United States v. Pennsylvania Railroad Company (266 U.S. 191)/Opinion of the Court

by Louis Brandeis

United States Supreme Court

266 U.S. 191

United States  v.  Pennsylvania Railroad Company (266 U.S. 191)

 Argued: Oct. 13 and 14, 1924. --- Decided: Nov 17, 1924

York, Pa., is served by three railroads. About 100 manufacturing establishments are directly connected with them by spurs or industry sidings-most of the plants with only one of the three railroads. Where the plant is thus directly connected with the railroad which has the line haul, it makes no extra charge for switching the car between its road and the plant. Where the connection is not direct that is, where in order to reach the plant the car must move for a short distance over the line of another carrier-all of the plants except 17 must pay an additional transportation charge. The more favored treatment accorded by the Pennsylvania Railroad and the Western Maryland Railway to these 17 was held by the Interstate Commerce Commission to constitute unjust discrimination, ^[1] and the customary order to remove the discrimination was made. Manufacturers' Assn. of York v. Pennsylvania R. R. Co., 73 Interst. Com. Com'n R. 40. The Western Maryland acquiesced in the order. The Pennsylvania brought this suit against the United States to enjoin its enforcement. The Commission intervened as defendant. The case was heard before three judges on motions to dismiss. The court, Judge Witmer dissenting, entered a final decree granting the relief prayed for. 295 F. 523. The case is here on direct appeal under the Act of October 22, 1913, c. 32, 38 Stat. 208, 220.

The 17 plants are located in a small section of the city in which lines of the Pennsylvania and of the Western Maryland run substantially parallel. About half of these plants have their spur connections with the Pennsylvania; the remainder have theirs with the Western Maryland. By an arrangement between these companies, each is permitted to, and does, pass over the road of the other with its own locomotives and attached cars in order to make deliveries to and accept shipments from plants located on spurs directly connected only with the road of the other carrier. Industries within the zone thus get the same advantage over those without it which would flow from an agreement for reciprocal free-switching or for absorption of the switching charges which was limited to their traffic. The Commission found that, 'from the standpoint of carriage, the situation of industries inside and outside the zone is substantially similar,' and that the described practice 'subjects shippers * * * without the zone to undue prejudice and disadvantage.' ^[2] The only substantial question ^[3] for decision is whether the advantage enjoyed by these 17 plants, although found, as a fact, to result in undue prejudice, must be held, as a matter of law, to be a lawful preference, because of the means by which the advantage is effected.

The argument most strongly urged is this: In the absence of an appropriate order carriers are not obliged to extend or curtail their facilities; or to submit to enlarged use of their terminals. The arrangement by which the Pennsylvania and the Western Maryland extend, each to the other, the use of their tracks to effect terminal receipt and delivery of carload freight within the zone is a trackage agreement and is, in law, either a limited extension of the line of each carrier or an agreement for the limited common use by each carrier of terminal facilities of the other. To accord to plants without the zone the same service which, under the arrangement, is enjoyed by those within the zone would involve either a further extension of the tracks of each carrier or an enlargement of the common use of their terminal facilities. Under the Interstate Commerce Act, as amended by Transportation Act, c. 91, 41 Stat. 456, the Commission might, upon proper findings and conditions, have ordered such extension of tracks, under the powers conferred by section 1, par. 21, p. 478 (Comp. St. Ann. Supp. 1923, § 8563), or it might have ordered an enlargement of the common use of terminals under section 3, par. 4, p. 479 (Comp. St. Ann. Supp. 1923, § 8565); or it might have equalized rates and charges for plants within and without the zone by exercise of the power, conferred by section 15, pars. 3 and 4, pp. 485, 486 (Comp. St. Ann. Supp. 1923, § 8583), to establish through routes and joint rates. The grant of these specific powers indicates a purpose on the part of Congress to so restrict the Commission's general power to prevent unjust discrimination, prohibited by section 3, that a preference granted certain shippers served by a carrier by virtue of the ownership of tracks or trackage rights over other shippers not reached by the carrier, because it does not own tracks or trackage rights which would enable it to reach them, cannot warrant a finding of undue discrimination; and that similarly the withholding or possession of trackage rights between carriers cannot, in law, constitute undue preference. In support of this argument, attention is called to the fact that, as originally enacted, ^[4] section 3, after prohibiting discrimination as between connecting carriers in respect to facilities for interchange of traffic, rates nad charges, provides: 'But this shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business.' 24 Stat. 380 (Comp. St. § 8565).

The argument is, in our opinion, unsound. There is nothing in the Act to Regulate Commerce, as originally enacted, or in Transportation Act 1920, or in any earlier amendment, which indicates a purpose on the part of Congress either to allow a carrier to create undue prejudice by the use of facilities possessed, or to narrow the Commission's powers to prevent unjust discrimination. The clause quoted was doubtless inserted in section 3 to make clear that the mere grant to one carrier of the use of tracks or terminal facilities for the purpose of interchanging traffic and the refusal of such facilities to another, does not make the preference given illegal. The clause had no other effect. In this respect, it resembles the provision contained in section 22 (Comp. St. § 8595), concerning free service or reduced rates to the federal, state and municipal governments. Nashville, Chattanooga & St. Louis Ry. v. Tennessee, 262 U.S. 318, 43 S.C.t. 583, 67 L. Ed. 999.

The Commission has found, not merely that the facilities in question were granted to some and refused to other, but that the grant and refusal have, by reason of the use made and intended to be made of the facilities, resulted in undue prejudice. It is true that an extension of trackage rights, an enlarged common use of terminals, or the establishment of through routes and joint rates, or the withdrawal of any of them, could not be ordered except upon the findings and conditions prescribed in the act. But the order complained of does not require any such thing. It requires only that the carriers shall desist from a practice which involves such use as has resulted and will result in the undue prejudice found. The order leaves them free to remove the discrimination by any appropriate action. American Express Co. v. Caldwell, 244 U.S. 617, 624, 37 S.C.t. 656, 61 L. Ed. 1352; United States v. Illinois Central R. R. Co., 263 U.S. 515, 521, 44 S.C.t. 189, 68 L. Ed. 417. To accomplish this, it is not necessary that the Pennsylvania should grant to the other carriers the extensive use of the terminal facilities and tracks WHICH WAS SOUGHT, ^[5] AND WHich the commission found was not SHOwn to be in the public interest. Compare Pennsylvania Co. v. United States, 236 U.S. 351, 368, 35 S.C.t. 370, 59 L. Ed. 616; Louisville & Nashville R. R. Co. v. United States, 238 U.S. 1, 20, 35 S.C.t. 696, 59 L. Ed. 1177. The situation in this case is unlike that which was presented in Louisville & Nashville R. R. Co. v. United States, 242 U.S. 60, 37 S.C.t. 61, 61 L. Ed. 152.

Reversed.

Notes

1. The fact that 2 of the 17 plants hereinafter referred to are connected by spurs with both roads may be ignored in this discussion.
2. The order declared that the 'Commission having found in said report that the practice of the Pennsylvania Railroad Company and the Western Maryland Railway Company of extending the use of their tracks to each other for the purpose of terminal receipt and delivery of freight at industries in York within a zone described in the report, while refusing to extend the use of their tracks for the purpose of delivering or receiving freight at other industries similarly located but without the zone, under substantially similar circumstances and conditions, is subjecting various shippers and industries to undue prejudice: It is ordered that said defendants be * * * required to cease and desist * * * from practicing the undue prejudice. * * *'
3. There is a faint contention that the order is invalid, also, because it is not in terms limited to interstate commerce. That it should be construed as not applying to intrastate commerce is clear. Compare Texas v. Eastern Texas R. R. Co., 258 U.S. 204, 42 S.C.t. 281, 66 L. Ed. 566.
4. The clause was stricken out by the amendment of the section made in Transportation Act 1920, 41 Stat. 479.
5. The proceeding before the Commission, which was instituted by the Manufacturers' Association of York, sought an order requiring the three railroads (a) to interchange at York all traffic originating in or destined to that city; (b) to permit common use by all the carriers of all terminal facilities at York, including the main line tracks for a reasonable distance outside the terminals; and (c) to establish reciprocal switching throughout the city.