Case Name: STANDARD OIL CO. OF INDIANA v. UNITED STATES
Court: United States Court of Appeals for the Seventh Circuit
Jurisdiction: United States
Decision Date: 1908-07-22
Citations: 164 F. 376
Docket Number: No. 1,409
Parties: STANDARD OIL CO. OF INDIANA v. UNITED STATES.
Judges: Before GROSSCUP, BAKER,'and SEAMAN, Circuit Judges.
Reporter: Federal Reporter
Volume: 164
Pages: 376–396

Head Matter:
STANDARD OIL CO. OF INDIANA v. UNITED STATES.
(Circuit Court of Appeals, Seventh Circuit.
July 22, 1908.
On Rehearing, November 10, 1908.)
No. 1,409.
1. Carriers (§ 38 ) — Obtaining Illegal Concession — Shipper’s Liability-Lawful Rates — Knowledge—Evidence.
Under Elkins Act Feb. 19, 1903, c. 708, 32 Stat. 847, § 1 (U. S. Comp. St. Supp. 1907, p.. 880), making it unlawful for any person or corporation to accept or receive any rebate, concession, or discrimination in respect to the transportation of any property in interstate or foreign commerce, and requiring the filing and publication- of interstate rates, a shipper cannot be convicted of accepting a concession from the lawfully published rate without proof of knowledge of what such rate in fact was; and hence evidence that the shipper had no knowledge of the published rate, and could only have ascertained the same by construction of several tariff sheets, the application of which was questionable, was admissible.
[Ed. Note. — For other cases, see Carriers, Dee. Dig. § 38. ]
2. Carriers (§ 38 ) —Illegal Concessions — Prosecution of Shipper — “Transaction” — Completed Offense.
Elkins Act Feb. 19, 1903, c. 708, 32 Stat. 847, § 1 (U. S. Comp. St. Supp. 1907, p. 880), prohibits any person or corporation from receiving any rebate, concession, or discrimination in respect to the transportation of any' property in interstate or foreign commerce, etc., and declares that every person or corporation who shall accept or receive any such rebates or concession shall be guilty of a misdemeanor, and on conviction be fined, etc. Held, that the gist of the offense was the receipt of a concession, irrespective of whether the property involved was train loads, ear loads, or pounds, and consisted of the “transaction,” which was not completed until the shipper received a rate different from the established rate, without reference to the size of the shipment.
LEd. Note. — For other cases, see Carriers, Dec. Dig. § 38. ]
3. Carriers (§ 38 ) — Illegal Concessions — Sentence—Abuse of Discretion.
Defendant, Standard Oil Company of Indiana, was found guilty on 1,462 counts of an indictment for receiving concessions from a railroad company on shipments of oil, in violation of Elkins Act Feb. 19, 1903. c. 708, 32 Stat. 847, § 1- (U. S. Comp. St. Supp. 1907, p. 880). Defendant’s capital stock was $1,000,000, and there was no evidence that its assets were in excess of that sum, nor did it appear that defendant had ever before been guilty of a similar offense. A majority of defendant’s capital stock was owned by the Standard Oil Company of New Jersey, which was no party to the prosecution, whose capital stock was $100,000,000. This corporation was a holding company, and its net earnings for the period during which the concessions were received the court investigated before passing sentence. Held, that the assessment of the fine of $29,-240,000, which was the maximum punishment on each count, based on a finding that such amount was less than one-third of the net revenues of the Standard Oil Company of New Jersey during the period of violation, the effect of which would be to bankrupt the defendant, was excessive, and an abuse of discretion.
[Ed. Note. — For other cases, see Carriers, Dec. Dig. § 38. ]
In Error to the District Court of the United States for the Northern Division of- the Northern District of Illinois.
For opinion below see 155 Fed. 305.
John S. Miller and Moritz Rosenthal, and Alfred D. Eddy, for plaintiff in error.
Edwin W. Sims, U. S. Dist. Atty., and Janies H. Wilkerson, Sp. Asst. U. S. Atty.
Before GROSSCUP, BAKER,'and SEAMAN, Circuit Judges.
For other oases see same topic & 5 number in Deo. & Am. Digs. 1907 to date, & Rep’r Indexes
For other cases see same topic & § numbek in Dee. & Am. Digs. 1907 to date, & Rop’r Indexes

Opinion:
GROSSCUP, Circuit Judge.
The writ of error is to the judgment and sentence of the District Court, fining plaintiff in error in the sum of twenty-nine million, two hundred and forty thousand dollars, upon a verdict of guilty upon 1,462 counts of an indictment, each charging plaintiff in error with having, on a date mentioned within the period from September 1, 1903, to March 1, 1905, unlawfully and knowingly accepted and received from the "Chicago & Alton Railway Company a concession in respect of the transportation of certain property of plaintiff in error therein mentioned, in interstate commerce, whereby such property was transported, in such interstate commerce, at a rate less than that named in the tariffs published and filed by said Railway Company, as required by the act to regulate commerce and the acts amendatory thereof.
The indictment is based upon section 1 of the Act approved February 19, 1903 (32 Stat. 847, c. 708_ [U. S. Comp. St. Supp. 1907, p. 880]), formerly known as the "Elkins Act," wherein it was provided:
"That it shall be unlawful for any person, persons or corporation, to offer, grant or give, or to solicit, accept or receive any rebate, concession or discrimination in respect of the transportation of any property in interstate or foreign commerce, whereby any such property shall, by any device whatever, be transported at a less rate than that named in the tariffs published and filed by such carrier, as is required by said act to regulate commerce and the acts amendatory thereto, or whereby any other advantage is given, or discrimination is practiced. Every person or corporation who shall offer, grant, or give, or solicit, accept or receive, any such rebates, concession or discrimination, shall be deemed guilty of a misdemeanor, and on conviction thereof shall be punished by a fine of not less than one thousand dollars or more than twenty thousand."
The fine actually imposed, was the maximum penalty provided.
The provision of the interstate commerce act relating to the publishing and filing of rates is as follows:
'Sec. 6. That every common carrier subject to the provisions of this act shall print and keep open to public inspection schedules showing the rates, and fares and charges for the transportation of passengers and property which any such common carrier has established and which are in force at the time upon its route. The schedules printed as aforesaid by any such common carrier shall plainly state the places upon its railroad between which property and passengers will be carried, and shall contain the classification of freight in force, and shall also state separately the terminal charges and any rules or regulations which in any wise change, affect, or determine any part or the aggregate of such aforesaid rates, fares and charges. Such schedules shall be plainly printed in large type and copies for the use of the public shall be posted in two public and conspicuous places in every depot, station or office of such carrier where passengers or freight, respectively, are received for transportation, in such form that they shall be accessible to the public and can be conveniently inspected. * '
"And when any such common carrier shall have established and published its rates, fares and charges, in compliance with the provisions of this section, it shall be unlawful for such common carrier to charge, demand, collect or receive from any person or persons, a greater or less compensation for the transportation of passengers or property, or for any services in connection therewith, than is specified in such published schedules of rates, fares and charges as may at the time be in force.
"Every common carrier subject to the provisions of this act shall file with the. Commission hereinafter provided for, copies of its schedules of rates, fares, and charges which have been established and published in compliance with the requirements of this section, 'and shall promptly notify said Commission of all changes made in the same. Every such common carrier shall also file with said Commission copies of all contracts, agreements, or arrangements with other common carriers, in relation to any traffic affected by the provisions of this act, to which it may be a party. And in cases where passengers and freight pass over continuous lines or routes operated by more than one common carrier, and the several common carriers operating such lines or routes establish joint tariffs of rates, or fares, or charges for such continuous lines or routes, copies of such joint tariffs shall also, in like manner, be filed with said Commission. Such joint rates, fares and charges on such continuous lines, so filed as aforesaid, shall be made public by such common carriers when directed by said Commission, in so far as may, in the judgment of the Commission, be deemed practicable; and said Commission shall from time to time prescribe the measure of publicity which shall be given to such rates, fares, and charges, or to such part of them as it may deem it practicable for such common carriers to publish, and the places at which they shall be published."
Act March 2, 1889, c.' 382, § 1, 25 Stat. 855 (3 U. S. Comp. St. 1901, p. 3156; 3 Fed. St. Ann. 827-829).
Each count of the indictment is based upon a car load of petroleum and products of petroleum, irrespective of the number of pounds, carried by such car (in some cases thirty thousand pounds, in other cases eighty thousand pounds) and irrespective, also, of whether the car constituted the whole or a part only of an actual shipment — the plaintiff in error being convicted of as many offenses as there were car loads, although each car load was in some instances but one only, in a number of car loads that made up the shipment.
From 1 to 885 inclusive, the counts charge, that during the period covered by the shipment, the said Chicago & Alton Railway Company, as required by law, kept open for public inspection at Whiting and Chappell, its printed tariffs and schedules then in force upon its route; and, as required by law, filed copies of such tariffs and schedules with the Interstate Commerce Commission; which tariffs and schedules, so published and filed, showed the rate for the transportation of petro leum and products of petroleum, in car load lots, from Whiting, Indiana, to East St. Louis, Illinois, to be eighteen cents per one hundred pounds, all of which was well known to the plaintiff in error; but that said Railroad Company, at the request, and on account of said plaintiff in error, did unlawfully engage in the transportation in interstate commerce from Whiting to St. Louis, of the property named, at a total rate and charge to said plaintiff in error, for such transportation, of six cents for each one hundred pounds, under a common arrangement between the said Railway Company and the Chicago Terminal Transfer Railroad Company, for continuous carriage and shipment of such property from Whiting to East St. Louis; wherefore the plaintiff in error unlawfully did knowingly accept and receive from said Railway Company, the concession named. The remaining counts of the indictment from 886 to 1903 inclusive, are in the same form as the previous counts (except as to the dates, weight, description of property, number, of car and the like) with this exception, that the transportation was charged to be from Chappell, in Illinois, to St. Louis in the State of' Missouri — the published tariff being charged to be nineteen and one-half cents per one hundred pounds, and the total rate and charge to plaintiff in error being seven and one-half cents for each one hundred pounds.
There are one hundred and sixty-nine assignments of error, taking up seventy-six pages of the printed record. In view of the conclusion, however, to which we have come, it is unnecessary to review many of these assignments — the ones reviewed covering all the propositions of law that we deem essential to the guidance of the District Court in the event of a second trial. Comprehensively stated, the assignments of error that we shall review, relate:
First: To the view adopted by the trial court, carried oüt in its rulings on the admission and exclusion of evidence, and embodied in its charge to the jury, that a shipper can be convicted of accepting a concession from the lawfully published rate, even though it is shown, as bearing on the matter of intent, that the shipper, at the time of accepting such concession, did not know what the lawfully published rate actually was;
Secondly: To the vie\y adopted by the trial court that the number of offenses is the number of car loads of property transported, irrespective of whether each car load constituted the whole or a part only, of a single transaction resulting in a shipment; and
Thirdly: Whether, in the imposition of the line named, the trial court abused the discretion vested in the court.
We shall take up these subjects in the order stated, the first being whether a shipper can, without error, be convicted of accepting a concession from the lawful published rate, even though it is shown, as bearing on the matter of intent, that the shipper, at the time of accepting such concession, did not know what the lawful published rate actually was — a view of the law that is embodied in the charge, and carried out in the ruling excluding certain proffered testimony including, as a result of the charge on that point, the testimony of one Edward Bogardus, who, being in absolute charge of the traffic affairs of plaintiff in error during the period covered by the transac tions, was offered to testify on that point, that during the period involved, he did not know anything about an eighteen cent rate over the Alton Railroad; that his attention had never been called to any such rate by any person, or by the examination of any document; and that it was his understanding and belief, based on what he was told by one Hollands, Tariff Clerk for the Alton Railroad, that the rate over the Alton, road was six cents; and that such rate had been filed with the Interstate Commerce Commission.
Hollands, who was called by the government, had previously testified that he had no recollection of telling Bogardus that the six cent rate (a-commodity rate) had been filed with the Interstate Commerce Commission. But answering on his voir dire, the jury being excused, Hollands further stated that he regarded six cents per one hundred pounds as the oil rate between Whiting and East St. Louis; that he regarded a certain application sheet, which covered Whiting at Chicago rates, and the sheet for Chicago, taken together, as showing a six cent .commodity rate; that whenever he spoke of a rate on this commodity between Whiting and East St. Louis, he had in mind those papers; and'that if he had been asked by Bogardus or anybody else, whether there was a rate between Whiting and East St. Louis, he would have answered that there was, and that it was filed, and jhat such rate was six cents; which evidence thus proffered was excluded by the court, for the sole reason that, as a matter of fact, as the court (not the jury) found the fact to be, the application sheet containing this six cent commodity rate had not b,een filed with the Interstate Commerce Commission. Had the court found, as a fact, that that sheet had been so filed, or, submitting that question to the jury, had the jury found that that sheet had been so filed, the six cent rate given to Bogardus admittedly would have been the lawful published rate.
In addition to this, Bogardus was offered as a witness to prove that a tariff prescribing a rate of six and a quarter cents per one hundred pounds from Whiting to East St. Louis was issued by the Chicago & Eastern Illinois Railroad .Company, a competing line, October 9th, 1895, and filed with the Interstate Commerce Commission October 11th, 1895; that such tariff sheet was among the tariff files in possession of the plaintiff in error; that plaintiff in error, during the period named, shipped thereunder a large number of cars of petroleum and its products, from Whiting to East St. Louis, over the Eastern Illinois, at said rate; and that such rate of six and a quarter cents was equivalent, to the shipper, of the rate of six cents over the Alton, owing to a quarter of a cent terminal charges, all of which evidence was excluded, as also the offer of the tariff sheet itself, produced from the files of the Interstate Commerce Commission, and an amendment thereto filed in April, 1903.
The relation between the action of the trial court in thus excluding this evidence, and the charge of the court on the subject of knowledge, is apparent. The view embodied in the charge is- as follows:
"The indictment alleges that the defendant accepted the concession knowingly. To sustain this averment the proof need not establish that the defendant had actual knowledge of the lawful rate. It was the duty of the defend ant to diligently endeavor in good faitii to get from the Chicago & Alton Company the lawful rate by applying to the Alton Company at one of its freight or traffic offices or depots. Jn making this endeavor the defendant is presumed to have known that the Railway Company would be guilty of a misdemeanor if'it gave the defendant a rate on interstate traffic which was not set down on paper, and a copy of the schedule filed with the Interstate Commerce Commission. The defendant must also be presumed to have known that the defendant would be guilty of a misdemeanor if it accepted a rate for the transportation of property in interstate commerce which was lower than a rate thus published ata railway station or traffic office and filed with the Interstate Commerce Commission.
"The defendant must be held to have known that which this diligent endeavor would have enabled it to find out. Therefore, if you believe from the evidence beyond a reasonable doubt that such endeavor on the part of the defendant would have enabled it to ascertain the lawful rate as 1 have defined lawful rate to you in these instructions, and that the defendant did not make the endeavor in good faith, such failure on defendant's part will not excuse defendant, and you will find it guilty on those counts of the indictment, if any, which under these instructions, you find sustained by the evidence."
Of course if this view of the law is sound, the action of the court, in its rulings on the evidence offered, as well as its charge, is without error; for if a shipper can be held guilty of accepting a concession from the lawful published rate, even though the shipper had no knowledge of what the lawful published rate was — if the plaintiff in error, in the transactions before us, was bound, at its peril, first to successfully disentangle the Alton's confused tariff sheets, and then correctly to interpret them — the evidence excluded could have had little determinative weight in any judgment of the jury upon the guilt or innocence of the shipper. But if, on the contrary, it is necessary to a conviction of a shipper of accepting a concession from the lawful published rate, that it should appear as bearing on intent, that the shipper knew what the lawful published rate was, the evidence offered and excluded clearly relates to the fact of such knowledge, and was erroneously excluded, because the plaintiff in error was thereby deprived of its right to have the judgment, not of the court alone, but of the jury as to whether the plaintiff in error had such knowledge as charged him with an intent to violate the law. Indeed the whole question is the fundamental one of whether a shipper is guilty, under the Interstate Commerce Act, of having accepted a rate less than .the lawful published rate, even though he does not know, at the time, that the _ rate accepted was in fact less than the published rate, thereby having no intent to violate the law; or, as the Supreme Court stated the question in Armour Packing Company v. United States (decided March 16, 1908) 209 U. S. 56, 28 Sup. Ct. 428, 52 L. Ed. 681, whether
"shippers who pay a rato under the honest belief that it is the lawful published rate when in fact it is not, are liable, under the statute, because of a duty resting on them to inform themselves as to the existence of the elements essential to establish a rate as required by law."
The trial court was doubtless influenced by judicial holdings in cases under statutes against smuggling, the sale of liquors to minors, and other cases arising out of fiscal and police regulations, for the mere violation of which, irrespective of the motive or intent, certain penalties are enforced (Greenleaf on Evidence, § 21; 1 Wharton Crim. Raw (10th Ed.) § 23a; United States v. Bayard (C. C.) 16 Fed. 376 and other cases cited); and thus influenced, proceeded on the' view that if the shipper can, by diligent endeavor, decipher out of the tariff sheets, no matter how entangled or confused they'may be, a rate that a court, upon subsequent investigation, no matter how close the question thus raised may be, determines to be the lawful published tariff rate, under all the circumstances named, the shipper may not plead that under information from the carrier or any other investigation short of diligent research on his own account, he mistook another rate to be the lawful published rate — may not plead that he had no intent to violate the law.
In this interpretation of the interstate commerce law, so far as it relates to shippers, we cannot concur. The cases cited by the government, such as those requiring liquor sellers, at their peril, to know whether the person to whom a drink is sold, is a minor, or within the prohibitions of the act or not, are not controlling, nor very persuasive. The Interstate Commerce Act was intended to promote, not to restrain trade and commerce — to secure fair dealing in commerce through uniformity, not to put obstructions in the way of commerce. Texas & Pacific R. R. v. Interstate Commerce Com., 162 U. S. 197, 16 Sup. Ct. 666, 40 L. Ed. 940. Surely the farmer who brings his produce to town to be shipped to the city markets, or the small merchant shipping to the country, or the householder who ships his furniture, when changing his residence, were not meant by the interstate commerce law to be guilty of having accepted a concession, merely because they took the word of the carrier or his agent, as to what the rate was, accepting such rate stated, in the honest belief that it was in fact the regularly established rate. In'this respect the shipper and the carrier stand on different ground. The carrier is required by- a separate provision of the law to establish and publish rates (section 6) and is forbidden to. charge or collect from the shipper a rate greater or less than such established and published rate; and as to the carrier, the doctrine laid down by Wharton and by Judge Cooley in Bonker V. People, 37 Mich. 4, that ignorance of the fact is no defense is perhaps applicable; for the carrier having established and filed the rate, can very justly be denied the right to plead that he overlooked or forgot the rate that he has thus knowingly established and filed. But is the ordinary shipper, under any reasonable view of the situation to which the law relates, thus bound — bound at his peril, under this law. intended to promote commerce, to cipher out, before he can safely put anything that he has into commerce, all the confusing papers and figures that generally make up the tariff sheet ? Plainly not, it seems to us. As to him, the language of Bishop (1 Bishop, New Criminal Law, § 286) seems sound, that:
"It is never right to'punish a man for walking circumspectly in the pa.th which appears to be laid down by the law, even though some fact which he is unable to discover renders the appearance false. And for the Government, whether by legislation or by judicial decree, to inflict injustice on a subject.' is to injure itself more than its victim. And the court should, in all circumstances, so interpret both the common law and the statutes as to avoid this wrong."
And though it is true that large shippers like the plaintiff in error do not usually take the word of the carrier as to what the rate is, but examine for themselves the tariff sheets, and have all the knowledge that is necessary to an intelligent examination, from which it might easily follow, as a matter bearing wholly on the weight of the evidence, that professions of ignorance upon the part of such shipper would stand on a different plane of credibility from a plea of ignorance put' forward by the ordinary shipper, it does not, on that account, follow that the ultimate question of intent, to be submitted to the jury, is not the same whether the shipper be a large one, or a small one; for the law is the same for all shippers, and the duty devolving on the government is the same, viz.: that before conviction, there must be proof of all the facts upon which the shipper's offense is predicated.
This view of what is essential to constitute the offense, makes it plain that the trial court was in error, as a matter of law, in the application, to the case of a shipper, of the principles that the trial court applied to this case. And this error is made all the plainer, lifting it from what might otherwise be considered a mere technical error, to the level of a real substantial error, when the exact nature of the so-called tariffs published and filed, relied upon by the government as-the lawful rate, are scrutinized; and when the rate that the trial court deciphered out of these papers, is compared with admitted rates on other roads for the same products, and with the admitted rates on the same road for like products. The tariff sheet relied upon as the lawful published rate filed with the Interstate Commerce Commission, is tariff sheet No. 24 of the Chicago & St. Louis Traffic Association; and the first thing to be noted is that this tariff sheet No. 24 makes no reference, by name, to petroleum or the products of petroleum. On the face of that tariff sheet, no eighteen cent rate for petroleum or the products of petroleum, appears. The eighteen cent rate was only arrived at by a process of circumlocution; that is to say, on the face of these tariff sheets there was found the printed line "Governed by Illinois classification except as noted herein"; then by turning to a classification adopted by the Railroad & Warehouse Commission of Illinois, September 7th, 1899, it was found that petroleum and its products were set down in the "fifth" class; and then by turning back to tariff sheet No. 24, it was found that the rate set down for the "fifth class" was eighteen cents per one hundred pounds. And so, out of this process of reference and cross reference, the lawful published rate was evolved by the trial court to be eighteen cents, not because it so appeared on the face of the tariff sheets, but because, by reference to other sheets — sheets fixing, not rates, but classification, and that not by the Interstate Commerce Commission or the carrier, but by the Illinois Railway Commission — it could be so figured out.
Now many nice judicial questions are raised, in this case, upon the' accuracy and validity of the result thus arrived at. Tariff schedule No. 24, for instance, with the words thereon printed, "Governed by Illinois Classification," took effect May 15th, 1899. The Illinois classification, that the government relies upon as adoption by reference, was not adopted until nearly four months afterwards, to-wit, September 7th, 1899. No proof is in the record either of the terms or the existence of any Illinois classification as of May 15th, 1899, the time the tariff sheet was filed. Do the words, "Governed by Illinois Classification" refer to a classification presently in existence — the classification in existence when the tariff was filed? If so, the proof fails, for no. such classification is shown. Are the words to be interpreted as if they read: Governed by Illinois Classification "as from time to time that classification may be changed"? If so, it is only because words not expressed are to be judicially imported into the face of this tariff sheet — the clause to be so enlarged by judicial interpretation, that it would be thereafter within the power of state commissions, at any time, through changes of state classifications, to alter from time to time, and without consent of the interstate carriers, interstate rates for interstate commerce, unless such interstate carrier instantly recon-formed its tariff sheets to the changed classifications of the several state commissions. Indeed, taking this along with some of the other questions that have been brought to our attention in connection with these schedules, we are not prepared to say that tariff sheet No. 24 really fixes the rate on petroleum-and its products at eighteen cents. The most we can say is, that the question is one upon which judges, after full discussion, might very reasonably disagree. And when to this We add that the representative of the plaintiff in error, in charge of its traffic affairs, knew that a six and a quarter cent rate — the equivalent of a six cent rate over the Alton — was the lawful published rate of the competing Chicago & Eastern Illinois Railroad, duly filed with the Interstate Commerce Commission; that in this tariff schedule No. 24 there were no oils, and nothing similar to » oils even though small in quantity as freight compared' with petroleum and its products, scheduled at more than ten cents; that he had been told by the Alton representative that six cents was the lawful Alton "commodity" rate; that he knew that in 1903 there were in force on the Alton road, three hundred and eighty-six commodity tariffs of the same character as the six cent tariff which he was told was the commodity tariff on petroleum and its products, and in 1904 and 1905 even a larger number of such commodity tariffs; and when we bear in mind that all that prevented the trial court from holding, as a matter of law, that a six cent rate upon petroleum and its products was a lawful commodity rate was that, technically, the filing with the commission of the application sheets upon which that proposed commodity rate appeared was not, in the trial court's opinion, the filing of a tariff within the requirements of the law; and when we put against this positive information, and these strong confirmatory circumstances, a confused mass of tariff sheets that on their face show no rate on petroleum and its products whatever, leaving it to the judicial mind to cipher out the eighteen cent rate by reference to other papers that may or may not have been properly interpreted, the error of the trial court in taking away from the plaintiff in error its right to submit to the jury the whole question of whether it had knowledge of the tariff sheet from which it is said to have accepted a concession, and therefore an intent to violate the law — whether the rate paid was not paid in the honest belief that it was the lawful rate — is an error that rises into one of solid substance.
This brings us to tire second question: Whether, as a matter of law the number of offenses is the number of car loads of the property transported, irrespective of whether each car load constituted the whole, or a part only, of an actual single transaction resulting in a shipment.
The shipments upon which the indictment was based were within the period from September 1, 1903, to March 1, 1905; were carried in fourteen hundred and sixty-two car loads; and were settled for, and the charges thereon paid, upon thirty-six distinct days within that period. The proof shows, also, that in the regular course of business, whenever an order came to plaintiff in error from a buyer in the St. Rouis district (the order being in gallons or barrels, not cars) the order was translated by the clerks into car loads, according to the capacity of the cars, running all the way from thirty thousand to eighty thousand pounds; that the oil was then loaded upon the cars— cars for that purpose nearly always standing in the yards; and that the cars were then turned over to the carrier, some single orders filling six or eight cars. Notwithstanding this, in the indictments, and upon sentence, each single car load was dealt with as a separate offense.
At the trial, the plaintiff in error moved, severally, that the government be required to proceed upon one count only and to elect such count; that the government be required to proceed upon one count averred to have taken place during each of the years 1903, 1904 and" 1905, respectively, and to elect such count; and that the government be required to proceed upon thirty-six counts only, or upon as many counts as there were settlements and payments by the shipper to the carrier, and to elect such counts; all of which motions were overruled.
The chief argument, if we rightly comprehend the argument and can state it compactly, in favor of the proposition that under these cir • cumstances each car transported constituted a separate offense is, that each "act of transportation," whereby property in interstate or foreign commerce is transported at the prohibited rate, constitutes a distinct offense, and that each car was a separate act of transportation, as was evidenced by the issuing of a way bill to the plaintiff in error for every car.
The offense denounced in the statute, and charged in the indictment, is the accepting by plaintiff in error of a concession in respect to the transportation of property in interstate commerce, whereby such property was transported at a less rate than that named in the tariffs published and filed. The gist of the offense is the acceptance of the concession, irrespective of whether the property involved was car loads, train loads, or pounds. Has a shipper fully and finally accepted a concession when he has done nothing more than to agree with the carrier that less than the published and filed rates shall be paid for transportation of his property ? Is it not necessary that the transaction be closed by actual payment of the lower rate? Take the rebate, the commonest form of the evil — the concession being only a variety. In the rebate, the shipper pays in the first instance the full rate to the carrier and afterwards receives back a part. Manifestly the offense of accepting a rebate has not been committed until the shipper has taken back a part of the freight money, whereby his property has been transported at less than the lawful rate. Proof that he agreed to accept a return of a part of the full rate — stopping there — would not support an indictment for accepting a rebate. Such an agreement is not binding; and at any time before its complete fulfillment the shipper may repent and insist upon the carrier's keeping the whole amount. The concession differs from the rebate only in this, that in the concession the shipper, instead of paying the full rate and receiving back part, merely settles for the difference. The result is the same — the property is transported for the same net amount less than the lawful rate. And there is no basis in the statute for holding that in the case of accepting a concession the transaction is consummated, and the door of repentance is closed, at any earlier moment than in the case of accepting a rebate. So proof that a shipper has agreed to accept a concession — stopping there — whether the proof be embodied in way bills, or book entries, or formal contracts, will not support an indictment for accepting a concession, until the intended wrong becomes an accomplished fact. Of course the irrevocable may be reached and the transaction consummated in other ways than by money settlements, as by the off-setting of mutual accounts. The point is that the transaction, as a transaction, must be consummated.
The offense of accepting a concession is the "transaction" that the given rebate consummates — not the units of mere measurement of the physical thing transported — but the "transaction" whereby the shipper, for the thing shipped, no matter how great or how little its quantity, received a rate different from the established rate — the wide range between maximum and minimum punishment being doubtless thought to be.a sufficient r'ange within which to differentiate the punishment adapted to one transaction, from the punishment adapted to another.
The number of offenses in the present case should have been ascertained in accordance with these principles. The measure adopted by the trial court was wholly arbitrary — had no basis in any intention or fixed rule discoverable in the statute. And no other way of measuring the number of offenses seems to have been given a thought either by the government or the trial court.
This brings us, then, to the last question, Did the court, in the fine imposed, abuse its discretion? The defendant indicted, tried and convicted, was the Standard Oil Company, a corporation of Indiana. The capital stock of this corporation is one million dollars. There is nothing in the record, in the way of evidence, either before conviction, or after conviction and before sentence, that shows that the assets of this corporation were in excess of one million dollars. There is nothing in the record, either before conviction, or after conviction and before sentence, that shows that the defendant, before the court, had ever before been guilty of an offense of this character. It may, therefore, be safely assumed, that but for the relation of the defendant before the court to another corporation not before the court — a relation to be presently stated — the court would have measured out punishment on the basis of the facts just stated.
That under such circumstances the punishment would have been the maximum punishment, does not secrn possible; for, bearing in mind that this is not the punishment of an unlawful business, but the punishment of unlawful practices connected with a lawful business, the maximum sentence, put into execution against the defendant before the court, would wipe out, many times, and for its first offense, all the property that constitutes the defendant's lawful business. Put into execution, this maximum sentence would add to the liabilities of defendant to its creditors, (and, according to a petition of the government on the matter of supersedeas there were current liabilities of from three to five million dollars) an additional liability of twenty-nine million, two hundred and forty thousand dollars; resulting without doubt in a condition of bankruptcy that would deduct from every creditor's share of the assets to be divided a sum running from fifty to nearly one hundred per cent, of the money that such creditors had advanced. Is the defendant, by way of regulative punishments, to be thus punished? Are the creditors to be thus punished? Would a cab driver, convicted of violating the city law against excessive cab fares, be sentenced to pay a fine that would take his horse and cab, and then leave him a bankrupt many times over, unable to pay anything but the least proportion of his debts to his other creditors? Is this case another case, simply because, instead of being an individual, the defendant is a corporation, and instead of being up for sentence under a city ordinance that was intended, not to destroy, but to regulate, the defendant was up for sentence under a national law that was intended, not to destroy, but to promote? Indeed, that the sentence was not imposed on the basis of the facts just stated respecting the defendant before the court, but was imposed wholly because of other facts, wholly outside the record so far as this defendant is concerned, is disclosed by the reasons set out in connection with the sentence.
Briefly stated, the trial court had in mind when the sentence was fixed, not so much the Standard Oil Company of Indiana, as the Standard Oil Company of New Jersey; and intended by the imposition of this sentence, to reach and punish, not so much the Standard Oil Company of Indiana, as the Standard Oil Company of New Jersey. "The nominal defendant is the Standard Oil Company of Indiana, a million dollar corporation. The Standard Oil Company of New Jersey, whose capital stock is one hundred million dollars, is the real defendant," says the trial court in imposing the sentence; and with this in mind "for the guidance of the court in determining the penalty to be fixed" the court says information was requested, as to what cor - poration held the stock of the Standard Oil Company of Indiana, what the outstanding capital stock of such "holding" company was, and what its (the holding company's) net earnings and dividends were, for the three years covered by the indictment, in order, as the court said, that it might "advisedly exercise the discretion required by the law in fixing the punishment." And, when such information was not furnished, it was the officers of the Standard Oil Company of New Jersey who were subpoenaed before the court, and it was the net earnings and dividends, not of the Standard Oil Company of Indiana, but of the Standard Oil Company of New Jersey, that was obtained, for flic three } ears covered by the indictment — proceedings and a purpose that have no meaning unless, in the mind of the court, one of the parties to the punishment was to be the Standard Oil Company of New Jersey.
That this was the view and purpose of the trial court is again disclosed in the reason given why the fine was fixed at the amount stated, viz.: "that for the law to take from one of its corporate creatures, as a penalty for the commission of a dividend producing crime, less than one-third of its net revenues accrued during the period of violation, falls far short of the imposition of an excessive fine" — the "dividend producing crime" in the mind of the court obviously being the crime, not of the Standard Oil Company of Indiana (it had not been brought out what were that company's net revenues) — but of the Standard Oil Company of New Jersey, whose net revenues were said by the court, in this connection, to be "approximately forty per cent." upon the "approximately one hundred million dollars" of its capitalization.
And again, in fixing the penalty, the-trial court said "in this connection it may be observed that the figures exhibiting the net earnings of the Standard Oil Company of New Jersey during the period covered by this indictment are exceedingly instructive, because of the peculiarly intimate relation between the character of the crime, and the revenues of the offender" — a remark wholly without meaning unless the court had in mind the revenues of the Standard Oil Company of New Jersey, for, as already stated, no revenues of the Standard Oil Company of Indiana were in the record; and a remark also wholly without meaning, unless the court had in mind that the offense for which he was fixing the punishment was not the company's first or "virgin" offense; for all the revenues derived from the transactions involved in the trial were — so far as the record enables us to figure them out — an infinitesimal amount merely of the amount of revenues upon which that statement was based. Indeed, that it was the Standard Oil Company of New Jersey that the trial court was reaching out for, counsel for the government do not dispute, but seek rather to justify by the statement that: '
"The effect of these violations of the law was to enhance the earnings of the Standard Oil Company of Indiana, and every dollar of the increased earnings of that company, went into the treasury of the Standard Oil Company of New Jersey. It was the Standard Oil Company of New Jersey, therefore, who was the real beneficiary of the unlawful acts of the plaintiff in error."
Now can a sentence such as the trial court imposed, based upon reasoning such as the trial court gave, be a sound sentence? Can a court without abuse of judicial discretion, wipe out all of the property of the defendant before the court, and all the assets to which its creditors look, in an effort to reach and punish a party that is not before the court — a party that has not been convicted, has not been tried, has .not been indicted even? True it is, that if one corporation uses another corporation to violate law, just as if one individual uses another individual to violate law, such offender ought not, though masked, to go unpunished. And there are ways, as old as the law itself, to reach and punish him. But can the individual who is merely "said" to have procured the crime to be committed be deprived of a hear ing — be condemned to punishment without being tried, convicted, or indicted even? Can an individual merely "said" to be behind the party convicted, be reached for punishment, not by indictment, trial, and conviction in due process of law, but by supplemental proceedings before the judge, somewhat in the nature of civil proceedings in aid of execution? Can an American judge, without an abuse of judicial discretion, condemn anjr one, individual or corporation, who has not, in his own person, first been duly indicted, duly tried, and duly convicted ?
That, to our mind, is strange doctrine in Anglo-Saxon jurisprudence. No monarch, no parliament, no tribunal of Western Europe, for centuries, has pretended to have the right to punish except after due trial under all the forms of the law. Can that rightfully be done here, on no other basis than the judge's personal belief that the party marked by him for punishment deserves punishment? If so it is because the man who happens to be the judge is above th6 law.
Counsel for the government say, in concluding their brief, that the Elkins Act was passed because the peace of society and the welfare of the people demanded it; that railroad inequality means business ruin to all except those powerful enough to make themselves the beneficiaries of the discriminations; means the wiping out of an industry, of a town, of a city, at the command of an officer of a private corporation; that railroad inequality is the basis of monopoly and the wrongful concentration of wealth; that no law of more vital importance was ever passed' by congress; and that those guilty of violating it, are guilty of a serious crime against the principles of industrial freedom and equality.
Every sentence of that arraignment is true. That this court recognizes the importance of the enforcement, of that act is shown in its af-firmance of penalties that under other circumstances would be regarded as very severe. But the Interstate Commerce Act, important as that law is, is not the only law under which we live. We live under a guaranty that reaches back to the beginnings of our law, and is securely planted in every constitution of civilized government, that no one shall be punished until he has been heard; and above this fundamental guaranty there can be set no higher prerogative; for let it once come to pass that under the stress of enforcing commercial equality, any power in the government may override the fundamental human right of being judged only after having been duly tried — a right just as essential to men in the associated relationship of the corporation, as to men in the relationship of copartners, or to men individually — there will remain no commerce worth the name to safeguard. The beginning of commerce is constitutional government, and the foundation of constitutional government is the faith that every guaranty of our institutions, no matter what the provocation, will he sacredly observed.
The judgment of the District Court is reversed and the case remanded with instructions to grant a new trial, and proceed further in accordance with this opinion.