more direct routes. These practices have not been indulged either to aid or to harm a port, as such, but solely to obtain or retain business for the carrier's own line. [Footnote 12] With the abstract fairness of such adjustment,
neither the Commission nor the courts have any concern. This is not to say, however, that the rates promulgated are beyond the Commission's jurisdiction. While that body has no control over the ocean rate, it has power to compel a reasonable charge for the rail haul. Compare Armour Packing Co. v. United States, 153 F. 1; News Syndicate Co. v. New York Central R. Co., 275 U. S. 179, 275 U. S. 186-187. [Footnote 13] As the carriers are in competition for the business, they may, within the zone of reasonableness [Footnote 14] prescribed by the statute, adjust their rates so as to obtain or retain the desired traffic for their own lines. Interstate Commerce Comm'n v. Alabama Midland Ry. Co., 74 F. 715, 723-724; 168 U. S. 168 U.S. 144, 168 U. S. 172-173; Skinner & Eddy Corp. v. United States, 249 U. S. 557, 249 U. S. 564; United States v. Illinois Central R. Co., 263 U. S. 515, 263 U. S. 522.
The theory of the Act is that the carriers in initiating rates may adjust them to competitive conditions, and that such action does not amount to undue discrimination; Texas & Pacific Ry. Co. v. Interstate Commerce Comm'n, 162 U. S. 197. There, the charging of rates on import traffic moving from a port on through bills of lading, much lower than those fixed for domestic transportation, was held not to amount as matter of law to discrimination forbidden by § 3. The carrier showed, in justification of the lower rates on import traffic, that, unless these were permitted, water and rail-and-water competition would divert the traffic away from the Port of New Orleans and the carrier's lines extending from that
While the carriers may therefore meet competition by equalizing rates or maintaining differentials both to interior points and to ports, they may not adjust their rates with the motive of injuring or aiding a shipper, a particular kind of traffic, or a locality, for so to do is to depart from the transportation standard, conformity to which the Act contemplates, and substitute others which are prohibited. A tariff published for the purpose of destroying a market or building up one, of diverting traffic from a particular place to the injury of that place, or in aid of some other, is unlawful, and obviously what the carrier may not lawfully do the Commission may not compel. Southern Pac. Co. v. Interstate Commerce Comm'n, 219 U. S. 433, 219 U. S. 444; Interstate Commerce Comm'n v. Diffenbaugh, 222 U. S. 42, 222 U. S. 46; Ellis v. Interstate Commerce Comm'n, 237 U. S. 434, 237 U. S. 445; United States v. Illinois Central R. Co., 263 U. S. 515, 263 U. S. 524; Atchison,
T. & S.F. Ry. Co. v. Interstate Commerce Comm'n, 190 F. 591; Anchor Coal Co. v. United States, 25 F.2d 462, 471. [Footnote 16]
The legislative history of the Act demonstrates that Congress did not intend to forbid the equalization of export or import rates by lines serving several ports in order to meet competition. These rates, it was said, were not to be proportioned to the respective distances between inland origins or destinations and the ports. [Footnote 18] Both
Appellees say, however, that the Commission has always treated ports as localities within the meaning of § 3, and exercised the power to abate discrimination by prescribing differentials in export rates. They add that, though the Act has been several times amended, this section has been retained in its original form, and Congress has thus sanctioned the Commission's interpretation. Where a statutory body has assumed a power plainly not granted, no amount of such interpretation is binding upon the courts. Interstate Commerce Comm'n v. C., N.O. & T.P. Ry. Co., 167 U. S. 479, 167 U. S. 510. This we think is the situation here presented, for, as we have said, the word "localities" is used with reference to places of origin and
The legislative history of the Hepburn Amendment discloses a clear intent not to confer power to circumscribe the adjustment of export and import rates by the carriers to meet competition. [Footnote 20] The expressions used disclose
Between the dates of the Hepburn Amendment and the Transportation Act, 1920, the Commission had before it two cases relevant to the power to prescribe port differentials. [Footnote 22] In the first, the Commission recognized its lack of power to deal with the relationship of the rates. [Footnote 23] In
It remains to determine whether, since 1920, there has been such a uniform and repeated assertion of this authority as would constrain us to adopt the principle. The instances in which the Commission has considered export and import traffic fall into several classes: first, where shippers' complaints concerning port differentials established by carriers were dismissed, [Footnote 25] or were found justified and prejudice ordered removed; [Footnote 26] secondly, where, on
While the Commission's jurisdiction of port rate relation was fully argued, the appellees seek to support the orders under the power to abate discrimination between persons and shippers. The argument is based upon averments of the complaint as to prejudice of persons at Galveston. There is, however, no allegation that shippers or consignees in the interior are prejudiced or preferred by the equalization of the New Orleans rates with those to the Texas ports, and the Commission made no finding of preference or prejudice of shippers or consignees, or localities of origin and destination. [Footnote 30] It compared at great
The line of the Texas & Pacific in Texas is intersected at intervals of about 40 miles by north-and-south lines directly or indirectly serving the Texas ports. The population of these junction points is over ten times as great as that of all other open stations on this appellant's line in Texas, and the greater volume of export and import traffic originates and terminates at the junctions. [Footnote 33] Thus, the question is whether the Texas & Pacific may continue to participate in the handling of the traffic moving through the ports to and from points on its own rails on an equality of rates with competing lines which extend to the Texas ports, or may be forbidden so to do because it is a party with the competing carriers to joint rates from stations on its own line to the Texas ports. The same issue is presented with respect to the L.R. & N. Neither of the appellants controls the rates to the Texas ports, and the Commission so finds. [Footnote 34] Though the Texas port lines can reduce their rates to and from those ports without the concurrence of the New Orleans lines, no reductions can be made in those rates by the New Orleans lines,
The classical case of discrimination in rates is presented where a single carrier serving two points approximately equidistant from a common origin on the carrier's line exacts unequal rates for the two hauls. Not only is the prejudice obvious, but equally so the ability of the carrier to abate it by raising the rates to the point enjoying the lower rates, or decreasing those to the point subject to the higher charge. The principle comprehends, as well, instances of joint rates where the same carriers participate in the rates to both points, [Footnote 35] and where the originating (or delivering) carriers are different, but the delivering (or originating) carriers are the same. [Footnote 36] So too, a carrier may be responsible for preference or prejudice where it participates in one of several through routes between point of origin and the prejudiced destinations although its own line may reach only one or neither of the latter, St. Louis S.W. Ry. v. United States, 245 U. S. 136, for the discrimination
is brought about by the disparity of rates, and the order requiring its abatement necessarily runs against all the carriers parties to them. If one or more of the railroads whose lines make up the through route should refuse, upon an order to equalize rates, to afford one of the others a proper division of the rate, the latter may obtain redress from the Commission under § 15(6). Where, however, a carrier whose lines reach, or which controls the rate to, one of the destinations is a party to a joint rate to the other, but cannot make or control the latter rate, or, though it were to withdraw as a party thereto, or to cancel the rate, the discrimination would still continue -- it cannot be held responsible, nor can any order to remove the prejudice run against it. [Footnote 37] This rule has been consistently applied in respect of export and import rates to the ports. [Footnote 38] The reason for the doctrine is that preference or prejudice can be found only by a comparison of two rates. If these are the rate of one
The appellees contend, however, and the Commission concluded that, in later cases, the Court has held the principle inapplicable in circumstances so like those here exhibited that it should not control our decision in the instant case. One of these is St. Louis S.W. Ry. Co. v. United States, 245 U. S. 136, cited for the proposition that the Commission has power to prevent carriers which participate in rates from blanket territory from discriminating against a particular destination, although one of them does not, with its own lines, reach such destination, but bills through traffic to it over connecting lines. The order there under review was for the establishment of a reasonable joint rate, or, in the alternative, new through routes with joint rates, under § 15 of the Act, and was held by
Principal reliance is placed upon United States v. Illinois Central R. Co., and Wyoming Ry. Co. v. United States, 263 U. S. 515. In the first, it appeared that the Illinois Central equalized rates on lumber to certain destinations from all its main and branch line points in blanket origin territory, and from points on certain independent short lines within the blanket area, but refused
Southern Ry. Co. v. United States, 204 F. 465; Chicago, I. & L. Ry. v. United States, 270 U. S. 287; Rates on Grain Milled in Transit, 35 I.C.C. 27.
In holding that the Commission is without power to make the order, the Court does not deny that a discrimination which is produced by charging equal rates for unequal service is prohibited by the statute as much as one resulting from unequal rates for equal service. Compare The Shreveport Case, 234 U. S. 342, 234 U. S. 346. Nor does the Court consider material, in this respect, the findings
I can find nothing in the purpose or history of the statute which suggests that it means any less than it says. This Court has often declared that the purpose of the all-embracing language of the statute was to suppress every form of unreasonable discrimination which it was within the power of Congress to condemn. Merchants' Warehouse Co. v. United States, 283 U. S. 501, 283 U. S. 512; Louisville & Nashville R. Co. v. United States, 282 U. S. 740, 282 U. S. 749-750; The Shreveport Case, supra, 234 U. S. 356; Louisville & Nashville R. Co. v. Mottley, 219 U. S. 467. It has said that discrimination was the principal thing aimed at, and "the
a fair distribution of traffic among the Atlantic ports and the carriers serving them, were very different in quality and prejudicial effect upon the localities concerned from the rate structure resulting in the discrimination disclosed here. [Footnote 2/2] The existence of those equalizations before 1887 and the fact that, in some instances since that date, they have been regarded as innocuous even by the Commission itself, can hardly lend support to the supposition that the statute was not intended to forbid destructive discriminations in that form as well as in any other. The argument seems to be that the statute cannot be deemed to forbid unjust discriminations against ports, since, if it did, all rates to competing ports not measured by mileage or carrier service would be forbidden, whether unjust or not. With equal plausibility, it was argued that, because competition between carriers was an established practice before the enactment of § 3 and is not forbidden by the Act, no discrimination induced by carrier competition was forbidden. But that construction was rejected by this Court, Wight v. United States, 167 U. S. 512, 167 U. S. 517; United States v. Illinois Central R. Co., supra; Merchants' Warehouse Co. v. United States, supra, for the same reason that the present construction should be rejected -- that, although carrier competition was not destroyed by the Interstate Commerce Act, it was limited by the prohibition of § 3 of those discriminations which, in the light of all the circumstances, are found to be undue or unreasonable.
Close scrutiny of the legislative history of the original act and of the Hepburn Amendment fails to disclose any intention to except from the forbidden discriminations against localities, undue or unreasonable discriminations against ports. Senator Cullom, who was in charge of the earlier bill, made no reference to the present question in his explanatory statement, [Footnote 2/3] cited in the opinion of the
Court, [Footnote 2/4] and none is to be found in the House proceedings to which reference is also made. [Footnote 2/5] Senator Cullom emphasized the fact that the discriminations forbidden included those against localities, and nowhere suggested any exceptions. Mention in the Report of the Senate Committee of the investigation of a committee of the British Parliament and the quotation of its conclusions [Footnote 2/6] are without significance here. Those conclusions were not indorsed by the Senate Committee, and did not deal with undue discriminations produced by railroad competition. It is true that, in the debates in Congress on the Hepburn Amendment, it was pointed out in several instances that the bill did not confer on the Commission the general
Moreover, the basis for this want of power to fix differentials was not that a port is not a "locality" within the meaning of § 3, but that differential rates on different roads cannot be fully controlled without the fixing of a minimum rate. [Footnote 2/9] And it was recognized in the decisions of
But the statute does not compel the Commission to afford such an alternative or permit an offending carrier to avoid its salutary provisions merely for the reason that, although participating in both the offending rates, it can with certainty control only one. It is true that, in cases arising before the enactment of Transportation Act 1920, by which power was given to the Commission to fix a minimum rate, it could not remove a discrimination by prescribing a minimum rate to one of the competing localities. But it could remove the discrimination by imposing a lower maximum rate, even though a joint rate participated in by the carrier whose rails did not reach the locality discriminated against (compare St. Louis Southwestern Ry. Co. v. United States, supra), or, as already mentioned, it could leave the carriers free to remove the discrimination by raising one or lowering the other. See American Express Co. v. Caldwell, supra, 244 U. S. 624; United
States v. Pennsylvania R. Co., 266 U. S. 191. And now that the Commission has power under § 15(1) to fix a minimum rate, it may equally command the removal of the discrimination by directing a rate to be raised, just as, where the carrier maintains discriminatory practices, the Commission may direct the modification of one and not the other, and is not bound to allow the carrier a choice. Merchants' Warehouse Co. v. United States, supra, 283 U. S. 513; New York, New Haven & Hartford R. v. Interstate Commerce Comm'n, supra, 200 U. S. 404. The fact that the Commission has given to the carrier an option to remove the discrimination by arrangement with the connecting carriers, through which the traffic reaches the Texas ports, does not afford to the carrier any ground for complaint or impair the power of the Commission to make the order.