Court Opinion

ID: 7134458
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:22:25.088568+00
Date Added: 2024-06-11T16:14:34.662287
License: Public Domain

OPINION OP THE MAJORITY OP THE COTJKT BY
CHIEF JUSTICE HAZEL RIGG,
POLLOWED by Dissenting Opinion OP JUDGE PAYNTE'R, in which JUDGE WHITE and JUDGE GUFFY Concur.
These appeals involve particularly the construction of section 215 of the Constitution and of sections 817, 818, and 819 of the Kentucky Statutes. Incidentally other sections of the Constitution and the Statutes will be noticed so far as they are supposed to- affect the particular sections named. The constitutional provision is as follows: “Sec. 215. All railway, transfer, belt lines or railway bridge companies shall receive, load, unload, transport, haul, deliver and handle freight of the same class for all persons, associations or corporation's from and to the same-points and upon the same conditions, in the same manner and for the same charges, and for the same method of payment.” The statutory sections are as follows: “Sec. 817. If any corporation engaged in operating a railroad in this State shall, directly or indirectly, by any special rate, rebate, drawback or other device, charge, demand, collect or receive from any person a greater or less compensation *632for any service rendered in the transportation of passengers or property than it charges, demands, collects or receives from any other person for doing for him a like and contemporaneous service in the transportation of a like kind of traffic, it shall be deemed guilty of unjust discrimination.” Section 818 makes it “unlawful for any corporation to make or give any undue or unreasonable preference or advantage to any particular person or locality, or any particular description of traffic, in any respect whatever, in the transportation of a like kind of traffic,” etc. Section 819 reads thus: “Any railroad corporation that shall be guilty of extortion or unjust discrimination, or of giving to any person or locality, or to any description of traffic, an undue or unreasonable preference or advantage, shall upon conviction, be fined,” etc. “The circuit court of any county into or through which the line or railroad may run, be owned or operated by the corporation alleged to be guilty as aforesaid, and the Franklin Circuit Court, shall have jurisdiction- of the offense, which shall be prosecuted by indictment, or by action in the name of the Commonwealth, upon information filed by the board of railroad commissioners,” etc. “Indictments under this section shall be made only upon the recommendation or request of the railroad commission filed in the court having jurisdiction of the offense; and all prosecutions and actions under the law shall be commenced within two years,” etc. As the manner of instituting prosecutions for violation of the constitutional pro-' visions and the statutes on the subject involved is a matter in dispute here, we quote section 217 of the Constitution, which is as follows:. “Bee: 217. Any person, association or corporation willfully or knowingly violating any of the provision of sections two hundred and thirteen, two *633hundred and fourteen, two hundred and fifteen or two-hundred and sixteen, shall upon conviction by a court of •competent jurisdiction, for the first offense be fined two-thousand dollars; for the second offense five thousand dollars, and for the third offense, shall therefore, ipso facto, forfeit his franchises-, privileges or charter rights; and if’ such delinquent be a foreign corporation it shall, ipso facto, forfeit its right to do business in this State; and the attorney general of the Commonweailth shall forthwith upon notice of the violation of any of said provisions, institute proceedings to enforce the provisions of the aforesaid sections.” Section 213 requires railroad companies to receive and handle loaded and iempty cars and freight in car loads, etc., coming from other companies without discrimination or preference, etc. Section 214 was designed to compel the carrier to perform the^ service of receiving, transporting, and handling freight without exclusive or preferential contract or arrangement, -and secures equality of service, leaving the succeeding section to secure equality of charges.
A preliminary question is raised by appellant growing out of the provision of section 217, to the effect that the attorney general of the Commonwealth shall forthwith, upon notice of the violation of any of the provisions of sec-tins 213-216 institute proceedings to enforce such provisions. These prosecutions are by indictment, and it does not appear that they were set on foot by the Attorney General; hence it is claimed by the appellant -company the prosecutions can not be maintained. We do not think the contention tenable. The well-known and usual mode of inflicting punishment for a violation of the penal laws of the State is by a trial of the offender under an indictment, and, if the radical change claimed had been intended, we *634think plainer language would have been used'. The language is not that - the Attorney General shall institute prosecutions for the enforcement of the penalties fixed for a violation of these sections, but that officer was to institute proceedings to enforce the provisions of the sections. It will be noticed that there are certain positive •dutes enjoined on the common carrier in which Ihe public is vitally interested, and these, we do not doubt, the Attorney General might require to be performed at the suit of the State. To punish by a criminal prosecution for a violation of law is one thing, and to institute proceedings to enforce the performance of duty is another. It is true, the punishment may induce the performance, but not necessarily. ' What the public wants at the hands of the carrier is performance of those important duties. It cares nothing for fines, except, indeed, as their infliction mav possibly induce performance. The language, strictly followed, only purports to look to the enforcement of the provisions of these sections by the institution of proceedings by the Attorney General, and not necessarily to the prosecution of the offender. Again, it is urged by appellant chat, as the Constitution does not provide in what particular way — if we hold it does not so provide — such prosecution shall be inaugurated, the matter was intended to be left to the Legislature; and that it has declared that indictments for violation of the- provisions of these sections shall be made only on the recommendation of the railroad commission, filed in the court having jurisdiction of the offense. And, as the record does not disclose such recommendation, there ■can be no prosecution. It would seem clear that the Legislature has attempted to confide the inauguration of such ■prosecutions to this board. There seems, however, to have been no motion made to dismiss the prosecution based on *635the ground mentioned, and' it is too late to make the question here for the first time.
Nor do we decide' or intimate that such prosecutions must be inaugurated by this board. . The question is not before us. These preliminary questions aside, we come to the vital questions involved. The indictments, as already foreshadowed, charge the appellant with “unjust discrimination,” and it is averred with some particularity how it did so. In substance, it is charged in indictment No. 519 — the others differing only in names and amounts of rebate — that the carrier, after having received from the Lebanon Roller Mills the same rate of compensation for the transportation of coal to Lebanon Ky., as it had unlawfully, willfully, and' knowingly received from J. M. Shreve for the contemporaneous transportation of coal of a like amount, and of the same kind or class of traffic, in the same manner, and upon the same conditions, for the same distance, over the same line, in the same direction, and for the s.ame method of payment, did willfully and knowingly refund and pay to the Lebanon Roller Mills a rebate of $11.88 in pursuance of an agreement so to do in advance, and did fail and refuse to refund to J. M. Shreve any portion of the amount so collected for him as aforesaid, thereby willfully and knowingly charging and receiving from the Lebanon Roller Mills a less compensation for a service rendered in the transportation of coal to Lebanon, Ky., than it charged and received from J. M. Shreve for a like and contemporaneous service in the transportation of a like kind of traffic. Contrary, etc., the form, etc. There are probably some minor defects in these indictments. For example, the points from and to which the coal is alleged to have been transported ought to be set out, so that the carrier may know how to meet the accusation,, *636and with respect to what shipments it is to prepare its proof. It is also noticeable that the qualifying phrases “of a like amount, and of the same kind or class of traffic, in the same manner, and upon the same conditions, for the same distance, over the same line, in the same direction, and for the same method of payment,” are so grouped as to leave the construction of the sentence somewhat confused, and the meaning obscure. The effect of this we may notice later on. We shall assume that the averments of the indictments are sufficient to constitute the offense denounced by the Constitution. The facts developed on the trial are not in dispute; and, using the same indictment we have already referred to as illustrating the facts of all of them, it appears that the Lebanon Roller-Mills Company was engaged in the business of manufacturing flour and meal at Lebanon, Ky., on the line of the carrier’s road. The capacity of the plant was about BOO or 400 barrels per day, and its company shipped out and over appellant’s road about two-thirds of the output of the mill. The company bought the coal it used for generating steam at the 'Eastern Kentucky mines, — Jellico, Middlesboro, Pittsburg, East Bernstadt, etc. This coal was shipped over the appellant road to Lebanon at the same rates which were published and announced for all buyers of coal by the appellant in the usual public way; but for all coal it used for steam purposes it got a rebate of 30 per cent., and this rate was also announced publicly on the tariff sheets of appellant, and was well known. The various coals used for steam purposes were known as “slack,” “pea coal,” “nút coal,” sometimes “run of mine's,” — un-. screened coals, — and were inferior grades of coal. Shreve was a coal dealer, and sold that commodity for domestic use only. He used lump coal, and sometimes clean nut, *637grades demanded.for domestic use, and which were higher grades than those used for steam purpose's. The proof does not show that he ever used, or that his trade demanded, the steam coals, but it is admitted that, had he done so, he would not have been entitled to any rebate. Moreover, while the proof does not show that the manufacturing establishments in question in fact used other than the lower grades of coal, it is admitted that occasionally similar establishments did so, as it was not always possible to get the lower grades, or the higher grades might be desired for some special reason or occasion. In such exceptional event it is admitted the manufacturer would get the rebate. It was further shown that the demand for coal by the manufacturer was much more regular throughout the year than the demand by the domestic dealer. Upon these conditions being shown, it is the contention of appellant that there has been no violation of the law, because the freight shipments in question made to the Lebanon Roller-Mills Company and to Shreve, respectively, do not constitute an unjust discrimination, and were not made “upon the same conditions,” within the meaning of the Constitution.
There are several grounds on which the appellant rests its right to impose the discriminating rates in question. In the first place, it is- claimed the classification adopted by the company, while formally otherwise, is substantially and practically a classification based on the quality and grades of the coal. "Whatever may be the formal test applied to decide the rate applicable at the localities in question, the rule is that the manufacturer used the lower grades and the dealer the higher grades of coal. Whenever it happened' otherwise, it was exceptional, and the carrier, it is contended, was authorized to maintain a rate *638based on the ordinary and usual course of trade, unaffected by rare and exceptional occurrences. In the second place, it is claimed that the carrier may charge a lower rate of freight for coal transported to a manufacturing establishment, from which it eventually and inevitably obtains manufactured products for additional transportation, than to a coal dealer not in competition with the manufacturer, and whose business with the carrier is limited merely to the coal transported; that in such case there is no equality or conditions, or sameness of conditions, which will justify the coal dealer in demanding the rate which is given the manufacturer; that the manufacturer’s coal is consumed on the premises in the creation of products which must be put back on the transporting line, enhanced in bulk and value, etc., by other commodities which enter inU the man-uf.KÍured product, and is then hauUd to the markets. Moreover, a manufacturing plant requires other commodities besides coal — such as grain in this instance — to conduct its operations, while the coal dealer takes nothing but his coal; and that the freight derived by the carrier from the transporation of these commodities forms an important addition to its traffic, and constitutes a condition of business which has no existence in the business of carrying coal to those who are local dealers merely. In considering these ground's, while we have stated them separately, it is, of course, apparent that each and every element that enters into the business of transportation has to be taken into the account, and the result as a whole is to be considered in determining whether the conditions of particular transportations are the same, or are substantially the same. We 'say substantially, because it will not be contended that the conditions must be precisely the same. That could rarely happen. The application of the section *639is not to be denied merely because the conditions surrounding the shipment are not entirely the same. There must, on the whole, be a reasonable, just, and appreciable difference in the conditions before there can be allowed a difference in rate. There must be a difference in the conditions that addresses itself to the intelligence and business common sense of the public, and those to whom, as triors under the law, such questions are to be determined. Such a difference, we believe, has been shown to exist in these cases.' While it was understood and announced that steam coal was hauled at 30 per cent, less than other coals, yet, as the former was almost invariably an unscreened and lowrnr grade of- coal, and therefore of less value, the formal classification into “steam coal” and “domestic coal” was practically a classification into screened and unscreen-ed coals. The proof makes this abundantly clear, and this is in accordance with common knowledge. In its substance, and for practical purposes, the proof brings the case within the principles announced in Louisville & N. R. Co. v. Com. (Ky.) 48 S. W. 416, where Chief Justice Lewis, speaking for the court, said: “For that it is allowable and proper for a railroad company to classify freight according to its quality or character and marketable value, and discriminate in charges for carrying different classes or kinds, is not only universally recognized, but plainly authorized by section 215.” However, the plan of the carrier for fixing and maintaining its coal rates as developed in these cases looks to a discrimination in rates growing out of its peculiar business relations to and connection with the manufacturer as such, and we therefore pass to a consideration of the reasons for such discrimination already briefly set out above. It is certainly true, as contended by appellant, that from and by reason of the *640transportation of the manufacturer’s coal, and as a necessary consequence, there are products manufactured, which, coming again to the carrier, secure additional business for the road. It is known in advance, and without the form of an agreement, that these results will follow such shipments of coal to the manufacturer, and that a return trip, so to speak, will be secured over the carrier’s road. Looking at the transaction as a whole, is there any difference in principle between it, and the ordinary transaction of a sale by a carrier of a return ticket to a passenger at a reduced rate? The steam coal starts from the mines to the manufacturer in one form, and the use to which it is pat creates other commodities, which the carrier picks up as a result of the shipment in the first instance. Knowing all this in advance, the carrier, on business principles, encourages the first shipment, and advertises and arranges its rates accordingly. The case of Hoover v. Railroad (Pa. Sup.) 27 Atl. 282, is precisely in point. The court, in an elaborate opinion, said among other things: “The plaintiffs were dealers in coal merely, while the nail company was a manufacturer of fabrics, and itself consumed the coal it received. They were, therefore, not competitors in the same business; and a lower rate to the manufacturer would not, under the contract, affect the business of the plaintiffs injuriously. . . . The business of the plaintiffs paid but one freight to the defendant, while the business of the nail company paid not only the freight, to wit, for hauling the coal to the nail works, but also, in addition to that, another and entirely independent freight to the defendant on all the products manufactured by the nail company.' . . . The authorities are very clear and strong that, where an additional freight is obtained by means of the lower charge, the discrimination is justified *641both át common law and tbe statutes. . . . That a railroad company may lawfully secure to itself so important an addition to its business by making a lower charge to one customer than to others is fully established by the authorities, as we shall presently see.” And the court proceeded to review the authorities fully, and sustained the discriminating rate in favor of the manufacturer. In Interstate Commerce Comission v. Baltimore & O. R. Co., 145 U. S. 276, 12 Sup. Ct. 848, 36 L. Ed. 703, the supreme court had under consideration the legality of sale of party ticket rates at a reduced fare, and held their issual not to be an unjust discrimination, or an undue or unreasonable preference or advantage. In the course of that opinion, Mr. Justice Brewer, for the court, said: “It is not all discrimination or preferences that fall within the inhibition of the statute [interstate commerce act]; only such as are unjust or unreasonable. For instance, it would be obviously unjust to charge A. a greater sum than B. for a single trip from Washington to Pittsburg; but if A. agrees not only to go, but to return by the same route, it is no injustice to B. to permit him to do so for a reduced fare, since the services are not alike, nor the circumstances and conditions substantially similar, as required by section 2 to make an unjust discrimination.” It is said, however, that there are certain qualifying words not found in our Constitution, but found in the Pennsylvania Constitution considered in Hoover v. Railroad Co., supra, and also certain qualifying words in the interstate commerce act, and in the numerous authorities cited in these oases, showing that the services of the carrier were to be “like” services, or be free from “unjust discrimination,” or “undue or unreasonable preference.” This is true. *642For example, in the Pennsylvania law the carrier was prohibited' from charging any person for the transportation of property a greater sum than it charged any other person “for like service from the same place, upon like conditions, and under similar circumstances.” This is the purport of every law on the subject involved to which our attention has been called, and enactments of this character are found in perhaps every State in the Union. The purpose of all these are the same. Our own statute only prohibits different or discriminating charges “for a like contemporaneous service.” Our Constitution does not use these particular words, but uses the broader and more comprehensive expression, “upon the same conditions.” These words must be taken as descriptive of the character of service the carrier performs in making its shipments, and have reference to the conditions which affect the freight transported, considered in its relations to both shipper and carrier. If the conditions under which any given shipments are made are not the same, or substantially the same, is there any just reason why the charges therefor must be or should be the same? If, for example, the cost is less for making a shipment of coal to A. in the month of July than it is in making one to B. in the month of August in any given year, should the freight charges on the two shipments be the same, because all railways must haul freight of the same class for all persons from and to the same points in the same manner, and for the same charges, and for the same method of payment? Nowhere -in the words of our law can we find authority for saying that shipments of freight not contemporaneously made, or made at a different cost, are not embraced in the requirement that they are to be hauled in the same manner, and for the same charges, .and for the same meth*643od of payment, except in the qualifying words, “upon the same conditions.” Without these words, the law is an- arbitrary and rigid rule, and unlike any of. the numerous laws in any of the States of the Union on the same subject. Except these words “upon the same conditions” be taken as an adjective phrase looking to or indicating the conditions surrounding the shipment, the law becomes an arbitrary, unyielding enactment, and different rates could not be charged for freight of the same class when shipped in car-load lots and when shipped in less than car-load lots, — a thing expressly authorized under our statute's. We think the legislative construction of the Constitution was the true construction, and that the same charges were to be collected for services- in transportation when they were “like and contemporaneous services,” being in such case performed under the same or similar “conditions.” If, in the bill of lading for the coal in controversy, appellant had inserted the stipulation that the coal was carried at the reduced rate upon the condition that it was to be used for steam purposes, in manufacturing, then admittedly this coal would not have been carried on the same conditions as the coal hauled for domestic purpose's; yet this is in substance what appellant did, as the reduced rate was not allowed until written evidence to this effect was given. The case does not, therefore, fall within the letter of the section. But, although the case is not within the letter of the Constitution, the question remain's, is it within its fair purpose and spirit? The provision is highly penal, and it is a familiar rule that such provisions are not to be extended by construction to oases not fairly within their purview; for otherwise the innocent may fall into punishment. The common law required common carriers to serve all alike. In aid of this rule of the common *644law, the English railway and canal traffic act wTas passed in 1854, to forbid and punish discrimination. This was followed by the interstate commerce act by the United States, and similar statutes and constitutional provisions by many of the several States. The thing aimed at in all these statutes is the prevention of unjust discrimination. In the same line is section 196 of our Constitution: “Transportation of freight and passengers 'by railroad, steamboat or other common carrier shall be so regulated by general law as to prevent unjust discrimination.” Also section 214: “No railway . . . company shall make any exclusive or preferential contract or arrangement . . . for the conduct of any business as a common carrier:” Section 215 is a part of the scheme covered by sections 196 and 214. It requires all railroads to transport in the same manner, for the same charges, and for the same method of payment of freight of the same class for all persons from and: to the same points and upon the s.ame conditions. The purpose was to secure equality between shippers, and prevent injustice or unjust discrimination. It can not be maintained that the convention contemplated that there should be no discrimination, for it was notorious then there were many discriminations not regarded as unlawful, and section 194 expressly recognizes that such discriminations as are not unjust may be made. All shippers of coal were placed on equality by appellant, and all were alike allowed to ship at the reduced rate coal for steiam purposes. There was nothing unreasonable in this, as not only an inferior quality of coal was thus used, but without it manufacturers in the interior towns in the State would be placed in hopeless competition with those having water transportation, and the operators of mines in this State would also be at a great disadvantage, for *645their competitors in the adjoining States (in some cases very near by) could get the reduced rate under the interstate commerce act. It can not be believed that the constitutional convention intended such a result, or that, if they had contemplated it, they would have expressed their conclusions in such terms as they employed.
It is still further suggested that, without ignoring the grammatical construction of the section, and by regarding the clauses “of the same class,” “from and to the same points,” and “upon the same conditions” as adjective phrases qualifying the noun “freight,” still the conditions meant by the section are those which immediately and actually pertain and attach to the freight, — that is the physical status and surroundings; and ¡subsequent conditions, such as its contemplated use, can not be taken into the account. This is clearly a more reasonable view of the section than the one which requires nothing to be established to fix the offender’s guilt than that the freight ■shall be of the same class, and is shipped from and to the same points. But when we attempt to apply it as a fixed rule, we find it at once inadequate. Thus, obviously, the material conditions immediately attaching to any shipment of freight are those of quality and quantity. As the law expressly provides as to the quality or class, we need not give this element further attention. Two consignments of freight are tendered the carrier. One of them is for the hauling of 1,000 bushels of coal from Pittsburg to Lebanon; the other is for the hauling of 10,000 bushels from and to the same points. Now, if the quantity of the shipment is to be a controlling factor, — as it must under this construction, — then the carrier* may haul for the large dealer nr manufacturer at a less rate than for the small dealer or manufacturer, and this is an evil not at all to *646be tolerated under any construction. The larger concern would inevitably crush out its 'Smaller competitors. The advocates of this latter construction therefore must deny its application for the reason that the contemplated use of the freight by competitors in business is a proper subject of inquiry, and may be taken into the account in determining whether the same condition's attach to any given shipments of freight. And this is- all that is done under the construction we adopt. The whole transaction is scanned from the standpoint of the purpose of the law, which is to prevent unjust discrimination- by the carrier in dealing with the public. If the conditions -of the shipments are not “the same,” or substantially so, if the services are not “alike,” if the “preferences are undue” or “unreasonable,” if the “discrimination is unjust” and unfair, the law has been violated. And, in determining whether these results follow, all the conditions of the shipment from its beginning to its ending are to be considered. All these expressions in the various statutes on the subject of unjust discrimination mean the same thing, and the authorities determining the effect of the various statutes on the subject involved-are directly in point; and they, as said in the Hoover case, “are very clear and’ strong that, when there is an additional freight obtained by means of the lower charge, the discrimination is justified both at common law and under the statutes.” It can not be suggested that a denial to the carrier of the right to make these rebates to the manufacturer will in the slightest degree even tend to lower the rates to domestic, dealers. The result of the denial oan only be disastrous to the manufacturers, particularly within the interior of the State, where cheap coal can not be obtained over water courses. Or, if they are saved, it will be at the expense of the Ken*647tucky mines, because all steam coals will be furnished at the cheap rate from outside the State under the interstate commerce act. It is true that it is not the business ' of a common carrier to build up this or that enterprise, and it can give no rebate to a manufacturer over a dealer merely because the • use of the coal by the former may incidentally build up the manufacturing interests of the State. But the discrimination is allowable because it is not an unjust or unreasonable discrimination to give the rebate when two freight charges are secured instead of one only, provided always those in the same business are treated alike, and provided the discrimination is not hurtful to, and does not affect, others who deal in or use coal. The Goodridge Case, 149 U. S. 680, 13 Sup Ct. 970, 37 L. Ed. 986, was where there was an undisputed secret discrimination made by the carrier between two competing “coal merchants,” and, the services for each being th*, same, the rebate to one of them was held to be an unjust discrimination. While certain language of that case is to the effect that the carrier shall “put all its patrons upon an absolute equality,” this could only mean they were to be so put when the charges were “for a like service from the same place, or upon like conditions, and under similar circumstances!’; such being the very terms of the statute the court was considering. Upon the conceded facts and other facts established by the proof, we think there has been no violation of the law as we interpret it, and the judgment in each case is- reversed, and cause remanded for proceedings in conformity with this opinion.