Case Name: INTERSTATE COMMERCE COMMISSION v. DETROIT, G. H. & M. RY. CO.
Court: United States Circuit Court for the Western District of Michigan
Jurisdiction: United States
Decision Date: 1893-10-06
Citations: 57 F. 1005
Docket Number: 
Parties: INTERSTATE COMMERCE COMMISSION v. DETROIT, G. H. & M. RY. CO.
Judges: 
Reporter: Federal Reporter
Volume: 57
Pages: 1005–1020

Head Matter:
INTERSTATE COMMERCE COMMISSION v. DETROIT, G. H. & M. RY. CO.
(Circuit Court, W. D. Michigan, S. D.
October 6, 1893.)
1. Carriers — Interstate Commerce Commission — Who may Complain.
It. is no objection to the enforcement by tbe court of an order made against a railway company by the interstate commerce commission, that the complainants before the commission have no real grievance, but are instigated by a competing railroad, as section 1?, of tbe interstate commerce act expressly provides that no complaint shall be dismissed by the commission because of tbe absence of direct damage to the complainant, and as the commission lias power, of its own motion, to institute invesligations, make orders, and apply to the courts for their enforcement.
3. Same — Interstate Commerce Act — Violation—Free Cartage.
Free cartage by a railroad company, of goods shipped from without the state, from its station in Grand Rapids, Mich., to the business section thereof, an average distance of one and one-quarter miles, for delivery to the consignees, is a violation of the long and short ha.nl clause of the interstate commerce act, (section 4,) where it appears that the same freight rates are charged to merchants of the city of Ionia, through which the railroad passes to reach Grand Rapids, blit; where such merchants are obliged to cart their goods from ilio railway station to their storehouses at their own expense. Severens, District Judge, dissenting.
3. Same — -“Similar Circumstances and Conditions.”
The grouping together by tbe railroad company of Ionia and Grand Rapids as stations to which freight rates from eastern cities may properly be made the same is a conclusive admission by the company that, so far as transportation from the east to the warehouses of the company at the two plací*» is concerned, it is under substantially similar circumstances ana conditions. Severens, District Judge, dissenting.
4. Same — Justification by Carrier.
Such free cartage is not justified by the fact that competitors of the defenaant company nave stations at Grand Rapids in the business center, thus placing defendant at. a disadvantage.
5. Same.
Neither is the discrimination in rates justified by tbe fact that Grand Rapids is a much larger place than Ionia, and that the greater amount of business of the company with the larger place enables it to do carting more cheaply there than at the smaller place. Severens, District Judge, dissenting.
In Equity. Petition by the Interstate Commerce Commission for the enforcement of an order made against the Detroit, Grand Haven & Milwaukee Railway Company.
Reiief granted.
Statement by TAFT, Circuit Judge;
This was a bill in equity, exhibited by the interstate commerce commission, averring that the Detroit, Grand Haven & Milwaukee Railway Company, a common carrier corporation subject to tbe provisions of the interstate commerce law, had been duly impleaded in a controversy before the interstate commerce commission upon the petition of Mary O. Stone and Thomas Garten, residing1 at the city of Ionia, Mich., wherein it was made to appear to the satisfaction of the commission that the said defendant liad violated the provisions of the interstate commerce law as alleged; that the commission had formulated an order and notice in relation to the matters charged in the petition, based upon findings and determinations of the commission with respect thereto, which order was still in force, but which the defendant refused to obey; wherefore the commission prayed for an injunction, mandatory or otherwise, to restrain the defendant, its officers, servants, and attorneys, from further continuing in their violations of and disobedi ence to the order of the commission. The facts found by the commission were-as follows:
“(1) The complainants are copartners doing business under the firm name of Stone & Carten, and are engaged in the sale at retail of goods, wares, and merchandise in the city of Ionia, county of Ionia, and state of Michigan, purchasing said goods, wares, and merchandise at Philadelphia, Pa., New York, N. Y., Boston, Mass., and points east of Detroit, Mich.
“(2) That the respondent railway company is a corporation existing under and pursuant to the laws of the state of Michigan, and is a common carrier of passengers and property for hire between the city of Detroit and the city of Grand Haven, both of said places and its entire line of railway being in the state of Michigan; that it does not own and control a line of steamboats plying across Lake Michigan, between Grand Haven and Milwaukee, Wis., but there is a line of steamboats engaged in the transportation of persons and property across Lake Michigan, between Grand Haven and Milwaukee, from which the respondent received traffic consigned over its road from Milwaukee, and to which it delivers traffic from its road, destined to Milwaukee; that all of said boats are under the direction and control of an independent corporation, organized under the laws of the state of Michigan, by the name of the Grand Haven & Milwaukee Transportation Company; that the management of the business of the last-named company is under the management and control of the same officers as those which manage and control the road and business of the respondent.
“(3) The respondent, for its services as a common carrier for continuous shipment, under a common arrangement, of property from Detroit to its stations on its line of transportation, established and published a schedule or rates and charges, which makes on all freights from Philadelphia, New York, and Boston, and all other points east of Detroit, consigned over the respondent’s road, the same rates and charges for the complainants which are made and charged for the same class of freights to the merchants doing business at the city of Grand Rapids, a copy of which schedule is hereto annexed, and deemed a part hereof.
“(4) The shipments of freight from Philadelphia, New York, Boston, and points east of Detroit, which are delivered to complainant’s road at said city of Detroit, and transported by it over its line of railway, pass through the city of Ionia before reaching the city of Grand Rapids; that it is a shorter distance from Detroit to Ionia than from Detroit to Grand Rapids, and over the same line, in the same direction, the shorter being included in the longer distance.
‘-‘(5) That the respondent provides, at its own expense, drays, carts, and trucks at the city of Grand Rapids for the service of transisorting merchandise and freights generally, as well as merchandise and freight consigned from. Philadelphia, New York, Boston, and points east of Detroit, between its station at Grand Rapids and the x>laees of business of merchants, traders, and other patrons of its road at that place, which service it performs ■without additional charge to the owner or shipper of property on account thereof; that this service is not furnished to complainants or other merchants, traders, and patrons of its road'at the city of Ionia; that this service at Grand Rapids has been openly and notoriously rendered for a long period of time, to wit, for 25 years and upwards; that its station at the said city of Grand Rapids is within the corporate limits thereof, and is on an average one and a quarter miles from the business sections of said city where the traffic of the xfiaces tributary to respondent’s road originates and terminates, while respondent's station for receiving and discharging freight and property at the city of Ionia is not to exceed an eighth of a mile from the business center of said city; that at the city of Grand Rapids there are two other railroads, — the Michigan Central Railroad and the Grand Rnxfids, Lansing & Detroit Railroad, — both of which are immediately and directly in competition with respondent’s road for the business of Grand Rapids; tliat the stations of both of said roads for receiving and discharging freight and property at Grand Rapids are near the business center of said city, requiring only short hauls to and from their stations, — on an average about one-quarter of a mile; . that the respondent did the carting of freight to and from Us station at Grand Rapids substantially in the same manner as at present, long prior to the time when either said Michigan Gent,ral or Grand Rapids, Ransing & Detroit Railroads were constructed 1;o that place.
•■(()■) That the actual cost of carting or draying freight from the respondent’s warehouse in the city of Ionia to the several places in said city of Ionia to and from which traffic has to be hauled is two cents per hundredweight; that the cost of carting or draying freight transported over respondent’s line to and from the places of business of the merchants, traders, and other patrons of its road at Grand Rapids is two cents per hundredweight.
“(7) That (hero is but slight competition encountered by the complainants and other persons, lirms, and corporations engaged in business at the city of Ionia, interested in shipping over respondent’s road, with similar business at the city of Grand Rapids.
“(9) The complainants hare not brought any suit for the recovery of money or damages for which the respondent is alleged to be liable under the provisions of the act to regulate commerce, but have elected to adopt this procedure as the sole means of obtaining relief. ■
“(10) The city of Grand Rapids has a population of about 70,000. The city of Ionia has a population of about 0,000. The freight traffic to and from Grand Rapids by all roads in 1887 amounted to 082,(585 tons. The freight trafile to and from Ionia by all roads for the same lime amounted to about 55,000 tons.
"(11) Cartage by railway companies in a similar manner to Unit at Grand Rapids is conducted by other railway companies at exceptional stations in the state of Michigan, and moro or less extensively practiced by companies in other states at exceptional stations.”
On this statement of facts, a majority of the commission, the chairman, Judge Cooley, and Commissioners Morrison and Schoonmaker, held that the cartage at Grand Rapids was a violation of the long and short haul clause of the fourth section of the act to regulate commerce, because its result was that 1he merchants at Grand Rapids obtained transportation of freight from Boston, New York, and Philadelphia at two cents a hundred less than the merchants of Ionia, the free cartage at Grand Rapids being in effect a payment in money’s worth to the merchants at Grand Rapids of two cents a hundred. Commissioners Morrison and Schoonmaker also held that the free cartage was unlawful on the further ground that it was in effect a device for receiving loss Ilian the established tariff rate from and to that point, — that it was a rebate, in viola Hon of the second section of the act.
The answer of the defendant to the bill herein admitted the averment of the findings of fact embodied in the opinion of the interstate commerce commission, and averred that it had been the practice of railway companies engaged in interstate commerce to do free cartage as a. means of obtaining traffic at exceptional stations on the lines of the railroads where the business was of sufficient magnitude to warrant the carrier in incurring the expense, and that such expense was deemed to be legitimate as a means of semiring traffic for the railroad, and of affording increased facilities and dispatch for doing its business; that on every railroad in Michigan and in the TTnited States there were tracks constructed by the railway company, at its own expense, at exceptional stations on the line of road, leading from the main track of the road to private business establishments, which were used solely for delivering and receiving freight in the business between such private business establishments and the railway and without any charge being made by the railway company therefor, though there were private business establishments at the same stations of the railroad not furnished with these advantages in connection with such traffic; that such practice did not infringe any provision of the interstate commerce law, and yet it. involved quite as clear an element of discrimination as the cartage system at Grand Rapids; that the practice of freight cartage was originally adopted because it was less expensive than would be a change of its line so as to bring it into nearer proximity to the business center of the city, or the construction and operation of spur tracks from the main line of road into the business center, where the main line tracks of its competitors, the Michigan Central and the Detroit, Lansing & Northern Railroad Companies, were laid' in said city; that' the free cartage had the additional advantage of enabling the carrier to promptly clear the freight buildings of traffic, and prevent its burdensome and exx>ensive accumulation, and that it secured a method and order in the delivery of its traffic from its buildings, and that it also saved the éxpense óf sending notice to the consignees of the arrival of freight; that the free cartage at Grand Rapids was an absolute condition of the respondent’s procuring for its road any considerable part of the freight traffic of the city; that the two cents a hundred pounds paid for cartage at the city of Grand Rapids by respondent was not paid alone for the cartage, but included the services of the cartage agents, acting in behalf of respondent, in soliciting freight traffic for its road and collecting bills for freight charges; that the value of these services, aside from the mere matter of carting the freight, was not less than one-third the sum which respondent paid.
Wherefore the defendant submitted that, in view of all these considerations, the free cartage was not an undue or unreasonable preference or advantage to said city of Grand Rapids as against the city of Ionia, and was not in conflict with the long and short haul clause of the law.
L. G-. Palmer, Dist. Atty., and J. B. McMahon, (Ashley Pond, of counsel,) for complainant.
E. W. Meddaugh, (Otto Kirchner, of counsel,) for defendant.

Opinion:
TAFT, Circuit Judge,
(after stating the facts.) The first objection made by defendant to granting the relief asked is that the complainants • before the commission, Stone & Carten, had no real grievance, but were instigated to their prosecution by a competitor of the defendant, the Michigan Central Railway, which is paying the expenses of the litigation. This objection is not founded on any finding of the commission, but on an admission of counsel for the complainants below before the commission, and is referred to in the dissenting opinion of Mr. Commissioner Bragg. Were this a mere private action by private litigants, the objection, if founded on anything in the record, (as this does not seem to be,) might have weight, but under the provisions of the interstate commerce law we are not permitted to entertain it. The act by section 13 provides for the lodging by any person of complaints with the commission of a common carrier's violations of the law, and expressly enjoins upon the commission "that no complaint shall at any time be dismissed because of the absence of direct damage to the complainant." Moreover, the same section provides that "said commission may institute any inquiry on its own motion in the same manner and to the same effect as though complaint had been made." By section 15 of the act the commission is required, in any case where investigation has been made by it, if the law has been violated, to notify the common carrier to cease from further violation, and by section 16, in case of the refusal of the common carrier to obey, it becomes the duty of the commission to apply by petition to a circuit court in equity to enforce its order and restrain the further violation of law by the carrier. It is obvious from these provisions that when the case reaches the circuit court on petition of the commission, it is the complaint of the commission which gives the court jurisdiction, and that the bona lides of the complaint cannot be attacked by impeaching the good faith of those who, in the first instance, induced the commission to take action.
Although (he question was made in the original answer before the commission, it is not seriously disputed here that the defendant is a common carrier, subject to the provisions of the interstate commerce law. The question at issue is whether the practice of free cartage at Grand Rapids is, with reference to the shippers at Ionia, a violation of the following sections of the interstate commerce law:
"Sec. 2. That if any common carrier subject to the provisions of this act shall, directly or indirectly, by any special late, rebate, drawback, or other device, charge, demand, collect or receive from any person or persons a greater or less compensation for any service rendered, or to he rendered, in the transportation of passengers or property, subject to the provisions of this act, than it charges, demands, collects or receives from any other person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful.
"Sec. 3. That it shall be unlawful for any common carrier subject to tiie provisions of this act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or io subject any particular person, company, firm, corporation or locality, or any particular description of traffic, lo any undue or unreasonable prejudice or disadvantage in any respect whatsoever.
"Sec. 4. That it shall he unlawful for any common carrier subject to the provisions of this act to charge or receive any greater compensation in the aggregate for the transportation of passengers or a like kind of property, under substantially similar circumstances and conditions, for a shorter than for a longer distance over the same fine, in the same direction, the shorter being included within the longer distance: hut this shall not he construed as authorizing any common carrier within the terms of this act to charge and receive as groat compensation for a shorter as for a longer distance: provided, however, 1ha t upon application to the commission appointed under the provisions of this act, such common carrier may, in special cases, after investigation by the commission, he authorized to charge less for longer than for shorter distances for the transportation of passengers or property: 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 of this act"
It is conceded that the contract of carriage of a railway common carrier, as usually understood, is the transportation of the goods from the warehouse of the railway at the point of shipment to the railway warehouse at the point of destination. Generally the cartage from the railway warehouse to the storehouse of the consignee is paid by him. If the railway company pays it, the expense of transporting the goods to the place where he can use them is lessened by the cost of cartage. This is generally exactly equivalent to the railway company's reducing the freight by as much as the cartage would cost the consignee. Now, it is admitted that this latter would be a violation of the long and short haul clause if the reduction were made at Grand Rapids, and not at Ionia. Why should not its exact equivalent — the furnishing of free cartage — be also a violation? It is said that it is not, because the transportation to Ionia and that to Grand Bapids are not under substantially similar circumstances and conditions. In accordance with a practice which has been approved by the interstate commerce commission, (Imperial Coal Co. v. Pittsburgh & L. E. R. Co., 2 Inter St. Commerce Com. R. 618,) Ionia and Grand Bapids are grouped together by the defendant company as stations to which the freight rates from the far east, Boston, New York, and Philadelphia, may properly be made the same. This is a conclusive admission by the defendant that, so far as the transportation from the east to the warehouses of the company at the two places is concerned, it is under substantially similar circumstances and conditions. The question remains whether the conditions existing with reference to the delivery of goods from the warehouses to the storehouses of the consignees are such as to warrant a full charge for the same at Ionia, and no charge at all at Grand Bapids. If not, then the free cartage at Grand Bapids is, in fact, a reduction in the cost of transportation to Grand Bapids, and illegal. We do not see how this result can be escaped. The reasoning is said to be mathematical, but that is a term not ordinarily used to describe defective reasoning. Any benefit in relation to the shipment of goods, having a definite money value, conferred gratis by the carrier upon one shipper which is not conferred upon another, when the service to each is admittedly under substantially similar circumstances and conditions, is an undue reduction in the price of carriage to the former, and is illegal. If this were not true, then the provision against undue discrimination, of which the long and short haul inhibition is only one instance, would be a dead letter.
It may be admitted that the terminal facilities may be varied at different stations without causing undue discrimination, provided such a variation is not such a departure from the usual facilities as to make it an obvious reduction in the cost of transportation to the shipper. It is very clear that free cartage is exceptional, and that it is a departure from the usual terminal facilities furnished either at large or small cities and towns. Of course it would not be a discrimination that could be complained of, that one company puts its station at one town nearer the business center than another, and, if free cartage could be said to properly make up for the greater distance of defendant's station from the business center of Grand Bapids, and in this respect to put Grand Bapids merchants on the same footing as Ionia merchants with their proximity to the station, then it would seem to be unobjectionable, because justified by the dissimilar circumstances. But can this be said? We think not. If at Grand Bapids the defendant's station were moved into the business center, the consignees would still have to pay for the cartage, It may be that it would be for a less price, but still they would have to pay. The equalizing of the conditions between the two places in this respect would be complete by a charge for cartage by the railway company at the lower rate which would be charged for cartage were the station in the city. Free cartage from' defendant's station at Grand Bapids con fers on the shippers' a benefit of a definite money value over and above that usually included in a. transportation tariff, equal to the cost of cartage; from a station in the; center of the city.
What has be>en said with reference to the difference between the dislance; of the station at Grand liapids from the business center and that of the station at Ionia lias equal application to the contení ion of the defendant that the free cartage is justified by the fae-t: (hat the competitors erf the; defendant have their stations at Grand liapids in the business center, and that this iriaces defendant at a disadvantage, which creates a dissimilar («erudition. Even if competition under such circumstances can produce dissimilarity of conditions, the extent erf the discrimination ferunded thereon must be commensurate with and limited to the dissimilarity. It will fully e;qualize; the conditions if the defendant furnishes cartage for a mile; and a quarter at a price equal to that at which cartage; for a quarter erf a mile could he; furnished without loss. To do more is to bid for competition by reducing the cost of transportation, and this cannot he done except by prerportionately reducing the rates at Ionia also.
But it is said that. Grand liapids is a much Iarge;r place than Ionia, and thereferre a carrier may confer favors on a shipper at the; former place, in so far as the greater amerunt of business enables the railway company to do ('aiding at a cheaper rate at Grand liapids than at Ionia, by so much may the carrier reduce the cartage1 cost to the shipper at (lie former place, because this is a legitimate and actual dissimilarity in conditions betweem the two places; but cartage at Grand liapids must cost something, and free cartage;, therefore;, confers on the shipper a benefit which dissimilarity of conditions does not justify.
The chief argument for the defendant is based on the custom among railroads to furnish those of their custome;rs whose storehouses are convenient to the railway track with switch tracks, so that upon these trades consignments in car loads a,re; delivereel at the door of the consignee. If free cartage is to be prohibited, it is said that the same; principle must prevemt the use of switch tracks for such a purpose, because this is a benefit to certain customers of a similar character not enjoyed by others. We do not think the cases are parallel. The providing of a switch track depemds on two things: hirst, the proximity of the consignee's storehouse; and, second, business of a character to require or per mil consignmemls in car load lots. The first of these conditions, and perhaps (he se;cond, entitles the customer to a lawful discrimination in his favor. The favorable location of his storehouse; with re;spect to the track is an advantage which he may righf.lv improve, and it maybe that the wholesale character of his business is another element which may justify a discrimination in his favor oven? smaller shippers. Interstate Commerce Commission v. Baltimore & Ohio It. Co., 145 U. S. 263, 12 Sup. Ct. Rep. 844 If a case wewe presented where; a merchant at Ionia, with his storehouse convenieoit to the1 trade of the deffendanf, had been refused a switch track and delivery thereon of meu-ehandise; in car load lots, when such a benefit was conferred on merchants at Grand Eapids, not differently situated, a question might then arise similar to that at the bar, but it is not presented by a discrimination between merchants with storehouses far from the railroad track, or who receive consignments of small bulk, and those who are near the track and receive car load lots. Even if it be conceded that a construction of the interstate commerce law which would prohibit so general a practice as the delivery of consignments on private switch tracks must be erroneous, the prohibition of free cartage does not involve any such result. In order that a railway may reach many •customers, it sometimes builds a belt railroad. This is a mere extension of its track, and, if the business to be obtained thereby will justify, there is no more objection to it as undue discrimination than there would be to the building of a branch road, or the delivery of goods from several warehouses. It is part of the railroad business, and the means of delivery is by railroad. Cartage is not usual railroad business, but is something not usually undertaken by them. The free cartage, as furnished at Grand Eapids by the respondent, is as foreign to ordinary freight business as it would be for the company to do the. packing for shippers free of cost.
Eor the reasons given the prayer of the petition must be granted, and a decree entered accordingly.