Interstate Commerce Commission v. Chicago Great Western Railway Company/Opinion of the Court

by David Josiah Brewer

United States Supreme Court

209 U.S. 108

Interstate Commerce Commission  v.  Chicago Great Western Railway Company

 Argued: April 16, 17, 1907. --- Decided: March 23, 1908

It is unnecessary to define the full scope and meaning of the prohibition found in § 3 of the interstate commerce act, or even to determine whether the language is sufficiently definite to make the duties cast on the Interstate Commerce Commission ministerial, and therefore such as may legally be imposed upon a ministerial body, or legislative, and therefore, under the Federal Constitution, a matter for congressional action, for, within any fair construction of the terms 'undue or unreasonable,' the findings of the circuit court place the action of the railroads outside the reach of condemnation.

The complainant, before the interstate commerce action, was an incorporated association. The purposes for which it was organized were, as stated in its charter, 'to establish and maintain a commercial exchange; to promote uniformity in the customs and usages of merchants; to provide for the speedy adjustment of all business disputes between its members; to facilitate the receiving and distributing of live stock, as well as to provide for and maintain a rigid inspection thereof, thereby guarding against the sale or use of unsound or unhealthy meats; and generally to secure to its members the benefits of co-operation in the furtherance of their legitimate pursuits.' Its members were, as found by the Commerce Commission, 'engaged in the purchase, shipment, and sale of live stock for themselves and upon commission.' It was such an association, with members engaged in the business named, that initiated these proceedings and in whose behalf they were primarily prosecuted. While it may be that the proceedings are not to be narrowly limited to an inquiry whether this particular complainant has been in any way injured by the action of the railroad companies, yet that question must be regarded as the one which was the special object of inquiry and consideration. It is true that the Commission subsequently commenced, under the Elkins act, an independent suit in its own name, but it was practically to enforce the award made by the Commission after its inquiry into the controversy between the live-stock exchange and the railroad companies.

It must be remembered that railroads are the private property of their owners; that while, from the public character of the work in which they are engaged, the public has the power to prescribe rules for securing faithful and efficient service and equality between shippers and communities, yet, in no proper sense, is the public a general manager. As said in Interstate Commerce Commission v. Alabama Midland R. Co. 168 U.S. 144, 172, 42 L. ed. 414, 425, 18 Sup. Ct. Rep. 45, 51, quoting from the opinion in 5 Inters. Com. Rep. 697, 21 C. C. A. 59, 41 U.S. App. 466, 74 Fed. 723:

'Subject to the two leading prohibitions that their charges shall not be unjust or unreasonable, and that they shall not unjustly discriminate so as to give undue preference or disadvantage to persons or traffic similarly circumstanced, the act to regulate commerce leaves common cariers as they were at the common law,-free to make special rates looking to the increase of their business, to classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce and of their own situation and relation to it, and generally to manage their important interests upon the same principles which are regarded as sound and adopted in other trades and pursuits.'

It follows that railroad companies may contract with shippers for a single transportation or for successive transportations, subject though it may be to a change of rates in the manner provided in the interstate commerce act (Armour Packing Co. v. United States, 209 U.S. 56, 52 L. ed. --, 28 Sup. Ct. Rep. 428), and also that, in fixing their own rates, they may take into account competition with other carriers, provided only that the competition is genuine, and not a pretense (Interstate Commerce Commission v. Baltimore & O. R. Co. 145 U.S. 263, 36 L. ed. 699, 4 Inters. Com. Rep. 92, 12 Sup. Ct. Rep. 844; Texas & P. R. Co. v. Interstate Commerce Commission, 162 U.S. 197, 40 L. ed. 940, 5 Inters. Com. Rep. 405, 16 Sup. Ct. Rep. 666; Interstate Commerce Commission v. Alabama Midland R. Co. supra; Louisville & N. R. Co. v. Behlmer, 175 U.S. 648, 44 L. ed. 309, 20 Sup. Ct. Rep. 209; East Tennessee, V. & G. R. Co. v. Interstate Commerce Commission, 181 U.S. 1, 45 L. ed. 719, 21 Sup. Ct. Rep. 516; Interstate Commerce Commission v. Louisville & N. R. Co. 190 U.S. 273, 47 L. ed. 1047, 23 Sup. Ct. Rep. 687).

It must also be remembered that there is no presumption of wrong arising from a change of rate by a carrier. The presumption of honest intent and right conduct attends the action of carriers as well as it does the action of other corporations or individuals in their transactions in life. Undoubtedly, when rates are changed, the carrier making the change must, when properly called upon, be able to give a good reason therefor; but the mere fact that a rate has been raised carries with it no presumption that it was not rightfully done. Those presumptions of good faith and integrity which have been recognized for ages as attending human action have not been overthrown by any legislation in respect to common carriers.

The Commerce Commission did not find whether the rates were reasonable or unreasonable per se. Its omission may have been owing, partly at least, to the decision in Interstate Commerce Commission v. Cincinnati, N. O. & T. P. R. Co. 167 U.S. 506, 42 L. ed. 255, 17 Sup. Ct. Rep. 896, for this controversy arose before the amendment of June 29, 1906. 34 Stat. at L. 584, chap. 3591, U.S.C.omp. Stat. Supp. 1907, p. 892. On the other hand, the circuit court found specifically that the live-stock rates were reasonable, and also that the rates for carrying packers' products and dressed meats were remunerative. See findings 1 and 7. Obviously, shippers had, in the rates considered separately, no ground of challenge. But the burden of complaint is not that any rates, taken by themselves, were too high, but that the difference between those on live stock and those on dressed meats and packers' products worked an unjust discrimination.

It is insisted that 'the making of the livestock rate higher than the product rate is violative of the almost universal rule that the rates on raw material shall not be higher than on the manufactured product.' This may be conceded, but that the rule is not universal the proposition itself recognizes, and the findings of the court give satisfactory reasons for the exception here shown. See findings 2, 3, and 9. The cost of carriage, the risk of injury, the larger amount which the companies are called upon to pay out in damages, make sufficient explanation. They do away with the idea that, in the relation established between the two kinds of charges, any undue or unreasonable preference was intended or secured.

Finding No. 6 is very persuasive. It reads:

'Sixth. That the present rates on live stock have not materially affected any of the markets, prices, or shipments; that they are reasonably fair to Chicago and to the shippers; that the shipments of live stock from points between Chicago and the Missouri river and St. Paul are as great in proportion to the volume of business as before the present rates were made; that the majority of the live stock comes to Chicago from points as near as 150 miles this side of the Missouri river and St. Paul, and that the lower rate given to the packers does not seem to directly influence or injure the shippers of live stock.'

If the rates complained of have not materially affected any of the markets, prices, or shipments; if they are reasonably fair to Chicago and the shippers; if the shipments of live stock from the West to Chicago are as great in proportion to the bulk of the business as before the present rates were made; and that lower rate given to the packers does not directly influence or injure the shippers of live stock,-it is difficult to see what foundation there can be for the claim of an undue and unreasonable preference. It would seem a fair inference from the findings that the real complaint was that the railroad companies did not so fix their rates as to help the Chicago packing industry; that they recognized the fact that along the Missouri river had been put up large packing houses, and, without any intent to injure Chicago, had fixed reasonable rates for the carrying of live stock to such packing houses and also to Chicago; that those packing houses, being nearer to the cattle fields, were able to engage in the packing industry as conveniently and successfully as the packing houses in Chicago. If we were at liberty to consider the mere question of sentiment, certainly to place packing houses close to the cattle fields, thus avoiding the necessity of long transportation of the living animals,-a transportation which cannot be accomplished without more or less suffering to them,-and to induce transportation to those nearer packing houses, would deserve to be commended rather than condemned.

With reference to competition, we have referred to the cases in this court in which that matter has been considered. According to the 4th finding, the rates in question given to the packers at the Missouri river and St. Paul were the result of competition. Without recapitulating all the facts disclosed in that finding, it is enough to say that the Chicago Great Western Railway Company, which had the longest line from Chicago to Missouri river points, made a reduction in the rates, and did this, as its president testified, 'for the purpose of securing a greater proportion of the traffic in the products of live stock than it had been previously able to obtain.' That is one of the facts inducing competition, and one of the results expected to flow from a reduction of rates. It certainly of itself deserves no condemnation. In order to secure to themselves what was likely to be transferred to the Great Western by virtue of its reduction of rates, the other companies also made a reduction, and, as shown by the 5th finding, the competition was not the result of agreement, but was an 'actual, genuine competition.' It may be true, as contended by counsel for the appellant, that even a genuine competition which results in a change of rates does not necessarily determine the question whether the rates as fixed work an undue preference or create an unlawful discrimination. Those rates fixed may make a preference or discrimination irrespective of the motives which caused the railway companies to adopt them, and yet the fact of a genuine competition does not make against the contention that the rates were intended to work injustice. An honest and fair motive was the cause of the change in rates, honest and fair on the part of the Great Western in its effort to secure more business, and equally honest and fair on the part of the other railway companies in the effort to retain as much of the business as was possible. In other words, this competition eliminates from the case an intent to do an unlawful act, and leaves for consideration only the question whether the rates as established do work an undue preference or discrimination; and, as the findings of the court show that the result of the new rates has not been to change the volume of traffic going to Chicago, or materially affect the business of the original complainant, it would seem necessarily to result that the charge of an unlawful discrimination is not proved. In short, there was no intent on the part of the railway companies to do a wrongful act, and the act itself did not work any substantial injury to the rights of the complainant.

We have not attempted to review in detail the great mass of testimony, amounting to two enormous printed volumes. It is enough to say that an examination of it clearly shows sufficient reasons for the findings of fact made by the circuit court.

In short, the findings of the circuit court were warranted by the testimony, and those findings make it clear that there was no unlawful discrimination.

The decree of the Circuit Court is affirmed.

Mr. Justice Moody did not hear the argument nor take part in the decision in this case.

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