Court Opinion

ID: 6249238
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:09:26.629666+00
Date Added: 2024-06-11T08:59:22.688546
License: Public Domain

Mr. Justice Potter,
dissenting :
I do not agree that the court below pursued the proper method in determining the reasonableness of the rate for passenger travel prescribed to railroad companies by the act of April 5,1907. In adopting its estimate, the court took into consideration only the anticipated earnings from passenger travel, without regard to the earnings from any other source. In considering the effect of legislation, the interests of the stockholders of the railroad are beyond question to be fairly protected ; but so long as the earnings of the road from all sources *128produce a satisfactory return upon the capital invested, the exact proportion which may result from the operation of any particular department would seem to be immaterial. It is not to be expected that railroad companies will earn the same percentage of profit in every department, or upon all classes of business which they may conduct. It may readily happen that the proper discharge of its duty to the public in furnishing an adequate service, may require a railroad to perform some particular service at a low price, or even at a loss; and yet the returns from the business as a whole may be entirely satisfactory.
As we understand the testimony in this case, and as shown by the last published report, the plaintiff company earned during the last fiscal year, a net profit of more than eleven and a half per cent upon its capitalization. If the estimate accepted by the court below is correct, as to the probable amount of the reduction in earnings, which will be caused by the new statute, it would not reduce the total amount more than one-third of one per cent, and it would leave a net annual return, based upon last year’s business, of more than eleven per cent per annum upon the entire capitalization. Legislation permitting such a return as this can hardly be termed confiscatory, or even fairly regarded as tending in that direction. In judging the reasonableness of a rate, the interest of the party for whom the service is performed must be recognized, as well as that of the party performing the service.. The proposition that the state may impose a comparatively low rate upon a particular portion of the business of a railroad, provided the company is able to earn a fair profit upon its business as a whole, is supported both by reason and authority. For example, in Minneapolis & St. Louis Railroad Company v. Minnesota, 186 U. S. 257, it was contended that a certain rate of freight prescribed by the state railroad commission, upon coal in car load lots, was unreasonable, because it was alleged, if the same rate were imposed upon all merchandise, the road would not pay its operating expenses. But it was there distinctly pointed out by the supreme court of the United States that it might well be that other existing rates might be sufficient to earn a large profit for the company even though little came from the particular source in question. *129And the power of the state was sustained to reduce the rate upon a particular article provided the company was able to earn a fair profit upon its entire business.
So also in Atlantic Coast Line R. R. Co. v. N. C. Corporation Com., 206 U. S. 1, the supreme court of the United States upheld the right of the state to compel a railroad company to perform a particular duty, the running of an additional train necessary for the convenience of the public, even though it entailed some pecuniary loss.
It appears also from the reports of the Interstate Commerce Commission, that it is the practice of that body, in determining questions of the reasonableness of railroad rates, to take into consideration the entire earnings, operating expenses and fixed charges of the road under consideration. This was done in the case of passenger rates in Brabham v. Atlantic Coast Line R. R. Co., 11 Interst. Com. Rep. 464 (1905). In the opinion in Artz v. Seaboard Air Line Ry. Co., 11 Interst. Com. Rep. 458 (1905), a case of passenger rates, it is said (p.-462): “ The reasonableness of the passenger fare upon a particular part of the defendant’s system must be determined with some reference to the system as a whole.”
The same practice prevails in determining the reasonableness of freight rates. See Matter of Freight Rates, 11 Interst. Com. Rep. 180 (1905) ; Rates from St. Louis to Texas Common Points, 11 Interst. Com. Rep. 238 (1905); Matter of Proposed Advances in Freight Rates, 9 Interst. Com. Rep. 382 (1903). Under this rule the entire earnings of the plaintiff company within the state should have been considered in the present case. Had this been done, it would without doubt have appeared that the rate imposed by the act of 1907, will not prevent the company from earning a fair profit upon its entire business. For this reason I would reverse the decree of the court below and dismiss the bill.